Manager
ASX Market Announcements
Australian Securities Exchange
Attached is the Company’s Annual Report for the 12 month period ended 31 March 2020 in
the form in which it will be distributed to shareholders of the Company.
This version will be mailed to those shareholders who have elected to receive a printed copy of
the Annual Report as at 24 June 2020.
Shareholders who have elected to receive the Annual Report electronically will receive an email
on or about 24 June 2020 providing a link to the report on the Company’s website.
AACo has released its inaugural Sustainability Benchmarking Report, you can find it on our
website: https://aaco.com.au/about-us/environment-sustainability.
This announcement is authorised to be given to the ASX by the AACo Board.
Issued by:
Bruce Bennett
Company Secretary and General Counsel
T H E A R T
O F
A U S T R A L I A N B E E F
2 0 2 0 A N N U A L R E P O R T
Key Highlights
Positive Statutory
EBITDA result:
+$80.1M
Positive operating profit and
operating cash flow delivered
despite adverse seasonal conditions
experienced during FY20.
An increase of $262.8M v pcp driven by favourable
livestock valuation movements year-on-year and
positive operating profit result.
+19.7%
Strong wagyu meat sales achieved,
up 19.7%, driven by positive price
and volume growth.
Operational efficiencies being realised
through supply chain simplification
and cost reduction programme.
Strong sales growth
across all key regions:
+34%
North
America
+17%
Europe/
Middle East
+19%
Asia
+16%
Australia
AACo has released its inaugural Sustainability
Benchmarking Report, you can find it on our website:
https://aaco.com.au/about-us/environment-sustainability
SUSTAINABILITYAACO ANNUAL REPORT Contents
02
Chairman’s Letter
Page 02
03
Letter from the MD & CEO
Page 04
04
Directors’ Report
Page 08
05
Financial Report
Page 40
06
ASX Information
Page 90
07
Company Information
Page 91
1
CONTENTS Chairman’s Letter
Dear Fellow Shareholders,
Your company made solid progress during the financial year as
our branded beef strategy gained momentum at home and in our
export markets where our products have built a strong reputation
amongst consumers for superior quality. We recorded double-digit
wagyu meat sales growth across every region we operate as the
company launched the brand across major cities globally.
AACo has a proven ability to produce the highest quality beef at
scale and we secure a premium price for it because our brands
and our products are so well regarded internationally.
Australian agricultural products generally have long been sought
after in export markets because of our tough regulations which
demand adherence to the highest safety and hygiene standards
in farming practices and food processing. These high standards
which permeate our supply chain, have given Australian food
products an enviable reputation around the world.
We see this sentiment play out in our export markets year after
year with strong demand for AACo’s wagyu beef, particularly
coming from Asia and the United States . The Asian market is an
important one for AACo as it accounted for 66 percent of our total
wagyu meat sales in FY20. Our market in North America made
the biggest gains, recording a 34 percent increase year-on-year
in wagyu meat sales revenue.
As a branded beef business, the customer is central to our
operations. In the past year Asian consumer trends towards the
purchase of beef became increasingly influenced by several factors
“While provenance is important to
consumers, increasingly they are also
demanding to know more about the
sustainability practices of the companies
from which they source their food.”
D O N A L D M C G A U C H I E AO , C H A I R M A N
2
AACO ANNUAL REPORT including a growing middle class, changing diets
and a protein deficiency brought on by the impact
to Asia’s pork industry by African Swine Fever. Beef is
widely accepted as more nutritious than other forms
of protein.
Consumer research by Meat and Livestock Australia
found safety, freshness and origin ranked highest
for customers in developing countries, while in more
mature markets consumers care about quality,
source and a point of difference.
Customers tend to gravitate towards brands and
sources that they trust. In the current uncertain
global environment trust is especially important
as we adapt our business to meet the demands
of consumers who seek high quality beef from
paddock to plate supply chains.
Sustainability Report
While provenance is important to consumers,
increasingly they are also demanding to know more
about the sustainability practices of the companies
from which they source their food.
Following the release of AACo’s sustainability policy,
the Board has approved the release of AACo’s
inaugural sustainability benchmarking report which
details the measures we will adopt towards making
the company and the industry become more
sustainable.
The report outlines the environmental, social
and economic activities we will undertake as a
company to meet our goals. The report focuses on
four key areas around Animal Health and Welfare,
Environmental Stewardship, People and Culture and
Livestock Transport.
With almost one percent of Australia’s land mass
under our stewardship, we have an enormous
responsibility to ensure that it is protected and
maintained well. Sustainable practices will maintain
our social licence to operate through continuous
improvements using innovation, creativity and best
practice so that we can continue to produce the best
beef in the world.
Portfolio of Assets
Our world class pastoral properties increased by a
net $63.6 million over the prior year, demonstrating
the quality of the assets. Our operations spanning
more than 26 stations, farms and feedlots provide
pristine pastures and grow natural grasses, herbage
and grains for our herd to graze on.
During the year, we added Rewan Station in Central
Queensland on a 10-year lease from Rural Funds
Management.
Rewan is a cattle backgrounding and finishing
property about 200 kilometres south of Emerald.
The property spans 17,500 hectares and benefits
from high average rainfall which provides AACo
extra capacity to background on reliable high
performing country.
Board of Directors
The Board has not declared a dividend for AACo
shareholders in FY20. We feel it is prudent in times
of uncertainty to preserve cash and use all available
resources to rebuild and invest in the company.
On July 31, 2019 we welcomed Marc Blazer as a non-
executive director, following the retirement of long
serving non-executive director David Crombie AM .
Marc brings a background in the global food
and hospitality industry as well as a career in
capital markets and understands how to build
brands around people and products. As co-founder
and director of several brand and hospitality
related businesses, Marc is Chairman of the board
of Noma Holdings, the parent company of two
Michelin-starred restaurant “noma” in Copenhagen.
Looking ahead
Finally, I would like to commend the entire team led
by Managing Director and CEO Hugh Killen for a
pleasing result this year. The team showed resilience
and commitment in overcoming the several
obstacles facing the business to produce a positive
set of financial and operating results. The company’s
response to the challenges presented by COVID-19
showed strength and leadership in the industry. The
speed at which all employees adapted their way of
working and supported each other throughout the
uncertainty is commendable.
While the COVID-19 pandemic has presented
unprecedented challenges, AACo sees this as an
opportunity to examine everything we do as a
company and ensure that we emerge as a stronger
business. We are protecting our brands as we pivot
deeper into retail and expand our presence in this
channel. As we navigate through the uncertainty
created by COVID-19, the company is focusing on
controlling costs across the business.
Yours sincerely,
Donald McGauchie AO
Chairman
Australian Agricultural Company Limited
3
CHAIRMAN’S LETTER
Letter from the
MD & CEO
Dear Fellow Shareholders,
It is a pleasure to present you with AACo’s
Fiscal Year 2020 Annual Report as the leader
of a company as resilient as it is rich in history.
Throughout the 196 years which AACo has been
operating, we have survived drought, floods,
wars and now a global pandemic. One thing
which has been a constant throughout these
challenges, is AACo’s ability to produce high
quality beef at scale.
We started the financial year continuing the
enormous clean up and rebuild of our Gulf
infrastructure after the devastating floods in
February 2019 and ended the final few weeks
of the financial year managing the fallout from
COVID-19.
In between these two challenging events and
while still battling drought, AACo’s strategy to
produce and supply high-quality branded beef
for the global food service and retail sectors
continued to deliver growth for your company
and I thank each member of the AACo team
for their loyalty and flexibility to adapt under
challenging conditions.
“Our solid first half performance continued
into the second half of the year delivering
a healthy operating profit...”
H U G H K I L L E N , M A N A G I N G D I R E C T O R A N D C E O
4
AACO ANNUAL REPORT Branded beef strategy
Our integrated supply chain helps us connect our
product to our customers around the world. The
targeted marketing strategy saw our premium
brand Westholme launched in dozens of cities
where the product features on the menus of top
fine dining restaurants. Westholme now accounts
for 11 percent of the total wagyu sales for the
company.
Throughout FY20, with our sales and marketing
teams embedded around the world, AACo focused
on cementing its presence in existing markets
while establishing and growing others. This
resulted in a 19.7 percent increase in wagyu beef
sales for the year. This growth not only meant
more volume of product was sold, but also at a
higher price. We sold our wagyu products at 8
percent per kilogram higher this year than the
previous year. In each of the regions which we sell
into, we experienced double-digit sales growth.
All of the beef which is part of AACo’s meat sales
programme is wagyu beef, most of our products
are branded and some are non-branded.
A stand-out performer out of our regions was
North America which delivered 34 percent
revenue growth on wagyu meat sales and now
accounts for 7 percent of our overall meat sales.
In FY20 we made positive progress in rebuilding
our presence in the US and Canada through the
food service and retail channels and executed
distribution partnerships across seven key cities in
the US. We predominantly sell into food service in
the US and Canada, however we are also growing
our retail presence there targeting gourmet
butchers, large supermarket chains and online
retailers.
Asia accounts for 66 percent of AACo’s total wagyu
meat sales. South Korea is AACo’s largest market
and we enjoy a long-established business and
retail relationship going back more than 15 years.
AACo is proud of the business we have built up in
South Korea and we have a deep brand presence
there which is supported through in-store
promotions and demonstrations. Darling Downs
Wagyu is a household name in South Korea and
can be found on the shelves of the country’s
largest supermarket chain. Other significant Asian
markets in which we operate are China, Taiwan,
Singapore, Hong Kong and Indonesia. Asia is a big
and important market. We are noticing a trend in
the Asia region whereby consumers are increasing
their focus on provenance and clean, safe-farming
and processing standards.
Our business in Europe and Middle East saw good
growth in FY20, with sales increasing 17 percent
and the region accounting for about 12 percent
of overall sales of wagyu beef for the company.
We continued to restructure our distribution
partnerships throughout Europe and the UK
and launched Westholme in London. AACo’s
retail presence in Europe and the Middle East is
also set to be expanded.
In our home market of Australia which accounts
for 15 percent of overall wagyu meat sales, we
revitalised our distribution partnerships in the
three major eastern seaboard cities of Melbourne,
Sydney and Brisbane. We focused on allocating
our products into the high-end food service sector
and gourmet butchers. The sales growth we
achieved in Australia for FY20 was 16 percent.
Financial Performance
Our solid first half performance continued into
the second half of the year contributing to the
delivery of a healthy full year operating profit
of $15.2 million. In addition, AACo recorded the
highest operating cash flow in three years of $20.1
million despite absorbing approximately $42
million in elevated costs for feed and transport
associated with the drought. These results were
driven by our strong improvements across meat
sales in FY20 while exercising discipline over costs
which reduced by $31 million.
Our Statutory EBITDA of $80.1 million was boosted
by gains in the value of our herd and was a $262.8
million improvement on FY19 which recorded a
loss of $182.7 million. AACo recorded a net profit
after tax in FY20 of $31.3 million.
There is still more work to be done on reducing
AACo’s costs and continuing our focus on efficient
uses of our assets through prudent capital and
financial management. We have comfortable
headroom in our banking covenants and secured
an additional $50 million borrowing capacity
during the year.
Operations
In FY20, AACo’s operations spanned more than
26 properties across stations, feedlots and farms
in Queensland and the Northern Territory. We
are focusing on streamlining our processes and
simplifying our supply chain. We still have a lot
of work to do to make AACo a more efficient
business. Our farms which produce some of the
feed for our cattle had a good year with average
rainfall, although because of drought elsewhere,
5
LETTER FROM THE MD & CEO we were hit by high freight costs. As the year wore
on and the weather improved, our costs for feed
and transport reduced significantly. In the first
half of the year the elevated costs of feed and
transport was about $36 million, while the second
half of the year the extra cost was just $6 million.
Our Livingstone Beef Operations in the Northern
Territory remains suspended.
Gulf Rebuild
One of the biggest challenges to the business
was the rebuild of the Gulf infrastructure after
inundation in February 2019. The rebuild was
completed before deadline and under budget in
October 2019. All credit to the team who replaced
sheds, tanks, troughs, a homestead, laid kilometres
of pipe and constructed 572 kilometres of fence to
replace those which were destroyed. The capital
investment by the business was approximately
$9 million. We lost a significant number of
cattle as a result of the flood event and it was
a very emotional time for the team involved
and I commend them for the resilience they’ve
demonstrated.
Herd
AACo’s herd ended the year 19 percent lower than
in FY19, finishing just shy of 350,000 head. This
reduced herd size is due to the losses of cattle
in the Gulf floods and strategic destocking in
response to drought and changes to the supply
chain. Our breeding herd remains protected.
People
Our people are central to the operations and
their safety and welfare is the priority at AACo.
We are committed to improving our safety
standards for our 423 full-time employees.
AACo has a focus on creating a strong safety
culture at AACo but more needs to be done.
During the year, we implemented a number
of safety initiatives to educate employees about
risks which exist within their workplace and roles
and their responsibilities with regards to keeping
themselves and their colleagues safe.
Key indicators of success in this space have been
a significant increase in reporting of near misses
and minor incidents, increases in safety meeting
and toolbox talks and a 6-point improvement in
safety engagement across the business.
Ensuring our people understand AACo’s strategy
and are committed to our values and goals helps
to build a positive culture for our business.
Chief Marketing Officer Appointment
I am delighted to announce the appointment of
Rosemary Scott as AACo’s Chief Marketing Officer.
Rose will join the company in July 2020 and drive
our global marketing strategy. With more than
two decades of experience in marketing and sales
domestically and internationally, Rose joins us
from the beverage sector where she has worked
with some of the top brands in the industry.
Sustainability
AACo has recently published its inaugural
sustainability benchmarking report and we
are taking every opportunity to integrate
sustainable practices across our business.
From people, livestock, land and communities
we are adjusting our operations in an effort
to become a better corporate citizen. Some
examples are building a diverse workforce,
supporting regional and remote communities
through offering traineeships, best practice
animal welfare including mandatory pain relief
in all potentially painful surgical procedures
on livestock and a switch to renewable energy
where it is possible on our stations. We will give
regular updates as to how we are progressing
against our goals.
COVID-19
Our response to the COVID-19 pandemic was
swift and decisive. AACo immediately put in place
management plans early to protect our people,
communities and the company. We shared our
plans with our industry peers and worked with the
state and territory governments so that our people
and livestock could continue to cross borders to
ensure our operations were not disrupted.
The impact of COVID-19 had a negligible impact
on the FY20 results. As a business we are pivoting
our sales strategy towards greater retail presence
into the markets in which we operate after
almost all of our food service export markets were
disrupted by COVID-19. This is still very much a
work in progress and the impact of the pandemic
on the business remains uncertain.
6
AACO ANNUAL REPORT “Our response to the COVID-19 pandemic
was swift and decisive. AACo put in place
management plans early to protect our
people, communities and the company.”
Finally, I would like to thank the AACo team which
has put in a tremendous effort in one of the most
challenging years in the company’s recent history.
Again, thank you to the Board for their guidance
and to the shareholders for your ongoing support
as we transform AACo into a branded beef
business.
Yours sincerely,
Hugh Killen
Managing Director and CEO
Australian Agricultural Company Limited
7
LETTER FROM THE MD & CEO Directors’ Report
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
Your Directors submit their report for the year ended 31 March 2020.
DIRECTORS
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 Directors were in office for the entire period unless otherwise stated.
Donald McGauchie AO, FAICD (Non-executive Chairman)
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 and Brand &
Marketing 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:
>
>
Nufarm Limited* – appointed December 2003
GrainCorp Limited* – appointed December 2009
*Denotes current Directorship
Hugh Killen GMP (Harvard Business School)
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.
2
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
8
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
DIRECTORS (continued)
Stuart Black AM, FCA, FAICD, BA (Accounting)
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 Palla Pharma Limited, a
former director of NetComm Wireless Limited, Coffey International Limited, 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 – resigned June 2019
Palla Pharma Limited* – appointed June 2016
*Denotes current Directorship
Tom Keene BEc, FAICD
Mr Keene was appointed a Director on 5 October 2011. Mr Keene is Chairman of the Staff and Remuneration Committee
and a member of the Nomination Committee.
Mr Keene has had an extensive career in agriculture; he 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
Dr Shehan Dissanayake Ph.D.
Dr Shehan Dissanayake was appointed a Director on 27 April 2012, and was an Executive Director from 11 April 2017 to
20 November 2019. 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.
3
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
9
DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
DIRECTORS (continued)
Anthony Abraham BEc LLB (Accountancy and Law)
Mr Abraham was appointed a Director on 7 September 2014. Mr Abraham is a member of the Audit and Risk
Management Committee and 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.
Neil Reisman JD
Mr Reisman was appointed a Director on 10 May 2016. Mr Reisman is a member of the Audit and Risk Management
Committee and the Nomination Committee.
Mr Reisman was a Managing Director and member of the Board of Directors of the Tavistock Group, holding multiple roles
including chairing Tavistock Group’s Investment Committee and having the General Counsel and Chief Financial Officer
report into him.
Mr Reisman 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 Bachelor 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
Jessica Rudd BCom LLB (Hons)
Ms Rudd was appointed a director on 15 November 2017. Ms Rudd is a member of the Staff and Remuneration
Committee, Nomination Committee and Brand & Marketing Committee.
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 served as a non-executive director.
consultant for a global communications firm before moving to Beijing, where she lived and worked for five years.
Beginning her career as a media and intellectual property lawyer, Ms Rudd later worked in London as a crisis management
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 – resigned 22 January 2020
4
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
10
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
DIRECTORS (continued)
Marc Blazer MSc (LSE), BA (UMD) Appointed 31 July 2019
Mr Blazer was appointed a director on 31 July 2019. Mr Blazer is Chairman of the Brand & Marketing Committee.
Mr Blazer is a leader in the international tourism and hospitality sector. Mr Blazer is currently the Chairman and CEO of
Overture Holdings, a consumer, hospitality and brand investment group. He is also Chairman of the Board of Noma
Holdings, the parent company of world renowned restaurant noma based in Copenhagen; co-founder and Executive
Chairman of New York based PRIOR, a global hospitality and travel company; and Co-founder and Director of Ahimsa
Partners, a venture that licenses, owns, and operates Le Pain Quotidien in India.
In addition to his consumer and hospitality business activities, Mr Blazer has also had an extensive career in capital markets. Before becoming
Chairman of Overture Holdings, he was a partner and the global head of investment banking at Cantor Fitzgerald. During his tenure, he was
named one of Investment Dealer’s Digests 40-under-40 in 2006. Prior to joining Cantor Fitzgerald, Mr. Blazer spent six years at ChaseMellon
Financial Corp. (now Bank of New York Mellon), a joint venture between Chase Manhattan Corporation and Mellon Financial Group LLC.
Earlier in his career, Mr Blazer was an advisor to members of Congress in both the US House of Representatives and Senate on tax matters,
banking and securities legislation, international trade policy, and foreign relations.
Mr Blazer earned a graduate degree from the London School of Economics in 1992, and a BA from the University of Maryland in 1990.
During the past three years Mr Blazer has not served as a Director of any other listed company.
David Crombie AM, BEc (UQ) Retired 30 July 2019
Mr Crombie was appointed a Director on 5 October 2011 and retired on 30 July 2019.
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
COMPANY SECRETARY
Bruce Bennett BCom, LLB
Mr Bennett was appointed Company Secretary and General Counsel in November 2006. Before joining the Company, he 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.
5
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
11
DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
INTERESTS IN THE SHARES AND OPTIONS OF THE COMPANY
AND RELATED BODIES CORPORATE
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
T. Keene
Dr. S Dissanayake
A. Abraham
N. Reisman
J. Rudd
M. Blazer
ORDINARY SHARES
OPTIONS OVER
ORDINARY SHARES
PERFORMANCE
RIGHTS
1,120,774
198,361
40,000
75,000
2,025,000
30,000
45,000
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
253,681
Nil
Nil
Nil
Nil
Nil
Nil
Nil
DIVIDENDS AND EARNINGS PER SHARE
EARNINGS PER SHARE
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
No final or interim dividends were declared or paid during the current and prior financial periods.
31 MAR 2020
CENTS
31 MAR 2019
CENTS
5.25
5.25
(24.9)
(24.9)
6
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
12
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
OPERATING AND FINANCIAL REVIEW
About AACo
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’s Business Activities
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 423 employees
calculated on a full time equivalent basis as at 31 March 2020 (31 March 2019: 424).
AACo’s Business Model
AACo is a fully integrated branded beef business with three principal activities:
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Sales and marketing of high quality branded beef into global markets;
Production of beef including breeding, backgrounding, feedlotting and processing of cattle; and
Ownership, operation and development of pastoral properties.
AACo operates an integrated cattle production system across 19 owned cattle stations, 3 leased stations, 3 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. The Company is large enough to obtain production efficiencies but small enough to target key markets and customers.
Key Financial Indicators Used by Management
The following table summarises financial indicators used by management to monitor and manage the Company. Operating Profit is one of the key
performance metrics of the Company, as Management believe it is a better reflection of actual financial performance under the control of
management. It 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 livestock at market value with the movement at cost of production. Management therefore believe that external
stakeholders benefit from this metric being reported. Operating Profit is unaudited, non-IFRS financial information. Discussion on drivers of
movements in key financial indicators are included in the Sales & Marketing, Production and Statutory Financial Results sections below.
Meat sales
Cattle sales
Administration and selling costs
Statutory EBITDA profit/(loss)
Statutory EBIT profit/(loss)
Net profit/(loss) after tax
Net cash inflow/(outflow) from operating activities
Underlying Operating Profit/(Loss)
Operating Profit/(Loss)
31 MAR 2020
$000
31 MAR 2019
$000
MOVEMENTS
$000
229,607
104,539
(37,572)
80,129
62,063
31,317
20,120
15,194
15,194
246,244
117,837
(41,200)
(182,709)
(194,083)
(148,396)
12,990
23,720
(22,922)
(16,637)
(13,298)
3,628
262,838
256,146
179,713
7,130
(8,526)
38,116
Statutory EBITDA was a profit of $80.1 million in FY20 ($182.7 million loss in FY19), while Operating Profit was $15.2 million ($22.9 million loss
in FY19, with an Underlying Profit of $23.7m after removing impacts of the Gulf Flood losses). Operating Profit/Loss does not include unrealised
livestock gains or losses, while Statutory EBITDA does include these.
This report is the first set of annual financial statements in which AASB 16 Leases has been applied by the Company. Under the transition method
chosen, comparative information has not been restated, with the cumulative impact of adoption recognised as an improvement to the opening
balance of retained earnings at 1 April 2019. The 31 March 2020 results are therefore not directly comparable with prior periods. Changes to
significant accounting policies and the impact of applying this new standard are described in Note F2 and Note G3.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
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DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
OPERATING AND FINANCIAL REVIEW (continued)
Key Operational Indicators Used by Management
Sales and Marketing
In FY20, Luxury/Prestige revenues, volumes and $/kg 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
31 MAR 2020
31 MAR 2019
224.5
15.6
14.44
0.9
0.1
15.53
-
-
-
34.2
104.5
187.3
14.0
13.35
20.3
2.3
8.70
28.9
5.2
5.60
46.2
117.8
(1) CW – carton weight containing saleable boxed meat, LW – Live animal weight.
Production
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 period, excluding the offsetting impact of attrition kilograms. Kilograms produced has reduced 21% on the
previous corresponding period, due to strategic destocking, with continued cattle sales and lower cattle purchases in response to adverse
seasonal conditions.
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 period. The cost of production increased by 17% on the previous corresponding
period, due to a lower breeding herd, as well as a shift to a greater proportion of Wagyu production.
Kilograms produced – mil Kg LW
Cost of production – $/kg LW
31 MAR 2020
31 MAR 2019
54.1
3.38
68.9
2.88
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
14
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
OPERATING AND FINANCIAL REVIEW (continued)
Operating Review
During FY20, the Company has continued to make progress implementing its premium branded beef strategy. By leveraging off embedded sales
and marketing capabilities in key markets, AACo has been able to achieve its highest Wagyu sales revenue to date: up 20% on FY19. Execution of
brand transition has improved Westholme sales by over 50% over the prior year, with product launches driving increased brand awareness and
demand. Further, the Company has driven growth across key markets in Asia and North America.
During the year, the continuation and collaboration of our world-class executive team has driven cultural and business improvements across the
organisation. A simplified business model and focus on the Wagyu supply chain has enabled a rationalisation of resources and operational
expenditure.
FY20 saw continued 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. Due to the drought conditions and loss of breeding cattle in the 2019 Gulf flood event, both Wagyu and Non-
Wagyu head count has reduced. Despite the reduced herd numbers, the Company continues to be able to execute its branded beef strategy at an
improved operating margin.
Livestock Movements
Livestock values as recorded on the Balance Sheet have improved from the prior year due to price improvements on Non-wagyu and Wagyu
livestock, offset by headcount reductions.
As the Company no longer retains composite cattle for boxed beef, there continues to be a lower reliance on non-wagyu herd numbers, which has
led to a decline in the non-wagyu headcount. Further, the impact of the Gulf flood losses has impacted brandings during FY20, resulting in a
decline in Wagyu headcount.
Market values of Non-Wagyu and Wagyu animals have however improved over the past year, leading to a significant increase in the value of cattle
held at year end.
The Company’s ability to deliver against its premium branded beef strategy has not been impacted by these movements.
Property
Although it has continued to be a 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.
Impacts of Coronavirus (COVID-19)
The Company continues to monitor developments in the Novel Coronavirus (COVID-19) pandemic and the measures being implemented on the
economy to control and slow the outbreak. Given the dynamic nature of these circumstances and the significant increase in economic uncertainty,
the related impact on the Company's go forward consolidated results of operations, cash flows and financial condition cannot be reasonably
estimated at this stage and will be reflected in the Company's 2021 interim and annual financial statements.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
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DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
OPERATING AND FINANCIAL REVIEW (continued)
Statutory Financial Results
The FY20 results include a Statutory EBITDA profit of $80.1 million, driven primarily by positive market value movements in the value of the
closing herd of $104.1 million.
In summary:
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Operating Profit of $15.2 million, compared with a loss of $22.9 million in FY19
Statutory EBITDA profit of $80.1 million, compared with a loss of $182.7 million for FY19
Total sales revenue of $334.1 million, compared with $364.1 million in FY19, with lower volumes due to the decision to cease Livingstone
and 1824 production. Wagyu meat sales revenue was up 20% compared to FY19.
Cost of production $/kg Live Weight increased by 17% in FY20, which is a reflection of lower volumes due to a lower breeding herd, as well
as a shift to a greater proportion of Wagyu production
Net tangible assets per share was $1.53 as at 31 March 2020, compared to $1.42 as at 31 March 2019, driven by improvements in the
livestock market values and in the property portfolio
The Company maintains a robust balance sheet, with comfortable headroom under existing bank covenants
Positive net operating cash flows of $20.1 million, compared with $13.0 million in FY19
Risk Management
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 Regional 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.
Net Tangible Assets
The Company’s net tangible assets per share was $1.53 as at 31 March 2020, compared to $1.42 as at 31 March 2019. Net tangible assets of
the Company include leasehold land assets.
Business Strategies, Likely Developments and Expected Results
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.
The impact of COVID-19 on the Company's go forward consolidated results of operations, cash flows and financial condition cannot be reasonably
estimated at this stage and will be reflected in the Company's 2021 interim and annual financial statements.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There have been no significant changes in the state of affairs of the Company during the financial year. Changes due to the impacts of COVID-19
which occurred after balance date, have been disclosed in the Significant Events after Balance Date note.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
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AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
SIGNIFICANT EVENTS AFTER BALANCE DATE
COVID-19 was declared a global pandemic by the World Health Organisation on 11 March 2020. The impact of the virus has seen an
unprecedented global response by governments, regulators and numerous industry sectors. The Company’s financial results for FY20 have not
been materially impacted by COVID-19, due to changes in the Company’s supply chain and sales falling after the end of financial year.
Following the financial year-end, the Company has taken several steps to manage impacts of COVID-19, including accelerating our allocation of
products to the retail markets, modifying sales and marketing priorities and reducing salaries of Directors, Executives and corporate staff for a
period of time.
Valuations included in the financial report such as the valuation of Pastoral property and improvements and Livestock are based on information
available and relevant as at 31 March 2020, which is the Company’s balance date. As market conditions are changing daily, the values of these
assets may have changed after the financial year-end.
The Company continues to monitor developments in the COVID-19 pandemic and the measures being implemented on the economy to control
and slow the outbreak. Given the dynamic nature of these circumstances and the significant increase in economic uncertainty, the related impact
on the Company's go forward consolidated results of operations, cash flows and financial condition cannot be reasonably estimated at this stage
and will be reflected in the Company's 2021 interim and annual financial statements.
There have been no other significant events after the balance date which require disclosure in the financial report.
ENVIRONMENTAL REGULATION AND PERFORMANCE
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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 2020.
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.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
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DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
ENVIRONMENTAL REGULATION AND PERFORMANCE (continued)
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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.
There have been no breaches of compliance with environmental regulations during the year ended 31 March 2020.
SHARE OPTIONS
Unissued Shares
As at the date of this report, there were 567,810 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.
Shares Issued as a Result of the Exercise of Options
During and since the end of the financial period, there were no options exercised to acquire shares in the Company.
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. The performance rights will remain until such time as they are either exercised or the rights lapse.
There were 202,510 shares issued on exercise of performance rights under the AACo Performance Rights Plan during the year.
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND
OFFICERS
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 officers 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.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
18
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
CORPORATE GOVERNANCE STATEMENT
The Company’s Corporate Governance Statement sets out the corporate governance framework adopted by the Board of Australian Agricultural
Company Limited. This statement is publicly available on the Company’s external website: www.aaco.com.au/investors-media/corporate-
governance.
Board Skills Matrix
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
OUT OF 9 DIRECTORS
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
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8
5
1
7
6
6
2
7
5
5
2
5
6
3
6
7
4
9
5
8
7
7
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
19
DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED)
This remuneration report for the year ended 31 March 2020 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:
1.
Individual Key Management Personnel (KMP) disclosures
2. Remuneration at a glance
3. Board oversight of remuneration
4. Non-executive Director (NED) remuneration arrangements
5.
Executive remuneration arrangements
6.
Executive contractual arrangements
7.
Link between remuneration and performance
8.
Equity instruments disclosures
9.
Loans to KMP and their related parties
10. Other transactions and balances with KMP and their related parties
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
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AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
1. Individual Key Management Personnel
Details of KMP of the Company are set out in the following sections.
(i) Directors
Independent
D. McGauchie
H. Killen
Dr S. Dissanayake
N. Reisman
A. Abraham
S. Black
T. Keene
J. Rudd
M. Blazer
(1) Dr S. Dissanayake ceased being an Executive Director on 20 November 2019 but continued as a Non-executive Director
(2) These directors of the Company were determined to be non-independent.
Chairman, Non-executive Director
Managing Director and Chief Executive Officer
Non-executive Director (1)
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
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 15 November 2017
Appointed 31 July 2019
Non-Independent
Non-Independent
Non-Independent
Independent
Independent
Independent
Independent
Independent
(2)
(2)
(2)
(ii) Non-independent Directors
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 48.06% shareholder of the Company
N. Reisman
Mr N. Reisman is not considered independent as during the year he was an officer of Tavistock Group which controls the
AA Trust which is a major 48.06% shareholder of the Company
(iii) Directors who resigned or retired during the period
D. Crombie
Non-executive Director
Independent
Retired effective 30 July 2019
(iv) 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
(v) Executives who resigned, retired or otherwise ceased employment during the period
None
There were no other changes to KMP after the reporting date and before the date the financial report was authorised for issue.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
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DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
2. Remuneration at a Glance
Remuneration strategy and policy
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:
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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 is at the discretion of the Board after assessing the performance of the Company
and the MD/CEO and other senior executives against agreed performance hurdles
Offer participation in the long term incentives (LTI) plan to the MD/CEO and other senior executives
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
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
22
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
2. Remuneration at a Glance (continued)
The following table illustrates the structure of the Company’s executive remuneration arrangements for the year ended 31 March 2020:
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 with a balance across
financial, non-financial and 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
%
53
50-63
MD/CEO
Key Management
(1) 50% of cash bonus actually paid
Board remuneration
SHORT TERM
INCENTIVES
%
26
25-29
DEA
INCENTIVE(1)
%
13
13-15
LONG TERM
INCENTIVE
%
8
0-12
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.
Use of Remuneration Consultants
During the year ended 31 March 2020, PwC and Willis Towers Watson have provided assistance to the Company covering a range of
remuneration matters, including the following:
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Remuneration Strategy Review
Senior Executive remuneration
Long Term Incentive (LTI) Plan
Assistance from external parties was limited to a review of the above remuneration matters. No changes have been recommended or made to the
remuneration for directors or executives as a result of this remuneration assistance.
In the year ended 31 March 2020, services provided by third parties totalled $43,302 (excluding GST and out-of-pocket expenses).
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
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DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
3. Board Oversight of Remuneration
Staff and Remuneration Committee
The Staff and Remuneration Committee currently comprises three independent non-executive Directors (Ms J. Rudd, 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 2019 Annual General Meeting (‘AGM’)
The Company received 85.81% of ‘for’ votes in relation to its remuneration report for the year-ended 31 March 2019.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
24
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
4. Non-Executive Director (NED) Remuneration Arrangements
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
Board identified large or otherwise important projects. Generally, Directors are not separately remunerated for membership in 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 2020 and 31 March 2019 is detailed in the table on page 33.
5. Executive Remuneration Arrangements
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.
During the year ended 31 March 2020, 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 all Australian based 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 remuneration is detailed in the tables on pages 33 to 34.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
25
DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
5. Executive Remuneration Arrangements (continued)
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 an 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 in which the executive’s performance is being measured.
In addition, Executives who are paid an STI cash bonus will 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.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
26
AACO ANNUAL REPORT
CCOOMMPPAANNYY IINNFFOORRMMAATTIIOONN
REMUNERATION REPORT (AUDITED) (continued)
5. Executive Remuneration Arrangements (continued)
The structure of the short-term incentive plan is as follows:
FEATURE
Maximum opportunity
Minimum opportunity
Performance metrics
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
The STI metrics align with the strategic priorities at both a Company and business unit level.
The general performance metrics for the KMP are as follows:
METRIC
Primary financial performance metrics of Operating Profit and Operating cash flow, in conjunction
with Customer, Operations and People performance indicators.
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 targets for the MD/CEO and key executives were largely met and in certain cases exceeded the Board approved STI targets.
In the uncertain and unprecedented environment created by COVID-19, the Board have exercised their discretion to not offer any STI bonus or
DEA entitlement in relation to FY20 performance.
The STI cash bonus paid or accrued for the MD/CEO or any other executive in respect of performance for the year to 31 March 2020 therefore
amounts to $nil (31 March 2019: $nil).
Consistent with the position on STI cash bonuses, a DEA was not offered in respect of performance for the year to 31 March 2020 (31 March
2019: $nil).
27
DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
5. Executive Remuneration Arrangements (continued)
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 attempts to align 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
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.
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.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
28
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
5. Executive Remuneration Arrangements (continued)
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.
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.
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)
The performance condition for the first grant round of targeted market capitalisation of $1 billion was achieved on 5 June 2017. The rights
associated with 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, offered during FY19, was forfeited in FY20 by all recipients as the performance condition of target market capitalisation was not met by 30
June 2019.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
29
DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
6. Executive Contractual Arrangements
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, AACo Singapore Holdings Pty Ltd Singapore Branch and AACo
Operations (US) LLC.
Total fixed remuneration
CEO DESCRIPTION
$600,000 including superannuation (subject to
annual review by Board)
SENIOR EXECUTIVE DESCRIPTION
Range between $377,775 and $656,529
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
Subject to Company performance conditions being
satisfied and the service conditions being met
Contract duration
Ongoing
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
6 months
Unvested performance rights lapse unless Good
Leaver and Board exercises discretion to allow
Termination for serious misconduct Nil
Nil
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
FY20 performance and impact on remuneration
In relation to the performance metrics for the payment of short-term incentives for KMP, being Operating Profit and Operating Cash Flow, in
conjunction with Customer, Operations and People performance indicators, the Company largely achieved and in certain cases exceeded, the
Board approved thresholds.
In the uncertain and unprecedented environment created by COVID-19, the Board have exercised their discretion to not offer any STI bonus or
DEA entitlement in relation to FY20 performance. Therefore, no STI cash bonuses have been paid or accrued nor DEA offered with respect to the
2020 financial year.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
30
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
7. Link between Remuneration and Performance
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
Achieved
Achieved
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
2020
31,317
5.25
-
-
10%
20,120
2019
(148,396)
2018
(102,559)
(24.9)
(17.4)
-
-
-
-
(14%)
12,990
(31%)
(39,864)
2017
71,586
13.2
-
-
28%
29,260
2016
67,807
12.7
-
-
(19%)
21,789
The table below shows the relative proportions of remuneration that were linked to performance and those that were fixed, based on the amounts
disclosed as statutory remuneration expense (refer to tables on pages 33 to 34).
Directors
H. Killen
Executives
B. Bennett
S. Grant
N. Simonsz
A. Speer
A. O’Brien
FIXED REMUNERTATION
AT RISK – STI – CASH
AT RISK – STI – DEA(1)
AT RISK – LTI
2020
2019
2020
2019
2020
2019
2020
2019(2)
89%
84%
80%
100%
100%
100%
100%
70%
99%
99%
99%
100%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
2%
0%
0%
0%
0%
0%
3%
0%
0%
0%
0%
11%
16%
18%
27%
0%
0%
0%
0%
1%
1%
1%
0%
(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.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
31
DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
7. Link between Remuneration and Performance (continued)
Performance based remuneration granted during the year
During FY20, Management has largely achieved the performance targets and thresholds approved by the Board to be eligible for STI cash
bonuses and DEA entitlement. In the uncertain and unprecedented environment created by COVID-19, the Board have exercised their discretion
to not offer any STI bonus or DEA entitlement in relation to FY20 performance. Therefore, no STI cash bonuses have been paid or accrued nor DEA
offered with respect to the 2020 financial year.
For each STI cash bonus and grant of rights to deferred shares (refer to tables on pages 33 to 34), the percentage of the available bonus or grant
that was paid, or that vested, in the financial year, and the percentage that was forfeited as a result of the Board’s discretionary decision is set out
below.
Directors
H. Killen
Executives
B. Bennett
S. Grant
N. Simonsz
A. Speer
A. O’Brien
CURRENT YEAR STI ENTITLEMENT (CASH BONUS AND DEA)
Total Opportunity ($)
Awarded %
Forfeited %
450,000
261,771
226,665
412,500
371,287
418,548
0%
0%
0%
0%
0%
0%
100%
100%
100%
100%
100%
100%
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
32
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
7. Link between Remuneration and Performance (continued)
Remuneration of Key Management Personnel – Directors
SHORT TERM
SALARY &
FEES
CASH
BONUS
NON-
MONETARY
BENEFITS
POST-
EMPLOYMENT
LONG-TERM
BENEFIT
TERMINATION SHARE BASED PAYMENT
SUPER-
ANNUATION
LONG SERVICE
LEAVE(1)
BENEFITS
SHORT TERM
INCENTIVE
(DEA)
PERFORMANCE
RIGHTS (LTI)(2)
DIRECTORS
Non-executive Directors
$
$
$
$
$
$
$
250,000
250,000
125,000
125,000
105,753(3)
100,000
D. McGauchie
31/03/2020
31/03/2019
S. Black
31/03/2020
31/03/2019
A. Abraham
31/03/2020
31/03/2019
T. Keene
31/03/2020
31/03/2019
Dr S. Dissanayake(4)
31/03/2020
31/03/2019
N. Reisman
31/03/2020
31/03/2019
J. Rudd
31/03/2020
31/03/2019
M. Blazer(5)
31/03/2020
134,247
140,000
189,625
239,800
115,000
115,000
105,507(3)
99,351
83,562
Executive Directors
643,498
648,509
H. Killen
31/03/2020
31/03/2019
Former Directors
D. Crombie(6)
31/03/2020
31/03/2019
Total Remuneration: Directors
43,096
130,000
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
N/A
N/A
N/A
N/A
N/A
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,750
23,750
11,875
11,875
10,047
9,500
12,753
13,300
-
-
-
-
10,023
10,149
-
-
-
19,445
12,964
25,664
20,089
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
N/A
N/A
-
-
4,094
12,350
N/A
N/A
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
N/A
N/A
N/A
N/A
N/A
-
-
N/A
N/A
TOTAL
$
273,750
273,750
136,875
136,875
115,800
109,500
147,000
153,300
189,625
239,800
115,000
115,000
115,530
109,500
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-
-
N/A
N/A
N/A
N/A
N/A
83,562
85,603
129,919
774,210
811,481
N/A
N/A
47,190
142,350
-
-
19,445
12,964
98,206
101,013
1,795,288
1,847,660
31/03/2020
31/03/2019
(1) Long service leave balances are only accrued from 5 years’ service onwards, and this is not applicable to non-executive directors
(2) The LTI expense is based on estimates of the expected value of rights to be granted under the LTI plan at that point in time
(3) A. Abraham was appointed as a member of the Audit and Risk Committee on 12 November 2019 and J. Rudd was appointed as a member of
the Staff and Remuneration Committee on 18 November 2019.
(4) Dr S. Dissanayake ceased being an Executive Director on 20 November 2019 but continued as a Non-executive Director
(5) M. Blazer was appointed as a Non-executive Director on 31 July 2019
(6) D. Crombie retired as a Non-executive Director on 30 July 2019
1,998,542
2,091,556
85,603
129,919
-
-
-
-
-
-
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
33
DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
7. Link between Remuneration and Performance (continued)
Remuneration of Key Management Personnel – Other KMP
SHORT TERM
POST-
EMPLOYMENT
LONG-TERM
BENEFIT
TERMINATION SHARE BASED PAYMENT
NON-
MONETARY
BENEFITS
SUPER-
ANNUATION
LONG SERVICE
LEAVE(1)
BENEFITS
SHORT TERM
INCENTIVE
(DEA)(2)
PERFORMANCE
RIGHTS (LTI)(3)
$
$
$
$
TOTAL
$
SALARY &
FEES
OTHER
PAYMENTS
$
$
EXECUTIVES
Other KMP
B. Bennett
31/03/2020
359,194
31/03/2019
310,523
S. Grant
31/03/2020
405,664
-
-
-
31/03/2019
381,225
40,000
N. Simonsz
31/03/2020
594,013
31/03/2019
397,508
-
-
A. Speer
$
-
-
4,200
4,200
4,200
2,800
31/03/2020
532,223
25,000(4)
12,435
31/03/2019
362,235
100,000
1,976
A. O’Brien
31/03/2020
676,201
70,000(5)
31/03/2019
147,585
-
Total Remuneration: Other KMP
-
-
20,828
20,049
18,483
31,707
21,434
19,317
20,764
13,753
-
-
3,136
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,162
15,599
85,603
475,923
125,524
471,695
-
-
-
-
-
-
-
-
-
1,465
428,347
458,597
-
2,832
619,647
422,457
-
2,637
590,422
480,601
-
-
746,201
147,585
7,162
85,603
2,860,540
31/03/2020
2,567,295
95,000
20,835
81,509
3,136
8,976
1,599,076 140,000
31/03/2019
-
(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 is based on estimates of the expected value of rights to be granted under the LTI plan at that point in time
(4) Other payments to A. Speer during FY20 relates to an anniversary payment
(5) Other payments to A. O’Brien during FY20 relates to a relocation assistance package
84,826
15,599
-
132,458
1,980,935
No STI cash incentives were granted during the 12-month period ended 31 March 2020.
28
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
34
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
8. Equity Instruments Disclosures
Nil performance rights under the LTI plan and Nil DEA performance rights were granted during the twelve months to 31 March 2020 (31 March
2019: 5,948,897 performance rights under the LTI plan and nil DEA performance rights).
178,834 shares were distributed to key management personnel during the year-ended 31 March 2020, as a result of exercising vested
performance rights granted during 2018 (31 March 2019: 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 F8
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
GRANTED AS
REMUNERATION
EXERCISED
DURING
THE YEAR
NET CHANGE
OTHER (1)
BALANCE AT
END OF
PERIOD
NOT VESTED
AND NOT
EXERCISABLE
VESTED AND
EXERCISABLE
VALUE YET TO
VEST (2)
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
FISCAL YEAR
GRANTED
$
271,440
288,969
-
-
-
2020
Executives
H. Killen
B. Bennett
S. Grant
N. Simonsz
A. Speer
2018, 2019
2,042,476
2018, 2019
783,724
2019
2019
2019
426,059
823,713
766,905
-
-
-
-
-
(84,561) (1,704,234)
253,681
253,681
(94,273)
(426,059)
263,392
263,392
-
-
-
(426,059)
(823,713)
(766,905)
-
-
-
-
-
-
-
-
-
-
-
A. O’Brien
(1) Represents the second grant round that was forfeited due to the market cap performance condition not being met on 30 June 2019.
(2) The maximum value of the deferred shares yet to vest has been determined as the amount of the grant date fair value of the rights that is yet to
-
-
-
-
-
-
-
-
-
be expensed. The minimum value of deferred shares yet to vest is nil, as the shares will be forfeited if the vesting conditions are not met.
No other Directors or executives held options or performance rights during the period.
29
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
35
DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
REMUNERATION REPORT (AUDITED) (continued)
8. Equity Instruments Disclosures (continued)
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.
2020
Directors
D. McGauchie
H. Killen
S. Black
T. Keene
A. Abraham
Dr S. Dissanayake
N. Reisman
J. Rudd
M. Blazer
Executives
B. Bennett
S. Grant
N. Simonsz
A. Speer
A. O’Brien
Total
BALANCE AT
BEGINNING OF
PERIOD
NUMBER
GRANTED AS
REMUNERATION
EXERCISE OF
OPTIONS/RIGHTS
NET CHANGE
OTHER
BALANCE AT END
OF PERIOD
NUMBER
NUMBER
NUMBER
NUMBER
1,120,774
113,800
40,000
75,000
30,000
2,025,000
45,000
-
-
97,142
-
-
-
-
3,546,716
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
84,561
-
-
-
-
-
-
-
94,273
-
-
-
-
178,834
-
-
-
-
-
-
-
-
-
-
-
-
-
1,120,774
198,361
40,000
75,000
30,000
2,025,000
45,000
-
-
191,415
-
-
-
50,000
50,000
50,000
3,775,550
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.
9. Loans to key management personnel and their related parties
There are no loans outstanding with the key management personnel at 31 March 2020 (31 March 2019: nil), nor have there been any transactions
that would be considered a loan throughout the period.
10. Other transactions and balances with key management personnel and their
related parties
There have been no other transactions with key management personnel or their related parties during the financial year to 31 March 2020 (31
March 2019: nil).
30
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
36
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
DIRECTORS’ MEETINGS
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
BRAND &
MARKETING
COMMITTEE(1)
A
9
9
9
3
9
9
9
9
9
7
B
9
9
9
3
9
8
9
9
9
7
A
10
10
10
4
10
10
10
10
10
7
B
10*
10*
10(2)
4
10
6*
10(3)
9
8*
5*
A
7
7
7
3
7
7
7
7
7
5
B
7
7*
7
3
7*
5*
7*
7*
6(4)
5*
A
1
1
1
1
1
1
1
1
1
0
B
1
1*
1
1
1
1*
1
1
1
0*
A
2
2
2
0
2
2
2
2
2
2
B
2
2*
0*
0
0*
0*
0*
0*
1
2
D. McGauchie
H. Killen¥
T. Keene
D. Crombie
S. Black
Dr S. Dissanayake
A. Abraham
N. Reisman
J. Rudd
M. Blazer
A = Number of meetings held during the time the Director held office
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
(1) The Brand & Marketing Committee was formed by the Board on 5 February 2020
(2) Mr. Keene retired as a member of the Audit & Risk Management Committee on 11 November 2019
(3) Mr. Abraham was appointed as a member of the Audit & Risk Management Committee on 12 November 2019
(4) Ms. Rudd was appointed as a member of the Staff & Remuneration Committee on 18 November 2019
Committee Membership
As at the date of this report, the Company had an Audit and Risk Management Committee, Staff and Remuneration Committee, Nomination
Committee and a Brand & Marketing Committee.
Rounding
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.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
37
DIRECTORS’ REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
AUDITOR INDEPENDENCE
We have obtained the following independence declaration from our auditors KPMG.
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Australian Agricultural Company Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Australian Agricultural
Company Limited for the financial year ended 31 March 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Simon Crane
Partner
Brisbane
20 May 2020
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
38
AACO ANNUAL REPORT
DDIIRREECCTTOORRSS’’ RREEPPOORRTT
NON AUDIT SERVICES
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
Training workshop
Review of draft sustainability report
Signed in accordance with a resolution of the Directors
31 MAR 2020
$
-
19,600
19,600
31 MAR 2019
$
23,150
-
23,150
Donald McGauchie
Chairman
Brisbane
20 May 2020
Hugh Killen
Managing Director
Brisbane
20 May 2020
33
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
39
DIRECTORS’ REPORT
Financial Report
CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL SSTTAATTEEMMEENNTTSS
Consolidated Income Statement
For the year ended 31 March 2020
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
(Loss)/gain on equity investments
Depreciation and amortisation
Profit/(Loss) before finance costs and income tax
Finance costs
Profit/(Loss) before income tax
Income tax (expense)/benefit
Net profit/(loss) after tax
PROFIT/(LOSS) PER SHARE ATTRIBUTABLE TO THE
ORDINARY EQUITY HOLDERS OF THE PARENT
Basic profit/(loss) per share
Diluted profit/(loss) per share
NOTE
31 MAR 2020
$000
31 MAR 2019
$000
229,607
104,539
334,146
285,810
619,956
(199,779)
(99,428)
(130,001)
190,748
246,244
117,837
364,081
58,389
422,470
(226,549)
(108,858)
(142,082)
(55,019)
4,174
1,888
(47,903)
(37,572)
(25,756)
(3,562)
(172)
(17,894)
62,063
(14,935)
47,128
(15,811)
31,317
CENTS
5.25
5.25
(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)
A3
A2
F4
F4
F4
F3
C5
C5
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
35
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
40
AACO ANNUAL REPORT
CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL SSTTAATTEEMMEENNTTSS
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2020
Profit/(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 profit/(loss) for the year, net of tax
31 MAR 2020
$000
31 MAR 2019
$000
31,317
(148,396)
44,528
21,942
(6,305)
38,223
69,540
(4,628)
17,314
(131,082)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
36
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
41
FINANCIAL REPORT
CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL SSTTAATTEEMMEENNTTSS
Consolidated Statement of Financial Position
As at 31 March 2020
NOTE
31 MAR 2020
$000
31 MAR 2019
$000
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
Right-of-use assets
Investments
Other receivables
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Provisions
Lease liabilities
Derivatives
Total Current Liabilities
Non-Current Liabilities
Provisions
Borrowings
Lease liabilities
Derivatives
Deferred tax liabilities
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Retained earnings/(losses)
Total Equity
B1
B4
B3
A3
A3
A4
F2
F6
B5
F2
C2
C1
F2
C2
F3
C3
F5
18,125
9,907
26,571
186,995
2,895
244,493
285,974
870,652
1,995
28,159
3,402
867
7,565
18,661
33,684
171,006
1,099
232,015
252,331
795,341
2,534
-
3,613
742
1,191,049
1,435,542
1,054,561
1,286,576
22,358
2,962
7,600
8,941
41,861
2,891
379,768
25,791
7,324
64,518
480,292
522,153
913,389
528,822
473,085
(88,518)
913,389
29,818
3,397
1,658
8,319
43,192
4,578
361,632
2,782
-
30,732
399,724
442,916
843,660
528,822
435,369
(120,531)
843,660
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
37
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
42
AACO ANNUAL REPORT
CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL SSTTAATTEEMMEENNTTSS
Consolidated Statement of Changes in Equity
For the year ended 31 March 2020
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
At 1 April 2019
Adjustment to opening retained losses for AASB16
(Note F2)
Adjusted opening balances
Profit for the year
Other comprehensive income
Total comprehensive income 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 2020
CONTRIBUTED
EQUITY (NOTE C3)
$000
531,937
RESERVES
(NOTE F5)
$000
417,718
RETAINED
EARNINGS/(LOSSES)
$000
27,865
-
-
-
-
(3,115)
-
-
-
17,314
17,314
-
-
(10)
347
TOTAL EQUITY
$000
977,520
(148,396)
17,314
(131,082)
(148,396)
-
(148,396)
-
-
-
-
-
(3,115)
(10)
347
528,822
435,369
(120,531)
843,660
528,822
-
528,822
-
-
-
-
-
-
-
435,369
-
435,369
-
38,223
38,223
-
-
(762)
255
(120,531)
696
(119,835)
31,317
-
31,317
-
-
-
-
843,660
696
844,356
31,317
38,223
69,540
-
-
(762)
255
528,822
473,085
(88,518)
913,389
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
38
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
43
FINANCIAL REPORT
CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL SSTTAATTEEMMEENNTTSS
Consolidated Statement of Cash Flows
For the year ended 31 March 2020
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, net of transaction costs
Acquisition of treasury shares
Principal repayments of leases
Net cash inflow from financing activities
Net increase/(decrease) in cash
Cash at the beginning of the year
Cash at the end of the year
NOTE
31 MAR 2020
$000
31 MAR 2019
$000
359,182
(324,339)
68
34,911
(14,791)
20,120
378,285
(352,742)
108
25,651
(12,661)
12,990
(22,666)
(25,967)
748
(148)
426
(487)
(22,066)
(26,028)
37,000
(19,000)
-
(5,494)
12,506
10,560
7,565
18,125
37,000
(24,500)
(3,115)
-
9,385
(3,653)
11,218
7,565
B2
B1
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
39
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
44
AACO ANNUAL REPORT
IINNDDEEXX –– NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD
FFIINNAANNCCIIAALL SSTTAATTEEMMEENNTTSS
A
FINANCIAL PERFORMANCE
A1 Significant Matters
A2 Operating Margin
A3 Livestock
A4 Property
A5 Segment Information
B WORKING CAPITAL
B1 Net Working Capital
B2 Cash
B3
Inventory and Consumables
B4 Trade and Other Receivables
B5 Trade and Other Payables
C
FUNDING AND CAPITAL MANAGEMENT
C1 Borrowings
C2 Derivatives
C3 Equity
C4 Capital Management
C5 Earnings Per Share
C6 Dividends
D
FINANCIAL RISK MANAGEMENT
D1
Interest Rate Risk
D2 Foreign Currency Risk
D3 Commodity Price Risk
D4 Credit Risk
D5 Liquidity Risk
E
UNREGONISED ITEMS
E1 Commitments
E2 Contingencies
F
OTHER
F1 Property, Plant and Equipment at Cost
F2 Right-of-use Assets and Lease Liabilities
F3 Tax
F4 Other Earnings Disclosures
F5 Reserves
F6
Investments
F7 Related Parties
F8 Share-based Payments
F9 Controlled Entities
F10 Parent Entity
F11 Auditor’s Remuneration
F12 Significant Events After Balance Date
G
POLICY DISCLOSURES
G1 Corporate Information
G2 Basis of Preparation
G3 Accounting Policies
40
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
45
PAGE
46
41
47
42
48
43
51
46
53
48
56
51
56
51
56
51
57
52
57
52
53
58
53
58
54
59
55
60
55
60
55
60
61
56
62
57
62
57
63
58
63
58
65
60
65
60
65
60
66
61
67
62
68
63
68
63
69
64
69
64
70
65
73
68
75
70
75
70
76
71
76
71
76
71
77
72
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
A
FINANCIAL PERFORMANCE
A1
Significant Matters
Property Revaluation
The Company recorded a $63.6 million increase in the value of the Company’s pastoral property and improvements, following a Directors’
assessment of fair value at 31 March 2020. In assessing fair value, the Directors utilised information provided by an independent valuation
performed by CBRE during FY20. The revaluation reflects value increases resulting from capital investments made to our properties, and
increased prices for recent comparable property sales.
See note A4 for further details.
Herd Numbers
The closing herd head count is 19.1% lower than prior year, as Management responded to continued dry seasonal conditions and changes to
the supply chain through strategic destocking.
Herd Valuation
Improvements in cattle market prices since 31 March 2019 have resulted in an unrealised gain in the fair value of the herd of $104.1 million.
Livingstone Beef
At 31 March 2020, consideration was given to internal and external factors that may impact the recoverable value of the Cash-Generating
Unit, noting no indications of a material change to the recoverable 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 monitor
and review various strategic options for Livingstone Beef.
Impacts of Coronavirus (COVID-19)
Valuations included in the financial report such as the valuation of Pastoral property and improvements and Livestock are based on
information available and relevant as at 31 March 2020, which is the Company’s balance date. As market conditions are changing daily
particularly due to the uncertainty surrounding COVID-19, the values of these assets may have changed after the financial year-end and the
related impact on the Company's FY21 results cannot be reasonably estimated at this stage.
41
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
46
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
A2 Operating Margin
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 2020
$000
31 MAR 2019
$000
229,607
(199,779)
29,828
104,539
(99,428)
5,111
285,810
(62,145)
(67,856)
155,809
246,244
(226,549)
19,695
117,837
(108,858)
8,979
58,389
(69,448)
(72,634)
(83,693)
190,748
(55,019)
A3
(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.
Refer to note A3 for financial information and accounting policies related to Livestock.
42
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
47
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
A3
Livestock
CATTLE AT FAIR VALUE
Current
Non-Current
Total livestock
LIVESTOCK MOVEMENT
Opening carrying amount
Changes in fair value
Purchases of livestock
31 MAR 2020
$000
186,995
285,974
472,969
31 MAR 2020
HEAD
104,197
241,888
346,085
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
Total cattle fair value adjustments
31 MAR 2019
$000
171,006
252,331
423,337
31 MAR 2020
$000
423,337
285,810
22,345
(99,428)
(159,095)
472,969
31 MAR 2020
$000
104,144
150,752
42,436
(11,250)
-
(272)
285,810
31 MAR 2019
HEAD
148,565
279,340
427,905
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)
58,389
(1) As a biological asset, AASB 141 Agriculture requires the livestock to be valued at fair value less costs to sell at all times prior to sale or
harvest. As such, value increases occur through changes in fair value 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, grows, ages, and progresses through the various stages to become a trading or production animal.
(3) Due to the Gulf flooding event in February 2019, the Company recognised additional attrition reflecting livestock lost in this unprecedented
natural disaster.
Accounting Policies – Livestock
Livestock is measured at fair value less costs to sell, with any change recognised in the profit or loss. 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.
43
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
48
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
A3
Livestock (continued)
Livestock fair value
At the end of each reporting period, we measure livestock at fair value less costs to sell. The fair value is determined through price movements
and movements in the weight of the herd due to growth, attrition, natural increase, harvest or sale.
The net increments or decrements in the market value of livestock are recognised as either gains or losses in the profit or loss, 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 2020
$000
31 MAR 2020
HEAD
31 MAR 2019
$000
31 MAR 2019
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
-
262,150
80,912
18,474
111,433
472,969
-
-
197,463
235,387
70,740
42,721
35,161
346,085
$1,367
86,406
13,835
87,709
423,337
-
218,918
111,323
58,956
38,708
427,905
$989
44
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
49
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
A3
TYPE
Livestock (continued)
LEVEL VALUATION METHOD
Commercial & Stud
Breeding Herd
2
Trading Cattle
2
Unbranded Calves
Feedlot Cattle
2
3
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 animal 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 2020
$000
31 MAR 2020
HEAD
31 MAR 2019
$000
31 MAR 2019
HEAD
13,835
4,639
18,474
58,956
(16,235)
42,721
$432
36,021
(22,186)
13,835
86,716
(27,760)
58,956
$235
(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 2020
$000
31 MAR 2020
HEAD
31 MAR 2019
$000
31 MAR 2019
HEAD
87,709
99,613
(134,249)
(1,381)
59,741
111,433
38,708
54,044
(57,035)
(556)
-
35,161
$3,169
117,208
104,227
(134,973)
(831)
2,078
87,709
44,859
50,369
(56,202)
(318)
-
38,708
$2,266
45
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
50
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
A4 Property
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 2020
$000
31 MAR 2019
$000
810,560
738,462
F1
F1
F1
30,998
26,084
3,010
31,278
24,380
1,221
870,652
795,341
Pastoral property and improvements at fair value
31 MAR 2020
Opening balance
Additions
Disposals
Net revaluation increment/(decrement) recognised in asset revaluation reserve (Note F5)
Depreciation
Closing balance
31 MAR 2019
Opening balance
Additions
Disposals
Net revaluation increment/(decrement) recognised in asset revaluation reserve (Note F5)
Depreciation
Closing balance
TOTAL
$000
738,462
14,199
(243)
63,611
(5,469)
810,560
TOTAL
$000
698,207
14,410
(402)
31,346
(5,099)
738,462
Accounting policies – Pastoral property and improvements at fair value
Freehold pastoral property and improvements, and pastoral property and improvements held under statutory leases with government bodies,
are carried at 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 profit or loss. Any revaluation decrement is
recognised in the profit or loss 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 profit or loss as incurred.
Pastoral landholdings are generally held under a leasehold agreement with the Crown. Leasehold properties in Queensland are mainly
pastoral holdings which are rolling term leases. In the Northern Territory, the pastoral leases held have been granted on a perpetual basis by
the Northern Territory Government. We treat statutory leases held with government bodies as perpetual leases. Perpetual leases are
specifically excluded from measurement under AASB 16 Leases.
This accounting policy excludes Right-of-use Assets disclosed in Note F2. 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.
46
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
51
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
A4 Property (continued)
Fair value
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 2020
$000
31 MAR 2019
$000 VALUATION TECHNIQUE
692,460
629,162
Direct Comparison
(Productive Unit Approach)
SIGNIFICANT
UNOBSERVABLE INPUTS
Number of adult equivalents
48,000
43,850
Direct Comparison
(Hectare Rate Approach)
70,100
65,450
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 2020
RANGE/(AVERAGE)
31 MAR 2019
RANGE/(AVERAGE)
5,350 – 89,200
25,553
$1,050 - $5,500
$1,856
5,350 – 89,200
25,406
$1,000 - $4,500
$1,669
18
$1,410
$1,410
1
18
$1,289
$1,289
1
$3,611 - $3,771
$3,691
$3,521 - $3,528
$3,525
16,000 – 45,000
30,500
16,000 – 45,000
30,500
Number of properties
2
2
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 2020.
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 FY20 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.
47
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
52
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
A4 Property (continued)
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
A5
Segment Information
Identification of reportable segments
31 MAR 2020
$000
357,921
(62,979)
294,942
31 MAR 2019
$000
343,722
(57,510)
286,212
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.
Reportable segments
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.
Accounting policies and inter-segment transactions
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 movement in livestock and inventory volume at cost of production, whilst
Statutory EBITDA results include revaluations based on market prices for livestock movements.
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 2020 and 31 March 2019. Segment assets and liabilities are not reported
to the MD/CEO and therefore segment assets and liabilities are not separately disclosed.
48
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
53
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
A5
Segment Information (continued)
31 MAR 2020
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 profit/(loss)
Depreciation and amortisation
Loss on equity investments
Statutory EBIT profit/(loss)
Net finance costs
Income tax expense
Net profit after tax
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
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
334,146
-
334,146
21,027
17,067
(1,764)
49,632
85,962
(16,994)
(172)
68,796
-
-
-
(5,833)
-
-
-
(5,833)
(900)
-
(6,733)
-
-
-
--
-
-
-
--
-
-
--
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
-
--
-
-
-
-
-
-
--
-
-
--
TOTAL
$000
334,146
-
334,146
15,194
17,067
(1,764)
49,632
80,129
(17,894)
(172)
62,063
(14,935)
(15,811)
31,317
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)
49
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
54
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
A5
Segment Information (continued)
Revenues from external customers
MEAT SALES REVENUES
South Korea
China
Australia
USA
Other countries
Total meat sales revenue per Income Statement
31 MAR 2020
$000
31 MAR 2019
$000
68,873
34,005
33,476
14,177
79,076
229,607
65,876
25,860
47,592
19,860
87,056
246,244
Meat sales revenues of $87.1 million were derived from two of the Company’s major external customers (31 March 2019: $58.9 million from
one 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 2020
$000
104,539
104,539
31 MAR 2019
$000
117,837
117,837
50
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
55
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
B WORKING CAPITAL
B1 Net Working Capital
Cash
Inventory and consumables
Trade and other receivables
Trade and other payables
Net working capital
B2 Cash
NOTE
B3
B4
B5
31 MAR 2020
$000
31 MAR 2019
$000
18,125
26,571
9,907
(22,358)
32,245
7,565
33,684
18,661
(29,818)
30,092
RECONCILIATION OF NET PROFIT/(LOSS) AFTER TAX TO NET CASH FLOWS
FROM OPERATIONS
Net profit/(loss) after income tax
Adjustments for:
Depreciation and amortisation
(Gain)/loss on equity investments
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 inflow from operating activities
B3
Inventory and Consumables
Meat inventory
Feedlot commodities
Bulk stores
Other inventory
31 MAR 2020
$000
31,317
31 MAR 2019
$000
(148,396)
17,894
172
(748)
(317)
255
(49,632)
(17,677)
(7,238)
7,113
8,629
(1,797)
33,786
(7,460)
7,946
(2,123)
20,120
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
31 MAR 2020
$000
31 MAR 2019
$000
8,304
10,632
6,088
1,547
26,571
13,917
10,275
7,964
1,528
33,684
51
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
56
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
B4 Trade and Other Receivables
Trade receivables
Provision for impairment of receivables
Other receivables
31 MAR 2020
$000
31 MAR 2019
$000
9,402
(896)
8,506
1,401
9,907
17,143
(319)
16,824
1,837
18,661
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 2020
$000
9,041
14
347
9,402
31 MAR 2019
$000
16,804
2
337
17,143
31 MAR 2020
$000
31 MAR 2019
$000
(717)
(7)
(172)
(896)
(253)
-
(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 section D for more information on the risk management policy of the
Company.
B5 Trade and Other Payables
Trade payables
Other payables
Deferred revenue
31 MAR 2020
$000
31 MAR 2019
$000
15,380
6,265
713
22,358
22,398
4,023
3,397
29,818
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 F7 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 2020
$000
22,300
31 MAR 2019
$000
21,712
46
12
22,358
686
-
22,398
52
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
57
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
C
FUNDING AND CAPITAL MANAGEMENT
C1
Borrowings
Non-Current
Secured bank loan facility
Secured bank loan facility
31 MAR 2020
$000
31 MAR 2019
$000
379,768
379,768
361,632
361,632
The Company has successfully secured access to an additional $50 million in borrowing capacity under the currently held debt facilities. This
increase expands combined available capacity from $500 million to $550 million ($390m Facility A + $160m Facility B). The increase in
borrowing capacity will ensure the company is well positioned to respond to any future adverse seasonal conditions. Cost of funds under the
amended facility arrangement is materially consistent with prior arrangement.
Facility A loans are repayable on 8 September 2022 and Facility B loans are repayable on 8 September 2021. The interest on these facilities
is charged at the applicable BBSY rate + Margin. The facility is currently drawn down by $380.7 million (31 March 2019: $362.7 million) and
is offset in the Statement of Financial Position by a prepaid facility participation fee of $0.9 million (31 March 2019: $1 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
C2 Derivatives
Current
Interest rate swap contracts
Foreign currency contracts
Non-Current
Interest rate swap contracts
Foreign currency contracts
31 MAR 2020
$000
31 MAR 2019
$000
550,000
3,000
(382,154)
170,846
500,000
3,000
(364,154)
138,846
31 MAR 2020
$000
31 MAR 2019
$000
4,629
4,312
8,941
6,943
381
7,324
6,884
1,435
8,319
-
-
-
53
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
58
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
C2 Derivatives (continued)
Foreign currency contracts
SELL FX/BUY AUD
Sell USD Maturity 0-12 months
Sell USD Maturity 12-24 months
NOTIONAL AMOUNTS
(AUD)
31 MAR 2020
$000
NOTIONAL AMOUNTS
(AUD)
31 MAR 2019
$000
AVERAGE
EXCHANGE RATE
31 MAR 2020
$000
AVERAGE
EXCHANGE RATE
31 MAR 2019
$000
42,709
2,894
45,603
48,391
-
48,391
0.6790
0.6912
0.7339
-
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. 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 2020 was AUD $45.6 million (31 March 2019: AUD
$48.4 million).
The net fair value loss on foreign currency derivatives during the twelve months to 31 March 2020 was $4,693,000 with $4,381,000 effective
and $311,000 ineffective (12 months to 31 March 2019: $1,435,000 loss with $1,358,000 effective and $77,000 ineffective).
Interest rate swap contracts
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 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, swap floating rate debt for fixed, and
have been designated as effective 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 2020
$000
-
235,000
31 MAR 2019
$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 the
hedging reserve component of equity, 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 2020 the related loss recognised in profit or loss was $2.7 million (twelve months to
31 March 2019: $2.1 million). There was no hedge ineffectiveness in the current or prior year.
C3 Equity
Opening balance
596,001,899
598,430,888
528,822
531,937
31 MAR 2020
SHARES
31 MAR 2019
SHARES
31 MAR 2020
$000
31 MAR 2019
$000
Shares issued on exercise of performance rights
202,510
Shares issued on exercise of options
Treasury shares acquired
Total contributed equity
-
-
(2,428,989)
-
-
-
-
-
596,204,409
596,001,899
528,822
-
-
(3,115)
528,822
54
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
59
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
C4 Capital Management
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 remains between 20.0%
to 35.0%, excluding any impacts of the adoption of AASB 16 Leases. We include within net debt, interest-bearing loans and borrowings. For
the Company’s financial risk management objectives and policies refer to section D.
ASSETS AND CAPITAL STRUCTURE
Current debt
Lease liabilities
Non-current debt
Lease liabilities
Bank loan facility (1)
Bank guarantees
Cash
Net debt
Net equity
Total capital employed
Gearing (net debt/net debt+equity)
31 MAR 2020
$000
31 MAR 2019
$000
7,600
1,658
25,791
380,700
1,454
(18,125)
397,420
913,389
1,310,809
30.32%
2,782
362,700
1,454
(7,565)
361,029
843,660
1,204,689
29.97%
Gearing (net debt/net debt+equity) pre-AASB 16 adoption
(1) The gearing ratio is calculated utilising the drawn-down balance of the bank loan facility. This is not offset for $0.9 million of prepaid
28.79%
29.97%
borrowing costs.
C5 Earnings Per Share
The following reflects the income used in the basic and diluted earnings per share computations:
Net profit/(loss) attributable to ordinary equity holders of the parent (basic)
Net profit/(loss) attributable to ordinary equity holders of the parent (diluted)
31 MAR 2020
$000
31,317
31,317
31 MAR 2019
$000
(148,396)
(148,396)
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 2020
SHARES
596,346,436
31 MAR 2019
SHARES
596,690,028
567,810
-
Weighted average number of ordinary shares (diluted) as at 31 March
596,914,246
596,690,028
C6 Dividends
No final or interim dividends were declared and/or paid during the twelve months to 31 March 2020 (twelve months to 31 March 2019: nil).
There are no franking credits available for the subsequent financial year (31 March 2019: nil).
55
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
60
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
D
FINANCIAL RISK MANAGEMENT
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 2020 and 31 March 2019, 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.
D1
Interest Rate Risk
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 unrealised fair value loss on interest rate swaps during the twelve months to 31 March 2020 was
$11.6 million (31 March 2019: $6.9 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 2020, after taking into account the effect of interest rate swaps,
approximately 61.7% (31 March 2019: 65%) 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 2020
$000
31 MAR 2019
$000
18,125
7,565
(145,700)
(11,572)
(139,147)
(127,700)
(6,884)
(127,019)
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 2020
+1% (100 basis points)
-1% (100 basis points)
31 MAR 2019
+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
(1,457)
1,457
(1,277)
1,277
5,875
(5,875)
8,225
(8,225)
56
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
61
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
D2 Foreign Currency Risk
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 $4,693,000 movement in other
comprehensive income and a $311,000 movement in profit and loss in the twelve months to 31 March 2020 (31 March 2019: $1,435,000
movement in other comprehensive income and a $77,000 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. It also allows us to hedge between 0% and 50% of
forecast sales for period 13 months to 24 months in advance. For the year ended 31 March 2020, approximately 74% and 48% of highly
probable forecast sales were hedged for the periods 0-3 months in advance and 3-12 months in advance, 5% of highly probable forecast sales
were hedged for the period 13-24 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 2020
USD $000
31 MAR 2019
USD $000
3,033
(4,693)
(1,660)
531
(1,435)
(904)
At 31 March 2020, 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 2020
AUD/USD +10%
AUD/USD -10%
31 MAR 2019
AUD/USD +10%
AUD/USD -10%
EFFECTS ON PROFIT
BEFORE TAX
$000
EFFECTS ON EQUITY
$000
304
(371)
243
(298)
4,269
(5,217)
4,286
(5,239)
D3 Commodity Price Risk
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 2020,
we had forward purchased approximately 56% (31 March 2019: 51%) 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.
57
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
62
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
D4 Credit Risk
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.
D5
Liquidity Risk
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 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 2020, 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 2020. 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.
58
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
63
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
D5
Liquidity Risk (continued)
LESS THAN
6 MONTHS
$000
6-12
MONTHS
$000
1-2
YEARS
$000
2-5
YEARS
$000
TOTAL
$000
CARRYING
AMOUNT
$000
31 MAR 2020
Financial assets
Cash
Trade and other receivables
Derivatives
Financial liabilities
Trade and other payables
Lease liabilities
Borrowings
Derivatives
Net maturity
31 MAR 2019
Financial assets
Cash
Trade and other receivables
Derivatives
Financial liabilities
Trade and other payables
Lease liabilities
Borrowings
Derivatives
Net maturity
18,125
9,907
-
(22,358)
(3,782)
(4,604)
(2,136)
(4,848)
7,565
18,661
-
(29,818)
(950)
(6,690)
(607)
(11,839)
-
-
-
-
-
-
-
-
-
-
-
-
(3,761)
(4,604)
(2,136)
(6,180)
(164,207)
(4,272)
(19,613)
(239,512)
(6,407)
(10,501)
(174,659)
(265,532)
18,125
9,907
-
(22,358)
(33,336)
(412,927)
(14,951)
(455,540)
18,125
9,907
-
(22,358)
(33,391)
(379,768)
(16,265)
(423,750)
-
-
-
-
(707)
(6,690)
(607)
(8,004)
-
-
-
-
-
-
-
-
(1,301)
(1,482)
7,565
18,661
-
7,565
18,661
-
(29,818)
(4,440)
(29,818)
(4,440)
(128,380)
(267,770)
(409,530)
(361,632)
(1,214)
(1,821)
(4,249)
(8,319)
(130,895)
(271,073)
(421,811)
(377,983)
59
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
64
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
E UNRECOGNISED ITEMS
E1 Commitments
We have entered into forward purchase contracts for $7.3 million worth of grain commodities as at 31 March 2020 (31 March 2019: $19.3
million) and forward purchase contracts for $39.5 million worth of cattle as at 31 March 2020 (31 March 2019: $15.8 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 2020 (31 March 2019: $nil).
E2 Contingencies
At 31 March 2020, 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.
F
OTHER
F1
Property, Plant and Equipment at Cost
31 MAR 2020
Opening balance
Additions and transfers
Disposals
Depreciation
Closing balance
Cost
Accumulated depreciation and impairment
31 MAR 2019
Opening balance
Additions and transfers
Disposals
Depreciation
Closing balance
Cost
Accumulated depreciation and impairment
INDUSTRIAL PROPERTY AND
IMPROVEMENT
$000
PLANT AND
EQUIPMENT
$000
CAPITAL WORK IN
PROGRESS
$000
31,278
120
-
(400)
30,998
78,013
(47,015)
24,380
8,313
(206)
(6,403)
26,084
159,550
(133,466)
1,221
1,789
-
-
3,010
3,010
-
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
-
TOTAL
$000
56,879
10,222
(206)
(6,803)
60,092
240,573
(180,481)
TOTAL
$000
55,570
8,005
(325)
(6,371)
56,879
230,557
(173,678)
Impairment of property, plant and equipment at cost
The Livingstone Beef Cash-Generating Unit (CGU) is the only location with property and improvements measured under the cost model by the
Company per AASB 116 Property, Plant and Equipment. Under the requirements of AASB 136 Impairment of Assets, at each reporting period
an assessment of internal and external factors must be made to determine whether there are indicators of impairment. Where indicators exist,
a formal estimate of the recoverable amount of these assets is undertaken.
During FY20 operations continue to be suspended at Livingstone Beef. Management have 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 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 31 March 2020.
The calculation of the recoverable amount for Livingstone Beef requires management to make key estimates with relation to a number of
assumptions that are inherently uncertain. The recoverable amount is sensitive to changes in these key assumptions and accordingly the
estimate of the recoverable amount could change in future reporting periods.
60
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
65
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
F2 Right-of-use Assets and Lease Liabilities
Due to the adoption of AASB 16 Leases from 1 April 2019, the Company has recognised leases previously classified as operating leases on
the balance sheet, and new leases entered into have been measured and disclosed in line with AASB 16. The associated balances due to
adoption and application of this standard during the period are shown below.
The Company has adopted AASB 16 using a modified retrospective approach. Therefore, the cumulative effect of adopting AASB 16 has been
recognised as an improvement to the opening balance of retained earnings at 1 April 2019, as shown in the Statement of Changes in Equity,
for $0.7 million.
Right-of-use assets
Non-current
Lease liabilities
Current
Non-current
Retained earnings
Equity
1 APR 2019
$’000
31 MAR 2020
$’000
14,005
5,523
12,922
18,445
(696)
28,159
7,600
25,791
33,391
-
When measuring lease liabilities for leases previously classified as operating leases, the Company discounted lease payments using its
incremental borrowing rate at 1 April 2019. The average rate applied is 3.91%.
Below is a reconciliation of operating lease commitments and finance lease liabilities previously disclosed, reconciled to lease liabilities on
adoption of AASB 16 Leases.
Operating lease commitments at 31 March 2019 as disclosed under AASB 117 Leases
Operating leases discounted using the incremental borrowing rate at 1 April 2019
Finance lease liabilities recognised as at 31 March 2019
Recognition exemption for leases of low-value assets
Extension options reasonably certain to be exercised
Leases recognised under AASB 16 Leases
1 APR 2019
$’000
4,359
4,114
4,440
(86)
922
9,055
18,445
Reconciliations of movements in Right-of-use assets and amounts recognised in the Income Statement relating to lease are shown below.
RIGHT OF USE ASSETS
Balance at 1 April 2019
Depreciation charge for the year
Additions to right-of-use assets
AMOUNTS RECOGNISED IN THE INCOME STATEMENT RELATING TO LEASES
Interest on lease liabilities
Expenses relating to short term and low-value leases
$’000
14,005
(5,082)
19,236
28,159
$’000
812
2,122
Right-of-use assets relate to buildings and property leased by the Company, excluding Pastoral property held under perpetual leases. During
the period the Company entered into a 10-year lease of Rewan, a central Queensland cattle property.
The Company has elected to expense short-term and low value leases on a straight-line basis over the lease term, as permitted under the
recognition exemptions of AASB 16. The amount expensed during the period relating to short-term and low value lease assets was $2.1
million.
61
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
66
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
F3 Tax
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 expense/(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 profit/(loss) before tax
At the statutory income tax rate of 30%
Research and development offsets
Other items (net)
Income tax expense/(benefit) 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
Other
Total deferred tax expense/(benefit)
62
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
67
31 MAR 2020
$000
31 MAR 2019
$000
-
15,837
(26)
-
15,811
677
19,083
19,760
47,128
14,138
-
1,673
15,811
(90,387)
(9,098)
(7,212)
42,179
(64,518)
288
65
1,389
-
-
3,080
1,012
4,610
29,434
214
2,087
42,179
-
(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
15,456
(68,458)
-
38
343
15,837
238
316
6,485
(61,419)
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
F4 Other Earnings Disclosures
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:
Lease payments – short term and low value leases
31 MAR 2020
$000
31 MAR 2019
$000
4,174
-
4,174
14,556
379
14,935
40,745
2,976
3,927
255
47,903
1,749
139
1,888
15,456
317
15,773
42,616
3,398
5,426
347
51,787
2,122(1)
5,752
Commodity and foreign currency expense/(benefit)
(1) Due to AASB16 Leases being adopted from 1 April 2019, this amount is not directly comparable with the prior year. Refer to Note F2.
2,295
960
F5 Reserves
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
At 1 April 2019
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 2020
ASSET
REVALUATION
RESERVE
$000
CAPITAL
PROFITS
RESERVE
$000
CASH FLOW
HEDGE
RESERVE
$000
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)
-
(10)
6,190
417,718
-
-
-
-
347
31,346
(9,404)
(4,628)
(10)
347
6,537
435,369
350,257
84,762
(6,177)
(10)
6,537
435,369
63,611
(19,083)
-
-
-
-
-
-
-
-
-
-
(6,305)
-
-
-
-
-
(762)
-
-
-
-
-
255
63,611
(19,083)
(6,305)
(762)
255
394,785
84,762
(12,482)
(772)
6,792
473,085
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 as part of their remuneration. Refer
to note F8 for further details of these plans.
63
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
68
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
F6
Investments
Equity accounted investments in associate – Pyxle (Private) Limited
Other equity accounted investments in individually not material associates
Other investments
31 MAR 2020
$000
31 MAR 2019
$000
1,765
1,271
366
3,402
2,072
1,175
366
3,613
The Company has a 31.82% interest in Pyxle (Private) Limited (2019: 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.
F7 Related Parties
COMPENSATION FOR KEY MANAGEMENT PERSONNEL
Short-term employee benefits
Post-employment benefits
Share-based payment
Termination benefits
Long-term benefits
Total compensation
31 MAR 2020
$000
31 MAR 2019
$000
4,498
180
178
-
3
4,859
4,070
201
340
-
-
4,611
Transactions with other related parties
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
Dividends received from associates
Other transactions with associates
Transactions with other related parties
Purchase of goods or services from other individually not material related parties
31 MAR 2020
$000
31 MAR 2019
$000
(1,572)
(299)
(1,871)
(4,818)
(1,436)
(6,254)
31 MAR 2020
$000
31 MAR 2019
$000
-
(486)
187
-
(299)
470
(862)
135
(1,179)
(1,436)
31 MAR 2020
$000
-
31 MAR 2019
$000
(804)
64
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
69
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
F8
Share-based Payments
The share-based payment plans are described below. During 2020, expenses arising from equity settled share-based payment transactions
were $255,000 (31 March 2019: $347,000).
Executive Option Plan (EOP)
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 2019 and 2020.
Performance rights plan (PRP)
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. 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.
65
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
70
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
F8
Share-based Payments (continued)
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
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.
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)
(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.
Lapsing conditions
Change of control event
On market acquisition of shares
66
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
71
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
F8
Share-based Payments (continued)
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, it was forfeited on 30 June 2019 as the performance condition of target
market capitalisation of $1.5 billion was not met.
Equity settled awards outstanding:
The table below shows the number (No.) and weighted average exercise prices (WAEP) of options under the Executive Option Plan (EOP) and
performance rights outstanding under the Performance Right Plans (PRP). There have been no cancellations or modifications to any of the
plans during the twelve months to 31 March 2020.
EOP
NO.
-
-
-
-
-
-
-
-
-
31 MAR 2020
Outstanding at the beginning of the period
Granted during the period
Forfeited during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
Weighted average remaining contractual life (days)
Weighted average fair value at grant date
Range of exercise prices ($)
31 MAR 2019
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.
EOP
NO.
300,000
-
-
(300,000)
-
-
-
-
-
3.22
EOP
WAEP $
-
-
-
-
-
EOP
WAEP $
3.22
-
-
3.22
-
3.22
PRP
NO.
5,882,736
-
(5,112,416)
(202,510)
567,810
-
311
1.070
-
PRP
NO.
1,198,727
4,913,876
(126,345)
(103,522)
-
5,882,736
-
1,147
0.230
-
67
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
72
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
F9 Controlled Entities
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
AACo Singapore Holdings Pty Ltd
NOTES
COUNTRY OF
INCORPORATION
31 MAR 2020
% OF SHARES HELD
31 MAR 2019
% OF SHARES HELD
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
(a)
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
United States of America
United States of America
Australia
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
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
Right-of-use assets
Investments
Intercompany receivable
Total Non-Current Assets
Total Assets
68
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
73
31 MAR 2020
$000
31 MAR 2019
$000
Restated*
17,505
9,907
26,571
186,995
2,895
243,873
285,974
870,652
1,995
28,159
127
6,689
7,544
18,661
33,684
171,006
1,099
231,994
252,331
795,341
2,534
-
127
3,711
1,193,596
1,054,044
1,437,469
1,286,038
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
F9 Controlled Entities (continued)
Current Liabilities
Trade and other payables
Provisions
Lease liabilities
Derivatives
Total Current Liabilities
Non-Current Liabilities
Provisions
Borrowings
Lease liabilities
Derivatives
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
Depreciation and amortisation
Profit/(Loss) before finance costs and income tax expense
Net finance costs
Profit/(Loss) before income tax
Income tax benefit
Net profit/(loss) after tax
31 MAR 2020
$000
31 MAR 2019
$000
Restated*
14,536
2,962
7,600
8,941
34,039
2,891
379,768
25,791
7,324
64,518
480,292
514,331
923,138
526,964
473,859
(77,685)
923,138
24,716
3,397
1,658
8,319
38,090
4,578
361,632
2,782
-
30,732
399,724
437,814
848,224
526,964
435,369
(114,109)
848,224
31 MAR 2020
$000
31 MAR 2019
$000
Restated*
229,607
104,539
334,146
285,810
619,956
(199,779)
(99,428)
(130,001)
190,748
4,174
(45,044)
(35,807)
(25,756)
(3,258)
(17,894)
67,163
(14,928)
52,235
(15,811)
36,424
246,244
117,837
364,081
58,389
422,470
(226,549)
(108,858)
(142,082)
(55,019)
1,888
(50,827)
(40,596)
(29,627)
(6,960)
(11,994)
(193,135)
(15,773)
(208,908)
61,460
(147,448)
*Previously disclosed amounts and balances have been restated to exclude results of entities outside of the Closed Group.
69
Australian Agricultural Company Limited | FINANCIAL REPORT 2020
74
AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
F10 Parent Entity
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
31 MAR 2020
$000
31 MAR 2019
$000
15,710
739,219
754,929
16,291
379,768
396,059
358,870
538,822
18,391
8,566
738,927
747,493
10,198
361,632
371,830
375,663
538,822
23,066
(198,343)
(186,225)
358,870
(12,118)
(20,053)
375,663
(49,878)
(52,877)
Australian Agricultural Company Limited and the wholly owned entities listed in note F9 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 2020.
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.
F11 Auditor’s Remuneration
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
380,000
Training workshop
Review of draft sustainability report
Total
-
19,600
399,600
410,000
23,150
-
433,150
31 MAR 2020
$
31 MAR 2019
$
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
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FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
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FOR THE TWELVE MONTHS TO 31 MARCH 2020
F12 Significant Events After Balance Date
COVID-19 was declared a global pandemic by the World Health Organisation on 11 March 2020. The impact of the virus has seen an
unprecedented global response by governments, regulators and numerous industry sectors. The Company’s financial results for FY20 have not
been materially impacted by COVID-19 due to changes in the Company’s supply chain and sales falling after the end of financial year.
Following the financial year-end, the Company has taken several steps to manage impacts of COVID-19, including accelerating our allocation
of products to the retail markets, modifying sales and marketing priorities, and reducing salaries of Directors, Executives and corporate staff.
Valuations included in the financial report, such as the valuation of Pastoral property and improvements and Livestock, are based on
information available and relevant as at 31 March 2020, which is the Company’s balance date. As market conditions are changing daily, the
values of these assets may have changed after the financial year-end.
The Company continues to monitor developments in the COVID-19 pandemic and the measures being implemented on the economy to control
and slow the outbreak. Given the dynamic nature of these circumstances and the significant increase in economic uncertainty, the related
impact on the Company's go forward consolidated results of operations, cash flows and financial condition cannot be reasonably estimated at
this stage and will be reflected in the Company's 2021 interim and annual financial statements.
There have been no other significant events after the balance date which require disclosure in the financial report.
G
POLICY DISCLOSURES
G1 Corporate Information
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 2020 were authorised for issue in accordance with a resolution of the Directors on 20 May 2020.
We recommend the financial statements be considered together with any public announcements made by the Company during the year ended
31 March 2020 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.
G2 Basis of Preparation
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.
(a) Terminology used in the financial statements
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.
(b) Historical cost convention
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.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
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AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
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FOR THE TWELVE MONTHS TO 31 MARCH 2020
G2 Basis of Preparation (continued)
(c) Compliance with IFRS
The financial statements also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting
Standards Board (IASB).
(d) Critical accounting estimates
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.
(e) Rounding amounts in the financial statements 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.
G3 Accounting Policies
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.
(a) New accounting standards and interpretations
(i) New and amended standards adopted
>
AASB 16
Leases adoption
AASB 16 introduced 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.
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.
LLeeaasseess iinn wwhhiicchh tthhee CCoommppaannyy iiss aa lleesssseeee
From 1 April 2019, the Company has recognised new assets and liabilities for its operating leases of land, buildings and equipment. The
nature of expenses related to these leases has also changed, as under AASB 16 Leases the Company recognises a depreciation charge
for right-of-use assets and interest expense on lease liabilities.
Previously, the Company recognised operating lease expenses on a straight-line basis over the term of the lease, and recognised assets
and liabilities only to the extent there was a timing difference between actual lease payments and the expense recognised.
The Company has adopted AASB 16 using a modified retrospective approach from 1 April 2019. Therefore, the cumulative effect of
adopting AASB 16 has been recognised as an adjustment to the opening balance of retained earnings at 1 April 2019, with no
restatement of comparative information as permitted under the specific transitional provisions in the standard. Lease liabilities are
measured at the present value of the remaining lease payments, discounted using the Company’s incremental borrowing rate as of 1
April 2019, and for leases entered into following this, the incremental borrowing rate at the commencement date of the lease
arrangement. The average incremental borrowing rate applied to the lease liabilities on 1 April 2019 was 3.91%.
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Australian Agricultural Company Limited | FINANCIAL REPORT 2020
77
FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
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FOR THE TWELVE MONTHS TO 31 MARCH 2020
G3 Accounting Policies (continued)
(a) New accounting standards and interpretations (continued)
>
AASB 16
Leases accounting policy
The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially
measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses, and adjusted for certain
remeasurements of the lease liability. When a right-of-use asset meets the definition of investment property, it is presented in investment
property.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental borrowing
rate. Generally, the Group’s incremental borrowing rate is used as the discount rate.
The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payment made. It is
remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in the estimate of the
amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase
or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.
Judgement has been used to determine the lease term for some lease contracts in which it is a lessee, that include renewal options. The
assessment of whether it is reasonably certain the Company will exercise such options impacts the lease term, which can significantly
affect the amount of lease liabilities and right-of-use assets recognised.
(b) Basis of consolidation
The consolidated financial statements comprise the financial statements of Australian Agricultural Company Limited, and its subsidiaries (as
outlined in note F9) 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.
(c) Significant accounting judgements, estimates and assumptions
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.
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AACO ANNUAL REPORT
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FOR THE TWELVE MONTHS TO 31 MARCH 2020
G3 Accounting Policies (continued)
(d) Foreign currency translation
(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.
(e) Cash
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.
(f) Trade and other receivables
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.
(g) Inventories and consumables
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.
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FINANCIAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
FOR THE TWELVE MONTHS TO 31 MARCH 2020
G3 Accounting Policies (continued)
G3 Accounting Policies (continued)
(h) Derivative financial instruments and hedge accounting
(h) Derivative financial instruments and hedge accounting
We use derivative financial instruments, such as forward currency contracts, interest rate swaps and forward commodity contracts, to hedge
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
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
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.
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
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.
portion of cash flow hedges, which is recognised in other comprehensive income.
For the purpose of hedge accounting, hedges are classified as:
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
(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.
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
(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.
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
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
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
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
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
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
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:
designated. Hedges that meet the strict criteria for hedge accounting are accounted for as described below:
Cash flow hedges
Cash flow hedges
AASB 9 Financial Instruments addresses classification, measurement, and derecognition of financial assets and financial liabilities, sets out
AASB 9 Financial Instruments 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.
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
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
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.
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
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.
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
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).
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
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
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
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
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
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.
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
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
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.
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.
75
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AACO ANNUAL REPORT
NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
G3 Accounting Policies (continued)
(i) Plant and equipment
(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.
(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
(j) Leases
(i) AACo as a lessee
30 years
30 years
3-10 years
2-5 years
The accounting policy for arrangements in which the Company is a lessee is included in Note G3 (a).
(ii) Pastoral and perpetual property leases
Freehold pastoral property and improvements and pastoral property and improvements held under statutory leases with government bodies
have been included in Property, Plant and Equipment (Refer note A4).
(k)
Trade and other payables
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.
(l)
Borrowings
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.
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.
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FINANCIAL REPORT
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G3 Accounting Policies (continued)
(m)
Share-based payment transactions
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).
(n)
Contributed equity
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.
(o)
Revenue recognition
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
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.
(p)
Income tax and other taxes
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.
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NNOOTTEESS TTOO TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL
SSTTAATTEEMMEENNTTSS
FOR THE TWELVE MONTHS TO 31 MARCH 2020
G3 Accounting Policies (continued)
(p)
Income tax and other taxes (continued)
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.
(q)
Earnings per share
(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
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FINANCIAL REPORT
DDIIRREECCTTOORRSS’’ DDEECCLLAARRAATTIIOONN
In accordance with a resolution of the Directors of the Australian Agricultural Company Limited, we state that:
1.
In the opinion of the Directors:
a.
The financial statements, notes and remuneration report of Australian Agricultural Company Limited for the year ended 31
March 2020 are in accordance with the Corporations Act 2001, including:
i. Giving a true and fair view of its financial position as at 31 March 2020 and of its performance for the year ended
on that date.
ii. Complying with Australian Accounting Standards and Corporations Regulations 2001.
b.
c.
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.
2.
3.
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 2020.
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 F9 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
20 May 2020
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IINNDDEEPPEENNDDEENNTT AAUUDDIITT RREEPPOORRTT
Independent Auditor’s Report
To the shareholders of Australian Agricultural Company Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of
Australian Agricultural Company Limited
(the Company).
In our opinion, the accompanying Financial
Report of the Company is in accordance
with the Corporations Act 2001, including:
• giving a true and fair view of the
Group's financial position as at 31
March 2020 and of its financial
performance for the year ended on
that date; and
The Financial Report comprises:
• Consolidated Statement of Financial Position as at 31
March 2020;
• Consolidated Income Statement, Consolidated
Statement of Comprehensive Income, Consolidated
Statement of Changes in Equity, and Consolidated
Statement of Cash Flows for the year then ended;
• Notes, including a summary of significant accounting
policies; and
• Directors' Declaration.
• complying with Australian Accounting
Standards and the Corporations
Regulations 2001.
The Group consists of the Company and the entities it
controlled at the year-end or from time to time during the
financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the
audit of the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of
the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the
Code.
KPMG, an Australian partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG
International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
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IINNDDEEPPEENNDDEENNTT AAUUDDIITT RREEPPOORRTT
Key Audit Matters
The Key Audit Matters we identified are:
• quantity and valuation of livestock; and
• valuation of pastoral property and
improvements.
Key Audit Matters are those matters that, in our
professional judgement, were of most significance
in our audit of the Financial Report of the current
period.
These matters were addressed in the context of our
audit of the Financial Report as a whole, and in
forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Quantity and valuation of livestock ($472,969,000)
Refer to Note A3 Livestock in the Financial Report.
The key audit matter
How the matter was addressed in our audit
The quantity and valuation of livestock is
considered a key audit matter due to:
the size of the balance (being 32.9% of total
assets);
the significant audit effort as a result of the
risk of error associated with quantifying
livestock at year end. In quantifying livestock
the Group uses estimates of birth rates,
animal growth rates and rates of attrition; and
•
•
•
•
the level of judgement required by us in
evaluating the market prices for livestock
used by the Group where there is no readily
observable market price.
The judgements made by the Group in assessing
the quantity and value of livestock have a
significant impact on the Group’s financial
performance and financial position.
In assessing this key audit matter, we involved
senior audit team members who understand the
industry and the complexities involved in
quantifying and valuing livestock.
Our procedures included:
• visiting three of the Group’s cattle properties to
test key controls in the livestock accounting
process;
testing the Group’s reconciliation of the number
of livestock at the beginning of the year to the
number recorded at the end of the year,
including checking a sample of cattle purchases
and sales transactions, and natural increase in
the herd to various sources of evidence, for
example, purchase invoices and sales
documentation;
• comparing estimates of birth rates, animal
growth rates and rate of attrition to historical
data and our industry understanding;
• comparing a sample of livestock market prices
adopted by the Group to a range of recent
observable market prices, such as from the
Meat and Livestock Australia Market
Information reports and cattle sales
transactions;
• evaluating the competence, experience and
objectivity of the external valuer used by the
Group; and
• evaluating the report of the external valuer for
consistency with our understanding of the
business, industry and environmental
conditions, trends in historical livestock prices
and other information available to us.
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IINNDDEEPPEENNDDEENNTT AAUUDDIITT RREEPPOORRTT
Valuation of pastoral property and improvements ($810,560,000)
Refer to Note A4 Property in the Financial Report.
The key audit matter
How the matter was addressed in our audit
Our procedures included:
• evaluating the competence, experience and
objectivity of external valuers and other external
experts used by the Group;
• working with our valuation specialists, reading
the reports of the external valuers and other
external experts and evaluating their work
regarding Adult Equivalent carrying capacity of
each property and the dollar per Adult
Equivalent, Standard Cattle Unit or hectare for
consistency with our understanding of the
properties, environmental conditions, recent
comparable market transactions and other
information available to us; and
• using our valuation specialist to assess the
valuation report and compare the valuation
methodology for each property to accepted
market practices, industry norms, and criteria in
the accounting standards.
The valuation of pastoral property and
improvements is considered a key audit matter
due to:
•
•
the size of the balance (being 56.5% of total
assets); and
the level of judgement required by us in
evaluating the Group’s assessment of the fair
value of pastoral property and improvements.
The Group’s assessment of the fair value of
pastoral property and improvements involves
significant judgements, including determination
of:
•
•
•
the valuation methodology applied to each
property;
the Adult Equivalent carrying capacity of each
property; and
the corresponding dollar per Adult Equivalent,
Standard Cattle Unit or hectare.
The Group has appointed external valuers and
other external experts to assist in the
determination of these key valuation inputs.
The judgements made by the Group in assessing
the fair value of property and improvements have
a significant impact on the Group’s financial
position.
In assessing this key audit matter, in particular
the complex inputs involved, we involved senior
audit team members, including valuation
specialists, who understand the nature of the
Group’s properties and recent comparable
market transactions.
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IINNDDEEPPEENNDDEENNTT AAUUDDIITT RREEPPOORRTT
Other Information
Other Information is financial and non-financial information in Australian Agricultural Company Limited’s
annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The
Directors are responsible for the Other Information.
The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report,
including the Remuneration Report, ASX Additional Information and Company Information. The Chairman’s
Message and CEO’s Message are expected to be made available to us after the date of the Auditor's
Report.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not and
will not express an audit opinion or any form of assurance conclusion thereon, with the exception of the
Remuneration Report and our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In
doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or
our knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information,
and based on the work we have performed on the Other Information that we obtained prior to the date of
this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
• preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001;
•
implementing necessary internal control to enable the preparation of a Financial Report that gives a
true and fair view and is free from material misstatement, whether due to fraud or error; and
• assessing the Group and Company's ability to continue as a going concern and whether the use of the
going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either intend to
liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of this Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf.
This description forms part of our Auditor’s Report.
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IINNDDEEPPEENNDDEENNTT AAUUDDIITT RREEPPOORRTT
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration Report of
Australian Agricultural Company Limited for the
year ended 31 March 2020, complies with Section
300A of the Corporations Act 2001.
Directors’ responsibilities
The Directors of the Company are responsible for
the preparation and presentation of the
Remuneration Report in accordance with Section
300A of the Corporations Act 2001.
Our responsibilities
We have audited the Remuneration Report
included in pages 20 to 36 of the Directors’ Report
for the year ended 31 March 2020.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit
conducted in accordance with Australian Auditing
Standards.
KPMG
Simon Crane
Partner
Brisbane
20 May 2020
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FINANCIAL REPORT
ASX Information
AASSXX AADDDDIITTIIOONNAALL IINNFFOORRMMAATTIIOONN
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in the Financial Report is as follows. The
information is current as at 05 June 2020.
(a)
Distribution of equity securities
Ordinary share capital
602,766,747 fully paid ordinary shares are held by 8,655 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
2,122
3,206
1,345
1,808
174
8,655
As at 05 June 2020, there were 567,810 unlisted performance rights granted over unissued ordinary shares in the Company.
(b)
Twenty largest holders of quoted equity securities
The names of the twenty largest holders of quoted shares as shown in the Company’s Share Register are:
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
AACO NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
NATIONAL NOMINEES LIMITED
CUSTODIAL SERVICES LIMITED
QUALITY LIFE PTY LTD
TASMAN SUPER PTY LIMITED
NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
MR JOHN QIANE HE
NEASHAM HOLDINGS PTY LTD
CS THIRD NOMINEES PTY LIMITED
MR BARRY MARTIN LAMBERT
BOND STREET CUSTODIANS LIMITED
POSEIDON NOMINEES PTY LTD
(c)
Substantial shareholders
NUMBER PERCENTAGE
188,306,520
167,978,561
62,660,452
13,697,000
11,253,416
8,230,000
6,405,275
6,296,864
5,050,060
4,999,833
3,697,253
3,175,000
2,411,920
1,581,159
1,422,113
1,220,735
1,214,732
1,177,660
1,030,000
1,000,000
31.24%
27.87%
10.40%
2.27%
1.87%
1.37%
1.06%
1.04%
0.84%
0.83%
0.61%
0.53%
0.40%
0.26%
0.24%
0.20%
0.20%
0.20%
0.17%
0.17%
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
(d)
Marketable shares
NUMBER
289,694,453
The number of security investors holding less than a marketable parcel of 463 securities ($1.080 on 05 June 2020) is 790 and they hold
136,102 securities.
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AACO ANNUAL REPORT
Company Information
CCOOMMPPAANNYY IINNFFOORRMMAATTIIOONN
Name of Entity
Australian Agricultural Company Limited
ABN
15 010 892 270
Registered Office
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
Share Registry
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.
Solicitors
Allens Linklaters
Level 26, 480 Queen Street
Brisbane QLD 4000
Auditors
KPMG
Level 16, 71 Eagle Street
Brisbane QLD 4000
Annual General Meeting
The Annual General Meeting of Shareholders of the Australian Agricultural Company Limited will be held on Wednesday 29th July 2020.
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FINANCIAL REPORT
A ACO ANNUAL REPORT
92
AACO ANNUAL REPORT A ACO ANNUAL REPORT
Our Properties
La Belle
Livingstone Beef
Pell
Delamere
Montejinni
Camfield
Eva Downs
Anthony Lagoon
Brunette
Downs
Canobie
Avon Downs
Austral Downs
Wondoola
Dalgonally
Carrum
Headingly
Gordon Downs
Collie Blue
Glentana
Goonoo
Feedlot
Rewan
South Galway
Wylarah
Aronui
Feedlot
Owned properties
Leased properties
Tennant CreekAlice SpringsBouliaTownsvilleWintonLongreachWindorahDalbyRockhamptonEmeraldBarkly HomesteadCamoowealMt IsaJulia CreekCloncurryKatherineNoonamahTop SpringsBroomePort HeadlandDarwinBorroloolaKarumbaRomaSuratBrisbaneNarrabriSydneyHayAdelaideMelbourneWagga WaggaCONTENTSKEY HIGHLIGHTS