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2023 ReportPeers and competitors of AAC Clyde Space:
Anglo-Eastern PlantationsManager
ASX Market Announcements
Australian Securities Exchange
Attached is the Company’s Annual Report for the 12 month period ended 31 March 2022 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 2022.
Shareholders who have elected to receive the Annual Report electronically will receive an email
on or about 24 June 2022 providing a link to the report on the Company’s website.
This announcement is authorised to be given to the ASX by the AACo Board.
Issued by:
Bruce Bennett
Company Secretary and General Counsel
Australian Agricultural Company Limited
Level 1, Tower A, 76 Skyring Terrace
Newstead QLD 4006
ABN 15 010 892 270
Telephone: 07 3368 4400
Facsimile: 07 3368 4401
ir@aaco.com.au
www.aaco.com.au
Annual
Report
2022
Australian Agricultural Company Limited
ABN 15 010 892 270
About AACo
Our Purpose
Our purpose is
to evolve together
to benefit future
generations.
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CONTENTS
01
About AACo
07
At a Glance
08
Chairman and
MD’s Message
10
Strategic
Roadmap for
Growth
11
19
Stewards of
great endeavours
in the agriculture
industry
20
Our Crew
22
Health Safety
and Wellbeing
24
Our
Craftmanship
Driving our
Future Success
26
Our sustainable
future: The key to
our success
32
Directors’
Report
12
Regional Beef
Market Overview
18
Financial &
Operational
Performance
Highlights
Established in
1824
“To do what we do best we must continuously
adapt and change. This is why we’ve been around
for nearly 200 years and is how we will continue
to adapt to meet the challenges of the future.”
p.01
~6.4m
hectares of land
“The land we nurture, the people we grow, the
animals we care for and the exceptional product
we create are the hallmarks of our success.
But, we are only today’s custodians and it’s
our business to leave our world in better shape
for the generations to follow.
This is our legacy.”
Our Vision
Our Vision is to be
trusted globally as the
producers of the finest
quality Australian beef.
p.02
About AACo cont.
Our History
Established in 1824, the Australian
Agricultural Company Limited (AACo)
is one of Australia’s largest integrated
cattle and beef producers and is the
oldest continuously operating company
in Australia.
Today, AACo owns and operates
a strategic balance of properties,
feedlots and farms comprising
around 6.4 million hectares of
land across Queensland and the
Northern Territory.
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Our long, proud history
is what has made
us a world-leading
producer of beef.
Our Values
At AACo, our core values
and behaviours unite
and motivate us to work
with each other, across
every unique part of our
organisation.
Our values influence our culture,
our brand reputation, reflect the
pride we have in our rich heritage
and provide clear expectations
in how we work with each other,
our customers and stakeholders.
The integration of our values and
behaviours into our everyday helps
make AACo a great place to work
and is a critical driver in helping
us to reach our vision, to be trusted
globally as producers of the finest
quality Australian beef.
Respect what
makes it possible
Aim
higher
• The future of AACo depends
on our people, our animals and
our environment. We raise our
cattle with attention and care.
We keep our lands productive.
We treat each other with
respect. For nearly 200 years
these resources have made
our work possible.
• This is our heritage and also
our future.
• We embrace change
and adapt.
• We exchange ideas and share
knowledge to solve challenges
and capture opportunities.
• We encourage new
approaches to moving
forward and respect
the diverse experience
of our people.
p.03
Our Business Model
AACo is an
integrated
branded beef
business with
three principal
activities:
• Distribution of
high-quality branded
beef into global markets;
• Breeding, growing
feedlotting and trading
of our animals; and
• Ownership, operation
and development of
pastoral properties.
We operate a cattle production
system across 19 owned cattle stations,
3 leased stations, 1 leased farm, 2 owned
feedlots and 2 owned farms 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 scale efficiencies but
small enough to ensure the highest of
production standards and produce the
finest quality beef in the world.
Embrace
change
Take the
reins
Do it for the
diner
• Excellence is an attitude,
not an outcome.
• We take pride in everything
we do – as individuals and
as teams working toward
shared goals.
• There’s no such thing as good
enough, we have to be better
than the best.
• We all own the success of our
business. When opportunities
arise and challenges emerge,
it’s up to every person at AACo
to take the reins.
• This means performing
in our own roles and working
together to achieve success
as a team.
Whether in the paddock, feedlot or
the office, everyone at AACo is here
to serve the same person, the diner
experiencing our beef.
• Each of us have an essential role
in creating an exceptional product.
• Our commitment to diners is
at the core of everything we
do, but never at the expense
of our people, our animals or
the environment.
p.04
About AACo cont.
$49.9m
OPERATING PROFIT1 VS $24.4m PCP2
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A Year in
Review.
Strong operating results
delivered despite considerable
global uncertainty.
$24.2m
OPERATING CASH FLOW VS $18.4m PCP2
(1) Key financial indicators are defined on page 36 of the Directors’ Report.
(2) Pcp represents prior comparative period.
Continuation of our branded beef strategy with a
focus on price premiumisation has helped to deliver:
p.05
4%
MEAT SALES $208.5m
AN INCREASE OF 4%
VS PCP2
21%
83%
WAGYU MEAT SALES
PRICE $18.74/KG, AN
INCREASE OF 21% VS PCP2
OF BRANDED MEAT
SALES3 NOW WESTHOLME
AND DARLING DOWNS
$136.9m
STATUTORY NET PROFIT AFTER TAX
VS $45.5m PCP2
Strengthening
of our balance
sheet continues.
$1.36b
OF NET ASSETS
NTA per share
$2.27
VS $1.75 PCP2 A
30% INCREASE
(3) Branded meat sales represents total meat sales excluding trim & by-products.
p.06
About AACo cont.
Responsible Stewards
We are proud
custodians of the
land we nurture.
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Our Australian hard-working attitude,
spirit and craftmanship, combined
with years of experience cultivating
cattle on our pristine pastoral assets is
unique to our country and our company;
we take great pride in that.
We are custodians of a special
relationship between our people,
livestock, land and communities
that has lasted generations and
positions us internationally as the
finest Australian Wagyu beef producer.
We will continue to be responsible
stewards to benefit future generations.
We capture the magic of Australia
and craft this into remarkable
dining experiences for people
around the world to enjoy.
At a Glance
p.07
Progress against
strategy in FY22.
Delivering full potential from our brands
+21%
WAGYU MEAT SALES
$/KG CW INCREASE
83%
BRANDED SALES1 WESTHOLME
AND DARLING DOWNS
+56%
BRANDED SALES1
GROWTH NORTH AMERICA
Executing on our sustainability strategy
Developed
sustainability
framework
and
commitments
74k
AUSTRALIAN
CARBON CREDIT
UNIT GENERATION
Making AACo a great place to work
+10%
IMPROVED
LTIFR
Created and
launched
our Purpose
and Vision
Statements
Gold level
recognition
Mental Health
First Aid
Australia
>35%
WOMEN IN
LEADERSHIP
A simpler and more efficient AACo
(6%)
REDUCTION IN COST
OF PRODUCTION VS PCP2
(1) Branded meat sales represents total meat sales excluding trim & by-products.
(2) Pcp represents prior comparative period.
p.08
Chairman and MD’s Message
Positive results
shaped by discipline
and ingenuity.
This was a year of considerable achievement for AACo. Our ability to deliver a
quality financial result and continue to make progress against our strategy has
been excellent and is testament to the commitment and strength of our team,
partners, and customers operating in a challenging global environment.
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Dear shareholders,
We are pleased to present the 2022
Annual Report for the Australian
Agricultural Company Limited.
The 2022 financial year presented
many challenges to our way of life and
our ways of working, as we responded
to the continuing COVID-19 pandemic.
Our strategy was tested and served
us well.
Our strong financial result this year is
testament to our dedicated teams who
have found new ways to meet our customers’
needs, despite trading headwinds.
We are very proud of the determination,
discipline and ingenuity that helped
shape our positive results. It is a
well-earned outcome, but there is
always more to do.
STRATEGY DRIVING
OPERATING RESULTS
In FY22 we delivered a Statutory
EBITDA1 profit of $228.6 million,
compared with a Statutory EBITDA1
profit of $99.3 million for FY21.
Ongoing progress across our strategy is
highlighted by a strong Operating Profit1
off the back of a 21% increase in average
Wagyu meat sales price per kilogram.
It marks three consecutive years of
positive operating profit1 growth and
a 22% increase in our Operating Profit
Margin since FY18.
The positive operating cash flow result is
the fourth consecutive year of growth and
a $64 million improvement since FY18.
We have also had a further reduction in
the cost of production in FY22.
This success is significant when
considering the challenging seasonal
conditions that we have experienced
over multiple years including the 2019
Gulf floods combined with several
years of drought, and more recently
the COVID-19 global pandemic.
Notwithstanding these difficulties,
we’ve been able to make the necessary
changes to now be in a strong position.
These achievements can be directly
attributed to our strategy and progress
made across the business and the
supply chain over that time, along
with our commitment to invest in
our brands and properties.
Continued investment back into
the business will remain important
moving forward.
STRENGTH OF ASSETS
Our land assets include stations, farms
and feedlots spread over 6.4 million
hectares of pristine country in Queensland
and the Northern Territory.
The increasing value of our properties
supported our positive results with
a material uplift in pastoral property
and improvements valuations.
There was also strong growth in the
value of AACo’s unique herd as we
continue to rebuild after the losses
incurred during the floods and drought.
In FY22 we increased the headcount
by an additional 43,000 animals.
The assets we manage, including our
land and cattle, are amongst the best
in the world and the foundation of our
ability to produce the highest quality
beef at scale.
(1) Key financial indicators are defined on page 36 of the Directors’ Report.
PROGRESS IN KEY MARKETS
Our strategy includes a relentless focus
on maximizing returns from every cut of
meat we produce and allocating volume
through our global distribution networks
to get the right cuts to the markets that
will deliver the best value at the right time.
This approach has been particularly
important during the everchanging
landscape that COVID-19 presented.
In our messages to you last year, we spoke
about the impacts of the global COVID-19
pandemic. The food service industry was
effectively closed overnight across all our
major markets. We were forced to adapt.
We did so swiftly and successfully.
Conditions improved in the food service
sector in FY22 across multiple major
markets, becoming a key enabler of
AACo’s strategy and focus on price
premiumisation through brand.
Overall, this resulted in a further 21%
increase in average Wagyu meat sales
price per kilogram and resulted in key
brands Westholme and Darling Downs
growing to 83% of branded meat sales.
Growth of AACo’s brands was evidenced
in key markets including North America
which realised an increase in branded
meat sales revenue, volume and average
meat sales price per kilo. The price
and volume increases were driven by
increased brand awareness, strategic
allocation of product and the easing of
COVID-19 restrictions.
We were able to leverage our relationships
and distribution network to take advantage
of the improved market conditions in
FY22. Further expanding Westholme in
the US market is a key initiative that will
deliver the full potential from our brands
in the future.
p.09
Donald McGauchie
Hugh Killen
AACo’s overall global strategy in FY22
included reallocating higher value cuts
to higher paying food service markets.
This resulted in reduced sales value in
Asia and Australia. Despite this, it was
impressive to see increases in price in
both markets.
In Asia this was largely driven by the
strength of the Darling Downs brand
in South Korea, while in Australia,
our spiritual home, Westholme sales
increased in the order of 80% as we grew
pricing off the back of improved brand
awareness amongst consumers and as
key menu placements were achieved.
Both markets remain key for AACo.
SUSTAINABILITY FOCUS
We will be sharing AACo’s FY22
Sustainability Report with you later
this year. This will be the third
accounting of AACo’s sustainability
activities. It is an important tool for
monitoring and assessing ourselves
internally while also measuring our
progress against industry benchmarks.
FY22 marked a significant milestone for
AACo with the release of our sustainability
framework and five major commitments.
This framework, which is a first of its
kind for the Australian beef industry,
has helped guide our climate and
sustainability activities since its
November 2021 launch.
We have begun work on each of the
commitments: landscape carbon,
natural capital, methane emissions
reduction, animal health and welfare
certification and the Wylarah Institute.
This is an important area for AACo and
will remain an ongoing focus in FY23.
POSITIONING FOR GROWTH IN
THE YEARS AHEAD
The AACo supply chain includes
three principal activities: distribution
of high-quality branded beef into
global markets; breeding, growing
feedlotting and trading of our animals;
and ownership, operation and
development of pastoral properties.
Increased geopolitical risk will continue
to impact global supply chains in FY23.
This, along with rising inflationary
pressures will impact the cost of key
inputs across the beef supply chain.
We will continue to be guided by our
Purpose and Vision, which were both
developed in FY22. Our Purpose, we’re
evolving together to benefit future
generations, speaks to why we exist,
while our Vision is to be trusted globally
as the producers of the finest quality
Australian beef. Together these statements
sit at the centre of our plans for growth
along with our five strategic pillars:
• A simpler and more efficient AACo;
• Delivering full potential from
our brands;
• Executing on our sustainability
framework;
• Developing our natural resources
and assets; and
• Making AACo a great place to work.
OUR PEOPLE
The success of FY22 and our plans
for the future would not be possible
without our dedicated team bringing
our strategy to life. Our team has
adapted to the challenges and
changing operating environment
with professionalism and tenacity
We are proud of our station crews
and teams across our head office
and in markets around the world.
Their dedication to their craft, care
for the animals and land under our
stewardship, and desire to live our
purpose and vision makes AACo
a truly remarkable organisation.
It’s one we are very proud of.
We are confident that our strategic
agenda will continue to deliver value
and position us for a very bright future.
Looking ahead, we will invest our profit
directly back into the business and our
people and continue to build on our
strong FY22 results and further grow
the company as we look to celebrate
our 200th anniversary in 2024.
Yours sincerely,
Donald McGauchie
AO Chairman
Hugh Killen
Managing Director and CEO
Strategic Roadmap for Growth
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The future
is ours to build.
Our purpose and vision statements sit at the centre of our
plans for growth, leveraging the foundations put in place
to continue delivering under our strategic pillars.
We will continue to invest back into the business under
these strategic pillars, and in doing so, we will be able to
build on our strong FY22 results and further grow the
company as we look to our 200th anniversary in 2024.
A i m H i g h e r
OUR PURPOSE
We’re evolving
together to benefit
future generations
OUR VISION
To be trusted globally as
the producers of the finest
quality Australian beef
e the R ein s
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i
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o
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R
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espect what
akes it possible
A simpler
and more
efficient AACo
Delivering full
potential from
our brands
Executing
on our
sustainability
framework
Developing our
natural resources
and assets
Making AACo
a great place
to work
S
A
E
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A
S
U
C
O
F
Y
E
K
• Improving operational efficiency
• Continuous improvement with a focus on test and learn
• Embedding our S&OP processes
• Developing a data strategy focussed on value creation
• Drive further growth of Westholme
• Continuing to support and grow Darling Downs in Korea
• Full carcass optimisation through new product
development and value add innovation
• Develop efficient landscape carbon
measurement methodology
• Creating a framework for valuing natural capital
including biodiversity
• Establishing the Wylarah Institute
• Animal Health and Welfare certification
standard development
• Developing authentic First Nations partnerships
• Extending our Gulf farming trials
• Exploring the potential for alternate asset uses
• Optimising our asset mix to boost supply chain efficiencies
• Connecting our people to Our Purpose and enabling
great leaders
• Ensuring care is at the forefront when it comes to our
people, animals and the environment in which we work
• Defining our Employee Value Proposition
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1AA SAFETY
Driving our Future Success
p.11
Our brands in
the spotlight.
Today, AACo is known around the
world for its portfolio of wagyu brands.
Brands that consistently deliver
integrity, flavour and tenderness.
Nothing compares to the passion and
respect our people have for our land and
our animals to create extraordinary
dining experiences in some of the most
recognised and awarded restaurants
around the world.
It’s how we share the
magic of Australia.
DARLING DOWNS
DARLING DOWNS
ISN’T JUST A PRODUCT,
IT’S A WAY OF LIFE.
Crafted by our cattleman who love
what they do and take enormous pride
in caring for the land, their dedication
ensures that Darling Downs provides
home chefs with high quality
goodness they can count on.
By honing our craft and building
on our experience, Darling Downs
delivers the most flavoursome,
tender and versatile Wagyu, with
strong consumer demand in the
Korean market.
WYLARAH
EXCLUSIVE, RARE,
MASTERFUL. WYLARAH
IS LIKE NO OTHER.
Crafted from Fullblood or
Purebred animals which have been
derived from some of the world’s
most revered breeding bulls and
cows, Wylarah is a decadent
experience of silky, finely textured
slices specially curated to deliver
an exquisite moment.
As the pinnacle brand in the
portfolio, it is the perfect balance
of marbling and lean, delighting the
palate with a sense of pure luxury
that is creamy and perfectly buttery.
Wylarah is a rare piece of art,
designed to last only a fraction of
time, yet leaving the whispers of
an everlasting memory, and the
murmur of a profound savoury depth.
WESTHOLME
THERE’S A STORY
IN EVERY MOUTHFUL
OF WESTHOLME.
A story of Australian craftsmanship
and ingenuity, and an unyielding
dedication to perfection and care
from station to plate. A story of a
country so vast, that we’ve sustained
for almost two centuries, providing
our unmatched herd clean air,
pure water and infinite freedom
to roam and graze.
Westholme builds on our strong
heritage of breeding, pairing a
Wagyu herd of unrivalled provenance
with our own northern Australian
breed, the Mitchell, to craft a
signature eating experience that
is enjoyed around the world.
With every bite of Westholme, diners
will experience the layering of rich,
complex, buttery flavours that are
consistent to every cut. A flavour that
only northern Australia can produce,
and only Westholme can perfect.
p.12
Regional Beef Market Overview
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Adapting to
meet changing
market trends.
AACo distributes quality product to
more than 20 countries around the
world. In spite of the challenges the
global pandemic continued to have
on the food service industry in FY22,
we delivered a strong commercial
performance. Our $/Kg has been
boosted by price premiumisation
through brand, as economies and
food service recovers.
We continue to optimise our market
allocation and sales mix, focussing on
strategic market allocation and adapting
our channel strategies to changing
consumer and market trends. For a
second year, in an uncertain operating
environment, we flexed our approach
to address the rising growth of at
home consumption and the home
chef through gourmet e-marketplaces
and premium retail specialists.
We also continued to reinforce our
successful branded beef strategy with
targeted digital marketing campaigns
and improved branding of our products
on menu and in-store.
p.13
Our $/Kg has
been boosted by
premiumisation
through brand
and optimised
market allocation
of product.
p.14
Regional Beef Market Overview cont.
North America
Realising USA
potential.
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Our focus in the USA has been a key
driver of our improved results, with
targeted allocation of product increasing
Westholme’s brand awareness and
helping us to optimise sales across
the entirety of the carcass:
• Food service recovery has been a key
enabler to growing Westholme sales.
• Combination of highly engaging
branded content, digital paid and
earned media, as well as using the
right chef engagement is delivering
new food service customer leads
and commercial results.
Great Australian
Ambassadors
Abroad
Meet Monty Koludrovic,
who along with his wife Jaci,
is a successful Australian
award-winning chef, capturing
the hearts of Americans with their
Australian inspired cuisine at
Grandmaster Recorders in
Los Angeles. Monty was already
very familiar with AACo from his
long history in our esteemed local
industry and the relationship
has developed over time.
Monty is a very proud flag bearer
for quality Australian products.
“The Westholme flavour is what
I hold as a benchmark for marbled
beef flavour. Often marbled
beef has a luxurious mouthfeel,
but the dominant flavour is feed.
With Westholme you get the same
luxurious mouthfeel, but the
dominant flavour is beef and
caramelisation.” When next in
LA we recommend you visit
Monty and his team to experience
Westholme Wagyu Denver steak
or slow cooked braised cheek.
North America Branded Meat Sales1
REVENUE
PRICE/MIX
VOLUME
56%
35%
21%
(1) Branded meat sales represents total meat sales excluding trim & by-products.
p.15
E-mart in Korea
E-mart is the largest retailer and
first hypermarket franchise in
South Korea. With a growing
GDP and shifting social patterns,
the consumption of beef has
increased across the country.
Our Darling Downs brand has
a long history in Korea and is now
the #1 Wagyu beef brand in
E-mart. The brand has secured
leading market share, having
reached strong store distribution
and is now available in
126 E-mart stores.
Asia
Product reallocation and
improved price realisation.
•
Improved in store navigation and
brand visibility enabled a better
shopping experience, helping
to deliver price premiums with
Darling Downs in South Korea.
• Brand refresh implemented
in Hong Kong retail following
the success of new branding in
South Korea.
Reduced volumes as higher valued
cuts were reallocated away from retail
into food service markets around the
world as part of our overall global
strategy. Solid price increases were
achieved in this region:
• Darling Downs’ leading Wagyu
market share within E-mart in
South Korea supported by
improved online and offline brand
experience focusing on building
education and trial.
Asia Branded Meat Sales1
REVENUE
PRICE/MIX
VOLUME
15%
6%
21%
p.16
Regional Beef Market Overview cont.
Australia
Premiumisation
through brand.
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Focus has been on price
premiumisation through brand
as we optimise supply across the
carcass to enhance returns globally
in line with our overall strategy:
• Westholme sales growth
of ~80% vs pcp2 off the
back of improved brand
awareness amongst consumers
and as key menu placements
were achieved.
Australia Branded Meat Sales1
REVENUE
PRICE/MIX
VOLUME
17%
7%
24%
• Supported and collaborated with
influential Australian chefs to help
build visibility of our brands.
Great Australian
Ambassadors
Scott Pickett leads the renowned
Scott Pickett Group, and a
growing list of award-winning
Melbourne restaurants and
establishments including
Chancery Lane, Longrain,
Matilda and Audrey’s in Sorrento.
As one of Australia’s leading
chefs and restaurateurs, he pairs
his vast experience with his deep
understanding of seasonality and
respect for Australian growers and
producers. Scott lends his
respected reputation to Westholme
Wagyu, representing the brand at
Beef Australia in the 2021 celebrity
chef line-up. Scott recently
showcased Westholme at the
Melbourne Food and Wine Festival
Chef Series dinner, cooking
alongside Julien Royer from
Odette Singapore. He also
features in our digital marketing
campaign “Kitchen Tales”.
(1) Branded meat sales represents total meat sales excluding trim & by-products.
(2) Pcp represents prior comparative period.
p.17
Europe/Middle East
Robust volume
increases.
Predominantly food service
focussed, this region saw robust
volume increases in FY22 as part
of the post COVID-19 recovery:
• Execution of in-market chef
focussed events and product
sampling programs leading to
Westholme listings with some of
the EU/UK’s most discerning chefs.
• Training and education a
key initiative to improve
brand awareness and to
share the Westholme story.
Europe/Middle East Branded Meat Sales1
REVENUE
PRICE/MIX
VOLUME
41%
23%
18%
p.18
Financial and Operational Performance Highlights
Strong result
despite global
uncertainty.
$136.9m
STATUTORY NET PROFIT
AFTER TAX VERSUS
$45.5m IN FY21.
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AN IMPROVED OPERATING PROFIT 1 OF
$49.9m
In the face of continuing global
volatility and uncertainty, we have
been able to deliver a strong result.
The success of our global brands and
value chain partnerships have continued
to strengthen and prosper. This has
been galvanised by our ability to adapt
to ongoing disruption, apply fiscal
discipline and lead a committed team.
We delivered operating cash flow of
$24.2 million, an improved operating
profit1 of $49.9 million and a statutory
EBITDA1 of $228.6 million.
Our operating profit margin was
18.1%, an increase of 9 ppt2 versus pcp3.
The company delivered meat sales of
$208.5 million up 4.3% from the previous
year. Net profit after tax was $136.9 million
versus $45.5 million in FY21.
FY22 revenue has been driven by
an improvement in price realisation
for meat sales. However, this was
offset by lower meat sales volume
of 14% due to the impact of historic
lower calving affected by drought
and Gulf flood event in FY19.
Branded sales growth in key markets has
helped drive this operating performance,
as margins improved, and the strategy
was further reinforced with growing
brand awareness and demand.
Cost of production decreased by
6% versus pcp3, driven by improved
seasonal conditions and productivity.
Key initiatives implemented across
the operations have been effective in
achieving greater efficiencies.
(1) Key financial indicators are defined on page 36 of the Directors' Report.
(2) Ppt represents percentage points.
(3) Pcp represents prior comparative period.
Stewards of great endeavours in the agriculture industry
p.19
Fleet Management
AACo manages an impressive mobile
fleet of assets, including more than
500 machines. This includes around six
aircraft, 150 earth moving equipment
assets, 180 passenger vehicles, seven
road trains, 80 trucks, 90 motorbikes
and many more.
FY22 saw a focus on Asset
Management and Tier-1 Fleet
Management Principles, with
particular focus on two predominant
areas, earth moving equipment assets
and passenger vehicles.
The earth moving equipment project
(called Yellow Bull – a partnership
between Caterpillar/Hastings Deering and
AACo) saw AACo reduce its fleet size
by ~30%, reduce total cost of ownership
(“TCO”) by ~30% and optimised the
fleet to produce a reduced carbon
footprint with 375 less cars on the road.
The passenger vehicle project (called
White Horse – a partnership between
Custom Fleet and AACo), saw the fleet
size drop by about 15%, reduce TCO
by ~10% and optimised the fleet to
produce a reduced carbon footprint
with 30 less cars on the road.
Both projects are still ongoing and
AACo anticipates benefits to continue
into the future.
Our Operations
At AACo, we operate a
strategic balance of world
class assets including around
6.4 million hectares of
Australian land which
underpins the value of
our business.
Our property portfolio is core to our
production system and comprises
a strategic mix of cattle stations,
feedlots and farms across Queensland
and the Northern Territory.
The strength of these assets enables
us to produce the highest quality
beef at scale and this is key to
supporting our branded beef strategy.
Leveraging our generational
experience with these properties,
we are constantly looking to evolve and
improve the efficiency of our operations.
The value of our Pastoral Property
and Improvements grew over the
year, consistent with a long-term
trend in our business.
These assets are now worth
$1.2 billion, supporting our net
assets value of over $1.3 billion.
The quality of our herd is also key
to delivering on our strategy and
this is supported by our dedicated
Breeding and Genetics team.
This team measure and track
the performance metrics of
our breeding herd and use this
information as well as the latest
technology to improve genomic
selections. This means we are
constantly refining our joining
and selection strategy to improve
our underlying genetics, and this
continues to pay off.
Feature
Meet Michael Johnson
Michael Johnson, affectionately
known as MJ, was appointed Head of
Pastoral Operations in March 2021 and
currently manages the Barkly Group
and Brunette Downs station. He joined
AACo in 2010 as Manager of Avon and
Austral Downs.
“I’ve been lucky enough to live almost
a quarter of my life at Brunette Downs
and have been able to raise my children
in one of the most beautiful parts of
the world.
Hundreds of thousands of cattle have
come through the station over the last
decade and I’ve been able to mentor
many young people who have and will
go on to be future industry leaders.
A lot has changed over the last
decade and that change is only going
to accelerate over the next 10 years.
Station managers were once able to
focus only on managing cattle and
people, but at companies like AACo they
need to have as much understanding
of the rest of the supply chain, as well
as our customers in market.”
MJ is passionate about northern beef
production systems and the development
of people within it. He is active in the
local community donating time to
various community organisations
and events.
“It is a very special family
here and we have generations
that continue to share their
knowledge and experience.”
p.20
Our Crew
Our crew,
our greatest asset.
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Living our values
Respect what makes
it possible, aim higher,
embrace change, take the
reins, and do it for the diner.
At AACo, we are an equal opportunity
employer committed to building a
team from a range of backgrounds,
skills, talents, and aspirations with
strong work ethics.
We promote an inclusive workplace
that embraces diversity as part of
our culture. This involves providing
supportive and inclusive diversity-
related workplace policies, programs
and practices within our business.
Our team experienced many
challenges relating to the COVID-19
pandemic for a second year in a row.
But they continued to take the reins,
do things differently and worked
hard towards producing the world’s
finest beef.
Our crew are our greatest asset.
And we want to take care of them.
We have deployed a new strategy
around behaviour and health and
safety, critical risk control and
smart decision making. We have
also introduced a hazard profile
across the business and are training
p.21
It’s our dedicated
team that enables us to
feed our beef to people
throughout the world,
every single day.
team members as mental health first
responders, introducing the Mental
Health First Aid Accreditation system.
We continue to build a real connection
with safety.
Our people work across our stations,
feedlots and farms in Queensland
and the Northern Territory as well as
Skyring, our head office in Brisbane and
commercial offices around the world.
They deliver on our high-performance
culture by living our values: Respect what
makes it possible, aim higher, embrace
change, take the reins, and do it for
the diner.
AACo’s commitment to safety
continues to evolve and advance as
we refine our work health and safety
strategy and continue to embed three
key initiatives: lAA, Switch On and
Leadership Development.
These initiatives have supported
improved performance across our key
safety metrics including increasing
Near Miss reporting and reducing
serious injuries.
p.22
Health Safety and Wellbeing
Investing in Health,
Safety and Wellbeing.
We recognise that agriculture can
be a dangerous industry to work in.
And we take this seriously.
One of the areas of focus we are proud
of at AACo is investing in our crew’s
health and wellbeing. We are focussed
on ensuring everyone remains safe
and healthy, day-in, day-out both
physically and mentally.
AACo promotes a strong community-based
culture because we know that being part
of a community is critical to creating a
safe and healthy workplace.
We recognise that
agriculture can be a
dangerous industry
to work in. And we
take this seriously.
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Near miss reporting has been a key
focus in building a strong reporting and
learning culture, a key element of our
safety discipline. Over the past 12 months
we saw an increase in reporting of 170%.
Developed a hazard profile of our
operations to understand our key
hazards, where they are located
and how we are to control them to
minimise harm to our workforce.
Focussed on developing our
frontline leaders as we recognise
how important this role is in leading
and developing our safety culture.
We trained a large cohort of mental
health first aiders and achieved mental
health first aid accreditation as a
Skilled Workplace (Gold level).
Continued our behavioural
safety program rollout
“Switch On” to build safer
habits and improve situational
awareness of our workforce.
Partnered with Sober in the Country (SITC)
to deliver the message that it’s ok to say no to
booze in the bush. SITC’s leader spoke at our
Frontline Leaders conference, and we also
made a large donation to her charity.
p.23
Feature
Jo Tulloch:
The next generation
Johanna Tulloch is a great example
of leadership in action at AACo.
Originally from Gippsland in Victoria,
she studied for a Bachelor of Commerce
and Bachelor of Agriculture at
LaTrobe University. A regular visitor
to Wagga Wagga in the Riverina region
of New South Wales, Jo was introduced
to AACo. Since then, she successfully
applied to the company’s Graduate
Program and has not looked back.
The two-year program has introduced
her to wide range of activities.
Experiencing three rotations, including
placements at head office in assets and
procurement, Jo is now a rangelands
officer at Brunette Downs.
Jo said: “There is a huge focus on
sustainability right across the business,
so to have this opportunity to play a role
in the management of land and pastures
makes me very proud. When I started
here, I never expected to be surrounded
by so many highly skilled mentors,
make great friends and know that
everyone has my back.”
Jo represents the industry’s next
generation. She has been accepted to
participate the Northern Territory
Cattleman’s Association Future Leaders
Program, established in 2014 to foster
and develop leadership skills in the beef
industry. It is an opportunity to capture
new ideas and network for future leaders
in the cattle industry.
Our 1AA. brand was developed to
define our culture of care and also set
boundaries for us to work within.
Delivered several health and wellbeing
programs within the business on topics
such as ergonomics, nutrition, alcohol
and men’s and women’s health.
Introduced a new employee support
program. We achieved an increase in
utilisation from 1.5% with our previous
employee assistance program provider
to 8.3% over six months.
10%
improvement in LTIFR
A 25% reduction in LTIFR (Lost Time Injury Frequency
Rates) in FY21 was a very pleasing result, and we have
continued this progress with a further 10% reduction in FY22.
FY23 Plans
In 2023, we will invest in a greater
focus on psychological and social
safety hazards and management
plans. We will implement hazard
profile assessments at all our sites
to ensure we have effective and
adequate controls in place and
will continue to streamline our
HSW management systems.
Our Craftmanship
Some of the
most credentialed
Black Wagyu
outside of Japan.
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How We Breed
We run one of the world’s
largest Wagyu herds.
Our three major Wagyu
bloodlines ensure diversity
of our herd.
How We Feed
On average, our cattle are raised
on grass for 15 months, then finished
on grain for around 300 days.
Our native pastures are one of the
most intact natural environments
in the agricultural sector.
Our grains are prepared fresh
each day by rolling or steam flaking,
and are blended with roughage
like hay and silage, plus minerals
and molasses for energy.
How We Care
Our herd of 382,010 cattle have
the freedom to graze in expansive
areas, moving naturally together.
We breed the vast majority of our
animals internally, caring for
them throughout the supply
chain, to guarantee the best care
and nutrition for each and every one.
Our feedlots allow our cattle enough
space to exhibit natural behaviour
movement, and access to plentiful
clean water and feed.
AACo’s herd has some of
the most highly credentialed
full blood Japanese Black
Wagyu sires and breeding
females to ever leave Japan.
Our three major Wagyu bloodlines
ensure the diversity of our herd, and
produce a reliably balanced outstanding
quality carcass every time.
Our cattle are raised and grown on
native pastures in one of the most
intact natural environments in the
agricultural sector and finished on
custom designed blends of grains.
Grains are prepared fresh each
day by rolling or steam flaking
and are blended with roughage
like hay and silage, plus minerals
and molasses for energy.
This grain finishing achieves our
signature flavour and marbling.
It takes craft.
p.25
Feature
Matt Kelly:
Driving innovation
(AACo Genetics and
Breeding Program)
Matt Kelly has a PhD in animal
breeding and years of experience
in academic research and designing
and implementing animal breeding
programs. He can also be described
as a geneticist or an agricultural
scientist. Either way, he has a very
important role leading the cattle
breeding program at AACo. In his role
with the company, Matt and his team
dedicate their work to fully realise
natural genetic improvements to
achieve increased marbling, carcass
quality, growth, feed efficiency and
healthier cattle. Animal welfare is
always at the heart of their program
and these genetic innovations are
achieved through natural breeding
techniques. As recognised leaders
in this field of work, Matt is currently
collaborating with Meat and Livestock
Australia to bring this expertise to the
wider industry.
p.26
Our sustainable future: The key to our success
Sustainability
underpins
our success.
Sustainability fundamentally
underpins the success of our business
and the Australian agriculture sector.
Unveiled in November 2021, our
Sustainability Framework is the
blueprint for our future, guiding
our decisions and committing us to
action. It serves to future proof our
business and our environment.
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ulture to meet the
anging world
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Animal Health
& Welfare
New approaches
to landscapes
Future of Food
V a l u ing Nature
P r o t e c t i n g the foundation of
t u r e f o r a better tomorrow
a
n
Pursuing
Circularity
Climate
Action
Regenerating
Nature
Our Purpose
We’re evolving
together to
benefit future
generations
Foundations
T
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Valuing
People
Resilient
Communities
First Nations
Partnerships
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Partnerships
Capital
Allocation
Climate &
Nature Risk
Data Systems
& Reporting
Culture
Governance
Financial
sustainability
Product
safety &
quality
Human rights
& an ethical
supply chain
Employee
safety &
wellbeing
Responsible Business Fundamentals
Business
integrity &
Good Governance
Committed to
transparency
p.27
“We recognise our
responsibility to mitigate
our climate impact and to
produce food in a way that
benefits future generations.”
~ CEO Hugh Killen
Feature
Feature
Russell O’Keefe:
Grader Driver,
Headingly
Proud Wambaya and Mangarayi man
Russell O’Keefe grew up at Corella Creek
on Brunette Downs Station in the
Northern Territory.
In 2004, Russell joined AACo and
not long after, commenced with a
contracting camp on Brunette. He spent
five years in the camp learning about his
culture and developing his station hand
skills with trusted mentor and friend,
the late Tony Green.
Over a period of around 18 years
Russell has worked with us as a bore
runner, leading hand, run a stock camp
and most recently taken up the position
as Grader Driver on Headingly, AACo’s
second largest station, with an area
of 1 million hectares.
“Russell loves all aspects of station life,
he’s great for crew morale and can turn
his hand to just about anything,” said
Headingly Station Manager, Chris Keane.
“He’s skilled at all aspects of station
work – horse and motor bike riding,
cattle handling, bore running and
repairs, heavy vehicle and machinery
operation. Russell can even take on the
role of station cook, creating delicious
meals for the crew.”
Over the next few years Russell will
mentor young First Nations people
starting with AACo, a job he’s really
looking forward to.
“Being with AACo is a better
opportunity than being at
home for a lot of young
Aboriginals,” said Russell.
Sarah Marsden:
Living the dream
Sarah Marsden, currently lives and
works at Brunette Downs Station,
located in the middle of the Barkly
Tableland and 350km northeast of the
nearest town, Tennant Creek and 660km
northwest of Mount Isa in Queensland,
the station’s main service town.
The property comprises of mostly open
downs country and is involved in the
breeding and backgrounding of the
company’s Composite animals.
With roots in Australian agriculture,
Sarah previously studied and trained
as a solicitor, working in Family Law
but has always been drawn to the land.
“I realised my dream in
2018 when I rolled up to the
AACo stand at Beef Week
in Rockhampton, to work
on station in the agriculture
industry, I have not
looked back.”
Sarah commenced in AACo’s stock
camp at Dalgonally in 2019 where she
worked for two years. She then stepped
into a finance support role in the
Goonoo station office, and is currently
working in the sustainability team,
developing a strategy to collaborate with
First Nations People and Native Title.
And she still gets to go mustering
on the weekend.
p.28
Our sustainable future: The key to our success cont.
Our Approach
Tackling the
big issues.
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We are aiming high, with bold
ambitions that shape agriculture to
meet the needs of a changing world,
protect and respect the foundation of
nature and help our communities thrive.
Reimagining
Agriculture
Valuing
Nature
Thriving
Communities
By virtue of our size and integrated
supply chain we are uniquely placed
to realise the opportunity to meet
increasing consumer demand for
sustainably produced food from
finite resources.
Because nature is fundamental to
everything we do, we are taking
concerted climate action, pursuing
circularity across our operations
and, critically, working to regenerate
nature to protect and enhance key
ecosystem services in our care.
Thriving communities are critical
for the health, resilience, and
fundamental future of our business.
This ambition will be realised
through the creation of connection
and opportunity for our people, the
communities we touch and critically,
in active, co-developed partnerships
with the First Nations Communities
that we are connected with.
p.29
Our Commitments
Meeting the
needs of a
changing world.
We have set five priority commitments
in climate action, regenerating nature
and animal health and welfare as a first
step in bringing our strategy to life.
These priority commitments along with
our extended commitments signal a
broader program to come for tackling the
material issues for our business and our
ambition for sustainability at AACo.
1. LANDSCAPE CARBON
Carbon sequestration in the landscape presents one of our
most significant opportunities to contribute to the solution
for global warming, participate in carbon markets as an
alternate revenue stream, increase our productivity, and
improve our resilience to drought and climate change.
2. NATURAL CAPITAL
We are stewards of vast tracts of land in the northern
Australian landscape. Enhancing natural capital makes
sense commercially as well as being a key opportunity to
play our part in addressing the global biodiversity decline.
3. METHANE EMISSIONS
We recognise our responsibility to mitigate our climate
impact and to produce food in a way that benefits future
generations. Methane emissions represent a significant
component of our current operational footprint – addressing
them is a key component of our Climate Action. We have
been focussed on reducing our emissions intensity for several
years and are now working towards tackling our methane
emissions head on.
4. FIVE DOMAINS AHW CERTIFICATION
Certification opens markets and provides a framework
to drive improvement in performance. There is a gap in
certification for Animal Health and Welfare in northern
Australian rangelands.
5. THE WYLARAH INSTITUTE
Developing and nurturing agricultural innovation is vital
to the long-term sustainability of our industry. Faced with
multiple challenges including drought, climate variability,
biosecurity, global competition and consumer preferences
our industry needs new practices that can be implemented
at speed and scale more than ever.
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p.30
Annual Report 2022
Financial
Report
CONTENTS
32
Directors’ Report
42
Remuneration Report (Audited)
58
Lead Auditor’s Independence
Declaration
60
Consolidated Financial Statements
105
Directors’ Declaration
106
Independent Auditor’s Report
111
ASX Additional Information
113
Company Information
p.32
Directors’ Report
Directors’ Report
Your Directors submit their report for the year ended 31 March 2022.
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.
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Donald McGauchie AO, FAICD
(Non ‑Executive Chairman)
Hugh Killen GMP (Harvard
Business School)
Stuart Black AM, FCA, FAICD,
BA (Accounting)
Mr McGauchie was appointed an
Independent Director of Australian
Agricultural Company Limited
on 19 May 2010 and subsequently
Chairman on 24 August 2010.
Mr McGauchie is also the current
Chairman of the Australian Wool
Testing Authority.
His previous roles with public companies
include Chairman of Telstra Corporation
Limited, Chairman of NuFarm, Deputy
Chairman of James Hardie and Director
of GrainCorp, Deputy Chairman of Ridley
Corporation Limited, Director of National
Foods Limited, Chairman of Woolstock,
Chairman of the Victorian Rural Finance
Corporation, President of the National
Farmers Federation from 1994 to 1998
and Director of Reserve Bank of Australia
from 2000 to 2011.
In 2001, Mr McGauchie was named
Rabobank Agribusiness Leader of the
year and awarded the Centenary Medal
for services to Australian society
through agriculture and business.
In 2004 Mr McGauchie was appointed
an Officer of the Order of Australia for
services to the wool and grain industries.
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 that
included managing Westpac Banking
Corporation’s North American business
throughout the global financial crisis, and
serving 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 alumnus of the Harvard
Business School, and a Member of the
Australian Institute of Company Directors.
Raised on pastoral properties in northern
NSW and south‑west Queensland,
Mr Killen has a lifelong association
with agriculture and has retained strong
personal involvement in the industry
through private investments in farming.
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 Non‑Executive
Director of Noumi Limited, a former
Non‑Executive Director of Palla Pharma
Limited, NetComm Wireless Limited,
Coffey International Limited, and
Country Education Foundation of
Australia Limited, former Chairman of
the Chartered Accountants Benevolent
Fund 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.
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 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 – resigned
April 2022; and
• Noumi Limited* – appointed
March 2021.
* Denotes current Directorship.
p.33
Directors’ Report cont.
Directors cont.
Tom Keene BEc, FAICD
Dr Shehan Dissanayake Ph.D.
Dr Shehan Dissanayake was appointed
as 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 of the
Tavistock Group.
Before joining Tavistock Group in 2002,
Dr Dissanayake was a Managing Partner
of Arthur Anderson.
He holds a Ph.D. in Pharmacological and
Physiological Sciences from the University
of Chicago.
During the past three years, Dr Dissanayake
has not served as a Director of any other
listed company.
Mr 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.
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 has over 30 years’
experience in banking, finance and
investment management, including
18 years specifically in food and
agriculture. Mr Abraham established
Macquarie Group’s agricultural fund’s
management business and is currently
a member of ROC Partners’ food and
agricultural investment team.
Mr Abraham consults to the Clean
Energy Finance Corporation’s food
and agricultural team, which seeks
investments aimed at facilitating the
reduction of carbon intensity in the
Australian agricultural sector.
During the past three years, Mr Abraham
has not served as a Director of any other
listed company.
p.34
Directors’ Report
Directors’ Report cont.
Directors cont.
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Jessica Rudd BCom LLB (Hons)
Marc Blazer MSc (LSE), BA (UMD)
Neil Reisman JD
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 & Sales Committee.
In 2015, Ms Rudd founded Jessica’s
Suitcase, an e‑commerce retail platform
that 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 until 2020.
Ms Rudd has served on the Griffith
University Council since January 2020
and was appointed co‑chair of the
National Apology Foundation in 2021.
Beginning her career as a media and
intellectual property lawyer, Ms Rudd later
worked in London as a crisis management
consultant for a global communications
firm before moving to Beijing, where she
lived and worked for five years.
Ms Rudd served as Australia and New
Zealand Lifestyle Ambassador for the
Alibaba Group from 2016 until 2020. She
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.
Mr Blazer was appointed a Director on
31 July 2019. Mr Blazer is Chairman of the
Brand, Marketing & Sales 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, food &
beverage, and hospitality investment
group. From 2013 until 2020, he was the
co‑owner and 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 invests in, licenses, owns,
and operates hospitality ventures 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. While at Cantor,
he was on the advisory board of Enertech, a
clean energy venture fund. 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.
Mr Reisman was appointed a Director
on 10 May 2016. He is a member of the
Audit and Risk Management Committee
and the Nomination Committee.
Neil has more than 30 years of business
experience with emphasis on operations,
legal, tax, investments and finance.
He has worked at various multinational
companies, including Tavistock Group,
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 not served as a Director of any other
listed company.
Company Secretary
Bruce Bennett BCom, LLB, AGIA
ACG (CS, CGP)
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. Bruce has been a
Chartered Secretary since 2005 and is a
member of the Chartered Governance
Institute and an Associate of the
Governance Institute of Australia.
Directors’ Report cont.
p.35
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
Dividends and earnings per share
EARNINGS PER SHARE
Basic earnings per share
Diluted earnings per share
ORDINARY
SHARES
1,120,774
452,042
40,000
75,000
2,025,000
30,000
45,000
32,258
–
OPTIONS OVER
ORDINARY
SHARES
PERFORMANCE
RIGHTS
–
–
–
–
–
–
–
–
–
–
86,845
–
–
–
–
–
–
–
31 MAR 2022
CENTS
31 MAR 2021
CENTS
22.94
22.92
7.62
7.62
No final or interim dividends were declared or paid during the current and prior financial periods.
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p.36
Directors’ Report
Directors’ Report cont.
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
one of Australia’s largest, integrated cattle and beef producers, and is the oldest continuously operating company in Australia.
AACo’s Business Activities
AACo controls a strategic balance of properties, feedlots, farms and a processing facility comprising around 6.4 million hectares
of land and specialises in high‑quality beef production.
AACo’s Business Model
AACo is a fully integrated branded beef business with three principal activities:
• Sales and marketing of high‑quality branded beef into global markets;
• Production of beef including breeding, backgrounding and feedlotting; and
• Ownership, operation and development of pastoral properties.
AACo operates an integrated cattle production system across 19 owned cattle stations, 3 leased stations, 2 owned feedlots,
2 owned farms and 1 leased farm, 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 scale efficiencies but small enough to ensure the
highest of production standards and produce some of the finest quality beef in the world.
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, Statutory EBIT and Statutory EBITDA are 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
Operating Profit
Statutory EBITDA
Statutory EBIT
Net profit after tax
Net cash inflow from operating activities
31 MAR 2022
$000
31 MAR 2021
$000
MOVEMENTS
$000
208,529
199,974
67,538
49,886
228,611
208,770
136,930
24,248
65,548
24,360
99,326
80,322
45,474
18,423
8,555
1,990
25,526
129,285
128,448
91,456
5,825
Statutory EBITDA was a profit of $228.6 million in FY22 ($99.3 million profit in FY21), while Operating Profit was $49.9 million
($24.4 million profit in FY21). Operating Profit does not include unrealised livestock gains or losses, while Statutory EBITDA
does include these.
Statutory EBITDA is earnings before interest, tax, depreciation and amortisation, and gain/loss on equity investments.
Directors’ Report cont.
p.37
Operating and financial review cont.
Key Financial Indicators Used by Management cont.
SALES AND MARKETING
In FY22, Wagyu beef revenues improved despite lower volumes sold, driven by significant average sales $/kg increases on FY21,
consistent with the Company’s branded beef strategy and market conditions.
In line with the historical low herd levels seen in the Australian national cattle herd, AACo experienced lower than usual calving
in prior periods due to drought and the Gulf flood event.
These headwinds are still being felt through the supply chain due to the average F1 Wagyu lifecycle length being 3.5 years from
conception through to backgrounding, feedlots, and processing. Lower calving in prior impacted periods have translated into
lower meat volumes processed in the FY22 financial year.
Wagyu beef revenue – $ mil
Wagyu beef kgs sold – mil kg CW(1)
Wagyu beef sold – $/kg CW
Cattle revenue – $ mil
Cattle sales – mil kg LW(1)
31 MAR 2022
31 MAR 2021
203.8
10.9
$18.74
67.5
17.3
196.9
12.7
$15.50
65.5
19.4
(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 increased 28.1% on the previous corresponding period, resulting from higher calving rates in the
current year due to improved seasonal conditions and herd growth on the prior year.
Cost of production is a measure of the operating costs to produce a kilogram of live weight of cattle throughout the breeding,
backgrounding and feedlot operations of the Company during the period. This calculation is the sum of all annual production
costs incurred at each of the Company’s productive properties, divided by the number of total live weight kilograms produced.
Higher kilograms produced have had a favourable impact on cost of production, with the company realising a 5.7% reduction on
the previous corresponding period, due to a disciplined focus on costs across the business, and improved seasonal conditions.
Kilograms produced – mil Kg LW
Cost of production – $/kg LW
Operating Review
31 MAR 2022
31 MAR 2021
53.3
$2.82
41.6
$2.99
During FY22, the Company continued to execute its branded beef strategy. Strategic management of market and channel
optimisation, as well as market price increases, resulted in a 3.5% increase in Wagyu beef sales revenue despite a 14.2% decrease
in carton weight kilograms sold. The strength of our brand premium continued to grow, with an extra $3.24/kg added to the
average meat selling price, up 20.9% on the prior comparative period notwithstanding continued challenges of COVID‑19 on
global food service and distribution channels.
Operational expenditures have normalised, with business activities more heavily restricted during the prior year due to
COVID‑19. Investments continue to be made in line with the Company’s strategy, improving brand performance whilst
maintaining a disciplined focus on expenditures across the entire business.
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p.38
Directors’ Report
Directors’ Report cont.
Operating and financial review cont.
Operating Review cont.
LIVESTOCK MOVEMENTS
Livestock carrying values have improved from the prior year due to market price improvements on both Non‑Wagyu and
Wagyu livestock, and overall headcount increases.
The herd headcount has improved due to increased brandings following investment in the supply chain as required and the
company’s internal breeding program, recovering from the impact of droughts and floods in previous years. The Company
continues to benefit from its integrated supply chain, with a predominantly self‑sustaining herd.
Market values of Non‑Wagyu and Wagyu animals have improved significantly over the past year, leading to a $129.6 million
market value improvement of cattle held at the FY22 year‑end.
PROPERTY
Property values continue to see growth, and during FY22 the Company recorded a net $254.5 million increase in the fair value
of the Company’s Pastoral Property and Improvements, bringing the value of this portfolio to $1.2 billion as at 31 March 2022.
This significant increase is a reflection of management practices and investment in these properties, as well as substantial
market increases seen in comparable property sales.
Consistent with prior years, the Company reflects potential risks and impacts of climate change as part of the valuation
methodology, by ensuring the pastoral property values are based on a long‑term view of sustainable carrying capacity and
rates applied that reflect sustainable management practices.
Statutory Financial Results
The FY22 results include a Statutory EBITDA profit of $228.6 million, driven by improvements in both average cattle and
meat sales prices on lower volumes, and a $129.6 million positive market value increase in the value of the herd.
In summary:
• Total sales revenue of $276.1 million, compared with $265.5 million in FY21, with a lower volume of cattle sold and meat
produced more than offset by higher average prices achieved in both revenue streams;
• Statutory EBITDA profit of $228.6 million, compared with a Statutory EBITDA profit of $99.3 million for FY21;
• Operating Profit of $49.9 million, compared with an Operating Profit of $24.4 million in FY21;
• Positive net operating cash flows of $24.2 million, compared with $18.4 million in FY21;
• Cost of production $/kg Live Weight decreased by 5.7% in FY22, which is due to higher kilograms produced, a disciplined
focus on costs held across the business, as well as improved seasonal conditions;
• Average Wagyu meat sales price per kilogram has increased by 20.9% in FY22;
• Net tangible assets per share was $2.27 as at 31 March 2022, compared to $1.75 as at 31 March 2021, driven by increases
in the market value of Pastoral Property and Improvements and livestock; and
• The Company maintains a robust balance sheet, with comfortable headroom under existing bank covenants.
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 capable of thriving in a diverse
set of geographic locations and climatic 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 and currency 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 $2.27 as at 31 March 2022, compared to $1.75 as at 31 March 2021.
Directors’ Report cont.
p.39
Operating and financial review cont.
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 continue to optimise our supply chains, implement a differentiated branding
strategy, and invest in innovation and technology.
The ongoing impact of COVID‑19 on the Company’s go forward consolidated results of operations and cash flows cannot be
reasonably estimated at this stage.
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.
Significant events after balance date
There have been no significant events after the 31 March 2022 balance date which require disclosure in the financial report.
Environmental regulation and performance
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 2022.
• 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.
• The Company holds other water access rights in the Gulf region of Queensland that currently remain unused; however,
should the Company begin to access water under these licenses, the pumping of water under these licenses would be subject
to regulations under the Sustainable Planning Act 2009 (Qld) and the Water Act 2000 (Qld).
• 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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Directors’ Report
Directors’ Report cont.
Environmental regulation and performance cont.
• 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 2022.
Share options
Unissued Shares
As at the date of this report, there were 541,753 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 523,796 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.
Directors’ Report cont.
p.41
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
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
Sustainability
Agribusiness
Farmer or Producer
Innovation
Information Technology
Sectoral Experience
Livestock
Beef Manufacturing
Sales
Branding and Marketing
Finance, Capital Management and Risk
Formal Accounting and Finance Qualifications (CPA or CA)
Capital Restructuring
Audit Committee Experience
Legal
People
People and Culture
Remuneration Committee Experience
Geographic Experience
International Markets
Asian Markets
USA Markets
OUT OF 9
DIRECTORS
9
9
8
6
2
8
6
5
6
3
8
5
5
3
6
7
4
7
7
6
9
5
8
7
7
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Directors’ Report
Remuneration Report (Audited)
This remuneration report for the year ended 31 March 2022 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. Executive Remuneration Framework (Overview);
3. Executive Contractual Arrangements;
4. Remuneration of Key Management Personnel – Other KMP;
5. Link between Remuneration and Performance;
6. Board Oversight of Remuneration;
7. Non‑Executive Director (NED) Remuneration Arrangements;
8. Equity Instruments Disclosures; and
9. Shareholdings and other mandatory disclosures.
1. Individual Key Management Personnel
Details of KMP of the Company are set out in the following sections.
(i) Directors
D. McGauchie
Chairman, Non‑Executive Director
Independent
Appointed 19 May 2010
H. Killen
Managing Director and Chief Executive Officer
Non‑Independent(1)
Appointed 1 February 2018
Dr S. Dissanayake
Non‑Executive Director
Non‑Independent(1)
Appointed 27 April 2012
N. Reisman
A. Abraham
S. Black
T. Keene
J. Rudd
M. Blazer
Non‑Executive Director
Non‑Executive Director
Non‑Executive Director
Non‑Executive Director
Non‑Executive Director
Non‑Executive Director
Non‑Independent(1)
Appointed 10 May 2016
Independent
Appointed 7 September 2014
Independent
Appointed 5 October 2011
Independent
Appointed 5 October 2011
Independent
Appointed 15 November 2017
Independent
Appointed 31 July 2019
(1) These Directors of the Company were determined to be Non‑Independent.
Remuneration Report (Audited) cont.
p.43
1. Individual Key Management Personnel cont.
(ii) Non‑Independent Directors
H. Killen
Dr S. Dissanayake
N. Reisman
(iii) Executives
B. Bennett
N. Simonsz
A. O’Brien
D. Harris
R. Scott
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, a major 48.06% shareholder of the Company
Mr N. Reisman is not considered independent as he was an officer of Tavistock Group within
the last 3 years which controls the AA Trust, a major 48.06% shareholder of the Company.
Company Secretary/General Counsel
Appointed 20 November 2006
Chief Financial Officer
Chief Commercial Officer
Appointed 1 August 2018
Appointed 17 December 2018
Chief Operating Officer – Supply Chain
Appointed 1 April 2020
Chief Marketing Officer
Appointed 6 July 2020
(iv) Executives who resigned, retired or otherwise ceased employment during the period
A. Speer
Chief Operating Officer – Pastoral
Resigned 31 May 2021
R. Scott resigned from AACo and concluded her employment on 29th April 2022.
2. Executive Remuneration Framework (Overview)
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:
• 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%); and
• The actual DEA awarded to an executive is generally set at 50% of the amount of any STI actually paid to the executive.
p.44
Directors’ Report
Remuneration Report (Audited) cont.
2. Executive Remuneration Framework (Overview) cont.
Remuneration strategy and policy cont.
CEO AND KEY MANAGEMENT PERSONNEL (KMP) CONT.
The following table illustrates the structure of the Company’s executive remuneration arrangements for the year ended
31 March 2022:
Attract and retain
high calibre employees
Motivate and reward
outstanding performance
Align to Shareholder
returns
OBJECTIVE
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REMUNERATION
COMPONENT
Total Fixed
Remuneration
At risk remuneration
Short‑term incentive
(STI)
Long‑term incentive
(LTI)
Cash
Deferred Equity
(Performance Rights)
Deferred Equity
(Performance Rights)
Base salary,
superannuation
and any ‘packaged’
benefits including
FBT grossed‑up on
a Total Employment
Cost (TEC) basis
Reward for role size
and complexity and
external and internal
relativities
Mechanism
Purpose
Link to
Performance
Reward for
contribution to
achievement of
business outcomes
and individual KPIs
Reward for
contribution to
achievement of
business outcomes
and individual KPIs
No link to Company
performance although
reviewed annually
with consideration
given to the
performance of
the Company and
business unit in the
remuneration review
STI for executives
is calculated
with a balance
across financial,
non‑financial
and individual
performance
metrics
Generally, 50% of
the STI cash bonus
earned and subject to
two‑year (50%) and
three‑year (50%)
service vesting
conditions
Aligns remuneration
of the Company’s
senior executives
with the long‑term
strategic goals of the
company, as well as
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
%
SHORT‑TERM
INCENTIVES
%
DEA
INCENTIVE(1)
%
LONG‑TERM
INCENTIVE
%
57
57
29
29
14
14
–
–
TOTAL
TARGETED
REWARD
%
100
100
MD/CEO
Key Management
(1) 50% of cash bonus paid.
Remuneration Report (Audited) cont.
p.45
2. Executive Remuneration Framework (Overview) cont.
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.
Total Fixed Remuneration (TFR)
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.
The fixed component of the executives’ and MD/CEO’s base remuneration is detailed in the tables on pages 50 and 54.
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 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 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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Directors’ Report
Remuneration Report (Audited) cont.
2. Executive Remuneration Framework (Overview) cont.
Short‑term incentives cont.
The structure of the short‑term incentive plan is as follows:
FEATURE
DESCRIPTION
Maximum opportunity
Short‑term incentives (STI)
CEO: 50% of fixed remuneration
Other executives: 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
Minimum opportunity
Short‑term incentives (STI)
CEO: 0% of fixed remuneration
Other executives: 0% of fixed remuneration
Deferred equity award (DEA)
CEO: 0% of short‑term incentive cash bonus
Other executives: 0% of short‑term incentive cash bonus
Performance metrics
The STI metrics align with the strategic priorities at both a Company and business unit level.
The general performance metrics for the KMP are as follows:
Metric
Primary metrics are Financial, Strategic, Customer, Operational Efficiency, People and Safety.
Delivery of STI
The STI is paid in cash generally in the next financial year.
Board discretion
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 16 Sep 2021 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.
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 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.
Remuneration Report (Audited) cont.
p.47
2. Executive Remuneration Framework (Overview) cont.
Long‑term incentives cont.
It was determined by the Board that there will be four grant rounds in total. The following summary reflects the key features
of the four grant rounds:
FEATURE
DESCRIPTION
Timing of grant
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
Vesting period
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.
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.
Lapsing conditions
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.
Change of control event
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.
On market acquisition
of shares
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.
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Directors’ Report
Remuneration Report (Audited) cont.
2. Executive Remuneration Framework (Overview) cont.
Long‑term incentives cont.
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:
COMMENCING
MARKET CAPITALISATION
OF THE COMPANY
PERFORMANCE
CONDITION (TARGETED
MARKET CAPITALISATION
OF THE COMPANY)
PERFORMANCE PERIOD
(CALCULATED USING AN
ASSUMED ANNUALISED
GROWTH RATE OF 20%)
First Grant Round
The market capitalisation of
the Company on the LTI Plan
Implementation Date
$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
Within 2 quarters of the LTI
Plan Implementation Date
(i.e. performance period
ended 30 September 2017)
Within 9 quarters of the LTI
Plan Implementation Date
(i.e. performance period
ended 30 June 2019)
Within 16 quarters of the
LTI Plan Implementation
Date (i.e. performance
period ended 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. The third grant round, offered during FY20, was forfeited in FY21 by all
recipients as the performance condition of target market capitalisation was not met by 31 March 2021.
3. 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
Short‑Term Incentive (STI)
Cash Bonus
Deferred Equity Award
Long‑Term Incentive
CEO DESCRIPTION
SENIOR EXECUTIVE DESCRIPTION
$600,000 including superannuation
(subject to annual review by Board)
Maximum opportunity of $300,000
(50% of TFR)
Range between $356,100 and $550,000
Maximum opportunity 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
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
Remuneration Report (Audited) cont.
p.49
3. Executive Contractual Arrangements cont.
The MD/CEO’s termination provisions are as follows:
Employer‑initiated
termination
Termination for
serious misconduct
Employee‑initiated
termination
NOTICE
PERIOD
6 months
PAYMENT IN
LIEU OF NOTICE
TREATMENT
OF STI ON TERMINATION
TREATMENT OF PERFORMANCE RIGHTS
ON TERMINATION
Part or all
of 6 months
Not eligible
Unvested performance rights lapse
unless Good Leaver and Board exercises
discretion to allow
Nil
Nil
Not eligible
Unvested performance rights lapse
6 months
Part or all
of 6 months
Not eligible
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
3 to 6
months
PAYMENT IN
LIEU OF NOTICE
TREATMENT
OF STI ON TERMINATION
TREATMENT OF PERFORMANCE RIGHTS
ON TERMINATION
Part or all of
3 to 6 months
Not eligible
Unvested performance rights lapse
unless Good Leaver and Board exercises
discretion to allow
Nil
Nil
Not eligible
Unvested performance rights lapse
Employer‑initiated
termination
Termination for
serious misconduct
Employee‑initiated
termination
3 to 6
months
Part or all of
3 to 6 months
Not eligible
Unvested performance rights lapse
unless Good Leaver and Board exercises
discretion to allow
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Directors’ Report
Remuneration Report (Audited) cont.
4. Remuneration of Key Management Personnel – Other KMP
EXECUTIVES
SHORT‑TERM
POST‑
EMPLOY‑
MENT
LONG‑
TERM
BENEFIT
TERMIN‑
ATION
SHARE‑BASED
PAYMENT
Salary
& Fees
$
Other
Payments
$
Non‑
Monetary
Benefits
$
Superan‑
nuation
$
Long
Service
Leave(1)
$
Benefits
$
Short‑
Term
Incentive
(DEA)(2)
$
Perfor‑
mance
Rights
(LTI)(3)
$
Total
$
Current Other KMP
B. Bennett
31/03/2022
358,811
178,068
31/03/2021
338,862
158,895
–
–
23,100
21,521
6,387
9,469
N. Simonsz
31/03/2022
601,158
275,000
31/03/2021
580,280
247,500
4,200
4,200
23,100
21,521
A. O’Brien
31/03/2022
674,075
254,088
9,491
31/03/2021
665,276
247,182
D. Harris
31/03/2022
449,664
235,500
31/03/2021
365,828
168,750
R. Scott
31/03/2022
467,496
–
31/03/2021
347,472
151,230
Former KMP
A. Speer
–
–
–
–
–
31/03/2022
80,929
–
2,487
31/03/2021
489,283
25,000(4)
12,435
Total Remuneration: Other KMP
–
–
23,100
21,521
23,100
16,271
7,231
21,521
–
–
–
–
–
–
–
–
–
–
31/03/2022
2,632,133
942,656
16,178
99,631
31/03/2021
2,787,001
998,557
16,635
102,355
6,387
9,469
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21,403
8,208
595,977
672
51,599
581,018
33,337
–
31,528
–
22,730
–
20,370
–
–
–
–
–
–
–
–
–
–
–
–
–
936,795
853,501
969,182
912,458
730,994
556,099
510,966
514,973
90,647
548,239
129,368
8,208 3,834,561
672
51,599 3,966,288
(1) Long service leave balances are only accrued from 5 years’ service onwards.
(2) The STI expense in the current year relates to the DEA granted in 2022, based on FY21 performance.
(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 FY21 relate to anniversary payments.
Remuneration Report (Audited) cont.
p.51
5. Link between Remuneration and Performance
Statutory performance indicators
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
2022
2021
2020
2019
2018
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
136,930
22.85
–
–
36%
24,248
45,474
7.62
–
–
5%
18,423
31,317
5.25
–
–
10%
20,120
(148,396)
(102,559)
(24.9)
(17.4)
–
–
(14%)
12,990
–
–
(31%)
(39,864)
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 page 50 and 54).
FIXED REMUNERATION
AT RISK – STI – CASH
AT RISK – STI – DEA(1)
AT RISK – LTI
2022
2021
2022
2021
2022
2021
2022
2021
Directors
H. Killen
Executives
B. Bennett
N. Simonsz
A. O’Brien
D. Harris
R. Scott
66%
73%
25%
22%
65%
67%
71%
65%
96%
64%
71%
73%
70%
71%
30%
29%
26%
32%
0%
27%
29%
27%
30%
29%
Former Executives
A. Speer
100%
95%
0%
5%
8%
4%
4%
3%
3%
4%
0%
0%
0%
0%
0%
0%
0%
0%
1%
1%
0%
0%
0%
0%
0%
5%
9%
0%
0%
0%
0%
0%
(1) Based on the share‑based payment expense incurred by the Company in relation to a prior year award.
Performance based remuneration granted during the year
The Board have exercised their discretion to 98% of the target STI bonus and DEA entitlement in relation to FY22 performance.
As a result, the total amount of STI cash bonus paid or accrued for the MD/CEO or any other executive in respect of performance
during the year to 31 March 2022 amounts to $1,212,657 (31 March 2021: $1,183,722). The DEA has not yet been formally offered
to the MD/CEO or any other executives in respect of performance during the year to 31 March 2022 and will be granted upon
acceptance of letters of offer. Letters of offer will be transmitted to participants once the Board approves the opening of the first
trading window under the AACo trading policy, which is typically immediately following the AACo full‑year announcement.
The DEA is awarded based on FY22 performance and will be expensed over the 3‑year vesting period commencing on grant date.
No expense has been recorded for the FY22 performance year DEA in the 31 March 2022 results.
The STI cash bonus for the MD/CEO and any other executives in respect of performance during the year to 31 March 2021 was
$1,183,722. The DEA was awarded based on FY21 performance and will be expensed over the 3‑year vesting period commencing
from grant date of 16 September 2021. The expense recorded for the FY21 performance year DEA in the 31 March 2022 results
for the MD/CEO and any other executive is $176,592.
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p.52
Directors’ Report
Directors’ Report
Remuneration Report (Audited) cont.
5. Link between Remuneration and Performance cont.
Performance based remuneration granted during the year cont.
As outlined above, for each STI cash bonus and grant of rights to deferred shares (refer to tables on pages 55 to 56), the percentage
of the available bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited as a
result of the Board’s discretionary decision is set out below.
Directors
H. Killen
Executives
B. Bennett
N. Simonsz
A. O’Brien
D. Harris
R. Scott
CURRENT YEAR STI ENTITLEMENT
(CASH BONUS AND DEA)
Total
Opportunity
($)
Awarded
%(1)
Forfeited
%
450,000
90%
10%
264,750
412,500
382,500
323,723
343,926
100%
100%
100%
100%
0%
0%
0%
0%
0%(2)
100%(2)
(1) The DEA is awarded based on FY22 performance, and will be granted in FY23 and expensed over the subsequent 3‑year vesting period.
(2) R. Scott resigned her employment with AACo effective 29 April 2022 and therefore has forfeited any STI entitlement.
6. 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 KMPs 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.
Remuneration Report (Audited) cont.
p.53
6. Board Oversight of Remuneration cont.
Voting and comments made at the company’s 29 July 2021 Annual General Meeting (‘AGM’)
The Company received 83.82% of ‘for’ votes in relation to its remuneration report for the year‑ended 31 March 2021.
7. 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. NEDs 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.
NEDs 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 2022 and 31 March 2021 is detailed in the table on page 54.
Payment of amounts equivalent to superannuation for US based Directors
US based Directors of the Company receive a monetary amount in lieu of post‑employment benefits, with the amount being
equivalent to superannuation as if Australia’s superannuation laws applied to them, subject to the following qualifications:
(a) Dr Shehan Dissanayake, a US based Director, will not receive an amount in lieu of post‑employment benefits as he is an
officer of Tavistock Group which controls the AA Trust which is a major 48.061% shareholder of the Company.
Use of Remuneration Consultants
During the year ended 31 March 2022 the following external parties provided assistance to the Company covering
remuneration matters:
(a) Crichton & Associates, invitations and participant guide for the 2022 DEA; and
(b) Korn Ferry, external benchmarking of executive remuneration.
Assistance from external parties covering remuneration was limited to the above matters.
In the year ended 31 March 2022, remuneration consultants were engaged for remuneration matters for the value of $40,848
(31 March 2021: $nil).
p.54
Directors’ Report
Remuneration Report (Audited) cont.
7. Non‑Executive Director (NED) Remuneration Arrangements cont.
Use of Remuneration Consultants cont.
DIRECTORS
SHORT‑TERM
POST‑
EMPLOY‑
MENT
LONG‑
TERM
BENEFIT
TERMIN‑
ATION
SHARE‑BASED
PAYMENT
Salary
& Fees
$
Other
Payments(1)
$
Non‑
Monetary
Benefits
$
Superan‑
nuation
$
Long
Service
Leave(2)
$
Short‑Term
Incentive
(DEA)
$
Benefits
$
Perfor‑
mance
Rights
(LTI)(3)
$
Total
$
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0
2
2
A
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o
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–
–
–
–
–
–
–
–
–
–
Non‑Executive Directors
D. McGauchie
31/03/2022
250,000
237,397
125,000
118,699
115,000
109,203
125,000
118,699
100,164
94,959
31/03/2021
S. Black
31/03/2022
31/03/2021
A. Abraham
31/03/2022
31/03/2021
T. Keene
31/03/2022
31/03/2021
Dr S. Dissanayake
31/03/2022
31/03/2021
N. Reisman
31/03/2022
31/03/2021
J. Rudd
31/03/2022
31/03/2021
M. Blazer
31/03/2022
31/03/2021
115,189
109,203
11,375(4)
10,374
130,000
123,447
–
–
125,000
118,699
12,344(5)
19,215
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
24,688
22,553
12,344
11,276
11,357
10,374
12,344
11,276
–
–
–
–
12,838
11,727
–
–
Executive Directors
H. Killen
31/03/2022
31/03/2021
674,648
270,000
647,829
210,164
15,245
19,445
23,100
19,494
Total Remuneration: Directors
31/03/2022
1,760,001
293,719
31/03/2021
1,678,135
239,753
15,245
19,445
96,671
86,700
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
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
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
274,688
259,950
137,344
129,975
126,357
119,577
137,344
129,975
100,164
94,959
126,564
119,577
142,838
135,174
137,344
137,914
86,845
8,208 1,078,046
–
51,599
948,531
86,845
8,208 2,260,689
–
51,599 2,075,632
(1) Other payments relate to STI payments for the MD/CEO and payments in lieu of post‑employment benefits for US based Directors.
(2) Long service leave balances are only accrued from 5 years’ service onwards, and this is not applicable to Non‑Executive Directors.
(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) N. Reisman received an amount in lieu of post‑employment benefits.
(5) M. Blazer received an amount in lieu of post‑employment benefits.
Remuneration Report (Audited) cont.
p.55
8. Equity Instruments Disclosures
Nil performance rights under the LTI plan and 541,753 DEA performance rights were granted during the twelve months to
31 March 2022 (31 March 2021: nil performance rights under the LTI plan and nil DEA performance rights).
338,240 shares were distributed to key management personnel during the year‑ended 31 March 2022, as a result of exercising
vested performance rights granted during 2018 (31 March 2021: 178,833).
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. Although the approved STI calculation relates to the year
ended 31 March 2022, the DEA is not granted to participants until the Board approves the opening of the first trading window
under the AACo trading policy, which is typically immediately following the AACo full‑year announcement.
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:
FISCAL
YEAR
GRANTED
AWARD
BALANCE
AT
BEGIN‑
NING OF
PERIOD
GRANTED
AS
REMUN‑
ERATION
EXECISED
DURING
THE
YEAR
NET
CHANGE
OTHER
BALANCE
AT END
OF
PERIOD
NOT
VESTED
AND NOT
EXERC‑
ISABLE
VESTED
AND
EXERC‑
ISABLE
VALUE
YET TO
VEST
$
Number
Number
Number
Number
Number
Number
Number
$
Executives
H. Killen
B. Bennett
N. Simonsz
A. O’Brien
D. Harris
R. Scott
2023(1)
2022(2)
2018
2023(1)
2022(2)
2018
2023(1)
2022(2)
2023(1)
2022
2023(1)
2022(2)
2022(3)
Former Executives
A. Speer
–
DEA
DEA
LTIP
DEA
DEA
LTIP
DEA
DEA
DEA
DEA
DEA
DEA
DEA
–
–
–
86,845
–
–
169,120
–
–
169,120
–
–
–
–
–
–
–
–
–
–
65,659
–
–
102,273
–
96,723
–
69,731
62,492
–
(169,120)
–
–
(169,120)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
86,845
–
–
65,659
–
–
102,273
–
96,723
–
69,731
62,492
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
135,000
125,925
–
89,034
95,206
–
137,500
148,296
127,044
140,248
117,750
101,110
90,613
–
(1) Performance rights for the Deferred Equity Award will be granted once the Board approves the opening of the first trading window under
AACo trading policy, which is usually immediately following the AACo full‑year announcement. The number of performance rights granted
will depend on the Company’s share price at the grant date. The 2023 DEA is awarded based on FY22 performance and will be expensed over
the 3‑year vesting period commencing once grant dated has occurred.
The maximum value for the 2023 DEA is 50% of the short‑term incentive cash bonus earned for the same performance period, with the
number of rights to be granted subject to the share price on grant date. The minimum value of performance rights yet to vest is nil, as the
rights will be forfeited if the vesting conditions are not met.
(2) The 2022 DEA was granted during FY22 based on FY21 performance. The value is based on the Company’s share price at the grant date.
(3) R. Scott resigned her employment with AACo effective 29 April 2022, forfeiting the 2022 DEA performance rights on the date of her
resignation, as well as any entitlements to the 2023 DEA grant round.
No other Directors or executives held options or performance rights during the period.
A
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p.56
Directors’ Report
Remuneration Report (Audited) cont.
9. Shareholdings and other mandatory disclosures
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.
2022
Directors
D. McGauchie
H. Killen
S. Black
T. Keene
A. Abraham
Dr S. Dissanayake
N. Reisman
J. Rudd
M. Blazer
Executives
B. Bennett
N. Simonsz
A. O’Brien
D. Harris
R. Scott
Former Executives
A. Speer
Total
BALANCE
AT BEGINNING
OF PERIOD
GRANTED AS
REMUNERATION
EXERCISE OF
OPTIONS/
RIGHTS
NET CHANGE
OTHER
BALANCE
AT END OF
PERIOD
Number
Number
Number
Number
Number
1,120,774
282,922
40,000
75,000
30,000
2,025,000
45,000
–
–
285,687
–
50,000
–
–
–
3,954,383
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
169,120
–
–
–
–
–
–
–
167,120
–
–
–
–
–
–
–
–
–
–
–
–
32,258
–
–
–
–
–
–
–
1,120,774
452,042
40,000
75,000
30,000
2,025,000
45,000
32,258
–
452,807
–
50,000
–
–
–
336,240
32,258
4,322,881
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.
Loans to key management personnel and their related parties
There are no loans outstanding with the key management personnel at 31 March 2022 (31 March 2021: nil), nor have there
been any transactions that would be considered a loan throughout the period.
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 2022 (31 March 2021: nil).
Directors’ Report cont.
p.57
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
& SALES
COMMITTEE
A
9
9
9
9
9
9
9
9
9
B
9
9
9
9
7
9
8
9
9
A
9
9
9
9
9
9
9
9
9
B
9*
9*
8*
9
2*
9
8
5*
8*
A
6
6
6
6
6
6
6
6
6
B
6
6*
6
6*
1*
6*
5*
6
5*
A
1
1
1
1
1
1
1
1
1
B
1
1*
1
1
1
1
1
1
1
A
3
3
3
3
3
3
3
3
3
B
2
3*
3*
3*
0*
3*
3*
2
3
D. McGauchie
H. Killen¥
T. Keene
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.
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 & Sales 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.
p.58
Directors’ Report
Lead Auditor’s Independence Declaration
We have obtained the following independence declaration from our auditors KPMG.
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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 2022 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.
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
KPMG
Scott Guse
Partner
Brisbane
19 May 2022
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
Directors’ Report cont.
p.59
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:
Review of draft sustainability report
Other non‑audit services
Signed in accordance with a resolution of the Directors
31 MAR 2022
$
31 MAR 2021
$
21,500
20,400
41,900
–
–
–
Donald McGauchie
Chairman
Brisbane
19 May 2022
Hugh Killen
Managing Director
Brisbane
19 May 2022
p.60
Financial Report
Consolidated
Financial
Statements
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CONTENTS
61
Consolidated Income Statement
62
Consolidated Statement of
Comprehensive Income
63
Consolidated Statement of
Financial Position
64
Consolidated Statement of
Changes in Equity
65
Consolidated Statement of Cash Flows
67
Notes to the Consolidated
Financial Statements
105
Directors’ Declaration
106
Independent Auditor’s Report
111
ASX Additional Information
113
Company Information
p.61
Consolidated Income Statement
For the year ended 31 March 2022
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 on equity investments
Depreciation and amortisation
Profit before finance costs and income tax
Finance costs
Profit before income tax
Income tax expense
Net profit after tax
PROFIT PER SHARE ATTRIBUTABLE TO THE ORDINARY EQUITY
HOLDERS OF THE PARENT
Basic profit per share
Diluted profit per share
NOTE
31 MAR 2022
$000
31 MAR 2021
$000
208,529
67,538
276,067
385,912
661,979
199,974
65,548
265,522
218,037
483,559
(168,148)
(150,045)
(65,769)
(84,805)
343,257
5,454
(49,558)
(40,827)
(25,271)
(4,444)
–
(19,841)
208,770
(14,041)
194,729
(57,799)
136,930
(63,257)
(76,674)
193,583
9,700
(46,660)
(33,483)
(21,101)
(2,713)
(385)
(18,619)
80,322
(14,275)
66,047
(20,573)
45,474
CENTS
CENTS
22.94
22.92
7.62
7.62
A3
A2
F4
F4
F4
F3
C5
C5
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
p.62
Financial Report
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2022
Profit for the year
Other Comprehensive Income
Items not to be reclassified subsequently to profit or loss:
Movement in property revaluations, net of tax
Revaluation of intangible assets, 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 for the year, net of tax
31 MAR 2022
$000
31 MAR 2021
$000
136,930
45,474
177,014
663
3,281
180,958
317,888
76,095
–
8,845
84,940
130,414
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
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Consolidated Statement of Financial Position
As at 31 March 2022
p.63
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
Interest‑bearing liabilities
Lease liabilities
Derivatives
Total Current Liabilities
Non‑Current Liabilities
Provisions
Interest‑bearing liabilities
Lease liabilities
Derivatives
Deferred tax liabilities
Total Non‑Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Retained earnings/(losses)
Total Equity
NOTE
AS AT
31 MAR 2022
$000
AS AT
31 MAR 2021
$000
B1
B4
B3
A3
A3
A4
F2
F6
B5
C1
F2
C2
C1
F2
C2
F3
C3
F5
9,269
7,548
22,204
334,047
12,140
385,208
402,143
1,239,061
6,290
21,873
238
78
8,875
7,202
26,543
202,730
4,084
249,434
334,641
975,916
2,896
21,612
288
777
1,669,683
1,336,130
2,054,891
1,585,564
27,610
3,997
4,631
5,239
2,301
16,457
3,562
1,856
4,171
5,362
43,778
31,408
1,623
375,946
16,565
–
254,409
648,543
692,321
2,881
367,173
18,035
2,675
118,767
509,531
540,939
1,362,570
1,044,625
528,822
739,862
93,886
528,822
558,847
(43,044)
1,362,570
1,044,625
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
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p.64
Financial Report
Consolidated Statement of Changes in Equity
For the year ended 31 March 2022
At 1 April 2020
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Revaluation of foreign currency operations
Cost of share‑based payments
At 31 March 2021
At 1 April 2021
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Revaluation of foreign currency operations
Cost of share‑based payments
At 31 March 2022
CONTRIBUTED
EQUITY
(NOTE C3)
$000
RESERVES
(NOTE F5)
$000
RETAINED
EARNINGS/
(LOSSES)
$000
TOTAL EQUITY
$000
528,822
473,085
–
–
–
–
–
–
84,940
84,940
674
148
(88,518)
45,474
–
45,474
–
–
913,389
45,474
84,940
130,414
674
148
528,822
558,847
(43,044)
1,044,625
528,822
558,847
(43,044)
1,044,625
–
–
–
–
–
–
136,930
180,958
180,958
–
136,930
136,930
180,958
317,888
(142)
199
–
–
(142)
199
528,822
739,862
93,886
1,362,570
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Consolidated Statement of Cash Flows
For the year ended 31 March 2022
p.65
Cash Flows from Operating Activities
Receipts from customers
Payments to suppliers, employees, and others
Interest received
Net operating cash inflow before interest and finance costs
Payment of interest and finance costs
Net cash inflow/(outflow) from operating activities
B2
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 inflow/(outflow) from investing activities
Cash Flows from Financing Activities
Proceeds from interest‑bearing liabilities, net of transaction costs
Repayment of interest‑bearing liabilities, net of transaction costs
Principal repayments of leases
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash
Cash at the beginning of the year
Cash at the end of the year
B1
NOTE
31 MAR 2022
$000
31 MAR 2021
$000
297,327
285,899
(257,825)
(253,591)
71
39,573
(15,325)
24,248
(15,178)
1,566
–
(13,612)
35,000
(40,024)
(5,218)
(10,242)
394
8,875
9,269
10
32,318
(13,895)
18,423
(9,421)
415
2,653
(6,353)
15,000
(31,139)
(5,181)
(21,320)
(9,250)
18,125
8,875
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
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p.66
Financial Report
Notes to the Consolidated Financial Statements
Contents
E Unrecognised 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
85
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85
85
86
88
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89
90
90
91
94
97
97
97
98
98
98
99
A
Financial Performance
A1 Significant Matters
A2 Gross 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
Interest‑bearing Liabilities
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
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71
74
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83
83
84
p.67
Notes to the Consolidated Financial Statements
For the twelve months to 31 March 2022
A Financial Performance
A1 Significant Matters
PROPERTY REVALUATION
The Company recorded a net $254.5 million increase in the value of the Company’s pastoral property and improvements,
following a Directors’ assessment of fair value at 31 March 2022. In assessing fair value, the Directors utilised information
provided by an independent valuation performed by LAWD Pty Ltd. The revaluation reflects value increases resulting from
management practices and active investment in these properties, as well as substantial market increases seen in comparable
property sales.
See note A4 for further details.
HERD NUMBERS
The closing herd headcount is 12.4% higher than the prior year, with approximately 382k head on hand at 31 March 2022. This increase
is a result of the Company’s internal breeding program, and rebuilding of the herd following prior year drought and flood impacts.
HERD VALUATION
Improvements in Wagyu and Non‑Wagyu liveweight market prices since 31 March 2021 have resulted in an unrealised gain in the
fair value of the herd of $129.6 million.
LIVINGSTONE BEEF CGU
At 31 March 2022, consideration was given to internal and external factors that may impact the recoverable value of the Livingstone
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.
A2 Gross Margin
Gross 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).
NOTE
31 MAR 2022
$000
31 MAR 2021
$000
Meat Sales
Sales
Cost of meat sold(1)
Meat sales gross margin
Cattle Sales
Sales
Cost of cattle sold(2)
Cattle sales gross margin
Cattle Production
Fair value adjustments
Cattle expenses
Feedlot expenses
Cattle production gross margin
Total Gross Margin
208,529
(168,148)
40,381
67,538
(65,769)
1,769
385,912
(45,723)
(39,082)
301,107
343,257
199,974
(150,045)
49,929
65,548
(63,257)
2,291
218,037
(32,489)
(44,185)
141,363
193,583
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.
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Financial Report
Notes to the Consolidated Financial Statements cont.
A Financial Performance cont.
A3 Livestock
CATTLE AT FAIR VALUE
Current
Non‑Current
Total livestock
LIVESTOCK MOVEMENT
Opening carrying amount
Changes in fair value
Purchases of livestock
External sale of livestock less selling expenses
Transfers for meat sales
Closing carrying amount
CATTLE FAIR VALUE ADJUSTMENTS
Market value movements(1)
Biological transformation(2)
Natural increase
Attrition
Other
Total cattle fair value adjustments
31 MAR 2022
$000
31 MAR 2022
HEAD
31 MAR 2021
$000
31 MAR 2021
HEAD
334,047
402,143
736,190
117,636
264,374
382,010
202,730
334,641
537,371
87,814
252,032
339,846
31 MAR 2022
$000
537,371
385,912
25,991
(65,769)
(147,315)
736,190
31 MAR 2022
$000
129,647
151,570
117,669
(12,653)
(321)
385,912
31 MAR 2021
$000
472,969
218,037
33,239
(63,257)
(123,617)
537,371
31 MAR 2021
$000
91,401
86,860
65,690
(25,611)
(303)
218,037
(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.
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.
Notes to the Consolidated Financial Statements cont.
p.69
A Financial Performance cont.
A3 Livestock cont.
ACCOUNTING POLICIES – LIVESTOCK CONT.
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; and
•
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.
Livestock are classified as Current and Non‑Current. Current livestock are trading cattle and feedlot cattle with less than
a year remaining in the feedlot at the end of the financial year, as these animals are due to be sold or processed within the next
12 months. Non‑Current livestock are the commercial and stud breeding herd, calves and feedlot cattle with over a year
remaining in the feedlot at end of financial year.
LIVESTOCK FAIR VALUE
At the end of each reporting period, livestock is measured 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, beef transfers 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 2022
$000
31 MAR 2022
HEAD
31 MAR 2021
$000
31 MAR 2021
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
–
350,418
194,702
48,566
142,504
736,190
–
194,987
87,394
68,537
31,092
382,010
$1,927
–
295,122
92,489
37,831
111,929
537,371
–
188,822
56,649
62,636
31,739
339,846
$1,581
p.70
Financial Report
Notes to the Consolidated Financial Statements cont.
A Financial Performance cont.
A3 Livestock cont.
LIVESTOCK FAIR VALUE CONT.
TYPE
LEVEL
VALUATION METHOD
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Stud Breeding Herd
Trading Cattle
Unbranded Calves
Feedlot Cattle
2
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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 2022
$000
31 MAR 2022
HEAD
31 MAR 2021
$000
31 MAR 2021
HEAD
37,831
10,735
48,566
62,636
5,901
68,537
$709
18,474
19,357
37,831
42,721
19,915
62,636
$604
(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.
Notes to the Consolidated Financial Statements cont.
p.71
A Financial Performance cont.
A3 Livestock cont.
LIVESTOCK FAIR VALUE CONT.
FEEDLOT CATTLE
Opening values
Inductions
Sales
Attrition and rations
Fair value adjustments recognised
Closing values
Average value per head
A4 Property
31 MAR 2022
$000
31 MAR 2022
HEAD
31 MAR 2021
$000
31 MAR 2021
HEAD
111,928
143,795
31,739
36,134
111,433
73,288
35,161
36,760
(144,211)
(36,613)
(124,473)
(39,963)
(664)
31,656
142,504
(168)
–
31,092
$4,583
(693)
52,374
111,929
(219)
–
31,739
$3,527
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
PASTORAL PROPERTY AND IMPROVEMENTS AT FAIR VALUE
NOTE
31 MAR 2022
$000
31 MAR 2021
$000
F1
F1
F1
1,170,300
915,800
33,401
31,758
3,602
32,950
25,684
1,482
1,239,061
975,916
31 MAR 2022
Opening balance
Additions
Disposals
Net revaluation increment/(decrement) recognised in asset revaluation reserve (Note F5)
Depreciation
Closing balance
31 MAR 2021
Opening balance
Additions
Disposals
Net revaluation increment/(decrement) recognised in asset revaluation reserve (Note F5)
Depreciation
Closing balance
TOTAL
$000
915,800
7,455
(49)
252,877
(5,783)
1,170,300
TOTAL
$000
810,560
2,375
(34)
108,707
(5,808)
915,800
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Financial Report
Notes to the Consolidated Financial Statements cont.
A Financial Performance cont.
A4 Property cont.
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.
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 2022
$000
31 MAR 2021
$000
VALUATION TECHNIQUE
SIGNIFICANT
UNOBSERVABLE INPUTS
1,009,200
790,100
Direct Comparison
(Productive Unit Approach)
Number of adult equivalents
31 MAR 2022
RANGE/
(AVERAGE)
31 MAR 2021
RANGE/
(AVERAGE)
5,350 – 89,200
25,568
5,350 – 89,200
25,568
73,400
53,700
Direct Comparison
(Hectare Rate Approach)
87,700
72,000
Direct Comparison
(Hectare Rate and Standard
Cattle Unit Approach)
Dollar per adult equivalents $1,200 – $10,252
$2,818
$1,050 – $5,500
$2,099
Number of properties
Dollar per hectare
Number of properties
Dollar per hectare
18
$2,251
$2,251
1
18
$1,578
$1,578
1
$5,125 – $7,528
$6,326
$3,611 – $3,771
$3,691
Standard cattle units
16,000 – 45,000
30,500
16,000 – 45,000
30,500
Number of properties
2
2
Notes to the Consolidated Financial Statements cont.
p.73
A Financial Performance cont.
A4 Property cont.
FAIR VALUE CONT.
An independent valuation of the pastoral properties was performed by valuers LAWD 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 2022.
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 FY22 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 an 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. Permanent shifts in long‑term climate and weather conditions could result in a lower or higher
carrying capacity, dollar per adult equivalent and dollar per hectare.
Consistent with prior years, the Company reflects potential risks and impacts of climate change as part of the valuation
methodology, by ensuring the pastoral property values are based on a long‑term view of sustainable carrying capacity and
rates applied that reflect sustainable management practices.
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
31 MAR 2022
$000
31 MAR 2021
$000
368,148
(74,570)
360,296
(68,787)
293,578
291,509
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Financial Report
Notes to the Consolidated Financial Statements cont.
A Financial Performance cont.
A5 Segment Information
IDENTIFICATION OF REPORTABLE SEGMENTS
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
Following the suspension of Livingstone Beef processing plant in prior years, management no longer views the business
as two distinct operating segments of Livingstone Beef and AACo excluding Livingstone Beef as Livingstone has not
been in operation during this financial year or the comparative. The internal reporting to the Board and executive team
(chief operating decision makers) is viewed as one segment for all of the Company until such a time as the Livingstone Beef
processing plant is unsuspended.
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 2022 and 31 March 2021. Segment assets and
liabilities are not reported to the MD/CEO and therefore segment assets and liabilities are not separately disclosed.
Segment revenue
Inter‑segment revenue
Revenue from external customers
Operating Profit/(Loss)
Unrealised mark‑to‑market of herd
Cost versus Fair Value: Kgs sold or produced
Other income/expenses
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 2022
$000
31 MAR 2021
$000
276,067
265,522
–
276,067
49,886
129,647
46,189
2,889
228,611
(19,841)
–
208,770
(14,041)
(57,799)
136,930
–
265,522
24,360
64,396
14,630
(4,060)
99,326
(18,619)
(385)
80,322
(14,275)
(20,573)
45,474
Notes to the Consolidated Financial Statements cont.
A Financial Performance cont.
A5 Segment Information cont.
REVENUES FROM EXTERNAL CUSTOMERS
MEAT SALES REVENUES
South Korea
USA
Australia
China
Canada
Other countries
p.75
31 MAR 2022
$000
31 MAR 2021
$000
57,734
40,740
23,718
21,397
13,621
51,319
68,842
23,805
26,183
22,635
14,060
44,449
Total meat sales revenue per Income Statement
208,529
199,974
Meat sales revenues of $85.2 million were derived from two of the Company’s major external customers (31 March 2021:
$62.7 million from one of the Company’s major external customers). No other customers contributed to more than 10% of the
Company’s revenue.
CATTLE SALES REVENUES
Australia
Total cattle sales revenue per Income Statement
31 MAR 2022
$000
31 MAR 2021
$000
67,538
67,538
65,548
65,548
B Working Capital
B1 Net Working Capital
Cash
Inventory and consumables
Trade and other receivables
Trade and other payables
Net working capital
NOTE
31 MAR 2022
$000
31 MAR 2021
$000
B3
B4
B5
9,269
22,204
7,548
(27,610)
11,411
8,875
26,543
7,202
(16,457)
26,163
p.76
Financial Report
Notes to the Consolidated Financial Statements cont.
B Working Capital cont.
B2 Cash
RECONCILIATION OF NET PROFIT/(LOSS) AFTER TAX TO NET CASH FLOWS FROM OPERATIONS
Net profit/(loss) after income tax
Adjustments for:
Depreciation and amortisation
(Increment)/decrement in fair value of livestock
Income tax expense reported in equity
Derivative movement reported in equity
Other non‑cash adjustments
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
B4 Trade and Other Receivables
Trade receivables
Provision for impairment of receivables
Other receivables
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$000
31 MAR 2021
$000
136,930
45,474
19,841
(198,819)
(76,778)
4,998
1,203
4,339
354
(8,984)
135,642
11,153
(4,808)
(823)
24,248
18,619
(64,402)
(33,676)
9,909
77
28
2,872
1,009
54,249
(5,901)
(10,426)
591
18,423
31 MAR 2022
$000
31 MAR 2021
$000
9,285
5,677
5,687
1,555
22,204
8,164
10,303
6,699
1,377
26,543
31 MAR 2022
$000
31 MAR 2021
$000
5,193
(109)
5,084
2,464
7,548
5,693
(185)
5,508
1,694
7,202
Notes to the Consolidated Financial Statements cont.
p.77
B Working Capital cont.
B4 Trade and Other Receivables cont.
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 provision for impairment of receivables
31 MAR 2022
$000
31 MAR 2021
$000
5,066
96
31
5,193
5,572
15
106
5,693
31 MAR 2022
$000
31 MAR 2021
$000
(79)
(12)
(18)
(109)
(89)
(1)
(95)
(185)
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 2022
$000
31 MAR 2021
$000
21,443
4,834
1,333
27,610
8,800
7,174
483
16,457
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.
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Financial Report
Notes to the Consolidated Financial Statements cont.
C Funding and Capital Management
C1 Interest‑bearing Liabilities
Current
Other interest‑bearing liabilities
Non‑Current
Secured bank loan facility
Other interest‑bearing liabilities
31 MAR 2022
$000
31 MAR 2021
$000
4,631
1,856
367,249
8,697
375,946
364,448
2,725
367,173
Other interest‑bearing liabilities are lease over vehicles, plant and equipment. These liabilities are discounted using the interest
rate implicit in the financing arrangements. The average rate is 2.60%.
SECURED BANK LOAN FACILITY
AACo have secured the refinance of its existing Club Debt Facilities, extending expiry until 8 October 2026. Total committed
facility capacity increased from $550 million to $600 million. The interest on these facilities is charged at the applicable BBSY
rate + Margin. The facility is currently drawn down by $368.8 million (31 March 2021: $365 million) and is offset in the Statement
of Financial Position by a prepaid facility participation fee of $1.6 million (31 March 2021: $0.6 million).
The Facility A limit increased from $390 million to $410 million, repayable on 8 October 2026. The Facility B limit increased
from $160 million to $190 million repayable on 8 April 2023, with a rolling 18 month tenor.
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). The following financing facilities are available:
Borrowing Capacity under Facility A and Facility B
Guarantee Facility Capacity
Facility A and B Drawn‑down
Bank guarantee utilised
Unused
C2 Derivatives
Current Assets
Foreign currency contracts
Current Liabilities
Interest rate swap contracts
Foreign currency contracts
Non‑Current Liabilities
Interest rate swap contracts
Foreign currency contracts
31 MAR 2022
$000
31 MAR 2021
$000
600,000
550,000
3,000
3,000
(368,834)
(365,000)
(1,454)
(1,454)
232,712
186,546
31 MAR 2022
$000
31 MAR 2021
$000
1,269
2,196
2,301
–
2,301
–
–
–
5,351
11
5,362
2,675
–
2,675
Notes to the Consolidated Financial Statements cont.
p.79
C Funding and Capital Management cont.
C2 Derivatives cont.
FOREIGN CURRENCY CONTRACT
SELL FX/BUY AUD
NOTIONAL
AMOUNTS
(AUD)
31 MAR 2022
$000
NOTIONAL
AMOUNTS
(AUD)
31 MAR 2021
$000
AVERAGE
EXCHANGE
RATE
31 MAR 2022
AVERAGE
EXCHANGE
RATE
31 MAR 2021
Sell USD Maturity 0‑12 months
32,580
37,799
0.7213
0.7143
Foreign currency contracts are attributed to forecast meat sales. As these contracts are hedge accounted, effectiveness was
assessed under the requirements 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 2022 was AUD $32.6 million (31 March 2021: AUD $37.8 million).
The net fair value gain on foreign currency derivatives during the twelve months to 31 March 2022 was $1,269,300
with $1,254,600 effective and $14,700 ineffective (12 months to 31 March 2021: $2,185,000 with $1,981,600 effective and
$203,400 ineffective).
INTEREST RATE SWAP CONTRACTS
The Company has entered into interest rate swaps which are economic hedges. Interest rate swaps are entered in order to
manage the mix of borrowings between fixed and floating rates as per our Treasury Policy. The fair value of interest rate swaps
at the reporting date is determined by discounting the future cash flows using the forward interest rate curves at reporting date.
The $235 million of swaps (swap floating rate debt for fixed) have been designated as effective and therefore satisfy the accounting
standard requirements for hedge accounting. The swaps expire on 8 September 2022.
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 2022
$000
31 MAR 2021
$000
235,000
–
–
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 2022 the related loss recognised in profit or loss was
$5.4 million (twelve months to 31 March 2021: $5.1 million). There was no hedge ineffectiveness in the current or prior year.
C3 Equity
Opening balance
596,618,515
596,361,472
528,822
528,822
Treasury shares issued on exercise of performance rights
514,085
257,043
–
–
Total contributed equity
597,132,600
596,618,515
528,822
528,822
31 MAR 2022
SHARES
31 MAR 2021
SHARES
31 MAR 2022
$000
31 MAR 2021
$000
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Financial Report
Notes to the Consolidated Financial Statements cont.
C Funding and Capital Management cont.
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
Interest‑bearing liabilities
Lease liabilities
Non‑Current debt
Interest‑bearing liabilities
Lease liabilities
Bank loan facility(1)
Bank guarantees
Cash
Net debt
Net equity
Total capital employed
Gearing (net debt/net debt+equity)
Gearing (net debt/net debt+equity) pre‑AASB 16 adoption
31 MAR 2022
$000
31 MAR 2021
$000
4,631
5,239
8,697
16,565
1,856
4,171
2,725
18,035
368,834
365,000
1,454
(9,269)
1,454
(8,875)
396,151
384,366
1,362,570
1,044,625
1,758,721
1,428,991
22.5%
21.6%
26.9%
25.7%
(1) The gearing ratio is calculated utilising the drawn‑down balance of the bank loan facility. This is not offset for $1.6 million of prepaid
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 2022
$000
31 MAR 2021
$000
136,930
136,930
45,474
45,474
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:
31 MAR 2022
SHARES
31 MAR 2021
SHARES
596,942,459
596,519,923
Weighted average options and rights
481,401
625,230
Weighted average number of ordinary shares (diluted) as at 31 March
597,423,860
597,145,153
Notes to the Consolidated Financial Statements cont.
p.81
C Funding and Capital Management cont.
C6 Dividends
No final or interim dividends were declared and/or paid during the twelve months to 31 March 2022 (twelve months
to 31 March 2021: nil). There are no franking credits available for the subsequent financial years (31 March 2021: nil).
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 the 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 2022 and 31 March 2021, 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.
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 2022 was
$5.4 million (31 March 2021: $8.0 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 2022, after taking into account the effect of
interest rate swaps, approximately 61.5% (31 March 2021: 64.4%) 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 2022
$000
31 MAR 2021
$000
9,269
8,875
(133,834)
(130,000)
(2,301)
(8,026)
(126,866)
(129,151)
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Financial Report
Notes to the Consolidated Financial Statements cont.
D Financial Risk Management cont.
D1 Interest Rate Risk cont.
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 2022
+1% (100 basis points)
–1% (100 basis points)
31 MAR 2021
+1% (100 basis points)
–1% (100 basis points)
EFFECTS
ON PROFIT
BEFORE TAX
$000
EFFECTS
ON OTHER
COMPONENTS
OF EQUITY(1)
$000
(1,338)
1,338
(1,300)
1,300
1,175
(1,175)
3,525
(3,525)
(1) Figures represent an increase/(decrease) in other components of equity.
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 therefore 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 less the forecast cash outflows from purchases, through forward foreign exchange contracts. These foreign exchange
contracts have been designated as effective hedges and therefore satisfy the accounting standard requirements for hedge
accounting. This resulted in a $1,269,300 movement in other comprehensive income and a $14,700 movement in profit and loss
in the twelve months to 31 March 2022 (31 March 2021: $2,185,000 movement in other comprehensive income and a $203,400
movement in profit and loss).
Our Treasury Policy is to hedge between 50% and 90% of net US dollar cash flows up to one quarter in advance, and between 25%
and 75% of net cash inflows for the period three months to 12 months in advance. It also allows us to hedge between 0% and 50%
of net cash inflows for period 13 months to 24 months in advance. For the year ended 31 March 2022, approximately 52% and 25%
of highly probable net cash inflows were hedged for the periods 0‑3 months in advance and 3‑12 months in advance, respectively.
At reporting date, we had the following mix of financial assets and liabilities exposed to foreign exchange risk.
Financial assets
Derivatives
Trade receivables
Financial liabilities
Derivatives
Net exposure
31 MAR 2022 US
$000
31 MAR 2021 US
$000
1,269
504
–
1,773
2,196
1,552
(11)
3,737
Notes to the Consolidated Financial Statements cont.
p.83
D Financial Risk Management cont.
D2 Foreign Currency Risk cont.
At 31 March 2022, 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 2022
AUD/USD +10%
AUD/USD –10%
31 MAR 2021
AUD/USD +10%
AUD/USD –10%
EFFECTS
ON PROFIT
BEFORE TAX
$000
EFFECTS
ON EQUITY
$000
33
(40)
301
(368)
2,814
(3,439)
2,936
(3,589)
D3 Commodity Price Risk
We have transactional commodity price risk 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.
Price risks are managed, where possible, through forward sales of boxed beef for a period of up to 6 months. Forward sales
contracts for boxed beef are classified as non‑derivative and are not required to be fair valued. Revenues derived from these
forward sales are recognised in accordance with the Company’s revenue recognition policy for meat sales disclosed at note G3 (o).
We mitigate the price risk for the Company through internal production, on‑site storage and entering into forward purchase
contracts for grain and roughage commodities. As at 31 March 2022, stock on hand was approximately 18% (31 March 2021: 33%) of
our expected grain and roughage usage for the coming 12 months. We had forward purchased approximately 65% (31 March 2021: 63%)
of our expected grain and roughage purchases for the coming 12 months. These forward purchases include expected Internal
Supply. Without the Internal Supply, we had forward purchased approximately 34% (31 March 2021: 21%) of our expected grain
and roughage purchases 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.
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.
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Financial Report
Notes to the Consolidated Financial Statements cont.
D Financial Risk Management cont.
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 2022, 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 2022. 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.
LESS
THAN
6 MONTHS
$000
6‑12
MONTHS
$000
1‑2
YEARS
$000
2‑5
YEARS
$000
MORE
THAN
5 YEARS
$000
TOTAL
$000
CARRYING
AMOUNT
$000
9,269
7,548
–
(27,610)
(3,084)
(5,026)
(2,627)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
9,269
7,548
–
9,269
7,548
–
(27,610)
(27,610)
(2,846)
(5,128)
–
(4,677)
(7,656)
(6,010)
(24,273)
(21,804)
(9,299)
(390,390)
–
–
–
–
(409,843)
(380,577)
(2,627)
(2,301)
(21,530)
(7,974)
(13,976)
(398,046)
(6,010)
(447,536)
(415,475)
31 MAR 2022
Financial assets
Cash
Trade and other receivables
Derivatives
Financial liabilities
Trade and other payables
Lease liabilities
Interest‑bearing liabilities
Derivatives
Net maturity
31 MAR 2021
Financial assets
Cash
Trade and other receivables
Derivatives
Financial liabilities
8,875
7,202
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,875
7,202
–
8,875
7,202
–
(16,457)
(16,457)
Trade and other payables
(16,457)
Lease liabilities
Interest‑bearing liabilities
Derivatives
Net maturity
(2,656)
(4,727)
(2,748)
(2,236)
(3,945)
(7,177)
(8,050)
(24,064)
(22,206)
(4,206)
(373,473)
(11,230)
(2,748)
(2,748)
–
–
–
(393,636)
(369,029)
(8,244)
(8,037)
(10,511)
(9,190)
(380,166)
(18,407)
(8,050)
(426,324)
(399,652)
Notes to the Consolidated Financial Statements cont.
p.85
E Unrecognised Items
E1 Commitments
We have entered into forward purchase contracts for $13.7 million worth of grain commodities as at 31 March 2022
(31 March 2021: $7.8 million). There are no forward purchase contracts for cattle as at 31 March 2022 (31 March 2021: $12.0 million).
The contracts are expected to be settled within 12 months from the balance date.
Capital expenditure of $2.1 million has been contracted in respect of property, plant and equipment as at 31 March 2022
(31 March 2021: $0.7 million).
During the period, the Company entered into a separate Comanche Aggregation Lease agreement for 10 years of the Comanche
and Homehill properties, which will commence on 1 May 2022 with an expected present value of net cash flows of $18.4 million.
E2 Contingencies
At 31 March 2022, 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 2022
Opening balance
Additions and transfers
Disposals
Depreciation
Closing balance
Cost
INDUSTRIAL
PROPERTY
AND
IMPROVEMENT
$000
PLANT AND
EQUIPMENT
$000
CAPITAL
WORK IN
PROGRESS
$000
32,950
860
–
(409)
33,401
81,234
25,684
13,800
(495)
(7,231)
31,758
178,757
1,482
2,120
–
–
3,602
3,602
TOTAL
$000
60,116
16,780
(495)
(7,640)
68,761
263,593
Accumulated depreciation and impairment
(47,833)
(146,999)
–
(194,832)
31 MAR 2021
Opening balance
Additions and transfers
Disposals
Depreciation
Closing balance
Cost
INDUSTRIAL
PROPERTY
AND
IMPROVEMENT
$000
PLANT AND
EQUIPMENT
$000
CAPITAL
WORK IN
PROGRESS
$000
30,998
2,361
–
(409)
32,950
80,374
26,084
6,296
(394)
(6,302)
25,684
165,452
3,010
(1,528)
–
–
1,482
1,482
TOTAL
$000
60,092
7,129
(394)
(6,711)
60,116
247,308
Accumulated depreciation and impairment
(47,424)
(139,768)
–
(187,192)
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Financial Report
Notes to the Consolidated Financial Statements cont.
F Other cont.
F1 Property, Plant and Equipment at Cost cont.
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 FY22 operations continue to be suspended at Livingstone Beef. Management have not noted any indicators of impairment
as at 31 March 2022.
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.
F2 Right‑of‑use Assets and Lease Liabilities
Right‑of‑use assets
Non‑Current
Lease liabilities
Current
Non‑Current
31 MAR 2022
$000
31 MAR 2021
$000
21,873
21,612
(5,239)
(16,565)
(4,171)
(18,035)
(21,804)
(22,206)
When measuring lease liabilities for property, the Company discounts payments using the incremental borrowing rate as at
the commencement date of the lease. The average rate applied is 3.60%.
Reconciliations of movements in Right‑of‑use assets and amounts recognised in the Income Statement relating to leases are
shown below.
RIGHT OF USE ASSETS
Opening balance
Depreciation charge for the year
Recognition of right‑of‑use asset additions
Derecognition of terminated lease
31 MAR 2022
$000
21,612
(5,961)
6,574
(352)
21,873
Notes to the Consolidated Financial Statements cont.
p.87
F Other cont.
F2 Right‑of‑use Assets and Lease Liabilities cont.
Right‑of‑use assets relate to buildings, property and vehicles leased by the Company excluding Pastoral property held under
perpetual leases. During the period the Company chose to terminate a lease agreement and the right‑of‑use asset relating to this
lease was therefore derecognised. The Company chose to renew the lease of Comet Downs and sublease of Collie Blue, resulting
in the recognition of additional 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
31 MAR 2022
$000
1,210
559
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 $0.6 million.
AMOUNTS RECOGNISED IN THE STATEMENT OF CASH FLOWS RELATING TO LEASES
Payment of interest and finance costs
Principal repayments of leases
Total cash outflow relating to leases
Refer to note D5 for contractual cashflows and maturity analysis.
31 MAR 2022
$000
31 MAR 2021
$000
(983)
(5,218)
(6,201)
(924)
(5,181)
(6,105)
p.88
Financial Report
Notes to the Consolidated Financial Statements cont.
F Other cont.
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/(loss) 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%
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
Total net deferred tax liability
Deferred tax assets
Accruals and other
Capitalised expenses accelerated for book purposes
Interest rate swaps
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)
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31 MAR 2022
$000
31 MAR 2021
$000
–
–
57,851
20,573
(52)
–
–
–
57,799
20,573
915
75,863
76,778
194,729
58,419
(620)
57,799
(198,875)
(92,679)
(2,064)
39,209
(217)
32,612
32,395
66,047
19,814
759
20,573
(123,028)
(32,577)
(2,499)
39,337
(254,409)
(118,767)
88
22
690
2,837
1,012
4,610
84
33
1,605
3,332
1,012
4,610
29,450
28,395
400
100
145
121
39,209
39,337
59,586
(4)
14
(1,797)
57,799
24,518
204
32
(4,181)
20,573
Notes to the Consolidated Financial Statements cont.
p.89
F Other cont.
F4 Other Earnings Disclosures
Other income(1)
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
Commodity and foreign currency expense/(benefit)
31 MAR 2022
$000
31 MAR 2021
$000
5,454
5,454
13,223
818
14,041
42,645
3,336
3,377
200
9,700
9,700
13,776
499
14,275
40,578
2,921
3,013
148
49,558
46,660
559
(552)
1,175
1,825
(1) Other income includes disposals of fixed assets ($1.1 million) and the recognition of 74,313 Australian Carbon Credit Units (ACCUs) generated
during the year ($2.3 million).
F5 Reserves
ASSET
REVALUATION
RESERVE
$000
At 1 April 2020
Revaluation of land and buildings
394,785
108,707
CAPITAL
PROFITS
RESERVE
$000
84,762
–
CASH FLOW
HEDGE
RESERVE
$000
(12,482)
–
FOREIGN
CURRENCY
TRANSLATION
RESERVE
$000
EMPLOYEE
EQUITY
BENEFITS
RESERVE
$000
(772)
–
6,792
–
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 2021
(32,612)
–
–
–
–
–
–
–
–
8,845
–
–
470,880
84,762
(3,637)
At 1 April 2021
Revaluation of land and buildings
470,880
252,877
84,762
–
(3,637)
–
Tax effect on revaluation
of land and buildings
Revaluation of carbon credits,
net of tax
Net movement in cash flow
hedges, net of tax
Revaluation of foreign
currency operations
Share‑based payment
At 31 March 2022
(75,863)
663
–
–
–
–
–
–
–
–
–
–
3,281
–
–
648,557
84,762
(356)
–
–
674
–
(98)
(98)
–
–
–
–
(142)
–
(240)
–
–
–
148
6,940
6,940
–
–
–
–
–
199
7,139
TOTAL
$000
473,085
108,707
(32,612)
8,845
674
148
558,847
558,847
252,877
(75,863)
663
3,281
(142)
199
739,862
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Financial Report
Notes to the Consolidated Financial Statements cont.
F Other cont.
F5 Reserves cont.
The asset revaluation reserve is used to record increments and decrements in the fair value of property and improvements and the
fair value of Australian Carbon Credit Units (ACCUs) recognised as intangible assets, 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.
F6 Investments
Equity accounted investments in individually not material associates
Other investments with associates
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 2022
$000
31 MAR 2021
$000
–
238
238
50
238
288
31 MAR 2022
$000
31 MAR 2021
$000
5,660
196
233
–
6
5,859
207
104
363
9
6,095
6,542
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
31 MAR 2022
$000
31 MAR 2021
$000
–
–
–
(125)(1)
(3)
(128)
Notes to the Consolidated Financial Statements cont.
p.91
F Other cont.
F7 Related Parties cont.
TRANSACTIONS WITH OTHER RELATED PARTIES CONT.
TRANSACTIONS WITH INDIVIDUALLY NOT MATERIAL ASSOCIATES
FOR THE YEAR ENDED 31 MARCH
31 MAR 2022
$000
31 MAR 2021
$000
Sales of goods or services to associates
Purchase of goods or services from other associates
Dividends received from associates
Other transactions with associates
–
–
–
788(2)
788
–
(52)(1)
–
49
(3)
(1) During the year ended 31 March 2021, AACo fully disposed of its interest in these associates.
(2) During the year ended 31 March 2022, a loan receivable was repaid in full by an associate, inclusive of accrued interest.
F8 Share‑based Payments
The share‑based payment plans are described below. During 2022, expenses arising from equity settled share‑based payment
transactions were $200,000 (31 March 2021: $148,000).
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 2021 and 2022.
PERFORMANCE RIGHTS PLAN (PRP)
The Company’s Performance Rights Plan (PRP) 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 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 was anticipated that performance rights under the LTI Plan would 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.
It was determined 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:
p.92
Financial Report
Notes to the Consolidated Financial Statements cont.
F Other cont.
F8 Share‑based Payments cont.
PERFORMANCE RIGHTS PLAN (PRP) CONT.
LONG-TERM INCENTIVES CONT.
FEATURE
DESCRIPTION
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Timing of grant
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.
Lapsing conditions
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.
Change of control event
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
On market acquisition
of shares
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.
Notes to the Consolidated Financial Statements cont.
p.93
F Other cont.
F8 Share‑based Payments cont.
PERFORMANCE RIGHTS PLAN (PRP) CONT.
LONG-TERM INCENTIVES CONT.
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
SECOND GRANT
ROUND
THIRD GRANT
ROUND
FOURTH GRANT
ROUND
PERFORMANCE
CONDITION
(TARGETED MARKET
CAPITALISATION OF
THE COMPANY)
$1 billion
COMMENCING
MARKET CAPITALISATION
OF THE COMPANY
The market
capitalisation of the
Company on the LTI Plan
Implementation Date
$1 billion
$1.5 billion
$1.5 billion
$2 billion
$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 ended
30 September 2017)
Within 9 quarters of the
LTI Plan Implementation Date
(i.e. performance period ended
30 June 2019)
Within 16 quarters of the
LTI Plan Implementation Date
(i.e. performance period ended
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 forfeited on 30 June 2019 as the performance condition of target market capitalisation of $1.5 billion
was not met. The third grant round it was forfeited on 31 March 2021 as the performance condition of target market capitalisation
of $2 billion was not met.
EQUITY SETTLED AWARDS OUTSTANDING
The table below shows the number (No.) and weighted average exercise prices (WAEP) of options under the Executive Option
Plan (EOP) and performance rights outstanding under the Performance Right Plans (PRP). There have been no cancellations
or modifications to any of the plans during the twelve months to 31 March 2022.
31 MAR 2022
Outstanding at the beginning of the period
Granted during the period
Forfeited during the period
Exercised during the period
Outstanding at the end of the period
Exercisable at the end of the period
Weighted average remaining contractual life (days)
Weighted average fair value at grant date
Range of exercise prices ($)
EOP
NO.
EOP WAEP
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
PRP
NO.
523,795
541,753
–
(523,795)
541,753
–
721
1.450
–
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Financial Report
Notes to the Consolidated Financial Statements cont.
F Other cont.
F8 Share‑based Payments cont.
EQUITY SETTLED AWARDS OUTSTANDING CONT.
31 MAR 2021
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 ($)
EOP
NO.
EOP WAEP
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
PRP
NO.
793,046
–
–
(269,251)
523,795
–
69
1.07
–
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 2022
% OF SHARES
HELD
31 MAR 2021
% 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
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
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).
Notes to the Consolidated Financial Statements cont.
F Other cont.
F9 Controlled Entities cont.
(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
Current Liabilities
Trade and other payables
Provisions
Interest Bearing Liabilities
Lease liabilities
Derivatives
Total Current Liabilities
Non‑Current Liabilities
Provisions
Interest Bearing Liabilities
Lease liabilities
Derivatives
Deferred tax liabilities
Total Non‑Current Liabilities
Total Liabilities
Net Assets
Equity:
Contributed equity
Reserves
Retained earnings/(losses)
Total Equity
p.95
31 MAR 2022
$000
31 MAR 2021
$000
8,907
7,548
22,204
334,047
12,140
384,846
402,143
1,239,004
6,290
21,873
238
9,022
8,087
7,201
26,543
202,730
4,084
248,645
334,641
975,916
2,895
21,612
283
13,030
1,678,570
2,063,416
1,348,377
1,597,022
26,893
3,998
4,631
5,239
2,301
14,684
3,562
1,856
4,171
5,362
43,062
29,635
1,623
375,946
16,565
–
254,409
648,543
691,605
2,881
367,173
18,035
2,675
118,767
509,531
539,166
1,371,811
1,057,856
528,822
740,102
102,887
528,822
558,940
(29,906)
1,371,811
1,057,856
p.96
Financial Report
Notes to the Consolidated Financial Statements cont.
F Other cont.
F9 Controlled Entities cont.
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 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
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$000
31 MAR 2021
$000
208,529
67,538
276,067
385,912
661,979
199,974
65,548
265,522
218,037
483,559
(168,148)
(150,045)
(65,769)
(84,805)
343,257
5,454
(46,998)
(43,675)
(25,252)
(3,911)
(19,841)
209,034
(14,033)
195,001
(57,777)
137,224
(63,257)
(76,674)
193,583
9,697
(45,449)
(32,913)
(21,039)
(2,638)
(18,619)
82,622
(14,270)
68,352
(20,573)
47,779
Notes to the Consolidated Financial Statements cont.
p.97
F Other cont.
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 2022
$000
31 MAR 2021
$000
7,194
523,463
530,657
2,301
375,946
378,247
152,410
538,822
48,496
4,167
661,395
665,562
8,038
364,448
372,486
293,076
538,822
27,376
(434,908)
(273,122)
152,410
293,076
(161,786)
(176,343)
(74,779)
(66,074)
Australian Agricultural Company Limited and the wholly‑owned entities listed in note F9 are parties to a deed of cross
guarantee as described in F9. In accordance with the deed of cross guarantee, each Company which is party to the deed
guarantee, to each creditor, payment in full of any debt. No deficiency of net assets existed for the Company as at 31 March 2022.
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 which 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
Review of draft sustainability report
Other non‑audit services
Total
31 MAR 2022
$
31 MAR 2021
$
378,500
365,000
21,500
20,400
–
–
420,400
365,000
F12 Significant Events After Balance Date
There have been no other significant events after the 31 March 2022 balance date which require disclosure in the financial report.
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Financial Report
Notes to the Consolidated Financial Statements cont.
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 2022 were authorised for issue in accordance with a resolution of the Directors on 19 May 2022.
We recommend the financial statements be considered together with any public announcements made by the Company
during the year ended 31 March 2022 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), Australian Carbon Credit Units (ACCUs) included in intangibles, and 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.
(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.
Notes to the Consolidated Financial Statements cont.
p.99
G Policy Disclosures cont.
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
The Company adopted no new and amended Australian Accounting Standards and AASB Interpretations during the year ended
31 March 2022.
(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 livestock, refer to note A3;
• Fair value determination of pastoral property and improvements, refer to note A4; and
•
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.
(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.
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Notes to the Consolidated Financial Statements cont.
G Policy Disclosures cont.
G3 Accounting Policies cont.
(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.
(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 our foreign currency risks, interest rate risks and commodity price risks, respectively. Such derivative
financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives are carried as financial assets when the fair value is positive and as financial
liabilities when the fair value is negative.
Any gains or losses arising from changes in the fair value of derivatives are taken directly to the income statement, except for
the effective portion of cash flow hedges, which is recognised in other comprehensive income.
For the purpose of hedge accounting, hedges are classified as:
(a) Fair value hedges when hedging the exposure to changes in the fair value of a recognised asset or liability or an unrecognised
firm commitment.
(b) Cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk
associated with a recognised asset or liability or a highly probable forecast transaction or the foreign currency risk in an
unrecognised firm commitment.
Notes to the Consolidated Financial Statements cont.
p.101
G Policy Disclosures cont.
G3 Accounting Policies cont.
(h) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGE ACCOUNTING CONT.
At the inception of a hedge relationship, we formally designate and document the hedge relationship to which we wish to apply
hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes
identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how we will
assess the effectiveness of changes in the hedging instrument’s fair value in offsetting the exposure to changes in the hedged
item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving
offsetting changes in fair value or cash flows and are assessed on an ongoing basis to determine that they actually have been
highly effective throughout the financial reporting periods for which they were designated. Hedges that meet the strict criteria
for hedge accounting are accounted for as described below:
(i) CASH FLOW HEDGES
AASB 9 Financial Instruments addresses classification, measurement, and derecognition of financial assets and financial
liabilities, sets out rules for hedge accounting, and requires impairment models based on expected credit losses.
All derivatives are recognised in the balance sheet at fair value and are classified as FVTPL except where they are designated as
part of an effective hedge relationship and classified as hedging derivatives. The carrying value of a derivative is remeasured at
fair value throughout the life of the contract. Derivatives are carried as assets when the fair value is positive and as liabilities
when the fair value is negative.
The method of recognising the resulting fair value gain or loss on a derivative depends on whether the derivative is designated
as a hedging instrument and, if so, the nature of the item being hedged.
The Company designates its derivatives as hedges of highly probable future cash flows attributable to a recognised foreign
currency asset or liability or a highly probably foreign currency forecast transaction (cash flow hedges).
The Company documents at the inception of the transaction the relationship between hedging instruments and hedged items,
the risk being hedged and the Company’s risk management objective and strategy for undertaking these hedge transactions.
The effectiveness of the cash flow hedge is measured throughout the life of the hedging relationship. Ineffectiveness arises in
the event of over hedging, whereby the notional amount of the designated hedge instrument exceeds the notional amount of the
hedged item attributable to the hedged risk, or timing mismatches. Where ineffectiveness is identified, any revaluation gains
or loss on the ineffective portion of the hedging instrument are immediately recognised in the statement of profit or loss in foreign
exchange gains or foreign exchange losses.
The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges are recognised in the cash
flow hedge reserve within equity. Upon recognition of the forecast transaction (“hedged item”) the carrying value is not adjusted.
Amounts accumulated in equity are transferred to the statement of profit or loss in the period(s) in which the hedged item affects
the statement of profit or loss.
(i) 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.
p.102
Financial Report
Notes to the Consolidated Financial Statements cont.
G Policy Disclosures cont.
G3 Accounting Policies cont.
(i) PLANT AND EQUIPMENT CONT.
(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)
Buildings
Fixed improvements
Owned plant and equipment
Plant and equipment under lease
(j) LEASES
(i) AACO AS A LESSEE
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AVERAGE
USEFUL LIFE
Not depreciated
30 years
30 years
3‑10 years
2‑5 years
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.
(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.
Notes to the Consolidated Financial Statements cont.
p.103
G Policy Disclosures cont.
G3 Accounting Policies cont.
(l) BORROWINGS CONT.
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 profit or loss 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 profit or loss.
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.
(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.
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p.104
Financial Report
Notes to the Consolidated Financial Statements cont.
G Policy Disclosures cont.
G3 Accounting Policies cont.
(p) INCOME TAX AND OTHER TAXES CONT.
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; and
• When the taxable temporary difference is associated with investments in subsidiaries and the timing of the reversal of the
temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry‑forward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary
differences and the carry‑forward of unused tax credits and unused tax losses can be utilised, except:
• When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an
asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
• 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; and
• The weighted average number of additional ordinary shares that would have been outstanding assuming the conversion
of all dilutive potential ordinary shares.
p.105
Directors’ Declaration
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 2022 are in accordance with the Corporations Act 2001, including:
i. Giving a true and fair view of its financial position as at 31 March 2022 and of its performance for the year ended
on that date.
ii. Complying with Australian Accounting Standards and Corporations Regulations 2001.
b. The financial statements and notes also comply with International Financial Reporting Standards as disclosed in note G2.
c. 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. 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 2022.
3.
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 AO
Chairman
Brisbane
19 May 2022
p.106
Financial Report
Independent Auditor’s Report
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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 2022 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 2022;
• 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
these requirements.
KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated
with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and
logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by
a scheme approved under Professional Standards Legislation.
Independent Auditor’s Report cont.
p.107
Key Audit Matters
The Key Audit Matters we identified are:
• quantity and valuation of livestock; and
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.
• valuation of pastoral property and
improvements.
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 $736,190,000
Refer to Note A3 Livestock to 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 35.8% 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 five of the Group’s cattle properties to
understand and observe 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;
• 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.
p.108
Financial Report
Independent Auditor’s Report cont.
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Valuation of pastoral property and improvements $1,170,300,000
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 specialist, 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 57.0% 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 a valuation
specialist, who understand the nature of the
Group’s properties and recent comparable
market transactions.
Independent Auditor’s Report cont.
p.109
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.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do 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
• 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 the 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.
p.110
Financial Report
Independent Auditor’s Report cont.
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Report on the Remuneration Report
Opinion
Directors’ responsibilities
In our opinion, the Remuneration Report
of Australian Agricultural Company
Limited for the year ended 31 March
2022, complies with Section 300A of the
Corporations Act 2001.
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 42 to 56 of the Directors’ report for the year ended
31 March 2022.
Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
KPMG
Scott Guse
Partner
Brisbane
19 May 2022
ASX Additional Information
p.111
ASX Additional Information
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 23 May 2022.
(a) Distribution of equity securities
Ordinary share capital
602,766,747 fully paid ordinary shares are held by 8,122 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
NUMBER OF
SHAREHOLDERS
2,365
2,986
1,161
1,477
133
8,122
Unquoted equity securities
As at 23 May 2022, there were 541,753 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:
NUMBER
PERCENTAGE
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMINEES PTY LTD
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
BELL POTTER NOMINEES LTD
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