ANNUAL
REPORT
2024
AUSTRALIAN DAIRY NUTRITIONALS GROUP
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
02
CORPORATE DIRECTORY
BOARD OF DIRECTORS
Peter Nathan
Non-Executive Chair
Jason Dong
Non-Executive Director
Scott Lai
Non-Executive Director
COMPANY SECRETARY
Elizabeth Spooner
Company Secretary
REGISTERED OFFICE
160 Depot Road
Camperdown VIC 3260
Telephone: (03) 8692 7284
Email: shareholders@adnl.com.au
SHARE REGISTER
Link Market Services Limited
Level 21, 10 Eagle Street
Brisbane QLD 4000
Telephone: 1300 554 474
Facsimile: (02) 9287 0303
Email: registrars@linkmarketservices.com.au
Web: www.linkmarketservices.com.au
CORPORATE OFFICE
160 Depot Road
Camperdown VIC 3260
Telephone: (03) 8692 7284
Email: shareholders@adnl.com.au
AUDITOR
Nexia Brisbane Audit Pty Ltd
Level 28, 10 Eagle Street
Brisbane QLD 4000
Telephone: (07) 3229 2022
Facsimile: (07) 3229 3277
Email: audit@nexiabrisbane.com.au
Web: www.nexia.com.au
STOCK EXCHANGE
Australian Dairy Nutritionals Group is listed
on the official List of the Australian Securities
Exchange Limited (ASX).
The ASX Code is “AHF”.
WEBSITE
adnl.com.au
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
03
CONTENTS
CORPORATE DIRECTORY
02
CHAIR AND CEO REPORT
05
DIRECTORS’ REPORT
07
CORPORATE GOVERNANCE STATEMENT
22
AUDITOR’S INDEPENDENCE DECLARATION
23
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
25
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
26
CONSOLIDATED STATEMENT
OF CASH FLOWS
27
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
28
NOTES TO THE FINANCIAL STATEMENTS
30
CONSOLIDATED ENTITY
DISCLOSURE STATEMENT
68
DIRECTORS’ DECLARATION
69
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS
70
SHAREHOLDER INFORMATION
74
04
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
The Group is well placed to fundamentally change the
trajectory of the business over the medium to long term
with its change in strategic direction.
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
05
CHAIR AND CEO’S REPORT
FY24 WAS A CHALLENGING YEAR FOR THE BUSINESS AS ALTHOUGH
REVENUE OF $6.26M IN FY24 EXCEEDED THE REVENUE IN FY23 OF
$5.86M, IT WAS NONE THE LESS SUB-SCALE, AND THE NET LOSS IN FY24
OF $7.44M WAS UNFAVOURABLE COMPARED WITH THE LOSS OF $7.09M
ACHIEVED IN FY23. THE LOSS WAS LARGELY ATTRIBUTED TO LOWER
THAN FORECASTED INFANT FORMULA SALES FOR THE YEAR.
The net assets of the Group at 30 June 2024 totalled $26.73m, a decrease
of $6.79m from June 2023. The decrease in net assets was predominantly
due to operating losses, offset by the equity capital raising in July 2023.
The Groups borrowings were $1.74m at 30 June 2024, however it is worth
noting the loan from Gippsreal Limited was repaid 27 August 2024 to make
the Group debt free at the date of this report.
Cash closed at $6.11m in FY24 compared with $2.01m in FY23 due to the
sale of the South Brucknell farm.
The board and management has now completed a full strategic review of
the business and have formulated a new strategic road map which it will
begin to execute in FY25. It is planned to more fully utilise the unique assets
and competitive advantage of the business. The business is in the process
of developing key strategic partnerships and valuable brand assets which
leverage its competitive advantage.
The current partnership with our Vietnam distributor Dunamex is progressing
well, with a pleasing sales volume growth trajectory and consumer off-take
in this attractive market opportunity.
The Group is well placed to fundamentally change the trajectory of the
business over the medium to long term with its change in strategic direction.
We look forward to informing the market of key initiatives as soon as details
are finalised and negotiations completed.
Over the next year the focus will be to ensure we maximise our production
volumes at our Camperdown facility with the longer-term objective of
achieving full plant capacity.
Management and the board have conducted a complete cost review and
have identified some areas of savings which will be realised in FY25. The new
management team will continue to focus on efficiency and cost control as a
priority as well as delivering best in class product quality.
We would like to express our thanks to all of our shareholders, staff, suppliers
and customers for your continued support over the past 12 months.
Peter Nathan
Sundaranathan Mahinthan
Chair
CEO
30 August 2024
30 August 2024
Peter Nathan
Chair
Sundaranathan Mahinthan
CEO
$6.26m
FY24 REVENUE
$26.73m
NET ASSETS
$6.11m
CASH AT FY24 CLOSING
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
Over the next year the focus will be to ensure we maximise
our production volumes at our Camperdown facility with the
longer-term objective of achieving full plant capacity.
06
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
07
DIRECTORS’ REPORT
The Board of directors of Australian Dairy Nutritionals
Limited (the Company) submits to members the Annual
Report of the Company and its controlled entities (the
Group) for the financial year ended 30 June 2024.
PRINCIPAL ACTIVITIES AND SIGNIFICANT
CHANGES IN THE NATURE OF THOSE
ACTIVITIES
The principal activities of the Group during the year were:
•
ownership of dairy farms via Regen Properties Pty Ltd
(Regen Properties);
•
operation of dairy farms and ownership of livestock
through SW Dairy Farms Pty Ltd (SWD);
•
manufacture of Ocean Road Dairies Organic A2
infant formula base powders at 160 Depot Road,
Camperdown, Victoria; and
•
distribution of the Group’s infant formula ranges
through Organic Nutritionals Pty Ltd (Organic
Nutritionals).
There has been no significant changes in the nature of
these activities during this year.
BUSINESS MODEL AND OBJECTIVES
The infant formula category continues to remain a
challenging but still commercially attractive market
opportunity. Locally, a few large players dominate the
category and significant investment is needed to gain
meaningful consumer trial.
Although the infant formula category in China has
experienced recent volume and value decline, it remains
the largest infant formula category in the world, with a retail
value of approx. 22 billion USD. It is also a highly fragmented
market from both a brand and channel perspective, which
still provides a very attractive opportunity for a successful
brand entry.
Over the last year, the Group has established distribution
of our Ocean Road Dairies infant formula range in JD.co.
hk as a first step in entry to the China market. The recent
data suggest that the English label products are growing
in China post the Covid period, signalling that Chinese
consumers are looking for high quality overseas products
at reasonable price.
With the recent board and management changes, the
Group has reviewed and subsequently significantly revised
its strategy which it now intends to execute. The strategy
intends to best use its assets in vertical integration, small run
size manufacturing assets, and brand building capability to
succeed in the market.
Going Concern
The financial statements have been prepared using the going
concern basis of preparation. During the year the Group
incurred a loss of $7.44 million (2023: $9.39 million loss),
has total accumulated losses of $53.46 million and had a
net cash outflow from operations of $4.44 million (2023:
$7.05 million outflow). The Group’s cash and cash equivalent
balance as at 30 June 2024 was $6.11 million and it has an
unutilised 2-year loan facility of $1.22 million.
The Board is satisfied the going concern basis of preparation
remains appropriate, reaching such a conclusion after having
regard to the circumstances which they consider reasonably
likely to affect the Group during the period of at least one
year from the date of this report.
The Board has been closely monitoring working capital
and cash flows throughout the year while infant formula
product sales build, and the Group works to gain access to
international markets.
The Board is confident in the Group’s ability to continue
as a going concern for the 12-month period based on its
current cash and cash equivalents and forecasts for the next
12 months. In addition to the above, as a listed entity, the
Group also has capital raising opportunities available to it
from existing shareholders as well as sophisticated investors
with strong alignment to the Group’s strategy and future
objectives.
The Board are satisfied at the date of signing the financial
report there are reasonable grounds to believe that the
Group will be able to continue to meet its debts as and
when they fall due and that it is appropriate for the financial
statements to be prepared on a going concern basis.
The financial report does not include any adjustments to the
amounts or classifications of recorded assets or liabilities
that might be necessary should the Group not continue as a
going concern.
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
08
DIRECTORS’ REPORT, CONTINUED.
OPERATING RESULTS
The consolidated net loss attributed to members of the
Group, after providing for income tax was $7,439,176
(2023: $9,393,955).
This result is comprised of the following results:
•
net loss from the nutritional powders segment of
$3,704,420 (2023: $3,859,599).
•
net loss from the dairy farm segment of $1,928,606
(2023: $724,160).
•
corporate costs of $1,806,150 (2023: $2,504,559).
•
loss from discontinued operations in the 30 June 2023
comparative of $2,305,637.
Total revenue for FY24 is $6,263,071, up 7% against the
FY23 comparative period of $5,855,677.
Below is a breakdown of total revenue by segment:
•
total revenue and other income from the dairy farms
segment of $5,594,894 (2023: $5,442,236).
•
total revenue from the nutritional powders segment of
$668,177 (2023: $413,441).
The increase in dairy farms segment revenue of $152,658
in FY24 is largely attributable to an increase in livestock
sales as a result of the Brucknell South farm sale, offset
by a reduction in production volumes and milk sales
associated with a decrease in herd size following the sale.
The nutritional powders segment revenue in FY24 increased
by $254,736 compared to FY23, reflecting the sales launch
in Vietnam in Q3 FY24. Although an increase, this is a
disappointing result and demonstrates that domestic sales
have been slower to build than anticipated due to the lack
of brand traction achieved in a highly competitive and
mature category.
Total expenses from continuing operations for FY24 were
$13,702,247, up 7% against the FY23 comparative period
of $12,943,995.
Below is a breakdown of total expenses by segment:
•
total expenses from the dairy farms segment of
$7,523,500 (2023: $6,166,396).
•
total expenses from the nutritional powders segment
of $4,372,597 (2023: $4,273,040).
•
Total corporate expenses of $1,806,150 (2023:
$2,504,559)
The dairy farms segment expenses increase of $1,357,104
on the 2023 comparative is largely attributable to an
increase in the deemed cost of livestock sold and
increased feed costs.
The nutritional powders segment expenses increase of
$99,557 on the 2023 comparative is largely attributable
to an impairment expense for the write-down of the
intangible asset associated with the Future brand of
$244,592. The other operating costs are relatively flat
and are reflective of operating the facility on limited
production.
The decrease in corporate expenses of $698,409 on
the 2023 comparative is attributed to decreases in
employment and consulting costs.
FINANCIAL POSITION
The net assets of the Group at 30 June 2024 total
$26,726,569, a $6,796,785 decrease from the June 2023
comparative of $33,523,354. The decrease is primarily
driven by operating losses, offset by the equity capital
raising in July 2023.
The key assets and liabilities in the statement of financial
position at 30 June 2024 are:
•
cash and cash equivalents of $6,106,312 (2023:
$2,007,429);
•
inventories of $1,632,793 (2023: $1,507,153);
•
property, plant and equipment of $18,851,582 (2023:
$26,381,586);
•
intangible assets of $393,707 (2023: $635,732);
•
biological assets of $1,873,697 (2023: $3,535,686); and
•
total borrowings of $1,739,957 (2023: $nil).
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
09
DIRECTORS’ REPORT, CONTINUED.
REVIEW OF OPERATIONS
DAIRY FARM SEGMENT
Regen Properties Pty Ltd (land owner) and
SW Dairy Farms Pty Ltd (farm operator)
Dairy farm segment performance
For the first time in the last four years, seasonal conditions
in Southwest Victoria have not been as favourable for dairy
farming, with drier than normal conditions. The dairy farms
segment net loss for the financial year was $1,928,606
(2023: $724,160 loss). Included in the loss are non-cash
costs for losses from changes to fair value of livestock
of $346,132 (2023: $238,913 loss) and the deemed cost
of livestock sold $1,554,415 (2023: $641,606), which is
materially above the 2023 comparative because of the
herd restructure and reduction following the Brucknell
South farm sale.
After removing the impact of fair value movements of
livestock and deemed cost of sales in both financial years,
the dairy farm operating segment’s financial performance
is down on FY23 with an operational net loss of $28,059
(2023: $156,359 profit). This is largely a result of increased
feed costs for FY24 as a result of the drier conditions,
offset by additional sales of livestock from the herd
reduction.
Livestock values
Livestock values continued to soften during the year as
a result of a decline in the export market, softening milk
price and unfavourable seasonal conditions. This has
resulted in a loss from changes in fair value of livestock of
$346,132 (2023: $238,913 loss).
Farm values
Registered valuers Preston Rowe Paterson completed an
independent valuation on the Yaringa farm for the year
ended 30 June 2023. The basis of the valuation was ‘As
Is and In Use’ with vacant possession and the fair value of
the farm was $8,400,000.
The Board has reviewed the carrying amount at 30 June
2024 and are satisfied it is not impaired. The carrying
amount for the Yaringa farm of $8,544,216 represents the
independent valuation from June 2023 plus capitalised
costs from the valuation date, less depreciation (refer Note
13(a)(ii)).
FY25 Farmgate milk price
After a period of record prices in FY23, farmgate
conventional milk prices have continued to soften. Despite
this, demand for organic farmgate milk has remained
steady and SWD is contracted for all the excess organic
milk produced by its farms at the same price as FY24.
NUTRITIONAL POWDERS SEGMENT
Nutritional powders segment performance
The nutritional powders segment net loss for the financial
year was $3,704,420 (2023: $3,859,599).
The operating costs are relatively flat and are reflective of
operating the facility on limited production.
The Ocean Road Dairies infant formula range has been
available in Chemist Warehouse stores nationally since
November 2022. The sales off-take has been below
expectations.
The Group decided to discontinue the Future Gradulac
Gentle infant formula range (Future) due to poor
consumer sales. The Group’s revised strategy intends to
best use its assets and brand building capability to succeed
in the market.
In FY24, there is a write-down in relation to the short-dated
discontinued Future range of $419,412 (reported in the
31 December 2023 half-year) and a $192,786 write-down
of short-dated Ocean Road Dairies infant formula and
associated ingredients at 30 June 2024. There has also
been an impairment for the write-down of the intangible
assets associated with the Future range of $244,592.
Land and Buildings - Independent Valuation
Registered valuers IPN Valuers - Greater Geelong
completed an independent valuation of the Depot & Old
Geelong Road land and infant formula building for 30 June
2023. The basis of valuation was a cost approach using
the summation of land and improvements, supported by
comparable sales evidence and capitalisation of income.
The combined fair value was assessed at $5,100,000 and
an impairment expense of $149,769 was reflected in the
profit and loss on 30 June 2023. At the 30 June 2024,
with reference to the previous valuation, IPN Valuers
completed an updated assessment of the current fair value
at $4,900,000 and an impairment expense of $111,630 is
reflected in the profit and loss for 30 June 2024.
10
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
Property, Plant and Equipment - Independent Valuation
Registered valuers Compass Valuation & Asset Services
completed an independent valuation of the infant formula
property, plant and equipment for 30 June 2024. The basis
of valuation was the market approach where possible,
with the cost approach considered and employed where
necessary and the fair value was assessed at $4,985,020.
Although the fair value exceeds the current carrying value,
the property, plant and equipment is carried at cost so
continues to be carried at $4,813,689.
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
Farm Sale
On 22 December 2023 the Group announced to the
ASX that it had entered into a binding contract of sale
for the Brucknell South farm for $7,125,000 and the sale
completed on 24 April 2024.
Capital Raising
During the year, the Group has undertaken the following
capital raising to support its cash flows as it works to
establish distribution networks for its products:
•
On 11 July 2023, a private placement to specific
sophisticated investors to raise $710k at a price of
$0.022 per share.
Loan Facility
On 5 December 2023, the Group established a $3,000,000
secured loan facility with Gippsreal Limited. The facility
is secured against the Group’s Yaringa dairy farm as well
as a first ranking security over the assets of the borrower
in connection with the property. The loan is for a period
of 24 months and the lender has the right to review the
terms and conditions of the loan on an annual basis.
Interest is calculated on a variable interest rate at the
Reserve Bank of Australia prevailing rate plus a margin of
5.4% per annum. At 30 June 2024 the Group had drawn
down $1,780,000 (2023: $nil) of the facility. On 27 August
2024, the Group repaid the drawn down $1,780,000 of its
loan facility with Gippsreal Limited, net of prepaid interest.
In the opinion of the directors, there are no other
significant changes in the state of affairs of the Group that
occurred during the year that are not disclosed elsewhere
in this report or in the accompanying financial statements.
EVENTS AFTER THE REPORTING PERIOD
On 27 August 2024, the Group repaid the drawn down
$1,780,000 of its loan facility with Gippsreal Limited, net of
prepaid interest.
In the opinion of the directors there are no other material
matters that have arisen since 30 June 2024 that have
significantly affected or may significantly affect the Group,
that are not disclosed elsewhere in this report or in the
accompanying financial statements.
ENVIRONMENTAL ISSUES
The Group is regulated by environmental obligations
contained in the Environment Protection Act 1970 (Cth) and
is subject to water licensing restrictions under the Water
Act 1989 (Vic). The Group is also subject to a Trade Waste
Agreement with Wannon Water which regulates effluent
disposal from the Depot Road manufacturing facility.
The Group considers itself to be in compliance with its
environmental obligations.
FUTURE DEVELOPMENTS, PROSPECTS
AND BUSINESS STRATEGIES
After a significant period of investment in transitioning
its dairy farms to organic A2 protein milk production and
construction of the Group’s infant formula manufacturing
facility, the Group’s s vertical integration strategy is now
complete. In FY25 and beyond, the Group will focus on
the following core areas:
•
sale and distribution of its infant formula ranges and
complementary products;
•
increasing the capacity and efficiency of its
manufacturing operations;
•
refining its farming operations; and
•
effective management of non-operational costs.
BUSINESS RISK
The Group consists of complementary businesses in
dairy farming and manufacture and distribution of infant
formula products. The Group is exposed to a range of
strategic, financial, operational, environmental and related
risks that are inherent when operating in agricultural and
fast-moving consumer goods markets. The Group has an
enterprise risk management framework which, together
with corporate governance, provides a framework for
managing the material uncertainties impacting the Group.
11
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
Below is a summary of some of the key risks impacting the
Group but is not intended to be an exhaustive list:
Milk Prices
Milk prices are set by the Australian and global markets
depending on the product type, seasonal demand and
tariffs. In recent years, competitive forces within Australia
have influenced fresh milk pricing whereas the export
market for milk product is determined by international
supply and demand and global seasonal conditions.
Changes in domestic and global milk pricing will affect the
revenue earned by the Group.
Operating Risks
The operation of processing factories, farms and
other agricultural and manufacturing activities involves
risks to employees, contractors, livestock and plant
and equipment. This may include through accident,
malfunction, acts of God, infectious disease, and other
events which are not foreseeable, unable to be insured
against or which the Group and management have little
or no control or knowledge. Some events may cause
considerable or even catastrophic damage to the Group
and its assets. There can be no assurance that the Group
can avoid or insure against such events.
Environmental Risks
Agricultural businesses are exposed to various
environmental risks such as fire, flood, drought,
unseasonal rain, wind, storms and similar events of
nature which can have adverse or positive impacts on the
operation of the business and financial performance.
This could include increased operational costs, disruption
to operations or impact on the health and well-being
of livestock. These risks are part of the operation of
agricultural businesses and there may be limited avenues
to mitigate such risks.
Development Projects
The Group may undertake new projects to build new
facilities and expand existing facilities, which may include
installation of an additional dryer or installation of the
high-speed canning line. There are risks associated with
development projects, including trial and testing delays,
cost overruns or, the development may not perform to
its designed capacity initially or at all. This may result
in delays in anticipated revenues flowing from the
developments, all of which could have an adverse effect
on the Group’s revenues and costs.
Access to Specialised Raw Materials
As the Group moves to manufacture more complex
nutritional products and organic products, it will need
to source raw materials from a variety of domestic and
international suppliers. Some of these raw materials
have limited supply, long lead times and require forward
commitments to secure supply. If the Group does not
manage its inventory requirements of these raw materials
it may experience delays in production of its products
and product outages. This may in turn cause issues with
the Group’s customers if customer supply arrangements
are impacted.
Customer / Supplier Contract Security
The supply of the Group’s products to major retailers
in Australia are governed by limited supply agreements
which include six-monthly reviews at which time products
may be removed from sale in those retailers. Such reviews
could reduce the number of the Group’s products sold by
this channel, adversely impacting the Group’s revenues in
the future.
Food Safety / Quality
While the Group maintains and follows good industry
quality and assurance practices there remains a risk of
product contamination in supply, production and storage
of the Group’s products. A product contamination or
threat of contamination may cause reputational damage
to the Group and its brands from the perspective of
suppliers, customers, the general public and regulators.
This may also result in significant product recall costs,
compensation payments and penalties all of which have
an adverse effect on the Group’s revenue, profitability
and reputation.
Funding and Access to Capital
In order to support large increases in demand for the
Group’s products and increase inventory or, to expand the
Group’s infant formula plant capacity or install the high-
speed blending and canning line, further capital may need
to be raised. There is no guarantee that those funds will
be able to be raised, or if they are raised, raised at a cost
which is acceptable to the Group. Further, any equity capital
raising may dilute existing shareholders in the Group.
12
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
Marketing Investment and Competitive Landscape
The infant formula and infant nutrition segment is highly
competitive and many large, long established businesses
participate in the segment. These brands have very
large marketing budgets to promote their products
making it difficult for new brands to gain exposure in the
market. There is no guarantee that the level of marketing
investment available to the Group will be sufficient to
increase brand or product awareness in the market or,
that consumers will develop the required level of trust
in the Group’s brands/products to consider trying or
switching to them. Furthermore, there is no guarantee that
other participants in the segment won’t introduce similar
products to the Group’s products potentially eroding the
Group’s competitive advantage.
Inventory Management
Predicting market and consumer demand for new
products is very difficult. Furthermore, manufacturing
facilities often require minimum production volumes to
manufacture products or components of a product. There
is a risk of large inventory write offs and/or brand damage
if inventory of finished products (particularly products
with shelf-life restrictions) or components of products
materially exceed demand.
Infectious Diseases and Export Risks
An outbreak of COVID-19 or another infectious disease at
the Group’s production plant could cause the temporary
shutdown of that plant and standing down of staff, with
a consequential effect on production and revenues.
Furthermore, the discovery of infectious diseases affecting
livestock in Australia may require isolation or even
destruction of livestock or, restrictions on movement of
livestock both domestically and internationally. This would
have significant impact of the Group’s farming operations
and its raw milk production volumes.
The Group is also exposed to the global dairy market
and the availability of export opportunities of milk from
Victoria. If country borders are closed or imports or
exports limited, then there is a risk that there will be excess
local supply, attracting a lower price, and reducing the
prices which the Group is able to obtain for its products.
Global Climate Conditions Risk
Changes in global and regional weather and climate
conditions are not easily or reliably predicted and,
can have a positive or negative effect on farm and
manufacturing production which in turn affects revenues
and costs. Domestic and international legislation,
regulation and similar programs introduced to mitigate
such climate change may have positive or adverse effects
on Group financial performance and asset values over
time.
Regulatory / Compliance Risk
Changes in relevant taxes, legal and administration
regimes, accounting practice and government licensing
and operations policies may adversely affect the financial
performance of the Group. The sale of infant formula
products is highly regulated both domestically and in
international markets. Failure to comply with these
regulations may damage the reputation of the Group
and its brands and impact the financial performance of
the Group including access to international markets. In
addition, in order to perform its activities the Group must
comply with the environmental legislation of Federal,
State and Local governments, which may include changes
to the conditions of or further obligations under its
environmental and water use licences and other regulated
entitlements.
Consumption Trends
Vegan or plant-based products are becoming more
mainstream and as a result there is potential for future
movement away from traditional dairy milk-based
products, which could adversely impact the Group’s
revenues in the future.
13
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
INFORMATION ON DIRECTORS
The following persons held office as directors of the Company during or since the end of the year.
The names and details of the directors are:
Name
Position
Peter Nathan
Non-Executive Director and Chair (appointed 3 June 2024)
Zhao Hui (Jason) Dong
Non-Executive Director (appointed 15 April 2021)
Qing (Scott) Lai
Non-Executive Director (appointed 7 August 2023)
Peter Skene
Executive Director (appointed 10 April 2024 & resigned 14 June 2024)
Bernard Kavanagh
Non-Executive Director (resigned 10 April 2024)
Martin Bryant
Non-Executive Director (resigned 13 September 2023)
Adrian Rowley
Non-Executive Director (resigned 27 July 2023)
Peter Nathan
Non-Executive Director and Chair
Qualifications
Bachelor of Business (Marketing), University of South Australia
Directorships held in other listed entities in
the past 3 years
No other current or former directorships in listed entities.
Interest in Group securities & options
Nil.
Mr Peter Nathan is an experienced corporate executive with strong financial acumen and pioneer in the infant formula
business. Peter is the former CEO of Asia Pacific for the a2 Milk Company (ASX:A2M) and was instrumental in a2’s success,
leading its most profitable business segment and delivering exceptional shareholder value and growing revenue from $7m
to $1.3bn over his 14 year tenure.
Jason Dong
Non-Executive Director
Qualifications
Master of Commerce (University of Melbourne) Bachelor
of Economics, Shanxi University of Finance and Economics, China
Directorships held in other listed entities in
the past 3 years
No other current or former directorships in listed entities.
Interest in Group securities & options
A relevant interest in 500,000 shares at 30 June 2024.
Jason Dong was appointed to the Board on 15 April 2021. Jason is a highly skilled executive with extensive experience
working with Australian and Chinese enterprises to promote trade and industry relationships. His previous roles include
Industry Adviser and Research Fellow for the Centre of International Agricultural Research of the Chinese Academy of
Agricultural Sciences and a member of the Industry Advisory Board for the Centre for Asian Business and Economics at the
University of Melbourne.
14
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
Scott Lai
Non-Executive Director
Qualifications
Bachelor of Commerce - Banking, Finance and Risk Management
(Griffith University)
Master of Commerce - Professional Accounting (Griffith University)
Directorships held in other listed entities in
the past 3 years
No other current or former directorships in listed entities.
Interest in Group securities & options
A relevant interest in 49,064,135 shares at 30 June 2024.
Scott Lai was appointed to the Board on 7 August 2023. Scott brings strong financial market knowledge and an exten-
sive network of more than 1,000 corporate and high net worth investors to the Group. He also has a strong track record
of establishing and growing innovative businesses in highly regulated sectors including financial services and energy
markets with demonstrated skills managing teams of more than 100 employees. In 2017 Mr Lai founded IJ Financial
Services Pty Ltd and has grown this business to be a preeminent leader in the fund investment and
mortgage loan industry in Queensland with a specific focus on the Chinese market. Mr Lai is also a director of IJ Funds
Management Pty Ltd which has been a major shareholder in the Group since 2022.
COMPANY SECRETARY
Ms Elizabeth Spooner serves as company secretary of the Company. She was appointed as the Company Secretary on
22 February 2024.
Elizabeth Spooner is a Senior Company Secretary and Corporate Lawyer at Confidant Partners, a corporate secretarial
provider. Ms Spooner holds a Juris Doctor degree from the Australian National University, a Bachelor of Business
Administration with Bachelor of Arts and a Graduate Diploma of Applied Corporate Governance from the Governance
Institute. Elizabeth Spooner is an experienced governance and compliance professional who works closely with a number
of boards of both listed and unlisted public companies.
Kate Palethorpe was Company Secretary and General Counsel during the year. She was appointed since 14 September 2018
and resigned effective 31 January 2024 when she was replaced by Peter Skene as Company Secretary. Peter Skene resigned
as Company Secretary on 22 February 2024 and was replaced by Elizabeth Spooner. Ms Palethorpe held a relevant interest
in 1,000,000 shares as at 30 June 2024.
MEETINGS OF DIRECTORS
The Board generally meets on a monthly basis either in person or by telephone conference. Directors meet bi-annually
with the Group’s auditor to discuss relevant issues arising in relation to the half year review and annual audit. On matters
of corporate governance, the Board retains a direct interest rather than through a separate committee structure which at
this stage is appropriate for a Board of this size and structure. At each Board meeting written reports in relation to operating
strategies and activities are provided as well as risk and compliance matters with a particular focus on occupational health
and safety, food safety and quality and key strategic and emerging risks.
Aside from formally constituted directors’ meetings, the directors and chair are in regular contact regarding the operation of
the Group and particular issues of importance.
15
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
The number of directors’ meetings and number of meetings attended by each of the Company directors during the financial
year are set out in the table below:
Directors
Meetings eligible to attend
Meetings attended
Peter Nathan
2
2
Jason Dong
15
14
Scott Lai
14
13
Peter Skene
3
3
Martin Bryant
3
3
Adrian Rowley
1
1
Bernard Kavanagh
10
9
DIVIDENDS PAID OR RECOMMENDED
The directors have not recommended or paid a dividend for the year ended 30 June 2024 (2023: $nil) at the date
of this report.
INDEMNIFYING OFFICERS OR AUDITOR
During the financial year, the Company paid an insurance premium in respect of an insurance policy insuring the directors,
the company secretary and all executive officers of the Group against a liability incurred as a consequence of holding that
office in the Group to the extent permitted by the Corporations Act 2001. The amount of the premium was $41,750 (2023:
$41,740) for all directors and officers for the year.
The Company has not otherwise, during or since the end of the financial year, indemnified or agreed to indemnify an officer
or auditor of the Company against a liability incurred as such by an officer or auditor.
PROCEEDINGS ON BEHALF OF COMPANY
No person has applied for leave of a court to bring proceedings against or on behalf of the Group or to intervene in any
significant proceedings to which any such entity is a party for the purpose of taking responsibility for all or any part of those
proceedings. No proceeding has had or is likely to have a material impact on the financial position of the Group.
NON-AUDIT SERVICES
The Board is satisfied that the provision of non-audit services during the year is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001 and is satisfied that the services disclosed below did not
compromise the external auditor’s independence for the following reasons:
i) all non-audit services are reviewed and approved by the Board prior to commencement to ensure they do not adversely
affect the integrity and objectivity of the auditor; and,
ii) the nature of the services provided do not compromise the general principles relating to auditor independence in
accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional Ethical
Standards Board.
During the year ended 30 June 2024 there was no payment to external auditors for non-audit services (2023: $nil).
OPTIONS / PERFORMANCE SECURITIES
At the date of this report, there are no unissued ordinary shares of Australian Dairy Nutritionals Limited under option or right.
A summary of movements in options and other performance securities is set out in Note 26.
For details of options and performance securities issued to directors and executives as remuneration, refer to the
Remuneration Report.
AUDITOR’S INDEPENDENCE DECLARATION
The auditor’s independence declaration for the year ended 30 June 2024 has been received and a copy can be found
at page 23.
16
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
REMUNERATION REPORT
Remuneration Policy
The remuneration policy of Australian Dairy Nutritionals
Limited has been designed to align key management
personnel (KMP) objectives with shareholder and business
objectives by providing a fixed remuneration component
and offering specific incentives based on achievement
of key operational and strategic objectives affecting the
Group’s performance. Whilst the Board acknowledges
that the Group received a second strike in relation to
the remuneration report for financial year ending 30
June 2023, the Board has acted on the message from
shareholders to ensure the remuneration policy is
appropriate and effective in its ability to attract and retain
high-quality KMP to manage the Group, as well as create
goal congruence between directors, executives and
shareholders based on the performance of the Group.
The Board’s policy for determining the nature and amount
of remuneration for KMP of the Group is as follows:
•
the remuneration policy is developed and approved by
the Board. The Group does not have a remuneration
committee due to the current size and nature of the
Group’s activities. Professional advice is sought by the
Board from independent external consultants when
required;
•
All KMP receive a base salary (which is based on factors
such as role and experience, market comparison with
equivalent roles, performance and length of service)
plus superannuation;
•
Performance incentives are based on the achievement
of strategic and operational objectives by the KMP,
which are agreed in advance, typically shortly after the
Group’s budget and strategy for the relevant financial
year is approved;
•
Performance incentives are only paid if the Board
determines the KMP has met the predetermined key
performance indicators (KPIs);
•
Incentives paid in the form of equity are intended to
align the interests of the KMP with the Group and the
shareholders. In this regard, KMP are prohibited from
limiting risk attached to those instruments by use of
derivatives or other means; and
•
The Board reviews KMP packages annually by
reference to the Group’s performance, executive
performance, and comparable information from
industry sectors. Performance of KMP is reviewed
on an ongoing basis with a formal review conducted
annually, typically after issue of the Group’s audited
result for the relevant financial year. This includes
review of the relevant KMP’s performance against
agreed objectives and award of incentives (if
applicable). The remuneration policy is designed to
attract a high caliber of executives and reward them
for performance leading to long-term growth in
shareholder value.
KMP receive, at a minimum, a superannuation guarantee
contribution in line with legislation, which is currently
11.5%. Some individuals, however, may choose from
time to time to sacrifice part of their salary to increase
payments towards superannuation.
There are currently no defined benefit superannuation
entitlements to KMP and upon retirement KMP are paid
employee benefit entitlements accrued to the date of
retirement. Any options or rights not exercised before or
on the date of termination will lapse (unless otherwise
agreed by the Board).
All remuneration paid to KMP is valued at the cost to the
Group and expensed.
The Board’s policy is to remunerate non-executive
directors at market rates for their time, commitment,
and responsibilities. The Chair determines payments to
the directors and reviews their remuneration annually,
based on performance, market practice, duties, and
accountability. Independent external advice is sought
when required. The maximum aggregate amount of fees
that can be paid to directors is subject to approval by
shareholders at the annual general meeting.
Directors and executives are entitled to participate in
the Company’s Long Term Incentive Plan (LTIP) to align
their interests with shareholders’ interests. Given the
second strike against the 2023 Remuneration Report, the
Board elected not to seek approval for any performance
incentives in respect of financial year 2024.
KMP or closely related parties of KMP are prohibited from
entering hedge arrangements that would have the effect
of limiting the risk exposure relating to their remuneration.
In addition, the Board’s remuneration policy prohibits
directors and KMP from using Australian Dairy Nutritionals
Limited shares as collateral in any financial transaction,
including margin loan arrangements.
17
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
Engagement Of Remuneration Consultants
During the financial year, no consultants were engaged by
the remuneration committee to review the elements of
KMP remuneration and provide recommendations. As the
size and nature of the Group’s activities increase, this may
become necessary.
Performance-Based Remuneration
Performance incentives are set annually, in consultation
with KMP and based on the Group’s strategic and
operational objectives, both short term and long term. For
executives, a portion of the measures typically focus on the
overall performance of the Group (measured by specific
performance metrics) and a portion are tailored to the
operational area each individual is accountable for. The KPIs
target areas the Board believes hold greatest potential for
Group expansion and profit, covering financial and non-
financial as well as short and long-term goals.
Performance in relation to the KPIs is assessed annually,
based on an assessment of the KMP’s performance against
the agreed KPIs. In determining whether a KPI has been
achieved, the Group bases the assessment on audited
figures; however, where the KPI involves comparison
of the Group, or a division within the Group, to the
market, independent reports may be obtained from other
organisations.
Following the assessment, the KPIs are reviewed by the
Board in light of the desired and actual outcomes, and
the Board determines whether the relative attached KPI
is approved.
Relationship Between Remuneration Policy And Group
Performance
As noted above, the remuneration policy provides for
a fixed and variable component of remuneration for
KMP’s of the Group. The fixed component of a KMP’s
remuneration is a contractual obligation and cannot be
amended without the agreement of the relevant KMP or,
termination of the KMP. The remuneration policy provides
for a variable component of the KMP’s remuneration
which is at-risk and only granted to the KMP if pre-agreed
performance conditions are achieved. The variable
component of the KMP’s remuneration is designed to
reward the KMP only for performance which contributes
to the performance of the Group thereby aligning
the experience of the KMP with the experience of the
shareholder. The issue of performance-based incentives
to KMP pursuant to the Group’s Long Term Incentive
Plan is to align KMP and shareholder interests. The Group
believes this policy to be effective in driving KMP’s and
other Group personnel to increase shareholder wealth in
future years.
Performance Conditions Linked To Remuneration
During this financial year, the Group did not issue any
performance incentives to KMP’s.
Key Management Personnel (KMP) Shareholdings
The number of ordinary shares held directly, indirectly, or beneficially by each KMP (or their related parties) of the Group
during the financial year is as follows:
30 June 2024
Balance at
01/07/2023
Initial
Interest
Purchased
on Market
Expired
Loan
Securities
Final
Interest
Balance at
30/06/2024
Current KMP:
Peter Nathan (i)
-
-
-
-
-
-
Jason Dong
500,000
-
-
-
-
500,000
Scott Lai (ii)
-
43,264,120
5,800,015
-
-
49,064,135
Sundaranathan Mahinthan (iii)
-
-
-
-
-
-
Former KMP:
Adrian Rowley (iv)
1,911,000
-
-
-
(1,911,000)
-
Martin Bryant (v)
2,500,000
-
-
-
(2,500,000)
-
Bernard Kavanagh (vi)
-
-
-
-
-
-
Peter Skene (vii)
15,073,951
-
-
(7,000,000)
(8,073,951)
-
19,984,951
43,264,120
5,800,015
(7,000,000)
(12,484,951)
49,564,135
(i) Appointed as the chariman 03 June 2024
(ii) Appointed as a director 07 August 2023
(iii) Appointed as CEO 18 June 2024
(iv) Resigned as a director 27 July 2023
(v) Resigned as chair 13 September 2023
(vi) Resigned as chair 10 April 2024
(vii) Resigned as CEO 14 June 2024
18
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
Other Equity-Related KMP Transactions
There have been no other transactions involving equity instruments apart from those described in the tables above relating
to options, rights and shareholdings.
Changes In Directors And KMP Subsequent To Year-End
There has been no change in directors or KMP subsequent to year end.
Employment Details Of Members Of Key Management Personnel
The following table provides employment details of persons who were, during the financial year, members of KMP
of the consolidated Group. The table also illustrates the proportion of remuneration that was performance and
non-performance based.
Proportions of Elements of
Remuneration Related to
Performance (Other than
Options/Rights Issued)
Proportions of Elements of
Remuneration Not Related
to Performance
Non-salary
Cash-based
Incentives
Securities
Fixed Salary
Name
Position Held
Contract Details
%
%
%
Peter Nathan
Chair
N/A
-
-
100
Jason Dong
Director
N/A
-
-
100
Scott Lai
Director
N/A
-
-
100
Sundaranathan Mahinthan
Group CEO 3 months' notice
-
-
100
Former KMP:
Martin Bryant
Chair
N/A
-
-
100
Adrian Rowley
Director
N/A
-
-
100
Bernard Kavanagh
Director
N/A
-
-
100
Peter Skene
Group CEO 3 months' notice
-
-
100
In the current year, no KMP received any performance-based remuneration.
19
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
Remuneration Expense Details For The Year Ended 30 June 2024
The following table of benefits and payments represents the components of the current year and comparative year
remuneration expenses for each member of KMP of the Group. Such amounts have been calculated in accordance with
Australian Accounting Standards.
Key Management
Personnel (KMP)
Short Term Benefit
Post
Employment
Long-term
Benefit
Termination
Benefits
Equity-settled
Share-based
Payments
Total
Salary /
Director’s
Fees
Annual
Leave
Super
Contributions
LSL
Termination
Benefits
Performance
Rights
$
$
$
$
$
$
$
Current KMP:
Peter Nathan - 2024
6,250
-
688
-
-
-
6,938
Peter Nathan - 2023
-
-
-
-
-
-
-
Scott Lai - 2024
58,535
-
6,439
-
-
-
64,974
Scott Lai - 2023
-
-
-
-
-
-
-
J Dong - 2024
60,000
-
6,600
-
-
-
66,600
J Dong - 2023 (ii)
202,497
-
6,300
-
-
2,500
211,297
Sundaranathan
Mahinthan - 2024
12,639
-
1,453
-
-
-
14,092
Sundaranathan
Mahinthan - 2023
-
-
-
-
-
-
-
Former KMP:
A Rowley - 2024
5,000
-
550
-
-
-
5,550
A Rowley - 2023 (i)
63,450
-
3,150
-
-
-
66,600
M Bryant - 2024
15,208
-
1,673
-
-
-
16,881
M Bryant - 2023
75,000
-
7,875
-
-
-
82,875
B Kavanagh - 2024
56,306
-
6,194
-
-
62,500
B Kavanagh - 2023
78,000
-
8,190
-
-
2,500
88,690
P Skene - 2024
336,221
140,751
36,275
99,411
102,500
-
715,158
P Skene - 2023
382,404
16,197
25,000
9,211
-
-
432,812
Total - 2024
550,159
140,751
59,872
99,411
102,500
-
952,693
Total - 2023
801,351
16,197
50,515
9,211
-
5,000
882,274
(i) This includes directors’ fees and an amount paid in accordance with a contract arrangement with Watershed Funds Management Pty Ltd, an entity associated
with Adrian Rowley.
(ii). This amount includes director’s fees and an amount paid in accordance with a contract arrangement with Ozvic Victoria Pty Ltd, an entity associated with Jason Dong.
20
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
Options And Rights Granted As Share-Based Payments
During the year ended 30 June 2024 are as follows:
Grant Details
Exercised
Expired
Balance at
01/07/2023
Issue Date
No.
Value
($)
No.
Value
($)
No.
Value
($)
Balance at
30/06/2024
P Skene
7,000,000
-
-
-
-
-
(7,000,000)
-
-
Total
7,000,000
-
-
-
-
-
(7,000,000)
-
-
During the year ended 30 June 2023 are as follows:
Grant Details
Exercised
Forfeited
Balance at
01/07/2022
Issue Date
No.
Value
($)
No.
Value
($)
No.
Value
($)
Balance at
30/06/2023
P Skene
7,500,000
-
-
(500,000)
(9,000)
-
-
7,000,000
M Bryant1
-
-
-
-
(500,000)
(9,000)
500,000
-
A Rowley
-
-
(500,000)
(9,000)
-
-
500,000
-
J Dong
24/11/2022
1,000,000
29,000
(500,000)
(9,000) (1,000,000)
(29,000)
500,000
-
B Kavanagh
- 24/11/2022
1,000,000
29,000
-
- (1,000,000)
(29,000)
-
Total
9,000,000
2,000,000
58,000
(1,500,000) (27,000) (2,500,000)
(67,000)
7,000,000
1. Martin Bryant was entitled to 500,000 director performance rights (TSR hurdle) at 30 June 2022. As announced to the ASX on 25 August 2022, he elected not
to receive the securities to which he is entitled and these have been cancelled.
Vested
Unvested
Balance at
30/06/2023
No.
No.
P Skene1
7,000,000
7,000,000
-
7,000,000
7,000,000
-
1Loan Securities issued under the Company’s Long Term Incentive Plan which were canceled and bought back on 19 January 2024 and are no longer on issue.
21
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ REPORT, CONTINUED.
Other Transactions With KMP And/Or Their Related Parties
As set out in Note 24(b) of the financial statements, the
Group had the following transactions with KMP:
Adrian Rowley is a director of Watershed Funds
Management Pty Ltd. During the comparative year ended
30 June 2023, Watershed Funds Management Pty Ltd was
paid $33,450 for the provision of services by Adrian Rowley
as director. There was no amounts due at 30 June 2023.
Jason Dong is a director of OZVIC Group Pty Ltd. During
the comparative year ended 30 June 2023, OZVIC Group
Pty Ltd was paid $142,497 for the provision of consultancy
services by Jason Dong.
Second Strike - 2023 AGM
At the Company’s 2022 Annual General Meeting (AGM),
more than 25% of the votes cast on the resolution to adopt
the 2022 Remuneration Report were against the resolution
and accordingly, the Company received a ‘first strike’ on its
Remuneration Report. At the Company’s 2023 AGM, more
than 25% of the votes cast on the resolution to adopt the
2023 Remuneration Report were against the resolution,
which constituted the Company’s ‘second strike’ on its
Remuneration Report. Having received two strikes, a Board
spill resolution was put to shareholders to vote at the 2023
AGM. The spill resolution was not passed by shareholders
and therefore a spill meeting was not convened within 90
days of the 2023 AGM. If the 2024 Remuneration Report
receives a strike at the AGM, it will constitute a ‘first strike’
for the purposes of section 250U of the Corporations Act
and there will be no requirement to put a spill resolution to
shareholders.
Despite receiving a second strike at last year’s AGM,
the Board recognises the significant support for our
Remuneration Report which increased to over 60%
from 49% a year before. While the Board were naturally
disappointed with the result, the directors were grateful at
the overwhelming support for the board in relation to the
spill resolution.
The second strike against the adoption of the 2023
Remuneration Report was a serious message for the Board
from shareholders. The Board has taken the second strike
seriously and taken the following measures to deliver
greater transparency to shareholders in relation to Board
and Executive remuneration and to ensure there is greater
alignment between executive and shareholder experience
whilst also honouring its contractual obligations to its
personnel:
(a) the CEO and other Executives only received the fixed
component of their remuneration for financial year
2024 and, neither the CEO or other Executives received
variable performance-based remuneration in relation
to financial year 2024;
(b) any variable performance-based remuneration
component for the CEO and other Executives
in relation to financial year 2025 will be tied to
performance hurdles determined by the Board.
Peter Nathan
Chair
30 August 2024
22
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
CORPORATE GOVERNANCE STATEMENT
The Board is responsible for the overall Corporate Governance of the Group.
The Board monitors the operational and financial position and performance of the Group and oversees the business
strategy, including approving the strategic goals of the Group and considering and approving its business plan and the
associated farm, processing and corporate budgets.
The Board is committed to maximising performance and growth and generating appropriate levels of shareholder value
and returns. In conducting the Group’s business, the Board strives to ensure the Group is properly managed to protect and
enhance shareholder interests and that the Group operates in an open and transparent corporate governance environment.
In accordance with this, the Board has developed and adopted a framework of Corporate Governance systems, processes,
policies and risk management practices and internal controls that it believes are appropriate for the Group.
The ASX Listing Rules require the Group to report on the extent to which it has followed the ASX Corporate Governance
Council’s Corporate Governance Principles and Recommendations (Fourth Edition) (ASX Principles and Recommendations)
throughout the financial year ended 30 June 2024. The Group’s Corporate Governance Statement, which sets out the
corporate governance practices that were in operation during the Reporting Period, and which is current as of 30 August
2024, was approved by the Board as part of the Annual Report and can be found on the Investor Centre page at https://adnl.
com.au/investorcentre
The Corporate Governance Statement, which was lodged with this Annual Report, discloses the extent to which the Group
will follow the recommendations taking into account the relatively small size of the Group in determining the extent of
practical implementation.
The principal governance related policies and practices are as follows:
•
Corporate Governance Statement
•
Board Charter
•
Securityholder Communication Policy
•
Risk Management Policy
•
Market Disclosure Policy
•
Share Trading Policy
•
Code of Conduct
•
Board Skills Matrix
Details of the Group’s key policies, charters for the Board and code of conduct are available on the Group’s website under
the Investor Centre at www.adnl.com.au.
23
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
AUDITOR’S INDEPENDENCE DECLARATION
Auditor’s Independence Declaration
under section 307C of the
Corporations Act 2001
To the Directors of Australian Dairy Nutritionals Limited
As lead auditor for the audit of the financial statements of Australian Dairy Nutritionals Group for the
financial year ended 30 June 2024, I declare that, to the best of my knowledge and belief, there have
been no contraventions of:
i.
the auditor independence requirements as set out in the Corporations Act 2001 in relation to
the audit; and
ii.
any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Australian Dairy Nutritionals Limited and the entities it controlled
during the year.
Yours sincerely
Nexia Brisbane Audit Pty Ltd
Gavin Ruddell
Director
Date: 30 August 2024
Gavin Rud
Director
24
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
FINANCIAL STATEMENTS 2024
25
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF PROFIT
OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2024
2024
2023
Note
$
$
Continuing Operations
Revenue
3(a)
6,263,071
5,855,677
Administration and non-dairy related costs
3(b)(v)
(771,791)
(916,179)
Employment expenses
3(b)(iv)
(3,061,012)
(3,352,074)
Finance costs
3(b)(i)
(136,181)
(56,748)
Dairy farm related costs
3(b)(ii)
(4,141,911)
(3,659,058)
Infant formula product related costs
3(b)(iii)
(2,286,716)
(3,176,790)
Depreciation and amortisation
(1,047,867)
(752,858)
Deemed cost of livestock sold
10
(1,554,415)
(641,606)
Loss from changes in fair value of livestock
10
(346,132)
(238,913)
Impairment expenses
3(b)(vi)
(356,222)
(149,769)
Loss before income tax
(7,439,176)
(7,088,318)
Income tax expense
-
-
Loss from continuing operations
(7,439,176)
(7,088,318)
Discontinued operations
Loss from discontinued operations after tax
-
(2,305,637)
Loss for the period
(7,439,176)
(9,393,955)
Other comprehensive income
Items that will be reclassified subsequently to profit or loss
-
-
Items that will not be reclassified to profit or loss
Fair value movement on land and buildings at fair value through
other comprehensive income
-
1,208,691
Other comprehensive loss for the year
-
1,208,691
Total comprehensive loss for the year
(7,439,176)
(8,185,264)
Loss attributable to:
Company shareholders
(7,356,460)
(9,307,436)
Trust unitholders
-
(21,730)
Non-controlling interest
(82,716)
(64,789)
(7,439,176)
(9,393,955)
Total comprehensive loss attributable to:
Company shareholders
(7,356,460)
(8,098,745)
Trust unitholders
-
(21,730)
Non-controlling interest
(82,716)
(64,789)
(7,439,176)
(8,185,264)
Earnings per share from continuing and discontinued operations:
Basic earning per share (cents)
29
(1.14)
(1.68)
Diluted earnings per share (cents)
29
(1.14)
(1.68)
The accompanying notes form part of these financial statements.
26
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
AS AT 30 JUNE 2024
2024
2023
Note
$
$
ASSETS
Current Assets
Cash and cash equivalents
6
6,106,312
2,007,429
Trade and other receivables
7
598,073
660,390
Inventories
8
1,623,793
1,507,153
Biological assets
10
238,558
225,521
Other current assets
9
384,093
276,267
Total Current Assets
8,950,829
4,676,760
Non-Current Assets
Biological assets
10
1,635,139
3,535,686
Right of use assets
11
515,340
1,009,996
Intangible assets
12
393,707
635,732
Property, plant & equipment
13
18,851,582
26,381,586
Total Non-Current Assets
21,395,768
31,563,000
Total Assets
30,346,597
36,239,760
LIABILITIES
Current Liabilities
Trade and other payables
14
1,078,758
945,138
Lease liabilities
11
464,215
555,605
Provisions
15
268,196
699,559
Borrowings
16
1,739,957
-
Total Current Liabilities
3,551,126
2,200,302
Non-Current Liabilities
Lease liabilities
11
48,452
484,920
Provisions
15
20,450
31,184
Total Non-Current Liabilities
68,902
516,104
Total Liabilities
3,620,028
2,716,406
Net Assets
26,726,569
33,523,354
EQUITY
Issued capital
17
76,733,411
76,091,020
Reserves
18
3,604,766
6,551,895
Accumulated losses
(53,463,264)
(49,053,933)
Equity attributable to shareholders
26,874,913
33,588,982
Non-controlling interests
Accumulated losses
(148,344)
(65,628)
Equity attributed to non-controlling interests
(148,344)
(65,628)
Total Equity
26,726,569
33,523,354
The accompanying notes form part of these financial statements.
27
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2024
2024
2023
Note
$
$
Cash Flows from Operating Activities
Receipts from customers
6,845,112
8,836,952
Payments to suppliers and employees
(10,942,982)
(15,814,031)
Interest received
20,916
4,046
Finance costs
(362,042)
(78,153)
Net operating cash flows
6(b)
(4,438,996)
(7,051,186)
Cash Flows from Investing Activities
Payment for property, plant & equipment
13(b)
(249,247)
(825,881)
Proceeds from sale of property, plant & equipment
7,016,339
7,146,669
Payment for non-current assets held for sale
-
(30,900)
Payment for intangible assets
12(a)
(32,342)
(110,011)
Cash on disposal of VFD
-
(2,937)
Net investing cash flows
6,734,750
6,176,940
Cash Flows from Financing Activities
Net proceeds from issue of shares
17(a)(i)
642,391
1,434,032
Proceeds from borrowings - unsecured
332,820
630,555
Repayment of borrowings - unsecured
(297,915)
(630,555)
Proceeds from borrowings - secured
1,676,014
-
Repayment of related party loan
-
(500,000)
Repayment of lease principal
(550,181)
(484,053)
Net financing cash flows
1,803,129
449,979
Net increase / (decrease) in cash held
4,098,883
(424,267)
Cash at the beginning of the period
2,007,429
2,431,696
Cash at the end of the financial period
6,106,312
2,007,429
The accompanying notes form part of these financial statements.
28
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2024
Issued Capital
Ordinary
Asset
Revaluation
Reserve
Option
Reserve
Non-
controlling
Interests
Accumulated
Losses
Total
$
$
$
$
$
$
Balance at 1 July 2023
76,091,020
6,477,280
74,615
(65,628)
(49,053,933)
33,523,354
Comprehensive income
for the year
Loss attributable to company
shareholders for the period
-
-
-
-
(7,356,460)
(7,356,460)
Non-controlling interests
-
-
-
(82,716)
-
(82,716)
Total comprehensive
loss for the period
-
-
-
(82,716)
(7,356,460)
(7,439,176)
Transactions with equity
holders in their capacity
as equity holders and
other transfers
Transfer to retained earnings
-
(2,872,514)
(74,615)
-
2,947,129
-
Contribution of equity, net
of transaction costs
642,391
-
-
-
-
642,391
Total transactions with
equity holders
642,391
(2,872,514)
(74,615)
-
2,947,129
642,391
Balance at 30 June 2024
76,733,411
3,604,766
-
(148,344)
(53,463,264)
26,726,569
The accompanying notes form part of these financial statements.
29
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2023
Issued Capital
Ordinary
Asset
Revaluation
Reserve
Option
Reserve
Non-
controlling
Interests
Accumulated
Losses
Total
$
$
$
$
$
$
Balance at 1 July 2022
43,563,897
7,160,545
866,364
23,899,417
(35,541,736)
39,948,487
Comprehensive income
Loss attributable to company
shareholders for the period
-
-
-
(21,730)
(9,307,436)
(9,329,166)
Non-controlling interests
-
-
-
(64,789)
-
(64,789)
Other comprehensive
income for the period
-
1,208,691
-
-
-
1,208,691
Total comprehensive loss for
the period
-
1,208,691
-
(86,519)
(9,307,436)
(8,185,264)
Transactions with equity holders
in their capacity as equity
holders and other transfers:
Contribution of equity, net
of transaction costs
1,434,032
-
-
-
-
1,434,032
Director performance rights
-
-
5,000
-
-
5,000
Share-based payments - shares.
231,100
-
-
-
-
231,100
Share-based payment - supplier
90,000
-
-
-
-
90,000
Transfer to retained earnings
-
(1,891,956)
(769,749)
-
2,661,705
-
Transfer from NCI on de-stapling
30,744,991
-
-
(23,878,525)
(6,866,466)
-
Shares issued on exercise of rights
27,000
-
(27,000)
-
-
-
Total transactions with
equity holders
32,527,123
(1,891,956)
(791,749)
(23,878,525)
(4,204,761)
1,760,132
Balance at 30 June 2023
76,091,020
6,477,280
74,615
(65,628)
(49,053,933)
33,523,354
The accompanying notes form part of these financial statements.
30
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES
(a) Basis of Preparation
These general purpose consolidated financial statements have been prepared in accordance with the Corporations Act 2001, Australian
Accounting Standards and Interpretations of the Australian Accounting Standards Board and in compliance with International Financial
Reporting Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting
purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are
presented below and have been consistently applied unless stated otherwise.
The financial statements were authorised for issue by the Board of Directors as at the date of signing the directors’ declaration.
Except for cash flow information, the financial statements have been prepared on an accruals basis and are based on historical costs,
modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.
Going concern
The financial statements have been prepared using the going concern basis of preparation. During the year the Group incurred a loss of
$7.44 million (2023: $9.39 million loss), has total accumulated losses of $53.46 million and had a net cash outflow from operations of $4.44
million (2023: $7.05 million outflow). The Group’s cash and cash equivalent balance as at 30 June 2024 was $6.11 million and it has an
unutilised 2-year loan facility of $1.22 million.
The Board is satisfied the going concern basis of preparation remains appropriate, reaching such a conclusion after having regard to the
circumstances which they consider reasonably likely to affect the Group during the period of at least one year from the date of this report.
The Board has been closely monitoring working capital and cash flows throughout the year while infant formula product sales build, and the
Group works to gain access to international markets.
The Board is confident in the Group’s ability to continue as a going concern for the 12-month period based on its current cash and cash
equivalents and forecasts for the next 12 months. In addition to the above, as a listed entity, the Group also has capital raising opportunities
available to it from existing shareholders as well as sophisticated investors with strong alignment to the Group’s strategy and future
objectives.
The Board are satisfied at the date of signing the financial report there are reasonable grounds to believe that the Group will be able to
continue to meet its debts as and when they fall due and that it is appropriate for the financial statements to be prepared on a going
concern basis.
The financial report does not include any adjustments to the amounts or classifications of recorded assets or liabilities that might be
necessary should the Group not continue as a going concern.
(b) Principles of Consolidation
Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the Company and all subsidiaries from the date on
which control is obtained by the Company.
Subsidiaries are entities controlled by the Company. Control exists when the Company is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The financial
statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that
control ceases.
Inter-entity transactions, balances and unrealised gains on transactions between Company entities are eliminated. Unrealised losses are
also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency with the policies adopted by the Company.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the statement of comprehensive income and
statement of financial position respectively.
Investments in subsidiaries are accounted for at cost in the individual financial statements of the Company. A list of subsidiaries appears in
Note 23 to the consolidated financial statements.
31
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont’d)
(c) Income tax
Under current income tax legislation, the Trust is not liable to pay tax provided its taxable income and realised capital gains are distributed to
unitholders. The liability for capital gains tax that may arise if the land and buildings were sold is not accounted for in this report.
The Company’s income tax expense for the period is the tax payable on the current period’s taxable income adjusted by changes in de-
ferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts
in the financial statements and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered
or liabilities are settled, based on those tax rates which are enacted or substantively enacted. The relevant tax rates are applied to cumula-
tive amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain
temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation
to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not
affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for tempo-
rary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control
the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised in other comprehensive income or directly in equity are also rec-
ognised in other comprehensive income or directly in equity.
Tax consolidation
The Company and its wholly owned entities (this excludes the Trust) have formed a tax-consolidated group with effect from 1 July 2014
and are, therefore, taxed as a single entity from that date. The head entity within the tax consolidated group is Australian Dairy Nutritionals
Limited.
Current tax expense/income, deferred tax liabilities and deferred tax assets arising from temporary differences of the members of the tax
consolidated group are recognised in the separate financial statements of the members of the tax consolidated group, using the ‘separate
taxpayer within the group’ approach by reference to carrying amounts of assets and liabilities in the separate financial statements of each
entity and the tax values applying under tax consolidation.
Any current tax liabilities or assets and deferred tax assets arising from unused tax losses of the subsidiaries are assumed by the head entity
in the tax consolidated group and are recognised as amounts payable (receivable) to (from) other entities in the tax consolidated group
in conjunction with any tax funding arrangement amounts referred to in the following section. Any difference between these amounts is
recognised by the Company as an equity contribution or distribution.
The Company recognises deferred tax assets arising from unused tax losses of the tax consolidated group to the extent that it is probable
that future taxable profits to the tax consolidated group will be available against which the asset can be utilised. Any subsequent period
adjustment to deferred tax assets arising from unused tax losses, as a result of revised assessments of the probability of recoverability, is
recognised by the head entity only.
32
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont’d)
(c) Income tax (cont’d)
Tax funding arrangements and tax sharing arrangements
The head entity, in conjunction with other members of the tax consolidate group, has entered into a tax funding arrangement, which sets
out the funding obligations of members of the tax consolidated group in respect of tax amounts. The tax funding arrangements require
payments to/from the head entity equal to the current tax liability (asset) assumed by the head entity and any tax-loss deferred tax asset
assumed by the head entity, resulting in the head entity recognising an inter-entity receivable (payable) equal in amount to the tax liability
(asset) assumed. The inter-entity receivable (payable) is at call.
Contributions to fund the current tax liabilities are payable as per the tax funding arrangement and reflect the timing of the head entity’s
obligation to make payments for tax liabilities to the relevant tax authorities.
The head entity, in conjunction with other members of the tax consolidated group, has also entered into a tax sharing agreement. The tax
sharing agreement provides for the determination of the allocation of income tax liabilities between the entities should the head entity
default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this agreement, as
payment of any amounts under the tax sharing agreement is considered remote.
(d) Fair value of assets and liabilities
The Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the
requirements of the applicable Accounting Standard.
Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (ie unforced) transaction
between independent, knowledgeable and willing market participants at the measurement date.
As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value.
Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and
liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise,
to the extent possible, the use of observable market data.
To the extent possible, market information is extracted from either the principal market for the asset or liability (i.e. the market with the
greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available
to the entity at the end of the reporting period (i.e. the market that maximises the receipts from the sale of the asset or minimises the
payments made to transfer the liability, after taking into account transaction costs and transport costs).
For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest and best
use or to sell it to another market participant that would use the asset in its highest and best use.
The fair value of liabilities and the entity’s own equity instruments (excluding those related to share-based payment arrangements) may be
valued, where there is no observable market price in relation to the transfer of such financial instruments, by reference to observable market
information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and,
where significant, are detailed in the respective note to the financial statements.
(e) Inventories
Inventories and consumables held for use in operations are valued at the lower of cost and net realisable value. 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 method used to determine costs for inventory categories are:
Feedstocks, hay and silage: Purchase price of inventory and other direct costs for farm produced inventory.
Packaging: Purchase price of packaging including transport costs.
Raw materials: Purchase price of raw materials including transport costs.
Finished goods: Purchase price of raw materials, direct labour, other direct production costs and overheads.
(f) Biological Assets
Biological assets are comprised of crops and livestock (dairy cattle). Biological assets are measured at fair value less costs to sell, with any
change recognised in profit or loss. Costs to sell include all costs that would be necessary to sell the assets, including freight and direct
selling costs.
The Group, at each reporting date, appoints an external, independent valuer who having recent experience in the location and nature of
cattle held by the Group performs a valuation for the reporting date. Fair value is determined by reference to market values for cattle of
similar age, weight, breed and genetic make-up. The fair value represents the estimated amount for which cattle could be sold on the date
of valuation between a willing buyer and willing seller in an arm’s length transaction after proper marketing wherein the parties had each
acted knowledgeably, prudently and without compulsion.
33
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont’d)
(f) Biological Assets (cont’d)
In the event an independent valuer has not been appointed the Group determines whether an active or other effective market exists for a
biological asset in its present location and condition, the quoted price in that market is the appropriate basis for determining the fair value of
that asset. If an active market does not exist then the directors use one of the following valuation methods, when available, in determining
fair value:
•
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; or
•
market prices, in markets accessible to the entity, for similar assets with adjustments to reflect differences.
(g) Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions to the instrument.
For financial assets, this is the date that the Group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is
adopted).
Financial instruments (except for trade receivables) are initially measured at fair value plus transaction costs, except where the instrument
is classified at fair value through profit or loss, in which case transaction costs are expensed to profit or loss immediately. Where available,
quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.
Trade receivables are initially measured at the transaction price if the trade receivables do not contain a significant financing component or
if the practical expedient was applied as specified in AASB 15.63.
Classification and subsequent measurement
Financial liabilities
All of the Group’s financial liabilities are subsequently measured at amortised cost using the effective interest method.
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest expense in profit
or loss over the relevant period.
The effective interest rate is the internal rate of return of the financial asset or liability; that is, it is the rate that exactly discounts the
estimated future cash flows through the expected life of the instrument to the net carrying amount at initial recognition.
The Group does not have any financial liabilities classified as held for trading, designated as fair value through profit or loss or any financial
guarantee contracts.
A financial liability cannot be reclassified.
Financial assets
Financial assets are subsequently measured at:
•
amortised cost; or
•
fair value through other comprehensive income, or through profit and loss.
Measurement is on the basis of the two primary criteria:
•
the contractual cash flow characteristics of the financial asset; and
•
the business model for managing the financial assets.
A financial asset is subsequently measured at amortised cost if it meets the following conditions:
•
the financial asset is managed solely to collect contractual cash flows; and
•
the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the
principal amount outstanding on specified dates.
A financial asset is subsequently measured at fair value through other comprehensive income if it meets the following conditions:
•
the contractual terms within the financial asset give rise to cash flows that are solely payments of principal and interest on the
principal amount outstanding on specified dates; and
•
the business model for managing the financial asset comprises both contractual cash flows collection and the selling of the
financial asset.
By default, all other financial assets that do not meet the measurement conditions of amortised cost and fair value through other
comprehensive income are subsequently measured at fair value through profit or loss.
The Group does not have any financial assets classified at fair value through other comprehensive income or through profit and loss.
34
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont’d)
(g) Financial instruments (cont’d)
Derecognition
Derecognition refers to the removal of a previously recognised financial asset or financial liability from the statement of financial position.
Derecognition of financial liabilities
A liability is derecognised when it is extinguished (i.e. when the obligation in the contract is discharged, cancelled or expires). An exchange
of an existing financial liability for a new one with substantially modified terms, or a substantial modification to the terms of a financial
liability is treated as an extinguishment of the existing liability and recognition of a new financial liability.
The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any
non-cash assets transferred or liabilities assumed, is recognised in profit or loss.
Derecognition of financial assets
A financial asset is derecognised when the holder’s contractual rights to its cash flows expires, or the asset is transferred in such a way that
all the risks and rewards of ownership are substantially transferred.
All of the following criteria need to be satisfied for derecognition of financial assets:
•
the right to receive cash flows from the asset has expired or been transferred;
•
all risk and rewards of ownership of the asset have been substantially transferred; and
•
the Group no longer controls the asset (i.e. the Group has no practical ability to make a unilateral decision to sell the asset to a
third party).
On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the
consideration received and receivable is recognised in profit or loss.
On derecognition of an investment in equity which was elected to be classified as at fair value through other comprehensive income, the
cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to
retained earnings.
Impairment
The Group recognises a loss allowance for expected credit losses on:
•
financial assets that are measured at amortised cost;
Loss allowance is not recognised for:
•
financial assets measured at fair value.
Expected credit losses are the probability-weighted estimate of credit losses over the expected life of a financial instrument. A credit loss
is the difference between all contractual cash flows that are due and all cash flows expected to be received, all discounted at the original
effective interest rate of the financial instrument.
The Group uses the simplified approach to impairment, as applicable under AASB 9: Financial Instruments.
Simplified approach
The simplified approach does not require tracking of changes in credit risk at every reporting period, but instead requires the recognition of
lifetime expected credit loss at all times.
In measuring the expected credit loss, a provision matrix for trade receivables was used taking into consideration various data to get to an
expected credit loss (i.e. diversity of customer base, appropriate groupings of historical loss experience, etc.).
Recognition of expected credit losses in financial statements
At each reporting date, the Group recognises the movement in the loss allowance as an impairment gain or loss in the statement of profit or
loss and other comprehensive income.
The carrying amount of financial assets measured at amortised cost includes the loss allowance relating to that asset.
35
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont’d)
(h) Property, Plant and Equipment
Each class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation
and impairment losses.
Property
Freehold land and buildings are carried at their fair value (being the amount for which an asset could be exchanged between
knowledgeable, willing parties in an arm’s length transaction), based on periodic, but at least triennial, valuations by external independent
valuers, less accumulated impairment losses and accumulated depreciation for buildings.
Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation surplus in equity. Decreases that
offset previous increases of the same asset are recognised against revaluation surplus directly in equity; all other decreases are recognised
in profit or loss.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is
restated to the revalued amount of the asset.
Plant and equipment
Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated
impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying
amount is written down immediately to the estimated recoverable amount and impairment losses are recognised in profit or loss. A formal
assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(l) for details of impairment).
The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount
from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the
asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining
recoverable amounts.
The cost of fixed assets constructed within the Consolidated Group includes the cost of materials, direct labour, borrowing costs and an
appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs
and maintenance are recognised as expenses in profit or loss during the financial period in which they are incurred.
Depreciation
The depreciable amount of all fixed assets, including buildings but excluding freehold land, is depreciated on a straight-line basis over the
asset’s useful life to the Group commencing from the time the asset is available for use. Leasehold improvements are depreciated over the
shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.
The useful-life rates used for each class of depreciable assets are:
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at the end of each reporting period.
An assets carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
redeemable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are included in the
statement of profit or loss and other comprehensive income in the period which they arise. When revalued assets are sold, amounts included in
the revaluation surplus relating to that asset are transferred to retained earnings.
Class of Fixed Assets
Depreciation Rate (years)
Land
Not depreciated
Buildings
40 years
Fixed Improvements
30 years
Plant and equipment - owned
3-10 years
Plant and equipment - leased
2-5 years
Motor Vehicles
5 years
36
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont’d)
(i) Leases (the Group as lessee)
At inception of a contract, the Group assesses if the contract contains or is a lease. If there is a lease present, a right-of-use asset and a
corresponding lease liability is recognised by the Group where the Group is a lessee. However, all contracts that are classified as short-term
leases (lease with remaining lease term of 12 months or less) and leases of low value assets are recognised as an operating expense on a
straight-line basis over the term of the lease.
Initially the lease liability is measured at the present value of the lease payments still to be paid at commencement date. The lease payments
are discounted at the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses the incremental borrowing
rate.
Lease payments included in the measurement of the lease liability are as follows:
•
fixed lease payments less any lease incentives;
•
variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
•
the amount expected to be payable by the lessee under residual value guarantees;
•
the exercise price of purchase options, if the lessee is reasonably certain to exercise the options;
•
lease payments under extension options if lessee is reasonably certain to exercise the options; and
•
payments of penalties for terminating the lease if the lease term reflects the exercise of an option to
terminate the lease.
The right-of-use assets comprise the initial measurement of the corresponding lease liability as mentioned above, any lease payments
made at or before the commencement date as well as any initial direct costs. The subsequent measurement of the right-of-use assets is at
cost less accumulated depreciation and impairment losses.
Right-of-use assets are depreciated over the lease term or useful life of the underlying asset whichever is the shortest.
Where a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group anticipates exercising
a purchase option, the specific asset is depreciated over the useful life of the underlying asset.
(j) Employee Benefits
Short-term employee benefits
Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination
benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the
related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to
be paid when the obligation is settled.
The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part of current trade
and other payables in the statement of financial position. The Group’s obligations for employees’ annual leave and long service leave
entitlements are recognised as provisions in the statement of financial position.
Equity-settled payments
Share-based payments to employees are measured at the fair value of the instruments issued and amortised over the vesting periods. Share-based
payments to non-employees are measured at the fair value of goods or services received or the fair value of the equity instruments issued, if it is
determined the fair value of the goods or services cannot be reliably measured, and are recorded at the date the goods or services are received.
The corresponding amount is recorded to equity. The fair value of options is determined using a binomial pricing model. The number of shares
and options expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received
as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest.
37
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont’d)
(k) Impairment of Assets
At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indica-
tion that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s
fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recov-
erable amount is recognised immediately in profit or loss.
Impairment testing is performed annually for intangible assets with indefinite lives.
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
(l) Intangible Assets other than Goodwill
Recipes, formulations, trademarks and patents
Recipes, formulations, trademarks and patents are recognised at cost of acquisition. They have an indefinite life and are tested annually for
impairment and carried at cost less any accumulated impairment losses.
Product development
Product development is recorded at cost, has a finite life and is carried at cost less accumulated amortisation and any impairment losses.
Product development has an estimated useful life of between one and three years.
(m) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits available on demand with banks, other short-term highly liquid investments with
original maturities of three months or less.
(n) Trade and other receivables
Trade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business.
Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receiv-
ables are classified as non-current assets.
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest
method, less any provision for impairment. Refer to Note 1(g) for further discussion on the determination of impairment losses.
(o) Trade and other payables
Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the Group
during the reporting period which remains unpaid. The balance is recognised as a current liability with the amount being normally paid
within 30 days of recognition of the liability.
(p) Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from
the Australian Taxation Office (ATO).
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to,
the ATO is included with other receivables or payables in the statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recov-
erable from, or payable to, the ATO are presented as operating cash flows included in receipts from customers or payments to suppliers.
(q) Revenue and Other Income
Revenue recognition policies are as follows:
The sale of dairy farm and nutritional powder segment products are measured at the fair value of consideration received net of any trade
discounts and volume rebates allowed.
38
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont’d)
(q) Revenue and Other Income (cont’d)
The sale of nutritional powders represents a single performance obligation and accordingly, revenue will be recognised in respect of the
sale of these goods at the point in time when control over the corresponding goods and services is transferred to the customer (i.e. at a
point in time for sale of goods when the goods are delivered to the customer or transfer to the freight forwarder).
Dairy cattle fair value adjustments are determined at the end of each reporting date (refer Note 10). The amount of the net increment or
decrement in the fair value is recorded as either revenue or expense and is determined as:
•
The difference between the total net fair value of dairy cattle recognised at the beginning of the financial year and the total fair
value of dairy cattle recognised as at the reporting date; less
•
Costs expected to be incurred in realising the fair value (including freight and selling costs).
Dairy cattle sales are recognised when:
•
there has been a transfer of control to the customer (through the execution of a sales agreement at the time of delivery of the
cattle to the customer);
•
the quantity and quality of the cattle has been determined; and
•
the price is fixed and generally title has passed.
Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the
instrument.
(r) Critical Accounting Estimates and Judgments
The preparation of the financial statements requires directors to make judgements, estimates and assumptions that affect the reported
amounts in the financial statements. The director’s continually evaluate their judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses. Judgements and estimates are based on historical experience and on other various factors they
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.
Accounting measurements for which significant judgements, estimates and assumptions have been made are:
- Carrying value determination of land and buildings, refer Note 13(a);
- Carrying value determination of right of use assets, refer Note 11(a);
- Carrying value determination of intangible assets, refer Note 12(a)(i);
- Fair value determination of livestock, refer Note 10;
- Share-based payments, refer Note 26; and
- Income tax and other taxes, refer Note 5;
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.
39
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 1: SUMMARY OF MATERIAL ACCOUNTING POLICIES (cont’d)
(s) Comparative figures
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current
financial year.
Where the Group has retrospectively applied an accounting policy, made a retrospective restatement of items in the financial statements
or reclassified items in its financial statements, an additional statement of financial position as at the beginning of the earliest comparative
period will be disclosed.
(t) New and Amended Accounting Standards and Interpretations Adopted by the Group
The Australian Accounting Standards Board (AASB) has issued a number of standards and amendments to standards that are mandatory for
the first time in the reporting period commenced 1 July 2023. The Group has assessed and determined that there are no new or amended
standards applicable for the first time for the financial report for the year ended 30 June 2024, that materially affect the Group’s accounting
policies or any of the amounts recognised in the financial statements.
40
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 2: PARENT ENTITY
The following information has been extracted from the books and records of the parent and has been prepared
in accordance with Accounting Standards.
2024
2023
$
$
Statement of Financial Position
Assets
Current Assets
18,537,194
18,145,754
Non-current Assets
12,233,444
12,695,232
Total Assets
30,770,638
30,840,986
Liabilities
Current Liabilities
1,751,585
757,466
Non-current Liabilities
2,434
64,614
Total Liabilities
1,754,019
822,080
Equity
Issued capital
76,733,410
76,091,020
Reserves
-
74,615
Retained earnings
(47,716,791)
(46,146,729)
Total Equity
29,016,619
30,018,906
Statement of Comprehensive Income
Total loss
(1,644,679)
(25,728,692)
Total comprehensive loss
(1,644,679)
(25,728,692)
Contingent liabilities and guarantees
The Company does not have any contingent liabilities or guarantees for the year ended 30 June 2024.
Contractual commitments
At 30 June 2024, the parent company had not entered into any contractual commitments.
41
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 3: REVENUE AND EXPENSES
2024
2023
Footnote
$
$
(a) Revenue
Continued operations
Revenue from contracts with customers
(i)
6,175,188
5,804,396
Other sources of revenue
(ii)
87,883
51,281
6,263,071
5,855,677
Discontinued operations
Revenue from contracts with customers
(i)
-
2,131,077
Other sources of revenue
(ii)
-
12,556
-
2,143,633
6,263,071
7,999,310
(i) Revenue disaggregation
The revenue is disaggregated by service line and timing of revenue recognition.
Service lines
- Nutritional powders
640,895
407,300
- Dairy Farms
5,534,293
5,397,096
- Dairy Processing
-
664,743
- Consumer Direct
-
1,466,334
6,175,188
7,935,473
Timining of revenue recognition
Services transferred to customers:
- at a point in time
6,175,188
7,935,473
(ii) Other sources of revenue
Interest - unrelated
20,916
4,046
Farm costs recoveries
25,100
31,200
Fuel rebate and other revenue
41,867
28,591
87,883
63,837
(b) Expenses
(i) Finance costs
Loans - secured
88,878
-
Loans - unsecured
19,556
25,906
Loan - related party
-
2,904
Right of use assets
27,747
27,938
136,181
56,748
.
42
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 3: REVENUE AND EXPENSES, (cont’d)
Note
2024
2023
(b) Expenses continued.
$
$
(ii) Dairy related costs
Feed costs
2,334,127
1,722,050
Repairs, maintenance and vehicle costs
346,029
363,926
Animal health costs
20,323
31,495
Land holding and lease costs
25,850
30,969
Breeding and herd testing expenses
86,810
59,032
Dairy shed expenses
136,518
104,183
Electricity
117,594
125,688
Other dairy farm related costs
1,074,660
1,221,715
4,141,911
3,659,058
(iii) Infant formula related costs:
Cost of goods sold
460,730
294,461
Inventory impairment
612,198
916,519
Manufacturing related costs
728,955
909,352
Advertising and marketing costs
327,722
660,970
Property related costs
40,831
28,368
Other infant formula costs
116,280
367,120
2,286,716
3,176,790
(iv) Employee benefits expense
Employee and director remuneration costs
3,061,012
3,120,974
Equity settled share-based payment costs
26(e)
-
231,100
3,061,012
3,352,074
(v) Administration and non-dairy related costs
Administraion costs
401,846
504,929
Equity settled share-based payment - professional costs
26(e)
-
90,000
Professional costs
326,622
277,543
Property costs
43,323
43,707
771,791
916,179
(vi) Impairment expenses
Property, plant and equipment
13
111,630
149,769
Intangible assets
12
244,592
-
356,222
149,769
.
43
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 4: DISCONTINUED OPERATIONS
2023 Comparative:
a) On 22 August 2022, the Group ceased fresh milk processing at its Camperdown Dairy Manifold Street site and on 29 June 2023 the
Group announced the sale of the Camperdown dairy equipment and transfer of the Manifold Street lease to complete the closure of
the discontinued fresh dairy processing activites. Cash consideration of $1,050,000 was received and a $1,025,217 loss on disposal of
property, plant and equipment was recorded in discontinued operations.
(b) With the closure of the Group’s fresh milk processing at Camperdown and with the consumer direct business achieving losses,
the Group sold Victorian Farmers Direct Pty Ltd On 28 April 2023 for $19,600. A gain of $12,557 from disposal of subsidiaries
was recorded in discontinued operations.
2024
2023
(c) Statement of Profit or Loss and Other Comprehensive Income for the period
from discontinued operations:
$
$
Revenue
-
2,131,076
Other Income
-
12,557
Employment expenses
-
(477,152)
Finance costs
-
(18,634)
Dairy product related costs
-
(2,805,531)
Depreciation and amortisation expense
-
(122,736)
Loss on disposal of property, plant and equipment
-
(1,025,217)
Loss before income tax
-
(2,305,637)
Income tax expense
-
-
Net loss from discontinued operations
-
(2,305,637)
(d) The net cash flows of the discontinued operation, which have been
incorporated into the statement of cash flows, are as follows:
2024
2023
$
$
Net cash outflow from operating activities
-
(1,222,900)
Net cash outflow from investing activities
-
1,048,774
Net cash outflow from from financing activities
-
(79,395)
Net cash outflow by discontinued operations
-
(253,521)
.
44
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 5: INCOME TAX EXPENSE
2024
2023
$
$
(a) The prima facie tax on profit before income tax is reconciled to the income
tax as follows:
Prima facie tax payable / (benefit) on profit / (loss) from ordinary activities before
income tax at 25% (2023: 25%):
(1,859,794)
(2,311,047)
Add / (less)
Tax effect of:
- trust (profit) / loss not recognised
-
(1,711,184)
- current period tax losses not recognised
274,626
2,049,103
- net amount of expenses not currently deductible
783,316
2,033,810
- other income not included in assessable income
801,852
(60,682)
Income tax expense / (benefit) attributable to entity
-
-
Applicable weighted average effective tax rates are nil due to losses.
(b) Deferred tax assets not recognised
Deferred tax assets and liabilities not brought to account, the net benefit of which will only be realised if the conditions for deductibility set out
in Note 1 occur. The amount of losses ultimately available is also dependent on compliance with conditions of deductibility imposed by law.
2024
2023
$
$
Temporary differences
2,035,735
452,820
Tax losses
11,867,419
11,592,793
Net unbooked deferred tax assets
13,903,154
12,045,613
The Group has significant carry forward tax losses and will only be able to utilise these losses subject to it satisfying certain carry forward
rules and other taxation legislation such as the Same Business Test and/or the Continuity of Ownership Test. Due to the changes that have
occurred within the Group since these losses commenced accumulating, there is uncertainty as to the likelihood of the Group being able
to utilise these losses. The Group has previously endeavoured to obtain a private ruling as to the status of its carry forward losses from the
Australian Taxation Office (ATO) only to be advised that the ATO will not rule on the applicability of carry forward tax losses until such time
as the Group endeavours to utilise those losses.
The 2023 comparative year amounts have been re-stated to agree to tax returns as lodged.
.
45
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 6: CASH AND CASH EQUIVALENTS
2024
2023
Note
$
$
Current
Cash at bank and in hand
6,106,312
2,007,429
Total cash and cash equivalents
27
6,106,312
2,007,429
Cash at bank earns interest at floating rates based on daily bank deposit rates.
(a) Reconciliation of Cash
For the purpose of the Consolidated Cash Flow Statement, cash includes cash
and cash equivalents comprising the following at 30 June 2024:
Cash at bank and in hand
6,106,312
2,007,429
6,106,312
2,007,429
(b) Reconciliation of Profit after Income Tax to Cash Flows from Operations
Net loss after income tax
(7,439,176)
(9,393,955)
Adjustment of non cash items
Amortisation & depreciation
1,047,867
875,593
Deemed cost of livestock disposed
1,554,415
641,606
Fair value adjustment of biological assets
346,132
238,913
Net loss on disposal of property, plant and equipment
9,933
41,276
Loss on disposal of property, plant and equipment - discontinued operations
-
1,025,217
Inventory impairments
612,198
916,519
Impairment expenses
356,222
149,769
Bad debts and impairment provision
-
7,193
Gain on disposal of subsidiary
-
(12,557)
Finance costs
88,878
(2,770)
Equity settled share-based payments
-
258,600
Changes in assets and liabilities, net of the effects of purchase of subsidiaries
(Increase) / decrease in trade and other receivables
49,527
301,979
(Increase) / decrease in other assets
(40,466)
276,139
(Increase) / decrease in inventories
(728,838)
(865,232)
Increase / (decrease) in trade and other payables
146,411
(1,514,678)
Increase / (decrease) in provisions
(442,098)
5,202
Net operating cash flows
(4,438,996)
(7,051,186)
(c) Changes in liabilities arising from finance activities
1 July 2023
Cash flows
Non-cash Movements
30 June 2024
$
$
$
$
Borrowings
-
1,710,919
29,038
1,739,957
Lease liabilities
1,040,525
(527,858)
-
512,667
1,040,525
1,183,061
29,038
2,252,624
46
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 7: TRADE AND OTHER RECEIVABLES
2024
2023
Note
$
$
Current
Trade debtors
529,625
621,253
Other receivables
68,448
39,137
Total current trade and other receivables
27
598,073
660,390
The Group applies the simplified approach to providing for expected credit loss prescribed by AASB 9, which permits the use of the lifetime
expected loss provision for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on
shared credit risk characteristics and the days past due.
The Group has not recorded an impairment for expected credit losses in the current or prior year as all trade and other receivables are
considered credit worthy with no material balances past due. The effect of any expected credit loss is considered immaterial.
(a) Lifetime Expected Credit Loss Credit Impaired
2024
Current
> 30 days past due
> 60 days past due
>90 days past due
Total
$
$
$
$
$
Expected loss rate
0%
0%
0%
0%
-
Gross carrying amount
594,583
-
-
3,490
598,073
Loss allowance provision
-
-
-
-
-
2023
Current
> 30 days past due
> 60 days past due
>90 days past due
Total
$
$
$
$
$
Expected loss rate
0%
0%
0%
0%
-
Gross carrying amount
621,453
38,718
219
-
660,390
Loss allowance provision
-
-
-
-
-
Credit Risk
The Group has a significant concentration of credit risk with two (2023: one) key customer totaling $454,417 (2023: $527,291) or 76% (2023:
80%) of receivables at balance date. There is no impairment on these customers and outstanding amounts, the customers have always paid
within terms and are within terms at year end.
The class of assets described as “trade and other receivables” is considered to be the main source of credit risk to the Group.
On a geographical basis, the Group has all credit risk exposures in Australia.
The Group always measures the loss allowance for trade receivables at an amount equal to lifetime expected credit loss. The expected credit
losses on trade receivables are estimated using a provision matrix by reference to past default experience of the debtor and an analysis of the
debtor’s current financial position, adjusted for factors that are specific to the debtor, general economic conditions of the industry in which the
debtor operates and an assessment of both the current and the forecast direction of conditions at the reporting date.
There has been no change in the estimation techniques used or significant assumptions made during the current reporting period.
The Group writes off a receivable when there is information indicating that the debtor is in severe financial difficulty and there is no realistic
prospect of recovery.
(b) Financial Assets Measured at Amortised Cost
2024
2023
Note
$
$
Trade and other receivables
Total current
598,073
660,390
Total financial assets measured at amortised cost
27
598,073
660,390
47
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 8: INVENTORIES
Note
2024
2023
Current
$
$
Feedstocks, hay and silage
140,934
225,901
Packaging
65,631
18,161
Raw materials, finished goods and chemicals
1,417,229
1,263,091
Total inventories (at cost)
1,623,793
1,507,153
NOTE 9: OTHER ASSETS
2024
2023
$
$
Current
Prepayments
363,043
227,017
Bonds and deposits
27
21,050
49,250
Total other assets
384,093
276,267
NOTE 10: BIOLOGICAL ASSETS
2024
2023
Footnote
$
$
Current
Feed crops
238,558
225,521
Non-current
Dairy livestock
(i)
1,635,139
3,535,686
Total biological assets
1,873,697
3,761,207
Opening carrying amount
3,535,686
4,416,205
Deemed cost of livestock disposed
(1,554,415)
(641,606)
Loss from changes to fair value
(346,132)
(238,913)
Closing carrying amount
1,635,139
3,535,686
Movement during the year (herd numbers):
2024
2023
No.
No.
Opening balance
2,305
2,227
Natural increase and attrition
754
860
Sales
(1,385)
(782)
Closing balance
1,674
2,305
(i) Biological assets represent the dairy livestock owned by the Group. At 30 June 2024, the livestock has been valued at fair value, by
independent stock agents, based on the prices in the open cattle market in the locality of the dairy operations. A fair value loss of
$346,132 (2023: $238,913) has been recognised in profit and loss at 30 June 2024, and represents price movements, natural increase
and the movement in ages of young stock.
Financial risks associated with the Group’s dairy herd relates to selling prices of milk, and is managed by way of contracted revenue prices.
During the year ended 30 June 2024, the Group produced 5.8 million litres (2023: 6.2 million litres) of raw milk. The average number of
cows milked during the year was 939 (2023: 1,051).
48
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 11: RIGHT OF USE ASSETS
(a) AASB 16 related amounts recognised in the statement of financial position
2024
2023
$
$
Right of use assets
Leased land and buildings
1,483,969
1,483,968
Accumulated depreciation
(968,629)
(473,972)
Total right of use assets
515,340
1,009,996
Movement in carrying amounts:
Footnote
Opening balance
(i)
1,009,996
569,654
Additions
(ii)
-
1,081,099
Disposals
(iii)
-
(168,858)
Depreciation expense
(494,656)
(471,900)
Net carrying amount
515,340
1,009,996
(i) The Group has the following carried forward land and building leases recognised under AASB16.
• a 3-year lease on 368 acres of land on Cooramook Road, Grassmere, Victoria, with an expiry date of 24 December 2024.
• a 3-year lease on a warehouse at 3/216 Blackshaws Road, Altona North, Victoria, with an expiry date of 31 May 2025.
• a 3-year lease on 410 acres of land at 463 Moreys Road, Brucknell, Victoria with an expiry date of 14 July 2025.
• a 3-year lease on 229 acres of land at 463 Moreys Road, Brucknell, Victoria with an expiry date of 14 July 2025.
• a 3-year and 3 months lease on 651 acres of land at Claidheamh, Darlington, Victoria with an expiry date of 22 March 2026.
(ii) The Group did not enter into any leases recognised under AASB 16 during the year.
(iii) There were no disposals of leases recognised under AASB 16 during the year.
49
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 11: RIGHT OF USE ASSETS, (cont’d)
(b) AASB 16 related amounts recognised in the statement of profit or loss
Note
2024
2023
$
$
Depreciation charge related to right of use assets
376,743
414,266
Interest expense on lease liabilities (included in finance costs)
27,747
23,334
(c) AASB 16 related amounts recognised in the statement of cash flows
Total cash outflows for leases
550,181
484,053
(d) Lease liabilities
Current
Lease liabilities
464,215
555,605
Total current lease liabilities
464,215
555,605
Non-current
Lease liabilities
48,452
484,920
Total non-current lease liabilities
48,452
484,920
Total lease liabilities
27
512,667
1,040,525
NOTE 12: INTANGIBLE ASSETS
2024
2023
$
$
Recipes, formulations, trademarks and patents
-at cost
385,737
597,987
385,737
597,987
Product development
-at cost
59,505
59,505
Less accumulated amortisation
(51,535)
(21,760)
7,970
37,745
Total intangible assets
393,707
635,732
(a) The movement in carrying amounts of intangibles comprises:
Footnote
Opening balance
635,732
547,481
Additions in year
32,342
110,011
Impairment expenses
(i)
(244,592)
-
Amortisation
(29,775)
(21,760)
Closing balance
393,707
635,732
(i) The useful lives of intangible assets have been assessed at 30 June 2024 and following the deletion of the Future range the Board
has written off the Recipes, formulations, trademarks and patents for the Future brand.
50
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 13: PROPERTY, PLANT AND EQUIPMENT
2024
2023
Footnote
$
$
Land, buildings and improvements
- at fair value
13,550,778
20,500,000
less accumulated depreciation
(106,562)
-
(a)
13,444,216
20,500,000
Plant and equipment
- at cost
6,900,204
6,901,800
less accumulated depreciation
(1,492,838)
(1,020,214)
5,407,366
5,881,586
Total property, plant and equipment
18,851,582
26,381,586
(a) Below is a table showing the carrying value of land and buildings and improvements by property:
Property name
Footnote
Acquisition Date
2024
2023
Brucknell No 2
(i)
22 October 2014
-
7,000,000
Yaringa - Nirranda South
(ii)
4 October 2018
8,544,216
8,400,000
Infant Formula Facility
(iii)
1 July 2022
4,900,000
5,100,000
Total
13,444,216
20,500,000
(i) Registered valuers Preston Rowe Paterson completed an independent valuation of the farm for 30 June 2023. The basis of the
valuation was ‘As Is and In Use’ with vacant possession and the fair value of the farm was $7,000,000. On 22 December 2023 the
Group announced to the ASX that it had entered a binding contract of sale for the farm for $7,125,000 and the sale completed
on 24 April 2024.
(ii) Registered valuers Preston Rowe Paterson completed an independent valuation of the farm for 30 June 2023. The basis of the valuation
was ‘As Is and In Use’ with vacant possession and the fair value of the farm was $8,400,000. The Board has reviewed carrying amounts at
30 June 2024 and are satisfied they are not impaired and the best estimate of the property values are the independent valuations from
June 2023 plus capitalised costs from the valuation date, less depreciation. As per (i) above, the Brucknell No 2 farm sale completed 24
April 2024 for a price in excess of the the 30 June 2023 valuation, providing further support the estimate remains appropriate.
(iii) Registered valuers IPN Valuers - Greater Geelong completed an independent valuation of the Depot & Old Geelong Road land and
infant formula building for 30 June 2023. The basis of valuation was a cost approach using the summation of land and improvements,
supported by comparable sales evidence and capitalisation of income. The combined fair value was assessed at $5,100,000 and an
impairment expense of $149,769 was reflected in the profit and loss on 30 June 2023. At 30 June 2024, with reference to the previous
valuation, IPN Valuers completed an updated assessment of the current fair value at $4,900,000 and an impairment expense of
$111,630 is reflected in the profit and loss for 30 June 2024.
51
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 13: PROPERTY, PLANT AND EQUIPMENT, (cont’d)
(b) Movements in the carrying amounts:
Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current
financial year:
Land, Buildings &
Improvements
Plant &
Equipment
Total
2024
$
$
$
Balance beginning of the financial year
20,500,000
5,881,586
26,381,586
Additions
178,216
71,031
249,247
Disposals
(6,987,592)
(38,679)
(7,026,271)
Transfer between classes
(5,451)
5,451
-
Fair value adjustments
(111,630)
-
(111,630)
Depreciation expense
(129,327)
(512,023)
(641,350)
Balance at end of financial year
13,444,216
5,407,366
18,851,582
Land, Buildings &
Improvements
Plant &
Equipment
Total
2023
$
$
$
Balance beginning of the financial year
19,359,298
7,643,990
27,003,288
Additions
134,095
691,786
825,881
Disposals
(118,059)
(2,177,612)
(2,295,671)
Fair value adjustments
1,284,536
-
1,284,536
Depreciation expense
(159,870)
(276,578)
(436,448)
Balance at end of financial year
20,500,000
5,881,586
26,381,586
NOTE 14: TRADE AND OTHER PAYABLES
2024
2023
Note
$
$
Current
Trade creditors
336,903
485,711
Sundry creditors and accrued expenses
741,855
459,427
Total trade and other payables
1,078,758
945,138
Financial liabilities at amortised cost classified as trade and other payables
Total Trade and other payables
1,078,758
945,138
Financial liabilities as trade and other payables
27
1,078,758
945,138
52
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 15: PROVISIONS
2024
2023
$
$
Current
Employee benefits
268,196
699,559
Total current provisions
268,196
699,559
Non-Current
Employee benefits
20,450
31,184
Total non-current provisions
20,450
31,184
288,646
730,743
Opening Balance
730,743
725,541
Additional provisions
74,627
276,434
Amounts used
(516,724)
(271,232)
Closing Balance
288,646
730,743
Provision for employee benefits
A provision has been recognised for employee entitlements relating to annual leave and long service leave. In calculating the present
value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data.
The measurement and recognition criteria relating to employee benefits have been included in Note 1(j) to this report.
NOTE 16: BORROWINGS
2024
2023
Footnote
$
$
Current
Loans - unsecured
(i)
34,905
-
Loans - secured
(ii)
1,780,000
-
Transaction costs
(74,948)
-
Total current borrowing
1,739,957
-
(i) The Group has unsecured short-term loans for payment of the Group’s insurance policies.
(ii) On 5 December 2023, the Group established a $3,000,000 secured loan facility with Gippsreal Limited. The facility is secured against the
Group’s Yaringa dairy farm as well as a first ranking security over the assets of the borrower in connection with the property. The loan
is for a period of 24 months and the lender has the right to review the terms and conditions of the loan on an annual basis. Interest is
calculated on a variable interest rate at the Reserve Bank of Australia prevailing rate plus a margin of 5.4% per annum. At 30 June 2024
the Group has drawn down $1,780,000 (2023: $nil) of the facility.
53
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 17: ISSUED CAPITAL
2024
2023
$
$
Contributed equity of the Group
76,733,411
76,091,020
(a) Movement in ordinary shares at 30 June 2024:
Details
Date
Number of
Shares
Issued Capital
Issue Price
$
$
Opening balance
1 Jul 2023
611,472,858
76,091,020
-
Placement shares (i)
11 Jul 2023
32,272,727
710,000
0.022
Placement shares (ii)
11 Jul 2023
12,121,212
-
-
Cancellation of loan securities (iii)
19 Jan 2024
(9,500,000)
-
-
Transaction costs
-
-
(67,609)
-
30 June 2024
-
646,366,797
76,733,411
-
(i) On 11 July 2023, there were 32,272,727 shares issued to sophisticated investors. The fair value of shares issued, determined by reference
to the placement price of $0.022, was $710,000, with transaction costs of $67,609.
(ii) On 26 April 2023, there were 33,333,333 shares issued to Mr Xin Yang in a private placement. The fair value of shares issued, determined
by reference to the placement price of $0.03, was $1,000,000, with transaction costs of $50,000. Subsequent to the initial issue, on 11
July 2023, Mr Yang was issued a further 12,121,212 top up shares to ensure consistency with the price of the completed share purchase
plan on 29 June 2023.
(iii) On 19 January 2024, 9,500,000 loan securities issued under the Company’s Long Term Incentive Plan were bought back.
(b) Movement in stapled securities at 30 June 2023:
Details
Date
Number
of Stapled
Securities
Shareholders
Unitholders
Issued Capital
Issue Price
$
$
$
$
Opening balance
01 Jul 2022
548,552,225
43,563,897
30,744,991
74,308,888
-
Employee performance securities (i)
24 Aug 2022
3,230,000
226,100
-
226,100
0.070
Performance rights exercised (ii)
24 Aug 2022
1,500,000
27,000
-
27,000
0.018
Transfer from NCI on de-stapling (iii)
5 Dec 2022
-
30,744,991
(30,744,991)
-
-
Supplier securities (iv)
16 Dec 2022
1,800,000
90,000
-
90,000
0.050
Employee performance securities (v)
16 Dec 2022
100,000
5,000
-
5,000
0.050
Placement shares (vi)
26 Apr 2023
33,333,333
1,000,000
-
1,000,000
0.030
Share purchase plan (vii)
29 Jun 2023
22,957,300
505,061
-
505,061
0.022
Transaction costs
-
(71,029)
-
(71,029)
-
30 June 2023
611,472,858
76,091,020
-
76,091,020
-
Until 5 December 2022, the stapled securities of the Group were comprised of one share in the Company and one unit in the Trust.
(i) On 24 August 2022, there were 3,230,000 stapled securities issued as a share-based payment under the AHF Long Term Incentive
Plan at a price of $0.070 per security. The fair value of securities issued, determined by reference to the market price, was $226,100.
(ii) On 24 August 2022, there were 1,500,000 stapled securities issued at a price of $0.018 per security upon vesting of employee
performance rights.
(iii) On 5 December 2022, the Company and the Trust were destapled.
(iv) On 16 December 2022, there were 1,800,000 shares issued as a share-based payment for consulting services under the AHF Long
Term Incentive Plan at a price of $0.05 per security. The fair value of securities issued, determined by reference to the market price,
was $90,000.
54
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 17: ISSUED CAPITAL, (cont’d)
(v) On 16 December 2022, there were 100,000 shares issued as a share-based payment under the AHF Long Term Incentive Plan at a price
of $0.050 per security. The fair value of securities issued, determined by reference to the market price, was $5,000.
(vi) On 26 April 2023, there were 33,333,333 shares issued to Mr Xin Yang in a private placement. The fair value of shares issued,
determined by reference to the placement price of $0.03, was $1,000,000, with transaction costs of $50,000. Subsequent to the year
end on 11 July 2023, Mr Yang was issued a further 12,121,212 top up shares to ensure consistency with the price of the completed
share purchase plan on 29 June 2023.
(vii) On 29 June 2023, there were 22,957,300 shares issued on completion of a Share Purchase Plan (SPP). The fair value of shares issued,
determined by reference to the SPP price of $0.022 per share, was $505,061.
NOTE 18: RESERVES
Nature and purpose of reserves
Option reserve
The option reserve records amounts recognised on issue of share-based payments (options and securities).
Asset revaluation reserve
The asset revaluation reserve records revaluation of land and buildings.
NOTE 19: COMMITMENTS
There are no capital expenditure commitments contracted for the year ended 30 June 2024 (2023: nil).
NOTE 20: CONTINGENT LIABILITIES
The Group does not have any contingent liabilities for the year ended 30 June 2024 (2023: nil).
NOTE 21: KEY MANAGEMENT PERSONNEL COMPENSATION
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each member of the
Group’s key management personnel (KMP) for the year ended 30 June 2024.
The totals of remuneration paid to KMP of the Company and the Group during the year are as follows:
2024
2023
$
$
Short term
690,910
817,548
Post-employment
59,872
50,515
Other Long-term
201,911
9,211
Share-based payments
-
5,000
952,693
882,274
Short-term employee benefits
These amounts include fees and benefits paid to the non-executive Chair and non-executive directors as well as all salary, leave benefits,
fringe benefits and cash bonuses awarded to executive directors and other KMP.
Post-employment benefits
These amounts are the current-year’s cost of providing for the Group’s superannuation contributions made during the year.
Other long-term benefits
These amounts represent long service leave benefits accruing during the year and termination payments.
Share-based payments
These amounts represent the expense related to the participation of KMP in equity settled remuneration, as measured by the fair value
of the options, rights and shares granted on grant date.
Further information in relation to KMP remuneration can be found in the directors’ report.
55
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 22: AUDITORS’ REMUNERATION
Remuneration of the auditor for:
2024
2023
$
$
Audit and review of the financial statements
89,651
80,342
NOTE 23: CONTROLLED ENTITIES
Particulars in relation to controlled entities
Footnote
Class of
Equity
2024
Percentage
Owned
2023
Percentage
Owned
Parent Entity:
%
%
Australian Dairy Nutritionals Limited
(a)
Wholly Owned Controlled Entities
SW Dairy Farms Pty Ltd
ordinary
100
100
Dairy Fund Management Limited
(b)
ordinary
-
100
Camperdown Dairy Company Pty Ltd
ordinary
100
100
Organic Nutritionals Pty Ltd
ordinary
100
100
Regen Properties Pty Ltd
ordinary
100
100
Regen Farms Pty Ltd
ordinary
100
100
Regen Operations Pty Ltd
ordinary
100
100
Camperdown Dairy Park Trust
units
100
100
Other Controlled Entities
Ocean Dairy Pty Ltd
ordinary
50
50
All controlled entities have the same financial year end as that of the holding company and all controlled entities are incorporated in
Australia. All entities principal place of business and country of incorporation is Australia. All ownership interests are directly held and have
equal voting rights. There are no significant restrictions over the Group’s ability to access or use assets, and settle liabilities, of the Group.
(a) Ultimate Controlling Entity
The ultimate controlling entity of the Group is Australian Dairy Nutritionals Limited.
(b) Deregistered entities
Dairy Funds Management Limited was deregistered on 3 July 2024.
(c) Transactions with Non-controlling interests in ADFT
ADFT was a controlled entity. On 5 December 2022, the shares in the Company were destapled from the units in the Trust. The consolidated
financial statements for the year ended 30 June 2023 were presented as a continuation of the existing Group with the Company as the
accounting parent entity. The destapling constitutes a transaction amongst owners, where previously they held their interest through the
Company and Trust (the non-controlling interest), and after the destapling they hold all of their interest directly through the Company. The
impact of the destapling has been recognised in equity whereby the issued units of the Trust have been transferred to issued capital in the
Company and the retained earnings in the Trust have been transferred to retained earnings in the Company.
Following the destapling of ADFT and the Company, the Board elected to forgive all intercompany loans with ADFT. This resulted in a
revenue from forgiveness of the loans of $6,866,466 in the June 2023 comparative.
NOTE 24: RELATED PARTY TRANSACTIONS
(a) The Group’s main related parties are as follows
(i) Entities exercising control over the Group:
The ultimate parent entity that exercises control over the Group is Australian Dairy Nutritionals Limited, which is incorporated in Australia.
(ii) Key management personnel:
Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly,
including any director (whether executive or otherwise) of that entity, are considered key management personnel.
For details of disclosures relating to key management personnel, refer to Note 21.
56
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 24: RELATED PARTY TRANSACTIONS, (cont’d)
(a) The Group’s main related parties are as follows, continued.
(iii) Other related parties:
Other related parties include entities controlled by the ultimate parent entity and entities over which key management personnel
have joint control.
(b) Transactions with related parties:
Transactions between related parties are on normal commercial terms and conditions no more favorable than those available to other
parties unless otherwise stated.
The following transactions occurred with related parties:
(i) Director related entities
Adrian Rowley is a director of Watershed Funds Management Pty Ltd. During the comparative year ended 30 June 2023, Watershed Funds
Management Pty Ltd was paid $33,450 for the provision of services by Adrian Rowley as director. There was no amounts due at 30 June 2023.
Jason Dong is a director of OZVIC Group Pty Ltd. During the comparative year ended 30 June 2023, OZVIC Group Pty Ltd was paid
$142,497 for the provision of consultancy services by Jason Dong. There was no outstanding amounts due at 30 June 2023.
(ii) Funding amongst Group entities is on an unsecured, interest free, no fixed term basis.
NOTE 25: SEGMENT REPORTING
The Group has identified its operating segments based on the internal reports that are reviewed by the Board in assessing performance and
determining the allocation of resources.
The Group is managed primarily on the basis of product category since the diversification of the Group’s operations inherently have notably
different risk profiles and performance assessment criteria. Operating segments are therefore determined on the same basis.
Reportable segments disclosed are based on aggregating operating segments where the segments are considered to have similar economic
characteristics and are also similar with respect to the following:
• the products sold and/or services provided by the segment;
• the type or class of customer for the products or service; and
• external regulatory requirements.
The Group has two reportable segments:
Nutritional Powders - There has been no change to the nutritional powders segment which includes the processing and sale of dairy and
nutritional products to domestic and international markets.
Dairy Farms - There has been no change to the dairy farms segment which includes the ownership and operation of dairy farms and dairy
livestock for the production and sale of fresh raw milk for conversion to milk and milk products.
Basis of accounting for purposes of reporting by operating segments
Accounting policies adopted
Unless otherwise stated, all amounts reported to the Board with respect to operating segments are determined in accordance with
accounting policies that are consistent to those adopted in the annual financial statements of the Group.
Corporate costs and KMP remuneration have not been allocated to segments but are reviewed by the Board and there are no
intersegment sales.
Segment assets
If an asset is used across multiple segments, if possible, it is allocated to the segment that receives the majority of economic value from it,
otherwise it is split between segments. Segment assets are generally identifiable on the basis of their nature and physical location.
Segment liabilities
Liabilities are, if possible, allocated to segments where there is a direct nexus between the incurrence of the liability and the operations of
the segment, otherwise they are split between segments. Segment liabilities include trade and other payables.
57
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 25: SEGMENT REPORTING, (cont’d)
(i) Segment Performance
30 June 2024
Nutritional
Powders
Dairy Farms
Total
$
$
$
Revenue
External sales
668,177
5,573,978
6,242,155
Interest revenue
-
20,916
20,916
Total segment revenue
668,177
5,594,894
6,263,071
Total group revenue
6,263,071
Segment net loss before tax
(3,704,420)
(1,928,606)
(5,633,026)
Reconciliation of segment result to group net profit/loss before tax:
Amounts not included in segment result but reviewed by the Board:
- Corporate charges
(903,075)
(903,075)
(1,806,150)
Net loss before tax
(7,439,176)
(ii) Segment Performance
30 June 2023
Revenue
External sales
413,441
5,438,190
5,851,631
Interest revenue
-
4,046
4,046
Total segment revenue
413,441
5,442,236
5,855,678
Total Group revenue
-
-
5,855,678
Segment net profit / (loss) before tax
(3,859,599)
(724,160)
(4,583,759)
Reconciliation of segment result to group net profit/loss before tax:
Amounts not included in segment result but reviewed by the Board:
- Corporate charges
(626,140)
(1,252,280)
(1,878,420)
- Corporate charges allocated to discontinued operations
-
-
(626,139)
Net loss from continuing operations before tax
(7,088,318)
58
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 25: SEGMENT REPORTING, (cont’d)
(iii) Segment Assets
As at 30 June 2024
Nutritional
Powders
Dairy Farms
Total
$
$
$
Segment assets
14,863,323
15,483,274
30,346,597
Segment assets include:
Additions to non-current assets
74,406
207,182
281,588
(iv) Segment Assets
As at 30 June 2023
Nutritional
Powders
Dairy Farms
Total
$
$
$
Segment assets
13,286,970
22,952,790
36,239,760
Segment assets include:
Additions to non-current assets
786,292
1,261,599
2,047,891
(v) Segment Liabilities
As at 30 June 2024
Nutritional
Powders
Dairy Farms
Total
$
$
$
Segment liabilities
741,275
2,878,753
3,620,028
(vi) Segment Liabilities
As at 30 June 2023
Nutritional
Powders
Dairy Farms
Total
$
$
$
Segment liabilities
1,066,963
1,649,443
2,716,406
59
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 25: SEGMENT REPORTING, (cont’d)
(iv) Revenue by geographic region
Revenue attributable to external customers is disclosed below, based on the location of the external customer
2024
2023
$
$
Australia
6,038,283
5,855,678
Other foreign countries
224,788
-
Total revenue
6,263,071
5,855,678
(v) Assets by geographic region
The location of segment assets is disclosed below by geographical location of the assets
2024
2023
$
$
Australia
30,346,597
36,239,760
Other foreign countries
-
-
Total revenue
30,346,597
36,239,760
NOTE 26: SHARE BASED PAYMENTS
(a) Ordinary shares granted to employees under the Group Incentive Plan as share-based payments
During the year ended 30 June 2024, there were no ordinary shares granted to employees.
During the comparative year ended 30 June 2023 shares granted to employees were as follows:
Grant Date
Footnote
Number
24 August 2022
(i)
3,230,000
16 December 2022
(ii)
100,000
(i) On 24 August 2022, there were 3,230,000 stapled securities issued to management personnel of the Group at a price of $0.070 per secu-
rity. The fair value of securities issued, determined by reference to the market price, was $226,100.
(i) On 16 December 2022, there were 100,000 stapled securities issued to an employee as part of a performance review at a price of $0.050
per security. The fair value of securities issued, determined by reference to the market price, was $5,000.
(b) Performance rights granted to employees under the Group Incentive Plan as share-based payments
A summary of movements in performance rights is as follows:
2024
2023
Opening balance
-
2,000,000
Granted (i)
-
2,000,000
Forfeited (ii)
-
(2,000,000)
Exercised (iii)
-
(1,500,000)
Cancelled (iv)
-
(500,000)
Closing balance
-
-
60
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 26: SHARE BASED PAYMENTS, (cont’d)
(i) Granted performance rights
During the year ended 30 June 2024, there were no performance rights granted to employees.
During the comparative year ended 30 June 2023, the following performance rights were granted:
•
On 24 November 2022 the Group issued 500,000 performance rights each to directors Bernard Kavanagh and Jason Dong (TSR hurdle).
The issue price of the rights is 0.5 cents calculated using the Monte Carlo method, the expiry date is 30 June 2023 and the rights vest
when total shareholder return is >30 in the period during 1 July 2022 to 30 June 2023. Other key inputs include volatility of 63.08% and
a risk-free rate of 3.24%.
The fair value of the rights issued was $5,000.
•
On 24 November 2022 the Group issued 500,000 performance rights each to Directors Bernard Kavanagh and Jason Dong
(EBITDA hurdle).
The issue price of the rights is 5.3 cents calculated using the Monte Carlo method, the expiry date is 30 June 2023 and the rights vest
if the Group’s audited operating EBITDA for the financial year ending 30 June 2023 is break even or above. Other key inputs include
volatility of 63.08% and a risk-free rate of 3.24%.
The fair value of the rights issued is $53,000.
(ii) Forfeited performance rights
Performance rights are forfeited if performance hurdles are not satisfied or after the holder ceases to be employed by the Group, unless
the Board determines otherwise.
During the year ended 30 June 2024, there were no performance rights forfeited.
During the comparative year ended 30 June 2023, 2,000,000 performance rights issued to Directors (TSR and EBITDA hurdles) were
forfeited as performance hurdles were not met.
(iii) Exercised performance rights
During the year ended 30 June 2024, there were no performance rights exercised.
During the comparative year ended 30 June 2023, 1,500,000 stapled securities were issued to directors on exercise of performance rights.
(iv) Cancelled performance rights
During the year ended 30 June 2024, there were no performance rights cancelled.
In the comparative year ended 30 June 2023, Martin Bryant was entitled to 500,000 director performance rights (TSR hurdle). As
announced to the ASX on 25 August 2022, he elected not to receive the securities to which he was entitled and these were canceled.
(v) Outstanding performance rights
As at 30 June 2024 there are no (2023: nil) performance rights on issue.
(c) Options
During the year ended 30 June 2024, 3,000,000 (2023: 6,500,000) lead manager options expired. There were no options issued or
exercised during the year.
A summary of movements in options is as follows:
2024
2023
Opening balance
3,000,000
9,500,000
Expired
(3,000,000)
(6,500,000)
Closing balance
-
3,000,000
61
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 26: SHARE BASED PAYMENTS, (cont’d)
(d) Loan securities
During the year ended 30 June 2024, there were no loan securities issued, forfeited or exercised.
A summary of movements in the number of loan securities in the 30 June 2023 comparative is as follows:
2024
2023
Opening balance
-
9,500,000
Expired (i)
-
(9,500,000)
Closing balance (exercisable)
-
-
(i) During the year ended 30 June 2023, 9,500,000 loan securities expired. The expired loan securities were cancelled and bought
back on 19 January 2024 and there are no longer any on issue.
(e) Total expenses arising from share-based transactions recognised during the year
2024
2023
Note
$
$
Equity settled share-based payments - employment benefit costs
3(b)(iv)
-
231,100
Equity settled share-based payments - professional costs
3(b)(v)
-
90,000
NOTE 27: FINANCIAL RISK MANAGEMENT
The Group’s principal financial instruments consist mainly of deposits with banks, accounts receivable, bonds and deposits, accounts
payable, bank loans and leases.
The totals for each category of financial instruments, measured in accordance with AASB 9 as detailed in the accounting policies to these
financial statements, are as follows:
2024
2023
Note
$
$
Financial assets
Financial assets at amortised cost:
Cash and cash equivalents
6
6,106,312
2,007,429
Loans and receivables
7
598,073
660,390
Bonds and deposits
9
21,050
49,250
Total financial assets
6,725,435
2,717,069
Financial Risk Management Policies
Financial liabilities
Financial liabilities at amortised cost:
Lease liabilities
11
512,667
1,040,525
Trade and other payables
14
1,078,758
945,138
Borrowings
16
1,739,957
-
Total financial liabilities
3,331,382
1,985,663
The main purpose of the financial instruments listed is to raise finance for the Group’s operations when the Board considers it appropriate.
The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its opera-
tions. Risks arising from the Group’s financial instruments include interest rate risk, liquidity risk and credit risk. The Board reviews and agrees
policies for managing each of these risks and they are summarised below.
62
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 27: FINANCIAL RISK MANAGEMENT, (cont’d)
Treasury Risk Management
The Board considers financial risk exposure to evaluate treasury management strategies in the context of the most recent economic
conditions and forecasts. The overall risk management strategy seeks to assist the Group in meeting its financial targets, while minimising
potential adverse effects on financial performance. Risk management policies are reviewed by the Board when necessary. These include the
use of credit risk policies and future cash flow requirements.
Financial Risk Exposures and Management
(a) Credit risk
The Group trades only with parties that it believes to be creditworthy. The maximum exposure to credit risk is equivalent to the financial
assets’ carrying value. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification
procedures. In addition, receivable balances are monitored on an ongoing basis, however the Group will always have exposure to potential
bad debts (see also Note 7).
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, bonds and
deposits, the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying
amount of those instruments. The Group generally does not require third party collateral.
(b) Liquidity risk
Liquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations
related to financial liabilities. The Group manages this risk through the following mechanisms:
• preparing forward looking cash flow analysis in relation to its operational, investing and financing activities;
• monitoring undrawn credit facilities;
• obtaining funding from a variety of sources;
• maintaining a reputable credit profile;
• managing credit risk related to financial assets;
• investing surplus cash with appropriately regulated financial institutions; and
• comparing the maturity profile of financial liabilities with the realisation profile of financial assets.
The table following presents contractual maturity of the Group’s financial instruments. Cash flows realised from financial assets reflect
management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows
presented in the table to settle financial liabilities reflects the earliest contractual settlement dates taking into consideration management
expectations that Group banking facilities will be extended.
63
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 27: FINANCIAL RISK MANAGEMENT, (cont’d)
(b) Liquidity risk, continued.
Financial Liability and Financial Asset Maturity Analysis:
Within 1 year
1 to 5 years
Over 5 years
Total
2024
2023
2024
2023
2024
2023
2024
2023
$
$
$
$
$
$
$
$
Financial liabilities due
for payment
Borrowings
(1,739,957)
-
-
-
-
-
(1,739,957)
-
Lease liabilities
(464,215)
(555,605)
(48,452)
(484,920)
-
-
(512,667)
(1,040,525)
Trade & other payables
(1,078,758)
(945,138)
-
-
-
-
(1,078,758)
(945,138)
Total expected outflows
(3,282,930)
(1,500,743)
(48,452)
(484,920)
-
-
(3,331,382)
(1,985,663)
Financial assets -
cash flows realisable
Cash
6,106,312
2,007,429
-
-
-
-
6,106,312
2,007,429
Trade and other receivables
598,073
660,390
-
-
-
-
598,073
660,390
Bonds and deposits
19,250
30,000
1,800
19,250
-
-
21,050
49,250
Total anticipated inflows
6,723,635
2,697,819
1,800
19,250
-
-
6,725,435
2,717,069
Net (outflows) / inflows on
financial instruments
3,440,705
1,197,076
(46,652)
(465,670)
-
-
3,394,053
731,406
(c) Market risk
Interest Rate Risks
The Group at the date of this report has $6,106,312 in variable rate cash balances and $1,780,000 in variable rate borrowings.
Sensitivity Analysis
The Group has performed sensitivity analysis relating to its exposure to variable interest rate at balance date. This sensitivity analysis demon-
strates the effect on the current year results and equity which could result from a change in this risk.
Interest rate sensitivity analysis
At 30 June 2024, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would
be as follows:
2024
2023
$
$
Change in profit
- Increase in interest rate by 1%
43,263
20,074
- Decrease in interest rate by 1%
(43,263)
(20,074)
Change in equity
- Increase in interest rate by 1%
(43,263)
(20,074)
- Decrease in interest rate by 1%
43,263
20,074
There has been no changes in the methods or assumptions used to prepare the above sensitivity analysis from the prior year.
64
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 27: FINANCIAL RISK MANAGEMENT, (cont’d)
Fair Values
Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial instruments recognised in the
financial statements.
Carrying Amount
Fair Value
Footnote
2024
$
2023
$
2024
$
2023
$
Financial assets at amortised cost:
Cash and cash equivalents
(i)
6,106,312
2,007,429
6,106,312
2,007,429
Trade and other receivables
(i)
598,073
660,390
598,073
660,390
Bonds and deposits
(i)
21,050
49,250
21,050
49,250
Total financial assets
6,725,435
2,717,069
6,725,435
2,717,069
Financial liabilities
Trade and other payables
(i)
1,078,758
945,138
1,078,758
945,138
Lease liabilities
(ii)
512,667
1,040,525
512,667
1,040,525
Borrowings
(ii)
1,739,957
-
1,739,957
-
Total financial liabilities
3,331,382
1,985,663
3,331,382
1,985,663
The fair values disclosed in the above table have been determined based on the following methodologies:
(i) Cash and cash equivalents, trade and other receivables, bonds and deposits and trade and other payables are short-term instruments
in nature whose carrying value is equivalent to fair value.
(ii) Fair values on borrowings and lease liabilities are determined using a discounted cash flow model incorporating current commercial
borrowing rates.
NOTE 28: FAIR VALUE MEASUREMENT
The Group measures and recognises the following assets and liabilities at fair value on a recurring basis after initial recognition:
• Biological assets
• Land and buildings
The Group may measure some items of property at fair value on a non-recurring basis. The Group does not subsequently measure
any other assets or liabilities at fair value on a non-recurring basis.
(a) Fair Value Hierarchy
AASB 13: Fair Value Measurement requires the disclosure of fair value information by level of the fair value hierarchy, which categorises
fair value measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement
can be categorised into as follows:
Level 1
Level 2
Level 3
Measurements based on quoted
prices (unadjusted) in active markets
for identical assets or liabilities
that the entity can access at the
measurement date.
Measurements based on inputs
other than quoted prices included
in Level 1 that are observable for
the asset or liability, either directly
or indirectly.
Measurements based on unobservable
inputs for the asset or liability.
65
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 28: FAIR VALUE MEASUREMENT, (cont’d)
(a) Fair Value Hierarchy, continued.
The fair values of assets and liabilities that are not traded in an active market are determined using one valuation technique. This valuation
technique maximises, to the extent possible, the use of observable market data. All significant inputs required to measure fair value are
observable, therefore the asset or liability is included in Level 2.
The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available to measure fair
value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset or liability being measured.
The valuation techniques selected by the Group are consistent with the following valuation approach:
• Market approach: valuation techniques that use prices and other relevant information generated by market transactions for identical
or similar assets or liabilities.
This valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset or liability
including assumptions about risks. When selecting a valuation technique, the Group gives priority to those techniques that maximise the use
of observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available
information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset or liability
are considered observable, whereas inputs for which market data is not available and therefore are developed using the best information
available about such assumptions are considered unobservable.
The following tables provide the fair values of the Group’s assets measured and recognised on a recurring basis after initial recognition and
their categorisation within the fair value hierarchy:
30 June 2024
Note
Level 1
Level 2
Level 3
Level 4
Total
$
$
$
$
$
Non-financial assets
Biological Assets
10
-
1,635,139
-
-
1,635,139
Land and buildings
13
-
13,444,216
-
-
13,444,216
Total non-financial assets
recognised at fair value on
a recurring basis
-
15,079,355
-
-
15,079,355
30 June 2023
Note
Level 1
Level 2
Level 3
Level 4
Total
$
$
$
$
$
Non-financial assets
Biological Assets
10
-
3,535,686
-
-
3,535,686
Land and buildings
13
-
20,500,000
-
-
20,500,000
Total non-financial assets
recognised at fair value on
a recurring basis
-
24,035,686
-
-
24,035,686
(b) Techniques and Inputs Used to Measure Level 2 Fair Values
In the absence of an active market for an identical asset, the Group selects and uses one or more valuation techniques to measure the fair
value of the asset. The Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is available
to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics of the asset being
measured. The valuation techniques selected by the Group are consistent with one or more of the following valuation approaches:
• Market approach uses prices and other relevant information generated by market transactions for identical or similar assets.
• Income approach converts estimated future cash flows or income and expenses into a single discounted present value.
• Cost approach reflects the current replacement cost of an asset at its current service capacity.
66
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 28: FAIR VALUE MEASUREMENT, (cont’d)
(a) Fair Value Hierarchy, continued.
Each valuation technique requires inputs that reflect the assumptions that buyers and sellers would use when pricing the asset, including
assumptions about risks. When selecting a valuation technique, the Group gives priority to those techniques that maximise the use of
observable inputs and minimise the use of unobservable inputs. Inputs that are developed using market data (such as publicly available
information on actual transactions) and reflect the assumptions that buyers and sellers would generally use when pricing the asset are
considered observable, whereas inputs for which market data is not available and therefore are developed using the best information
available about such assumptions are considered unobservable.
Description
Fair Value at 30 June 2024
Valuation Technique(s)
Input Used
$
Non-financial assets
Biological assets
1,635,139
Market approach using recent
observable industry market data
for dairy cattle
Breed, weight, condition
Land and buildings
13,444,216
Market approach using recent
observable comparable
sales evidence
Price per hectare, improvements
value, current replacement cost
15,079,355
67
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
NOTES TO THE FINANCIAL STATEMENTS, CONTINUED.
FOR THE YEAR ENDED 30 JUNE 2024
NOTE 29: EARNINGS PER SHARE CALCULATIONS
2024
2023
cents
cents
From continuing and discontinued operations :
(1.14)
(1.68)
Basic loss per share
(1.14)
(1.68)
Diluted loss per share
From continuing operations :
(1.14)
(1.27)
Basic loss per share
(1.14)
(1.27)
Diluted loss per share
From discontinued operations :
-
(0.41)
Basic loss per share
-
(0.41)
Diluted loss per share
2024
2023
$
$
Reconciliation of earnings to profit or loss:
(7,439,176)
(9,393,955)
Loss attributable to shareholders and unitholders
Number
of Shares
Number
of Shares
Weighted average number of stapled securities outstanding
during the year used in calculating basic EPS
Weighted average number of options outstanding
650,408,059
559,588,729
Weighted average number of stapled securities outstanding
during the year used in calculating dilutive EPS
650,408,059
559,588,729
All options on issue are considered to be dilutive potential ordinary shares, however they are presently anti-dilutive at 30 June 2024
as the average market price of shares during the period is less than the exercise price of all options.
NOTE 30: DIVIDENDS
The directors have not recommended or paid a dividend for the year ended 30 June 2024 (2023: $nil) at the date of this report.
NOTE 31: EVENTS AFTER THE BALANCE DATE
On 27 August 2024, the Group repaid the drawn down $1,780,000 of its loan facility with Gippsreal Limited, net of prepaid interest.
In the opinion of the directors there are no material matters that have arisen since 30 June 2024 that have significantly affected or may
significantly affect the Group, that are not disclosed elsewhere in this report or in the accompanying financial statements.
68
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
CONSOLIDATED ENTITY DISCLOSURE STATEMENT
FOR THE YEAR ENDED 30 JUNE 2024
Presented below is the consolidated entity disclosure statement for Australian Dairy Nutritionals Limited at 30 June 2024. This statement
outlines the relevant information noted in the table below for each entity in Australian Dairy Nutritionals Limited consolidated group.
Entity name
Entity type
Place
formed or
incorporated
% of share
capital held
Australian resident or
foreign resident
Australian Dairy Nutritionals Limited
Body Corporate
Australia
n/a
Australian
SW Dairy Farms Pty Ltd
Body Corporate
Australia
100%
Australian
Camperdown Dairy Company Pty Ltd
Body Corporate
Australia
100%
Australian
Organic Nutritionals Pty Ltd
Body Corporate
Australia
100%
Australian
Regen Properties Pty Ltd
Body Corporate
Australia
100%
Australian
Regen Farms Pty Ltd
Body Corporate
Australia
100%
Australian
Regen Operations Pty Ltd
Body Corporate
Australia
100%
Australian
Ocean Dairy Pty Ltd
Body Corporate
Australia
50%
Australian
Camperdown Dairy Park Trust
Trust
Australia
n/a
Australian
69
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
DIRECTORS’ DECLARATION
DIRECTORS’ DECLARATION
For the year ended 30 June 2024
In the opinion of the directors of Australian Dairy Nutritionals Group:
(a) the financial statements and notes of the Company and of the Group are in accordance
with the Corporations Act 2001, and:
(i) give a true and fair view of the Company’s and Group’s financial position as at
30 June 2024 and of their performance for the year ended on that date; and
(ii) comply with Australian Accounting Standards, which, as stated in accounting policy
Note 1 to the financial statements, constitutes compliance with International Financial
Reporting Standards (IFRS); and
(b) the consolidated entity disclosure statement presented on page 68 is true and correct.
(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; and
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 financial year
ending 30 June 2024.
This declaration is made in accordance with a resolution of the Board of directors.
Peter Nathan
Chair
30 August 2024
70
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS
Independent Auditor’s Report to the Members of Australian Dairy
Nutritionals Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Australian Dairy Nutritionals Limited (“the Company”) and its
subsidiaries (“the Group”), which comprises the consolidated statement of financial position as at 30
June 2024, the consolidated statement of profit or loss and other comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the
year then ended, and notes to the financial statements, including material accounting policy
information, the consolidated entity disclosure statement and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. 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 also fulfilled our other
ethical responsibilities in accordance with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the Directors of the Company, would be in the same terms if given to the Directors as
at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1(a) in the financial report which indicates that during the year the Group
incurred a loss of $7.44 million (2023: $9.39 million loss) has total accumulated losses of $53.46
million and had a net cash outflow from operations of $4.44 million (2023: $7.05 million outflow). As
stated in Note 1(a), these events or conditions, along with other matters as set forth in the note,
indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to
continue as a going concern.
Our opinion is not modified in respect of this matter.
71
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
Independent Auditor’s Report to the Members of Australian Dairy
Nutritionals Limited
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the financial report of the current period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit
matter
Assessment
of
carrying
value
of
property, plant and equipment
Refer Note 13 of the financial report.
At 30 June 2024 key assets of the Group
included property, plant and equipment of
$18,851,582. During the year the Group
continued to record operating losses and
cash outflows from operating activities.
Accounting standards require an entity to
assess at the end of each reporting period
whether there is any indication that an asset
may be impaired. The Group has identified
impairment
indicators
which
required
management to perform an impairment
assessment.
Impairment testing of property plant and
equipment was a key audit matter due to the
significance of the value of the recorded
assets in the statement of financial position.
Our procedures included, but were not limited to:
• We completed site visits at locations of material
property, plant and equipment and inspected
the general state of the assets to assess
whether assets continue to be employed in the
business and are in sound working order;
• We performed procedures to determine that
recorded assets existed and were reported
completely and accurately in the financial
records of the Group;
• We
assessed
the
competence
and
qualifications of the independent property,
plant and equipment valuation experts used by
the Group;
• We assessed the valuation reports obtained by
the Group, with reference to the methodology
used, prior independent expert valuations, our
knowledge of the Group assets obtained in
conjunction with our audit procedures and the
sale transaction of the Brucknell South farm;
• We evaluated the adequacy of the disclosures
made in the financial report regarding the
assessment of the carrying value of the Groups
property, plant and equipment.
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS, CONTINUED.
72
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS, CONTINUED.
Independent Auditor’s Report to the Members of Australian Dairy
Nutritionals Limited (continued)
Other Information
The Directors are responsible for the other information. The other information comprises the
information in Australian Dairy Nutritionals Limited’s annual report for the year ended 30 June 2024,
but does not include the financial report and the auditor’s report thereon. Our opinion on the financial
report does not cover the other information and we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, 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.
If, based on the work we have performed, we conclude that there is a material misstatement of the
other information we are required to report that fact. We have nothing to report in this regard.
Responsibility of the Directors’ for the Financial Report
The Directors of the Company are responsible for the preparation of:
a) The financial report (other than the consolidated entity disclosure statement) that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations
Act 2001; and
b) the consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
i)
the financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view and is free from material misstatement, whether due to fraud or error; and
ii) the consolidated entity disclosure statement that is true and correct and is free of
misstatement, whether due to fraud or error.
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or have no realistic alternative but to do so.
Auditor’s Responsibility for the Audit of the Financial Report
Our objectives are 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 the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
73
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS, CONTINUED.
Independent Auditor’s Report to the Members of Australian Dairy
Nutritionals Limited (continued)
A further description of our responsibilities for the audit of the financial report is located at The
Australian Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the remuneration report included in pages 16 to 21` of the directors’ report for the
year ended 30 June 2024.
In our opinion, the Remuneration Report of Australian Dairy Nutritionals Limited for the year ended
30 June 2024 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Nexia Brisbane Audit Pty Ltd
Gavin Ruddell
Director
Level 28, 10 Eagle Street
Brisbane, QLD, 4000
Date: 30 August 2024
Gavin Rud
Director
74
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
SHAREHOLDER INFORMATION
The following information was extracted from Australian Dairy Nutritional Group’s Register of Shareholders on 19 August 2024:
TWENTY LARGEST SHAREHOLDERS - ORDINARY SECURITIES
Securities Held
% of Issued
Capital
1
XIN YANG
45,454,545
7.03
2
IJ FUNDS MANAGEMENT PTY LTD
42,503,864
6.58
3
MRS QIUMEI DING
32,000,000
4.95
4
MR LI ZENG
25,536,156
3.95
5
MR JIMMY THOMAS & MS IVY RUTH PONNIAH
22,203,671
3.44
6
WE SAY GO PTY LIMITED
21,021,589
3.25
7
MR JIMMY THOMAS & MS IVY RUTH PONNIAH
17,565,472
2.72
8
CORPORATE SOLUTIONS PTY LTD
15,309,892
2.37
9 BARADNIL PTY LIMITED
12,500,000
1.93
10
MR MARK RICHARD JONES & MS MARGARET TAI
11,000,000
1.70
11
OZSCIENTIFIC PTY LTD
10,344,442
1.60
12
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
9,595,902
1.48
13
MR XIN DONG
8,951,732
1.38
14
COSTINE PTY LTD
7,696,324
1.19
15
IAN&JON INVESTMENT PTY LTD
6,560,271
1.01
16
PJB BRADCO PTY LTD
5,685,000
0.88
17
FIDUCIARY NOMINEES PTY LTD
5,205,540
0.81
18
MR PETER JOHN SKENE & MRS LYNNE NICOLE SKENE
5,033,951
0.78
19
MOWSAN PTY LTD
4,928,022
0.76
20
MR ZHONGDE ZHAO
4,776,432
0.74
313,872,805
48.56
Total Securities on issue
646,366,797
100.00
DISTRIBUTION OF SHAREHOLDINGS
Size of Holding
Number of
Securityholders
Shares
%
100,001 and Over
573
594,470,214
91.96
10,001 to 100,000
1,178
46,411,826
7.19
5,001 to 10,000
452
3,838,118
0.59
1,001 to 5,000
530
1,597,059
0.25
1 to 1,000
211
49,580
0.01
2,944
100.00
MARKETABLE PARCELS
On 19 August 2024, using the last traded share price of $0.022 per share, there were 1,622 holdings totalling 12,559,950 shares,
which were less than a marketable parcel ($500).
VOTING RIGHTS
On a show of hands, every member present in person or by proxy or attorney or being a corporation by its authorised representative
shall have one vote. On a poll, every member who is present in person or by proxy or attorney, or being a corporation, by its authorised
representative, shall have one vote for every share of which he is the holder.
646,366,797
75
AUSTRALIAN DAIRY NUTRITIONALS GROUP / ANNUAL REPORT 2024
SHAREHOLDER INFORMATION, CONTINUED.
SUBSTANTIAL SECURITYHOLDERS
The names of the substantial shareholders listed in the Group’s register on 19 August 2024 are:
Securities Held
% of Voting
Power
XIN YANG
45,454,545
7.03
IJ FUNDS MANAGEMENT PTY LTD
42,503,864
6.58
UNLISTED OPTIONS/RIGHTS OVER ORDINARY SECURITIES
At the date of this report, there are no unissued ordinary shares of Australian Dairy Nutritionals Limited under option or right.
RESTRICTED SECURITIES
At the date of this report, there are no restricted securities of Australian Dairy Nutritionals Limited.
ANNUAL GENERAL MEETING
Australian Dairy Nutritionals Group Limited intends to hold the Annual General Meeting (AGM) on Wednesday,
27 November 2024.
An item of business at the AGM will be the re-election of Directors. In accordance with the Company’s Constitution, the
closing date for receipt of nomination from persons to be considered for election as a director at the AGM, is 8 October
2024. Any nomination must be received by the Company by no later than 5:00pm (AEDT) on 8 October 2024.
Further details in respect of the AGM will be provided in the Notice of Meeting to be dispatched to Shareholders.
160 Depot Road
Camperdown VIC 3260
Telephone: (03) 8692 7284
Email: shareholders@adnl.com.au
adnl.com.au