2009
A N N U A L
R E P O R T
20 09
A N N UA L
R E P O R T
Company Directory
Directors
Mr Stephen Gerlach, AM, LLB Chairman
Mr Mark C Allison, BAgrSc, BEcon, GDM, FAICD
Mr Charles E Bright, BA MA(Oxon)
Dr James C Fox, BE MEngSci PhD
Mr Raymond G Grigg, FSAE-I FAICD
Mr James H (Hutch) Ranck, BS Econ
Mr Malcolm G Jackman, BSc BCom
Mr Ian G MacDonald, SF Fin
Mr Graham D Walters, AM FCA
Mr Rob H Wylie, FCA
Secretaries
Ms Sonya C Furey, BEc(Acc), LLM, FCA
Mr Ross E Mallett, JD BBus, FCIS, FCPA
Registered office
Level 3, 27 Currie Street
Adelaide, South Australia, 5000
Telephone: (08) 8425 4999
Facsimile: (08) 8410 1597
Email: information@elders.com.au
Website: www.elders.com.au
Share Registry
Computershare Investor Services Pty Ltd
Level 5, 115 Grenfell Street
Adelaide, South Australia, 5000
Telephone: 1300 55 61 61
Facsimile: +61 (0)8 8236 2305
Website: www.computershare.com.au
Auditors
Ernst & Young
Bankers
Australia & New Zealand Banking Group
BNP Paribas
Citigroup
Commonwealth Bank of Australia
HSBC Bank
National Australia Bank
Westpac Banking Corporation
Stock exchange listings
Elders Limited ordinary shares and
subordinated convertible unsecured notes
(Elders Hybrids) are listed on the Australian
Securities Exchange under the ticker codes
“ELD” and “ELDPA”
trustee for elders Hybrids
Permanent Trustee Company Limited
151 Rathdowne Street
Carlton South, Victoria, 3053
with the concentration of resources and management effort
around the Elders Brand and Network and the Australian
primary production sector
with a strong balance sheet and expanded shareholder base
with the completion of structural reform, the introduction
of new management and the identifi cation of opportunities
and strategies to unlock improved performance and value
for shareholders
20 09
20 09
A N N UA L
A N N UA L
R E P O R T
R E P O R T
1
2
OUR BUSINESS
Rural Services
Forestry
Futuris Automotive
(cid:129)
(cid:129)
(cid:129)
One of Australia’s largest
hardwood plantation managers
(by estate size)
Manages over 165,000 hectares
across Western Australia,
Victoria, South Australia and
Queensland
Provider of MIS plantation
grown hardwood
(cid:129)
(cid:129)
Design, manufacture and
supply of automotive interior
systems (seating, steering,
trims, carpets etc)
35% minority stake in Air
International Thermal Systems
(65% held by Unitas), a supplier
of automotive air-conditioning
and cooling systems
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
391 Australian and 22
New Zealand points of presence
Farm inputs – supply of
agricultural chemicals, fertilisers,
animal health and general rural
merchandise
Production advice
Farm outputs – marketing and
sale of livestock, wool and grain
Financial and real estate services,
including Elders’ 40% interest
in Rural Bank
Network related – supply chain
assets to leverage the network
distribution/accumulation
capability
Revenue*: $2,186 million
Employees†: 2,393
Revenue*: $185 million
Employees†: 106
Revenue*: $270 million
Employees†: 566
*12 months to 30 June 2009
† Full time equivalent employees at 30 September 2009
20 09
A N N UA L
R E P O R T
3
2009 THE YEAR IN BRIEF
REPORTING
• Adoption of 30 September balance date with 15-month transition year to 30 September 2009
FINANCIAL RESULTS
• Underlying loss after tax of $51.8 million versus underlying profi t of $84.2 million in 2008
• Non-recurring items totalling ($414.7) million:
> Gain on divested assets $55.3 million
> Results from discontinued operations ($153.8) million
> Impairment of assets retained ($101.4) million
> Restructuring, redundancy, refi nancing, relocation and major project costs ($115.3) million
> Write-down of assets to be divested or discontinued ($99.5) million
• Reported loss after tax of $466.4 million
• Refi nancing and recapitalisation completed subsequent to year-end:
> Cash of $550 million raised through equity raising
> Net proceeds applied to debt reduction
> Bank debt refi nanced with core debt term extended to 3 years
• Pro forma gearing 30 September post recapitalisation of 32%
• Dividend suspended (previously 9.5 cents per share fully franked)
CORPORATE
• Appointment of new Chief Executive Offi cer
• Announcement and implementation of Agenda for Change program:
> Company name changed from Futuris Corporation Limited to Elders Limited
> Organisational and management restructure to single company structure built around
Elders brand and network
> Change in business model to “owner-operator focus” with divestment of non-core
minority shareholdings in AAco, Webster, Amcom and other smaller interests
• Adoption of Aligned Partnerships model for fi nancial services:
> Joint venturing of insurance distribution
> Sale of insurance underwriting
> Rural Bank shareholding reduced from 50% to 40%
RURAL SERVICES
• Underlying EBIT of $8.8 million; down from $57.5 million
• Completion of Phase 1 of Elders Business Transformation Project
• Successful entry into deregulated export wheat market by Elders Toepfer Grain
• Poised for recovery as markets stabilise and Elders Business Transformation Project gains emerge
FINANCIAL SERVICES
• Equity accounted income of $27.7 million from Rural Bank versus $20.5 million in 2008
• Income from banking and insurance distribution to be reported within Rural Services from 2010
4
FORESTRY
• Underlying EBIT of $5.9 million, compared with $61.4 million in 2008:
> Excludes EBIT of $4.2 million for 2009 from Timber processing operations divested subject to regulatory approval
• 2009 MIS project sales of $23.7 million, market share increased in signifi cantly contracted MIS market
• Plantation woodchip price maintained
• Named Forest Manager of the Year by Forestry Stewardship Council
• Contract signed for sale of timber processing assets for $100 million, subject to regulatory approval
• Improvement expected in 2010 with MIS market recovery
AUTOMOTIVE
• Underlying EBIT of ($15.1) million, compared with 2008 underlying profi t of $26.2 million:
> Underlying EBIT of $6.8 million from Futuris Automotive
> Underlying EBIT of ($21.9) million from associates
• Named winner of global automotive industry awards for product and supply chain management excellence
• Chinese operations achieve critical mass and positive earnings
• Improvement expected in 2010 as a result of 2009 restructuring and stabilisation of industry conditions
ELDERS LIMITED
ABN 34 004 336 636
Reporting Period, Terms and Abbreviations
This Report uses terms and abbreviations relevant to the
Company and its accounts.
The terms “the Company”, “Elders Limited”, “Elders” and
“the Group” are used in this report to refer to Elders Limited
and/or its subsidiaries.
In 2009 Elders secured ASIC approval to change its balance
date to 30 September. The change from a 30 June balance
date to a 30 September balance date has been effected through
a 15 month transition period ending 30 September 2009.
This document reports on that period. Comparative fi gures
provided are from the last audited annual accounts, the
12 months ended 30 June 2008.
Accordingly the terms “2009” or “2009 fi nancial year” refer to
the 15 months ended 30 September 2009 unless otherwise
stated. ‘Year-end’ refers to 30 September 2009 unless otherwise
stated. References to 2008 or preceding years refer to the
12 months ended 30 June of that year. References to 2010 or
subsequent years refer to the 12 months ended 30 September of
that year. Negative numbers are designated by brackets, for
example ($7.0) million unless otherwise indicated.
Annual General Meeting
This document has been prepared to provide shareholders
with an overview of Elders Limited’s performance for the 2009
fi nancial year and its outlook.
The Annual Report is mailed to shareholders who elect to
receive a copy and is available free of charge on request (see
Shareholder Information printed in this Report).
The Annual Report can be accessed via the Company’s
website at www.elders.com.au.
Notice of Meeting
The 2009 Annual General Meeting of Elders Limited will be
held on Friday, 18 December 2009, commencing at 10.00am in
Hall A, Adelaide Convention Centre, North Terrace, Adelaide,
South Australia. A formal Notice of Meeting has been mailed to
shareholders. Additional copies can be obtained from the
Company’s registered offi ce or downloaded from its website
at www.elders.com.au.
20 09
A N N UA L
R E P O R T
5
FROM THE CHAIRMAN
Stephen Gerlach
This is the fi rst Annual Report issued by the Company
since it adopted the name of its principal business,
Elders, and changed its balance date to 30 September.
The change to balance date has been effected
through the 15 month transition year from 1 July 2008
to 30 September 2009 (“2009”) which is reported
on in this document. Subsequent reports will address
the 12 months to 30 September.
The change in name and date are among the more
prominent outcomes of the realignment and acceleration
of strategy to which the Directors committed the
Company at the conclusion of the previous fi nancial
year. More specifi cally, Directors identifi ed two avenues
to be addressed for improved performance: fi rstly, the
concentration of resources and effort around the Elders
brand and network; and secondly, the reduction of
debt to sustainable levels.
This strategy has been pursued with vigour, through a
wide ranging program that commenced with the
recruitment and appointment of an experienced and
capable new Chief Executive Offi cer, Mr Malcolm Jackman
in September 2008. As at the date of this report, the
objective of rebuilding the business around Elders
has been substantially advanced and the objective of
low sustainable debt levels has been achieved.
There is no doubt that Elders has completed the year in a
stronger position than which it began, and is much better
equipped to perform and to attract investor support.
Reaching this position in the midst of the volatile trading
conditions and reticent fi nance markets brought by the
Global Financial Crisis has been challenging and complex.
The task of securing of the Company’s ongoing fi nancing
proved to be more demanding and protracted than
originally anticipated. Poor trading conditions in each of
the Company’s markets saw cash fl ow deteriorate and
indebtedness rise, while the Company’s fi nanciers moved
to require a restructure rather than the simple facility
rollover that was previously contemplated.
In these circumstances, which were refl ected in a sharply
reduced share price, the securing of commitments from
lenders and equity underwriters ultimately required the
Company to issue equity at values that were lower than
would have been reasonably expected earlier in the year.
The Company also committed to a tight cash management
regime under which it has agreed to suspend payment
of hybrid distributions for a period of two years and agreed
to not pay ordinary dividends until after 31 March 2012.
6
The objective of rebuilding the business around Elders has
been substantially advanced and the objective of low sustainable
debt levels has been achieved.
The Board appreciates that shareholders would clearly
have preferred a package featuring a smaller, higher
priced, issue with a rights component and without
restriction on the ability to pay dividends and distributions.
However, this was not an option available to the Company
and the package employed was that which was necessary
to win the support needed from Elders’ lenders and
equity underwriters for the completion of the refi nancing
and recapitalisation exercises.
The $400 million conditional placement has substantially
upgraded the depth and range of institutional involvement
on the Company’s share register. The $150 million Share
Purchase Plan (SPP) gave shareholders the opportunity
to purchase shares on the same terms as the placement.
The SPP was successful in this regard, with 100% of
applications up to the $20,000 cap being met in full and
99% of all shareholders who held 15,000 shares or more
being granted all of the new shares for which they applied.
A cornerstone element of the re-capitalisation was the
partnership with QBE Limited which involved the sale
of Elders’ underwriting operations, the joint venturing of
insurance distribution under the Elders’ brand and a
$55 million equity investment by QBE in Elders. QBE has
been a long-term investor in the Company and on behalf
of the board, I welcome QBE as a major shareholder.
The recapitalisation was completed on 2 November.
The recapitalisation has substantially strengthened the
Company’s balance sheet with pro-forma gearing as
at that date estimated to be 32% compared with 128% as
at 30 September 2009. Further reduction is due to occur
with the completion of asset sales under contract or
subject to sales process.
As a result of the equity issue the Company’s shares on
issue have expanded to 4,486 million, a larger volume
than is preferable. The share consolidation proposed in
the Notice of Meeting for the Company’s forthcoming
Annual General Meeting will result in a more manageable
share base with less price volatility.
Elders’ Reported Loss of $466.4 million for 2009
(which includes $415.4 million for the 12 months to June)
includes non-recurring items totalling ($414.7) million.
By and large, these non-recurring items have either
resulted from the program to rebuild the Company around
Elders’ core operations, discontinue non-core and
non-performing operations or from actions taken to bring
asset values or operations into line with markets which
featured lower demand, lower prices and buyer uncertainty.
Results prior to non-recurring items refl ect the impact of
these markets on operating results, with Rural Services,
Automotive and Forestry all recording signifi cantly lower
underlying EBIT than the previous year.
The drivers responsible for the lower fi nancial results in
2009 are expected to either reverse or wane during
2010 and thereby support improved market conditions
and earnings.
Elders approaches this new year with confi dence, a
stronger balance sheet and a structured program for the
delivery of fi nancial improvement and better returns
for shareholders.
Board renewal is an ongoing process and two Directors
have indicated they will step down from the Board.
The Company’s Deputy Chairman, Dr Jim Fox will retire
after 24 years service, while Mr Anthoni Salim has
retired after serving on the board for over six years.
Both directors have made valuable contributions to the
Company and on behalf of shareholders I would like
to record our appreciation for their efforts.
I welcome new appointees Mr Robert Wylie and Mr Mark
Allison to the Board of Directors. Mr Wylie and Mr Allison,
both of whom joined the Board after year-end, bring
experience and expertise in accounting, fi nancial
management, rural distribution and farm services that is
highly relevant to the Company.
In closing I also acknowledge the work of the Company’s
employees in what has been a demanding year. Thank you
for your efforts. You have the Board’s best wishes for the
New Year.
Stephen Gerlach
Chairman
20 09
A N N UA L
R E P O R T
7
CHIEF EXECUTIVE OFFICER’S
REPORT
Elders has emerged from a year of extraordinary volatility
in the world’s fi nancial markets, and those for our own
goods and services, in a sound fi nancial position and with
the expectation of strong improvement in the new year.
However, these costs will be more than outweighed by
the expected benefi ts from these programs as well
as the refi nancing and recapitalisation of the Company
completed shortly after year end.
In particular, the reforms delivered by the Agenda for
Change program proved pivotal to securing the necessary
commitments from debt and equity capital providers.
Through these commitments, Elders issued $550 million
of new equity in the months of October and November,
almost all of which has been applied to debt reduction.
The end result of the Company’s efforts in 2009 is
that Elders is now refocused, recapitalised and
reenergised, possessing the structure and balance sheet
with which it can effectively pursue its plans for
lifting shareholder returns.
SAFETY
Safety performance improved over the year with
each business unit recording improvement. The Lost
Time Injury Frequency Rate for 2009 was 5.62
well down on the corresponding fi gure of 8.64 as
at 30 June 2008.
While this improvement is positive, the only acceptable
safety outcome is an incident-free and injury-free
performance and the Company is committed to the
achievement of that outcome.
With this objective, the Company commissioned a
comprehensive external survey of safety perceptions
during the year. Implementation of the Report resulted
in management, induction and training, communication,
performance measurement and incentivisation practices
being reviewed for their effectiveness in supporting the
achievement of our safety objectives. As a result, a range
of initiatives will be implemented in 2010 to reinforce
the importance of safety as the fi rst and foremost concern
of each employee in their workplace.
The years results have been largely shaped by three events:
1) The consequences of the global fi nancial crisis that
commenced in September 2008 on capital markets,
and on the farm supply, real estate, automotive
and forestry markets in which the Company operates.
2) The Company’s implementation of the Agenda
for Change company renewal program from
1 December 2008.
3) The execution of the fi rst stage of the Elders Business
Transformation Program, which aims to lift the sales
and earnings performance of the Company’s Rural
Services operations.
While the impact of the former is evident in the years
operating and underlying results, the Agenda for Change
has brought fundamental change to, and throughout,
the Company. These changes include a new:
(cid:129) identity
(cid:129) structure
(cid:129) fi nancial and operating paradigm
(cid:129) strategy
(cid:129) reporting period
(cid:129) capital structure.
The Elders Business Transformation program has
reformed the operating and cost structure and day-to-day
management of the Rural Services operations. This
three to fi ve year program is totally re-orienting the
Rural Services operations around its customers, and has
as its objective the delivery of a low-cost, leading
organisation with a better service proposition for clients,
increased market share and substantially improved
returns for shareholders.
The implementation of both the Agenda for Change and
the Transformation Program has brought short term
cost, with the programs accounting for the overwhelming
majority of the non-recurring items that adversely
affected the reported profi t for 2009.
8
Elders has emerged from a year of extraordinary
volatility in the world’s fi nancial markets, and
those for our own goods and services, in a sound
fi nancial position and with the expectation of
strong improvement in the new year.
Malcolm Jackman
PROFIT
Elders’ results for 2009 feature substantially reduced
underlying and reported profi ts.
After interest, tax and minority interests the Company
recorded an underlying loss to shareholders of
$51.8 million for the 15 months to 30 September 2009.
This fi gure includes an underlying loss of $26.9 million
for the 12 months to 30 June. In comparison the FY2008
underlying net profi t to shareholders was $84.2 million.
After inclusion of non-recurring items totalling a charge
of $414.7 million Elders has recorded a reported loss
after tax and minority interests of $466.4 million. The
non-recurring items which are detailed further in the
Discussion and Analysis of the Financial Statements on
page 54 of this report, essentially relate to discontinued
or divested assets and project, impairments and
restructuring and transformation costs.
The loss was generated from sales revenue of
$3,540.1 million ($2,902.0 million for the 12 months to
June) compared with $3,312.1 million in 2008. The
reduction in revenue for the 12 months to June refl ects
lower sales by each of the Company’s operations, with
the exception of Financial Services.
REVIEW OF OPERATIONS
All operations, with the exception of Financial Services,
generated signifi cantly less earnings than in the previous
year. To a large extent this can be attributed to the
volatility and general downturn in trading conditions and
prices across the world economy during the year. However,
each of our operations were affected differently, with
their fi nal outcomes for 2009 refl ecting their particular
circumstances.
Rural Services experienced sharp contraction in sales and
earnings but made substantial progress in its Business
Transformation Project. Underlying EBIT generated from
Rural Services of $8.8 million for the year ($9.6 million
for the 12 months to 30 June) compares with $57.5 million
in 2008. The earnings outcome can be attributed to the
combination of signifi cantly reduced demand across its
product and service range, lower prices, especially on key
product lines such as fertiliser and agricultural chemicals and
the disruption to operations incurred in the implementation
of fi rst stage of the Business Transformation Project.
The fi rst stage of the project has brought major changes
to the totality of Rural Services operations:
(cid:129) The old State-Offi ce-based management structure has
been replaced with a regional system where
management focus is applied to regions of common
agricultural activity rather than by state boundaries.
The 20 management regions that have resulted
have enabled a tighter management focus than was
possible under the previous six state offi ces. Regional
management has been relocated from capital
cities to the regions they serve.
(cid:129) Support services have been restructured and
centralised, to be more relevant to the needs of the
network and lower cost.
(cid:129) The ‘Go to Market’ model has been redesigned and
restructured to maximise the relevance of the Elders to
its clients, and the effectiveness of its sales proposition.
(cid:129) Refi nement of role responsibilities and recognition
systems for better alignment with organisational
objectives.
(cid:129) Reduced network operation and support service costs.
Having largely addressed the structural requirements for
improved performance in Phase 1, the transformation
project has now moved to specifi c measures to improve
the sales, cost and margins. These include reform of
supply chain and procurement systems and practices,
the standardisation of processes across the network and
ongoing cost improvement.
While the transformation project is anticipated to take
three to fi ve years to complete, the fi nancial benefi ts of
the project are expected to emerge from 2010.
FINANCIAL SERVICES
The Company moved to a more capital effi cient Financial
Services model during the 2009. Elders has moved
from an ‘ownership and control’ focus to ‘aligned
partnerships’ focussed on sales and distribution through
relationships with leading specialist fi nancial services
companies. The new structure has enabled Elders to
realise capital and value from within the Financial
Services businesses it has developed whilst retaining
involvement in distribution through the network.
9
FORESTRY
Forestry operations contributed underlying EBIT of
$5.9 million ($10.6 million for the 12 months to 30 June)
compared with $61.4 million in 2008.
The movement in annual results can largely be attributed
to the reduced establishment income resulting from
lower MIS sales and the loss recorded by associate Forest
Enterprises Australia Limited (FEA). 2009 was an
extraordinarily diffi cult year for MIS with industry sales of
forestry schemes falling by 76 per cent in the wake of
uncertainty created by global fi nancial markets and the
collapse of two of the sector’s two companies.
ITC’s performance in this climate was creditable,
increasing market share and restricting its reduction in
sales to 37 per cent.
Improved results are expected from MIS and plantation
operations in 2010 due to recovery in the MIS market
as the investor focus which was captured by the
aforementioned corporate failures shifts to successful
operators such as ITC.
Commercial forestry is characterised by long lead times.
ITC is now 10 years into a 12-year estate establishment
cycle. It is expected that, within two to three years,
harvest volumes and plantation rotation will see the
business transform from being cash negative to being a
net generator of cash for the medium to long term.
This outlook, together with the anticipated demand for
woodfi bre and other timber products, and the value
of ITC’s landholdings, highlight the long term value and
signifi cance of ITC.
Initiatives taken to implement the new model comprised:
> Reduction of Elders’ interest in Elders Rural Bank from
50% to 40% through sale of 10% to fellow shareholder
Bendigo and Adelaide Bank. The sell down enabled
Elders to realise capital of $33.9 million and provided
the bank, renamed Rural Bank, with a level of
independence that will facilitate growth that would
otherwise not be available under the existing structure.
Rural Bank will continue to hold preferred distribution
rights for banking products through the Elders network.
> Sale of Elders’ insurance underwriting operations to
QBE accompanied by joint venturing of insurance
distribution with QBE. Elders will hold a 25% interest
in the Elders Insurance Managed General Insurance
Agency, which will continue to distribute through
the Elders network. The partnership with QBE has been
accompanied by a major investment in Elders by
QBE through subscription to $55 million in new shares
in Elders to acquire a substantial shareholding interest
in the Company. Gross proceeds from the sale of the
Elders Insurance underwriting and distribution
operations were $270 million.
> The signing of Heads of Agreement for the sale of a
51% interest in Elders’ wealth management operations
to M3, a subsidiary of ING Australia Limited for a
net $5 million.
In total, these transactions realised capital exceeding
$360 million, a critical element in the Company’s
recapitalisation. Importantly, the new fi nancial services
model will present reduced capital demands and is
expected to support the growth of fi nancial services in
the Elders network through access to products from
specialist fi nancial services providers. Financial results
from the distribution of fi nancial services products
will be reported within Rural Services henceforth.
The 2009 result includes increased income from banking
which rose from $20.5 million after tax in 2008 to $27.7
million after tax ($22.2 million for the 12 months to June).
Agenda for Change Program Overview
Company Structure
Refocus on Elders
Financial performance
Engage the market
(cid:129) Owner operator instead of
(cid:129) Back the Elders
holding company
transformation program
(cid:129) Manage the company as a
whole rather than in silos
(cid:129) Simplify and clarify strategy
(cid:129) Leadership at the farm gate
(cid:129) Concentrate resources on
core assets
P Reorganised around Elders
with single management
structure
P Sale of non-core minority
interests
P Subsidiary boards removed
P New and re-invigorated
management team
P Change in company name
and identity to Elders
P New go-to-market
strategy implemented
P Operations and support
centres restructured
P Reinvesting in the
distribution network
(cid:129) Act immediately on
non-performing and
non-core assets
(cid:129) Signifi cantly reduce
(cid:129) Clear communication
of strategy
(cid:129) Transparency in fi nancial
reporting
leverage in the business
and strengthen the
balance sheet
(cid:129) Engage openly with all
key stakeholders
(cid:129) Present clear proposition
(cid:129) Cash returns rather than
for investors
equity accounted earnings
P Signifi cant asset
P Agenda for Change
divestments completed,
agreed or expected
P Signifi cant reduction
in future capital demands
through Rural Bank and
insurance transactions
P Independent review of
forestry completed
P Application of stringent
cash and return metrics
announced
P Adoption of a more
conservative management
and measurement
of gearing
P Change of balance date
to 30 September
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10
AGENDA FOR CHANGE PROGRAM
As noted by the Chairman in his opening comments, the
Agenda for Change program has seen the Company
commit to being a world class agribusiness leveraging the
power of the Elders’ brand and network.
Apart from the more conspicuous changes such as
Company name and reporting date, the embracing of the
program means that Elders has committed to wide-ranging
changes in its approach to shareholder value generation,
investment allocation, performance measurement and
reporting and engagement with markets.
The program and progress is detailed in the text box
opposite.
The central element of the program is the transition from
the investment orientated holding company structure
that prevailed previously to a single company structure
with a single integrated management team and an owner
operator focus on cash and shareholder value creation.
This transition has effectively been made. Remaining items
for completion under the Agenda for Change essentially
comprise the divestment of a limited number of minority
interests and non-core assets.
With the appropriate structures, balance sheet and
fi nancing now in place, the focus of our efforts has shifted
to the delivery of sustainable improvements in shareholder
returns.
2009 has been an extremely demanding year for all
associated with the Company. Elders is now in a position
to move forward.
I am conscious that this position has only been reached
through the ongoing support of shareholders, as well as
our clients and the efforts of our team of employees, many
of whom are also shareholders. Thank you all for your
contribution in 2009.
ITC’s Timber processing operations have steadily improved
their performance in recent years despite the fl at demand
levels for timber products in Australia. However, as a
manufacturing operation, the timber processing operations
fell outside Elders’ business strategy. A contract for sale
of the Timber processing operations for $100 million was
agreed with Gunns Limited on 31 August 2009 and is
awaiting regulatory approval for completion.
AUTOMOTIVE
The world’s automotive sector has been particularly
affected by the economic volatility of the 12 months to
30 September. Futuris Automotive’s results evidence this
impact, with its underlying EBIT contribution falling
from $26.2 million in 2008 to a loss of $15.1 million for
2009 (a loss of $15.5 million for the 12 months to June).
The loss result is attributable to 35% owned associate
Air International Thermal Systems which recorded
an underlying loss of $17.6 million ($17.6 million for
12 months to June).
Given the severity of the downturn in vehicle build,
Futuris Automotive’s result from its Australian operations
represent a solid performance. Chinese operations
are developing satisfactorily and are now contributing
positively to Company earnings and cash fl ow.
Improved and profi table results are expected from
automotive operations in 2010. Operations are
now restructured to sustainable cost levels and demand
levels appear to have stabilised, and in some areas
are improving.
Automotive operations fall outside our stated focus on
agribusiness. Futuris Automotive is performing relatively
well in the circumstances, and growing as a successful
niche automotive component supplier in the Asia Pacifi c
region. However, transaction valuations in the current
climate are not giving appropriate recognition for the
underlying asset values. Accordingly, Elders anticipates
continuing to hold and support the ongoing development
of this successful business until shareholder value
considerations make sale to a natural owner a suitable
course of action.
FINANCIAL POSITION
At 30 September Elders was poised to realise a total
transformation in its fi nancial and capital position as a
result of its refi nancing and recapitalisation.
Malcolm Jackman
Chief Executive
Net debt at 30 September of $900.7 million compares
with the corresponding fi gure of $976.4 million as at
30 June and $698.4 million at the beginning of the year.
However, post recapitalisation pro forma net debt at
30 September was $387.9 million.
Further debt reduction is expected in the fi rst half of the
2010 fi nancial year through the completion of the ITC
Timber processing sale and the securing of contracts for
the sale of the Company’s shareholding in HiFert.
The Company’s debt has been refi nanced into a
syndicated secured facility with a three year term expiring
in September 2012.
20 09
A N N UA L
R E P O R T
11
RURAL SERVICES
12
Rural Services Financial Results
Major features and outcomes
$ million
Sales
EBIT
Network: Australia
New Zealand
Network related
Support centres & other
Underlying EBIT
Non-recurring items:
Reported EBIT
2009
12 months
June 2009
• Underlying EBIT fell from $57.5 million
2008
to $8.8 million
2,665.0
2,185.6
2,472.3
• Non-recurring items of $(295.8) million
78.9
(8.4)
25.2
(86.9)
8.8
(295.8)
(287.0)
62.4
(5.7)
21.1
(68.2)
9.6
(231.0)
(221.4)
119.2
from business restructuring, transformation
and discontinuation or sale of operations
(2.3)
• Business Transformation progresses to
8.7
(68.1)
57.5
(36.6)
20.9
second stage
• Successful entry into deregulated
Australian wheat market
• Operational review, restructuring and
business improvement underway
DESCRIPTION OF OPERATIONS
Elders is one of the leading suppliers of rural services
to the Australian and New Zealand farm sectors. Through
a network that includes a network of 285 branches
and approximately 410 points of presence, Elders
provides Australian and New Zealand farmers with the
fi nancial, physical and technical and advisory inputs for
successful farming.
Network operations encompass the following product
and service offerings:
(cid:129) Farm supplies: Elders is one of Australia’s leading
suppliers of rural farm inputs, including seeds,
fertilisers, agricultural chemicals, animal health
products and general rural merchandise, backed by
professional advice on agronomy, genetics and animal
health to primary producers.
(cid:129) Livestock: Elders provides a range of marketing
activities from agency sales at the farm gate through
to feedlot and export options backed by animal
health advice, production management solutions and
breeding services.
(cid:129) Wool: Elders is the largest seller of Australian greasy
wool and has an extensive range of products, services,
facilities and alliances to help growers maximise returns
from their wool. These include wool handling, buying
and selling greasy wool, marketing and selling options
and risk management solutions.
(cid:129) Grain: Elders exclusively accumulates grain for Elders
Toepfer Grain (“ETG”), a joint venture between Elders
and Toepfer International, offering growers a range of
cash-based grain marketing options. The joint venture
combines Rural Services’ strength in grain accumulation
with Toepfer’s expertise in risk management and
global trading.
(cid:129) Real Estate: Elders primarily operates in the broadacre,
rural residential and lifestyle property markets via
177 branches, 44 stand alone and 33 franchise
locations across rural and regional Australia. Elders also
operates in the metropolitan residential market via
132 franchises.
(cid:129) Insurance: Elders is a 25% shareholder in Elders
Insurance; an insurance distribution joint venture that
utilises the Elders network. Elders Insurance distributes
a wide range of insurance cover including home
contents, motor vehicles, business and farm, and a
range of specialist insurance such as crop, livestock
and landlord.
(cid:129) Banking: Elders distributes banking products under an
exclusive distribution agreement with Rural Bank.
Elders network operations are supported by supply chain
interests that leverage or support its relationships
with the Australian farm sector. These network related
operations include:
(cid:129) Australian Wool Handlers (“AWH”): Elders holds a
50% interest in AWH, Australia’s largest wool logistics
company, which handles approximately half of the
national clip.
(cid:129) Elders Toepfer Grain: ETG is a 50:50 joint venture
between Elders and Toepfer International. ETG
leverages the accumulation capability of the Rural
Services network and the international trading and risk
management capabilities of Toepfer International.
(cid:129) Livestock Export & Trading: Elders’ operations consist
of live export and feedlots, which provides additional
sales and marketing options for clients.
(cid:129) Live export: Conducted through North Australian Cattle
Company and Universal Live Exports, which facilitate
the trade of feeder and breeding cattle respectively to
international markets, including Indonesia, Mexico,
China and Russia.
(cid:129) Feedlots and associated meat trading are conducted at
three feedlots: Charlton, Killara (53% interest) and
PT Elders Indonesia.
(cid:129) China operations: Elders Fine Foods is involved in the
importation and distribution of Australian products
in China.
(cid:129) Rural Bank: Elders holds a 40% interest in Rural Bank
(formerly known as Elders Rural Bank), a joint venture
with Bendigo and Adelaide Bank. Rural Bank is an
APRA regulated authorised deposit taking institution
that specialises in rural lending and also provides a
range of depository products tailored to meet the needs
of rural and metropolitan customers.
(cid:129) Elders Insurance: A 75:25 joint venture between QBE
and Elders which distributes insurance products in
rural and regional Australia under the Elders brand for
a 20 year term.
13
Australian network sales revenue
From continuing operations
$ million
Farm supplies
Livestock
Wool
Real Estate
Financial services
Other
Total
2009
12 months
June 2009
1,424.5
1,169.0
127.3
102.7
58.4
76.9
38.9
2.4
49.0
62.1
31.9
2.2
2008
1,241.4
132.9
66.9
87.8
40.9
0.5
1,728.4
1,416.9
1,570.4
Results from New Zealand network operations, which
recorded an EBIT loss of $8.4 million (loss of
$5.7 million in 12 months to June), are consistent with
the development of the business and the severe downturn
in trading conditions experienced by the New Zealand
farm sector during the year.
New Zealand operations recorded sales revenue of
$103.6 million ($86.3 million in 12 months to June);
comprising farm supplies sales $60.6 million, wool
sales $26.4 million, livestock $11.5 million, real estate
$1.5 million and fi nancial services distribution
$3.6 million.
Network related operations generated sales of
$540.4 million ($416.0 million in 12 months to June)
compared with $308.4 million in FY08 (exclusive of
discontinued operations).
Network related sales for 2009 included:
(cid:129) revenue of $526.3 million (12 months to June:
$404.4 million) from livestock and other trading
(FY08:$302.9 million), with the growth sourced from
increased live export and to a lesser extent feedlots.
(cid:129) revenue of $14.1 million attributable to the Elders
Fine Foods operations in China which imports and
distributes Australian agricultural produce (12 months
to June: $11.6 million).
(cid:129) Equity accounted earnings from:
> AWH of $2.6 million ($2.3 million in 12 months to
June versus $2.8 million in FY08). AWH earnings
contracted as wool bales handled fell due to smaller
wool clip.
> Elders Toepfer Grain of $1.4 million, being Elders’
50% share of ETG’s earnings from the purchase and
sale of grain. ETG sold 3.8 million tonnes of grain
in 2009 (3.1 million in the year to 30 June).
Elders generated revenue of $2.1 million ($2.0 million in
12 months to June) from accumulation of grain for ETG
through the Elders network.
Elders has undertaken to concentrate its rural service
operations around core network and network related
activities under the Elders Business Transformation and
Agenda for Change programs. As a result, Elders divested
a number of interests and assets considered non-core In
2009. These included interests in the fodder production,
citrus packing and horticulture sectors. Elders also
initiated a sales process for its 50% interest in fertiliser
distributor HiFert.
RESULTS
Results for 2009 highlight the volatility and uncertainty
that prevailed in rural services markets during the year
and the costs incurred in restructuring the Elders Rural
Services business during the year under the Agenda
for Change and Elders Business Transformation programs.
The reported EBIT loss of $287.0 million from Rural
Services for the year includes non-recurring items totalling
a charge of $295.8 million. These items, which are
detailed further in the Discussion and Analysis of the
Profi t and Loss statement, include: the results from
discontinued operations ($158.4 million); writedown of
assets to be divested or discontinued ($85.2 million);
impairment of assets to be retained ($19.4 million);
major project costs written off ($28.1 million); Business
Transformation Program costs ($32.8 million) offset by
a net gain of $28.1 million on the sale of assets.
Underlying EBIT from Rural Services operations for the
year was $8.8 million ($9.6 million in the 12 months to
30 June) compared with $57.5 million in the previous
year. The movement in underlying EBIT generation is
attributable to a sharp contraction in Australian network
earnings, consolidation of New Zealand network earnings
for the fi rst time, offset in part by strong growth from
livestock export and trading.
Australian network earnings were adversely affected by
the contraction in demand and prices, particularly in farm
supply markets.
Australian network sales from continuing operations were
$1,728.4 million ($1,416.9 million for 12 months to June)
compared with $1,570.4 million in 2008.
Features of the Australia network revenue result by
product include:
(cid:129) Farm supplies revenue was lower on a like-period-basis
due to lower volumes and sharp contraction in prices
of key lines such as agricultural chemicals and fertiliser.
Revenue from the sale of farm supplies for the
12 months to 30 June was down 6% to $1,169 million;
gross margin down 27%. Elders sold 656,000 tonne (t)
of fertiliser (548,000 (t) for 12 months to June,
763,000 (t) in FY08).
(cid:129) Livestock: Impact of lower volumes was partly offset by
higher average price for cattle and sheep.
(cid:129) Wool sales revenue declined as sales and receival
volumes were affected by lower wool production and
market uncertainty and lower prices.
(cid:129) Real Estate sales revenue fell following contraction in
vendor and buyer activity.
(cid:129) Financial Services distribution revenue fell as demand
for credit eased during the year and new banking
distribution fee arrangements were applied.
14
BUSINESS TRANSFORMATION
PROJECT
Elders committed its Rural Service operations to a
Business Transformation process shortly before the
beginning of the 2009 fi nancial year. The program aims
to achieve a substantial improvement in the fi nancial
performance of the business and, as at 30 September,
Elders had progressed into the second year of a three
to four year program.
The fi rst phase, which concentrated on the restructure
of operations, is largely complete. Actions completed
during this phase included restructuring of network
management from a state capital city-based model
to a regional management system, reform of the
Company’s ‘Go-to-Market’ strategy, centralisation
and rationalisation of support centre functions under
a new organisation structure.
The current (second phase) will focus on implementation
of reforms to drive improvement in performance
through addressing supply chain and procurement, the
implementation of standard management processes,
cost reduction and Go-to-Market initatives.
SUSTAINABILITY
Environment
Elders feedlots at Charlton (Victoria) and Killara (New
South Wales) are subject to local, state and federal
government environmental and animal welfare legislation.
Operations at both feedlots are quality assured under the
National Feedlot Accreditation Scheme, which is
independently administered and audited annually by
Aus-Meat. Charlton Feedlot is also ISO9001:2004
(Quality Business Management) and ISO14001:2008
(Environmental Management) accredited and externally
audited by NCSI. In addition, the operations are
conducted under the provisions of the Australian Code of
Practice for the Welfare of Cattle in Beef Feedlots (1996)
and the Australian Model Code of Practice for the Welfare
of Animals – Cattle (1992). No breaches of any of the
relevant acts, codes of practice or accreditation schemes
under which Killara or Charlton feedlots are approved and
operate were reported during the year ended 30 June
2009 or to the date of this Report.
Certain states have state and local government regulations
that apply to saleyards owned and/or operated by Elders,
in particular, in relation to effl uent run-off, dust and
noise. These regulations vary from state to state and
generally only apply to saleyards above a prescribed size.
No breaches of these environmental regulations were
reported during the year ended 30 June 2009 or to the
date of this Report.
Elders’ farm supplies operations are subject to state
environmental regulations governing the storage, handling
and transportation of dangerous goods such as agricultural
and veterinary chemicals and fertilisers. The majority of
Elders farm supplies operations are accredited under the
Agsafe co-regulatory accreditation program. The program
provides accreditation for premises and training and
accreditation for individuals in the safe transport, handling
and storage of agricultural and veterinary chemicals.
Licences for the handling and storage of dangerous goods
are obtained and maintained by Elders wherever necessary
as part of the Agsafe process. No material incidents
were reported in relation to the handling and storage of
dangerous goods during the year.
Human Resources
Elders’ employee numbers decreased in 2009 as a
result of the streamlining of business operations under
the Elders Business Transformation and Agenda for
Change programs. Elders Rural Services employs 3,187
employees representing full time equivalent (FTE) 2,393
employees compared with employment of 4,400 people,
representing 2,752 FTE employees at the start of
the year.
Elders continues to invest to support the development
and productivity of its employees and maintain a
workplace that is progressive and fair for all. Training is
a critical element of this commitment. In 2009
this included employment of 34 Trainees in regional
Australia as part of its new regionally focussed
organisation structure.
Elders supports its commitment to occupational health
and safety with training, workshops and communications
programs. The incidence of lost time injuries per million
hours worked was reduced from 3.30 to 2.94 during
the year.
Elders maintain a large vehicle fl eet to conduct its
operations throughout rural and regional Australia. A range
of initiatives including a duty of care program, driver
education programs, incident reporting and accident
management systems support the safe operation of the
vehicle fl eet.
Community
As a rural service organisation, Elders is committed to
supporting the communities which it serves. Elders
provides employment and a range of services to its
network of branches throughout Australia. Elders branches
support local initiatives and charities and Elders staff
members participate in community service organisations.
At a corporate level, Elders’ initiatives supported a
number of charities and a number of non-government
organisations and initiatives of relevance to its client base.
Elders’ major commitments are its 5-year partnership with
Landcare Australia to promote environmental sustainability
on Australian farms and the McGrath Foundation. Elders
fund raising for the Foundation raised over $100,000 per
annum for rural and regional breast care nurses.
15
FORESTRY
16
Elders conducts its forestry operations through ITC;
a forestry company engaged in plantation establishment
and management, the harvest, handling and export sale
of woodfi bre and the sustainable production of value-
added hardwood timber products.
ITC’s forestry operations have Forestry Stewardship
Council certifi cation and as of 30 September 2009
comprised an area under management in excess
of 165,000 hectares. Approximately 28% of the ITC
estate is owned with the balance leased.
Plantation operations consist of hardwood forests,
managed on behalf of investors, who have funded the
estate through subscription to managed investment
schemes (MIS) or through direct investment. MIS sales
presently account for the large majority of plantation
funding raised.
The plantations are predominantly eucalypt, with smaller
plantings in sandalwood, teak and red mahogany. They
are located in south-west Western Australia, Kununurra,
the Green Triangle region of south-west Victoria and
south-east South Australia and in both central and
northern Queensland.
ITC exports wood chips to Japanese customers from
Albany, Western Australia through its investment
in Plantation Pulpwood Terminals (trading as Albany
Chipping Terminal), a 50/50 joint venture with Timbercorp
Limited (Liquidators appointed), Plantation Pulpwoods
Terminals owns and operates a 1 million tonne per annum
capacity woodchip handling and loading facility.
ITC has a 13.5% interest in FEA, an ASX listed integrated
MIS forestry and timber company. Earnings from FEA are
equity accounted earnings within ITC’s fi nancial results.
Value adding timber processing was conducted through
ITC hardwood sawmilling operations during 2009. These
operations are the subject of a sales contract announced
31 August 2009, which is subject regulatory approval.
Forestry Financial Results
Major features and outcomes
$ million
Total Revenue
Underlying EBITDA
Depreciation & Amortisation
Equity accounted income
Underlying EBIT
Non-recurring items
Reported EBIT
MIS sales
2009
181.2
7.6
6.6
(2.7)
5.9
(106.6)
(100.6)
23.7
12 months
June 2009
198.2
16.8
6.2
(1.4)
10.6
(74.0)
(63.4)
23.7
2008
231.3
66.6
• Total revenue lower due to lower equity
accounted income, & lower sales
• Underlying EBIT of $5.9 million, down
from $61.4 million
5.2
• Reported EBIT loss affected by
12.2
61.4
0.1
61.4
37.6
non-recurring items of $(106.6) million,
• MIS market share increased in diffi cult
market: project sales of $23.7 million
• Sale of Timber processing operations
• Export Woodchip price maintained
• Winner of FSC Large Forestry Manager
of the Year Award 2009
PERFORMANCE
ITC recorded a reported EBIT loss of $100.6 million
in 2009 and an underlying EBIT profi t of $5.9 million
($10.6 million in the 12 months to June).
The reported loss includes non-recurring items totalling
$106.6 million being impairment to the value of
ITC’s shareholding in FEA and to the value of timber
processing assets.
Notwithstanding the generally reduced demand for
commodities during the year, ITC succeeded in negotiating
maintenance of the export price for certifi ed plantation
grown woodfi bre to Japan at $207.40 per bone dry
metric tonne.
Subsequent to year end, ITC was named the Large Forest
Manager of the Year for 2009 by the Forestry Stewardship
Council, an internationally recognised award for
environmental excellence.
The deterioration in total revenue and EBIT results in the
three months to September 2009 is due to greater than
anticipated operating losses by FEA in the period to
30 June 2009 and impairments arising from reduction to
the value of the net asset backing per share of ITC’s
FEA shares following the decision to not participate in a
FEA equity raising.
Underlying EBIT for the year was adversely affected by
the loss of $3.4 million incorporated to recognise
ITC’s share of FEA’s after tax loss. The 2008 accounts
incorporated a profi t of $11.0 million in respect of
the shareholding in FEA.
ITC generated sales revenue of $211.4 million in 2009
fi nancial year ($184.9 million in 12 months to June)
compared with $191.3 million in 2008. Sales during the
period were affected by the reduction to establishment
income resulting from lower MIS sales.
SUSTAINABILITY
Environment
ITC, as a matter of policy seeks to prevent, or otherwise
minimise, mitigate or remediate any adverse impacts
of its operations on the environment and the broader
communities in which it operates. No signifi cant breaches
of relevant environmental legislation or regulations
occurred during the period covered by this report.
ITC holds ISO14001:1996 accreditation in respect
of its environmental management system for its Forestry
operations. The Heyfi eld operations of ITC’s Timber
division in eastern Victoria also secured ISO14001
accreditation in June 2006.
ITC was successfully audited under its Forest Stewardship
Council (FSC) certifi cation during the year. Approximately
80% of the Company’s plantations under management
are now FSC certifi ed.
ITC’s 2009 MIS projects generated sales of $23.7 million
which compares to $37.6 million in the previous year. The
2009 MIS sales will fund the plantation of approximately
3,700 hectares of hardwood forest. ITC harvested and
sold woodfi bre from 2,994 hectares of plantation in the
Albany and Bunbury region in 2009 (2,300 in 2008).
Income from value appreciation in Investment Property
and SGARA for 2009 was $12.4 million ($12.4 million
in the 12 months to June) compared with $25.6 million in
the previous year. The movement is refl ective of a larger
value uplift in 2008 as a result of land sale and leaseback
transactions conducted in that year.
The combination of the lower sales, investment property
and SGARA income and equity accounted income resulted
in a reduction in total revenue.
ITC continued its corporate partnership with leading
environmental organisation, WWF-Australia. The
partnership seeks to encourage sustainable forestry
management practices across the forestry sector whilst
also jointly pursuing the uptake of credible forest
certifi cation by forest owners across Australia, including
the public authorities who license ITC Timbers
harvesting from state-owned native regrowth forests.
Human resources and safety management
ITC had 106 Full Time Equivalent employees as at
30 September compared with 426 at the beginning of
the year.
ITC’s achieved a substantial improvement in safety
performance compared with the previous year, recording
a lost time injury frequency rate of 20.98 for 2009
compared with 46.4 in the previous year.
17
AUTOMOTIVE
OPERATIONS
Futuris Automotive’s primary operations encompass the
design, manufacturing and supply of automotive
interiors solutions (Interiors) and a 35% investment in
Air International Thermal Systems (Thermal). Interiors
is Australia’s leading domestic based supplier of
automotive interior solutions.
The Interiors business designs and supplies automotive
seating and interior solutions. Interiors’ product range
includes seating, steering, pedals, window regulators, door
trims, headliners, fl oor carpets, parcel shelves, acoustic
and aftermarket products. These products are supplied to
high profi le automotive manufacturers including GM
Holden, Ford, Toyota and Chery Automobile. The supply of
these products is assisted through a number of joint
venture partnerships with automotive market participants
globally including:
(cid:129) Anhui JV: a joint venture in Anhui province (China),
whose operations involve the manufacture of seating
systems for supply to Chery and JAC.
(cid:129) Feltex JV: a joint venture in South Africa, whose
operations involve the manufacture of fl oor carpet and
mats for Daimler (Mercedes Benz).
(cid:129) Plexicor: a 50% interest in MCK Pacifi c in Australia,
a manufacturer of soft trim and acoustic trim products
for supply to Toyota, Ford and GM Holden.
All of these joint ventures are equity accounted by Elders
and the Company incorporates their fi nancial results
according to its equity share of their after-tax results.
The Thermal business is engaged in the design and
manufacturing of HVAC (air conditioning) and Power Train
Cooling systems in the US, Asia and Australia. Thermal’s
products are supplied to global automotive manufacturers
including GM, Suzuki, Ford, Mitsubishi and Mazda.
The business has been restructured to align with
substantial reductions to automotive build schedules
arising from current economic conditions and as a result is
expected to deliver positive cash fl ow. Management of
the business will continue to focus on the maintenance of
positive cash fl ow, leveraging returns on volume turnaround
and positioning for a favourable sale outcome when
market conditions improve.
18
Automotive Financial Results
Major features and outcomes
$ million
Sales
Underlying EBITDA
Depreciation & Amortisation
Underlying EBIT:
Futuris Automotive
Associates (equity account)
Underlying EBIT
Non-recurring items
Reported EBIT
2009
333.0
4.3
19.4
6.8
(21.9)
(15.1)
(44.3)
(59.4)
12 months
June 2009
270.1
0.0
15.5
5.6
(21.1)
(15.5)
(44.3)
(59.8)
2008
384.2
42.3
16.1
23.9
2.3
26.2
-
26.2
• Sales and earnings down due to
signifi cantly lower vehicle demand and build
• Business restructured to meet lower
volume market
• EBIT loss incurred due to results from
associate Thermal Systems
• Chinese operations fully operational, profi table
after fi rst full year
• Non-recurring items for restructuring,
impairments to meet market conditions
• Futuris Automotive named winner of a number
of global automotive industry awards
Results
Results from Automotive operations show the impact of
a severe contraction to vehicle build schedules during
the year.
The downturn in motor vehicle industry activity brought
lower supply requirements for Futuris Automotive’s
existing programs and delay or cancellation of new supply
programs. The major operating and fi nancial impact was
experienced by 35%-owned associate Thermal, through
its exposure to US vehicle production.
The realignment of business structure, costs and
valuations to levels appropriate for the new market
conditions resulted in non-recurring items totalling
$44.3 million. However, the measures taken have seen
costs and operations brought to sustainable levels, with
the business recording a positive operating cash fl ow
of $14.9 million for the year ($4.0 million for the
12 months to 30 June).
Underlying EBIT for the year was a loss of $15.1 million
($15.5 million loss for the 12 months to June) which
compares to the profi t of $26.2 million in 2008.
The loss incorporates an underlying profi t of $6.8 million
($5.6 million in 12 months to 30 June) from Futuris
Automotive operations and an underlying loss of
$21.9 million from associates (loss of $21.1 million in
12 months to 30 June).
The improvement in underlying EBIT results between the
12 months to June and the full year fi gure are considered
indicative of the improving market conditions in the motor
vehicle sector.
In China, Futuris Automotive Interiors (Anhui) completed
its fi rst full year of operation. The joint venture’s
activities increased with the addition of contracts for the
supply of seating to JAC, supplementing existing supply
agreements with Chery. Results improved over the
course of the year with ramp-up in production volumes,
and by the third quarter the joint venture had reached
profi table operation levels.
Futuris Automotive received a number of globally
recognised automotive industry awards during the year.
These included 3 awards at the 2009 Automotive News
PACE™ awards ceremony in Michigan, USA recognising
the innovation in its PET enviroTUF™ automotive carpet
solutions, which is manufactured from post-consumer
PET bottles.
The businesses’ supply chain management capabilities
were recognised with the Boston Strategies International
2008 award. The award, which was made after a global
supply chain benchmark study in which 500 diverse
companies responded.
SUSTAINABILITY
Futuris Automotive conducts its operations within the
parameters of management plans to ensure its day-to-day
activities are completed safely and in an environmentally
and socially responsible manner.
Environment
Futuris Automotive’s key manufacturing plants in Australia
are all accredited to ISO 14001 certifi cation.
The organisation’s operating facilities are subject to
relevant environmental protection legislation and
regulation in the areas in which they operate. There
were no reportable incidents or breaches of applicable
environmental legislation arising from Futuris
Automotive’s operations during the year.
Safety
Safety is managed through a series of safety committees
at each operation which report to senior management
on performance. Futuris Automotive recorded a lost time
injury frequency rate of 6.35 per million hours worked
during the year compared to the preceding years rate of
10.98 per million hours worked.
Human Resources
Futuris Automotive employed a total of 744 people in
Australia at 30 June 2009 compared with 1,044 at the
same time in the previous year. The 2009 employment
represents 566 Full Time Equivalent employees. In
addition 300 people are employed by Futuris Automotive
and its offshore joint ventures (268 as at 30 June 2008).
19
BOARD OF DIRECTORS
Mr Stephen Gerlach, AM, LLB Chairman Mr Gerlach age 64 – Non-executive member of the Board since November 1996 and Chairman
since July 2003. He chairs the Company’s Nomination & Prudential and Remuneration Committees. Formerly Managing Partner of Adelaide
legal fi rm Finlaysons, Mr Gerlach has extensive experience as a corporate advisor and company director. Mr Gerlach also holds directorships
at Santos Limited (Chairman) and Santos Finance Ltd (Chairman). He is the Chairman of Foodbank SA Inc., a director of Foodbank Australia
Ltd and a Trustee of the Australian Cancer Research Foundation. Mr Gerlach previously served as a director of Southcorp Limited from 1994
to 2005. Mr Gerlach is a resident of South Australia.
Mr Mark C Allison, BAgrSc, BEcon, GDM, FAICD Mr Allison age 48 – was appointed a Non-executive director of the Board on
10 November 2009. He has extensive experience spanning 25 years in the agribusiness sector. He is a former Managing Director of
Wesfarmers Landmark Limited and Wesfarmers CSBP Limited. Prior to his appointment at Wesfarmers in 2001, Mr Allison held senior
positions with Orica Limited as General Manager of Crop Care Australasia and with Incitec Limited as General Manager – Fertilisers.
Between 1982 and 1996 Mr Allison performed a series of senior sales, marketing and technical roles in the Crop Protection, Animal Health
and Fertiliser industries. Mr Allison was the Managing Director of Makhteshim Agan Australasia Pty Ltd from 2005 to 2007 and Managing
Director and Chief Executive Offi cer of Jeminex Limited from 2007 to 2008. Mr Allison is a resident of New South Wales.
Mr Charles E Bright, BA, MA(Oxon) Mr Bright age 64 – Non-executive member of the Board since May 2002. He is a member of the
Nomination & Prudential Committee and Chairman of BWK AG Supervisory Board. Mr Bright has over 30 years’ experience in investment
banking with positions including Chairman of Potter Warburg Securities and Head of Corporate Finance for HSBC in Australia. Mr Bright
also served as Chairman of Australian Agricultural Company Limited until January 2009 and a director of Tassal Group Limited (August
2005 – September 2009) and Webster Limited (August 2005 – February 2009). Mr Bright is a resident of Victoria.
Dr James C Fox, BE, MEngSci, PhD Dr Fox age 58 – Non-executive director and Deputy Chairman, Chairman of the Occupational Health,
Safety and Environment Committee and member of the Remuneration and Nomination & Prudential Committees. He resigned as director
of Elders Rural Services Ltd in April 2009. A non-executive director of Elders since July 1985, Dr Fox has more than 25 years experience
as a public company director across a range of internationally based businesses. His particular track record is in the building of innovative,
technology based companies in competitive international markets. After eight years working with a large international management
consulting company, he started his own technology based product and service company in 1987. Following the merger of Dr Fox’s company
with the then listed Vision Systems Limited in 1993, he was appointed CEO of the combined group until his retirement in 2006 following
a heavily competed takeover of the company. Dr Fox is Chairman of Biota Ltd and also a director of Air New Zealand Ltd, MS Research
Australia Ltd, Altitude Ltd, iSoft Group Ltd and TTP Group Plc (UK), and was a director of Optiscan Ltd from 1 July to 30 November 2009.
Dr Fox is a resident of Victoria.
Mr Raymond G Grigg, FSAE-I, FAICD Mr Grigg age 68 – Non-executive director of the Board since February 2004. He is also Non-
executive director of the Futuris Automotive Group of companies, and a member of the Elders Audit & Compliance Committee. Mr Grigg has
extensive experience and leadership in senior management within the automotive industry, having joined the Board following a 47 year
career with General Motors Corporation where he held a number of senior positions both in Australia and overseas. At retirement Mr Grigg
was President and Representative Director, General Motors Asia Pacifi c (Japan) as well as Chairman, CEO and Representative Director of
GM Japan. Previous positions held include General Manager-Operations at GM Holden in Australia and Executive Director, GM International
CKD Operations in Germany. Mr Grigg is also Vice President of the Royal Automobile Association of SA Inc and a non-executive director of
Adtrans Group Limited and Bedford Industries Inc. Mr Grigg is a resident of South Australia.
Mr James H (Hutch) Ranck, BS Econ Mr Ranck age 61 – Non-executive director of the Board since June 2008. He is Managing Director of
DuPont Australia & New Zealand and Group Managing Director for DuPont operations in ASEAN. Mr Ranck has had a long and distinguished
career with Du Pont where he has held senior management positions in Australia and overseas in fi nance, chemicals, pharmaceuticals
and agricultural products. He is currently Chair of the BCA Education, Skills and Innovation Task Force and a director of the Business Council
of Australia and the Australian Bush Heritage Foundation. Mr Ranck is a resident of New South Wales.
Mr Malcolm G Jackman, BSc, BCom Mr Jackman age 57 – Executive Director of the Board since October 2008. He is the Chief Executive
and Managing Director of the Elders Group. Prior to joining the Company Mr Jackman was Chief Executive Offi cer and Managing Director of
Coates Hire Ltd, an ASX 200 listed company, from 2003 until its sale in January 2008. Prior to Coates Mr Jackman was Chief Executive
Offi cer of Manpower Australia/New Zealand from 1996-2003. Mr Jackman was also a non-executive director of Rubicor Group Ltd from
2005 until 2008. Mr Jackman is a resident of South Australia.
Mr Ian G MacDonald, SF Fin Mr MacDonald age 55 – Non-executive member of the Board since November 2006 and a member of the Audit
& Compliance Committee. He is a director of Rural Bank Ltd and Elders Trustees Ltd. He was a director of Elders Insurance Ltd and Elders
Insurance Agencies Pty Ltd until the sale of these companies on 30 September 2009. He is a member of the Australian Institute of Company
Directors and a Senior Fellow of the Financial Services Institute of Australasia. Mr MacDonald has had an extensive career in banking both in
Australia and internationally, having served National Australia Bank Ltd for 34 years including performance of a number of senior management
roles, including Chief Operating Offi cer, Yorkshire Bank, Executive General Manager, Financial Services Australia, and Group Chief Information
Offi cer. Mr MacDonald is a director of Arab Bank Australia Ltd and CPT Global Ltd. Mr MacDonald is a resident of Victoria.
Mr Graham D Walters, AM, FCA Mr Walters age 67 – Non-executive member of the Board since January 2002. He is the Chairman of the
Audit & Compliance Committee and was a director of the Elders Financial Services Group until 1 September 2008 and Elders Rural
Services Ltd from November 2007 until April 2009. Mr Walters has extensive experience in accounting, having formerly held roles as
Chairman of Partners at KPMG South Australia and as a Member of the National Board of KPMG. Mr Walters also holds directorships of
Australian Rail Track Corporation Limited, BioInnovation SA and the Adelaide Festival of Arts. He is also the local Chairman of Westpac
Banking Corporation in South Australia. Mr Walters is a resident of South Australia.
Mr Rob H Wylie, FCA Mr Wylie age 59 – was appointed a Non-executive director of the Board on 10 November 2009. A Chartered Accountant
with over 30 years of experience in accounting, audit and corporate governance, including experience in mergers, acquisitions and corporate
advisory work. Mr Wylie’s past executive positions and non-executive directorships include Executive Partner (Offi ce of the Chief Executive
Offi cer) and National Managing Director Corporate Governance Services (New York), Deloitte & Touche USA; Deputy Managing Partner,
Deloitte Asia Pacifi c; and Chairman, Director – Board of Partners, Chief Executive Offi cer, Deloitte Australia. Mr Wylie is currently a non-
executive director of MaxiTRANS Industries and Centro Properties Group. Mr Wylie is also a former National President and State Chairman
– Victoria for the Institute of Chartered Accountants in Australia and former Victorian Board Member of the Australian Institute of Company
Directors. Mr Wylie is a resident of Victoria.
Company Secretaries
Ms Sonya C Furey, BEc(Acc), LLM, FCA Ms Furey was appointed Group Tax Manager in December 1999 and Company Secretary in December
2002. Prior to joining the Company, Ms Furey held a management role at KPMG, Corporate Tax Consulting. Ms Furey holds a Bachelor of
Economics (Accounting) from Flinders University of South Australia and a Master of Laws (Corporate and Commercial) from the University
of Adelaide. She is a Fellow of the Institute of Chartered Accountants and a Fellow of the Taxation Institute of Australia.
Mr Ross E Mallett, JD, BBus, FCIS, FCPA Mr Mallett was appointed Company Secretary in March 2008. Before joining the Company
Mr Mallett was Deputy Company Secretary of BHP Billiton Ltd and prior to that held senior company secretarial roles at WMC Resources Ltd
and CRA Limited (now Rio Tinto Ltd). Mr Mallett holds a Juris Doctor from Monash University and a Bachelor of Business from Deakin University.
He is a Fellow, National Councillor, Director and former National President of Chartered Secretaries Australia and a Fellow of CPA Australia.
20
CORPORATE GOVERNANCE
STATEMENT
The 2009 fi nancial period represented a period of
considerable challenge and change for the Company.
As set out on page 11 of this Annual Report, in
December 2008 the Company’s new Chief Executive
announced the Agenda for Change Program. During this
period of operational change the Board has also made
a number of changes to the governance framework and
policies in place throughout the Group to improve
their effectiveness. The Board has driven these changes
to ensure that the Company’s corporate governance
framework is in accordance with best practice.
The directors believe that good corporate governance
contributes long term value to stakeholders and are
therefore committed to enhancing corporate values and
culture and continuous improvement in governance.
This corporate governance statement summarises the key
changes made to the governance framework during the
2009 fi nancial year and sets out the key elements of the
Company’s governance framework and practices.
The Board is committed to acting in the best long-term
interest of shareholders, customers, employees and
the community. The Board has in place a Board Charter
that consolidates the principles, policies and practices of
its governance framework as refl ected in this statement.
(cid:129) Provide clear accountability.
(cid:129) Protect the rights and interests of shareholders and
other stakeholders.
(cid:129) Provide for proper management of the Company’s assets;
(cid:129) Support the achievement of the Company’s fi duciary,
environmental, safety, social and other obligations.
(cid:129) Preserve and enhance the Company’s reputation and
standing in the community.
(cid:129) Support the achievement of shareholder value within a
framework of appropriate risk assessment and
management.
The corporate governance policies and practices are
reinforced by a commitment by the Company to the
highest standards of legislative compliance and fi nancial
integrity and ethical behaviour.
Management and Oversight
The Board Charter defi nes those duties that are reserved
for the Board and its Committees and those that are
delegated to management.
Board
In developing our governance framework we have taken
into account the Corporate Governance Principles
and Recommendations (Best Practice Recommendations)
published by the ASX Corporate Governance Council
(ASXCGC). We believe that the Company’s governance
practices are consistent with the ASXCGC’s Corporate
Governance Principles and Recommendations, which were
revised in August 2007. Published on our website at
www.elders.com.au is a table comparing the Company’s
governance practices with the ASXCGC’s Corporate
Governance Principles and Recommendations.
The main responsibilities of the Board as set out in the
Board Charter are to:
(cid:129) Provide input into, and adopt, the strategic plan and
budget of the Company as prepared by management.
(cid:129) Monitor performance against the business plan
and budget;
(cid:129) Approve and monitor the progress of all material
acquisitions, divestments, contracts and capital
expenditure;
(cid:129) Approve capital raisings (debt or equity) by the
Company;
OPERATION OF THE BOARD
Relevant polices and charters:
– Board Charter
– Company constitution
Role of the Board
The Board is ultimately responsible for the governance of
the Company. It has implemented governance policies
and practices that are designed to:
(cid:129) Oversee the audit, compliance and fi nancial and
operational risk management functions of the Company;
(cid:129) Oversee the Company’s fi nancial reporting and
communication to the Company’s shareholders and the
investment community and shareholder-relations
generally;
(cid:129) Appoint and remove the Chief Executive and determine
that person’s remuneration (including termination
benefi ts);
(cid:129) Review the performance of the Board as a whole and of
individual directors; and
(cid:129) Monitor and assess the performance of the Chief
Executive and the Company’s senior executive team.
21
Committees
The Board has established a number of Board Committees
(Nomination & Prudential Committee, Remuneration
Committee, Occupational, Health, Safety and Environment
Committee and Audit and Compliance Committee) to
increase the Board’s effi ciency and effectiveness in
fulfi lling these responsibilities. The role and responsibilities
of these Committees are detailed in formal charters. In
addition, a Group Risk Committee comprising members
of the Company’s Executive Committee operates under
a Board-endorsed risk management policy and reports to
the Board on a regular basis. The responsibilities and
composition of these committees are detailed on pages
25 to 29.
BOARD STRUCTURE
COMPOSITION, INDEPENDENCE,
TRAINING AND ASSESSMENT
Relevant policies and charters:
– Board Charter
– Company Constitution
– Prudential Criteria
– Director Independence Policy
– Board Performance Assessment
– Director Induction and On-going Education
Delegation of Responsibility to Management
Board Composition
The Board delegates responsibility for the day-to-day
operation and administration of the Company to the Chief
Executive. Mr Malcolm Jackman was appointed as Chief
Executive of the Company on 29 September 2008 and
Managing Director on 20 October 2008 following the
resignation of former Chief Executive Mr Les Wozniczka
on 26 September 2008. The Board monitors the Chief
Executive’s performance on an ongoing basis through
regular management reporting and through the reporting
of the various Board Committees and Group Risk
Committee. The Company has in place a comprehensive
delegation of authority under which the Chief Executive
and the Executive Committee operate. The Board regularly
reviews the obligations set out in the Board Charter and
the delegations of authority.
The composition of the Board is determined by
the Company’s Constitution and by Board Policy, which
includes the following requirements:
(cid:129) The number of directors may be not less than three and
not more than 12;
(cid:129) The majority of directors must be independent non-
executive directors;
(cid:129) The Chairman should be an independent director; and
(cid:129) Directors (and prospective directors) must satisfy
prudential criteria arising from the Company’s
undertaking to comply with all requirements of specifi ed
regulators in respect of licences the Company holds.
Fit and Proper Person Policy
The process for evaluating the performance of senior
executives is set out in the Remuneration Report on
pages 39 and 40.
Executive Committee
In January 2009 the Company disbanded the independent
subsidiary boards that had oversight over the key
operating business units and reformed the Group’s
management structure into a single integrated executive
management team, the Executive Committee, comprising
business unit managing directors and senior functional
corporate managers who report directly to the CEO. One
of the functions of the Executive Committee is to assist in
the oversight function and to comply with obligations of
prudentially regulated entities within the Group.
Company Secretary
Under the Board Charter, the Company Secretary
is accountable to, and reports directly to, the Board
(through the Chairman where appropriate) on all
governance matters.
22
The Company has a fi t and proper person policy and
process to provide directors with assurance that existing
and potential directors and persons appointed to senior
executive positions within the Group are able to satisfy
appropriate fi tness and proprietary standards that will
enable them to discharge their prudential responsibilities
throughout the term of their appointment.
The Company has made an undertaking to comply with all
requirements of specifi ed regulators in respect of licences
the company holds including the Company’s undertaking
to comply with APRA Policy Statements, Policy Framework
and Prudential Standards relating to the prudential
supervision of conglomerates in respect of its ownership
interest in Rural Bank Ltd. The prudential criteria set down
in the Company’s Fit and Proper Policy are set out below
and on the Company’s website at www.elders.com.au:
(cid:129) Any director or proposed director of the Company must
comply with appropriate prudential standards formulated
by the Company which refl ect APRA’s or another
specifi ed regulators prudential standards and guidelines
(Prudential Criteria);
(cid:129) Any director who does not comply with those Prudential
Criteria (or who is the subject of an adverse
determination by APRA) is disqualifi ed from continuing
to hold the offi ce of director;
(cid:129) Limits are imposed on board representation by directors
affi liated with any one substantial shareholder to prevent
any substantial shareholder from exercising an undue
measure of control and infl uence over the policies
or operations of the Company and Rural Bank Limited;
(cid:129) A standing committee of the Board (the Nomination
and Prudential Committee) formulates, reviews
and administers appropriate Prudential Criteria; and
(cid:129) The key principles of the Prudential Criteria adopted by
the Company are that directors and certain senior
executives of the Group should be able to meet the
following compliance requirements:
> possess the confi dence, character, diligence, honesty,
integrity and judgement to perform properly the
duties of the responsible person position held;
> the person is not disqualifi ed under the Banking Act
1959, the Insurance Act 1973 or the Superannuation
Industry (Supervision) Act 1993 from holding their
position; and
> the person has either no confl ict of interest in
performing their duties or if the person has a confl ict
of interest, it would be prudent for the Company
to conclude that the confl ict will not create a material
risk that the person will fail to perform properly
their duties.
(cid:129) In addition to these general criteria, the Company will
also apply (but not be restricted to) the following
specifi c criteria for an individual to qualify as a “fi t and
proper” person.
That they have never:
> failed to discharge responsibilities as a director or
manager of, or a professional service provider to, a
body corporate, statutory body, partnership, trust, or
commercial or professional enterprise of any kind
(entity) with diligence, honesty, integrity or judgement;
> been the subject of justifi able criticism, discipline,
punishment, adverse fi ndings, directions or orders, by
a court, tribunal, offi cial inquiry, regulatory agency,
complaints handling body, dispute resolution body, or
professional or industry body concerning conduct in
relation to:
– the management of an entity; or
– commercial or professional activities.
> been the subject of civil or criminal proceedings, or
enforcement action, in relation to:
– the management of an entity; or
– commercial or professional activities.
> been expelled or excluded from, or refused admission
to, a professional or industry body, or a clearing
house or exchange;
> been involved with the affairs of an entity that was
expelled or excluded from, or refused admission to, a
professional or industry body, or a clearing house or
exchange;
> been refused a licence or authorisation relating to a
commercial or professional activity, or had such a
licence or authorisation revoked;
> been involved with the affairs of an entity that was
refused a licence or authorisation relating to a
commercial or professional activity, or had such a
licence or authorisation revoked;
> had their appointment terminated, or resigned or been
asked to resign, from a position as director or
manager of, or professional service provider to, an
entity in circumstances which refl ected adversely on
their competence, character, diligence, honesty,
integrity or judgement in discharging their
responsibilities in the position;
> seriously or persistently failed to manage their debts
or fi nancial affairs in accordance with contractual or
other legal obligations in circumstances where such
failure caused loss to others;
> been, or acted as, a director or manager of, or
professional advisor to, an entity that:
– was, or later came to be, insolvent;
– was, or later came to be, under insolvency
administration;
– was, or later came to be, under statutory or judicial
management; or
– failed to repay, or otherwise failed to meet its
fi nancial obligations to, creditors or benefi ciaries;
and engaged in unreasonable or unlawful conduct that
caused or contributed to the insolvency, placement
under insolvency administration or statutory or judicial
management, or failure to repay or otherwise meet
obligations to creditors or benefi ciaries;
> contravened any regulatory requirement or
professional standard relating to:
– the management of an entity; or
– commercial or professional activities;
> been unreasonably or improperly obstructive of,
or misleading or untruthful in dealing with, a court,
tribunal, offi cial inquiry, regulator, complaints
handling body, dispute resolution body, or
professional or industry body;
> breached a fi duciary obligation or other legal or
professional obligation involving trust or confl ict
of interest or perpetrated or participated in negligent,
deceitful or otherwise discreditable business or
professional practices; or
> failed to comply with a fi t and proper policy of an
APRA-regulated institution.
Director skills and experience
The Board is to be comprised of individuals with
an appropriate mix and depth of skills, experience and
knowledge in order to meet the Board’s responsibilities
and objectives.
The Board of Directors currently comprises an
independent non-executive chairman who is elected by
the full Board, eight other independent non-executive
directors and a managing director/chief executive.
The qualifi cations, experience, special responsibilities
and period of offi ce of each director may be found on
page 20 of this report.
Director Independence
The Company has adopted an Independence Policy that
is published on the website. The policy states that
the majority of the Board must comprise independent
directors.
In determining whether or not a director is to be
considered independent, the Board will have regard to
whether the director:
(cid:129) Is a substantial shareholder in the Company;
(cid:129) Within the last three years, has been an employee of
the Company, a material adviser to the Company
or a principal or employee of any material adviser to
the Company;
(cid:129) Is a material supplier to, or a material customer of, the
Company;
(cid:129) Is directly or indirectly associated with any of the above
persons;
(cid:129) Is otherwise free from any interest and any business or
other relationship which could, or could reasonably be
perceived to, materially interfere with the director’s
ability to act in the best interests of the Company; and
(cid:129) Is of independent character and judgment.
23
In assessing materiality, the Company takes a qualitative
approach rather than setting strict quantitative thresholds.
Whether an interest, relationship or business is ‘material’
is considered having regard to the nature, circumstances
and activities of the director and from the perspective
of the Company, the persons and entities with whom the
director has an affi liation, and the director.
Group’s businesses and industry or technical issues
impacting the Group and at least one meeting a year
is held in conjunction with a tour of one of the
Company’s operations.
Other Non-executive Director Activities/
Involvement
The Board does not believe that the period of service of a
director necessarily hinders the director’s ability to exercise
independent thought and judgement and to act in the
best interests of the Company. The directors believe that
experience and knowledge of the Company’s operations
are important contributors to the effi cient working of the
Board and the best interests of the Company.
In addition to the time spent in preparation for and
attendance at Board and committee meetings,
non-executive directors visit operational sites and assist
the Company in local, national and international industry
matters. Non-executive directors are also involved in
business and strategic planning meetings.
Board Performance Assessment
Chairman
The Board Charter prescribes that the Chairman should
be an independent director and details his responsibilities.
Mr Stephen Gerlach was appointed Chairman on
1 July 2003. The Board has determined that Mr Gerlach
is an independent non-executive director. The Chairman’s
role includes:
(cid:129) Providing effective leadership to the Board in all Board
matters;
(cid:129) Publicly representing the Board’s views to stakeholders;
(cid:129) Promoting effective relations between the Board and
management;
(cid:129) Leading the process of review of the performance of the
Board, Committees and individual directors;
(cid:129) Guiding the setting of agenda items and conduct of
Board and shareholder meetings; and
(cid:129) Overseeing succession of non-executive directors and
the Chief Executive.
Access to Independent Professional Advice
and Other Resources
Directors may obtain independent, professional advice,
at the Company’s expense, on matters relevant to
the Company’s affairs to assist them in carrying out their
duties as directors, subject to providing prior notice to
the Chairman.
All directors have direct access to and may seek
information directly from the Company’s External and
Internal Auditors provided that all such enquiries are fi rst
advised to the Chairman and the Chief Executive.
The Board reviews its own performance and that of its
Committees on an ongoing basis. The Chairman also holds
individual discussions with each director to discuss their
performance on a needs basis. The non-executive directors
are responsible for evaluating the performance of the
Chief Executive, who in turn evaluates the performance of
all other senior executives. The evaluations are based
on specifi c criteria, including the Company’s business
performance, whether long-term strategic objectives are
being achieved and the achievement of individual
performance objectives. This process was followed in
respect of the 2009 fi nancial year.
During the 2009 fi nancial year a formal board review was
conducted by an external board performance consultant
(Colin Carter & Associates). The review of the Board and
Board Committees collectively and of individual directors,
including the Chairman, was conducted by means of
survey and individual interviews of directors and senior
management on board performance issues. Board
members received a written report on the review fi ndings
and recommendations which was then used as a basis
for discussion at meetings of the Board in September and
November 2009.
The Board Charter prescribes that before a director is
recommended for re-election, the Chairman consults with
the other directors regarding the director’s effectiveness.
Based upon the outcome of these consultations, the
Board shall then determine whether or not to recommend
the director for re-election.
Directors have access to the Company’s management and
company information through the Chief Executive to assist
them in carrying out their duties as directors.
The Nomination & Prudential Committee assists in this
review process.
Appointment of Directors and Re-election
Director Induction and Training
Upon appointment, new directors are given a detailed
briefi ng by the Chairman on key board issues and by the
Chief Executive and senior executives on the nature of the
Company’s business and its key drivers. New directors are
also provided with appropriate background documentation.
Issues covered in the induction include:
(cid:129) The Company’s fi nancial, strategic, operational and risk
management position;
(cid:129) Directors’ rights, duties and responsibilities; and
(cid:129) The role of the Board and the Board committees.
Directors undertake training and development on an
as needs basis. Directors are also regularly briefed on the
24
The composition of the Board is reviewed on an annual
basis coinciding with the annual general meeting cycle to
ensure that the Board has the appropriate mix of expertise
and experience.
At each annual general meeting (AGM) of the Company,
one third of directors (other than the managing director
and directors who have been appointed since the previous
AGM) and any other director who will at the conclusion
of the meeting have been in offi ce for three or more
years and AGMs since they were last elected to offi ce are
required to retire and may stand for re-election. Directors
who have fi lled casual vacancies are required to be
elected at the fi rst annual general meeting following their
appointment to the Board.
When a vacancy exists, or when it is considered that the
Board would benefi t from the services of a new director
with particular skills, the Nomination & Prudential
Committee selects candidates with appropriate expertise
and experience for consideration by the full Board.
The Committee also takes into account the Prudential
Criteria and may seek advice from external consultants if
necessary in selecting candidates for board positions.
The Board then appoints the most suitable candidate who
must stand for election at the next general meeting of
shareholders and re-election at three yearly intervals.
Formal letters of appointment setting out key terms and
conditions are in place for all directors. The process of
Board renewal continued during the course of the year with
the appointments of Mr Rob Wylie and Mr Mark Allison
as directors on 10 November 2009. Mr Anthoni Salim
resigned as a director of the Company on 30 October 2009.
Dr Jim Fox has also indicated his intention to stand down
as director at the December 2009 AGM.
BOARD COMMITTEES
Relevant policies and charters:
– Nomination & Prudential Committee Charter
– Audit & Compliance Committee Charter
– Remuneration Committee Charter
– Occupational Health, Safety & Environment
Committee Charter
Nomination & Prudential Committee
Objective
The Board’s objective in relation to Board nomination and
review is to ensure that:
(cid:129) The Company has adopted selection, appointment and
review practices that result in a board:
> with an effective composition, size, mix of skill sets
and experience and commitment to adequately
discharge its responsibilities and duties and add value
to the Company and its shareholders;
> that has a proper understanding of, and competence
to deal with, the current and emerging issues of the
businesses of the Company; and
> can effectively review and challenge the performance
of management and exercise independent judgement.
(cid:129) Shareholders and other stakeholders understand
and have confi dence in those selection, appointment
and review practices; and
(cid:129) The prudential criteria that directors must satisfy at all
times, arising out of the Company’s undertaking to
comply with the requirements of Specifi ed Regulators to
protect the value of the Company’s substantial assets
allocated to fi nancial services activities, are met. The
prudential criteria is set out in the Fit and Proper Person
Policy section on pages 22 and 23. The Nomination
& Prudential Committee assists the Board in meeting its
prudential objectives.
Membership
The members of the Nomination & Prudential Committee
at the date of this Report are:
Mr S Gerlach (Chairman)
Mr C E Bright
Dr J C Fox
The Nomination & Prudential Committee currently
comprises three independent directors and includes the
Chairman of the Board and Deputy Chairman. The Chief
Executive Offi cer has a standing invitation to attend the
Committee meetings and may participate in discussions
on matters concerning the main Board, but has no
voting rights with respect to such matters. Members are
appointed for an initial term of three years, but are eligible
for re-appointment. From time to time the full Board
meets to consider nomination issues.
Role
The Nomination & Prudential Committee operates under a
formal charter adopted by the Board which can be viewed
on the Company’s website at www.elders.com.au.
The Committee’s principal responsibilities are to regularly
review and make recommendations to the Board on:
(cid:129) The necessary and desirable competencies of members
of the Boards of the Company and its subsidiaries and
their committees;
(cid:129) Appropriate processes for the review of the performance
of the Boards of the Company and its subsidiaries;
(cid:129) Appropriate policies with respect to the maximum
period of service and retirement age for directors;
(cid:129) Appropriate succession plans for the Boards of the
Company and its subsidiaries and the Chief Executive
Offi cer;
(cid:129) The appropriate size of the Board so as to encourage
effi cient decision-making;
(cid:129) Recommendations for the appointment (including
re-appointment in the case of directors retiring
by rotation) and removal of directors of the Company
and its subsidiaries;
(cid:129) The scope and content of letters of appointment of
non-executive directors;
(cid:129) Skills development and continuing education programs
for directors of the Company and its subsidiaries;
(cid:129) Appropriate induction procedures designed to allow
new directors to participate fully and actively in board
decision-making at the earliest opportunity and the
effectiveness of those procedures; and
(cid:129) Fulfi llment of the Company’s prudential obligations.
Key Activities During the Year
The Committee oversaw the following signifi cant activities
during the reporting period:
(cid:129) Appointment of new CEO during the year following the
completion of an international search;
(cid:129) Completion of a comprehensive review of the
effectiveness of the Board conducted by an external
board performance consultant; and
(cid:129) Continuation of the process of Board renewal with the
appointment of two new directors and impending
departure of two long standing directors.
Remuneration Committee
Objective
The board’s objective is to ensure that the Company has
adopted remuneration policies that meet the needs of the
Company and encourage a performance oriented culture.
A summary of the Company’s remuneration policies and
practices is set out in the Remuneration Report on pages
36 to 53.
25
Membership
The members of the Remuneration Committee at the date
of this Report are:
Mr S Gerlach (Chairman)
Dr J C Fox
Mr J H Ranck
Membership
The members of the Audit and Compliance Committee
at the date of this Report are:
Mr G D Walters (Chairman)
Mr I G MacDonald
Mr R G Grigg
The Remuneration Committee comprises three
independent directors and includes the Chairman of the
Board and Deputy Chairman. The Chief Executive
Offi cer has a standing invitation to attend Committee
meetings but leaves the meeting during those periods
in which consideration is being given to his compensation
arrangements. Committee members are appointed
for an initial term of three years, but are eligible for
re-appointment.
Role
The Remuneration Committee operates under a formal
charter adopted by the Board which can be viewed on the
Company’s website at www.elders.com.au.
The Committee’s principal responsibilities are to:
(cid:129) Ensure that appropriate policies are in place for
compensation arrangements for the Chief Executive
Offi cer, senior management, the Company and its
employees generally and the Board itself;
(cid:129) Advise and make recommendations to the Board on
employee share and option schemes, executive option
plans, performance incentive packages, superannuation
entitlements, retirement and termination benefi ts
and policies;
(cid:129) Review the Chief Executive Offi cer’s recommendations
with respect to the remuneration of key executives,
including members of the Executive Committee, and
his plans for the remuneration of employees in general
to ensure that the Company’s remuneration policies
are suffi ciently competitive and equitable to retain and
motivate a high quality workforce;
(cid:129) Review any equity plans and make recommendations
to the Board on equity plans for Directors and the Chief
Executive Offi cer, in particular. Committee approval
is required for key executive equity plans and for
the terms of any broadly based Group equity plan; and
(cid:129) Review and recommend for Board approval, where
appropriate, any employment contracts outside
normal parameters.
Key Activities During the Year
The Committee oversaw the following signifi cant activities
during the reporting period:
(cid:129) Setting of termination benefi ts for the former CEO and
contract terms and remuneration benefi ts for the
incoming CEO;
(cid:129) Appointment of Mr R Tanti reporting directly to the CEO
with responsibility for human resources and support
services; and
(cid:129) Review of the remuneration arrangements, policy and
structure for the Group. The review is discussed in detail
in the Remuneration Report on pages 37 and 45.
Audit and Compliance Committee
Objective
The Board is concerned to ensure the integrity of the
Company’s fi nancial reporting is independently verifi ed
and has established the Audit and Compliance Committee
to assist it in achieving this objective.
26
All members of the Audit and Compliance Committee are
independent, non-executive directors. At least one
member of the Committee is required to be a qualifi ed
accountant or other fi nancial professional with experience
in accounting and fi nancial matters. The Committee
Chairman Mr G Walters has extensive experience in
accounting and fi nancial matters having formerly held the
role of Chairman of Partners at KPMG South Australia.
Committee members are appointed for an initial term of
three years but are eligible for re-appointment.
Details of the members’ qualifi cations can be found on
page 20 of this report.
Representatives of Company’s management attend
meetings from time to time at the discretion and invitation
of the Committee.
Role
The Audit and Compliance Committee operates under a
formal charter adopted by the Board which can be viewed
on the Company’s website at www.elders.com.au. Its
primary functions are to:
(cid:129) Assist the Board in meeting its oversight responsibility
in relation to:
> integrity of fi nancial statements and fi nancial
accounting policies and practices;
> external auditor’s qualifi cations, performance and
independence;
> oversight and performance of the internal audit
function;
> integrity and effectiveness of internal controls and
regulatory compliance; and
> credibility and objectivity of the accountability
process;
(cid:129) Improve the effectiveness of the internal and external
audit functions and provide a forum for improving
communication between the Board and the external
auditors and, where applicable, the internal auditors;
(cid:129) Facilitate the maintenance of the independence of the
external auditor;
(cid:129) Provide a structured reporting line for internal audit
facilitating the maintenance of the objectivity of the
internal audit functions;
(cid:129) Improve the quality of external reporting of fi nancial
information and reports; and
(cid:129) Assist in establishing the objectives, and the assessment
of the performance, of the internal audit function.
Key Activities During the Year
The Committee oversaw the following signifi cant activities
during the reporting period:
(cid:129) Change in fi nancial year end from 30 June to
30 September through the use of a 15 month
transitional fi nancial period to 30 September 2009.
The change was introduced to bring the Company’s
reporting into line with seasonal cycles and that of other
agriculture focused companies;
(cid:129) Signifi cant revaluations were made to the assets of the
Group’s businesses following a restructuring of the
Group that emanated from the Company’s “Agenda for
Change” program; and
(cid:129) The Company moved from a substantially outsourced
internal audit model to a substantially in-house model
allowing development of a skill set and capability that
may more effectively meet business needs.
Occupational Health, Safety and Environment
(OHSE) Committee
The Board is committed to fulfi lling the Company’s
obligation to operate its business in a safe, ethically
responsible and sustainable manner and has established
the Occupational Health, Safety and Environment
Committee to assist in meeting this objective.
Membership
The members of the OHSE Committee at the date of
this Report are:
Dr J C Fox (Chairman)
Mr R G Grigg
Mr J H Ranck
The OHSE Committee comprises three independent
directors and is chaired by the Deputy Chairman of the
Board. Committee members are appointed for an initial
term of three years but are eligible for re-appointment.
Role
The OHSE Committee operates under a formal charter
adopted by the Board which can be viewed on the
Company’s website at www.elders.com.au. Its primary
functions are to:
(cid:129) Establish the strategic direction and targets for health,
safety and environmental management;
(cid:129) Provide a forum for discussion between the Board and
management on health, safety and environment issues;
(cid:129) Review the Company’s performance in relation to
health, safety and environment matters;
(cid:129) Review the adequacy and performance of the
Company’s Health, Safety & Environment functions
and management;
(cid:129) Review the effectiveness of the Company’s Health,
Safety & Environment policy framework, management
systems and internal controls including any health,
safety and environment standards, plans and
audit process;
(cid:129) Monitor the social, environmental and ethical impact of
the Company’s operations and set standards for social,
environmental and ethical practices;
(cid:129) Consider the key risks arising from Health, Safety &
Environment issues;
(cid:129) Monitor progress in the achievement of health, safety
and environment targets;
(cid:129) Monitor and consider the impact of changes and
emerging issues in health, safety and environment
legislation, community expectations, research fi ndings
and technology;
(cid:129) Consider reports submitted by Company management
on health, safety and environment performance and
issues including reports on material issues such
as serious injury or death or signifi cant environmental
incidents associated with the Company’s operations;
(cid:129) Receive and consider presentations from business unit
managers on the health, safety and environment
management and performance of their operations; and
(cid:129) Visit the Company’s operational sites to familiarise
committee members with health, safety and
environment issues associated with the operations on
those sites and to assure members that appropriate
systems and controls have been implemented.
Key Activities During the Year
The Committee oversaw the following signifi cant activities
during the reporting period:
(cid:129) Survey on employee safety perceptions;
(cid:129) Development of Group OH&S Framework
Implementation Plan to improve the safety framework;
and
(cid:129) Introduction of more effective Group OH&S reporting
to management and Board.
ATTENDANCE AT MEETINGS BY
DIRECTORS
Nine to ten formal Board meetings are scheduled each
year with meetings generally held over one to two days.
19 formal Board meetings were held during the current
fi nancial period to accommodate the extended (15 month)
reporting period and additional meeting requirements
associated with the restructuring of the Company’s debt
and equity structure. Additional meetings are convened
to consider specifi c or urgent matters, as required.
Attendance by directors at Board and Committee meetings
held during the period ended 30 September 2009 is
detailed on the following page.
On eight occasions during the fi nancial period the
non-executive directors met without management
being present.
Where directors are unable to attend meetings either in
person or by telephone (for example if they are overseas)
the Chairman or the Chief Executive endeavours to
canvass their views on key matters prior to the meeting in
order to represent their views at the meeting.
EXTERNAL AUDIT INDEPENDENCE
POLICY
Relevant policies and charters:
– Non-Audit Services Policy
The Company has in place a formal policy that:
(cid:129) Details the Group’s position in respect of the key issues
which may impair, or appear to impair, external audit
independence;
(cid:129) Details the internal procedures implemented to ensure
the independence of auditors; and
(cid:129) Establishes a framework that enables the Audit and
Compliance Committee to evaluate compliance with the
policy and report to the Board on compliance.
The key principles in the policy are:
(cid:129) An auditor is not independent if:
> an employment relationship exists or could be deemed
to exist, between the Company and the auditor, its
offi cers or former offi cers, employees or former
employees, or certain relatives;
> a fi nancial relationship exits between the auditor and
the Company; and
> specifi c non-audit services (including information
technology and human resources services) are
provided to the Company by the auditor.
27
(cid:129) In relation to the provision of other non-audit services
the following guidelines must be followed:
> management must consider the actual, perceived and
potential impact upon the independence of external
auditors prior to engaging external auditors to
undertake any non-audit service;
> the outsourcing of any internal audit project to the
external auditors or the undertaking of any joint
internal/external audit review, will require prior Audit
and Compliance Committee approval;
> the Audit and Compliance Committee must consider
whether the provision of such non-audit services
is compatible with maintaining the external auditors’
independence, by obtaining assurance and
confi rmation that the additional services provided
by the external auditor are not in confl ict with the
audit process. In order to assist with this assessment,
management will provide the Audit and Compliance
Committee with details of the amount of non-audit
services undertaken by the external auditors as a
proportion of all audit and non-audit engagements,
entered into by the Group for the period; and
> as a general rule, the Company does not utilise
external auditors for internal audit purposes or
consulting matters, other than services which are in
the nature of audit, such as review of tax compliance
and acting as independent accountants preparing a
report on forecast fi nancial information for inclusion
in the Company’s capital raising prospectus.
RISK MANAGEMENT
Relevant policies and charters:
– Risk Management Policy
– Group Risk Committee Charter
The Board has in place a Risk Management Policy and
Framework to assist the Company in achieving its risk
management objectives – to ensure the Group’s assets are
protected against fi nancial loss, legal and regulatory
obligations are satisfi ed, and business risks are identifi ed
and properly managed, and appropriately monitored by
the Board.
Under the Risk Management Policy the Board is
responsible for oversight of the risk management process
and framework. Senior executive management have
primary responsibility for identifi cation and management
of signifi cant risks within the Group’s businesses and
are accountable to the board for designing, implementing
and monitoring the process of risk management and
integrating it into the day to day activities of the Group’s
businesses. Business Unit Managers are responsible for
monitoring and managing key business risks for the
respective businesses. All personnel are responsible for
managing risks in their own areas.
The Audit and Compliance Committee is responsible for
ongoing review of the External Audit Independence Policy
and reports to the Board on the continuing suitability
of the policy and recommended changes to the existing
policy as and when required.
The Audit and Compliance Committee is responsible for
assessing the effectiveness of internal processes for
determining and managing key fi nancial and compliance
obligations and the OHSE Committee is responsible
for assessing the effectiveness of internal process for
determining and managing key OHSE risks.
Director Attendance at Meetings
Board of Directors
Audit and
Compliance
Committee
Nomination
and Prudential
Committee+
Remuneration
Committee
Occupational
Health, Safety
and Environment
Committee
Other
Committees**
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
S Gerlach
C E Bright
J C Fox
R G Grigg
M G Jackman#
I G MacDonald
J H Ranck
A Salim*
G D Walters
L Wozniczka^
19
19
16
18
12
18
19
5
19
6
19
19
19
19
12
19
19
19
19
6
12
14
14
14
14
14
4
4
4
2
2
2
1
2
4
4
4
2
2
2
2
2
4
4
3
1
4
4
3
1
2
2
2
2
2
2
12
12
8
7
3
26
25
12
8
7
3
30
29
12
18
18
* Mr Salim resides in Jakarta and owing to business commitments was unable to attend a number of meetings
^ Resigned from the Board 26/09/08
# Joined the Board 20/10/08
** Includes Refi nance Committee, AAco Sub-Committee and Equity Raising Due Diligence Committee meetings
+ Nomination via Prudential Committee met as the full Board on two occasions
28
Group Risk Committee
Management Certifi cates
During the year the Group Risk Committee (GRC) was
established to assist the Board in the application of
the Company’s Risk Management Policy and monitoring
of compliance with the policy. The GRC took over
this role from the former Corporate Risk and Compliance
Committee. The GRC reports to the Board on risk
management on a regular basis through the
Chief Executive.
Membership
The Group Risk Committee comprises the Chief Executive/
Managing Director, Group Executive team, Company
Secretary and General Manager Risk, Compliance
and Audit. Specialist support to the committee is provided
by internal experts as required, including the General
Counsel, General Manager Taxation, Group Safety
Manager and National Risk Manager.
The GRC reports to the Board through the Chief
Executive and copies of all GRC minutes are provided
to the next Board meeting and Audit and Compliance
Committee meeting.
In accordance with the Board Charter, prior to approving
the fi nancial reports of the Company in respect of the
2009 fi nancial year, the Board received from the Chief
Executive and the Chief Financial Offi cer a certifi cate
stating that:
(cid:129) The declaration provided under section 295A of
the Corporations Act is based on a sound system of risk
management and internal control; and
(cid:129) That the system is operating effectively in all material
respects in relation to fi nancial reporting risks.
Treasury Policy
The Company’s treasury operation is responsible for
managing currency and interest rate risks together with
managing the Company’s fi nance facilities.
Treasury operates within formal policies and compliance
with key policies is regularly reported to the Board.
The primary objectives are to have an appropriate debt
maturity profi le to fund on-going working capital and
liquidity needs and to prudently manage exposures to
variable interest rates and foreign exchange movements.
During 2009 the GRC reviewed the Group’s material
business risks and reported to the Board on the
effectiveness of the Company’s management of those
material business risks.
CONDUCT AND ETHICS
Code of Conduct
Responsibilities
The Committee operates under the Risk Management
Policy and is responsible for:
(cid:129) Oversight of the risk management process;
(cid:129) Considering and, where appropriate, making
recommendations to the Board with respect to risk
appetite, risk framework and policy;
(cid:129) Establishing, approving and reviewing corporate risk
management strategy in-line with the Risk
Management Policy;
(cid:129) Reviewing and monitoring Elders’ risk profi le and
adherence to the Elders risk management framework;
(cid:129) Receiving, considering and endorsing business trading
charters for submission to Elders Board of Directors
for approval;
(cid:129) Reviewing credit limits, mark-to-market trading
positions, and credit committee functions of Elders
and its subsidiaries;
(cid:129) Monitoring the risk management activities of
business divisions and subsidiaries through receipt
and consideration of risk reports from the Company;
(cid:129) Overseeing compliance by Elders with applicable
Australian Prudential Regulation Authority compliance
obligations and signifi cant related internal policies;
(cid:129) Providing regular advice to the Board about GRC
activities and making appropriate recommendations;
and
(cid:129) Providing an escalation point for identifi cation of
matters (material business risks) to be drawn to the
attention of the CEO, Board Audit and Compliance
Committee and/or Board.
The Committee is also responsible for ongoing review
of the risk management framework and policy and
reports to the Board on the continuing suitability of the
framework and policy and for recommending changes
to the framework and policy as and when required.
The Board is committed to promoting conduct and
behaviour that is honest, fair, legal and ethical
and respects the rights of the Company’s shareholders
and other stakeholders in the Company, including clients
and customers, suppliers, creditors and employees.
The Board has adopted a code of conduct that details the
conduct and behaviour it expects from its members
and the employees of the Company.
The Code, which may be accessed from the Company’s
website, details the Company’s position with respect
to dealings with parties with whom the Company engages,
use of position and company information, gifts and
gratuities and confl icts of interest and the principles the
Company promotes with respect to honesty and integrity,
occupational health and safety, equal opportunity,
legal compliance, competition, privacy, environment
and community.
The Board has also adopted a Reporting of Unacceptable
Conduct Policy to encourage and facilitate disclosure
of unacceptable conduct, including fraud or illegal activity,
occurring in the Company. The Policy and the associated
reporting process addresses the issues associated with
alleged improper conduct including reporting,
responsibility, confi dentiality and effective investigation.
Share Trading Policy
The Board encourages non-executive directors to own the
Company’s securities to further align their interests with
the interests of other shareholders. Details of directors’
shareholdings in the Company can be found on page 34 of
this report.
29
During the year the Company adopted a revised Share
Trading Policy that prescribes black out periods during
which directors and senior executives may not trade. Black
out periods generally run from the end of the Company’s
full year and half year to the date of the release of the
Company’s full year results or half year results.
Senior executives are prohibited from entering into
arrangements to hedge their exposure to unvested options
awarded under the Employee Share Option Plan.
Directors or senior executives must not deal in the
Company’s securities during black out periods or at any
time when directors or senior executives are in possession
of unpublished information that, if generally available,
might materially affect the price of the Company’s
securities. Prior to dealing, a director must seek clearance
from the Chairman and senior executives must seek
clearance from the Company Secretary.
The Share Trading Policy also prohibits employees and
contractors from trading in the Company’s securities
if they are in possession of price-sensitive information.
The Share Trading Policy can be found on the Company’s
website at www.elders.com.au.
Continuous Disclosure and Communication
with Shareholders
The Board is committed to timely disclosure of
information and communicating effectively with its
shareholders. This commitment is effected through the
application of the External Disclosure and Market
Communications Policy and a Communications strategy
which includes process to ensure that directors and
management are aware of, and fulfi ll, their obligations.
Each year the Company communicates to its shareholders
and the investment markets through a program of regular
announcements In addition:
(cid:129) The Company releases briefi ngs on Company
developments and events to the market as a whole;
(cid:129) The Company’s senior management interacts with
members of the investment community and fi nancial
and business media through a variety of forums
including results briefi ngs, ‘one on one’ meetings and
discussions; and
(cid:129) Background and technical information is provided to
institutional investors, market analysts and the fi nancial
and business media to support major announcements
made to the ASX and minor announcements made
about the Company’s on-going business activities.
External Disclosure and Market Communications Policy
Under the Policy the Company has instituted (and
monitors) procedures designed to ensure:
(cid:129) The Company’s compliance with continuous disclosure
obligations contained in applicable ASX Listing
Rules and the Corporations Act 2001. Procedures
followed to achieve this include the formation of
a Disclosure Advisory Group that works with the Chief
Executive in the consideration of disclosure issues,
the communication of disclosure requirements
and procedures to senior management together with
procedures to facilitate the timely fl ow of relevant
information to the Disclosure Advisory Group;
(cid:129) The timely release and dissemination of information
(within the requirements of continuous disclosure
obligations) necessary for the formation of an informed
and balanced view of the Company;
(cid:129) Information disclosed in investor or media briefi ngs is
not “market sensitive”. If market sensitive information
is inadvertently disclosed during a briefi ng it will
immediately be released to the market at large through
the ASX; and
(cid:129) That stakeholders have equal opportunity, subject to
reasonable means, to access information issued
externally by the Company. This is addressed through
a broad range of media including the Company’s
website, webcasts of the Company’s Annual General
Meeting and full year and half year results briefi ngs
(which are also archived and available for view on the
Company’s website), and an information subscription
service through which interested parties can register for
electronic advice of announcements. All public releases
are archived and available for view on the Company’s
website at www.elders.com.au.
The Board is also concerned to ensure that shareholders
are in a position to participate effectively in general
meetings and to this end:
(cid:129) The Company has adopted in all substantial respects
the ASX Corporate Governance Council guidelines
for communication with shareholders and improving
shareholder participation at general meetings; and
(cid:129) It is a term of engagement of the Company’s external
auditors that they attend the Company’s Annual
General Meetings and are available to answer questions
about the conduct of the audit of the Company and
the preparation and content of the auditor’s report
in respect of the relevant reporting period.
Disclosure of Governance Information
Information concerning the Company’s governance
framework and practices, principles and policies is posted
on the Company’s website at www.elders.com.au in the
section marked: About Us: Corporate Governance.
30
DIRECTORS’ REPORT
The Directors present their report for the 15 months
ended 30 September 2009.
Directors
Signifi cant Changes in the State of Affairs
The Directors of the Group in offi ce at the date of this
report are:
Non-Executive Directors:
Stephen Gerlach (Chairman)
James Charles Fox (Deputy Chairman)
Charles Ernest Bright
Raymond George Grigg
Ian Graham MacDonald
James Hutchison Ranck
Graham Douglas Walters
Robert Harvey Wylie
Mark Charles Allison
Executive Director:
Malcolm Geoffrey Jackman
(Chief Executive Offi cer and Managing Director)
Mr M G Jackman was appointed Chief Executive Offi cer
on 29 September 2008 and Managing Director on
20 October 2008. He replaced Mr Les Wozniczka who
resigned as Chief Executive Offi cer and Managing
Director effective from 26 September 2008. All other
directors held their position as director for the whole of
the year and up to the date of this report. Mr A Salim
resigned as director on 30 October 2009. Messrs
M C Allison and R H Wylie were appointed non-executive
directors on 10 November 2009.
Company Secretaries:
Sonya Catherine Furey
Ross Edwin Mallett
A summary of the experience, qualifi cations and special
responsibilities of each director and each Company
Secretary is provided on page 20.
Principal Activities
The principal activities of the Elders Group during the
15 month period were the:
(a) Provision of services and inputs to the rural sector;
(b) Provision of fi nancial and other services to rural and
regional customers;
(c) Management of investor-funded hardwood plantations
and manufacture of quality sawn timber products; and
(d) Supply of automotive components.
Results and Review of Operations
The Group recorded a loss for the 15 month period,
after tax and outside equity interest, of $466.4 million
(2008: profi t of $36.5 million). A review of the operations
and results of the consolidated entity and its principal
businesses during the 15 month period is contained in
pages 3 to 19 of this report.
There were a number of signifi cant changes in the state
of affairs of the consolidated entity during the 15 month
period which are referred to on pages 4 to 19 of
this report.
Events Subsequent to Balance Date
No matter or circumstance has arisen since 30 September
2009 which is not otherwise dealt with in this report or in
the consolidated fi nancial statements, that has signifi cantly
affected or may signifi cantly affect the operations of the
Group, the results of those operations or the state of affairs
of the Group in subsequent fi nancial years.
Likely Developments and Future Results
Discussion on likely developments in the operations of
the consolidated entity and the expected results for
those operations in future fi nancial years is included in
the information on pages 6 to 11 of this report. Further
information about the likely developments in the
operations of the consolidated entity and the expected
results for those operations in subsequent fi nancial years
has not been included in this report because, in the
opinion of the directors, their inclusion would prejudice
the interests of the consolidated entity.
Share and Other Equity Issues During the Year
The following information summarises the equity issues
made by the Company during the 15 months to
30 September 2009:
(cid:129) No employee options were exercised during the year;
(cid:129) No fully paid ordinary shares were issued under the
Company’s employee share plan during the year.
The Company’s employee share plan was suspended
in March 2009;
(cid:129) 14,461,482 fully paid ordinary shares were issued
in accordance with the terms of the Company’s dividend
reinvestment plan (DRP). A further 23,812,167 ordinary
shares were issued in accordance with the terms of
the underwriting agreement in respect of the DRP;
(cid:129) A conditional placement of 2,666,666,667 ordinary
shares was made at $0.15 per fully paid share on
19 October 2009 to institutional investors as part of an
equity raising to reduce Elders’ debt obligations and to
build a stronger balance sheet; and
(cid:129) 1,000,004,393 ordinary shares were issued under the
Company’s Share Purchase Plan (SPP) to participating
shareholders on 2 November 2009 at $0.15 per fully
paid share. Funds raised from the SPP were used
to retire existing debt.
31
Dividends and Other Equity Distributions
Details of dividends paid or payable in respect of the year are as follows:
Dividends paid on fully paid ordinary shares:
Final 2008 dividend of 5.5 cents paid on 28 October 2008 (franked to 100%)
Distributions paid on Elders Hybrids:
Quarterly distribution of 1.7663 cents paid on 30 September 2008 (franked to 100%)
Quarterly distribution of 1.6754 cents paid on 31 December 2008 (franked to 100%)
Quarterly distribution of 1.0960 cents paid on 31 March 2009 (franked to 100%)
Quarterly distribution of 0. 9316 cents paid on 30 June 2009 (franked to 100%)
$000
42,949
$000
2,649
2,513
1,643
1,397
On 4 September 2009 the Company announced that directors had resolved not to declare a fi nal dividend for the year
ending 30 September 2009. It is the Board’s intention that the Company will resume distribution of dividends as soon
as practicable subject to satisfaction of its balance sheet, cash fl ow management and fi nancial performance objectives.
The payment of dividends is subject to the discretion of the directors and will depend on many factors, including
Elders’ results of operations, fi nancial condition, general business conditions, restrictions imposed by fi nancing facilities
and Elders Hybrid securities and legal restrictions on the payment of dividends. In particular, Elders’ restructured
fi nancing arrangements impose restrictions on the payment of distributions on Elders Hybrids until and including
30 September 2011. These restrictions activate a “dividend stop” under the terms of the Elders Hybrids which prevents
Elders from paying dividends on its shares until the stop is lifted under the terms of the Elders Hybrids. Elders’
restructured fi nancing arrangements also prevent Elders from paying dividends on shares until after 31 March 2012
(and, thereafter, more limited restrictions apply).
Share Options
Share options are issued to company executives as part of the Group’s remuneration policy. Information on this policy
and associated procedures is provided in the Remuneration Report commencing on page 36 of this annual report.
The total quantity of options on issue as at 30 September 2009 represented 2.81% of the Group’s issued ordinary shares.
Details of options over unissued shares at the date of this report are as follows:
(1) Options on Issue:
All options listed in this table are subject to minimum tenure restrictions of three years.
Date Options Granted
Number of Options Granted
Issue Price
Option Expiry Date
31/03/05
26/07/06
4/10/05
4/10/05
25/10/06
25/10/06
25/10/06
25/07/06
25/07/06
31/08/07
26/09/08
1/10/07
1/03/08
1/07/03
26/09/08
31/10/08
31/10/08
26/09/08
24/10/05
32
200,000
108,000
1,655,000
625,000
150,000
100,000
2,530,000
1,950,000
200,000
1,000,000
750,000
2,225,000
750,000
1,000,000
1,250,000
2,360,000
3,450,000
2,000,000
750,000
23,053,000
$2.00
$2.25
$2.06
$2.06
$1.83
$1.92
$2.02
$2.17
$2.17
$2.54
$1.32
$2.45
$2.45
$1.37
$1.32
$1.29
$1.29
$1.32
$2.06
31/03/10
8/08/10
4/10/10
4/10/10
31/10/11
31/10/11
25/10/11
31/10/11
31/10/11
18/08/12
26/09/12
1/10/12
1/03/13
1/07/13
26/09/13
31/10/13
31/10/13
26/09/14
25/10/15
(2) Options issued since the end of the previous fi nancial year:
Date Options Granted
Number of Options Granted
Issue Price
Option Expiry Date
26/09/08
26/09/08
28/11/08
28/11/08
26/09/08
750,000
1,250,000
2,880,000
4,200,000
2,000,000
11,080,000
1.32
1.32
1.29
1.29
1.32
26/09/12
26/09/13
28/11/13
28/11/13
26/09/14
(3) Options exercised since the end of the previous fi nancial year:
No options have been exercised since the end of the previous fi nancial year.
(4) Options lapsed since the end of previous fi nancial year:
Date Options Granted
Number of Lapsed Options
Option Issue Price
Option Expiry Date
7/10/03
1/10/04
8/08/05
4/10/05
4/10/05
25/10/06
1/10/07
1/07/08
31/10/08
28/11/08
28/11/08
31/10/08
25/10/06
25/10/06
250,000
775,000
120,000
125,000
910,000
990,000
1,325,000
1,000,000
1,500,000
750,000
520,000
1,500,000
750,000
1,500,000
12,015,000
$1.71
$1.68
$2.25
$2.06
$2.06
$2.02
$2.45
$1.37
$2.36
$1.29
$1.29
$2.36
$2.06
$2.06
7/10/08
27/10/09
8/08/10
4/10/10
4/10/10
25/10/11
1/10/12
1/07/13
31/10/13
28/11/13
28/11/13
31/10/14
25/10/15
25/10/16
33
Directors’ Interests
At the date of this report, the interests of the directors in shares and other equity securities of the Group are:
No. of ordinary shares
No. of hybrids
Benefi cial Interest
Non-benefi cial Interest
Benefi cial Interest
Non-benefi cial Interest
Non-Executive Directors
C E Bright
J C Fox
S Gerlach
R G Grigg
I G MacDonald
J H Ranck
G D Walters
Executive Directors
M G Jackman
236,826
160,099
740,156
164,894
393,334
373,334
294,334
396,668
-
-
-
-
-
-
-
At the date of this report, the following options are on issue to directors.
M G Jackman
M G Jackman
M G Jackman
No. of options(a)
Exercise Price
750,000
1,250,000
2,000,000
1.32
1.32
1.32
(a) Each option issue is subject to performance hurdles.
Directors’ Meetings
-
-
-
-
-
-
1,000
Expiry
26/09/12
26/09/13
26/09/14
-
-
-
-
-
-
-
No. of options
exercised in year
nil
nil
nil
Details of the number of meetings held by the Board of Directors and Board committees and director attendance at
those meetings is provided in the Corporate Governance section of this report on page 28.
Indemnifi cation of Offi cers and Auditors
Insurance arrangements established in the previous year concerning offi cers of the consolidated entity were renewed
during the period.
The consolidated entity paid an insurance premium in respect of a contract insuring each of the directors of the
Company named earlier in this report and each full time executive offi cer, director and secretary of Australian Group
entities against all liabilities and expenses arising as a result of work performed in their respective capacities, to the
extent permitted by law. The terms of the policy prohibit the disclosure of the premiums paid.
Each director has entered into a Deed of Access, Insurance and Indemnity which provides:
(cid:129) That the Company will maintain an insurance policy insuring the director against any liability incurred by the director
in the director’s capacity as an offi cer of the Company to the maximum extent allowed by law;
(cid:129) For indemnity against liability as a director, except to the extent of indemnity under the insurance policy or where
prohibited by law; and
(cid:129) For access to company documents and records, subject to undertakings as to confi dentiality.
The consolidated entity has not entered into any agreement to indemnify its auditor.
Remuneration of Directors and Senior Executives
Details of the remuneration arrangements in place for directors and senior executives of the Group are set out in
the Remuneration Report commencing on page 36 of this Annual Report. In compiling this report the Group has met the
disclosure requirements prescribed in the Australian accounting standards and the Corporations Act 2001.
34
Environmental Regulation Performance
The Elders Group is subject to a range of environmental legislation in the places that it operates. Details of the Group’s
Environmental Regulation Performance can be found on pages 15, 17 and 19.
Rounding of Amounts
The parent entity is a Group of the kind specifi ed in Australian Securities and Investments Commission class order
98/0100. In accordance with that class order, amounts in the fi nancial report and directors’ report have been rounded
to the nearest thousand dollars unless specifi cally stated to be otherwise.
Non-Audit Services and Auditor Independence
Non-audit services provided by the Group’s auditor, Ernst & Young, to the Group during the course of the fi nancial year
are disclosed below. Based on advice received from the Audit Committee the directors are satisfi ed that the provision
of non-audit services is compatible with the general standard of independence for auditors imposed under the
Corporations Act for the following reasons:
(cid:129) All non-audit services have been reviewed by the Audit Committee to ensure they do not impact on the impartiality or
objectivity of the auditor; and
(cid:129) The nature and scope of each type of non-audit service provided means that auditor independence was not
compromised.
Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:
Tax services (primarily compliance)
Other compliance and assurance services
Fees in relation to independent accounts report
and preparation of prospectus
$141,268
$242,062
$1,764,345
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001
is set out below.
This report has been made in accordance with a resolution of directors.
S Gerlach
Chairman
16 November 2009
M G Jackman
Managing Director
Auditor’s Independence Declaration to the Directors of Elders Limited and the consolidated entity
In relation to our audit of the fi nancial report of Elders Limited for the fi nancial 15 month period ended 30 September
2009, to the best of my knowledge and belief, there have been no contraventions of the auditor independence
requirements of the Corporations Act 2001 or any applicable code of professional conduct.
Ernst & Young
Alan Herald
Partner
Adelaide
16 November 2009
35
ELDERS LIMITED
REMUNERATION REPORT
2009
This Remuneration Report forms part of the Directors’ Report and
details the remuneration arrangements in place for directors and
senior executives of the Group. In compiling this report the Group
has met the remuneration disclosure requirements prescribed
in the Australian Accounting Standards, the Corporations Act
2001 and the revised ASX Corporate Governance Principles and
Recommendations (“ASX Corporate Governance Principles”).
SECTION 1 BOARD REMUNERATION COMMITTEE
SECTION 2 NON-EXECUTIVE DIRECTORS’ REMUNERATION
SECTION 3 EXECUTIVE DIRECTOR AND SENIOR EXECUTIVE REMUNERATION
SECTION 4 NOMINATED EXECUTIVES’ CONTRACT TERMS
SECTION 5 REMUNERATION DISCLOSURE TABLES
37
37
39
47
49
SECTION 6 EQUITY INSTRUMENTS IN RELATION TO DIRECTORS AND EXECUTIVES
50
36
SECTION 1 BOARD REMUNERATION COMMITTEE
The Company’s overall objective is to generate strong returns for shareholders and to deliver enhanced shareholder value through
performance in the short and longer terms. To achieve those objectives the Company needs to have the best, brightest, most experienced
and committed people available to it. The Company’s remuneration strategy is a key factor in delivering the Company’s overall objective.
Role of Remuneration Committee
The Remuneration Committee assists the Board to ensure that Elders establishes and maintains remuneration strategies and policies that
are aligned with the Company’s overall objectives and accord with best practice as set down in the ASX Corporate Governance Principles.
The role and responsibilities of the Remuneration Committee are set out in the Corporate Governance Statement on pages 25 and 26 of this
Annual Report and the Committee’s Charter is published on the Company’s website at www.elders.com.au.
Group Remuneration Strategy
The Elders Group remuneration strategy seeks to encourage a performance orientated culture that will:
(cid:129) Provide competitive reward opportunities to attract and retain high calibre executives and to motivate them to pursue sustainable long
term growth and success for Elders, its employees and shareholders;
(cid:129) Align the rewards and interests of directors and senior executives with the long term growth and success of the Group within an
appropriate control framework;
(cid:129) Demonstrate a clear relationship between senior executive performance and remuneration; and
(cid:129) Be consistent and responsive to the needs of each operating business and the Group as a whole.
The Group remuneration strategy has been developed to allow each operating business the autonomy to manage remuneration policies and
procedures within the framework established for the Group and in line with budget targets. All remuneration determinations for executives
above a predetermined level of seniority within the Group, or those which would otherwise fall outside the established framework, must
be individually approved by the Chief Executive, the Elders’ Remuneration Committee or the Board, as appropriate.
During the year Mr Robert Tanti was appointed Group General Manager Human Resources & Corporate Services. Mr Tanti is in the
process of reforming the remuneration policy and structure into a more streamlined, consistent and principle based system refl ecting the
“one company” approach referred to in the Agenda for Change. The new policy and structure that will be rolled out in the 2010 fi nancial
period will include Short Term Incentive Plan (STIP) and Long Term Incentive Plan (LTIP) arrangements and contract terms for Elders
Limited executives.
SECTION 2 NON-EXECUTIVE DIRECTORS’ REMUNERATION
A. Board Policy
Non-executive directors are remunerated by way of fees in the form of cash and superannuation, as a consequence of the superannuation
guarantee levy, and generally in accordance with Recommendation 8.2 of the ASX Corporate Governance Principles. No directors’ fees
are paid to executive directors.
Non-executive directors do not participate in the Company’s cash or equity incentive plans and directors appointed after 30 June 2004 do
not receive retirement benefi ts other than superannuation contributions disclosed in this report. Directors appointed to the Board prior to
30 June 2004 are entitled to receive $150,000 on retirement. Only two directors are eligible for this retirement benefi t.
Non-executive directors have formal letters of appointment with the Company. Length of tenure is governed by the Company’s
Constitution and the ASX Limited Listing Rules, which provides that all non-executive directors are subject to re-election by shareholders
every three years.
B. Non-executive Directors’ Remuneration
Non-executive director fees are reviewed by the Board on an annual basis, taking into account the qualifi cations and time commitment of
each director, supported by advice from external remuneration consultants. The fees paid are generally consistent with those paid to
non-executive directors of comparable companies, while remaining within the aggregate fee limit of $1,800,000 per annum approved by
shareholders at the Company’s 2006 Annual General Meeting. Statutory superannuation guarantee contribution amounts are included
in the aggregate fee limit.
As at the date of this report, the annual base fee amount paid to each non-executive director, other than the Chairman and the Deputy
Chairman, is $90,000 per annum. The Chairman receives an annual composite fee of $350,000 and the Deputy Chairman receives a fee of
$130,000. Additional fees are payable to non-executive directors who sit on the Board Committees. Members of the Audit and Compliance
Committee are paid $16,000 per annum with the chairman of that committee receiving $24,000 per annum. In April 2009 following
a review of director fees, based on input from independent remuneration advisers, the Board resolved that members of the Occupational
Health, Safety and Environment Committee, Remuneration Committee and Nomination & Prudential Committee should receive
$10,000 per annum as part compensation for time spent on committee matters. The chairmen of these committees during the fi nancial
period (Messrs Gerlach and Fox) did not receive an additional fee for sitting on these committees as such a fee is incorporated into their
composite base fees. As a consequence of the review of directors’ fees it was decided not to increase base director fees set in 2006 during
the 2009 fi nancial year.
Until February 2009 it was Board policy that a non-executive director would sit on boards of the Company’s main operating businesses to
extend oversight to those subsidiary boards. Additional fees were paid to non-executive directors who sat on subsidiary boards, with fees ranging
from $60,000 to $75,000 per annum depending on the size and complexity of the operating divisions and the estimated time commitment.
37
In February 2009 it was decided to collapse the independent boards of Elders Rural Services Ltd and ITC Limited to streamline the
reporting framework and from that time, management of those businesses reported exclusively to the Elders’ Chief Executive. Additional
fees are paid to three non-executive directors (Messrs Grigg, MacDonald and Walters) who continue to sit on subsidiary and associated
boards and board committees.
The Board encourages non-executive directors to own securities in the Group to further align their interests with the interests of other
shareholders. Details of directors’ shareholdings in the Group can be found in table 6a of this Report. All shares held by directors were
acquired by the directors on market. Details of non-executive directors’ remuneration for the 2008 and 2009 fi nancial years are set out in
the following table:
Non-Executive Directors’ Remuneration 2008 and 2009
Table 2a (A$)
Short Term Payments (7)
Post Employment
Total
Base Board Fee
Board Committee
Fees
Subsidiary Fees
& Other Fees
Superannuation
S Gerlach (Chairman) (7)(8)
J C Fox (Deputy
Chairman)(8)
C E Bright
R G Grigg (7)
W H Johnson
I G MacDonald
J H Ranck
A Salim
G D Walters
Total
2009 (15mths)
2009 (12mths)
2008 (12mths)
2009 (15mths)
2009 (12mths)
2008 (12mths)
2009 (15mths)
2009 (12mths)
2008 (12mths)
2009 (15mths)
2009 (12mths)
2008 (12mths)
2009 (15mths)
2009 (12mths)
2008 (12mths)
2009 (15mths)
2009 (12mths)
2008 (12mths)
2009 (15mths)
2009 (12mths)
2008 (12mths)
2009 (15mths)
2009 (12mths)
2008 (12mths)
2009 (15mths)
2009 (12mths)
2008 (12mths)
2009 (15mths)
2009 (12mths)
2008 (12mths)
437,500
350,000
350,000
(3)
(3)
162,500
130,000
130,000
112,500
90,000
90,000
112,500
90,000
90,000
-
-
42,045
112,500
90,000
90,000
112,500
90,000
2,077
112,500
90,000
90,000
112,500
90,000
90,000
1,275,000
1,020,000
974,122
-
-
-
-
-
-
(2)
(2)
5,000
2,500
-
(4)
(4)
25,000
18,500
16,000
-
-
-
(3)
(3)
37,734
37,734
68,333
(2)
(2)
43,333
43,333
60,000
(4)
(4)
62,500
50,000
50,000
-
-
-
-
-
150,000
(5)
(5)
20,000
16,000
9,333
(1)
(1)
10,000
5,000
-
-
-
-
33,125
27,125
24,000 (6)
93,125
69,125
49,333
(5)
(5)
175,650
140,520
132,400
-
-
-
-
-
-
72,734
65,234
137,500
(6)
(6)
391,951
336,821
598,233
17,181
13,745
12,686
17,181
13,745
17,850
14,475
12,225
12,686
17,181
13,745
14,040
-
-
6,590
17,181
13,745
20,856
11,212
8,737
-
-
-
-
17,181
13,745
22,635
111,592
89,687
107,343
454,681
363,745
362,686
217,415
181,479
216,183
175,308
148,058
162,686
217,181
172,245
170,040
-
-
198,635
325,331
260,265
252,589
133,712
103,737
2,077
112,500
90,000
90,000
235,540
196,104
274,135
1,871,668
1,515,633
1,729,031
Notes:
(1) J H Ranck was paid a pro-rata fee of $10,000 for the six months to 30 September ($5,000 to 30 June) as a member of the Elders Remuneration
Committee and OHSE Committee.
(2) C E Bright was an Elders Board representative on the main operating subsidiary board, Integrated Tree Cropping Ltd (ITC) until February 2009, and
received ITC subsidiary board fees of $33,333 and ITC Research and Development Committee fees of $10,000. Mr Bright is also a member of the
Nominations Committee and received pro-rata fee of $5,000 for the six months to 30 September ($2,500 to 30 June) for being a member.
(3) J C Fox received a Deputy Chairman fee of $162,500 for the fi nancial period ($130,000 to 30 June) and sat on the main operating subsidiary board
Elders Rural Services Ltd until February 2009 and received fees of $37,734 (pro-rata for eight months).
(4) R G Grigg is a member of the Elders Board Audit & Compliance Committee and received an Elders Board Audit Committee fee of $20,000 for the fi nancial
period ($16,000 to 30 June). R Grigg is also an Elders Board representative on the main operating subsidiary board Futuris Automotive Group Ltd and
received a Futuris Automotive subsidiary board fee of $62,500 for the fi nancial period ($50,000 to 30 June). Mr Grigg is also a member of the OHSE
Committee and received a pro-rata fee of $5,000 for six months to 30 September ($2,500 to 30 June).
(5) I G MacDonald is an Elders Board representative on the main operating subsidiary board Elders Financial Services Group Pty Ltd for which he received a
subsidiary board fee of $93,750 for the fi nancial period ($75,000 to 30 June). Mr MacDonald is also an Elders representative on the board of Rural Bank
Ltd (RB) in which Elders holds a 40% interest. Mr MacDonald received a RB board fee of $81,900 for the fi nancial period ($65,520 to 30 June).
Mr MacDonald also received a fee of $20,000 to 30 September ($16,000 to 30 June) as a member of the Elders Board Audit & Compliance Committee
(6) G D Walters is Chairman of the Elders Board Audit & Compliance Committee and received an Elders Board Audit & Compliance Committee fee of $30,000
for the fi nancial period ($24,000 to 30 June). Mr Walters was also an Elders Board representative on the main operating subsidiary board Elders Financial
Services Group Pty Ltd (EFSG) until 1 September 2008 and received a pro-rata EFSG subsidiary board fee of $12,500 (for three months) and for his role
as Chairman of the EFSG Audit Committee (until 1 September 2008) received a pro-rata fee of $3,125. He was also an Elders Board representative on
the main operating subsidiary board Elders Rural Services Ltd until December 2008 and received pro-rata fees of $27,734 (for six months) and received a
fee of $32,500 for the fi nancial period ($25,000 to 30 June) for his role as Chairman and trustee director on the Mastersuper Board.
(7) In addition to statutory superannuation guarantee contributions, directors may salary sacrifi ce their short term payments into superannuation. A number
of directors have chosen to do so and are marked (7). For simplicity we have not split the short term payments to disclose the salary sacrifi ced
superannuation portion.
(8) Each director marked (8) has an entitlement of $150,000 to be paid on retirement. Retirement benefi ts ceased from 30 June 2004.
38
Name
S Gerlach
J C Fox
C E Bright
R G Grigg
SECTION 3 EXECUTIVE DIRECTOR AND SENIOR EXECUTIVE REMUNERATION
The disclosure in this section relates to the remuneration of key management personnel of both the Company and the consolidated entity
(being those persons with authority and responsibility for planning, directing and controlling the activities of the Company during the
fi nancial year).
Key management personnel for the purposes of this report include the following persons who were non-executive directors and senior
executives during the fi nancial year:
Non-executive Directors
Senior Executives
Position held
Name
Position held
Chairman
M G Jackman
Chief Executive (appointed 29 September 08) and
Managing Director (appointed 20 October 08)
Deputy Chairman
M G De Wit
Managing Director Futuris Automotive
Director
Director
V Erasmus
B A Griffi ths
J H Ranck
Director
M S Guerin
I G MacDonald
Director
T P Plant
Managing Director Integrated Tree Cropping
Executive Chairman Futuris Automotive (until 30
September 09)
Managing Director Rural Services (until 17 August 09)
Chief Operating Offi cer (from 18 August 09)
Managing Director Financial Services (until 30
September 09)
A Salim
G D Walters
Director
Director
M G Hosking
Chief Financial Offi cer (Appointed 14 April 09)
Former Executives
L P Wozniczka
Former Chief Executive Offi cer and Managing Director
(resigned 26 September 08)
P Zachert
Former Chief Financial Offi cer (resigned 30 June 2009)
A. Board policy
The Board seeks to align employee remuneration with the commercial needs and performance of each operating business and the objectives
of the consolidated entity as a whole.
The Board has delegated to the Remuneration Committee oversight of the Company’s remuneration policies and practices. Remuneration
policies and practices are benchmarked to the market by external, independent consultants to ensure that remuneration for executives
meets a range of criteria, including:
(cid:129) That executives are appropriately rewarded having regard to their role and responsibilities;
(cid:129) An appropriate balance between fi xed and “at risk” remuneration components is maintained and in relation to the “at risk”
component, an appropriate balance between short term and long term incentives;
(cid:129) Performance measures refl ect long term drivers of shareholder value;
(cid:129) Paying for performance, where superior or upper quartile remuneration is only paid for demonstrable superior performance; and
(cid:129) Remuneration is competitive when compared to both internal and external relativities.
The Board reviews and approves the performance and remuneration plans and outcomes for the CEO on the recommendation of the
Chairman and the Remuneration Committee on an annual basis. The plans and outcomes for the business unit Managing Directors are
reviewed and approved annually by the Remuneration Committee on the recommendation of the CEO and the CEO approves the plans and
outcomes for senior executives on the recommendation of the business unit Managing Directors. The Remuneration Committee reviews
the key elements of employment contracts for business unit Managing Directors, any non-standard contracts and the CEO’s
recommendations for equity incentives to senior executives.
B. Remuneration structure
The remuneration structure has been designed to support the Board’s remuneration policy. Executives’ remuneration is made up of the
following three main elements:
(cid:129) Fixed remuneration – including salary, non-monetary benefi ts (including Fringe Benefi ts Tax (FBT) grossed-up) and superannuation;
(cid:129) Short-term incentives; and
(cid:129) Long-term incentives.
A description of each component is set out below. Remuneration packages are strategically structured to ensure a portion of an executive’s
reward depends on meeting individual, business unit or group targets and objectives, including maximising returns for shareholders.
Generally, the portion of ‘at risk’ remuneration (being short and long-term incentive elements) increases with seniority.
39
Table 3a. Target Remuneration Structure
n
o
i
t
a
r
e
n
u
m
e
R
f
o
%
10 0%
80%
60%
40%
20%
0%
42%
29%
29%
13%
36%
51%
13%
20%
67%
CEO
CFO and Business
Unit MDs
Senior
Management
Threshold long-term incentive
Budgeted short-term incentive
Fixed Remuneration
The above table highlights the targeted proportion of fi xed and ’at risk’ remuneration components at different executive levels.
C. Fixed Remuneration
Fixed remuneration is made up of base salary, retirement benefi ts and any other benefi ts that the executive has nominated to receive as part
of his or her package. These benefi ts may include motor vehicle leases, car parking and any additional superannuation contributions beyond
the mandatory 9% Company contributions.
Executives may also receive non-monetary benefi ts in addition to their stated total remuneration. These may include product allowances
and other miscellaneous benefi ts, and FBT associated with such benefi ts.
The level of fi xed remuneration is set by reference to the market and is determined by the scope of the role and the level of knowledge, skill
and experience required of the individual.
Fixed remuneration is reviewed annually and is adjusted to refl ect each executive’s performance over the previous year, as assessed through
each business unit’s Performance Management Evaluation (PME) program. The PME program assesses employee performance against a
number of agreed key performance objectives.
D. Short-term incentives
All executives participate in either an Elders’ Group or a business unit Short Term Incentive (STI) plan. A summary of the key features of
the STI plan currently in place are set out in the table below:
Objective of STI
STI objectives are to:
(cid:129) focus participants on achieving calendar year performance goals which contribute to sustainable shareholder
value; and
(cid:129) provide signifi cant bonus differential based on performance against challenging commercial, personal, people
and safety targets.
What KPIs are used?
The KPIs used to assess group performance may vary from year to year and from business to business, depending
on changing business objectives. Both fi nancial and non-fi nancial KPIs include a target and stretch component
to drive performance. Group wide performance goals are set for the CEO and CFO and corporate offi ce executives
and business unit specifi c performance goals are established for executives in each of the business units.
What fi nancial KPIs
are used?
Business fi nancial KPIs include Budgeted Net Profi t After Tax (NPAT), Cashfl ow, Budgeted Earnings Before
Interest and Tax (EBIT) and Return on Net Assets (RONA). A minimum of 50% of KPIs at CEO, CFO and
Business Unit Managing Director level are based on fi nancial KPIs.
What non-fi nancial
KPIs are used?
Non-fi nancial KPIs may include performance measures relating to safety, business excellence, continuous
improvement and delivery of long term strategic initiatives.
How and when is
performance
assessed?
Following the signing of the Group’s accounts at the end of each fi nancial year each executive’s performance is
assessed by his or her immediate manager against the fi nancial results of the Group and/or the relevant
businesses and against the achievement of personal non-fi nancial KPIs established at the start of the fi nancial
period. Assessments are made on the basis of whether threshold targets or stretch targets are met and then
recommendations for STI payments are referred to the Chief Executive to ensure a consistent approach and to
the Remuneration Committee for review and approval.
Exercise of discretion
The Chief Executive, in conjunction with the Chairman, the Remuneration Committee and the Board, has the
authority to make discretionary bonus payments to executives (except in relation to himself) when superior
performance warrants additional reward.
Service Condition
Executives who become eligible to participate in the STIs during the course of the year, either through joining the
Group or being promoted within the Group may be eligible to receive pro rata entitlements as long as they have
been in the role for at least three months.
Election to take STI
as Deferred Shares
Payments of short-term incentives are generally cash based, however, selected senior executives are required to
take part of their incentive in the form of fully paid shares. Other executives may elect to take part or all of
the incentive in the form of fully paid ordinary shares in lieu of cash. The shares may be new shares issued by the
Company or may be purchased on-market. If the shares are purchased they are issued at their average market
cost and in accordance with the terms of the Company’s Employee Share – Save As You Earn Plan.
40
While the Corporate and Business Unit STIs share a number of common features the incentive opportunity and application of performance
KPIs varies across the various levels in the executive group. The differences are highlighted below:
CEO
CFO
Business Unit MDs
Senior Executives
STI Opportunities
(as % of base salary)
Threshold:
0% Max 100%
Threshold:
0% Max 100%
Threshold:
0% Max 60-80%
Threshold:
0% Max 30-60%
Financial versus
Non-fi nancial KPIs (1)
STI Rewards paid
in respect of 2009
fi nancial year
Financial 60%
(Budgeted Group
EBIT, Balance Sheet
& Cash fl ow)
Non-fi nancial 40%
Financial 60%
(Budgeted Group
EBIT, Balance Sheet
& Cash fl ow)
Non-fi nancial 40%
Decision made not to
pay STI
Decision made not to
pay STI
Discretionary Bonus
$300,000 bonus paid for
the signifi cant effort
required to successfully
complete the Company’s
refi nancing, asset sales
and recapitalisation
activities
$65,000 bonus paid for
the signifi cant effort
required to successfully
complete the Company’s
refi nancing, asset sales
and recapitalisation
activities
(1) STI’s are only paid when performance KPIs of the Company and/or businesses are met.
E. Long-term incentives
Financial 50-62%
(Budgeted Business
EBIT/NPAT & RONA)
Non-fi nancial 10-38%
Mix of Business Unit
Budgeted EBIT, NPAT,
RONA and individual
non-fi nancial KPIs
STI of $118,125 paid to
Tim Plant (MD EFSG) and
$128,000 paid to Vince
Erasmus for meeting
business KPIs set by
former subsidiary boards.
No STI payment was
awarded to Mike Guerin
STIs were paid to
executives of EFSG and
ITC for meeting business
KPIs set by former
subsidiary boards. Elders
Rural Services and Elders
Limited executives did not
receive an STI payment
Bonuses were paid to
Tim Plant ($65,000),
Vince Erasmus ($65,000)
and Mike Guerin
($50,000) for their
signifi cant contribution to
the Company’s refi nancing,
recapitalisation and
asset sales
Special bonuses were
awarded to key
executives involved in
management of
the Group’s refi nancing,
recapitalisation and
asset sales
Elders Limited has a number of long term equity participation and incentive programs in place. These plans are summarised below.
Name of Plan
Purpose
Eligibility
Criteria
Number of
Current
Participants as
at 30 June 2009
Number of
Current
Participants as
at 30 Sept 2009
Number of
Shares/Options
Outstanding as
at 30 June 2009
Number of
Shares/Options
Outstanding as
at 30 Sept 2009
103
94
25,523,000
24,403,000
3,277
3,276
20,192,643
20,192,643
Elders
Employee Share
Option Plan
(EESOP)
Elders Loan
Share Plan
(ELSP)
Invitation only
for eligible
group
executives
Invitation only.
Offers range
from $3,000
to $17,500 per
annum per
employee
depending on
seniority and
current year
performance
EESOP is a qualifying Division
13A (ITAA 36) employee
option scheme. Options to
acquire Elders shares are
granted to selected eligible
group executives at market (or
premium) price, subject to a
minimum of three years’ service
and performance conditions
(see below) determined by the
Board at the time of grant.
The ELSP is designed to
provide an equity participation
opportunity for all selected
eligible group employees,
including executives. Shares are
provided and paid for by way
of a non-recourse, interest-free
loan. Dividends are used to
repay the loan. Shares do not
vest for three years. There
are no performance conditions
once issued.
Operation of the ELSP was
suspended in February 2009
following signifi cant
deterioration in the Elders share
price. No shares were issued
under the ELSP during the
fi nancial year.
41
Eligibility
Criteria
Number of
Current
Participants as
at 30 June
2009
Number of
Current
Participants as
at 30 Sept
2009
Number of
Shares/Options
Outstanding as
at 30 June
2009
Number of
Shares/Options
Outstanding as
at 30 Sept
2009
All permanent
employees
64
64
964,972
964,972
E. Long-term incentives (continued)
Name of Plan
Purpose
Elders
‘Save as You
Earn’ Plan
(SAYE)
The SAYE plan is a qualifying
Division 13A (ITAA 36)
deferred benefi t employee share
scheme, designed to enable
employees to ‘sacrifi ce’
remuneration entitlements on a
pre-tax basis and receive Elders
shares in-lieu. Tax on these
shares can be deferred for up to
10 years. Elders makes no
contribution to this plan other
than supporting the costs of
administration.
Operation of the SAYE was
suspended in February 2009
following signifi cant
deterioration in the Elders share
price. No shares were issued
under the SAYE Plan after
February 2009.
The EESOP is the principal Long Term Incentive Plan (LTIP) for executives and is designed to reward executives for delivering long-term
shareholder returns. The plan was last approved by shareholders in October 2007. Under the plan, participants are issued with employee
options which may create an entitlement to newly issued ordinary shares in the Company if certain performance conditions are met (and
subject to continued employment).
EESOP option allocations are generally approved by the Remuneration Committee following the signing of the Company’s annual accounts
with options being issued following the annual general meeting. The Company is presently evaluating the most appropriate form of LTIP
equity incentive for 2009 and the future as part of the restructuring of Group remuneration arrangements. Refer to section (d) on page 45
for further information on the review of the Long Term incentives.
Participation in all plans is at the Board’s discretion, and, with the exception of the CEO, CFO and Business Unit managing directors, no
individual has a contractual right to participate in the plan or to receive any guaranteed benefi t under any plan. In the case of the CEO and
Managing Director, options are only issued after shareholder approval is given unless issued prior to being appointed Managing Director,
as was the case with options issued to Malcolm Jackman on 26 September 2008.
The Company’s Securities Trading Policy prohibits senior executives from entering into arrangements to protect the value of unvested
EESOP awards. This includes entering into contracts to hedge their exposure to options granted under the EESOP. Key Management
Personnel are not permitted to deal in the Company’s securities without prior permission from the Company and are required to disclose
all dealings on an annual basis. Adherence to the Policy is monitored on an annual basis by the Company Secretary.
The specifi c performance hurdles and option allocations vary with grants to the three classes of executive (CEO, CFO and Business Unit
Managing Directors and key functional and other key managers). The relationship between the LTIP rewards and Elders’ fi nancial
performance are set out on the next page. The Company has adopted a relative Total Shareholder Return performance hurdle to align the
interests of the Chief Executive Offi cer with those of shareholders. This performance measure was selected following consultation with
external remuneration experts as being the most appropriate and widely used measure of shareholder value.
42
Performance Conditions under Elders Employee Share Option Plan (EESOP)
Issue Date
Number of Options
Granted
Issue Price Hurdle Description
CEO EESOP Grants
26 September 2008
4,000,000 options
in three tranches
$1.32
Tranche 1
750,000 options
Tranche 2
1,250,000 options
Tranche 3
2,000,000 options
As part of his employment contract the CEO was granted four million options
issued in three tranches and exercisable over the period 26 September 2010
to 26 September 2012 subject to the meeting of specifi ed Total Shareholder
Return (TSR) performance hurdles
Tranche 1
TSR performance is measured over the two years from 26 September 2008
to 26 September 2010
Tranche 2
TSR performance is measured over the three years from 26 September 2008
to 26 September 2011
Tranche 3
TSR performance is measured over the four years from 26 September 2008
to 26 September 2012
For options to vest the percentile ranking of Elders growth in its Accumulation
Index relative to such growth in the ASX/S&P 200 Accumulation Index must
equal or exceed the prescribed ranking, as follows:
Hurdle Rate % of Tranche options that vest
Less than 50th percentile (median) Nil
At the 50th percentile 50%
50th to 75th percentile Pro-rata
At 75th percentile 100%
CFO and Business Unit Managing Directors EESOP Grants
The CFO and Business Unit Managing Directors may be offered, at the discretion of the Board, three equal tranches of up to
250,000 options with each tranche being subject to Group or business unit RONA,NPAT and/or EBIT performance hurdles, as follows:
Tranche 1 (33%) – with performance assessed initially over the fi rst fi nancial year after options are issued
Tranche 2 (33%) – with performance assessed over the second fi nancial year after options are issued
Tranche 3 (33%) – with performance assessed over the third fi nancial year after options are issued
The performance hurdles are cumulative across the three years over which the hurdles are measured. Therefore, if the hurdle is not met in
respect of the fi rst fi nancial year, and, for example, the fi rst and second fi nancial year performance when added together exceeds the sum
of the fi rst and second year fi nancial hurdle, the Tranche 1 hurdle will be satisfi ed.
If the performance hurdle in respect of each tranche is met, the options may only be exercisable during the period 3 to 5 years following
their date of issue. All unvested and unexercised options will lapse on their fi fth anniversary.
Key Functional Managers and Other Key Managers EESOP Grants
Options may be issued within strict limits, at the discretion of the Board, to selected deserving employees based on excellent performance
over the preceding 12 months. No future performance conditions are imposed in respect of these options. However, for the options
to vest, employees must continue to be employed by the Company for at least three years from the date of issue. Allocation of long term
incentives to key managers encourages future performance, improves the retention rate for these important contributors and increases
alignment of their interests with those of shareholders.
Relationship between Elders’ Financial Performance and Executive Rewards
Short Term Incentives
Short Term Incentives (STIs) are paid to executives on achievement of a range of fi nancial and non-fi nancial performance targets. The following
table shows the Company’s performance in relation to a number of fi nancial and operational performance measures over a fi ve year period.
Performance Measure ($ millions)
2009 (to
30/9/09)
2009 (to
30/6/09)
2008
2007
2006
2005
Sales Revenue
Underlying EBIT
Statutory Profi t
Cashfl ow from Operating Activities
3,540.1
2,902.0
3,312.1
3,228.5
3,355.8
3,174.7
12.8
(466.4)
(523.3)
16.8
(415.4)
(370.8)
171.7
36.4
(14.1)
169.4
105.4
85.0
157.1
87.4
127.4
131.3
58.6
(9.3)
43
The Financial Services Group and ITC were the only business units that met performance targets set by the former independent subsidiary
boards for the fi nancial period. As a consequence only senior executives from these business were allocated STIs in respect of the period.
At the beginning of 2009 as a result of the global fi nancial crisis and its impact on economic conditions in Australia and the operating
results being experienced by the Company, the Board decided to freeze all salaries for employees for a period of at least 12 months and
similarly agree not to make any adjustment to director’s Fees. The operational performance of the Company during our fi nancial year
(15 months to 30 September 2009) has not been satisfactory and no discretionary corporate and personal performances bonuses have
been paid to employees other than where previous performance commitments have been made under the general STI program for the
Company. That has included the CEO and Senior Executives. However, the Board Remuneration Committee and the Board have considered
at length the position of the CEO and certain Executives who were responsible for managing the bank refi nancing process, asset sales
and the recent equity raising together with all the other corporate restructuring processes and activities which have been put in place
surrounding those matters. These were all vital measures required to be effected in a short time frame in order to enable the Company to
meet the future requirements of its shareholders in its now very changed strategic, fi nancial, banking and economic circumstances.
In all cases those measures were completed and signifi cant progress has been made in regard to the issues arising out of the Agenda for
Change, including the refi nancing, recapitalisation and asset sales.
As a consequence of those considerations the Board decided to pay a number of smaller one-off bonuses to the CEO and certain Senior
Executives to refl ect the enormous commitment and effort required of them to meet those objectives. The CEO special bonus in that regard
amounted to $300,000.
Long Term Incentives
Long Term Incentives (LTIs) only vest when the Company achieves superior returns for shareholders as measured by relative Total
Shareholder Return (TSR) for the CEO and RONA, NPAT and/or EBIT for other senior executives.
(a) Total Shareholder Return (TSR)
Elders’ TSR has underperformed the ASX/S&P 200 Accumulation Index (All and Industrials) and the selected Peer Group* over the most
recent fi nancial period and on a cumulative basis over the period from 2004 to 2009. While none of the CEOs LTI performance options are
due to be measured until at least September 2010 it is unlikely that the CEO’s 2008 Tranche 1 options will vest as the TSR performance
hurdles over the period 26 September 2008 to the present will not be met.
Elders’ relative TSR performance against two comparator groups (ASX 200/S&P ) and the selected Peer Group* is set out as follows:
80%
40%
%
R
S
T
e
t
u
l
o
s
b
A
0%
(40%)
(80%)
120%
80%
40%
)
%
(
R
S
T
e
v
i
t
a
l
u
m
u
C
0%
(40%)
(80%)
2004
Year
2005
2006
2007
2008
2009
2004
Year
2005
2006
2007
2008
2009
Elders
ASX200
ASX200 Industrials
Peer Companies (mean)
Elders
ASX200
ASX200 Industrials
Peer Companies (mean)
*The selected Peer Group comprised Bendigo and Adelaide Bank Limited, AWB Limited, Bank of Queensland Limited, Gunns Limited,
GrainCorp Ltd and Ruralco Holdings Ltd. Data presented for 2009 in the graphs is based on a 15 month fi nancial period compared with
12 month fi nancial periods for 2004 to 2008.
44
(b) Other LTI Performance Hurdles for Senior Executives
Because the RONA, NPAT and/or EBIT performance hurdles were not met for the Group and all businesses, no LTI performance options
vested in respect of the current fi nancial period.
(c) Futuris Automotive Exit Incentive Plan
During the year the Company established a new long term incentive plan for Futuris Automotive Interiors (FAI) which seeks to reward the
FAI executive team for increases in the market value of the business over the fi ve years to 30 September 2013. LTI awards vest either at the
end of the plan period or on the sale of the business and can range from 0.5 to 5 times the fi xed salary of an executive should maximum
target increase in value be achieved for the business.
(d) Review of Long Term Incentives
The Board and Remuneration Committee are aware that for an incentive plan to be effective in retaining and motivating executives it must
reward senior executives for delivering superior results. The exercise prices of options issued under the Company’s existing option plan
will range from $12.90 to $25.40 (if the proposed 10:1 share consolidation is approved by shareholders at the 2009 AGM) leaving little
or no opportunity for executives to benefi t from the plans even if they achieve their respective performance hurdles. Accordingly, the
Remuneration Committee is proposing to replace the existing option plan with a new LTI for senior executives based on performance rights.
The directors propose to discontinue issuances of options under the existing option plan and implement a new Long Term Incentive Plan for
senior executives under which performance rights, being rights to acquire securities on terms established by the directors (“Performance
Rights”) will be issued.
The Company will seek the approval of shareholders to grant to Mr Jackman Performance Rights during November of each of 2009, 2010 and
2011 to acquire ordinary shares in the Company.
Each Performance Right will constitute the right to acquire 1 ordinary share in the Company if it becomes exercisable as described below.
The number of Performance Rights to be issued in a given year will be determined in accordance with the following formula:
N = (150% x TFR) ÷ Share Price Denominator
where fractions are rounded up and:
N = the number of Performance Rights issued in the applicable year, subject to meeting the performance hurdles associated
with the Performance Rights
TFR = Mr Jackman’s total fi xed remuneration in Australian dollars for the year during which the calculation is made
Share Price Denominator = the greater of (i) the volume weighted average of the closing price of the Company’s shares on ASX for the
10 trading days immediately preceding the issue date of the Performance Rights (which, if the share consolidation resolution is passed
by shareholders at the 2009 AGM, will be calculated on a post-consolidated basis) and (ii) $1.776 (or, $0.1776 if the share
consolidation resolution is not passed).
Given that the ‘Share Price Denominator’ is subject to a fl oor, the number of Performance Rights that may be issued over the 3 years (and,
therefore, the number of ordinary shares in the Company for which they might become exercisable) will not exceed 2,570,425 if the share
consolidation Resolution is passed (or 25,704,249 on a pre-consolidation basis), assuming a TFR of $1,014,461.
The Company intends to issue the Performance Rights to Mr Jackman, subject to shareholder approval, as of 10 November 2009 and on or
about 10 November 2010 and 10 November 2011.
No price is payable by Mr Jackman for the grant or exercise of the Performance Rights. Mr Jackman has agreed that if the share
consolidation Resolution is passed, he will forego the options granted to him under the Company’s existing option plan.
The directors consider that, in order to align Mr Jackman’s interests with those of the shareholders, an appropriate Long Term Incentive Plan
which rewards him for performance excellence must be implemented. Accordingly, the performance conditions attached to the Performance
Rights are linked to the achievement of sustainable shareholder returns (measured by a relative Total Shareholder Return (“TSR”) target).
This performance measure will focus Mr Jackman’s attention on building and maintaining the solid fi nancial performance of the Company, in
order to deliver sustained growth in long-term shareholder value.
45
The Performance Rights granted to Mr Jackman in a given year will become exercisable (and the performance hurdle will be measured):
(cid:129) as to the fi rst third of the relevant Performance Rights, at the completion of the 2 year period commencing on the date of issue of
the Performance Rights;
(cid:129) as to the second third of the relevant Performance Rights, at the completion of the 3 year period commencing on the date of issue of
the Performance Rights; and
(cid:129) as to the fi nal third of the relevant Performance Rights, at the completion of the 4 year period commencing on the date of issue of
the Performance Rights,
and, in each case, subject to meeting the performance hurdles associated with the Performance Rights.
TSR Performance Hurdles
The TSR performance hurdles measure the Company’s relative growth of the TSR performance from 10 November 2009, compared with
that of the ASX200 Accumulation Index (including the Company but excluding resources and property trusts) (“TSR Benchmark” ) (1)
to 10 November in each year of measurement. In the event that the Company’s TSR performance in a given measurement period is greater
than the performance of the 50th percentile of the TSR Benchmark, the Performance Rights will be exercisable as set out in the table below
(and otherwise, will not be exercisable):
Percentile of the Company’s growth in its TSR relative to
growth for the TSR Benchmark over the measurement period
for the relevant tranche of Performance Rights
% of the TSR Performance Rights of the relevant tranche
of Performance Rights that become exercisable
At 50th percentile
50th to 75th percentile
At 75th percentile
50%
Pro-rata
100%
Worked example: An illustration of how the new Long Term Incentive Plan will operate is as follows:
(cid:129) on 10 November 2010, the Company will issue the number of Performance Rights determined on that date in accordance with the above
formula (the “2010 Example Performance Rights”). That calculation will occur as follows:
> on 10 November 2010, the Company will calculate the volume weighted average of the closing price of the Company’s shares on ASX
for the immediately preceding 10 trading days. For the purposes of this example, assume that the share consolidation resolution is
passed and the result of the calculation is $2.00;
> since this is greater than $1.776, that volume weighted average price will be used as the ‘Share Price Denominator’ in the formula; and
> assuming a TFR of $1,014,461 for the year during which 10 November 2010 falls, the formula applies so that N = 760,846. That is,
the number of 2010 Example Performance Rights issuable will be 760,846 (N) (and they will, subject to meeting the performance
hurdles associated with the Performance Rights, be exercisable for a maximum of 760,846] ordinary shares in the Company);
(cid:129) the performance hurdle for the fi rst third of the 2010 Example Performance Rights (ie 253,616 Performance Rights being a third of
760,846) will be measured on 10 November 2012. Assuming the Company’s growth in its TSR relative to the Benchmark TSR between
10 November 2010 and 10 November 2012 is in the 72nd percentile, 182,604 of the fi rst third of the 2010 Example Performance
Rights will be exercisable for 182,604 ordinary shares in the Company, being a number of ordinary shares equal to 72% of 253,616,
the maximum number into which that third of the 2010 Example Performance Rights could have converted; and
(cid:129) the performance hurdle for, and number of ordinary shares issuable, if any, in respect of, the second and fi nal thirds of the 2010
Example Performance Rights will be measured in the same manner on 10 November 2013 and 10 November 2014, respectively (in each
case, in respect of the Company’s growth in its TSR relative to the Benchmark TSR between 10 November 2010 and that date).
(1) Directors will retain discretion to apply a different TSR Benchmark if the ASX 200 Accumulation Index ceases to be appropriate.
46
SECTION 4. NOMINATED EXECUTIVES’ CONTRACT TERMS
Formal employment contracts have been entered into with the Chief Executive and each of the 6 key management personnel. A summary
of the key terms of employment contracts for nominated executives applying during the 15 months to 30 September 2009 is outlined
in table 4a below.
Contracts for nominated executives have no fi xed term. Participation in various Short Term Incentive Plans is at the Board’s discretion.
Participation in the Long Term Incentive Plans is also at the Board’s discretion and subject to shareholder approval in the case of the
Chief Executive. Participants who cease employment before either the performance or service conditions have been met will forfeit all
unvested entitlements, unless otherwise determined by the Board in circumstances such as death, redundancy, total and permanent
disability and retirement.
Elders may terminate employment contracts immediately for cause, in which case the executive is not entitled to any payment other than
the value of fi xed remuneration up to the termination date. The Board, following the recommendation of the Remuneration Committee, may
amend the terms of the Chief Executive’s employment contract. The Chief Executive, in consultation with the Chairman, has the authority
to amend the terms of employment contracts of his direct reports, where circumstances warrant.
Table 4a. Summary of the Key Terms of Employment Contracts for Nominated Executives
Name
Employing
Company
Date of
Contract
Termination
by Elders
(without
cause)
Termination
by
Employee
Termination
Payments (only
where Termination
by Company)
Short and Long Term Incentives
(refer to sections 3D and 3E above)
M G Jackman (1) Elders Ltd
29
September
2008
12 months’
notice
12 months’
notice
M G De Wit
Futuris
Automotive
Group Ltd
1 January
2009
3 months’
notice
3 months’
notice
V Erasmus
Integrated
Tree
Cropping
Ltd
23 March
2006 (as
amended)
12 months’
notice
12 months’
notice
Payment in lieu of
notice based on
Base Salary
Discretion of Board
to pay portion of
STI and LTI
Payment in lieu of
notice based on
Base Salary.
Discretion of Board
to pay portion of
STI and LTI
STI: May earn up to 100% of fi xed
remuneration if CEO achieves fi nancial and
non-fi nancial KPIs
LTI: Refer section 3E above
STI: May earn up to 50% of fi xed
remuneration plus superannuation if
business unit achieves budget EBIT
LTI: May earn from 0.5 to 5 times
fi xed salary under Futuris Auto Exit
Incentive Scheme based on maximum
increase in value of business over fi ve years
to 30 September 2013
Payment in lieu of
notice based on
Base Salary
Discretion of CEO
to pay portion of
STI and LTI
STI: May earn up to 80% of fi xed
remuneration if business unit achieves
agreed KPIs
LTI: Awarded 750,000 options (250,000 pa)
under EEOP with vesting subject to
meeting budget NPAT performance hurdle
($1 million NPAT outperformance in 2010)
B A Griffi ths (2)
Futuris
Automotive
Group Ltd
30 August
2005 (as
amended)
12 weeks’
notice
4 weeks’
notice
Payment of $2
million
STI: May earn up to 50% of fi xed
remuneration if business unit achieves
quantitative and qualitative fi nancial
KPIs set by CEO
LTI: May earn 2-3% of any increase in value
of Company’s automotive operations under
special value creation incentive
M S Guerin
Elders
Rural
Services
Ltd
1 March
2008
12 months’
notice
6 months’
notice
M G Hosking (3) Elders Ltd
14 April
2009
6 months’
notice
3 months’
notice
Payment in lieu of
notice based on
Base Salary.
Discretion of CEO
to pay portion of
STI and LTI
STI: May earn up to 60% of fi xed
remuneration if business unit achieves
agreed KPIs and outperforms budget EBIT
LTI: Awarded 750,000 options (250,000 pa)
under EEOP with vesting subject to meeting
budget EBIT performance hurdle
Payment in lieu of
notice based on
Base Salary
Discretion of CEO
to pay portion of
STI and LTI
STI: May earn up to 100% of fi xed
remuneration if business unit achieves
agreed KPIs and outperforms budget EBIT
LTI: Yet to be determined
47
Table 4a. Summary of the Key Terms of Employment Contracts for Nominated Executives (continued)
Name
Employing
Company
Date of
Contract
Termination
by Elders
(without
cause)
Termination
by
Employee
Termination
Payments (only
where Termination
by Company)
Short and Long Term Incentives
(refer to sections 3D and 3E above)
T P Plant (4)
9 August
2006 (as
amended)
Elders
Financial
Services
Group
Pty Ltd
12 months’
notice
6 months’
notice
L P Wozniczka (5) Elders Ltd 26 February
2004 (as
amended)
12 months’
notice
12 months’
notice
P Zachert (6)
Elders Ltd 18
December
2002 (as
amended)
12 months’
notice
6 months’
notice
Payment in lieu of
notice based on
Base Salary
Discretion of CEO
to pay portion of
STI and LTI
STI: May earn up to 60% of fi xed
remuneration if business unit achieves
agreed KPIs and outperforms budget EBIT
LTI: Awarded 750,000 options (250,000 pa)
under EEOP with vesting subject to meeting
budget EBIT performance hurdle. All options
were cancelled following cessation of
employment
Payment in lieu of
notice based on
Base Salary.
Discretion of Board
to pay portion of
STI and LTI. (refer
below for details of
actual termination
arrangements)
Payment in lieu
of notice based on
Base Salary
STI: Could earn up to 150% of fi xed
remuneration if he achieved agreed KPIs
and Group outperformed budget EBIT
LTI: Awarded 3,000,000 options (1,500,000
pa) under EEOP with vesting subject to
meeting TSR and EPS growth performance
hurdles. All unvested options were cancelled
following cessation of employment
STI: Could earn up to 60% of fi xed
remuneration if Group achieved budget NPAT
LTI: Awarded 750,000 options (250,000 pa)
under EEOP with vesting subject to meeting
budget NPAT performance hurdle. All
unvested options were cancelled following
cessation of employment
Notes:
(1) Mr Jackman was appointed Chief Executive on 29 September 2008 and Managing Director on 20 October 2008.
(2) Mr Griffi th role as Executive Chairman of Futuris Automotive was terminated by agreement on 30 September 2009. As part of his
termination it was agreed that he be paid $2 million as specifi ed in his employment contract with such payment refl ecting his accrued
entitlements over 35 years with the Company.
(3) Mr Mark Hosking was appointed Chief Financial Offi cer on 14 April 2009.
(4) Mr Tim Plant ceased employment on 30 September 2009 following the sale of EFSG’s insurance business to QBE. Tim’s accrued
entitlements were transmitted with the business to the QBE/Elders joint venture where he has taken the role of Managing Director
Elders Insurance.
(5) Mr Les Wozniczka resigned as Chief Executive Offi cer and Managing Director effective on 26 September 2008. Details of his
termination payment are set out below.
(6) Mr Zachert resigned as Chief Financial Offi cer effective 30 June 2009. Mr Zachert was paid a termination payment comprising
12 months pay in lieu of notice and leave entitlements.
Termination Benefi ts Paid to Former Chief Executive
On 29 September 2008 the Company announced that the resignation of former Chief Executive Offi cer Mr Les Wozniczka became effective
on 26 September 2008 following completion of the search for his successor. Mr Wozniczka’s termination arrangements were as follows.
Payment in lieu of notice: Under the terms of his contract Mr Wozniczka was required to give 12 months’ notice of termination. The Board
exercised its discretion under the contract to pay Mr Wozniczka 12 months’ salary ($1,391,300) in lieu of notice.
Short Term Incentive: No short term incentive was paid as performance criteria were not met
Long Term Incentive: Mr Wozniczka was entitled to exercise 1,750,000 options that have previously vested under the terms of the Elders
Employee Share Option Plan following the achievement of performance hurdles. Details of vested options were disclosed in the 2008 Elders
Limited Remuneration Report published in the Company’s 2008 Annual Report. The 1,750,000 options comprise: 1,000,000 options issued
in 2003 with an exercise price of $1.37 and 750,000 options issued in 2005 with an exercise price of $2.06.
Ex Gratia Payment: The Board resolved to exercise its discretion to pay Mr Wozniczka an ex-gratia payment of $500,000 in recognition of his
contribution to the Company generally, and as part compensation for agreeing to relinquish unvested performance options.
Other Entitlements: In addition to the above benefi ts, Mr Wozniczka was entitled to be paid his normal accrued holiday leave, long service
leave and other contractual and statutory entitlements, amounting to $584,704.
48
SECTION 5. REMUNERATION DISCLOSURE TABLES
Table 5a: Details of Executive Directors’, Key Management personnel and the Five Highest Paid Executives Remuneration
for the 2008 and 2009 fi nancial year.
(A$)
Short Term Payments
Value of Share
Based Incentives
Long Term
Payments
Post
Employment
Total
Remuneration (7)
Total
Performance
Related
Base Salary
Bonus Other Non
Monetary
Options (6)
Shares
Long Service
Leave
Superannuation
M G Jackman (1)
2009 (15 months)
952,899
300,000
2009 (12 months)
702,899
2008 (12 months)
-
M G De Wit
2009 (15 months)
2009 (12 months)
2008 (12 months)
V Erasmus
2009 (15 months)
2009 (12 months)
2008 (12 months)
731,885
605,556
439,947
689,332
548,588
510,734
B A Griffiths (3)
2009 (15 months)
2,738,973
2009 (12 months)
2008 (12 months)
595,449
608,839
-
-
-
-
312,500
193,000
-
271,500
-
-
200,000
M S Guerin
2009 (15 months)
738,975
50,000
2009 (12 months)
2008 (12 months)
588,975
175,841
-
105,000
M G Hosking (4)
2009 (15 months)
T P Plant
2009 (12 months)
2008 (12 months)
2009 (15 months)
2009 (12 months)
2008 (12 months)
277,836
128,753
-
807,763
642,505
574,371
P Zachert (2)
2009 (15 months)
1,186,568
2009 (12 months)
1,186,568
65,000
-
-
183,125
-
315,000
-
-
2008 (12 months)
555,801
115,000
-
-
-
472,917
408,227
-
44,229
37,668
49,738
62,131
60,649
77,666
27,827
24,546
39,310
14,827
11,862
58,463
-
-
-
(121,197)
61,490
88,665
(988)
(988)
43,791
40,742
-
15,167
15,167
26,063
-
-
-
57,007
50,757
8,333
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,810
-
-
7,810
-
-
7,810
-
-
-
-
-
-
-
-
7,810
-
-
88,646
7,810
L P Wozniczka (5) 2009 (15 months)
2009 (12 months)
2,219,087
2,219,087
2008 (12 months)
1,427,592
-
-
-
4,283
(689,843)
4,283
(689,843)
21,651
624,477
Total
2009 (15 months)
10,343,318
791,125
120,249
(190,097)
2009 (12 months)
7,629,836
-
110,949
(86,390)
-
-
-
-
-
2008 (12 months)
4,293,125
1,319,000
56,047
1,026,965
39,050
-
-
-
26,394
17,563
-
11,094
8,580
-
17,106
14,327
-
-
-
-
-
-
-
-
-
-
103,251
103,251
-
-
-
-
157,845
143,721
-
13,277
1,739,093
9,661
1,120,787
-
-
53,294
46,564
48,592
17,360
13,745
13,129
899,593
748,093
858,587
988,084
646,729
906,902
120,175
2,904,081
100,002
72,391
63,500
50,000
15,826
25,005
11,588
-
17,360
13,745
13,129
13,797
13,797
13,129
734,324
928,350
924,309
701,594
363,463
367,841
140,341
-
887,051
717,740
998,975
1,302,628
1,302,628
780,386
257,818
257,818
1,791,345
1,791,345
204,280
2,278,000
581,586
11,804,026
516,920
380,476
7,903,580
7,114,663
44%
36%
-
5%
5%
43%
26%
9%
39%
1%
3%
27%
7%
2%
45%
18%
-
-
7%
9%
41%
-
-
27%
(39%)
(39%)
27%
Notes:
(1) M G Jackman was appointed CEO on 29 September 2008.
(2) P Zachert resigned as CFO on 30 June 2009. On termination, in accordance with the terms of his employment agreement, Mr Zachert received a
termination payment amounting to $603,750. Mr Zachert was also paid leave entitlements of $185,700 expensed in current and previous years
These leave entitlements are not included in the remuneration table above.
(3) B A Griffi ths role as Executive Chairman of Futuris Automotive was terminated by agreement on 30 September 2009. As part of his termination
it was agreed that he be paid $2 million as specifi ed in his employment contract with such payment refl ecting his accrued entitlements over
35 years with the Company. Mr Griffi ths was also paid leave entitlements of $637,581 expensed in the current and previous years. These leave
entitlements are not included in the remuneration table above.
(4) M G Hosking was appointed CFO on 14 April 2009.
(5) L P Wozniczka resigned as Chief Executive and Managing Director on 26 September 2008. Mr Wozniczka received a termination package
amounting to $1,891,300. Mr Wozniczka was also paid leave entitlements of $584,704 expensed in previous years. These leave entitlements
are not included in the remuneration table above.
(6) In accordance with AASB 2, the accounting value represents a proportion of the fair value of options that had not yet fully vested as at the
commencement of the fi nancial year. Where applicable this value includes an assumption that options will vest at the end of their vesting period
even though the executive only receives this value if performance hurdles are met. The amount included as remuneration does not represent a
cash payment, is not related to, nor indicative of the benefi t (if any) that may ultimately be realised by each Senior Executive should the options
become exercisable. The accounting value is determined at the date the options were granted when Company share prices and option exercise
prices were in excess of $1.29. As required under the accounting standards, accounting expense that was previously recognised as remuneration
has been reversed where a Key Management Person has left Elders, resulting in equity instruments being forfeited.
(7) Not all remuneration is paid in cash. Remuneration also includes value attributed to share and option incentive awards, accrued long service
leave, superannuation contributions and other forms of non-monetary remuneration.
49
Balance
of shares
held at
reporting
date
740,156
606,822
492,522
160,099
26,765
26,765
236,826
103,492
103,492
164,894
31,560
31,560
393,334
260,000
60,000
373,334
240,000
20,000
606,822
606,822
492,522
26,765
26,765
26,765
103,492
103,492
103,492
31,560
31,560
31,560
260,000
260,000
60,000
240,000
170,000
-
33,545,578
33,545,578
33,545,578
33,545,578
33,545,578
33,545,578
161,000
161,000
21,000
294,334
161,000
21,000
34,975,217
34,905,217
34,280,917
35,908,555
34,905,917
34,300,917
SECTION 6. EQUITY INSTRUMENTS IN RELATION TO DIRECTORS AND EXECUTIVES
Table 6a. Share Movements Non-Executive Directors and Executives
Shares
held at
start
of year
Shares
acquired
during the
year as
part of
remuneration
Shares
acquired
during the
year through
the vesting
of LTIP
Other shares
acquired/
(disposed of)
during
the year
Other
changes
during
the year
Balance of
shares held
at end of
fi nancial
period
(30 June/
30 Sep 09)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
114,300
114,300
14,031
-
-
-
-
-
-
-
-
-
200,000
200,000
-
240,000
170,000
-
-
-
-
140,000
140,000
-
694,300
624,300
14,031
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Non-executive Directors
S Gerlach
J C Fox
C E Bright
R G Grigg
2009 (15 months)
2009 (12 months)
2008
2009 (15 months)
2009 (12 months)
2008
2009 (15 months)
2009 (12 months)
2008
2009 (15 months)
2009 (12 months)
2008
I G MacDonald(1) 2009 (15 months)
2009 (12 months)
2008
492,522
492,522
478,491
26,765
26,765
26,765
103,492
103,492
103,492
31,560
31,560
31,560
60,000
60,000
60,000
-
-
-
2009 (15 months)
2009 (12 months)
2008
2009 (15 months)
2009 (12 months)
2008
33,545,578
33,545,578
33,545,578
2009 (15 months)
2009 (12 months)
2008
21,000
21,000
21,000
2009 (15 months)
2009 (12 months)
2008
34,280,917
34,280,917
34,266,886
J H Ranck
A Salim
G D Walters
Total
50
Table 6a. Share Movements Non-Executive Directors and Executives (continued)
Shares
held at
start
of year
Shares
acquired
during
the year
as part of
remuneration
Shares
acquired
during the
year through
the vesting
of LTIP
Other shares
acquired/
(disposed of)
during
the year
Other
changes
during
the year
Balance
of shares
held at end
of year
Executives
M G Jackman(1) (3) 2009 (15 months)
2009 (12 months)
2008
M G De Wit
V Erasmus
B A Griffi ths
M S Guerin
M G Hosking
T P Plant
P Zachert
30,000
30,000
-
51,980
51,980
41,694
19,955
19,955
9,669
2009 (15 months)
2009 (12 months)
2008
2009 (15 months)
2009 (12 months)
2008
2009 (15 months)
2009 (12 months)
2008
1,173,019
1,173,019
1,540,439
2009 (15 months)
2009 (12 months)
2008
270,698
270,698
-
2009 (15 months)
2009 (12 months)
2008
-
-
-
2009 (15 months)
2009 (12 months)
2008
247,554
247,554
115,175
2009 (15 months)
2009 (12 months)
2008
1,430,043
1,430,043
1,323,606
-
-
-
-
-
10,286 (2)
-
-
10,286 (2)
-
-
10,286 (2)
-
-
40,698 (2)
-
-
-
-
-
132,379 (2)
-
-
106,437 (2)
L P Wozniczka (4) 2009 (15 months)
2009 (12 months)
2008
4,521,341
4,521,341
4,521,341
-
-
-
Total
2009 (15 months)
2009 (12 months)
2008
7,744,590
7,744,590
8,261,453
-
-
310,372
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
100,000
100,000
-
-
-
-
-
-
-
(463,917)
(463,917)
(377,706)
-
-
230,000
-
-
-
-
-
-
-
-
-
-
-
-
(363,917)
(363,917)
(147,706)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
130,000
130,000
-
51,980
51,980
51,980
19,955
19,955
19,955
709,102
709,102
1,173,019
270,698
270,698
270,698
-
-
-
247,554
247,554
247,554
1,430,043
1,430,043
1,430,043
4,521,341
4,521,341
4,521,341
7,380,673
7,380,673
8,424,119
Balance
of shares
held at
reporting
date
396,668
130,000
-
185,314
51,980
51,980
19,955
19,955
19,955
963,338
709,102
1,173,019
537,365
270,698
270,698
-
-
-
247,554
247,554
247,554
2,896,710
1,430,043
1,430,043
4,521,341
4,521,341
4,521,341
9,914,011
7,380,673
8,424,119
Notes:
(1) Shares are held in name of spouse or family superannuation company in which the director is a benefi ciary.
(2) The 2008 comparative fi gure has been amended to replace the estimate of shares acquired as part of the STI with actual
shares acquired.
(3) M G Jackman held 30,000 shares when appointed Chief Executive Offi cer on 29 September 2008. He also holds 1,000 Elders
Hybrid convertible unsecured notes acquired on 11 September 2009.
(4) L P Wozniczka resigned from the Company effective on 26 September 2008. Shares shown at year end and reporting date
refl ect his holding on 26 September 2008.
51
Table 6b. Aggregate Long Term Incentive Plan Opportunities Received and Changes
Option holdings of Directors and Key Management Personnel
Vested at 30 September
2009
Options
Lapsed or
Surrendered
3 months to
30 September
2009
Balance at
30 September
(2) 2009 Exercisable
Balance at
beginning of
period
Options
Granted
Options
Lapsed or
Surrendered
to 30 June
2009
Balance at
30 June
(2) 2009
2009 (Number)
Directors
M G Jackman (1)
-
4,000,000
-
4,000,000
(6,250,000)
1,750,000
L P Wozniczka
8,000,000
Key Management Personnel
M G De Wit
500,000
-
-
V Erasmus
750,000
750,000
B A Griffi ths
400,000
-
M S Guerin
750,000
750,000
M G Hosking (1)
-
-
T P Plant
1,100,000
750,000
-
-
-
-
-
-
-
4,000,000
-
1,750,000 1,750,000
500,000
200,000
1,500,000
-
400,000
200,000
1,500,000
-
-
-
-
-
500,000
1,500,000
400,000
1,500,000
-
-
-
-
-
-
-
1,850,000
(1,850,000)
Not
exercisable
-
-
-
-
-
250,000
-
-
-
P Zachert
750,000
750,000
(875,000)
625,000
-
625,000
625,000
Total
12,250,000
7,000,000
(7,125,000)
12,125,000
(1,850,000)
10,275,000 2,775,000
250,000
(1) Messrs Jackman and Hosking were not Key Management Personnel in 2008.
(2) The value of options lapsed or surrendered was $812,028.
No options were exercised in the 15 months to 30 September.
Balance at
beginning of
period
Options
Exercised
Options
Granted
Options
Lapsed or
Surrendered
Balance at
30 June 2008
Vested at 30 June 2008
Exercisable Not Exercisable
2008 (Number)
Directors
L P Wozniczka (1)
5,000,000
Key Management Personnel
M G De Wit
V Erasmus
B A Griffi ths (1)
M S Guerin
300,000
750,000
300,000
-
T P Plant
1,100,000
P Zachert (1)
750,000
Total
8,200,000
-
-
-
-
-
-
-
-
3,000,000
200,000
-
100,000
750,000
-
-
4,050,000
-
-
-
-
-
-
-
-
8,000,000
1,000,000
750,000
500,000
100,000
-
750,000
-
400,000
400,000
100,000
300,000
750,000
-
250,000
1,100,000
100,000
500,000
750,000
-
625,000
12,250,000
1,300,000
2,825,000
(1) Messrs L P Wozniczka, P Zachert and B A Griffi ths, reported as Key Management Personnel in 2008, are no longer employees
of the Group.
52
Table 6c. Current Long Term Incentive Plan Opportunities
Granted
Options
(Number)
Vested
Options
(1) (Number) Grant Date
Value at
Grant Date
($)
per share
Value at
Grant Date
(2) ($)
Exercise
Price
($)
First
Exercise
Date
Expiry and
Last
Exercise
Date
Options
as % of
Remuneration
2009
Directors
M G Jackman
(Tranche 1 TSR)
M G Jackman
(Tranche 2 TSR)
M G Jackman
(Tranche 3 TSR)
750,000
1,250,000
2,000,000
Key Management Personnel
M G De Wit
-
V Erasmus
750,000
B A Griffi ths
-
M S Guerin
750,000
M G Hosking
-
T P Plant
P Zachert
2008
Directors
L P Wozniczka
(Tranche 1 TSR)
L P Wozniczka
(Tranche 2 TSR)
L P Wozniczka
(Tranche 1 EPS)
L P Wozniczka
(Tranche 2 EPS)
750,000
750,000
750,000
750,000
750,000
750,000
Key Management Personnel
M G De Wit
V Erasmus
B A Griffi ths
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
200,000
-
26 Sep 08
0.33
247,500
1.32
26 Sep 10
26 Sep 12
14.2
26 Sep 08
0.37
462,500
1.32
26 Sep 11
26 Sep 13
26.6
26 Sep 08
0.39
780,000
1.32
26 Sep 12
26 Sep 14
44.9
-
-
-
-
-
-
28 Nov 08
0.047
35,250
1.29
28 Nov 11
28 Nov 13
-
-
-
-
-
-
28 Nov 08
0.047
35,250
1.29
28 Nov 11
28 Nov 13
-
-
-
-
-
-
28 Nov 08
0.047
35,250
1.29
28 Nov 11
28 Nov 11
28 Nov 08
0.047
35,250
1.29
28 Nov 11
28 Nov 13
-
3.4
-
1.2
-
4.0
2.7
24 Oct 07
0.25
187,500
2.36
30 Jun 10
30 Jun 13
8.2
24 Oct 07
0.37
277,500
2.36
30 Jun 11
30 Jun 14
12.2
24 Oct 07
0.39
292,500
2.36
30 Jun 10
30 Jun 13
12.8
24 Oct 07
0.42
315,000
2.36
30 Jun 11
30 Jun 14
13.8
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
M S Guerin
750,000
250,000
1 Mar 08
0.42
315,000
2.45
1 Mar 11
1 Mar 13
86.7
G Hunt
T P Plant
P Zachert
-
-
-
187,500
250,000
125,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1) Exercisable subject to meeting performance hurdles.
(2) The valuation of the options issued to Messrs Wozniczka and Jackman was prepared independently based on the Trinomial
methodology. Valuation of options issued to other KMPs were based on the Black Scholes methodology.
All equity transactions with directors and key executives other than those arising from the exercise of remuneration options have been
entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arms’ length.
-
-
-
53
DISCUSSION AND ANALYSIS
OF FINANCIAL STATEMENTS
1. Income statement
Elders has reported a statutory loss of $466.4 million
for the 15 months to 30 September 2009 (loss of
$415.4 million for 12 months to 30 June). The reported
loss includes signifi cant and non-recurring items totalling
a loss of $414.7 million after tax.
Exclusive of these non-recurring items the Company
recorded an underlying loss after tax of $51.8 million
(loss of $26.9 million for 12 months to 30 June).
In comparison, Elders reported a statutory profi t of
$36.5 million and underlying profi t after tax of
$84.2 million in 2008.
The non-recurring items include:
(cid:129) Write-down of assets to be divested or discontinued
totalling $99.5 million after tax comprising:
> The Company’s 50% shareholding in HiFert has been
written down by $57.0 million to refl ect current
fertiliser market valuations.
> Abattoir interests were written down ($4.6 million).
One interest was divested, with the remaining interest
subject to an ongoing sales process.
> Horticulture and Fodder interests ($4.3 million).
Divestment of these assets was completed during
the year.
> Shareholding in Aspen Development Trust
($14.9 million) which is to be sold.
> Shareholdings in Aquaculture investments to be
divested ($17.9 million of which $14.4 million was
made in the June accounts).
> PlantTech, written-down as at June 30 based on
discounted cash fl ows ($0.9 million).
(cid:129) Net gain on sale of assets divested during the year
totalling $55.3 million after tax. Relevant assets include
Australian Agricultural Company, Amcom, Webster,
Run Corp, Broadwater Hospitality Management, Elders
Insurance and ITC’s timber processing operations.
(cid:129) Results from discontinued or discontinuing assets
totalling a loss of $153.8 million after tax. This fi gure
includes results from BWK Wool processing in Germany
and Turkey which are being closed, horticulture and
aquaculture interests, AAco, PlantTech, ITC Timber,
Amcom and the HiFert fertiliser business which is
subject to a sales process.
(cid:129) Impairments to assets to be retained ($101.4 million)
The impairments relate to the Company’s shareholdings
in FEA, Agricultural Land Trust, Australian Wool
Handlers, Air International Thermal Systems
and impairment to the of the MV Torrens following a
revision to estimated life.
(cid:129) Rural Services major projects and transformation costs
($42.7 million) incorporating expenditure, redundancy
costs and write-offs of capitalised costs.
(cid:129) Automotive write-offs and restructuring costs totalling
$27.8 million including redundancies, write-off of
stock, design and development expenditure, tooling
and provision for onerous leases.
(cid:129) Other ($44.7 million) includes mark-to-market on
the Company’s employee share plan and payments and
provisions relating to executive management changes
and refi nancing costs ($32.0 million). Of this fi gure,
($24.8 million) was incurred in the three months to
30 September.
Signifi cant revenue and expense items for the year
include:
(cid:129) Sales revenue from continuing operations of
$2,853.9 million (12 months to June: $2,627.6 million)
compared with $3,274.7 million. Discontinued
operations generated sales revenue of $686.2 million.
All business units recorded lower sales from their
continuing operations.
(cid:129) Income from associates and joint ventures of
$3.8 million ($0.5 million profi t at 30 June) compared
with $51.2 million in 2008. The chief factors in the
movement compared with 2008 were: losses incurred
by automotive joint ventures and associates (total of
$(28.3) million); a $14.6 million reduction in income
from FEA; a $15.5 million reduction in income from
HiFert; and the cessation of income from divested
interests in Webster and iiNet. Income from Rural Bank
rose from $20.5 million to $27.7 million.
(cid:129) Borrowing costs for continuing operations of
$112.2 million ($75.2 million for 12 months to
30 June) compared with $72.3 million for 2008.
Interest attributable to discontinuing operations for
2009 was $4.5 million. The increase in interest refl ects
terms applied to debt under an extension to the
Company’s debt from 30 June to 30 September 2009
under the refi nancing process. Completion of the
refi nancing has resulted in the negotiation of
competitive new terms.
54
(cid:129) Interest revenue from continuing operations was
(cid:129) Intangibles reduced from $306.8 million to
$13.0 million. Interest revenue from discontinued
operations of $13.7 million essentially relates to the
divested insurance underwriting business.
$228.5 million with the sale of Amcom, insurance and
timber processing operations and impairments
contributing to the movement.
Statement of cash fl ows
Elders’ cash fl ow has strong seasonal infl uence, with cash
outfl ows in the six months to December usually offset
by equal or greater cash infl ows in the six months to June.
Operating cash fl ow was signifi cantly weaker than
customary, with the size of the outfl ow reported for the
year being exacerbated by the fact that the 15 month
transitional year period adopted in 2009 incorporated
9 months when the business typically experiences
signifi cant cash outfl ow.
Operating activities generated a cash outfl ow of
$523.3 million for 2009 (outfl ow of $370.8 million in
12 months to June). The result featured a larger than
normal outfl ow in the period to December due to working
capital build up, followed by a weaker than normal infl ow
in the period to June and a customary outfl ow in the three
months to September. Segmental analysis of cash fl ows
is provided in Note 30 of the 2009 fi nancial statements.
(cid:129) Depreciation and amortisation from continuing
operations for 2009 of $36.2 million ($34.0 million
in 12 months to June) compares with $42.6 million in
2008. The reduction is attributable to the sale of
Amcom and discontinuation of BWK.
2. Balance sheet
Gearing as at 30 September was 128% (131% at 30 June)
compared with 54% at 30 June 2008. The increase in
gearing compared with the start of the year is the result of
higher net debt and the reduction to shareholders equity
resulting from the years fi nancial results.
Net debt at 30 September of $900.7 million compared
with $976.4 million at 30 June and $698.4 million at the
beginning of the year. The growth in net debt over 2009
refl ects increased gross debt. However, gross debt has
since been reduced substantially by the recapitalisation
subsequent to year end.
Year-end cash of $367.9 million includes the proceeds
from the sale of Elders Insurance Limited totalling
$270 million which was used to retire debt subsequent to
30 September.
Other signifi cant movements in the balance sheet during
the year included:
(cid:129) Current inventories were reduced from $396.8 million
to $225.5 million due to the sale of the timber
processing operations and inventory reduction in Elders
Rural Services.
(cid:129) Investments accounted for using the equity method
reduced from $694.5 million to $283.2 million.
The movement is largely attributable to the divestment,
or in the case of Elders Rural Bank, sell down of
shareholdings in associates, during the period.
Divestments included iiNet, AAco, Run Corporation and
Webster. In addition the value of the Company’s
shareholding in FEA was written down by $66.2 million.
(cid:129) Property, plant and equipment reduced from
$313.0 million to $114.4 million with the major
factors being the divestment of Amcom, the sale of
timber processing operations and writedowns to
automotive assets.
55
10 YEAR SUMMARY FINANCIAL RESULTS
$ million
unless otherwise indicated
15 Months
Sept 2009
12 months
June 2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
3,540.1
2,902.0
3,312.1
3,798.2
3,049.3
3,496.1
3,228.5
3,366.9
3,355.8
3,422.6
3,174.7
3,232.0
2,707.3
2,791.0
2,464.3
2,844.8
2,145.8
2,537.6
1,968.4
1,759.7
2,177.7
1,832.6
Profi tability
Sales revenue
Total revenue
Reported EBIT* by Segment
Rural Services 1
Financial Services 1
Forestry
Automotive Systems
Property
Other
Total EBIT
Underlying** EBIT
Underlying** profi t before tax
Abnormal & non-recurring items
after tax
Tax expense
Minority interests
Statutory profi t
-287.0
162.9
-100.6
-59.4
-
-221.4
22.3
-63.4
-59.8
-
-92.3
-61.7
-376.4
-384.0
12.8
-77.9
16.8
-35.0
20.9
22.4
61.4
26.2
-
-36.9
94.0
171.7
114.8
-414.7
-388.5
-47.8
-24.7
-1.5
-6.2
-1.9
-466.4
-415.4
21.0
9.6
36.4
84.2
56.3
27.2
61.6
9.5
30.4
-16.2
168.8
169.4
129.4
-1.0
20.2
-2.8
105.4
106.4
65.8
26.9
39.9
16.3
16.3
-8.4
156.8
157.1
118.2
-0.9
-21.4
-9.0
87.4
88.3
Underlying profi t after tax
-51.8
-26.9
Cash fl ow from operating
activities
Shareholders’ equity
Share information
Dividend per share (cents)
Interim
Final
Total
Dividend provided for or paid#
Hybrid distribution
Share price^ ($ per share)
-523.3
701.7
-370.8
-14.1
85.0
127.4
747.8
1,296.2
1,196.6
1,227.9
-
-
-
-
8.2
0.2
-
-
-
-
8.2
0.3
4.0
5.5
9.5
73.4
8.9
1.10
4.0
5.5
9.5
65.4
8.9
2.78
4.0
5.0
9.0
59.9
1.8
2.1
Market capitalisation^
196,599.6
233,462.0
858.4
Number of shareholders^
36,042
33,361
32,187
2,045
31,956
1,514
33,337
26.8
-
32.2
99.3
-3.3
-11.8
143.2
131.3
106.4
-13.2
-47.9
-11.8
58.6
71.8
-9.3
970.3
4.0
5.0
9.0
53.7
-
1.82
1,207
19.0
-
10.9
19.5
7.5
-5.0
51.9
96.1
86.1
-44.2
-12.2
-5.9
23.8
62.8
121.1
961.2
4.0
4.0
8.0
52.3
-
1.58
1,041
152.3
47.3
101.0
86.7
-
-
19.3
0.3
-5.5
166.4
84.0
65.0
82.4
-38.5
-6.9
102.0
48.0
-55.6
843.6
4.0
4.0
8.0
50.6
-
1.68
1,096
-
-
30.7
4.8
17.1
99.9
91.9
71.2
8.0
-13.9
-2.9
62.4
56.5
113.8
749.1
4.0
4.0
8.0
48.7
-
1.36
836
-
-
22.4
1.4
3.2
128
88.6
65.2
39.4
-18.1
-6.5
80.0
55.8
188.8
723.0
4.0
4.0
8.0
48.4
-
2.64
1,595
-
-
21.1
-
11.6
119.4
108.9
81.1
10.5
-12.3
-5.1
74.2
61.5
64.7
692.4
4.0
4.0
8.0
47.9
-
1.8
1,087
35,394
40,028
42,625
45,508
30,844
28,233
Ordinary shares on issue^
819,165,045 819,165,045 780,545,644 735,640,128 720,911,089 663,243,696 659,138,427 652,293,766 614,870,776 605,136,707 604,159,207
Share issues
Dividend
reinvestment
plan, (fully
underwritten)
Dividend
reinvestment
plan, (fully
underwritten)
Dividend
reinvestment
plan, (fully
underwritten),
conversion
of options and
convertible notes
Dividend
reinvestment
plan, conversion
of options
convertible
Convertible notes
conversion
Dividend
reinvestment
plan,
conversion
of options
institutional
placement
Dividend
reinvestment
plan,
conversion of
options
Dividend
reinvestment
plan,
conversion of
options
Dividend
reinvestment
plan, private
placement
conversion of
options
Dividend
reinvestment
plan,
conversion of
options
Dividend
reinvestment
plan,
conversion of
options
Dividend
reinvestment
plan,
conversion of
options
Ratios and statistics
Reported earnings per share
(cents)
Return on shareholders’ equity %
- Underlying profi t
- Reported profi t
Net tangible assets per share ($)
Gearing %†
Dividend payout ratio %
-57.65
-51.51
4.82
14.5
13.1
8.9
3.6
16.2
10.2
13.2
12.9
-
1.8
-66.5
0.37
128
-
-
2.2
-55.6
0.37
104
-
6.5
2.8
1.14
40
197
8.9
8.8
1.22
31
68
7.2
7.1
1.17
16
69
7.4
6.0
0.82
32
65
6.5
2.5
0.94
0
222
5.7
12.1
0.88
0
49
7.5
8.3
0.8
16
78
7.7
11.1
0.85
47
61
8.9
10.7
0.84
54
62
Reported earnings before interest and tax (inclusive of non-recurring and abnormal items).
1 Prior to 2006 Financial services result reported within Rural Services.
*
** Underlying profi t and earnings results excluding abnormal and non-recurring items (includes material profi t/loss on asset disposal).
#
^ As at period end.
† As measured by ratio of net interest-bearing debt/shareholders equity.
In respect of dividends declared for the fi nancial year.
56
ELDERS LIMITED
ANNUAL FINANCIAL REPORT
30 SEPTEMBER 2009
INCOME STATEMENT
BALANCE SHEET
CASH FLOW STATEMENT
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
DIRECTORS’ DECLARATION
INDEPENDENT AUDIT REPORT
58
59
60
61
64
154
155
57
INCOME STATEMENT
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Continuing operations
Sales revenue
Cost of sales
Other revenues
Expenses
Share of net profi ts/(losses) of associates and joint ventures
accounted for using the equity method
Profi t/(loss) on sale of non current assets
Profi t/(loss) from continuing operations before net fi nance costs
and income tax expense
Interest revenue
Finance costs
Profi t/(loss) from continuing operations before income tax expense
Income tax (expense)/benefi t
Consolidated
Parent
15 months
September
2009
$000
12 months
June
2008
$000
15 months
September
2009
$000
12 months
June
2008
$000
Note
3
3
3
11
3
3
3
4
2,853,917
3,274,659
(2,281,434)
(2,426,096)
-
-
-
-
47,264
112,510
6,694
166,780
(969,408)
(869,750)
(67,924)
(31,056)
3,766
120,846
51,236
(2,369)
-
1,204
6,358
-
(225,049)
140,190
(54,872)
136,928
13,045
15,422
48,891
20,545
(112,230)
(72,320)
(72,180)
(32,404)
(324,234)
83,292
(78,161)
125,069
10,125
(7,712)
19,003
(15,093)
Profi t/(loss) from continuing operations after income tax expense
(314,109)
75,580
(59,158)
109,976
Net profi t/(loss) of discontinued operations, net of tax
40
(153,391)
(29,490)
-
-
Net profi t/(loss) for the year
Attributable to:
Minority interest
Members of the parent
Reported Operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Continuing Operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Discontinued Operations
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
(467,500)
46,090
(59,158)
109,976
(1,074)
22
(466,426)
9,643
36,447
-
-
(59,158)
109,976
35
35
35
35
35
35
(57.65)¢
(57.65)¢
(38.64)¢
(38.64)¢
4.82¢
4.40¢
8.71¢
7.96¢
(19.01)¢
(19.01)¢
(3.89)¢
(3.56)¢
The accompanying notes form an integral part of this income statement.
58
BALANCE SHEET
AS AT 30 SEPTEMBER 2009
Current Assets
Cash and cash equivalents
Trade and other receivables
Current tax receivable
Livestock
Inventories
Derivative fi nancial instruments
Non current assets classifi ed as held for sale
Other
Total Current Assets
Non Current Assets
Receivables
Forestry
Other fi nancial assets
Investments in associates and joint ventures
Property, plant and equipment
Investment properties
Intangibles
Deferred tax assets
Other
Total Non Current Assets
Total Assets
Current Liabilities
Trade and other payables
Interest bearing loans and borrowings
Current tax payable
Provisions
Total Current Liabilities
Non Current Liabilities
Interest bearing loans and borrowings
Derivative fi nancial instruments
Deferred tax liabilities
Provisions
Total Non Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Hybrid equity
Reserves
Retained earnings
Total Parent Entity Interest In Equity
Minority interest
Total Equity
The accompanying notes form an integral part of this balance sheet.
5
4
6
8
9
11
15
5
7
10
11
12
13
14
4
15
16
17
4
18
17
9
4
18
19
20
21
22
24
Consolidated
Parent
September
2009
$000
Note
June
2008
$000
September
2009
$000
June
2008
$000
25(b)
367,868
244,043
293,100
42,162
535,785
633,782
1,147,872
1,213,663
-
-
43,752
37,023
225,524
396,846
7,820
16,599
23,202
706
-
-
-
-
-
-
13,315
-
-
-
-
-
132,277
632
1,220,550
1,444,677
1,441,604
1,269,140
232,689
241,328
11,183
25,628
27,014
17,549
25,716
27,232
-
-
374,590
204,592
283,224
694,492
75,562
101,758
114,381
312,983
236
236
283,797
256,417
228,520
306,836
115,040
18,459
79,178
27,058
-
-
-
-
76,198
35,019
-
-
1,320,673
1,971,240
537,769
367,233
2,541,223
3,415,917
1,979,373
1,636,373
362,731
966,726
802,479
299,979
854,069
164,905
149,594
38,047
32,000
-
-
-
107,197
208,136
2,238
6,450
1,362,044
1,371,767
954,311
306,429
345,204
550,657
100,028
320,614
49,924
69,186
13,206
52,366
53,802
91,149
38,143
4,145
-
51,456
5,933
-
477,520
747,974
142,316
378,003
1,839,564
2,119,741
1,096,627
684,432
701,659
1,296,176
882,746
951,941
737,513
145,151
694,118
145,151
(30,765)
16,190
737,513
145,151
9,984
694,118
145,151
12,263
(158,012)
353,991
(9,902)
100,409
693,887
1,209,450
882,746
951,941
7,772
86,726
-
-
701,659
1,296,176
882,746
951,941
59
CASH FLOW STATEMENT
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Consolidated
Parent
15 months
September
2009
$000
Infl ows
(Outfl ows)
12 months
June
2008
$000
Infl ows
(Outfl ows)
15 months
September
2009
$000
Infl ows
(Outfl ows)
12 months
June
2008
$000
Infl ows
(Outfl ows)
Note
9,089,951
8,979,463
23,723
4,261
(9,525,238)
(8,890,863)
(46,446)
(57,270)
20,719
21,318
28,840
13,635
14,749
1,676
21,450
6,809
Cash Flows From Operating Activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Interest and other costs of fi nance paid
(110,826)
(72,318)
(53,883)
(43,611)
GST (paid)/refunded
Income taxes (paid)/refunded
Other operating infl ows/(outfl ows)
Net operating cash fl ows
Cash Flows from Investing Activities
Payment for property, plant and equipment and
investment properties
Payment for investments
Payment for design and development
Proceeds from sale of property, plant and equipment
and investment properties
Proceeds from sale of investments
Loans to controlled entities
Loans to associated entities
Repayment of loans by related parties
Loans to growers
Loans repaid by growers
Loans repaid by third parties
Payment for controlled entities, net of cash acquired
39(a)
Proceeds from disposal of controlled entity
Net investing cash fl ows
Cash Flows from Financing Activities
Proceeds from issue of shares and other equity
Proceeds from borrowings
Repayment of borrowings
Principal repayments of lease liabilities
Partnership Profi ts
Dividends and Distributions paid
Dividends underwritten
Net fi nancing cash fl ows
Net increase/(decrease) in cash held
Cash/(overdraft) at the beginning of the fi nancial year
(22,914)
(15,299)
-
(2,411)
(9,058)
(30,291)
(6,624)
(30,939)
12,722
(27,261)
-
-
25(a)
(523,326)
(14,094)
(66,805)
(101,711)
(64,758)
(129,847)
-
-
(20,134)
(107,461)
(14,500)
(43,010)
(4,422)
(7,124)
10,774
231,633
-
97,835
23,079
-
-
-
-
33,862
36,686
-
414,584
277,615
(36,999)
(28,017)
(8,004)
(3,813)
8,383
-
(16,352)
(5,219)
7,284
-
-
94,583
4,299
52,266
2,323
15,437
-
-
-
-
-
-
-
-
-
53,545
-
-
209,992
(82,429)
425,942
321,023
-
7,082
522,709
250,186
-
-
2,415
-
(69,442)
(148,156)
(100,000)
(136,132)
(1,464)
(3,242)
(1,331)
-
-
-
-
-
(38,281)
(58,340)
(35,078)
(56,590)
26,879
437,159
123,825
244,043
46,815
96,256
26,879
46,815
(108,199)
(143,492)
(267)
250,938
75,820
244,310
42,162
(33,658)
Cash/(overdraft) at the end of the fi nancial year
25(b)
367,868
244,043
293,100
42,162
The accompanying notes form an integral part of this cash fl ow statement.
60
STATEMENT OF CHANGES IN EQUITY
15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Consolidated ($000)
Issued Capital
Convertible
Notes
Reserves Hybrid Equity
Retained
Earnings
Minority
Interest
Total Equity
As at 1 July 2008
694,118
Currency translation differences
Cash fl ow hedge reserve and fair
value of derivatives
Partnership profi ts
Total income and expense
for the period recognised
directly in equity
Profi t for period
Total income and expense for
the period
Attributable to:
Equity holders of the parent
Minority Interest
Equity Transactions:
Business combinations
Sale of Investment
-
-
-
-
-
-
-
-
Cost of share based payments
Shares vested to employees (net)
446
-
Dividend Reinvestment Plan
16,070
Dividends to shareholders
Dividends Underwritten
Hybrid Equity Distribution
Recognition of minority interests
in controlled entity
Recognition of share of reserve
for losses in associate
-
26,879
-
-
-
As at 30 September 2009
737,513
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,190
145,151
353,991
86,726
1,296,176
(196)
(10,303)
-
(10,499)
-
(10,499)
(38,159)
-
9,404
-
-
-
-
-
-
(7,701)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
155
(41)
-
(10,303)
(3,242)
(3,242)
(3,087)
(13,586)
(466,426)
(1,074)
(467,500)
(466,426)
(4,161)
(481,086)
(476,925)
(4,161)
-
-
-
-
-
(75,912)
(114,071)
-
-
-
-
9,850
-
16,070
(42,949)
(3,198)
(46,147)
-
(8,204)
-
-
26,879
(8,204)
-
4,317
4,317
5,576
-
(2,125)
(30,765)
145,151
(158,012)
7,772
701,659
The accompanying notes form an integral part of this statement of changes in equity.
61
STATEMENT OF CHANGES IN EQUITY
15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Consolidated ($000)
Issued Capital
Convertible
Notes
Reserves Hybrid Equity
Retained
Earnings
Minority
Interest
Total Equity
As at 1 July 2007
608,493
54,263
(22,408)
145,151
403,063
8,039
1,196,601
-
-
-
-
-
-
Currency translation differences
Cash fl ow hedge reserve
Partnership profi ts
Total income and expense
for the period recognised
directly in equity
Profi t for year
Total income and expense
for the period
Attributable to:
Equity holders of the parent
Minority Interest
Equity Transactions:
Issue of share capital, employee
share plan
Exercise of options
Business combinations
Sale of Investment
Cost of share based payments
Shares vested to employees (net)
11,453
2,415
-
-
-
-
Dividend Reinvestment Plan
23,988
Dividends to shareholders
Dividends Underwritten
Hybrid Equity Distribution
Convertible notes converted
Convertible notes matured
Acquisition of minority interests
in controlled entity
Recognition of share of reserve
for losses in associate
-
46,815
-
954
-
-
-
As at 30 June 2008
694,118
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(378)
(53,885)
-
-
-
3,615
3,415
-
7,030
-
7,030
-
-
27,501
-
2,449
(1,274)
-
-
-
-
-
-
-
2,892
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,615
3,415
(1,653)
(1,653)
(1,653)
5,377
36,447
9,643
46,090
36,447
7,990
51,467
43,477
7,990
11,453
2,415
99,661
(768)
2,449
(1,274)
23,988
(72,848)
46,815
(9,779)
576
(53,885)
-
-
72,160
(768)
-
-
-
-
-
-
-
-
(695)
(695)
-
-
-
-
-
-
-
(72,848)
-
(9,779)
-
-
-
(2,892)
-
-
16,190
145,151
353,991
86,726
1,296,176
The accompanying notes form an integral part of this statement of changes in equity.
62
STATEMENT OF CHANGES IN EQUITY
15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Parent ($000)
Issued Capital
Convertible
Notes
Reserves Hybrid Equity
Retained
Earnings
Total Equity
As at 1 July 2008
694,118
Currency translation differences
Cash fl ow hedge reserve
Total income and expenses for the period
recognised directly in equity
Profi t for period
Total income and expense for the period
Attributable to:
Equity holders of the parent
Minority interest
Equity transactions:
Issue of share capital, employee share plan
Exercise of options
Cost of share based payments
Shares vested to employees (net)
Dividend Reinvestment Plan
Dividends to shareholders
Dividends underwritten
Hybrid Equity Distribution
Convertible notes converted
Convertible notes matured
-
-
-
-
-
-
-
446
-
16,070
-
26,879
-
-
-
As at 30 September 2009
737,513
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,263
145,151
100,409
951,941
(12,395)
3,007
(9,388)
-
(9,388)
-
-
7,109
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(12,395)
3,007
(9,388)
(59,158)
(59,158)
(59,158)
(68,546)
(68,546)
-
-
7,555
-
16,070
-
-
-
-
-
(42,949)
(42,949)
-
26,879
(8,204)
(8,204)
-
-
-
-
9,984
145,151
(9,902)
882,746
As at 1 July 2007
608,493
54,263
4,355
145,151
71,011
883,273
Currency translation differences
Cash fl ow hedge reserve
Total income and expenses for the period
recognised directly in equity
Profi t for year
Total income and expense for the period
Attributable to:
Equity holders of the parent
Minority interest
Equity transactions:
Issue of share capital, employee share plan
Exercise of options
Cost of share based payments
Shares vested to employees (net)
Dividend Reinvestment Plan
Dividends to shareholders
Dividends underwritten
Hybrid Equity Distribution
Convertible notes converted
Convertible notes matured
-
-
-
-
-
11,453
2,415
-
-
23,988
-
46,815
-
954
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(378)
(53,885)
74
7,638
7,712
-
7,712
-
-
522
(326)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
109,976
109,976
-
-
-
-
-
74
7,638
7,712
109,976
117,688
117,688
-
11,453
2,415
522
(326)
23,988
(70,799)
(70,799)
-
(9,779)
-
-
46,815
(9,779)
576
(53,885)
As at 30 June 2008
694,118
-
12,263
145,151
100,409
951,941
The accompanying notes form an integral part of this statement of changes in equity.
63
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 1. Corporate Information
The Group changed its name from Futuris Corporation Limited to Elders Limited as at 30 April 2009. This is the fi rst Annual Report
provided with the reporting date of 30 September 2009, providing fi nancial results for the 15 month period to 30 September 2009.
The fi nancial report of Elders Limited for the 15 month period ended 30 September 2009 was authorised for issue in accordance with a
resolution of the Directors on 16 November 2009.
Elders Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange.
The nature of the operations and principal activities of the Group are described in Note 29.
Note 2. Statement of Signifi cant Accounting Policies
(a) Basis of accounting
The fi nancial report is a general-purpose fi nancial report, which has been prepared in accordance with the requirements of the Corporations
Act 2001 and Australian Accounting Standards.
This report has been prepared on a historical cost basis, except for investment properties, derivative fi nancial instruments and available for
sale fi nancial assets that have been measured at fair value, and biological assets that are measured at fair value less estimated point of sale
costs. The carrying values of recognised assets and liabilities that are hedged with fair value hedges are adjusted to record changes in the
fair values attributable to the risks that are being hedged.
This report has been prepared on the basis that the sale of ITC Timber Pty Ltd, an entity which holds Elders’ hardwood timber processing
operations as well as its 50% stake in Smartfi bre Pty Ltd proceeds. Refer to Note 28.
The fi nancial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($’000) unless
otherwise stated under the option available to the Company under ASIC Class Order 98/0100. The Company is an entity to which the class
order applies.
The accounting policies and disclosures are consistent with those of the previous fi nancial year.
(b) Statement of compliance
The fi nancial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
Australian Accounting Standards and Interpretations that have recently been issued or amended, but are not yet effective, have not been
adopted by the Group for the annual reporting period ending 30 September 2009. These are outlined in the table below.
64
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement Of Signifi cant Accounting Policies (continued)
Application
date for
Group
1 October
2009
Application
date of
standard
1 October
2008
Impact on Group
fi nancial report
The Group does not
currently hedge any of
its net investments in
foreign operations.
The application of AASB
Int. 16 is not expected to
have any impact on the
Group’s fi nancial report.
1 July 2009 The application of AASB
Int. 17 is not expected to
have any impact on the
Group’s fi nancial report.
1 October
2009
The application of AASB
Int. 18 is not expected to
have any impact on the
Group’s fi nancial report.
1 October
2009
Applies
prospectively
to transfer of
assets from
customers
received on
or after
1 July 2009
(b) Statement of compliance (continued)
Reference
Title
Summary
AASB Int. 16
Hedges of a Net
Investment in a
Foreign Operation
AASB Int. 17 and
AASB 2008-13
AASB Int. 18
Distributions of
Non-cash Assets
to Owners and
consequential
amendments to
Australian
Accounting
Standards AASB
5 and AASB 110
Transfers of
Assets from
Customers
This Interpretation requires that the
hedged risk in a hedge of a net
investment in a foreign operation is the
foreign currency risk arising between
the functional currency of the net
investment and the functional currency
of any parent entity. This also applies
to foreign operations in the form of
joint ventures, associates or branches.
The Interpretation outlines how an entity
should measure distributions of assets,
other than cash, as a dividend to its
owners acting in their capacity
as owners. This applies to transactions
commonly referred to as spin-offs,
split offs or demergers and in-specie
distributions.
This Interpretation provides guidance
on the transfer of assets such as items
of property, plant and equipment or
transfers of cash received from
customers. The Interpretation provides
guidance on when and how an entity
should recognise such assets and
discusses the timing of revenue
recognition for such arrangements
and requires that once the asset meets
the condition to be recognised at fair
value, it is accounted for as an
‘exchange transaction’.
Once an exchange transaction occurs
the entity is considered to have delivered
a service in exchange for receiving the
asset.
Entities must identify each identifi able
service within the agreement and
recognise revenue as each service is
delivered.
AASB 8 and
AASB 2007- 3
Operating
Segments and
consequential
amendments to
other Australian
Accounting
Standards
New Standard replacing AASB 114
Segment Reporting, which adopts
a management reporting approach to
segment reporting.
1 January
2009
1 October
2009
AASB 8 is a disclosure
standard so will have
no direct impact on the
amounts included in
the Group’s fi nancial
statements, although it
may indirectly impact the
level at which goodwill is
tested for impairment. In
addition, the amendments
may have an impact
on the Group’s segment
disclosures.
65
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(b) Statement of compliance (continued)
Reference
Title
Summary
AASB 123
(Revised) and
AASB 2007-6
Borrowing Costs
and consequential
amendments to
other Australian
Accounting
Standards
The amendments to AASB 123
require that all borrowing costs
associated with a qualifying
asset be capitalised.
Application
date of
standard
1 January
2009
AASB 101
(Revised),
AASB 2007-8 and
AASB 2007-10
Presentation of
Financial
Statements and
consequential
amendments to
other Australian
Accounting
Standards
Introduces a statement of
comprehensive income.
1 January
2009
Other revisions include impacts on
the presentation of items in the
statement of changes in equity,
new presentation requirements for
restatements or reclassifi cations
of items in the fi nancial statements,
changes in the presentation
requirements for dividends and changes
to the titles of the fi nancial statements.
AASB 2008-1
AASB 2008-2
Amendments to
Australian
Accounting
Standard – Share-
based Payments:
Vesting Conditions
and Cancellations
The amendments clarify the defi nition
of “vesting conditions”, introducing
the term “non-vesting conditions” for
conditions other than vesting conditions
as specifi cally defi ned and prescribe the
accounting treatment of an award that is
effectively cancelled because a non-
vesting condition is not satisfi ed.
Amendments to
Australian
Accounting
Standards –
Puttable Financial
Instruments and
Obligations arising
on Liquidation
The amendments provide a limited
exception to the defi nition of a liability
so as to allow an entity that issues
puttable fi nancial instruments with
certain specifi ed features, to classify
those instruments as equity rather than
fi nancial liabilities.
1 January
2009
1 January
2009
Impact on Group
fi nancial report
These amendments to
AASB 123 require that all
borrowing costs associated
with a qualifying asset be
capitalised. The Group
has previously elected to
capitalise borrowing costs
associated with qualifying
assets and as such
the amendments are not
expected to have any
fi nancial impact.
These amendments are
only expected to affect
the presentation of the
Group’s fi nancial report
and will not have a
direct impact on the
measurement and
recognition of amounts
disclosed in the fi nancial
report. The Group has
not determined at this
stage whether to present
a single statement of
comprehensive income or
two separate statements.
The Group has share-
based payment
arrangements that may be
affected by these
amendments. The Group
is in the process of
determining the impact of
these amendments, if any.
These amendments are
not expected to have any
impact on the Group’s
fi nancial report as the
Group does not have on
issue or expect to issue
any puttable fi nancial
instruments as defi ned by
the amendments.
AASB 3 (Revised) Business
Combinations
66
1 July 2009 The Group has not
entered into any business
combinations since
balance date. Any impact
will depend on whether
the Group enters into a
business combination
subsequent to the
adoption of the standard.
The revised Standard introduces
a number of changes to the accounting for
business combinations, the most signifi cant
of which includes the requirement to have
to expense transaction costs and a choice
(for each business combination entered
into) to measure a non-controlling interest
(formerly a minority interest) in the
acquiree either at its fair value or at its
proportionate interest in the acquiree’s net
assets. This choice will effectively result in
recognising goodwill relating to 100% of
the business (applying the fair value option)
or recognising goodwill relating to the
percentage interest acquired. The changes
apply prospectively.
Application
date for
Group
1 October
2009
1 October
2009
1 October
2009
1 October
2009
1 October
2009
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(b) Statement of compliance (continued)
Reference
Title
Summary
AASB 127
(Revised)
Consolidated and
Separate Financial
Statements
There are a number of changes arising
from the revision to AASB 127
relating to changes in ownership interest
in a subsidiary without loss
of control, allocation of losses of a
subsidiary and accounting for the loss of
control of a subsidiary. Specifi cally in
relation to a change in the ownership
interest of a subsidiary
(that does not result in loss of control) –
such a transaction will be accounted for
as an equity transaction.
Application
date for
Group
1 October
2009
Application
date of
standard
Impact on Group
fi nancial report
1 July 2009 If the Group changes its
ownership interest in
existing subsidiaries in the
future, without loss of
control, the change will be
accounted for as an equity
transaction. This will have
no impact on goodwill, nor
will it give rise to a gain or
loss in the Group’s income
statement.
AASB 2008-3
AASB 2008-5
Amendments to
Australian
Accounting
Standards arising
from AASB 3 and
AASB 127
Amendments to
Australian
Accounting
Standards arising
from the Annual
Improvements
Project
AASB 2008-6
Further
Amendments to
Australian
Accounting
Standards arising
from the Annual
Improvements
Project
Amending Standard issued as a
consequence of revisions to AASB 3 and
AASB 127. Refer above.
1 July 2009 Refer to AASB 3 (Revised)
and AASB 127 (Revised)
above.
1 October
2009
The improvements project is an annual
project that provides a mechanism for
making non-urgent, but necessary,
amendments to IFRSs. The IASB has
separated the amendments into two
parts: Part 1 deals with changes the
IASB identifi ed resulting in accounting
changes; Part II deals with either
terminology or editorial amendments that
the IASB believes will have minimal
impact.
This was the fi rst omnibus of
amendments issued by the IASB arising
from the Annual Improvements Project
and it is expected that going forward,
such improvements will be issued
annually to remove inconsistencies and
clarify wording in the standards.
The AASB issued these amendments
in two separate amending standards; one
dealing with the accounting changes
effective from 1 January 2009 and the
other dealing with amendments
to AASB 5, which will be applicable from
1 July 2009 [refer below
AASB 2008-6].
This was the second omnibus of
amendments issued by the IASB arising
from the Annual Improvements Project.
Refer to AASB 2008-5 above for
more details.
1 January
2009
These amendments are
not expected to have any
material impact on the
Group’s fi nancial report.
1 October
2009
1 October
2009
1 July 2009 The amendments in
AASB 2008-6 are
disclosure related and
so will have no impact
on the amount included
in the Group’s fi nancial
statements.
67
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
Application
date for
Group
1 October
2009
Application
date of
standard
1 January
2009
Impact on Group
fi nancial report
Recognising all
dividends received from
subsidiaries, jointly
controlled entities and
associates as income will
likely give rise to greater
income being recognised
by the parent entity
after adoption of these
amendments.
In addition, if the Group
enters into any group
reorganisation
establishing new parent
entities, an assessment
will need to be made
to determine if the
reorganisation meets the
conditions imposed to
be effectively accounted
for on a ‘carry-over
basis’ rather than at
fair value.
1 October
2009
1 October
2009
1 July 2009 The application of hedge
accounting is currently
limited to the Automotive
Segment. The Group
is in the process of
determining the impacts
of AASB 2008-8, if any.
The amendments in
AASB 2009-2 are
disclosure related and
will have no direct impact
on the amounts included
in the Group’s fi nancial
statements.
Annual
reporting
periods
beginning
on or after
1 January
2009 that
end on or
after 30 April
2009
(b) Statement of compliance (continued)
Reference
Title
Summary
AASB 2008-7
Amendments to
Australian
Accounting
Standards – Cost
of an Investment
in a Subsidiary,
Jointly Controlled
Entity or
Associate
The main amendments of relevance to
Australian entities are those made to
AASB 127 deleting the “cost method”
and requiring all dividends from a
subsidiary, jointly controlled entity or
associate to be recognised in profi t or
loss in an entity’s separate fi nancial
statements (i.e., parent company
accounts). The distinction between
pre- and post-acquisition profi ts is no
longer required. However, the payment
of such dividends requires the entity
to consider whether there is an indicator
of impairment.
AASB 127 has also been amended to
effectively allow the cost of an
investment in a subsidiary, in limited
reorganisations, to be based on the
previous carrying amount of the
subsidiary (that is, share of equity)
rather than its fair value.
Amendments to
Australian
Accounting
Standards –
Eligible Hedged
Items
The amendment to AASB 139 clarifi es
how the principles underlying hedge
accounting should be applied when (i) a
one-sided risk in a hedged item is being
hedged and (ii) infl ation in a fi nancial
hedged item existed or was likely to exist.
Amendments to
Australian
Accounting
Standards –
Improving
Disclosures
about Financial
Instruments
[AASB 4, AASB 7,
AASB 1023 &
AASB 1038]
The main amendment to AASB 7
requires fair value measurements
to be disclosed by the source of inputs,
using the following three-level hierarchy:
> quoted prices (unadjusted) in active
markets for identical assets or
liabilities (Level 1);
> inputs other than quoted prices
included in Level 1 that are observable
for the asset or liability, either directly
(as prices) or indirectly (derived from
prices) (Level 2); and
> inputs for the asset or liability that are
not based on observable market data
(unobservable inputs) (Level 3).
These amendments arise from the
issuance of Improving Disclosures about
Financial Instruments (Amendments to
IFRS 7) by the IASB in March 2009.
The amendments to AASB 4,
AASB 1023 and AASB 1038 comprise
editorial changes resulting from the
amendments to AASB 7.
AASB 2008-8
AASB 2009-2
68
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
Application
date for
Group
1 October
2009
Application
date of
standard
Impact on Group
fi nancial report
1 July 2009 The Group does not
currently hedge any of
its net investments in
foreign operations.
The amendments in
AASB 2009-4 are not
expected to have any
impact on the Group’s
fi nancial report.
1 January
2010
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
1 October
2010
(b) Statement of compliance (continued)
Reference
Title
Summary
AASB 2009-4
Amendments to
Australian
Accounting
Standards arising
from the Annual
Improvements
Project
The amendments to some Standards
result in accounting changes for
presentation, recognition or
measurement purposes, while some
amendments that relate to terminology
and editorial changes are expected to
have no or minimal effect on accounting.
[AASB 2 and
AASB 138 and
AASB
Interpretations
9 & 16]
AASB 2009-5
Further
Amendments to
Australian
Accounting
Standards arising
from the Annual
Improvements
Project
[AASB 5, 8, 101,
107, 117, 118,
136 and 139]
The main amendment of relevance to
Australian entities is that made to IFRIC
16 which allows qualifying hedge
instruments to be held by any entity or
entities within the group, including the
foreign operation itself, as long as the
designation, documentation and
effectiveness requirements in AASB 139
that relate to a net investment hedge
are satisfi ed. More hedging relationships
will be eligible for hedge accounting as
a result of the amendment.
These amendments arise from the
issuance of the IASB’s Improvements to
IFRSs. The amendments pertaining
to IFRS 5, 8, IAS 1,7, 17, 36 and
39 have been issued in Australia as
AASB 2009-5 (refer below).
The amendments to some Standards
result in accounting changes for
presentation, recognition or
measurement purposes, while some
amendments that relate to terminology
and editorial changes are expected to
have no or minimal effect on accounting.
The main amendment of relevance to
Australian entities is that made to AASB
117 by removing the specifi c guidance
on classifying land as a lease so that
only the general guidance remains.
Assessing land leases based on the
general criteria may result in more land
leases being classifi ed as fi nance leases
and if so, the type of asset which is to
be recorded (intangible v property, plant
and equipment) needs to be determined.
These amendments arise from
the issuance of the IASB’s
Improvements to IFRSs. The AASB
has issued the amendments to IFRS 2,
IAS 38, IFRIC 9 as AASB 2009-4
(refer above).
69
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(b) Statement of compliance (continued)
Reference
Title
Summary
AASB 2009-7
Amendments to
Australian
Accounting
Standards
These comprise editorial amendments
and are expected to have no major
impact on the requirements of the
amended pronouncements.
AASB 2009-8
[AASB 5, 7, 107,
112, 136 & 139
and Interpretation
17]
Amendments
to Australian
Accounting
Standards – Group
Cash-settled
Share-based
Payment
Transactions
(AASB 2)
AASB 2009-10
Amendments to
Australian
Accounting
Standards –
Classifi cation
of rights issues
[AASB 132]
The Standard makes amendments to
Australian Accounting Standard
AASB 2 Share-based Payment and
supersedes Interpretation 8 Scope of
AASB 2 and Interpretation 11 AASB 2 –
Group and Treasury Share Transactions.
The amendments clarify the accounting
for group cash-settled share-based
payment transactions in the separate or
individual fi nancial statements of the
entity receiving the goods or services
when the entity has no obligation to
settle the share-based payment
transaction.
The amendments clarify the scope of
AASB 2 by requiring an entity that
receives goods or services in a share-
based payment arrangement to account
for those goods or services no matter
which entity in the group settles the
transaction, and no matter whether the
transaction is settled in shares or cash.
The Standard makes amendments to
Australian Accounting Standard AASB
132 Financial Instruments: Presentation
as a consequence of the issuance of
Classifi cation of Rights Issues.
The amendments clarify that rights,
options or warrants to acquire a fi xed
number of an entity’s own equity
instruments for a fi xed amount in any
currency are equity instruments if the
entity offers the rights, options or
warrants pro rata to all existing owners
of the same class of its own non-
derivative equity instruments.
Application
date for
Group
1 October
2009
Application
date of
standard
Impact on Group
fi nancial report
1 July 2009 The amendments in AASB
2009-7 are editorial in
nature and are not
expected to have any
direct impact on the
amounts in the Group’s
fi nancial report.
1 January
2010
The Group has not yet
determined the extent of
the impact of the
amendments, if any.
1 October
2010
1 February
2010
The Group has not yet
determined the extent of
the impact of the
amendments, if any.
1 October
2010
70
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(c) Basis of consolidation
The consolidated fi nancial statements include the fi nancial statements of the parent entity, Elders Limited, and its controlled entities,
referred to collectively throughout these fi nancial statements as the “Group”.
All inter-entity balances and transactions have been eliminated. Where an entity either began or ceased to be controlled during the year, the
results are included only from the date control commenced or up to the date control ceased.
Subsidiaries are fully consolidated from the date on which control is obtained by the Group and cease to be consolidated from the date on
which control is transferred out of the Group.
Investments in subsidiaries held by the Group are accounted for at cost in the separate fi nancial statements of the parent entity.
Financial statements of foreign controlled entities presented in accordance with overseas accounting principles are, for consolidation
purposes, adjusted to comply with Group policy and generally accepted accounting principles in Australia.
(d) Signifi cant accounting estimates and assumptions
The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key
estimates and assumptions that have a signifi cant risk of causing a material adjustment to the carrying amounts of certain assets and
liabilities within the next annual reporting period are:
Impairment of goodwill and intangibles with indefi nite useful lives
The Group determines whether goodwill and intangibles with indefi nite useful lives are impaired at least on an annual basis. This requires
an estimation of the recoverable amount of the cash generating units to which the goodwill and intangibles with indefi nite useful lives are
allocated. The assumptions used in this estimation of recoverable amount are discussed in note 2(r).
Share based payment transactions
The Group measures the cost of equity settled transactions with employees by reference to the fair value of the equity instruments at the
date at which they are granted. The fair value is determined using both an external valuer for certain instruments and internally with a
Black-Scholes model, refer further to information on share based payments transactions at note 2(x) and note 37.
Other signifi cant accounting estimates and assumptions are disclosed elsewhere in the fi nancial statements where relevant.
(e) Cash and cash equivalents
For the purposes of the cash fl ow statement, cash includes cash on hand and in banks and money market investments, net of outstanding
bank overdrafts. For the purpose of the balance sheet bank overdrafts are included within interest bearing loans and borrowings in current
liabilities and cash only includes cash on hand and in banks and money market investments.
(f) Trade and other receivables
Trade and other receivables are recognised and carried at original invoice amount less an allowance for any uncollectible amounts.
An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identifi ed.
(g) Inventories
Inventories are valued at the lower of cost and net realisable value. Cost is determined on the fi rst in, fi rst out basis, and comprises the cost
of purchase including costs of bringing the inventories to sale location. In the case of manufactured goods, direct materials, direct labour
costs, variable overhead and a portion of fi xed overhead costs allocated on the basis of normal operating capacity are included.
Where commodity inventories are acquired principally for the purpose of selling in the near term and generating a profi t, such commodities
are measured at fair value less costs to sell with changes in fair value less costs to sell recognised in the income statement.
71
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(h) Livestock
The Group holds biological assets in the form of livestock, primarily beef cattle and sheep. These assets are measured at fair value, which
has been determined based upon various assumptions, including livestock prices, less point of sale costs and other incidental costs, mortality
rates, average daily weight gain, average daily feed price and the dress percentage. These assumptions are updated monthly and refl ect the
different categories of livestock held. The market value increments or decrements are recorded in the net profi t.
(i) Forestry
The Group has interests in forestry plantations through plantation areas established and maintained on its own account and interests in
the forestry managed investment schemes, which have reverted to the consolidated entity as a result of default by an original grower and
forfeiture of their plantation interest. Forestry plantation timber owned by the Group is valued at each reporting date at fair value and
increments and decrements in fair value are recognised in the income statement in the fi nancial period in which they occur.
Fair value is determined as follows:
• Up until the time at which the initial inventory of the plantation is conducted (expected to be between four to six years) by applying
historical costs; and
• After initial inventory and up until harvest of the timber – anticipated fair value less estimated point of sale costs.
As there is no active and liquid market for immature forestry plantation timber, fair value less estimated point of sales costs is based on
forecast plantation growth and yields at the current average annual growth rates, prices based on the current price plus indexation of between
2.5% and 5% per annum and forecast of the net present values of future net cash fl ows from harvest at a discount rate of 9% and costs of
maintaining plantations to maturity.
(j) Investments and other fi nancial assets
Financial assets are classifi ed as either fi nancial assets at fair value through the profi t or loss, loans and receivables, held to maturity
investments, or available for sale investments, as appropriate. When fi nancial assets are recognised initially, they are measured at fair value.
In the case of investments not at fair value through profi t or loss they include directly attributable transaction costs. The Group determines
the classifi cation of its fi nancial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each
fi nancial year end.
(i) Financial assets at fair value through profi t or loss
Financial assets classifi ed as held for trading are included in the category “fi nancial assets at fair value through profi t or loss”. Financial
assets are classifi ed as held for trading if they are acquired for the purpose of selling in the near term. Derivatives are also classifi ed
as held for trading unless they are designated as effective hedging instruments. Gains or losses on investments held for trading are
recognised in profi t or loss based on quoted market bid prices at the close of business on the balance date.
(ii) Held to maturity investments
Non derivative fi nancial assets with fi xed or determinable payments and fi xed maturity are classifi ed as held to maturity when the Group
has the positive intention and ability to hold to maturity. Investments that are held for an undefi ned period are not included in this
classifi cation. Held to maturity investments are subsequently measured at amortised cost.
For investments carried at amortised cost, gains and losses are recognised in profi t or loss when the investments are derecognised or
impaired, as well as through the amortisation process.
(iii) Loans and receivables
Loans and receivables are non derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market.
Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profi t and loss when the
loans and receivables are derecognised or impaired, as well as through the amortisation process.
(iv) Available for sale investments
Available for sale investments are those non derivative fi nancial assets that are designated as available for sale or are not classifi ed as any
of the preceding categories. After initial recognition, available for sale investments are measured at fair value with gains or losses being
recognised in profi t or loss.
The fair value of investments that are actively traded in organised fi nancial markets are determined by reference to quoted market bid
prices at the close of business on the balance sheet date. For investments with no active market, fair values are determined using
valuation techniques. Such techniques include using recent arm’s length market transactions, reference to the current market value of
similar instruments, or discounted cash fl ow analysis.
72
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(k) Investment in associates
Interests in associated entities are brought to account using the equity method. Associates are entities over which the Group has signifi cant
infl uence and that are neither subsidiaries nor joint ventures. Under this method, the investment in associates is initially recognised at cost.
Subsequently the investment is carried at cost plus post-acquisition changes in the Group’s share of net assets of the associate, less any
impairment in value and adjusted for any differences in accounting policies. The consolidated income statement refl ects the Group’s share
of the results of operations of the associate.
Where there has been a change recognised directly in the associate’s equity, the Group recognises its share of any changes and discloses
this, when applicable in the consolidated statement of changes in equity.
(l) Investment in joint ventures
Interests in joint venture entities are accounted for by applying the equity method of accounting. The Group identifi es joint venture entities
where the Group is in a position of joint control over the entity. Investments in joint venture entities are carried at the equity accounted
amount less any impairment in value.
(m) Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses.
Property, plant and equipment, excluding freehold land and assets under construction, are depreciated over their useful economic lives as
follows:
Buildings
Leasehold improvements
Plant and equipment – owned
Plant and equipment – leased
Livestock carrier
Network Infrastructure
Life
50 years
Lease term
3 to 10 years
Lease term
2.5 years
5 to 25 years
The useful lives are consistent with those of the prior year.
Method
Straight line
Straight line
Straight line and units of production
Straight line
Straight line
Straight line
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefi ts are expected to arise from the
continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the item) is included in the income statement in the period the item is derecognised.
(n) Investment properties
Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are
stated at fair value. Gains or losses arising from changes in the fair values of investment properties are included in the income statement in
the period in which they arise.
For plantation land, the basis of valuation is changed to fair value when a sub-lease is granted on the property. Fair value for plantation land
is determined using a discounted cash fl ow (DCF) valuation model. The DCF valuation model incorporates the following factors:
- recent external indicators including current purchase price of equivalent land or independent land valuations,
- the Future Land Price Index to the year after harvest,
- estimation of the present value of future rental income, either as annuity income or as a portion of deferred harvest proceeds,
- the number of years to harvest the current plantation,
- the land discount rate,
- the terminal land value derived from unencumbered land value after harvest.
The DCF valuation model and assumptions are reviewed on a half yearly basis.
All plantation land held for more than 12 months is subject to a three year rotational assessment by an independent valuer.
Investment properties are derecognised when they have either been disposed of or, when the investment property is permanently withdrawn
from use and no future benefi t is expected from its disposal. Any gains or losses on derecognition of an investment property are recognised
in the income statement in the period of derecognition.
73
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(n) Investment properties (continued)
Transfers are made to investment property when, and only when, there is a change in use, evidenced by ending of owner occupation,
commencement of an operating lease to another party or ending of construction or development. Transfers are made from investment
property when, and only when, there is a change in use, evidenced by commencement of owner occupation or commencement of
development with a view to sale.
Investment properties disposed of during the year are revalued prior to disposal with the revaluation recognised as a fair value change in
the income statement rather than a loss or gain on disposal.
(o) Goodwill
Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer’s interest in
the net fair value of the identifi able assets, liabilities and contingent liabilities. Following initial recognition, goodwill is measured at cost
less any accumulated impairment losses.
Goodwill is not amortised but is reviewed annually for impairment, or more frequently if there is any indication that the carrying value may
be impaired.
As at the acquisition date, any goodwill acquired is allocated to each of the cash generating units expected to benefi t from the
combination’s synergies. Each unit or group of units to which the goodwill is so allocated represents the lowest level within the Group at
which the goodwill is monitored for internal management purposes, and is not larger than a segment based on either the Group’s primary or
secondary reporting format determined in accordance with AASB114 Segment Reporting.
(p) Intangible assets
Intangible assets acquired separately are capitalised at cost and from a business combination are capitalised at fair value as at the date of
acquisition. Following initial recognition, the cost model is applied to the class of intangible assets. The useful lives of these intangible
assets are assessed to be either fi nite or indefi nite.
Intangible assets with fi nite lives are amortised on a straight line basis over their useful lives (5-15 years).
Brand names, which are considered to have an indefi nite life, are not amortised but are regularly tested for impairment. Expenditure
incurred in developing, maintaining or enhancing brand names is expensed in the year in which it is incurred.
Intangible assets, excluding development costs, created within the business are not capitalised and expenditure is charged against profi ts in
the period in which the expenditure is incurred.
(q) Design and development
Research costs are expensed as incurred.
Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as
assured and the Group can demonstrate the technical feasibility of completing the asset so that it will be available for use or sale, its
intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefi ts, the availability of
resources to complete the development and the ability to measure reliably the expenditure attributable to the asset during its development.
Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any
accumulated amortisation and accumulated impairment losses.
Any expenditure carried forward is amortised from the commencement of commercial production on a straight-line basis over the period of
the expected benefi t, which is over a 3 year period. These development costs are Automotive related and primarily represent engineering
costs incurred in developing products under awarded contracts.
(r) Impairment
Non-fi nancial assets
The carrying values of all assets, other than inventories and deferred tax assets, are reviewed for impairment when events or changes in
circumstances indicate that the carrying value may not be recoverable.
For an asset that does not generate largely independent cash infl ows, the recoverable amount is determined for the cash-generating unit to
which the asset belongs.
74
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(r) Impairment (continued)
If any indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are
written down to their recoverable amount. The recoverable amount is the greater of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that refl ects current market
assessments of the time value of money and the risks specifi c to the asset.
A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s
recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its
recoverable amount. The increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had
no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profi t or loss unless the asset is carried at
revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in
future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.
Assumptions used by each cash generating unit for cash fl ow projections when determining the value in use is to use the budgeted results
for the following three years, after which a growth rate was added, and discounted based on an appropriate weighted average cost of capital.
The weighted average cost of capital is a more refl ective rate of each cash generating units position in terms of the time value of money and
the risks it faces and therefore considered more appropriate than an incremental borrowing rate or other market borrowing rate.
Impairment for goodwill is determined by assessing the recoverable amount of the cash generating unit to which the goodwill relates. When
the recoverable amount of the cash-generating unit (or group of cash generating units) is less than the carrying amount, and impairment
loss is recognised. Where goodwill forms part of a cash generating unit and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal
of the operation. Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and
the portion of the cash generating unit retained. Impairment losses for goodwill are not subsequently reversed.
Intangible assets are tested for impairment where an indicator of impairment exists, and in the case of indefi nite life intangibles annually,
either individually or at the cash generating unit level. Useful lives are also examined on an annual basis and adjustments, where applicable,
are made on a prospective basis.
The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, or more frequently when an
indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable.
Financial Assets
If there is objective evidence that an impairment loss on fi nancial assets carried at amortised cost has been incurred, the amount of the loss
is measured as the difference between the asset’s carrying amount and the present value of estimated future cash fl ows (excluding future
credit losses that have not been incurred) discounted at the fi nancial asset’s original effective interest rate (ie the effective interest rate
computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of an allowance account. The
amount of the loss is recognised in the income statement.
The Group fi rst assesses whether objective evidence of impairment exists individually for fi nancial assets that are individually signifi cant,
and individually or collectively for fi nancial assets that are not individually signifi cant. If it is determined that no objective evidence of
impairment exists for an individually assessed fi nancial asset, whether signifi cant or not, the asset is included in a group of fi nancial assets
with similar credit risk characteristics and that group of fi nancial assets is collectively assessed for impairment. Assets that are individually
assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of
impairment.
If there is objective evidence that an impairment loss has been incurred on fi nancial assets carried at cost (because its fair value cannot be
reliably measured) the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of
estimated future cash fl ows, discounted at the current market rate of return for a similar fi nancial asset.
If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between its cost (net of
any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profi t or loss, is
transferred from equity to the income statement. Reversals of impairment losses for equity instruments classifi ed as available-for-sale are
not recognised in profi t. Reversals of impairment losses for debt instruments are reversed through profi t or loss if the increase in an
instrument’s fair value can be objectively related to an event occurring after the impairment loss was recognised in profi t or loss.
(s) Trade and other payables
Trade and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Group prior to the end
of the fi nancial year that remain unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of
these goods and services.
75
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(t) Interest bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received net of issue costs associated with the
borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate
method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.
Gains and losses are recognised in the income statement when the liabilities are derecognised as well as through the amortisation process.
(u) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an
outfl ow of resources embodying economic benefi ts will be required to settle the obligation and a reliable estimate can be made of the
amount of the obligation.
Certain subsidiaries are affected by warranty claims. Claims are covered by a provision for warranty, which has been calculated based on
past experience of the level of repairs and returns.
Where subsidiaries have entered into leasing arrangements that require the leased asset to be returned at the end of the lease term in its
original condition an estimate is made of the costs of restoration or dismantling of any improvements and a provision is raised.
A provision for dividend is not recognised as a liability unless the dividends are declared, on or before, reporting date.
Provisions for restructuring or termination benefi ts are only recognised when a detailed plan has been approved and the restructuring or
termination benefi ts have either commenced or been publicly announced, or when fi rm contracts have been entered into.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash fl ows at a pre-tax rate
that refl ects current market assessments of the time value of money and, where appropriate, the risks specifi c to the liability. Where
discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.
(v) Provision for employee entitlements
(i) Wages, salaries, and annual leave
Liabilities for wages and salaries, including non-monetary benefi ts and annual leave expected to be settled within 12 months of the
reporting date are recognised in provisions in respect of employee’s services up to the reporting date. They are measured at the amounts
expected to be paid when the liabilities are settled.
(ii) Long service leave
The liability for long service leave is recognised in the provision for employee benefi ts and measured as the present value of expected future
payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected
future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and
currencies that match, as closely as possible, the estimated future cash outfl ows.
(w) Pensions and other post employment benefi ts
The Group maintains an Australian-based superannuation fund comprising both an accumulation section and a defi ned benefi ts section.
The defi ned benefi ts section of the fund has been closed since December 1996 and all employees after that date must join the
accumulation section.
With respect to the accumulation section of the fund, employees are entitled to accumulated benefi ts on retirement, resignation, disability
or death. During the year, Group contributions are paid in accordance with legislative requirements, the fund’s rules and employee salary
packages. Employees may also contribute to the fund. The assets of the accumulation section of the fund are suffi cient to satisfy all
benefi ts that would be vested in the event of termination.
With respect to the defi ned benefi t section of the fund, relevant Group entities are obliged to contribute to the fund as set out in the
Trust Deed and in accordance with legal requirements. During the year, superannuation entitlements are paid in accordance with legislative
requirements at levels necessary to ensure that there are suffi cient assets to meet the liabilities determined by actuarial valuations
undertaken at regular intervals not exceeding three years. Member contributions are at a set rate.
76
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(w) Pensions and other post employment benefi ts (continued)
The Group’s subsidiary, BWK AG, also maintains a defi ned benefi t fund, referred to as provision for pensions. This provision is calculated by
applying the projected unit credit method. This calculation is based on no growth in the fund, an interest rate for accounting purposes of
4.5% as well as mortality tables provided by an independent actuary.
Actuarial gains and losses for the defi ned benefi ts section of the fund are recognised in the income statement.
(x) Share based payment
The Group provides benefi ts to employees in the form of share-based payment transactions, which may include shares or rights over shares
(equity-settled transaction such as options).
There are currently two share based plans in place to provide these benefi ts:
(i) Employee Share Option Plan (ESOP), which provides benefi ts to senior executives; and
(ii) Employee Share Loan Plan (ESLP), which provides benefi ts to all employees.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are
granted. The fair value is determined using a trinomial model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the
performance conditions are fulfi lled, ending on the date on which the relevant employees become fully entitled to the award (vesting date).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date refl ects:
(i) the extent to which the vesting period has expired; and
(ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest.
This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market
performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.
No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.
The dilutive effect, if any, of outstanding options is refl ected as additional share dilution in the computation of earnings per share.
Shares in the Group re-acquired on market and held by the Employee Share Plan at the reporting date are classifi ed in reserves.
(y) Contributed equity
Ordinary shares are classifi ed as equity. Incremental costs directly attributable to the issue of new shares or options are included in equity
as a deduction, net of tax, from the proceeds.
(z) Hybrid notes
Hybrid notes are classifi ed as equity. Incremental costs directly attributable to the issue of the Hybrid notes are included in equity as a
deduction, net of tax, from the proceeds. Distributions to note holders are made quarterly at the discretion of Directors.
(aa) Earnings per share
Basic earnings per share amounts are calculated by dividing net profi t for the year attributable to ordinary equity holders of the parent by
the weighted average number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profi t attributable to ordinary shareholders by the weighted average
number of ordinary shares outstanding during the year (adjusted for the effects of dilutive options, dilutive convertible notes and dilutive
hybrid notes).
77
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(ab) Revenue
Revenue is recognised to the extent that it is probable that economic benefi ts will fl ow to the Group and the revenue can be reliably
measured. The following specifi c recognition criteria must also be met before revenue is recognised:
Sale of goods
Revenue is recognised when the signifi cant risks and rewards of ownership of the goods have passed to the buyer and can be measured reliably.
Rendering of services – non insurance related
Where the contract can be reliably measured, it is probable that the economic benefi ts associated with the transaction will fl ow to the Group
and the stage of completion can be reliably measured. Stage of completion is measured by reference to the labour hours incurred to date
as a percentage of total estimated labour hours for each contract. Where the contract outcome cannot be reliably measured, revenue is
recognised only to the extent of the expenses recognised that are recoverable.
Interest and dividend income
Dividend revenue is recognised when the shareholder’s right to receive the payment is established. Interest revenue is recognised as it
accrues using the effective interest rate method. This is a method of calculating the amortised cost of a fi nancial asset and allocating the
interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the fi nancial asset to the net carrying amount of the fi nancial asset.
Forestry revenue
Revenue from the provision of forestry services is recognised by reference to the fi nancial period during which the relevant services are
provided. Any unearned portion of these fees at fi nancial year end is brought to account in the balance sheet as a liability and recognised in
subsequent periods.
(ac) Leases
Leases are classifi ed at their inception as either operating or fi nance leases based on the economic substance of the agreement so as to
refl ect the risks and rewards incidental to ownership.
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised
at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments.
Lease payments are apportioned between the fi nance charges and reduction of the lease liability so as to achieve a constant rate of interest
on the remaining balance of the liability. Finance charges are charged directly against income. Capitalised leased assets are depreciated
over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that the Group will obtain
ownership by the end of the lease term.
Leases where the lessor retains substantially all the risks and rewards of ownership of the asset are classifi ed as operating leases.
Operating lease payments are recognised as an expense in the income statement on a straight line basis over the lease term.
(ad) General insurance activities
Signifi cant accounting estimates and assumptions
The ultimate liability arising from claims made under insurance contracts
Provision is made for the estimated cost of claims incurred but not settled at the balance date. This provision consists of estimates of both
the expected ultimate cost of claims notifi ed to the Group as well as the expected ultimate cost of claims incurred but not reported to the
Group (“IBNR”). The estimated cost of claims includes direct expenses that are expected to be incurred in settling those claims.
The estimation of IBNR is generally subject to a greater degree of uncertainty than the estimate of the cost of settling claims already
notifi ed to the Group, where more information about the claims is generally available. Liability and other long tail classes of business,
where claims settlement may not happen for many years after the event giving rise to the claim, typically display greater variability between
initial estimates and fi nal settlement due to delays in reporting claims, uncertainty in respect of court awards and future claims infl ation.
Claims in respect of property and other short tail classes are typically reported and settled sooner after the claim event, giving rise to more
certainty. The estimation techniques and assumptions used in determining the outstanding claims provision and the associated reinsurance
and other recoveries are described below.
78
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(ad) General insurance activities (continued)
In calculating the estimated cost of unpaid claims the Group uses a variety of estimation techniques, generally based upon statistical
analyses of historical experience, which assumes that the development pattern of the current claims will be consistent with past experience.
Allowance is made, however, for changes or uncertainties which may create distortions in the underlying statistics or which might cause the
cost of unsettled claims to increase or reduce when compared with the cost of previously settled claims including:
• Changes in Group processes which might accelerate or slow down the development and/or recording of paid or incurred claims, compared
with the statistics from previous periods;
• Changes in the legal environment;
• The effects of infl ation;
• Changes in the mix of business;
• The impact of large losses; and
• Movements in industry benchmarks.
A component of these estimation techniques is usually the estimation of the current cost of notifi ed but not paid claims. In estimating the
cost of these the Group has regard to the claim circumstances as reported, any information available from loss adjusters and information on
the cost of settling claims with similar characteristics in the previous period.
Large claims impacting each relevant business class are generally assessed separately, being measured on a case by case basis or projected
separately in order to allow for the possible distortive effect of the development and incidence of these large claims.
Where possible the Group adopts multiple techniques to estimate the required level of provisions. This assists in giving greater
understanding of the trends inherent in the data being projected. The projections given by the various methodologies also assist in setting
the range of possible outcomes.
The most appropriate estimation technique is selected taking into account the characteristics of the business class and the extent of the
development of each accident year.
Provisions are calculated gross of any reinsurance recoveries. A separate estimate is made of the amounts that will be recoverable from
reinsurers based upon the gross provisions.
Details of specifi c assumptions used in deriving the outstanding claims liability at year end are detailed below.
Assets Arising from Reinsurance Contracts
Assets arising from contracts with the Group’s reinsurers are determined using the same methods described above. In addition, the
recoverability of these assets is assessed at each balance date to ensure that the balances properly refl ect the amounts that will ultimately
be received, taking into account counterparty and credit risk. Impairment is recognised where there is objective evidence that the Group
may not receive amounts due to it and these amounts can be reliably measured.
Accounting policies in relation to general insurance activities are as follows:
Premium Revenue
Premium comprises amounts charged to policyholders, excluding taxes collected on behalf of third parties. The earned portion of premium
received and receivable, including unclosed business, is recognised as revenue. Premium on unclosed business is brought to account based
upon the pattern of booking of renewals and new business.
Unearned Premium
Unearned premium is calculated based on the term of the risk which closely approximates the pattern of risks underwritten based on the
365th method.
At each balance date, the adequacy of the unearned premium liability is assessed on a net of reinsurance basis against the present value of
the expected future cash fl ows relating to potential future claims in respect of the relevant insurance contracts, plus an additional risk
margin to refl ect the inherent uncertainty of the central estimate. The assessment is carried out at the divisional level, being a portfolio of
contracts that are broadly similar and managed together as a single portfolio. If the unearned premium liability, less related intangible
assets and deferred acquisition costs, is defi cient, then the resulting defi ciency is recognised in the income statement of the Group.
The defi ciency is recognised fi rst by writing down any related intangible assets and then related deferred acquisition costs, with any excess
being recorded in the balance sheet as an unexpired risk liability.
Outwards Reinsurance Premiums
Premium ceded to reinsurers is recognised as an expense in accordance with the pattern of reinsurance service received. Accordingly, a
portion of outwards reinsurance premium is treated as a prepayment at the balance sheet date.
79
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(ad) General insurance activities (continued)
Outstanding Claims Liability
The provision for outstanding claims is measured as the central estimate of the present value of expected future claims payments
plus a risk margin. The expected future payments include those in relation to claims reported but not yet paid; claims incurred but not
reported (“IBNR”); claims incurred but not enough reported (“IBNER”); and estimated claims handling costs.
The expected future payments are discounted to present value using a risk free rate.
A risk margin is applied to the central estimate, net of reinsurance and other recoveries, to refl ect the inherent uncertainty in the
central estimate.
Reinsurance and Other Recoveries Receivable
Reinsurance and other recoveries receivable on paid claims, reported claims not yet paid, IBNR and unexpired risk liabilities are recognised
as revenue.
Amounts recoverable are assessed in a manner similar to the assessment of outstanding claims. Recoveries are measured as the present
value of the expected future receipts, calculated on the same basis as the provision for outstanding claims.
Acquisition Costs
A portion of acquisition costs relating to unearned premium revenue is deferred in recognition that it represents future benefi ts to the
organisation. Deferred acquisition costs are measured at the lower of cost and recoverable amount. A write-down to recoverable amount is
recognised where the present value of expected future claims (including settlement costs) in relation to business written to the reporting
date exceeds related unearned premiums. Deferred acquisition costs are amortised over the period expected to benefi t from the expenditure.
Fire Brigade and Other Charges
Fire service levies and other charges received or receivable from policyholders are included in premiums. A liability for fi re brigade and
other charges is recognised on business written to the reporting date, regardless of whether assessments have been issued by the
appropriate authority. Levies and charges payable by the organisation are expensed on the same basis as the recognition of premium
revenue, with the portion relating to unearned premium being recorded as a prepayment.
Assets Backing General Insurance Liabilities
The Group has determined that all assets are held to back general insurance liabilities and are valued at fair value in the balance sheet.
The following policies apply to assets held to back general insurance liabilities:
Financial Assets
Financial assets are designated at fair value through profi t or loss. Initial recognition is at cost in the balance sheet and subsequent
measurement is at fair value with any resultant unrealised profi ts and losses recognised in the income statement.
Details of fair values of different types of assets are listed below:
• Cash assets and bank overdrafts are carried at face value of the amounts deposited or drawn. The carrying amount of cash assets and bank
overdrafts approximate to their fair value. For the purposes of the cash fl ow statement, cash includes cash on hand, deposits held at call
with banks and investments in money market instruments, net of bank overdrafts;
• Fixed interest securities are initially recognised at cost and the subsequent fair value is taken as the quoted bid price of the instrument
at the balance sheet date; and
• Unlisted fi xed interest securities are recorded at amounts based on valuations using rates of interest equivalent to the yields obtainable
on comparable investments at balance date.
Financial assets are derecognised when the rights to receive future cash fl ows from the assets have expired, or have been transferred, and
Elders Insurance Limited has transferred substantially all the risks and rewards of ownership.
Receivables
Amounts due from policyholders are initially recognised at face value, being the amounts due. They are subsequently measured at fair
value which is approximated by taking the initially recognised amount and reducing it for impairment as appropriate.
A provision for impairment of receivables is established when there is objective evidence that Elders Insurance Limited will not be able to
collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset’s
carrying amount and the present value of estimated future cash fl ows. The discount is calculated using a risk free rate. The impairment
charge is recognised in the income statement.
80
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(ad) General insurance activities (continued)
Actuarial Assumptions and Methods
Short Tail Classes
With short tail classes, there is not a signifi cant delay between the occurrence of the claim and the claim being reported to the Group.
The costs of claims notifi ed to the Group at the balance sheet date are estimated on a case by case basis to refl ect the individual
circumstances of each claim. The ultimate expected cost of claims is projected from this data by reference to statistics which show how
estimates of claims incurred in previous periods have developed over time to refl ect changes in the underlying estimates of the cost of
notifi ed claims and late notifi cations.
Liability
Claims estimates for the Group’s liability business are derived from analysis of the results of several different actuarial methods. Ultimate
numbers of claims are projected based on the past reporting patterns. Payments experience is analysed based on averages paid per claim
incurred and averages paid per claim fi nalised. Historic case estimate development is also used to develop a model of future payments.
The resulting average claim sizes from these models are analysed, along with the loss ratios and other statistics, in order to determine a
fi nal estimate of outstanding claims.
Claims infl ation is incorporated into the resulting projected payments, to allow for both general economic infl ation as well as any
superimposed infl ation detected in the modelling of payments experience. Superimposed infl ation arises from non-economic factors such as
developments of legal precedent.
Projected payments are discounted to allow for the time value of money. The liability class of business is also subject to the possible
emergence of new types of latent claims, but no specifi c allowance is included for this as at the balance sheet date. Such uncertainties are
considered when setting the risk margin appropriate for this class.
The following assumptions have been made in determining the outstanding claims liabilities:
Discount Rate
Discount Mean Term (Years)
Claims Handling Expense Ratio
Ultimate Gross Loss Ratio Latest Accident Year
Sept 2009
Short-Tail
June 2008
Short-Tail
Sept 2009
Liability
June 2008
Liability
4.80%
0.36
5.0%
80%
6.9%
0.35
5.0%
74%
4.80%
2.46
6.0%
50%
6.9%
2.50
6.0%
47%
Process Used to Determine Assumptions
A description of the processes used to determine these assumptions is provided below:
Average Weighted Term to Settlement
The average weighted term to settlement is calculated separately by class of business based on historic settlement patterns.
Expense Rate
Claims handling expenses were calculated by reference to past experience of claims handling costs as a percentage of past payments.
Discount Rate
Discount rates derived from market yields on Commonwealth Government securities as at the balance date have been adopted.
Insurance Contracts - Risk Management Policies and Procedures
The fi nancial condition and operation of the Group are affected by a number of key risks including insurance risk, interest rate risk, currency
risk, credit risk, market risk, liquidity risk, fi nancial risk, compliance risk and operational risk.
Objectives in Managing Risks Arising from Insurance Contracts and Policies for Mitigating those Risks
The Group has the objective to control insurance risk thus reducing the volatility of operating profi ts. In addition to the inherent uncertainty
of insurance risk, which can lead to signifi cant variability in the loss experience, profi ts from insurance business are affected by market
factors, particularly competition and movements in asset values. Short-term variability is, to some extent, a feature of insurance business.
In accordance with Prudential Standards GPS220 Risk Management and GPS230 Reinsurance Management issued by the Australian
Prudential Regulation Authority (APRA), the Board and senior management of the Group have developed, implemented and maintained a
sound and prudent Risk Management Strategy (RMS) and Reinsurance Management Strategy (REMS).
81
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(ad) General insurance activities (continued)
The RMS and REMS identify the Group’s policies and procedures, processes and controls that comprise its risk management and control
systems. These systems address all material risks, fi nancial and non-fi nancial, likely to be faced by the Group. Annually, the Board certifi es
to APRA that adequate strategies have been put in place to monitor those risks, that the Group has systems in place to ensure compliance
with legislative and prudential requirements and that the Board has satisfi ed itself as to the compliance with RMS and REMS.
The RMS and REMS have been approved by the Board and submitted to APRA. Key aspects of the processes established in the RMS to
mitigate risks include:
• The maintenance and use of sophisticated management information systems, which provide up to date, reliable data on the risks to which
the business is exposed at any point in time;
• Actuarial models, using information from the management information systems, are used to calculate premiums and monitor claims
patterns. Past experience and statistical methods are used as part of the process;
• Documented procedures are followed for underwriting and accepting insurance risks;
• Natural disasters such as bushfi res are more challenging to manage. The Group monitors exposure to such risks through special modelling
techniques involving the collation of data on weather patterns which support decisions on limiting exposure;
• Reinsurance is used to limit the Group’s exposure. When selecting a reinsurer the Group only consider those companies that provide high
security. In order to assess this, the Group uses rating information from the public domain or gathered through internal investigations;
• In order to limit concentrations of credit risk, in purchasing reinsurance the Group has regard to existing reinsurance assets and seeks to
limit excess exposure to any single reinsurer or group of related reinsurers; and
• The mix of assets in which the Group invests is driven by the nature and term of the insurance liabilities. The management of assets and
liabilities is closely monitored to attempt to match the maturity dates of assets with the expected pattern of claim payments.
Terms and Conditions of Insurance Business
The terms and conditions attaching to insurance contracts affect the level of insurance risk accepted by the Group. The majority of direct
insurance contracts written are entered into on a standard form basis. There are no special terms and conditions in any non standard
contracts that have a material impact on the fi nancial statements.
Concentration of Insurance Risk
The Group’s exposure to concentrations of insurance risk is mitigated by a diversifi ed portfolio. Specifi c processes for monitoring identifi ed
key concentrations are set out below:
Risk
Source of Concentration
Risk Management Measures
Natural Catastrophes
Properties concentrated in
regions that are subject to:
• Earthquakes
• Bushfi res
• Cyclones
• Hail Storms
The Group’s underwriting strategy requires individual
risk premiums to be differentiated in order to refl ect the
higher loss frequency in particular geographical areas.
The Group has modelled aggregated risk by postcode using
commercially available catastrophe models.
The Group’s exposure data across the Australian
portfolio encompasses all fi re risks.
Based on the probable maximum loss per the models, the
Group purchases catastrophe reinsurance cover to limit
exposure to any single event.
(ae) Income tax
Income tax disclosed in the income statement comprises of current and deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at balance date,
and any adjustments to tax payable in respect of previous years.
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and
their carrying amounts for fi nancial reporting purposes.
82
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(ae) Income tax (continued)
Deferred income tax liabilities are recognised for all taxable temporary differences:
• except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profi t nor taxable profi t or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except
where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not
reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses,
to the extent that it is probable that taxable profi t will be available against which the deductible temporary differences and the carry forward
of unused tax assets and unused tax losses can be utilised:
• except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset
or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profi t nor
taxable profi t or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures,
deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future
and taxable profi t will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that suffi cient taxable profi t will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the
liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
(af) Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
Cash fl ows are included in the cash fl ow statement on a gross basis and the GST component of cash fl ows arising from investing and fi nancing
activities, which is recoverable from, or payable to, the taxation authority are classifi ed as operating cash fl ows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(ag) Foreign currency translation
Both the functional and presentation currency of Elders Limited and its Australian subsidiaries is Australian dollars (AUD).
Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance sheet date.
All exchange differences in the consolidated fi nancial report are taken to the income statement with the exception of differences on foreign
currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of
the net investment, at which time they are recognised in the income statement. Tax charges and credits attributable to exchange differences
on those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date
of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date
when the fair value was determined.
As at the reporting date the assets and liabilities of overseas subsidiaries are translated into the presentation currency of Elders Limited at the rate
of exchange ruling at the balance sheet date, and the income statements are translated at the weighted average exchange rates for the period.
The exchange differences arising on the retranslation are taken directly to a separate component of equity. On disposal of a foreign entity, the
deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the income statement.
83
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(ah) Derivative fi nancial instruments
The Group uses derivative fi nancial instruments to manage its exposure to foreign exchange, commodity price and interest rate risks.
Such derivative fi nancial instruments are stated at fair value.
The fair value of derivative fi nancial instruments is determined by reference to quoted market prices. Where a quoted market price is not
available, the fair value is the estimated amount the consolidated entity would receive or pay to terminate the derivative fi nancial instrument
taking into account available market information.
The gain or loss arising from changes in fair value is recognised immediately in the income statement, unless the derivative qualifi es for
hedge accounting, in which case the accounting treatment is set out below.
For the purposes of hedge accounting, hedges are classifi ed as either fair value hedges when they hedge the exposure to changes in the fair
value of a recognised asset or liability; or cash fl ow hedges where they hedge exposure to variability in cash fl ows that is either attributable
to a particular risk associated with a recognised asset or liability or a forecasted transaction.
In relation to fair value hedges which meet the conditions for special hedge accounting, any gain or loss from re-measuring the hedging
instrument at fair value is recognised immediately in the income statement.
Any gain or loss attributable to the hedged risk on re-measurement of the hedged item is adjusted against the carrying amount of the
hedged item and recognised in the income statement. Where the adjustment is to the carrying amount of a hedged interest-bearing fi nancial
instrument, the adjustment is amortised to the income statement such that it is fully amortised by maturity.
In relation to cash fl ow hedges to hedge fi rm commitments which meet the conditions for special hedge accounting, the portion of the gain
or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity and the ineffective portion is
recognised in the income statement.
When the hedged fi rm commitment results in the recognition of an asset or a liability, then, at the time the asset or liability is recognised,
the associated gains or losses that had previously been recognised in equity are included in the initial measurement of the acquisition cost
or other carrying amount of the asset or liability.
For all other cash fl ow hedges, the gains or losses that are recognised in equity are transferred to the income statement in the same year
in which the hedged fi rm commitment affects the net profi t and loss, for example when the future sale actually occurs.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifi es for
hedge accounting. At that point in time, any cumulative gain or loss recognised in equity is kept in equity until the forecasted transaction
occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the
income statement.
(ai) Derecognition of fi nancial assets and fi nancial liabilities
A fi nancial asset (or, where applicable, a part of a fi nancial asset or part of a group of similar fi nancial assets) is derecognised when:
• the rights to receive cash fl ows from the asset have expired;
• the Group retains the right to receive cash fl ows from the asset, but has assumed an obligation to pay them in full without material delay
to a third party under a ‘pass-through’ arrangement; or
• the Group has transferred its rights to receive cash fl ows from the asset and either (a) has transferred substantially all the risks and
rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred
control of the asset.
When the Group has transferred its rights to receive cash fl ows from an asset and has neither transferred nor retained substantially all
the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group’s continuing
involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of
the original carrying amount of the asset and the maximum amount of consideration received that the Group could be required to repay.
84
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 2. Statement of Signifi cant Accounting Policies (continued)
(ai) Derecognition of fi nancial assets and fi nancial liabilities (continued)
When continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision)
on the transferred asset, the extent of the Group’s continuing involvement is the amount of the transferred asset that the Group may
repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at
fair value, the extent of the Group’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option
exercise price.
A fi nancial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing fi nancial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
liability are substantially modifi ed, such an exchange or modifi cation is treated as a derecognition of the original liability and the recognition
of a new liability, and the difference in the respective carrying amounts is recognised in the income statement.
(aj) Business combinations
The purchase method of accounting is used to account for all business combinations regardless of whether equity instruments or other
assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of
exchange plus costs directly attributable to the combination. Where equity instruments are issued in a business combination, the fair value
of the instruments is their published market price as at the date of exchange unless, in rare circumstances, it can be demonstrated that
the published price at the date of exchange is an unreliable indicator of fair value and that other evidence and calculation methods provide
a more reliable measure of fair value. Transaction costs arising on the issue of equity instruments are recognised directly in equity.
Except for non current assets or disposal groups classifi ed as held for sale (which are measured at fair value less costs to sell), all
identifi able assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of the business combination over
the fair value of the Group’s share of the identifi able net assets acquired is recognised as goodwill. If the cost of acquisition is less than the
Group’s share of the net fair value of the identifi able net assets of the subsidiary, the difference is recognised as a gain in the income
statement, but only after reassessment of the identifi cation and measurement of the net assets acquired.
Where settlement of any part of the consideration is deferred, the amounts payable in the future are discounted to their present value as at
the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which similar borrowing could be
obtained from an independent fi nancier under comparable terms and conditions.
(ak) Non current assets and disposal groups held for sale and discontinued operations
Non current assets and disposal groups are classifi ed as held for sale and measured at the lower of their carrying amount and fair value less
costs to sell if their carrying amount will be recovered principally through a sale transaction. They are not depreciated or amortised. For an
asset or disposal group to be classifi ed as held for sale, it must be available for immediate sale in its present condition and its sale must be
highly probable.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell.
A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any
cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non current asset
(or disposal group) is recognised at the date of de-recognition.
A discontinued operation is a component of the entity that has been disposed of or is classifi ed as held for sale and that represents a
separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business
or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented
separately on the face of the income statement.
85
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 3. Revenue and Expenses
Consolidated
Parent
15 months
September
2009
$000
12 months
June
2008
$000
15 months
September
2009
$000
12 months
June
2008
$000
Note
2,300,502
2,302,774
181,612
275,390
-
96,413
407,776
280,463
193,144
90,502
26
2,853,917
3,274,659
40
686,166
37,456
3,540,083
3,312,115
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sales revenue:
Continuing operations
Sale of goods
Sale of biological assets
Commission and other selling charges
Insurance premium revenue
Other sales related income
Discontinued operations
Other revenue:
Continuing operations
Change in fair value of fi nancial assets designated
as fair value through profi t and loss
8,459
30,290
(2,282)
4,706
-
406
38,399
47,264
60,643
107,907
-
4,660
8,385
13,045
13,731
26,776
-
3,920
78,300
112,510
4,826
117,336
-
3,396
12,026
15,422
-
-
150,000
8,976
-
6,694
-
-
12,074
166,780
-
6,694
166,780
47,089
723
1,079
48,891
-
20,509
-
36
20,545
-
15,422
48,891
20,545
40
40
Dividends
- Controlled entities
- Other persons
Other
Discontinued operations
Interest revenue:
Continuing operations
- Controlled entities
- Associated entities
- Other persons
Discontinued operations
86
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 3. Revenue and Expenses (continued)
Consolidated
Parent
15 months
September
2009
$000
12 months
June
2008
$000
15 months
September
2009
$000
12 months
June
2008
$000
Note
Expenses:
Continuing operations
Distribution expenses
Marketing expenses
Occupancy expenses
Administrative expenses
Insurance claims & related expenses
Impairment losses
Other expenses
Discontinued operations
40
Depreciation and amortisation:
Property, plant and equipment
Leased assets
Design and development
Patents, trademarks and other
Discontinued operations
Finance costs:
Interest expense – other entities
Finance lease charges
Other fi nance costs
Discontinued operations
Specifi c net gains and (expenses):
Profi t/(loss) on sale of non current assets
- Property, plant and equipment
- Profi t on sale of investments
- Profi t on sale of controlled entities
Discontinued operations
453,020
487,006
16,926
12,010
168,515
-
165,548
153,389
969,408
543,063
1,512,471
14,666
17,492
154,713
128,981
-
66,892
869,750
53,535
923,285
24,713
34,901
44
6,314
5,232
36,303
9,239
45,542
678
4,046
2,959
42,584
-
42,584
-
-
-
67,924
-
-
-
67,924
-
-
-
1,096
26,835
-
-
3,125
31,056
-
67,924
31,056
-
-
-
-
-
-
-
72
-
-
-
72
-
72
101,342
70,344
61,298
31,168
6
10,882
112,230
4,521
116,751
(101)
38,401
82,546
120,846
3,263
124,109
40
40
404
1,572
72,320
11
-
10,882
72,180
-
-
1,236
32,404
-
72,331
72,180
32,404
(553)
(1,816)
-
(2,369)
-
(2,369)
-
6,358
-
6,358
-
6,358
-
-
-
-
-
-
87
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 3. Revenue and Expenses (continued)
Consolidated
Parent
15 months
September
2009
$000
12 months
June
2008
$000
15 months
September
2009
$000
12 months
June
2008
$000
Note
Reported Profi t/(loss) before tax:
Add back: Non-recurring gains/(losses):
Telco operations closure costs
Horticulture operations closure costs
Loss on sale of Rail and Bus division
Seed and Fodder impairments
Restructuring, redundancy and relocation costs
Write off/impairment other projects and activities
Discount on acquisition
Derivative fair value gain
Profi t on sale/Discount on acquisition
Impairment losses on telecommunications closure
Impairment losses on assets retained
Impairment losses on intangibles
Write down of assets to be divested/discontinued
Results from assets to be divested/discontinued
Refi nancing costs
Net non-recurring loss before tax
Underlying profi t/(loss) before tax
Reported tax benefi t/(expense)
Add back: Tax benefi t/(expense) on non-recurring items
Net Profi t attributable to minority interest
Underlying profi t/(loss) after tax
Non-recurring losses
Tax benefi t/(expense) on non-recurring items
Minority interest
Non-recurring losses after tax
Employee benefi t expense:
- Wages and salaries
- Post employment benefi ts including superannuation
- Workers compensation
- Share based payments
Discontinued operations
Other Impairment Losses:
Impairment losses
Impairment reversals
Impairment losses (net)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(466,330)
37,075
(78,161)
-
(4,668)
(2,802)
(4,861)
(70,738)
(36,101)
-
-
109,070
-
(99,928)
-
(223,613)
(9,158)
(45,669)
(12,948)
(6,710)
(16,189)
(1,278)
(22,472)
(13,134)
6,042
3,853
4,441
(6,453)
(6,300)
(6,581)
-
-
-
(388,468)
(77,729)
(77,862)
114,804
-
-
-
-
(14,305)
-
-
-
-
-
-
-
-
-
(45,669)
(59,974)
(18,187)
-
9,015
(29,965)
(15,467)
(9,643)
84,211
(77,729)
29,965
-
-
(33,654)
(59,974)
15,467
-
(414,674)
(47,764)
(44,507)
(1,170)
25,788
1,492
(51,752)
(388,468)
(25,788)
(418)
305,701
26,638
2,482
7,161
341,982
17,788
359,770
99,928
-
99,928
287,332
23,345
4,337
3,009
10,956
13,040
-
-
-
473
57
522
318,023
10,956
14,092
-
-
-
318,023
10,956
14,092
2,332
(989)
1,343
-
-
-
556
(69)
-
-
-
-
574
-
-
Operating leases - minimum lease payments
123,467
67,253
Foreign exchange net gains/(losses)
Provision for doubtful debts and bad debts written off
(484)
5,955
(251)
1,026
88
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 4. Income Tax
Consolidated
Parent
15 months
September
2009
$000
12 months
June
2008
$000
15 months
September
2009
$000
12 months
June
2008
$000
(21,551)
(583)
(5,752)
(5,335)
(11,837)
(368)
1,692
42,980
(a) Major components of income tax expense are:
Income Statement
Current income tax
Current income tax charge/(benefi t)
Adjustments in respect of current income tax of previous years
Deferred income tax
Origination and reversal of temporary differences
23,304
2,072
(6,798)
(29,579)
Income tax expense/(benefi t) reported in income statement
1,170
(9,015)
(19,003)
15,093
Statement of Changes in Equity
Deferred income tax
Net loss on revaluation of cash fl ow hedges
Income tax expense/(benefi t) reported in equity
(b) A reconciliation of income tax expense applicable to accounting
profi t before income tax at the statutory income tax rate to income tax
expense at the Group’s effective income tax rate is as follows:
(4,024)
(4,024)
3,274
3,274
(4,024)
(4,024)
3,274
3,274
Accounting profi t/(loss) before tax from:
- Continuing operations
- Discontinued operations
(324,234)
83,292
(78,161)
125,069
(142,096)
(46,217)
-
-
Total Accounting profi t/(loss) before tax
(466,330)
37,075
(78,161)
125,069
Income tax expense/(benefi t) at 30% (2008: 30%)
(139,899)
11,123
(23,448)
37,521
Adjustments in respect of current income tax of previous years
Share of associate (profi ts)/losses
Non assessable (profi ts)/losses
Non deductible depreciation and amortisation
Non deductible other expenses
Impairment expense
Non assessable dividends
Employee share plan costs
Non transferrable foreign losses
Losses recognised by Parent entity
Other
Income tax expense/(benefi t) as reported in income statement
Aggregate Income tax expense is attributable to:
- Continuing Operations
- Discontinued Operations
(583)
2,522
10,405
71
1,115
107,488
-
2,248
16,678
-
1,125
1,170
(10,125)
11,295
1,170
(5,335)
(12,151)
(4,062)
1,852
1,843
-
(596)
924
-
-
(2,613)
(9,015)
(368)
42,980
-
1,912
-
81
-
-
2,190
-
-
630
(361)
252
-
29
-
(45,000)
141
-
(20,406)
(63)
(19,003)
15,093
7,712
(19,003)
15,093
(16,727)
(9,015)
-
-
(19,003)
15,093
Current tax payable/(receivable)
38,047
32,000
-
(13,315)
89
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 4. Income Tax (continued)
Balance Sheet
Income Statement
15 months
September
2009
$000
12 months
June
2008
$000
15 months
September
2009
$000
12 months
June
2008
$000
Deferred income tax at 30 September (2008: 30 June)
relates to the following:
Consolidated
Deferred income tax liabilities
Revaluations of investment properties to fair value
(10,799)
(8,269)
2,528
1,175
Revaluations of foreign exchange contracts (cash fl ow hedges)
to fair value
Shares in associated entities
Exchange rates to fair value
Non assessable accrued income
Forestry assets (standing timber)
Plant and equipment temporary differences
Prepayments
Research and development
Other debtors
Other
(1,202)
(4,124)
(2,408)
(33,929)
(5,398)
-
-
(5,524)
(3,325)
(2,477)
(5,669)
(8)
(835)
(19,022)
(5,669)
1,404
(52)
(8,182)
(4,915)
(2,585)
Gross deferred income tax liabilities
(69,186)
(53,802)
Deferred income tax assets
Losses available to offset against future taxable income
Provision for employee entitlements
Other provisions
Forestry product investment income
Accrued expenditure
Deferred borrowing costs
Other capitalised expenses
Plant and equipment temporary differences
Other
Gross deferred income tax assets
Deferred income tax charge
Parent
Deferred income tax liabilities
63,030
11,733
12,360
4,290
2,613
9,249
8,294
3,189
282
115,040
33,109
14,794
13,607
9,822
1,450
988
4,220
-
1,188
79,178
1,224
3,161
1,363
14,907
301
-
-
(2,580)
(1,751)
(1,514)
17,639
4,121
2,053
(129)
5,533
(257)
(8,693)
(4,679)
7,945
(229)
5,665
307
1,034
(1,142)
10,753
1,131
(2,757)
(3)
935
1,046
(7,694)
4,785
(578)
(80)
(1,837)
2,252
268
210
(2,261)
-
(687)
(2,713)
23,304
2,072
Unrealised gain/loss on fi nancial instruments
(4,145)
(5,891)
2,277
Other debtors
Shares in associated entities
Other
-
-
-
-
(29)
(13)
-
-
-
235
589
-
218
Gross deferred income tax liabilities
(4,145)
(5,933)
2,277
1,042
90
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 4. Income Tax (continued)
Balance Sheet
Income Statement
15 months
September
2009
$000
12 months
June
2008
$000
15 months
September
2009
$000
12 months
June
2008
$000
Deferred income tax assets
Losses available to offset against future taxable income (i)
63,030
30,470
-
(30,470)
Accrued expenditure
Deferred borrowing costs
Prepayments
Other debtors
Provisions
Other
Gross deferred income tax assets
Deferred income tax charge
23
9,246
-
80
2,559
1,260
76,198
15
975
-
506
1,927
1,126
35,019
(136)
(8,703)
-
156
(624)
232
(80)
201
(3)
-
(727)
458
(9,075)
(30,621)
(6,798)
(29,579)
(i) Group losses not previously recognised in the Parent entity.
Estimated deferred tax assets attributable to tax losses not recognised in the fi nancial statements of $14.50 million
(2008: $19.09 million) that are available indefi nitely for offset against future taxable profi ts of the companies in which the losses arose.
At 30 September 2009, there is no recognised or unrecognised deferred income tax liability (2008: $Nil) for taxes that would be payable
on the unremitted earnings of certain of the Group’s subsidiaries, associates or joint venture, as the Group has no liability for additional
taxation should these amounts be remitted.
Tax Consolidation
Elders and its 100% owned subsidiaries are in a tax consolidated group. Members of the group have entered into a tax sharing arrangement
in order to allocate income tax expense to wholly owned subsidiaries.
Wholly owned Australian subsidiaries are required to make contributions to the head entity for tax liabilities and deferred tax balances
arising from external transactions occurring after the implementation of tax consolidations. The contributions are calculated as a
percentage of taxable income as if each subsidiary is a stand alone entity. Contributions are payable following payment of the liabilities by
Elders. The assets and liabilities arising under the tax funding agreement are recognised as intercompany assets and liabilities with a
consequential adjustment to income tax expense or benefi t.
In addition the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax
payment obligations or upon leaving the Group.
The head entity of the tax consolidated group is Elders Limited.
91
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 5. Receivables
Current
Trade debtors (i)
Allowance for doubtful debts
Amounts receivable from:
- controlled entities
- associated entities
Finance debtors
Allowance for doubtful debts
Reinsurance and other recoveries receivable
Deferred settlements
Other receivables
Allowance for non-recovery
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
333,912
421,781
(10,759)
323,153
(7,636)
414,145
-
-
-
-
-
-
-
34,228
34,228
11,965
-
11,965
-
23,194
143,823
(578)
166,439
535,785
-
1,132,565
1,198,435
36,821
36,821
8,667
964
1,141,232
1,199,399
825
-
825
69,689
36,450
78,225
(2,373)
181,991
-
-
-
-
5,750
892
(2)
-
-
-
-
-
14,266
(2)
6,640
14,264
633,782
1,147,872
1,213,663
Movements in the allowance for doubtful debts – trade debtors
Opening balance of allowance for doubtful debts
Trade debts written off
Trade debts provided for during the year
7,636
(2,185)
5,308
11,082
(4,771)
1,325
Closing balance of allowance for doubtful debts
10,759
7,636
Movements in allowance for non-recovery – other receivables
Opening balance of allowance for non-recovery
Other receivables written off
Other receivables provided for during the year
2,373
(1,795)
-
2,638
(304)
39
Closing balance of allowance for non-recovery
578
2,373
Non Current
Reinsurance and other recoveries receivable
Deferred settlements
Other receivables
Allowance for non recovery
Amounts receivable from associated entities
-
5,375
29,974
20,187
180,689
130,525
-
-
186,064
130,525
5,375
20,186
46,625
232,689
60,642
241,328
5,808
11,183
5,442
25,628
(i) Included in trade debtors is $76.29 million (2008: $118.19 million) which is subject to credit insurance with various terms and conditions.
92
-
-
-
-
2
-
-
2
-
5,375
-
-
-
-
-
-
-
-
2
2
-
-
20,186
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 5. Receivables (continued)
Trade receivables are non interest bearing and are generally on 30 to 90 day terms. An allowance for doubtful debts is made when there is
objective evidence that a trade receivable is impaired. An allowance of $5.31 million (2008: provision recovery of $1.03 million) has been
recognised in the Income Statement for the current year for specifi c debtors for which such evidence exists. These amounts have been
measured as the difference between the carrying amount of the trade receivables and the estimated future cash fl ows expected to be received.
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
The ageing analysis of trade debtors is as follows:
0-30 days
273,998
326,229
Trade debtors past due but not considered impaired
31-60 days
61-90 days
+91 days
Trade debtors past due and considered impaired
31-60 days
61-90 days
+91 days
22,087
5,519
21,549
49,155
13
29
10,717
10,759
47,548
6,567
33,801
87,916
-
922
6,714
7,636
Total trade debtors
333,912
421,781
The ageing analysis of other current receivables is as follows:
0-30 days
+31 days not past due
Other current receivables past due but not considered impaired
31-60 days
61-90 days
+91 days
Other current receivables past due and considered impaired
31-60 days
61-90 days
+91 days
130,655
-
130,655
733
722
11,135
12,590
-
-
578
578
31,561
33,616
65,177
-
-
10,675
10,675
-
-
2,373
2,373
-
-
-
-
-
-
-
-
-
-
890
-
890
-
-
-
-
-
-
2
2
-
-
-
-
-
-
-
-
-
-
-
14,266
14,266
-
-
-
-
-
-
-
-
Total other current receivables
143,823
78,225
892
14,266
Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other
balances will be received when due.
Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.
For terms and conditions relating to related party receivables refer to note 34.
Details regarding the effective interest rate and credit risk of non current receivables are disclosed in note 36.
93
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 6. Livestock
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
Current
Fair value at start of the period (note 2(h))
Purchases during the year
Cost of sales during the year
Fair value increment/(decrement) in period
Fair value at the end of the period
37,023
55,121
336,486
244,882
(329,822)
(261,634)
65
43,752
(1,346)
37,023
At balance date 49,240 head of beef cattle (2008: 41,856) are included in livestock.
Note 7. Forestry
Non Current
Fair value at start of the period (note 2(i))
Purchases during the year
Costs incurred in respect of forestry plantations
Harvest
Fair value increment in period
Fair value at the end of the period
25,716
1,474
1
(1,785)
1,608
27,014
21,421
526
829
-
2,940
25,716
-
-
-
-
-
-
-
-
-
-
-
Physical quantity of forestry plantation timber at the end of the year is 519,639 m3 (2008: 550,000 m3).
The fair value methodology for Forestry Assets is detailed in Note 2(i). The assumptions used in the valuation model to determine
fair value less point of sale costs are as follows:
• CPI 2.5% to 5% (2008: 2.5% to 5%);
• Discount rate 9% (2008: 9%);
• Period to harvest – between 2 to 12 years depending upon year of establishment and current harvest schedule for the
individual property; and
• Current woodchip FOB price $207.40 per bone dry metric tonne (BDMT) (2008: $207.40).
Note 8. Inventories
Current
Raw materials and bulk stores – at net realisable value
47,172
64,884
Work in progress – at cost
1,229
32,504
Finished goods – at net realisable value
– at fair value less cost to sell (i)
177,123
-
270,689
28,769
177,123
299,458
225,524
396,846
-
-
-
-
-
-
(i) The Group’s commodities are measured at fair value less costs to sell.
Inventory write-downs recognised as an expense totalled $9.06 million (2008: $2.82 million) for the Group and $Nil for the
parent entity (2008: $Nil).
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
94
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 9. Derivative Financial Instruments
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
Current
Asset
Forward exchange contracts
7,820
706
-
-
Non Current
Liability
Forward exchange contracts
49,924
52,366
38,143
51,456
Derivative fi nancial instruments are used by the Group in the normal course of business in order to hedge exposure to
fl uctuations in interest and foreign exchange rates.
For fi nancial risk management policies of the Group, refer to note 36.
Note 10. Other Financial Assets
Non Current
Unlisted investments
Other entities, at cost (i)
Controlled entities, at cost (i)
Provision for diminution
17,549
27,332
60
60
-
-
-
-
382,845
212,847
(8,315)
(8,315)
17,549
27,332
374,590
204,592
(i) These investments are measured at cost less impairment as fair value cannot be reliably measured, due to the equity instruments
not being traded in a liquid market environment.
95
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 11. Investments in Associates and Joint Ventures
Associates *
- listed
- unlisted
Investment in Joint ventures:
- unlisted
Contribution to net profi t / (loss) for Associates:
- listed
- unlisted
Contribution to net profi t / (loss) for Joint ventures:
- unlisted
Aggregate Associate or Joint Venture contribution to net profi t/(loss)
is attributable to:
- Continuing Operations
- Discontinued Operations
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
49,031
226,341
275,372
7,852
283,224
(2,434)
(15,765)
(18,199)
17,502
(697)
3,766
(4,463)
(697)
342,790
169,647
512,437
182,055
694,492
13,596
18,760
32,356
18,880
51,236
51,236
-
51,236
-
75,562
75,562
-
75,562
-
-
-
-
-
-
-
-
June
2008
$000
-
3,523
3,523
98,235
101,758
-
1,204
1,204
-
1,204
1,204
-
1,204
* The Group’s investments in Hi-Fert, Aqa Oysters Ltd, Seafood Delicacies Ltd and Kilcoy are held for sale and have therefore been
re-classifi ed in the balance sheet to “Non current assets held for sale” for $16.599m.
96
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 11. Investments in Associates and Joint Ventures (continued)
(a) Interests In Associates
(i) Details of material interests in associated entities are as follows:
Name of Associate
Principal activity
of Associate
Balance date
of Associate
Ownership
Interest
Consolidated Entity
Investment
Sept 2009
%
June 2008
%
Sept 2009
$000
June 2008
$000
Air International Thermal (US)
Holdings Inc (i)
Automotive
Air International Thermal (Belgium) NC (ii) Automotive
Futuris Automotive Interiors (Anhui)
Company Ltd (iii) (a)
Automotive
MCK Holdings Pty Ltd (Plexicor) (b)
Automotive
Rural Bank Limited (f)
Banking
Elders Rural Holdings Limited(iv)
Agribusiness
31 Dec
31 Dec
31 Dec
31 Dec
30 Jun
30 Jun
Australian Agricultural Company Ltd (c)
Beef production
31 Dec
AWH Pty Ltd (formerly Australian Wool
Handlers Pty Ltd)
Wool processing
30 Jun
Forest Enterprises Australia Ltd
Forestry
ELF Pty Ltd (Hi-Fert Pty Ltd) (d)
Fertiliser
30 Jun
30 Jun
Agricultural Land Trust (formerly
Westralia Property Trust)
Webster Ltd (e)
iiNet Limited (g)
Other – non strategic investments
Land management
30 Jun
Agribusiness
30 Jun
Telecommunications
30 Jun
35
35
70
50
40
50
-
50
27
50
50
-
-
35
35
70
50
50
50
43
50
31
50
51
33
22
-
-
4,096
-
11,786
12,114
21,819
23,948
148,017
-
-
-
3,931
126,026
38,224
36,769
32,405
105,149
-
71,436
16,626
20,985
-
-
21,164
68,530
6,495
18,289
275,372
512,437
All associates other than (i) to (iv) are Australian resident companies.
Air International Thermal (US) Holdings Inc is incorporated in the USA, Air International Thermal (Belgium) NC is incorporated in
Belgium, Futuris Automotive Interiors (Anhui) Company Ltd is incorporated in Mauritius and Elders Rural Holdings Limited is incorporated
in New Zealand.
(a) Futuris Automotive Interiors (Anhui) Company Ltd is considered a jointly controlled entity due to the control provided in the shareholders’
agreement to the minority parties.
(b) The consolidated entity has entered into an agreement with MCK Holdings Pty Ltd which includes a put option for the remaining 50%
of the equity not held by the Elders Limited Group, contingent on certain events occurring, including the takeover of all or part of the Group.
(c) On 14 April 2009 the shares in Australian Agricultural Company Limited (AACo) were sold, resulting in Elders Limited having nil
ownership interest in AACo Limited.
(d) Hi-Fert Pty Ltd is in the process of being sold, therefore it has been reclassifi ed in the balance sheet to ‘Non current assets classifi ed
as held for sale’ and is now stated at lower of cost and fair value less costs to sell.
(e) On 19 December 2009 the shares in Webster Limited were sold, resulting in Elders Limited having nil ownership interest in
Webster Limited.
(f) On 8 May 2009 the Group’s investment in Rural Bank Limited was reduced from 50% to 40%, therefore the nature of the investment
has been reclassifi ed from a joint venture to an associate.
(g) Investment in iiNet Limited was reduced to nil with the sale of the Group’s Amcom investment. Refer to note 39 for more details.
There are impairment losses relating to the following investments in associates that have been taken to account:
> Forest Enterprises Australia $66.2m
> AWH Pty Ltd $1.149m
> Agricultural Land Trust $4.202m
> Air International Thermal $9.116m.
97
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 11. Investments in Associates and Joint Ventures (continued)
Consolidated
Parent
15 months
September
2009
$000
12 months
June
2008
$000
15 months
September
2009
$000
12 months
June
2008
$000
(ii) Share of associates’ profi t or loss (i)
Revenue
Profi t before income tax
Income tax (expense)/benefi t
Profi t after income tax
Outside minority equity interests
Share of net results of associates
(iii) Share of associates’ balance sheet
Current assets
Non current assets
Current liabilities
Non current liabilities
Net assets
363,630
414,231
(18,357)
158
(18,199)
-
45,717
(12,882)
32,835
(469)
(18,199)
32,366
1,538,921
555,649
462,365
879,233
2,094,570
1,341,598
1,659,588
210,287
1,869,875
224,695
311,593
423,269
734,862
606,736
(iv) Commitments and contingent liabilities
Share of associates’ capital expenditure commitments (contracted)
6,451
7,279
Share of associates’ operating lease commitments
19,823
16,846
Share of associates’ contingent liabilities
1,802
-
(i) Share of associates’ profi t or loss includes Rural Bank Limited results from May to September 2009.
(b) Interests in Joint Ventures
(i) Interest in Rural Bank Limited
-
-
-
-
-
-
3,377
3,300
6,677
442
2,712
3,154
3,523
-
-
-
6,816
1,528
(324)
1,204
-
1,204
3,560
952
4,512
538
147
685
3,827
-
-
-
On 8 May 2009 the Group reduced its shareholding in Rural Bank Limited from 50% to 40%. The Group has sold a 10% stake holding
to the other holding party, Bendigo and Adelaide Bank Limited. The Group’s investment in Rural Bank Limited is recorded as an investment
in associate for 30 September 2009 (2008: recorded as a joint venture).
98
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 11. Investments in Associates and Joint Ventures (continued)
a. Summary of balance sheet of Rural Bank Limited
Finance receivables
Other assets
Total assets
Finance deposits
Other liabilities
Total liabilities
Net assets
Share of net assets
Reconciling items:
Dividend
Origination fees
b. Summary of share of profi t of Rural Bank Limited
Profi t before income tax
Tax expense
Timing variance in origination fees recognised, due to dissimilar accounting policies
Share of net results
c. Share of commitments and contingent liabilities of Rural Bank Limited
(ii) Interest in other joint ventures
a. Share of other joint ventures’ balance sheet
Current assets
Non current assets
Current liabilities
Non current liabilities
Net assets
b. Share of other joint ventures’ profi t or loss
Revenue
Profi t before income tax
Income tax expense
Share of net results of joint venture
c. Share of commitments and contingent liabilities of other joint ventures
Consolidated
15 months
September
2009
$000
3,631,433
717,578
4,349,011
3,723,836
277,388
4,001,224
347,787
12 months
June
2008
$000
3,639,631
676,910
4,316,541
3,729,305
273,216
4,002,521
314,020
139,114
157,010
10,244
(1,341)
148,017
38,884
(11,738)
27,146
576
27,722
1,397
44,833
15,840
60,673
(41,000)
-
(41,000)
19,673
-
-
157,010
29,334
(8,803)
20,531
-
20,531
20
35,461
25,002
60,463
35,257
465
35,722
24,741
378,673
119,596
1,911
(602)
1,309
92
(1,050)
(611)
(1,661)
442
99
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 12. Property, Plant and Equipment
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
Non Current
Freehold land – cost
Buildings
Cost
Accumulated depreciation and impairment
Leasehold improvements
Cost
Accumulated amortisation and impairment
Plant and equipment (owned)
Cost
Accumulated depreciation and impairment
Plant and equipment (leased)
Cost
Accumulated amortisation and impairment
Livestock Carrier
Cost
Accumulated depreciation and impairment
11,261
13,727
18,249
(7,576)
10,673
28,020
(13,994)
14,026
30,627
(4,934)
25,693
26,076
(12,493)
13,583
283,639
489,428
(214,384)
(281,658)
69,255
207,770
1,547
(520)
1,027
28,789
(24,270)
4,519
8,363
(2,478)
5,885
27,203
(8,378)
18,825
Assets under construction – cost
3,620
27,498
-
11
-
11
-
-
-
225
-
225
-
-
-
-
-
-
-
-
11
-
11
-
-
-
225
-
225
-
-
-
-
-
-
-
Total property, plant and equipment
114,381
312,983
236
236
Refer to note 17 for interest bearing loans and borrowings secured by property, plant and equipment.
100
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 12. Property, Plant and Equipment (continued)
Reconciliations of the carrying amounts for each class of property,
plant and equipment are set out below:
Freehold land
Carrying amount at 1 July
Additions
Disposals
Reversal of impairment
Exchange fl uctuations
Transfers
Carrying amount at period end
Buildings
Carrying amount at 1 July
Additions
Disposals
Depreciation
Impairment
Exchange fl uctuation
Transfers
Carrying amount at period end
Leasehold improvements
Carrying amount at 1 July
Additions
Disposals
Amortisation
Acquisition through entity acquired
Impairment
Transfers
Carrying amount at period end
Plant and equipment
Carrying amount at 1 July
Additions
Acquisition through entity acquired
Disposals
Depreciation
Impairment
Transfers
Exchange fl uctuation
Carrying amount at period end
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
13,727
1,652
(2,453)
-
(13)
(1,652)
11,261
25,693
1,378
(9,868)
(2,166)
(3,140)
(127)
(1,097)
10,673
13,583
2,755
(2,652)
(2,861)
-
-
3,201
14,026
207,770
12,890
-
(130,372)
(25,500)
(10,171)
14,236
402
15,141
153
(2,036)
989
14
(534)
13,727
25,464
3,648
(6,138)
(1,799)
-
395
4,123
25,693
17,824
1,677
(334)
(2,485)
458
(48)
(3,509)
13,583
120,077
26,001
98,854
(13,171)
(28,205)
(6,334)
9,787
761
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
11
-
-
-
-
-
-
11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11
25
-
-
(25)
-
-
-
-
225
272
-
-
-
-
-
-
-
-
-
-
(47)
-
-
-
69,255
207,770
225
225
101
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 12. Property, Plant and Equipment (continued)
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
Leased plant and equipment
Carrying amount at 1 July
Additions
Disposals
Transfers
Amortisation
Carrying amount at period end
Livestock Carrier
Carrying amount at 1 July
Additions
Depreciation
Impairment
Disposals
Carrying amount at period end
Assets under construction
Carrying amount at 1 July
Additions
Disposals
Exchange fl uctuation
Impairment
Transfers
Carrying amount at period end
Note 13. Investment Properties
Non Current
5,885
330
(4,220)
(250)
(718)
1,027
18,825
97
(1,923)
(12,480)
-
4,519
27,498
4,433
(671)
4
(15,604)
(12,040)
3,620
8,125
193
(2,316)
561
(678)
5,885
21,176
61
(2,412)
-
-
18,825
12,641
24,017
(39)
43
(777)
(8,387)
27,498
Investment properties as per valuation
283,797
256,417
Investment properties – at fair value
Carrying amount at 1 July
Transfer from other property, plant, equipment
Fair value adjustments, net
Impairment adjustment
Acquisition of investment properties
Disposal of investment properties
Foreign exchange variation
Carrying amount at period end
(a) Amounts recognised in profi t and loss for investment properties
Land and Buildings
Rental income
Direct operating expenses from property that generated
rental income
Direct operating expenses from property that did not generate
rental income
102
256,417
248,257
2,663
10,672
(25,626)
39,975
(985)
681
-
22,324
-
77,810
(92,070)
96
283,797
256,417
286
-
-
286
227
-
-
227
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 13. Investment Properties (continued)
Plantation Land
The Group does not separately recognise rental income from plantation land in profi t and loss. This income is embedded within the harvest
proceeds from plantations. Therefore it is not possible to provide a defi nitive rental income value and associated direct expenses generated
from rental income to disclose. Rental income is not considered to be a signifi cant revenue item.
The Plantation Land not yet used to generate income has some immaterial expenses associated with the land. These costs are not
separately recorded and therefore cannot be separately identifi ed.
(b) Valuation basis
The fair value represents the amount at which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable
willing seller in an arm’s length transaction at the date of valuation, in accordance with Australian Valuation Standards.
The fair value methodology for plantation land investments is detailed in Note 2(n). The independent land valuation expert is Colliers
Jardine using a desktop approach.
Plantation Land
The assumptions used for the Plantation Land DCF valuation model are as follows:
Future Land Price Index
CPI
Land discount rate (post-tax)
Future land rental income
Lease period
4.5% (2008: 4.5%)
2.5% (2008: 2.5%)
9% (2008: 9%)
Between 0% and 30% of fi nal net harvest proceeds
Between 1 and 20 years depending upon the individual property
Land and Buildings
Land and Buildings have been impaired by $25.6m (2008:nil). The impairment of this property is a direct result of the Board’s decision
during the current fi nancial reporting period, to exit the wool processing business in Bremen, Germany. Fair value was determined with
reference to advice received from an external sales agent expert engaged in facilitating the sale of this property.
In 2008, the fair value was determined based on valuations performed by Robert C Spiess as at 30 June 2007. Robert C Spiess are
independent, certifi ed property valuers and developers.
103
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 14. Intangibles
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
Non Current
Patents, trade marks and licences – (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
Goodwill – (gross carrying amount)
Accumulated impairment
Net carrying amount
3,224
(3,078)
146
12,623
(7,295)
5,328
168,341
225,444
(22,854)
145,487
(17,558)
207,886
Brand names – (gross carrying amount)
60,400
60,519
Development costs, rent roll & other – (gross carrying amount)
Accumulated amortisation and impairment
Net carrying amount
29,662
(7,175)
22,487
37,242
(4,139)
33,103
Total intangibles
228,520
306,836
Reconciliation of movement:
Patents, trade marks and licences
As at 1 July
Additions
Disposal/Transfers
Amortisation/Impairment
As at period end
Goodwill
As at 1 July
Acquisition of subsidiary
Additions
Impairment
Disposal/Transfers
As at period end
Brand names
As at 1 July
Additions
Impairment
Disposal/Transfers
As at period end
Development costs, rent rolls and other
As at 1 July
Additions
Disposal /Transfers
Amortisation/Impairment
As at period end
104
5,328
-
(4,310)
(872)
146
9,243
-
(2,866)
(1,049)
5,328
207,886
196,698
-
18,371
(13,380)
(67,390)
14,615
8,721
(6,484)
(5,664)
145,487
207,886
60,519
60,400
-
-
(119)
60,400
33,103
1,117
(6,546)
(5,187)
22,487
228
(109)
-
60,519
21,982
16,754
1,232
(6,865)
33,103
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 14. Intangibles (continued)
Refer Note 2 (o) and (p) for the accounting policy in relation to goodwill and other intangible assets.
Goodwill acquired through business combinations and acquisitions has been allocated to the respective cash generating unit (CGU) for
impairment testing based on a value in use calculation.
Impairment tests for goodwill and intangible assets with indefi nite useful lives
Goodwill acquired through business combinations and brand names have been allocated to CGU according to business segments and
operations within those segments.
The carrying amount of goodwill and brand names attributed to each of these cash generating units is as follows:
Goodwill
Brand Names
Rural Services Network
Rural Services New Zealand
Forestry
Timber
Other CGU’s
Parent: nil (2008: nil)
Goodwill
September
2009
$000
69,204
17,366
43,764
-
15,153
June
2008
$000
September
2009
$000
June
2008
$000
95,850
60,400
60,400
-
43,764
32,725
35,547
-
-
-
-
-
-
-
119
60,519
145,487
207,886
60,400
Rural Services Network CGU
The recoverable amount for Goodwill for Rural Services Network CGU has been determined based on a value in use calculation using cash
fl ow projections approved by management that covers a period of 5 years. Future cash fl ows are based on budgets and forecasts taking into
account current market conditions and known future business events that will impact cash fl ows. The discount rate applied to the cash fl ow
projections is 9.1% pre-tax (2008: 14.5% pre-tax) which has been determined based on a weighted average cost of capital calculation.
The calculation of value in use for the Rural Services Network CGU was based on the following key assumptions:
Gross margins
• General trading conditions for farm supplies are expected to normalise with stable commodity prices and rainfall returning to average
seasonal timing;
• Rural confi dence is expected to recover in line with strong and improving farmer terms of trade;
• Stronger livestock prices are expected consistent with data released by the Australian Bureau of Agricultural and Resource Economics
(ABARE);
• Real estate activity in both broadacre and residential markets are expected to increase over the forecast period; and
• Slight decline in wool earnings with weaker demand resulting from the global economic downturn.
Selling, general and administrative expenses
• Signifi cant reduction in expenses is expected through restructure initiatives undertaken by management over the 2009 fi nancial year.
Growth rate estimates
• Growth for years 1-3 is based on a three year forecast incorporating transformation and restructure benefi ts as recently announced in the
‘Agenda for Change’ strategy. These forecasted benefi ts were completed with extensive external consultation and are based on various
assumptions for each individual product group within the Rural Services Network; and
• The growth rate assumption for years 4 and 5 is 3% based on nominal growth.
Discount rates
• Discount rates refl ect management’s estimate of the time value of money and the risk specifi c to each unit that are not already refl ected in
the cash fl ows. Post tax discount rates have been applied as the entity has substantial tax losses that can be utilised up to year 5.
Management has determined there is no impairment in the current year for the Rural Services CGU (2008: $nil).
Rural Services New Zealand CGU
The recoverable amount for Goodwill for Rural Services New Zealand CGU has been determined based on a value in use calculation using
cash fl ow projections approved by management that covers a period of 5 years. Future cash fl ows are based on budgets and forecasts taking
into account current market conditions and known future business events that will impact cash fl ows. The discount rate applied to the cash
fl ow projections is 9.1% pre-tax (2008: 14.5% pre-tax) which has been determined based on a weighted average cost of capital calculation.
105
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 14. Intangibles (continued)
The calculation of value in use for the Rural Services New Zealand CGU was based on the following key assumptions:
Gross margins
• General trading conditions for farm supplies are expected to normalise with stable commodity prices and rainfall returning to average
seasonal timing;
• Rural confi dence is expected to recover in line with strong and improving farmer terms of trade;
• Real estate activity in both broadacre and residential markets are expected to increase over the forecast period; and
• Stable wool prices and volumes throughout the forecast period.
Selling, general and administrative expenses
• Signifi cant reduction in expenses is expected through restructure initiatives undertaken by management over the 2009 fi nancial year.
Growth rate estimates
• Growth for years 1 – 3 is based on a three year forecast incorporating transformation and restructure benefi ts identifi ed through a review
performed by an external consultant. These initiatives have been substantially implemented by management in 2009; and
• The growth rate assumption for years 4 and 5 is 3% based on nominal growth.
Discount rates
• Discount rates refl ect management’s estimate of the time value of money and the risk specifi c to each unit that are not already refl ected
in the cash fl ows. Post tax discount rates have been applied as the entity has substantial tax losses that can be utilised up to year 5.
Management has recorded an impairment of $1,001,000 (2008: $nil) for the Rural Services New Zealand CGU.
Forestry CGU
The recoverable amount for Goodwill for Forestry CGU has been determined based on a value in use calculation using cash fl ow projections
approved by management that covers a period of 20 years. Future cash fl ows are based on budgets and forecasts for 2010 and then
keeping quantities consistent and increasing sales price and costs by infl ation of 2.5%, after taking into account current market conditions
and known business events that will impact future cash fl ows. The discount rate applied to the cash fl ow projections is 12.0% pre-tax
(2008: 14.5% pre tax) which has been determined based on a weighted average cost of capital calculation.
Management has determined there is no impairment in the current year for the Forestry CGU (2008: $nil).
Brand Names
The brand name value represents the value attributed to the Elders brand when acquired. The carrying amount of the brand name
is supported by an independent valuation. An independent valuation was undertaken in June 2005 and was reviewed and confi rmed in
June 2009.
The recoverable amount for Brand Names for the Rural Services CGU has been determined based on a value in use calculation using cash
fl ow projections approved by management. Future cash fl ows are based on budgets and forecasts taking into account current market
conditions and known future business events that will impact cash fl ows. The discount rate applied to the cash fl ow projections is 9.1%
pre-tax (2008: 14.5% pre-tax) which has been determined based on a weighted average cost of capital calculation.
The calculation of value in use for the Rural Services Network CGU was based on the following key assumptions:
Gross margins
• General trading conditions for farm supplies are expected to normalise with stable commodity prices and rainfall returning to average
seasonal timing;
• Rural confi dence is expected to recover in line with strong and improving farmer terms of trade;
• Stronger livestock prices are expected consistent with data released by the Australian Bureau of Agricultural and Resource Economics
(ABARE);
• Real estate activity in both broadacre and residential markets are expected to increase over the forecast period; and
• Slight decline in wool earnings with weaker demand resulting from the global economic downturn.
Selling, general and administrative expenses
• Signifi cant reduction in expenses is expected through restructure initiatives undertaken by management over the 2009 fi nancial year.
Growth rate estimates
• Growth for years 1 – 3 is based on a three year forecast incorporating transformation and restructure benefi ts as recently announced in
the ‘Agenda for Change’ strategy. These forecasted benefi ts were completed with extensive external consultation and are based on
various assumptions for each individual product group within the Rural Services Network; and
• The growth rate assumption for years 4 and 5 is 3% based on nominal growth.
106
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 15. Other Assets
Current
Insurance deferred acquisition costs
Reinsurance premium ceded
Deferred expenses
Prepayments
Non Current
Deferred design and development expenditure
- as at 1 July
- current period costs
Accumulated amortisation
Note 16. Payables
Current
Trade creditors (i)
Other creditors and accruals
Unearned insurance premium
Unearned forestry income
Loans from controlled entities (ii)
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
-
-
2,063
21,139
23,202
27,019
84,550
1,919
18,790
132,277
53,016
(5,300)
47,716
64,936
(11,920)
53,016
(29,257)
(25,958)
18,459
27,058
199,828
145,587
-
17,316
-
458,960
274,905
193,227
39,634
-
362,731
966,726
-
-
-
632
632
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
12,667
4,450
-
-
-
-
789,812
802,479
295,529
299,979
(i) Trade and other creditors are non interest bearing and are normally settled on 30 day terms.
(ii) Loans from controlled entities are interest bearing based on commercial rates and repayable on demand.
Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.
Details regarding the effective interest rate and credit risk of non-current payables are disclosed in note 36.
107
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 17. Interest Bearing Loans and Liabilities
Current
Secured loans (a)
Unsecured loans
Lease liabilities (b)
Secured notes (a) (d)
Non Current
Secured loans (a)
Unsecured loans
Lease liabilities (b)
Unsecured notes (c)
Secured notes (a) (d)
Total Current and Non Current
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
702,419
30,704
1,603
453
149,594
133,006
1,196
-
854,069
164,905
245,064
-
112
-
100,028
345,204
1,199,273
22,107
301,501
6,435
220,614
-
550,657
715,562
-
-
-
149,594
149,594
-
-
-
-
100,028
100,028
249,622
-
-
-
-
-
-
100,000
-
220,614
-
320,614
320,614
(a) Secured loans and secured notes are secured by various fi xed and fl oating charges over the assets of the controlled entities concerned.
The total assets pledged as security are as follows:
Total Current assets
Total Non Current assets
930,110
1,366,630
2,296,740
-
-
-
1,441,604
537,769
1,979,373
-
-
-
(b) Lease liabilities are secured by a charge over the leased assets.
(c) For 2008 comparative purposes, unsecured notes are issued in the United States of America fi nancial markets and are denominated in
United States dollars. Terms of maturity vary between November 2009 and May 2015. The notes have been swapped into Australian
dollars as noted in Note 36(g).
(d) Secured notes are issued in the United States of America fi nancial markets and are denominated in United States dollars. Refer to (h)
below for further information.
(e) The carrying amount of the Group’s current and non current borrowings are held at their fair value.
(f) During the current and prior years, there were no defaults or breaches of any of the loans.
(g) Details regarding the liquidity, effective interest rate and credit risk of interest bearing liabilities are disclosed in note 36.
108
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 17. Interest Bearing Loans and Liabilities (continued)
(h) Financing arrangements.
The Group has access to the following fi nancing facilities with a number of fi nancial institutions.
Consolidated
Parent
Maturity
Accessible
$000
Drawn
$000
Unused
$000
Accessible
$000
Drawn
$000
Unused
$000
2009
Secured Loans
Tranche A1 Term Loan
Sep ‘12
127,214
127,214
Tranche B1 Asset Sales Bridge
Sep ‘10
344,737
344,737
-
-
-
-
316,272
316,272
116,777
116,777
35,000
28,105
19,414
23,069
15,586
5,036
968,105
947,483
20,622
-
-
-
-
-
-
-
-
-
-
-
-
-
-
19,366
37,919
14,450
28,293
78,018
71,576
30,691
19,366
37,919
14,450
28,293
78,018
71,576
30,691
280,313
280,313
Nov ‘14
(30,691)
(30,691)
249,622
249,622
2,168
2,168
-
-
-
-
-
-
-
-
-
-
-
19,366
37,919
14,450
28,293
78,018
71,576
30,691
19,366
37,919
14,450
28,293
78,018
71,576
30,691
280,313
280,313
(30,691)
(30,691)
249,622
249,622
-
-
1,219,895
1,199,273
20,622
249,622
249,622
Oct ‘09
Mar ‘11
Mar ‘11
Various
Nov ‘14
May ‘15
Nov ‘14
May ’15
Sep ‘10
Nov ‘09
Nov ‘14
Tranche C1 Equity Bridge
Tranche D1 Revolver
Tranche D2 Ancillary
Other
Secured Notes
- Tranche A2 – Series A
- Tranche A2 – Series B
- Tranche A3 – Series C
- Tranche A3 – Series D
- Tranche B2 – Series F
- Tranche C2 – Series G
- Tranche A4 – Series D
Costs to be amortised over
the period of the loan
Other unsecured loans and
lease liabilities
Total
2008
Multi-option facilities
975,000
428,502
546,498
100,000
100,000
Other
84,046
58,811
25,235
-
-
1,059,046
487,313
571,733
100,000
100,000
Unsecured Notes
- November 2009
- November 2014
- May 2015
48,294
30,184
48,294
30,184
142,136
142,136
220,614
220,614
-
-
-
-
48,294
30,184
48,294
30,184
142,136
142,136
220,614
220,614
• Tranches B1, C1, B2 & C2 are to be repaid from asset sales and equity proceeds; and
• Tranches A2, A3 & A4 maturities are subject to “Note Holder Put Rights” to September 2012.
For 2008
• $100 million of the multi option facilities are provided on a fi ve year bullet basis with ability to refresh (current maturity December 2012)
and are subject to compliance with various banking covenants;
• $475 million of the multi option facilities are provided on a three year evergreen basis with annual review/extension (current maturity
December 2010) and are subject to compliance with various banking covenants;
• $400 million of the multi option facilities are provided on a 364 day evergreen basis with biannual review/extension (current maturity
June 2009) and are subject to compliance with various banking covenants. A further $100 million is available for leasing, contingent
instruments, and other facilities; and
• $100.8 million being the balance of the facilities are provided to controlled entities on varying terms.
109
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 18. Provisions
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
Employee entitlements (a)
As at 1 July
Arising during year
Utilised
Unused amounts reversed
Discount rate adjustment
As at Period End
Insurance claims (b)
As at 1 July
Arising during year
Utilised or disposed of
Unused amounts reversed
Discount rate adjustment
As at Period End
Warranty (d)
As at 1 July
Arising during year
Utilised
Unused amounts reversed
As at Period End
Restructuring (e)
As at 1 July
Arising during year
Utilised
As at Period End
Redundancy (g)
As at 1 July
Arising during year
Utilised
Unused amounts reversed
As at Period End
Make good provision (c)
As at 1 July
Arising during year
Utilised
Discount rate adjustment
As at Period End
Other (f)
As at 1 July
Arising during year
Utilised
Unused amounts reversed
As at Period End
110
67,559
35,111
(38,619)
(753)
241
63,539
71,312
20,525
(20,770)
(2,880)
(628)
67,559
191,285
401,671
184,357
216,419
(362,885)
(208,778)
(234,370)
4,299
-
(713)
-
191,285
2,722
1,866
(1,187)
(1,159)
2,242
6,889
57,086
(27,796)
36,179
917
3,353
(1,806)
(464)
2,000
5,977
3,234
(2,248)
(4,261)
2,722
4,811
7,242
(5,164)
6,889
2,319
1,027
(2,429)
-
917
6,306
5,532
137
(14)
599
404
-
546
7,028
6,306
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
23,607
13,414
18,436
21,790
(26,175)
(12,579)
(1,431)
9,415
(4,040)
23,607
6,450
2,887
(7,099)
-
2,238
7,000
6.450
(6,456)
(544)
6,450
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 18. Provisions (continued)
Total Current
Total Non Current
Consolidated
Parent
September
2009
$000
107,197
13,206
120,403
June
2008
$000
208,136
91,149
299,285
September
2009
$000
2,238
-
2,238
June
2008
$000
6,450
-
6,450
(a) All employee entitlements for parent entity employees are recognised in a controlled entity’s balance sheet.
(b) The weighted average term to settlement from balance date of outstanding claims is expected to be less than 12 months. Refer to note
26 for more details about Insurance activities for the Group. On 30 September 2009, the Insurance business was sold, therefore there
is no Insurance Claim provision. Refer to Note 39 for more details.
(c) A make good provision is recorded at the commencement of a lease or operation being the present value of restoration obligations,
while the cost of future restoration is capitalised as part of the asset. The capitalised cost is depreciated over the life of the lease or
project and the provision is increased as the discounting of the liability unwinds.
(d) A provision is recognised for expected warranty claims on products sold during the last fi ve years, based on past experience of the level
of repairs and returns. It is expected that most of these costs will be incurred in the next fi nancial year and all will have been incurred
within two years of the balance sheet date. Assumptions used to calculate the provision for warranties were based on current sales
levels and current information available about returns based on the two-year warranty period for all products sold.
(e) The restructuring provision relates to the Group’s exit from its wool processing and trading operations (BWK). This provision was
recognised on announcement of the exit strategy in December 2008. The most signifi cant part of the restructure, being the exit of the
operation in Germany and Turkey, is expected to be substantially completed by June 2010.
(f) The remaining provision balance in ‘other’ includes provision for onerous leases ($5.3m), legal claims ($1.3m) and other items.
(g) The redundancy provision relates to redundancies communicated to staff during the year and that will be paid by December 2009.
111
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 19. Contributed Equity
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
Issued and paid up capital
819,165,045 ordinary shares (2008: 780,545,644)
737,513
694,118
737,513
694,118
Movements during year:
September 2009
June 2008
Opening balance, 1 July
Conversion of options
Issued capital, employee share plan
Employee Bonus Shares
Dividends underwritten
Dividend reinvestment plan
Convertible notes converted
Closing balance
Number
$000
Number
$000
780,545,644
694,118
735,640,128
608,493
-
-
345,752
23,812,167
14,461,482
-
-
446
26,879
16,070
1,387,500
5,746,830
-
24,609,680
12,757,050
-
-
404,456
819,165,045
737,513
780,545,644
2,415
11,453
-
46,815
23,988
954
694,118
Effective 1 July 1998, the Corporations legislation abolished the concepts of authorised capital and par value shares. Accordingly the
Company does not have authorised capital nor par value in respect of its issued capital.
Capital management
When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns
to shareholders and benefi ts for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of
capital available to the entity.
Management are constantly adjusting the capital structure to take advantage of favourable costs of capital or high returns on assets. As the
market is constantly changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
In accordance with the APRA requirements of Elders Insurance Limited, there was an imposed Minimum Capital Requirement (“MCR”) of
150%, Management had a target MCR of 175%, and managed capital to that level by paying dividends or obtaining capital from the parent
(Refer to Note 2). Management monitored the achievement of the MCR Management Target on a monthly basis, in addition the calculation
was incorporated into the Budget and was monitored as part of that budgeting process. During the year the MCR at all times exceeded
150%. With the sale of Elders Insurance Limited this is no longer a requirement for the Elders Limited Group.
Note 20. Hybrid Equity
Hybrid equity
Issued and fully paid up
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
145,151
145,151
145,151
145,151
1,500,000 perpetual, subordinated, convertible unsecured notes (“Hybrids”) were issued in April 2006 at $100 each. If the Board resolves
to pay them, distributions will be paid quarterly in arrears on 31 March, 30 June, 30 September and 31 December each year. Distributions
are frankable. Until 30 June 2011 (the fi rst remarking date) the distribution rate will be the 3 month bank bill swap rate plus a margin
of 2.20% pa. On a remarking date, Elders has discretion to either redeem the Hybrid for cash or convert the Hybrid into ordinary shares.
Alternatively, Elders can accept a one-off step up of 250 bps in margin or pursue a remarking process to set a new margin.
Elders’ current restructured fi nancing arrangements restricts Elders from paying distributions on Elders Hybrids until and including
30 September 2011.
112
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 21. Reserves
Business combination reserve:
Opening balance, 1 July
Arising during the year
Closing balance
Employee equity benefi ts reserve:
Opening balance, 1 July
Current year share option expense
Current year share plan expense
Other share plan transfers
Closing balance
Foreign currency translation reserve:
Opening balance, 1 July
Currency translation differences
Currency translation differences realised
Closing balance
Net unrealised gains reserve:
Opening balance, 1 July
Application of AASB 132 and 139
Cash fl ow hedge reserve
Closing balance
Share of reserve for losses in joint venture:
Opening balance, 1 July
Current year movement
Closing balance
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
27,501
(38,159)
(10,658)
-
27,501
27,501
(23,605)
(24,780)
(1,378)
8,734
2,048
734
1,715
(1,274)
(14,201)
(23,605)
(4,747)
(503)
307
(8,362)
3,541
74
(4,943)
(4,747)
3,907
(12,425)
2,122
(6,396)
13,134
(7,701)
5,433
492
3,618
(203)
3,907
10,242
2,892
13,134
-
-
-
2,622
(1,479)
8,415
175
9,733
-
-
-
-
9,641
(12,397)
3,007
251
-
-
-
-
-
-
2,426
434
88
(326)
2,622
(74)
-
74
-
2,003
-
7,638
9,641
-
-
-
Total Reserves
(30,765)
16,190
9,984
12,263
Nature and purpose of reserves:
Business combination reserve
This reserve is used to record fair value adjustments to those assets acquired by the Group in a business combination.
Employee equity benefi ts reserve
This reserve is used to record the value of equity benefi ts (both options and share loans) provided to employees and Directors as part
of their remuneration.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the fi nancial statements
of foreign subsidiaries. It is also used to record the effect of hedging net investments in foreign operations.
Net unrealised gains reserve
This reserve records fair value changes on available-for-sale investments and the portion of the gain or loss on a hedging instrument in
a cash fl ow hedge that is determined to be an effective hedge.
Share of reserve for losses in joint venture
Rural Bank (RB) has APRA reporting requirements for a general provision for credit losses to be recognised directly in equity.
The Group therefore is required to recognise the proportionate interest in RB’s reserve for credit losses directly in equity.
113
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 22. Retained Earnings
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
Retained earnings at the beginning of the fi nancial year
353,991
403,063
100,409
Net profi t/(loss) attributable to members
Dividends provided for or paid
Movements in equity (refer to Statement of Changes in Equity)
(466,426)
(51,153)
5,576
36,447
(82,627)
(2,892)
(59,158)
(51,153)
-
June
2008
$000
71,011
109,976
(80,578)
-
Retained earnings at the end of the fi nancial year
(158,012)
353,991
(9,902)
100,409
Note 23. Dividends
a) Dividends proposed
No fi nal dividend will be paid (2008: 5.5¢ per share, fully franked)
b) Dividends paid during the year
Current year interim
- No interim dividend will be paid (2007: 4¢ per share,
partly franked)
Previous year fi nal
- fully franked dividend of 5.5¢ per share (2007: 5¢ per share,
fully franked)
Hybrid distribution fully franked
Subsidiary Equity dividends on ordinary shares:
Dividends paid to external parties during the year
- B&W Rural Pty Ltd fully franked dividend paid 31 October 2008
of $4,460 per share
- Killara Feedlot Pty Ltd unfranked dividend paid 26 August 2008
of 0.2¢ per share
- Killara Feedlot Pty Ltd unfranked dividend paid 17 February 2009
of $0.17 per share
- Amcom fully franked dividend paid November 2007
of 0.5¢ per share and paid April 2008 of 0.3¢ per share
-
-
42,930
30,515
-
-
42,930
30,515
42,949
40,284
42,949
40,284
8,204
51,153
9,779
80,578
8,204
51,153
9,779
80,578
2,186
107
905
-
54,351
-
-
-
2,049
82,627
-
-
-
-
-
-
-
-
51,153
80,578
Elders’ current restructured fi nancing arrangements restricts Elders from paying dividends on shares until after 31 March 2012.
c) Franking credit balance
Franking credits available for subsequent fi nancial years
based on tax rate of 30% (2008: 30%)
Parent
September
2009
$000
Parent
June
2008
$000
15,790
22,501
The above amounts represent the balance of the franking account as at the end of the fi nancial year, adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date;
(d) franking credits that may be prevented from being distributed in subsequent fi nancial years; and
(e) franking credits that have been added to the Parent due to the acquisition of Integrated Tree Cropping Ltd.
The impact on the franking account of the dividend recommended by
the directors since year end, but not recognised as a liability at year
end, will be a reduction in the franking account of:
114
-
(18,399)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 24. Minority Interests
Minority interests comprise interests in the following items:
Contributed equity
Retained earnings
Consolidated
Parent
15 months
September
2009
$000
12 months
June
2008
$000
15 months
September
2009
$000
12 months
June
2008
$000
13,332
(5,560)
7,772
58,323
28,403
86,726
-
-
-
-
-
-
Note 25. Notes to Cash Flow Statement
(a) Reconciliation of net profi t /(loss) after tax to net cash fl ows from operations
Profi t after income tax expense
(466,426)
36,447
(59,158)
109,976
Depreciation and amortisation
Share of associates and joint venture (profi t)
Dividends from associates
Dividend received as DRP
Dividend from controlled entities
Interest income from controlled entities
Fair value adjustments to fi nancial assets
Impairment of assets
Movement in provision for:
- doubtful debts
- employee entitlements
- other provisions
Other write downs
Deferred tax asset
Deferred income tax
Provision for tax
Net (profi t)/loss on sale of non-current assets
Net (profi t)/loss on sale of controlled entity
Cost of share based payments
Other non cash items
Operational cash fl ow generated
Change in operating assets and liabilities net of effects of
acquisitions and disposals of entities and the consolidation
of controlled entities:
- (Increase)/decrease in receivables and other assets
- (Increase)/decrease in inventories
- Increase/(decrease) in payables and accruals
Net cash fl ows from operating activities
45,542
697
19,900
(7,703)
-
-
42,584
(51,236)
33,527
-
-
-
-
-
14,749
-
-
72
(1,204)
12,085
-
(143,000)
(24,763)
(20,509)
(18,853)
(26,094)
2,282
(783)
99,928
21,955
5,065
10,937
33,179
220,406
(35,862)
15,384
15,105
(41,563)
(82,546)
7,548
7,335
(3,711)
(4,492)
11,014
-
(635)
(4,063)
(29,341)
2,369
18,525
2,449
7,429
-
-
-
2,169
-
-
-
-
-
(6,358)
8,587
(9,774)
-
-
-
(550)
-
(29,234)
(2,258)
(38,026)
-
-
522
(7,812)
(171,927)
56,727
(72,266)
(120,721)
(150,184)
(136,640)
23,434
26,378
93,277
(294,492)
(523,326)
(12,395)
78,214
(14,094)
-
(17,973)
(66,805)
-
(7,368)
(101,711)
115
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 25. Notes to Cash Flow Statement (continued)
(b) Non cash fi nancing and investing activities
During the fi nancial year the following non-cash transactions occurred. These transactions are not refl ected in the cash fl ow statement:
• the issue of 14,461,482 ordinary shares for the value of $16.1 million under the terms of the dividend reinvestment plan
(2008: 12,757,050 ordinary shares for $24.0 million); and
• no receivables were settled by way of conversion into an equity interest in 2009 (2008: nil).
Cash and Cash Equivalents
Cash at bank and in hand
Short-term deposits
Consolidated
Parent
15 months
September
2009
$000
12 months
June
2008
$000
15 months
September
2009
$000
12 months
June
2008
$000
367,868
244,043
293,100
42,162
-
-
-
-
367,868
244,043
293,100
42,162
Cash at year end includes $nil (2008: $158.15 million) of insurance cash, the use of which is subject to restrictions in accordance with the
Insurance Act and the Insurance (Agents and Brokers) Act. Cash also includes $0.54 million (2008: $17.31 million) of cash held in trust
on behalf of certain controlled entities.
Note 26. Results of Insurance Activities
The summary of fi nancial position below refl ects the contribution to the Group of the general insurance activities of Elders Insurance
Limited (EIL). EIL was a wholly owned entity of the parent entity and was subject to prudential supervision by the Australian Prudential
Regulatory Authority until its disposal on 30 September 2009.
Profi t from ordinary activities includes the following results from
general insurance activities:
Direct premium revenue
Outward reinsurance premiums
Claims expense
Reinsurance and other recoveries
Claims handling costs
Net claims incurred (a)
Underwriting expenses
- Amortisation of deferred acquisition costs
- Recurring acquisition costs
- Other underwriting costs
Other underwriting revenue
Net underwriting result
Investment revenue
General and administration expenses
Profi t from ordinary activities before income tax
Income tax (expense)
Net profi t
116
535,451
339,037
(241,326)
(145,893)
294,125
193,144
(399,220)
(243,975)
213,839
121,432
(9,323)
(6,438)
(194,704)
(128,981)
(104,843)
(25,737)
(6,326)
(64,254)
(15,495)
(3,279)
(136,906)
(83,028)
54,918
17,433
12,510
(17,521)
12,422
(4,527)
7,895
35,709
16,844
11,886
(12,801)
15,929
(4,880)
11,049
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 26. Results of Insurance Activities (continued)
(a) Net claims incurred comprises:
September 2009
June 2008
Current Year
$000
Prior Year
$000
Total
$000
Current Year
$000
Prior Year
$000
Total
$000
Gross claims incurred and related expenses
-undiscounted
Reinsurance and other recoveries
- undiscounted
(440,693)
35,305
(405,388)
(279,792)
27,086
(252,706)
227,696
(15,308)
212,388
133,677
(10,371)
123,306
Net claims incurred – undiscounted
(212,997)
19,997
(193,000)
(146,115)
16,715
(129,400)
Discount and discount movement
- gross claims
Discount and discount movement
9,070
(12,225)
(3,155)
9,409
(7,116)
2,293
- reinsurance and other recoveries
(5,078)
6,529
1,451
(5,004)
3,130
(1,874)
Net discount movement
3,992
(5,696)
(1,704)
4,405
(3,986)
419
Total direct claims incurred
(209,005)
14,301
(194,704)
(141,710)
12,729
(128,981)
Process for Determining Risk Margin
The overall risk margin was determined allowing for diversifi cation between different APRA business classes and the relative uncertainty of
the outstanding claims estimate for each class. Uncertainty was analysed for each class taking into account potential uncertainties relating
to the actuarial models and assumptions, the quality of underlying data used in the models, the general insurance environment and the
impact of legislative reform.
The assumptions regarding uncertainty for each class were applied to the net central estimates and the results were aggregated, allowing for
diversifi cation in order to arrive at an overall provision which is intended to have a 90% probability of suffi ciency.
Risk Margins Applied (Net of Diversifi cation)
Long Tail Classes
Short Tail Classes
Overall Margin Allowing for Diversifi cation
September 2009
%
June 2008
%
16.5
8.9
12.0
27.1
15.0
19.9
117
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 27. Expenditure Commitments
Lease Commitments
Finance leases:
- not later than one year
- later than one year but not later than fi ve years
- later than fi ve years
Minimum lease payments
Future fi nance charges
Lease liabilities
Disclosed in the fi nancial statements as:
- current (note 17)
- non current (note 17)
Operating leases:
- not later than one year
- later than one year but not later than fi ve years
- later than fi ve years
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
495
116
-
611
(46)
565
453
112
565
1,520
7,047
-
8,567
(936)
7,631
1,196
6,435
7,631
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
74,387
176,758
134,145
385,290
66,740
167,936
132,931
367,607
556
1,390
-
1,946
574
2,297
2,871
5,742
The Group has fi nance leases and hire purchase contracts for various items of plant and machinery with a carrying amount of $1.03 million
(2008: $5.89 million). These lease contracts expire within 1 to 4 years. The leases have terms of renewal but no purchase options and
escalation clauses. Renewals are at the option of the specifi c entity that holds the lease.
The Group leases the majority of its branch networks and capital city properties under operating leases. The lease commitments comprise
base amounts adjusted where necessary for escalation clauses primarily based on infl ation rates. Leases generally provide the Group with a
right of renewal at the end of the lease term. The extent of lease commitments is a factor that is considered in the calculation of certain
borrowing covenants.
Capital Expenditure Commitments
Capital expenditure contracted for but not otherwise provided
for in these accounts:
- not later than one year
- later than one year but not later than fi ve years
- over fi ve years
14,649
38,878
-
-
-
-
14,649
38,878
-
-
-
-
-
-
-
-
118
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 28. Contingent Liabilities
Contingent liabilities at balance date, not otherwise provided
for in these fi nancial statements, are as follows:
Claims lodged for damages resulting from the
use of products or services (e)
Discounted Trade Bills
Guarantees issued to third parties arising in the normal
course of business
797
-
67,830
68,627
3,258
550
93,881
97,689
-
-
-
-
67,830
67,830
93,881
93,881
Unquantifi able contingent liabilities
(a) The Group has contingent obligations in respect of leased premises, which have been sub-let to associated entities.
(b) The Group has provided a guarantee for the performance of an associated entity under a lease agreement.
(c) Benefi ts are payable under service agreements with executive directors and offi cers of the Group under certain circumstances such as
termination or achievement of prescribed performance hurdles.
(d) There have been various legal claims lodged for damages resulting from the use of products or services of the Group for which no
provision has been raised as it is not currently probable that these claims will succeed and it is not practical to estimate the potential
effect of these claims. The directors’ are of the view that none of these claims are likely to be material.
(e) ITC Project Management Ltd (“ITCPM”) is the responsible entity of the ITC Group’s forestry management investment schemes.
ITCPM has established a large plantation estate in central Queensland which has been impacted by a fungal disease which causes
tree mortality and growth impairment. The impacted plantations have been established as part of various schemes promoted between
2000 and 2007. The directors are unable at this point to quantify the fi nancial effect that the disease may have on Elders and are
undertaking further review and analysis.
Other contingent liabilities
(a) The consolidated entity has entered into an agreement with MCK Holdings Pty Ltd which includes a put option for the remaining 50%
of the equity of Plexicor not held by the Elders Limited Group, contingent on certain events occurring, including the takeover of all or
part of the Group. If the put option is exercised, the purchase price would be approximately $27 million and the Elders Limited Group
would become responsible for Plexicor’s $70 million debt.
(b) As previously disclosed the Group has received amended income tax assessments from the Australian Taxation Offi ce (“ATO”) relating
to three separate matters which are disputed.
The fi rst matter relates to the capital gain arising on the disposal of the Group’s interest in its Building Products division in October
1997. The Group has appealed the amended assessments increasing the capital gain. Management consider the current provisioning in
relation to this matter to be adequate and will vigorously defend the assessments through the appeal process.
The second matter relates to the utilisation of a capital loss arising on the disposal of the Elders wool handling business in 1998
and utilised during the years 1998 to 2003. The amended assessments deny the capital loss. The Group continues to be of the view
that current provisioning is adequate in respect of these assessments. The Group is confi dent of the position it has adopted and intends
to defend vigorously the losses claimed.
The third matter relates to the utilisation of losses arising from the funding activities of the Group’s in-house fi nancier. The amended
assessments are attributable to the 2003 year denying the losses claimed. A provision has been raised against this potential exposure.
The Group is confi dent of the position it has adopted and intends to defend vigorously the deductions claimed
Other guarantees
(a) As disclosed in Note 32, the parent entity has entered into a Deed of Cross Guarantee with certain controlled entities. The effect of this
Deed is that Elders Limited and each of these controlled entities has guaranteed to pay any defi ciency of any of the companies party to
the Deed in the event of any of those companies being wound up.
(b) The parent entity and certain entities in the Group are parties to various guarantees and indemnities pursuant to bank facilities and
operating lease facilities extended to the Group and commitments under the convertible and unsecured notes.
Other matters
On 28 October 2009 the Australian Competition and Consumer Commission (ACCC) issued a Statement of Issues in relation to the
proposed sale of ITC Timber Pty Ltd, an entity which holds Elders’ hardwood timber processing operations as well as its 50% stake in
Smartfi bre Pty Ltd to Gunns Limited.
The ACCC has raised issues of concern with a small part of the overall transaction. The ACCC has also identifi ed other issues which may
be of concern and which require further analysis. Elders intends to work with Gunns to address all the issues identifi ed by the ACCC and is
confi dent that a transaction with Gunns can be completed. Gunns have provided an “in principle” agreement to acquire those assets to
which the ACCC gives fi nal approval.
In the event the entire transaction was not to proceed, total assets of $152 million and total liabilities of $14.2 million would need to be
consolidated into the Group’s balance sheet as at 30 September 2009 and the receivable for the sale proceeds of $96.2 million would be
eliminated. The loss on sale of $4.2 million including costs (after impairments of $40.0 million) would also not be recognised.
119
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 29. Segment Information
The Group is organised and managed separately according to the nature of the products and services provided. The consolidated entity
comprises the following distinguishable components; Rural Services, Financial Services, Forestry, Automotive Components and
Investment & Other.
Rural Services include the provision of a range of agricultural products and services through a common distribution channel.
Financial Services include the provision of a range of fi nancial services through a common distribution channel and the associate Rural Bank.
Forestry includes the Group’s interests in forestry plantations and processing.
Automotive Components include the manufacturing and sales of Automotive components of which the key components are seating,
heating ventilating and air-conditioning systems.
The Investment & Other segment includes the general investment activities not associated with the other business segments and the
administrative corporate offi ce activities.
Segment results have been determined on a consolidated basis and represent the earnings before corporate net borrowing costs and
income tax expense.
The Group operates predominantly within Australia. All other geographical operations are not material to the fi nancial statements.
Business Segments
15 months September 2009
External sales
Other revenue
Share of net profi t/(loss)
of associates
Total revenue
Underlying EBIT
Signifi cant items
Segment Result
Earnings before interest,
tax, depreciation & amortisation
Rural (i)
Services
$000
Financial
Services
Forestry
Automotive
Components
Investment
& Other
Total
$000
$000
$000
$000
$000
2,664,984
322,612
211,416
333,020
8,051
3,540,083
41,807
229,194
(27,513)
19,954
(4,650)
258,792
(724)
27,722
(2,668)
(25,986)
959
(697)
2,706,067
579,528
181,235
326,988
4,360
3,798,178
8,804
23,733
5,943
(15,057)
(10,642)
12,781
(295,800)
139,181
(106,566)
(44,348)
(81,603)
(389,136)
(286,996)
162,914
(100,623)
(59,405)
(92,245)
(376,355)
(268,596)
164,023
(94,040)
(39,974)
(92,226)
(330,813)
Depreciation & amortisation
(18,400)
(1,109)
(6,583)
(19,431)
(19)
(45,542)
Segment Result
(286,996)
162,914
(100,623)
(59,405)
(92,245)
(376,355)
Corporate net interest expense
Profi t from ordinary activities
before tax
Segment assets
Unallocated assets
(including tax assets)
Segment liabilities
Unallocated liabilities
(including tax liabilities)
(89,975)
(466,330)
842,055
166,692
726,160
194,279
129,129
2,058,315
-
-
-
-
-
482,908
358,995
11,428
30,718
61,174
70,744
533,059
-
-
-
-
-
1,306,505
Carrying value of equity investments
48,972
148,017
32,505
33,582
20,148
283,224
Acquisition of property, plant & equipment,
intangible assets and other non current
assets, including design and development
Non cash expenses other than depreciation
and amortisation
Profi t/(loss) on sale of investments and
controlled entities
120
17,201
15,984
45,816
10,259
54
89,314
263,664
(2,038)
65,881
16,453
21,234
365,194
41,041
137,986
(42,932)
(7)
(14,346)
121,742
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 29. Segment Information (continued)
Business Segments
12 months June 2008
$000
$000
$000
$000
$000
$000
Rural
Services
Financial
Services
Forestry
Automotive
Components
Investment
& Other
Total
External sales
Other revenue
Share of net profi t (loss) of associates
Total revenue
Underlying EBIT
Signifi cant items
Segment Result
2,472,331
218,534
191,344
384,241
45,665
3,312,115
13,965
9,460
49,909
20,531
27,714
12,200
21,374
2,269
19,796
132,758
6,776
51,236
2,495,756
288,974
231,258
407,884
72,237
3,496,109
57,537
22,407
61,351
26,168
4,250
171,713
(36,668)
-
87
-
(41,148)
(77,729)
20,869
22,407
61,438
26,168
(36,898)
93,984
Earnings before interest,
tax, depreciation & amortisation
36,201
23,019
66,634
42,268
(31,554)
136,568
Depreciation & amortisation
(15,332)
(612)
(5,196)
(16,100)
(5,344)
(42,584)
Segment Result
20,869
22,407
61,438
26,168
(36,898)
93,984
Corporate net interest expense
Profi t from ordinary activities
before tax
Segment assets
Unallocated assets
(including tax assets)
Segment liabilities
Unallocated liabilities
(including tax liabilities)
(56,909)
37,075
1,190,632
711,580
734,380
258,719
371,892
3,267,203
-
-
-
-
-
148,714
583,383
465,782
71,337
96,071
101,803
1,318,376
-
-
-
-
-
811,549
Carrying value of equity investments
296,771
156,943
106,202
40,239
94,337
694,492
Acquisition of property, plant
& equipment, intangible assets
and other non current assets, including
design and development
Non cash expenses other than depreciation
and amortisation
Profi t/(loss) on sale of investments
67,104
28,333
88,601
17,145
40,880
242,063
16,852
(1,816)
9
-
-
-
(6,540)
2,446
12,767
-
-
(1,816)
(i) The profi t made by Rural Services as a result of providing distribution services to the Insurance Division during the 15 month period to
30 September 2009 has been treated as continuing in the Rural Services segment. This is because Rural Services will continue to
receive part of this income as reimbursements for distribution costs under the new joint venture arrangement.
121
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 30. Supplementary Statement of Net Debt by Segment
(a) Statement of Net Debt
15 months September 2009
Rural
Services
$000
Financial
Services
Forestry
Automotive
Components
Investment
& Other
Total
$000
$000
$000
$000
$000
Earnings before interest & tax
(286,996)
162,914
(100,623)
(59,405)
(92,245)
(376,355)
Depreciation and amortisation
Equity accounted earnings
Dividends received from associates
Dividends received under DRP
Profi t/(loss) on sale of property,
plant & equipment
Profi t/(loss) on sale of investments
Profi t/(loss) on sale of controlled entities
Profi t on sale of investment properties
Interest (net)
Tax (paid)/refund
Share based payments
Impairment losses and write downs
Fair value adjustments on fi nancial assets
Provisions and other
Operating cash fl ow before movements
in working capital
18,400
724
940
(7,703)
(2,570)
(41,041)
-
-
224,146
(6,953)
31,025
1,109
(27,722)
14,749
-
5
335
6,583
2,668
3,153
-
(5)
-
(138,321)
42,932
-
-
-
236
(1,178)
1,332
85
66,200
(10,672)
(6,496)
13,739
(16,194)
(7,810)
(589)
229
19,431
25,986
-
-
(35)
7
-
-
19
45,542
(959)
1,058
-
2
697
19,900
(7,703)
(2,603)
1,503
(39,196)
12,843
(82,546)
-
236
(241)
(95,332)
(89,508)
7,957
399
5,657
7,424
(9,058)
7,548
19,084
10,902
320,332
-
679
(16,946)
14,720
(945)
(5,981)
18,914
57,733
(93,307)
33,947
9,766
7,202
(129,535)
(171,927)
Movement in working capital
(267,223)
(11,584)
(94,706)
7,736
14,378
(351,399)
Operating cash fl ow
(360,530)
22,363
(84,940)
14,938
(115,157)
(523,326)
Capital expenditure
(12,574)
(817)
(45,816)
(5,551)
Proceeds on sale of property, plant
and equipment
Proceeds sale of investments
Proceeds sale of controlled entity
7,130
195,073
-
-
3,337
34,442
65,715
Payments for investments and other
(4,627)
(15,167)
D&D capitalised
Loans to associated parties (net)
Loans to/from growers (net)
Loans to employees
-
(3,375)
-
1,928
-
-
-
-
-
(193)
-
-
3,049
(9,068)
258
307
-
-
(286)
(4,422)
-
-
-
-
-
(64,758)
10,774
2,118
231,633
29,061
94,583
(54)
(20,134)
-
(4,422)
(30,476)
(30,802)
-
-
(9,068)
2,186
Investing cash fl ow
183,555
84,173
(48,433)
(9,952)
649
209,992
Dividends paid
Dividends underwritten
Other
Other fl ows
Opening net debt
Total fl ows
De-consolidation of Amcom debt
De-consolidation of Broadwater debt
De-consolidation of Timber debt
Consolidation of Elders Rural Holdings debt
Fair value adjustments to debt
Closing net debt
(3,198)
-
(3,242)
(6,440)
-
-
-
-
-
-
-
-
-
-
-
-
(51,153)
(54,351)
42,949
-
42,949
(3,242)
(8,204)
(14,644)
(522,975)
(327,978)
23,027
15
3,980
(29,231)
(16,386)
(869,548)
Capitalised borrowing costs of $30.7m have been offset against interest bearing liabilities and will be expensed over the life of the debt.
122
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 30. Supplementary Statement of Net Debt by Segment (continued)
(a) Statement of Net Debt (continued)
Equity accounted earnings
(9,460)
(20,531)
(12,200)
Dividends received from associates
6,394
12,085
2,490
12 months June 2008
Earnings before interest & tax
Depreciation and amortisation
Rural
Services
$000
20,869
15,332
Profi t/(loss) on sale of property,
plant & equipment
Profi t on sale of investments
Profi t on sale of controlled entities
Profi t on sale of investment properties
Discount on acquisition
Interest (net)
Tax (paid)/refund
Share based payments
Impairment losses/(reversals)
Fair value adjustments on fi nancial assets
(1,133)
1,816
-
-
(1,743)
(354)
(8,393)
1,003
4,588
(830)
Financial
Services
Forestry
Automotive
Components
Investment
& Other
Total
$000
$000
$000
$000
$000
21,957
612
61,438
5,196
25,548
16,100
(2,269)
4,185
(35,828)
5,344
93,984
42,584
(6,776)
(51,236)
2,994
28,148
(2)
(998)
726
1,960
-
-
-
-
13,312
(8,658)
410
64
-
-
-
479
(1,351)
(543)
2,525
342
-
(25,264)
553
1,816
-
479
-
-
-
-
-
-
-
(6,042)
(9,136)
(60)
(71,038)
(58,683)
(1,227)
(14,538)
(30,291)
172
-
-
522
134
2,449
4,786
(3,824)
(29,918)
Provisions and other
15,003
35,832
(39,490)
15,907
10,835
38,087
Operating cash fl ow before movements
in working capital
43,092
55,081
(7,376)
59,082
(116,257)
33,622
Movement in working capital
5,152
(38,370)
(4,041)
1,165
(11,622)
(47,716)
Operating cash fl ow
48,244
16,711
(11,417)
60,247
(127,879)
(14,094)
Capital expenditure
(28,842)
(100)
(86,427)
(7,326)
(7,152)
(129,847)
Proceeds on sale of property,
plant and equipment
Proceeds sale of investments
Proceeds sale of controlled entity
2,939
7,877
-
24
4,715
-
94,324
548
-
-
-
-
-
25,924
-
97,835
38,516
-
Payments for investments and other
(32,775)
(28,234)
(829)
(22,573)
(23,050)
(107,461)
D&D capitalised
Loans to associated parties (net)
Loans repaid from third parties (net)
Loans from growers (net)
Loans to employees
Acquisition of controlled entity (net)
-
(16,973)
-
-
-
-
-
-
-
-
-
-
-
591
-
(920)
-
-
(7,124)
-
(7,124)
-
-
-
-
-
(11,635)
(28,017)
52,266
52,266
-
-
(920)
-
2,323
2,323
Investing cash fl ow
(67,774)
(23,595)
6,739
(36,475)
38,676
(82,429)
Proceeds from issue of shares
and other equity
Dividends paid
Dividends underwritten
Repayment of matured equity instrument
Other
Other fl ows
Total
-
(974)
-
-
-
(974)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,082
7,082
(57,366)
(58,340)
46,815
46,815
(53,885)
(53,885)
(131)
(131)
(57,485)
(58,459)
(20,504)
(6,884)
(4,678)
23,772
(146,688)
(154,982)
123
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 30. Supplementary Statement of Net Debt by Segment (continued)
(a) Statement of Net Debt (continued)
June 2008
Opening net debt
Total fl ows
Consolidation of Amcom debt
Convertible notes classifi ed as debt
converted to equity during the year (non
cash movement)
Fair value adjustments to debt
Closing net debt
Rural
Services
$000
Financial
Services
Forestry
Automotive
Components
Investment
& Other
Total
$000
$000
$000
$000
$000
(364,948)
(154,982)
(15,318)
576
11,697
(522,975)
(b) Reconciliation of Net Debt balance to Balance Sheet
Cash and cash equivalents
Interest Bearing Loans and Borrowings
Derivatives on Interest Bearing Loans and Borrowings
Note 31. Auditors Remuneration
Consolidated
15 months
September
2009
$000
12 months
June
2008
$000
367,868
244,043
(1,199,273)
(715,562)
(38,143)
(51,456)
(869,548)
(522,975)
Consolidated
Parent
15 months
September
2009
$
12 months
June
2008
$
15 months
September
2009
$
12 months
June
2008
$
The auditor of Elders Limited is Ernst & Young.
Amounts received or due and receivable by
Ernst & Young (Australia) for:
- auditing or review of fi nancial statements (i)
2,647,524
2,113,296
446,644
- tax services (primarily compliance)
141,268
253,662
92,100
- fees in relation to investigative accountants report
and preparation of prospectus
1,764,345
-
1,764,345
- other compliance and assurance services
242,062
272,316
74,903
4,795,199
2,639,274
2,377,992
265,776
221,027
-
158,779
645,582
-
-
-
-
-
-
432,650
432,650
265,048
265,048
21,000
474,091
669,442
30,000
156,274
741,634
216,671
-
124,624
87,758
5,817,176
2,090,494
4,217,182
412,688
6,981,709
3,018,402
4,433,853
625,070
Amounts received or due and receivable by
related practices of Ernst & Young (Australia) for:
- auditing or review of fi nancial statements
Amounts received or due and receivable by
non Ernst & Young audit fi rms for:
- auditing or review of fi nancial statements
- tax services
- internal audit
- other services (ii)
(i) This includes full statutory audit as at 30 June 2009 and as at 30 September 2009.
(ii) Other services including specifi c projects.
124
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 32. Investments in Controlled Entities
% Held by Group
September 2009
June 2008
A Top Pty Ltd
Abbino Pty Ltd
Acehill Investments Pty Ltd
ACN 073 323 038 Pty Ltd
Active Leisure (Sports) Pty Ltd
Agribusiness Insurance Brokers Pty Ltd
Agricultural Land Management Limited
AI Asia Pacifi c Operations Holding Limited
AI China Operations Holding Limited
AIM Metals Pty Ltd
Air International (China) Pty Ltd
Air International (India) Pty Ltd
Air International (Ventures) No 2 Pty Ltd
Air International Asia Pacifi c Operations Pty Ltd
Air International (Malaysia) Pty Ltd
Air International Vehicle Air Conditioning (Shanghai) Co Ltd
Albany Woolstores Pty Ltd
Aldetec Pty Ltd
Aldetec Unit Trust
Amcom Pty Ltd
Amcom Telecommunications Limited
Amnet Internet Services Pty Ltd
Amnet IT Services Pty Ltd
Amnet IX Pty Ltd
AMG Marketing & Research Pty Ltd
APO Administration Limited
APT Finance Pty Ltd
APT Forestry Pty Ltd
APT Projects Ltd
APT Land Pty Ltd
APT Nurseries Pty Ltd
Artreal Pty Ltd
Ashwick (Vic) No 102 Pty Ltd
Austech Ventures Ltd
Australian Combined Meat Processors Pty Ltd
Australian Plantation Timber Ltd
Australian Retirement Managers Pty Ltd
(formerly Australian Retirement Managers Limited)
AR Finance Pty Ltd (in liquidation)
Australian Topmaking Services Limited
B & W Rural Pty Ltd
Balcooma Pty Ltd (in liquidation)
Banks Marsden Pty Ltd
Bedcell Pty Ltd
BHC Sales & Marketing Pty Ltd
Brimhall Pty Ltd
Broadwater Hospitality Pty Ltd
(g)
(g)
(a)
(g)
(a)
(j)
(c)(e)
(c)(e)
(a)
(a)
(g)
(a)
(a)
(a)
(c)
(g)
(a)
(f)
(j)
(j)
(j)
(j)
(j)
(g)
(c)(e)
(a)
(a)
(g)
(a)
(a)
(g)
(a)
(a)
(i)
(a)
(a)
(g)
(a)
(h)
(g)
(g)
(j)
(g)
(j)
(j)
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
66
100
100
-
-
-
-
-
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
51
100
100
-
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
66
100
100
50
50
50
50
50
100
100
100
100
100
100
100
100
100
100
50
100
100
100
100
51
100
100
100
100
100
100
125
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 32. Investments in Controlled Entities (continued)
% Held by Group
September 2009
June 2008
Broadwater Hospitality Management Pty Ltd
Bremer Woll Kämmerei AG
BWK Australia Pty Ltd
BWK Elders Australia Pty Ltd
BWK Elders Europe GmbH
BWK Holdings Pty Ltd
BWK Elders Europtop GmbH
BWK Elders Industry and Trade
BWK Chemifraser GmbH
BWK Eastern Wool Industrial & Trading Joint Stock Corporation
BREWA Umwelt Service GmbH
Carbon Bid Co Pty Ltd
Canosac Limited
Caversham Investments Pty Ltd
Caversham Landscape D. & C. Pty Ltd
Caversham Projects Pty Ltd
Caversham Property (Sales) Pty Ltd
Caversham Property Holdings Pty Ltd
Charlton Feedlot Pty Ltd
Colotti Pty Ltd
Costilla Pty Ltd
CP Ventures Ltd
Danny F11 Investments Pte Ltd
Dawley Pty Ltd
Domeni Pty Ltd
E. & R. Steeden Pty Ltd
E Globulus Pty Ltd
Elders Australia Aktien Holding GmbH & Co KG
Elders Australia Beteiligungs GmbH
Elders Burnett Moore WA Pty Ltd
Elders China Trading Company
Elders Communications Pty Ltd
Elders Distribution Company Pty Ltd
Elders Finance Pty Ltd (formerly Futuris Administration Pty Ltd)
Elders Financial Services Group Pty Ltd
Elders Financial Solutions Pty Ltd
Elders Fine Foods (Shanghai) Company
Elders Global Wool Holdings Pty Ltd
Elders-GM Properties (SA) Pty Ltd
Elders-GM Properties (Vic) Pty Ltd
Elders Hycube Pty Ltd
Elders Insurance Ltd
Elders Insurance Agencies Pty Ltd
Elders International Australia Limited
Elders Meat Processing Pty Ltd (formerly Harvey Meat Processing Pty Ltd)
Elders Mortgage Brokers Pty Ltd
Elders Project Management Pty Ltd
126
(j)
(c)(e)
(g)
(a)
(c)(e)(i)
(a)
(c)
(c)
(c)
(c)
(c)
(g)
(c)(f)
(a)
(g)
(g)
(g)
(a)
(a)
(j)
(j)
(a)
(c)
(g)
(g)
(a)
(g)
(c)
(c)(h)
(g)
(c)
(a)
(j)
(a)
(a)
(g)
(c)
(a)
(a)
(a)
(g)
(j)
(j)
(a)
(g)
(g)
(g)
-
100
100
100
100
100
51
100
100
91
100
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
-
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
100
100
100
100
100
100
100
100
100
100
100
70
100
100
100
100
100
100
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 32. Investments in Controlled Entities (continued)
% Held by Group
September 2009
June 2008
Elders Property Management Pty Ltd
Elders Real Estate (NSW) Pty Ltd
Elders Real Estate (Qld) Pty Ltd
Elders Real Estate (Tasmania) Pty Ltd
Elders Real Estate (WA) Pty Ltd
Elders Real Estate Franchise (Vic) Pty Ltd
Elders Risk Management Pty Ltd
Elders Rural Holdings Limited
Elders Rural Services Limited (formerly Elders Australia Limited)
Elders Rural Services Australia Limited (formerly Elders Limited)
Elders Services Company Pty Ltd
Elders Telecommunications Infrastructure Pty Ltd
Elders Trustees Limited
Elders Underwriting Agency Pty Ltd
Elders Webster Pty Ltd
Elders Wool International Pty Ltd
EREF Pty Ltd
Ezesoftwrite Pty Ltd
Family Hospitals Pty Ltd
Fares Exports Pty Ltd
Fares Exports Management Mexico, S.A. de C.V.
Fares Exports Trading Mexico, S.A. de C.V.
Farmers Investment Trust
FGSF Pty Ltd
Future Proof Technologies (WA) Pty Ltd
Futuris Agencies Pty Ltd
Futuris Automotive Pty Ltd
Futuris Automotive Group Ltd
Futuris Automotive Interiors (Australia) Pty Ltd
Futuris Automotive Interiors (Barbados) Inc
Futuris Automotive Interiors Holdings Pty Ltd
Futuris Automotive Interiors Trading (Shanghai) Co Ltd
Futuris Automotive Interiors (US) Inc
Futuris Rural Pty Ltd
Futuris Ventures Pty Ltd
Futuris/Tamper Joint Venture Unit Trust
Geelong Wool Combing Ltd
George Moss (Qld) Pty Ltd
George Moss Pty Limited
Grouville Pty Ltd
H W Hayes & Sons (Ipswich) Pty Ltd
Hallette Pty Ltd
Hollymont Ltd
Hose & Pipe Pty Ltd
IMA Investment Management Australia (ADF) Pty Ltd
IMA Investment Management Australia Pty Ltd
Innerhadden Ltd
(g)
(g)
(g)
(g)
(g)
(g)
(j)
(c)
(a)
(d)
(g)
(g)
(g)
(g)
(g)
(j)
(a)
(a)
(c)
(c)
(f)
(g)
(j)
(a)
(a)
(a)
(a)
(c)
(a)
(c)
(c)
(a)
(a)
(f)
(a)
(a)
(a)
(g)
(g)
(g)
(a)
(a)
(a)
(a)
(a)
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
100
100
-
100
100
100
100
100
100
50
100
100
100
100
100
100
50
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
127
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 32. Investments in Controlled Entities (continued)
% Held by Group
September 2009
June 2008
Integrated Tree Cropping Ltd
ITC Ltd
ITC Esperance Woodchip Terminal Pty Ltd
ITC Fibre Pty Ltd
ITC Finance Pty Ltd
ITC Land Holdings Pty Ltd
ITC Portland Woodchip Terminal Pty Ltd
ITC Project Management Ltd
ITC Timber Pty Ltd
ITC Timber Alexandra Pty Ltd
ITC Timber China Pty Ltd
ITC Timber Heyfi eld Pty Ltd
ITC Timber Seymour Pty Ltd
ITC Timber Tasmania Pty Ltd
ITC Timberlands Ltd
J.A. Gilmour & Sons (NSW) Pty Ltd
JSB New Zealand Limited
JS Brooksbank & Co Australasia Ltd
J.S. Brooksbank Pty Ltd
Jetoleaf Pty Ltd
Kentlake Holdings Pty Ltd
Keratin Holdings Pty Ltd
Killara Feedlot Pty Ltd
Kojonup Farm Pty Ltd
Leisure Industries International Pty Ltd
M.E. Deniliquin Pty Ltd
Manet Holdings Pty Ltd
Manor Hill Pty Ltd
Marybrook Development Company Pty Ltd
Marybrook Investments Ltd
Milltoc Pty Ltd
Miranda Bay Pty Ltd
Mutual Benefi t Consulting Pty Ltd
Mylang Pty Ltd
New Ashwick Pty Ltd
Neues Wolkontor GmbH
North Australian Cattle Company Pty Ltd
Pacrim Meat & Livestock Trading Pty Ltd (in liquidation)
Pakenham Properties Pty Ltd
Pernatty Pty Ltd (in liquidation)
Pitt Son & Keene Pty Ltd
PlantTech Pty Ltd
Prestige Property Holdings Pty Ltd
Primac Elders Real Estate Pty Ltd
Primac Exports Pty Ltd
Primac Holdings Pty Ltd
Primac Pty Ltd
128
(g)
(a)
(a)
(a)
(g)
(g)
(j)
(j)
(j)
(j)
(j)
(j)
(j)
(g)
(c)
(c)
(i)
(g)
(g)
(a)
(i)
(g)
(a)
(j)
(a)
(a)
(g)
(a)
(a)
(g)
(g)
(a)
(g)
(c)
(a)
(g)
(g)
(g)
(g)
(a)
(a)
(g)
(a)
(a)
(a)
100
100
100
-
100
100
100
100
-
-
-
-
-
-
-
100
100
100
100
100
100
100
53
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
53
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 32. Investments in Controlled Entities (continued)
% Held by Group
September 2009
June 2008
Primac Pastoral Co Pty Ltd
Primac Superannuation No. 1 Pty Ltd
Primac Superannuation No. 2 Pty Ltd
Primac Superannuation Nominees Pty Ltd (in liquidation)
Primac Travel Pty Ltd
PT Elders Indonesia
Rachid Fares Enterprises of Australia Pty Ltd
Rescue Technology Group Pty Ltd
Redray Enterprises Pty Ltd
Relatran Pty Ltd
SA Bid Co Pty Ltd
Southern Wool Services (Goulburn) Pty Ltd
Steeden Holdings Pty Ltd
Steering Systems Australia Pty Ltd
Sycamore Enterprises Pty Ltd
Sydney Woolbrokers Limited
Tashmore Pty Ltd
Therm Air Australia Pty Ltd
Tomkins Financial Services Pty Ltd
Topsoils of Australia Pty Ltd
Torrens Investments Pte Ltd
Treecrop Pty Ltd
Trend-to-Zero Pty Ltd
Ultra Enterprises Pty Ltd (in liquidation)
Ultrasound Australia Pty Ltd
Ultrasound International Pty Ltd
Ultrasound Technical Services Pty Ltd
United Alliance Group Ltd
Victorian Investment Corporation Pty Ltd
Victorian Producers Co-operative Company Pty Ltd
Victorian Group of Companies Pty Ltd
Vickner Pty Ltd
Vision Group of Companies Pty Ltd
Vockbay Pty Limited
VP Services Pty Ltd
VP Travel Pty Ltd
WA Bid Co Pty Ltd
Wool Exchange (WA) Pty Ltd
Wooltech Marketing Pty Ltd
Yenley Pty Ltd
(g)
(g)
(g)
(g)
(g)
(c)
(g)
(j)
(a)
(g)
(g)
(g)
(a)
(a)
(a)
(i)
(g)
(a)
(g)
(c)
(g)
(a)
(g)
(a)
(a)
(a)
(g)
(a)
(a)
(g)
(g)
(d)
(a)
(j)
(j)
(g)
(g)
(g)
(g)
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
-
100
67
100
100
100
100
100
100
100
100
100
50
100
100
100
100
100
100
100
66
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
67
100
100
129
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 32. Investments in Controlled Entities (continued)
(i) Pursuant to Australian Securities and Investments Commission Class Order 98/1418 dated 13 August 1998, relief has been granted to
these controlled entities of Elders Limited from the Corporations Act 2001 requirements for preparation, audit and publication of
accounts. As a condition of the Class Order, Elders Limited, and the controlled entities subject to the Class Order, entered into a deed.
The effect of the deed is that Elders Limited has guaranteed to pay any defi ciency in the event of the winding up of any member of the
Closed Group, and each member of the Closed Group has given a guarantee to pay any defi ciency, in the event that Elders Limited
or any other member of the closed group is wound up.
(ii) The parties that comprise the Closed Group are denoted by (a) above. Parties added to the Closed Group during the year are denoted
by (b) above. Parties removed from the Closed Group during the year are denoted by (k) above.
The consolidated income statement and balance sheet of the entities which are members
of the Closed Group are as follows:
Consolidated income statement of the Closed Group
Profi t/(loss) from continuing operations before income tax
Income tax benefi t/(expense)
Profi t/(loss) after income tax from continuing operations
Profi t/(loss) after tax from discontinued operation (refer note 40)
Net profi t for the period
Retained earnings at the beginning of the period
Impact of acquisitions/disposals
Dividends provided for or paid
Retained earnings at the end of the period
Consolidated balance sheet of the Closed Group
Current Assets
Cash assets
Receivables
Inventories
Other
Total current assets
Non Current Assets
Receivables
Investments in associates and joint ventures
Other fi nancial assets
Inventories
Property, plant and equipment
Investment properties
Intangibles
Deferred tax assets
Other
Total non current assets
Total assets
130
Parent
15 months
September
2009
$000
12 months
June
2008
$000
38,502
(3,098)
35,404
(153,391)
(117,987)
(32,660)
(11,342)
(51,153)
(213,142)
297,823
198,948
68,176
10,186
575,133
238,480
242,824
563,987
27,014
58,758
273,921
70,661
76,857
18,459
80,773
6,804
87,577
(29,490)
58,087
(16,600)
4,422
(78,569)
(32,660)
229,225
494,856
142,466
121,938
988,485
231,082
441,593
573,711
25,720
110,583
221,597
119,273
58,555
27,058
1,570,961
2,146,094
1,809,172
2,797,657
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 32. Investments in Controlled Entities (continued)
Current Liabilities
Payables
Interest bearing liabilities
Current tax liabilities
Derivative fi nancial instruments
Provisions
Total current liabilities
Non Current Liabilities
Interest bearing liabilities
Derivative Financial Instruments
Deferred tax liabilities
Provisions
Total non current liabilities
Total liabilities
Net Assets
Equity
Contributed equity
Hybrid equity
Reserves
Retained earnings
Outside Equity Interest
Shareholder equity attributable to members of Elders Limited
Parent
15 months
September
2009
$000
104,804
830,017
65,877
38,733
24,118
1,063,549
344,019
-
12,713
5,194
361,926
1,425,475
720,619
737,513
145,151
47,408
(213,142)
3,689
720,619
12 months
June
2008
$000
898,678
134,055
18,063
-
167,425
1,218,221
526,079
52,366
38,783
67,361
684,589
1,902,810
894,847
694,118
145,151
88,238
(32,660)
-
894,847
Certain members of the Closed Group, in addition to certain controlled entities, are guarantors in connection with the consolidated entity’s
borrowings facilities disclosed at note 17 and in connection with the unsecured and convertible notes disclosed at note 19.
(iii) Certain branch locations are subject to agreements whereby profi ts are shared on a proportionate 50% basis albeit under the control of
the controlled entities within the Group.
(iv) All companies are incorporated and carry on business in Australia except for the companies designated by (c) above which are
incorporated in the following countries:
Company
Country of Incorporation
AI Asia Pacifi c Operations Holdings Limited
Hong Kong SAR
Air International Vehicle Air Conditioning (Shanghai) Co Ltd
China
APO Administration Limited
Bremer Woll Kämmerei AG
BWK Elders Europe GmbH
BWK Elders Europtop GmbH
BWK Elders Industry and Trade
BWK Chemifraser GmbH
BWK Eastern Wool Industrial & Trading Joint Stock Corporation
BREWA Umwelt Service GmbH
Canosac Limited
Hong Kong SAR
Germany
Germany
Germany
Germany
Germany
Turkey
Germany
Hong Kong SAR
131
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 32. Investments in Controlled Entities (continued)
Company
Country of Incorporation
Danny F11 Investments Pte Ltd
Elders Australia Aktien Holding GmbH & Co KG
Elders Australia Beteiligungs GmbH
Elders China Trading Company Ltd
Elders Fine Foods (Shanghai) Company
Elders Rural Holdings Limited (xi)
Fares Exports Management Mexico, S.A. de C.V.
Fares Exports Trading Mexico, S.A. de C.V.
Futuris Automotive Interiors (Barbados) Inc
Futuris Automotive Interiors Trading (Shanghai) Co Ltd
Futuris Automotive Interiors (US) Inc
JSB New Zealand Limited
JS Brooksbank & Co Australasia Ltd
Neues Wolkontor GmbH
PT Elders Indonesia
Torrens Investments Pte Ltd
Singapore
Germany
Germany
China
China
New Zealand
Mexico
Mexico
Barbados
China
USA
New Zealand
New Zealand
Germany
Indonesia
Singapore
(iv) Entities acquired during the period are denoted by (d).
(v) Entities audited by fi rms other than the parent entity auditors or by affi liates of the parent entity auditor are denoted by (e).
(vi) Entities exempted from audit requirements due to overseas legislation or non-corporate status are denoted by (f).
(vii)
Entities classifi ed by the Corporations Act 2001 as small proprietary companies relieved from audit requirements are denoted by (g).
In addition, a number of small proprietary companies are party to the Class Order deed referred to in (i).
(viii) Entities denoted by (h) are controlled entities, as the Group has the capacity to control via a dominance of fi nancial, management
and technological control.
(ix) Entities denoted by (i) are entities where an entity controlled by the parent entity holds a controlling interest in the entity.
(x)
Entities denoted by (j) are entities that were disposed of or liquidated during the year. An equity interest has been retained in some
of these entities.
(xi)
The following entities are subsidiaries of Elders Rural Holdings Limited (incorporated in New Zealand). All of these subsidiaries are
also incorporated in New Zealand, and the ultimate shareholding held by the Group is as follows:
% Held by Group
September
2009
June
2008
25
50
50
50
50
25
50
35
35
-
-
-
-
-
-
-
-
-
Company
AWE McNicol Transport (2005) Ltd
Elders Card Ltd
Elders Direct Ltd
Elders insurance Ltd
Elders Merchandise Limited
Elders Primary Wool Limited
Elders Real Estate Ltd
Elders Stock (SI) Ltd
Elderstock Ltd
132
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 32. Investments in Controlled Entities (continued)
Company
Elders Wairarapa Vet Services Ltd
EPW Southland Woolbrokers Ltd
Evia Rural Finance Ltd
Gisbourne Farmers Ltd
Hawkes Bay Wool Processors (2005) Ltd
Seed Production (NZ) Ltd
Wool Marketing Enterprises Ltd
Note 33. Key Management Personnel
(a) Details of Key Management Personnel
% Held by Group
September
2009
June
2008
50
25
50
34
25
50
25
-
-
-
-
-
-
-
Directors
S Gerlach
C E Bright
J C Fox
R G Grigg
A Salim
G D Walters
I G MacDonald
J H Ranck
M G Jackman
L P Wozniczka
Chairman
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Non Executive Director
Director and Chief Executive Offi cer (appointed 29 September 2008)
Director and Chief Executive Offi cer (resigned 26 September 2008)
Other Key Management Personnel
M G De Wit
B A Griffi ths
M S Guerin
V Erasmus
T P Plant
P Zachert
M G Hosking
Managing Director – Futuris Automotive Group Ltd
Executive Chairman – Futuris Automotive Group Ltd
Chief Operating Offi cer – Elders Ltd
Managing Director – ITC Ltd
Managing Director – Elders Financial Services Group (resigned 30 September 2009)
Chief Financial Offi cer (resigned 30 June 2009)
Chief Financial Offi cer (appointed 14 April 2009)
(b) Remuneration of Specifi ed Directors and other Key Management Personnel
For information on Group Remuneration Policy, Structure and the relationship between remuneration payment and performance
please refer to the Remuneration Report on pages 36 to 53 of the Annual Report.
Compensation by Category
Short term
Long term
Post employment
Share based payments
Consolidated
Parent
September 2009
$
June 2008
$
September 2009
$
June 2008
$
13,014,767
9,814,591
5,005,673
2,120,042
157,845
693,178
(190,097)
-
505,525
1,066,013
103,251
309,897
(217,914)
-
217,409
720,932
13,675,693
11,386,129
5,200,907
3,058,383
133
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 33. Key Management Personnel (continued)
(c) Option holdings of Directors and other Key Management Personnel
Options
Exercised
Options
Granted
Options
Lapsed
Balance
at end of
period
Vested at 30 Sept 2009(1)
Exercisable Not exercisable
4,000,000
-
4,000,000
-
(6,250,000)
1,750,000
1,750,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
250,000
-
-
-
-
-
750,000
-
750,000
-
-
-
-
-
-
500,000
200,000
1,500,000
-
400,000
200,000
1,500,000
-
-
-
-
-
750,000
(1,850,000)
750,000
(875,000)
625,000
625,000
7,000,000
(8,975,000)
10,275,000
2,775,000
250,000
3,000,000
200,000
-
100,000
-
-
-
-
8,000,000
1,000,000
750,000
500,000
100,000
-
750,000
-
400,000
400,000
100,000
300,000
September 2009
(Number)
Directors
M G Jackman
L P Wozniczka
Balance at
beginning of
period
-
8,000,000
Key Management Personnel
500,000
750,000
400,000
750,000
-
1,100,000
750,000
12,250,000
M G De Wit
V Erasmus
B A Griffi ths
M S Guerin
M G Hosking
T P Plant
P Zachert
Total
June 2008
(Number)
Directors
L P Wozniczka
5,000,000
Key Management Personnel
300,000
750,000
300,000
M G De Wit
V Erasmus
B A Griffi ths
G Hunt
M S Guerin
T P Plant
P Zachert
Total
1,250,000
(687,500)
-
(562,500)
-
-
1,100,000
750,000
-
-
-
750,000
-
-
-
-
-
750,000
-
-
-
250,000
1,100,000
100,000
500,000
750,000
-
625,000
9,450,000
(687,500)
4,050,000
(562,500)
12,250,000
1,300,000
2,825,000
(1) Options vested in respect of performance conditions, length of service conditions still required to be met.
(d) Shareholdings of Directors and other Key Management Personnel
September 2009
Ordinary shares
Balance at
beginning of period
On Exercise
of Options
Granted as
Remuneration
Net Change
Other
Balance
at end of period
Directors
S Gerlach
C E Bright
J C Fox
R G Grigg
A Salim
G D Walters
I G MacDonald
J H Ranck
M G Jackman
L P Wozniczka
134
492,522
103,492
26,765
31,560
33,545,578
21,000
60,000
-
30,000
4,521,341
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
114,300
-
-
-
-
140,000
200,000
240,000
100,000
606,822
103,492
26,765
31,560
33,545,578
161,000
260,000
240,000
130,000
-
4,521,341
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 33. Key Management Personnel (continued)
(d) Shareholdings of Directors and other Key Management Personnel (continued)
September 2009
Ordinary shares
Balance at beginning
of period
On Exercise of
Options
Granted as
Remuneration
Net Change Other
Balance at end
of period
Key Management Personnel
M G De Wit
B A Griffi ths
M S Guerin
V Erasmus
T P Plant
P Zachert
Total
51,980
1,173,019
270,698
19,955
247,554
1,430,043
42,045,507
Convertible Notes & Hybrid Instruments
Directors
M G Jackman
L P Wozniczka
June 2008
Ordinary shares
Directors
S Gerlach
C E Bright
J C Fox
R G Grigg
W H Johnson
A Salim
G D Walters
I G MacDonald
J H Ranck
L P Wozniczka
Key Management Personnel
M G De Wit
B A Griffi ths
G Hunt
M S Guerin
V Erasmus
T P Plant
P Zachert
Total
Directors
-
1,500
478,491
103,492
26,765
31,560
23,548,181
33,545,578
21,000
60,000
-
4,521,341
41,694
1,540,439
709,529
-
9,669
115,175
1,323,606
66,076,520
L P Wozniczka
51,100
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,286
10,286
-
40,698
10,286
132,379
106,437
310,372
-
(463,917)
-
-
-
-
51,980
709,102
270,698
19,955
247,554
1,430,043
330,383
42,355,890
1,000
-
1,000
1,500
14,031
-
-
-
-
-
-
-
-
-
-
(377,706)
-
230,000
-
-
-
492,522
103,492
26,765
31,560
23,548,181
33,545,578
21,000
60,000
-
4,521,341
51,980
1,173,019
709,529
270,698
19,955
247,554
1,430,043
(133,675)
66,253,217
-
(49,600)
1,500
All equity transactions with directors and key executives other than those arising from the exercise of remuneration options have been
entered into under terms and conditions no more favourable than those the Group would have adopted if dealing at arms length.
135
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 33. Key Management Personnel (continued)
(e) Loans to Directors and other Key Management Personnel
Balance at
beginning period
Interest
Charged
$000
Interest not
Charged (i)
Loan
Written Off
Loan Repaid/
Advanced
Balance at
end of period
Highest owing
in period
$000
$000
$000
$000
$000
Directors
September 2009
June 2008
Executives (ii)
September 2009
June 2008
Total
September 2009
June 2008
-
-
806
696
806
696
-
-
27
10
27
10
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(827)
100
(827)
100
-
-
6
806
6
806
-
-
821
1,593
821
1,593
(i) Interest not charged includes employee share scheme interest
(ii) There are 2 key executives within the loan group (2008: 3)
Details of individuals with loans above $100,000 in the reporting period are as follows:
Executives
P Zachert
J V M Erasmus
689
117
18
9
-
-
-
-
(707)
(120)
-
6
704
117
Terms and Conditions
The loan to Mr Zachert was made in June 2008 and was a short term personal loan with interest being charged at a commercial interest
rate of 9%. The loan was unsecured, however the Company had suffi cient lien over the annual leave, salary and bonus entitlements of
Mr Zachert to ensure the loan was repaid in full. The loan was repaid in full in November 2008.
The loan to Mr Erasmus relates to a bridging loan to purchase a house and other assets pending foreign house sale. Interest is charged at
the Australian Taxation Offi ce deemed rate for Fringe Benefi ts Tax purposes of 9% for 2007/08 and 5.85% for 2008/2009.
136
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 33. Key Management Personnel (continued)
(f) Other Transactions and Balances with Directors and other Key Management Personnel
The aggregate amounts recognised in respect of the following types of transactions with directors of entities in the Group and their
director-related entities were:
Transaction type
Director concerned
Sales through rural agency services
Purchase of merchandise
Purchases through rural agency services
W H Johnson
C E Bright
W H Johnson
C E Bright
W H Johnson
C E Bright
Consolidated
September
2009
$000
-
717
-
28
-
240
June
2008
$000
381
390
658
75
7
8
The above transactions were made on commercial terms and conditions and at market rates.
In addition, directors of the parent entity or its controlled entities, or their director-related entities, may purchase goods and services from
the Group in their domestic dealings and within normal customer or employee relationships on terms and conditions no more favourable
than those available in similar arms length dealings.
The amounts involved are immaterial to the Group and include the following:
(i) Sales of goods
(ii) Provision of insurance services
(iii) Provision of rural agency services
(iv) Provision of deposit facilities
Note 34. Related Party Disclosures
(a) Ultimate Controlling Entity
The ultimate controlling entity of the Group is Elders Limited.
(b) Transactions with related parties in the wholly owned group
Transactions between the parent entity and related parties in the wholly owned group during the fi nancial periods ended 30 September
2009 and 30 June 2008 consisted of:
loans advanced by Elders Limited;
loans repaid by Elders Limited;
the receipt and payment of interest on the above loans;
the payment of dividends to Elders Limited;
the receipt of management fees by Elders Limited;
the provision of accounting and administrative services;
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii) the provision of transport services;
(viii) the provision of guarantees and credit facilities; and
(ix)
the transfer of tax losses as permitted by the Income Tax Assessment Act.
These transactions were undertaken on commercial terms and conditions.
137
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 34. Related Party Disclosures (continued)
(c) Transactions with controlled entities not wholly owned
Transactions between the wholly owned Group and partly owned controlled entities consisted of:
Dividend income
Interest income
Recharges – other
Sales
Consolidated
15 months
September
2009
$000
12 months
June
2008
$000
3,423
2
612
5,838
1,079
-
352
3,725
All transactions with controlled entities not wholly owned are conducted on commercial terms and conditions.
Balances with controlled entities not wholly owned.
Owing to the Group
Owing from the Group
20,948
(5,990)
17,059
(4,008)
(d) Transactions with other partly owned related parties consisted of:
Consolidated
Parent
Class of
related party
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
Transaction type
Loans to other related parties
Loans advanced
Loans advanced
Loan repayments received
Loan repayments received
Loan repayments made
Interest received or receivable
Interest paid or payable
Other transactions
Dividends received
Dividend received
Distribution fees received
Distribution fees received
Associate
Joint Venture
Associate
Joint Venture
Associate
Associate
Associate
Associate
Joint Venture
Joint Venture
Associate
Management fee paid on transfer of cash accounts Joint Venture
Reimbursement of expenses
Transfer of cash accounts
Capital contributions
Purchases
Purchases
Sale of inventory
Sale of inventory
Sale of plant & equipment
Other services & recharges
Other services & recharges
Acquisition of investments
138
Joint Venture
Joint Venture
Joint Venture
Associate
Joint Venture
Associate
Joint Venture
Associate
Associate
Joint Venture
Associate
(27,825)
(12,475)
(6,200)
(1,083)
5,609
-
(6,081)
2,267
(220)
12,404
31,749
20,840
8,265
-
13,858
-
-
1,431
1,748
-
1,237
-
21,167
12,085
34,590
-
(104)
15,743
72
-
-
-
-
362
-
4
-
-
-
-
-
-
-
-
31,749
12,085
-
-
-
-
-
-
-
-
-
-
(31,500)
(19,000)
(31,500)
(19,000)
(102,433)
(133,456)
(561)
35,712
42
7
43,185
190
(666)
58,536
157
-
24,770
420
(10,801)
(39,794)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 34. Related Party Disclosures (continued)
(d) Transactions with other partly owned related parties (continued)
All transactions with other related parties are conducted on commercial terms and conditions.
Transaction type
Balances with other partly owned related parties
Owing to the Group
Owing from the Group
Owing to the Group
Owing from the Group
Note 35. Earnings Per Share
Consolidated
Parent
Class of
related party
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
Associate
Associate
Joint Venture
Joint Venture
79,843
65,887
(2)
3,725
(1)
-
4,242
-
-
-
-
-
-
-
-
-
The following refl ects the net profi t and share data used in the calculations of earnings per share (EPS)
Reported Operations
Basic
Consolidated
15 months
September
2009
$000
12 months
June
2008
$000
Net profi t attributable to members (after tax)
(466,426)
36,447
Dilutive
Operating profi t/(loss) after tax
Interest on convertible notes
(466,426)
36,447
-
-
Net profi t/(loss) attributable to members (after tax) adjusted for the effect of convertible notes
(466,426)
36,447
Continuing Operations
Basic
Net profi t/(loss) attributable to members (after tax)
Less: Net profi t/(loss) of discontinued operations (net of tax)
Net profi t/(loss) of continuing operations (net of tax)
Dilutive
Net profi t/(loss) of continuing operations (net of tax)
Interest on convertible notes
(466,426)
153,809
(312,617)
36,447
29,490
65,937
(312,617)
65,937
-
-
Net profi t/(loss) of continuing operations (net of tax) adjusted for the effect of convertible notes
(312,617)
65,937
Discontinued Operations
Net profi t/(loss) of discontinued operations (net of tax)
(153,809)
(29,490)
Weighted average number of ordinary shares (‘000) used in calculating basic EPS
809,056
756,662
Dilutive share options (‘000)
214,784
71,864
Adjusted weighted average number of ordinary shares used in calculating dilutive EPS (‘000)
1,023,840
828,526
Hybrid notes have been included in the calculation of dilutive EPS, as they are believed to be dilutive.
Basic underlying earnings per share (cents per share)
Diluted underlying earnings per share (cents per share)
(6.40) ¢
(6.40) ¢
11.13¢
10.16¢
Underlying earnings are earnings from ordinary activities adjusted for specifi c non recurring items.
Non recurring items (net of tax) used in calculating underlying basic and dilutive EPS is $414.674 million (2008: $47.764 million).
See note 3 for reconciliation between reported loss and underlying loss.
139
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 36. Financial Instruments
Exposure to commodity, interest rate, credit and foreign exchange risks arise in the normal course of business. The Group has policies in
place to manage these exposures within Board approved limits.
(a) Commodity risk exposures
The Group enters into contracts for the purchase and sale of various commodities, in the ordinary course of business operations. Differences
in the timing of purchase and sale contracts create an exposure to commodity price risk.
All business units that have exposure to commodity price risk operate within the confi nes of a Board approved risk management policy.
The Group enters into futures, swaps and option contracts to manage commodity price risk within the established Board approved limits.
The Group classifi es fi nancial instrument commodity purchase and sale contracts, commodity futures, swaps and option contracts as fair
value derivatives. All open contracts are fair valued at balance date with any gains and losses on these contracts, together with the
associated costs to completion of these contracts, being recognised immediately through the income statement.
The Group has elected not to apply hedge accounting for the fi nancial reporting of commodity contracts classed as fi nancial instruments.
The sensitivity analysis below estimates the impact of a +/- 10% movement in the price of wool, with all other variables held constant.
This analysis excludes the impact of these price movements on agency commission related to these commodities.
Consolidated
+/- 10%
Parent
+/- 10%
Post Tax Profi t/Equity
Higher/(Lower)
September
2009
$000
June
2008
$000
+/- 1,111
+/- 787
-
-
The impact on equity incorporates the impact on profi t and is therefore of the same magnitude.
(b) Interest rate risk exposures
The Group is exposed to interest rate risk through primary fi nancial assets and liabilities, modifi ed through derivative fi nancial instruments.
Cross currency interest swaps are used to hedge the Australian dollar value of cash fl ows associated with the payment of principal and
interest on long term fi xed rate borrowings and to swap a fi xed rate exposure into an Australian fl oating interest rate exposure.
Interest rate swap agreements are used to convert fl oating interest rate exposures on certain debt to fi xed rates. These swaps entitle the
Group to receive, or oblige it to pay, the amounts, if any, by which actual interest payments on nominated loan amounts exceed or fall below
specifi ed interest amounts.
At balance date, the Group had the following mix of fi nancial assets and liabilities exposed to Australian variable interest rate risk that are
not designated in cash fl ow hedges:
140
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 36. Financial Instruments (continued)
(b) Interest rate risk exposures (continued)
Financial Assets
Non current receivables
- Debtors
- Other debtors
- Receivables from associates
- Reinsurance and other recoveries receivable
Cash and cash equivalents
Financial Liabilities
Bank loans
Loan from associate
Consolidated
Parent
September
2009
$000
June
2008
$000
September
2009
$000
June
2008
$000
-
10,216
34,569
-
367,868
412,653
2,179
5,715
30,668
29,974
244,043
312,579
(947,483)
(451,846)
-
(6,081)
(947,483)
(457,927)
-
5,375
5,808
-
293,100
304,283
-
-
-
-
-
5,442
-
42,162
47,604
-
-
-
Net Exposure
(534,830)
(145,348)
304,283
(47,604)
The Group’s policy is to manage its fi nance costs using a mix of fi xed and variable rate debt. The Group constantly analyses its interest rate
exposure. Within this analysis consideration is given to potential renewals of existing positions, alternative fi nancing, alternative hedging
positions and the mix of fi xed and variable interest rates.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the balance sheet date. At 30 September 2009,
if interest rates had moved as illustrated in the table below, with all other variables held constant, post tax profi t and equity would have
been affected as follows:
Consolidated
+ 100 basis points
- 100 basis points
Parent
+ 100 basis points
- 100 basis points
Post Tax Profi t/Equity
Higher/(Lower)
September
2009
$000
June
2008
$000
(5,348)
5,348
(1,453)
1,453
3,043
(3,043)
(476)
476
The impact on equity is not materially different to the post tax profi t impact given the loans are fair valued to the extent they are hedged.
Movements in profi t are due to higher/lower interest costs from variable rate debt and cash balances. The sensitivity is higher in 2009 than
2008 because of higher debt levels.
141
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 36. Financial Instruments (continued)
(c) Liquidity risk exposures
The Group’s objective is to maintain a balance between continuity of funding and fl exibility through the use of bank overdrafts, bank loans
and committed available lines of credit.
Consolidated
Maturing In
1 Year or Less
$000
Over 1 to 5 Years More than 5 Years
$000
$000
Total
$000
710,528
1,603
278,994
-
-
-
-
-
78,888
71,965
-
-
453
236,640
125,687
38,047
26,814
53,669
20,007
40,046
-
-
36,752
(36,752)
112
406
-
-
1,263,811
420,048
30,704
133,006
-
-
-
1,193
966,726
32,000
22,107
301,496
48,294
-
-
6,438
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,184
142,136
-
-
-
989,522
1,603
26,814
53,669
20,007
40,046
78,888
71,965
36,752
(36,752)
565
237,046
125,687
38,047
1,683,859
52,811
434,502
48,294
30,184
142,136
7,631
966,726
32,000
1,163,629
378,335
172,320
1,714,284
September 2009
Financial liabilities
Secured loans
Unsecured loans
Secured Notes
- Tranche A2 – Series A
- Tranche A2 – Series B
- Tranche A3 – Series C
- Tranche A3 – Series D
- Tranche B2 – Series F
- Tranche C2 – Series G
- Tranche A4 – Series D
- Costs to be amortised over
the period of the loan
Finance leases
Payables
Other payables
Tax payables
June 2008
Financial liabilities
Secured loans
Unsecured loans
Unsecured notes 1999 (A)
Unsecured notes 1999 (B)
Unsecured notes 2005
Finance leases
Payables
Taxation payable
142
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 36. Financial Instruments (continued)
(c) Liquidity risk exposures (continued)
Parent
Maturing In
1 Year or Less
$000
Over 1 to 5 Years More than 5 Years
$000
$000
Total
$000
September 2009
Financial liabilities
Secured Notes
- Tranche A2 – Series A
- Tranche A2 – Series B
- Tranche A3 – Series C
- Tranche A3 – Series D
- Tranche B2 – Series F
- Tranche C2 – Series G
- Tranche A4 – Series D
- Costs to be amortised over the period of the loan
Payables
June 2008
Financial liabilities
Unsecured loans
Unsecured notes 1999 (A)
Unsecured notes 1999 (B)
Unsecured notes 2005
Payables
-
-
-
-
78,888
71,965
-
-
802,476
953,329
-
-
-
-
299,979
299,979
26,814
53,669
20,007
40,046
-
-
36,752
(36,752)
-
140,536
100,000
48,294
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,184
142,136
-
148,294
172,320
26,814
53,669
20,007
40,046
78,888
71,965
36,752
(36,752)
802,476
1,093,865
100,000
48,294
30,184
142,136
299,979
620,593
143
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 36. Financial Instruments (continued)
(d) Credit risk exposures
The Group’s exposures to credit risk on the balance sheet are indicated by the carrying amounts of its fi nancial assets. The Group
minimises concentrations of credit risk by undertaking transactions with a large number of debtors in various locations and industries.
The credit risk amounts do not take into account the value of any collateral or security. The creditworthiness of counterparties is regularly
monitored and subject to defi ned credit policies, procedures and limits. The following amounts disclosed do not refl ect expected losses
and are shown gross of provisions.
Location of credit risk
Australia
Asia (excluding China)
China
Europe
Japan
North America
Other
Total gross receivables
Industry classifi cation
Rural
Automotive
Financial Services
Forestry
Other (i)
Total gross receivables
September
2009
$000
June
2008
$000
676,093
803,122
3,259
16,034
19,432
-
1,656
63,337
779,811
304,221
61,453
2,604
322,127
89,406
779,811
5,446
28,257
35,002
20,919
24
3,213
895,982
245,395
91,863
254,331
170,503
133,890
895,982
(i) includes $14.86 million (2008: $56.64 million) in relation to deferred settlement of the property sale transaction.
The credit risk associated with cash is located primarily in Australia.
(e) Foreign Exchange Risk
The Group is exposed to movements in the exchange rates of a number of currencies, in the ordinary course of business operations.
The predominant exposure is to movements in the AUD/USD and AUD/EUR exchange rates. These are primarily generated from the
following activities:
(i) Purchase and sale contracts written in foreign currency, or priced in AUD but determined from a foreign currency value at a future date;
(ii) Receivables and payables denominated in foreign currencies;
(iii) Commodity derivatives traded in a currency other than AUD;
(iv) Commodity cash prices that are partially determined by movements in exchange rates;
(v) Costs to sale such as transportation and commission denominated in foreign currency; and
(vi) Funding raised in foreign currency.
Foreign exchange risk is managed within Board approved limits using forward foreign exchange and foreign currency option contracts.
Where possible, exposures are netted off against each other to minimise the cost of hedging.
In managing foreign exchange risk, hedge accounting will be applied for fi nancial reporting purposes for selected exposures based upon the
size and duration of the exposure.
Where hedge accounting is not applied, foreign currency contracts are fair valued at balance date with gains and losses recognised
immediately through the income statement.
144
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 36. Financial Instruments (continued)
(e) Foreign Exchange Risk (continued)
At 30 September 2009, the Group had the following exposures to foreign currencies that were not designated in cash fl ow hedges:
Consolidated
Parent
September 2009
$000
June 2008
$000
September 2009
$000
June 2008
$000
Financial Assets
Cash and cash equivalents – EUR
Cash and cash equivalents – USD
Cash and cash equivalents – NZD
Cash and cash equivalents – GBP
Cash and cash equivalents – RMB
Cash and cash equivalents – IDR
Cash and cash equivalents – Other
Debtors – EUR
Debtors – USD
Debtors – NZD
Debtors – ZAR
Debtors – JPY
Debtors – RMB
Debtors – TRL
Debtors – Other
Loans – NZD
Loans – CNY
Loans – ZAR
Other debtors – EUR
Other debtors – NZD
Other debtors – CNY
Other debtors – RMB
Other debtors – TRL
Other debtors – Other
Receivables from associates – EUR
Receivables from associates – NZD
Financial Liabilities
Trade and other payables – EUR
Trade and other payables – USD
Trade and other payables – NZD
Trade and other payables – Other
Bank Overdrafts – MYR
Interest bearing loans and borrowings – EUR
Interest bearing loans and borrowings – USD
Interest bearing loans and borrowings – CNY
Interest bearing loans and borrowings – RMB
Interest bearing loans and borrowings – NZD
Loans from related parties – NZD
19,273
20,436
2,241
24
2,034
525
35
16,308
17,809
26,142
93
51
1,185
-
1,390
11,965
1,858
1,768
801
984
-
524
-
15
-
13,293
138,754
(4,105)
(1,183)
(19,910)
(323)
-
(10,215)
-
-
(3,796)
(9,058)
(1,603)
1,950
1,003
-
40
939
151
247
16,779
3,963
-
1,242
23
493
2,166
331
-
-
-
1,777
-
225
-
1,160
73
1,151
1,079
-
13
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34,792
13
(1,395)
(3,769)
-
(631)
-
(36,890)
(10,099)
(81)
(1,698)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(50,193)
(54,563)
Net exposure
88,561
(19,771)
13
Given the Group effectively hedges its overall foreign currency position in relation to ordinary business activities, exchange rate movements
will have an insignifi cant impact on profi t and equity and therefore no sensitivity analysis has been provided. The foreign exchange risk in
relation to the secured USD notes is considered at (g).
145
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30
SEPTEMBER 2009
Note 36. Financial Instruments (continued)
(f) Fair value of fi nancial assets and liabilities
The fair value of derivative fi nancial instruments is determined by reference to quoted market prices. Where a quoted market price is not
available, the fair value is the estimated amount the consolidated entity would receive or pay to terminate the derivative fi nancial
instrument taking into account available market information.
All fi nancial assets and liabilities have been recognised in the balance sheet at their net fair values, except for the following:
Carrying Amount
Fair Value
2009
$000
2008
$000
2009
$000
2008
$000
Financial Assets
Listed shares (equity accounted - refer note 11)
49,031
342,790
18,406
449,786
(g) Hedging activities
At 30 September 2009, the Group had a number of interest rate swap agreements and cross currency swap agreements in place.
These swaps are used to hedge the movements in interest rates and the changes in fair value of borrowings denominated in a foreign
currency (USD).
The Group also held a number of forward exchange contracts designated as hedges of contracted future sales to customers and contracted
future purchases from suppliers for which the Group has fi rm commitments. The foreign currency contracts are being used to hedge the
foreign currency risk of the fi rm commitments.
In respect of the previous unsecured USD notes, the Group effectively hedged its overall foreign currency position and exchange rate
movements had an insignifi cant impact on profi t and equity and therefore no sensitivity analysis was performed. In respect of the new debt,
the Group has not yet achieved hedge effectiveness and Elders is currently working with the fi nanciers to achieve this. Given that the debt
position of the Group is dependant on various factors, including the capital raising and fi nalisation of the sale of assets, sensitivity analysis
has not been performed.
The terms of these swap agreements and forward contracts are as follows:
Amount in Total $AUD’000
Maturity
Pay Rate/Exchange Rate Number of Contracts
At 30 September 2009
Interest Rate Swaps
Cross Currency Swaps
At 30 June 2008
Interest Rate Swaps
Cross Currency Swaps
429,054
291,709
379,054
291,709
Oct 2009 to June 2015
5.49% to 7.42%
Nov 2009 to June 2015
BBSW + Margin
Sep 2009 to June 2015
5.49% to 6.67%
Nov 2009 to May 2015
BBSW + Margin
10
5
5
5
Note 37. Share Based Payment Plans
The number of full time equivalents employed at
30 September are:
Consolidated
Parent
September
2009
June
2008
September
2009
June
2008
3,088
4,317
18
23
146
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 37. Share Based Payment Plans (continued)
(a) Employee option ownership scheme
The parent entity issues from time to time options over ordinary shares to senior employees of the Group. These options are issued at the
sole discretion of the Directors as part of employees’ remuneration packages.
The following table illustrates the number (No.) and weighted average exercise prices (WAEP) of, and movements in, share options issued
during the year:
Outstanding at the beginning of the year
Issued during the year
Lapsed during the year
Exercised during the year
Outstanding at the end of the year
September
2009
No. (‘000)
September
2009
WAEP
$
June
2008
No. (‘000)
25,338
11,080
(12,015)
-
24,403
2.09
1.30
2.01
-
1.78
18,488
10,000
(1,762)
(1,388)
25,338
June
2008
WAEP
$
1.91
2.36
1.97
1.74
2.09
The range of exercise prices for options outstanding at the end of the year was $1.29 - $2.54.
The weighted average remaining contractual life for the share options outstanding as at 30 September 2009 is 3.06 years
(2008: 4.13 years).
The expense recognised in the income statement in relation to these options is disclosed in note 3.
(b) Employee share plan (ESP)
Shareholders approved the implementation of an ESP at a general meeting in November 1989 and October 1998. Within the ESP, two
schemes exist. The general terms and conditions of these schemes comprise:
(i) General Employee Scheme under which permanent employees may acquire shares in the parent company with a market value ranging
from $3,000 to $17,500 per year per employee; and
(ii) Incentive Scheme under which selected employees will be eligible to acquire shares in the parent company on such terms as the
Directors decide are appropriate in the circumstances of the employee.
During the fi nancial year no ordinary shares (2008: nil) in the parent company were transferred to eligible employees for nil consideration
under the Incentive Scheme.
Shares are issued to eligible employees by way of an interest free loan and are subject to holding restrictions, which prevent the employee
dealing in the shares until the restriction period has expired. All shares issued under the plan rank equally with other shares of their class
and participants enjoy all rights attaching to that class of shares. Any loan is repayable from dividends and the proceeds of sale of shares
issued under the plan but is otherwise non-recourse to the employee, the shares being held by the Trustee as security for repayment of loan.
This plan is accounted for and valued as an option plan, with the contractual life of each option equivalent to the estimated loan life.
The ESP was suspended in 2009 and no new shares were issued.
147
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 37. Share Based Payment Plans (continued)
(c) Option pricing model
The fair value of the share options is estimated as at the date of grant using either Trinomial or Black-Scholes valuation model and taking
into account the terms and conditions upon which the options were granted, (options with external market conditions are valued using the
Trinomial method).
The following table lists the inputs to the model used for the period. Given no share options were issued under the ESP, no valuation
inputs were required in 2009:
Dividend Yield (%)
Expected Volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Option exercise price ($)
Weighted average share price at measurement date ($)
Note 38. Superannuation Commitments
September
2009
-
-
-
-
-
-
June
2008
-
32.00
6.89
3.00
1.99
1.97
Details of the Group’s superannuation fund (accumulation and defi ned benefi t) as extracted from the plan’s most recent fi nancial reports,
being 30 June 2009, are as follows:
Net market value of plan assets
Accrued benefi ts as at 30 June 2009 (2008)
Excess of plan assets over accrued benefi ts
June 2009
$000
June 2008
$000
594,699
680,945
(594,699)
(680,945)
-
-
Contributions to the accumulation section of the fund by the employer are paid in accordance with legislative requirements, the fund’s rules
and employee salary packages. Employees may also contribute. The assets of the accumulation section of the fund are suffi cient to satisfy
all benefi ts that would be vested in the event of termination.
Funding recommendations made by the actuary are based on assumptions of various matters such as future salary levels, mortality rates,
membership turnover and interest rates. Comprehensive actuarial valuations are made at three yearly intervals, and the last such
assessment was made as at 30 June 2007, by S Mules, F.I.A.A from Mercer Investment Nominees Ltd. The next actuarial valuation is to be
conducted as at 30 June 2010.
The objective of the valuation is to ensure that the benefi t entitlements of employees are fully funded by the time they become payable.
To achieve this objective, the actuary has used the aggregate funding method, which entails contributions to be paid out as a constant
percentage of members’ salaries over their working lifetimes.
The defi ned benefi t fund does not comprise a material portion of the fund and thus disclosure of the components of the net benefi t income
recognised in the Group income statement in accordance with AASB 119 Employee Benefi ts has not been made.
148
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 39. Business Combinations
Changes in the Composition of the Entity
(a) Controlled Entities Acquired
There were no controlled entities acquired during the September 2009 fi nancial year.
During the 2008 fi nancial year, the Group acquired an additional 1.06% share in Amcom Limited, resulting in Amcom becoming a
controlled entity on 19 December 2007 (subsequent to this acquisition, the Group disposed of its share in Amcom, refer to Note 39 part (b)
for further details).
Equity and consideration paid in current period
Amcom Limited
- Purchase consideration
- Fair Value of identifi able assets acquired (refer below)
Goodwill on acquisition relating to step acquisitions
Discount relating to Amcom Limited purchased
from step acquisitions
Discount relating to other immaterial business combinations
Total discount recognised on business combinations
The aggregate amounts of assets and liabilities acquired by major class:
Cash
Receivables
Inventories
Investments
Property, plant and equipment
Intangibles
Other assets
Tax assets and liabilities
Creditors and provisions
Borrowings
Net identifi able assets acquired
Minority interests 49.96%
Less interest already acquired at 49.09%
Outfl ow of cash to acquire the entities, net of cash acquired:
Cash consideration
Cash balance acquired
Net Infl ow/(Outfl ow) of cash
Date Control
Acquired
Proportion of
Shares
June 2008
$000
19/12/07
0.95%
Acquiree’s
carrying amount
$000
3,862
4,731
1,452
30,843
61,467
14,802
1,931
1,539
(1,372)
167
(6,042)
(3,094)
(9,136)
Fair value
$000
3,862
4,731
1,452
55,391
101,427
14,802
1,931
16
(11,972)
(11,871)
(15,318)
(11,871)
(15,318)
91,915
144,435
-
-
91,915
(72,160)
(70,903)
1,372
(1,539)
(1,539)
3,862
2,323
3,862
2,323
A discount was recognised on the acquisition of Amcom Ltd representing the excess of fair value over book value of the iiNet equity
investment and the fair value of Amcom’s fi bre network, taken at each step of the acquisition process.
Amcom was equity accounted through to 30 November 2007 after which Amcom was consolidated.
149
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 39. Business Combinations (continued)
(b) Controlled Entities Disposed
The Group disposed of its controlling interest in Amcom Limited in two tranches. The initial tranche of 170 million shares were sold on
1 September 2008, resulting in Amcom Limited no longer being a controlled entity of the Group. The remaining 100 million shares were
sold on 10 December 2008.
On 31 August 2009, the Group entered into binding contracts to effect the sale of the Elders Insurance Ltd and Elders Insurance Agencies
Pty Ltd companies to QBE, inclusive of the insurance distribution operations, which will be conducted by a joint venture between
QBE and Elders (25% interest) under a 20 year exclusive distribution agreement. Settlement of the sale occurred on 30 September 2009.
On 31 August 2009, the Group entered into a binding purchase and sale agreement with Gunns Limited for the sale of the Timber group
of companies listed below (effective 31 July 2009):
ITC Fibre Pty Ltd
ITC Timber Pty Ltd
ITC Timber Alexandra Pty Ltd
ITC Timber China Pty Ltd
ITC Timber Heyfi eld Pty Ltd
ITC Timber Seymour Pty Ltd
ITC Timber Tasmania Pty Ltd
This sale has not yet settled and accordingly the proceeds are shown as a receivable as at 30 September 2009.
On 11 September 2007, the Group sold the following Transit companies:
Air International Transit Pty Ltd
Air International (UK) Holdings Ltd
Air International Coachair Pty Ltd
Air International (Ventures) No 3 Pty Ltd
Clima Air Conditioning Pty Ltd
Clima Air Conditioning (SA) Pty Ltd
Air International Transit (China) Co Ltd
Transit Systems (US) Inc
Air International Transit (Taiwan) Co Ltd
Air International (UK) Ltd
Air International Coachair Sdn Bhd
Air International (Malaysia) Sdn Bhd
APM-Coachair Sdn Bhd
Coachair (Thailand) Company Ltd
AI Coachair Holdings Limited
150
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 39. Business Combinations (continued)
(b) Controlled Entities Disposed (continued)
Proceeds received on disposal of shares:
Cash
Receivables
Cash balance disposed
Less costs of disposal
Net Proceeds
The carrying amounts of assets and liabilities
disposed of by major class are:
Receivables
Inventories
Other Assets
Property, plant and equipment
Capitalised costs
Intangibles
Investments
Tax assets and liabilities
Payables
Provisions
Unearned revenue/billings in advance
Other Liabilities
External borrowings
Net assets/(liabilities) of entity sold
Minority Interests
Profi t/(loss) on disposal (before tax)
Loss on disposal of other controlled entities
Consolidated
September
2009
$000
308,454
96,213
(209,356)
(7,277)
188,034
325,421
73,683
145,313
101,597
-
51,644
47,090
(4,367)
(361,092)
(213,499)
(6,565)
(1,798)
(25,289)
132,138
(48,511)
104,407
(932)
June
2008
$000
15,437
-
-
(3,400)
12,037
17,865
18,212
690
2,943
2,186
-
-
-
(11,842)
8,722
-
-
(8,214)
30,562
-
(18,525)
-
Total profi t/(loss) on disposal of controlled entities
103,475
(18,525)
151
Sales revenue
Cost of sales
Other revenues
Other expenses
Share of net profi ts/(loss) of
associates and joint ventures
accounted for using the
equity method
Profi t/(loss) on sale of
non current assets
Profi t/(loss) before net borrowing
costs and tax expense
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 40. Discontinued Operations and Businesses Disposed
Operations within Horticulture, Wool Processing, Insurance broking, Timber and Telecommunications division were disposed of during the
15 month period ended 30 September 2009 and are reported as discontinued operations. This note shows the results of the continuing
businesses and the discontinued business for comparative purposes only.
Continuing
15 months
September
2009
$000
Discontinued
15 months
September
2009
$000
Consolidated
15 months
September
2009
$000
Continuing
12 months
June
2008
$000
Discontinued
12 months
June
2008
$000
Consolidated
12 months
June
2008
$000
2,853,917
686,166
3,540,083
3,274,659
37,456
3,312,115
(2,281,434)
(353,852)
(2,635,286)
(2,426,096)
(34,953)
(2,461,049)
47,264
60,643
107,907
112,510
4,826
117,336
(969,408)
(543,063)
(1,512,471)
(869,750)
(53,535)
(923,285)
51,236
(2,369)
93,984
15,422
(72,331)
37,075
9,015
46,090
3,766
(4,463)
(697)
51,236
120,846
3,263
124,109
(2,369)
-
-
(225,049)
(151,306)
(376,355)
140,190
(46,206)
Interest revenue
Borrowing costs
13,045
13,731
26,776
(112,230)
(4,521)
(116,751)
Profi t/(loss) before tax expense
(324,234)
(142,096)
(466,330)
Income tax benefi t/(expense)
10,125
(11,295)
(1,170)
15,422
(72,320)
83,292
(7,712)
-
(11)
(46,217)
16,727
Net profi t/(loss) for year
(314,109)
(153,391)
(467,500)
75,580
(29,490)
Net profi t/(loss) attributable to
minority interest
Net profi t/(loss) attributable to
members of the parent entity
Revenue and Expenses
Sales revenue:
Sale of goods
(1,492)
418
(1,074)
9,643
-
9,643
(312,617)
(153,809)
(466,426)
65,937
(29,490)
36,447
2,300,502
373,388
2,673,890
2,302,774
37,456
2,340,230
Sale of biological assets
181,612
1,565
183,177
407,776
Commission and other
selling charges
275,390
17,088
Insurance premium revenue
-
294,125
Other sales related income
96,413
-
292,478
294,125
96,413
280,463
193,144
90,502
-
-
-
-
407,776
280,463
193,144
90,502
2,853,917
686,166
3,540,083
3,274,659
37,456
3,312,115
Other expenses:
Distribution expenses
Marketing expenses
Occupancy expenses
453,020
142,578
595,598
487,006
10,909
497,915
16,926
12,010
8,336
1,622
25,262
13,632
14,666
17,492
603
374
15,269
17,866
Administrative expenses
168,515
66,925
235,440
154,713
7,823
162,536
Insurance claims and
related expenses
Impairment losses
Other expenses
152
-
194,704
46,019
82,879
194,704
211,567
236,268
543,063
1,512,471
165,548
153,389
969,408
128,981
-
66,892
869,750
-
-
33,826
53,535
128,981
-
100,718
923,285
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 15 MONTH PERIOD ENDED 30 SEPTEMBER 2009
Note 40. Discontinued Operations and Businesses Disposed (continued)
Continuing
15 months
September
2009
$000
Discontinued
15 months
September
2009
$000
Consolidated
15 months
September
2009
$000
Consolidated
12 months
June
2008
$000
Discontinued
12 months
June
2008
$000
Consolidated
12 months
June
2008
$000
Revenue and Expenses (continued)
Profi t/(loss) on sale of
non current assets
- property, plant and equipment
(101)
2,468
- investments
- controlled entities
38,401
82,546
795
-
2,367
39,196
82,546
(553)
(1,816)
-
120,846
3,263
124,109
(2,369)
-
-
-
-
(553)
(1,816)
-
(2,369)
Cash fl ow information – discontinued operations
The net cash fl ow of the discontinued operations:
Operating activities
Investing activities
Financing activities
Net cash infl ow
Note 41. Subsequent Events
15 months
September
2009
$000
12 months
June
2008
$000
59,912
(14,947)
(12,058)
32,907
-
-
-
-
Anticipated sale of Hi-Fert Pty Ltd
As at 30 September 2009, Elders treated the investment in Hi-Fert Pty Ltd as an asset held for sale. At the date of these fi nancial
statements, Elders is undertaking a sale process and the investment has been written down to its fair value less costs to sell.
These negotiations are not complete.
Equity Raising
On 4 September 2009, Elders announced an equity raising comprising the following offering of $550 million of new ordinary shares in
Elders (New Shares) at an offer price of $0.15 per New Share. The offering, as detailed below, was approved by ordinary resolution at the
Extra-ordinary General Meeting held on 15 October 2009. The offering comprised of:
• $400 million fully underwritten conditional placement to institutional investors; and
• $150 million Share Purchase Plan (“SPP”).
As a consequence of approval of this offering, an additional 2.67 billion ordinary shares were issued on 19 October 2009 under the
conditional placement and 1.00 billion ordinary shares were issued on 2 November 2009 under the SPP.
Elders’ current restructured fi nancing arrangements has resulted in the majority of the interest bearing liabilities being classifi ed as current
(refer Note 17). This has resulted in total current liabilities exceeding total current assets as at 30 September 2009. Once the funds raised
through the equity raising detailed above are applied against the interest bearing liabilities this situation will be reversed.
Securitisation
On 1 October 2009, Elders completed negotiations in respect of its trade receivables securitisation programme (RSP). As a result of the
new RSP, the assets and liabilities of the RSP will be consolidated with the Group. The RSP has the capacity to purchase receivables from
Elders and related entities of Elders up to an aggregate level of $320 million, with a forecast average utilisation of around $200 million.
Forest Enterprises Australia Pty Ltd (FEA)
As announced on 9 October 2009, Elders did not participate in the capital raising announced by FEA on 16 September 2009. As a result
of not participating in the FEA capital raising, Elders’ FEA interest has been diluted from 27% to 13.5%.
Other
There is no other matter or circumstance that has arisen since 30 September 2009 which is not otherwise dealt with in this report or in the
consolidated fi nancial statements, that has signifi cantly affected or may signifi cantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in subsequent fi nancial periods.
153
DIRECTORS’ DECLARATION
(1) In the opinion of the directors:
(a) the fi nancial statements and notes of the company and of the Group are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the company’s and Group’s fi nancial position as at 30 September 2009 and of their performance for the
year ended on that date; and
(ii) complying with Accounting Standards and Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A
of the Corporations Act 2001 for the 15 month period ending 30 September 2009.
(3) In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the closed
group identifi ed in note 32, will be able to meet any obligations or liabilities to which they are, or may become subject by virtue of the
deed of cross guarantee.
Signed in accordance with a resolution of the directors.
G D Walters
Director
M G Jackman
Director
Adelaide
16 November 2009
154
(cid:37)(cid:50)(cid:46)(cid:51)(cid:52)(cid:0)(cid:6)(cid:0)(cid:57)(cid:47)(cid:53)(cid:46)(cid:39)
Ernst & Young Building
121 King William Street
Adelaide SA 5000 Australia
GPO Box 1271 Adelaide SA 5001
Tel: +61 8 8 417 1600
Fax: +61 8 8 417 1775
www.ey.com/au
155
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156
ASX ADDITIONAL INFORMATION
(a) Distribution of Equity Securities as at 2 November 2009
No of Shares
No of Holders
No of Hybrids
No of Holders
1
1,001
5,001
10,001
100,001
-
-
-
-
-
1,000
5,000
2,509,003
28,799,480
10,000
39,926,737
100,000
426,553,452
maximum
3,988,047,433
4,485,836,105
The number of holders holding less than a marketable parcel
(b) Voting rights
(i) Ordinary Shares: all ordinary shares carry one vote per share without restriction.
(ii) Elders Hybrids: Hybrids do not carry any voting rights under the Company’s constitution.
7,196
10,280
5,204
11,025
5879
39,584
660,909
282,204
120,474
436,413
0
1,500,000
Ordinary Shares
12,677
2,522
142
17
17
0
2,698
Hybrids
3
(c) Stock Exchange quotation
The company’s ordinary shares and Elders Hybrids are listed on the Australian Securities Exchange. The Home Exchange is Melbourne.
(d) Twenty Largest Shareholders as at 2 November 2009
The twenty largest holders of Elders Ordinary Shares were as follows:
No of Shares
% of Shares
Citicorp Nominees Pty Limited
HSBC Custody Nominees Australia Limited
J P Morgan Nominees Australia Limited
National Nominees Limited
ANZ Nominees Limited
HSBC Custody Nominees (Australia) Limited-GSCO ECA
UBS Nominees Pty Ltd
Cogent Nominees Pty Limited
RBC Dexia Investor Services Australia Nominees Pty Limited
Pacifi c Agrifoods Investments Pty Ltd
Citicorp Nominees Pty Limited
Citicorp Nominees Pty Limited
Queensland Investment Corporation
Ecapital Nominees Pty Limited
Invia Custodian Pty Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
CS Fourth Nominees Pty Ltd
UBS Wealth Management Australia Nominees Pty Ltd
Netherhill Pty Ltd
Invia Custodian Pty Limited
Total
619,011,732
506,118,014
284,860,771
281,680,431
174,040,869
138,474,530
110,915,729
90,633,720
52,567,281
33,545,578
31,567,778
23,886,831
22,003,706
20,547,684
19,129,662
19,011,560
18,751,472
16,801,302
16,500,000
16,000,000
2,496,048,650
13.80
11.28
6.35
6.28
3.88
3.09
2.47
2.02
1.17
0.75
0.70
0.53
0.49
0.46
0.43
0.42
0.42
0.37
0.37
0.36
55.64
Total held by twenty largest ordinary shareholders as a percentage of this class is 55.64%
The twenty largest holders of Elders Hybrids were as follows:
Hybrids
% of Hybrids
ANZ Nominees Limited
The Australian National University
UBS Wealth Management Australia Nominees Pty Ltd
M F Custodians Ltd
RBC Dexia Investor Services Australia Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Luton Pty Ltd
Equity Trustees Limited
HSBC Custody Nominees (Australia) Limited-GSCO ECA
RBC Dexia Investor Services Australia Nominees Pty Limited
National Nominees Limited
J P Morgan Nominees Australia Limited
Cogent Nominees Pty Limited
Mr Stephen Philip Goldberg + Mrs Janine Heather Goldberg
Jilliby Pty Ltd
Di Iulio Homes Pty Limited
Dahlonega Pty Ltd
Tree Pot Pty Ltd
Mr Orlando Berardino Di Iulio + Ms Catharina Maria Koopman
Mrs Janine Heather Goldberg
90,868
50,000
46,947
31,237
28,090
25,197
22,000
20,056
18,360
18,205
16,346
14,521
12,640
12,250
11,500
11,100
10,095
10,000
9,257
8,500
6.06
3.33
3.13
2.08
1.87
1.68
1.47
1.34
1.22
1.21
1.09
0.97
0.84
0.82
0.77
0.74
0.67
0.67
0.62
0.57
Total
467,169
31.14
Total held by twenty largest hybrid holders as a percentage of this class is 31.14%
(e) The number of shares held by the substantial shareholders listed in the Company’s register of
substantial shareholder as at 2 November 2009 were:
Shareholder
QBE Insurance Group Limited
ING Group
Number of shares
371,166,667
265,666,667
157
SHAREHOLDER INFORMATION
Share Registry
Dividends and Distributions
Computershare Investor Services Pty Ltd
Level 5, 115 Grenfell Street,
Adelaide, South Australia, 5000
Telephone: 1300 55 61 61
Facsimile: +61 (0)8 8236 2305
Website: www.computershare.com.au
Enquiries and share registry address
Shareholders with enquiries about their shareholdings
should contact the Company’s share registry,
Computershare Investor Services Pty Ltd, on
telephone: 1300 55 61 61.
Online shareholder information
Shareholders can obtain information about their
holdings or view their account instructions online, as
well as download forms to update their holder details.
For identifi cation and security purposes, you will need
to know your Holder Identifi cation Number (HIN/SRN),
Surname/Company Name and Post/Country Code to
access. This service is accessible via the Investor
Centre on the Company’s website or direct via the
Computershare website.
On 4 September 2009 the Company announced that it
would not declare a fi nal dividend for the year ending
30 September 2009. When and whether Elders resumes
paying dividends depends on many factors, including
contractual restrictions. Under the terms of the Elders
Hybrids, Elders will not be permitted to pay a distribution
on the Elders Hybrids due on 30 September 2009.
In addition, Elders’ restructured fi nancing arrangements
will restrict Elders from paying distributions on Elders
Hybrids until and including 30 September 2011.
As a consequence of non-payment of Elders Hybrid
distributions for any reason, under the Elders Hybrids
terms, Elders will be prevented from paying a dividend
on its Shares until such time as the “dividend stop”
is lifted in accordance with those terms. Also, Elders’
restructured fi nancing arrangements restrict Elders from
paying dividends on Shares until after 31 March 2012
(and thereafter, more limited restrictions apply).
Tax and dividend/interest payments
Elders is obliged to deduct tax from dividend/interest
payments (which are not fully franked) to holders
registered in Australia who have not quoted their tax fi le
number (TFN) to the Company. Shareholders who have
not already quoted their TFN can do so by contacting
Computershare. A notifi cation form is available from either
the Company’s or Computershare’s website.
Change of address
Shareholders who have changed their address should
advise Computershare in writing. Written notifi cation can
be mailed or faxed to Computershare at the address given
above and must include both old and new addresses
and the security holder reference number (SRN) of the
holding. Change of address forms are available for
download from either the Company’s or Computershare’s
website. Alternatively, holders can amend their details
on-line via Computershare’s website. Shareholders who
have broker sponsored holdings should contact their
broker to update these details.
158
Annual Report mailing list
Investor information
Shareholders who wish to vary their annual report mailing
arrangements should advise Computershare in writing.
Electronic versions of the report are available to all via
the Company’s website. Annual Reports will be mailed to
all shareholders who have elected to be placed on the
mailing list for this document. Report election forms can
be downloaded from either the Company’s or
Computershare’s website.
Forms for download
All forms relating to amendment of holding details and
holder instructions to the Company are available for
download from either the Company’s or Computershare’s
website.
Shareholders’ Calendar*
2009
1 October
16 November
18 December
2010
10 May
30 September
15 November
*Dates may be subject to change
Information about the Company is available from
a number of sources:
• Website: www.elders.com.au
• E-news: Shareholders can nominate to receive company
information electronically. This service is hosted by
Computershare and holders can register via the Investor
Centre on the Company’s website or direct via
Computershare’s website.
• Publications: the annual report is the major printed
source of company information. Other publications
include the Half-yearly report, company press releases,
presentations and Open Briefi ngs. All publications
can be obtained either through the Company’s website
or by contacting the Company.
• Direct enquiry with the General Manager,
Investor Relations, Mr Don Murchland by telephone
08 8425 4617 or via email dmurchland@elders.com.au.
Securities analysts, institutional and other potential
investors seeking information about the Company
should contact Don Murchland.
Start of 2010 fi nancial year
Announcement of full year result and fi nal dividend
Annual General Meeting
Announcement of half-year fi nancial results
End of fi nancial year
Announcement of 2010 full year results
159
Notes
160
Company Directory
Directors
Mr Stephen Gerlach, AM, LLB Chairman
Mr Mark C Allison, BAgrSc, BEcon, GDM, FAICD
Mr Charles E Bright, BA MA(Oxon)
Dr James C Fox, BE MEngSci PhD
Mr Raymond G Grigg, FSAE-I FAICD
Mr James H (Hutch) Ranck, BS Econ
Mr Malcolm G Jackman, BSc BCom
Mr Ian G MacDonald, SF Fin
Mr Graham D Walters, AM FCA
Mr Rob H Wylie, FCA
Secretaries
Ms Sonya C Furey, BEc(Acc), LLM, FCA
Mr Ross E Mallett, JD BBus, FCIS, FCPA
Registered Office
Level 3, 27 Currie Street
Adelaide, South Australia, 5000
Telephone: (08) 8425 4999
Facsimile: (08) 8410 1597
Email: information@elders.com.au
Website: www.elders.com.au
Share Registry
Computershare Investor Services Pty Ltd
Level 5, 115 Grenfell Street
Adelaide, South Australia, 5000
Telephone: 1300 55 61 61
Facsimile: +61 (0)8 8236 2305
Website: www.computershare.com.au
Auditors
Ernst & Young
Bankers
Australia & New Zealand Banking Group
BNP Paribas
Citigroup
Commonwealth Bank of Australia
HSBC Bank
National Australia Bank
Westpac Banking Corporation
Stock Exchange Listings
Elders Limited ordinary shares and
subordinated convertible unsecured notes
(Elders Hybrids) are listed on the Australian
Securities Exchange under the ticker codes
“ELD” and “ELDPA”
Trustee for Elders Hybrids
Permanent Trustee Company Limited
151 Rathdowne Street
Carlton South, Victoria, 3053
2009
A N N U A L
R E P O R T
20 09
A N N UA L
R E P O R T