Helping our
clients to make
more possible
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2013
Company Directory
Directors
Mr Mark C Allison, BAgrSC, BEcon, GDM, FAICD, Chairman
Mr Malcolm G Jackman BSc Bcom, Managing Director
Mr James H Ranck BS Econ FAICD
Ms Josephine M Rozman BEc, CA, GAICD
Secretary
Mr Peter G Hastings BA LLB GDLP
Registered Office
Level 3, 27 Currie Street
Adelaide, South Australia, 5000
Telephone: (08) 8425 4000
Facsimile: (08) 8410 1597
Email: information@elders.com.au
Website: www.elderslimited.com
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
Commonwealth Bank of Australia
National Australia Bank
Rural Bank Limited
Coöperative Centrale Raiffeisen – Boerenleenbank
(Rabobank Australia)
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
The Trust Company (Australia) Limited (formerly
known as Permanent Trustee Company Limited)
Level 3, 530 Collins Street
Melbourne, Victoria, 3000
Our clients and their
needs are our central focus
– all day, every day.
Elders is an Australian company with a
history dating back to 1839. Today, Elders
owns and operates one of Australia’s
leading rural services businesses.
Elders Rural Services’ network operations
supply the physical, financial and advisory
inputs and marketing options to help
Australian and New Zealand farmers realise
the best results for their efforts.
Elders International manages the trading
businesses of live export, wool trading,
feedlots and the importation and distribution
of Australian products in China.
List of photographers
Top left: Tanya Warrener, Roma, QLD
Top middle: Margie McClelland, Hay, NSW
Top right: Karen Miles, Mole Creek, TAS
Second row left: Jasmin Dawe, Booborowie, SA
Second row right: Danielle Short, Narrogin, WA
Third row left: Courtney Robinson, Badgingarra, WA
Third row right: Richard Poulish, Gnowangerup, WA
Bottom left: Paddy Weir, Alice Springs, NT
Bottom right: Jane Lamb, Armidale, NSW
2013
2
Our Business
Elders Rural Services
Network Operations
Sales Revenue: $1,283 million
Employees: 2,056*
International Trading
Sales Revenue: $375 million
Employees: 269*
Network Operations
Supply of product and services to
rural and regional clients including:
• Farm inputs – supply of
agricultural chemicals, fertilisers,
animal health and general
rural merchandise
• Marketing and sale of farm outputs
Supply of services to both rural and
metropolitan clients including:
• Real estate and property services
• Financial services distribution
Australia
209 rural branches
104 real estate and
insurance stores
139 real estate
franchises
New Zealand
12 rural branches
2 insurance stores
International Trading
International trading platforms
link offshore markets with
primary producers, delivering
a range of livestock, food and
fibre solutions.
Feedlots
Australian (2)
Indonesia (1)
Live Export
Long-haul breeding stock
Short-haul feeder cattle
Wool
Trading business
in New Zealand
China
Elders Fine Foods
importation
to Chinese markets
* Full time equivalent employees at 30 September 2013. Includes 98 FTEs whose last day of employment was on 30 September 2013.
These employees exited the business as part of the business reorganisation announced to the ASX on 10 September 2013.
Forestry and Corporate activities employed a further 12 and 3 FTEs respectively at year end.
3
2013 The Year in Brief
Key Financial Results
Year ended 30 September
$ million unless indicated otherwise
2013
2012
Sales revenue from continuing operations
1,657.1
1,813.2
Underlying EBIT
Net underlying interest
Underlying loss before tax
Tax on underlying profit
Non-controlling interests
Underlying loss to shareholders
Non-recurring items after tax
Statutory (Reported) loss to shareholders
Cash flow from operating activities
Borrowings
Net debt
Net assets
Earnings per share (cents) – underlying basic
Earnings per share (cents) – underlying diluted
Earnings per share (cents) – statutory basic
Earnings per share (cents) – statutory diluted
Gearing
(42.0)
(16.2)
(58.2)
(1.7)
(3.1)
(63.0)
(442.2)
(505.2)
(81.6)
294.7
255.2
46.2
(14.0)
(14.0)
(112.4)
(112.4)
552.4%
8.2
(13.1)
(4.9)
(2.5)
(3.2)
(10.6)
(50.0)
(60.6)
2.5
385.8
295.3
551.8
(2.4)
(2.4)
(13.5)
(13.5)
53.5%
Reporting Period, Terms and Abbreviations
Abbreviations and terms
Annual Report
Notice of Meeting
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. The terms “2013” or “2013
financial year” refer to the 12 months ended
30 September 2013 unless otherwise
stated. References to “2012” or other years
refer to the 12 months ended 30 September
of that year.
This document has been prepared to
provide shareholders with an overview of
Elders Limited’s performance for the 2013
financial 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.elderslimited.com.
The 2013 Annual General Meeting of
Elders Limited will be held on Thursday,
19 December 2013, 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
office or downloaded from its website at
www.elderslimited.com.
Elders Limited ABN 34 004 336 636
4
Safety
Lost Time Injury Frequency Rate reduced from 6.4 to 6.2
Medical Treatment Injury Frequency Rate reduced from 14.7 to 12.4
Profit and loss
Statutory loss after tax of $(505.2) million compared with
loss of $(60.6) million in 2012
Items excluded from underlying profit totalling $(442.2) million
after tax:
• Tax items of $(38.1) million
• Forestry related items totalling $(16.7) million
• Rural Services items totalling $(159.3) million
• Automotive items totalling $(201.8) million
• Corporate items totalling $(26.3) million
Underlying loss after tax of $(63.0) million compared with
$(10.6) million in 2012
Balance sheet and finance
Net debt of $255.2 million
Borrowings reduced from $385.8 million to $294.7 million
Rural Services
Sales from continuing operations down 9% to $1,657.1 million
Statutory EBIT of $(195.6) million, down from $18.6 million
Underlying EBIT of $(36.3) million, down from $18.2 million
2013
5
Chairman’s
Remarks
Mark Allison
I am conscious that this annual report, my first as Chairman of Elders Limited, is for many shareholders,
the latest in a succession of Elders’ annual reports chronicling losses rather than profits, and a steadily
descending share price.
I am also conscious that the previous Chairman’s Review expressed the then board’s intention to conduct
a formal sale process for the business’ core asset, Elders Rural Services, as this was considered the most
value accretive strategy for shareholders.
As this report documents, the 2013 financial results and share prices are the poorest yet recorded by
Elders and the sale of the Rural Services was pursued but not completed. The year’s outcomes and events
have lead shareholders, clients, employees and the many followers of Elders in the Australian farming,
financial and regional communities to question: “what now for Elders?”
This report’s primary purpose is, however, to detail and explain your company’s performance and position
for the twelve months ending 30 September 2013. I will not avoid the question “what now for Elders”,
as the company’s future is dependent on each director and employee of the company being able and
ready to present a compelling case for Elders’ relevance as an investment, supplier, advisor, client and
employer. However, accountability for outcomes is fundamental. Accordingly my first concern in presenting
this annual report is to address the results it records and their significance before turning to the future.
Financial Results
The loss of $(505.2) million recorded by the company in 2013 is comprised of an underlying loss of
$(63.0) million from continuing operations and a further net loss of $(442.2) million from items excluded
from underlying profit as they do not relate to operational results from continuing operations. Both of
these elements are analysed and discussed by the Managing Director in his report and in the Operating
and Financial Review.
A large discrepancy between Elders’ statutory profit and the underlying profit has been a feature of recent
profit announcements as the company divests assets that are not relevant to its strategy of becoming an
agriculture pure-play, or are uneconomic and it restructures its finances and operations.
While the total loss for abnormal and non-recurring items is the largest yet, it also marks the near
completion of what has been a five year process of rationalisation and restructuring of assets,
operations, finances and carrying values, conducted in uncompromising markets. In 2013, this activity
included the sale of the company’s automotive interests and the near-completion of the forestry
divestment program. In addition the carrying value of intangibles relating to the Elders Rural Services
businesses have been impaired to modest levels.
6
The sale process was initiated in the belief that a structured competitive process could provide
stakeholders with accelerated access to the value of the rural services business believed to exist, but
not reflected in the share price due to the company’s debt levels. As the previous Chairman advised
in the 2012 Annual Report and Annual General Meeting, it was intended that the board would present
a proposed transaction for shareholder consideration and approval once an appropriate transaction
was identified. Ultimately, none of a number of the indicative offers, or the one final offer, received were
considered adequate, and the focus of effort for our security-holders remains on reconstituting the
company as an appropriately capitalised, appropriately geared, agriculture pure-play that is leveraged
to the Elders brand.
Collectively, the impairment to Elders Rural Service intangibles of $151.4 million and the loss on sale of,
and other accounting adjustments attributable to, the divested Futuris automotive components business,
represent approximately 81% of the total of $(442.2) million excluded from the underlying profit and loss
in the 2013 accounts.
The underlying loss is disappointing, coming after the improvements reported in the past two years.
Seasonal factors in the form of unusually hot, dry weather contributed significantly to the result, as did a
total $(24.2) million charge necessary to restate global livestock trading balance sheet items after the
company identified that trading results had not been recorded in line with accounting policies. This matter
was announced to the ASX and is discussed in more detail, including the actions taken by the company,
by the Managing Director in his report following.
However, seasonal variations are a fact of life in agriculture and the business clearly needs to perform
better. It is realistic to expect that an enterprise with annual revenue of $1.65 billion and a customer base
of over 50,000 has the capacity to generate a material profit given the appropriate cost structure, business
mix and capital management. I have no doubt that Elders possesses the potential to be highly competitive
in costs, service and ultimately returns to shareholders.
In this respect, the business reorganisation initiative undertaken this year is a positive and necessary step
forward. This initiative, which is outlined by the Managing Director in his report, is expected to improve the
sales and earnings generation capability and client focus of the Elders network. The anticipated cost savings
of approximately $25 million per annum should see the business commence the new financial year with the
added impetus of a much more appropriate cost base and an organisation structure which moves senior
management closer to clients and provides branch management with greater autonomy and accountability.
Balance sheet and finance
The company has worked hard, and achieved good results, in its efforts to reduce debt levels and
progressively optimise the structure of its finances. 2013 was the fifth successive year that Elders reduced
its indebtedness and net debt at year-end of $255.2 million was 14% lower than at the beginning of the
year and 43% lower than three years earlier. The company enjoys the continuing support of its financiers,
as evidenced by the extension of its finance facilities to 31 December 2014.
In assessing indebtedness, it is important to appreciate that only 50% of borrowings are core debt owed
to banks under syndicated term facilities, with the balance being self-liquidating debt such as securitised
debtor facilities which are backed by farm supplies receivables. In a similar vein, I would like to make clear
that Elders’ borrowings, whether that be measured in gross debt or net debt measures, are all below
that of the previous year-end, notwithstanding an increase in equity-related debt metrics such as gearing,
which were impacted by the reduction in shareholders‘ equity arising from the year’s loss after tax.
Further debt reduction is planned for the 2014 financial year and it is expected that this will leave Elders
with modest borrowing levels, that are forecast to align with the requirements of the business, given
anticipated earnings improvement. This will represent a significant and hard won achievement for the
company and mean that, for the first time in several years, capital management can move from a priority
on reducing bank debt to longer term considerations such as addressing the reduction to equity levels
incurred in the restructuring process. Board and management are assessing the appropriate timing and
form of initiatives for this purpose.
Safety
Safety performance is another area where the company’s efforts have been rewarded with improvement in
the form of lower injury frequency rates. The gains made in 2013, outlined by the Managing Director, are
significant and commendable. However, the only acceptable safety performance is one which is injury and
incident free. Continual improvement towards this objective is ongoing priority for the company.
7
Board
The size of the board has been reduced to four members, comprising three non-executive directors and
the Managing Director. Elders is now a smaller, simpler company and the reduced board size is considered
appropriate for the current needs of the business.
The smaller board has resulted from the resignations during the year of Mr John Ballard, and Mr Ian
MacDonald. Mr Ballard, served the company as Chairman and non-executive director since 2010, while
Mr MacDonald joined the board in November 2006 as a non-executive director and served on a number
of committees, including Chair of the Remuneration and Human Resources Committee. On behalf
of shareholders and my fellow members of the board I would like to record our appreciation for the
contributions made to the company by Mr Ballard and Mr MacDonald.
Corporate governance
Your company is committed to an unequivocal and full discharge of its corporate governance and
continuous disclosure obligations. Elders’ corporate governance framework and practices are detailed in
the Corporate Governance Statement commencing on page 21 of this report.
The report includes details of the progress of the company’s diversity strategy, which was outlined for
the first time in the 2012 annual report. Sufficient diversity within the ranks of the company’s workforce
and board is important for the company to have access to optimal blends of skill, talent and perspective.
Agribusiness and rural and regional services have, traditionally, unlike farming enterprises themselves,
not featured high levels of gender diversity so I am pleased to report each of the targets set by the board
has been met or surpassed.
Concluding comments, the future
In concluding, I return to the question of the company‘s future. For some time, Elders has been engaged
in making the changes necessary for the company to once again be an agriculture-focussed pure-play.
For various reasons, this has taken longer than anticipated, and, as this year’s results have demonstrated,
been accompanied by a substantial diminution in shareholders’ equity, which we intend to address.
However this goal has now been achieved, and in its 175th year since Elders began, your company will,
once again, offer investors exposure to a pure-play that possesses the most well-known brand and
network in Australian agriculture. The progress made in simplifying the business and reducing debt levels
has enabled a simplification of its management structures and a return to day-to-day focus on its core
business that has not been available until now.
As the 2013 results evidence, the business has scope to improve, and management initiatives in train
should advance improvement.
Most importantly, I believe that Elders has the base ingredients required for delivery of its vision: a
substantial existing client and sales foundation, penetration into key markets, a strong brand in Australia
and abroad and a team of employees with passion and commitment to its reputation. The task now is
to take these ingredients and apply the necessary capital and business management so that Elders can
deliver on its potential and provide appropriate returns for its various stakeholders.
Your board is committed to providing the necessary guidance, oversight and action to support the
company’s management and employees in this task, and I look forward to updating you on our progress.
2013 has been a demanding year for all of the company’s stakeholders, whether they are security-holders,
financiers, clients or employees. Your ongoing support has been highly valued. In particular I would like,
on behalf of directors, to acknowledge the efforts and contribution made by the company’s employees
and their families and wish them well for the coming year. Elders enters 2014 with sharpened focus,
reduced debt, a better cost structure and a strong capacity and drive to deliver improved results for all
of its stakeholders.
Mark Allison
Chairman
8
Report by the
Managing Director
Malcolm Jackman
Management of your company in 2013 has been
essentially directed to three broad objectives.
First, the delivery of the best possible financial results.
Second, the continued development of Elders Rural
Services as a sales-focussed, efficient agricultural
services and supply organisation, that is the leader
in its field.
Third, completing the journey began in December
2008 to transform an over-geared conglomerate
corporate structure to an agribusiness pure-play
that offers investors attractive exposure to the value
created in the Australian farm sector in Australian
and international markets.
In this report I will address the company’s progress
and position in respect of each of these objectives.
While each is important, the latter two objectives have
occupied much of the company’s efforts over the
past five years, and are fundamental to the company’s
future and the realisation of improved returns for
security holders.
The progress made in 2013 has your company nearing
completion of the transformation to a pure-play
agribusiness that is now largely unencumbered by
excessive debt levels and the dead-weight of cash
absorbing forestry assets and liabilities. However, this
progress has been accompanied by the substantial
impact on the 2013 financial results that arise from the
necessary divestments, discontinuation, impairments
and restructuring.
Financial performance
Elders’ statutory loss after tax of $(505.2) million for
the 2013 financial year comprises an underlying loss
of $(63.0) million and items totalling $(442.2) million
which have been excluded from underlying profit as
they do not relate to operational results and the day-to-
day performance of the business. These items, which
are detailed in the Operating and Financial Review that
commences from page 13 of this document, largely
fall within 4 categories relevant to the organisation’s
shift to being competitive agriculture pure-play:
those attributable to assets divested or discontinuing
including write-downs, loss on sale and financial
results ($(182.5) million); the impairment of Elders
intangibles including brand and associated goodwill
($151.4 million); and the costs of restructuring
remaining assets and resource bases to that considered
necessary to be competitive ($(70.2) million). The tax
impact of items not included in underlying profit was
$(38.1) million.
The underlying loss of $(63.0) million after tax
compares to a corresponding result of $(10.6) million
in the previous year, with the deterioration being
attributable to lower earnings from Elders’ Australian
Network and Trading operations, the causes of
which are discussed below.
Operational results
Elders’ continuing operations now comprise the Rural
Services Network and Trading operations and joint
ventures. These operations contributed an underlying
EBIT loss of $(36.3) million, well below the previous
year’s comparative of $18.6 million due to seasonally
affected lower network sales and an unprofitable
result from global cattle trading.
Results from Network operations in 2013 were shaped
by an abnormally hot and dry opening six months,
which persisted over the year in pastoral regions
particularly in the north and east. Far north and
southern regions recorded good to above average
rainfall over the six months to 30 September.
Collectively, these conditions translated into reduced
sales through the combined effects of lower livestock
demand and prices, lower weight stock and reduced
demand for animal health, fungicide and other
farm supplies products. Cattle, sheep and wool prices
for the year were, respectively 18%, 29% and 6%
below 2012 averages. Sales revenue for the Australian
network in 2013 was $1,206.0 million, compared with
$1,275.5 million in the previous year.
Anecdotal evidence suggests the downturn in sales
and margin generated was consistent with industry
experience given the seasonal conditions.
However, in Elders’ case, the impact of these seasonal
and market conditions on earnings was exacerbated
by a $34.6 million contraction in the underlying
contribution from Trading operations. Trading,
which includes cattle trading, wool trading, feedlot
and Chinese and Indonesian operations, recorded
an underlying EBIT of $(20.5) million for 2013.
9
This result includes a charge of ($24.2) million to
adjust cattle inventory to fair value and restate other
Trading related balance sheet items after the company
identified certain cattle sale outcomes had not been
recorded in line with accounting policies for the global
cattle trading operations. The company immediately
submitted the accounts and procedures of the global
cattle trading operations to an external examination
by forensic accounting consultant, PPB Advisory for a
full and independent investigation. As at the date of
this report the company is yet to receive PPB Advisory’s
final report.
Development of Elders
Rural Services
Getting our core business ‘right’ for both clients and
shareholders has been, by necessity, an on-going
exercise over the past 5 years. Our objective, the
creation and maintenance of a high performance,
cash-focussed sales organisation, has been addressed
through a range of measures such as:
• replacing a service-supply culture with a sales focus
and structured sales management and accountability;
• management of supply chain and inventory reform
and reduction of support centre and overhead costs;
• reductions to working capital requirements,
and divestment or closure of non-working capital
efficient businesses;
• increasing the diversity of the workforce, and
• providing training, remuneration and incentive
structures, that are aligned with the performance
needs of the business.
This is, by nature, a progressive exercise. New changes
and gains need to be embedded and consolidated
before further change is introduced, front-line staff need
to be focussed on, and not distracted from, anticipating
and meeting the needs of our clients and management
resources need to be appropriately applied.
While this makes for a long term exercise, the business
has been making solid gains and the work done prior
to 2013 enabled the implementation during the year
of Project Horizon, a major reorganisation, which has
been designed to deliver a substantial reduction in
cost-to-serve and improved organisational efficiency.
The reorganisation, announced in September 2013,
has seen the introduction of a flatter, lower cost
management structure, the rationalisation of support
services and the introduction of greater autonomy
and accountability at the branch level. The move to
‘hub and spoke’ model will shorten reporting lines
from the branch to the senior executive responsible for
Elders Rural Services and will be accompanied by the
closure of a small number of branches. In total, the
restructuring is forecast to result in annualised savings
of approximately $25 million, a figure which represents
an improvement of 8%.
The management and cost of non-network businesses
such as the Trading and New Zealand have also
been rationalised.
Those who have followed Elders the past 5 years will
be well aware of previous restructurings conducted
during the course of its transformation over that period.
The changes made in 2013 are the most significant
undertaken over that period and it is important to
understand these changes are built upon the gains
made in organisational culture, systems and structures
delivered by previous initiatives.
This applies equally at the Network level (where the
adoption of new systems, performance aligned
remuneration and sales focus and management has
enabled the shift to a flatter, lower cost, high-
autonomy/high accountability structure) as it does to
support services, where the completion of Automotive
and the near-completion of Forestry divestments
mean that support services and overheads can now
be tailored to the needs of Elders’ core single business
in Rural Services.
…The outcome is…that Elders
for the first time in 20 years…
is once again an agricultural
pure-play”
Transformation to an agribusiness
pure-play
The transformation of Elders into an agriculture
pure-play with a sustainable and attractive capital
structure has been an ongoing management priority
since I announced the Agenda for Change program
in December 2008.
This has been a long term project which, due to events
such as the global financial crisis and the collapse of
the plantation forestry sector, has taken longer than
expected. The task list has been considerable:
debt has been reduced by over $1 billion; company
structure and focus has been simplified through a
series of transactions that have seen the divestment
of a range of diverse non-core businesses and interests
in automotive components, property development,
insurance underwriting, banking, financial planning,
aquaculture, telecommunications, horticulture, timber
manufacturing and wholesale, early stage wool
processing, shipping, beef production and forestry.
The forestry divestments have been particularly
complex. Elders’ decision to withdraw from forestry
following the contemporaneous collapse of the
industry’s funding and revenue sources required the
company to deal with a portfolio of some 180,000
hectares of freehold and leasehold land, and negotiate
exit from long term agreements with MIS investors and
leaseholders. Moreover, the execution of the forestry
asset divestment program initiated in October 2012 has
been conducted within a market already softened and
oversupplied by the fall-out from the insolvency of a
number of other forestry companies.
10
However, the progress made in 2013 has Elders’
forestry withdrawal and asset divestment approaching
completion. As at the date of this report:
• all freehold land has now been divested.
• all MIS schemes established by Elders Forestry have
completed, or are otherwise in the process of being
wound up with the approval of scheme investors.
This will be finalised with a payment of $5 million to
investors in remaining schemes in December 2013.
• agreements have been reached with respect to
the surrender of leases which will reduce Elders’
remaining leasehold estate to 4,600 ha, some 8%
of the 58,000 ha held at the commencement of
the Forestry Divestment Program.
In addition, Elders completed the divestment of
Futuris Automotive and reduced its equity in the Elders
Insurance joint venture to 10% through sale of a
15% interest to QBE, the joint venture partner. The sale
of the joint venture interest optimises Elders’ capital
participation in the insurance distribution joint venture,
whilst extending the agreed term for its use of the
Elders brand until 2033.
As a result of these divestments and other initiatives,
Elders has been able to record a substantial
reduction in debt and extend the term of its debt
facilities to December 2014. Core bank debt was
reduced by 21% in 2013 to $147.8 million, while gross
debt was reduced by 24% to $294.7 million. Further
reductions are anticipated in 2014 through a handful
of further divestments of assets not core to the
company’s strategy.
The outcome of the corporate actions taken in 2013
and the previous four years is that Elders, for the
first time in 20 years since it was acquired by Futuris
Corporation, is once again an agricultural pure-play.
The divestment agenda is now principally completed,
debt substantively reduced and trending downward,
and the business can now consolidate and focus
on building a sustainable and profitable agribusiness
under its new lower cost structure.
Safety
The provision of a safe environment for all who come
into contact with Elders’ operations is the Company’s
foremost priority. Safety management and promotion
in 2013 continued the focus on safe work practices
and on systems that promote reporting, effective
analysis and management.
Across the Group, including Futuris Automotive, safety
outcomes showed an improvement in the 12 month
rolling Lost Time Injury Frequency Rate (LTIFR), from 6.4
in 2012 to 6.2 in 2013. Performance in the Australian
Network has shown ongoing improvement, with 17%
reduction in the number of lost time injuries.
Consistent with the company’s shift to a pure-play
agribusiness, a revised safety strategy focussing on
Rural Services operations was approved by the
Board Occupational Health and Safety Committee
in April 2013 and is currently being implemented
across the business. The plan aims to improve safety
performance through robust risk management
activities and an embedded safety culture across
all levels of the business.
Human Resources
Elders employed 2,340 full time equivalent (FTE)
persons at 30 September 2013 compared with the
previous corresponding figure of 4,504 persons. The
fall in employment numbers is due to the divestment of
Futuris Automotive and the progressive reductions to
staffing levels required by the company as it moves
towards a simpler, more focussed structure.
The effectiveness and enterprise of our workforce is a
critical factor in its performance. To this end, Elders has
3 core aims in the management of its human resources:
1) making sure Elders has, and keeps, the ‘best
right talent’;
2) giving employees the training, opportunity and
leadership that will enable them to make their
greatest contribution to the company; and
3) providing remuneration and incentive structures that
appropriately motivate and reward employees to
deliver superior performance.
Elders is working to improve the diversity of its talent
pool, particularly in regards to the gender diversity
of its management, senior executive team and board
of directors. While the representation of women within
Elders’ workforce (33%) is comparable to the sector
in which it operates, it is nevertheless below the
general population level. Moreover, the representation
of women in the company’s leadership positions is
even lower.
The company is working to improve diversity in its
human resources throughout the company by the
pursuit of the measurable targets set out in the
Corporate Governance Statement which commences
on page 21. Targets have been set for gender diversity
at various levels of leadership and I am pleased to
report that the 2013 targets have been exceeded in all
but one of the categories, and met in the outstanding
category. Full details are provided in the Corporate
Governance Statement.
Net debt
$million
600
500
497.6
400
300
200
100
0
435.2
427.1
345.5
324.0
387.3
295.3
295.1
255.2
206.0
96.1
108.3
2010
2011
2012
2013
$million as at 30 September:
2010
2011
2012 2013
Total Debt
497.6
427.1
387.3 295.1
Total Net Debt
435.2
345.5
295.3 255.2
Core Net Debt
324.0 206.0
96.1 108.3
11
Concluding comments
In coming to the position five years ago, I was
attracted by the opportunity to work with one of
Australia’s great brands, and one of the few
with iconic historical and cultural significance.
My experience over the past 5 years as part of the
Elders ‘family’ in Australia and internationally has
only served to reinforce my belief in the business’
significance, and more importantly, its potential
if it were to be given the opportunity of a focussed
structure and a sustainable capital structure.
For reasons outlined above, and discussed in more
detail in the Operating and Financial Review, the
financial results for 2013 have been disappointing,
and have seen underlying profit decline after the trend
of improvement reported in the previous two years.
However, the years’ efforts also mean the business
is now in a position where, having addressed its
corporate structure so that it is completely focussed
on agribusiness, substantially reduced borrowings
and having adopted a lower cost operating structure,
the business can now turn its attention to share-
holders’ equity and the recapitalisation of the balance
sheet. As noted by the Chairman, work is already in
train on this front. It also means that, at a more
fundamental level, Elders can better focus on its
core task of generating appropriate returns for all
stakeholders from its day-to-day business of
supporting its rural, regional and international clients.
This is an outcome which the entire Elders team has
been striving for against numerous obstacles for
some time and I would like to record my appreciation
for the support, efforts and patience that the company
has been given by its employees, clients, security-
holders, suppliers and financiers.
Malcolm Jackman
Managing Director
Elders invests in the training and development of its
workforce and young people in the rural regions where
it operates. The Elders’ traineeship initiative entered its
fourth year. This program provides a 12 month program
of employment, on-the-job training and tertiary study of
a Certificate IV in Agriculture at TAFE institutions. Elders
has now provided a total of 90 traineeships since the
program began, all of whom have been recruited from
rural and regional locations, and 82% of whom have
been placed in ongoing roles within the Network
on graduation. An additional 8 trainees entered the
traineeship program in October 2013.
As is appropriate for a sales-based organisation such
as Elders, sales effectiveness training and management
is ongoing. With the SalesPlus program having
established a sales effectiveness culture and reporting
framework, the company has shifted its point of
emphasis to leadership capability at ‘the front line’.
The Branch Manager Training Program, initiated and
developed in the previous year, commenced delivery
in November 2012. It has been designed to build
managerial and leadership capability amongst those
responsible for the individual performance of the
branches that comprise the Elders network. A total of
80 branch managers completed the program in 2013.
The new year will see the program delivered to a
second wave of branch managers, and the ongoing
development of previous graduates through continuing
development of the Branch Manager Training Program
alumni group.
Community
As a rural service organisation, Elders is committed
to supporting the communities in which it serves.
Elders is a major employer in rural and regional
Australia and Elders’ branches support local initiatives
and charities and staff members participate in
community service.
At a corporate level, Elders supported a number
of charities and a number of non-government
organisations of relevance to its client base. Elders
supports the Australian Land Management Group in
its work to provide environmental sustainability on
Australian farms. Elders is also a sponsor of the Little
Heroes Foundation in its work to provide funding
for equipment and services for seriously ill children
and their families.
Elders is a member of a number of industry
organisations where it helps advance the interests
of Australian agriculture and primary producers.
12
Operating and Financial Review
Elders’ continuing operations involve the sale of inputs
and services to the Australian and New Zealand agricultural
industry, the marketing of real estate in both rural and non-
rural areas and the trading of livestock, wool and beef, both
domestically and into international markets. Elders has a
network of 221 full-service branches and approximately 330
points of presence including specialist real estate branches,
specialist insurance branches, specialist financial planning
branches plus three beef cattle feedlots.
Elders is now focused on its core agriculture pure-play and
Elders branded businesses, having divested its automotive
components operations, Futuris Automotive, during the year.
Australian Network
Network operations in Australia include the following
product and service offerings:
• Wool: Elders is one of the largest agents for sale 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 marketing and broking, wool handling,
in-shed wool preparation advisory and wool trading.
Elders also holds a 50% interest in AWH, Australia’s
largest wool logistics provider, which handles
approximately half of the national wool clip.
• Livestock: Elders provides a range of livestock
marketing activities including on-farm sales to third
parties, regular physical and on-line public livestock
auctions and direct sales into Elders-owned and
third-party feedlots and livestock exporters. The
livestock marketing services are backed by the
provision of professional animal health, genetics
and production advice. The Elders livestock network
comprises approximately 1,000 livestock agents
and staff operating across the entire pastoral area
of Australia.
• 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 to primary producers on
agronomy, genetics and animal health.
• Grain: Elders offers grain growers a range of
cash-based grain marketing options through an
accumulation agreement with Toepfer Australia.
• Real Estate: Elders operates real estate agencies
and property management services primarily in the
broadacre, rural residential and lifestyle property
markets. Broadacre and lifestyle property services are
conducted primarily through the Elders Network and
supporting specialist real estate offices. Residential
and metropolitan real estate services are conducted
mostly through Elders franchise operations.
• Insurance: The Elders Insurance joint venture with
QBE utilises the Elders Network as the core of its
distribution of a wide range of insurance policies
to rural and regional Australia. In September 2013,
Elders reduced its shareholding in the joint venture
from 25% to 10% through a sale to QBE. As part
of the transaction, the use of the Elders brand by the
joint venture has been extended to 2033.
• Banking: Elders distributes a wide range of banking
products through the Elders Network under a
distribution agreement with Rural Bank. Banking
services include Term Loans, Seasonal Finance,
Machinery Finance, Livestock Trading Facilities,
Transactional Banking and Term Deposits.
• Financial Planning: Elders provides professional
financial planning solutions through a network of
advisors under the Elders Financial Planning brand.
It operates through a joint venture, in which Elders
has a 49% interest, with OnePath (a subsidiary of
ANZ) and specialises in Business Succession Planning
as well as Risk Management, Superannuation and
Wealth Creation.
13
New Zealand Network
Operations in New Zealand provide wool, livestock,
real estate agency services, farm supplies and financial
services distribution through a network of 12 rural
branches and 2 specialist insurance stores. The
services in New Zealand are broadly similar to those
offered in Australia, but provided by local staff with
local knowledge and experience.
Trading
Elders conducts global trading operations under the
Elders International Trading (EIT) banner which
has well-developed supply chains into a range of
international markets:
Financial Performance
The statutory loss after tax attributable to owners of
the parent (shareholders) of $(505.2m) for the
12 months ended 30 September 2013 [F12 : $(60.6m)]
includes a number of items considered either not
related to ongoing operating performance or related
to discontinued operations.
Calculation of underlying profit, which is an unaudited
non IFRS measure, by excluding these items enables
more meaningful comparison of results between periods
by providing like-for-like figures for ongoing operations.
Underlying profit is calculated as follows:
• Live export: Facilitates principal position trades of
Statutory and Underlying Profit
dairy, beef feeder, beef slaughter and beef breeding
cattle from Australia, New Zealand and Uruguay
to international markets through North Australian
Cattle Company (NACC) and Universal Live Exports
(ULE). Cattle are transported by sea or air freight
depending on the market requirements.
• Wool Trading: Elders exports wool from New
Zealand to China, North Asia and Australasian
carpet producers.
• Feedlots: Elders operates Australian cattle feedlots
near Charlton in Victoria (Charlton) and near Tamworth
in New South Wales (Killara) as well as an Indonesian
cattle feedlot near Lampung (PT Elders Indonesia).
• China operations: Elders Fine Foods is involved
in the importation and distribution of Australian
and New Zealand food and beverage products
throughout China.
Automotive
Elders divested Futuris Automotive on 31 July 2013 to
Clearlake Capital Group. Futuris’ primary operations
involved the design, manufacture and supply of
automotive seating and interior solutions. As a result
of the sale, Futuris Automotive has been classified
among discontinued operations. Proceeds from
disposal were applied to reduce net debt by $55.2m.
Forestry
In October 2011, Elders announced its intention to
withdraw from conducting Forestry operations and to
divest its forestry assets under a long term divestment
program. Forestry operations have been classified as
a discontinued operation and the company has been
engaged in divesting forestry assets and effecting
withdrawal from the operation of forestry plantations
since that time. In 2013 this program was substantially
completed through the following events and
achievements:
• Disposal of Indian Sandalwood MIS schemes to
Santanol Pty Ltd
• Sale of the 30,000 hectare APT estate to NewForests
• MIS investor approval to terminate all remaining
retail MIS Forestry projects
• Entry into conditional implementation agreements
with the two largest remaining landlords relating
to the exit of substantial lease liabilities in Esperance
and Queensland.
Divestment of the final assets, including the divestment
of the Company’s equity in Agricultural Land Trust and
its responsible entity, Agricultural Land Management
Limited, is expected to be completed by the first
quarter of calendar year 2014.
14
$m after tax 12 months ended 30 September:
F13
F12
Reported profit/(loss) after tax
to shareholders
(505.2)
(60.6)
Items excluded from
underlying profit/(loss):
Rural Services
Corporate & other
Automotive
Forestry
Tax on items excluded from
underlying profit/(loss)
Items excluded from
underlying profit/(loss)
(159.3)
0.4
(26.3)
(15.1)
(201.8)
4.2
(16.7)
(74.9)
(38.1)
35.4
(442.2)
(50.0)
Underlying profit/(loss) after tax
to shareholders
(63.0)
(10.6)
Items excluded from statutory profit to determine
underlying profit for the 12 months ended
30 September 2013 comprise:
• Rural Services items before tax of $(159.3m),
including impairment of intangibles $(151.4m)1,
other asset impairments $(21.5m), cost of business
reorganisation $(14.1m), cost of terminating the
IT platform replacement project $(4.3m), onerous
contracts $(3.8m), mark to market loss on foreign
currency contracts $(3.0m) offset by profit on
sale of Elders Insurance JV $26.0m and fair value
uplift in Insurance JV $17.3m.
1 The Rural Services impairment loss, recognised
under Accounting Standards, is largely a result
of a reduction in future cash flows following the sell
down of a portion of the Elders Insurance JV and
an increased allocation of corporate costs to the
business due to the reorganisation of Elders as
a pure-play agribusiness. The Elders brand remains
the most recognisable rural banner in Australia.
• Corporate items before tax of $(26.3m), including
impairment of investment in Seafood Delicacies Ltd
$(5.3m) and Australian Fine China $(2.5m), costs
relating to intiatives to divest Automotive and Rural
Services $(6.8m), refinance costs $(3.2m) and
interest relating to discontinued operations $(8.9m).
• Automotive items before tax of $(201.8m), including
impairment of intangibles $(166.5m), loss on
disposal of $(37.7m) and results from discontinued
Automotive operations for the period $2.3m.
• Forestry items before tax of $(16.7m), including
equity loss and impairment associated with the ALT
investment $(18.5m), loss on disposal of forestry
assets $(2.6m), restructure costs $(11.8m) and
results from discontinued forestry operations for
the period $(9.7m) which were offset by reversal of
asset impairments for assets held for sale $6.7m
and reversal of onerous contract provisions $19.2m.
• Tax items excluded from underlying results of
$(38.1m), relating to de-recognition of deferred
tax asset on prior year losses and temporary
differences $(64.5m), partly offset by realisation
of taxable income on wind up of Forestry assets
and provisions $15.0m and disposal of Automotive
operations $4.6m.
Key Profit & Loss Items
$m 12 months ended 30 September:
F13
F12
Sales revenue
- Continuing operations
1,657.1
1,813.2
- Discontinued operations
305.5
359.4
Total sales revenue
1,962.6 2,172.6
Depreciation & amortisation
6.5
12.7
6.4
14.6
19.2
21.0
11.5
(3.1)
8.4
14.1
(6.3)
7.8
(10.8)
(8.1)
- Continuing operations
- Discontinued operations
Total depreciation &
amortisation
Income from associates
- Continuing operations
- Discontinued operations
Total income from associates
Net finance costs
- Underlying finance cost on
core debt
- Finance cost on self-liquidating
facilities
- Other finance costs and interest
income (net)
• International Trading sales were $(72.1m) lower
as a result of reduced Indonesian import quotas
impacting short haul shipping volumes and
decline in shipments to China from uncertainties
in government and regulatory changes affecting
long haul shipping business.
• Discontinued sales revenue related to Automotive
$304.1m (F12 $344.8m) and Forestry $1.4m
(F12 $14.6m).
• Reported net finance costs of $(25.5m) in F13
includes:
• Underlying net finance costs of $(16.2m), which
comprises:
− Underlying finance cost on core debt $(10.8m)
which excludes interest to finance designated
Forestry and Automotive assets being divested
$(6.3m). Finance cost on core debt of $(10.8m)
was $(2.7m) higher than F12 due to additional
facilities sourced during the year to fund the
divestment initiatives in the business.
− Finance cost on self-liquidating facilities for Rural
Services was down due to lower debt balance
during the period (Sep 13 $146.9m, Sep 12
$163.8m).
− Other finance costs relate to interest on overdue
debtors $7.8m (F12 $8.9m), facility fees and other
interest related items.
• Excluded from underlying finance cost $(9.3m),
comprises:
− Interest expense related to divestment of Forestry
and Automotive assets $(6.3m) [F12 $(14.0m)].
− Finance costs related to Automotive’s self-
liquidating facilities $(3.8m).
− F12 Interest income from the ATO as a result
of the successful objection to an amended tax
assessment $19.2m.
Underlying Financial Performance
Rural Services
Rural Services Results
$m 12 months ended 30 September:
F13
F12
(6.8)
(7.9)
Sales - continuing operations
1,657.1
1,813.2
- Underlying
1.4
2.9
- Excluded from underlying sales
Underlying net finance costs
(16.2)
(13.1)
Depreciation & amortisation
Excluded from underlying
finance costs
Total net finance costs
(9.3)
(25.5)
4.6
(8.5)
Gross margin
- Australian Network
- New Zealand
Key profit and loss items for the year include:
• Continuing sales revenue of $1,657.1m was down
9% or $(156.1m) on the previous year, with $(10.5m)
relating to operations wound down in F12 (wool
indent) and $(145.6m) relating to ongoing Rural
Services operations:
• Australian Network sales were down $(69.5m),
mainly in Farm Supplies $(45.1m) from lower
demand for agricultural chemicals due largely to
hot and dry conditions and in Livestock $(19.8m)
from lower sheep and cattle prices.
• New Zealand Network sales were $(4.0m) lower
as drought induced destocking placed downward
pressure on livestock prices and limited cash
flow spending on farm inputs.
- Trading
Costs
- Australian Network
- New Zealand
- Trading
- Support centres & other
Equity accounted earnings
Underlying EBIT
Items excluded from
underlying EBIT
Reported EBIT
1,657.1
1,802.7
-
6.5
10.5
6.4
253.4
309.0
233.3
257.7
19.1
1.0
16.9
34.4
(302.0)
(304.9)
(224.3)
(220.6)
(18.4)
(18.4)
(23.2)
(22.0)
(36.1)
(43.9)
12.3
(36.3)
(159.3)
(195.6)
14.1
18.2
0.4
18.6
15
Rural Services operations recorded an underlying EBIT
of $(36.3m) compared to $18.2m in the previous year.
The principal factors in the underlying EBIT result were:
• Reduced margin generated by the Australian Network
as a result of extensive hot and dry conditions in
Australia and depressed livestock values;
• Higher margin generated by the New Zealand Network
by increasing market share in the wool business;
• Reduced margin from International Trading
operations as a result of the deterioration in short
haul livestock export markets that followed the
curtailing of cattle import permits by the Indonesian
government;
• Financial impact of the International Trading balance
sheet adjustment; and
• Successful initiatives to control overall costs,
specifically including reducing the costs in Support
Centres (down $7.8m).
Australian Network
Results from Australian Network operations in F13 were
affected by unfavourable seasonal conditions Australia-
wide in the first half-year and specifically in Eastern
Australia in the second half, including the second-
warmest spring and hottest summer on record. These
high temperatures, coupled with below average spring
and summer rainfalls across Eastern Australia, resulted
in lower crop plantings, lower crop disease and pest
pressure, decreased demand for agricultural herbicides,
reduced feed availability for livestock and continued
subdued broadacre property markets.
Network contribution in 2013 of $9.0m compares to
$37.1m in 2012.
Sales decreased by 5% to $1,206.0m in comparison
with the previous year with the features by service
area being:
• Wool agency revenue of $47.9m, 5% lower than 2012
due to lower wool prices. Volumes were constant,
however high AUD during the year continued to put
downward pressure on wool prices.
• Livestock agency sales revenue and margin fell due
to lower prices for sheep and cattle. Elders sold
9.11m sheep and 1.61m cattle in 2013 compared
with 8.16m sheep and 1.63m cattle in the previous
year. High livestock slaughter rates have reduced
the national cattle herd and sheep flock, with much
lower re-stocking activity and reduced international
demand placing downward pressure on prices.
The average cattle price was $637 per head in 2013
($775 in 2012) while average sheep price was $74
per head in 2013 ($104 in 2012).
• Real estate sales revenue declined by 6% due to
subdued activity in the broadacre markets, with
adverse seasonal conditions impacting investment
confidence levels.
• Farm Supplies sales revenue of $999.9m, is down
4% from $1,045.0m in 2012. Sales were lower due
to reduced demand for insecticide, fungicide and
herbicide products. Fertiliser sales were relatively
stable compared to 2012.
• Banking distribution revenue rose 1% to $20.8m in
2013 ($20.5m in 2012). New lending increased 24%
from the previous year, benefiting from training and
development of the banking staff, more active and
targeted marketing and the increased effectiveness
of the Elders-Rural Bank working relationship.
16
• Other revenue of $8.0m includes income from
accumulation of grain and distribution and access
fees from the Elders Insurance and Elders Financial
Planning joint ventures.
Australian Network gross margin
$million
300
250
200
150
100
50
0
2011
2012
2013
$million 12 months ended 30 September:
2011
2012
2013
Wool
Livestock
Real Estate
18.7
15.5
15.1
86.0
74.3
58.9
28.0
26.7
26.2
Farm Supplies
114.8
114.6
105.2
Banking Distribution
21.2
20.3
20.6
Other
Total
8.1
6.3
7.3
276.8
257.7 233.3
New Zealand
New Zealand recorded an underlying profit of
$0.7m in 2013, an improvement of $2.2m from the
previous year driven by improved market share and
higher volumes and margins from wool agency
services. Drought conditions in the North and South
Islands for the first half of 2013 resulted in slightly
poorer performances in livestock and farm supplies.
Trading
Trading operations include Elders’ cattle export
operations, New Zealand wool trading, feedlot
operations and Elders Fine Food in China which
imports and distributes premium Australian
agricultural produce.
Underlying EBIT loss of $(20.5m) from Trading in
2013 included $(24.2m) arising from a balance sheet
adjustment made as a result of the company identifying
that trading results had not been recorded in line
with accounting policies for the global cattle trading
operations. This matter was announced to the ASX on
1 and 4 October 2013. The company has engaged
PPB Advisory as independent forensic accountants to
investigate the discrepancies further. As at balance
date, adjustments were made to livestock valuations,
creditors, debtors and provisions to bring the Trading
balance sheet in line with accounting policies.
Excluding this item, Trading generated an underlying
EBIT profit of $3.7m in 2013 compared to $14.1m
in 2012. This reduction can be attributed to the lower
margins in both short haul and long haul livestock
trading arising from a combination of global commercial
and regulatory market events. This includes the
Indonesian Government’s reduction to its cattle import
quota and uncertainties created by government and
regulatory changes in China during 2013.
The Indonesian feedlot operation lifted its margin
contribution from $2.9m to $5.9m as a result of strong
demand for beef in a very tight supply environment.
Financial year 2014 has seen increased demand for
slaughter and feeder cattle in Indonesia with additional
import quotas released by the government. Breeder
cattle demand from China is strong, having responded
to the improved trading confidence that has emerged
following the change of government in that country.
Equity Earnings
Equity earnings are recognised for Elders’ joint
ventures, which include the financial services joint
ventures (Elders Insurance and Elders Financial
Planning), the wool handling and logistics operation
(AWH) and other equity positions including Kilcoy
abattoir and Auctions Plus. These operations
contributed equity accounted income of $12.3m,
compared with $14.1m for the twelve months to
30 September 2012.
Contributions from the individual operations are
as follows:
Equity Accounted Earnings
$m 12 months ended 30 September:
2013
2012
AWH
Elders Insurance
Elders Financial Planning
Auctions Plus
KIlcoy Pastoral Co
4.5
5.6
5.3
6.5
-
(0.2)
0.5
1.7
0.8
1.7
Equity accounted earnings
12.3
14.1
Corporate
Corporate Results
$m 12 months ended 30 September:
Costs
Underlying EBIT
Items excluded from
underlying EBIT
Reported EBIT
F13
F12
(5.7)
(10.0)
(5.7)
(10.0)
(18.5)
(21.1)
(24.2)
(31.1)
Corporate represents Elders’ corporate operations,
including Elders directors, Chief Executive Officer,
Company Secretary, Legal, Risk and associated
compliance costs. Underlying EBIT results improved
by $4.3m as a result of reduced costs.
Financial Position
Balance Sheet: key items
$m as at end:
Sept 13 Sept 12
Assets and Liabilities: key items
Inventory and livestock
153.0
234.4
Trade and other receivables
340.2
498.0
Trade and other payables
(254.5)
(386.6)
Other assets
Working Capital
Assets (Liabilities) held for sale - net
Property, plant and equipment
Investments
Intangibles
Provisions
Net Debt and Equity
- Borrowings - current
self-liquidating facilities
3.9
17.7
242.6
363.5
6.1
35.1
62.7
71.5
95.7
80.5
5.6
277.3
(81.5)
(146.0)
146.9
199.2
- Borrowings - current core debt
121.2
103.8
- Borrowings - non current:
core debt
26.6
82.8
- Debt related financial derivatives
0.4
1.5
- Cash and cash equivalents
(39.9)
(92.0)
Net debt
Shareholders’ equity
255.2
295.3
46.2
551.8
Assets and liabilities
Significant movements during the 12 months to
30 September 2013 include:
• A reduction to working capital of $120.9m as a
result of:
• Sale of Automotive, which held $38.4m working
capital at 30 September 2012.
• Reduced working capital in Rural Services in which:
− Inventory and livestock were $44.1m lower as
a result of the International Trading balance sheet
adjustment of $18.6m and a reduction in Farm
Supplies Inventory of $16.1m through improved
business disciplines.
− Receivables were $62.1m lower from reduced
livestock turnover due to lower sheep and cattle
prices, lower farm input sales due to hot and dry
conditions and improved debtor management.
− Payables were $50.5m lower from reduced trade
payables due to lower turnover in livestock and
reduction in year end farm supplies creditors
compared to 30 September 2012.
• Assets held for sale (net of liabilities) comprised
$4.9m related to Forestry and $1.2m investments
held for sale as at 30 September 2013.
• Intangibles reduced by $271.7m as a result of
impairments to goodwill and brandname in Rural
Services and Automotive.
• Provisions reduced by $64.5m mainly due to
the utilisation and reassessment of Forestry onerous
contract provisions and divestment of Automotive
business $(23.6m).
17
Indebtedness
Financing cash flow
Net debt was $40.1m lower than at September 2012
with repayment of term debt with asset disposal
proceeds.
Financing cash flow of $(55.1m) in F13 includes the net
repayment of term debt of $(37.4m) and a reduction
in the balance of the self-liquidating facilities $(16.8m).
(55.1)
(44.0)
• Consolidation of under-performing branches.
Gross borrowings of $294.7m at 30 September 2013
comprise a combination of core debt of $147.8m and
self-liquidating finance facilities of $146.9m. Self-
liquidating finance facilities are securitised by farm
supplies receivables.
The Group has reset its financing facilities to December
2014. There has been no change to the membership
of the financing syndicate.
Cash Flow
Cash Flow
$m 12 months ended 30 September:
Operating cash flow
Investing cash flow
Financing cash flow
Total cash flow
F13
(81.5)
F12
2.5
84.6
51.8
(52.0)
10.3
Operating cash flow
Positive cash generation from Rural Services and
Automotive in F13 were more than offset by cash
outflow from Corporate and Forestry.
Rural Services and Corporate generated net operating
cash outflow of $(33.2m). Features of operating cash
flow include:
• Rural Services’ recorded cash inflow from operating
activities of $9.6m, which reflects lower turnover
together with the active management of debtors and
Farm Supplies inventory.
• Corporate recorded an operating cash outflow of
$(42.8m) mainly due to borrowing costs $(32.3m),
head office costs $(5.7m), costs relating to initiatives
to divest of Automotive and Rural Services $(6.8m)
and refinance costs $(3.2m).
Automotive operations generated an operating cash
inflow of $30.8m before working capital movements of
$(27.2m), which reflected requirements of new
programs in USA and Thailand.
Forestry operations recorded cash outflow of $(19.3m)
before working capital movements. Working capital
movements $(32.6m) comprises payments associated
with maintaining assets held for sale, including lease
obligations prior to sale.
Investing cash flow
Investing cash flow of $84.6m includes receipts of net
$16.1m for sale of Automotive (gross receipts $43.5m
less cash disposed $27.4m), $27.4m for 15% sale of
Insurance JV, $63.8m from Forestry asset sales, partially
offset by capital expenditure of $(25.4m) by Automotive
on design and development for new contracts, together
with expenditure on new facilities related to expansion
of operations overseas.
18
Strategy
Elders recognises the Australian and New Zealand
agribusiness industries are consolidating, with
farming and pastoral businesses declining in number
but increasing their requirements for both products
and services.
Elders implemented Project Horizon during 2013 which
allowed it to reset its operational strategy accordingly,
now wholly focusing on operating a pure-play
agribusiness and also aligning itself to a changing
market environment. Project Horizon sets out to
optimise financial performance through:
• Simplification of Support Centres;
• Transition to hub and spoke organisational structure;
• Gradual decentralisation of Farm Supplies
management; and
This strategy is expected to reduce the total ongoing
annual running cost of Elders by approximately $25m,
whilst enabling the business to concentrate on growing
its customer base and broaden its range of products
and services. The strategy of operating with tighter
control over Farm Supplies inventory and debtor
management allows Elders to optimise its return on
available capital.
Initiatives in 2014 will be focussed on continuing to
deliver benefits from the new structure and driving
stronger sales performance in the Network and Trading
business units.
Outlook
As a pure-play agribusiness, Elders’ future financial
results will be highly dependent on the outlook
and prospects of the Australian and New Zealand
farm sector, and the values and volume growth
in internationally traded livestock and fibre.
Financial performance for the Rural Services
operations is heavily reliant on, but not limited to,
the following factors:
• Weather and rainfall conditions;
• Commodity prices; and
• International trade relations.
It is not possible to forecast these drivers with
accuracy. However the company’s 2013 results were
significantly affected by abnormally dry and hot
weather conditions, substantially reduced livestock
prices and reduced international livestock trade. Elders
anticipates that a return to more normal seasonal
conditions could be expected to drive improvement in
demand for farm supplies and increase prices for
livestock. Elders also anticipates a return to more
cooperative trading relationships with Indonesia and
other importing countries will improve throughput
and margins in Trading.
Elders’ capacity to generate sales and margin is
expected to be enhanced by the initiatives undertaken
in Project Horizon, including the cost savings
outlined above.
Material Business Risks
There are a number of material business risks, both
specific to Elders and to the general business
community which could affect the operating and
financial performance of Elders. The Board Audit, Risk
and Compliance Committee maintains oversight of the
Group Risk Committee which regularly reviews these
risks. Set out below are some of the key risks identified
by the business. The risks below should not be taken
to be a complete list of the risks associated with Elders.
Seasonal weather conditions and
biosecurity
Elders’ business is directly impacted by seasonal
weather conditions. Uncharacteristically high or low
rainfall and temperatures can affect our business.
Natural events, caused or affected by weather, such as
drought, flood and fire can also have impacts. Such
conditions can influence the demand for rural products
and services, resulting in varied revenue levels.
An outbreak of a systemic animal or plant disease
can lead to quarantine conditions in rural Australia and
reduce producers’ needs for goods and services or
affect their ability to operate.
To limit the impact of the above risks Elders maintains
both a geographical spread of operations and a
diverse product and service range, along with effective
staff training and disease management protocols.
Elders also has a Business Continuity program in place
to respond to the risk of disruption.
Australian rural production
The financial performance of Elders depends on the
performance of Australia’s rural sector. A decrease
in volume or quality of production or a lack of
any significant increase in either quantity or quality
over a season can affect our operations. Elders
has specifically measured risks related to this:
Credit Risk – exposures to losses associated with a
major client’s inability to repay debt. This risk is
mitigated by maintaining an active Credit Committee,
stringent debtor monitoring and reporting, and
high level reviews of significant credit issues by the
Chief Executive Officer and Chief Financial Officer.
Trading Risk – adverse market conditions created by
the quantity and/or quality of inventory available
impacting forward bought or sold position thus creating
a price exposure. Government intervention can also
influence the Trading business. Mitigants for this risk
include effective supply chain relationships, regular
contract reviews with suppliers and customers,
and maintaining ongoing relationships with regulators.
Farm Supplies – a reduced need for our products
and services can affect Elders. To reduce any potential
negative impact of this, Elders maintains effective
relationships with our suppliers and ensures inventory
levels in our branches are actively monitored and are
a measurable target for management.
Market risk
The performance of Elders is influenced by the
business’ ability to respond to changes in financial
market conditions. This includes movements in
financial markets, including foreign exchange,
commodity prices and interest rates.
Prices of agricultural commodities fluctuate and are
affected by a variety of regional and global factors that
are beyond the control of Elders.
These factors include: regional and international supply
and demand for specific commodities, production cost
levels, governmental regulation and initiatives, trade
subsidies, sanctions and barriers. Moreover, commodity
prices are also affected by macroeconomic factors
such as expectations regarding inflation, interest rates
and general global economic conditions. Accordingly,
movements in commodity prices could have an impact
on Elders’ financial condition and results of operations.
Elders manages Market Risk through its Treasury
Department, Financial Risk Management Policy,
monitoring of agribusiness indicators and establishment
of governance committees.
Capital
Elders has recently secured an extension and renewal
of its finance facilities to December 2014. As part of
the renewal, Elders has agreed to a staged debt
amortisation programme to be conducted throughout
the year to 30 September 2014. Elders’ ability to
operate its business and effectively implement its
strategic plan over time will depend in part on its ability
to amortise or refinance its facilities as they fall due
(under the staged debt amortisation programme) and
maintain ongoing securitisation arrangements.
Workforce capability
Revenue is generated through transactions generated
by its employees utilising their relationships with
rural and regional clients or international customers.
Accordingly Elders needs to attract and retain skilled
and engaged staff to reduce the threat of lost business
through employee departure. Through its distribution
system, offering and sales management systems, Elders
has measures in place to guard against this, as well
as legal protection such as certain post-employment
contractual obligations in certain instances. Elders also
has a number of staff engagement initiatives in place
including Branch Manager Leadership Development
Program, Trainee program, One Elders approach and
short term incentive plans.
On 1 October 2013, Elders reported to the ASX the
resignation of seven senior members of its Trading
management and sales team. Immediate action has
been taken to rebuild its Trading executive capability
and Elders is continuing liaison and dialogue with
our Trading customers.
Ongoing review
The likelihood, consequence and impacts of key risks
identified are monitored and managed by Elders
on a continuous basis, to not only mitigate the adverse
impacts to the business but to also improve business
operations. The business is also required to report new
or emerging risks as part of monthly reporting processes.
19
Board of Directors
Mr Mark Charles Allison, BAgrSc, BEcon, GDM, FAICD – Age 52 – Non-executive director since
November 2009 and appointed Chairman of the Board on 27 June 2013. He is a member of the
Audit, Risk and Compliance Committee, the Nomination and Prudential Committee, the
Occupational Health and Safety Committee and Chair of the Remuneration and Human
Resources Committee. He has extensive experience spanning over 28 years in the agribusiness
sector and is currently CEO of Graingrowers Limited and a director of Grain & Legumes Nutrition Council.
He is a former Managing Director of Wesfarmers Landmark Limited and Wesfarmers CSBP Limited and former
chairman of Australian Pesticides and Veterinary Medicines Authority. 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 Officer of Jeminex Limited from 2007 to 2008. Mr Allison is a
resident of New South Wales.
Mr Malcolm Geoffrey Jackman BSc BCom FAICD – Age 61 – 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 Officer and Managing Director of Coates
Hire Limited, an ASX 200 company, from 2003 until its sale in January 2008. Prior to Coates,
Mr Jackman was Chief Executive Officer of Manpower Australia/New Zealand from 1996 until
2003. Mr Jackman was also a non-executive director of Rubicor Group Ltd from 2005 until 2008. Prior to
entering commerce Malcolm served as an Officer in the Royal New Zealand Navy. He is currently the Chairman
and director of SubZero Group Limited. Mr Jackman is a resident of New South Wales.
Mr James Hutchison (Hutch) Ranck, BS Econ, FAICD – Age 65 – Non-executive director of the
Board since June 2008. He is Chairman of the Occupational Health and Safety Committee and a
member of the Nomination and Prudential Committee, Remuneration and Human Resources
Committee, and Audit, Risk and Compliance Committee. Mr Ranck had a long and distinguished
career with DuPont where he held senior management positions in Australia and overseas in
finance, chemicals, pharmaceuticals and agricultural products. He retired as Managing Director of DuPont
Australia & New Zealand and Group Managing Director for DuPont operations in ASEAN on 31 May 2010. He
is currently a director of the CSIRO and Iluka Resources Limited. Mr Ranck is a resident of New South Wales.
Ms Josephine Mary Rozman, BEc, CA, FAICD – Age 54 – Non-executive director of the Board
since November 2011. She is Chairman of the Audit, Risk and Compliance Committee and a
member of the Occupational Health and Safety Committee, the Nomination and Prudential
Committee and the Remuneration and Human Resources Committee. Ms Rozman has over 20
years sales, marketing, management and CEO experience across a diverse range of industries
globally including working in the USA and Asia. After working for PriceWaterhouse in Sydney and San
Francisco, she worked in the successful establishment of several businesses in the USA including a wine
import and distribution company and a biotechnology company servicing the beverage and food industries.
She has previously worked as Asia Pacific Marketing Director for a multinational FMCG company, as
Financial Controller of a commodity trading company and CEO of a Victorian wine company. She is a
Chartered Accountant, holding a Bachelor of Economics from the University of Sydney, and a graduate of
the Australian Institute of Company Directors. She is currently a director of Wine Australia Corporation
where she chairs both the Audit and Finance Committee and the Wine Sector Intelligence Advisory
Committee. Ms Rozman is a resident of New South Wales.
Company Secretary
Mr Peter Gordon Hastings BA LLB GDLP – Mr Hastings was appointed Company Secretary in February 2010.
He held the position of Group Solicitor with the Elders Group between 1995 and 1999 and again between
2003 and 2010, and has held the position of General Counsel since February 2010.
20
Corporate Governance
Statement
This corporate governance statement summarises
the key elements of the Company’s governance
framework and practices.
We are dedicated to maintaining a high standard
of effective corporate governance. We recognise
that quality governance, through its key principles
of fairness, accountability, responsibility, and
transparency, is vital for the long term performance
and sustainability of the Company. The Board and
management regularly review the Company’s
governance arrangements to ensure they are compliant
with legislative standards and commonly adopted
industry practice. In this statement, we specify some
of our key governance policies and practices that
enable the Board, executive management, and
the organisation to discharge their duties that serve
to protect the best interests of the Company’s
shareholders, customers, business partners and
other stakeholders.
In FY13, the Company has complied with the ASX
Corporate Governance Council’s Corporate
Governance Principles and Recommendations
(ASX Recommendations). A table comparing the
Company’s governance practices with the ASX
Recommendations appears on the Company’s website
(www.elderslimited.com). Additional information
complementing the governance arrangements
summarised in this report, including copies of the
Board and Board Committee Charters and key policies,
can also be found in the corporate governance
section of our website.
1. Board Structure and Operation
Relevant policies and charters:
– Board Charter
− Company Constitution
− Prudential Criteria
− Director Independence Policy
− Board Performance Assessment
− Director Induction and Ongoing Education
The Board
The Board is ultimately responsible for the governance
of the Company. The key responsibilities of the Board
include:
• provide input into, and adopt, the strategic plan and
budget of the Company as prepared by management;
• monitor performance against the business plan
and budget;
• approve and monitor the progress of all material
acquisitions, divestments, contracts and capital
expenditure;
• approve debt or equity raisings by the Company;
• oversee the audit, compliance and financial
and operational risk management functions of
the Company;
• oversee the Company’s financial reporting and
communication to the Company’s shareholders and
the investment community and shareholder-
relations generally;
• appoint and remove the CEO and determine that
person’s remuneration (including termination
benefits);
• review the performance of the Board as a whole and
of individual directors; and
• monitor and assess the performance of the CEO and
the Company’s senior executive team.
The Board has adopted a Board Charter that, in
addition to the above main responsibilities, defines
those duties reserved for the Board and its Committees
and those that are delegated to the Chief Executive
Officer (CEO).
21
The Board delegates responsibility for the day-to-day
operation and administration of the Company to
the CEO, Mr Malcolm Jackman. The Board monitors
the CEO’s performance on an ongoing basis through
regular management reporting and through the
reporting of the various Board Committees. The
Company has in place comprehensive delegations
of authority under which the CEO and executive
management operate. The Board regularly reviews
the obligations set out in the Board Charter and the
delegations of authority.
The Chairman
The Board Charter prescribes that the Chairman of the
Board should be an independent director and details
his responsibilities. Mark Allison was elected Chairman
on 27 June 2013 upon the retirement of John Ballard.
Mr Allison is a non-executive and has been determined
by the Board to be independent.
The Chairman’s role includes:
• providing effective leadership to the Board in all
Board matters;
• publicly representing the Board’s views to
stakeholders;
• promoting effective relations between the Board and
management;
• leading the process of review of the performance of
the Board, Committees and individual directors;
• guiding the setting of agenda items and conduct of
Board and shareholder meetings; and
• overseeing succession of non-executive directors
and the CEO.
Board Composition
The composition of the Board is determined by the
Company’s Constitution and by Board policy, which
includes the following requirements:
• the number of directors may not be less than 3 and
not more than 12;
• the majority of directors must be independent non-
executive directors;
• the Chairman should be an independent director; and
• the Board be comprised of directors who
are financially literate and who together have an
appropriate mix and depth of skills, experience
and knowledge.
There are currently four directors on the Board,
comprising three non-executive directors and the CEO.
The qualifications, experience, special responsibilities
and period of office of each director can be found on
page 20 of this report. John Ballard retired as a
non-executive director and Chairman on 27 June 2013.
Ian MacDonald retired as a non-executive director
on 30 November 2012. There were no new directors
appointed to the Board during financial year 2013.
Appointment of Directors and re-election
The composition of the Board is reviewed on an annual
basis coinciding with the Annual General Meeting
(AGM) cycle to ensure that the Board has the
appropriate mix of expertise and experience.
At each 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
22
have been in office for 3 or more years and AGMs since
they were last elected to office are required to retire
and may stand for re-election. The director obliged to
retire under this rule in 2013 is Mr J Hutch Ranck who
has advised the Chairman that he will offer himself for
re-election at the forthcoming AGM. The resolution to
re-elect Mr Ranck has the support of the Board.
When a vacancy exists, or when it is considered that the
Board would benefit from the services of a new director
with particular skills, the Nomination and 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 of appointment are in place for all directors.
Fit and Proper Person Policy
The Company continues to adopt and comply with its
fitness and propriety regime given its distribution
arrangements with Rural Bank Limited (a prudentially
regulated Authorised Deposit Taking Institution) and its
several Australian Financial Services Licences, which
ensures a robust selection process for directors
generally consistent with the standards set by APRA.
The criteria set down in the Company’s Fit and Proper
Policy are available on the Company’s website at
www.elderslimited.com.
The Company’s Fit and Proper Person Policy and
process provide the Company with assurance that
existing and potential directors and persons appointed
to senior executive positions within the Group
are able to satisfy appropriate fitness and propriety
standards that will enable them to discharge their
governance responsibilities throughout the term of
their appointment.
Director Induction and Training
All new directors are given a detailed briefing on key
board issues, including appropriate background
documentation coordinated by the Company Secretary
and by the CEO on the nature of the Company’s
business and its key drivers.
Directors undertake training and development on an
“as needs” basis. Directors are also regularly briefed on
the Group’s businesses and on industry, technical and
legislative issues impacting the Group. Directors aim
to have at least one meeting a year in conjunction with
a tour of one of the Company’s operations. At all other
times, non-executive directors are encouraged to visit
the Company’s operations.
Director Independence
The Company has adopted an Independence Policy
that is published on the Company’s 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:
• is a substantial shareholder in the Company;
• within the last 3 years, has been an employee of
The Board is supported in governance and
administration matters by the Company Secretary.
the Company, a material adviser to the Company or
a principal or employee of any material adviser to
the Company;
• is a material supplier to, or a material customer of,
the Company;
• is directly or indirectly associated with any of the
above persons;
• 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
• is of independent character and judgment.
Materiality is assessed on a case-by-case basis, taking
a qualitative approach rather than setting strict
quantitative thresholds from the perspective of both
the Company and the relevant director.
Each of the current non-executive directors is
considered by the Board to be independent.
Access to Management and Independent
Professional Advice
All directors have complete access to senior
management through the Chairman, CEO and Company
Secretary at all times and may seek information from
the Company’s External and Internal Auditors provided
that all such enquiries are first advised to the Chairman
and the CEO.
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.
Board Performance Assessment
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 CEO, who in turn evaluates
the performance of all other senior executives. The
evaluations are based on specific criteria, including the
Company’s business performance, whether long-term
strategic objectives are being achieved and the
attainment of individual performance objectives.
Board meetings
During the financial year, Directors held 25 Board
meetings. The attendance of Directors at Board
meetings is set out in the table on page 24.
Where directors are unable to attend meetings either in
person or by telephone (e.g. if they are overseas) the
Chairman or the CEO endeavours to canvass their views
on key matters prior to the meeting in order to
represent their views at the meeting.
The CFO, the Group General Manager, Australian
Network, Elders Rural Services, and Group General
Manager Trading have a standing invitation to attend
all Board meetings with relevant senior executives and
management invited on occasion to give presentations
and inform the Board of important issues and
developments within their area of responsibility.
The Chairman sets the agenda for each meeting, in
conjunction with the Company Secretary and CEO. All
directors are welcome to suggest to the Chairman that
particular items of business be included in the agenda.
Standing items at all full scheduled Board meetings
include Non-Executive Director only and Non-Executive
Director and CEO only sessions. Papers are distributed
to all Directors in advance of the meetings.
2. Board Committees
Relevant policies and charters:
− Nomination and Prudential Committee Charter
− Remuneration and Human Resources
Committee Charter
− Audit, Risk and Compliance Committee Charter
− Occupational Health and Safety Committee
Charter
Purpose
To increase the effectiveness of the Board’s functioning
and to allow the Board to spend additional and more
focused time on specific issues, the Board has four
principal standing committees, being the Nomination
and Prudential Committee, the Remuneration and
Human Resources Committee, the Audit, Risk and
Compliance Committee and the Occupational Health
and Safety Committee.
In FY13 the Board was subject to internal performance
review.
Membership and attendance
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 then determines whether or
not to recommend the director for re-election.
The Nomination and Prudential Committee assists in
this review process.
Company Secretary
The Company Secretary is accountable to, and reports
directly to, the Board (through the Chairman where
appropriate) on all governance matters. All Directors
have unfettered access to the Company Secretary.
Each of the Board Committees, other than the
Nomination and Prudential Committee (which includes
the CEO as a member), is comprised solely of
independent Non-Executive Directors. The CEO has a
standing invitation to attend all Board Committee
meetings – except where the relevant Committee is
discussing the CEO’s employment arrangements –
and may participate in discussions on matters
concerning the main Board but has no voting rights
with respect to such matters. Other senior executives
are regularly invited to attend Board Committee
meetings where the Committee Chairman believes that
person’s attendance would be useful and relevant.
23
The members of each Board Committee during the
financial year are set out below.
Committee membership
Audit, Risk and
Compliance Committee
Remuneration and Human
Resources Committee
Nomination and
Prudential Committee
OH&S
Committee
M Allison
Member
M Jackman1
-
J H Ranck
J Rozman
J Ballard2
I MacDonald3
Member
Chairman
-
-
1 Non-voting on Board matters.
Chairman
-
Member
Member
-
-
Chairman
Member
Member
Member
-
-
Member
-
Chairman
Member
-
-
2 Mr Ballard retired during FY13. He was Chairman of the Nomination and Prudential Committee, and a member of the
Remuneration and Human Resources Committee.
3 Mr MacDonald retired during FY13. He was Chairman of the Remuneration and Human Resources Committee and a
member of the Nomination and Prudential Committee and the Audit, Risk and Compliance Committee.
Each Board Committee has a formal Charter which
details the Committee’s role and responsibilities.
The main responsibilities of each Board Committee are
detailed further in this report, commencing on page 25.
Board Committee meetings
Board Committee meetings are held at scheduled
intervals during the year, with additional meetings
convened as required. The number of meetings
and attendance at those meetings is set out below.
Following each Committee meeting, the Board
receives a report from that Committee Chairman on
its deliberations, conclusions and recommendations.
Minutes of each Board Committee meeting are
included in the papers provided to the subsequent
Board meeting.
Other ad hoc committees are convened as and when
required to consider matters of special importance
or to aid the efficient functioning of the Board.
Attendance at meetings by Directors
Attendance by directors at Board and Committee
meetings held during FY13 is detailed below.
Attendance in the table is only recorded where a
director is a member.
Board of Directors
Audit, Risk and
Compliance Committee
Nomination and
Prudential Committee2
Attended
No. of meetings
held during
relevant period
Attended
No. of meetings
held during
relevant period
Attended
No. of meetings
held during
relevant period
M Allison
J H Ranck
J Rozman
M Jackman
J Ballard1
I MacDonald1
25
25
25
24
16
3
25
25
25
25
16
3
7
7
7
-
-
1
7
7
7
-
-
1
Remuneration and Human
Resources Committee
OH&S Committee
Attended
No. of meetings
held during
relevant period
Attended
No. of meetings
held during
relevant period
Other Committees**
M Allison
J H Ranck
J Rozman
M Jackman
J Ballard1
I MacDonald1
6
6
6
-
4
1
6
6
6
-
4
1
1 Messrs Ballard and MacDonald retired during FY13.
2 No meetings were held in FY13
24
3
3
3
-
-
-
3
3
3
-
-
-
Nomination and Prudential Committee
Objective
The Board’s objective in relation to Board nomination
and review is to ensure that:
• the Company has adopted selection, appointment
and review practices that result in a board:
> with an effective composition, size, mix of skills
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
> that can effectively review and challenge
the performance of management and exercise
independent judgement.
• shareholders and other stakeholders understand
and have confidence in the Company’s selection,
appointment and review practices.
Responsibilities
The Committee’s principal responsibilities are to
regularly review and make recommendations to the
Board on:
• the necessary and desirable competencies of
members of the Board of the Company and its
committees;
• appropriate processes for the review of the
performance of the Board of the Company and
its committees;
• appropriate policies with respect to the maximum
period of service and retirement age for directors;
• appropriate succession plans for directors and
the CEO;
• the appropriate size of the Board so as to encourage
efficient decision-making;
• recommendations for the appointment (including
re-appointment in the case of directors retiring by
rotation) and removal of directors of the Company;
• the scope and content of letters of appointment of
non-executive directors; skills development and
continuing education programs for directors of the
Company; and
• 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.
Remuneration and Human Resources
Committee
Objective
The Board’s objective is to ensure that the Company
has adopted remuneration and human resources
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 37 to 44.
The CEO has a standing invitation to attend Committee
meetings but must leave the meeting during those
periods in which consideration is being given to his
employment arrangements.
The Company notes that the composition of the
Remuneration and Human Resources Committee meets
the requirements of Recommendation 8.2 of the
amended 2nd edition of the ASX Recommendations.
Role
The objectives of the Committee are to:
• ensure the appropriate policies and procedures are
in place to assess the remuneration levels of the CEO,
executive management, the Company’s employees
generally and the Board;
• ensure the appropriate policies and procedures are
in place to attract and retain the Chairman, Non-
Executive Directors, Executive Directors, CEO and
executive management;
• ensure the Company (which includes all subsidiaries
and, as appropriate, associated companies) adopts,
monitors and applies appropriate remuneration
policies and procedures that align with the creation
of shareholder value;
• engage and motivate directors and senior executives
to pursue the long-term growth and success of the
Company;
• ensure a clear relationship between business
performance and the key performance indicators and
remuneration of the CEO and executive management;
• align executive incentive awards with the creation of
shareholder value;
• ensure that the Company’s human resources strategy,
policies and procedures are appropriate to the
Company’s needs and clearly designed and executed;
and
• to achieve diversity in the Company’s workplaces
and on the Board and to achieve equal treatment of
employees and Directors regardless of sex, race,
age, disability, religion, sexual orientation or
family responsibilities.
The Committee meets its objectives by reviewing and
making recommendations to the Board on:
• appropriate policies for compensation arrangements
for the CEO, executive management, the Company’s
employees generally and the Board itself;
• the remuneration package for the CEO;
• KPIs relevant to the remuneration of the CEO and the
performance of the CEO against those KPIs;
• the CEO’s recommendations with respect to the
remuneration of executive management;
• the CEO’s plans for the remuneration of employees
in general;
• the annual remuneration review applying generally
across the Company;
• the competitiveness and appropriateness of the
Company’s remuneration policies and practices;
• remuneration of Company employees by gender;
• human resources policies and procedures to ensure
alignment between remuneration and shareholder
value creation;
• remuneration of directors;
• employee share, option and rights schemes and
other performance incentive programs;
• recruitment, retention, retirement and termination
policies and benefits;
• Company superannuation arrangements;
• human resources strategy, policies and procedures
(but not occupational health and safety);
25
• employment contracts for all directors, the CEO
and those executive management contracts which
are outside normal parameters;
• organisational development, including training
and education;
• succession planning for executive management;
• policies regarding diversity, including measurable
objectives for achieving diversity;
• policies regarding equal treatment of employees;
• policies regarding workplace behaviour expected of
employees; and
• disclosures in the Company’s annual report on
remuneration matters.
Key Activities During the Year
The Committee oversaw the following significant
activities during the reporting period:
• performance against measurable diversity objectives;
and
• ongoing review of the remuneration arrangements,
policy and structure for the Group.
Audit, Risk and Compliance Committee
Objective
The Board is concerned to ensure the integrity of the
Company’s financial reporting, its management of risk
and its regulatory and policy compliance. The Audit,
Risk and Compliance Committee assists the Board in
achieving this objective.
At least one member of the Committee is required
by the Committee Charter to be a qualified accountant
or other financial professional with experience of
accounting and financial matters. Ms J Rozman
is highly qualified in accounting and financial matters
having both domestic and international experience
as a chartered accountant and is currently Chairman
of the Audit and Finance Committee at Wine
Australia Corporation.
Details of the members’ qualifications can be found
on page 20 of this report.
The CEO, Chief Financial Officer and the Head of Risk
and Compliance all have standing invitations to
attend (and are expected to attend) meetings of the
Committee. In addition, the audit engagement partner
from the Company’s auditors also has a standing
invitation to attend the meetings of the Committee.
Responsibilities
The Audit, Risk and Compliance Committee assists
the Board to meet its oversight responsibilities in
relation to:
• the Company’s financial statements and financial
reporting;
The Committee does this by discharging its
responsibilities set out in its charter, namely:
• monitoring the effectiveness of the Company’s
financial reporting and internal control policies and
its procedures for the identification, assessment,
reporting and management of financial risks;
• approving the appointment of the head of internal
audit;
• approving the terms of reference of the internal
audit department, requiring advice of the planned
programme of audits and the reason for any change
or delay in the programme;
• reviewing the management of financial matters and
the freedom allowed to the internal auditors;
• reviewing reports on the Company from the internal
auditors;
• considering and making recommendations to the
Board about the appointment and retirement of the
Company’s external auditors, and ensuring that the
audit partner from the firm providing audit services
is rotated from time to time in accordance with all
applicable regulation and Company policy;
• meeting with the external auditors (including in the
absence of management);
• reviewing any auditor’s letters addressed to
management and management’s responses;
• approving the scope of the audit, the terms of the
annual audit engagement letter and audit fees;
• monitoring the independence, objectivity and
performance of the External Auditors;
• monitoring the nature and quantum of non-audit
services provided by the External Auditor, including
the amount of fees paid for such services;
• reviewing any recommendations made by the
External Auditor;
• co-ordinating internal and External Auditors and
reviewing and approving any integrated audit plans;
• monitoring the consistency and application of
accounting policies;
• reviewing the Company’s statutory half and full year
financial statements;
• monitoring the effectiveness of the Company’s
compliance programme;
• reviewing specific policies, systems and processes
for addressing compliance with applicable laws and
Company policy;
• reviewing the Company’s material corporate
governance policies including the Delegations of
Authority and the Financial Risk Management Policy;
• receiving reports from management regarding
compliance with laws;
• receiving recommendations from management on
compliance policies, systems and processes relating
to significant legal, compliance or regulatory matters;
• overseeing the Company’s process for dealing with
• the Company’s financial risk management processes,
the reporting of unacceptable conduct;
accounting and control systems;
• the Company’s internal and external audit
arrangements;
• the Company’s compliance with legal, regulatory and
• overseeing the Company’s policies, processes and
frameworks for identifying, analysing and addressing
complaints and reviewing material complaints;
• assessing the adequacy of the Company’s internal
internal policy requirements; and
risk control systems;
• the Company’s risk management programmes.
• reviewing and approving the Company’s Risk
Management Framework, including risk appetite, and
processes for identifying and monitoring significant
areas of risk for the Company;
26
• reviewing and assessing management information
Key Activities During the Year
systems and internal control systems;
• regularly reviewing the Company’s risk profile; and
• reviewing the corporate insurance program and
risk coverage.
Key Activities During the Year
The Committee oversaw the following significant
activities during the reporting period:
• review of the statutory and periodic financial
statements of the Company; and
• ongoing monitoring of significant risks and the
Group’s compliance framework and oversight of
the internal audit function in light of the changing
business mix of the Group.
Occupational Health and Safety Committee
The Board is committed to the Company’s vision that
nothing is so important it cannot be done safely.
The Occupational Health and Safety Committee (OH&S
Committee) exists to assist the Board in meeting
this vision.
Role
The Committee’s objectives are to:
• ensure the appropriate policies and procedures are
in place to assist the Company to meet its statutory
obligations and the Board’s commitment to health
and safety;
The Committee oversaw the following significant
activities during the reporting period:
• development and implementation of Safety Strategy
FY14
• analysis of the Company’s obligations under
harmonised OH&S laws; and
• continued focus on high risk activities undertaken
throughout the Group.
3. External Audit Independence
Policy
Relevant policies and charters:
− Non-Audit Services Policy
The Company has in place a policy that:
• details the Group’s position in respect of the key
issues which may impair, or appear to impair,
external audit independence;
• details the internal procedures implemented to
ensure the independence of auditors; and
• establishes a framework that enables the Audit,
Risk and Compliance Committee to evaluate
compliance with the policy and report to the Board
on compliance.
The key principles of the policy are:
• ensure appropriate policies, procedures and systems
• An auditor is not independent if:
are in place to effectively manage, measure and
improve OH&S activities; and
• oversee the provision by management of a healthy
and safe working environment and culture for
all employees, contractors, clients and other visitors
to the Company’s work premises.
The Committee meets its objectives by discharging the
responsibilities set out in its charter, namely reviewing
and making recommendations to the Board on:
• the plans and targets for OH&S management;
• cultural initiatives designed to build and foster OH&S
leadership and demonstration of appropriate OH&S
behaviours consistently at all levels;
• Company performance in relation to OH&S matters;
• the adequacy, integrity and effectiveness of
management processes and procedures used
to manage OH&S as well as the performance of the
Company’s OH&S function and management;
• the adequacy, integrity and effectiveness of
Company management’s processes for ensuring and
monitoring compliance with OH&S statutory and
reporting obligations;
• the internal process for determining and managing
key OH&S risk areas, particularly compliance
with laws, regulations, standards and best practice
guidelines;
• the impact of changes and emerging issues in
OH&S legislation, community expectations, research
findings and technology;
• reports by Company management on OH&S
performance and issues including reports on
material OH&S issues associated with the Company’s
operations; and
• OH&S issues associated with the operations on
Company controlled sites (including, if feasible, visits
to those sites).
> an employment relationship exists or could be
deemed to exist, between the Company and the
auditor, its officers or former officers, employees or
former employees or certain relatives;
> a financial relationship exits between the auditor
and the Company; and
> specific non-audit services (including information
technology and human resources services) are
provided to the Company by the auditor.
• 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 audit prior to engaging external audit 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, Risk and Compliance Committee approval;
> the Audit, Risk and Compliance Committee must
consider whether the provision of such non-audit
services is compatible with maintaining the external
auditor’s independence, by obtaining assurance
and confirmation that the additional services
provided by the external auditor are not in conflict
with the audit process. In order to assist with this
assessment, management will provide the Audit,
Risk 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
in connection with prospectuses.
27
The Audit, Risk 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.
4. Risk Management
Relevant policies and charters:
− Risk Management Policy and Framework
− Group Risk Committee Charter
− Financial Risk Management Policy
− Tax Risk Management Policy
The Board reviews its Risk Management Policy and
Framework annually to assist the Company in
achieving its risk management objectives. These
include ensuring the Group’s assets are protected
against financial loss, business risks are identified and
properly managed, legal and regulatory obligations
are satisfied, and business risks are 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
has primary responsibility for identification and
management of material risks within the Group’s
businesses and is 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 their respective businesses.
All personnel are responsible for managing risks in
their areas.
The Audit, Risk and Compliance Committee is
responsible for assessing the effectiveness of internal
processes for determining and managing key risks and
compliance obligations while the OH&S Committee is
responsible for assessing the effectiveness of internal
process for determining and managing key OH&S risks.
Group Risk Committee
The Group Risk Committee (GRC) meets quarterly and
assists the Audit, Risk and Compliance Committee and
the Board in the application of the Company’s Risk
Management Policy and monitoring of compliance with
the Policy.
Membership
The GRC comprises the CEO, the Company’s senior
executives, Company Secretary and senior risk
personnel. Specialist support to the committee is
provided by internal experts as required, including the
General Counsel and General Manager Credit.
The GRC reports to the Board through the Audit, Risk
and Compliance Committee. Minutes of each GRC
meeting are also included in the papers to the Audit,
Risk and Compliance Committee.
Responsibilities
The Committee operates under the Risk Management
Policy and is responsible for:
• oversight of the risk management process;
• reviewing and monitoring the Company’s risk profile;
• considering and where appropriate making
recommendations to the Board with respect to risk
appetite, risk framework and policy;
• establishing, approving and reviewing corporate
risk management strategy in line with the Risk
Management Policy;
• reviewing and monitoring adherence to the
Company’s risk management framework;
• receiving, considering and endorsing business
trading charters for submission to the Company’s
Board for approval;
• reviewing credit committee functions of Elders and
its subsidiaries;
• monitoring the risk management activities of
business divisions and subsidiaries through receipt
and consideration of risk reports from the Company;
• overseeing compliance by the Company with
applicable regulatory obligations and significant
related internal policies;
• providing regular advice to the Audit, Risk and
Compliance Committee about GRC activities and
making appropriate recommendations;
• approving the corporate insurance program; and
• providing an escalation point for identification
of matters (material business risks) to be drawn
to the attention of the CEO, Board Audit, Risk and
Compliance Committee or Board.
During 2013 the GRC reviewed the Group’s top 20
material business risks and reported to the Audit, Risk
and Compliance Committee and the Board on the
effectiveness of the Company’s management of those
material business risks.
Management Certificates
In connection with the financial reports of the Company
for the financial year ended 30 September 2013, the
Board received from the CEO and the CFO a certificate
stating that:
• the declaration provided under section 295A of
the Corporations Act is based on a sound system
of risk management and internal control; and
• that the system is operating effectively in all material
respects in relation to financial reporting risks.
Financial Risk Management Policy
The Company has a formal Financial Risk Management
Policy for management of liquidity and funding,
commodity, currency, interest rate and basis risks.
The primary objective of this Policy is to manage the
risk of financial loss to Elders measured in terms of
impact on earnings arising from unfavourable
movements in the financial and commodity markets.
The Board is provided with regular reports on
compliance with the Policy, including on an immediate
basis in the case of material breaches.
28
5. Conduct and Ethics
Relevant policies:
− Code of Conduct
− Securities Dealing Policy
− External Disclosure and Market
Communications Policy
− Fraud Policy
− Whistleblower Policy
− Diversity Policy
− Discrimination, Bullying and Harassment Policy
− Workplace Health & Safety Policy
Copies of each of these documents may be found
on the Company’s website, www.elderslimited.com
Code of Conduct
The Board has adopted a code of conduct that details
standards for acceptable practices by Elders and Elders
People, and the behaviour and responsibilities
expected of them.
The Code exists to ensure that all Elders People act in
the best interests of Elders, manage any potential
conflicting interests, act in the best interests of their
customers and colleagues (absent any conflict
with their duties to Elders), ensure all business is
undertaken safely, fairly, honestly, and ethically,
maintain confidentiality, comply with company policy
and behave in accordance with the underpinning
values of Elders.
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, including clients and customers,
suppliers, creditors and employees.
The Board has also adopted a Whistleblower 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 address the issues associated with alleged
improper conduct including reporting, responsibility,
confidentiality and effective investigation.
Securities Dealing Policy
The Board encourages non-executive directors and
employees 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 47 of this Report.
The Company’s Securities Dealing Policy prescribes
trading windows during which directors and employees
may trade in the Company’s securities. Trading
windows run for 6 weeks from announcement of the
Company’s full year results and half year results and
6 weeks from the Company’s AGM.
Directors or staff must not deal in the Company’s
securities during any periods other than a trading
window or at any time when that staff member or
director is in possession of unpublished information
that, if generally available, might materially affect the
price of the Company’s securities. Prior to dealing
in a window, a director or senior executive must seek
clearance from the Company Secretary, or if the
Company Secretary wishes to trade, the Chairman.
The Securities Dealing Policy also prohibits contractors
from trading in the Company’s securities if they are in
possession of price-sensitive information.
Continuous Disclosure and Communication
with Shareholders
The Board is committed to timely disclosure of
information and communicating effectively with its
shareholders. The External Disclosure and Market
Communications Policy is designed to implement
effective communication strategies to enable timely
disclosure of both market sensitive information and
other information enabling both shareholders and
prospective new investors to make informed
investment decisions. The policy includes processes to
ensure that Directors and management are aware of,
and fulfil, their obligations.
The Company communicates with its shareholders and
the investment markets through a number of channels,
including the ASX announcements platform and its
website. The website in particular is useful in assisting
shareholders to easily access information relating to:
• briefings on Company developments and events;
• information released to the ASX by way of an
announcement;
• historical market announcements, annual reports
and briefings of half and full year results for a limited
number of years; and
• electing to receive ASX and media announcements
electronically as they are posted on the Company’s
website.
Further engagement with the investment community
occurs by way of:
• interaction by senior management with members of
the investment community and financial and business
media through a variety of forums including results
briefings, ‘one on one’ meetings and discussions; and
• provision of background and technical
information to institutional investors, market
analysts and the financial and business media
to support announcements made to the ASX and
announcements made about the Company’s on-going
business activities.
Each of the above means of engagement takes place
in the context of the Company’s External Disclosure and
Market Communications Policy described below.
External Disclosure and Market
Communications Policy
Under this Policy the Company has instituted (and
monitors) procedures designed to ensure:
• 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
maintenance of a Disclosure Committee comprised
of senior management to consider disclosure issues
(where circumstances permit, in conjunction with
the Chairman of the Board), the communication of
disclosure requirements and procedures to senior
management together with procedures to facilitate
the timely flow of relevant information to the
Disclosure Committee;
29
• 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;
Emphasis continues to be on building the pipeline of
female managers in the ‘manager’ and ‘middle
manager’ categories, which is where the greatest
opportunity for improvement lies.
• information disclosed in investor or media briefings is
not “market sensitive”. If market sensitive information
is inadvertently disclosed during a briefing it will
immediately be released to the market at large
through the ASX; and
• 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, audio, audio-visual or slide webcasts of the
Company’s AGM and full year and half year results
briefings (which are announced in advance to the
market and also archived and available for viewing or
listening on the Company’s website).
Significant investor briefings (other than the AGM and
the half and full year result briefings which are webcast
and stored as video or audio on the Company’s
website) are generally held by recorded telephone
conference which requires registration so that
attendees’ details can be recorded.
The Company generally allows investors to access the
recorded facility by telephone for a short period after
the event (usually 7 days) and thereafter to obtain a
copy of the transcript or digital audio recording.
The Board is also concerned to ensure that share-
holders participate effectively in general meetings and
to this end:
• 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
• it is a term of engagement of the Company’s external
auditors that they attend the Company’s AGM 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.
Diversity
Our Diversity Policy sets out the key elements of what
makes a diverse organisation as well as the values and
benefits that stem from incorporating diversity into
business practices. The Board endorsed measurable
diversity objectives in FY12, and our progress in
achieving them is detailed below.
Objective 2:
Strengthen the talent pipeline by increasing
women’s participation in development and
mentoring programs and target 50/50 gender
balance in the trainee intake.
In 2013 Elders continued its successful Agricultural
Traineeship program, with a further 28 participants,
of whom 32% were female.
Recruitment of women to trainee roles will remain a
focus in the coming year with the aim of 50/50 gender
balance in future intakes.
Objective 3:
Maintain the number of female non-executive
Board directors at a minimum 25% through
to 2016.
The current non-executive board composition is 2
males (67%) and one female (33%) following an overall
reduction in the number of board members in 2013.
Discrimination, Bullying and Harassment
Elders is committed to providing an environment that is
free from discrimination, harassment, workplace
bullying and victimisation and will not tolerate such
behaviour under any circumstance. This commitment
extends to a workplace that promotes equal
opportunity and fair treatment of staff, contractors,
visitors and customers.
The policy defines procedures for investigating and
dealing with complaints, including the use of impartial
contact officers to receive and advise on complaints.
Occupational Health and Safety
Elders maintains a workplace health and safety
management system, inclusive of corporate standards,
policies and procedures. This system reflects the
requirements of workplace health and safety legislation
and is monitored and evaluated to ensure its integrity
and effectiveness.
We strongly believe that nothing done in the course of
employment is so important that it cannot be done
safely. The Board and officers of Elders are committed
to running an integrated workplace health and
management system based on best practice and
continuous improvement to provide a safe and healthy
environment for employees, contractors, clients
and visitors.
Objective 1:
Increase the representation of women in management positions as follows:
Actual Sept 121
Actual Sept 13
FY14 Target
FY15 Target
FY16 Target
Senior Executives
Senior Managers
Middle Managers
Managers
9%
15%
7%
7%
14%
25%
9%
10%
11%
15%
10%
12%
14%
15%
12%
13%
15%
17%
15%
15%
1 Actual September 12 numbers include Futuris Automotive.
30
Directors’ Report
The directors present their report for the
year ended 30 September 2013.
Results and Review of Operations
The Group recorded a loss for the year, after tax and
non-controlling interest, of $505.2m (2012: loss of
$60.6m). A review of the operations and results of the
consolidated entity and its principal businesses during
the year is contained in pages 13 to 19 of this report.
Significant Changes in the State of Affairs
There were a number of significant changes in the state
of affairs of the consolidated entity during the year
which are referred to on pages 13 to 19 of this report.
Events Subsequent to Balance Date
On or about 25 October 2013 members of the Group
entered into agreements with major landlords in the
Esperance region which have leased land to members
of the Group in connection with the Group’s Forestry
business, including the Agricultural Land Trust (ALT).
If implemented, those agreements will result in
members of the Group being released from significant
ongoing forestry lease liabilities in consideration
for members of the Group transferring land, paying
surrender fees, agreeing to cancellation of ALT
units and forgiving debt owed by ALT to Elders. This
financial report assumes that these transactions will
be implemented. At the signing date of this report,
the transactions remain subject to certain conditions
precedent, including ALT unit holder consent, which
may or may not be satisfied.
There is no other matter or circumstance that has arisen
since 30 September 2013 which is not otherwise
dealt with in this report or in the consolidated financial
statements, that has significantly affected or may
significantly affect the operations of the Group, the
results of those operations or the state of affairs of the
Group in subsequent financial periods.
Directors and Company
Secretary
Current Directors
The directors of the Company in office during the
financial year and until the date of this report were:
Non-Executive Directors:
Mark Charles Allison
(elected Chairman on 27 June 2013)
James Hutchison Ranck
Josephine Mary Rozman
Executive Director:
Malcolm Geoffrey Jackman
(Chief Executive Officer and Managing Director)
Ceased Directors:
The following Non-Executive directors ceased to be a
director during the financial year:
John Charles Ballard, Chairman and director since
20 September 2010, retired on 27 June 2013.
Ian Graham MacDonald, a director since 28 November
2006, retired on 30 November 2012.
Company Secretary:
Peter Gordon Hastings
A summary of the experience, qualifications and special
responsibilities of each Director and the Company
Secretary is provided on page 20 of this annual report.
Principal Activities
The principal activities of the Elders Group during the
year were:
(a) the provision of services and inputs to the
rural sector;
(b) the provision of financial and real estate services to
rural and regional customers;
(c) real estate franchisor;
(d) trading operations, principally in live cattle and wool;
(e) feedlotting of cattle; and
(f) manufacture and supply of automotive components.
On 31 July 2013 the Company sold its automotive
components business to Clearlake Capital Group.
31
Likely Developments and Future Results
Discussion of likely developments in the operations of the consolidated entity and the expected results for
those operations in future financial years is included in the information on page 18 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 financial 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
• No employee options were exercised during the year.
• A total of 6,414,849 fully paid ordinary shares were issued under the Company’s Employee Retention Plan during
the year. The shares are restricted from trading until after 31 July 2014. They rank equally with other ordinary
shares in all other respects.
• No ordinary shares were issued to any other person during the year.
Dividends and Other Equity Distributions
As announced by the Company to the ASX on 30 November 2012, the Company’s finance facilities do not allow the
payment of dividends or hybrid distributions until the repayment of all syndicated debt. Accordingly, no dividends
or hybrid distributions were declared or paid during the 12 months to 30 September 2013.
Share Options
1) Options on Issue:
All remaining options that were on issue at the end of the previous financial year have lapsed. Details are set out
below in item 4.
2) Options issued since the end of the previous financial year
No options have been issued since the end of the previous financial year.
3) Options exercised since the end of the previous financial year
No options have been exercised since the end of the previous financial year.
4) Options lapsed since the end of the previous financial year
Date Options Granted
Number of Lapsed Options
Issue Price
Option Expiry Date
01/07/2003
Total
Directors’ Interests
100,000
100,000
$13.70
01/07/2013
At the date of this report, the relevant interests of the directors in shares and other equity securities of
the Group are:
No. of ordinary shares
No. of hybrids
No. of performance rights
Non-Executive Directors
M C Allison
J H Ranck
J M Rozman
Executive Directors
M G Jackman
100,000
430,000
20,000
-
-
-
-
-
-
221,755
1,000
1,706,270
At the date of this report, there are no options on issue to directors.
Directors’ Meetings
Details of the number of meetings held by the Board of Directors and Board committees and the attendance at
those meetings is provided in the Corporate Governance section of this report on page 24.
Indemnification of Officers and Auditors
Insurance arrangements established in previous years concerning officers 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 officer, 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.
32
Each director and other officer has entered into a Deed of Access, Insurance and Indemnity which provides:
• that the Company will maintain an insurance policy insuring the officer against any liability incurred by the officer
in the officer’s capacity as an officer of the Company to the maximum extent allowed by law;
• for indemnity against liability as an officer, except to the extent of indemnity under the insurance policy or where
prohibited by law; and
• for access to company documents and records, subject to undertakings as to confidentiality.
The consolidated entity has provided a limited indemnity to its auditor, Ernst & Young, for loss suffered by
Ernst & Young from claims by a third party related to the audit service provided by Ernst & Young, excluding losses
resulting from the proven negligent, wrongful or wilful acts or omissions of Ernst & Young.
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 35. In compiling this report the Group has met the disclosure
requirements prescribed in the Australian Accounting Standards and the Corporations Act 2001.
Environmental Performance Regulation
The Elders Group is subject to a range of environmental legislation in the places that it operates. Detail of the
Group’s environmental regulation performance follows.
Feedlots
Elders’ feedlots, Charlton (Victoria) and Killara (New South Wales), are subject to local and state government
environmental and animal welfare legislation. Operations at both feedlots are subject to quality assurance under
the National Feedlot Accreditation Scheme (NFAS). The NFAS is independently administered and audited annually
by Aus-Meat. In addition, the operations are conducted under the provisions of the Australian Model Code of
Practice for the Welfare of Animals – Cattle (2004).
No breaches of any relevant Act, code of practice or accreditation scheme under which Killara or Charlton feedlots
are approved and operate were reported during the year ended 30 September 2013 or to the date of this Report.
Saleyards
State, territory and local government regulations apply to saleyards owned and/or operated by Elders, in
particular, in relation to effluent 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 September 2013 or to
the date of this Report.
Farm supplies
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. 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 regulatory environment for the transporting, handling, storage, sale and use of dangerous goods and
chemicals is complex and subject to the legislation and regulatory oversight separately applied in each state or
territory. Agsafe provides assistance through the provision of accredited training and safety programs. No material
incidents were reported in relation to the handling and storage of dangerous goods during the year or to the date
of this Report.
The Environment Protection Authority (EPA) actively assists organisations and also investigates matters relating to
environmental issues and on occasions contacts Elders.
Three minor incidents occurred in the year to 30 September 2013. Smithton (Tas) suffered a minor insecticide spill
which was reported to the EPA and resolved. Koo Wee Rup (Vic) was investigated for the release of storm water
from holding ponds but was advised by the EPA that the activity was appropriate in the conditions. Barmera (SA)
was contacted by the EPA in connection with water overflow which was resolved by the installation of additional
rainwater tanks and additional bunding.
Live Export
Elders is engaged in the export of cattle to international markets, namely the supply of ‘feeder’ stock for slaughter
in Indonesia and ‘long-haul’ live export of dairy and breeding cattle to markets seeking to supplement their local
herd. All live export operations are subject to Australian Government regulation and standards including the
Australian Standards on the Export of Livestock (ASEL version 2.3) which provides comprehensive and detailed
standards on the sourcing, preparation, management and transportation of livestock through the supply chain to
the point of disembarkation.
Elders’ livestock export operations are also subject to the Exporter Supply Chain Assurance System (ESCAS) which
requires exporters to demonstrate they have control of and traceability throughout the supply chain to the point of
slaughter in the destination country.
No breaches of regulatory or legislative requirements were recorded by Elders’ live export operations in the year to
30 September 2013 or to the date of this report.
33
Rounding of Amounts
The parent entity is a Group of the kind specified in Australian Securities and Investments Commission class order
98/0100. In accordance with that class order, amounts in the financial report and Directors’ report have been
rounded to the nearest thousand dollars unless specifically stated to be otherwise.
Non-Audit Services
Non-audit services provided by the Group’s auditor, Ernst & Young to the Group during the course of the financial
year are disclosed below. Based on advice received from the Audit, Risk and Compliance Committee the Directors
are satisfied that the provision of non-audit services is compatible with the general standard of independence
for auditors imposed under the Corporations Act 2001 for the following reasons:
• all non-audit services have been reviewed by the Audit, Risk and Compliance Committee to ensure they do not
impact on the impartiality or objectivity of the auditor; and
• 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)
$361,413
Other compliance and assurance services $657,356
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.
M C Allison
Chairman
18 November 2013
M G Jackman
Director
Auditor’s Independence Declaration to the Directors of Elders Limited
In relation to our audit of the financial report of Elders Limited for the financial period ended 30 September 2013,
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
Mark Phelps
Partner
Adelaide
18 November 2013
34
Elders Limited
Remuneration Report 2013
The Directors of Elders Limited present the Remuneration Report for
the consolidated entity for the year ended 30 September 2013.
The information provided in this report has been audited, unless
otherwise indicated, as required by the Corporations Act 2001 (Cth)
and forms part of the Directors’ Report.
Section 1
Key Management Personnel
Section 2
Remuneration governance
and strategy
Section 3
Non-executive Director remuneration
Section 4
Executive Director and
Senior Executive remuneration
Section 5
Senior Executive contract terms
Section 6
Senior Executive remuneration details
Section 7
Equity instruments in relation to
directors and executives
37
37
38
39
45
46
47
35
Chief Executive Officer and Senior Executive remuneration outcomes for 2013
Figure 1 below sets out certain items of remuneration paid or payable to the Group’s Chief Executive Officer (CEO) and Senior Executives in respect
of the 2013 financial year. The information in Figure 1 is unaudited and is different from and additional to that required by Accounting Standards
and statutory requirements.
Table 6 on page 46 provides the audited remuneration disclosures as required under Accounting Standards and statutory requirements.
Elders however believes that the information provided in Figure 1 is useful to investors, and is consistent with the Productivity Commission’s
recommendation in its Report on Executive Remuneration in Australia.
Figure 1 includes information on base salary, STI, superannuation, other monetary benefits, other non-monetary benefits and termination benefits
identical to that contained in Table 6, but omits the information on the issue of shares, share rights and options and long-term payments
contained in Table 6. Additionally, Figure 1 provides information on LTIs based on rights vesting or options exercised during the financial year,
which is not provided in Table 6.
Figure 1. Remuneration outcomes for 2013 (unaudited and non-IFRS)
Base Salary
STI2
LTI3 Superannuation
Other
(monetary)
Other
(non-monetary)5
Termination
benefits6
Total
Malcolm Jackman
1,146,536
Hamish Browning1
42,031
Tony Dage1
Richard Davey1
Mark De Wit1
572,061
237,127
610,964
0
0
0
0
0
0
25,484
106,866
16,796
2,437
16,796
0
0
0
0
11,306
100,0008
353,4197
23,467
0
David Goodfellow
615,511
23,500
0
16,796
30,0004
2,640
362
1,927
1,760
0
0
0
0
1,165,972
70,314
669,456
1,367,106
0
0
0
350,193
987,850
685,807
Mark Hosking1
227,366
0
182,563
5,490
0
880
715,000
1,131,299
1 Figures relate to part-year service (see Section 1 below).
2 STI that will be paid for performance in the 2013 financial year.
3 Value of any performance or service rights that vested during the 2013 financial year based on the closing share price on the date of vesting.
Service rights held by Hamish Browning, Tony Dage and Mark Hosking vested on 1 August 2013 the closing share price on this date was $0.088.
4 Travel allowance.
5 Provision of leased car parking.
6 These benefits comply with Part 2D.2 of the Corporations Act 2001 (Cth).
7 Payment made under the Futuris Automotive Incentive Plan (see page 45).
8 Completion bonus paid upon finalisation of extension and renewal of the Group’s finance facilities on 23 September 2013.
36
Section 1. Key Management Personnel
The disclosure in this Remuneration Report relates to the remuneration of Key Management Personnel (KMP) 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 financial year).
Key Management Personnel for the purposes of this report include the following persons who were Non-executive Directors and Senior Executives
during the financial year:
Name
Non-executive Directors
M C Allison
J C Ballard
I G MacDonald
J H Ranck
J M Rozman
Executive Director and Senior Executives
M G Jackman
H S Browning1
A T Dage
R I Davey
M G De Wit
D W Goodfellow
M G Hosking
Position held
Period held in 2013 (if not full year)
Chairman
Chairman
Director
Director
Director
Non-executive Director from 1 October 2012
to 26 June 2013
Chairman from 27 June 2013
1 October 2012 to 27 June 2013
1 October 2012 to 30 November 2012
Chief Executive and Managing Director
General Manager Trading
From 12 August 2013
Group General Manager Trading
1 October 2012 to 9 August 2013
Chief Financial Officer
From 1 February 2013
Managing Director Futuris Automotive
1 October 2012 to 30 August 2013
Group General Manager Australian Network
Chief Financial Officer
1 October 2012 to 31 January 2013
1 H S Browning resignation effective 27 December 2013
Section 2. Remuneration governance and strategy
A. Role of Remuneration and Human Resources Committee
The Remuneration and Human Resources Committee assists the Board in ensuring that the Company establishes and maintains remuneration
strategies and policies aligned with the Company’s overall objectives and in accordance with the practice set out in the ASX Corporate Governance
Council Principles and Recommendations. The role and responsibilities of the Remuneration and Human Resources Committee are set out in
the Corporate Governance Statement on page 25 of this Annual Report and the Committee’s Charter is published on the Company’s website at
www.elderslimited.com.
The Committee is entirely comprised of Non-executive Directors.
B. Independent remuneration advice
The Remuneration and Human Resources Committee is briefed by management, but makes all decisions free of the influence of management.
To assist in its decision-making, the Committee may, from time to time, seek independent advice from remuneration consultants, and in so doing
will directly engage with the consultant without management involvement.
In the year ending 30 September 2013, the Committee did not seek or receive remuneration recommendations from any external party, and
consequently no fees were paid during the year for such advice.
C. Group remuneration strategy
The Elders Group remuneration strategy seeks to encourage a performance-orientated culture that will:
• provide competitive reward opportunities to attract and retain high calibre executives and to motivate them to pursue sustainable long-term
growth and success for the Company, its employees and shareholders;
• 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;
• demonstrate a clear relationship between Senior Executive performance and remuneration; and
• be consistent and responsive to the needs of each operating business and the Group as a whole.
37
Section 3. Non-executive Director remuneration
A. Board policy
Non-executive Directors are remunerated by way of fees in the form of cash and superannuation, and generally in accordance with
Recommendation 8.2 of the ASX Corporate Governance Council Principles and Recommendations.
Executive Directors do not receive director’s fees.
Non-executive Directors do not participate in the Company’s cash or equity incentive plans and do not receive retirement benefits other than
superannuation contributions disclosed in this report.
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 in the manner set out
in the Corporate Governance Statement on pages 22 and 23 of this Annual Report.
Non-executive Director fees are reviewed by the Board on an annual basis, taking into consideration the accountability and time commitment
of each director, supported, where appropriate and necessary, by advice from external remuneration consultants.
The Board encourages Elders Non-executive Directors to own securities in the Group to further align their interests with the interests of other
shareholders. Details of Non-executive Directors’ shareholdings in the Group can be found in Table 7a(i) of this Report. All shares held by
Non-executive Directors were acquired on market.
B. Non-executive Director remuneration in 2013
Total fees for the financial year ended 30 September 2013 remain well 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 contributions are included in the aggregate
fee limit.
Each Non-executive Director was entitled to an annual base fee of $100,000, except the Chairman who was entitled to an annual composite
base fee of $300,000.
During the financial year ended 30 September 2013, as compensation for time spent on committee business, the following fees applied:
• Each member of the Audit, Risk and Compliance Committee was entitled to $16,000 per annum; except for the Committee Chair who was
entitled to $30,000 per annum to reflect the significant workload associated with this position.
• Each member of the Occupational Health and Safety Committee was entitled to $10,000 per annum.
• Each member of the Remuneration and Human Resources Committee was entitled to $10,000 per annum.
Actual Committee fees paid are provided as “Board Committee Fees” in Table 3 below.
Table 3: Non-executive Director remuneration details
Short Term Payments
Post Employment
Total
Base Board Fee
Board
Committee Fees
Subsidiary Fees
and Other Fees
Superannuation
Other
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
151,667
100,000
225,000
300,000
n/a
71,410
n/a
83,333
16,667
100,000
100,000
100,000
100,000
88,077
n/a
87,500
593,334
930,320
25,071
12,028
0
0
n/a
7,141
n/a
21,667
4,333
26,000
33,394
20,000
48,371
24,675
n/a
26,250
111,169
137,761
0
0
0
0
n/a
0
n/a
20,833
-
10,192
0
0
0
0
n/a
0
0
31,025
13,477
10,083
12,421
15,949
n/a
7,070
n/a
11,325
1,890
12,449
12,090
10,800
13,447
10,148
n/a
10,725
53,325
88,549
0
0
0
0
n/a
0
n/a
0
0
0
0
0
0
0
n/a
0
0
0
190,215
122,111
237,421
315,949
n/a
85,621
n/a
137,158
22,890
148,641
145,484
130,800
161,818
122,900
n/a
124,475
757,828
1,187,655
M C Allison
J C Ballard
A Buduls
R G Grigg
I G MacDonald
J H Ranck
J M Rozman
R H Wylie
Total
38
Section 4. Executive Director and Senior Executive remuneration
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 oversight of the Company’s remuneration policies and practices to the Remuneration and Human Resources Committee.
Remuneration polices and practices are benchmarked to the market by independent external consultants to ensure that remuneration for
executives meets a range of criteria, including:
• that executives are appropriately rewarded having regard to their roles and responsibilities;
• an appropriate balance between fixed and at-risk remuneration components is maintained; and in relation to the at-risk component, that there
is an appropriate balance between short and long-term incentives;
• that performance measures reflect long-term drivers of shareholder value;
• paying for performance, where superior or upper quartile remuneration is only paid for demonstrable superior performance; and
• that remuneration is competitive when compared to both internal and external relativities.
On an annual basis the Board reviews and approves the performance and remuneration plans and outcomes for the CEO on the recommendation
of the Chairman and the Remuneration and Human Resources Committee. The plans and outcomes for the CEO’s direct reports are reviewed and
approved annually by the Committee on the recommendation of the CEO, and the CEO approves the plans and outcomes for positions reporting to
his direct reports. The Committee reviews the key elements of Senior Executive employment contracts as well as the CEO’s recommendations for
equity incentives to Senior Executives and other senior managers in the Company. The Committee also reviews major remuneration policies and
programs applying to the wider group.
B. Remuneration structure
The remuneration structure has been designed to support the Board’s remuneration policy. Executive remuneration is made up of three elements:
• Total Fixed Remuneration (TFR);
• Short-term incentives (STI); and
• Long-term incentives (LTI).
A description of each component is set out below. Remuneration packages are 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.
Remuneration structure
100%
80%
41%
d
r
a
w
e
R
l
a
t
o
T
f
o
%
60%
40%
20%
0%
32%
27%
30%
20%
50%
25%
33%
42%
LTI
STI
TFR
CEO
CFO
Business Unit
Head
The above assumes the at-risk remuneration components are at their maximum, and represents the Company’s intended policy in respect
of remuneration structure. In the 2013 financial year, however, no awards under any of the Company’s long-term incentive programs were made
(see section E5(a)). Hence the actual remuneration structure for 2013 was as follows:
CEO
CFO (R I Davey)
CFO (M G Hosking)
Business Unit Head (D W Goodfellow, A T Dage, M G De Wit)
Business Unit Head (H S Browning)
TFR
45%
71%
50%
56%
62%
STI
55%
29%
50%
44%
38%
LTI
0%
0%
0%
0%
0%
39
C. Total Fixed Remuneration
Total Fixed Remuneration (TFR) is made up of base salary, superannuation and any other benefits (including Fringe Benefits Tax) that the
executive has nominated to receive as part of his or her package. These benefits may include motor vehicle leases, car parking and any additional
superannuation contributions beyond the statutory maximum.
The level of TFR is set by reference to market activity for like positions and is determined by the level of knowledge required to perform
the position, the problem solving complexities of the position, level of autonomy to make decisions and the particular capabilities, talents and
experience the individual brings to the position.
TFR is reviewed annually and is adjusted according to market relativity, company performance and the executive’s performance over the previous
year, as assessed through the Company’s Performance Development Program (PDP). The PDP assesses employee performance against a number
of agreed key performance indicators1.
1 Key performance indicators include measures for cash management, sales, people management, safety and demonstration of Company values.
D. Short-term incentive
All executives participate in either an Elders’ Group or a business unit Short-term Incentive (STI) plan. The key features of the STI plans applying to
KMP during the year are set out in the table below:
KMP participants and
maximum STI
opportunity as % of TFR
Corporate
Australian Network
Trading
Futuris Automotive
M G Jackman (120%)
D W Goodfellow (80%)
A T Dage (80%)
M G De Wit (80%)
R I Davey (40%)
M G Hosking (80%)
H S Browning (60%)
Plan
Performance measure(s)
Underlying profit
Summary
Return on Funds Employed
Net debt/EBITDA
Gross Margin
The Company’s
performance against the
above measures generates
an STI pool which is
distributed among
participants according to
their performance against
individual Key Performance
Indicators (KPI)3.
CODI (Total Contribution1
/Debtors + Inventory)
EBT
Direct Contribution2
EBIT
Operating cash flow
An STI pool is generated
when Futuris Automotive
meets at least 90% of
its EBIT budget. The pool
is distributed among
participants according to
EBIT, cash, safety and
personal KPIs3.
If a branch meets
its CODI and/or Direct
Contribution targets,
a percentage of the
branch’s Direct
Contribution is set aside
for national network
management. The sum
of all these amounts
generated by individual
branches forms
the national network
management pool,
which is distributed to
participants according
to their performance
against individual KPIs3.
A percentage of any
overperformance against
the Trading business’s
budgeted EBT is set aside
to form an STI pool which
is distributed among
participants according to
performance against
individual KPIs3.
(Note: H S Browning’s
STI 2013 arrangements
were in respect of his
capacity as General
Manager Live Export, the
role he held for most of
the year. The structure of
his STI was the same as
that described above,
but applying to the Live
Export division instead of
the whole of Trading.)
Exercise of discretion
The CEO, in conjunction with the Chairman, may recommend discretionary bonus payments to executives
(except himself) for approval by the Remuneration and Human Resources Committee.
Service condition
Payment
Any STI payable to executives who become eligible to participate in STI during the course of the year, either
through joining the Group or being promoted within the Group, will be pro-rated accordingly.
Payments are made in cash which participants may elect to sacrifice to acquire the Company’s shares via the
Deferred Employee Share Plan.
1 Total Contribution = Direct Earnings + Indirect Earnings – Direct Costs – Net Interest
2 Direct Contribution = Direct Earnings + Indirect Earnings – Direct Costs
3 Key performance indicators include measures for cash management, sales, people management, safety and demonstration of Company values.
40
STI outcomes for 2013
All STI payments for 2013 performance were according to plan.
Of the KMP participating in the business unit STI plans in 2013:
• D W Goodfellow received an STI payment of 4% of maximum for the Australian Network business unit’s performance;
• A T Dage, H S Browning and M G De Wit did not receive an STI payment.
The STI outcome was nil for KMP who participated in the Corporate STI plan in 2013.
E. Long-term incentive
The Company has a number of Long-term Incentive (LTI) and equity participation plans in place. These plans are summarised below.
E1. Current Equity Schemes
Name
of Plan
Description
Eligibility
Criteria
Number of
participants
as at 30
September
2012
Number of
participants
as at 30
September
2013
Elders
Long Term
Incentive
Rights Plan
(ELTIRP)
Rights to Elders shares are granted to selected
eligible executives at the 10-day Volume
Weighted Average Price (VWAP) subject to
a minimum of 12 months’ service and
performance conditions (see below)
determined by the Board at the time of grant.
This plan replaced the EESOP and the ELSP
described below.
CEO
1
19
Senior
Executives
by invitation.
1
12
Number of
shares /
options /
rights
outstanding
as at 30
September
2012
Number of
shares /
options / rights
outstanding
as at 30
September
2013
2,284,822
1,706,270
7,409,031
3,111,412
E2. Discontinued Equity Schemes in which one or more past or present KMP participates
Name
of Plan
Description
Elders
Employee
Share
Option Plan
(EESOP)
EESOP is an employee option scheme.
Options to acquire Elders shares were granted
to selected eligible executives at market
(or premium) price, subject to a minimum of
three years’ service.
Elders Loan
Share Plan
(ELSP)
The ELSP was designed to provide an equity
participation opportunity for all selected eligible
group employees. Shares were provided and
paid for by way of a non-recourse, interest-free
loan. Dividends are used to repay the loan.
Shares vest three years after issue. There are
no performance conditions once issued.
No shares were issued
under the ELSP during the financial year.
Eligibility
Criteria
Number of
participants
as at 30
September
2012
Number of
participants
as at 30
September
2013
Number of
shares /
options /
rights
outstanding
as at 30
September
2012
Number of
shares /
options / rights
outstanding
as at 30
September
2013
By invitation.
2
0
115,000
0
The EESOP
was suspended
in 2009
and will be
discontinued
once all
options lapse.
By invitation.
1,262
986
791,535
630,394
The ELSP was
suspended
in 2009
and will be
discontinued.
Elders ‘Save
as You Earn’
Plan (SAYE)
The SAYE plan is a deferred benefit employee
share scheme, designed to enable employees
to sacrifice remuneration on a pre-tax basis and
receive Elders shares in lieu. Elders makes no
contribution to this plan other than funding the
costs of administration.
No shares were issued under the SAYE Plan
during the financial year.
All permanent
employees.
46
Operation of
the SAYE plan
was suspended
in February
2009.
24
19,308
9,821
41
E3. Current equity saving schemes in which one or more KMP participates
Name
of Plan
Description
Eligibility
Criteria
Number of
participants
as at 30
September
2012
Number of
participants
as at 30
September
2013
Number of
shares /
options /
rights
outstanding
as at 30
September
2012
Number of
shares /
options /
rights
outstanding
as at 30
September
2013
This plan enables participants to salary sacrifice
remuneration to acquire restricted shares.
All permanent
employees.
57
48
332,844
1,082,410
Deferred
Employee
Share Plan
(DESP)
Eligibility
Criteria
Number of
participants
as at 30
September
2012
Number of
participants
as at 30
September
2013
Number of
shares /
options /
rights or
dollar
amount
outstanding
as at 30
September
2012
Number of
shares /
options /
rights or dollar
amount
outstanding
as at 30
September
2013
By invitation.
13
Nil
6,572,589
Nil
Note: 6,414,849
shares have
been issued
against all
service rights
under the plan
and are
currently subject
to a trading
restriction until
1 August 2014.
By invitation.
9
Nil
$473,747
Nil
E4. Retention schemes
Name
of Plan
Description
Retention
Plan
(general)
To retain the services of key employees during
the period of Company “turn-around”.
This scheme provides for the issue of service
rights to selected executives in three tranches
in August 2010, August 2011 and August 2012,
for vesting on 1 August 2013. Shares will
issue on the vesting date assuming continued
employment (or earlier termination of
employment for a reason other than resignation
or dismissal for poor performance or
misconduct) and may vest earlier in the case
of takeover.
Retention
Plan
(Forestry
Scheme 2)
Retention cash incentives for key Forestry
employees who remain employed at
15 October 2012 or who cease employment
before that date for a reason other than
resignation or dismissal for poor performance
or misconduct.
E5. Discussion of long-term incentive plans
(a) General
The ELTIRP is the Company’s principal long-term incentive plan. The ELTIRP is based on the performance rights scheme for the CEO approved by
shareholders at the AGM of the Company on 18 December 2009.
A number of Senior Executives (including all KMP) have a contractual right to participate in ELTIRP up to certain percentages of TFR (which
differ by employee). However, notwithstanding the right to participate in the ELTIRP, all awards remain at the Board’s discretion. During the 2013
financial year, no award under the ELTIRP was made due to poor business results and uncertainty caused by the Rural Services and Futuris
Automotive sale processes.
(b) Dealing in securities
Further, KMP are not permitted to deal in the Company’s securities without prior permission from the Company and only during trading windows
and are required to disclose all dealings on an annual basis. The measures are designed principally to manage insider trading risk, but also go
some way to aligning the interests of KMP with the Company’s security holders generally.
42
(c) Performance Hurdles
The Company has adopted a relative Total Shareholder Return (TSR) performance hurdle to align the interests of the CEO and senior management
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.
Summaries of LTIP grants are provided below.
Issue Date
CEO grants
Number of performance
rights granted
Denominator
Hurdle description
10 November 2009
856,808
$1.776
Pursuant to the approval granted by the Shareholders at the 2009 AGM,
the CEO was granted performance rights issuing as at 10 November 2009,
as at 10 November 2010 and on or about 10 November 2011. Each
performance right, which is issued at no cost to Mr. Jackman, will,
if it vests, constitute the right to acquire 1 ordinary share in the Company.
The issue as at 10 November 2009 resulted in 856,808 performance
rights being issued. These rights will be tested as set out below.
Tranche 1 (2009 Allocation)
TSR performance is measured over the two years from 10 November
2009 to 10 November 2011. This tranche has been tested and resulted
in nil vesting.
Tranche 2 (2009 Allocation)
TSR performance is measured over the three years from 10 November
2009 to 10 November 2012. This tranche has been tested (see below).
Tranche 3 (2009 Allocation)
TSR performance is measured over the four years from 10 November
2009 to 10 November 2013.
The vesting of these performance rights depend on the Company’s Total
Shareholder Return (TSR) performance relative to the ASX/S&P 200
Accumulation Index, as determined by the following schedule:
Relative TSR
Below 50th percentile
At 50th percentile
50th to 74th percentile
75th percentile and above
% of Tranche that vests
Nil
50%
Pro-rata
100%
10 November 2010
878,852
$1.776
These rights will be tested as set out below.
Tranche 1 (2010 Allocation)
TSR performance is measured over the two years from 10 November 2010
to 10 November 2012. This tranche has been tested (see below).
Tranche 2 (2010 Allocation)
TSR performance is measured over the three years from 10 November
2010 to 10 November 2013.
Tranche 3 (2010 Allocation)
TSR performance is measured over the four years from 10 November 2010
to 10 November 2014.
These performance rights vest according to the same schedule applying
to the 2009 allocation.
10 November 2011
834,765
$1.776
These rights will be tested as set out below:
Tranche 1 (2011 Allocation)
TSR performance is measured over the two years from 10 November 2011
to 10 November 2013.
Tranche 2 (2011 Allocation)
TSR performance is measured over the three years from 10 November
2011 to 10 November 2014.
Tranche 3 (2011 Allocation)
TSR performance is measured over the four years from 10 November 2011
to 10 November 2015.
These performance rights will vest according to the same schedule
applying to the 2009 and 2010 allocations.
43
(c) Performance Hurdles (continued)
Issue Date
Number of performance
rights granted
Denominator
Hurdle description
Senior Executive grants
10 November 2010
5,546,587
10 November 2011
4,525,000
$0.646
$0.269
Performance rights granted to Senior Executives as at 10 November 2010
operate the same way as the CEO’s 2010 Allocation.
Performance rights granted to Senior Executives as at 10 November 2011
operate the same way as the CEO’s 2011 Allocation.
Performance testing of Tranche 2 of CEO’s 2009 Allocation, Tranche 1 of CEO’s 2010 Allocation and Tranche 1 of 2010
Senior Executive grant
Following completion of their measurement periods, Tranche 2 of the CEO’s 2009 Allocation, Tranche 1 of the CEO’s 2010 Allocation, and
Tranche 1 of the 2010 Senior Executive grant were tested against their performance hurdles, resulting in nil vesting and lapsing of 1,970,004
performance rights valued at $305,351 (number of rights multiplied by closing share price of $0.155 as at 12 November 2012).
E6. Relationship between Elders’ financial performance and executive reward
(a) Short-term incentive
STI payments are awarded to executives on achievement of a range of financial and non-financial performance targets. The following table shows
the Company’s performance in relation to a number of financial and operational performance measures over a five-year period.
Performance measure
($ millions)
Sales revenue
Underlying EBIT
Statutory profit
Cashflow from operating activities
2013
2012
2011
2010
2009
(to 30/9/09)
2009
(to 30/6/09)
1,657.1
2,157.9
2,358.7
2,154.4
3,540.1
2,902.0
(42.0)
(505.3)
(81.6)
38.8
(60.6)
2.5
33.7
(395.3)
(23.8)
34.0
(217.6)
(110.5)
40.3
(466.4)
(523.3)
16.8
(415.4)
(370.8)
Details of KMP STI outcomes for 2013 are provided on page 41.
(b) Long-term incentive
LTIs only vest when the Company achieves superior returns for shareholders as measured by relative TSR.
Relative Total Shareholder Return (TSR)
Elders’ TSR has underperformed the ASX/S&P 200 Accumulation Index (All and Industrials) over the 2013 financial year and on a cumulative basis
over the period from 2009 to 2013.
Elders’ relative TSR performance against these two comparator groups is as follows:
Absolute TSR %
Cumulative TSR %
80%
40%
0%
(40%)
%
R
S
T
e
t
u
o
s
b
A
l
50%
0
(50%)
(100%)
(150%)
(200%)
(250%)
)
%
(
R
S
T
e
v
i
t
a
u
m
u
C
l
(80%)
2009
2010
2011
2012
2013
(300%)
2009
2010
2011
2012
2013
Elders
ASX200
ASX200 Industrials
Source: Capital IQ, Bloomberg
Elders
ASX200
ASX200 Industrials
Note: TSR was calculated for the following periods:
2009
2010 onwards
1 July 2008 to 30 September 2009 (due to the change in Elders’ financial year end in that year)
1 October to 30 September
44
Factors contributing to the calculation of TSR include dividends and share price. The history of both for the last five years is set out below:
Dividend history
Dividend
2013
2013
2012
2012
2011
2011
2010
2010
2009
2009
Type
Ordinary
- final
Ordinary
- interim
Ordinary
- final
Ordinary
- interim
Ordinary
- final
Ordinary
- interim
Ordinary
- final
Ordinary
- interim
Ordinary
- final
Ordinary
- interim
Payment date
Amount
per share
Franking rate
-
Nil
-
-
Nil
-
-
Nil
-
-
Nil
-
-
Nil
-
-
Nil
-
-
Nil
-
-
Nil
-
-
Nil
-
-
Nil
-
Elders Share price history 2008-2013
$
16
14
12
10
8
6
4
2
0
8
0
r
e
b
o
t
c
O
9
0
y
r
a
u
n
a
J
9
0
l
i
r
p
A
9
0
y
l
u
J
9
0
r
e
b
o
t
c
O
0
1
y
r
a
u
n
a
J
0
1
l
i
r
p
A
0
1
y
l
u
J
0
1
r
e
b
o
t
c
O
1
1
y
r
a
u
n
a
J
1
1
l
i
r
p
A
1
1
y
l
u
J
1
1
r
e
b
o
t
c
O
2
1
y
r
a
u
n
a
J
2
1
l
i
r
p
A
2
1
y
l
u
J
2
1
r
e
b
o
t
c
O
3
1
y
r
a
u
n
a
J
3
1
l
i
r
p
A
3
1
y
l
u
J
3
1
t
p
e
S
Futuris Automotive Exit Incentive Plan
The Company had in place a cash-based long-term incentive plan for Futuris Automotive Interiors (FAI) to retain key employees critical to the
sale of the business, as well as to provide an incentive for increasing the market value of the business over the period to 30 September 2013.
The cash payments under this plan were initiated either at the end of the plan period or the sale of the business. Consequently, when the sale
of FAI was finalised on 30 August 2013, cash payments to eight participants totaling $1,499,095 were triggered. This amount represents the
minimum entitlement under the plan.
Section 5. Senior Executive contract terms
In 2013, the Company had employment agreements with the Senior Executives. The agreements are ongoing until terminated by either party.
In a Company-initiated termination:
• the Company is required to give the Senior Executive 12 months’ notice, except for Messrs De Wit, Davey and Browning who are entitled
to receive six months’ notice;
• the Company may make a payment in lieu of notice equivalent to the remuneration the Senior Executive would have received over the
notice period;
• for serious misconduct, the Company may terminate immediately whereupon no payment in lieu of notice or other termination payments
are payable under the employment agreement;
• due to genuine redundancy, as defined by the Fair Work Act 2010, the Senior Executive is entitled to a retrenchment payment in
accordance with Company policy. This payment is also subject to the rules and limitations specified in the Corporations Act 2001 and
Corporations Regulations;
• the Senior Executive may be entitled to a payment under a short-term or long-term incentive plan in accordance with plan rules.
If the Senior Executive initiates the termination, he is required to give the company six months’ notice, except for Mr. Jackman (twelve months)
and Messrs Davey and Browning (three months).
In the event of a Change of Control or Disposal of Business (i.e. a shareholder gains voting power greater than 50% or a sale of substantially
all of the Company occurs) resulting in a material diminution in the roles and responsibility of the Senior Executive, the Senior Executive may
terminate his contact on three months’ notice. If the Senior Executive exercises that right of termination, the Company will pay the equivalent
of 12 months’ base salary.
45
Section 6. Senior Executive remuneration details
Table 6. Details of Executive Director and Senior Executive remuneration for the 2012 and 2013 financial years
Short-term payments
Post
employment
Share-
based
payments
Long-term
payments
Base salary
STI
Other2
Super-
annuation
Options
Share
Rights
Long
Service
Leave
Other3 Termination
benefits4
Total
%
performance
- related6
M G Jackman
2013 1,146,536
2012 1,129,609
H S Browning
20131
42,031
0
0
0
2012
n/a
n/a
2,640
2,520
362
n/a
16,796
15,949
2,437
0
0
0
43,475
41,120
65,017
22,975
73,830
7,729
0
0
0
n/a
n/a
n/a
n/a
n/a
0 1,250,567
0
0
n/a
1,236,070
126,389
n/a
A T Dage
20131
572,061
0
1,927
2012
644,051 141,000
2,226
16,796
15,949
R I Davey
20131
237,127
0 101,760
11,306
0
0
0
127,447
(4,827)
394,144
3,130
9,804
37,300
0
0
0
669,456 1,382,860
0 1,200,500
0
397,297
2012
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
M G De Wit
2013
610,964
2012
644,344
0
0
0
0
23,467
25,360
0
0
0
0
22,458 115,038
26,764 238,381
0
0
771,927
934,849
V Erasmus
2013
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
20121
367,078
0 327,013
11,831
D W Goodfellow 2013
615,511 23,500 30,000
20121
417,768
44,000
22,055
M G Hosking
20131 227,366
2012
688,880
0
0
880
2,520
16,796
12,005
5,490
18,701
0
0
0
0 (46,630)
0
0
2,271
0
0 259,883
(16,714)
0
633,471
8,559
S C Hughes
2013
n/a
n/a
n/a
n/a
n/a
n/a
n/a
20121
372,857
0
36,143
22,867
0
301,910
(11,744)
S J D McClure
2013
n/a
n/a
n/a
n/a
n/a
n/a
n/a
20121
262,925
0
2,100
11,831
0 (137,752)
(28,865)
0
0
0
0
0
n/a
0
n/a
0
376,9105 1,036,202
0
0
688,078
495,828
715,000
1,191,905
0
1,352,131
n/a
n/a
457,130
1,179,163
n/a
n/a
3%
5%
58%
n/a
9%
45%
2%
n/a
0%
0%
n/a
0%
3%
9%
22%
47%
n/a
26%
n/a
192,115
302,354
(46%)
Total
2013 3,451,596 23,500 137,569
93,088
0 514,439
89,337 115,038
1,384,456 5,809,023
2012
4,527,512 185,000 394,577
134,493
0 1,256,790
(25,811) 238,381
1,026,155
7,737,097
1 Figures relate to part-year service (see Section 1).
2 Comprising the provision of leased car parking (Jackman, Browning, Dage, Davey, Erasmus, Goodfellow, Hosking, Hughes and McClure),
retention payment (Erasmus), completion bonus (Davey), travel allowance (Goodfellow) and higher duties allowance (Hughes).
3 Expense relating to participation in the Futuris Automotive Exit Incentive Plan (see page 45).
4 These benefits, which comprise redundancy payments under the Company’s redundancy policy and payments in lieu of notice, comply with
Part 2D.2 of the Corporations Act 2001 (Cth).
5 The combined termination benefits disclosed in the 2011 and 2012 financial years were paid as a lump sum to Mr. Erasmus on termination
in May 2012.
6 Performance related remuneration consists of STI and Share Rights as a percentage of total remuneration. Share Rights includes
Performance Rights disclosed in Table 7c(i) and Service Rights disclosed in Table 7c(ii).
46
Section 7. Equity instruments in relation to directors and executives
Table 7a(i). Non-executive Director share movements
Shares held at
start of year
Other shares
acquired
(disposed of)
during the year
Other changes
during the year
Balance of shares
held at end of
financial period
Balance of shares
held at date
of signing
Remuneration
Report (see Note)
M C Allison
J C Ballard
A Buduls
R G Grigg
I G MacDonald
J H Ranck
J M Rozman
R H Wylie
Total
Note:
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
100,000
0
1,000,000
250,000
n/a
0
n/a
16,490
52,668
52,668
430,000
128,334
20,000
0
n/a
6,000
1,602,668
453,492
0
100,000
0
750,000
n/a
0
n/a
45,200
0
0
0
301,666
0
20,000
n/a
0
0
1,216,866
0
0
0
0
n/a
0
n/a
0
0
0
0
0
0
0
n/a
0
0
0
100,000
100,000
1,000,000
1,000,000
n/a
0
n/a
61,690
52,668
52,668
430,000
430,000
20,000
20,000
n/a
6,000
100,000
100,000
1,000,000
1,000,000
n/a
0
n/a
61,690
52,668
52,668
430,000
430,000
20,000
20,000
n/a
6,000
1,602,688
1,670,358
1,602,688
1,670,358
Cessation dates were used for Non-executive Directors who retired or resigned
before the date the Remuneration Report was signed, as follows:
J C Ballard
A Buduls
R G Grigg
I G MacDonald
R H Wylie
27 June 2013
30 July 2012
30 July 2012
30 November 2012
15 August 2012
47
Table 7a(ii). Senior Executive share movements
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
financial
period
Balance of
shares held at
date of signing
Remuneration
Report
M G Jackman
H S Browning
A T Dage
R I Davey
M G De Wit
V Erasmus
D W Goodfellow
M G Hosking
S C Hughes
S J D McClure
Total
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
188,676
83,8341
506,632
n/a
90,000
90,000
200,160
n/a
18,537
18,537
n/a
1,998
173,356
173,356
0
0
n/a
17,087
n/a
7,697
1,177,361
392,509
0
0
0
n/a
0
0
0
n/a
0
0
n/a
0
0
0
0
0
n/a
0
n/a
0
0
0
0
0
33,079
104,842
289,586
n/a
1,214,391
0
0
n/a
0
0
n/a
0
0
0
n/a
0
n/a
0
n/a
0
0
n/a
0
0
0
n/a
0
0
n/a
0
0
0
0
0
n/a
0
n/a
0
1,503,977
0
33,079
104,842
0
0
0
n/a
0
0
0
n/a
0
0
n/a
0
0
0
0
0
n/a
0
n/a
0
0
0
221,755
188,676
221,755
190,220
796,218
796,218
n/a
n/a
1,304,391
1,304,391
90,000
90,000
200,160
200,160
n/a
18,537
18,537
n/a
1,998
173,356
173,356
0
0
n/a
17,087
n/a
7,697
n/a
18,537
18,537
n/a
1,998
173,356
173,356
0
0
n/a
17,087
n/a
7,697
2,714,417
2,714,417
497,351
498,895
1 This number of shares differs from the 2011 number as it only reflects the shares in which Mr. Jackman holds a relevant interest.
Notes:
• No shares were issued on exercise of options or performance rights during the 2013 financial year.
• Cessation dates were used for Senior Executives who ceased employment with Elders
before the date the Remuneration Report was signed, as follows:
A T Dage
V Erasmus
M G Hosking
S C Hughes
S J D McClure
9 August 2013
18 May 2012
31 January 2013
2 August 2012
15 June 2012
48
Table 7b. CEO and Senior Executive LTI movements – EESOP
2013
Balance at
beginning of period
Options granted
Options lapsed,
surrendered or
foregone to
30 September 2013
Balance at
30 September 2013
Exercisable
M G Jackman
H S Browning
A T Dage
R I Davey
M G De Wit
D W Goodfellow
M G Hosking
Total
2012
M G Jackman
A T Dage
M G De Wit
V Erasmus
D W Goodfellow
M G Hosking
S C Hughes
S J D McClure
Total
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Balance at
beginning of period
Options granted
Options lapsed,
surrendered or
foregone to
30 September 2012
Balance at
30 September 2012
Exercisable
0
0
30,000
150,000
0
0
15,000
22,500
217,500
0
0
0
0
0
0
0
0
0
0
0
(30,000)
(150,000)
0
0
(15,000)
(22,500)
(217,500)
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
49
Table 7c(i). Current long-term Incentive plan opportunities (by offer) – Performance Rights
2013
Granted
Performance
Rights
(number)
Vested
Performance
Rights
(number)
Grant date Tranche(s)
Value per
right at
grant date
($)
Total value
at grant
date ($)
Vesting, last
exercise
and
expiry date
Expensed
at 30
September
2013 ($)
Performance
Rights % of
remuneration
M G Jackman
285,603
292,951
292,951
278,255
278,255
278,255
H S Browning
200,000
0 10 November
2009
0 10 November
2009
0 10 November
2009
0 10 November
2009
0 10 November
2009
0 10 November
2009
0 23 December
2011
3
2
3
1
2
3
0.12
0.12
0.12
0.11
0.12
0.12
34,130 10 November
2013
33,836 10 November
2013
35,008 10 November
2014
30,052 10 November
2013
32,138 10 November
2014
33,251 10 November
2015
43,475
3%
1,2,3 0.15 to 0.16
30,267
25,145
20%
9 November
2013 to
9 November
2015
305,551
0 29 June 2011
2,3 0. 21 to 0.24
45,833 10 November
2013 to
10 November
2014
A T Dage
600,000
0 23 December
2011
1,2,3 0.15 to 0.16
90,800
(see note)
(76,713)
0%
R I Davey
603,482
75,000
0 29 June 2011
2,3 0.21 to 0.24
124,720
0 23 December
2011
1,2,3 0.15 to 0.16
11,350
9,804
2%
9 November
2013 to
9 November
2015
122,630
0 29 June 2011
2,3 0.21 to 0.24
18,395 10 November
2013 to
10 November
2014
M G De Wit
D W Goodfellow
0
0
0
0
0
0
0
0
0
0
0
0
0
0
M G Hosking
700,000
0 23 December
2011
1,2,3 0.15 to 0.16
105,933
(see note)
(88,890)
0%
0%
0%
696,325
0 29 June 2011
2,3 0.21 to 0.24
143,907
50
Table 7c(i). Current long-term Incentive plan opportunities (by offer) – Performance Rights (continued)
2012
Granted
Performance
Rights
(number)
Vested
Performance
Rights
(number)
Grant date Tranche(s)
Value per
right at
grant date
($)
Total value
at grant
date ($)
Vesting, last
exercise
and
expiry date
Expensed
at 30
September
2012 ($)
Performance
Rights % of
remuneration
M G Jackman
285,603
285,603
292,951
292,951
292,951
278,255
278,255
278,255
A T Dage
600,000
0 10 November
2009
0 10 November
2009
0 10 November
2009
0 10 November
2009
0 10 November
2009
0 10 November
2009
0 10 November
2009
0 10 November
2009
0 23 December
2011
2
3
1
2
3
1
2
3
0.12
0.12
0.11
0.12
0.12
0.11
0.12
0.12
32,987 10 November
2012
34,130 10 November
2013
31,639 10 November
2012
33,836 10 November
2013
35,008 10 November
2014
30,052 10 November
2013
32,138 10 November
2014
33,251 10 November
2015
65,017
5%
1,2,3 0.15 to 0.16
90,800
72,559
6%
9 November
2013 to
9 November
2015
603,482
0 29 June 2011
1,2,3 0.17 to 0.24
124,720 10 November
2012 to
10 November
2014
M G De Wit
V Erasmus
D W Goodfellow
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
M G Hosking
700,000
0 23 December
2011
1,2,3 0.15 to 0.16
105,933
9 November
2013 to 9
November
2015
0
0
0
84,096
0%
0%
0%
6%
696,325
0 29 June 2011
1,2,3 0.17 to 0.24
143,907 10 November
2012 to 10
November
2014
S C Hughes
450,000
0 23 December
2011
1,2,3 0.15 to 0.16
68,100
(see note)
(29,714)
0%
467,559
0 29 June 2011
1,2,3 0.17 to 0.24
96,629
S J D McClure
350,000
0 23 December
2011
1,2,3 0.15 to 0.16
52,967
(see note)
(22,421)
0%
352,809
0 29 June 2011
1,2,3 0.17 to 0.24
72,914
Notes:
• Details of the performance rights in Tranche 2 of the CEO’s 2009 Allocation, Tranche 1 of the CEO’s 2010 Allocation and Tranche 1 of the
2010 Senior Executive grant that lapsed are provided in Section 4.E5(c). No other performance rights lapsed and no performance rights were
exercised during the 2013 financial year.
• All unvested Performance Rights held by Mr. Dage, Mr. Hosking, Mr Hughes and Mr McClure lapsed when they ceased employment with Elders.
51
Table 7c(ii). Current Long-term Incentive plan opportunities (by offer) – Service Rights
2013
Number
granted
Number
forfeited
Closing
number
Number
vested
Vesting and
expiry date
Value at
grant date
($ per right)
Expensed at
30 September
2013 ($)
Service
Rights % of
remuneration
H S Browning
A T Dage
M G Hosking
Total
2012
0
0
0
0
0
0
0
0
0
0
0
0
289,586
1 August 2013
1,214,391
1 August 2013
2,074,585
1 August 2013
3,578,562
-
0.61
0.61
0.61
-
48,684
204,160
348,773
601,617
39%
15%
29%
Number
granted
Number
forfeited
Closing
number
Number
vested
Vesting and
expiry date
Value at
grant date
($ per right)
Expensed at
30 September
2012 ($)
Service
Rights % of
remuneration
A T Dage
325,314
M G Hosking
555,746
S C Hughes
205,199
0
0
0
1,214,391
2,074,585
766,001
S J D McClure
179,549
(670,251)
0
Total
1,265,808
(670,251)
4,054,977
0
0
0
0
0
1 August 2013
1 August 2013
1 August 2013
1 August 2013
0.61
0.61
0.61
0.61
321,586
549,375
331,624
27%
41%
28%
(115,331)
(38%)
-
-
1,087,254
52
10 Year Summary Financial Results
Sept 2013
Sept 2012
Sept 2011
Sept 2010
June 2009
June 2008
June 2007
June 2006
June 2005
June 2004
2,172.6
2,358.7
2,154.4
2,902.0
3,312.1
3,228.5
3,355.8
3,174.7
2,707.3
2,247.3
2,421.0
2,251.0
3,049.3
3,496.1
3,366.9
3,422.6
3,232.0
2,791.0
1,962.7
1,983.4
(195.6)
-
(17.2)
(199.5)
-
(24.1)
(436.5)
(42.0)
(58.2)
(1.7)
(442.2)
(3.1)
(505.2)
(63.0)
(81.5)
46.2
-
-
-
-
-
0.11
50.1
31,854
$ million year ended
unless otherwise indicated
Profitability
Sales revenue
Total revenue
Reported EBIT* by Segment
Rural Services
Financial Services
Forestry
Automotive
Property
Other
Total EBIT
Underlying** EBIT
Underlying** profit before tax
Tax (expense)/benefit
Abnormal & non-recurring items
after tax
Non-controlling interests
Statutory profit
Underlying profit after tax
Cash flow 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)
Market capitalisation^
Number of shareholders^
Ratios and statistics
Reported earnings per share^
(cents)
Return on shareholders’ equity
- Underlying profit
- Reported profit
Net tangible assets per share ($)^
Gearing†
Dividend payout ratio
18.7
-
4.2
-
13.7
(221.4)
(74.1)
(390.6)
(158.6)
22.3
(63.4)
(59.8)
-
20.9
22.4
61.4
26.2
-
(61.7)
(36.9)
(384.0)
16.8
(35.0)
(6.2)
94.0
171.7
114.8
21.0
15.3
-
(17.9)
(389.0)
32.4
13.8
(1.6)
15.9
-
(50.8)
(179.8)
2.6
(13.7)
3.7
(404.4)
(202.5)
(388.5)
(47.8)
(5.1)
(217.6)
(15.1)
(1.9)
(415.4)
(26.9)
9.6
36.4
84.2
56.3
27.2
61.6
9.5
30.4
(16.2)
168.8
169.4
129.4
20.2
(1.0)
(2.8)
105.4
106.4
65.8
26.9
39.9
16.3
16.3
(8.4)
156.8
157.1
118.2
(21.4)
(0.9)
(9.0)
87.4
88.3
(110.5)
(370.8)
(14.1)
85.0
127.4
1,006.1
747.8
1,296.2
1,196.6
1,227.9
-
-
-
-
8.2
0.28^
233.5
4.0
5.5
9.5
73.4
8.9
1.10^
858.4
4.0
5.5
9.5
65.4
8.9
2.78^
2,045
4.0
5.0
9.0
59.9
1.8
2.10^
1,514
0.25
112.1
0.29
130.1
0.39^
175.0
4.4
-
(30.7)
(81.7)
38.8
18.1
(1.7)
(73.8)
(3.2)
(60.6)
13.2
2.5
551.8
-
-
-
-
-
(3.2)
(395.4)
9.0
(23.8)
604.7
-
-
-
-
-
-
-
-
-
-
-
26.8
-
32.2
99.3
(3.3)
(11.8)
143.2
131.3
106.4
(47.9)
(13.2)
(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
(12.2)
(44.2)
(5.9)
23.8
62.8
121.1
961.2
4.0
4.0
8.0
52.3
-
1.58^
1,041
32,741
34,954
40,075
33,361
32,187
31,956
33,337
35,394
40,028
Ordinary shares on issue^
455,013,329 448,598,480 448,598,480 448,598,480 819,165,045 780,545,644 735,640,128 720,911,089 663,243,696 659,138,427
Share issues
-
-
-
Share
placement
Share purchase
plan, 10:1 share
consolidation
Dividend
reinvestment
plan, (fully
underwritten)
Dividend
reinvestment
plan, (fully
underwritten),
conversion
of options and
convertible
notes
Dividend
reinvestment
plan,
conversion of
options and
convertible
notes
Dividend
reinvestment
plan,
conversion
of options
institutional
placement
Dividend
reinvestment
plan,
conversion of
options
Dividend
reinvestment
plan,
conversion of
options
(112.4)
(13.5)
(88.1)
(51.1)
(51.5)
4.8
14.5
13.1
8.9
3.6
(136.3)
(1,093.5)
0.07
552
-
2.4
(11.0)
0.40
54
-
0.8
(65.4)
0.55
57
-
(1.5)
(21.6)
1.50
43
-
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
Reported earnings before interest and tax (inclusive of items excluded from underlying profit).
*
** Underlying profit and earnings results exclude items unrelated to ongoing operating performance or relating to discontinued operations.
#
^ As at period end. Comparison to 2010 and preceding years should take into account 10:1 share consolidation completed January 2010.
† As measured by ratio of net interest-bearing debt/shareholders equity.
In respect of dividends declared for the financial year.
6.5
2.5
0.94
0
222
53
54
Elders Limited
Annual Financial Report
30 September 2013
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
Corporate Information
Summary of Significant Accounting Policies
Significant Accounting Judgements, Estimates and Assumptions
Revenue and Expenses
Income Tax
Receivables
Livestock
Inventory
Derivative Financial Instruments
1
2
3
4
5
6
7
8
9
10 Other Financial Assets
11 Investments in Associates and Joint Ventures
12 Property, Plant and Equipment
13 Investment Properties
14 Intangibles
15 Other Assets
16 Trade and Other Payables
17 Interest Bearing Loans and Borrowings
18 Provisions
19 Contributed Equity
20 Hybrid Equity
21 Reserves
22 Retained Earnings
23 Dividends
24 Cash Flow Statement Reconciliation
25 Expenditure Commitments
26 Contingent Liabilities
27 Segment Information
28 Supplementary Statement of Net Debt
29 Auditors Remuneration
30 Investments in Controlled Entities
31 Key Management Personnel
32 Share Based Payment Plans
33 Related Party Disclosures
34 Earnings Per Share
35 Financial Instruments
36 Business Combinations – Changes in the Composition of the Entity
37 Discontinued Operations
38 Parent Entity
39 Subsequent Events
Directors’ Declaration
Independent Auditor’s Report
56
57
58
59
60
60
60
71
72
74
76
77
78
78
78
79
80
80
81
83
83
84
86
87
87
87
88
89
89
90
91
91
94
96
97
101
104
104
106
107
111
113
115
115
116
117
55
Consolidated Statement of Comprehensive Income
For the Year ended 30 September 2013
Note
2013
$000
2012
$000
Continuing operations
Sales revenue
Cost of sales
Other revenues
Expenses
Share of profit of associates and joint ventures
Profit/(loss) on sale of non current assets
Interest revenue
Finance costs
Profit/(loss) from continuing operations before income tax expense
Income tax (expense)/benefit
Profit/(loss) from continuing operations after income tax expense
Net profit/(loss) of discontinued operations, net of tax
Net profit/(loss) for the period
Items that may be reclassified to profit and loss
Foreign currency translation
Cash flow hedge and fair value of derivatives
Income tax on items of other comprehensive income
Other comprehensive income/(loss) for the period, net of tax
1,657,112
1,813,205
(1,332,713)
(1,426,921)
2,415
13,929
(568,777)
(457,593)
4
4
4
11
4
4
4
5
11,475
25,939
8,792
(31,032)
(226,789)
(65,966)
(292,755)
37
(209,115)
(501,870)
2,869
1,423
(53)
4,239
14,097
179
30,753
(38,626)
(50,977)
38,313
(12,664)
(44,709)
(57,373)
4,398
(1,755)
283
2,926
Total comprehensive income/(loss) for the period
(497,631)
(54,447)
Profit/(loss) for the period is attributable to:
Non-controlling interest
Owners of the parent
Total comprehensive income/(loss) for the period is attributable to:
Non-controlling interest
Owners 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)
The accompanying notes form an integral part of this consolidated statement of comprehensive income.
3,385
22
(505,255)
(501,870)
3,227
(60,600)
(57,373)
4,225
(501,856)
(497,631)
3,076
(57,523)
(54,447)
34
34
34
34
34
34
(112.4)¢
(112.4)¢
(13.5)¢
(13.5)¢
(65.8)¢
(65.8)¢
(46.6)¢
(46.6)¢
(3.5)¢
(3.5)¢
(10.0)¢
(10.0)¢
56
Consolidated Statement of Financial Position
As at 30 September 2013
Current assets
Cash and cash equivalents
Trade and other receivables
Livestock
Inventory
Derivative financial instruments
Non current assets classified as held for sale
Other
Current tax assets
Total current assets
Non current assets
Receivables
Other financial assets
Investments in associates and joint ventures
Property, plant and equipment
Intangibles
Deferred tax assets
Other
Total non current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Interest bearing loans and borrowings
Current tax payable
Provisions
Total current liabilities
Non current liabilities
Payables
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Hybrid equity
Reserves
Retained earnings
Total parent entity equity interest
Non-controlling interests
Total equity
The accompanying notes form an integral part of this consolidated statement of financial position.
Note
2013
$000
2012
$000
24(b)
39,927
91,969
6
7
8
9
37
15
5
6
10
11
12
14
5
15
16
9
17
5
18
16
17
5
18
19
20
21
22
340,186
498,015
36,671
67,382
116,311
166,975
1,220
6,100
3,947
1,363
1,593
71,474
17,704
-
545,725
915,112
4,175
19,538
62,700
35,096
5,615
8,068
-
18,522
1,330
80,539
95,684
277,257
89,575
31,883
135,192
594,790
680,917
1,509,902
254,530
386,606
493
2,010
268,116
302,987
-
1,566
73,630
121,065
596,769
814,234
-
26,569
3,468
7,911
1,413
82,842
34,722
24,909
37,948
143,886
634,717
958,120
46,200
551,782
1,269,153
1,270,323
145,151
145,151
(21,825)
(27,310)
(1,350,520)
(844,029)
41,959
544,135
4,241
7,647
46,200
551,782
57
Note
2013
$000
2012
$000
5,526,735
6,148,572
(5,570,544)
(6,157,859)
16,344
10,263
(35,293)
(27,588)
(1,503)
24(a)
(81,586)
9,069
32,053
(36,631)
(16,531)
23,855
2,528
(13,622)
(19,611)
(280)
-
-
(18,314)
(1,261)
219
(14,994)
(15,862)
63,298
27,390
413
-
566
15,597
(189)
2,917
4,813
84,648
73,240
925
684
2,730
-
28,168
(3,232)
-
2,875
51,822
10
36
62,333
101,665
(113,847)
(142,420)
(430)
(3,170)
(480)
(2,796)
(55,104)
(43,995)
(52,042)
91,969
39,927
10,355
81,614
91,969
24(b)
Consolidated Statement of Cash Flows
For the Year ended 30 September 2013
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Interest and other costs of finance paid
GST (paid)/refunded
Income taxes (paid)/refunded
Net operating cash flows
Cash flow from investing activities
Payment for property, plant and equipment
Purchase of equity accounted investments
Payment for intangibles
Payment for controlled entities, net of cash acquired
Payment for design and development capitalised
Proceeds from sale of non current assets held for sale
Proceeds from sale of equity accounted investments
Proceeds from sale of property, plant and equipment
Proceeds from sale of investment properties
Proceeds from sale of intangibles
Proceeds from disposal of controlled entity
Payment for acquisition of non-controlling interest
Repayment of loans by associated entities
Loans repaid by growers
Net investing cash flows
Cash flow from financing activities
Proceeds from sale of reserved shares
Proceeds from borrowings
Repayment of borrowings
Principal repayments of lease liabilities
Partnership profit distributions/dividends paid
Net financing cash flows
Net increase/(decrease) in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
The accompanying notes form an integral part of this consolidated statement of cash flows.
58
Consolidated Statement of Changes in Equity
For the Year ended 30 September 2013
$000
As at 1 October 2012
Profit/(loss) for the period
Other comprehensive income/(loss):
Foreign currency translation
Net gains/(losses) on cash flow hedges
Income tax on items of other comprehensive income
Total comprehensive income/(loss) for the period
Transactions with owners in their capacity as owners:
Tax effect on share issue costs
Proceeds from sale of reserved shares
Partnership profit distributions/dividends paid
Derecognition of subsidiary
Excess paid for purchase of non-controlling interest
Cost of share based payments
Reallocation of equity
As at 30 September 2013
As at 1 October 2011
Profit/(loss) for the period
Other comprehensive income/(loss):
Foreign currency translation
Net gains/(losses) on cash flow hedges
Income tax on items of other comprehensive income
Total comprehensive income/(loss) for the period
Transactions with owners in their capacity as owners:
Tax effect on share issue costs
(1,170)
Proceeds from sale of reserved shares
Partnership profit distributions/dividends paid
Acquisition of non-controlling interest
Acquisition of subsidiary
Excess paid for purchase of non-controlling interest
Cost of share based payments
Reallocation of equity
As at 30 September 2012
Issued
capital
Hybrid
equity
Reserves
Retained
earnings
Non-
controlling
interest
Total
equity
1,270,323
145,151
(27,310)
(844,029)
7,647
551,782
-
-
-
-
-
(1,170)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(505,255)
3,385
(501,870)
2,029
1,423
(53)
-
-
-
840
-
-
2,869
1,423
(53)
3,399
(505,255)
4,225
(497,631)
-
10
-
-
12
818
-
-
-
-
-
-
1,246
(1,236)
-
-
(3,170)
(4,461)
-
-
-
(1,170)
10
(3,170)
(4,461)
12
818
10
1,269,153
145,151
(21,825)
(1,350,520)
4,241
46,200
1,271,493
145,151
(33,592)
(781,322)
-
(60,600)
2,953
3,227
604,683
(57,373)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,549
(1,755)
283
-
-
-
(151)
-
-
4,398
(1,755)
283
3,077
(60,600)
3,076
(54,447)
-
36
-
-
-
(1,077)
2,139
2,107
-
-
-
-
-
-
-
(2,107)
-
-
(1,170)
36
(2,796)
(2,796)
2,198
2,216
-
-
-
2,198
2,216
(1,077)
2,139
-
1,270,323
145,151
(27,310)
(844,029)
7,647
551,782
The accompanying notes form an integral part of this consolidated statement of changes in equity.
59
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 1. Corporate Information
The consolidated financial report of Elders Limited for the year ended 30 September 2013 was authorised for issue in accordance with a resolution
of the Directors on 18 November 2013.
Elders Limited (the Parent) is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange.
The nature of the operations and principal activities of the Group are described in the Directors’ Report and note 27.
Note 2. Summary of Significant Accounting Policies
(a) Basis of preparation
The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act
2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board (AASB). The financial
report has also been prepared on a historical cost basis, except for investment properties and derivative financial instruments which have been
measured at fair value, and biological assets that are measured at fair value less costs to sell.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) unless otherwise stated.
The Group is a for-profit entity.
In preparing the financial report, the Directors have made an assessment of the ability of the Group to continue as a going concern. In doing so,
the Directors have considered the cash flow requirements of business operations, availability of funding, realisation of assets and expected
settlement of liabilities.
In order for the Group to achieve its operational and debt obligations the Group will be required to meet forecast trading results and cash flows, and
to complete the sale of certain assets or to otherwise obtain additional funding. The Group uses best estimate assumptions in the development of
trading and cash flow forecasts. These assumptions are subject to influences and events outside the control of the Group. The current domestic and
international trading environment presents challenges in terms of forecasting sales prices, volumes, margins and operating cash flows. Whilst the
Directors have instituted measures to minimise the cash demands of the business, this environment creates material uncertainties over the future
trading results and cash flows.
The most recent facilities agreement between the Group and its banking syndicate requires the Group to amortise its facilities in a staged fashion.
In order to meet these amortisation obligations, the Group will be required to realise certain investments and assets, for which the Directors have
instituted an orderly divestment process, or to otherwise obtain additional or replacement debt or equity funding.
At the date of this report, the following material uncertainties arise in relation to the preparation of this financial report: a) whether the Group will
continue to trade within expectations; b) whether asset realisation program initiatives will be achieved in respect of quantum and timing of sales;
c) whether debt amortisation milestones will be met or be supplanted in whole or in part by alternative capital or funding proposals. Resolution of
these material uncertainties is fundamental to the ability of the Group to pay its debts as and when they become due and payable and to continue as
a going concern.
Subject to resolution of the material uncertainties set out above in a manner favourable to the Group, the Directors believe at the date of the signing
of the financial report there are reasonable grounds to believe that the Group will meet its debts as and when they become due and payable.
Should the Group not achieve anticipated trading or asset realisation outcomes, otherwise continue to receive the ongoing support of its financiers or
obtain additional or replacement debt or equity funding, there is material uncertainty whether the Group will continue as a going concern and
therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial report.
(b) Compliance with IFRS
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board.
(c) New accounting standards and interpretations
(i) New and Revised Accounting Standards
A number of new amendments to standards and interpretations became operative for the financial year ended 30 September 2013 and have been
applied in preparing these consolidated financial statements. None of these have materially impacted the Group and its policies. The Group has not
elected to early adopt any new standard, interpretation or amendments that has been issued but is not yet effective.
(ii) Accounting Standards and Interpretations issued but not yet effective
Certain new accounting standards and interpretations have been published that are not mandatory for the financial year ended 30 September 2013
but are available for early adoption and have not been applied in preparing this report. None of the following are expected to have a significant effect
on the Group and its policies:
60
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(c) New accounting standards and interpretations (continued)
• AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards Arising from AASB 9. These standards address
the classification, measurement and derecognition of financial assets and financial liabilities.
• AASB 10 Consolidated Financial Statements introduces a new definition of control and addresses whether an entity should be included in the
consolidated financial statements of the parent company.
• AASB 12 Disclosure of Interests in Other Entities relates to disclosure requirements for all forms of interests in other entities, including subsidiaries,
joint arrangements, associates and unconsolidated structured entities.
• AASB 13 Fair Value Measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB 13 introduce new guidance
on fair value measurement and disclosure requirements when fair value is permitted by accounting standards.
• The amendments to AASB 119 Employee Benefits and AASB 2011-10 Amendments to Australian Accounting Standards arising from AASB 119
introduces changes to the presentation of employee benefits.
The standards above become mandatory for the September 2014 financial year, with the exception of AASB 9, which becomes mandatory for the
September 2016 financial year.
(d) Basis of consolidation
The consolidated financial statements comprise the financial statements of Elders Limited and its subsidiaries and special purpose entities (as
outlined in note 30) as at and for the period ended 30 September each year (the Group). Interests in associates and joint ventures are equity
accounted and are not part of the consolidated group (see note 11).
Subsidiaries are all those entities over which the Group has the power to govern the financial and operating policies so as to obtain benefits from
their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether
the Group controls another entity.
Special purpose entities are those entities over which the Group has no ownership interest but in effect the substance of the relationship is such that
the Group controls the entity so as to obtain the majority of benefits from its operation.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances, transactions, unrealised gains and losses resulting from intra-group
transactions and dividends have been eliminated in full.
Subsidiaries and special purpose entities 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 accounting records of the parent entity less any impairment
charges. Dividends received from subsidiaries are recorded as a component of other revenues in the separate income statement of the parent, and do
not impact the recorded cost of the investment. Upon receipt of dividend payments from subsidiaries, the parent will assess whether any indicators of
impairment of the carrying value of the investment in the subsidiary exist. Where such indicators exist, to the extent that the carrying value of the
investment exceeds its recoverable amount, an impairment loss is recognised.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method of accounting involves
recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in
the acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values (see note 2(e)).
The difference between the above items and the fair value of the consideration (including the fair value of any pre-existing investment in the acquiree)
is goodwill or a discount on acquisition.
Non-controlling interests are allocated their share of net profit after tax in the statement of comprehensive income and are presented within equity
in the consolidated statement of financial position, separately from the equity of the owners of the parent. Total comprehensive income within a
subsidiary is attributed to the non-controlling interest even if that results in a deficit balance.
A change in the ownership interest of a subsidiary that does not result in a loss of control, is accounted for as an equity transaction. If the Group loses
control over a subsidiary, it:
• Derecognises the assets (including goodwill) and liabilities of the subsidiary.
• Derecognises the carrying amount of any non-controlling interest.
• Derecognises the cumulative translation differences, recorded in equity.
• Recognises the fair value of the consideration received.
• Recognises the fair value of any investment retained.
• Recognises any surplus or deficit in profit or loss.
• Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings,
as appropriate.
61
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(e) Business combinations
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration
transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination,
the Group elects whether it measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree’s
identifiable net assets. Acquisition costs incurred are expensed and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in
accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition date fair value and any resulting
gain or loss is recognised in profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair
value of the contingent consideration which is deemed to be an asset or liability will be recognised in accordance with AASB 139 either in profit or
loss or as a charge to other comprehensive income. If the contingent consideration is classified as equity, it shall not be remeasured until it is finally
settled within equity. In instances where the contingent consideration does not fall within the scope of AASB 139, it is measured in accordance with
the appropriate AASB standard.
(f) Operating segments
An operating segment is a component of an entity that engages in business activities from which it may earn revenues or incur expenses (including
revenues and expenses relating to transactions with other components of the same entity), whose operating results are reviewed regularly by the
entity’s chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which
discrete financial information is available. This includes start up operations which are yet to earn revenues. Management will also consider other factors
in determining operating segments, such as the existence of a line manager and the level of segment information presented to the Board of Directors.
The Group aggregates two or more operating segments when they have similar economic characteristics, and the segments are similar in each of the
following respects:
• Nature of product and services
• Nature of production processes
• Type or class of customer for the products and services
• Method used to distribute the products or provide the services, and if applicable
• Nature of regulatory environment
Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However, an operating segment that does not
meet the quantitative criteria is still reported separately where information about the segment would be useful to users of the financial statements.
(g) Foreign currency translation
(i) Functional and presentation currency
Both the functional and presentation currency of Elders Limited and its Australian subsidiaries is Australian dollars (AUD). Subsidiaries incorporated in
countries other than Australia (see note 30), which have a functional currency other than Australian Dollars, are translated to the presentation currency.
(ii) Transactions and balances
Transactions in foreign currencies are initially recorded by the Group entities at their respective functional currency spot rates at the date the
transaction first qualifies for recognition. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange
ruling at the reporting date.
Differences arising on settlement or translation of monetary items are recognised in profit and loss with the exception of monetary items that are
designated as part of the hedge of the Group’s net investment of a foreign operation. These are recognised in other comprehensive income until the
net investment is disposed, at which time, the cumulative amount is reclassified to profit and loss. Tax charges and credits attributable to exchange
differences on those monetary items are also recorded in other comprehensive income.
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. The gain or loss arising on the retranslation of non-monetary items is treated in line with the recognition of gain or loss on
change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in other comprehensive income or
profit or loss is also recognised in other comprehensive income or profit or loss, respectively).
(iii) Translation of Group Companies’ functional currency to presentation currency
The results of subsidiaries incorporated in countries other than Australia, are translated into Australian Dollars (presentation currency) as at the date
of each transaction. Assets and liabilities are translated at exchange rates prevailing at reporting date. Exchange variations resulting from the
translation are recognised in the foreign currency translation reserve in equity.
62
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(g) Foreign currency translation (continued)
On consolidation, exchange differences arising from the translation of net investments in overseas subsidiaries are taken to the foreign currency
translation reserve. If such a subsidiary was sold, the proportionate share of exchange differences would be transferred out of equity and recognised
in profit or loss.
(h) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position comprise cash at banks and on hand and short-term deposits with a maturity of three
months or less. For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and cash deposits as defined
above, net of outstanding bank overdrafts.
(i) Trade and other receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest rate method, less an
allowance for impairment.
Collectability of trade receivables are reviewed on an ongoing basis at an operating unit level. Individual debts that are known to be uncollectible are
written off when identified. An impairment provision is recognised when there is objective evidence that the Group will not be able to collect the
receivable. Financial difficulties of the debtor, default payment or debts greater than 60 days overdue are considered objective evidence of
impairment. The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows,
discounted at the original effective interest rate.
(j)
Inventory
Inventories are valued at the lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and the estimated costs necessary to make the sale.
Costs incurred in bringing each product to its present location are accounted for as follows:
Raw materials – purchase cost is on the first in, first out basis. The cost of purchase comprises the purchase price, import duties and other taxes
(other than those subsequently recoverable by the entity from the taxing authorities), transport, handling and other costs directly attributable to the
acquisition of raw materials. Volume discounts and rebates are included in determining the cost of purchase.
Finished goods and work in progress – costs of direct materials and labour and a proportion of variable and fixed manufacturing overheads based on
normal operating capacity. Costs are assigned on the basis of weighted average costs.
(k) Livestock
The Group holds biological assets in the form of livestock. These assets are measured at fair value, which has been determined based upon various
assumptions, including livestock prices, less costs to sell. These assumptions reflect the different categories of livestock held. The market value
increments or decrements are recorded in profit and loss.
(l) Derivative financial instruments and hedging
The Group uses derivative financial instruments (including forward currency contracts and interest rate swaps) to hedge its risks associated with
foreign currency and interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a
derivative contract is entered into and are subsequently remeasured to fair value. Derivatives are carried as financial assets when their fair value is
positive and as financial liabilities when their fair value is negative. Derivative assets and liabilities are classified as non-current in the statement of
financial position when the remaining maturity is more than 12 months, or current when the remaining maturity is less than 12 months.
The fair values of forward currency contracts are calculated by reference to current forward exchange rates for contracts with similar maturity profiles.
The fair value of interest rate swaps are determined using a valuation technique based on cash flows discounted to present value using current
market interest rates. Any gains or losses arising from changes in fair value of derivatives are taken directly to profit and loss, except for the effective
portion of cash flow hedges, which is recognised in other comprehensive income.
For the purposes of hedge accounting, hedges are classified as cash flow hedges where they hedge the exposure to variability in cash flows that is
either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecasted transaction or the foreign currency
risk in an unrecognised firm commitment. The Group has cash flow hedges attributable to future foreign currency purchases and future foreign
currency sales.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply
hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation includes identification of the
63
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(l) Derivative financial instruments and hedging (continued)
hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the entity will assess the effectiveness of changes in
the hedging instrument’s fair value in offsetting the exposure to changes in the hedged item’s fair value or cash flows attributable to the hedged risk.
Such hedges are expected to be highly effective in achieving offsetting changes in fair value or cash flows and are assessed on an ongoing basis to
determine that they actually have been highly effective throughout the financial reporting periods for which they were designated.
The effective portion of the gain or loss on the hedging instrument is recognised directly in other comprehensive income in the net unrealised gains
reserve, while any ineffective portion is recognised immediately in profit and loss. Amounts recognised as other comprehensive income are
transferred to profit and loss when the hedged transaction affects profit or loss, such as when the hedged financial income or financial expense is
recognised or when a forecast sale occurs. When the hedged item is the cost of a non-financial asset or non-financial liability, the amounts recognised
as other comprehensive income are transferred to the initial carrying amount of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur, the cumulative gain or loss previously recognised in equity is transferred to profit and loss. If
the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, any
cumulative gain or loss previously recognised in other comprehensive income remains in other comprehensive income until the forecast transaction
or firm commitment affects profit and loss.
(m) Non current assets and disposal groups held for sale and discontinued operations
Non current assets and disposal groups are classified as held for sale and measured at the lower of their carrying amount and fair value less costs to
sell. Non current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction instead of use. This condition is regarded as met when the sale is highly probable and the asset or disposal group is available for immediate
sale in its present condition. Property, plant and equipment and intangible assets once classified as held for sale are not depreciated or amortised.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group). 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 classified 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 statement
of comprehensive income and the assets and liabilities are presented separately on the face of the statement of financial position.
(n)
Investments and other financial assets
Investments and financial assets in the scope of AASB 139 are categorised as either financial assets at fair value through the profit or loss, loans and
receivables, held to maturity investments, or available for sale assets. The classification depends on the purpose for which the assets were acquired
or originated. Designation is re-evaluated at each reporting date, but there are restrictions on reclassifying to other categories. When financial assets
are recognised initially, they are measured at fair value, plus, in the case of assets not at fair value through profit and loss, directly attributable
transaction costs.
Recognition and derecognition
All regular way purchases and sales of financial assets are recognised on the trade date i.e., the date that the Group commits to purchase the asset.
Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period
established generally by regulation or convention in the market place. Financial assets are derecognised when the right to receive cash flows from the
financial assets has expired or when the entity transfers substantially all the risks and rewards of the financial assets. If the entity neither retains nor
transfers substantially all of the risks and rewards, it derecognises the asset if it has transferred control of the assets.
Subsequent measurement
(i) Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in the category “financial assets at fair value through profit or loss”. Financial assets are
classified as held for trading if they are acquired for the purpose of selling in the near term with the intention of making a profit. Derivatives are also
classified as held for trading unless they are designated as effective hedging instruments. Gains or losses on financial assets held for trading are
recognised in profit or loss and the related assets are classified as current assets in the statement of financial position.
(ii) Loans and receivables
Loans and receivables including loan notes and loans to key management personnel are non derivative financial assets with fixed 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 profit and loss when the loans and receivables are derecognised or impaired. These are included in current assets, except for those with
maturities greater than 12 months after balance date, which are classified as non-current.
The fair value of investments that are actively traded in organised financial markets are determined by reference to quoted market bid prices at
the close of business on the reporting date. For investments with no active market, fair values are determined using valuation techniques.
64
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(n)
Investments and other financial assets (continued)
Such techniques include using recent arms length market transactions, reference to the current market value of another instrument that is
substantially the same, discounted cash flow analysis and option pricing models, making as much use of available and supportable market data as
possible and keeping judgemental inputs to a minimum.
(o)
Investments in associates and joint ventures
The Group’s investments in its associates and joint ventures (equity accounted investments) are accounted for using the equity method of accounting
in the consolidated financial statements and at cost in the parent. Associates are entities over which the Group has significant influence and that are
neither subsidiaries nor joint ventures. The Group generally deems they have significant influence if they have over 20% of the voting rights. A joint
venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control.
Under the equity method, equity accounted investments are carried in the consolidated financial statements at cost plus post acquisition changes in
the Group’s share of net assets of the investment. Goodwill relating to the investment is included in the carrying amount of the investment and is
neither amortised nor individually tested for impairment.
The income statement reflects the Group’s share of the results of operations of the associate. When there has been a change recognised directly in
the equity of the associate, the Group recognises its share of any changes and discloses this, when applicable, in the statement of changes in equity.
Unrealised gains and losses resulting from transactions between the Group and the associate are eliminated to the extent of the interest in the
associate. The Group’s share of profit of an associate is shown on the face of the income statement. This is the profit attributable to equity holders of
the associate and, therefore, is profit after tax and non-controlling interests in the subsidiaries of the associate.
After application of the equity method, the Group determines whether it is necessary to recognise any impairment loss with respect to an additional
impairment loss on its net investment in its associate. The Group determines at each reporting date whether there is any objective evidence that the
investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable
amount of the associate and its carrying value and recognises the amount in the “share of profit of an associate” in the income statement.
Upon loss of significant influence over the associate, the Group measures and recognises any retaining investment at its fair value. Any difference
between the carrying amount of the associate upon loss of significant influence and the fair value of the retained investment and proceeds from
disposal is recognised in profit and loss.
The reporting dates of the equity accounted investments are disclosed in note 11 and the equity accounted investment accounting policies conform
to those used by the Group for like transactions and events on similar circumstances.
(p) Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Such costs include
the cost of replacing part of the property, plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are
met. When significant parts of property, plant and equipment are required to be replaced at intervals, the Group recognises such parts as individual
assets with specific useful lives and depreciates them accordingly. Likewise, when a major inspection is performed, its cost is recognised in the
carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. All other repairs and maintenance are recognised
in profit or loss as incurred.
Property, plant and equipment, excluding freehold land and assets under construction, are depreciated over the estimated useful economic life of
specific assets as follows:
Buildings
Leasehold improvements
Plant and equipment – owned
Plant and equipment – leased
Network infrastructure
Life
50 years
Lease term
3 to 10 years
Lease term
5 to 25 years
Method
Straight line
Straight line
Straight line and units of production
Straight line
Straight line
The useful lives are consistent with those of the prior period. The assets’ residual values, useful lives and amortisation methods are reviewed, and
adjusted if appropriate at each financial year end.
Derecognition
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal.
Gains and losses on disposal are determined by comparing the proceeds with the carrying amount. These are included in the statement of
comprehensive income.
65
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(q)
Investment properties
Investment properties are initially measured at cost, including transaction costs. Subsequent to initial recognition, investment properties are
measured at fair value, which is based on active market prices, adjusted if necessary, for the difference in the nature, location or condition of the
specific asset at reporting date. Gains or losses arising from changes in the fair values of investment properties are recognised in profit or loss in the
period in which they arise.
Investment properties are derecognised either when they have been disposed of or, when the investment property is permanently withdrawn from
use and no future benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in
profit and loss in the period of retirement or disposal.
(r) Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at inception date, whether the
fulfilment of the arrangement is dependent on the use of a specific asset or assets or the arrangement conveys a right to use the asset, even if that
right is not explicitly specified in the arrangement.
(i) Group as a lessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the
inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Lease payments are
apportioned between finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the
liability. Finance charges are recognised as an expense in profit or loss.
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.
Operating lease payments are recognised as an expense in the statement of comprehensive income on a straight-line basis over the lease term.
Operating lease incentives are recognised as a liability when received and subsequently reduced by allocating lease payments between rental
expense and reduction of the liability.
(ii) Group as a lessor
Leases in which the Group retains substantially all the risks and benefits of ownership of the leased asset are classified as operating leases. Initial
direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised as an expense over the
lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which they are earned.
(s)
Impairment of non financial assets other than goodwill and indefinite life intangibles
Non financial assets other than goodwill and indefinite life intangibles are tested for impairment whenever events or changes in circumstances
indicate the carrying amount may not be recoverable.
At each reporting date, the Group conducts an internal review of asset values, which is used as a source of information to assess for any indicators of
impairment. External factors, such as changes in expected future processes, technology and economic conditions, are also monitored to assess for
indicators of impairment. If any indication of impairment exists, an estimate of the asset’s recoverable amount is calculated.
An impairment loss is recognised for the amount by which the asset’s carrying value exceeds its recoverable amount. Recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for
which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (cash
generating units). Non financial assets other than goodwill that suffered impairment are tested for possible reversal of the impairment whenever
events or changes in circumstances indicate that impairment may be reversed.
(t) Goodwill and intangibles
Goodwill
Goodwill acquired in a business combination is initially measured at cost, being the excess of the consideration transferred over the fair value of the
Group’s net identifiable assets acquired and liabilities assumed. If this consideration transferred is lower than the fair value of the net identifiable
assets of the subsidiary acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of impairment testing, goodwill acquired
in a business combination is, from the acquisition date, allocated to each of the Group’s cash generating units, or groups of cash generating units, that
are expected to benefit from the synergies of the combination, irrespective of whether the other assets and liabilities of the Group are assigned to those
units or group of units. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is
monitored for internal management purposes, and is not larger than an operating segment determined in accordance with AASB 8.
66
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(t) Goodwill and intangibles (continued)
Impairment is determined by assessing the recoverable amount of the cash-generating unit (group of cash-generating units), to which goodwill relates.
The Group performs its impairment testing every reporting date using discounted cash flows under the fair value less costs to sell methodology and the
value in use methodology, and independent valuations. Further details on methodology and assumptions used are outlined in note 14.
When the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the carrying amount, an impairment loss is
recognised. When goodwill forms part of a cash-generating unit (group of cash-generating units) and an 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 manner is measured based on the relative values of the operation disposed of and the portion of the
cash-generating unit retained. Impairment losses recognised for goodwill are not subsequently reversed.
Intangibles
Intangible assets acquired separately or in a business combination are initially measured at cost. The cost of an intangible asset acquired in a
business combination is its fair value as at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any
accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs,
are not capitalised and expenditure is recognised in profit or loss in the year in which the expenditure is incurred.
The useful lives of these intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over their
useful lives and tested for impairment whenever there is an indication that the intangible asset may be impaired (see note 2(s) for methodology). The
amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year end.
Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for
prospectively by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on
intangible assets with finite lives is recognised in profit and loss in the expense category consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are tested for impairment at each reporting date either individually or at the cash-generating unit level
consistent with the methodology outlined for goodwill above. Such intangibles (brand names) are not amortised.
The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether the indefinite life assessment
continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in accounting
estimate and is thus accounted for on a prospective basis.
Design and Development
Research costs are expensed as incurred. An intangible asset arising from design and development expenditure on an internal project is recognised
only when 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 benefits, 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
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 so capitalised is amortised over the period of expected benefit from the related project.
The carrying value of an intangible asset arising from development expenditure is tested for impairment at each reporting date.
Gains and losses arising from the derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognised in profit and loss when the asset is derecognised. Expenditures on advertising and promotional
expenses are recognised as a component of marketing expense in the statement of comprehensive income when the Group has either the right to
access the goods or has received the services.
(u) Trade and other payables
Trade and other payables are carried at amortised cost and due to their short term nature they are not discounted. They represent liabilities for goods
and services provided to the Group prior to the end of the financial 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. The amounts are unsecured and are usually paid within supplier terms.
Financial guarantees
Financial guarantee contracts issued by the Group are those contracts that require a payment to be made to reimburse the holder for a loss it incurs
because the specific debtor fails to make a payment when due in accordance with the terms of the debt instrument. Financial Guarantee contracts are
recognised initially at fair value, adjusted for transaction costs that are directly attributable to the issuance of the guarantee. Subsequently, the
liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the
amount recognised less cumulative amortisation.
(v)
Interest bearing loans and borrowings
All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method.
67
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(v)
Interest bearing loans and borrowings (continued)
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months
after the reporting date.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale) are capitalised as part of the cost of that asset. All other borrowing costs are
expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
(w) Provisions and employee benefits
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 outflow of
resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
When the Group expects some or all of the provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as
a separate asset, but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of
comprehensive income net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the
reporting date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks
specific to the liability. The increase in the provision resulting from the passage of time is recognised in finance costs.
Warranty provisions
Provisions for warranty-related costs are recognised when the product is sold or service provided. Initial recognition is based on historical experience.
The initial estimate of warranty-related costs is revised at each reporting date.
Restructuring
Restructuring provisions are only recognised when general recognition criteria provisions are fulfilled. Additionally, the Group needs to follow a
detailed formal plan about the business or part of the business concerned, the location and the number of employees affected, a detailed estimate of
the associated costs, and appropriate time line. The people affected have a valid expectation that the restructuring is being carried out or the
implementation has been initiated already.
Employee leave benefits
(i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the reporting date
are recognised in respect of employees’ service up to the reporting date. They are measured at the amounts expected to be paid when the liabilities
are settled. Expenses for non accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.
(ii) Long service leave
The liability for long service leave is recognised in the provision for employee benefits 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 outflows.
Make Good (Restoration)
Where the Group has entered 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.
Onerous contracts
A provision for onerous contracts is recognised when the expected benefits to be derived from a contract are lower than the unavoidable cost of
meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the
contract and the expected net cost of complying with the contract. Before a provision is established, the Group recognises any impairment loss on the
assets associated with that contract.
(x) Share based payments
Equity settled transactions
The Group provides benefits to employees (including key management personnel) in the form of share-based payment transactions, whereby
employees render services in exchange for shares or rights over shares (equity-settled transactions). The cost of equity-settled transactions with
employees is measured by reference to the fair value at grant date. In valuing equity settled transactions, no account is taken of any of the vesting
conditions, other than:
• Non vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment in equity, and
• Conditions that are linked to the price of the shares of Elders Limited (market conditions).
68
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(x) Share based payments (continued)
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance
conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date). At each subsequent
reporting date until vesting, the cumulative charge to the statement of comprehensive income is the product of:
• The grant date fair value of the award.
• The current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the
vesting period and the likelihood of non-market performance conditions being met.
• The expired portion of the vesting period.
The charge to the statement of comprehensive income for the period is the cumulative amount as calculated above less the amounts already charged
in previous periods. There is a corresponding entry to equity.
Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to
do so. Any award subject to a market condition or non-vesting condition is considered to vest irrespective of whether or not that market condition or
non-vesting is fulfilled, provided that all other conditions are satisfied. If a non-vesting condition is within the control of the Group, Company or the
employee, the failure to satisfy the condition is treated as a cancellation. If a non-vesting condition within the control of neither the Group, Company
nor employee is not satisfied during the vesting period, any expense for the award not previously recognised is recognised over the remaining vesting
period, unless the award is forfeited.
If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional
expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to
the employee, as measured at the date of modification.
If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is
recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is
granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.
The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share. Shares in the Group
reacquired on market and held at the reporting date are classified as reserved shares held within a separate component of equity – reserved shares
reserve (refer note 21).
(y) Hybrid notes
Hybrid notes are classified 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.
(z) Contributed equity
Ordinary shares are classified 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.
Reserved shares
The Group’s own equity instruments, which are reacquired for later use in employee share-based payment arrangements (reserved shares), are held
as a separate component of equity (reserved shares reserve – refer note 21). No gain or loss is recognised in profit or loss on the purchase, sale,
issue or cancellation of the Group’s own equity instruments.
(aa) Earnings per share
Basic earnings per share amounts are calculated by dividing net profit or loss for the year attributable to ordinary equity holders of the parent by the
weighted average number of ordinary shares outstanding during the period.
Diluted earnings per share are calculated by dividing the net profit attributable to ordinary equity holders of the parent by the weighted average of
ordinary shares outstanding during the period plus the weighted average number of ordinary shares that would be issued on conversion of all dilutive
potential ordinary shares into ordinary shares.
(ab) Revenue recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent that it is probable that economic benefits
will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
(i) Sale of goods
Revenue from the sale of goods is recognised when there has been a transfer of risks and rewards to the customer (through the execution of a sales
agreement at the time of delivery of the goods to the customer), no further work or processing is required, the quantity and quality of the goods has
been determined, the price is fixed and generally title has passed (for shipped goods this is the bill of lading).
69
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(ab) Revenue recognition (continued)
(ii) Rendering of services
Revenue from the rendering of services is recognised by reference to the stage of completion of a contract or contracts in progress at reporting date
or at time of completion of the contract and billing by the customer. 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.
(iii) Interest income
Revenue is recognised as it accrues using the effective interest rate method. This is a method of calculating the amortised cost of a financial 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 financial asset to the net carrying amount of the financial asset.
(iv) Dividend income
Revenue is recognised when the Group’s right to receive the payment is established.
(v) Forestry revenue
Revenue from the provision of forestry services is recognised by reference to the financial period during which the relevant services are provided. Any
unearned portion of these fees at financial year end is brought to account in the statement of financial position as a liability and recognised in
subsequent periods.
(ac) Government grants
Government grants are recognised when there is reasonable assurance that the grant will be received and all attached conditions will be complied
with. When a grant relates to an expense item, it is recognised as income over the period necessary to match the grant on a systematic basis to the
costs that it is intended to compensate. When the grant relates to an asset, it is recognised as deferred income and released to income in equal
amounts over the expected useful life of the related asset.
(ad) Income tax and other taxes
Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation
authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or
substantively enacted by the reporting date. Current income tax relating to items recognised directly in equity is recognised in equity and not in the
income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which the applicable tax
regulations are subject to interpretation and establishes provisions where appropriate.
Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying
amounts for financial reporting purposes. Deferred 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 profit nor taxable profit or loss; and
• when the taxable temporary difference is associated with investments in subsidiaries, associates and interests in joint ventures and 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 credits and unused tax losses, to the
extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry forward of unused tax
assets and unused tax losses can be utilised except:
• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• when the deductible temporary difference is associated with investments in subsidiaries, associates 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 profit
will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that
sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets
are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred
tax asset to be recovered.
Deferred 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 reporting date.
Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax
liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.
70
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 2. Summary of Significant Accounting Policies (continued)
(ad) Income tax and other taxes (continued)
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 statement of
financial position.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising from investing and financing
activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
Note 3. Significant Accounting Judgements, Estimates and Assumptions
The preparation of the Group’s consolidated financial statements requires management to make judgements, estimates and assumptions that affect
the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities,
contingent liabilities, revenue and expenses. Management bases its judgements and estimates on historical experience and on other various factors
it believes to be reasonable under the circumstances, the result of which forms the basis of the carrying value of assets and liabilities that are not
readily apparent from other sources.
Management have identified the following critical accounting policies for which significant judgement, estimates and assumptions are made. Actual results
may differ from these estimates under different assumptions and conditions and may materially affect the financial result or the financial position reported
in future periods. Further details of the nature of these assumptions and conditions may be found in the relevant notes to the financial statements.
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary differences as management considers that it is probable the future taxable profit will be
available to utilise those temporary differences. Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable
profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax
assets that can be recognised, based on the likely timing and the level of future taxable profits together with future tax planning strategies.
Impairment of non-financial assets other than goodwill and indefinite life intangibles
The Group assesses impairment of all assets at each reporting date by evaluating conditions specific to the group and to the particular asset that may
lead to impairment. These include product and manufacturing performance, technology, climate, economic and political environments and future
product expectations. If an impairment trigger exists the recoverable amount of the asset is determined. It is the Group’s policy to conduct bi-annual
internal reviews of asset values, which is used as a source of information to assess for any indicators of impairment. Assets have been tested for
impairment in accordance with the accounting policies described in note 14, including the determination of recoverable amounts of assets using the
higher of value in use and fair value less cost to sell.
Classification of assets and liabilities as held for sale
The Group classifies assets and liabilities as held for sale when the carrying amount will be recovered through a sale transaction. The assets and
liabilities must be available for immediate sale and the Group must be committed to selling the asset either through entering into a contractual sale
agreement or the activation and commitment to a program to locate a buyer and dispose of the assets and liabilities.
Impairment of goodwill and intangibles with indefinite useful lives
The group determines whether goodwill and intangibles with indefinite useful lives are impaired on a bi-annual basis. This requires an estimation of
the recoverable amount of the cash-generating units, using a value in use discounted cash flow methodology, to which goodwill and intangibles with
indefinite useful lives are allocated. The assumptions used in this estimation of recoverable amount and the carrying amount of goodwill and
intangibles with indefinite useful lives including a sensitivity analysis are discussed in note 14.
Make good provision
Provisions have been made for the present value of anticipated costs of future restoration of leased property. The provision includes the future cost
estimates associated with the required restorations. The calculation of this provision requires assumptions, and in those assumptions there are
uncertainties which may result in future actual expenditure differing from the amounts currently provided. The provisions are periodically reviewed
and updated on the facts and circumstances available at the time. Changes to the estimated future costs for sites are recognised in the statement of
financial position by adjusting both the expense and provision. The related carrying amount is disclosed in note 18.
Estimation of useful lives of assets
The estimation of useful lives of assets has been based on historical experience as well as lease terms (for leased assets). In addition, the condition of
the assets is assessed bi-annually and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary.
71
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 4. Revenue and Expenses
Sales revenue:
Sale of goods and biological assets
Commission and other selling charges
Other sales related income
Discontinued operations:
Other revenues:
Change in fair value of financial and other assets
Dividends
Other
Discontinued operations:
Interest revenue:
Associated entities
Other persons
Discontinued operations:
Expenses:
Distribution expenses
Marketing expenses
Occupancy expenses
Administrative expenses
Forestry fair value adjustments and impairments
Impairment of assets retained
Restructuring, redundancy and other write offs
Change in fair value of financial and other assets
Discontinued operations:
Profit/(loss) on sale of non current assets:
Investments in associates and joint ventures
Property, plant and equipment
Discontinued operations:
Finance costs:
Interest expense
Finance lease charges
Other finance costs
Discontinued operations:
72
Note
2013
$000
2012
$000
1,458,292
1,593,518
168,138
30,682
190,540
29,147
1,657,112
1,813,205
37
305,542
359,353
1,962,654
2,172,558
-
106
2,309
2,415
13,566
15,981
649
8,143
8,792
1,471
10,263
11,344
41
2,544
13,929
20,692
34,621
1,500
29,253
30,753
1,300
32,053
260,856
263,138
7,253
31,610
78,357
(7,422)
137,302
57,861
2,960
568,777
238,111
806,888
25,988
(49)
25,939
(40,278)
(14,339)
9,359
33,759
97,567
36,025
18,634
(889)
-
457,593
121,946
579,539
-
179
179
26,956
27,135
26,318
31,291
38
4,676
31,032
4,808
35,840
36
7,299
38,626
1,916
40,542
37
37
37
37
37
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 4. Revenue and Expenses (continued)
Specific expenses
Depreciation and amortisation:
Property, plant and equipment
Leased assets
Patents, trademarks and other
Discontinued operations:
Employee benefit expense:
Wages and salaries
Post employment benefits including superannuation
Workers compensation
Share based payments
Discontinued operations:
Operating lease expenditure
Foreign exchange net gains/(losses)
Provision for doubtful debts expense - trade debtors
Provision for doubtful debts expense - associate entities and other receivables
Note
2013
$000
2012
$000
5,694
171
665
6,530
12,654
19,184
169,949
13,323
1,967
818
186,057
60,966
247,023
74,207
1,160
13,028
11,711
5,719
212
515
6,446
14,571
21,017
184,844
12,536
1,644
2,139
201,163
78,131
279,294
97,693
(9,627)
3,415
(72)
73
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 5. Income Tax
(a) Major components of income tax expense are:
Income statement
Current income tax
Current income tax charge/(benefit)
Adjustments in respect of current income tax of previous years
Deferred income tax
Origination and reversal of temporary differences
Income tax expense/(benefit) reported in the statement of comprehensive income
Statement of changes in equity
Deferred income tax
Income tax expense/(benefit) reported in equity
2013
$000
2012
$000
3,099
(3,414)
10,414
(60,321)
40,131
39,816
17,057
(32,850)
1,223
887
(b)
Reconciliation of income tax expense applicable to accounting profit/(loss) before income tax at the statutory income
tax rate to income tax expense at the Group’s effective income tax rate is as follows:
Accounting profit/(loss) before tax from:
- Continuing operations
- Discontinued operations
Total Accounting profit/(loss) before tax
Income tax expense/(benefit) at 30% (2012: 30%)
Adjustments in respect of current income tax of previous years
Share of associate (profits)/losses
Non assessable (profits)/losses
Non deductible other expenses
Impairment expense
Non assessable dividends
Capitalised research and development
Losses available to offset against future taxable income
(Recognition)/derecognition of deferred tax assets
Other
Income tax expense/(benefit) as reported in the statement of comprehensive income
Aggregate Income tax expense/(benefit) is attributable to:
- Continuing operations
- Discontinued operations
Current tax payable/(receivable)
(226,789)
(235,265)
(462,054)
(138,616)
(3,415)
(2,081)
19,376
5,606
48,826
(325)
(1,702)
35,807
74,150
2,190
39,816
65,966
(26,150)
39,816
(1,363)
(50,977)
(39,246)
(90,223)
(27,067)
(61,001)
(1,692)
(5,187)
1,404
19,728
(11)
4,537
17,914
18,000
525
(32,850)
(38,313)
5,463
(32,850)
1,566
74
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 5. Income Tax (continued)
Deferred income tax liabilities
Revaluations of investment properties 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
Research and development
Other debtors
Other
Gross deferred income tax liabilities
Deferred income tax assets
Losses available to offset against future taxable income
Provision for employee entitlements
Other provisions
Accrued expenditure
Deferred borrowing costs
Other capitalised expenses
Plant and equipment temporary differences
Derecognition of deferred tax assets
Other
Gross deferred income tax assets
Deferred income tax charge
Statement of
Financial Position
Statement of
Comprehensive Income
2013
$000
(1,074)
(1,259)
(355)
-
-
-
-
-
(780)
(3,468)
-
10,759
8,038
2,027
2,584
4,398
2,330
(22,150)
82
8,068
2012
$000
(1,256)
(829)
(444)
2013
$000
(182)
430
(89)
(14,042)
(14,042)
(580)
(1,463)
(8,597)
(5,658)
(1,853)
(580)
(1,463)
(8,597)
(5,658)
(1,073)
(34,722)
(31,254)
52,000
15,652
12,088
1,835
4,995
2,512
-
-
493
89,575
52,000
4,893
4,050
(192)
2,411
(1,886)
(2,330)
22,150
411
81,507
50,253
2012
$000
1,256
407
444
(3,628)
580
(1,300)
2,314
1,275
(2,184)
(836)
18,000
(3,156)
(656)
1,384
3,657
3,859
-
-
6,820
29,908
29,072
As previously disclosed the Group had received amended income tax assessments from the Australian Taxation Office in connection with an alleged
capital gain arising on the disposal of the Group’s interest in its Building Products division in October 1997. The Group appealed the amended
assessments increasing the capital gain, while also paying 50% of the tax, penalties and interest claimed by the ATO on a without prejudice basis.
On 19 March 2012 the Full Federal Court dismissed the appeal of the ATO. The effect of the Full Federal Court judgement is that the objections of
Elders against the amended taxation assessments were upheld.
As a result of the Full Federal Court decision, in the 2012 financial year, the Group received cash of $46.8 million, comprising of a refund of pre-paid
tax, penalties and interest of $27.6 million, and interest on that pre-payment of $19.2 million. The Group recognised a profit of $71.5 million after
tax in relation to this matter, through the reversal of provisions and the reimbursements.
Tax losses
The Group has tax losses for which no deferred tax assets is recognised in the statement of financial position of $232.1 million (2012: $145.1 million)
which are available indefinitely for offset against future taxable profits subject to continuing to meet relevant statutory tests.
Unrecognised temporary differences
At 30 September 2013, there are no unrecognised temporary differences associated with the Group’s investment in subsidiaries, associates or joint
ventures, as the Group would have no additional tax liability.
Tax Consolidation
Elders and its 100% owned Australian resident subsidiaries are in a tax consolidated group. Elders Limited is the head entity of the tax consolidated
group. Members of the Group have entered into a tax sharing agreement that provides for the allocation of income tax liabilities between the entities
should the head entity default on its tax payment obligations. No amounts have been recognised in the financial statements in respect of this
agreement on the basis that the possibility of default is remote.
75
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 5. Income Tax (continued)
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 benefit.
Note 6. Receivables
Current
Trade debtors (i)
Allowance for doubtful debts
Amounts receivable from associated entities
Other receivables
Allowance for non-recovery
Non current
Amounts receivable from associated entities
Other receivables
Movements in the allowance for doubtful debts – trade debtors
Opening balance of allowance for doubtful debts
Trade debts written off
Amounts derecognised as part of sale of business
Trade debts provided for during the year
Closing balance of allowance for doubtful debts
Movements in allowance for non-recovery – amounts receivable from associated entities and other receivables
Opening balance of allowance for non-recovery
Amounts written off
Amounts provided for during the year
Closing balance of allowance for non-recovery
2013
$000
2012
$000
328,712
456,301
(9,214)
(12,710)
319,498
443,591
5,261
5,261
15,840
(413)
15,427
11,353
11,353
44,981
(1,910)
43,071
340,186
498,015
-
-
4,175
4,175
4,175
12,710
(14,924)
(1,600)
13,028
9,214
1,910
(13,208)
11,711
413
7,109
7,109
11,413
11,413
18,522
13,774
(4,479)
-
3,415
12,710
9,348
(7,366)
(72)
1,910
(i) Included in trade debtors is $38.9 million (2012: $92.7 million) which is subject to credit insurance with various terms and conditions.
Trade receivables are non interest bearing and are generally on 30 to 90 day terms with the exception of livestock receivables which are on 10 day
terms. A provision for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired. An impairment
loss of $13 million (2012: $3.4 million) has been recognised by the Group. Other than one individual impairment loss related to Mondello Farms
of $5.9 million, no other individual amount within the impairment allowance is material.
76
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 6. Receivables (continued)
The ageing analysis of trade debtors is as follows:
0-30 days
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
Total trade debtors
The ageing analysis of other current receivables is as follows:
0-30 days
Other current receivables past due but not considered impaired
+91 days
Other current receivables past due and considered impaired
+91 days
Total other current receivables
Related party receivables
For terms and conditions of related party receivables refer to notes 31 and 33.
2013
$000
2012
$000
298,901
393,422
4,392
1,223
14,982
20,597
337
61
8,816
9,214
20,829
6,107
23,233
50,169
1,348
56
11,306
12,710
328,712
456,301
20,688
49,258
-
-
413
413
5,166
5,166
1,910
1,910
21,101
56,334
Fair value and credit risk
Due to the short term nature of trade and other current receivables, their carrying value is assumed to approximate their fair value. For other
receivables the carrying amount is not materially different to their fair values. The maximum exposure to credit risk is the fair value of each class of
receivables. Details regarding credit risk exposure are disclosed in note 35.
Foreign exchange and interest rate risk
Details regarding the foreign exchange and interest rate risk exposure are disclosed in note 35.
Note 7. Livestock
Current
Fair value at the end of the period
36,671
67,382
At balance date 44,440 head of beef cattle (2012: 62,706) are included in livestock. The fair value methodology for livestock assets is detailed in
note 2(k). The group is exposed to a number of risks related to its livestock:
Regulatory and environmental risks
The Group is subject to laws and regulations and has established environmental policies and procedures aimed at compliance with local
environmental and other laws. Management performs regular reviews to identify environmental risks and ensure systems in place are adequate to
manage those risks.
77
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 7. Livestock (continued)
Financial/supply and demand risk
The Group is exposed to financial risk in respect of livestock activity. The primary financial risk associated with this activity occurs due to the length of
time between expending cash on the purchase and ultimately receiving cash from the sale to third parties. The Group’s strategy to manage this
financial risk is to actively review and manage its working capital requirements. The Group is exposed to risks arising from fluctuations in price and
sales volumes. Where possible, the Group manages these risks by aligning volumes with market supply and demand.
Other risks
The Group’s livestock are exposed to the risk of damage from diseases and other natural forces. The Group has extensive processes in place aimed at
monitoring and mitigating those risks, including regular health inspections and industry pest and disease surveys.
Note 8. Inventory
Current
Raw materials and bulk stores – at net realisable value
Work in progress – at cost
Finished goods – at net realisable value
2013
$000
2012
$000
5,624
-
110,687
116,311
38,982
240
127,753
166,975
Inventories recognised as an expense for the year ended 30 September 2013 totalled $1,259.6 million (2012: $1,297.7 million). This expense has
been included in the cost of sales line item as a cost of inventories. In addition inventory write-downs recognised as an expense totalled $6.6 million
(2012: $2.7 million) for the Group.
Note 9. Derivative Financial Instruments
Current
Asset
Liability
(a) Instruments used by the group
1,220
493
1,593
2,010
The Group holds 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 firm commitments. The foreign currency contracts are being used to hedge the foreign currency risk
of the firm commitments.
(b) Interest rate and credit risk
For financial risk management policies of the Group, refer to note 35.
Note 10. Other Financial Assets
Non current
Unlisted investments
19,538
1,330
On 23 September 2013, the Group sold 15% of its 25% shareholding in Elders Insurance (Underwriting Agency). The 10% shareholding retained in
Elders Insurance (Underwriting Agency) has been transferred to other financial assets, and upon transfer a fair value adjustment was recorded which
resulted in an upward revaluation of $17.3 million. Other impairment losses of $nil (2012: $16.5 million) relating to these investments have been
recorded in the profit and loss.
78
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 11. Investments in Associates and Joint Ventures
Name of Investment
Balance
date
Ownership
interest
Consolidated entity
investment
Contribution to net
profit/(loss)
2013
2012
%
50
20
49
10
52
%
50
20
49
25
49.7
AWH Pty Ltd
Kilcoy Pastoral Company Limited
Elders Financial Planning Pty Ltd
Elders Insurance (Underwriting Agency) Pty Limited
Agricultural Land Trust
Other investments
30 Jun
30 Jun
30 Sep
31 Dec
30 Jun
Share of profit of associates and joint ventures
is attributable to:
Continuing operations
Discontinued operations
2013
$000
2012
$000
49,671
49,731
5,685
5,343
3,693
7,120
5,278
-
-
2013
$000
4,278
1,435
(65)
5,517
2012
$000
5,341
1,749
(224)
6,504
12,185
(2,968)
(5,263)
631
3,902
173
(335)
62,700
80,539
8,370
7,772
11,475
14,097
(3,105)
8,370
(6,325)
7,772
All associates and joint ventures are Australian resident companies. On 23 September 2013, the Group sold 15% of its 25% shareholding in Elders
Insurance (Underwriting Agency) for $27.4 million. The Group recorded a profit on sale of $26.0 million. The 10% shareholding retained in Elders
Insurance Underwriting Agency has been transferred to other financial assets (note 10), and upon transfer a fair value adjustment was recorded which
resulted in an upward revaluation of $17.3 million.
Although Elders’ ownership interest in Agricultural Land Trust is 52% the Directors are of the view they do not have sufficient power over the
operating and financing policies of the entity such that control exists. Therefore the investment in Agricultural Land Trust continues to be treated as an
equity accounted investment, which has been classified as held for sale. Before the investment was classified as held for sale impairment losses of
$2.6 million were recognised. Post classification as held for sale, a further $4.5 million impairment was recognised.
(a) Share of Associates and Joint Ventures
Share of associates’ and joint ventures' statement of financial position
Current assets
Non current assets
Current liabilities
Non current liabilities
Share of net assets of associates
Share of associates’ and joint ventures' profit or loss
Revenue
Profit before income tax
Income tax (expense)/benefit
Profit after income tax
Share of net results of associates
Share of associates' and joint ventures' commitments and contingent liabilities
Capital expenditure commitments (contracted)
Operating lease commitments
2013
$000
2012
$000
50,628
31,689
82,317
37,758
4,618
42,376
39,941
78,148
36,921
115,069
58,764
8,491
67,255
47,814
183,861
166,496
12,810
(4,440)
8,370
8,370
12,467
(4,695)
7,772
7,772
10,028
27,415
1,411
57,686
79
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 12. Property, Plant and Equipment
Reconciliation of carrying amounts at beginning and end of period:
Non current
2013
Freehold
land
Buildings
Leasehold
improve-
ments
Plant and
equipment
(owned)
Plant and
equipment
(leased)
$000
$000
$000
$000
$000
Assets
under
construct-
ion
$000
Total
$000
Carrying amount at beginning of period
6,669
14,722
10,928
50,227
Additions
Disposals
Disposals through entities sold
Depreciation expense
Impairment
Exchange fluctuations
Transfers from assets under construction
Other
-
(113)
-
-
(18)
(25)
-
(88)
83
(44)
852
(67)
1,698
(238)
(2,883)
(475)
(25,777)
(950)
(103)
30
486
93
(2,029)
(10,696)
(3,975)
(17,833)
18
224
(5)
32
12,993
325
Carrying amount at end of period
6,425
11,434
5,471
10,731
1,412
387
-
(443)
(197)
-
-
-
(325)
834
11,726
10,602
95,684
13,622
-
(462)
(6,362)
(35,940)
-
(13,872)
(1,208)
(23,137)
101
(13,703)
(955)
201
156
-
(955)
35,096
Cost
6,443
20,315
11,411
39,149
1,009
201
78,528
Accumulated depreciation and impairment
(18)
(8,881)
(5,940)
(28,418)
6,425
11,434
5,471
10,731
2012
Carrying amount at beginning of period
6,137
12,966
Additions
Additions through entities acquired
Disposals
Depreciation expense
Impairment
Exchange fluctuations
Transfers from assets under construction
Other
-
-
(3)
-
572
(37)
-
-
196
2,764
(173)
(834)
(30)
(238)
71
-
8,745
1,035
-
(26)
50,932
1,926
3,840
(280)
(1,794)
(11,423)
(157)
(2,397)
-
208
2,917
(546)
7,978
197
(175)
834
852
728
-
(23)
(248)
-
-
286
(183)
-
(43,432)
201
35,096
11,705
15,726
129
-
-
-
137
(8,543)
(7,428)
91,337
19,611
6,733
(505)
(14,299)
(2,012)
(684)
-
(4,497)
Carrying amount at end of period
6,669
14,722
10,928
50,227
1,412
11,726
95,684
Cost
6,669
29,333
27,281
223,714
2,273
11,726
300,996
Accumulated depreciation and impairment
-
(14,611)
(16,353)
(173,487)
(861)
-
(205,312)
6,669
14,722
10,928
50,227
1,412
11,726
95,684
Property, plant and equipment pledged as security for liabilities
Refer to note 17 for interest bearing loans and borrowings secured by property, plant and equipment.
Note 13. Investment Properties
Non current
Carrying amount at beginning of period
Disposal of investment properties
Foreign exchange variation
Carrying amount at end of period (at fair value)
80
2013
$000
-
-
-
-
2012
$000
2,975
(2,730)
(245)
-
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 14. Intangibles
Reconciliation of carrying amounts at beginning and end of period:
Non current
2013
Carrying amount at beginning of period
Additions
Disposal of controlled entity
Disposals
Transfers
Amortisation
Impairment
IT
development
and software
$000
Patents,
trademarks
and licences
$000
Goodwill
Brand
Names
$000
$000
Development
costs, rent
rolls and other
$000
Total
$000
25,484
100
-
-
955
(151)
3,210
171,907
60,400
16,256
277,257
-
(635)
(342)
(468)
(246)
150
-
-
-
-
-
-
-
-
-
188
(406)
-
468
438
(1,041)
(342)
955
(1,606)
(2,003)
(26,388)
(1,601)
(172,057)
(54,785)
(14,961)
(269,792)
Exchange fluctuations
Carrying amount at end of period
-
-
82
-
-
-
-
5,615
61
-
143
5,615
Cost
26,537
4,750
79,397
60,400
2,561
173,645
Accumulated amortisation and impairment
(26,537)
(4,750)
(79,397)
(54,785)
(2,561)
(168,030)
2012
Carrying amount at beginning of period
Additions
Acquisition of controlled entity
Transfers
Amortisation
Impairment
Exchange fluctuations
-
-
18,070
-
7,414
-
-
-
-
-
5,615
-
5,615
2,739
165,228
60,400
21,865
250,232
744
938
163
(248)
(1,090)
(36)
-
10,814
-
-
(4,318)
183
-
-
-
-
-
-
100
-
(163)
(2,602)
(2,950)
6
18,914
11,752
7,414
(2,850)
(8,358)
153
Carrying amount at end of period
25,484
3,210
171,907
60,400
16,256
277,257
Cost
Accumulated amortisation and impairment
25,484
-
25,484
6,425
(3,215)
3,210
185,925
60,400
26,266
304,500
(14,018)
-
(10,010)
(27,243)
171,907
60,400
16,256
277,257
A description of each intangible asset is included below. Refer note 2(t) for the accounting policy in relation to goodwill and other intangible assets.
(a) Description of the Group’s intangible assets and goodwill
(i) IT Development and software
Costs incurred in developing products or systems and costs incurred in acquiring software that will contribute to future period financial benefits
through revenue generation and/or cost reduction are capitalised to IT development and software. Costs capitalised include external direct costs of
materials and service and direct payroll and payroll related cost of employees time spent on the project. These intangible assets have been
determined to have finite useful lives and are amortised over their useful lives and tested for impairment whenever there is an indicator of impairment
(refer section (b) of this note).
During the period the IT platform modernisation project was cancelled, and as a result an impairment charge of $25.5 million was recognised to
impair the project to nil value.
(ii) Patents, trade marks and licences
Patents and licences have been acquired through business combinations and are carried at cost less accumulated impairment losses. These
intangible assets have been determined to have finite useful lives and are amortised over their useful lives and tested for impairment whenever there
is an indicator of impairment (refer section (b) of this note).
(iii) Goodwill
After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not
amortised but is subject to impairment testing on an annual basis or whenever there is an indication of impairment (refer section (b) of this note).
81
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 14. Intangibles (continued)
(iv) Brand Names
The Brand Name value represents the value attributed to the Elders Brand when acquired through business combinations and are carried at cost less
accumulated impairment losses. Brand Names have been determined to have indefinite useful life due to there being no foreseeable limit to the
period over which they are expected to generate net cash inflows, given the strength and durability of our Brand and the level of marketing support.
The Brand has been in the rural and regional Australian market for many years, and the nature of the industry we operate in is such that Brand
obsolescence is not common, if appropriately supported by advertising and marketing spend. Brand Names are not amortised but are subject to
impairment testing on an annual basis or whenever there is an indication of impairment (refer section (b) of this note).
Expenditure incurred in developing, maintaining or enhancing Brand Names is expensed in the year that it occurred.
(v) Development costs, rent rolls and other
Development costs and rent rolls have been acquired through business combinations and are carried at cost less accumulated impairment losses.
These intangible assets have been determined to have finite useful lives and are amortised over their useful lives and tested for impairment whenever
there is an indicator of impairment (refer section (b) of this note).
(b)
Impairment tests for goodwill and intangibles with indefinite useful lives
For the purposes of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s
cash generating units, or groups of cash generating units, that are expected to benefit from the synergies of the combination, irrespective of whether
the other assets and liabilities of the Group are assigned to those units or group of units. Each unit or group of units to which the goodwill is allocated
represents the lowest level within the entity at which the goodwill is monitored for internal management purposes, and is not larger than an operating
segment determined in accordance with AASB 8.
The carrying amount of goodwill and brand names attributed to each of these cash generating units is as follows:
Rural Services Network
MCK Holdings
Other CGU’s
Goodwill
Brand Names
2013
$000
-
-
-
-
2012
$000
65,681
87,499
18,727
2013
$000
5,615
-
-
2012
$000
60,400
-
-
171,907
5,615
60,400
(i) Rural Services Network CGU
During the period the value in use of the Rural Services Network has been assessed, resulting in an impairment charge of $120.5 million against
goodwill and Brand Names being brought to account. The recoverable amount of Goodwill and Brand Names for Rural Services Network CGU has
been determined based on a value in use calculation using cash flow projections approved by management that covers a period of 5 years. Future
cash flows are based on budgets and forecasts taking into account current market conditions and known future business events that will impact
cash flows. The discount rate applied to the cash flow projections is 13.7% pre-tax (2012: 13.9% pre-tax) which has been determined based on a
weighted average cost of capital calculation which incorporates the specific risks relating to the Rural Services Network.
The impairment loss is largely a result of a reduction in future cash flows following the sale of Elders Insurance (Underwriting Agency) and an
increased allocation of corporate costs to the CGU as a result of the reorganisation of Elders as a pure agribusiness.
The calculation of value in use for the Rural Services Network CGU was based on the following key assumptions:
Gross margins
Gross margins are expected to increase as a result of:
• Recovery in livestock prices from current levels to historic averages as seasons normalise.
• A return to normal spring and summer rainfall patterns improving sales of agricultural chemicals, seed and fertiliser, and likely restoration of
margins to historic levels as demand increases.
• An increase in animal health sales as the national sheep flock and cattle herd rebuilds.
Selling, general and administrative expenses
Substantial cost savings are expected to be achieved as a result of the reorganisation plan and new business model focused on the core rural services
and trading businesses. The reorganisation will be implemented before the end of calendar year and the new business model is expected to reduce
annualised operating costs by more than $25 million.
Profit from associates and joint ventures
Profit from associates and joint ventures are expected to decrease as a result of the Groups divestment of Elders Insurance (Underwriting Agency).
82
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 14. Intangibles (continued)
Growth rate estimates
Year 1 cash flows are based on a forecast model. The EBIT growth rate for years 2 to 5 are based on a 3% nominal growth factor.
Discount rates
Discount rates reflect management’s estimate of the time value of money and the risk specific to each unit that are not already reflected in the cash flows.
Any increase in the discount rate or decrease in the cash flows will result in further impairment.
(ii) MCK Holdings
On 15 August 2012, the Group announced the intended sale of Futuris Automotive. As at 31 March 2013, the Board of Directors resolved that the
Automotive divestment had progressed to a stage where it was appropriate to classify the Automotive segment, including the MCK Holdings CGU, as
held for sale and as a discontinued operation. On transfer to held for sale, $103.8 million of goodwill impairments have been recognised to revalue
the segment to the lower of carrying amount or fair value less costs to sell. The $103.8 million impairment charge consisted of an impairment charge
of $87.5 million against the MCK Holdings CGU and a further $16.3 million against other Automotive CGU’s.
Note 15. Other Assets
Current
Deferred expenses
Prepayments
Non current
Deferred design and development expenditure
As at beginning of period
Additions through entity acquired
Design and development expenditure capitalised
Impairment
Amortisation
Amounts disposed through sale of controlled entity
Foreign exchange fluctuations
As at period end
Note 16. Trade and Other Payables
Current
Trade creditors
Other creditors and accruals
Payables to associated companies
Non current
Payables
Fair Value
Due to the short term nature of these payables, their carrying value is assumed to approximate their fair value.
Financial guarantees
Information regarding financial guarantees is set out in note 26 and 35.
Related party payables
For terms and conditions of related party payables refer to note 33.
Interest rate, foreign risk and liquidity risk
Information regarding interest rate, foreign exchange and liquidity risk exposure is set out in note 35.
2013
$000
501
3,446
3,947
-
31,883
-
14,994
(27,813)
(3,309)
(17,423)
1,668
2012
$000
667
17,037
17,704
31,883
22,854
1,297
15,862
(4,224)
(3,868)
-
(38)
-
31,883
220,398
346,422
31,251
2,881
35,883
4,301
254,530
386,606
-
-
1,413
1,413
83
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 17. Interest Bearing Loans and Borrowings
Current
Secured loans
Trade receivables funding
Lease liabilities
Non current
Secured loans
Unsecured loans
Lease liabilities
Total current and non current
(a) Financing arrangements
The Group has access to the following financing facilities with a number of financial institutions:
2013
Secured loans
Trade receivables funding
Unsecured loans and lease liabilities
Total
2012
Secured loans
Trade receivables funding
Unsecured loans and lease liabilities
Total
2013
$000
2012
$000
119,547
148,282
287
103,354
199,196
437
268,116
302,987
24,720
80,983
1,733
116
1,555
304
26,569
82,842
294,685
385,829
Accessible
$000
Drawn
$000
157,785
144,267
192,600
148,282
350,385
292,549
2,136
2,136
Unused
$000
13,518
44,318
57,836
-
352,521
294,685
57,836
199,261
227,600
426,861
184,337
199,196
383,533
14,924
28,404
43,328
2,296
2,296
-
429,157
385,829
43,328
The Group also has an ancillary facility in relation to off balance sheet funding, such as bank guarantees, of $61.3 million. As at 30 September 2013,
$39.6 million had been drawn.
The parent entity and certain controlled entities have potential financial liabilities which may arise from certain contingencies disclosed in note 26.
However the Directors do not expect those potential financial liabilities to crystallise into obligations and therefore financial liabilities disclosed in the
above table are the Directors estimate of amounts that will be payable by the Group. No material losses are expected and as such, the fair values
disclosed are the Directors estimate of amounts that will be payable by the Group.
84
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 17. Interest Bearing Loans and Borrowings (continued)
(b) Assets pledged as security
Secured loans are secured by various fixed and floating charges over the assets of the controlled entities concerned. Lease liabilities are secured by a
charge over the leased assets. The carrying amount of assets pledged as security for current and non-current interest bearing liabilities are:
Current assets
Floating charge
Cash and cash equivalents
Trade and other receivables
Livestock
Inventory
Other
Non current assets
Floating charge
Receivables
Other financial assets
Investments in associates and joint ventures
Property, plant and equipment
Intangibles
Other
2013
$000
2012
$000
26,277
38,659
291,790
296,571
33,769
54,679
101,722
144,224
10,603
67,045
464,161
601,178
4,175
19,528
62,700
26,895
5,615
5,480
124,393
17,962
-
79,586
94,580
143,157
113,127
448,412
Total current and non current
588,554
1,049,590
85
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 18. Provisions
Reconciliation of carrying amounts at beginning and end of period:
Employee
entitlements
Restructuring
and
redundancy
Make
good
Onerous
contracts
Other
Total
$000
$000
$000
$000
$000
$000
52,838
25,031
17,702
26,607
(23,704)
(23,147)
(214)
(350)
-
(14,038)
-
39,563
36,712
2,851
(563)
-
(400)
(1,218)
11,028
30,009
30,009
-
39,563
30,009
47,283
35,919
10,486
25,228
(31,862)
(15,133)
(174)
1,747
-
-
(75)
52,838
49,142
3,696
(651)
-
-
-
(2,228)
17,702
17,702
-
13,100
707
(3,861)
(5,246)
376
-
(547)
(60)
4,469
2,088
2,381
4,469
15,566
3,311
(4,975)
(2,800)
684
-
-
1,314
13,100
9,620
3,480
59,212
6,641
(24,053)
(22,026)
521
-
(2,796)
(10,968)
6,531
3,852
2,679
6,531
61,923
24,937
(29,668)
(279)
1,480
-
(117)
936
3,122
1,613
(954)
(384)
-
-
145,974
60,599
(75,719)
(28,433)
547
(400)
(2,428)
(21,027)
-
969
969
-
969
3,164
1,254
(1,101)
(582)
-
260
-
127
-
81,541
73,630
7,911
81,541
138,422
90,649
(82,739)
(4,486)
3,911
260
(117)
74
59,212
3,122
145,974
42,620
16,592
1,981
1,141
121,065
24,909
52,838
17,702
13,100
59,212
3,122
145,974
2013
As at beginning of period
Arising during year
Utilised
Unused amounts reversed
Discount rate adjustment
Provisions allocated to other assets
Disposals of controlled entities
Other
Disclosed as:
Current
Non current
Total
2012
As at beginning of period
Arising during year
Utilised
Unused amounts reversed
Discount rate adjustment
Provisions arising from entities
acquired
Disposals of controlled entities
Other
Disclosed as:
Current
Non current
Total
Nature and timing of provisions
(i) Employee entitlements
Refer to note 2(w) for the relevant accounting policy and a discussion of the significant estimations and assumptions applied in the measurement of
this provision.
(ii) Restructure and redundancy
The restructuring provision relates to provisions arising upon classification of the Forestry division being held for sale, and redundancies
communicated to staff during the year.
(iii) Make Good
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.
(iv) Onerous leases
The onerous lease provision relates to leases for which the expected benefits are lower than the unavoidable cost of meeting obligations under
the lease.
86
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 19. Contributed Equity
2013
$000
2012
$000
Issued and paid up capital
455,013,329 ordinary shares (September 2012: 448,598,480)
1,269,153
1,270,323
The movement in the dollar balance of share capital is a result of the unwinding of the tax effect of the equity raising costs incurred in the 2010
financial year. On 1 August 2013, 6,414,849 shares were issued to participants in the employee retention plan who met the vesting conditions
under that plan (refer to note 32).
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
The Group considers both capital and net debt as relevant components of funding, hence, part of its capital management. When managing capital
and net debt, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders and
benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital available to the entity.
Elders financing package prohibits the payment of ordinary dividends until repayment of all syndicated debt. Refer to note 23 for dividend disclosure.
Note 20. Hybrid Equity
Issued and fully paid up
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 first remarketing date) the distribution rate was the 3 month bank bill swap rate plus a margin of 2.20% pa. On 30 June 2011,
Elders accepted a one-off step up of 250bps in margin.
Elders financing package prohibits the payment of distributions to the hybrid holders until repayment of all syndicated debt. No distributions were
declared or paid during the year.
The Hybrids may, on the occurrence of certain events, be converted or resold by the Company at its election or pursuant to a request of holders. The terms
of such conversion or resale can be found in the Futuris Hybrids Prospectus dated 28 February 2006, which is available on the Company’s website.
Hybrid holders rank after all creditors but before ordinary shareholders on a winding up to the face value of the Hybrids plus unpaid Hybrid
distributions for the prior 12 months.
Note 21. Reserves
Reconciliation of carrying amounts at beginning and end of period:
2013
Business
combination
reserve
$000
Employee
equity
benefits
reserve
$000
Foreign
currency
translation
reserve
$000
Net
unrealised
gains
reserve
$000
Reserved
shares
reserve
Total
$000
$000
Carrying amount at beginning of period
(16,169)
397
(7,707)
(1,641)
(2,190)
(27,310)
Foreign currency translation
Non-controlling interest share of movement
Net gains/losses in cash flow hedges
Income tax on items taken directly or transferred to equity
Sale of reserved shares
Excess paid for purchase of non-controlling interest
Cost of share based payments
Transfer to retained earnings
Transfers to reserved shares reserve
Carrying amount at end of period
-
-
-
-
-
12
-
(346)
-
(16,503)
-
-
-
-
-
-
818
(985)
397
627
2,869
(840)
-
-
-
-
-
-
-
-
-
1,423
(53)
-
-
-
-
-
-
-
-
-
10
-
-
2,577
(397)
2,869
(840)
1,423
(53)
10
12
818
1,246
-
(5,678)
(271)
-
(21,825)
87
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 21. Reserves (continued)
2012
Business
combination
reserve
$000
Employee
equity
benefits
reserve
$000
Foreign
currency
translation
reserve
$000
Net
unrealised
gains
reserve
$000
Reserved
shares
reserve
Total
$000
$000
Carrying amount at beginning of period
(15,092)
(3,081)
(12,256)
(169)
(2,994)
(33,592)
Foreign currency translation
Non-controlling interest share of movement
Transfer to statement of comprehensive income
Net gains/losses in cash flow hedges
Income tax on items taken directly or transferred to equity
Sale of reserved shares
-
-
-
-
-
-
Excess paid for purchase of non-controlling interest
(1,077)
-
-
-
-
-
-
-
Cost of share based payments
Transfer to retained earnings
Transfers to reserved shares reserve
Carrying amount at end of period
Nature and purpose of reserves
-
-
-
(16,169)
2,139
(1,978)
3,317
397
4,398
151
-
-
-
-
-
-
-
-
-
-
(477)
(1,278)
283
-
-
-
-
-
-
-
-
-
-
36
-
-
4,085
(3,317)
4,398
151
(477)
(1,278)
283
36
(1,077)
2,139
2,107
-
(7,707)
(1,641)
(2,190)
(27,310)
(i) Business combination reserve
The reserve is used to record the differences between the carrying value of non-controlling interests and the consideration paid/received, where there
has been a transaction involving non-controlling interests that do not result in a loss of control.
(ii) Employee equity benefits reserve
This reserve is used to record the value of equity benefits provided to employees, including key management personnel as part of their remuneration.
(iii) Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign
subsidiaries.
(iv) Net unrealised gains reserve
This reserve records the portion of the gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge.
(v) Reserved Shares Reserve
This reserve represents shares that have been forfeited by employees that were issued under the employee share loan plan.
Note 22. Retained Earnings
Retained earnings at the beginning of the financial year
Net profit/(loss) attributable to owners of the parent
Transfer from business combinations reserve
Transfer from employee equity benefits reserve
Transfer from reserved shares reserve
Other
2013
$000
(844,029)
(505,255)
346
985
(2,577)
10
2012
$000
(781,322)
(60,600)
-
1,978
(4,085)
-
Retained earnings at the end of the financial year
(1,350,520)
(844,029)
88
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 23. Dividends
(a) Dividends proposed
No final dividend will be paid (2012: Nil)
(b) Dividends paid during the year
Current year interim
- No interim dividend will be paid (2012: Nil)
Previous year final
- No final dividend paid (2012: Nil)
Subsidiary equity dividends on ordinary shares:
Dividends paid to external parties during the year
2013
$000
-
2012
$000
-
-
-
-
-
3,170
2,796
Elders financing package prohibits the payment of ordinary dividends until repayment of all syndicated debt.
(c) Franking credit balance
Franking credits available to the parent for subsequent financial years based on tax rate of 30% (2012: 30%)
16,570
9,410
The above amounts represent the balance of the franking account as at the end of the financial period, adjusted for:
• franking credits that will arise from the payment of the amount of the provision for income tax;
• franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
• franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
• franking credits that may be prevented from being distributed in subsequent financial years.
Note 24. Cash Flow Statement Reconciliation
(a) Reconciliation of net profit/(loss) after tax to net cash flows from operations
Profit/(loss) after income tax expense
Adjustments for non cash items:
Depreciation and amortisation
Share of associates and joint venture (equity accounted earnings)
Dividends from associates
Fair value adjustments to financial assets
Other fair value adjustments
Fair value adjustments and impairments
Movement in provision for:
- doubtful debts
- employee entitlements
- other provisions
Other write downs
Net (profit)/loss on sale of non-current assets
Net (profit)/loss on sale of controlled entity
Cost of share based payments
Deferred tax asset
Deferred income tax
Provision for tax
Other non cash items
- (Increase)/decrease in receivables and other assets
- (Increase)/decrease in inventories
- Increase/(decrease) in payables and accruals
Net cash flows from operating activities
2013
$000
2012
$000
(501,870)
(57,373)
19,184
(8,370)
15,237
2,923
-
309,576
24,739
24,467
8,246
6,638
(23,569)
37,908
818
72,140
(30,425)
(2,731)
(2,383)
(47,472)
89,944
(612)
21,017
(7,772)
9,028
(6,192)
(5,266)
75,663
3,343
37,492
52,582
2,659
(16,506)
(10,629)
2,139
29,874
208
(39,268)
3,955
94,954
39,480
20,181
(123,446)
(152,087)
(81,586)
2,528
89
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 24. Cash Flow Statement Reconciliation (continued)
(b) Cash and cash equivalents
Cash at bank and in hand
Cash includes $4.3 million (2012: $3.9 million) of cash held in trust on behalf of certain controlled entities.
(c) Non cash financing and investing activities
During the financial year, and the previous financial year, there were no non cash financing and investing transactions.
2013
$000
2012
$000
39,927
91,969
Note 25. Expenditure Commitments
Finance lease commitments – Group as a lessee
The Group has finance leases and hire purchase contracts for various items of plant and machinery with a carrying amount of $0.8 million (2012:
$1.4 million). These lease contracts expire within five years. The leases have terms of renewal but no purchase options and escalation clauses.
Renewals are at the option of the specific entity that holds the lease.
Finance leases commitments:
- Within one year
- After one year but not after five years
Total minimum lease payments
Less amounts representing finance charges
Present value of minimum lease payments
Disclosed in the financial statements as:
- current (note 17)
- non current (note 17)
Operating leases commitments:
- Within one year
- After one year but not later than five years
- After more than five years
Total minimum lease payments
317
130
447
(44)
403
287
116
403
495
345
840
(99)
741
437
304
741
59,417
117,255
57,530
234,202
81,524
193,974
92,634
368,132
Operating leases commitments – Group as a lessee
The Group leases the majority of its branch network and capital city properties under operating leases. The lease commitments comprise base
amounts adjusted where necessary for escalation clauses primarily based on inflation 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.
Property, plant and equipment commitments
Capital expenditure contracted for but not otherwise provided for in these accounts:
- Within one year
- After one year but not later than five years
Total property, plant and equipment commitments
-
-
-
11,213
7,230
18,443
90
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 26. Contingent Liabilities
Contingent liabilities at balance date, not otherwise provided for in the financial statements, are as follows:
Claims lodged for damages resulting from the use of products or services
Guarantees issued to third parties arising in the normal course of business
2013
$000
-
39,638
39,638
2012
$000
525
35,520
36,045
Unquantifiable contingent liabilities
• The Group has contingent obligations in respect of real property let or sub-let by entities within the Group.
• Benefits are payable under service agreements with executive Directors and officers of the Group under certain circumstances such as termination
or achievement of prescribed performance hurdles.
• The Group has provided a guarantee to a third party in relation to certain obligations of Caversham Property Developments Pty Limited, a former
subsidiary of Elders Limited. The Directors are of the view that the Group’s liability under the guarantee is unquantifiable and remote.
• A member of the Group is party to a put option, exercisable from August 2013, in connection with a third party’s holding in B&W Rural Pty Ltd, an
incorporated joint venture in which the Group is the 75% shareholder. If exercised, the Group will own all the issued capital in B&W Rural Pty Ltd. It
is not known whether the third party will exercise its rights pursuant to that put option, nor is it presently ascertainable what the consideration for
the option shares might be.
• Members of the Group have, from time to time and in the ordinary course, provided parent company guarantees in respect of certain contractual
obligations of their subsidiaries.
• Members of the Group have from time to time provided warranties and indemnities in connection with the disposal of assets. The Directors are not
aware at the present time of any material expenses under the warranties or indemnities.
• 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 or it is not practical to estimate the potential effect of these claims. The
Directors are of the view that none of these claims based on the net exposure are likely to be material.
Other guarantees
As disclosed in note 30, 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 deficiency of any of the company’s party to the Deed in the event of
any of those companies being wound up.
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.
Note 27. Segment Information
Identification of reportable segments
The Group has identified its operating segments to be the four segments of Rural Services, Forestry, Automotive Components and Investment & Other.
This is the basis on which internal reports are reviewed and used by the executive management team (the chief operating decision makers) in
assessing performance and in determining allocation of resources. Discrete financial information about each of these operating businesses is
reported to the executive management team on at least a monthly basis. The Group operates predominantly within Australia. All other geographical
operations are not material to the financial statements.
Type of product and service
• Rural Services include the provision of a range of agricultural products and services through a common distribution channel.
• Forestry includes the Group’s interests in forestry plantations and forestry related investments.
• Automotive Components include the manufacturing and sales of automotive components of which the key components are seating, interior trim,
and insulation packages. The Automotive segment was disposed of on 31 July 2013.
• The Investment & Other segment includes the general investment activities not associated with the other business segments and the
administrative corporate office activities.
Accounting policies and intersegment transactions
The accounting policies used by the group in reporting segments internally are the same as those contained in note 2 to the accounts. Segment
results have been determined on a consolidated basis and represent the earnings before corporate net financing costs and income tax expense.
91
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 27. Segment Information (continued)
2013
External sales
Other revenues
Share of profit of associates and joint ventures
Profit/(loss) on sale of non current assets
Interest revenue
Total revenue
Earnings before interest, tax, depreciation &
amortisation
Depreciation & amortisation
Segment result
Corporate net interest expense
Profit from ordinary activities before tax
Rural Services
Forestry
$000
1,657,112
2,415
11,475
25,939
8,532
$000
1,412
1,476
(2,968)
(2,594)
553
Automotive
Components
$000
Investment
& Other
$000
Total
$000
304,130
12,090
(137)
(37,684)
153
-
1,962,654
497
-
-
1,025
1,522
16,478
8,370
(14,339)
10,263
1,983,426
1,705,473
(2,121)
278,552
(189,067)
(17,213)
(186,883)
(24,130)
(417,293)
(6,527)
-
(12,654)
(3)
(19,184)
(195,594)
(17,213)
(199,537)
(24,133)
(436,477)
(25,577)
(462,054)
Segment result
Less discontinued operations results
(195,594)
-
(17,213)
(24,635)
(199,537)
(199,537)
(24,133)
(436,477)
(7,756)
(231,928)
(195,594)
7,422
-
(16,377)
(204,549)
Segment assets
623,040
6,196
(22,240)
(226,789)
2,323
631,559
-
2,323
7,708
-
7,708
(5,385)
49,358
680,917
336,564
298,153
634,717
46,200
-
-
62,700
(30,157)
-
-
-
-
-
-
-
-
(25,676)
-
623,040
306,347
-
306,347
316,693
62,700
(4,481)
-
6,196
22,509
-
22,509
(16,313)
-
-
(197,138)
11,457
(180,189)
(9,278)
(375,148)
25,939
(2,594)
(37,684)
-
(14,339)
Continuing profit/(loss) before net borrowing costs and
tax expense
Corporate net interest expense
Continuing profit/(loss) before tax expense
Unallocated assets (including tax assets)
Total assets
Segment liabilities
Unallocated liabilities (including tax liabilities)
Total liabilities
Net assets
Carrying value of equity investments
Acquisition of non current assets
Non cash income/(expense) other than depreciation
and amortisation
Profit/(loss) on sale of non current assets and
controlled entities
92
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 27. Segment Information (continued)
2012
External sales
Other revenues
Share of profit of associate and joint ventures
Profit/(loss) on sale of non current assets
Interest revenue
Total revenue
Earnings before interest, tax, depreciation &
amortisation
Depreciation & amortisation
Segment result
Corporate net interest expense
Profit from ordinary activities before tax
Rural Services
Forestry
$000
1,813,205
13,338
13,603
(114)
10,038
1,850,070
$000
14,611
1,127
(5,263)
27,249
286
38,010
25,095
(6,439)
18,656
(73,619)
-
(73,619)
Automotive
Components
$000
Investment
& Other
$000
Total
$000
-
2,172,558
344,742
19,565
(568)
-
188
363,927
18,915
(14,571)
4,344
1,130
-
-
21,541
22,671
(31,108)
(7)
(31,115)
35,160
7,772
27,135
32,053
2,274,678
(60,717)
(21,017)
(81,734)
(8,489)
(90,223)
(81,734)
(38,630)
(43,104)
(7,873)
(50,977)
Segment result
Less discontinued operations results
18,656
(2,220)
(73,619)
(37,594)
4,344
4,344
(31,115)
(3,160)
Continuing profit/(loss) before net borrowing costs and
tax expense
Corporate net interest expense
Continuing profit/(loss) before tax expense
20,876
(36,025)
-
(27,955)
Segment assets
894,088
99,516
327,736
7,018
1,328,358
Unallocated assets (including tax assets)
Total assets
Segment liabilities
Unallocated liabilities (including tax liabilities)
Total liabilities
Net assets
-
894,088
345,481
-
345,481
548,607
-
99,516
81,130
-
81,130
18,386
-
327,736
101,394
-
101,394
226,342
Carrying value of equity investments
Acquisition of non current assets
65,542
(23,099)
12,185
438
-
(30,469)
-
181,544
7,018
7,998
-
7,998
(980)
2,374
-
1,509,902
536,003
422,117
958,120
551,782
80,539
(53,568)
Non cash income/(expense) other than depreciation
and amortisation
Profit/(loss) on sale of non current assets and
controlled entities
(14,382)
(86,309)
(29,154)
(24,656)
(154,501)
(114)
27,249
-
-
27,135
93
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 28. Supplementary Statement of Net Debt
(a) Statement of Net Debt
This Supplementary Statement of Net Debt has been prepared to provide additional disclosure of segmental cash flows and the resultant impact on
net debt for the period. This non-IFRS disclosure is provided as a supplementary disclosure to IFRS reporting contained in the Consolidated Statement
of Cash Flows to provide illumination of cash performance of individual segments within the Consolidated Statement. The Directors consider this to be
particularly useful given the diverse nature of the Group’s operating segments. The Supplementary Statement of Net Debt should not be used as
replacement for the Consolidated Statement of Cash Flows which appears in this report but should be read in conjunction with.
2013
Earnings before interest & tax
Depreciation and amortisation
Share of associates and joint venture (profit)
Dividends received from associates
Fair value adjustments on financial assets
Impairment of assets
Movement in provision for:
- doubtful debts
- employee entitlements
- other provisions
Other writedowns
(Profit)/loss on sale of non-current assets
(Profit)/loss on sale of controlled entity
Cost of share based payments
Interest received
Interest and other costs of finance paid
Tax (paid)/refund
Other non cash items
Movement in working capital
Operating cash flow
Payment for property, plant and equipment
Purchase of equity accounted investments
Payment for controlled entities, net of cash acquired
Payment for design and development capitalised
Proceeds from sale of non current assets held for sale
Proceeds from sale of equity accounted investments
Proceeds from sale of property, plant and equipment
Proceeds from sale of intangibles
Proceeds from disposal of controlled entity
Payment for acquisition of non-controlling interest
Repayment of loans by associated entities
Loans repaid by growers
Investing cash flow
Proceeds from sale of reserved shares
Intercompany movement
Partnership profit distributions/dividends paid
Other flows
Total Flows
Opening net debt
Total flows
Derivatives recognised in relation to net debt
Debt derecognised as part of sale of controlled entity
Closing net debt
94
Rural
Services
$000
Forestry
$000
Automotive
Components
$000
Investment
& Other
$000
Total
$000
(195,594)
(17,213)
(199,537)
(24,133)
(436,477)
6,527
(11,475)
11,981
2,960
141,765
20,987
16,722
13,521
2,660
(25,939)
-
-
8,532
(1,564)
(2,800)
(1,477)
(13,194)
22,760
9,566
(3,220)
-
(1,261)
-
-
27,390
413
-
-
(189)
2,167
-
25,300
-
(42,912)
(3,170)
(46,082)
(11,216)
-
2,968
3,256
(37)
473
-
157
(12,050)
-
2,594
-
-
553
(15)
-
-
(19,314)
(32,620)
(51,934)
-
-
-
-
63,298
-
-
-
-
-
750
4,813
68,861
12,654
137
-
-
3
-
-
-
19,184
(8,370)
15,237
2,923
161,692
5,646
309,576
1,334
6,124
6,180
3,978
(224)
37,908
-
153
(374)
(137)
881
30,769
(27,203)
3,566
(10,402)
(280)
-
(14,994)
-
-
-
566
(455)
-
-
-
2,418
1,464
595
-
-
-
818
1,025
(33,340)
1,434
(1,663)
(45,733)
2,949
(42,784)
-
-
-
-
-
-
-
-
24,739
24,467
8,246
6,638
(23,569)
37,908
818
10,263
(35,293)
(1,503)
(2,259)
(47,472)
(34,114)
(81,586)
(13,622)
(280)
(1,261)
(14,994)
63,298
27,390
413
566
16,052
15,597
-
-
-
(189)
2,917
4,813
(25,565)
16,052
84,648
-
-
(17,352)
26,057
-
(17,352)
(425)
-
26,057
4,058
10
34,207
-
34,217
7,485
10
-
(3,170)
(3,160)
(98)
(295,365)
(98)
1,079
39,200
(255,184)
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 28. Supplementary Statement of Net Debt (continued)
2012
Earnings before interest & tax
Depreciation and amortisation
Share of associates and joint venture (profit)
Dividends received from associates
Fair value adjustments on financial assets
Other fair value adjustments
Impairment of assets
Movement in provision for:
- doubtful debts
- employee entitlements
- other provisions
Other writedowns
(Profit)/loss on sale of non-current assets
(Profit)/loss on sale of controlled entity
Cost of share based payments
Interest received
Interest and other costs of finance paid
Tax (paid)/refund
Other non cash items
Movement in working capital
Operating cash flow
Payment for property, plant and equipment
Payment for intangibles
Payment for controlled entities, net of cash acquired
Payment for design and development capitalised
Proceeds from sale of non current assets held for sale
Proceeds from sale of equity accounted investments
Proceeds from sale of property, plant and equipment
Proceeds from sale of investment properties
Rural
Services
$000
18,656
6,439
(13,603)
9,028
(6,078)
(5,266)
3,704
2,311
21,961
2,894
2,771
114
-
-
10,038
(2,002)
(4,188)
6,083
52,862
(31,546)
21,316
(3,213)
(18,314)
(1,572)
-
-
925
684
2,730
Payment for acquisition of non-controlling interest
Loans repaid by growers
Investing cash flow
Proceeds from sale of reserved shares
Intercompany movement
Partnership profit distributions/dividends paid
Other flows
Total Flows
Opening net debt
Total flows
Derivatives recognised in relation to net debt
Closing net debt
Forestry
$000
(74,014)
-
5,263
-
(114)
-
Automotive
Components
$000
4,344
14,571
568
-
-
-
Investment
& Other
$000
(30,720)
7
-
-
-
-
43,758
9,360
18,841
1,177
559
36,854
-
(16,620)
(10,629)
-
286
(101)
44
(793)
(14,330)
(41,212)
(55,542)
-
-
-
-
73,240
-
-
-
(145)
13,669
10,036
(112)
-
-
-
188
(139)
252
(4,222)
48,370
(24,073)
24,297
(16,398)
-
1,791
(15,862)
-
-
-
-
-
-
-
-
1,303
2,798
-
-
-
2,139
21,541
(34,389)
27,747
(1,215)
8,052
4,405
12,457
-
-
-
-
-
-
-
-
-
-
-
-
(3,232)
-
-
2,875
(21,992)
104,283
(30,469)
-
(26,662)
(2,796)
(29,458)
(30,134)
-
-
(44,783)
11,764
-
(44,783)
3,958
-
11,764
5,592
36
59,681
-
59,717
72,174
Proceeds from disposal of controlled entity
-
28,168
Total
$000
(81,734)
21,017
(7,772)
9,028
(6,192)
(5,266)
75,663
3,343
37,492
52,582
2,659
(16,506)
(10,629)
2,139
32,053
(36,631)
23,855
(147)
94,954
(92,426)
2,528
(19,611)
(18,314)
219
(15,862)
73,240
925
684
2,730
28,168
(3,232)
2,875
51,822
36
-
(2,796)
(2,760)
51,590
(345,450)
51,590
(1,505)
(295,365)
95
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 28. Supplementary Statement of Net Debt (continued)
(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 29. Auditors Remuneration
The auditor of Elders Limited is Ernst & Young.
Amounts received or due and receivable by Ernst & Young (Australia) for:
- auditing or review of financial statements
- tax services (primarily compliance)
- other compliance and assurance services
Amounts received or due and receivable by related practices of Ernst & Young (Australia) for:
- auditing or review of financial statements
- other services
Amounts received or due and receivable by non Ernst & Young audit firms for:
- auditing or review of financial statements
- tax services
- internal audit
- other services
2013
$000
39,927
2012
$000
91,969
(294,685)
(385,829)
(426)
(1,505)
(255,184)
(295,365)
2013
$
2012
$
1,222,176
1,494,063
361,413
631,824
213,407
432,492
2,215,413
2,139,962
140,015
298,600
25,532
29,675
165,547
328,275
-
-
-
-
-
-
-
-
-
-
96
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 30. Investment in Controlled Entities
(a) Schedule of controlled entities
Acehill Investments Pty Ltd
Agricultural Land Management Limited
Agsure Pty Ltd
AI Asia Pacific Operations Holding Limited
Air International Asia Pacific Operations Pty Ltd
Air International Vehicle Air Conditioning (Shanghai) Co Ltd
Albany Woolstores Pty Ltd
Aldetec Unit Trust
APO Administration Limited
APT Finance Pty Ltd
APT Forestry Pty Ltd
APT Land Pty Ltd
APT Nurseries Pty Ltd
APT Projects Ltd
Argo Trust No. 2
Ashwick (Vic) No 102 Pty Ltd
Australian Plantation Timber Pty Ltd
Australian Retirement Managers Pty Ltd
Australian Topmaking Services Pty Ltd
B & W Rural Pty Ltd
BWK Australia Pty Ltd
BWK Holdings Pty Ltd
Carbon Bid Co Pty Ltd
Charlton Feedlot Pty Ltd
E Globulus Pty Ltd
Elders Australia Aktien Holding GmbH & Co KG
Elders Australia Beteiligungs GmbH
Elders Automotive Group Limited
Elders Burnett Moore WA Pty Ltd
Elders Card Ltd
Elders China Trading Company
Elders Communications Pty Ltd
Elders Direct Ltd
Elders Esperance Woodchip Terminal Pty Ltd
Elders Finance Pty Ltd
Elders Financial Services Group Pty Ltd
Elders Fine Foods (Shanghai) Company
Elders Forestry Finance Pty Ltd
Elders Forestry Holdings Pty Ltd
Elders Forestry Land Holdings
Elders Forestry Management Ltd
Elders Forestry Pty Ltd
Elders Global Wool Holdings Pty Ltd
Elders Insurance Limited
Elders International Australia Pty Ltd
Elders Management Services Pty Ltd
Elders Meat Processing Pty Ltd
Elders Merchandise Limited
Elders Mortgage Brokers Pty Ltd
Elders Primary Wool Limited
Elders PT Indonesia
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 Real Estate Ltd
Country of
Incorporation
Australia
Australia
Australia
Hong Kong SAR
Australia
China
Australia
Australia
Hong Kong SAR
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Germany
Germany
Australia
Australia
New Zealand
China
Australia
New Zealand
Australia
Australia
Australia
China
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
New Zealand
Australia
New Zealand
Indonesia
Australia
Australia
Australia
Australia
Australia
New Zealand
(f)
(a)
(f)
(f)
(e)
(a)
(a)
(a)
(a)
(f)
(h)
(f)
(a)
(f)
(f)
(f)
(a)
(f)
(a)
(f)
(i)
(i)
(a)
(f)
(g)
(f)
(g)
(f)
(a)
(f)
(a)
(a)
(f)
(a)
(a)
(g)
(a)
(f)
(f)
(g)
(f)
(g)
(f)
(f)
(f)
(f)
(f)
(g)
% Held by Group
2013
100
100
100
100
100
100
66
100
100
100
100
100
100
100
100
100
100
100
100
75.5
100
100
100
100
100
-
-
100
100
50
100
100
50
100
100
100
100
100
100
100
100
100
100
50
100
100
100
50
100
25
100
100
100
100
100
100
50
2012
100
100
100
100
100
100
66
100
100
100
100
100
100
100
100
100
100
100
100
75.5
100
100
100
100
100
100
90
100
100
50
100
100
50
100
100
100
100
100
100
100
100
100
100
50
100
100
100
50
100
25
100
100
100
100
100
100
50
97
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 30. Investment in Controlled Entities (continued)
Elders Rural Holdings Limited
Elders Rural Services Australia Limited
Elders Rural Services Limited
Elders Services Company Pty Ltd
Elders Stock (SI) Ltd
Elders Tasmanian Fibre Pty Ltd
Elders Telecommunications Infrastructure Pty Ltd
Elders Trustees Pty Ltd
Elders Webster Pty Ltd
Elders Wool International Pty Ltd
Elderstock Limited
EVIA Rural Finance Ltd
EWI Pty Ltd
Family Hospitals Pty Ltd
Fares Exports Management Mexico, S.A. de C.V.
Fares Exports Pty Ltd
Fares Exports Trading Mexico, S.A. de C.V.
Futuris Automotive (CA) LLC
Futuris Automotive (DE) LLC
Futuris Automotive Interiors (Australia) Pty Ltd
Futuris Automotive Interiors (Barbados) Inc
Futuris Automotive Interiors (Hong Kong) Inc
Futuris Automotive Interiors (Mauritius) Inc
Futuris Automotive Interiors (Shanghai) Co Ltd
Futuris Automotive Interiors (Singapore) Pte Ltd
Futuris Automotive Interiors (US) Inc
Futuris Automotive Interiors Holdings Pty Ltd
Futuris Automotive Thailand Co Ltd
Futuris Feltex (proprietary) Limited
Futuris Pty Ltd
Geelong Wool Combing Pty Ltd
Gisborne Farmers Ltd
Hollymont Pty Ltd
ITC Portland Woodchip Terminal Pty Ltd
ITC Timerlands Pty Ltd
JS Brooksbank Pty Ltd
JS Brooksbank & Co Australasia Ltd
JSB New Zealand Limited
Keratin Holdings Pty Ltd
Killara Feedlot Pty Ltd
Manor Hill Pty Ltd
Marybrook Development Company Pty Ltd
Masterfund (WA) Pty Ltd
MCK Group Pty Ltd
MCK Holdings (Australia) Pty Ltd
MCK Holdings Pty Ltd
MCK Pacific Pty Ltd
Milltoc Pty Ltd
Mutual Benefit Consulting Pty Ltd
New Ashwick Pty Ltd
North Australian Cattle Company Pty Ltd
Pitt Son & Keene Pty Ltd
Plexicor Pty Ltd
Prestige Property Holdings Pty Ltd
Primac Exports Pty Ltd
Primac Holdings Pty Ltd
Primac Pty Ltd
Primac Travel Pty Ltd
Rachid Fares Enterprises of Australia Pty Ltd
98
Country of
Incorporation
New Zealand
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Mexico
Australia
Mexico
USA
USA
Australia
Barbados
Hong Kong SAR
Mauritius
China
Singapore
USA
Australia
Thailand
South Africa
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
(g)
(a)
(f)
(g)
(a)
(f)
(f)
(f)
(a)
(g)
(g)
(i)
(f)
(f)
(i)
(i)
(c)(i)
(i)
(i)
(i)
(i)
(i)
(i)
(c)(i)
(i)
(i)
(c)(i)
(f)
(g)
(f)
(f)
(a)
(f)
(a)
(a)
(f)
(f)
(f)
(c)(i)
(c)(i)
(c)(i)
(c)(i)
(f)
(f)
(f)
(a)
(f)
(i)
(a)
(f)
(f)
(f)
(i)
(f)
% Held by Group
2013
50
100
100
100
35
100
100
100
100
100
35
50
-
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
2012
50
100
100
100
35
100
100
100
100
100
35
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
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
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 30. Investment in Controlled Entities (continued)
Redray Enterprises Pty Ltd
SA Bid Co Pty Ltd
Seed Production Limited
Sydney Woolbrokers Limited
Torrens Investments Pte Ltd
Treecrop Pty Ltd
Ultrasound Australia Pty Ltd
Victorian Producers Co-operative Company Pty Ltd
Vision Group of Companies Pty Ltd
Vockbay Pty Limited
WA Bid Co Pty Ltd
Wool Exchange (WA) Pty Ltd
Wool Marketing Enterprises Pty Ltd
Country of
Incorporation
Australia
Australia
New Zealand
Australia
Singapore
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
(f)
(f)
(g)
(f)
(i)
(f)
(a)
(f)
(f)
(f)
(f)
(f)
(g)
% Held by Group
2013
100
100
50
53
-
100
100
100
100
100
100
67
25
2012
100
100
50
53
100
100
100
100
100
100
100
67
25
• The parties that comprise the Closed Group are denoted by (a). Parties added to the Closed Group during the year are denoted by (b).
Parties removed from the Closed Group during the year are denoted by (c).
• Entities acquired or registered during the period are denoted by (d).
• Entities exempted from audit requirements due to overseas legislation or non-corporate status are denoted by (e).
• Entities classified by the Corporations Act 2001 as small proprietary companies relieved from audit requirements are denoted by (f).
• Entities denoted by (g) are controlled entities, as the Group has the capacity to control via a dominance of financial, management and
technological control.
• Entity denoted by (h) is a controlled special purpose entity related to trade receivable financing program.
• Entities denoted by (i) are entities that were disposed of, deregistered or liquidated during the year.
(b) Deed of cross guarantee
Pursuant to Australian Securities and Investments Commission Class Order 98/1418 (as amended) 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 lodgement of financial reports, and
directors’ reports.
As a condition of the Class Order, Elders Limited, and the controlled entities subject to the Class Order, entered into a Deed of Cross Guarantee. The
effect of the deed is that Elders Limited has guaranteed to pay any deficiency 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 deficiency, in the event that Elders Limited or any other member of the closed
group is wound up.
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.
A consolidated statement of comprehensive income and consolidated statement of financial position, comprising the Company and the controlled
entities which are a party to the deed, after elimination of all transactions between parties to the Deed of Cross Guarantee, for the year ended 30
September is set out as follows:
99
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 30. Investment in Controlled Entities (continued)
Statement of comprehensive income and retained earnings of the Closed Group
Profit/(loss) from continuing operations before income tax
Income tax benefit/(expense)
Profit/(loss) after income tax from continuing operations
Profit/(loss) after tax from discontinued operation (refer note 37)
Net profit for the period
Other comprehensive income
Total comprehensive income for the period
Retained earnings at the beginning of the period
Impact of entities exiting or joining closed group
Transfers to and from reserves
Retained earnings at the end of the period
Consolidated statement of financial position of the Closed Group
Current assets
Cash and cash equivalents
Trade and other receivables
Livestock
Inventories
Derivative financial instruments
Non current asset classified as held for sale
Other assets
Total current assets
Non current assets
Receivables
Other financial assets
Investments in associates and joint ventures
Property, plant and equipment
Intangibles
Deferred tax assets
Other assets
Total non current assets
Total assets
Current liabilities
Trade and other payables
Derivative financial instruments
Interest bearing loans and borrowings
Current tax liabilities
Provisions
Total current liabilities
Non current liabilities
Interest bearing loans and borrowings
Deferred tax liabilities
Provisions
Total non current liabilities
Total liabilities
Net assets
100
2013
$000
2012
$000
(1,606,459)
(279,365)
4,672
36,785
(1,601,787)
(242,580)
399,812
(10,582)
(1,201,975)
(253,162)
645
(683)
(1,201,330)
(253,845)
(958,147)
(695,078)
792,246
(1,592)
-
(9,907)
(1,369,468)
(958,147)
4,894
21,090
13,585
6,687
-
17,247
196
14,115
147,614
27,268
32,255
53
54,927
2,936
63,699
279,168
902
108,017
51,973
13,829
-
-
-
10,319
548,607
79,463
48,881
117,995
99,687
95,880
174,721
1,000,832
238,420
1,280,000
32,656
67
120,448
-
14,329
546,428
2,010
129,061
4,502
48,915
167,500
730,916
24,720
-
-
24,720
192,220
46,200
81,078
9,941
4,788
95,807
826,723
453,277
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 30. Investment in Controlled Entities (continued)
Equity
Contributed equity
Hybrid equity
Reserves
Retained earnings
Total equity
2013
$000
2012
$000
1,269,153
1,270,323
145,151
1,364
(1,369,468)
46,200
145,151
(4,050)
(958,147)
453,277
Note 31. Key Management Personnel
(a) Details of Key Management Personnel
Directors
MC Allison
JC Ballard
MG Jackman
IG MacDonald
JH Ranck
JM Rozman
Chairman (elected 27 June 2013)
Chairman (resigned 27 June 2013)
Managing Director and Chief Executive Officer
Non Executive Director (resigned 30 November 2012)
Non Executive Director
Non Executive Director
Other Key Management Personnel
D Goodfellow
R Davey
M De Wit
M Hosking
A Dage
H Browning
Group General Manager Australian Network
Chief Financial Officer (appointed 31 January 2013)
Managing Director – Futuris Automotive Group Ltd (ceased employment 31 July 2013)
Chief Financial Officer (ceased employment 31 January 2013)
Group General Manager Trading (ceased employment 9 August 2013)
General Manager Trading (appointed 9 August 2013, resigned with effect 28 December 2013)
(b) Remuneration of specified 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.
Short term
Long term
Post employment
Termination benefits
Share based payments
2013
$
2012
$
4,317,168
6,206,195
204,375
146,413
212,570
223,042
1,384,456
1,026,155
514,439
1,256,790
6,566,851
8,924,752
101
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 31. Key Management Personnel (continued)
(c) Retention Rights of Directors and other Key Management Personnel
(Number)
2013
M Hosking
S Hughes
A Dage
H Browning
Total
2012
M Hosking
S McClure
S Hughes
A Dage
Total
Balance at
beginning
of period
Rights
exercised
Rights
granted
Rights
lapsed /
forfeited
Balance
at end
of period
Vested
at end
of period
2,074,585
(2,074,585)
766,001
(766,001)
1,214,391
(1,214,391)
289,586
(289,586)
4,344,563
(4,344,563)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,518,839
490,702
560,802
889,077
3,459,420
-
-
-
-
-
555,746
179,549
205,199
325,314
-
2,074,585
(670,251)
-
-
-
766,001
1,214,391
1,265,808
(670,251)
4,054,977
-
-
-
-
-
-
-
-
-
-
(d) Long Term Incentive Rights held by Directors and other Key Management Personnel
Balance at
beginning
of period
2,284,822
505,551
1,396,325
1,203,482
197,630
5,587,810
2,570,425
696,325
352,809
467,559
603,482
4,690,600
Rights
exercised
Rights
granted
Rights
lapsed /
forfeited
Balance
at end
of period
Vested
at end
of period
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(578,552)
1,706,270
(101,851)
403,700
(1,396,325)
(1,203,482)
-
-
(40,876)
156,754
(3,321,086)
2,266,724
-
(285,603)
2,284,822
700,000
350,000
450,000
600,000
-
1,396,325
(702,809)
(917,559)
-
-
-
1,203,482
2,100,000
(1,905,971)
4,884,629
-
-
-
-
-
-
-
-
-
-
-
-
(Number)
2013
MG Jackman
H Browning
M Hosking
A Dage
R Davey
Total
2012
MG Jackman
M Hosking
S McClure
S Hughes
A Dage
Total
102
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 31. Key Management Personnel (continued)
(e) Shareholdings of Directors and other Key Management Personnel
(Ordinary shares)
2013
JC Ballard*
MC Allison
IG MacDonald*
JH Ranck
JM Rozman
MG Jackman
H Browning
A Dage*
R Davey
M De Wit*
D Goodfellow
Total
2012
JC Ballard
MC Allison
RG Grigg*
IG MacDonald
JH Ranck
JM Rozman
RH Wylie*
MG Jackman
M De Wit
V Erasmus*
S McClure*
S Hughes*
A Dage
D Goodfellow
Total
(Hybrid equity)
2013
MG Jackman
2012
MG Jackman
On exercise
of options
Granted as
remuneration
Net change
other
Balance at
beginning
of period
1,000,000
100,000
52,668
430,000
20,000
188,676
506,632
-
-
-
-
-
-
289,586
90,000
1,214,391
200,160
18,537
173,356
-
-
-
2,780,029
1,503,977
33,079
-
-
-
-
-
33,079
-
-
-
-
-
Balance
at end
of period *
1,000,000
100,000
52,668
430,000
20,000
221,755
796,218
1,304,391
200,160
18,537
173,356
4,317,085
-
-
-
-
-
-
-
-
-
-
-
-
250,000
-
16,490
52,668
128,334
-
6,000
107,168
18,537
1,998
7,697
17,087
90,000
173,356
869,335
1,000
1,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
750,000
1,000,000
100,000
100,000
45,200
-
61,690
52,668
301,666
430,000
20,000
-
20,000
6,000
81,508
188,676
-
-
-
-
-
-
18,537
1,998
7,697
17,087
90,000
173,356
1,298,374
2,167,709
-
-
1,000
1,000
* Balance at period end represents balance at date of cessation of services.
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.
(f) Loans to and transactions with Directors and other Key Management Personnel
During the 2013 financial year, JC Ballard and D Goodfellow purchased immaterial amounts of product from the Group. All transactions were made at
arm’s length terms. No other loans were granted to, and no other transactions were entered into, with Directors and other Key Management Personnel
in either the 2012 or 2013 financial years.
103
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 32. Share Based Payment Plans
(a) Retention Plan (General)
During the period 6,414,849 shares were issued to participants in the employee retention plan who met the vesting conditions under the plan. The
Plan was designed to retain the services of certain key employees. The Plan recognises that Australian economic conditions are generally good and
quality employees have alternative employment options. It is important for Elders to preserve its senior management team to ensure successful
execution of its business strategies.
An expense of $0.8 million was recognised in profit and loss during the year in relation to the issue of service rights.
(b) Elders Long Term Incentive Rights Plans
The parent entity issues from time to time rights over ordinary shares to senior employees of the Group. The rights are issued at the sole discretion
of the Directors as part of the employee’s remuneration packages. Each right will convert to one ordinary share automatically on the vesting date
assuming satisfaction of certain performance conditions as determined by the Board at the time of grant, continued employment (or earlier
termination of employment for reason other than resignation or dismissal for poor performance or misconduct), and may vest earlier in the event
of a takeover.
(i) CEO Long Term Incentive Plan
As at 30 September 2013 1,706,270 CEO rights were outstanding, with maturity dates between 10 November 2013 and 10 November 2015.
(ii) Executive Long Term Incentive Plan
As at 30 September 2013 3,111,412 executive rights were outstanding, with maturity dates between 10 November 2013 and 10 November 2015.
The fair value of the equity settled share rights was measured using the Monte Carlo simulation model, taking into account the terms and conditions
upon which the instruments were granted.
Note 33. Related Party Disclosures
(a) Ultimate controlling entity
The ultimate controlling entity of the Group is Elders Limited.
(b) Transactions between Elders Limited (Parent Entity) and related parties in the wholly owned group
Transactions with related parties in the wholly owned group:
Intercompany loan movements
Interest recharged
Recharges – other
Impairment of intercompany loans
Balances with related parties in the wholly owned group:
Owing to the Parent Entity
Owing from the Parent Entity
2013
$000
-
-
1,500
2012
$000
104,230
1,357
3,000
283,987
(532,674)
-
-
-
401,379
(686,866)
(285,487)
Transactions with related parties in the wholly owned group are made in arms length transactions both at normal market prices and on normal
commercial terms.
104
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 33. Related Party Disclosures (continued)
(c) Transactions between controlled entities wholly owned and controlled entities not wholly owned
Details of entities not wholly owned are set out in note 30.
Transactions with controlled entities not wholly owned:
Intercompany loan movements
Dividends received
Amounts relating to loan balances to entities which were disposed of during the period
Amounts converted to loan balances upon consolidation
Balances with controlled entities not wholly owned:
Owing to the Group
Owing from the Group
2013
$000
10,802
4,683
(2,033)
-
4,989
(567)
4,422
Transactions with controlled entities not wholly owned are made in arms length transactions both at normal market prices and on normal
commercial terms.
(d) Transactions between controlled entities and partly owned entities (associates and joint ventures)
Details of associates and joint ventures are set out in note 11.
Transactions with partly owned entities:
Loan movements
Interest charged
Dividends received
Entity no longer partly owned
Impairment of loans
Balances with partly owned entities:
Owing to the Group
Owing from the Group
(2,898)
1,414
13,561
(213)
(10,084)
5,261
(2,881)
2,380
Loans made to partly owned entities are priced on an arms length basis. None of the balances are secured.
Transactions with partly owned entities are made in arms length transactions both at normal market prices and normal commercial terms.
2012
$000
(14,067)
4,836
-
760
2,779
(11,809)
(9,030)
(1,468)
1,524
9,028
(4,502)
-
18,462
(4,301)
14,161
105
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 34. Earnings Per Share
Weighted average number of ordinary shares (‘000) used in calculating basic EPS
Dilutive share options (‘000)
2013
449,671
1,425,161
2012
448,598
628,343
Adjusted weighted average number of ordinary shares used in calculating dilutive EPS (‘000)
1,874,832
1,076,941
The following reflects the net profit/(loss) and share data used in the calculations of earnings per share (EPS):
Reported operations
Basic
Net profit/(loss) attributable to members (after tax)
(505,255)
(60,600)
Dilutive
Net profit/(loss) attributable to members (after tax)
(505,255)
(60,600)
2013
$000
2012
$000
Reported operations earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Continuing operations
Basic
Net profit/(loss) attributable to members (after tax)
Less: Net loss/(profit) of discontinued operations (net of tax)
Net profit/(loss) of continuing operations (net of tax)
Dilutive
(112.4)¢
(112.4)¢
(13.5)¢
(13.5)¢
(505,255)
209,443
(295,812)
(60,600)
44,742
(15,858)
Net profit/(loss) of continuing operations (net of tax)
(295,812)
(15,858)
Continuing operations earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Discontinued operations
(65.8)¢
(65.8)¢
(3.5)¢
(3.5)¢
Net profit/(loss) of discontinued operations (net of tax)
(209,443)
(44,742)
Discontinued operations earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
(46.6)¢
(46.6)¢
(10.0)¢
(10.0)¢
106
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 35. Financial Instruments
The Group’s principal financial instruments comprise receivables, payables, loans, finance leases, cash and other short term deposits and derivatives.
Risk exposures and responses
The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Group’s financial risk
management policy. The objective of the policy is to support the delivery of the Group’s financial targets while protecting future financial security.
The Group enters into derivative transactions, principally interest rate swap and forward currency contracts. The purpose is to manage the interest rate
and currency risks arising from the Group’s operations and its sources of finance. The main risks arising from the Group’s financial instruments are
interest rate risk, foreign currency risk, credit risk and liquidity risk. The Group uses different methods to measure and manage different types of risks
to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for
interest rate and foreign exchange prices. Ageing analysis and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity
risk is monitored through the development of future rolling cash flow forecasts.
The Board reviews and agrees policies for managing each of these risks as summarised below.
(a)
Interest rate risk
The Group’s exposure to market interest rates relates primarily to the Groups short term and long term debt obligations. The level of debt is disclosed
in note 17.
At balance date, the Group had the following mix of financial assets and liabilities exposed to Australian variable interest rate risk that are not
designated in cash flow hedges:
Financial assets
Cash and cash equivalents
Amounts receivable from associated entities
Financial liabilities
Secured loans
Unsecured loans
Net exposure
2013
$000
39,927
-
2012
$000
91,969
9,510
39,927
101,479
(172,549)
(263,533)
(1,733)
(174,282)
(134,355)
(1,555)
(265,088)
(163,609)
The Group’s policy is to manage its finance costs using a mix of fixed and variable rate debt. The Group constantly analyses its interest rate exposure
so as to manage its cash flow volatility arising from interest rate changes. Within this analysis consideration is given to potential renewals of existing
positions, alternative financing, alternative hedging positions and the mix of fixed and variable interest rates.
To manage this, the Group enters into interest rate swaps, in which the group agrees to exchange, at specified intervals, the difference between fixed
and variable rate interest amounts calculated by reference to an agreed-upon notional principal amount. These swaps are designated to hedge
underlying debt obligations.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the balance sheet date. At 30 September 2013, if interest
rates had moved as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows:
+ 100 basis points
- 100 basis points
Post Tax Profit/equity
Higher/(Lower)
2013
$000
(1,344)
2012
$000
(1,636)
1,344
1,636
107
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 35. Financial Instruments (continued)
(b) Liquidity risk
Liquidity risk arises from the financial liabilities of the group and the group’s subsequent ability to meet their obligations to repay their financial
liabilities as and when they fall due.
The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans and
committed available lines of credit. The Group manages its liquidity risk by monitoring the total cash inflows and outflows expected on a weekly basis.
Elders Limited has established comprehensive risk reporting covering its business units that reflect expectations of management of the expected
settlement of financial assets and liabilities.
A. Non derivative financial liabilities
The following liquidity risk disclosures reflect all contractually fixed pay-offs, repayments and interest resulting from the recognised financial liabilities
and financial guarantees as of 30 September 2013. For the other obligations the respective undiscounted cash flows for the respective upcoming
fiscal years are presented. The timing of cash flows for liabilities is based on the contractual terms of the underlying contract.
However, where the counterparty has a choice of when the amount is paid, the liability is allocated to the earliest period in which the Group can be
required to pay. When the Group is committed to make amounts available in instalments, each instalment is allocated to the earliest period in which
the Group is required to pay. For financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the
guarantee can be called.
The risk implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows of non-derivative financial instruments.
2013
Non derivative financial assets:
Cash and cash equivalents
Trade and other receivables
Non derivative financial liabilities:
Secured loans
Unsecured loans
Finance leases
2012
Non derivative financial assets:
Cash and cash equivalents
Trade and other receivables
Non derivative financial liabilities:
Secured loans
Unsecured loans
Finance leases
Carrying amount
Contractual
cash flows
6 months
or less
$000
$000
$000
39,927
353,988
393,915
39,927
353,988
393,915
39,927
343,223
383,150
6-12
months
$000
-
6,590
6,590
1-5
years
$000
-
4,175
4,175
(292,549)
(301,906)
(199,828)
(76,954)
(25,124)
(1,733)
(403)
(2,080)
(447)
(87)
(159)
Trade and other payables
(254,530)
(255,943)
(254,530)
Financial guarantees
-
(39,638)
(39,638)
Net inflow/(outflow)
(155,300)
(206,099)
(111,092)
(549,215)
(600,014)
(494,242)
(87)
(158)
-
-
(77,199)
(70,609)
(1,906)
(130)
(1,413)
-
(28,573)
(24,398)
91,969
531,157
623,126
91,969
533,362
625,331
91,969
506,965
598,934
-
6,751
6,751
-
19,646
19,646
(383,533)
(402,239)
(312,691)
(3,582)
(85,966)
(1,555)
(741)
(1,867)
(840)
(78)
(247)
(78)
(248)
-
-
(3,908)
2,843
(1,711)
(345)
(1,413)
-
(89,435)
(69,789)
Trade and other payables
(388,019)
(388,019)
(386,606)
Financial guarantees
-
(35,520)
(35,520)
Net inflow/(outflow)
(150,722)
(203,154)
(136,208)
(773,848)
(828,485)
(735,142)
108
> 5
years
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 35. Financial Instruments (continued)
B. Derivative financial instruments
Due to the unique characteristics and inherent risks to derivative instruments, the Group (through the Group Treasury Function) separately monitors
liquidity risk arising from transacting in derivative instruments.
The table below details the liquidity risk arising from derivative financial liabilities held by the group at balance date. Net settled derivative liabilities
comprise forward exchange and interest rate hedges.
Carrying amount
Contractual
cash flows
6 months
or less
$000
$000
$000
6-12
months
$000
1-5
years
$000
> 5
years
$000
1,220
(493)
727
1,593
(2,010)
(417)
1,220
(493)
727
1,593
(2,010)
(417)
1,220
(493)
727
1,593
(2,010)
(417)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2013
Derivative assets – net settled
Derivative liabilities – net settled
Total inflow/(outflow)
2012
Derivative assets – net settled
Derivative liabilities – net settled
Total inflow/(outflow)
(c) Credit risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, trade and other receivables, and derivative
instruments. The Group’s exposures to credit risk arise from potential default of the counterparty, with the maximum exposure equal to the carrying
amount of the financial assets.
The ageing of the Groups’ trade and other receivables at balance date is reported at note 6. The credit risk associated with cash and derivatives is
located primarily in Australia.
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 defined credit policies, procedures and limits. The amounts disclosed do not reflect expected losses and are shown gross of provisions. The
Group’s maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
Derivative financial assets
Location of credit risk
Australia
New Zealand
Asia
Other
Total gross receivables
Industry classification
Rural
Forestry
Automotive
Investment and other
Total gross receivables
2013
$000
2012
$000
39,927
91,969
353,988
531,157
1,220
1,593
395,135
624,719
323,198
459,436
25,357
5,433
-
43,096
24,457
4,168
353,988
531,157
353,056
416,692
84
-
848
13,401
87,139
13,925
353,988
531,157
109
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 35. Financial Instruments (continued)
(d) Foreign currency 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, AUD/NZD, and AUD/CNY exchange rates. These are primarily generated from the following activities:
• Purchase and sale contracts written in foreign currency, or priced in AUD but determined from a foreign currency value at a future date;
• Receivables and payables denominated in foreign currencies;
• Commodity cash prices that are partially determined by movements in exchange rates;
• Costs of sale such as transportation and commission denominated in foreign currency; and
• 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 financial 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 statement of comprehensive income.
At 30 September 2013, the Group had the following AUD exposures to foreign currencies that were not designated in cash flow hedges:
Financial assets
Cash and cash equivalents – USD
Cash and cash equivalents – NZD
Cash and cash equivalents – CNY
Cash and cash equivalents – other
Receivables – USD
Receivables – NZD
Receivables – CNY
Receivables – other
Financial liabilities
Payables – USD
Payables – NZD
Payables – CNY
Payables – other
Interest bearing loans and borrowings – USD
Interest bearing loans and borrowings – NZD
Interest bearing loans and borrowings – other
Net exposure
2013
$000
2012
$000
297
9,377
981
437
2,621
25,357
1,453
1,360
41,883
(7,790)
(20,560)
-
(718)
(1,342)
(2,831)
-
(33,241)
8,642
17,185
9,361
9,943
17,332
6,156
39,239
11,454
14,312
124,982
(8,657)
(18,867)
(24,428)
(25,640)
-
(4,172)
(451)
(82,215)
42,767
Given the foreign currency balances included in the Statement of Financial Position at balance date, if the Australian dollar at that date strengthened
by 10% with all other variables held constant, then the impact on post tax profit/(loss) arising on the balance sheet exposure would be as follows:
USD
NZD
CNY
Other
Post Tax Profit
Higher/(Lower)
2013
$000
621
(1,134)
(230)
(122)
2012
$000
(1,468)
(2,456)
303
(555)
A 10% weakening of the Australian dollar against the above currencies would have had the equal but opposite effect on the above currencies to the
amounts shown above, on the basis that all other variables are held constant.
110
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 35. Financial Instruments (continued)
(e) Fair value of financial assets and liabilities
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
• Level 1 – the fair value is calculated using quoted prices in active markets.
• Level 2 – the fair value is estimated using 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 3 – the fair value is estimated using inputs for the asset or liability that are not based on observable market data.
The fair value of financial instruments as well as the method used to estimate the fair values are summarised in the table below:
Quoted
market
price
(Level 1)
2013
Valuation
technique
- market
observable
inputs
(Level 2)
Valuation
technique –
non market
observable
inputs
(Level 3)
Quoted
market
price
(Level 1)
2012
Valuation
technique
- market
observable
inputs
(Level 2)
Valuation
technique –
non market
observable
inputs
(Level 3)
$000
$000
$000
$000
$000
$000
-
-
-
1,220
(493)
727
-
-
-
-
-
-
1,593
(2,010)
(417)
-
-
-
Financial assets
Derivatives
Financial liabilities
Derivatives
Quoted market prices represent the fair value determined based on quoted prices on active markets as at the reporting date without any deduction
for transaction costs.
For financial instruments not quoted in active markets, the group uses valuation techniques such as present value technologies, comparison to
similar instruments for which active market observable prices exist and other relevant models used by market participants.
Note 36. Business Combinations – Changes in the Composition of the Entity
(a) Controlled entities acquired
During the period no entities were acquired.
Prior Period acquisitions
The Group holds a 70% interest in Futuris Automotive Interiors (Anhui) Company Ltd, which in prior reporting periods was considered to be a jointly
controlled entity due to the control provided in the shareholders’ agreement to the minority parties. As at 1 October 2011 it was determined that the
relationship between the Group and the minority shareholders had changed to an extent that it was appropriate to account for the investment as a
controlled entity rather than as a jointly controlled entity. The business combination resulted in the recognition of $10.8 million of goodwill. During the
2012 financial year the Anhui entity contributed $29.5 million of sales revenue and $1.4 million of profit before tax to the Group’s continuing results.
Fair value of initial investment
Non-controlling interest - share of fair value of net assets
Total consideration
Fair value of identifiable net assets acquired (see below)
Goodwill on acquisition
Date Control
Acquired
1 Oct 2011
2012
$000
15,984
2,216
18,200
7,386
10,814
111
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 36. Business Combinations – Changes in the Composition of the Entity (continued)
The aggregate amounts of assets and liabilities acquired by major class:
Cash and cash equivalents
Trade and other receivables
Inventories
Property, plant and equipment
Intangibles
Other assets
Trade and other payables
Provisions
Net identifiable assets acquired
Outflow of cash to acquire the entities, net of cash acquired:
Cash balance acquired
Net Inflow/(outflow) of cash
(b) Controlled entities disposed
Acquiree’s
carrying amount
Fair value
$000
1,791
7,439
1,376
6,733
938
8,001
$000
1,791
7,439
1,376
6,733
938
1,297
(11,928)
(11,928)
(260)
14,090
(260)
7,386
1,791
1,791
The Group disposed of the Futuris Automotive group of Companies on 31 July 2013 to affiliates of Clearlake Capital Group, L.P. Futuris Feltex (Proprietary)
Limited was also disposed of in the period, for which the assets and liabilities disposed, and the cash proceeds were of an immaterial amount.
Proceeds received on disposal of assets/shares:
Cash
The carrying amounts of assets and liabilities disposed of by major class are:
Cash
Trade and other receivables
Inventories
Derivatives
Other assets
Investment in associates and joint ventures
Property, plant and equipment
Intangibles
Tax assets and liabilities
Trade and other payables
Provisions
Interest bearing loans and liabilities
Net assets/(liabilities) of entity sold
Non-controlling interests
Reclassification of other comprehensive income
Total profit/(loss) on disposal of controlled entities
2013
$000
2012
$000
43,633
28,168
28,036
100,633
44,969
255
19,305
674
35,940
1,041
8,340
(89,304)
(21,027)
(39,200)
89,662
(4,461)
(3,660)
-
-
-
-
-
-
18,666
-
(1,010)
-
(117)
-
17,539
-
-
(37,908)
10,629
Prior period disposals
The Group disposed of Plantation Pulpwood Terminals Pty Ltd on 18 July 2012 to a fund managed by Global Forest Partners.
112
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 37. Discontinued Operations
Financial period 30 September 2013
The Group’s investment in the Futuris Automotive segment was disposed of during the period. Additionally the Group’s investment in Australian Fine
China and Agricultural Land Trust were classified as held for sale.
As required by AASB 5 Non-current Assets Held for Sale and Discontinued Operations the 2012 comparative discontinued operations disclosed
below have been re-presented to show the effects of this classification.
Financial period 30 September 2012
Operations within the Group’s Forestry division, and the Group’s investment in Seed Technology and Marketing Pty Ltd (‘Seedmark’), which forms part
of the Rural Services segment, were classified as discontinued operations, or were disposed of during the period ended 30 September 2012 and
reported as discontinued operations.
The Group’s Forestry division continues to be classified as discontinued operations in the current financial year.
Sales revenue
Cost of sales
Other revenues
Other expenses
Cont
2013
$000
Disc
2013
$000
Total
2013
$000
Cont
2012
$000
Disc
2012
$000
Total
2012
$000
1,657,112
305,542 1,962,654
1,813,205
359,353
2,172,558
(1,332,713)
(269,542) (1,602,255) (1,426,921)
(317,360) (1,744,281)
2,415
13,566
15,981
13,929
20,692
34,621
(568,777)
(238,111)
(806,888)
(457,593)
(121,946)
(579,539)
Share of profit of associates and joint ventures
Profit/(loss) on sale of non current assets
11,475
25,939
(3,105)
8,370
14,097
(6,325)
7,772
(40,278)
(14,339)
179
26,956
27,135
Profit/(loss) before net borrowing costs and tax expense
(204,549)
(231,928)
(436,477)
(43,104)
(38,630)
(81,734)
Interest revenue
Finance costs
Profit/(loss) before tax expense
Income tax benefit/(expense)
Net profit/(loss) for year
8,792
1,471
10,263
30,753
1,300
32,053
(31,032)
(4,808)
(35,840)
(38,626)
(1,916)
(40,542)
(226,789)
(235,265)
(462,054)
(50,977)
(39,246)
(90,223)
(65,966)
26,150
(39,816)
38,313
(5,463)
32,850
(292,755)
(209,115)
(501,870)
(12,664)
(44,709)
(57,373)
Net profit/(loss) attributable to non-controlling interest
3,057
328
3,385
3,194
33
3,227
Net profit/(loss) attributable to members of the parent entity
(295,812)
(209,443)
(505,255)
(15,858)
(44,742)
(60,600)
Revenue and expenses
Sales revenue:
Sale of goods and biological assets
Commission and other selling charges
Other sales related income
Other expenses:
Distribution expenses
Marketing expenses
Occupancy expenses
Administrative expenses
Forestry fair value adjustments
1,458,292
304,441 1,762,733
1,593,518
356,398
1,949,916
168,138
30,682
856
245
168,994
190,540
30,927
29,147
1,658
1,297
192,198
30,444
1,657,112
305,542 1,962,654
1,813,205
359,353
2,172,558
260,879
263,138
260,856
7,253
31,610
78,357
23
358
7,611
3,108
34,718
49,560
127,917
(7,422)
(6,664)
(14,086)
9,359
33,759
97,567
36,025
32
475
263,170
9,834
3,583
37,342
53,554
151,121
44,050
80,075
Write down of assets to be divested or discontinued
-
189,798
189,798
-
4,198
Impairment of assets retained
Restructuring, redundancy and other writeoffs
Change in fair value of financial and other assets
137,302
57,861
2,960
-
137,302
18,634
-
1,741
59,602
(889)
14,125
187
3,147
-
1,929
4,198
18,634
13,236
1,929
568,777
238,111
806,888
457,593
121,946
579,539
Profit/(loss) on sale of non current assets
Non current assets held for sale
Equity accounted investments
Property, plant and equipment
Intangibles
Controlled entities
-
(2,594)
(2,594)
25,988
(49)
-
-
-
-
224
25,988
(49)
224
(37,908)
(37,908)
-
-
179
-
-
25,939
(40,278)
(14,339)
179
16,620
16,620
(293)
-
-
(293)
179
-
10,629
26,956
10,629
27,135
113
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 37. Discontinued Operations (continued)
The net cash flow of the discontinued operations are as follows:
Operating activities
Investing activities
Financing activities
Net cash inflow / (outflow)
(a) Assets and liabilities – held for sale operations
Forestry assets
Receivables
Investments in associates and joint ventures
Property, plant and equipment
Investment property
Australian Fine China Pty Ltd
Seafood Delicacies Ltd
Fair value less costs to sell at the end of the period
Forestry assets
2013
$000
(47,603)
59,348
1,894
13,639
-
500
-
4,350
4,850
1,250
-
6,100
2012
$000
(30,814)
77,469
(33,019)
13,636
12,260
1,726
340
52,637
66,963
-
4,511
71,474
As announced by the Company on 3 October 2011, the Board of Directors have resolved that all operations of the Group’s Forestry division would be
held for sale, effective 30 September 2011. It is considered that shareholder value is better served by withdrawal from the Forestry sector to release
and redirect capital to debt reduction and reinvestment in other operations.
The Forestry division comprises a number of separate disposal groups. The remaining disposal groups are Pulpwood Esperance and Red Mahogany.
The major classes of assets within the disposal groups are investment properties. There may be factors beyond the Group’s control that impact the
timing of the ultimate sale of these disposal groups however at present it is expected all disposal groups will be sold within twelve months.
Liabilities have also been recognised as a result of classifying the Forestry division as held for sale. Where it is expected that these liabilities will be
settled and not sold to third parties they have been treated as part of continuing operations as they do not meet the accounting standard
requirements of held for sale.
All disposal groups are reported in the Forestry segment as detailed in note 27 of the financial report.
During the 12 months ended 30 September 2013, the Group received proceeds of $63.3 million from asset disposals which had a carrying amount
of $65.9 million. The Group also recognised fair value decreases of $8.8 million to revalue remaining assets to the lower of their carrying value or fair
value less costs to sell. In addition, provisions of $7.4 million have been reversed during the period.
114
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2013
Note 38. Parent Entity
Information relating to the parent entity of the Group, Elders Limited:
Results:
Net profit/(loss) for the period after income tax expense
Total comprehensive income/(loss)
Financial position:
Current assets
Non current assets
Total assets
Current liabilities
Non current liabilities
Total liabilities
Net assets
Issued capital
Hybrid equity
Retained earnings
Employee equity reserve
Reserved shares reserve
Total equity
2013
$000
2012
$000
(530,744)
(530,744)
(134,181)
(134,181)
2,145
48,407
50,552
4,352
-
4,352
46,200
3,414
580,368
583,782
2,285
251
2,536
581,246
1,269,153
1,270,323
145,151
145,151
(1,368,731)
(836,815)
627
-
397
2,190
46,200
581,246
Guarantees
As disclosed in note 30, 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 deficiency of any of the company’s party to the Deed in the event of
any of those companies being wound up.
The parent entity is a party to various guarantees and indemnities pursuant to bank facilities and operating lease facilities extended to the Group and
commitments under unsecured notes.
Note 39. Subsequent Events
On or about 25 October 2013 members of the Group entered into agreements with major landlords in the Esperance region which have leased land
to members of the Group in connection with the Group’s Forestry business, including the Agricultural Land Trust (ALT). If implemented, those
agreements will result in members of the Group being released from significant ongoing forestry lease liabilities in consideration for members of the
Group transferring land, paying surrender fees, agreeing to cancellation of ALT units and forgiving debt owed by ALT to Elders. This financial report
assumes that these transactions will be implemented. At the signing date of this report, the transactions remain subject to certain conditions
precedent, including ALT unit holder consent, which may or may not be satisfied.
There is no other matter or circumstance that has arisen since 30 September 2013 which is not otherwise dealt with in this report or in the
consolidated financial statements, that has significantly affected or may significantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in subsequent financial periods.
115
Directors’ Declaration
In accordance with a resolution of the Directors of Elders Limited, I state that:
1.
In the opinion of the Directors:
(a) the financial statements and notes of Elders Limited for the financial year ended 30 September 2013 are in accordance with the
Corporations Act 2001, including:
(i) Giving a true and fair view of its financial position as at 30 September 2013 and of its performance for the year ended on that date; and
(ii) Complying with Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 2(b)
(c) subject to the material uncertainty set out in note 2(a), there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable.
2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the
Corporations Act 2001 for the year ended 30 September 2013.
3.
In the opinion of the Directors, as at the date of this declaration but subject to the material uncertainty set out in note 2(a), there are reasonable
grounds to believe that the members of the Closed Group identified in note 30 will be able to meet any obligations or liabilities to which they
are or may become subject, by virtue of the deed of cross guarantee.
On behalf of the Board
M C Allison
Chairman
M G Jackman
Director
Adelaide
18 November 2013
116
117
118
ASX Additional Information
(a) Distribution of Equity Securities as at 31 October 2013
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – maximum
The number of holders holding less than a marketable parcel
No of Shares
No. of Holders
No. of Hybrids
No. of Holders
4,501,603
15,483,198
19,414,391
114,394,796
301,219,341
455,013,329
17,050
5,843
2,491
4,044
464
391,863
219,859
80,233
469,046
338,999
29,892
1,500,000
Ordinary Shares
22,222
1,529
113
11
12
2
1,667
Hybrids
55
(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.
(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 31 October 2013
The twenty largest holders of Elders Ordinary Shares were as follows:
No. of Shares % of Shares
Citicorp Nominees Pty Limited
Ruralco Holdings Limited
Bell Securities Pty Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
Pacific Agrifoods Investments Pty Ltd
National Nominees Limited
Mr Jin Koo Lee
Hishenk Pty Ltd
Pangaea Trade (Aus) Pty Ltd
J P Morgan Nominees Australia Limited
Mark Hosking
Grozier Pty Ltd
Netherhill Pty Ltd
Ms Sarah Jane Botten
Heytesbury Pty Ltd
Ms Weiming Jiang
Clearing & Management Services Pty Ltd
Mr Kevin David Pfeiffer
Total
Total held by twenty largest ordinary shareholders as a percentage of this class is 38.73%
The twenty largest holders of Elders Hybrids were as follows:
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
C S Fourth Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited - A/C 2
Mr Robert Lee Petersen
The Australian National University
BNP Paribas Noms Pty Ltd
HSBC Custody Nominees (Australia) Limited-GSCO ECA
J P Morgan Nominees Australia Limited
Brazil Farming Pty Ltd
Luton Pty Ltd
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
Mr Giuseppe Pulitano + Mrs Verona Pulitano
Di Iulio Homes Pty Limited
Mr Guthrie John Williamson
Equitas Nominees Pty Limited
Sidmouth Pty Limited
Mr Kui She Hung
ABN Amro Clearing Sydney Nominees Pty Ltd
Total
55,850,834
54,029,638
14,966,713
11,028,873
4,960,076
4,368,372
3,354,557
3,252,601
2,653,314
2,500,000
2,423,330
2,206,327
2,074,586
2,000,000
2,000,000
1,900,000
1,833,055
1,713,739
1,600,000
1,500,330
12.27
11.87
3.29
2.42
1.09
0.96
0.74
0.71
0.58
0.55
0.53
0.48
0.46
0.44
0.44
0.42
0.40
0.38
0.35
0.33
176,216,345
38.73
No. of Hybrids % of Hybrids
203,607
135,392
74,602
72,769
72,256
50,000
37,416
36,530
35,339
27,000
19,000
17,300
16,087
10,747
10,000
10,000
9,081
8,000
7,171
7,011
859,308
13.57
9.03
4.97
4.85
4.82
3.33
2.49
2.44
2.36
1.80
1.27
1.15
1.07
0.72
0.67
0.67
0.61
0.53
0.48
0.47
57.29
Total held by twenty largest hybrid holders as a percentage of this class is 57.29%
(e) The number of shares held by the substantial shareholders listed on the Company’s register of substantial shareholders as at 31 October 2013 were:
Shareholder
Ruralco Holdings Limited
QBE Insurance Group Limited
Number of shares
54,029,638
45,882,132
119
Shareholder Information
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
Enquiries
Shareholders with enquiries about their shareholdings
should contact the Company’s share registry,
Computershare Investor Services on the above
contact details.
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 identification and security purposes, you will need
to know your Holder Identification 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 at www.investorcentre.com
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 File Number (TFN) to the Company. Shareholders
who have not already quoted their TFN can do so
by contacting Computershare. A notification
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 notification
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.
Annual Report mailing list
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.
Investor information
Information about the Company is available from a
number of sources:
• Website: www.elderslimited.com
• Subscribe: 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 Briefings.
All publications can be obtained either through the
Company’s website or by contacting the Company.
120
Notes
121
Notes
122
Notes
123
Notes
124
Company Directory
Directors
Mr Mark C Allison, BAgrSC, BEcon, GDM, FAICD, Chairman
Mr Malcolm G Jackman BSc Bcom, Managing Director
Mr James H Ranck BS Econ FAICD
Ms Josephine M Rozman BEc, CA, GAICD
Secretary
Mr Peter G Hastings BA LLB GDLP
Registered Office
Level 3, 27 Currie Street
Adelaide, South Australia, 5000
Telephone: (08) 8425 4000
Facsimile: (08) 8410 1597
Email: information@elders.com.au
Website: www.elderslimited.com
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
Commonwealth Bank of Australia
National Australia Bank
Rural Bank Limited
Coöperative Centrale Raiffeisen – Boerenleenbank
(Rabobank Australia)
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
The Trust Company (Australia) Limited (formerly
known as Permanent Trustee Company Limited)
Level 3, 530 Collins Street
Melbourne, Victoria, 3000
Helping our
clients to make
more possible
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