Since 1839 Elders has been an
integral part of Australia’s rural
landscape and in 2014 has celebrated
175 years of knowledge, experience
and advice.
In celebrating this special milestone
we’ve recognised our proud history
and contribution to Australian
rural life and have also looked to the
future, reinforcing our ongoing
commitment to Australian agriculture.
We thank our loyal employees,
clients, shareholders and all those
who have joined us on our journey
over the last 175 years. We look
forward to the future.
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2014
ANNUAL
REPORT
Company Directory
Directors
Mr James H Ranck, BS Econ, FAICD, Chairman
Mr Mark C Allison, BAgrSC, BEcon, GDM, FAICD
Mr James A Jackson, BCom, FAICD
Mr Ian Wilton, FCPA, FAICD, FCCA(UK)
Secretaries
Mr Peter G Hastings, BA LLB GDLP
Ms Nina M Abbey
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
National Australia Bank
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
Level 3, 530 Collins Street
Melbourne, Victoria, 3000
LOOKING
TO THE FUTURE
In our 175th year we’re recognising where we’ve been and we’re
celebrating where we’re going. The one constant throughout the years
has been our people; their pride and passion for the Elders brand and
the commitment to the work they do. As we look towards the future
we’re firmly focused on building on our strong platform and creating
value for all stakeholders.
Father and son livestock team Lindsay and Aaron Hill at the annual Hamilton weaner sales.
ELDERS IS
Elders is an Australian agribusiness that seeks to create
real value for all its stakeholders in Australian and
international markets.
We do this through approximately 2,000 employees
in more than 370 points of presence across Australia,
China and Indonesia who use their expertise and
knowledge to provide primary producers with the inputs,
advice, marketing options and trading platforms they
need to get the most out of their own businesses.
Elders is an integral part of the Australian rural
landscape and an iconic brand that draws on its proud
175 year history to build a strong future.
Integrity • Accountability • Teamwork • Customer Focus • Innovation
1
Our traineeship program has been specifically designed by the top
sales staff in our business to ensure it provides practical and
realistic training to the next generation of stock and station agents.
The combination of hands on experience, on the job training and
face-to-face learning ensures our first class agricultural knowledge
and experience is retained in the industry and provides valuable
career opportunities for young people in rural and regional areas.
Experienced livestock manager, Steve Ridley, from Goulburn passes on his knowledge to Wagga
Experienced livestock manager, Steve Ridley, from Goulburn passes on his knowledge to Wagga
Wagga trainee Laura Tansell, Julia Creek territory sales manager Lindsay Brown and Bendigo
Wagga trainee Laura Tansell, Julia Creek territory sales manager Lindsay Brown and Bendigo
trainee Jake Smith at the 49th Herefords Australia national show and sale in Wodonga.
trainee Jake Smith at the 49th Herefords Australia national show and sale in Wodonga.
INVESTING
IN THE FUTURE
2
OUR
BUSINESS
Retail Products
Agency Services
Financial Services
Feed & Processing
Services
Live Export
Services
Farm Supplies
Livestock
Fertiliser
Wool
Grain
Real Estate
Banking
Insurance
Killara Feedlot
Short haul livestock
Elders Indonesia
Long haul livestock
Financial Planning
Elders China
$888m retail sales
9.6m head sheep
$2.9b loan book
685k tonnes fertiliser
1.7m head cattle
$1.5b deposit book
352k wool bales
1.2m grain tonnes
$1.4b real estate
sales
$580m gross
written premium
144k head short
haul
42k head long haul
Killara
47k head turnoff
Indonesia
19k head turnoff
China
$11m sales
Online platforms
Agsure
Auctions Plus (50%)
Kazakhstan
Pakistan
Japan
China
Vietnam
Thailand
Indonesia
* Based on FY14 statistics, excluding discontinued operations.
3
PLANNING
FOR THE FUTURE
Our team of agronomists and livestock production advisers provide
clients with expert advice and support to help them maximise the
performance of their farming operations. By keeping up to date with
the latest technical knowledge and market trends our people are able
to help clients plan their production and ensure that our offering of
products and services is tailored to their individual needs.
Finley branch manager and agronomist Stacey Doolan
Finley branch manager and agronomist Stacey Doolan
conducts a soil analysis with soil specialists near Albury.
conducts a soil analysis with soil specialists near Albury.
4
EIGHT POINT
PLAN
In 2014 we released our three year strategic plan
with the aim of achieving $60 million earnings before
interest and tax (EBIT) and a 20 percent return on
capital (ROC) in 2017.
The Eight Point Plan marks a significant step in our
evolution to being an efficient user of capital that
creates real value for all our stakeholders.
Values,
Performance & Brand
Delivering our strategies
through a values, safety and
performance based culture that
maximises the iconic Elders
brand and positioning
Geographical
Coverage &
Distribution Channels
Strengthening and
expanding our range of
distribution channels
Retail Products
Business improvement
of our farm supplies and
fertiliser products
Agency Services
Strengthening and expansion
of our wool, livestock, real
estate and grain products
STRATEGIC INTENT:
Elders will be an
agribusiness creating real
value for all stakeholders
in both Australian and
international markets
Financial Services
Strengthening and expansion
of our banking, insurance, and
financial planning products
Feed &
Processing Services
Improvement and
expansion of our feed and
processing business
Live Export Services
Controlled growth of our
live export business
Cost, Capital & Efficiency
Continuous efficiency
gains with cost and
capital reduction
5
2014
THE YEAR
IN BRIEF
Reporting Period, Terms
and Abbreviations
Abbreviations and terms
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 “2014” or
“2014 financial year” refer to the 12
months ended 30 September 2014 unless
otherwise stated. References to “2013”
or other years refer to the 12 months
ended 30 September of that year.
Annual Report
This document has been prepared to
provide shareholders with an overview of
Elders Limited’s performance for the 2014
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.
Notice of Meeting
The 2014 Annual General Meeting of
Elders Limited will be held on Thursday,
18 December 2014, commencing at
10.00am in The Banquet Room,
Adelaide Festival Centre, King William
Street, 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.
Financial Highlights
Year ended 30 September
2014
2013
Continuing sales revenue
Underlying EBITDA
Underlying EBIT
Reported net financing costs
Reported profit / (loss) after tax
Underlying profit / (loss) after tax
Net debt
Term debt
Operating cash flow
Reported earnings per share (basic)
Reported earnings per share (diluted)
Underlying earnings per share (basic)
Underlying earnings per share (diluted)
Key Ratios
EBIT margin
Return on capital
Gearing
Key Share Data
Share price
Market capitalisation
Number of shareholders
$m
$m
$m
$m
$m
$m
$m
$m
$m
cents
cents
cents
cents
%
%
%
$
$m
1,431.5
1,422.1
30.5
27.3
(23.2)
3.0
8.8
(137.6)
(34.1)
15.1
0.6
0.2
1.7
0.6
1.9
11.7
241
0.18
91.6
(43.5)
(48.9)
(33.2)
(505.3)
(68.5)
(255.2)
(143.8)
(81.6)
(99.6)
(99.6)
(13.5)
(13.5)
(3.4)
(9.5)
552
0.11
50.1
30,240
31,854
Elders Limited ABN 34 004 336 636
Ordinary shares on issue
523,265,328
455,013,329
6
PROGRESS
Safety performance
• Lost time injuries reduced by 39.4 percent
• Lost time injury frequency rate reduced from 7.4 to 4.7
• Medical treatment injury frequency rate reduced from 13.5 to 11.6
Operational performance
• $76.2 million turnaround in underlying EBIT
• All segments of the business have lifted earnings contribution
• Eight Point Plan launched with structured implementation
• EBIT margin lifted to 2 percent from -3 percent
• ROC at 12 percent up from -10 percent
Leadership renewal
• Two new directors with agribusiness experience appointed
• Chief Executive Officer with corporate strategy and
agribusiness experience appointed
• Executive management restructured to align capabilities
with strategy
• Ongoing investment in training and development
Capital management
• Working capital reduced 27 percent
• Net debt reduced by 46 percent
• Divestment of non-core assets completed
• $57 million equity raising undertaken
7
CHAIRMAN’S
REMARKS
Hutch Ranck
In my first report to shareholders as Chairman of Elders Limited,
it gives me great pleasure to announce that the 2014 financial
year has been one of significant positive change for the Company.
One of the most significant highlights of the past year is
your Company’s turnaround in financial performance.
I’m pleased to advise that for the first time in six years,
Elders has delivered both a statutory and underlying
profit. This reinforces that Elders, now operating as a
focused agribusiness, has established what we consider
to be a firm foundation from which to generate further
growth and value for its shareholders.
Our continued focus on debt reduction has seen us again
achieve significantly lower debt. Net debt is 46 percent
lower than last year, with term debt subsequently
eliminated in October 2014 following receipt of proceeds
from recapitalisation.
Investors have responded positively to our signs of
turnaround with the completion of a $57 million equity
raising which has seen us reset our share register and
balance sheet.
Underpinning our turnaround and our plans for future
growth is our three year strategy. Our Eight Point Plan has
been developed by Elders’ leadership and is our blueprint
and goal for becoming Australia’s leading agribusiness
and achieving $60 million earnings before interest and
tax and 20 percent return on capital in 2017.
2014 has also been the year in which Elders celebrated
its 175 year anniversary. Many people have helped
build and shape Elders into the company we know today
and it is timely that this year has signalled our return
to what we have always done best: supporting Australian
agriculture and opening up opportunities for primary
producers, both domestically and overseas.
Other features that will be outlined in this report are
board and management renewal, our new banking
facilities and our significant progress towards an injury
free workforce.
Financial results
Elders has achieved a significant turnaround in its
financial results, recording a $3 million statutory profit
in the 12 months to 30 September 2014, compared with
the $(505.3) million loss recorded in the previous year.
The statutory result includes a number of items that
are attributable to discontinued operations or unrelated
to operating financial results, totalling $5.8 million.
These items relate to the net impact of asset divestments
during the financial year and operating losses relating
to a small number of forestry leases which have been
largely offset by positive tax items.
The underlying profit is therefore $8.8 million, up
$77.3 million on the previous year.
The improved underlying profit has been achieved
through an uplift in all of the Company’s business
units and a 10 percent reduction in costs. Each of these
areas are discussed in detail in the Chief Executive
Officer’s report.
These results are particularly pleasing given the seasonal
and market fluctuations that are inherent in the
agricultural sector.
Debt reduction and finance
With the support of our financiers, over the last five years
Elders has worked on reducing its debt which totalled in
excess of $1 billion at the commencement of the global
financial crisis.
In the 2014 financial year, net debt was reduced by
46 percent to $137.6 million. The Company’s term debt
at 30 September 2014 was $34.1 million which has
subsequently been repaid through the equity raising
proceeds, received in October.
8
Safety
Elders is committed to the safety of its people including
staff, contractors, clients and members of public.
The Elders safety statement is “we believe that nothing
is so important that it cannot be done safely”. Safety
performance was again a key priority for the Company
during the year and the continued focus on safety has
resulted in a 36.5 percent reduction in the Lost Time
Injury Frequency Rate (LTIFR).
The Chief Executive Officer will further outline the safety
improvements made throughout the year, and whilst any
improvement is commendable our safety goal is an injury
and incident free workplace and we will continue to work
towards this objective.
Board and leadership renewal
Leadership renewal has occurred at both a board and
executive level which ensures the Company’s
management aligns with our position as a pure
agribusiness.
You will see from the key management personnel table in
the remuneration report on page 42 that there has been
significant movement. As Chairman I am confident we
have the appropriate experience and expertise at a board
and executive level to implement the Eight Point Plan
and create real value for all stakeholders.
During the year Mr Malcolm Jackman stepped down
as Chief Executive Officer and Managing Director,
a role which he had held since 2008, and Ms Josephine
Rozman resigned from the board, having served as
a non-executive director since 2011. On behalf of the
board I would like to record our appreciation for the
contributions made to the company by Ms Rozman
and Mr Jackman.
Following Mr Jackman’s departure, then-Chairman
Mr Mark Allison chaired an Executive Committee
comprising all other members of the Company’s senior
leadership team, pending completion of a formal
executive search for a CEO successor.
Concurrent with this search, two new non-executive
directors, Mr James Jackson and Mr Ian Wilton, were
appointed to the board in April and both bring extensive
agribusiness experience and strong financial
management skills to the Company.
Internal and external candidates for the Chief Executive
Officer and Managing Director role were examined
during an extensive recruitment process conducted by an
external executive search firm. The new and expanded
Board concluded that Mr Allison’s extensive agribusiness
and corporate strategy experience made him the best
candidate and he was subsequently appointed Chief
Executive Officer and Managing Director in April.
In line with our commitment to reduce debt we
commenced a refinancing during the financial year,
which was completed in October 2014. We now
enjoy the support of three core financiers, ANZ, NAB
and Rabobank, and the new banking facilities comprise
flexible working capital lines on normalised commercial
terms suited to a focused agribusiness.
The Board’s policy is for the Company to maintain
minimal to zero term debt. As such the new refinance
arrangement does not include any term debt facilities
but instead includes a revolving working capital cash
advance facility. This model is better suited to the
business and the seasonal fluctuations it encounters.
The modest borrowing levels are a significant
achievement and without the distraction of divestment
activity or high interest payments, the Company can
now devote its entire focus in 2015 to being Australia’s
leading agribusiness.
Equity raising and shareholder value
During the 2014 financial year Elders commenced a
$57 million equity raising which was completed in
October 2014. As mentioned above, the proceeds of the
equity raising, together with the proceeds of asset sales,
have been applied to debt reduction.
The equity raising consisted of a $10.2 million placement
to institutional and sophisticated investors and a
$47 million three-for-five traditional non-renounceable
entitlement offer to all eligible shareholders. We are very
pleased with the interest that was shown in the equity
raising and the calibre of local and offshore investors that
took up the opportunity to invest in Elders.
The recapitalisation of Elders provides a sound platform
to generate value for all stakeholders and free of the
distraction of debt reduction and divestments, the
Board and management will now be totally focused on
efficiency improvements, growth and improved return
on capital.
A question that has arisen since the equity raising is
why we did not include hybrid shareholders in the offer.
In undertaking the placement, the board gave due
consideration to the participation of both ordinary
shareholders and hybrid holders.
Ultimately, the Elders Board sought to reset the Elders
ordinary shareholder register by allocating shares to
new high quality domestic and international institutional
investors with long term investment outlooks. This
allowed the Company to raise new capital and rebuild its
balance sheet and normalise its banking arrangements.
The Board considered this imperative in setting the
appropriate capital structure and platform to create value
for all stakeholders.
Having now substantially addressed the Company’s
debt burden, the Board and Management’s priority in the
short to medium term is to direct cash flow back into
reinvigorating and strengthening the business to grow
earnings and returns. As a result, ordinary share
dividends (and hybrid distributions) are unlikely to
resume in the near term.
9
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 26 of
this report.
Closing remarks
In closing, I would like to express sincere gratitude and
appreciation on behalf of directors for the hard work
and dedication of our employees, the loyalty from our
clients, customers and security-holders, the support of
our suppliers and financiers and the faith that all other
stakeholders have shown in Elders.
This report includes details of the progress the Company
is making towards its diversity strategy. Achieving
diversity in the workplace is a critical factor in Elders
attracting, retaining and leveraging a broader talent pool
to most effectively deliver organisational results.
Progress is being made to build diverse talent pipelines
in what is traditionally a male dominated industry.
Clearly further and ongoing action is required to address
the representation of women in leadership roles and
we have in place a Diversity Action Plan which involves
a continual focus on establishing policies, processes
and systems in areas such as recruitment and selection,
flexible working arrangements, remuneration and
leadership capability.
The 2014 results reveal that Elders has established
a platform from which to create value for all our
stakeholders, both in Australia and overseas, and our
Chief Executive Officer will outline how we plan to
implement our Eight Point Plan at an operational level.
As I mentioned at the start of my report, the journey
to this point has been a challenging one. Elders is
certainly in a much better position than it was
12 months ago with modest debt levels, a simpler
and focused structure, and improvements in safety
and operating performance. However, I am conscious
there is still a long way to go until shareholders will
view our performance as acceptable.
The board is confident that the right foundation is
in place to create value for its stakeholders and
is committed to providing the appropriate level of
guidance, oversight and support to the management
team and employees in achieving this goal. I look
forward to sharing our progress with you.
Hutch Ranck
Chairman
Chairman Hutch Ranck speaks with Walcha trainee Sam Gemmell, Roma trainee Jake Smith,
Chairman Hutch Ranck speaks with Walcha trainee Sam Gemmell, Roma trainee Jake Smith,
Geraldton trainee Chad Golding, Clermont territory sales manager Jake Kennedy and
Geraldton trainee Chad Golding, Clermont territory sales manager Jake Kennedy and
Ballarat trainee Kirsty Taylor at a workshop in Albury.
Ballarat trainee Kirsty Taylor at a workshop in Albury.
10
REPORT
BY THE
MANAGING
DIRECTOR
Mark Allison
2014 has been a year of significant change for Elders and the
focus of management has been on four key priorities:
safety performance, operational performance, leadership
renewal and capital management.
When I outlined those priorities as Chairman 12 months
ago, Elders was still very much in survival mode.
However, it was abundantly clear that a dedicated focus
on these priorities at all levels of the organisation was
what was needed to ensure we established a strong
platform from which to create value for all stakeholders.
I’m pleased to report that progress has been made
against each of those four priorities and we now have
that strong platform in place.
Safety performance: A continued focus on safety has
seen lost time injuries reduce by nearly half. This means
14 less of our people have been hurt during the year
and is a good step in our journey to zero injuries.
Operating performance: At the underlying profit level
we have achieved a $77.3 million turnaround in
performance over the previous year and all areas of the
business have lifted contribution.
Leadership renewal: With the appointment of two new
non-executive directors we now have a board with an
agribusiness focus and we have aligned our management
structure with our strategy and business segmentation.
Capital management: Our debt has been reduced,
the completion of the equity raising in October will allow
working capital to be optimised in line with seasonal
and market demand and the normalised banking terms
now in place set the stage for growth.
2014 has also been a year of recognising our proud
175 year history. Elders has been a part of the
Australian rural landscape for generations and as
current custodians of the Elders brand we owe it
to our employees, clients, shareholders and all other
security-holders to ensure we continue to play an
important role in growing this country’s agricultural
wealth and prosperity into the future. I’m confident
that our current position as a focused agribusiness
will assist in achieving this aim.
Financial performance
Elders’ improved financial performance in the 2014
financial year, incorporating a $3 million reported
profit and a $8.8 million net underlying profit, is a
significant highlight.
All products and geographies contributed to the
$8.8 million underlying profit, a $77.3 million turn-
around on the previous year. This represents a strong
platform to operate our business from in the future.
11
Operational results
Elders’ operations contributed an underlying EBIT
profit of $27.3 million, a $76.2 million improvement on
the previous year’s $(48.9) million EBIT loss. This
improvement was largely driven by a $13.7 million
increase from Agency Services, a $30.4 million increase
in Live Export Services and $28.5 million in cost savings.
The major contributor in the Agency Services business
was a recovery in cattle and sheep prices and volumes,
driven by turnoff and live export demand.
Included in the Live Export Services result is a
$24.2 million balance sheet adjustment recorded in the
2013 financial year. Notwithstanding this adjustment
live export still saw an improvement of $6.2 million,
driven by strong demand in Asian markets.
The cost savings are the result of initiatives undertaken
at the end of last financial year to refocus and simplify
the business.
As outlined above, capital management has been
a priority for the business and we have seen a
27 percent reduction in working capital usage from the
previous year. A $40 million reduction was achieved
through lower retail debtors and inventory levels and
the divestment of non-core businesses contributed
approximately $36 million. These gains offset a
$12 million increase in working capital as a result of
restocking the live export business.
Improvements in working capital also translate to strong
operating cash flows for the year, with the core business
generating more than $50 million in cash flows before
taking into account non-recurring restructuring and
Forestry exit payments.
As stated by the Chairman in his report, reducing
debt levels has been a significant achievement for
the Company. The proceeds from the sale of Elders
New Zealand, JS Brooksbank, Charlton Feedlot, Elders
Insurance, Kilcoy Pastoral, Australian Fine China
and AWH were applied to debt reduction. During the
reporting period we also completed our Forestry exit
program which significantly reduces our commitments
to approximately $2 million per annum.
The Company’s operational results are outlined in
further detail in the Operating and Financial Review
which begins on page 15.
Eight Point Plan
Underpinning our ability to continue our turnaround
journey is our Eight Point Plan; our strategic vision for
becoming an efficient user of capital and a business that
produces acceptable returns for all our stakeholders
while servicing our customers’ needs. In tangible terms
we have set ourselves a strategic target of $60 million
EBIT and 20 percent return on capital in 2017.
The Eight Point Plan was developed by more than
40 leaders from across our business who identified
what we exist for, what we excel at and how we want to
deliver on the needs of our clients. Through that process
we were able to identify eight tangible and achievable
agribusiness objectives that we feel confident we can
execute over the next three years.
An overview of the Eight Point Plan is available on
page 5 of this report.
It is not practical to outline each Eight Point Plan
initiative in this report as some are still in development
but I will detail some initiatives that are already
underway and are likely to offer the greatest opportunity
for improvement.
Values, Performance and Brand
In 2015 a key priority is managing the performance of
our workforce to lift productivity. Underpinning a
performance culture is a workforce where all employees
understand what is expected of them through realistic,
achievable performance objectives.
To bring transparency and consistency to the
performance process, for the 2015 financial year we
have introduced a structured, online performance
management system. This system enables us to
cascade performance objectives from our Eight Point
Plan into individual goals for employees, right to the
front line. To support the performance process we
will continue to focus on developing leadership
capability throughout 2015.
Geographical coverage and distribution
channels
By conducting a comprehensive benchmarking and
branch improvement plan across our business we can
identify underperforming branches and work on
ways that we can lift performance, or identify a more
beneficial ownership structure or geographical coverage
model. We’ll also be looking at a wholesale business
model, a new channel to market.
Retail products
In the farm supplies and fertiliser space we’re seeking
to develop and implement a capital light/return on
capital driven business model. This means working very
closely with our supply partners to develop mutually
beneficial business models.
Agency services
Livestock is the largest component of our business
and of course there are many seasonal and market
factors that can impact pricing and volumes. Our focus
is therefore on managing the things we can control –
like looking at ways to grow volume and share
though the expansion and investment in our current
people and attracting new people to our business.
Redeveloping our remuneration model to make sure
it rewards the high performers and drives sales
performance is one way to achieve this. It will also
help to realign our cost base giving us variability during
times of unfavourable market conditions.
12
We’re also piloting a facility to allow our clients to
access funding for trading livestock. Traditionally, this
service had been funded by Elders; however, capital
constraints have limited our capacity to fund it. Using a
third party to facilitate this will allow for an increased
turnover of trading stock. Whilst it is still in its infancy
we’re seeing some promising results.
Financial Services
Our financial services business incorporates our
distribution arrangements with Rural Bank and Elders
Insurance, plus the additional joint ventures of Elders
Financial Planning and Elders Home Loans. The focus for
2015 will be on continuing new business growth
together with driving cross-referrals and maximising
opportunities throughout the portfolio.
Feed and Processing Services
Developing and implementing a disciplined return on
capital based feedlot capacity utilisation model will
be a focus for the coming year. We also plan to explore
opportunities to expand and establish integrated
domestic and international red meat supply chains.
Live Export Services
We continue to see strong demand for live export in both
long-haul and short-haul markets. The priority for 2015
will be to maintain controlled growth and to investigate
opportunities in Eastern European and Middle Eastern
markets. Furthermore, all agreed actions arising from
the PPB Advisory investigation as outlined in the 2013
annual report have been actioned with the next step to
implement an automated inventory management system.
These measures ensure appropriate and robust controls
and systems are in place.
Cost, capital and efficiency
As a seasonally-based business, it is important for
Elders to have an appropriate cost and capital base to
allow it to generate earnings in good and bad seasons.
A number of cost-saving initiatives associated with the
use of property, information technology and vehicles
have been identified and a methodical and ongoing
approach will be taken with regards to efficiency gains
and cost reduction.
Safety
Safety continues to be a significant focus for our
business and our ultimate goal is to be injury free.
For the 12 months to 30 September 2014, Elders
achieved an improvement in the Lost Time Injury
Frequency Rate (LTIFR), from 7.4 in 2013 to 4.7.
The number of lost time injuries (LTIs) reduced by
39.4 percent. This is a step in the right direction
towards our goal, but there is still work to be done.
A large component of Elders’ injuries stem from our
livestock areas and manual handling branches so these
areas will continue to be a focus for us going forward.
In 2015, a safety communication and engagement
plan will be implemented to develop an industry-
leading safety culture within Elders and further reduce
workplace injuries.
People
Elders employed 1,937 full time equivalent (FTE) persons
at 30 September 2014 compared with the previous
corresponding figure of 2,340 persons. The decline in
headcount is attributable to the divestment of assets and
the organisational restructure undertaken at the start
of the financial year to assist the company in becoming
a simpler, more focused agribusiness. The number
of FTEs in Australia as at 30 September 2014 is 1,760.
Our annual employee engagement and effectiveness
survey conducted by Hay Group showed Elders’ overall
engagement and enablement levels are above other
Australian organisations (+3 and +6 respectively).
This provides a very solid foundation upon which to
build on the overall effectiveness of our workforce.
Elders prides itself on investing in the training and
development of its people, particularly young people in
rural and regional areas. Elders’ Traineeship Program,
in place since 2009, is continually reviewed to ensure
it remains aligned with business, graduate and
industry priorities.
The current program focuses on livestock and builds
stock and station agency skills over an 18 month period
through on-the-job training and study of a Certificate IV
in Agriculture. The traineeship program is a successful
tool for building the talent pipeline as 90 percent of
graduate trainees from the current model have been
placed in permanent roles. Since 2012 30 trainees have
graduated from the program, with another 12 trainees
active in the current intake. The success of this program
is reinforced by the number of applications which
continue to increase with each intake.
Training and development isn’t just a focus at the start
of our employees’ careers. The Branch Manager
Development Program has continued to build leadership
capability amongst managers responsible for the
individual performance of Elders branches. In 2014,
59 branch managers completed the program.
As discussed by the Chairman in his report, Elders
continues to work towards improving the diversity of its
workforce, particularly in regards to gender diversity.
The representation of women within Elders’ workforce is
35 percent which is comparable to the agricultural
sector; however, the representation of women in
leadership roles is lower than we desire. This is an area
of specific focus that will be addressed through our
Diversity Action Plan, outlined on page 35 of this report,
and will be underpinned by driving cultural change
throughout the organisation in order to achieve a step
change in our diversity outcomes.
2015 will see a continuation of the trainee program and
learning and development opportunities for employees
in our business. In addition, the Company’s new online
learning and performance management tools will ensure
the training needs of our employees are identified, and
that all employees and managers have a structured
approach to managing performance, and importantly
that individual goals align with the Company’s priorities.
13
Community
As a focused agribusiness, Elders is a large part of
rural life. Our employees live and work in the
communities where we operate, whether that be in
Australia, Indonesia or China, and as a company
we are committed to supporting those communities.
At a community level, Elders branches support local
initiatives and charities and our employees participate
in community service.
At a corporate level, Elders supported a number of
charities and non-government organisations that have
relevance to our client base. Elders supports the
Royal Flying Doctor Service and their work in providing
medical assistance to people living, working and visiting
rural and remote Australia. 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 to advance the interests of
agriculture and primary producers.
Closing remarks
As you can see, 2014 has been about establishing
the foundation to create value for our stakeholders.
In 2015 the focus will be on embedding the initiatives
that create that value.
In order for us to continue towards our goal of becoming
Australia’s leading agribusiness that creates value for
all stakeholders, we need to maintain our disciplined
approach to running the Company.
Like we did in 2014, we have again identified four key
priorities that will guide the management of Elders in
2015; they are:
• Safety Performance;
• Operational Performance;
• Key Relationships; and
• Growth and Efficiency.
The achievements of the past year are indeed significant
so in closing, I’d like to make special mention of our
people. Thank you for your dedication and hard work in
helping Elders achieve its turnaround.
Thank you also to our clients, suppliers, financiers and
of course, our security-holders for your ongoing support
during what has been a challenging period. We look
forward to continuing our journey with you.
Mark Allison
Managing Director
Managing Director Mark Allison inspects potato varieties
Managing Director Mark Allison inspects potato varieties
at the Adelaide Central Markets. Elders has exclusive
at the Adelaide Central Markets. Elders has exclusive
rights to certain potato varieties in Australia.
rights to certain potato varieties in Australia.
14
OPERATING
AND FINANCIAL
REVIEW
Elders is now operating as a pure and focused agribusiness, having
completed its divestment of non-core assets. In Australia, primary
producers work closely with Elders to access products, marketing options
and specialist technical advice across retail, agency and financial product
categories. Our feed and processing business operates a top-tier beef cattle
feedlot in New South Wales, an integrated beef supply chain in Indonesia
and a premium food distribution model in China. Elders also extends our
service to international markets through our live export business.
Elders’ vision is to be Australia’s leading agribusiness that creates value for
all stakeholders in both Australian and international markets.
Elders’ operations include the following product and
service offerings:
cash-based grain marketing options through an
accumulation agreement with ADM Trading Australia.
Retail Products
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 production advice.
Agency Services
Elders provides a range of marketing options for livestock,
real estate, wool, and grain. The Elders livestock network
comprises approximately 400 livestock agents and staff
operating across the entire pastoral area of Australia
and together they conduct on-farm sales to third parties,
regular physical and online public livestock auctions and
direct sales into Elders-owned and third-party feedlots
and livestock exporters. Elders’ real estate agency and
property management services are primarily conducted
in the broadacre, rural residential and livestock property
markets through its rural branches and real estate
offices. Residential and metropolitan real estate services
are mostly conducted through Elders’ network of 144
franchise offices. Elders is one of the largest agents
for the sale of Australian greasy wool and operates a
brokering service for wool growers. Our team of
dedicated wool specialists assist clients with wool
marketing, in-shed wool preparation, ram selection and
sheep classing. Elders offers grain growers a range of
Financial Services
Elders distributes a wide range of financial services
through its Australian network. Our banking and
insurance activities are undertaken in partnerships with
Rural Bank and Elders Insurance (a QBE subsidiary)
respectively, whilst Elders Financial Planning is facilitated
through a joint venture. Collectively they facilitate a broad
spectrum of activities from various banking products
such as deposits, loans, seasonal finance and livestock
trading facilities; and financial planning products
such as succession planning, risk management, and
superannuation and wealth creation.
Feed and Processing Services
In Australia, Elders operates a beef cattle feedlot near
Tamworth in New South Wales. In China, Elders imports
and distributes premium Australian products throughout
China and operates an integrated feedlot, abattoir and
meat distribution business in Indonesia.
Live Export Services
Elders exports live dairy, feeder, slaughter and breeding
cattle and breeding sheep to well-developed and, where
relevant, ESCAS approved, supply chains in a range of
international markets. Livestock are transported by sea or
air freight depending on the market requirements.
15
2014
2013
1,431.5
1,422.1
Change
9.4
51.0
4.6
5.1
(33.4)
27.3
(15.7)
11.6
(1.1)
(1.7)
8.8
(5.8)
3.0
2014
107.9
117.9
25.8
15.3
11.7
(251.3)
27.3
2014
19.3
36.3
15.4
6.2
(49.9)
27.3
15.6
4.2
(27.5)
(41.2)
(48.9)
(15.8)
(64.7)
(1.8)
(2.0)
(68.5)
(436.8)
(505.3)
2013
106.1
104.2
25.8
13.5
(18.7)
(279.8)
(48.9)
2013
13.1
17.4
9.6
(25.8)
(63.2)
(48.9)
35.4
0.4
32.6
7.8
76.2
0.1
76.3
0.7
0.3
77.3
431.0
508.3
Change
1.8
13.7
(0.0)
1.8
30.4
28.5
76.2
Change
6.2
18.9
5.8
32.0
13.3
76.2
Financial Overview
Profit: Reported and Underlying
$m 12 months ended 30 September:
Sales
Underlying EBIT:
Australian Network
Feed and Processing
Live Export
Corporate Services
Underlying EBIT
Net underlying finance costs
Underlying profit/(loss) before tax
Tax on underlying profit/(loss)
Non-controlling interests
Underlying profit/(loss) to shareholders
Items excluded from underlying profit/(loss)
Reported profit/(loss) after tax to shareholders
Underlying EBIT by Product
$m 12 months ended 30 September:
Retail Products
Agency Services
Financial Services
Feed and Processing Services
Live Export Services
Costs
Underlying EBIT
Underlying EBIT by Geography
$m 12 months ended 30 September:
Northern Australia
Southern Australia
Western Australia
International
Functional and Technical
Underlying EBIT
16
The statutory result included a number of items that
are either attributable to discontinued operations or
unrelated to operating financial results. Measurement
and analysis of financial results excluding these items
is considered to give a meaningful representation
of like-for-like performance from ongoing operations
(“underlying profit”).
Items excluded from underlying profit
Underlying profit is a non-IFRS measure and is not
audited or reviewed.
Items excluded from underlying profit are:
$m after tax 12 months ended 30 September:
2014
Explanation of items
AWH divestment
Other divestments
Forestry related
Tax
Other
Items excluded from underlying profit
Underlying Profit
Underlying profit by product
$ million
(16.5)
Net impact on divestment of AWH
Net impact of other divestments during the year
Relates to operating losses for the period
Reassessment and recognition of previously impaired
tax balances on temporary differences based on
Elders improvement in profitability
(1.0)
(2.1)
15.6
(1.8)
(5.8)
0.1
1.0
8.8
Product margin
28.5
(68.5)
0.0
1.8
13.7
1.8
6.2
24.2
FY13
Retail
Products
Agency
Services
Financial
Services
Feed &
Live Export
SG&A
Interest
Tax & NCI
FY14
Processing Services
Services
Elders improved underlying profit by $77.3 million from
a loss of $68.5 million in FY13 to a profit of $8.8 million
in FY14. This significant improvement resulted from:
• Retail Products: Despite a very hot and dry start to
the financial year, solid autumn rainfall provided a
positive start to the winter cropping season in Southern
and Western Australia. This provided farmers with
confidence to sow their full winter seeding program.
The Northern zone remained dry with reduced demand
for farm inputs in 2014. In addition, benefits were
also realised through reduced warehousing and freight
costs from decentralisation of retail management.
• Agency Services: FY14 saw strong performance by
Livestock and Real Estate agency businesses.
Strengthening of sheep and cattle prices and volumes
through drought induced turnoff and robust live
export demand contributed to improved earnings
across all zones.
• Financial Services: Earnings from Banking distribution
has remained steady with significant new lending levels
offsetting strong seasonal inflows to existing clients
across southern Australia and a generally subdued
Northern market.
• Feed and Processing Services: Uplift from improvement
in Killara occupancy, offset by lower margins from
Indonesia due to increasing competitive pressures.
• Live Export Services: There was strong demand from
short and long haul destinations in FY14. In addition,
$24.2 million of improvement relates to balance
sheet adjustment in FY13.
• Costs: Costs have reduced by 10% through benefits
realised from the FY13 restructure. Savings have been
made through decentralisation of retail management,
restructure of network and corporate support and
continued focus on discretionary spending.
17
Cash Flow
Cash Flow
$m 12 months ended
30 September:
2014
2013
Change
Operating cash flow
15.1
(81.6)
96.7
Investing cash flow
93.7
84.6
9.1
Financing cash flow
(126.2)
(55.1)
(71.1)
Highlights from FY14 operating cash flows are:
• $69.0 million cash flow generation from core Elders
business. This was partly driven by lower working
capital levels and a stronger bias in less capital
intensive revenue streams in the Agency segment.
• $18.9 million outflows relating to payments
for interest and tax offset by dividends received
from investments.
Total cash flow
(17.4)
(52.0)
34.7
• $14.7 million outflows associated with restructuring
2014 operating cash flow
$ million
69.0
(18.9)
(14.7)
(20.4)
Operating
EBITDA
Interest, Restructuring Forestry
tax and
and working dividends
capital
15.1
Operating
cash flow
initiated in FY13.
• $20.4 million outflows associated with the
discontinuing Forestry operation. This includes lease,
grower and redundancy payments made during the
year. A small number of rural property leases, with
varying maturities, remain with an annual aggregate
lease and cost payments of approximately $2 million
per annum.
Cash flow of $93.7 million from investing activities mainly
relates to proceeds from disposal of non-core assets
during the year. These proceeds were used to repay term
debt. Financing cash flows also include $22.7 million
outflow resulting from lower working capital facilities
usage, offset by $10.2 million placement proceeds from
capital raising completed in September 2014.
Balance Sheet
Balance Sheet: key items
$m as at end:
Inventory
Livestock
Trade and other receivables
Trade and other payables
Working capital
Investments
Provisions
Borrowings: term debt
Borrowings: working capital and other facilities
Debt related financial derivatives
Cash and cash equivalents
Net debt
Shareholders' equity
Sep 14
84.8
41.1
302.1
(249.6)
178.4
7.1
(47.1)
(34.1)
(126.1)
-
22.5
(137.6)
57.0
Sep 13
116.3
36.7
345.4
(255.1)
243.3
82.2
(81.5)
(143.8)
(150.9)
(0.4)
39.9
(255.2)
46.2
Change
(31.5)
4.4
(43.3)
5.5
(64.9)
(75.1)
34.4
109.7
24.8
0.4
(17.4)
117.6
10.8
18
Working capital
Net debt
Working capital has decreased 27% from last year.
Main reasons for the decrease are:
• Reduced Retail working capital usage by $40 million
through lower debtors and inventory.
• Divestment of non-core businesses during the year
reducing working capital by approximately $36 million.
• Offset by $12 million increase in Live Export working
capital with the restocking in this business during
the year.
Investments
During the year, as part of the non-core asset divestment
strategy, Elders has successfully divested its investments
in Kilcoy Pastoral, AWH, Elders Insurance and Australian
Fine China; and disposed of its Charlton feedlot, New
Zealand network and wool trading businesses. The
non-core asset divestment program is now completed.
Provisions
Reduction in provisions during the year were for
payments relating to the Forestry exit program and
project Horizon restructure announced in 2013.
Pro-forma Balance Sheet
$m as at end:
Cash and cash equivalents
Other assets
Total assets
Borrowings: term debt
Borrowings: working capital and other facilities
Other liabilities
Total liabilities
Issued capital
Other equity
Total equity
Gearing
Net debt as at 30 September 2014 of $137.6 million is
lower by $117.6 million (46%) from last year. This has
been driven by the amortisation of debt using proceeds
from divestment activities. Remaining term debt of
$34.1 million has subsequently been repaid through
recapitalisation proceeds received in October 2014,
resulting in a pro-forma drawn net debt of $92.6 million
at balance date.
Elders completed its refinance on 21 October 2014.
The new finance package comprises $308 million
working capital facilities with zero term debt.
Shareholders’ equity
Elders undertook a capital raising in September 2014
with a $10.2 million placement and $47.1 million
3-for-5 shares non-renounceable entitlement offer.
The placement was completed prior to year end with the
net proceeds of $9.8 million recorded in shareholders’
equity at balance date. New shares for the entitlement
offer, with net proceeds of $45.0 million, were issued
post balance date on 14 October 2014 and have not
been reflected in equity.
Pro-forma balance sheet reflecting the receipt of the
entitlement offer proceeds as at 30 September 2014 is
as follows:
Sep 14
Entitlement offer
Pro-forma Sep 14
22.5
492.5
515.0
(34.1)
(126.1)
(297.9)
(458.0)
1,277.8
(1,220.8)
57.0
241%
11.0
-
11.0
34.1
-
-
34.1
45.0
-
45.0
33.5
492.5
526.0
-
(126.1)
(297.9)
(424.0)
1,322.8
(1,220.8)
102.0
91%
19
Operational Review
Retail Products
1. Workplace Health, Safety and
Environmental Performance Regulation
1.1 Workplace Health and Safety
Safety has been identified as the most important
operational priority for the business, with an
aspirational goal of a zero injury workplace. During the
year, there were 20 lost time injuries reported in the
business, down from 33 in the prior year. In March,
Elders conducted its first national safety survey to
gauge the safety culture in the business. The results of
this survey were prioritised and will be used to improve
poor performance and benchmark future surveys.
1.2 Environmental Performance Regulation
Elders’ operations are subject to a range of
environmental legislation across the areas in which
it operates. Detail of Elders’ performance in relation
to the various regulations and our operations are
as follows.
Elders’ retail operations are subject to state
environmental regulations governing the storage,
handling and transportation of dangerous goods such
as agricultural and veterinary chemicals and fertilisers.
The majority of Elders’ retail 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.
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.
Feedlots
Live Export Services
Elders operates a feedlot in Killara (New South Wales)
having divested its Victorian feedlot at Charlton
in July 2014. Feedlots are subject to local and state
government environmental as well as animal welfare
legislation, and are subject to a quality assurance
program 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 2014 or to the
date of this report.
Saleyards
Saleyards owned and/or operated by Elders are
subject to various State, Territory and local
government regulations particularly in relation to
effluent management, 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
2014 or to the date of this report.
Elders is engaged in the export of cattle to international
markets, namely the supply of feeder and slaughter
cattle in Indonesia and Vietnam as well as long haul
live export of dairy and breeding cattle to distant
markets seeking to supplement their local herds.
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,
including various aspects relating to the environment.
• The Exporter Supply Chain Assurance System
(ESCAS) which requires exporters to demonstrate
they have control and traceability throughout
the supply chain to the point of slaughter in the
destination country.
Other than minor breaches of ESCAS self-reported by
Elders (and in connection with which no action was
taken by regulators), no breaches of regulatory or
legislative environmental requirements were recorded
by Elders’ live export operations in the year to
30 September 2014 or to the date of this report.
20
2. Operational Review
2.1 Retail Products
Retail Products Margin
107.9
Gross margin for Retail increased by 2% in FY14.
106.1
The Retail product had a slow start for the remainder of
calendar year 2013 with very dry weather conditions
across Australia. Lack of weed and disease pressure over
summer resulted in decreased demand for agricultural
chemicals. Livestock turnoff in the North also reduced
the demand for animal health inputs during this period.
Good rainfalls in late autumn and winter provided
a solid start to the winter cropping season in the West
and South zones. This allowed farmers in the area to
sow their full program, improving fertiliser and seed
sales. Dry conditions through summer and winter in the
cropping areas of Queensland and Northern New South
Wales continue to subdue sales and margin in the North.
A lack of water allocation and rainfall resulted in lower
than average cotton and sorghum plantings this year.
Strategy To improve the business model of our farm
supplies and fertiliser products.
Strategy
Plan
Capital light
• Review business model
• Rationalise product lines
Focus on
return on capital
• Improve margin controls
• Renegotiate supplier terms
FY13
FY14
Margin by Product
Debtor Interest 5%
Fertiliser 19%
Farm Supplies 76%
Margin by Geography
West 20%
North 37%
and purchase models
South 43%
2.2 Agency Services
Agency services delivered a significant improvement
from FY13 with an increase in earnings of 13%. This
was predominantly attributable to recovery of sheep and
cattle prices during the financial year driven by strong
live export demand. Livestock volumes also increased
with dry weather turnoff and increased supply to
international markets. Livestock contributed an increase
of $14.3 million in earnings for the year.
Real Estate earnings remained stable during the year,
with good economic conditions having a positive impact
on consumer confidence in the rural and residential
property markets.
Wool clip size continued to decline, impacted by dry
conditions and increased slaughter rates. Price was
also softer, particularly for finer wools, resulting in a
$1.3 million decline in earnings compared to last year.
Strategy To strengthen and expand our wool, livestock,
real estate and grain products.
Strategy
Plan
Operating model
• Development and implementation
Agency Services Margin
117.9
104.2
FY13
FY14
Margin by Product
Grain 2%
Wool 13%
Real Estate 23%
Livestock 62%
of innovative and mutually
beneficial operating models
across all products
Margin by Geography
Recruitment
• Develop strategies to retain high
performing staff
• Identify and recruit for talent gaps
across products
West 14%
North 35%
Remuneration
• Development and implementation
of an innovative and mutually
beneficial remuneration model
South 51%
21
2.3 Financial Services
Financial Services Margin
Financial services generated steady earnings in FY14.
The significant investment in our banking team in recent
years saw excellent results with a strong uplift in new
lending activities. Whilst the loan book increased only
marginally, the new business result in fact has been
critical in maintaining the loan book as strong seasonal
returns across southern Australia saw significant
reductions of existing borrowings as clients consolidated
their positions.
Strategy To strengthen and expand our banking,
insurance and financial planning products.
Strategy
Plan
Operating model
• Refine long term joint venture
agreements
• Develop and implement
innovative operating models
Recruitment
• Development of our teams,
25.8
25.8
FY13
FY14
Margin by Product
Insurance and
Financial Planning 18%
Banking 82%
identifying gaps and
opportunities as they may arise
Margin by Geography
Cross referrals
• Review current capability
West 25%
North 29%
and develop cultural shift in
this area
South 46%
2.4 Feed and Processing Services
Feed and Processing Services Margin
The Killara feedlotting business saw an improvement in
performance compared to FY13. Dry conditions drove
larger numbers of cattle into the feedlot system, which
was well supported by strong export demand. Higher
occupancy at Killara feedlot increased overhead
efficiencies which in turn resulted in better margins.
Killara experienced a 26% improvement in margin for
the year.
In Indonesia, favourable market and trading conditions
from last year have continued to buoy the demand for
beef. However, prices have fallen as supply constraints
have eased, resulting in a lower margin of $1.1 million
in FY14.
Strategy To improve and expand our feed and
processing business.
Strategy
Plan
Robust systems
• Build capability of
management team
• Operational excellence review
of processes and systems
• Optimise existing business
model
• Consider alternative asset
ownership options
• Investigate demand and
opportunities for integrated
supply chain domestically
and in Asia
Return on
capital focus
Integrated red
meat supply chain
22
13.5
15.3
FY13
FY14
Margin by Product
China 15%
Killara 54%
Indonesia 31%
Margin by Geography
China 15%
Australia 54%
Indonesia 31%
2.5 Live Export Services
Live Export Services Margin
Included in margin improvement for live export
services is the impact of the negative $24.2 million
balance sheet adjustment recorded in FY13. Notwith-
standing this adjustment, live export still saw an
improvement of $6.2 million in FY14.
Short haul volumes rose by 87% as a result of Indonesia
ending its volume-based import quota restrictions in
September 2013. Earnings improved by $2.0 million with
supply competition leading to lower margin per head.
Demand for breeding cattle continues to remain strong,
particularly diary heifers from Australia and New Zealand
for Chinese milk production and herd building. This
contributed to higher margins in the long haul business.
Strategy To maintain controlled growth of our live
export business.
Strategy
Plan
Robust systems
• Build capability of management
team
• Improve inventory management
system
Return on capital
focus
• Thorough evaluation and
approval of live export contracts
prior to execution
(18.7)
FY13
5.5
FY13
excluding balance
sheet adjustment
11.7
FY14
Margin by Product
Long Haul 62%
Short Haul 38%
Margin by Geography
Other 17%
Indonesia 33%
Customer
satisfaction
New markets
• Develop shipment based
customer satisfaction reviews
• Comprehensive investigation into
growth opportunities for Eastern
European and Middle Eastern
markets
China 50%
Outlook
The future financial performance of Elders will, as always,
be subject to the influence of seasonal, market and
international trade relation factors that affect the
Australian farm sector. At the date of this report, the
following conditions are forecast:
• Retail Products:
° Dry spring and summer conditions for most of Australia
° Assume average winter cropping season
• Agency Services:
° Upward pressure on cattle prices with tightening
supply and robust global demand
° Increase in sheep flock to support export demand
° Positive real estate activity driven by local and foreign
investment
° Wool volumes easing driven by weaker pricing and
the continuation of high slaughter rates
• Financial Services: Continued uplift in activity within
the Banking business and development of long term
strategic agendas with joint venture businesses
• Feed and Processing: Feedlot well utilised and growing
demand for meat in Indonesia and China
• Live Export: Strong demand for live cattle and sheep
from Indonesia, Vietnam and China.
Material Business Risks
Elders is committed to developing a culture where
risks that could affect our people, shareholders’ value,
community, environment, reputation, operating assets,
financial and legal status, or prevent the achievement
of our objectives are identified and actively managed.
The Board is responsible for oversight of the risk
management framework. Executive management has
responsibility for applying the framework, and is
accountable to the Board and Board Audit, Risk and
Compliance Committee for designing, implementing and
monitoring the process of risk management and
integrating it into the day-to-day activities of the business.
All Elders’ people are responsible for identifying and
managing risks in their areas of responsibility. A range of
strategic, operational and financial risks are outlined
below. The risks noted are not exhaustive and are in no
particular order.
Strategic Risks
• Reputation and brand: Elders has over 175 years of
tradition and the brand is important to the success
of the business. General performance issues and
other factors could lead to Elders’ capabilities and
credibility being diminished or lost amongst our key
stakeholders. Key stakeholders include employees,
clients, shareholders, rural and regional communities,
bankers, investors, suppliers, politicians and regulators.
This is managed through marketing activities, brand
guidelines, client monitoring and disclosure committee.
• Political: The Australian political system, although
stable, has regular election cycles that can result in
changes in macro policy settings such as climate
change, industrial relations and free trade. Elders also
operates in a number of foreign jurisdictions where
the local political risk can affect business operations.
23
• Seasonal Weather Conditions: Uncharacteristically high
or low rainfall and temperatures can affect our business.
Natural events, caused or affected by weather, such as
frost, drought, flood and fire can also have impacts.
Such conditions can influence the demand for rural
products and services provided by Elders, resulting in
varied revenue levels. To limit the impact of the above
risks Elders maintains both a geographical spread of
operations and a diverse product and service range.
Financial Risks
• Working Capital: Elders’ operations are subject to a
level of working capital volatility against budget
which may result from seasonal weather conditions,
commodity price fluctuations or variations in the time
taken to convert short term assets into cash. Elders
classifies this risk as liquidity risk. Liquidity risk is
mitigated by a range of management practices including
prudent working capital management, active liquidity
management and daily cash flow forecasting.
• Capital: Elders’ ability to operate its business and
effectively implement its strategic plan over time
will depend in part on its ability to meet the terms
of its financing agreement and maintain ongoing
securitisation arrangements. Elders completed a
refinance in October 2014 and believes that the
new financing facilities provides sufficient capital to
grow our business in line with the Eight Point Plan.
• Credit risk: Elders grants credit to approved
counterparties to allow them to purchase goods
and services from us and may be exposed to losses
associated with a client’s inability to repay debt. This
risk is managed by maintaining policies and procedures,
oversight by Credit Committee, stringent debtor
monitoring and reporting, trade credit insurance in
place for major debtor processors, and high level
reviews of significant credit issues by the CEO and CFO.
• Fraud: Fraud is defined as some form of deceit, theft,
trickery, false statements, breach of trust and guilty
intention with the object of obtaining money or other
benefit. Elders is not only exposed to traditional financial
fraud, but also to the potential misrepresentation
of goods and services. Elders has in place Code of
Conduct, compliance policies, procedures and training,
reconciliations process, management representation
process and Internal Audit program to manage the
risk of fraud.
• Market: 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.
Elders manages Market Risk through the Treasury
Department, Financial Risk Management Policy,
monitoring of agribusiness indicators and establishment
of governance committees.
• Taxation: There are four main areas of tax risk: strategic,
operational, compliance, and financial. Tax risks
are managed by the tax department in accordance
and application of the tax risk management policy
and philosophy.
• Workforce Capability: The attraction and retention of
skilled and engaged staff can be affected by competition,
shortage of skilled people within industry and ability to
engage people during periods of change. Elders actively
manages the ongoing development of capability and
leadership through workforce planning and a range of
formal and informal development activities.
Operational Risks
• Safety: Safety risk is inherent in Elders’ business
activities. The safety of Elders’ people, clients and
the general community is our number one priority.
Elders has a safety strategy in place to drive
continuous improvement and compliance with safety
management system.
• Livestock Inventory: The nature of Elders’ live export
activities includes risk associated with inventory
management, leading to an accounting discrepancy
in 2013. The business is currently reliant on a number
of manual and interim controls, and a whole of Live
Export business review is underway to improve systems
and processes. Implementation of an end-to-end
livestock inventory and traceability system has been
approved and will be completed by 2015.
• Live Export: Adverse market conditions created by the
quantity and/or quality of stock available impacting
upon our forward bought / sold position thus creating
a price exposure. Government intervention can also
influence the Live Export business. Controls for this risk
include effective supply chain relationships, regular
contract reviews with suppliers and customers,
and maintaining ongoing relationships with regulators.
• Retail: Elders is involved in a number of key parts
of the supply chain within its Retail business. To
manage supply chain risks, Elders maintains effective
relationships with our suppliers and ensures inventory
levels in our branches are actively monitored and
are a measurable target for management.
• Business Systems: Current business systems are custom
written, purpose built applications. These applications
are serviceable, but require continued investment
to keep pace with the commercial applications that
leverage large customer bases and new technologies,
and drive functional improvements to the user base.
• Legal and Regulatory: Elders operates nationally and
internationally and is therefore impacted by various
pieces of legislation. Risk arises from the potential of
breach of legislation, or failure to abide by contracts/
licences. Elders’ compliance framework supports
management in the maintenance of these obligations.
• Biosecurity: An outbreak of a systemic animal or plant
disease can lead to quarantine conditions in rural
Australia and reduce producers’ need for goods and
services or affect their ability to operate. To limit
the impact, Elders has in place employee training and
disease management protocols. Elders also has a
business continuity framework in place to respond to
the risk of disruption.
• Business Interruption: A significant event or incident
could affect core operations, including weather event,
IT security threat, activist attack, loss of shipping
or transport, etc. Elders has established a business
continuity framework including crisis management,
emergency response and disaster recovery. The aim
of the framework is to minimise the extent and duration
of any disruption or impairment of services and supply
to Elders and our clients.
24
BOARD
OF DIRECTORS
Mr James Hutchison (Hutch)
Ranck, BS Econ, FAICD
Mr Mark Charles Allison,
BAgrSc, BEcon, GDM, FAICD
Mr James Andrew Jackson,
B Com, FAICD
Mr Ian Wilton,
FCPA, FAICD, FCCA (UK)
Age 66 – Appointed Chairman in
April 2014. Non-executive director
of the Board since June 2008.
He is also Chairman of the Work
Health and Safety Committee and
the Nomination and Prudential
Committee, and a member of
the Remuneration and Human
Resources Committee and
the Audit, Risk and Compliance
Committee. Hutch retired as
Managing Director of DuPont
(Australia) and Group Managing
Director of DuPont ASEAN in
May 2010. In his 31 years with
DuPont Hutch led businesses in
ANZ and Asia Pacific in Agriculture,
Pharmaceuticals, and Industrial
Chemicals. In the last 10 years
Hutch served as a director
in a variety of companies and
organisations including, The
Business Council of Australia, an
Australian Government Statutory
Authority – APVMA, The Chemical
and Plastics Association – PACIA,
and The Crop Chemical Association
– Crop Life. From 2000 until 2010
Hutch was a member of the Prime
Minister’s Science, Engineering
and Innovation Council – PMSEIC.
Currently Mr Ranck is a director
of Iluka Resources and the CSIRO.
Mr Ranck is a resident of New
South Wales.
Age 53 – Appointed Chief Executive
Officer and Managing Director in
May 2014. He has extensive
experience spanning 30 years in
the agribusiness sector. He is a
former Managing Director of
Wesfarmers Landmark Limited and
Wesfarmers CSBP Limited and
executive director of GrainGrowers
Limited. Prior to his appointment
at Wesfarmers in 2001, Mr Allison
held senior positions with Orica
Limited as General Manager of Crop
Care Australasia and with Incitec
Limited as General Manager –
Fertilisers. Between 1982 and
1996 Mr Allison performed a
series of senior sales, marketing
and technical roles in the Crop
Protection, Animal Health and
Fertiliser industries. Mr Allison
was the Managing Director
of Makhteshim Agan Australasia
Pty Ltd from 2005 to 2007 and
Managing Director and Chief
Executive Officer of Jeminex Limited
from 2007 to 2008. Mr Allison is a
resident of South Australia.
Age 52 – Non-executive director
and Deputy Chairman of the
Board since April 2014. He is also
Chairman of the Remuneration
and Human Resources Committee
and a member of the Work Health
and Safety Committee, the Audit
Risk and Compliance Committee
and the Nomination and Prudential
Committee. Mr Jackson has more
than 25 years experience in capital
markets and agribusiness, both
in Australia and overseas. He
held a Senior Vice President role
with investment bank SG Warburg
(now part of UBS) in New York
and was a director of MSF Sugar
Limited from 2004 to 2012,
including being Chairman from
2008. He is currently Chairman of
Australian Rural Capital Limited.
Mr Jackson owns and operates
a beef cattle enterprise in northern
New South Wales and is a resident
of New South Wales. Mr Jackson
brings strong skills and knowledge
in capital markets, agricultural
production and supply chains,
corporate governance, corporate
and financial strategy and
hands on experience in the rural
agency business.
Age 62 – Non-executive director
of the Board since April 2014.
He is also Chairman of the Audit,
Risk and Compliance Committee
and a member of the Work
Health and Safety Committee,
the Nomination and Prudential
Committee and the Remuneration
and Human Resources Committee.
Ian Wilton is a Certified Practising
Accountant with senior executive
experience across the agricultural
sector. He has held Chief Financial
Officer positions with the sugar
division of CSR Limited, Ridley
Corporation and GrainCorp Limited
and was President and Chief
Executive Officer of GrainCorp Malt.
Mr Wilton is currently Chief
Financial Officer for Allied Mills
Pty Limited, a joint venture between
GrainCorp Limited and Cargill.
Mr Wilton is a resident of New
South Wales.
Company Secretaries
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.
Ms Nina Margaret Abbey
Ms Nina Abbey was appointed joint
Company Secretary on 20 February
2014. She also holds the position
of Head of Risk and Assurance,
since August 2012.
25
CORPORATE
GOVERNANCE
STATEMENT
This corporate governance statement summarises the key
elements of the Company’s governance framework and practices.
The Company continues to maintain a robust governance
framework and comply with the ASX Corporate
Governance Council’s Corporate Governance Principles
and Recommendations 2nd Edition (ASX
Recommendations).
The Board strongly believes that the governance
arrangements in place for the Company are effective but,
because governance practices are dynamic, remains
committed to building on the existing framework through
regular review. As an example, mindful of the absolute
need for ethics and integrity in business, the Board has
continued to enhance the Company’s Code of Conduct.
This Corporate Governance Statement reflects those
governance arrangements, including updates made
through the year, and describes the current policies and
practices of the Company since the Board’s last report
to shareholders.
A comparison of the Company’s governance practices
with the ASX Recommendations appears on our
website at www.elderslimited.com along with other
complementary information such as key policies and
charters discussed in this governance statement.
On 27 March 2014, the ASX Corporate Governance
Council released the 3rd Edition of the Corporate
Governance Principles and Recommendations which
take effect for a company’s first full financial year
commencing on or after 1 July 2014. The Company notes
that it will adopt the 3rd Edition in its next financial
year commencing 1 October 2014.
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, 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 Chief Executive Officer (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.
26
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 CEO.
The Board delegates responsibility for the day-to-day
operation and administration of the Company to the
CEO, Mr Mark Allison. 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. Hutch Ranck was elected Chairman
on 1 May 2014 having replaced Mark Allison who
was appointed CEO on the same day. Mr Ranck 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 25 of this report. FY14 saw several changes
to Board membership. Malcolm Jackman resigned as
CEO and Managing Director on 27 November 2013.
Mark Allison resigned as Chairman and was appointed
CEO on 1 May 2014. Hutch Ranck was elected Chairman
on 1 May 2014. Josephine Rozman retired as a non-
executive director on 25 March 2014 and two new
non-executive directors, Ian Wilton and James Jackson,
were appointed to the Board on 13 April 2014.
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
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. There were no directors
obliged to retire under this rule in financial year 2014.
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.
Both non-executive directors Ian Wilton and James
Jackson having been appointed since the last AGM will
stand for election in 2014.
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 two 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 Company 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. In FY14, directors conducted
board meetings (outside of its traditional Adelaide head
office) at several of the Company’s branches and client
operations in Western Australia.
27
Director Independence
Company Secretary
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.
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.
In determining whether or not a director is considered
independent, the Board will have regard to whether
the director:
The Board is supported in governance and administration
matters by the Company Secretary. During the financial
year, Nina Abbey was appointed Joint Company Secretary.
• is a substantial shareholder in the Company;
• within the last 3 years, has been an employee of the
Company, a material adviser to the Company or
a principal or employee of any material adviser to
the Company;
• 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 meetings
During the financial year, Directors held 20 Board
meetings. The attendance of Directors at Board meetings
is set out in the table on page 29.
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 has 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
− Work Health and Safety Committee Charter
Board Performance Assessment
Purpose
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.
A formal review was not conducted in FY14 due to the
restructuring of the Board during the year. A review is
planned for the second quarter of financial year 2015.
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.
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
standing committees, being the Nomination and
Prudential Committee, the Remuneration and Human
Resources Committee, the Audit, Risk and Compliance
Committee and the Work Health and Safety Committee.
Membership and attendance
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 or
non-executive director only sessions are being held
– 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.
28
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
WHS
Committee
J H Ranck
Member
M C Allison1
-
I Wilton
Chairman
J A Jackson
Member
J M Rozman2
M G Jackman3
-
-
Member
-
Member
Chairman
-
-
Chairman
Member
Member
Member
-
-
Chairman
-
Member
Member
-
-
1 Mr Allison was a member of each Committee up until his appointment as CEO and Managing Director on 1 May 2014.
He remains a non-voting member of the Nomination and Prudential Committee on Board matters.
2 Ms Rozman retired during FY14. She was Chairman of the Audit, Risk and Compliance Committee and a member of
the remaining board committees.
3 Mr Jackman retired as CEO during FY14.
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 30.
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 committee meetings 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 the financial year is detailed below.
Attendance in the table is only recorded where a director
is a member.
Board of Directors
WHS Committee
Audit, Risk and
Compliance Committee
Attended
No. of meetings
held during
relevant period
Attended
No. of meetings
held during
relevant period
Attended
No. of meetings
held during
relevant period
6
3
4
3
2
-
6
3
4
3
2
-
Other Committees**
J H Ranck
M C Allison
I Wilton
J A Jackson
J M Rozman
M G Jackman
20
19
11
11
9
4
20
20
11
11
9
5
4
2
2
3
1
-
4
2
2
3
1
-
Remuneration and Human
Resources Committee
Nomination and
Prudential Committee
Attended
No. of meetings
held during
relevant period
Attended
No. of meetings
held during
relevant period
J H Ranck
M C Allison
I Wilton
J A Jackson
J M Rozman
M G Jackman
4
1
3
4
0
-
4
1
3
4
0
-
1
1
0
0
0
0
1
1
0
0
0
0
29
Work Health and Safety Committee
Nomination and Prudential Committee
The Board continued its commitment to the Company’s
vision that nothing is so important it cannot be
done safely. The Work Health and Safety Committee
(WHS 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;
• ensure appropriate policies, procedures and systems
are in place to effectively manage, measure and
improve WHS 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 WHS management;
• cultural initiatives designed to build and foster WHS
leadership and demonstration of appropriate WHS
behaviours consistently at all levels;
• Company performance in relation to WHS matters;
• the adequacy, integrity and effectiveness of
management processes and procedures used to
manage WHS as well as the performance of the
Company’s WHS function and management;
• the adequacy, integrity and effectiveness of Company
management’s processes for ensuring and monitoring
compliance with WHS statutory and reporting
obligations;
• the internal process for determining and managing
key WHS risk areas, particularly compliance with laws,
regulations, standards and best practice guidelines;
• the impact of changes and emerging issues in WHS
legislation, community expectations, research findings
and technology;
• reports by Company management on WHS performance
and issues including reports on material WHS issues
associated with the Company’s operations; and
• WHS issues associated with the operations on
Company controlled sites (including, if feasible, visits to
those sites).
Key Activities During the Year
The Committee oversaw the following significant
activities during the reporting period:
• development and implementation of Safety Strategy
FY14
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
commencing on page 40.
• continued analysis of the Company’s obligations under
harmonised WHS laws; and
• continued focus on high risk activities undertaken
throughout the Group.
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 2nd
edition of the ASX Recommendations.
30
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;
• 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
• ensure the appropriate policies and procedures are in
remuneration matters.
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;
Key Activities During the Year
The Committee oversaw the following significant
activities during the reporting period:
• performance against measurable diversity objectives;
and
• ongoing review and simplification 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 legal, 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 Rozman retired as Chairman of
the Committee during the first half of the financial year
and was replaced by Ian Wilton. Mr Wilton is a Certified
Practicing Accountant with extensive experience in
the agricultural sector. His background in running and
managing large successful businesses brings a depth of
strong financial management skills to the Elders Board
with key understanding of agriculture specific risks.
Details of the members’ qualifications can be found on
page 25 of this report.
The CEO, CFO and the Head of Risk and Assurance
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.
• the annual remuneration review applying generally
Responsibilities
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
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 Company’s financial risk management processes,
accounting and control systems;
• the Company’s internal and external audit
arrangements;
performance incentive programs;
• the Company’s compliance with legal, regulatory and
• recruitment, retention, retirement and termination
internal policy requirements; and
policies and benefits;
• the Company’s risk management programmes.
• Company superannuation arrangements;
• human resources strategy, policies and procedures
(but not work health and safety);
• employment contracts for all directors, the CEO and
those executive management contracts which are
outside normal parameters;
• organisational development, including training and
education;
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;
31
• approving the terms of reference of the internal
Key Activities During the Year
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 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;
• coordinating 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
reporting of unacceptable conduct;
• 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 risk
control systems;
• 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;
• reviewing and assessing management information
systems and internal control systems;
• regularly reviewing the Company’s risk profile; and
• reviewing the corporate insurance program and
risk coverage.
32
The Committee provided oversight over the following key
activities during the course of the year:
•The preparation of the statutory financial accounts
of the company, including the review of those
accounts and the application of accounting policies
in accordance with Australian Accounting Standards
• The independence of external and internal auditor
arrangements
• The approval and performance of the internal audit
plan and related assurance activities designed
to assess the effectiveness of the Company’s internal
control environment
• Periodic assessments of the significant risks of the
Company; and
• Review, update and approval of the Risk Management
Policy and Framework.
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:
• An auditor is not independent if:
> 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 exists 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.
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
− Management 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 respective 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 WHS Committee is responsible
for assessing the effectiveness of internal process for
determining and managing key WHS risks.
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;
• 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 MRC 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 2014 the MRC reviewed Elders’ top 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 2014, 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.
Management Risk Committee
Financial Risk Management Policy
The Management Risk Committee (MRC) 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 MRC 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 MRC reports to the Board through the Audit, Risk and
Compliance Committee. Minutes of each MRC meeting
are also included in the papers to the Audit, Risk and
Compliance Committee.
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 reports on compliance with
the Policy, including on an immediate basis in the case of
material breaches.
33
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. The Fraud
Policy also underpins the Whistleblower Policy and
processes, and the Code.
Securities Dealing Policy
The Board believes non-executive directors and
employees should 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 52 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, 6 weeks from the
Company’s AGM and for the duration of an offer period
of any pro-rata issue of securities by the Company.
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
34
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;
• 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;
• 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 shareholders
participate effectively in general meetings and to this end:
• the Company has adopted in all substantial respects
the ASX Recommendations 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 2014 Elders’ Agricultural Traineeship program recruited
19 participants, 26% of whom were female. The challenge
remains in attracting women to an industry which has
traditionally been male dominated.
Recruitment of women to trainee roles will remain a focus
in the coming year with the same aim of achieving 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 retirement of Josephine Rozman on 25 March 2014
has resulted in the Board having no female non-executive
directors for the remainder of FY14. The Board is
conscious of the importance of attracting and retaining
female non-executive directors, and will focus, amongst
other matters, on diversity in its FY15 board review
planned for the second quarter of the year.
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.
Work Health and Safety
Elders maintains a work health and safety management
system, inclusive of corporate standards, policies and
procedures. This system reflects the requirements of
work 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 work 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:
FY14 Target
Actual Sept 14
FY15 Target
FY16 Target
Senior Executives
Senior Managers
Middle Managers
Managers
12%
15%
10%
12%
15%
22%
7%
7%
15%
25%
12%
13%
15%
25%
15%
15%
35
DIRECTORS’
REPORT
The directors present their report for the
year ended 30 September 2014.
Directors
Current Directors
The directors of the Company in office during the
financial year and until the date of this report were:
Principal Activities
The principal activities of Elders during the year were:
(a) the provision of livestock, real estate and wool
agency services to rural and regional customers;
(b) the provision of services and farm inputs to the
Non-Executive Directors:
rural sector;
James Hutchison Ranck (elected Chairman on
1 May 2014)
Ian Wilton (appointed 13 April 2014)
James Andrew Jackson (appointed 13 April 2014)
Executive Director:
Mark Charles Allison (retired as Chairman, and
appointed Chief Executive Officer and Managing Director
on 1 May 2014)
Ceased Directors:
The following directors ceased to be a director during
the financial year:
Malcolm Geoffrey Jackman, Chief Executive Officer and
Managing Director since 29 September 2008, retired
on 27 November 2013.
Josephine Mary Rozman, a non-executive director since
15 November 2011, retired on 25 March 2014.
Company Secretaries:
Peter Gordon Hastings
Nina Margaret Abbey, appointed joint Company Secretary
on 20 February 2014.
A summary of the experience, qualifications and special
responsibilities of each Director and Company Secretary
is provided on page 25 of this annual report.
(b) the provision of financial services to rural and
regional customers;
(c) real estate franchisor;
(d) live export trading operations;
(e) feedlotting of cattle; and
(f) red meat supply chains in Indonesia and China
Results and Review of Operations
The Group recorded a profit for the year, after tax and
non-controlling interests, of $3.0m (2013: loss of
$505.2m). A review of the operations and results of the
consolidated entity and its principal businesses during
the year is contained in pages 15 to 24 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.
These are referred to on pages 15 to 24 of this report.
Events Subsequent to Balance Date
On 14 October 2014, Elders issued 313,967,179 new
shares under a 3 for 5 non renounceable entitlement
offer announced by Elders to the ASX on 15 September
2014. The total number of shares on issue following
completion of the entitlement offer is 837,232,507.
Total funds raised from this offer were approximately
$47 million (before costs).
36
On 22 October 2014, Elders completed the refinance of its existing senior debt arrangements with a new syndicated
working capital facility provided by ANZ, NAB and Rabobank. The new facilities include, in addition to the syndicated
lines, bilateral contingent and transactional lines and an extension of the retail debtor funding facility. Gross debt
immediately following the refinance close was comprised entirely of debtor funding facilities.
The facility limits are structured to meet the anticipated working capital requirements of Elders over the tenor
of the facilities which range between 12 and 36 months.
There is no other matter or circumstance that has arisen since 30 September 2014 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 Elders, the results of those operations or the state of affairs of Elders in subsequent financial periods.
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 23 of this report.
Share and Other Equity Issues During the Year
No employee options were granted over unissued shares or unissued interests during the year.
No ordinary shares were issued under the Company’s employee share plans during the year.
68,251,999 ordinary shares were issued to sophisticated investors during the year pursuant to the Company’s
15% placement capacity under ASX Listing Rule 7.1.
Dividends and Other Equity Distributions
No dividends or hybrid distributions were declared or paid during the 12 months to 30 September 2014.
Share Options
No options over unissued shares in the entity exist.
Directors’ Interests
At the date of this report, the relevant interests of the directors in shares and other equity securities of the Company are:
No. of ordinary shares
No. of hybrids
No. of performance rights
Non-Executive Directors
J H Ranck
I Wilton
J A Jackson
Executive Director
M C Allison
1,000,000
800,000
300,000
160,000
-
-
-
-
-
-
-
-
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 29.
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.
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.
No payments have been made to indemnify Ernst & Young during or since the financial year.
37
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 40. 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
Details of the Company’s environmental performance is provided on page 20 of the Operating and Financial Review
section of this report.
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 is due to receive the following amounts for the provision of non-audit services:
Tax services (primarily compliance)
$131,764
Other compliance and assurance services $161,472
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is
set out on the next page.
This report has been made in accordance with a resolution of directors.
J H Ranck
Chairman
17 November 2014
M C Allison
Managing Director
38
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
2014, 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
17 November 2014
39
ELDERS LIMITED
REMUNERATION
REPORT 2014
The Directors of Elders Limited present the Remuneration
Report for the consolidated entity for the year ended
30 September 2014. 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
Executive Director and Senior Executive
contract terms
Section 6
Executive Director and Senior Executive
remuneration details
Section 7
Equity instruments, loans to and
transactions in relation to
Key Management Personnel
42
42
43
44
50
51
52
40
Chief Executive Officer and Senior Executive remuneration outcomes for 2014
Figure 1 below sets out certain items of remuneration paid or payable to the Chief Executive Officer and Managing Director (CEO) and Senior
Executives in respect of the 2014 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 51 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 as it provides a simple overview of the remuneration paid
or payable to the CEO and Senior Executives, 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 LTI based on rights vesting or options exercised during the financial year,
which is not provided in Table 6.
Figure 1. Remuneration outcomes for 2014 (unaudited and non-IFRS)
$
Base Salary
STI2
LTI3 Superannuation
Other
(monetary)
Other
(non-monetary)5
Termination
benefits6
Total
M G Jackman1
164,085
290,0008
M C Allison1
334,132 300,000
H S Browning1
74,322
0
R I Davey
J H Cornish1
G I Dunne1
355,047
28,000
105,597
11,667
113,597
10,000
D W Goodfellow1
567,290
0
0
237,003
113,946
16,667
C C Hall1
M L Hunt1
0
0
0
0
0
0
0
0
0
4,444
7,658
4,444
18,027
6,177
6,177
0
0
0
0
0
0
418
1,117,740 1,576,686
0
632
2,640
440
1,218
0
0
0
0
0
641,790
79,398
403,714
123,880
130,992
18,027
27,5004
0
648,441 1,261,259
12,939
25,0007
6,177
0
1,722
7,969
0
0
276,665
144,759
1 Figures relate to part-year service as a KMP. Jackman, Browning and Goodfellow ceased employment 27 November 2013, 27 December 2013
and 29 August 2014 respectively. Allison and Hall commenced employment 1 May 2014 and 15 January 2014 respectively. Cornish, Dunne
and Hunt became KMP from 2 June 2014.
2 STI that will be paid for performance in the 2014 financial year. For Cornish, Dunne and Hunt the STI amount relates to period of service as a KMP.
3 Value of any performance rights that vested during the 2014 financial year based on the closing share price on the date of vesting, and options
that were exercised during the 2014 financial year based on the difference between the exercise price and the closing share price on the date
of exercise. This figure does not represent the value of rights or options granted during the 2014 financial year.
4 Travel allowance.
5 Provision of leased car parking and company leased vehicle.
6 These benefits comply with Part 2D.2 of the Corporations Act 2001 (Cth).
7 Qualifying payment subject to completion of probation period as at 15 April 2014.
8 The STI paid to Mr Jackman in respect of the 2014 financial year was for achievement of company divestments and was 29% of his FY14
maximum STI opportunity.
41
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
J H Ranck
M C Allison
J A Jackson
J M Rozman
I Wilton
Executive Director and Senior Executives
M G Jackman
M C Allison
H S Browning
R I Davey
J H Cornish
G J Dunne
D W Goodfellow
C C Hall
M L Hunt
Position held
Period held in 2014 (if not full year)
Chairman
Chairman
Director
Director
Director
Non-executive Director from 1 October 2013
to 30 April 2014
Chairman from 1 May 2014
1 October 2013 to 30 April 2014
From 13 April 2014
1 October 2013 to 25 March 2014
From 13 April 2014
Chief Executive and Managing Director
1 October 2013 to 27 November 2013
Chief Executive and Managing Director
From 1 May 2014
General Manager Trading
Chief Financial Officer
Zone General Manager West
Zone General Manager North
1 October 2013 to 27 December 2013
From 2 June 2014
From 2 June 2014
Group General Manager Australian Network
1 October 2013 to 29 August 2014
GM Elders International
Zone General Manager South
From 15 January 2014
From 2 June 2014
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’s Principles and Recommendations. The role and responsibilities of the Remuneration and Human Resources Committee are set out in
the Corporate Governance Statement on page 30 of this Annual Report and the Committee’s Charter is published on the Company’s website
at www.elderslimited.com.
The Committee is comprised entirely 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 2014, the Committee engaged AON Hewitt to provide recommendations in respect of Executive long term
incentive plan design. These recommendations also covered key management personnel. Under the terms of the engagement, AON Hewitt was
paid $11,660 for these services.
The following arrangements were made to ensure that the remuneration recommendations were free from undue influence:
• AON Hewitt was engaged by, and reported directly to, the Chairman of the Remuneration and Human Resources Committee. The agreement for
the provision of remuneration consulting services was executed by the Chairman of the Remuneration and Human Resources Committee under
delegated authority on behalf of the Board.
• The report containing the remuneration recommendations was provided by AON Hewitt directly to the Chairman of the Remuneration and
Human Resources Committee; and AON Hewitt was permitted to speak to management throughout the engagement to understand Company
processes, practices and other business issues and obtain management perspectives. However, AON Hewitt was not permitted to provide any
member of management with a copy of their draft or final report that contained the remuneration recommendations.
As a consequence, the Board is satisfied that the recommendations were made free from undue influence from any members of the key
management personnel.
No other remuneration recommendations from any other external party were sought or received or fees paid during the year.
42
C. Remuneration strategy
Elders’ 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 Company 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 business unit and Elders as a whole.
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’s 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 page 27 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 believes Elders’ Non-executive Directors should own securities in the Company to further align their interests with the interests of
other shareholders. Details of Non-executive Directors’ shareholdings in the Company can be found in Table 7a(i) of this Report.
B. Non-executive Director remuneration in 2014
Total fees for the financial year ended 30 September 2014 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.
At the Company’s 2013 Annual General Meeting the Company made a commitment to reduce the aggregate fee limit to a level aligned to
current business requirements. In line with that commitment the Board has reduced the aggregate fee limit to $1,200,000 per annum (excluding
superannuation costs). Current fees remain within this limit.
Each Non-executive Director was entitled to an annual base fee of $100,000, except the Chairman who was entitled, for the period 1 October
2013 to 30 April 2014, to an annual composite fee of $300,000. The Chairman’s composite fee was reduced to $240,000 effective 1 May 2014.
All amounts exclude superannuation paid up to the maximum contribution base inline with Superannuation Guarantee legislation.
During the financial year ended 30 September 2014, 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 Work 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.
43
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
M C Allison
J C Ballard
J A Jackson
I G MacDonald
J H Ranck
J M Rozman
I Wilton
Total
20141
2013
2014
2013
20141
2013
2014
2013
2014
2013
20141
2013
20141
2013
2014
2013
175,000
151,667
n/a
225,000
46,591
n/a
n/a
16,667
158,333
100,000
50,000
100,000
46,591
n/a
476,493
593,334
0
25,071
n/a
0
15,985
n/a
n/a
4,333
21,000
33,394
70,000 2
48,371
22,311
n/a
129,318
111,169
0
0
n/a
0
0
n/a
n/a
0
0
0
0
0
0
n/a
0
0
10,369
13,477
n/a
12,421
5,873
n/a
n/a
1,890
15,001
12,090
7,912
13,447
6,467
n/a
45,622
53,325
0
0
n/a
0
0
n/a
n/a
0
0
0
0
0
0
n/a
0
0
185,369
190,215
n/a
237,421
68,449
n/a
n/a
22,890
194,334
145,484
127,912
161,818
75,369
n/a
651,433
757,828
1 Figures relate to part year service (see Section 1).
2 Includes temporary increase to Chair of Audit, Risk and Compliance Committee fee from $30,000 to $75,000.
Section 4. Executive Director and Senior Executive remuneration
A. Board policy
The Board seeks to align employee remuneration with the strategic objectives of the Company and the commercial needs and performance of
each business unit.
The Board has delegated oversight of the Company’s remuneration policies and practices to the Remuneration and Human Resources Committee.
Remuneration policies 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 Company.
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 Company targets and objectives, including maximising returns for shareholders.
44
Remuneration structure
100%
80%
60%
40%
d
r
a
w
e
R
l
a
t
o
T
f
o
%
33%
33%
25%
25%
25%
25%
20%
33%
50%
50%
0%
CEO
CFO
Senior Executives
LTI
STI
TFR
The above assumes the at-risk remuneration components are at their maximum, and represents the Company’s intended policy in respect of
remuneration structure.
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 and Development Planning (PDP). PDP assesses employee performance against a number
of agreed key performance indicators, including measures for safety, operational performance, capital management, people and Company values.
D. Short-term incentive
The key features of the STI plan applying to Executive Director and Senior Executives during the year are set out in the table below:
KMP participants and
maximum STI opportunity
as % of TFR
Performance measure(s)
M G Jackman (86%)
M C Allison (100%)
D W Goodfellow, C C Hall (80%)
Plan
R I Davey, H S Browning (60%)
J H Cornish, G J Dunne, M L Hunt (40%)
Key Performance Indicators namely:
Net Profit After Tax
Return on Funds Employed
Safety
Operational Performance
Capital Management
People
Nine financial and non-financial
Key Performance Indicators
related to:
Nine financial and non-financial
Key Performance Indicators
namely:
Budgeted EBIT
Working Capital
Company Divestments
Safety
Underlying EBIT
SG&A Reduction
Net Working Capital
Term Debt
Strategic Development
Business Refinancing
Recapitalisation
Business Engagement
Governance
Assessment of Mr Jackman’s
performance against the
relevant KPIs is assessed by the
Chairman with recommendation
for STI payment referred to the
Board for approval.
Assessment of Mr Allison’s
performance against the
relevant KPIs is assessed
by the Chairman with
recommendation for STI
payment referred to the
Board for approval.
Assessment of performance against
the above measures and individual
KPIs is assessed by the CEO with
recommendation for STI payment
referred to the Board for approval.
45
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.
Plan (continued)
Service condition
Payment
STI outcomes for 2014
Any STI payable to Executives who become eligible to participate in STI during the course of the year, either
through joining the Company or being promoted within the Company, will be pro-rated accordingly.
Payments are made in cash which participants may elect to sacrifice to acquire the Company’s shares in the
Deferred Employee Share Plan.
All STI payments for 2014 performance were paid according to plan performance measures.
Of the KMP participants who received an STI payment in 2014:
Incentive payment as a % of Maximum STI opportunity
M C Allison
J H Cornish
R I Davey
G J Dunne
M L Hunt
88%1
26%
12%
21%
35%
1 % of maximum STI opportunity is based on period of service as CEO & MD
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
2013
Number of
participants
as at 30
September
2014
Number of shares
/options/rights
outstanding
as at 30
September 2013
Number of shares
/options/rights
outstanding
as at 30
September 2014
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 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.
1
12
CEO (M G
Jackman)
Senior
Executives
by invitation.
0
10
1,706,270
0
3,111,412
1,381,293
E2. Discontinued Equity Schemes in which one or more past or present KMP participates
Name
of Plan
Description
Eligibility
Criteria
Number of
participants
as at 30
September
2013
Number of
participants
as at 30
September
2014
Number of shares
/options/rights
outstanding
as at 30
September 2013
Number of shares
/options/rights
outstanding
as at 30
September 2014
By invitation.
986
659
630,394
441,326
The ELSP was
suspended
in 2009 and
will be
discontinued.
Elders Loan
Share Plan
(ELSP)
The ELSP was designed to provide
an equity participation opportunity
for all selected eligible 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 once loan is fully repaid.
There are no performance conditions
once issued.
No shares were issued under the ELSP
during the financial year.
Note: The Elders Employee Share Option Plan (EESOP) previously disclosed in 2013 was discontinued once all options lapsed in 2013.
46
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
2013
Number of
participants
as at 30
September
2014
Number of shares
/options/rights
outstanding
as at 30
September 2013
Number of shares
/options/rights
outstanding
as at 30
September 2014
All permanent
employees.
48
38
1,082,410
727, 763
Deferred
Employee
Share Plan
(DESP)
This plan enables participants to salary
sacrifice remuneration of up to $5,000
to acquire restricted shares. Tax can be
deferred up to 7 years. Elders makes no
contribution to this plan other than
funding the costs of administration.
No shares were issued under the DESP
during the financial year.
Note: There are no current retention schemes in operation, the previously disclosed retention schemes were finalised in 2013, with the
applicable service rights vesting as shares and cash retention incentives paid in 2013.
E4. 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.
Participation in ELTIRP is at the Board’s discretion through individual invitation to KMP and other selected senior managers up to certain
percentages of TFR (which differ by position). During the 2014 financial year, no award under the ELTIRP was made while the Company reset as
a pure play agribusiness and recapitalised.
(b) Dealing in securities
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.
(c) Performance Hurdles
The Company has adopted a relative Total Shareholder Return (TSR) performance hurdle to align the interests of 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.
47
Summaries of LTIP grants are provided below.
Issue Date
Number of performance
rights granted
Denominator
Hurdle description
Senior Executive grants
10 November 2010
5,546,587
$0.646
10 November 2011
4,525,000
$0.269
Performance rights granted to Senior Executives as at 10 November
2010 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 and resulted
in nil vesting.
Tranche 2 (2010 Allocation)
TSR performance is measured over the three years from 10 November
2010 to 10 November 2013. This tranche has been tested and
resulted in nil vesting (see below).
Tranche 3 (2010 Allocation)
TSR performance is measured over the four years from 10 November
2010 to 10 November 2014.
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%
Performance rights granted to Senior Executives as at 10 November
2011 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. This tranche has been tested and
resulted in nil vesting (see below).
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
performance condition applying to the 2010 allocations.
Note: All rights granted to the prior CEO (M G Jackman), and previously disclosed, lapsed when he ceased employment on 27 November 2013.
Performance testing of Tranche 2 of 2010 Senior Executive grant and Tranche 1 of 2011 Senior Executive grant
Following completion of their measurement periods, Tranche 2 of the 2010 Senior Executive grant and Tranche 1 of the 2011 Senior Executive
grant were tested against their performance hurdles, resulting in nil vesting and lapsing of 1,199,962 performance rights valued at $137,996
(number of rights multiplied by closing share price of $0.115 as at 11 November 2013).
E5. Relationship between Elders’ financial performance and Executive reward
(a) Short-term incentive
STI payments are awarded to executives on achievement of a range of financial and non-financial performance targets. The following table shows
the Company’s performance in relation to a number of financial and operational performance measures over a five-year period.
Performance measure ($ millions)
Sales revenue
Underlying EBIT
Statutory profit
Cashflow from operating activities
2014
1,431.1
27.3
3.0
15.1
2013
1,422.1
(48.9)
(505.3)
(81.6)
2012
2,157.9
38.8
(60.6)
2.5
2011
2,358.7
33.7
(395.3)
(23.8)
2010
2,154.4
34.0
(217.6)
(110.5)
Note: Details of KMP STI outcomes for 2014 are provided on page 46.
48
(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 2014 financial year and on a cumulative basis
over the period from 2010 to 2014.
Elders’ relative TSR performance against these two comparator groups is as follows:
Absolute TSR %
Cumulative TSR %
100%
50%
0%
-50%
%
R
S
T
e
t
u
o
s
b
A
l
100%
60%
20%
-20%
-60%
)
%
(
R
S
T
e
v
i
t
a
u
m
u
C
l
-100%
2010
2011
2012
2013
2014
-100%
2010
2011
2012
2013
2014
Elders
ASX200
ASX200 Industrials
Elders
ASX200
ASX200 Industrials
The method used to calculate the cumulative TSR is on a compound basis.
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:
Source: Thomson Reuters
Dividend history
No dividends have been declared or paid (interim or final) over the last five years from 2010 to 2014.
Elders Share price history 2009-2014 ($)
7
6
5
4
3
2
1
0
9
0
l
i
r
p
A
9
0
y
l
u
J
9
0
y
r
a
u
n
a
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
r
e
b
o
t
c
O
4
1
y
r
a
u
n
a
J
4
1
l
i
r
p
A
4
1
y
l
u
J
4
1
r
e
b
o
t
c
O
49
Section 5. Executive Director and Senior Executive contract terms
In 2014, the Company had employment agreements with the Executive Director and Senior Executives. The agreements are ongoing until
terminated by either party.
In a Company-initiated termination:
• the company is required to give Mr M C Allison notice as follows:
• 6 months where less than or equal to 1 year of service has been completed;
• 9 months where greater than 1 years’ service but less than or equal to 2 years of service has been completed; and
• 12 months where greater than 2 years of service has been completed:
• the Company is required to give the Senior Executive 6 months’ notice, and Mr M L Hunt has an additional contractual termination condition
where the Company will provide him 12 month’s notice if Ruralco Holdings Limited or a Related Body Corporate of Ruralco Holdings Limited
obtains control of Elders Limited or Elders Rural Services Australia Limited within the first three years of his employment with Elders which
commenced 2 July 2012.
• 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 Mr M C Allison initiates termination of employment he is required to give the Company 6 months notice, all other Senior Executives are required
to provide 3 months’ notice.
With the exception of Messrs Hall and Allison, 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 3 months’ notice. If the Senior Executive exercises that right
of termination, the Company will pay the equivalent of up to 12 months’ TFR except for Mr Hunt who will be paid the equivalent of 3 months
base salary.
50
Section 6. Executive Director and Senior Executive remuneration details
Table 6. Details of Executive Director and Senior Executive remuneration for the 2013 and 2014 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
- related5
0
n/a
0
n/a
0
n/a
0
n/a
0
n/a
641,790
n/a
0 (75,884) (93,889)
0 1,117,740 1,406,913
M C Allison
20141 334,132 300,000
0
2013
n/a
n/a
n/a
M G Jackman
20141 164,085 290,000
418
2013 1,146,536
0
2,640
H S Browning
2014
74,322
20131
42,031
0
0
J H Cornish
20141 105,597
11,667
A T Dage
2013
2014
n/a
n/a
n/a
n/a
n/a
632
362
440
n/a
7,658
n/a
4,444
16,796
4,444
2,437
6,177
n/a
n/a
0
43,475
41,120
0 (31,548) (43,617)
0
0
n/a
n/a
73,830
7,729
3,933
2,403
n/a
n/a
n/a
n/a
20131 572,061
0
1,927
16,796
0 127,447
(4,827)
R I Davey
2014 355,047
28,000
2,640
18,027
20131 237,127
0 101,760
11,306
0
0
5,196
7,893
9,804
37,300
M G De Wit
2014
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
2013
610,964
0
0
23,467
G J Dunne
20141 113,597 10,000 1,218
6,177
0
0
0
22,458 115,038
3,819
2,451
137,261
10%
47%
n/a
15%
3%
0%
58%
12%
n/a
n/a
9%
8%
2%
n/a
0%
n/a
0%
3%
0%
n/a
n/a
22%
11%
n/a
0
0
0
0
n/a
n/a
0
0
0
0 1,250,567
0
0
0
n/a
n/a
4,233
126,389
130,217
n/a
n/a
669,456 1,382,860
0
0
416,803
397,297
n/a
0
0
n/a
n/a
771,927
n/a
648,441
1,258,988
0
0
n/a
n/a
688,078
276,665
n/a
n/a
715,000 1,191,905
0
144,978
n/a
n/a
0
n/a
0
0
0
n/a
n/a
0
0
n/a
2013
n/a
n/a
n/a
n/a
n/a
n/a
n/a
D W Goodfellow 20141 567,290
0 27,500
18,027
2013
615,511
23,500 30,000
16,796
C C Hall
20141 237,003
0 26,722
12,939
2013
M G Hosking
2014
n/a
n/a
20131 227,366
n/a
n/a
0
n/a
n/a
880
M L Hunt
20141 113,946 16,667
7,969
2013
n/a
n/a
n/a
Total
2014 2,065,019 656,333 67,538
2013 3,451,596
23,500 137,569
1 Figures relate to part-year service (see Section 1).
n/a
n/a
6,177
n/a
84,070
93,088
0
0
0
n/a
n/a
0
0
0
n/a
n/a
(2,271 )
2,271
0
n/a
n/a
0
n/a
0
n/a
219
n/a
5,490
0 259,883
(16,714)
0 (94,484) (126,811)
0
1,766,181 4,417,848
0 514,439
89,337 115,038
1,384,456 5,809,023
2 Comprising the provision of leased car parking (Jackman, Browning, Cornish, Dage, Davey, Dunne, Hall, Hosking, Hunt), company leased vehicle
(Hunt), completion bonus (Davey), travel allowance (Goodfellow), qualifying payment (Hall).
3 Expense relating to participation in the Futuris Automotive Exit Incentive Plan, being a cash-based long-term incentive plan 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. This payment was paid when the sale of Futuris Automotive Interiors was finalised on 30 August 2013.
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 Performance related remuneration consists of STI and Share Rights as a percentage of total remuneration. Share Rights includes Performance
Rights disclosed in Table 7b(i).
51
Section 7. Equity instruments, loans to and transactions in relation to
Key Management Personnel
Table 7a(i). Non-executive Director share movements
Shares held at
start of year
Other shares
acquired (disposed of)
during the year
Balance of shares
held at end of
financial period
Balance of shares
held at date of signing
Remuneration Report
(see Note)
J H Ranck
J A Jackson
I Wilton
J M Rozman1
J C Ballard
I G MacDonald
Total
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
430,000
430,000
0
n/a
0
n/a
20,000
20,000
n/a
1,000,000
n/a
52,668
550,000
1,602,668
312,000
0
240,000
n/a
500,000
n/a
0
0
n/a
0
n/a
0
1,052,000
0
742,000
430,000
240,000
n/a
500,000
n/a
20,000
20,000
n/a
1,000,000
430,000
300,000
n/a
800,000
n/a
20,000
20,000
n/a
1,000,000
1,000,000
n/a
52,668
1,602,000
1,602,688
n/a
52,668
2,280,000
1,602,688
Note: No other changes occurred during the year.
1 Cessation dates were used for Non-executive Directors who retired or resigned before the date the Remuneration Report was signed, as follows:
J M Rozman
25 March 2014
52
Table 7a(ii). Executive Director and 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
Balance of
shares held
at end of
financial period
Balance of
shares held at
date of signing
Remuneration
Report
M C Allison
R I Davey1
J H Cornish
G J Dunne
C C Hall
M L Hunt
M G Jackman2
D W Goodfellow2
H S Browning2
A T Dage
M G De Wit
Total 1
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
2013
2014
100,000
100,000
2,530
2,530
260,241
n/a
345,328
n/a
35
n/a
25
n/a
221,755
188,676
173,356
173,356
290,667
20131 1,081
2014
2013
2014
2013
2014
2013
n/a
90,000
n/a
18,537
1,293,937
474,180
0
0
0
0
0
n/a
0
n/a
0
n/a
0
n/a
0
0
0
0
0
0
n/a
0
n/a
0
0
0
0
0
0
0
0
n/a
0
n/a
0
n/a
0
n/a
0
0
0
0
0
289,586
n/a
1,214,391
n/a
0
0
0
0
0
0
0
n/a
0
n/a
0
n/a
0
n/a
0
33,079
0
0
0
0
n/a
0
n/a
0
0
100,000
100,000
2,530
2,530
160,000
100,000
2,530
2,530
260,241
260,241
n/a
n/a
345,328
405,328
n/a
35
n/a
25
n/a
221,755
221,755
173,356
173,356
290,667
290,667
n/a
n/a
35
n/a
25
n/a
221,755
221,755
173,356
173,356
290,667
290,667
n/a
1,304,391
1,304,391
n/a
18,537
n/a
18,537
1,293,937
1,353,937
1,503,977
33,079
2,011,236
2,011,236
1 The 2013 number has been restated to reflect the number of shares only, and not performance rights as previously included.
2 Cessation dates were used for Executive Director and Senior Executives who ceased employment with Elders before the date the Remuneration
Report was signed, as follows:
M G Jackman
D W Goodfellow 29 August 2014
H S Browning
27 December 2013
27 November 2013
Note: No other changes occurred during the year. No shares were issued on exercise of options or performance rights during the 2014 financial year.
53
Table 7b(i). Current long-term Incentive plan opportunities (by offer) – Performance Rights
2014
Granted
Performance
Rights
(number)
Vested
Performance
Rights
(number)
Grant date Tranche(s)
Value per
right at
grant
date ($)
Total
value at
grant
date ($)
Vesting,
last exercise
and expiry
date
Expensed
at 30
September
2014 ($)
Performance
Rights % of
remuneration
10 November
2009
10 November
2009
10 November
2009
10 November
2009
10 November
2009
10 November
2009
23 December
2011
3
2
3
1
2
3
0.12
34,130
0.12
33,836
0.12
35,008
0.11
30,052
(see note)
(75,884)
0%
0.12
32,138
0.12
33,251
2,3
0.15 to 0.16
30,267
(see note)
(31,548)
0%
29 June 2011
3
0.21 to 0.24
45,833
23 December
2011
2,3
0.15 to 0.16
15,150
29 June 2011
3
0. 21 to 0.24
46,141
23 December
2011
2,3
0.15 to 0.16
11,350
29 June 2011
3
0.21 to 0.24
18,395
2,3
0.15 to 0.16
15,150
23 December
2011
29 June 2011
0
0
0
3
0
0
0
11,800
7%
5,196
1%
11,458
7%
9 November
2014 to
9 November
2015
10 November
2014
9 November
2014 to
9 November
2015
10 November
2014
9 November
2014 to
9 November
2015
10 November
2014
0. 21 to 0.24
43,868
0
0
0
0
0
0
0
0
0
0%
0%
0%
M G Jackman
285,603
292,951
292,951
278,255
278,255
278,255
H S Browning
200,000
305,551
J H Cornish
150,000
307,607
R I Davey
75,000
122,630
G J Dunne
150,000
292,456
D W Goodfellow 0
C C Hall
M L Hunt
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
54
Table 7b(i). Current long-term Incentive plan opportunities (by offer) – Performance Rights (continued)
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
43,475
3%
M G Jackman
285,603
292,951
292,951
278,255
278,255
278,255
278,255
278,255
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
3
2
3
1
2
3
2
3
0.12
0.12
0.12
0.11
0.12
0.12
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
32,138 10 November
2014
33,251 10 November
2015
H S Browning
200,000
0 23 December
2011
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
603,482
0 29 June 2011
2,3
R I Davey
75,000
0 23 December
2011
1,2,3
122,630
0 29 June 2011
2,3
M G De Wit
D W Goodfellow
0
0
M G Hosking
700,000
0
0
0
0
0 23 December
2011
0
0
1,2,3
696,325
0 29 June 2011
2,3
0.15 to
0.16
0.21 to
0.24
0.15 to
0.16
0.21 to
0.24
0
0
0.15 to
0.16
0.21 to
0.24
90,800
(see note)
(76,713)
0%
9,804
2%
124,720
11,350
9 November
2013 to
9 November
2015
18,395 10 November
2013 to
10 November
2014
0
0
0
0
105,933
(see note)
(88,890)
0%
0%
0%
143,907
Note:
Details of the performance rights in Tranche 2 of the 2010 Senior Executive grant and Tranche 1 of the 2011 Senior Executive grant that lapsed
are provided in Section 4.E4(c). No other performance rights lapsed and no performance rights were exercised during the 2014 financial year.
All unvested Performance Rights held by Messrs Jackman, Browning, Dage, and Hosking lapsed when they ceased employment with Elders.
55
7b(ii) Long Term Incentive Rights held by Directors and Senior Executives
(Number)
2014
M G Jackman
H S Browning
J H Cornish
R I Davey
G J Dunne
Total
Balance at
beginning of period
Rights exercised
Rights granted
Rights lapsed/
forfeited
Balance at end
of period
Vested at end
of period
1,706,270
403,700
355,073
156,754
344,972
2,966,769
-
-
-
-
-
-
-
-
-
-
-
-
(1,706,270)
(403,700)
(152,534)
(65,875)
(147,484)
-
-
202,539
90,879
197,488
(2,475,863)
490,906
-
-
-
-
-
-
7(c) Loans to and transactions with Directors and other executives
2014
C Hall
Type of Transaction
Purchase of Product through Elders
Purchase of Property through Elders Real Estate
Providing agistment services of cattle to Elders International as
Director of Tazach Trading Pty Ltd
Aggregate Amount
$407
$9,091 excl GST
$15,500 excl GST
D W Goodfellow
Purchase of Product through Elders under DW & AM Goodfellow and Koranui Pty Ltd
$99,983
Note:
All of the above transactions were provided under normal terms and conditions on arm’s length terms.
No other loans were granted to, and no other transactions were entered into with, KMP in either the 2013 or 2014 financial years.
56
ELDERS
LIMITED
ANNUAL
FINANCIAL
REPORT
30 SEPTEMBER
2014
Consolidated Statement of Comprehensive Income 58
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
1 Corporate Information
2 Summary of Significant Accounting Policies
3 Significant Accounting Judgements,
Estimates and Assumptions
4 Revenue and Expenses
5 Income Tax
6 Receivables
7 Biological Assets
8 Inventory
9 Other Financial Assets
10 Equity Accounted Investments
11 Property, Plant and Equipment
12 Brand Name
13 Trade and Other Payables
14 Interest Bearing Loans and Borrowings
15 Provisions
16 Contributed Equity
17 Hybrid Equity
18 Reserves
19 Retained Earnings
20 Dividends
21 Cash Flow Statement Reconciliation
22 Expenditure Commitments
23 Contingent Liabilities
24 Segment Information
25 Auditors Remuneration
26 Investments in Controlled Entities
27 Key Management Personnel
28 Related Party Disclosures
29 Earnings Per Share
30 Financial Instruments
31 Business Combinations –
Changes in the Composition of the Entity
32 Discontinued Operations
33 Parent Entity
34 Subsequent Events
Directors’ Declaration
Independent Auditor’s Report
59
60
61
62
62
62
69
70
71
73
75
77
77
77
79
80
81
81
82
83
83
83
84
85
85
86
86
87
89
90
93
94
95
96
100
101
102
102
103
104
57
Consolidated Statement of Comprehensive Income
For the Year ended 30 September 2014
Continuing operations
Sales revenue
Cost of sales
Gross profit from continuing operations
Other revenues
Distribution expenses
Administrative expenses
Finance costs
Other expenses
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
Net gains/(losses) on cash flow hedges
Income tax on items of other comprehensive income
Other comprehensive income/(loss) for the period, net of tax
Total comprehensive income/(loss) for the period
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.
58
Note
2014
$000
2013
$000
4
1,431,515
1,422,056
(1,153,383)
(1,191,432)
278,132
230,624
493
245
(217,961)
(238,599)
(33,343)
(23,342)
3,967
7,946
14,703
22,649
(41,164)
(30,490)
(204,915)
(284,299)
(64,440)
(348,739)
4
4
4
5
32
(17,294)
(153,131)
5,355
(501,870)
(2,310)
399
(128)
(2,039)
2,869
1,423
(53)
4,239
3,316
(497,631)
2,373
2,982
5,355
2,497
819
3,316
0.6¢
0.2¢
4.2¢
1.5¢
(3.6)¢
(1.3)¢
3,385
(505,255)
(501,870)
4,225
(501,856)
(497,631)
(99.6)¢
(99.6)¢
(69.1)¢
(69.1)¢
(30.4)¢
(30.4)¢
19
29
29
29
29
29
29
Consolidated Statement of Financial Position
As at 30 September 2014
Current assets
Cash and cash equivalents
Trade and other receivables
Livestock
Inventory
Non current assets classified as held for sale
Current tax assets
Total current assets
Non current assets
Receivables
Plantations
Other financial assets
Equity accounted investments
Property, plant and equipment
Brand Name
Deferred tax assets
Total non current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing loans and borrowings
Provisions
Total current liabilities
Non current liabilities
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
21(b)
6
7(a)
8
32
5
6
7(b)
9
10
11
12
5
13
14
15
14
5
15
16
17
18
19
2014
$000
2013
$000
22,477
302,137
41,123
84,817
-
743
39,927
345,353
36,671
116,311
6,100
1,363
451,297
545,725
-
4,175
4,588
1,269
5,877
25,750
5,615
20,616
-
19,538
62,700
35,096
5,615
8,068
63,715
135,192
515,012
680,917
249,677
159,982
36,572
255,023
268,116
73,630
446,231
596,769
121
1,116
10,514
11,751
26,569
3,468
7,911
37,948
457,982
634,717
57,030
46,200
1,277,813
1,269,153
145,151
145,151
(20,069)
(21,825)
(1,347,225)
(1,350,520)
55,670
41,959
1,360
4,241
57,030
46,200
59
Note
2014
$000
2013
$000
4,949,295
5,534,358
(4,912,289)
(5,570,544)
4,901
(22,649)
(3,076)
(1,127)
21(a)
15,055
16,344
(32,653)
(27,588)
(1,503)
(81,586)
(2,455)
(13,622)
-
-
-
18,454
38,271
10,994
97
-
(280)
(1,261)
(14,994)
-
63,298
27,390
413
566
24,067
15,597
-
4,282
-
(189)
2,917
4,813
93,710
84,648
10,238
(408)
-
-
-
10
13,158
62,333
(145,904)
(113,847)
(457)
(2,842)
(430)
(3,170)
(126,215)
(55,104)
(17,450)
(52,042)
39,927
22,477
91,969
39,927
21(b)
Consolidated Statement of Cash Flows
For the Year ended 30 September 2014
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends 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 controlled entities, net of cash acquired
Payment for design and development capitalised
Proceeds from sale of other financial assets held at cost
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
Net investing cash flows
Cash flow from financing activities
Proceeds from issue of shares
Share issue costs
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.
60
Consolidated Statement of Changes in Equity
For the Year ended 30 September 2014
$000
As at 1 October 2013
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:
Shares issued
Transaction costs on share issue (net of tax)
Tax effect on share issue costs
Partnership profit distributions/dividends paid
Amounts derecognised on sale of controlled entity
Cost of share based payments
Reallocation of equity
As at 30 September 2014
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
(1,170)
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
Issued
capital
Hybrid
equity
Reserves
Retained
earnings
Non-
controlling
interest
1,269,153
145,151
(21,825)
(1,350,520)
-
2,982
4,241
2,373
Total
equity
46,200
5,355
-
-
-
-
-
10,238
(408)
(1,170)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,434)
399
(128)
-
-
-
124
(2,310)
-
-
399
(128)
(2,163)
2,982
2,497
3,316
-
-
-
-
4,285
(53)
(313)
-
-
-
-
-
-
313
-
-
-
(2,842)
(2,536)
-
-
10,238
(408)
(1,170)
(2,842)
1,749
(53)
-
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
1,277,813
145,151
(20,069)
(1,347,225)
1,360
57,030
1,270,323
145,151
(27,310)
(844,029)
-
(505,255)
7,647
3,385
551,782
(501,870)
1,269,153
145,151
(21,825)
(1,350,520)
4,241
46,200
The accompanying notes form an integral part of this consolidated statement of changes in equity.
61
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 1. Corporate Information
The consolidated financial report of Elders Limited for the year ended 30 September 2014 was authorised for issue in accordance with a resolution of
the Directors on 17 November 2014.
Elders Limited (the Parent) is a for profit 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 Company are described in the Directors’ Report and note 24.
References in this consolidated financial report to ‘Elders’ are to Elders Limited and each of its controlled entities unless the context requires otherwise.
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 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
financial report has been prepared on a going concern basis.
(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 2014 and have been
applied in preparing these consolidated financial statements. None of these have materially impacted Elders and its policies:
• 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 11 Joint Arrangements introduces only two forms of joint arrangements, a joint venture or joint operation.
• 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.
• AASB 7 Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities – Amendments to AASB 7 provides new guidance
on offsetting financial assets and liabilities.
The Company has not elected to early adopt any new standard, interpretation or amendment 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 2014
but are available for early adoption and have not been applied in preparing this report. None are expected to have a significant effect to Elders and its
policies. The impact of AASB 9 Financial Instruments and IFRS 15 Revenue Recognition has not yet been fully assessed.
(d) Basis of consolidation
The consolidated financial statements comprise the financial statements of Elders Limited and its subsidiaries as at 30 September 2014. Control is
achieved when Elders is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns
through its power over the investee. Specifically, Elders controls an investee if and only if Elders has:
• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
• Exposure, or rights, to variable returns from its involvement with the investee, and
• The ability to use its power over the investee to affect its returns
When Elders has less than a majority of the voting or similar rights of an investee, it considers all relevant facts and circumstances in assessing
whether it has power over an investee, including:
• The contractual arrangement with the other vote holders of the investee
• Rights arising from other contractual arrangements
• Elders voting rights and potential voting rights
Elders re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three
elements of control. Consolidation of a subsidiary begins when Elders obtains control over the subsidiary and ceases when it loses control of the
subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of
comprehensive income from the date Elders gains control until the date Elders ceases to control the subsidiary.
62
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 2. Summary of Significant Accounting Policies (continued)
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of Elders and to the
non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the
financial statements of subsidiaries to bring their accounting policies into line with Elders’ accounting policies. All intra-group assets and liabilities,
equity, income, expenses and cash flows relating to transactions between members of Elders are eliminated in full on consolidation.
(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,
Elders 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 Elders 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) 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 26), 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 subsidiaries 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. 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.
(iii) Translation of Subsidiary 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.
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.
(g) 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.
(h) 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 is 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 Company
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.
63
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 2. Summary of Significant Accounting Policies (continued)
(i)
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.
(j) Biological assets
Elders holds biological assets in the form of livestock and plantations. Livestock is 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. Plantations are measured at anticipated fair value less point of sale costs. These
assumptions forecast plantation growth and yields at the current average annual growth rates, prices based on the current price plus indexation and
forecast of the net present value of future net cash flows from harvest and costs of maintaining plantations to maturity.
(k) Derivative financial instruments and hedging
Elders uses forward currency contracts to hedge risks associated with foreign currency 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.
Any gains or losses arising from changes in fair value of derivatives are taken directly to profit and loss.
(l) 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.
(m) Investments and other financial assets
Investments and financial assets are categorised as either financial assets at fair value through profit or loss, loans and receivables, held to maturity
investments, or available for sale assets. 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.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place
(regular way trades) are recognised on the trade date, i.e. the date that Elders commits to purchase or sell the asset.
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
This category is most relevant to Elders as it refers to loans and receivables which 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, less impairment.
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.
Elders has not designated any investments or financial assets as held to maturity investments.
64
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 2. Summary of Significant Accounting Policies (continued)
(n)
Investments in associates and joint ventures
Elders’ investments in its associates (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 Elders has significant influence and that are neither subsidiaries nor
joint ventures. Elders generally deem 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
Elders 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 Elders’ share of the results of operations of the associate. When there has been a change recognised directly in the
equity of the associate, Elders 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 Elders and the associate are eliminated to the extent of the interest in the associate.
The 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, Elders determines whether it is necessary to recognise any impairment loss with respect to an additional
impairment loss on its net investment in its associate. Elders determines at each reporting date whether there is any objective evidence that the
investment in the associate is impaired. If this is the case, Elders calculates the amount of impairment as the difference between the recoverable
amount of the associate and its carrying value.
Upon loss of significant influence over the associate, Elders 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 10 and the equity accounted investment accounting policies conform
to those used by Elders for like transactions and events on similar circumstances.
(o) Property, plant and equipment
Property, plant and equipment are 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, Elders 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.
(p) 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.
65
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 2. Summary of Significant Accounting Policies (continued)
(i) Elders as a lessee
Finance leases, which transfer 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 Elders 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) Elders as a lessor
Leases in which Elders 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.
(q)
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, Elders 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 level 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.
(r) Brand Name
The Brand Name intangible is deemed to have an indefinite useful life and is not amortised. The Brand Name is tested for impairment at each
reporting date. Impairment is determined by assessing the recoverable amount of the group of cash-generating units, to which the Brand Name
relates. When the recoverable amount of the group of cash-generating units is less than the carrying amount, an impairment loss is recognised.
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.
(s) 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 by Elders prior to the end of the financial year that remain unpaid and arise when Elders 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 Elders 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.
(t)
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.
Borrowings are classified as current liabilities unless Elders has an unconditional right to defer settlement of the liability for at least 12 months after
the reporting date.
66
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 2. Summary of Significant Accounting Policies (continued)
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.
(u) Provisions and employee benefits
Provisions are recognised when Elders 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 Elders 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.
Employee 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.
Restructuring and redundancy
Provisions are only recognised when general recognition criteria provisions are fulfilled. Additionally, Elders 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.
Make Good (Restoration)
Where Elders 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, Elders recognises any impairment loss on the
assets associated with that contract.
(v) 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.
(w) 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.
(x) 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 Elders 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).
67
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 2. Summary of Significant Accounting Policies (continued)
(ii) Rendering of services
Revenue from the rendering of services is recognised as the service is provided.
(iii) Interest income
Revenue is recognised as it accrues using the effective interest rate method.
(iv) Dividend income
Revenue is recognised when Elders’ right to receive the payment is established. Dividends received from associates are accounted for in accordance
with the equity method of accounting.
(y)
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 or associates 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 or associates, 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.
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.
68
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 3. Significant Accounting Judgements, Estimates and Assumptions
The preparation of Elders’ 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 has 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
Elders assesses impairment of all assets at each reporting date by evaluating conditions specific to the company and to the particular asset that may
lead to impairment. These include product 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 Elders’ 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, including the determination of recoverable amounts of assets using the higher of value in use and fair value less cost to sell.
Impairment of Brand Name
Elders determines whether the Brand Name is impaired on a bi-annual basis. This requires an estimation of the recoverable amount of the associated
cash-generating units, using a value in use discounted cash flow methodology, to which the Brand Name is allocated. The assumptions used in this
estimation of recoverable amount are discussed in note 12.
Classification of assets and liabilities as held for sale
Elders 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 Elders 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.
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
assets is assessed bi-annually and considered against the remaining useful life. Adjustments to useful lives are made when considered necessary.
69
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 4. Revenue and Expenses
Sales revenue
Sale of goods and biological assets
Debtor interest associated with sales
Commission and other selling charges
Discontinued operations
Other revenues
Share of profit of associates
Discontinued operations
Other expenses
Forestry fair value adjustments
Gain on divested assets
Impairment of assets retained
Restructuring, redundancy and other write offs
Discontinued operations
Finance costs
Interest expense
Other finance costs
Discontinued operations
Specific expenses: depreciation and amortisation
Depreciation and amortisation
Discontinued operations
Specific expenses: employee benefit expense
Salaries and wages
Superannuation and other employee costs
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
70
Note
2014
$000
2013
$000
1,203,041
1,235,263
5,578
7,069
222,896
179,724
1,431,515
1,422,056
32
138,289
486,730
1,569,804
1,908,786
32
32
32
493
493
4,342
4,835
245
245
9,126
9,371
(1,125)
(2,243)
(7,422)
-
-
154,628
(599)
57,709
(3,967)
204,915
20,363
16,396
181,839
386,754
17,645
5,697
23,342
(183)
23,159
3,245
3,245
461
3,706
26,244
4,246
30,490
2,731
33,221
5,501
5,501
13,683
19,184
128,811
158,537
24,829
28,268
(53)
818
153,587
187,623
9,831
73,687
163,418
261,310
47,880
1,428
2,591
14
74,207
1,160
13,028
11,711
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 5. Income Tax
(a) Major components of income tax expense are:
Income statement
Current income tax expense/(benefit)
Adjustments in respect of current income tax of previous years
Deferred income tax expense/(benefit)
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
2014
$000
1,537
104
(16,197)
(14,556)
2013
$000
3,099
(3,414)
40,131
39,816
1,298
1,223
(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 Elders’ 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% (2013: 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 not otherwise brought to account
(Recognition)/derecognition of deferred tax assets on previously unrecognised/recognised temporary differences
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 receivable
7,946
(284,299)
(17,147)
(177,755)
(9,201)
(462,054)
(2,760)
(138,616)
104
(1,110)
(6,995)
984
6,332
(341)
-
3,316
(10,875)
(3,211)
(14,556)
(14,703)
147
(14,556)
743
(3,415)
(2,081)
19,376
5,606
48,826
(325)
(1,702)
87,807
22,150
2,190
39,816
64,440
(24,624)
39,816
1,363
71
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
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
Statement of
Financial Position
Statement of
Comprehensive Income
2014
$000
(740)
-
-
-
(81)
-
-
-
2013
$000
(1,074)
(1,259)
(355)
-
-
-
-
-
2014
$000
(334)
(1,259)
(355)
-
81
-
-
-
(295)
(1,116)
(780)
(3,468)
(485)
(2,352)
2013
$000
(182)
430
(89)
(14,042)
(580)
(1,463)
(8,597)
(5,658)
(1,073)
(31,254)
Losses available to offset against future taxable income
-
-
-
52,000
Provision for employee entitlements
10,481
10,759
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
4,159
1,112
377
14,709
798
8,038
2,027
2,584
4,398
2,330
278
3,879
915
2,207
(10,311)
1,532
(11,275)
(22,150)
(10,875)
255
20,616
82
8,068
(173)
(12,548)
(14,900)
4,893
4,050
(192)
2,411
(1,886)
(2,330)
22,150
411
81,507
50,253
Tax losses
Elders has tax losses for which no deferred tax asset is recognised in the statement of financial position of $250.6 million (2013: $232.1 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 2014, there are no unrecognised temporary differences associated with investment in subsidiaries, associates or joint ventures, as
Elders 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.
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.
72
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 6. Receivables
Current
Trade debtors
Allowance for doubtful debts
Amounts receivable from associated entities
Other receivables
Allowance for non-recovery
Total current receivables
Non current
Total non current 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
2014
$000
2013
$000
298,552
328,712
(6,631)
(9,214)
291,921
319,498
331
331
5,261
5,261
9,885
21,007
-
(413)
9,885
20,594
302,137
345,353
-
4,175
9,214
(5,174)
-
2,591
6,631
413
(427)
14
-
12,710
(14,924)
(1,600)
13,028
9,214
1,910
(13,208)
11,711
413
(i) Included in trade debtors is $62.6 million (2013: $38.9 million) which is subject to credit insurance with various terms and conditions.
Trade receivables 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 $2.6 million
(2013: $13 million) has been recognised by Elders. During the period, no individual amount within the impairment allowance is considered material.
73
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
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 and considered impaired
+91 days
Total other current receivables
Related party receivables
For terms and conditions of related party receivables refer to note 28.
2014
$000
2013
$000
280,327
298,901
3,554
2,046
5,994
11,594
-
-
6,631
6,631
4,392
1,223
14,982
20,597
337
61
8,816
9,214
298,552
328,712
9,885
20,594
-
413
9,885
21,007
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 30.
Foreign exchange and interest rate risk
Details regarding the foreign exchange and interest rate risk exposure are disclosed in note 30, including those relating to derivative related balances.
74
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 7. Biological Assets
(a) Livestock
Current
Fair value at the end of the period
2014
$000
2013
$000
41,123
36,671
The below table discloses the fair value of livestock assets in their fair value hierarchy:
Fair Value Input
Cattle Type
$000
Head
$000
Head
2014
2013
Level 1
Level 2
Level 3
None
None
All
-
-
-
-
-
-
-
-
41,123
41,123
34,507
34,507
36,671
36,671
44,440
44,440
All Elders’ cattle are valued at fair value, using Level 3 Price Inputs. Cattle are held for live export and feedlotting purposes, which means that quoted
prices in active markets for identical cattle are not available, nor are there other input prices other than quoted prices which are available.
Fair Value Inputs are summarised as follows:
• Level 1 Price Inputs – are quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the
measurement date.
• Level 2 Price Inputs – are input prices other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
• Level 3 Price Inputs – are unobservable inputs for the asset or liability.
At balance date 34,507 head of cattle (2013: 44,440) are included in livestock. This includes:
• 16,321 cattle held in Australia and New Zealand destined for the Chinese and Indonesian live export markets;
• 18,186 cattle held in Australia and Indonesia for feedlotting purposes.
Cattle are held for short term trading and feeding purposes, and at period end an unrealised $1.7 million (2013: $1.5 million) fair value increment
was recognised.
In regard to Live Export cattle, as Elders has access to different active markets, Elders has used the most relevant one, being the market that is going
to be used, in determining fair value. Fair value has been determined internally by Elders based on the estimated selling price of cattle (allowing for
breed and specifications of the cattle), less costs to sell, including associated shipping and transportation costs.
Feedlot cattle are valued internally by Elders as there is no observable market for them. The value is based on the estimated exit price per kilogram
and the value changes for the weight of each animal as it progresses through the feedlot program. The key factors affecting the value of each animal
are price/kg, days on feed and the feed conversion ratio. The average daily gain of weight is in the range of 1.5kgs to 2.0kgs. The value is determined
by applying the average weight gain per day by the number of days on feed from induction to exit at which point the cattle are delivered to market.
The value per animal is based on the breed and specifications of the animal and the market it is destined for.
Significant increases/(decreases) in any of the significant unobservable valuation inputs for feedlot cattle in isolation would result in significantly
lower/(higher) fair value measurement.
The group is exposed to a number of risks related to its livestock:
Regulatory and environmental risks
Elders 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.
Supply and demand risk
Elders 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. Elders’ strategy to manage this financial risk is
to actively review and manage its working capital requirements. Elders is exposed to risks arising from fluctuations in price and sales volumes. Where
possible, Elders manages these risks by aligning volumes with market supply and demand.
Other risks
Elders’ livestock are exposed to the risk of damage from disease and other natural forces. Elders has extensive processes in place aimed at
monitoring and mitigating those risks, including regular health inspections and industry pest and disease surveys.
75
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 7. Biological Assets (continued)
(b) Plantations
As at 1 April 2014, the remaining forestry assets were reclassified as held for use after it became apparent that efforts to exit certain associated
leases were unsuccessful.
Non current
Fair value at classification as held for use
Costs incurred in respect of forestry plantations
Unrealised fair value increment in period
Fair value at the end of the period
The below table discloses the fair value of plantation assets in their fair value hierarchy:
Fair Value Input
Level 1
Level 2
Level 3
2014
$000
4,588
4,101
217
270
4,588
-
-
4,588
4,588
2013
$000
-
-
-
-
-
-
-
-
-
Plantations are valued at fair value, using Level 3 Price Inputs. Fair Value Inputs are summarised as follows:
• Level 1 Price Inputs – are quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the
measurement date.
• Level 2 Price Inputs – are input prices other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
• Level 3 Price Inputs – are unobservable inputs for the asset or liability.
Physical quantity of forestry plantation timber at the end of the 2014 year was 2,699ha. Residual lease obligations are estimated to be $1.6 million a
year and these costs have been fully provided for. The fair value methodology for forestry assets is detailed in note 2(j). The assumptions used in the
valuation model to determine fair value less costs to sell are as follows:
CPI:
Discount rate:
Period to harvest:
Current woodchip FOB price:
2.5% to 4%
14.5%
Between 5 to 7 years, depending upon year of establishment and current harvest schedule for the
individual property.
$170 per BDMT (Bone Dry Metric Tonne)
Elders is exposed to a number of risks related to its plantations:
Regulatory and environmental risks
Elders 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.
Supply and demand risk
Elders is exposed to financial risk in respect of forestry activity. The primary financial risk associated with this activity occurs due to the length of time
between expending cash on the purchase or planting and maintenance of the plantations and ultimately receiving cash from the sale of timber to
third parties. Elders’ strategy to manage this financial risk is to actively review and manage its working capital requirements.
Elders is exposed to risks arising from fluctuations in price and sales volumes. Where possible, Elders manages these risks by aligning harvest
volumes with market supply and demand.
Climate and other risks
Elders’ plantations are exposed to the risk of damage from climatic changes, diseases, forest fires and other natural forces. Elders conducts regular
plantation health inspections and is involved in industry pest and disease surveys.
76
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 8. Inventory
Current
Inventory – at net realisable value
2014
$000
2013
$000
84,817
116,311
Inventories recognised as an expense for the year ended 30 September 2014 totalled $856.0 million (2013: $1,259.6 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 $2.7 million
(2013: $6.6 million).
Note 9. Other Financial Assets
Non current
Unlisted investments
1,269
19,538
On 8 May 2014, the Company sold its remaining 10% shareholding in Elders Insurance (Underwriting Agency) for $18.5 million, resulting in an
immaterial gain on sale.
Note 10. Equity Accounted Investments
Name of equity accounted investment
Balance
date
Ownership
interest
Consolidated entity
investment
Contribution to net
profit/(loss)
AWH Pty Ltd
Kilcoy Pastoral Company Limited
Elders Financial Planning Pty Ltd
Elders Insurance (Underwriting Agency) Pty Limited
Auctions Plus
Agricultural Land Trust
Other investments
Share of profit of investments:
Continuing operations
Discontinued operations
2014
2013
%
-
-
49
-
50
-
%
50
20
49
10
50
52
30 Jun
30 Jun
30 Sep
31 Dec
30 Jun
30 Jun
2014
$000
-
-
5,151
-
726
-
-
2013
$000
49,671
7,120
5,278
-
631
-
-
2014
$000
2,378
828
(126)
-
619
-
-
2013
$000
4,278
1,435
(65)
5,517
310
(2,968)
(137)
5,877
62,700
3,699
8,370
493
3,206
245
8,125
3,699
8,370
All equity accounted investments are Australian resident companies. During the period, a $2.4 million profit on sale of Elders’ investment in
Kilcoy Pastoral Company was recognised.
On 8 May 2014, Elders sold its 10% equity holding in Elders Insurance (Underwriting Agency) Pty Ltd (refer to note 9).
The Company’s investment in AWH Pty Ltd was impaired at 31 March 2014 by $20.4 million and subsequently sold, resulting in a gain on sale of
$3.9 million. Elders’ investment in Agricultural Land Trust was classified as held for sale at 30 September 2013 and impaired to nil value in this
period as part of the divestment of Forestry related assets. Due to the nature of this sales transaction Elders still holds an immaterial ownership
interest in Agricultural Land Trust which will be cancelled in the near future.
77
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 10. Equity Accounted Investments (continued)
(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
2014
$000
2,088
6,188
8,276
1,363
1,036
2,399
5,877
2013
$000
50,628
31,689
82,317
37,758
4,618
42,376
39,941
47,625
183,861
5,144
(1,445)
3,699
3,699
12,810
(4,440)
8,370
8,370
-
617
10,028
27,415
78
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 11. Property, Plant and Equipment
Reconciliation of carrying amounts at beginning and end of period:
Non current
2014
Freehold
land
Buildings
Leasehold
improve-
ments
Plant and
equipment
(owned)
Plant and
equipment
(leased)
Assets under
construction
Total
$000
$000
$000
$000
$000
$000
$000
Carrying amount at beginning of period
6,425
11,434
5,471
10,731
Additions
Disposals
Disposals through entities sold
Depreciation expense
Impairment
Exchange fluctuations
Transfers from assets under construction
Other
-
-
316
(9)
(592)
(3,093)
-
(798)
(812)
(1,096)
60
-
-
30
-
339
129
(98)
(10)
(1,050)
(1,085)
-
-
-
1,772
(168)
(1,161)
(1,701)
(869)
88
201
233
Carrying amount at end of period
5,081
7,123
3,357
9,126
834
432
(51)
-
(157)
-
-
-
(233)
825
201
238
-
-
-
-
-
(201)
-
35,096
2,887
(326)
(4,856)
(3,706)
(3,862)
178
-
339
238
25,750
Cost
5,081
13,551
9,232
29,210
1,022
238
58,334
Accumulated depreciation and impairment
-
5,081
(6,428)
7,123
(5,875)
(20,084)
3,357
9,126
(197)
825
-
(32,584)
238
25,750
2013
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
(175)
834
-
(43,432)
201
35,096
The impairments in 2014 relate to writedowns to the New Zealand Network prior to its disposal. This was recognised in the operating segment titled
‘Other’. Refer to note 32 for details relating to discontinued operations.
All Property, plant and equipment is pledged as security, refer to note 14 for interest bearing loans and borrowings.
79
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 12. Brand Name
Brandname
(a) Description of Elders Brand Name
2014
$000
5,615
2013
$000
5,615
The Brand Name value represents the value attributed to the Elders Brand when acquired through business combinations and is carried at cost less
accumulated impairment losses. The Brand Name has been determined to have an indefinite useful life due to there being no foreseeable limit to the
period over which it is 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 Elders operates in is such that Brand
obsolescence is not common, if appropriately supported by advertising and marketing spend. The Brand Name is not amortised but is subject to
impairment testing on an bi-annual basis or whenever there is an indication of impairment.
Expenditure incurred in developing, maintaining or enhancing the Brand Name is expensed in the year that it occurred.
(b)
Impairment test for the Brand Name
For the purposes of impairment testing, the Brand Name has not been allocated to individual CGU’s but rather assessed against all CGU’s expected to
benefit from it. The recoverable amount of the cash generating units to which the Elders’ Brand Name has been allocated to have 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 13.2% pre-tax (2013: 13.7% pre-tax) which has been determined based on a weighted average cost of
capital calculation which incorporates the specific risks relating to the cash generating units identified.
Management has determined that there is no impairment loss in the current year in relation to the brand name. In 2013 $54.8m of Brand Name was
impaired, along with a further $189.5m relating to goodwill associated with the Branch Network and Automotive cash generating units. In 2013, a
further impairment of $25.5 million was recognised as a result of the cancellation of the Elders IT modernisation project.
The calculation of value in use for the cash generating units expected to benefit from the Brand Name was based on the following key assumptions:
Gross margins
Gross margins are expected to increase as a result of:
• Increased livestock agency commission driven through increases in livestock pricing and volumes.
• A return to normal summer rainfall patterns improving sales of agricultural chemicals, seed and fertiliser, and likely restoration of margins to
historic levels as demand increases.
• Continued strong demand for cattle in overseas markets.
Selling, general and administrative expenses
Significant cost savings were achieved in the 2014 financial year as a result of the successful implementation of the reorganisation plan and new
business model focused on agribusiness. Further cost saving initiatives which offset inflationary pressure are expected over the next 3 years.
Growth rate estimates
Year 1-3 cash flows are based on a forecast model. No EBIT growth for years 4 to 5 has been incorporated in the discounted cash flow.
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.
With regard to the assessment of the value in use of the cash generating units which benefit from the Brand Name, there are reasonably possible
changes in key assumptions that could cause the carrying value of the unit to materially exceed its recoverable amount:
• a decrease in expected future cash flows in excess of 11% across all years of the discounted cash flow model could result in an impairment; or
• an increase in the discount rate by more than 1.7%, could result in impairment.
80
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 13. Trade and Other Payables
Current
Trade creditors
Other creditors and accruals
Payables to associated companies
2014
$000
2013
$000
226,583
220,398
23,094
-
31,744
2,881
249,677
255,023
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 23 and 30.
Related party payables
For terms and conditions of related party payables refer to note 28.
Interest rate, foreign risk and liquidity risk
Information regarding interest rate, foreign exchange and liquidity risk exposure is set out in note 30, including those relating to derivative
forward contracts.
Note 14. 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 Company has access to the following financing facilities with a number of financial institutions:
2014
Secured loans - term debt
Trade receivables funding
Lease liabilities
Total
2013
Secured loans - term debt
Trade receivables funding
Unsecured loans and lease liabilities
Total
34,050
125,631
118,449
149,380
301
287
159,982
268,116
-
-
121
121
24,720
1,733
116
26,569
160,103
294,685
Accessible
$000
Drawn
$000
Unused
$000
34,050
34,050
-
197,100
125,631
71,469
422
422
-
231,572
160,103
71,469
143,169
143,169
-
207,216
149,380
57,836
2,136
2,136
-
352,521
294,685
57,836
The Company also has an ancillary facility in relation to contingent funding, such as bank guarantees, of $45.0 million. As at 30 September 2014,
$32.2 million had been issued. The parent entity and certain controlled entities have potential financial liabilities which may arise from certain
contingencies disclosed in note 23. 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 Elders. No material losses are
expected and as such, the fair values disclosed are the Directors’ estimate of amounts that will be payable by Elders.
81
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 14. Interest Bearing Loans and Borrowings (continued)
(b) Assets pledged as security
Secured loans are secured by various fixed and floating charges over all the assets of Elders Limited (either directly or indirectly). Lease liabilities are
secured by a charge over the leased assets.
(c) Fair value
The carrying value of interest bearing liabilities approximates fair value.
Note 15. Provisions
Reconciliation of carrying amounts at beginning and end of period:
Employee
entitlements
Restructuring
and redundancy
$000
$000
Make
good
$000
Onerous
contracts
Other
Total
$000
$000
$000
39,563
17,130
30,009
4,469
6,531
600
-
(20,476)
(23,610)
(100)
(300)
369
-
(1,342)
-
34,944
31,699
3,245
34,944
52,838
25,031
(23,704)
(214)
(350)
-
(14,038)
-
(3,275)
(2,829)
-
750
-
(3,874)
229
-
-
-
600
1,769
600
440
-
1,329
600
1,769
17,702
26,607
13,100
707
(23,147)
(3,861)
(563)
(5,246)
-
(400)
(1,218)
11,028
376
-
(547)
(60)
-
(2,995)
(2,463)
281
-
-
7,974
9,328
3,388
5,940
9,328
59,212
6,641
(24,053)
(22,026)
521
-
(10,968)
39,563
30,009
4,469
6,531
36,712
2,851
39,563
30,009
-
2,088
2,381
30,009
4,469
3,852
2,679
6,531
969
3,479
81,541
21,209
(1,086)
(48,267)
-
-
-
-
(2,917)
(8,867)
879
750
(1,342)
1,183
445
47,086
445
-
445
36,572
10,514
47,086
3,122
1,613
(954)
(384)
-
-
145,974
60,599
(75,719)
(28,433)
547
(400)
-
969
969
-
969
-
81,541
73,630
7,911
81,541
(2,796)
(2,428)
(21,027)
2014
As at beginning of period
Arising during year
Utilised
Unused amounts reversed
Discount rate adjustment
Provisions transferred to held for sale assets
Disposals of controlled entities
Other
Disclosed as:
Current
Non current
Total
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
82
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 16. Contributed Equity
2014
$000
2013
$000
Issued and paid up capital
523,265,328 ordinary shares (September 2013: 455,013,329)
1,277,813
1,269,153
The movement in the dollar balance of share capital is a result of:
• A $1.2 million decrease due to the unwinding of the tax effect of the equity raising costs incurred in the 2010 financial year; and
• A $9.8 million increase as a result of placement of 68,251,999 shares at $0.15c per share on 18 September 2014. Gross proceeds were $10.2m with
associated costs totalling $0.4m.
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 Company 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.
Note 17. 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.
No distributions were declared or paid during the year.
The Hybrids may, on the occurrence of certain events, be converted or resold by Elders 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 Elders’ 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 18. Reserves
Reconciliation of carrying amounts at beginning and end of period:
Business
combination
reserve
Employee
equity benefits
reserve
Foreign currency
translation
reserve
Net
unrealised
gains reserve
Reserved
shares
reserve
Total
2014
Carrying amount at beginning of period
Foreign currency translation
Non-controlling interest share of movement
$000
(16,503)
-
-
Amount derecognised on sale of controlled entity
275
Net gains/losses in cash flow hedges
Income tax on items taken directly or transferred
to equity
Cost of share based payments
Transfer to retained earnings
-
-
-
-
Carrying amount at end of period
(16,228)
$000
627
-
-
-
-
-
(53)
(313)
261
$000
(5,678)
(2,310)
(124)
4,010
-
-
-
-
(4,102)
$000
(271)
-
-
399
(128)
-
-
-
$000
$000
-
-
-
-
-
-
-
-
(21,825)
(2,310)
(124)
4,285
399
(128)
(53)
(313)
(20,069)
83
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 18. Reserves (continued)
Business
combination
reserve
Employee
equity benefits
reserve
Foreign currency
translation
reserve
Net
unrealised
gains reserve
Reserved
shares
reserve
Total
2013
Carrying amount at beginning of period
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
$000
(16,169)
$000
397
-
-
-
-
-
12
-
(346)
-
-
-
-
-
-
-
818
(985)
397
627
Carrying amount at end of period
(16,503)
Nature and purpose of reserves
$000
(7,707)
2,869
(840)
-
-
-
-
-
-
-
$000
(1,641)
-
-
1,423
(53)
-
-
-
-
-
$000
$000
(2,190)
(27,310)
-
-
-
-
10
-
-
2,577
(397)
2,869
(840)
1,423
(53)
10
12
818
1,246
-
(5,678)
(271)
-
(21,825)
(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 discontinued employee share loan plan.
Note 19. 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
2014
$000
2013
$000
(1,350,520)
(844,029)
2,982
(505,255)
-
313
-
-
346
985
(2,577)
10
Retained earnings at the end of the financial year
(1,347,225)
(1,350,520)
84
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 20. Dividends
(a) Dividends proposed
No final dividend will be paid (2013: Nil)
(b) Dividends paid during the year
Current year interim
- No interim dividend was be paid (2013: Nil)
Previous year final
- No final dividend paid (2013: Nil)
Subsidiary equity dividends on ordinary shares:
Dividends paid to non-controlling interests during the year
(c) Franking credit balance
2014
$000
-
2013
$000
-
-
-
-
-
2,842
3,170
Franking credits available to the parent for subsequent financial years based on tax rate of 30% (2013: 30%)
19,690
16,570
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 21. 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
Share of associates 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
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 provisions
Net cash flows from operating activities
5,355
(501,870)
3,706
(3,699)
3,765
(15)
(1,508)
24,307
2,605
17,199
(3,978)
2,688
(5,967)
(328)
(12,781)
(2,352)
620
(1,223)
28,394
14,119
9,874
19,184
(8,370)
15,237
2,923
-
309,576
24,739
24,467
8,246
6,638
(23,569)
37,908
72,140
(30,425)
(2,731)
(1,565)
(47,472)
89,944
(612)
(37,332)
(123,446)
15,055
(81,586)
85
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 21. Cash Flow Statement Reconciliation (continued)
(b) Cash and cash equivalents
Cash at bank and in hand
Cash includes $5.1 million (2013: $4.3 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.
2014
$000
2013
$000
22,477
39,927
Note 22. Expenditure Commitments
Operating lease commitments – Elders as a lessee
Elders’ operating lease commitments relate to property leases associated with the branch network, the remaining forestry leases, and vehicle and
shipping leases. The lease commitments comprise base amounts adjusted where necessary for escalation clauses primarily based on inflation rates.
Leases generally provide the right of renewal at the end of the lease term.
Operating lease commitments:
- Within one year
- After one year but not later than five years
- After more than five years
Total minimum lease payments
Property, plant and equipment commitments
Capital expenditure contracted for but not otherwise provided for in these accounts:
- Within one year
Total property, plant and equipment commitments
Note 23. Contingent Liabilities
43,404
47,722
9,522
59,417
117,255
57,530
100,648
234,202
324
324
-
-
Contingent liabilities at balance date, not otherwise provided for in the financial statements, are as follows:
Guarantees issued to third parties arising in the normal course of business
32,237
39,638
There are potential legal matters that occur in the ordinary course of business that are being considered by Elders’ legal advisors. Based on the
current information available, the following applies:
Unquantifiable contingent liabilities
• Elders has contingent obligations in respect of real property let or sub-let by subsidiaries of Elders.
• Elders has contingent obligations in respect of real property sub-let to the purchaser of Elders’ former Sandalwood estate.
• Benefits are payable under service agreements with executive Directors and other employees of Elders under certain circumstances such as
achievement of prescribed performance hurdles, occurrence of certain events or termination of employment for reasons other than serious misconduct.
• Elders 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 Elders’ liability under the guarantee is unquantifiable and remote.
• A wholly owned subsidiary of Elders is party to a put option in connection with a third party’s holding in B&W Rural Pty Ltd, an incorporated joint
venture in which Elders is the 75% shareholder. If exercised, Elders 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.
• Subsidiaries of Elders have, from time to time and in the ordinary course, provided parent company guarantees in respect of certain contractual
obligations of their subsidiaries.
• Subsidiaries of Elders 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 exposures under the warranties or indemnities.
• Various legal claims for damages resulting from the use of products or services of Elders are in existence 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.
• Elders is assisting certain regulators in connection with enquiries either specific to the activities of Elders or to certain markets in which Elders
operates. The Directors are of the view that it is not yet known what the outcome of the enquiries will be and it is not presently ascertainable
whether any liabilities will arise from these enquiries.
86
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 23. Contingent Liabilities (continued)
Other guarantees
As disclosed in note 26, 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 companies party to the Deed in the event of
any of those companies being wound up.
The parent entity and certain subsidiaries of Elders are parties to various guarantees and indemnities pursuant to bank facilities and operating lease
facilities extended to Elders.
Note 24. Segment Information
Identification of reportable segments
Elders has identified its operating segments to be Network, Feed and Processing, Live Export, Forestry, Automotive Components (divested during the
period up to 30 September 2013) and Other. This is the basis on which internal reports are reviewed and used by the Chief Executive Officer (the
chief operating decision maker) in assessing performance and in determining allocation of resources. Discrete financial information about each of
these operating businesses is reported to the Chief Executive Officer on at least a monthly basis. Elders operates predominantly within Australia. All
other geographical operations are not material to the financial statements.
Type of product and service
• Network includes the provision of a range of agricultural products and services through a common distribution channel.
• Feed and Processing includes the Australian cattle feedlot near Tamworth in New South Wales (Killara Feedlot), the Indonesian cattle feedlot near
Lampung (PT Elders Indonesia), and Elders Fine Foods which is involved in the importation and distribution of Australian and New Zealand food
products throughout China.
• Live Export facilitates principle position trades of dairy, beef feeder, beef slaughter and beef breeding cattle from Australia and New Zealand to
international markets by sea or air freight.
• 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 divested during the period up to 30 September 2013.
• The 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 company 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.
Changes have been made to the composition of the Rural Services and Investment & Other segments to reflect changes in internal reporting. The
comparative segment information has been restated to reflect these changes.
87
(23,159)
(9,201)
13,958
17,330
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 24. Segment Information (continued)
2014
External sales
Other revenues
Share of profit of associates
Total revenue
Network
Feed and
Processing
Live Export
Forestry
$000
$000
$000
$000
1,111,289
188,843
205,982
1,136
2,871
-
828
-
-
1,115,296
189,671
205,982
-
-
-
-
Other
$000
Total
$000
63,690
1,569,804
-
-
1,136
3,699
63,690
1,574,639
Earnings before interest, tax, depreciation & amortisation
41,629
11,722
(1,053)
(1,973)
(32,661)
17,664
(1,934)
(1,121)
-
-
(651)
(3,706)
39,695
10,601
(1,053)
(1,973)
(33,312)
13,958
Depreciation & amortisation
Segment result
Corporate net interest expense
Profit/(loss) from ordinary activities before tax
Segment result
Discontinued operations results
39,695
12,799
10,601
(1,053)
(1,973)
(33,312)
(6,250)
-
2,543
8,238
Continuing profit/(loss) before net borrowing costs and tax
expense
Corporate net interest expense
Continuing profit/(loss) before tax expense
52,494
4,351
(1,053)
570
(25,074)
31,288
(23,342)
7,946
Segment assets
Segment liabilities
Net assets
377,801
41,184
35,088
4,588
56,351
515,012
208,974
1,458
12,074
7,765
227,711
457,982
168,827
39,726
23,014
(3,177)
(171,360)
57,030
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
5,877
1,761
-
822
(25,617)
1,738
6,145
5,843
-
92
-
-
-
-
-
212
5,877
2,887
(230)
(15,966)
(40,075)
(130)
(5,563)
6,295
88
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 24. Segment Information (continued)
2013
External sales
Other revenues
Share of profit of associates
Total revenue
Network
Feed and
Processing
Live
Export
Forestry
Automotive
Compon-
ents
Other
Total
$000
$000
$000
1,147,860
206,733
171,478
-
-
10,040
1,435
-
-
$000
1,412
1,001
(2,968)
$000
$000
$000
304,130
77,173
1,908,786
-
(137)
-
-
1,001
8,370
1,157,900
208,168
171,478
(555)
303,993
77,173
1,918,157
Earnings before interest, tax, depreciation &
amortisation
62,034
5,452
(28,897)
(17,414)
(186,883)
(243,941)
(409,649)
Depreciation & amortisation
(3,034)
(1,743)
(4)
-
(12,654)
(1,749)
(19,184)
Segment result
59,000
3,709
(28,901)
(17,414)
(199,537)
(245,690)
(428,833)
Corporate net interest expense
Profit/(loss) from ordinary activities before tax
(33,221)
(462,054)
Segment result
59,000
3,709
(28,901)
(17,414)
(199,537)
(245,690)
(428,833)
Discontinued operations results
(53,109)
(2,549)
-
24,635
199,537
6,510
175,024
5,891
1,160
(28,901)
7,221
-
(239,180)
(253,809)
Continuing profit/(loss) before net borrowing
costs and tax expense
Corporate net interest expense
Continuing profit/(loss) before tax expense
Segment assets
Segment liabilities
Net assets
482,162
70,098
21,884
6,112
194,471
1,870
13,435
21,003
287,691
68,228
8,449
(14,891)
(30,490)
(284,299)
-
-
-
-
100,661
680,917
403,938
634,717
(303,277)
46,200
-
62,700
(25,676)
(103)
(30,159)
55,580
(3,935)
7,120
(445)
(193,878)
(3,260)
-
-
-
-
-
11,457
(180,189)
(9,278)
(375,148)
24,543
262
116
(2,594)
(37,684)
1,018
(14,339)
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
Note 25. 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
2014
$
2013
$
860,296
1,222,176
131,764
161,472
361,413
631,824
1,153,532
2,215,413
-
-
-
140,015
25,532
165,547
89
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 26. Investment in Controlled Entities
(a) Schedule of controlled entities
Acehill Investments Pty Ltd
Agricultural Land Management Limited
Agsure Pty Ltd
Country of
Incorporation
Australia
Australia
Australia
AI Asia Pacific Operations Holding Limited
Hong Kong SAR
Air International Asia Pacific Operations Pty Ltd
Air International Vehicle Air Conditioning (Shanghai) Co Ltd
Albany Woolstores Pty Ltd
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 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
90
Australia
China
Australia
Hong Kong SAR
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
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
(f)
(h)
(a)
(f)
(f)
(e)
(c)
(c)
(h)
(c)
(f)
(g)
(f)
(c)
(h)
(h)
(h)
(c)
(f)
(c)
(h)
(c)
(f)
(h)
(f)
(h)
(f)
(a)
(h)
(c)
(c)
(c)
(c)
(c)
(h)
(a)
(f)
(h)
(h)
(f)
% Held by Group
2014
100
-
100
100
100
100
100
100
100
100
-
100
100
100
100
100
-
-
2013
100
100
100
100
100
100
66
100
100
100
100
100
100
100
100
100
100
100
75.5
75.5
-
100
100
100
-
100
100
-
100
100
-
100
100
-
100
100
100
100
100
100
100
-
100
100
-
-
100
100
100
100
100
100
100
100
50
100
100
50
100
100
100
100
100
100
100
100
100
100
50
100
100
100
50
100
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 26. Investment in Controlled Entities (continued)
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
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 Webster Pty Ltd
Elders Wool International Pty Ltd
Elderstock Limited
EVIA Rural Finance 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.
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
Milltoc Pty Ltd
Mutual Benefit Consulting Pty Ltd
New Ashwick Pty Ltd
North Australian Cattle Company Pty Ltd
Pitt Son & Keene Pty Ltd
Prestige Property Holdings Pty Ltd
Primac Exports Pty Ltd
Primac Holdings Pty Ltd
Primac Pty Ltd
Rachid Fares Enterprises of Australia Pty Ltd
Redray Enterprises Pty Ltd
Country of
Incorporation
New Zealand
Indonesia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Mexico
Australia
Mexico
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
(h)
(h)
(f)
(f)
(f)
(h)
(h)
(a)
(f)
(h)
(c)
(f)
(f)
(c)
(h)
(f)
(f)
(h)
(h)
(f)
(c)
(f)
(c)
(a)
(f)
(h)
(f)
(h)
(h)
(f)
(a)
(h)
(c)
(f)
(f)
(f)
(h)
(f)
% Held by Group
2014
2013
-
100
-
100
100
100
-
-
100
100
100
100
-
100
100
100
100
-
100
100
100
100
100
-
100
-
100
100
100
100
100
100
100
100
-
100
-
-
100
100
-
100
100
100
100
-
100
25
100
100
100
100
100
100
50
50
100
100
100
35
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
100
91
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 26. Investment in Controlled Entities (continued)
SA Bid Co Pty Ltd
Seed Production Limited
Sydney Woolbrokers Limited
Treecrop Pty Ltd
Ultrasound Australia Pty Ltd
Victorian Producers Co-operative Company Pty Ltd
Vockbay Pty Limited
WA Bid Co Pty Ltd
Wool Exchange (WA) Pty Ltd
Wool Marketing Enterprises Pty Ltd
Country of
Incorporation
Australia
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
(h)
(h)
(f)
(h)
(a)
(f)
(h)
(f)
(h)
(h)
% Held by Group
2014
-
-
53
-
100
100
-
100
-
-
2013
100
50
53
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 as small proprietary companies relieved from audit requirements are denoted by (f).
• Entity denoted by (g) is a controlled special purpose entity related to trade receivable financing program.
• Entities denoted by (h) 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 14. 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:
2014
$000
2013
$000
(27,511)
(1,606,459)
3,121
4,672
(24,390)
(1,601,787)
-
399,812
(24,390)
(1,201,975)
-
645
(24,390)
(1,201,330)
(1,369,468)
(958,147)
27,350
792,246
313
(1,592)
(1,366,195)
(1,369,468)
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
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
92
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 26. Investment in Controlled Entities (continued)
Consolidated statement of financial position of the Closed Group
Current assets
Cash and cash equivalents
Trade and other receivables
Livestock
Inventories
Non current asset classified as held for sale
Total current assets
Non current assets
Receivables
Other financial assets
Investments in associates
Property, plant and equipment
Total non current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing loans and borrowings
Provisions
Total current liabilities
Non current liabilities
Interest bearing loans and borrowings
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Hybrid equity
Reserves
Retained earnings
Total equity
2014
$000
2013
$000
4,503
26,505
18,957
6,317
-
4,894
21,286
13,585
6,687
17,247
56,282
63,699
-
902
60,682
108,017
-
6,672
67,354
123,636
18,980
46,215
1,411
51,973
13,829
174,721
238,420
32,723
120,448
14,329
66,606
167,500
-
-
66,606
57,030
24,720
24,720
192,220
46,200
1,277,813
1,269,153
145,151
145,151
261
1,364
(1,366,195)
(1,369,468)
57,030
46,200
Note 27. Key Management Personnel
Remuneration of specified Directors and other Key Management Personnel
For information on the 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
2014
$
2013
$
3,394,703
4,317,168
(126,811)
204,375
129,692
146,413
1,766,181
1,384,456
(94,484)
514,439
5,069,281
6,566,851
93
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 28. 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:
Recharges – other
Impairment of intercompany loans
2014
$000
2013
$000
-
-
1,500
283,987
There are no balances between the parent entity and related parties in the wholly owned group.
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.
(c) Transactions between controlled entities wholly owned and controlled entities not wholly owned
Details of entities not wholly owned are set out in note 26.
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
Balances with controlled entities not wholly owned:
Owing to the Group
Owing from the Group
(3,937)
2,917
-
4,056
(654)
3,402
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)
Details of associates are set out in note 10.
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
(4,494)
-
3,765
-
(436)
331
-
331
(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.
94
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 29. Earnings Per Share
Weighted average number of ordinary shares (‘000) used in calculating basic EPS
Dilutive share options (‘000)
2014
2013
509,352
507,521
779,853
1,425,161
Adjusted weighted average number of ordinary shares used in calculating dilutive EPS (‘000)
1,289,205
1,932,682
On 14 October 2014, Elders issued 313,967,179 shares under a 3 for 5 non renounceable entitlement offer announced by Elders to the ASX on
15 September 2014. After this issue, the number of ordinary share on issue is 837,232,507. The weighted average number of ordinary shares as
described above has been adjusted to incorporate the effects of this issue.
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)
Dilutive
Net profit/(loss) attributable to members (after tax)
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
Net profit/(loss) of continuing operations (net of tax)
Continuing operations earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Discontinued operations
2014
$000
2013
$000
2,982
(505,255)
2,982
(505,255)
0.6 ¢
0.2 ¢
(99.6)¢
(99.6)¢
2,982
18,275
21,257
(505,255)
154,491
(350,764)
21,257
(350,764)
4.2 ¢
1.5 ¢
(69.1)¢
(69.1)¢
Net profit/(loss) of discontinued operations (net of tax)
(18,275)
(154,491)
Discontinued operations earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
(3.6)¢
(1.3)¢
(30.4)¢
(30.4)¢
95
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 30. Financial Instruments
The Company’s principal financial instruments comprise cash, receivables, payables, interest bearing loans and borrowings, and derivatives.
Risk exposures and responses
Elders manages its exposure to key financial risks, including interest rate and currency risk in accordance with its financial risk management policy.
The objective of the policy is to support the delivery of financial targets while protecting future financial security. The main risks arising from Elders
financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The Company 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
Elders’ exposure to market interest rates relates primarily to short term debt obligations. The level of debt is disclosed in note 14. At balance date,
Elders had the following mix of financial assets and liabilities exposed to Australian variable interest rate risk:
Financial assets
Cash and cash equivalents
Amounts receivable from associated entities
Financial liabilities
Secured loans
Unsecured loans
Net exposure
2014
$000
22,477
331
22,808
2013
$000
39,927
-
39,927
(159,681)
(172,549)
-
(1,733)
(159,681)
(174,282)
(136,873)
(134,355)
Elders 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.
The following sensitivity analysis is based on the interest rate risk exposures in existence at the balance sheet date. At 30 September 2014, 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:
Post Tax Profit/equity
Higher/(Lower)
2014
$000
2013
$000
(1,369)
(1,344)
1,369
1,344
+ 100 basis points
- 100 basis points
96
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 30. Financial Instruments (continued)
(b) Liquidity risk
Liquidity risk arises from Elders’ financial liabilities and the subsequent ability to meet our obligations to repay their financial liabilities as and when
they fall due. Elders’ 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 Company manages its liquidity risk by monitoring the total cash inflows and outflows expected on a
weekly basis. Elders 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 2014. 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 we can be required
to pay. When Elders is committed to make amounts available in instalments, each instalment is allocated to the earliest period in which we are
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.
2014
Non derivative financial assets:
Cash and cash equivalents
Trade and other receivables
Non derivative financial liabilities:
Interest bearing loans and borrowings
Trade and other payables
Financial guarantees
Net inflow/(outflow)
2013
Non derivative financial assets:
Cash and cash equivalents
Trade and other receivables
Non derivative financial liabilities:
Carrying
amount
Contractual
cash flows
6 months
or less
$000
$000
$000
6-12
months
$000
1-5
years
$000
22,477
308,768
331,245
22,477
308,768
331,245
22,477
308,768
331,245
-
-
-
-
-
-
(160,103)
(160,757)
(160,485)
(151)
(121)
(249,545)
(249,545)
(249,545)
-
(32,237)
(32,237)
(409,648)
(442,539)
(442,267)
(78,403)
(111,294)
(111,022)
-
-
(151)
(151)
-
-
(121)
(121)
39,927
357,935
397,862
39,927
357,935
397,862
39,927
347,170
387,097
-
6,590
6,590
-
4,175
4,175
Interest bearing loans and borrowings
(294,685)
(304,433)
(200,074)
(77,199)
(27,160)
Trade and other payables
Financial guarantees
Net inflow/(outflow)
(254,530)
(254,530)
(254,530)
-
(39,638)
(39,638)
-
-
-
-
(549,215)
(598,601)
(494,242)
(151,353)
(200,739)
(107,145)
(77,199)
(70,609)
(27,160)
(22,985)
B. Derivative financial instruments
Due to the unique characteristics and inherent risks to derivative instruments, Elders 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 Company at balance date. Net
settled derivative liabilities comprise forward exchange and interest rate hedges.
97
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 30. Financial Instruments (continued)
2014
Derivative liabilities – net settled
Total inflow/(outflow)
2013
Derivative assets – net settled
Derivative liabilities – net settled
Total inflow/(outflow)
(c) Credit risk
Carrying
amount
Contractual
cash flows
6 months
or less
$000
$000
$000
6-12
months
$000
1-5
years
$000
(132)
(132)
1,220
(493)
727
(132)
(132)
1,220
(493)
727
(132)
(132)
1,220
(493)
727
-
-
-
-
-
-
-
-
-
-
Credit risk arises from Elders’ financial assets, which comprise cash and cash equivalents, trade and other receivables, and derivative instruments. The
Company’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 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.
Elders minimises concentrations of credit risk by undertaking transactions with a large number of debtors in various locations. 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 maximum
exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
Location of credit risk
Australia
New Zealand
Asia
Total gross receivables
(d) Foreign currency risk
2014
$000
22,477
308,768
331,245
2013
$000
39,927
359,155
399,082
302,455
328,365
-
6,313
25,357
5,433
308,768
359,155
Elders is exposed to movements in the exchange rates of a number of currencies. The predominant exposure is to movements in the AUD/USD
exchange rates. These are primarily generated from the following activities:
• Purchase and sale contracts written in foreign currency,
• 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
Foreign exchange risk is managed within Board approved limits using forward foreign exchange and foreign currency contracts. Where possible,
exposures are netted off against each other to minimise the cost of hedging. Hedge accounting is not applied, with foreign currency contracts fair
valued at balance date with gains and losses recognised immediately through the statement of comprehensive income. At 30 September 2014, the
Company had the following AUD exposures to foreign currencies that were not designated in cash flow hedges:
98
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 30. Financial Instruments (continued)
Financial assets
Cash and cash equivalents – USD
Cash and cash equivalents – CNY
Cash and cash equivalents – IDR
Cash and cash equivalents – other
Receivables – USD
Receivables – CNY
Receivables – IDR
Receivables – other
Financial liabilities
Payables – USD
Payables – CNY
Payables – IDR
Payables – other
Interest bearing loans and borrowings – USD
Interest bearing loans and borrowings – NZD
Net exposure
2014
$000
72
319
446
155
12,928
3,356
2,957
-
20,233
2013
$000
297
981
338
9,476
2,621
1,453
1,360
25,357
41,883
(3,229)
(7,790)
(587)
(906)
(98)
(12,166)
-
(136)
(582)
(20,560)
(1,342)
(2,831)
(16,986)
(33,241)
3,247
8,642
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
CNY
IDR
Other
Post Tax Profit
Higher/(Lower)
2014
$000
240
(309)
(250)
(6)
2013
$000
621
(230)
(230)
(112)
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.
99
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 30. Financial Instruments (continued)
(e) Fair value of financial assets and liabilities
Elders use 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.
All forward exchange derivative contracts were measured at fair value using the level 2 method. Fair value of derivative instruments approximates the
carrying value. The fair values of forward currency contracts are calculated by reference to current forward exchange rates for contracts with similar
maturity profiles. 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.
The fair value of financial instruments as well as the method used to estimate the fair values are summarised in the table below:
2014
2013
Quoted
market price
(Level 1)
$000
Valuation technique
– market observable
inputs (Level 2)
$000
Valuation technique –
non market observable
inputs (Level 3)
$000
Quoted
market price
(Level 1)
$000
Valuation technique
– market observable
inputs (Level 2)
$000
Valuation technique –
non market observable
inputs (Level 3)
$000
Financial assets
Derivatives
Financial liabilities
Derivatives
-
-
-
-
(132)
(132)
-
-
-
-
-
-
1,220
(493)
727
-
-
-
Note 31. Business Combinations – Changes in the Composition of the Entity
(a) Controlled entities acquired
During the current and prior period no entities were acquired.
(b) Controlled entities disposed
Elders’ investments in Charlton Feedlot, New Zealand Network, Wool Trading and Vet Supplies were disposed of during the period.
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
Investments
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
100
2014
$000
2013
$000
28,469
43,633
4,402
19,595
18,932
8
4,856
-
233
(18,481)
(1,342)
(1,811)
26,392
(2,536)
4,285
328
28,036
120,193
44,969
674
35,940
1,041
8,340
(89,304)
(21,027)
(39,200)
89,662
(4,461)
(3,660)
(37,908)
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 31. Business Combinations – Changes in the Composition of the Entity (continued)
Prior period disposals
Elders 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.
Note 32. Discontinued Operations
Financial period 30 September 2014
Elders’ investments in Kilcoy Pastoral, AWH Pty Ltd, Elders Insurance (Underwriting Agency) Pty Ltd, Charlton Feedlot, New Zealand Network,
Wool Trading, Australian Fine China and Agricultural Land Trust were disposed of during the period. The Forestry divestment was largely completed,
with all the assets previously classified as held for sale sold.
As required by AASB 5 Non-current Assets Held for Sale and Discontinued Operations the 2013 comparative discontinued operations disclosed
below have been re-presented to show the effects of this classification.
Financial period 30 September 2013
Elders’ 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. The prior year balance of $6.1 million represented the Groups investment in Forestry,
Australian Fine China and Agricultural Land Trust.
Sales revenue
Cost of sales
Gross profit
Other revenues
Distribution expenses
Administration expenses
Other expenses
Cont
2014
$000
Disc
2014
$000
Total
2014
$000
Cont
2013
$000
Disc
2013
$000
Total
2013
$000
1,431,515
138,289
1,569,804
1,422,056
486,730
1,908,786
(1,153,383)
(111,093)
(1,264,476)
(1,191,432)
(424,494)
(1,615,926)
278,132
27,196
305,328
230,624
62,236
292,860
493
4,342
4,835
245
9,126
9,371
(217,961)
(26,840)
(244,801)
(238,599)
(23,876)
(262,475)
(33,343)
(1,665)
(35,008)
(41,164)
(40,671)
(81,835)
3,967
(20,363)
(16,396)
(204,915)
(181,839)
(386,754)
Profit/(loss) before borrowing costs and tax expense
31,288
(17,330)
13,958
(253,809)
(175,024)
(428,833)
Finance costs
(23,342)
183
(23,159)
(30,490)
(2,731)
(33,221)
Profit/(loss) before tax expense
7,946
(17,147)
(9,201)
(284,299)
(177,755)
(462,054)
Income tax benefit/(expense)
Net profit/(loss) for year
Net profit/(loss) attributable to non-controlling interest
Net profit/(loss) attributable to members of the
parent entity
14,703
22,649
1,392
(147)
14,556
(64,440)
24,624
(39,816)
(17,294)
981
5,355
2,373
(348,739)
(153,131)
(501,870)
2,025
1,360
3,385
21,257
(18,275)
2,982
(350,764)
(154,491)
(505,255)
Revenue and expenses
Sales revenue:
Sale of goods and biological assets
1,203,041
131,424
1,334,465
1,235,263
475,344
1,710,607
Debtor interest associated with sales
5,578
371
5,949
7,069
554
7,623
Commission and other selling charges
222,896
6,494
229,390
179,724
10,832
190,556
1,431,515
138,289
1,569,804
1,422,056
486,730
1,908,786
Other expenses:
Forestry fair value adjustments
1,125
-
1,125
7,422
6,664
14,086
Write down of assets to be divested or discontinued
-
(24,645)
(24,645)
Gain/(loss) on divested assets
Impairment of assets retained
Restructuring, redundancy and other writeoffs
2,243
4,282
6,525
-
-
(173,213)
(173,213)
(14,290)
(14,290)
-
599
-
-
-
(154,628)
-
(154,628)
599
(57,709)
(1,000)
(58,709)
3,967
(20,363)
(16,396)
(204,915)
(181,839)
(386,754)
101
Notes to the Consolidated Financial Statements
For the Year ended 30 September 2014
Note 32. Discontinued Operations (continued)
The net cash flow of the discontinued operations is as follows:
Operating activities
Investing activities
Financing activities
Net cash inflow / (outflow)
Note 33. 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
Total liabilities
Net assets
Issued capital
Hybrid equity
Retained earnings
Employee equity reserve
Total equity
2014
$000
(16,815)
93,703
(913)
75,975
2013
$000
(33,259)
61,515
1,268
29,524
2,223
2,223
(530,744)
(530,744)
3,053
55,942
58,995
1,965
1,965
57,030
2,145
48,407
50,552
4,352
4,352
46,200
1,277,813
1,269,153
145,151
145,151
(1,366,195)
(1,368,731)
261
57,030
627
46,200
Guarantees
As disclosed in note 26, 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 companies 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.
Note 34. Subsequent Events
On 14 October 2014, Elders issued 313,967,179 new shares under a 3 for 5 non renounceable entitlement offer announced by Elders to the ASX on
15 September 2014. The total number of shares on issue following completion of the entitlement offer is 837,232,507. Total funds raised from this
offer were approximately $47 million (before costs).
On 22 October 2014, Elders completed the refinance of its existing senior debt arrangements with a new syndicated working capital facility provided
by ANZ, NAB and Rabobank. The new facilities include, in addition to the syndicated lines, bilateral contingent and transactional lines and an
extension of the retail debtor funding facility. Gross debt immediately following the refinance close was comprised entirely of debtor funding facilities.
The facility limits are structured to meet the anticipated working capital requirements of Elders over the tenor of the facilities which range between
12 and 36 months.
There is no other matter or circumstance that has arisen since 30 September 2014 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 Elders, the results of those operations or
the state of affairs of Elders in subsequent financial periods.
102
Directors’ Declaration
In accordance with a resolution of the Directors of Elders Limited, the Directors declare:
1.
In the opinion of the Directors:
(a) the financial statements and notes of Elders Limited for the financial year ended 30 September 2014 are in accordance with the
Corporations Act 2001, including:
(i) Giving a true and fair view of its financial position as at 30 September 2014 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) 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 2014.
3.
In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed
Group identified in note 26 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
J H Ranck
Chairman
M C Allison
Managing Director
Adelaide
17 November 2014
103
104
105
ASX Additional Information
(a) Distribution of Equity Securities as at 31 October 2014
No of Shares
No. of Holders
No. of Hybrids
No. of Holders
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 - Maximum
3,898,358
14,145,486
18,409,114
154,391,444
646,388,105
837,232,507
The number of holders holding less than a marketable parcel
(b) Voting rights
(i) Ordinary Shares: all ordinary shares carry one vote per share without restriction.
(ii) Elders Hybrids: Hybrids do not carry any voting rights under the Company’s Constitution.
(c) Stock Exchange quotation
15,474
5,265
2,375
4,909
892
296,199
174,369
89,502
449,724
490,206
28,915
1,500,000
Ordinary Shares
18,599
1,245
87
12
11
2
1,357
Hybrids
4
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 2014
The twenty largest holders of Elders Ordinary Shares were as follows:
No. of Shares % of Shares
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Limited
RBC Investor Services Australia Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
Bell Securities Pty Limited
Brispot Nominees Pty Ltd
National Nominees Limited
AMP Life Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
BNP Paribas Noms Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
UBS Nominees Pty Ltd
Venn Milner Superannuation Pty Ltd
CS Fourth Nominees Pty Ltd
HSBC Custody Nominees (Australia) Limited - A/C 3
Hishenk Pty Ltd
Tintern (Vic) Pty Ltd
National Nominees Limited
Hyecorp Property Fund No 1 Pty Ltd
Pacific Agrifoods Investments Pty Ltd
Total
68,957,643
42,377,322
34,787,787
30,595,209
23,946,741
21,261,661
19,418,080
18,773,318
16,549,524
15,386,053
15,218,396
14,232,989
10,000,000
7,201,937
6,123,791
6,000,000
5,839,511
4,976,902
3,500,000
3,354,557
8.24
5.06
4.16
3.65
2.86
2.54
2.32
2.24
1.98
1.84
1.82
1.70
1.19
0.86
0.73
0.72
0.70
0.59
0.42
0.40
368,501,421
44.01
Total held by twenty largest ordinary shareholders as a percentage of this class is 44.01%
The twenty largest holders of Elders Hybrids were as follows:
No. of Hybrids % of Hybrids
J P Morgan Nominees Australia Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
Mr Robert Lee Petersen
National Nominees Limited
The Australian National University
BNP Paribas Noms Pty Ltd
Brazil Farming Pty Ltd
HSBC Custody Nominees (Australia) Limited
ABN Amro Clearing Sydney Nominees Pty Ltd
Ayersland Pty Ltd
Luton Pty Ltd
Mr Giuseppe Pulitano + Mrs Verona Pulitano
Mr Guthrie John Williamson
Wyllie Funds Management Pty Ltd
Equitas Nominees Pty Limited
Di Iulio Homes Pty Limited
Sidmouth Pty Limited
Mr Kui She Hung
Leithner & Company Pty Ltd
Total
281,652
208,554
95,917
72,256
67,520
50,000
37,416
27,000
26,791
22,073
22,004
18,000
10,747
10,000
10,000
9,081
9,000
8,000
7,171
7,000
18.78
13.90
6.39
4.82
4.50
3.33
2.49
1.80
1.79
1.47
1.47
1.20
0.72
0.67
0.67
0.61
0.60
0.53
0.48
0.47
1,000,182
66.68
Total held by twenty largest hybrid holders as a percentage of this class is 66.68%
(e) There were no substantial shareholders listed on the Company’s register of substantial shareholders as at 31 October 2014.
106
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.
107
Notes
108
Company Directory
Directors
Mr James H Ranck, BS Econ, FAICD, Chairman
Mr Mark C Allison, BAgrSC, BEcon, GDM, FAICD
Mr James A Jackson, BCom, FAICD
Mr Ian Wilton, FCPA, FAICD, FCCA(UK)
Secretaries
Mr Peter G Hastings, BA LLB GDLP
Ms Nina M Abbey
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
National Australia Bank
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
Level 3, 530 Collins Street
Melbourne, Victoria, 3000
LOOKING
TO THE FUTURE
In our 175th year we’re recognising where we’ve been and we’re
celebrating where we’re going. The one constant throughout the years
has been our people; their pride and passion for the Elders brand and
the commitment to the work they do. As we look towards the future
we’re firmly focused on building on our strong platform and creating
value for all stakeholders.
Father and son livestock team Lindsay and Aaron Hill at the annual Hamilton weaner sales.
Since 1839 Elders has been an
integral part of Australia’s rural
landscape and in 2014 has celebrated
175 years of knowledge, experience
and advice.
In celebrating this special milestone
we’ve recognised our proud history
and contribution to Australian
rural life and have also looked to the
future, reinforcing our ongoing
commitment to Australian agriculture.
We thank our loyal employees,
clients, shareholders and all those
who have joined us on our journey
over the last 175 years. We look
forward to the future.
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