2015
Annual
Report
ELDERS LIMITED
ABN 34 004 336 636
Live it.
Contents
4 We Live it at Killara
6 Chairman’s Remarks
8 CEO’s Report
13 We Live it at Bodallin
14 Year in brief
15 A year of progress
17 Operating & Financial Review
22 Review of Operations
27 Outlook
28 Material Business Risks
30 Board of Directors
32 Directors’ Report
36 Remuneration Report
51 Annual Financial Report
98 Shareholder Information
99 Company Directory
2Elders. Live it.Annual Report 2015 How we
live it.
Elders’ business model, based on FY15 statistics.
Retail
Products
FARM SUPPLIES
$926m retail sales
FERTILISER
505k tonnes fertiliser
Financial
Services
BANKING
$2.7b loan book
$1.4b deposit book
INSURANCE
$566m gross written premium
Principal positions are held by
Rural Bank and Elders Insurance
(QBE subsidiary) respectively.
Feed & Processing
Services
KILLARA FEEDLOT
50k head
ELDERS INDONESIA
17k head
ELDERS CHINA
$13m sales
Agency
Services
LIVESTOCK
9.4m head sheep
1.7m head cattle
REAL ESTATE
$1.4b real estate turnover
WOOL
364k wool bales
GRAIN
0.4m grain tonnes
Live Export
Services
SHORT HAUL LIVESTOCK
119k head
LONG HAUL LIVESTOCK
33k head
Online
Platforms
ELDERS ONLINE
AUCTIONS PLUS (50%)
LIVESTOCK.COM.AU
3 We live it
at Killara
Killara doesn’t stop. It’s a busy place, 52 weeks a year the supply cycle rolls on. All the staff at Killara work a big week; whether they are riding pens, inducting cattle, driving a feedtruck or maintaining the feedlot – they all play an important role.In recent years the Killara feedlot has turned over in excess of 50,000 cattle per year. This business is diverse - feeding cattle for the domestic market (70 days) through to 150 days for premium grade export markets. That’s a lot of cattle to feed and look after, but the livestock and feeding teams are up to the challenge. Andrew Talbot, Elders’ trading manager at the Killara feedlot, said it’s a real pleasure dealing with rural people across the Killara supply chain, whether they are in the New England, western plains or central west of New South Wales. “The passion they have for their cattle is easy to see, and I suppose it’s never difficult dealing with good people,” Andrew said.“These mid-fed (150 days on feed), hgp free, Angus steers are being prepared for exit from the feedlot. They are destined for the high quality food restaurant sectors in Dubai, Saudi Arabia, Shanghai, Hong Kong and Japan. This product is representative of the quality and consistency of the Killara brand, in partnership with our long term customers,” he said.All sourced by the Elders network, the Killara feedlot procures 100 percent paddock cattle which are purchased across New South Wales Killara continues to have a focus on lines of quality cattle particularly those which are preconditioned, ready for feedlot entry. “Working with producers and purchasing quality cattle which have been properly prepared is critical in ensuring sustainable outcomes for both the feedlot and our customers.” This year was the time to shine for the feedlot sector. Higher global beef demand, a lower Aussie dollar and reduced cattle numbers in Australia have all contributed to the price turnaround seen in cattle prices this year. Last December the EYCI was at 357c, within 12 months it rose to near 600c. “We have strong, long-term supply arrangements with domestic and export customers. Some of this final beef product will exit Australia under Elders’ Killara beef brand via our processing partner Warmoll foods,” Andrew said.“You’ve got to be passionate about cattle if you work in this industry. Feedlots in Australia play an important role in finishing cattle and providing consistent meat to domestic and export customers,” he said.It’s no wonder feedlots have become so much a part of the supply chain. We live in a country where droughts are a part of life and the ability to grass finish cattle can be very difficult, if not impossible. As Australia looks to produce more beef on the same amount of country, it’s fair to assume feedlots will continue to grow. “The gains made by beef producers in recent years are quite amazing. I am continually amazed at seeing milk tooth steers leave Killara after 150 days on feed weighing 660-700kg. When genetics and preparation of cattle work together, the results are often quite special, and testament to the cattle people are producing. From seed stock right through to abattoir, we all need to find further production gains.”Elders. Live it.Annual Report 20154 8am, Quirindi, NSW
SHAY PRATT AND ANDREW TALBOT
Elders Killara feedlot:
A 20,000 head facility
located on the Liverpool
plains of NSW. Owned by
Elders since 1996.
Total employees:
35 (including contractors)
5 Chairman’s
Remarks
HUTCH RANCK
The 2015 financial year was one of continued improvements
and stability for Elders, as we take another step towards
our goal of becoming an agribusiness that creates real
value for all of our stakeholders.
Our consistent improvement, year on year, reflects management’s commitment to achieving the key elements of the eight point strategic plan in 2014/2015.The achievements this financial year are a reflection of the strength and incredible resilience from our people, each of whom have helped Elders achieve its 176 years of continuous operation. Elders. Live it.Annual Report 20156 This is... a reflection of the
“
strength, and incredible
resilience from Elders’ people.”
Safety
As the key business priority for 2015, we
saw improvements to the safety culture at
Elders. An increased focus on our people
and their wellbeing across the business
has resulted in a 0.1 percent reduction
in the Lost Time Injury Frequency Rate
(LTIFR) and a 34% increase in workplace
safety discussions.
Whilst the increased engagement
of our employees is commendable, I
am conscious that this year we again
recorded 14 lost time injuries, which
means we have held improvements
made in 2014. With a goal of operating
an injury free workplace, any injury is
unsatisfactory. Our Chief Executive Officer
will further outline our improvements and
goals for a safe workplace in his report.
Financial results
Elders has continued to build on a
significant financial turnaround, recording
a $38.3 million statutory profit in the 12
months to 30 September 2015, coming
from a $3.0 million statutory profit
recorded in the previous year.
Elders’ underlying profit was up
$23.5 million on last year, to $32.6 million
for the 2015 financial year. This was
largely achieved through an uplift in retail
earnings, strong livestock performance,
increase in feed and processing
efficiencies and interest cost savings.
Our financial results are discussed in
detail in the Chief Executive Officer’s
report.
Balance sheet and finance
After seven successive years of debt
reduction, I am pleased to confirm that
this financial year saw Elders reach a
level of zero term debt. This was a key
milestone in the Elders turnaround
story which provided us with a platform
to focus on value generation for our
stakeholders.
In line with our commitment to maintain
minimal to zero term debt, Elders enjoys
a positive and constructive relationship
with its financiers (ANZ, NAB and
Rabobank) and has an improved financing
package with extended tenure, lower fees
and improved terms.
We are now in a strong position to direct
our cash flow back into Eight Point Plan
initiatives – and ultimately reinvigorate
and strengthen the business to grow
earnings and returns.
Capital Structure Normalisation
In order to simplify our capital structure,
Elders Finance Pty Ltd (a wholly owned
subsidiary of Elders Limited) acquired
375,000 Elders Hybrid shares for a total
of $30 million, which together with our
refinancing, represented entry to the last
phase of normalisation of our capital
and debt structures. While we have no
immediate plan for dealing with the
remaining hybrids, we will continue to
assess capital management opportunities
as they present themselves and act on
those which are in the best interests of
Elders and our shareholders.
During the year, we also conducted a
small holding sale facility and top-up
facility with a total of 709,019 shares
either purchased by shareholders, or sold
on behalf of shareholders. This process
allowed us to reduce the significant
administrative cost of managing small
shareholdings.
In September 2015, we received another
confidence boost as Elders was re-
admitted into the S&P/ASX 300 index.
Board and leadership
This year we welcomed Robyn Clubb to the
Board as a non-executive director, further
strengthening our team. Robyn comes to
Elders with extensive experience in the
agricultural and financial services sector
and is a qualified chartered accountant
and fellow of the Finance and Securities
Institute of Australia.
As a New South Wales beef producer and
stonefruit grower, Robyn brings with her
significant experience and interest in
agriculture, further complementing the
strong skill set of our Board, and providing
sound support to the Company’s strategic
growth plans.
Corporate governance
Your company is committed to high
standards of corporate governance,
including its continuous disclosure
obligations. Elders’ corporate governance
framework and practices, which are fully
compliant with the 3rd edition of the ASX
Corporate Governance Council’s
Principles and Recommendations, are
detailed in the Corporate Governance
Statement available on our website at
www.elderslimited.com/about-us/
corporate-governance
Elders continues to make progress against
our diversity objectives and understands
that diversity in our workplace is a critical
factor in our turnaround and ongoing
success.
In what has traditionally been a male-
dominated industry, Elders is taking steps
to address the representation of women
at Elders, particularly in leadership roles.
Closing remarks
I am extremely humbled to have been
your Chairman through what has been an
incredible year of milestones for Elders.
I speak on behalf of the Board when I say
that the results outlined in this report,
would not have been possible without
the hard and disciplined work of the
entire Elders team. I am conscious that
there is still a long way for us to go until
shareholders will view our performance as
fully acceptable. However, over the past
18 months there has been an obvious
shift in mindset and culture within the
business, and within the communities in
which we operate, and we are confident
that we are yet another step closer in
creating value for all stakeholders.
I look forward to sharing our progress
with you.
Hutch Ranck
Chairman
7
CEO’s
Report
MARK ALLISON
For the second year in a row, I am pleased to share with you the positive progress and results that have been made across our business.Last year I labelled 2014 as a year of survival for Elders. This year, however, was a year of stabilisation and growth. 2015 saw the business rise to the challenge of our new priorities, new expectations and a new level of performance, resulting in another year of solid improvement for Elders.As I will further detail in my report below, our management team has again delivered against our Eight Point Plan and our four key business priorities:• Safety performance• Operational performance• Key relationships, and • Efficiency and growth.For those who are closely following the turnaround and the progress of Elders – there should be nothing new or surprising in my report – ultimately, Elders is on track and we’re doing what we said we would do.Elders. Live it.Annual Report 20158 2015 saw... new priorities,
“
new expectations and a new
level of performance.”
Safety performance
Over the past 12 months, as part of
our safety strategy to drive continuous
improvement and improve the safety
culture, we have implemented an
innovative employee engagement
campaign ‘Stand Up Speak Up.’
Recognised by the National Safety
Council of Australia as the best work,
health and safety improvement in an
Australian workplace this year, the Stand
Up Speak Up campaign has already
contributed to a 34% increase in team
safety discussions and an increase in
safety initiatives as a business priority.
Elders recorded 14 lost time injuries in
2015, which means we have held our
improvement from the previous year.
Whilst we did see improvements in
our safety culture across the board,
any injury is an injury too many, and
so I am conscious that our systems,
processes and educational efforts will
need continuous development in order
to achieve further improvements in all
safety indicators in 2016, and to reach
our ultimate goal of ensuring none of our
employees or contractors is injured.
Operational performance
2015 saw another strong financial
performance from Elders, recording a
$38.3 million statutory profit in the 12
months to 30 September 2015, up from
the $3.0 million statutory profit recorded
in the previous year.
Elders’ underlying profit was up $23.5
million on last year, recording a $32.6
million profit for the 2015 financial year.
Our improved profit was largely due to
strong livestock performance, uplift
in retail earnings, increase in feed and
processing efficiencies and interest cost
reductions.
Our retail arm saw a $3.7 million
improvement on last year, due to
improvement in winter crop demand and
gains from Eight Point Plan initiatives
such as price book management and the
consolidation of our supplier base.
The $16.3 million improvement in the
agency services business was driven by
an increase in strong livestock prices,
and an increase in cattle and wool
volumes. In addition, our ‘Welcome
Back’ campaign saw 200 lapsed clients
successfully return to Elders for their
livestock or wool agency services.
Improved efficiency and occupancy in
Killara Feedlot, along with a refocused
business model for Elders China saw a
further $3.1 million improvement in the
feed and processing services business on
last year’s results.
Net underlying finance costs reduced by
$5.7 million on last year with average net
debt reducing in 2015.
Strong results from our capital light
streams, namely livestock agency and
short haul live export, delivered a 21.9%
return on capital which is an improvement
from 13.6% recorded last year.
And finally, after a lengthy debt-reduction
process, our remaining term debt of $34.1
million was reduced to zero, using capital
raising proceeds in October 2014.
Key Relationships
It is a key understanding at Elders that
the business and our brand is built on
relationships. With that in mind, this
year we prioritised the strengthening of
these relationships as a key business
deliverable.
Our people
Elders employed 1,838 full time
equivalent (FTE) persons at 30 September
2015 compared with 1,811 persons at
the end of the previous corresponding
period.
In just 12 months, we have seen improved
levels of employee effectiveness and
enablement across the board. Our annual
employee engagement and effectiveness
survey conducted by Hay Group
showed Elders’ overall engagement
and enablement levels remain above
other Australian organisations and have
improved (+3 and +3 respectively) on our
2014 result.
Significant progress has been made
in building a high performance
culture within the business. We saw
a 97% participation rate in the 2015
performance review process, as well as
the implementation of incentive plans
that align shareholder expectations and
employee performance with reward.
We are proud to continue our investment
in the training and development of our
people, with more than 60 front line
leaders graduating from our Leadership
Development Program, more than 20
trainees inducted into the Stock and
Station Agency Traineeship Program, and
a further 3 agronomy graduates accepted
into a new Agronomy Graduate Program,
in the 2015 year.
We continue to work towards improving
the diversity of our workforce, particularly
in regards to gender diversity. The
representation of women within Elders’
workforce is 36% which is comparable
to the agricultural sector. However, the
representation of women in leadership
roles is lower than we desire and we
continue to implement our Diversity
Action Plan which is outlined in our
Corporate Governance Statement
available on our website at
www.elderslimited.com/about-us/
corporate-governance. As our Chairman
noted in his remarks, the Board was
pleased to welcome Robyn Clubb as a
non-executive director, which fulfilled
a key objective of maintaining the
percentage of female non-executive
Board directors at 25% or more.
Our clients
Elders’ clients and the communities
in which we operate are the bread
and butter for our business. To gain
a greater insight into their needs and
opportunities, this year we conducted
client and non-client focus group
research across Australia. The results
of our research prompted us to deliver
the 2015 brand campaign ‘Elders. Live It’
which focussed on our local presence,
national network, and industry expertise.
In addition, we engaged in regional
sponsorship agreements in key focus
regions, ensuring we support and invest
back into communities in which we
operate.
In 2015, Elders supported a number
of charities and non-government
organisations, including the Royal
Flying Doctors Service and their work in
9 providing medical assistance to people
living, working and visiting rural and
remote Australia. At a corporate level
Elders is a sponsor of the Little Heroes
Foundation, Ronald McDonald House and
also Snowy Hydro SouthCare.
Internationally, Elders has a strong focus
on supporting the Indonesian villages in
which we operate, with donations to local
mosques, events and weekly donations
to local rice and tapioca farmers.
At a community level in Australia, Elders
branches continue to support a wide
range of local initiatives and charities
and many of our employees participate in
community service activities.
Our suppliers
In the farm supplies and fertiliser space
we’ve developed and implemented a
capital light/return on capital driven
business model. We’ve rationalised
and refocused our relationships with
our supply partners to develop mutually
beneficial business models.
Our customers
As we look for opportunities for growth
and new markets, particularly in our
livestock and live export businesses, it
is important that we work alongside our
customers to ensure certain standards
are met. In the past 12 months, Elders
has made significant investments
towards animal welfare, including the
appointment of a dedicated animal
welfare and ESCAS manager, and the
roll-out of automated traceability systems
in Vietnam.
Efficiency and Growth
Closing remarks
As a result of yet another year of
significant tangible progress, in
September 2015, Elders was awarded the
Turnaround Management Association’s
Large Business Turnaround of the Year
Award. It was very humbling to accept
the award on behalf of all those involved
in our turnaround, particularly our
employees who have been so dedicated
and committed to our future. Whilst our
employees are geographically spread
across Australian and international
locations, it is clear that we are ‘one
Elders’ and we are all working towards
the same goal.
For me, receiving the TMA award was a
great time to reflect on the year that had
been, mentally draw a line in the sand,
and turn to our next phase - growth.
As shareholders, many of you have
continued to support us over a long
uncertain period, and for this we extend
our gratitude. You can now be confident
that Elders is back, we are doing what we
said we would do, and we are focussed
on the future.
We look forward to another year of
growth, success, and value generation
for all our stakeholders.
Mark Allison
Managing Director
For us to remain competitive, it is vital
that we pursue organic growth and other
relevant opportunities in a planned and
methodical manner. This year, our own
people have been the main drivers in
identifying and delivering strategies
aligned to our client and customer base,
and the Eight Point Plan.
Key achievements include the launch
of an online livestock auction platform,
the introduction of a livestock financing
facility, and the exploration of new live
export markets, all providing our clients
with increased market opportunity.
We have also developed our ‘Killara’,
‘Kooyong’, and ‘Marlee’ branded meat
product lines for international markets
and customers.
A key priority of 2015 was to improve the
performance of our workforce and lift
productivity. As such, 45 of our branches
implemented a 90 day plan, supporting
improved productivity and business
growth.
Eight Point Plan
In addition to the progress on our FY15
priorities outlined above, significant
progress has been made to our Eight
Point Plan.
The Eight Point Plan is 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.
After two solid years of progress, we
remain on track to fully execute the
strategic objectives of the Eight Point Plan.
It is evident from the ideas and initiatives
that are being implemented, that we
have an experienced team, and the right
people within the business to take control
of our own future.
You can now be confident that
“
Elders is back, we are doing
what we said we would do, and
we are focussed on the future.”
Elders. Live it.Annual Report 201510 1.30pm, Hamilton, Vic
HAMILTON SHEEP MARKET
Elders’ Keely Price, Lindsay Hill
and Matt Martin checking off
pens and sheep numbers with
local buyer, Des Mansbridge.
11 5.30am, Bodallin, WA
ANDREW FARSON AND MIKE SHIELDS
Planning inputs and
production at Glenvar.
12Elders. Live it.Annual Report 2015 We live it
at Bodallin
The Shields family have been farming
Western Australia’s golden wheat belt
since 1925.
One of their broadacre properties
‘Glenvar’ is managed by third
generation Mike Shields, with the
entire family business now employing
around three permanent and
seven casual employees over
12,250 hectares.
Elders key account manager Andrew
Farson, along with the Elders teams
at Wongan Hills, Merredin and Kojonup
are on hand from dawn to dusk, to
help the Shields get the most from
their business.
Mr Farson said he really gets a kick
out of working with clients that are
forward thinking and focussed on
continuous development.
“The team at Glenvar are keen
innovators and always looking to
maximise opportunities, so helping
them to find options and solutions is
really rewarding,” Mr Farson said.
“Whether it is sourcing and transacting
cropping land, to planning inputs and
improving productivity, our team has
seen Glenvar grow from strength to
strength,” he said.
Glenvar specialises in producing
premium grains using minimum tillage
seeding techniques to further enhance
soil conditions, and since 2010 has
been recognised for sewing Western
Australia’s largest GM canola crop
at their Bodallin property.
13 YEAR IN BRIEF
For the year ended 30 September 2015
Continuing sales revenue
Underlying EBITDA
Underlying EBIT
Reported net financing costs
Reported profit after tax
Underlying profit after tax
Net debt
Shareholders’ equity
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 (underlying EBIT to sales)
Return on capital
Leverage (net debt to EBITDA)
Interest cover (EBITDA to net interest)
Gearing (net debt to equity)
Key Share Data
ELD share price *
Market capitalisation
Number of ordinary shareholders
Ordinary shares on issue *
ELDPA security price
Number of hybrid holders
Hybrid securities on issue ^
$m
$m
$m
$m
$m
$m
$m
$m
$m
cents
cents
cents
cents
%
%
times
times
%
$
$m
$
2015
1,514.2
2014
1,431.5
48.9
45.8
11.3
38.3
32.6
136.2
111.6
(5.3)
46.4
33.8
39.4
28.7
3.0
21.9
3.3
3.4
122
30.9
27.6
23.2
3.0
9.1
137.6
57.0
15.1
5.9
2.3
17.9
7.1
1.9
13.6
7.8
0.6
241
3.82
319.9
14,515
1.75
91.6
28,860
83,734,671
52,326,533
75.52
1,059
55.00
1,380
1,500,000
1,500,000
* 2014 balances have been restated to reflect a 10 to 1 share consolidation completed in December 2014.
^ On 18 August 2015, Elders Finance Pty Ltd (wholly owned subsidiary of Elders Ltd) acquired 375,000 hybrid securities.
These securities remain on issue and have not been redeemed.
Elders. Live it.Annual Report 201514 A year of
progress
Elders enjoyed a year of successes and improvements.
Here are some of our highlights:
Safety performance
Employee safety engagement
increased by 34 percent
Lost time injury frequency rate
reduced from 3.5 to 3.4
Lost time injury rate
stabilised at 14
Key relationships
New female director
with agribusiness experience appointed
Improved levels of employee
effectiveness and enablement
Client and non-client focus groups
conducted
Winner of 2015 Work Health and
Safety Improvement Award by NSCA
Delivered ‘Elders. Live it’
national brand campaign
Operational performance
$38.3 million statutory net profit,
up $35.3 million
$32.6 million underlying net profit,
up $23.5 million
EBIT margin lifted to 3 percent
from 2 percent
ROC at 21.9 percent
up from 13.6 percent
Winner of 2015 Large Company
Turnaround of the Year Award by TMA
Added into ASX 300 index
in September 2015
Engaged in regional
sponsorship agreements
Rationalised and refocused
relationships with key suppliers
Efficiency and growth
Launched online livestock platform
Developed branded meat product lines
for international markets
Introduced livestock financing
facility
Developed active business
development pipeline
15 10am, Hallett, SA
EAST BUNGAREE
Elders’ Tony Wetherall, Tom Penna with client Tony Brooks inspecting his 14 month old Merino and Poll Merino rams for an upcoming on-property sale.16Elders. Live it.Annual Report 2015 Operating &
Financial
Review
Elders is focused on creating value for all of its stakeholders in Australia and internationally. We do this through approximately 1,800 employees in more than 440 points of presence across Australia, China and Indonesia. Our people use their expertise and knowledge to provide primary producers with the inputs, advice, marketing options and trading platforms that are central to get the most out of their own businesses. In Australia, primary producers work closely with Elders to access products, marketing options and specialist technical advice across retail, agency and financial product and service 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 meat distribution model in China. Elders also extends its service to international markets through our live beef and dairy cattle and sheep export business.Elders is an important part of the Australian rural landscape that draws on its proud history, service and innovation.17 PROFIT AND LOSS
$ million 12 months ended 30 September
Profit: Reported and Underlying
Sales
Australian Network
Feed and Processing Services
Live Export Services
Corporate Services and unallocated costs
Underlying EBIT
Net underlying finance costs
Underlying profit before tax
Tax on underlying profit
Non-controlling interests
Underlying profit to shareholders
Items excluded from underlying profit
Reported profit after tax to shareholders
UNDERLYING EBIT BY PRODUCT $ million
FY14
FY15
FY15
$m
FY14
$m
Change
$m
1,514.2
1,431.5
75.5
8.5
5.2
(43.4)
45.8
(10.0)
35.8
(1.4)
(1.8)
32.6
5.7
38.3
55.1
4.6
5.4
(37.5)
27.6
(15.7)
11.9
(1.1)
(1.7)
9.1
(6.1)
3.0
82.7
20.4
3.9
(0.2)
(5.9)
18.2
5.7
23.9
(0.3)
(0.1)
23.5
11.8
35.3
8
.
7
0
1
5
.
1
1
1
4
.
8
1
1
7
.
4
3
1
8
.
5
2
4
.
5
2
3
.
5
1
4
.
8
1
8
.
1
1
.
8
0
1
Retail
Products
Agency
Services
Financial
Services
Feed &
Processing
Services
Live
Export
Services
)
5
.
1
5
2
(
)
0
.
5
5
2
(
Costs
6
.
7
2
8
.
5
4
Underlying
EBIT
UNDERLYING EBIT BY GEOGRAPHY $ million
FY14
FY15
8
.
4
1
4
.
6
2
5
.
0
3
2
.
7
3
3
.
3
1
4
.
8
1
5
.
6
2
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5
.
7
3
(
)
4
.
3
4
(
6
.
7
2
8
.
5
4
Northern
Australia
Southern
Australia
Western
Australia
International
Corporate and
unallocated
costs
Underlying
EBIT
Elders. Live it.Annual Report 201518
UNDERLYING PROFIT MOVEMENT $ million
Product Margin
(0.4)
3.1
(1.0)
(3.5)
5.7
(0.4)
32.6
9.1
3.7
16.3
FY14
Underlying
NPAT
Retail
Products
Agency
Services
Financial
Services
Feed &
Processing
Services
Live
Export
Services
Costs
Net
finance
costs
Tax &
NCI
FY15
Underlying
NPAT
Elders’ FY15 underlying profit improved by
$23.5 million to $32.6 million compared to last year.
Key movements in profit resulted from:
Retail Products
Uplift in the second half of the financial
year with positive seasonal conditions
supporting winter crop demand and gains
from strategic initiatives such as price
book management and supplier base
consolidation.
consolidating their positions post
strong seasonal returns.
Feed and Processing Services
Profitability was driven by improved
efficiency and occupancy in Killara Feedlot
and a refocused business model in China.
Finance costs
Lower finance costs resulted from
decreasing average net debt this year.
Benefits also arose from refinance
activities undertaken through lower
facility and commitment fees paid.
Agency Services
Live Export
Improvement was influenced by strong
livestock prices, and an increase in cattle
and wool volumes. Livestock prices were
buoyed by reducing global supply and
solid export demand.
Financial Services
Banking distribution activity was
subdued in FY15 with restricted new
lending activity occurring in southern and
western Australia as a result of clients
Softening conditions in China and
Indonesia during the year were offset by
strong feeder, slaughter and beef breeder
cattle demand from Vietnam.
Costs
Increased costs supported stronger
margin generation and reinvestment
in areas of IT, training, brand refresh,
strategy and leadership as well as
incentive programs to drive growth.
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”). Underlying profit
is a non-IFRS measure and is not
audited or reviewed.
ITEMS EXCLUDED FROM UNDERLYING PROFIT
$ million 12 months ended 30 September
Exit of Currie Street lease
Impairment of Elders Financial Planning
Mark-to-market of foreign currency hedges
FY15
(4.1)
(2.0)
(1.6)
Commentary
Make good and other associated exit costs for Currie Street office on
relocation of Elders Head Office to Grenfell Street
Impairment of investment to recoverable value
Unrealised loss on foreign currency contracts due to weakening of
AUD against USD
Refinance costs
Tax asset adjustment
Other
Items excluded from underlying profit
(0.8)
Costs associated with migration to a new financier syndicate
Recognition of previously impaired tax balances on temporary differences
based on improvement in profitability
14.5
(0.3)
5.7
19
BALANCE SHEET
$ million as at 30 September
Balance Sheet: key items
Inventory
Livestock
Trade and other receivables
Trade and other payables
Working capital
Borrowings: term debt
Borrowings: working capital and other facilities
Cash and cash equivalents
Net debt
Provisions
Shareholders’ equity
Return on capital
2015
$m
2014
$m
Change
$m
100.3
45.9
349.4
(276.1)
219.5
-
84.8
41.1
302.1
15.5
4.8
47.3
(249.6)
(26.5)
178.4
(34.1)
41.1
34.1
(136.9)
(126.0)
(10.9)
0.7
22.5
(21.8)
(136.2)
(137.6)
(52.3)
111.6
21.9%
1.4
(5.2)
54.6
(47.1)
57.0
13.6%
8.3%
Working capital
Net debt
Return on capital
Working capital at September 2015 was
23% higher than at September 2014.
This increase resulted from:
• Normalising Retail debtor and
inventory levels to reflect average
seasonal conditions
• Increased livestock debtors in Agency
from higher turnover
• Increase in cattle inventory and cost
for Live Export and Killara feedlot
Average working capital utilised in
FY15 was $215.8 million compared to
$219.2 million in FY14. Working capital
increases that occurred during the
year as discussed above were offset
by disposal of residual non-core
businesses which were held in FY14.
Provisions
Provisions increased during the year
due to full and final recognition of exit
costs for previous Currie Street office
and additional provision for incentive
programs.
Although net debt balance remained
unchanged from September 2014,
key activities influencing movement
during the year were:
Elders delivered a 21.9% return on
capital in FY15, an improvement from
13.6% recorded last year. Key drivers to
the result were:
• Remaining term debt of $34.1 million
• Agency growth requiring minimal
capital
• Stronger bias to short haul Live Export
business with shorter working capital
cycle
• Efficiency gains and profit improvement
in Killara and China
• Capital allocation based on business
case approval
was extinguished using capital raising
proceeds in October 2014
• $30.0 million hybrid acquisition
was funded through EBITDA cash
flow generated by the business
during the financial year
As part of our cash management strategy,
Elders aims to minimise daily cash
balances and drawn debt in order to
minimise interest costs. At 30 September
2015, Elders had $157 million in undrawn
facilities.
Shareholders’ equity
Shareholders’ equity increased by
$54.6 million as a result of additional
shares issued for equity raising completed
in October 2014 and the FY15 net profit
offset by $30.0 million hybrid acquisition
in August 2015.
Elders. Live it.Annual Report 201520
CASH FLOW
$ million 12 months ended 30 September
Operating cash flow
Investing cash flow
Financing cash flow
Total cash flow
FY15
$m
(5.3)
(6.0)
(10.5)
(21.8)
FY14
$m
15.1
Change
$m
(20.4)
93.7
(99.7)
(126.2)
115.7
(17.4)
(4.4)
OPERATING CASH FLOW $ million
Working capital movements
(10.4)
62.2
(23.5)
51.8
(13.8)
(13.8)
(6.0)
(5.3)
EBITDA
cash flow
Interest,
tax &
dividends
Operating
cash flow
pre-working
capital
Retail
Products
Feed &
Processing
Live
Export
Other
Operating
cash flow
Operating cash flow
$ million
EBITDA adjusted
Interest, tax and dividends
Working capital
Operating cash flow
Retail
Products
Agency
Services
Financial
Services
Feed &
Processing
Live Export
31.8
39.0
9.9
9.3
10.0
(23.5)
8.3
(0.6)
38.4
0.1
10.0
(13.8)
(4.5)
(13.8)
(3.8)
Other
(37.8)
(10.4)
(5.5)
(53.7)
Total
62.2
(10.4)
(57.1)
(5.3)
Highlights from the FY15
cash flow were:
• $62.2 million EBITDA cash flow
generation
• $10.4 million outflow for interest
and tax net of dividends received
represents a reduction of interest
paid by $12.8 million compared to
FY14 due to lower debt levels
• Working capital cash flow usage
normalising from low working capital
levels at the end of FY14, with:
- Higher Retail debtors and inventory
since September 2014
- Increased inventory in Feed and
Processing and Live Export due
to higher cattle prices
Investing outflow of $6.0 million
represents purchases of property, plant
and equipment, including reimbursable
leasehold improvements for the new
head office in Adelaide.
Financing outflow of $10.5 million
included net proceeds from
recapitalisation of $44.7 million offset
by $30.0 million outflow for hybrid
acquisition and net repayment of debt.
This included extinguishing remaining
$34.1 million term debt in October 2014.
21
OPERATING & FINANCIAL REVIEW
Review of
Operations
RETAIL MARGIN $ million
116.3
116.4
106.0
107.8
111.5
2011
2012
2013
2014
2015
MARGIN BY PRODUCT $ million
87.0
Farm Supplies
19.1
Fertiliser
5.4
Debtor Interest
MARGIN SPLIT BY GEOGRAPHY
22%
west
41%
south
37%
north
Strategy
To improve the business model of our farm supplies and fertiliser products.
Strategy
Achievement
Plan
Capital light,
return on capital
driven business
model
• Margin management
program for non-price
sensitive products
• Implement home brand strategy
with key suppliers for additional
margin growth
• Consolidated supplier base
and product lines
• Improved supplier trading
• Negotiate additional payment
terms or consignment inventory
arrangements
terms
• Expansion to higher margin
product offers such as
Companion Animals
• Implement vendor managed
inventory
Channel review
and growth
• Developed Elders wholesale
• Implement Elders wholesale
model
and online strategy
People
• Improved under-performing
branches through 90 day
branch improvement
program
• Establishment of the
Graduate Agronomy
program
• Assess and implement growth
opportunities through segment
gap analysis
• Establish Agronomy Centre of
Excellence with suitable funding
options
• Increase focus on joint funding
opportunities with research and
development agencies
RETAIL PRODUCTSElders is one of Australia’s leading suppliers of rural farm inputs including seeds, fertilisers, agricultural chemicals, animal health products and general rural merchandise. We provide professional production and cropping advice with over 110 agronomists nationwide. PerformanceRetail performance improved by $3.7 million in FY15. Summer cropping conditions remained subdued with a lack of rainfall over Queensland and northern New South Wales. This led to reduced seed, agricultural chemical and fee-for-service demand from cotton producers. Performance lifted in the second half of the year with improved seasonal conditions and gains from strategic initiatives. Average autumn and winter rainfall across most cropping areas provided farmers with confidence to plant winter crop across southern Australia. Successful initiatives have also benefited Retail margin through price book management and consolidation of our supplier base leading to additional volume rebates and improved trading terms. Elders. Live it.Annual Report 201522 AGENCY MARGIN $ million
139.3
122.6
105.0
118.4
134.7
2011
2012
2013
2014
2015
MARGIN BY PRODUCT $ million
89.5
Livestock
27.6
Real Estate
17.0
Wool
0.6
Grain
MARGIN SPLIT BY GEOGRAPHY
14%
west
50%
south
36%
north
Strategy
To strengthen and expand our wool, livestock, real estate and grain products.
Strategy
Achievement
Plan
Operating
model
• Minimum activity
KPI rolled out and
monitored monthly
• “Welcome Back”
campaign launched to
target lapsed clients
• Livestock trading
facility rolled out
• Continue to focus on efficiency and
performance
• Execute livestock demand strategy
• Product development for wool, real
estate and grain services
• Acquisition growth for livestock and
real estate
• Increase grain capability
People
• Key grain personnel
• Recruit Head of Real Estate
recruited
• Head of Franchise
recruited to drive
expansion
• Recruit additional high performing
FTEs across agency services
AGENCY SERVICESElders provides a range of marketing options for livestock, real estate, wool, and grain. LivestockThe Elders livestock network comprises livestock agents and employees operating across Australia conducting 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. Real EstateElders’ real estate agency and property management services are primarily conducted in the broadacre and rural residential markets through its rural branches and real estate offices. Residential and metropolitan real estate services are mostly conducted through Elders’ network of franchise offices. WoolElders 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 assists clients with wool marketing, in-shed wool preparation, ram selection and sheep classing. GrainElders offers grain growers a range of cash-based grain marketing options. A new accumulation model supported by multiple buyers will be launched in FY16.PerformanceLivestock: Margin increase of $15.8 million was significantly buoyed by continued strengthening of livestock prices during the financial year. Cattle and sheep prices rose on average 32% and 13% respectively with solid volumes from last year continuing in FY15. Prices were driven by reducing global supply and solid export demand, underpinned by a low Australian dollar. Volumes remained high as producers took advantage of strong prices and sold down numbers in drought affected areas. Real Estate: Real Estate margin remained relatively constant from last year. Improved activity in the West was offset by reduced turnover in the North and South. Intense industry competition and slower than expected agent recruitment limited growth in this service. Wool: Margin improved by 11% compared to last year. Bales sold increased by 12,000 bales as wool producers capitalised on high wool prices in the second half of the financial year. Wool prices have benefited from an increase in demand, reduced flock size and lower Australian dollar. Grain: Our grain business suffered considerably in FY15 as we transitioned from a previous exclusive business model. As a result, only 0.4 million tonnes were accumulated this year, representing a 70% reduction in volume. A new accumulation model is planned for FY16 supported by multiple buyers and providing growers with a more competitive offering. 23 FINANCIAL SERVICES MARGIN $ million
26.7
24.2
25.8
25.8
25.4
2011
2012
2013
2014
2015
MARGIN BY PRODUCT $ million
20.7
Banking
4.6
Insurance
0.2
Financial
Planning
MARGIN SPLIT BY GEOGRAPHY
24%
west
46%
south
30%
north
Strategy
To strengthen and expand our banking, insurance and financial planning products.
Strategy
Achievement
Plan
Operating
model
• Restructured franchises
• Review and improve long term
for Elders Financial
Planning
arrangements with joint venture
partners
People
• 100% ownership of
Elders Home Loans
• Minimal recruitment
activity occurred
in FY15
• Explore further product development
and diversification
• New leadership for Financial
Services driving growth
• Recruitment of high performing
Banking staff
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 with the ANZ Group.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 risk management, superannuation and wealth creation as well as succession planning.PerformanceBanking: Banking margin decreased slightly by $0.5 million in FY15. New lending activity reduced $121 million as a result of continued positive seasonal conditions across southern Australia reducing the demand for financing and subdued seasonal conditions supressing demand in northern Australia. Insurance: Insurance margin was steady at $4.6 million in FY15 with gross written premium generated of $566 million. Elders. Live it.Annual Report 201524 FEED & PROCESSING MARGIN $ million
8.6
10.9
13.5
15.3
18.4
2011
2012
2013
2014
2015
MARGIN BY PRODUCT & GEOGRAPHY
$ million
11.2
Killara
(Australia)
4.6
Indonesia
2.6
China
Strategy
To improve and expand our feed and processing business.
Strategy
Achievement
Plan
Robust systems • Deployed new operating
system in Indonesia
increasing efficiency
and transparency
• Increased oversight and
review with quarterly
board meetings
Return on
capital focus
• Minor feedlot expansion
in Indonesia completed
• Maximised return for
Killara with strategic
management
• China business
restructure completed
and now profitable
• Review and upgrade forecasting
and supply chain management
systems for China
• Further expansion of Indonesian
feedlot once operating conditions
improve
• Growth in Elders China business
customers and footprint
Integrated red
meat supply
chain
• Developed meat brands
Killara, Kooyong and
Marlee, as premium
meat products
• Execute strategy for entry to
Vietnam meat supply chain
FEED & PROCESSING SERVICES In Australia, Elders operates Killara Feedlot, a beef cattle feedlot near Tamworth in New South Wales. In Indonesia, Elders operates an integrated feedlot, abattoir and meat distribution business. Elders imports, processes and distributes premium Australian meat in China. PerformanceKillara Feedlot: The feedlot achieved solid performance in FY15 with margins increasing by $2.9 million from last year. Despite challenges posed by high livestock prices, strategic portfolio management allowed the business to maximise profitability by increasing efficiency and capacity to 90%. It is anticipated that this high utilisation will ease in FY16 in line with a more sustainable operating model. Indonesia: Margin for Indonesia was lower by 4% compared to FY14. Activity in Indonesia is reliant on live export quotas issued by the Indonesian government. As a result of domestic policy for self-sustainability, quotas issued reduced by 32,000 heads in FY15 which affected the performance of the feedlot and abattoir through lower occupancy levels. Lower volumes however drove higher market prices for beef in Indonesia. China: The restructured Elders China business is now focused on premium meat and burger sales. The business is profitable with margin increasing by $0.4 million and costs decreasing by $0.7 million compared to last year. The impact of higher meat prices were largely offset by lower Australian dollar. 25 LIVE EXPORT MARGIN $ million
17.1
(18.7)
11.1
11.8
10.8
2011
2012
2013
2014
2015
LIVE EXPORT BY PRODUCT
84%
Feeder/slaughter
Cattle
10%
Dairy Cattle
6%
Sheep
LIVE EXPORT BY GEOGRAPHY
44%
Indonesia
34%
Vietnam
16%
China
6%
Others
Strategy
To maintain controlled growth of our live export business.
Strategy
Achievement
Plan
Robust systems
to improve
performance
• Introduced livestock
inventory traceability
system
New markets
• Market diversification
strategy in line with
board approved trading
charter
• Established Elders
New Zealand joint
venture with Carrfields
Livestock
• Developed new markets
in South East Asia and
Middle East
• Contract signed for
first import of slaughter
cattle to China
• Continued roll-out of integrated
operational and monitoring systems
to new supply chains for livestock
management and traceability
• Formalise checklist, materials and
training programs for breeding
livestock operations
• Improved ROC analysis on individual
shipments
• Further diversification with new
markets and customers
• Business expansion for China feeder
and slaughter cattle
• Continue investigation into supply
chain infrastructure investment
where additional value creation
is identified
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.PerformanceFY15 presented mixed trading conditions for Live Export with the depreciating Australian dollar and lower fuel bunker costs largely offset by higher domestic cattle costs. The long haul business was impacted by the temporary halt in demand from the Chinese dairy market triggered by depressed global dairy prices and milk powder stockpiles in China. The decline in long haul demand has been largely offset by new market opportunities for the short haul business as result of increased demand from Vietnam. Elders introduced a new role to manage animal welfare and ESCAS requirements across the business. It is our priority to ensure that our trading partners have proper processes to protect the welfare of animals we export with a traceable supply chain. Elders. Live it.Annual Report 201526 4pm, Lampung Province, Indonesia
ELDERS’ INDONESIAN FEEDLOT
Elders’ Dick Slaney
checking cattle ready for
sale to the wet markets.
OPERATING & FINANCIAL REVIEW
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• The prospect of a strong El Nino is likely to bring drier spring and summer conditions across eastern Australia.• The prospect of a drier winter cropping season and reduction in northern cotton plantings will likely reduce potential input requirements.Agency Services • Cattle prices to remain high, driven by reduced supply and strong international demand for Australian beef and live cattle. Significant tightening of cattle supply over autumn expected.• Sheep and lamb prices to rise in response to robust export demand.• Positive real estate activity driven by low interest rates and continuing local and foreign investment in the agricultural sector.• Lower wool production is expected to support wool prices in the short term.Financial Services • Leadership refresh for Financial Services with a view of growing banking and insurance products. Feed and Processing • Killara: Cattle on feed are expected to remain high, reflecting dry seasonal conditions. Rolling plant maintenance is expected to be performed during FY16.• Indonesia: Demand for beef is subdued due to market price increases. Performance of our Indonesian feedlot is highly dependent on the volume of cattle import permits issued by the Indonesian government. • China: Growth in Chinese food and hospitality industry fuelling demand in premium Australian beef.Live Export • Short haul: Stable demand from Indonesia and Vietnam. • Long haul: Export volumes to rise on the back of feeder, slaughter and breeder cattle demand from China. Slow recovery of dairy cattle export to China in the first half of FY16.Costs and Capital• Continued focus in controlling base costs and improving productivity measures for the business.• Investment in strategy and growth initiatives will increase cost and capital usage in FY16.27 OPERATING & FINANCIAL REVIEW
Material
Business Risks
5pm, Humula, NSW
‘MIOWERA’
Discussing lamb prices with
Laurie Sykes over a cool drink
on the verandah, after drafting
lambs for the Wagga sale.
Achievement of our business objectives could be affected by a number of risks that might, individually or collectively, have an impact. Set out below is an overview of key risks including economic, environmental and social sustainability risks, that Elders faces in seeking to achieve those objectives. The risks noted are not exhaustive and are in no particular order. Elders seeks to control, manage and monitor these risks wherever practicable and an example of these key measures are also outlined below. While all reasonable steps are taken to manage these risks and their exposures, the risk exists that the business may fail to implement those measures or that they may be ineffective. The policies, governance and control of the risk management framework is contained in the Corporate Governance Statement on the Elders’ website at www.elderslimited.com/about-us/corporate-governance.Health and safetySafety risk is inherent in Elders’ business activities. The safety of Elders’ people, clients and the general community is our number one priority. Key safety risks include livestock handling, remote driving, manual handling and chemical handling. Elders has a safety strategy in place to drive continuous improvement and compliance with the safety management system and has implemented an innovative engagement campaign “Stand Up Speak Up” to improve the safety culture.Animal welfareThe safety and welfare of livestock is of importance to Elders and the company has controls in place to ensure their wellbeing and proper treatment. Failure to protect the welfare of our livestock and livestock owned by others but in the control of Elders may result in increased animal activism and reputational damage. Elders has “zero tolerance” for poor treatment of livestock and complies with, and strives to exceed, government requirements including the Export Supply Chain Accreditation Scheme (ESCAS), Australian Maritime Safety Authority (AMSA) and Australian Standards for the Export of Livestock (ASEL) standards. Live Export operates within well-regulated industry environments and complies with the requirements of applicable external licence requirements, standards and governmental organisations at all times. In addition we actively engage with the industry and stakeholders to improve animal welfare practices where possible. Live Export Elders sources, procures and transports livestock to meet Live Export contracts and through these processes may be exposed to risk including pricing and 28Elders. Live it.Annual Report 2015Elders. Live it.Annual Report 2015 inventory traceability. Elders manages
these risks through documented controls
outlined in the Board-approved Live
Export charter, including position limits,
forward purchasing and sales contracts,
inventory control systems, processes
and procedures, and the development
of inventory programs to minimise risk
associated with availability and pricing
movement.
Commodity pricing
Elders has exposures to commodity
price fluctuations in its Agency, Retail,
Live Export (discussed above) and
Feed and Processing operations where
movements in commodity prices,
exchange rates and/or a change
in the volume of Australian rural
production could affect margins in
the future. Exposures are managed
through diversification of income
streams by product and geography,
controlled inventory levels and flexible
remuneration models for the Agency
business which allow for cost base
adjustments in response to fluctuations.
Adverse climatic conditions
Adverse climatic conditions and other
natural events may reduce the output of
relevant agricultural products and affect
the operation of Elders’ business. Natural
events, caused or affected by weather,
such as frost, drought, flood and fire can
have an impact. 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.
Biosecurity threats
Biosecurity threats to agricultural
products and livestock may affect Elders’
business. 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 manage 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.
Food safety
Through our Feed and Processing
operations, Elders handles livestock
within the food safety chain prior to and
during processing. As such, there exists
risk of contamination which is managed
effectively through HACCP accreditation in
meat processing plants and strict animal
health controls within the feedlots.
Fraud and corruption
Elders is exposed to traditional financial
fraud, bribery and corruption risks and
potential misrepresentation of goods and
services. Elders has numerous controls to
counter these risks, including appropriate
segregation of duty, Code of Conduct,
compliance policies, anti-bribery and
corruption policy, training throughout the
business, financial orientated reconciliation
processes, whistle-blower policy, reporting
hot-line, leave management protocols
and an Internal Audit program which
is complemented by periodic reviews
conducted by the external auditor.
Counterparty
Elders grants credit to approved
counterparties, both domestically and
internationally, and may be exposed
to losses associated with a client’s
inability to repay debt. This risk is
managed by maintaining credit policies
and procedures, oversight by the Credit
Committee, debtor monitoring and
reporting, trade credit insurance (for
major debtor processors) and high level
reviews of significant credit issues by the
CEO and CFO. To address counterparty
risk through its foreign operations, Elders
performs counterparty risk assessments
and due diligence processes, and seeks to
establish long term strategic relationships
with key customers.
Political
Elders operates in a number of foreign
jurisdictions where the business may
be affected by changes implemented
by foreign governments. In addition,
subsidies given to foreign rural producers
may adversely affect the competitive
position of Australian rural outputs.
Elders controls consequential exposure
to this risk through contractual means
wherever practicable and seeks to
cultivate a diverse range of international
markets to reduce concentration risk. The
Board maintains control and oversight
over ventures into new jurisdictions.
5pm, Naracoorte, SA
‘STRATHYRE’
Elders’ Nikki Armstrong
checks Nick Wight’s newly
purchased trade lambs as
they plan their transition
onto Lucerne.
29
Board of
Directors
Mr James Hutchison (Hutch) RanckBS Econ, FAICDAge 67 – 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 Limited and the CSIRO. Mr Ranck is a resident of New South Wales.Mr Mark Charles AllisonBAgrSc, BEcon, GDM, FAICD Age 55 – 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. Mr James Andrew JacksonB Com, FAICDAge 53 – 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. Elders. Live it.Annual Report 201530 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
BSc, MMgt
Ms Nina Abbey was appointed joint
Company Secretary on 20 February
2014. She also holds the position of
Head of Risk, Safety and Assurance,
since August 2012.
Mr Ian Wilton
FCPA, FAICD, FCCA (UK)
Ms Robyn Clubb
BEc, CA, F Fin, MAICD
Age 63 – Non-executive director of the
Board since April 2014.
Age 58 – Non-executive director of the
Board since 21 September 2015.
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 Limited and
GrainCorp Limited and was President and
Chief Executive Officer of GrainCorp Malt.
Mr Wilton is currently (until 15 December
2015) 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.
She is also a member of the Audit, Risk
and Compliance Committee, Work Health
and Safety Committee, Remuneration
and Human Resources Committee and
Nomination and Prudential Committee.
Robyn is a Chartered Accountant and
Fellow of the Finance & Securities Institute
of Australia, with senior executive
experience of over twenty years in the
financial services industry, working for
organisations including AMP Limited,
and Citibank Limited.
Since 2004 she has held a range of Non-
executive directorships with a focus on
the agribusiness sector.
Robyn is a beef producer, and until
recently a stonefruit grower, in South
Eastern NSW. She is currently Chair of
the Rice Marketing Board for the State of
NSW, non-executive director of Murray
Irrigation Limited, and Treasurer of
the Royal Agricultural Society of NSW.
Robyn is a former non-executive director
of Rural Bank Ltd, Beef CRC Limited,
and UrbanGrowth (a NSW state-owned
corporation responsible for urban land
development).
Ms Clubb is a resident of New South
Wales.
31 Directors’
Report
The directors present their report for
the year ended 30 September 2015.
DIRECTORS
Current Directors
The directors of the Company in office
during the financial year and until the date
of this report were:
Non-executive directors
James Hutchison Ranck
(Chairman)
James Andrew Jackson
(Deputy Chairman)
Ian Wilton
Robyn Clubb
(appointed 21 September 2015)
Executive Director
Mark Charles Allison
(Managing Director and Chief Executive
Officer)
Company Secretaries
Peter Gordon Hastings
Nina Margaret Abbey
A summary of the experience,
qualifications and special responsibilities
of each Director and Company Secretary is
provided on pages 30 and 31 of this annual
report.
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 rural sector;
(c) the provision of financial services
to rural and regional customers;
(d) real estate franchisor;
(e) live export operations;
(f) feedlotting of cattle; and
(g) 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 $38.3m (2014: profit of $3.0m). A
review of the operations and results of
the consolidated entity and its principal
businesses during the year is contained in
pages 17 to 29 of this report.
Significant Changes in
the State of Affairs
There were no significant changes in the
state of affairs of the consolidated entity
during the year not otherwise disclosed
elsewhere in this annual report.
Events Subsequent
to Balance Date
There is no matter or circumstance that
has arisen since 30 September 2015 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 27 of this report.
Share and Other Equity
Issues During the Year
No ordinary shares were issued under the
Company’s employee share plans during
the year.
Dividends and Other
Equity Distributions
No dividends or hybrid distributions were
declared or paid during the 12 months to
30 September 2015.
Share Options
Share options were issued during the
year to company executives under a long
term incentive plan forming part of Elders’
remuneration structure. Information on
this element of the remuneration structure
is provided in the Remuneration Report
commencing on page 36 of this annual
report.
The total quantity of options on issue as
at 30 September 2015 would represent,
if exercised, 2.24% of the Group’s issued
ordinary shares.
Details of options over unissued shares at
the date of this report are as follows:
1) Options on Issue:
All options listed in Table 1 are subject to
performance conditions as described on
page 44 of the Remuneration Report.
2) Options issued since the end of the
previous financial year
1,920,000 options, as set out in
Table 1, have been issued since
30 September 2014.
3) Options exercised since the end of
the previous financial year
No options have been exercised since
30 September 2014.
4) Options lapsed since the end of
previous financial year
No options over unissued shares have
lapsed since 30 September 2014. As
disclosed in the table 16 appearing on
page 50 of the Remuneration Report,
36,591 performance rights held by
senior executives have lapsed since
30 September 2014.
Directors’ Interests
At the date of this report, the relevant
interests of the directors in shares
and other equity securities of the
Company are detailed in Table 2.
Elders. Live it.Annual Report 201532 At the date of this report, there are
no options on issue to directors other
than to the Managing Director as set
out in Table 2.
Directors’ Meetings
Detail of the number of meetings
held by the Board of Directors and
Board committees and the attendance
at those meetings is provided in Table 3.
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.
Table 1. Options over unissued shares
Date Options
Granted
Number of
Options Granted
Issue Price
of each option
18/12/2014
1,920,000
nil
Exercise Price
of each option
$1.70
Option Expiry
Date
30/09/2019
Table 2. Directors’ Interests
Non-executive directors
J H Ranck
I Wilton
J A Jackson
R Clubb
Executive Director
M C Allison
No. of ordinary shares
No. of hybrids
No. of performance rights or options
100,000
80,000
30,000
-
17,685
-
-
-
-
-
-
-
-
-
600,000
Table 3. Attendance at meetings by Directors
Attendance by directors at Board and Committee meetings held during the financial year is detailed below.
Committee attendance is only recorded where a director is a member of the relevant committee.
Board of Directors
WHS Committee
Audit, Risk and
Compliance Committee
No. of meetings
held during
relevant period
Attended
No. of meetings
held during
relevant period
Attended
No. of meetings
held during
relevant period
Attended
19
19
19
19
1
19
19
19
19
1
4
4
4
-
1
4
4
4
-
1
6
6
6
-
1
6
6
6
-
1
Remuneration and Human Resources
Committee
Nomination and
Prudential Committee
No. of meetings
held during
relevant period
Attended
No. of meetings
held during
relevant period
Attended
5
5
5
-
1
5
5
5
-
1
2
2
2
2
0
2
2
2
2
0
J H Ranck
J A Jackson
I Wilton
M C Allison
R Clubb
J H Ranck
J A Jackson
I Wilton
M C Allison
R Clubb
33 Remuneration of Directors
and Senior Executives
Details of the remuneration arrangements
in place for directors and senior
executives of the Group are set out
in the Remuneration Report commencing
on page 36. 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
A number of Elders’ operations are
subject to environmental legislation.
Such legislation is diverse and varies
between state, territory and local
authorities and various regulators.
Detail of Elders’ performance in relation
to the various regulations is as follows.
Feedlots
Elders operates a feedlot in Killara (NSW)
which is subject to both state and local
government environmental legislation,
as well as animal welfare legislation.
Feedlots can also be subject to quality
assurance standards under the National
Feedlot Accreditation Scheme (NFAS)
which is independently administered and
audited each year by Aus-Meat. Killara
operates under such standards as well
conducting its operations according to the
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 was approved or operates
were reported during the year ended 30
September 2015 or to the date of this
report.
Saleyards
Saleyards are subject to various
State, Territory and local government
environmental legislation and regulations,
particularly relating to effluent
management, dust and noise. These
obligations vary from state to state and
generally only apply to saleyards above
a prescribed size. Elders expects its
saleyard operations, irrespective of their
size, to abide by the applicable laws and
regulations.
Elders was served, in September 2015,
with a Contaminated Site notice by the
WA Department of Environment Regulation
in relation to a co-owned livestock
saleyard which has been classified as
a potentially contaminated site. This is
as a result of the site being adjacent to a
known contaminated site. The site that
is the source of this contamination is
not owned by Elders, and the owners of
the site are liable for the remediation of
the source site itself, and our co owned/
managed site, if required.
No other breaches of environmental
regulations affecting saleyards were
reported during the year ended 30
September 2015 or to the date of this
report.
traceability throughout the supply
chain up to and including the point of
slaughter in the receiving country.
Retail Operations
Elders’ retail operations are subject to
state environmental regulations relating
to the storage, handling, transport
and sale of dangerous goods such as
agricultural chemicals, fertilisers and
poisons. Although these regulations
are based on nationally recognised
standards, the regulatory environment
for the transporting, handling, storage,
sale and use of such dangerous goods,
chemicals and scheduled poisons is
complex and subject to regulations
imposed by each state and territory.
The majority of Elders’ retail operations
are accredited under the co-regulatory
accreditation program operated by
Agsafe. The program provides
accreditation for premises and training
and accreditation for staff in the safe
handling, storage and transport of
agricultural and veterinary chemicals.
Agsafe provides assistance to Elders
by providing appropriate training and
safety programs including a program
of recognised audits.
In March 2015 a minor incident near
Carnamagh (WA) involved a spill of
glyphosate, after a motor vehicle accident.
The local Shire was advised, attended
and performed clean up. The Shire also
investigated and determined no sanctions
or further action were warranted.
No other breaches of these environmental
regulations were reported during the
year ended 30 September 2015 or to the
date of this report.
Live Export Services
Elders is engaged in the export of livestock
to international markets, namely the
supply of feeder and slaughter cattle to
Indonesia and Vietnam as well as long
haul live export of dairy, breeding and
feeder and slaughter cattle to distant
markets such as China and Kazakhstan.
Sheep are also exported to a variety of
markets.
All live export operations are subject to
Australian Government regulations and
standards including:
• The Australian Standards on the Export
of Livestock (ASEL version 2.3) which
provides detailed standards on the
sourcing, preparation, management
and transportation of livestock
throughout the supply chain, until
disembarkation. The ASEL also
requires exporters to comply with
state, territory and local government
regulations including animal welfare
and environmental regulations.
• The Exporter Supply Chain Assurance
System (ESCAS) which requires
exporters to have control and
Apart from minor breaches of ESCAS
which Elders self-reported (for which
regulators took no adverse action against
Elders), no breaches of environmental
regulations or legislation were recorded by
the live export business in the year to 30
September 2015 or the date 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 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)
$157,538
• Other compliance and assurance
services
$118,014
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
M C Allison
Managing Director
16 November 2015
Elders. Live it.Annual Report 201534
M C Allison
Managing Director
35
ELDERS LIMITED
Remuneration
Report 2015
Section 1
Key Management Personnel
Section 2
Remuneration governance and strategy
Section 3
Non-executive director remuneration
Section 4
Managing Director & Chief Executive Officer and Senior Executive remuneration
Section 5
Managing Director & Chief Executive Officer and Senior Executive contract terms
Section 6
Managing Director & Chief Executive Officer and Senior Executive remuneration details
Section 7
Equity instruments, loans to and transactions in relation
to Key Management Personnel
38
38
39
40
46
47
48
The Directors of Elders Limited present the Remuneration Report for the consolidated entity for the year ended 30 September 2015. 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.Elders. Live it.Annual Report 201536 MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
AND SENIOR EXECUTIVE REMUNERATION OUTCOMES
For the year ended 30 September 2015
Table 1 below sets out certain items of
remuneration paid or payable to the
Managing Director & Chief Executive
Officer (MD & CEO) and Senior Executives
in respect of the 2015 financial year. The
information in Table 1 is unaudited and
is different from and additional to that
required by Accounting Standards and
statutory requirements.
Table 11 on page 47 provides the audited
remuneration disclosures as required
under Accounting Standards and
statutory requirements. Elders however
believes that the information provided in
Table 1 is useful to investors as it provides
a simple overview of the remuneration
paid or payable to the MD & CEO and
senior executives, and is consistent
with the Productivity Commission’s
recommendation in its report on
Executive Remuneration in Australia.
Table 1 includes information on base
salary, STI, superannuation, other
monetary benefits, other non-monetary
benefits and termination benefits
identical to that contained in Table 11 ,
but omits the information on the issue
of shares, share rights and options and
long-term payments contained in Table 11 .
Additionally, Table 1 provides information
on LTI based on rights vesting or options
exercised during the financial year,
which is not provided in Table 11.
Table 1. Remuneration outcomes for 2015 (unaudited and non-IFRS)
$
Base
Salary
STI1
LTI2 Superannuation
Other
(monetary)
Other (non-
monetary)3
Termination
benefits
M C Allison
801,580
800,000
R I Davey
404,238
110,000
J H Cornish
328,572
80,000
G J Dunne
C C Hall
M L Hunt
345,597
90,000
335,259
70,000
347,584
90,000
0
0
0
0
0
0
18,915
18,915
18,915
18,915
18,915
18,915
0
0
0 2,596
0 1,351
0
3,640
0 2,919
0 15,572
0
0
0
0
0
0
Total
1,620,495
535,749
428,838
458,152
427,093
472,071
1. STI that will be paid for performance in the 2015 financial year.
2. Value of any performance rights/options that vested during the 2015 financial year based on the closing share price on the date of vesting, and options that were exercised
during the 2015 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 2015 financial year.
3. Provision of leased car parking and company leased vehicle.
37
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, MD & CEO and senior executives
during the financial year:
Table 2. Key management personnel
Name
Non-executive directors
J H Ranck
R Clubb
J A Jackson
I Wilton
MD & CEO and Senior Executives
M C Allison
R I Davey
J H Cornish
G J Dunne
C C Hall
M L Hunt
Position held
Period held in 2015 (if not full year)
Commenced 21 September 2015
Chairman
Director
Director
Director
Managing Director and Chief Executive Officer
Chief Financial Officer
Zone General Manager West
Zone General Manager North
General Manager Live Export
Zone General Manager South
SECTION 2.
REMUNERATION GOVERNANCE AND STRATEGY
A. Role of Remuneration and
Human Resources Committee
B. Independent remuneration
advice
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 Principles
and Recommendations. The role and
responsibilities of the Remuneration
and Human Resources Committee are
set out in the Corporate Governance
Statement which, along with the
Committee’s Charter is published
on the Company’s website at
www.elderslimited.com.
The Committee is comprised entirely of
Non-executive directors.
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 2015,
the Committee did not seek or receive
remuneration recommendations from any
external party and consequently no fees
were paid during the year for such advice.
C. Remuneration strategy
Elders remuneration strategy seeks to
reinforce a performance culture through:
• providing competitive reward
opportunities to attract and retain
high calibre executives and motivate
them to pursue sustainable long-term
growth and success for the Company, its
employees and shareholders;
• aligning the rewards and interests of
directors and senior executives with the
long-term growth and success of the
Company within an appropriate control
framework;
• demonstrating a clear relationship
between senior executive performance
and remuneration; and
• being consistent and responsive to the
needs of each business unit and Elders
as a whole.
Elders. Live it.Annual Report 201538 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.
The MD & CEO and senior executives 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 published at
www.elderslimited.com.
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 12 of this Report.
B. Non-executive director
remuneration in 2015
Total fees for the financial year ended
30 September 2015 remain well within
the aggregate fee limit of $1,200,000 per
annum, approved by the Board following
the Company’s 2013 Annual General
Meeting. Statutory superannuation
guarantee contributions are excluded
from the aggregate fee limit.
Each Non-executive director was
entitled to an annual base fee of
$100,000, except the Chairman who
was entitled to a total annual
composite fee of $240,000 (includes
committee fees). All amounts exclude
superannuation which is paid up to the
maximum contribution base in line with
Superannuation Guarantee legislation.
During the financial year ended
30 September 2015, as compensation
for time spent on Committee business,
the following fees applied:
• Each member of the Audit, Risk and
Compliance Committee was entitled
to $16,000 per annum; except for the
Committee Chair who was entitled
to $30,000 per annum to reflect the
significant workload associated with
this position.
• Each member of the Occupational
Health and Safety Committee was
entitled to $10,000 per annum.
• Each member of the Remuneration
and Human Resources Committee
was entitled to $10,000 per annum.
Actual Committee fees paid are provided
as “Board Committee Fees” in Table 3
below.
Table 3: Non-executive director remuneration details
Short-term payments
Post employment
Total
Base Board
Fee
Board
Committee Fees
Subsidiary Fees
and Other Fees
Superannuation
Other
J H Ranck
R Clubb
J A Jackson
I Wilton
M C Allison
J M Rozman
Total
2015
20141
20153
2014
2015
20141
2015
20141
2015
20141
2015
20141
2015
2014
240,000
158,333
3,030
N/A
0
21,000
1,091
N/A
100,000
36,000
46,591
15,995
100,000
50,000
46,591
N/A
175,000
N/A
50,000
22,311
N/A
0
N/A
70,0002
443,030
87,091
476,515
129,306
0
0
0
N/A
0
0
0
0
N/A
0
N/A
0
0
0
18,915
15,001
392
N/A
12,920
5,873
14,250
6,467
N/A
10,369
N/A
7,912
46,477
45,622
0
0
0
N/A
0
0
0
0
N/A
0
N/A
0
0
0
258,915
194,334
4,513
N/A
148,920
68,449
164,250
75,369
N/A
185,369
N/A
127,912
576,598
651,433
1. Figures relate to part year service. M C Allison ceased as Chairman 30 April 2014. J A Jackson and I Wilton commenced as Directors from 13 April 2014.
J M Rozman ceased as Director from 25 March 2014. J H Ranck became Chairman from 1 May 2014.
2. Includes temporary increase to Chair of Audit, Risk and Compliance Committee fee from $30,000 to $75,000.
3. R.Clubb was appointed as Director from 21 September 2015, and the above fees were paid October 2015.
39
SECTION 4.
MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
AND SENIOR EXECUTIVE REMUNERATION
A. Board policy
B. 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, key relationships, efficiency,
growth and Company values.
The Board seeks to align employee
remuneration with the interests of
shareholders, the strategic objectives of
the Company and the commercial needs
and performance of each business unit.
The remuneration structure has been
designed to support the Board’s
remuneration policy. Executive
remuneration is made up of three
elements:
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 MD & CEO on the recommendation
of the Chairman and the Remuneration
and Human Resources Committee.
The plans and outcomes for the MD &
CEO’s direct reports are reviewed and
approved annually by the Committee on
the recommendation of the MD & CEO,
and the MD & 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
MD & 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.
• 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 and Company
targets and objectives, including
maximising returns for shareholders.
Chart 1. Remuneration structure
d
r
a
w
e
r
l
a
t
o
t
f
o
%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
LTI
STI
TFR
25%
25%
50%
33%
33%
33%
CEO
Senior
Executives
The above assumes the at-risk
remuneration components are at
their maximum, and represents the
Company’s intended policy in respect
of remuneration structure.
Elders. Live it.Annual Report 201540
D. Short-term incentive
The key features of the STI plan applying to MD & CEO and senior executives during the year are set out in the table below:
Table 4. Short-term incentive plan
Maximum STI opportunity
as % of TFR
Performance measure(s)
MD & CEO
100% of TFR
Senior executives
50% of TFR
65% of the MD & CEO’s STI is based on
quantitative financial performance of
Underlying EBIT and ROC targets;
10% of the STI is based on driving significant
progress in achieving an injury free workplace;
and
25% of the STI is based on qualitative
performance regarding creating value
through the delivery of key milestones of
the Elders Eight Point Plan.
Senior executives are eligible for
an STI if Elders achieves threshold
financial performance hurdles including
Underlying EBIT and ROC.
The STI is based on the Company,
business unit and individual
performance against KPIs set for:
• Safety
• Operational performance
(including EBIT and ROC)
• Key relationships
(people and customers)
• Efficiency and growth
(Eight Point Plan milestones)
Governance
Exercise of discretion
Service condition
Payment
Assessment of the MD & CEO’s performance
against the relevant KPIs is determined by
the Remuneration and Human Resources
Committee with recommendation for STI
payment referred to the Board for approval.
Assessment of performance against
the above measures and individual
KPIs is determined by the MD & CEO
with recommendation for STI payment
referred to the Board for approval.
The MD & CEO, in conjunction with the Chairman, may recommend discretionary bonus
payments to executives (except himself) for approval by the Committee.
Any STI payable to executives who become eligible to participate in the Plan 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; participants may elect to sacrifice to acquire the Company’s shares
via the Deferred Employee Share Plan. In FY16, 30% of STI payments for the MD & CEO and senior
executives will be deferred into shares, where the deferred component has a value of more than
$10,000. Shares will be locked for a period of one year.
STI outcomes for 2015
Table 5.
All STI payments for 2015 performance
were paid according to plan
performance measures.
The following table outlines the
KMP participants who received
an STI payment in 2015:
Incentive payment as a %
of maximum STI opportunity
% of maximum STI opportunity forfeited
as performance criteria not met
M C Allison
R I Davey
J H Cornish
G J Dunne
C C Hall
M L Hunt
98%
50%
46%
49%
39%
49%
2%
50%
54%
51%
61%
51%
41
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, with plans shown at Tables 6 and 7 continuing and the plan at Table 8 discontinued.
Table 6. Current equity schemes in which one or more KMP participate
Number of participants
Number of shares /
options / rights
outstanding
as at
30 September
2014
as at
30 September
2015
as at
30 September
2014
as at
30 September
2015
0
0
1
11
0
0
600,000
1,320,000
10
10
138,129
40,000
Name of Plan
Description
Elders Executive
Incentive Plan/
Options (EEIPO)
Elders Long Term
Incentive Rights
Plan (ELTIRP)
Options granted to eligible executives,
with a three year performance period, and
split into three tranches. Each tranche
carries a different performance condition
being Absolute TSR, Underlying EBIT, and
ROC. Upon paying the required exercise
price each option entitles the holder to
one ordinary share in Elders.
Rights to Elders shares are granted
to selected eligible executives at the
10-day Volume Weighted Average
Price at the relevant date subject to
a minimum of 12 months service and
performance conditions (as outlined in
Table 9) determined by the Board at the
time of grant.
Eligibility
Criteria
MD & CEO
Senior
executives
by invitation
Senior
executives
and senior
managers by
invitation.
Table 7. Current equity saving schemes in which one or more KMP participate
Number of participants
Number of shares /
options / rights
outstanding
as at
30 September
2014
as at
30 September
2015
as at
30 September
2014
as at
30 September
2015
38
98
72,776
122,832
Eligibility
Criteria
All permanent
employees.
Name of Plan
Description
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 cost of administration.
Table 8. Discontinued equity schemes in which one or more KMP participate
Number of participants
Number of shares /
options / rights
outstanding
as at
30 September
2014
as at
30 September
2015
as at
30 September
2014
as at
30 September
2015
659
614
44,133
42,741
Eligibility
Criteria
The ELSP was
suspended in
2009.
Name of Plan
Description
Elders Loan
Share Plan
(ELSP)
The ELSP was designed to provide an
equity participation opportunity for all
eligible employees when offered by the
Company. 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 number of shares/options/rights outstanding as at 30 September 2014 in Tables 6, 7 and 8 above
have been restated using the post consolidation value being 1 for every 10 to provide a consistent basis.
Elders. Live it.Annual Report 201542
E1. Discussion of long-term
incentive plans
(a) General
At the Company’s AGM held on 18 December
2014 shareholders approved the long
term incentive plan (EEIPO) for the MD &
CEO. An initial grant under this plan was
made to the MD & CEO and senior executives
on the 18 December 2014. This plan is the
Company’s principal long-term incentive
plan and replaces the Elders long term
incentive rights plan (ELTIRP), with the last
grant made under the ELTIRP in 2011.
Participation in EEIPO is at the Board’s
discretion through individual invitation
to senior executives up to a maximum of
50% of TFR.
Subject to the ASX Listing Rules, the
Board has discretion to make
adjustments to one or more of:
• the exercise price of the options;
• the number of options;
• the number of shares received upon
exercise of options; and
• the performance conditions,
in the event of a corporate restructuring,
major transaction or capital event or to
prevent any unintended consequences.
(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,
and align the interests of KMP with the
Company’s security holders generally.
(c) Performance Hurdles
The long term incentive plan seeks
to align the interests of senior
management with those of shareholders.
The performance measures of the
principal long-term incentive plan
(EEIPO) being TSR, EBIT ad ROC provide
comprehensive measures of shareholder
return, Company performance and
alignment to the Company’s three
year strategic plan (known as the
Eight Point Plan).
Table 9. Long term incentive plan detail
Issue Date
MD & CEO
grants
EEIPO
18 Dec
2014
Number of
performance
rights/options
granted
Denominator Hurdle description
600,000
$1.70
(Exercise
Price)
Pursuant to the approval granted by the Shareholders at the 2014 AGM, the MD & CEO was
granted options as at 18 December 2014 vesting on 30 September 2017.
These options will vest based on the performance conditions set out below.
Tranche 1 - TSR Options
50% of options vest subject to an absolute total shareholder return (TSR) performance
condition. The absolute TSR performance condition is tested based on the Company’s average
annual compound TSR over the three year performance period 1 October 2014 ending on
30 September 2017.
The % of TSR options that will vest is determined as follows:
Absolute TSR over
performance period
Less than target
Target1
Between target and stretch2
Stretch2 and above
% of Options in tranche that vest
Nil
50%
50-100% on a straight line sliding scale
100%
1. Target - 12% average annual compound TSR. 2. Stretch - 20% average annual compound TSR.
Absolute TSR will be measured using opening and closing share prices determined as follows:
• the opening share price value will be $1.70; and
• the closing share price value will be based on the 10 trading day VWAP up to and including
the last day of the performance period.
Tranche 2 – EBIT Options
25% of options vest subject to an Underlying Earnings Before Interest and Tax performance
condition.
EBIT options will vest in full if EBIT is greater than or equal to $60 million for the financial year
ending 30 September 2017.
Tranche 3 – ROC Options
25% of options vest subject to a Return on Capital performance condition.
ROC options will vest in full if ROC is greater than or equal to 20% for the financial year ending
30 September 2017.
Vested options become exercisable on the first day on or after vesting that the share price is
greater than the Exercise Price. For this purpose, the relevant share price is the market price at
the close of trade.
For each option that vests and is exercised, an exercise price of $1.70 per option is payable by
the MD & CEO in return for one fully paid ordinary share in Elders.
The options will expire on 30 September 2019. Options which have not been exercised within
this exercise period will lapse.
43 Number of
performance
rights/options
granted
Issue Date
Senior Executive grants
Denominator Hurdle description
ELTIRP
10 Nov
2010
554,659
$6.46
Performance rights granted to senior executives as at 10 November 2010 were tested as
set out below.
Tranche 1 (2010 Allocation)
TSR performance was 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 was measured over the three years from 10 November 2010 to
10 November 2013. This tranche has been tested and resulted in nil vesting.
Tranche 3 (2010 Allocation)
TSR performance was measured over the four years from 10 November 2010 to
10 November 2014. This tranche has been tested and resulted in nil vesting
(see section E2 performance testing below).
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 % of Tranche that vests
Below 50th percentile Nil
At 50th percentile
50%
50th to 74th percentile
Pro-rata
75th percentile and above
100%
Upon vesting of performance rights one fully paid Share in Elders will be allocated for
each performance right.
10 Nov
2011
452,500
$2.69
Performance rights granted to senior executives as at 10 November 2011 are tested as
set out below:
Tranche 1 (2011 Allocation)
TSR performance was measured over the two years from 10 November 2011 to
10 November 2013. This tranche has been tested and resulted in nil vesting.
Tranche 2 (2011 Allocation)
TSR performance was measured over the three years from 10 November 2011 to
10 November 2014. This tranche has been tested and resulted in nil vesting (see Section E2
performance testing below).
Tranche 3 (2011 Allocation)
TSR performance is measured over the four years from 10 November 2011 to
10 November 2015. Testing of this tranche will occur in November 2015.
These performance rights vest according to the same performance condition applying to
the 2010 allocations.
1,320,000
EEIPO
18 Dec
2014
$1.70
(Exercise
Price)
Options granted to senior executives as at 18 December 2014 vesting on
30 September 2017.
These options vest according to the same performance conditions as the
MD & CEO EEIPO grant.
Note: The number of performance rights/options granted and the value of the denominator for the ELTIRP made on
10 November 2010 and 10 November 2011 have been restated using the post consolidation value being 1 for every 10.
E2. Performance testing
of 2010 and 2011 senior
executive grant.
Following completion of their
measurement periods, the final tranche
(Tranche 3) of the 2010 senior executive
grant and Tranche 2 of the 2011 senior
executive grant were tested against
their performance hurdles, resulting
in nil vesting and lapsing of 1,031,465
performance rights (103,147 post
consolidation) valued at $206,293. The
value is based on the number of rights
multiplied by closing share price of $0.20
as at 11 November 2014.
Elders. Live it.Annual Report 201544 E3. Relationship between
Elders’ financial performance
and executive reward
(a) Short-term incentive
STI payments are awarded to executives
on achievement of a range of financial
and non-financial performance targets.
The following table shows the Company’s
performance in relation to a number of
financial and operational performance
measures over a five-year period.
Table 10. Company performance
Performance measure
($ millions)
2011
2012
2013
Sales revenue
2,358.7
2,157.9
1,422.1
Underlying EBIT
Statutory profit
Cashflow from
operating activities
33.7
(395.3)
(23.8)
38.8
(48.9)
(60.6)
(505.3)
2.5
(81.6)
Note: Details of KMP STI outcomes for 2015 are provided on page 41.
(b) Long-term incentive
Under the senior executive LTI
grants issued 10 November 2010,
and 10 November 2011, the performance
rights vest when the Company achieves
superior returns for shareholders as
measured by TSR. Under the LTI grant
issued 18 December 2014 the options
are split into three tranches, carrying
different performance conditions of
absolute TSR, EBIT and ROC.
Total Shareholder Return (TSR)
Charts 2 and 3 below show Elders’ relative
TSR performance over the last five years
against these two comparator groups:
Chart 2. Absolute TSR %
%
R
S
T
e
t
u
l
o
s
b
A
150%
150%
100%
100%
50%
50%
0%
0%
-50%
-50%
-100%
-100%
2014
1,431.1
27.6
3.0
15.1
2015
1,514.2
45.8
38.3
(5.3)
Elders
ASX200
ASX200 Industrials
Source: Thomson Reuters
118.3%
19.6%
-0.7%
2011
2012
2013
2014
2015
Chart 3. Cumulative TSR %
100%
50%
0%
-50%
%
R
S
T
e
v
i
t
a
l
u
m
u
C
2011
2012
2013
2014
2015
The method used to calculate the cumulative TSR is on a compound basis.
45
Factors contributing to the calculation
of TSR include dividends and share
price. The history of both for the last
five years is set out in Chart 4:
Dividend history
No dividends have been declared or paid (interim or final) over the last five years from
2011 to 2015.
Chart 4. Elders five year share price history
7
6
5
4
3
2
1
0
0
1
‘
r
e
b
o
t
c
O
0
1
‘
r
e
b
m
e
v
o
N
0
1
‘
r
e
b
m
e
c
e
D
1
1
‘
y
r
a
u
r
b
e
F
1
1
‘
y
a
M
1
1
‘
e
n
u
J
1
1
‘
h
c
r
a
M
1
1
‘
t
s
u
g
u
A
1
1
‘
r
e
b
m
e
t
p
e
S
1
1
‘
r
e
b
o
t
c
O
1
1
‘
r
e
b
m
e
c
e
D
2
1
‘
h
c
r
a
M
2
1
‘
y
r
a
u
n
a
J
2
1
‘
l
i
r
p
A
2
1
‘
e
n
u
J
2
1
‘
y
l
u
J
2
1
‘
t
s
u
g
u
A
2
1
‘
r
e
b
o
t
c
O
3
1
‘
y
r
a
u
n
a
J
3
1
‘
y
r
a
u
r
b
e
F
2
1
‘
r
e
b
m
e
v
o
N
3
1
‘
l
i
r
p
A
3
1
‘
y
a
M
3
1
‘
y
l
u
J
3
1
‘
t
s
u
g
u
A
3
1
‘
r
e
b
m
e
t
p
e
S
3
1
‘
r
e
b
m
e
v
o
N
3
1
‘
r
e
b
m
e
c
e
D
4
1
‘
h
c
r
a
M
4
1
‘
y
r
a
u
n
a
J
4
1
‘
l
i
r
p
A
4
1
‘
e
n
u
J
4
1
‘
y
l
u
J
4
1
‘
r
e
b
m
e
t
p
e
S
4
1
‘
r
e
b
o
t
c
O
4
1
‘
r
e
b
m
e
c
e
D
5
1
‘
y
r
a
u
n
a
J
5
1
‘
y
r
a
u
r
b
e
F
5
1
‘
l
i
r
p
A
5
1
‘
y
a
M
5
1
‘
y
l
u
J
5
1
‘
t
s
u
g
u
A
5
1
‘
r
e
b
m
e
t
p
e
S
Note: In December 2014 Elders consolidated shares from 10 to 1, therefore for comparison purposes the
share price in the above graph has been consolidated for the full five year period from 10 shares to 1.
SECTION 5.
MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
AND SENIOR EXECUTIVE CONTRACT TERMS
In 2015, the Company had employment
agreements with the MD & CEO 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:
- six (6) months where less than or
equal to one (1) year of service has
been completed;
- nine (9) months where greater than
one (1) years service but less than or
equal to two (2) years of service has
been completed; and
- twelve (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 would provide him
12 months 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 six months notice, all other
senior executives are required to provide
three 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 contract on three
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.
Elders. Live it.Annual Report 201546
SECTION 6.
MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER
AND SENIOR EXECUTIVE REMUNERATION DETAILS
Table 11. Details of MD & CEO and senior executive remuneration for the 2014 and 2015 financial years
Short-term payments
Post-
employment
Share-based
payments
Base
salary
STI
Other1
Super-
annuation
Options
Share
Rights
M C Allison
2015
801,580
800,000
0 18,915
125,700
20144
334,132
300,000
0
7,658
0
0
0
Long
Service
Leave
775
0
Long-term payments
%
performance
- related3
Total
1,746,970
53%
R I Davey
2015
404,238
110,000
2,596
18,915
31,425
1,342
35,873
2014
355,047
28,000
2,640
18,027
0
5,196
7,893
J H Cornish
2015
328,572
80,000
1,351
18,915
25,140
2,824
9,923
20144
105,597
11,667
440
6,177
0
3,933
2,403
G J Dunne
2015
345,597
90,000
3,640
18,915
27,235
2,790
8,370
20144
113,597
10,000
1,218
6,177
0
3,819
2,451
C C Hall
2015
335,259
70,000
2,919
18,915
25,140
20144
237,003
0
26,722
12,939
0
M L Hunt
2015
347,584
90,000
15,572
18,915
27,235
20144
113,946
16,667
7,969
M G Jackman
2015
N/A
N/A
20144
164,085
290,000
H S Browning
2015
N/A
20144
74,322
D W Goodfellow
2015
N/A
N/A
0
N/A
N/A
418
N/A
632
N/A
Other
Termination
benefits2
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
641,790
604,389
416,803
466,725
130,217
496,547
137,262
452,450
276,664
500,820
144,978
N/A
N/A
N/A
N/A
0
N/A
0
0
0
N/A
0
N/A
N/A
4,233
N/A
648,441
1,258,987
0
4,267,901
1,766,181
4,417,848
47%
24%
8%
23%
12%
24%
10%
21%
0%
23%
11%
N/A
15%
N/A
0%
N/A
0%
0
0
0
0
N/A
217
0
1,514
219
N/A
6,177
N/A
0
N/A
N/A
N/A
N/A
N/A
4,444
0
(31,548)
(43,617)
N/A
N/A
0
N/A
N/A
0
(2,271)
4,444
0
(75,884)
(93,889)
0
1,117,740
1,406,914
20144
567,290
0
27,500
18,027
Total
2015
2,562,830
1,240,000
26,078
113,490
261,875
6,956
56,672
2014
2,065,019
656,334
67,539
84,070
0
(94,484 )
(126,811)
1. Comprising the provision of leased car parking (Jackman, Browning, Cornish, Davey, Dunne, Goodfellow, Hall, Hunt), company leased vehicle
(Hunt), 2014 completion bonus (Davey), travel allowance (Goodfellow).
2. 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).
3. Performance related remuneration consists of STI and share rights and options as a percentage of total remuneration. Share options are those
disclosed in Table 14 and share rights includes performance rights disclosed in Table 15.
4. Figures relate to part-year service. M C Allison commenced as MD & CEO 1 May 2014, M G Jackman ceased employment 27 November 2013,
H S Browning ceased employment 27 December 2013, J H Cornish, G J Dunne and M L Hunt commenced as KMP 2 June 2014, D W Goodfellow
ceased employment 29 August 2014 and C C Hall commenced employment 15 January 2014.
47
SECTION 7.
EQUITY INSTRUMENTS, LOANS TO AND TRANSACTIONS
IN RELATION TO KEY MANAGEMENT PERSONNEL
Table 12. Non-executive director share movements
J H Ranck
R Clubb
J A Jackson
I Wilton
J M Rozman
Total
Shares held
at start of year
74,200
43,000
0
N/A
24,000
0
50,000
0
N/A
2,000
148,200
45,000
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
Other shares acquired
(disposed of)
during the year
Balance of shares
held at end of
financial period
25,800
31,200
0
N/A
6,000
24,000
30,000
50,000
N/A
0
61,800
105,200
100,000
74,200
0
N/A
30,000
24,000
80,000
50,000
N/A
2,000
210,000
150,200
Note: The shares disclosed in the 2014 year have been restated to reflect the consolidated number of 10 shares to 1 share, which takes into account any rounding up post consolidation.
No other changes occurred during the year.
JM Rozman ceased as Director from 25 March 2014, R Clubb commenced as Director 21 September 2015.
Table 13. MD & CEO 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
M C Allison
R I Davey
J H Cornish
G J Dunne
C C Hall
M L Hunt
M G Jackman
D W Goodfellow
H S Browning
Total1
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
10,000
10,000
258
258
26,032
26,032
34,554
34,554
4
4
3
3
N/A
22,176
N/A
17,336
N/A
29,067
70,851
139,430
0
0
0
0
0
0
0
0
0
0
0
0
N/A
0
N/A
0
N/A
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
N/A
0
N/A
0
N/A
0
0
0
Other shares
acquired
(disposed of)
during the year
7,685
0
0
0
(4)
0
6,000
0
(4)
0
(3)
0
N/A
0
N/A
0
N/A
0
13,674
0
Balance of shares
held at end of
financial period
17,685
10,000
258
258
26,028
26,032
40,554
34,554
0
4
0
3
N/A
22,176
N/A
17,336
N/A
29,067
84,525
139,430
Note: The shares disclosed in the 2014 year have been restated to reflect the consolidated number of 10 shares to 1 share, which takes into account any rounding up
post consolidation. No other changes occurred during the year. No shares were issued on exercise of options or performance rights during the 2015 financial year.
Elders. Live it.Annual Report 201548
Table 14. Current long-term incentive plan opportunities (by offer) – Options plan EEIPO
2015
Grant
Date
Total No.
Granted
No in
Tranche
1
No in
Tranche
2
No in
Tranche
3
Vested/
Lapsed
Test
date
R I Davey
M C Allison 18 Dec
2014
18 Dec
2014
J H Cornish 18 Dec
2014
18 Dec
2014
G J Dunne
600,000 300,000 150,000 150,000
150,000
75,000 37,500 37,500
120,000
60,000 30,000 30,000
130,000
65,000 32,500 32,500
C C Hall
M L Hunt
18 Dec
2014
18 Dec
2014
120,000
60,000 30,000 30,000
130,000
65,000 32,500 32,500
0
0
0
0
0
0
30 Sept
2017
30 Sept
2017
30 Sept
2017
30 Sept
2017
30 Sept
2017
30 Sept
2017
Tranche
1
– Fair
Value
Per
option
Tranche
2 and 3
– Fair
Value
Per
option
Expensed
at
30 Sept
2015 ($)
Options %
of remun-
eration
Fair
Value
at grant
date
Exercise
Price
0.500
0.757
1.70
125,700
7%
377,100
0.500
0.757
1.70
31,425
5%
94,275
0.500
0.757
1.70
25,140
6%
75,420
0.500
0.757
1.70
27,235
6%
81,705
0.500
0.757
1.70
25,140
6%
75,420
0.500
0.757
1.70
27,235
6%
81,705
Note: Fair value is used to calculate the value of performance options when granted. The fair value at Grant Date is independently determined using
Monte Carlo simulation techniques which take into account the exercise price, the term of the rights, the share price at grant date and expected
price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the options.
Table 15. Current long-term incentive plan opportunities (by offer) – Performance rights plan ELTIRP
Granted
performance
rights
(number)
Vested
performance
rights
(number)
Grant
date
Lapsed
performance
rights
(number) Tranche(s)
Value per
right at
grant date
($)
Total
value at
grant date
($)
Vesting,
last exercise
and expiry
date
Expensed
at 30
Sept 2015
($)
Performance
rights %
of remun-
eration
2015
R I Davey
J H Cornish 23 Dec
2011
23 Dec
2011
23 Dec
2011
0
G J Dunne
C C Hall
M L Hunt
0
15,000
7,500
15,000
0
0
0
0
0
0
0
10,000
5,000
10,000
3
3
3
0
0
0.15 to 0.16
15,150
0.15 to 0.16
11,350
0.15 to 0.16
15,150
0
0
9 Nov
2015
9 Nov
2015
9 Nov
2015
0
0
2,824
1,342
2,790
0
0
1%
0%
1%
0%
0%
Granted
performance
rights
(number)
Vested
performance
rights
(number)
Grant
date
Lapsed
performance
rights
(number) Tranche(s)
Value per
right at
grant date
($)
Total
value at
grant date
($)
Vesting,
last exercise
and expiry
date
Expensed
at 30 Sept
2014
($)
Performance
rights %
of remun-
eration
2014
J H Cornish 23 Dec
2011
29 June
2011
R I Davey
23 Dec
2011
29 June
2011
G J Dunne 23 Dec
2011
29 June
2011
0
C C Hall
M L Hunt
0
15,000
30,760
7,500
12,263
15,000
29,245
0
0
0
0
0
0
0
0
0
0
5,000
2, 3
0.15 to 0.16
15,150
20,507
3
0.21 to 0.24
46,141
2,500
2, 3
0.15 to 0.16
11,350
9 Nov 2014
to 9 Nov 2015
10 Nov 2014
9 Nov 2014
to 9 Nov 2015
8,175
3
0.21 to 0.24
18,395 10 Nov 2014
11,800
4%
5,196
1%
5,000
2, 3
0.15 to 0.16
19,497
3
0
0
0.21 to 0.24
0
0
15,150
9 Nov 2014
to 9 Nov 2015
43,868 10 Nov 2014
11,458
7%
0
0
0
0
0%
0%
continued over page >
49 continued from previous page >
2014
M G
Jackman
H S
Browning
Grant
date
10 Nov
2009
10 Nov
2009
10 Nov
2009
10 Nov
2009
10 Nov
2009
10 Nov
2009
23 Dec
2011
29 June
2011
Granted
performance
rights
(number)
Vested
performance
rights
(number)
Lapsed
performance
rights
(number) Tranche(s)
Value per
right at
grant date
($)
Total
value at
grant date
($)
Vesting,
last exercise
and expiry
date
Expensed
at 30 Sept
2014
($)
Performance
rights %
of remun-
eration
28,560
29,295
29,295
27,826
27,826
27,826
20,000
30,555
0
0
0
0
0
0
0
0
28,560
29,295
29,295
27,826
27,826
27,826
3
2
3
1
2
3
0.12
34,130
0.12
33,836
0.12
35,008
(see note)
(75,884)
0%
0.11
30,052
0.12
32,138
0.12
33,251
20,000
2,3
30,555
3
0.15 to
0.16
0.21 to
0.24
30,267
(see note)
(31,548)
0%
45,833
Note: The 2014 performance rights have been restated to reflect the consolidated number of 10 shares to 1 share.
Details of the performance rights in Tranche 3 of the 2010 senior executive grant and Tranche 2 of the 2011 senior executive grant that lapsed are provided in Section 4.E2.
No other performance rights lapsed and no performance rights were exercised during the 2015 financial year.
All unvested performance rights held by Messrs Jackman and Browning lapsed when they ceased employment with Elders.
Table 16. Long term incentive rights/options held by MD & CEO and senior executives
(Number)
2015
M C Allison
R I Davey
J H Cornish
G J Dunne
C C Hall
M L Hunt
Total
Balance at
beginning of period
Rights /options
exercised
Rights/options
granted
Rights/Options
lapsed/forfeited
Balance at
end of period
Vested at
end of period
0
9,088
20,254
19,749
0
0
49,091
0
0
0
0
0
0
0
600,000
150,000
120,000
130,000
120,000
130,000
0
6,588
15,254
14,749
0
0
600,000
152,500
125,000
135,000
120,000
130,000
1,250,000
36,591
1,262,500
0
0
0
0
0
0
0
Note: All rights/options reflect actual holdings following the share consolidation of 10 shares consolidated into 1 share as approved at the AGM on 18 December 2014.
Table 17. Loans to and transactions with Key Management Personnel
2015
C Hall
Type of transaction
Purchase of product through Elders
Providing agistment services of cattle to Elders
Live Export as Director of Tazach Trading Pty Ltd
Purchase of insurance through Elders Insurance
M Hunt
Purchase of product through Elders
as Director of Moonaree Pastoral Co Pty Ltd
Purchase of insurance through Elders Insurance
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
D W Goodfellow
Purchase of product through Elders under
DW & AM Goodfellow and Koranui Pty Ltd
Aggregate amount
paid to Elders
(inc GST unless stated)
Aggregate amount
paid by Elders
(inc GST unless stated)
$75,897
$7,018
$1,930
$33,196
$6,271
Aggregate amount
paid to Elders
(inc GST unless stated)
Aggregate amount
paid by Elders
(inc GST unless stated)
$407
$9,091
excl GST
$99,983
$15,500
excl GST
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 2014 or 2015 financial years.
Elders. Live it.Annual Report 201550 ELDERS LIMITED
Annual
Financial
Report
For the year ended 30 September 2015
Live it.
Elders Limited
ANNUAL FINANCIAL REPORT
For the year ended 30 September 2015
Consolidated Statement of Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Cash Flows
Consolidated Statement of Changes in Equity
Notes to the Consolidated Financial Statements
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
53
54
55
56
57
57
57
63
64
65
67
68
69
69
69
70
71
72
72
73
74
74
75
75
76
76
77
77
78
79
80
83
83
84
85
89
90
91
91
92
Elders. Live it.Annual Report 201552
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2015
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.
Note
2015
$000
2014
$000
4
4
4
4
5
32
19
29
29
29
29
29
29
1,514,217
1,431,540
(1,213,928)
(1,152,892)
300,289
278,648
522
498
(211,595)
(214,060)
(43,454)
(11,339)
(7,484)
26,939
13,116
40,055
-
40,055
(37,502)
(23,189)
1,661
6,056
14,402
20,458
(15,103)
5,355
564
(2,310)
-
-
564
40,619
1,768
38,287
40,055
1,768
38,851
40,619
46.4¢
33.8¢
46.4¢
33.8¢
399
(128)
(2,039)
3,316
2,373
2,982
5,355
2,497
819
3,316
5.9¢
2.3¢
37.4¢
14.8¢
-
-
(31.6)¢
(31.6)¢
53
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 30 September 2015
Current assets
Cash and cash equivalents
Trade and other receivables
Livestock
Inventory
Current tax assets
Total current assets
Non current assets
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
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
5
7(b)
9
10
11
12
5
13
14
15
5
15
16
17
18
19
2015
$000
2014
$000
669
349,433
45,912
100,304
197
22,477
302,137
41,123
84,817
743
496,515
451,297
5,969
1,269
4,088
28,658
5,615
35,619
81,218
577,733
276,157
136,822
43,874
4,588
1,269
5,877
25,750
5,615
20,616
63,715
515,012
249,677
160,103
36,572
456,853
446,352
819
8,432
9,251
1,116
10,514
11,630
466,104
457,982
111,629
57,030
1,323,284
1,277,813
107,600
145,151
(19,307)
(20,069)
(1,301,213)
(1,347,225)
110,364
55,670
1,265
1,360
111,629
57,030
Elders. Live it.Annual Report 201554
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 September 2015
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
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 disposal of controlled entity
Repayment of loans by associated entities
Net investing cash flows
Cash flow from financing activities
Proceeds from issue of shares
Share issue costs
Proceeds from borrowings
Repayment of borrowings
Hybrid equity repurchased
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.
Note
2015
$000
2014
$000
5,353,329
4,949,295
(5,343,564)
(4,912,289)
508
(9,866)
(4,645)
(1,040)
(5,278)
4,901
(22,649)
(3,076)
(1,127)
15,055
21(a)
(6,967)
(2,455)
-
-
600
313
-
-
(6,054)
18,454
38,271
10,994
97
24,067
4,282
93,710
47,095
(2,376)
-
10,238
(408)
13,158
(23,281)
(146,361)
(30,051)
(1,863)
-
(2,842)
(10,476)
(126,215)
(21,808)
(17,450)
22,477
669
39,927
22,477
21(b)
55 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2015
$000
As at 1 October 2014
Profit/(loss) for the period
Other comprehensive income/(loss):
Foreign currency translation
Total comprehensive income/(loss) for the period
Transactions with owners in their capacity as owners:
Shares issued
Transaction costs on share issue
Tax effect on share issue costs
Partnership profit distributions/dividends paid
Hybrid equity repurchased
Cost of share based payments
Reallocation of equity
As at 30 September 2015
Issued
capital
Hybrid
equity
Reserves
Retained
earnings
Non-
controlling
interest
Total
equity
1,277,813
145,151
(20,069)
(1,347,225)
1,360
57,030
-
-
-
47,095
(2,376)
752
-
-
-
-
-
-
-
-
-
-
-
(30,051)
-
(7,500)
-
38,287
1,768
40,055
564
564
-
-
564
38,287
1,768
40,619
-
-
-
-
-
423
(225)
-
-
-
-
-
-
7,725
-
-
-
47,095
(2,376)
752
(1,863)
(1,863)
-
-
-
(30,051)
423
-
1,323,284
107,600
(19,307)
(1,301,213)
1,265
111,629
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
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
1,269,153
145,151
(21,825)
(1,350,520)
4,241
46,200
-
-
-
-
-
10,238
(408)
(1,170)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,982
2,373
5,355
(2,434)
399
(128)
-
-
-
124
(2,310)
-
-
399
(128)
(2,163)
2,982
2,497
3,316
-
-
-
-
4,285
(53)
(313)
-
-
-
-
-
-
313
-
-
-
10,238
(408)
(1,170)
(2,842)
(2,842)
(2,536)
1,749
-
-
(53)
-
1,277,813
145,151
(20,069)
(1,347,225)
1,360
57,030
The accompanying notes form an integral part of this consolidated statement of changes in equity.
Elders. Live it.Annual Report 201556
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 1 – Corporate Information
The consolidated financial report of Elders Limited for the year ended 30 September 2015 was authorised for issue in accordance with
a resolution of the Directors on 16 November 2015. 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
2015 and have been applied in preparing these consolidated financial statements. None of these have materially impacted
Elders and its policies:
• AASB 1031 Materiality
• AASB 132 Financial Instruments: Presentation (AASB 2012-3 Amendments – Offsetting Financial Assets and Financial
Liabilities)
• AASB 136 Impairment of Assets (AASB 2013-3 Amendments – Recoverable Amount Disclosures for Non-Financial Assets)
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 2015 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 AASB 15
Revenue from Contracts with Customers 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 2015. 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.
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.
57
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 2 – Summary of Significant Accounting Policies
(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 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.
(i) Inventory
Inventories are valued at the lower of cost and net realisable value. Costs are assigned to individual items of inventory
predominately on the basis of weighted average cost. Net realisable value is the estimated selling price in the ordinary course of
business less 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.
Elders. Live it.Annual Report 201558
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 2 – Summary of Significant Accounting Policies
(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) Other financial assets
Other financial assets consist of unlisted investments held at historical cost and are classified as available for sale financial assets.
(n) Equity accounted investments
Elders’ equity accounted investments are accounted for using the equity method of accounting in the consolidated financial
statements and at cost in the parent. Equity accounted investments 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.
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 equity accounted investments.
(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. 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
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.
59
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 2 – Summary of Significant Accounting Policies
(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.
(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.
Elders. Live it.Annual Report 201560
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 2 – Summary of Significant Accounting Policies
(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.
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
high quality corpoate 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.
61
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 2 – Summary of Significant Accounting Policies
(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).
(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 equity accounted
investments 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 equity accounted investments 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 equity accounted investments,
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.
Elders. Live it.Annual Report 201562
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
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 various other 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 are used as sources of information to assess for
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.
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 and considered against the remaining useful life. Adjustments to useful lives are made
when considered necessary.
63
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
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
Equity accounted profits
Discontinued operations
Other expenses
Gain on divested assets
Impairment of assets retained
Restructuring, redundancy and other fair value adjustments
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
Note
2015
$000
2014
$000
1,263,706
1,203,041
5,391
5,578
245,120
222,921
1,514,217
1,431,540
32
-
138,289
1,514,217
1,569,829
32
32
32
522
522
-
522
-
2,000
5,484
7,484
-
7,484
10,009
1,330
11,339
-
11,339
3,072
3,072
-
3,072
131,044
26,052
423
157,519
-
157,519
57,964
65
403
498
498
4,342
4,840
(2,243)
-
582
(1,661)
20,233
18,572
15,710
7,479
23,189
(30)
23,159
3,245
3,245
461
3,706
128,965
24,864
(53)
153,776
9,642
163,418
47,880
1,428
2,591
Elders. Live it.Annual Report 201564
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
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
2015
$000
(54)
(1,449)
14,619
13,116
2014
$000
(1,537)
(104)
16,197
14,556
Statement of changes in equity
Deferred income tax (expense)/benefit reported in equity
752
(1,298)
(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% (2014: 30%)
Adjustments in respect of current income tax of previous years
Share of equity accounted profits/(losses)
Recognition/(derecognition) of current period tax losses
Recognition/(derecognition) of net deferred tax asset
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
26,939
-
26,939
(8,082)
(1,449)
156
5,129
18,573
(1,211)
13,116
13,116
-
13,116
197
6,056
(15,257)
(9,201)
2,760
(104)
1,110
(3,316)
10,875
3,231
14,556
14,402
154
14,556
743
65 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 5 – Income Tax
Statement of
Financial Position
Statement of
Comprehensive Income
Deferred income tax liabilities
Revaluations of property to fair value
(694)
(740)
2015
$000
2014
$000
Shares in equity accounted investments
Exchange rates to fair value
Other
Gross deferred income tax liabilities
Deferred income tax assets
Losses available to offset against future taxable income
Provision for employee entitlements
Other provisions
Accrued expenditure
Deferred borrowing costs
Other capitalised expenses
Plant and equipment temporary differences
Derecognition of deferred tax assets
Other
Gross deferred income tax assets
Deferred income tax charge/(benefit)
-
-
(125)
(819)
7,299
11,209
5,192
1,111
54
9,928
648
-
178
35,619
-
-
(376)
(1,116)
-
10,481
4,159
1,112
377
14,709
798
2015
$000
(46)
-
-
(251)
(297)
(7,299)
(728)
(1,033)
1
323
4,710
150
2014
$000
(334)
(1,259)
(355)
(404)
(2,352)
-
278
3,879
915
2,207
(10,311)
1,532
(11,275)
(11,275)
(10,875)
255
20,616
77
(15,074)
(15,371)
(172)
(12,547)
(14,899)
Tax losses
Elders has tax losses for which no deferred tax asset is recognised in the statement of financial position of $239.7 million (2014:
$250.6 million) which are available indefinitely for offset against future taxable profits subject to continuing to meet relevant
statutory tests.
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.
Elders. Live it.Annual Report 201566
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 6 – Receivables
Current
Trade debtors
Allowance for doubtful debts
Amounts receivable from associated entities
Other receivables
Total current receivables
Movements in the allowance for doubtful debts – trade debtors
Opening balance of allowance for doubtful debts
Trade debts written off
Trade debts provided for during the year
Closing balance of allowance for doubtful debts
2015
$000
2014
$000
344,023
298,552
(5,236)
(6,631)
338,787
291,921
132
10,514
331
9,885
349,433
302,137
6,631
(1,798)
403
5,236
9,214
(5,174)
2,591
6,631
(i) Included in trade debtors is $73.1 million (2014: $62.6 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.
In some instances deferred terms in excess of 90 days are offered. A provision for impairment loss is recognised when there is
objective evidence that an individual trade receivable is impaired. An impairment loss of $0.4 million (2014: $2.6 million) has
been recognised by Elders. During the period, no individual amount within the impairment allowance is considered material.
The ageing analysis of trade debtors is as follows:
Current – within terms
Trade debtors past due but not considered impaired
1-30 days
31-60 days
61-90 days
+91 days
Trade debtors and past due and considered impaired
+91 days
Total trade debtors
Related party receivables
For terms and conditions of related party receivables refer to note 28.
268,895
183,494
58,329
86,839
3,602
2,784
5,177
4,629
3,090
13,869
5,236
6,631
344,023
298,552
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.
67
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 7 – Biological Assets
(a) Livestock
Current
Fair value at the end of the period
2015
$000
45,912
2014
$000
41,123
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. Where there are unobservable inputs for an asset or liability, these are classified as Level 3 Price Inputs.
At balance date 37,960 head of cattle (2014: 34,507) are included in livestock. This includes:
• 18,217 cattle held in Australia and New Zealand destined for the Chinese and Indonesian live export markets;
• 19,743 cattle held in Australia and Indonesia for feedlotting purposes.
Cattle are held for short term trading and feeding purposes, and at period end a fair value decrement of $1.8 million was recognised
(2014: $1.7 million increment).
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.
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.
(b) Plantations
Non current
Opening balance
Fair value at classification as held for use
Costs incurred in respect of forestry plantations
Fair value increment in period
Fair value at the end of the period
5,969
4,588
4,588
-
227
1,154
5,969
-
4,101
217
270
4,588
Elders. Live it.Annual Report 201568
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 7 – Biological Assets
Plantations are valued at fair value, using Level 3 Price Inputs. Where an asset or liability has unobservable inputs, these are
classified as Level 3 Price Inputs.
Effective net stocked area of forestry plantations at the end of the 2015 year was 2,537ha. Residual lease obligations are estimated to
be $1.7 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:
1.5% to 2.5%
11.0%
Between 4 to 6 years, depending upon year of establishment and current harvest schedule for the
individual property.
Current woodchip FOB price: $175 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.
NOTE 8 – Inventory
Current
Inventory – at net realisable value
Inventory write-downs recognised as an expense totalled $2.0 million (2014: $2.7 million).
NOTE 9 – Other Financial Assets
Non current
Unlisted investments
NOTE 10 – Equity Accounted Investments
2015
$000
2014
$000
100,304
84,817
1,269
1,269
Equity accounted investments
4,088
5,877
Share of profit:
Continuing operations
Discontinued operations
522
-
522
498
3,206
3,704
All equity accounted investments are Australian resident companies. During the period, a $2.0 million impairment was recognised
against the investment in Elders Financial Planning Pty Ltd. This was recognised in the operating segment titled ‘Other’.
During the prior period, Elders recognised equity accounted earnings from discontinued operations in relation to its investments in
Kilcoy Pastoral Company Limited and AWH Pty Ltd of $3.2m. The Company’s investments in these entities were also divested in the
prior period.
69
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 11 – Property, Plant and Equipment
Reconciliation of carrying amounts at beginning and end of period:
Non current
2015
Freehold
land
$000
Buildings
$000
Leasehold
improve-
ments
$000
Plant and
equipment
(owned)
$000
Plant and
equipment
(leased)
$000
Assets
under
construct-
ion
$000
Carrying amount at beginning of period
5,081
Additions
Disposals
Depreciation expense
Impairment
Exchange fluctuations
Transfers from assets under construction
Other
-
(5)
-
-
286
-
-
7,123
867
(9)
(576)
-
95
-
-
3,357
3,793
(55)
(669)
(258)
-
-
-
9,126
1,640
(730)
(1,616)
(344)
33
238
195
Carrying amount at end of period
5,362
7,500
6,168
8,542
Cost
5,362
14,198
11,461
26,974
Accumulated depreciation and
impairment
-
(6,698)
(5,293)
(18,432)
825
315
-
(211)
-
-
-
(195)
734
1,076
(342)
Total
$000
25,750
6,967
(799)
(3,072)
(602)
414
-
-
238
352
-
-
-
-
(238)
-
352
28,658
352
59,423
-
(30,765)
5,362
7,500
6,168
8,542
734
352
28,658
2014
Carrying amount at beginning of period
6,425
11,434
5,471
10,731
Additions
Disposals
-
-
316
(9)
Disposals through entities sold
(592)
(3,093)
129
(98)
(10)
1,772
(168)
(1,161)
Depreciation expense
-
(798)
(1,050)
(1,701)
Impairment
Exchange fluctuations
Transfers from assets under construction
Other
(812)
(1,096)
(1,085)
(869)
60
-
-
30
-
339
-
-
-
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
Accumulated depreciation and
impairment
-
(6,428)
(5,875)
(20,084)
1,022
(197)
238
58,334
-
(32,584)
5,081
7,123
3,357
9,126
825
238
25,750
During the period, $0.5 million of impairments were recognised as a result of exit costs associated with the head office relocation.
This was recognised in the operating segment titled ‘Other’.
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.
Elders. Live it.Annual Report 201570 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 12 – Brand Name
Brand Name
(a) Description of Elders Brand Name
2015
$000
5,615
2014
$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 the 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 11.0% pre-tax (2014: 13.2% 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 or reversal in the current year in relation to the brand name.
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 from financial year 2015 levels due to:
•
Increased retail sales and margins through comprehensive branch improvement plans, price book management and
consolidation of supplier base.
• Successful implementation of growth strategies in both Real Estate and Banking portfolios.
• Higher Live Export margins through increased availability of shipping.
Selling, general and administrative expenses
Ongoing emphasis on cost control will be offset by investment directly linked to margin improvement and control enhancement,
including implementation of remuneration models which drive performance and growth.
Growth rate estimates
Cash flows are based on the 2016 budget. No EBIT growth for years 2 to 5 or perpetuity has been incorporated in the discounted
cash flow.
Discount rates
Discount rates reflect management’s estimate of the time value of money and the specific risk 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 36% across all years of the discounted cash flow model could result in
an impairment; or
• an increase in the discount rate by more than 6.3%, could result in impairment.
71
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 13 – Trade and Other Payables
Current
Trade creditors
Other creditors and accruals
2015
$000
2014
$000
258,715
226,583
17,442
23,094
276,157
249,677
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
15,000
34,050
121,468
125,631
354
422
136,822
160,103
The Company also has an ancillary facility in relation to contingent funding, such as bank guarantees. As at 30 September 2015,
$4.2 million had been issued.
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.
Fair value
The carrying value of interest bearing liabilities approximates fair value.
Elders. Live it.Annual Report 201572
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 15 – Provisions
Reconciliation of carrying amounts at beginning and end of period:
Employee
entitle-
ments
$000
Restruct-
uring and
redundancy
$000
Make
good
$000
Onerous
contracts
$000
Other
$000
Total
$000
34,944
7,230
(4,496)
-
291
37,969
34,742
3,227
37,969
39,563
17,130
(300)
369
-
(1,342)
2015
As at beginning of period
Arising during year
Utilised
Unused amounts reversed
Discount rate adjustment
Disclosed as:
Current
Non current
Total
2014
As at beginning of period
Arising during year
Utilised
Unused amounts reversed
Discount rate adjustment
Provisions transferred to held for sale liabilities
Disposals of controlled entities
Other
Disclosed as:
Current
Non current
Total
600
917
(338)
(262)
-
917
917
-
917
1,769
2,003
(155)
(140)
126
3,603
3,603
-
9,328
1,625
445
294
47,086
12,069
(3,555)
(295)
(8,839)
-
2,046
9,444
4,239
5,205
(71)
-
(473)
2,463
373
52,306
373
43,874
-
8,432
3,603
9,444
373
52,306
30,009
4,469
6,531
(20,476)
(23,610)
(3,275)
(2,829)
600
-
750
-
-
(100)
229
-
-
-
440
1,329
-
(2,995)
(2,463)
281
-
-
7,974
9,328
3,388
5,940
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
36,572
-
10,514
1,769
9,328
445
47,086
-
(3,874)
34,944
600
1,769
31,699
3,245
34,944
600
-
600
73
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 16 – Contributed Equity
Issued and paid up capital
2015
$000
2014
$000
83,734,671 ordinary shares (September 2014: 523,265,328)
1,323,284
1,277,813
The movement in the dollar balance of share capital is a result of:
• A $47.1 million increase as a result of placement of 313,967,179 pre-consolidated shares on 14 October 2014. Associated costs
totalled $2.4m; and
• A $0.7 million increase due to the tax effect of equity raising costs incurred.
On 14 October 2014, Elders issued 313,967,179 shares under a 3 for 5 non renounceable entitlement offer as described above.
On 18 December 2014, Elders’ ordinary shareholders approved a resolution to consolidate every 10 shares into 1 share. The total
number of shares on issue following completion of the entitlement offer and consolidation is 83,734,671.
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
107,600
145,151
1,500,000 perpetual, subordinated, convertible unsecured notes (“Hybrids”) were issued in April 2006 at $100 each. If distributions
are resolved, they 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.
On 18 August 2015, Elders’ wholly owned subsidiary, Elders Finance Pty Ltd, purchased 375,000 Hybrids at a price of $80 each,
being total consideration of $30m. The 375,000 Hybrids acquired by Elders Finance Pty Ltd remain on issue and have not been
redeemed. As a result of this transaction, the Hybrid equity balance held on balance sheet has declined by $37.5m being the face
value of the Hybrids purchased. The difference between the face value and the purchase price, totalling $7.5m, has been transferred
to retained earnings.
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.
Elders. Live it.Annual Report 201574
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 18 – Reserves
Reconciliation of carrying amounts at beginning and end of period:
2015
Carrying amount at beginning of period
Foreign currency translation
Cost of share based payments
Transfer to retained earnings
Business
combination
reserve
$000
(16,228)
-
-
-
Carrying amount at end of period
(16,228)
261
-
423
(225)
459
2014
Carrying amount at beginning of period
(16,503)
627
Foreign currency translation
Non-controlling interest share of movement
-
-
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)
-
-
-
-
-
(53)
(313)
261
Employee
equity
benefits
reserve
$000
Foreign
currency
translation
reserve
$000
Net
unrealised
gains
reserve
$000
Total
$000
(20,069)
564
423
(225)
(19,307)
-
-
-
-
-
(271)
(21,825)
-
-
-
399
(128)
-
-
-
(2,310)
(124)
4,285
399
(128)
(53)
(313)
(20,069)
(4,102)
564
-
-
(3,538)
(5,678)
(2,310)
(124)
4,010
-
-
-
-
(4,102)
Nature and purpose of reserves
(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.
NOTE 19 – Retained Earnings
Retained earnings at the beginning of the financial year
Net profit/(loss) attributable to owners of the parent
Transfer from employee equity benefits reserve
Retirement of hybrid equity
Retained earnings at the end of the financial year
2015
$000
2014
$000
(1,347,225)
(1,350,520)
38,287
2,982
225
7,500
313
-
(1,301,213)
(1,347,225)
75
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 20 – Dividends
No dividends are proposed to be paid or were paid during the year (2014: Nil).
Subsidiary equity dividends on ordinary shares:
Dividends paid to non-controlling interests during the year
Franking credits available to the parent for subsequent financial years based on tax rate of
30% (2014: 30%)
2015
$000
1,863
20,740
2014
$000
2,842
19,690
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 Reconcilliation
(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 equity accounted profit
Dividends from equity accounted investments
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
(b) Cash and cash equivalents
Cash at bank and in hand
40,055
5,355
3,072
(522)
311
1,554
3,330
2,602
403
7,521
6,538
1,955
486
-
(15,003)
(297)
546
1,175
53,726
(57,649)
(17,442)
16,087
(5,278)
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
(37,332)
15,055
669
22,477
Elders. Live it.Annual Report 201576
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 22 – Expenditure Commitments
Operating leases 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
NOTE 23 – Contingent Liabilities
2015
$000
2014
$000
56,815
82,072
8,591
43,404
47,722
9,522
147,478
100,648
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
4,169
32,237
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 75.5% 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.
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.
77
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 24 – Segment Information
Identification of reportable segments
Elders has identified its operating segments to be Network, Feed and Processing, Live Export 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 breeding cattle and sheep from Australia
and New Zealand to international markets by sea or air freight.
• The Other segment includes the general investment activities not associated with the other business segments and the
administrative corporate office activities, including centrally held costs not allocated to the other segments.
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 Other segment to reflect changes in internal
reporting. The comparative segment information has been restated to reflect these changes.
2015
External sales
Equity accounted profits
Total revenue
Earnings before interest, tax, depreciation &
amortisation
Depreciation & amortisation
Segment result
Corporate net interest expense
Profit/(loss) from ordinary activities before tax
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
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
Network
$000
Feed and
Processing
$000
Live Export
$000
Other
$000
1,174,939
141,465
197,813
580
-
(58)
1,175,519
141,465
197,755
-
-
-
Total
$000
1,514,217
522
1,514,739
77,357
9,298
5,242
(50,547)
41,350
(1,856)
75,501
(821)
8,477
(4)
(391)
(3,072)
5,238
(50,938)
38,278
(11,339)
26,939
75,501
8,477
5,238
(50,938)
38,278
(11,339)
26,939
437,817
52,961
31,496
55,459
577,733
246,107
191,710
4,088
1,360
(4,147)
(486)
2,858
50,103
-
1,534
-
-
2,557
214,582
466,104
28,939
(159,123)
111,629
-
147
(3,484)
-
3,926
(1,982)
4,088
6,967
(9,613)
-
-
(486)
Elders. Live it.Annual Report 201578
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 24 – Segment Information
2014
External sales
Other revenues
Equity accounted profits
Total revenue
Earnings before interest, tax, depreciation &
amortisation
Depreciation & amortisation
Segment result
Corporate net interest expense
Profit/(loss) from ordinary activities before tax
Segment result
Discontinued operations results
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
Carrying value of equity investments
Acquisition of non current assets
Non cash income/(expense) other than
depreciation and amortisation
Network
$000
1,111,314
1,136
2,876
Feed and
Processing
$000
Live Export
$000
Other
$000
Total
$000
188,843
205,982
63,690
1,569,829
-
828
-
-
-
-
1,136
3,704
1,115,326
189,671
205,982
63,690
1,574,669
45,779
11,486
(822)
(38,779)
17,664
(1,934)
43,845
(1,121)
10,365
-
(651)
(822)
(39,430)
43,845
12,799
56,644
10,365
(6,250)
4,115
(822)
(39,430)
-
8,738
(822)
(30,692)
373,329
202,672
170,657
5,877
1,761
(25,617)
41,540
6,249
35,291
-
822
1,738
62,785
231,300
(168,515)
-
212
37,358
17,761
19,597
-
92
-
-
(3,706)
13,958
(23,159)
(9,201)
13,958
15,287
29,245
(23,189)
6,056
515,012
457,982
57,030
5,877
2,887
(16,196)
(40,075)
(5,693)
6,295
2015
$
2014
$
581,866
860,296
157,538
118,014
131,764
161,472
857,418
1,153,532
35,973
35,973
-
-
Profit/(loss) on sale of non current assets and
controlled entities
6,145
5,843
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
79
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 26 – Investment in Controlled Entities
(a) Schedule of controlled entities
Acehill Investments Pty Ltd
Agsure Pty Ltd
Country of
Incorporation
Australia
Australia
AI Asia Pacific Operations Holding Limited
Hong Kong SAR
Air International Asia Pacific Operations Pty Ltd
Australia
Air International Vehicle Air Conditioning (Shanghai) Co Ltd
China
Albany Woolstores Pty Ltd
APO Administration Limited
APT Finance Pty Ltd
APT Forestry Pty Ltd
APT Nurseries Pty Ltd
APT Projects Pty Ltd
Argo Trust No. 2
Ashwick (Vic) No 102 Pty Ltd
Australian Plantation Timber Pty Ltd
B & W Rural Pty Ltd
BWK Holdings Pty Ltd
Carbon Bid Co Pty Ltd
Elders Victorian Feedlot Pty Ltd
Elders Automotive Group Pty Ltd
Elders Burnett Moore WA Pty Ltd
Elders China Trading Company
Elders Communications Pty Ltd
Elders Esperance Woodchip Terminal Pty Ltd
Elders Finance Pty Ltd
Elders Fine Foods (Shanghai) Company
Elders Forestry Finance Pty Ltd
Elders Forestry Holdings Pty Ltd
Elders Forestry Land Holdings Pty Ltd
Elders Forestry Management Ltd
Elders Forestry Pty Ltd
Elders Global Wool Holdings Pty Ltd
Elders International Australia Pty Ltd
Elders Management Services Pty Ltd
Elders Merchandise Limited
Elders Mortgage Brokers Pty Ltd
Elders PT Indonesia
Elders Real Estate (Qld) Pty Ltd
Elders Real Estate (Tasmania) Pty Ltd
Elders Real Estate (WA) Pty Ltd
Elders Real Estate Ltd
Elders Rural Holdings Limited
Australia
Hong Kong SAR
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
China
Australia
Australia
Australia
China
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
Australia
Indonesia
Australia
Australia
Australia
New Zealand
New Zealand
(f)
(a)
(f)
(h)
(e)
(h)
(h)
(h)
(f)
(g)
(f)
(c)
(h)
(f)
(f)
(h)
(a)
(h)
(a)
(f)
(f)
(f)
(f)
(f)
% Held by Group
2015
2014
100
100
100
100
100
-
100
-
-
-
100
100
100
100
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
100
100
100
100
100
100
100
100
100
100
100
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
50
Elders. Live it.Annual Report 201580
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 26 – Investment in Controlled Entities
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 Wool International Pty Ltd
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.
Gisborne Farmers Ltd
ITC Portland Woodchip Terminal Pty Ltd
ITC Timberlands 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
Masterfund (WA) Pty Ltd
New Ashwick Pty Ltd
North Australian Cattle Company Pty Ltd
Prestige Property Holdings Pty Ltd
Primac Exports Pty Ltd
Primac Pty Ltd
PT Indo Mahesa Surya
Redray Enterprises Pty Ltd
Sydney Woolbrokers Limited
Ultrasound Australia Pty Ltd
Victorian Producers Co-operative Company Pty Ltd
VPC Superannuation Fund Pty Ltd
WA Bid Co Pty Ltd
Country of
Incorporation
Australia
Australia
Australia
New Zealand
Australia
Australia
Australia
New Zealand
Australia
Mexico
Australia
Mexico
New Zealand
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Indonesia
Australia
Australia
Australia
Australia
Australia
Australia
(a)
(f)
(h)
(f)
(f)
(f)
(h)
(h)
(a)
(f)
(f)
(f)
(a)
(f)
(f)
(f)
(h)
(a)
(f)
(h)
(h)
% Held by Group
2015
2014
100
100
100
100
-
100
100
100
100
100
100
100
100
-
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
-
-
100
100
100
100
100
100
100
50
100
100
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
53
100
100
100
100
• 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.
81 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 26 – Investment in Controlled Entities
(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:
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
Net profit for the period
Total comprehensive income for the period
Retained earnings at the beginning of the period
Impact of entities exiting or joining closed group
Transfers to and from reserves
Retained earnings at the end of the period
Consolidated statement of financial position of the Closed Group
Current assets
Cash and cash equivalents
Trade and other receivables
Livestock
Inventories
Total current assets
Non current assets
Other financial assets
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
Total liabilities
Net assets
Equity
Contributed equity
Hybrid equity
Reserves
Retained earnings
Total equity
2015
$000
38,756
-
38,756
38,756
38,756
2014
$000
(27,511)
3,121
(24,390)
(24,390)
(24,390)
(1,366,195)
(1,369,468)
-
7,725
27,350
313
(1,319,714)
(1,366,195)
1,396
11,991
-
24,763
38,150
93,789
7,033
100,822
138,972
5,430
19,958
1,955
27,343
27,343
111,629
4,503
26,505
18,957
6,317
56,282
60,682
6,672
67,354
123,636
18,980
46,215
1,411
66,606
66,606
57,030
1,323,284
1,277,813
107,600
459
145,151
261
(1,319,714)
(1,366,195)
111,629
57,030
Elders. Live it.Annual Report 201582
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
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
2015
$
2014
$
4,359,029
3,394,703
56,672
(126,811)
159,967
129,692
-
1,766,181
268,831
(94,484)
4,844,499
5,069,281
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
There are no balances or transactions between the parent entity and related parties in the wholly owned group.
(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
Balances with controlled entities not wholly owned:
Owing to the Group
Owing from the Group
2015
$000
(1,621)
1,951
4,386
-
4,386
2014
$000
(3,937)
2,917
4,056
(654)
3,402
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 (equity accounted investments)
Transactions with partly owned entities:
Loan movements
Dividends received
Impairment of loans
Balances with partly owned entities:
Owing to the Group
(199)
311
-
132
132
(4,494)
3,765
(436)
331
331
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.
83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 29 – Earnings Per Share
Weighted average number of ordinary shares (‘000) used in calculating basic EPS
Dilutive hybrid equity (‘000)
Dilutive employee incentive rights (‘000)
2015
82,530
28,953
1,920
2014
50,935
77,985
-
Adjusted weighted average number of ordinary shares used in calculating dilutive EPS (‘000)
113,403
128,920
On 14 October 2014, Elders issued 313,967,179 shares under a 3 for 5 non renounceable entitlement offer. On 18 December 2014,
Elders’ ordinary shareholders approved a resolution to consolidate every 10 shares into 1 share. The total number of shares on issue
following completion of the entitlement offer and consolidation is 83,734,671. The weighted average number of ordinary shares as
described above has been adjusted to incorporate the effects of the issue and consolidation.
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)
38,287
2,982
Dilutive
Net profit/(loss) attributable to members (after tax)
38,287
2,982
2015
$000
2014
$000
Reported operations earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Continuing operations
Basic
Net profit/(loss) attributable to members (after tax)
Less: Net loss/(profit) of discontinued operations (net of tax)
Net profit/(loss) of continuing operations (net of tax)
Dilutive
46.4 ¢
33.8 ¢
5.9 ¢
2.3 ¢
38,287
-
38,287
2,982
16,084
19,066
Net profit/(loss) of continuing operations (net of tax)
38,287
19,066
Continuing operations earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
Discontinued operations
46.4 ¢
33.8 ¢
37.4 ¢
14.8 ¢
Net profit/(loss) of discontinued operations (net of tax)
-
(16,084)
Discontinued operations earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
- ¢
- ¢
(31.6)¢
(31.6)¢
Elders. Live it.Annual Report 201584 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
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 September 2015 interest on $80 million of secured loans was hedged under a floating to fixed arrangement, meaning 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
Net exposure
2015
$000
2014
$000
669
132
801
22,477
331
22,808
(56,468)
(159,681)
(56,468)
(159,681)
(55,667)
(136,873)
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 2015, if interest rates had moved as illustrated in the table below, with all other variables held constant, post tax
profit and equity would have been affected as follows:
+ 100 basis points
- 100 basis points
Post Tax Profit/equity
Higher/(Lower)
2015
$000
(557)
557
2014
$000
(1,369)
1,369
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 30 – Financial Instruments
(b) Liquidity risk
Liquidity risk arises from Elders’ financial liabilities and the subsequent ability to meet our obligations to repay 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. Elders 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 2015. 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.
Carrying
amount
$000
Contractual
cash flows
$000
6 months
or less
$000
6-12
months
$000
1-5 years
$000
2015
Non derivative financial assets:
Cash and cash equivalents
669
669
669
Trade and other receivables
354,669
354,669
354,669
355,338
355,338
355,338
Non derivative financial liabilities:
Interest bearing loans and borrowings
(136,822)
(136,881)
(136,881)
Trade and other payables
(276,157)
(276,157)
(276,157)
Financial guarantees
-
(4,169)
(4,169)
Net inflow/(outflow)
(57,641)
(61,869)
(61,869)
(412,979)
(417,207)
(417,207)
2014
Non derivative financial assets:
Cash and cash equivalents
22,477
22,477
22,477
Trade and other receivables
308,768
308,768
308,768
331,245
331,245
331,245
Non derivative financial liabilities:
Interest bearing loans and borrowings
(160,103)
(160,757)
(160,757)
Trade and other payables
(249,545)
(249,545)
(249,545)
Financial guarantees
-
(32,237)
(32,237)
Net inflow/(outflow)
(78,403)
(111,294)
(111,294)
(409,648)
(442,539)
(442,539)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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 Elders at balance date. Net settled derivative liabilities comprise forward exchange and interest rate hedges.
Elders. Live it.Annual Report 201586
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 30 – Financial Instruments
2015
Derivative assets – net settled
Total inflow/(outflow)
2014
Derivative liabilities – net settled
Total inflow/(outflow)
Carrying
amount
$000
Contractual
cash flows
$000
6 months
or less
$000
6-12
months
$000
1-5 years
$000
238
238
(132)
(132)
238
238
(132)
(132)
238
238
(132)
(132)
-
-
-
-
-
-
-
-
(c) Credit risk
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
Derivative financial assets
Location of credit risk
Australia
Asia
Total gross receivables
(d) Foreign currency risk
2015
$000
669
2014
$000
22,477
354,431
308,768
238
-
355,338
331,245
347,787
302,455
6,882
6,313
354,669
308,768
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; and
• Costs of sale such as transportation and commission denominated in foreign currency.
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 2015, the Company had the following AUD exposures to foreign currencies that were
not designated in cash flow hedges:
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 30 – Financial Instruments
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
Financial liabilities
Payables – USD
Payables – CNY
Payables – IDR
Payables – other
Interest bearing loans and borrowings – USD
Net exposure
2015
$000
2014
$000
900
916
1,146
88
8,339
3,919
2,964
18,272
72
319
446
155
12,928
3,356
2,957
20,233
(1,435)
(3,229)
(96)
(827)
-
(4,958)
(7,316)
10,956
(587)
(906)
(98)
(12,166)
(16,986)
3,247
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)
2015
$000
(285)
(474)
(328)
(9)
2014
$000
240
(309)
(250)
(6)
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.
(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 as
follows:
Elders. Live it.Annual Report 201588
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 30 – Financial Instruments
2015
Valuation
technique
- market
observable
inputs
(Level 2)
$000
Valuation
technique –
non market
observable
inputs
(Level 3)
$000
Quoted
market price
(Level 1)
$000
2014
Valuation
technique
- market
observable
inputs
(Level 2)
$000
Valuation
technique –
non market
observable
inputs
(Level 3)
$000
Quoted
market price
(Level 1)
$000
-
-
-
238
-
238
-
-
-
-
-
-
-
(132)
(132)
-
-
-
Financial assets
Derivatives
Financial liabilities
Derivatives
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
During the current period no entities were disposed of.
Prior period disposals
Elders’ investments in Charlton Feedlot, New Zealand Network, Wool Trading and Vet Supplies were disposed of during the period. A
gain of $0.3m was recognised on the disposal of these investments.
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
NOTE 32 – Discontinued Operations
Financial period 30 September 2015
No operations are classified as discontinued during this period.
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.
Cont
2015
$000
Disc
2015
$000
Total
2015
$000
Cont
2014
$000
Disc
2014
$000
Total
2014
$000
Sales revenue
Cost of sales
Gross profit
Other revenues
Distribution expenses
Administration expenses
Other expenses
Profit/(loss) before borrowing costs and
tax expense
Finance costs
Profit/(loss) before tax expense
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
Revenue and expenses
Sales revenue:
Sale of goods and biological assets
Debtor interest associated with sales
Commission and other selling charges
Other expenses:
Write down of assets to be divested or
discontinued
Gain/(loss) on divested assets
Impairment of assets retained
Restructuring, redundancy and other fair
value adjustments
1,514,217
(1,213,928)
300,289
522
(211,595)
(43,454)
(7,484)
38,278
(11,339)
26,939
13,116
40,055
1,768
38,287
1,263,706
5,391
245,120
1,514,217
-
-
(2,000)
(5,484)
(7,484)
The net cash flow of the discontinued operations is as follows:
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Operating activities
Investing activities
Financing activities
Net cash inflow / (outflow)
1,514,217
1,431,540
138,289
1,569,829
(1,213,928)
(1,152,892)
(110,845)
(1,263,737)
300,289
278,648
522
498
27,444
4,342
306,092
4,840
(211,595)
(214,060)
(26,840)
(240,900)
(43,454)
(7,484)
38,278
(37,502)
1,661
29,245
(11,339)
(23,189)
26,939
13,116
40,055
1,768
6,056
14,402
20,458
1,392
-
(20,233)
(15,287)
30
(15,257)
154
(15,103)
981
(37,502)
(18,572)
13,958
(23,159)
(9,201)
14,556
5,355
2,373
38,287
19,066
(16,084)
2,982
1,263,706
1,203,041
131,424
1,334,465
5,391
5,578
245,120
222,921
371
6,494
5,949
229,415
1,514,217
1,431,540
138,289
1,569,829
-
-
(2,000)
(5,484)
-
(24,645)
(24,645)
2,243
-
(582)
4,412
-
-
6,655
-
(582)
(7,484)
1,661
(20,233)
(18,572)
2015
$000
2014
$000
-
-
-
-
604
87,853
(913)
87,544
Elders. Live it.Annual Report 201590 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2015
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
2015
$000
8,705
8,705
116
112,087
112,203
574
574
111,629
2014
$000
2,223
2,223
3,053
55,942
58,995
1,965
1,965
57,030
1,323,284
1,277,813
145,151
145,151
(1,357,265)
(1,366,195)
459
111,629
261
57,030
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
There is no matter or circumstance that has arisen since 30 September 2015 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.
91 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 2015 are in accordance with
the Corporations Act 2001, including:
(i) Giving a true and fair view of its financial position as at 30 September 2015 and of its performance for the year ended on
that date; and
(ii) Complying with Australian 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 2015.
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
Hutch Ranck
Chairman
Mark Allison
Managing Director
Adelaide
16 November 2015
Elders. Live it.Annual Report 201592 93 94 NOTES
95 ASX ADDITIONAL INFORMATION
(a) Distribution of Equity Securities as at 31 October 2015
No. of Ordinary Shares
No. of Ordinary Holders
No. of Hybrids
No. of Hybrid Holders
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – maximum
Total
3,433,935
10,252,206
6,135,341
19,851,433
44,061,756
83,734,671
8,530
4,391
806
763
51
14,541
The number of holders holding less than a marketable parcel
226,996
128,163
37,431
409,116
698,294
1,500,000
Ordinary Shares
1,606
972
61
5
10
3
1,051
Hybrids
5
(b) Voting rights
(i) Ordinary Shares: all ordinary shares carry one vote per share without restriction.
(ii) Elders Hybrids: Hybrids do not carry any voting rights under the Company’s Constitution.
(c) Stock Exchange quotation
The Company’s ordinary shares and Elders Hybrids are listed on the Australian Securities Exchange. The Home Exchange is Sydney.
(d) Twenty Largest Shareholders as at 30 October 2015
The twenty largest holders of Elders Ordinary Shares were as follows:
No. of Shares
% of Shares
National Nominees Limited
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Limited
BNP Paribas Noms Pty Ltd
Bell Securities Pty Limited
AMP Life Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
RBC Investor Services Australia Pty Limited
Brispot Nominees Pty Ltd
Venn Milner Superannuation Pty Ltd
Catholic Church Insurance Limited
Tintern (Vic) Pty Ltd
Brazil Farming Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
Elianaelysia Pty Ltd
Mr James Gardiner
Pacific Agrifoods Investments Pty Ltd
Mr Kwok Ching Chow + Ms Pik Yun Peggy Chan
RBC Investor Services Australia Nominees Pty Limited
7,104,888
6,727,230
4,823,226
4,485,300
2,596,938
2,394,675
1,917,490
1,563,287
1,350,646
1,125,860
1,000,000
615,000
583,952
550,000
423,087
404,272
400,000
335,456
310,000
281,372
8.49
8.03
5.76
5.36
3.10
2.86
2.29
1.87
1.61
1.34
1.19
0.73
0.70
0.66
0.51
0.48
0.48
0.40
0.37
0.34
Total
38,992,679
46.57
Total held by twenty largest ordinary shareholders as a percentage of this class is 46.57%
Elders. Live it.Annual Report 201596
The twenty largest holders of Elders Hybrids were as follows:
No. of Hybrids
% of Hybrids
Elders Finance Pty Ltd
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
J P Morgan Nominees Australia Limited
CS Fourth Nominees Pty Ltd
Hsbc Custody Nominees (Australia) Limited
Mr Robert Lee Petersen
Brazil Farming Pty Ltd
ABN AMRO Clearing Sydney Nominees Pty Ltd
Ayersland Pty Ltd
The Australian National University
National Nominees Limited
Mr Robert Lee Petersen
Mr Guthrie John Williamson
Equitas Nominees Pty Limited
Mr Robert Petersen
Tak Fuk Investment Pty Ltd
Mr Albert Hung + Mrs Tammy Hung
Mariejo Pty Ltd
National Nominees Limited
Total
375,000
197,092
126,202
96,453
74,602
59,160
54,349
28,000
23,775
22,004
20,000
19,666
11,107
10,000
9,081
6,800
6,275
5,275
5,000
5,000
25.00
13.14
8.41
6.43
4.97
3.94
3.62
1.87
1.59
1.47
1.33
1.31
0.74
0.67
0.61
0.45
0.42
0.35
0.33
0.33
1,154,841
76.99
Total held by twenty largest hybrid holders as a percentage of this class is 76.99%.
(e) There were no substantial shareholders listed on the Company’s register of substantial shareholders
as at 30 October 2015.
97
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.
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.
both old and new addresses and the
Securityholder Reference Number (SRN)
of the holding.
Change of address forms are available for
download from the Company’s website.
Alternatively, holders can amend their
details online 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 the Company’s
website.
Investor information
Information about the Company is
available from a number of sources:
Tax and dividend/interest
payments
Website
www.elderslimited.com
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 the Company’s website.
Change of address
Issuer Sponsored 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
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.
Elders. Live it.Annual Report 201598 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)
Ms Robyn Clubb BEc, CA, F Fin, MAICD
Secretaries
Mr Peter G Hastings BA LLB GDLP
Ms Nina M Abbey BSc, MMgt
Registered Office
Level 10, 80 Grenfell Street
Adelaide, South Australia, 5000
Telephone (08) 8425 4000
Facsimile (08) 8410 1597
Email CompanySecretary@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
Perpetual Trustee Company Limited
Level 12, 123 Pitt Street
Sydney, NSW 2000
Live it.