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Farm PrideFORAUSTRALIAN AGRICULTURE2021 EldersAnnual ReportElders Limited ABN 34 004 336 636 Contents
Chair's Report
CEO’s Report
Year in Brief
Operating and Financial Review
Review of Operations
Sustainability
Directors’ Report
Remuneration Report
Executive Management
Elders Limited Annual Financial Report
Shareholder Information
Company Directory
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2
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136
137
2
Elders 2021 Annual Report
Chair’s Report
Sustainability and community
Elders has committed to being an industry
leader in adopting the best governance and
sustainability standards practised in corporate
Australia. We published our first Sustainability
Report in 2020 and we have continued
to develop and implement our strategy
throughout the 2021 financial year.
Climate change is one of the most significant
challenges that we face. Action to address
climate change is not only a corporate
social responsibility, it is critical to ensure
the sustainability of Australian agribusiness
into the future. As an industry leader, we
acknowledge the role we play in leading
by example to accelerate the adoption
of sustainable farming practices throughout
Australia. We have committed to aggressively
and transparently reducing the greenhouse gas
emissions associated with our own activities to
net zero through a staged emissions reduction
plan. In addition, we are investing in developing
a carbon farming advisory capability that
will support Australian farmers to implement
carbon emission reduction strategies.
We will achieve full alignment of our climate
related disclosures with the recommendations
of the Taskforce on Climate-related Financial
Disclosures by the end of our third Eight
Point Plan (30 September 2023). Our second
Sustainability Report is available at
Elders Investor Centre.
We have also continued to invest into the
communities in which we operate through
direct financial support and job creation. We
also support organisations that provide critical
services to remote and rural communities
in Australia. The best example of this is
the extension of our commitment to the
Royal Flying Doctors Service (Central Division)
through a $300,000 contribution to its capital
raising program for the perennial upgrade of
its fleet of flying intensive care units. This is
an investment in the health and wellbeing of
the rural and regional communities that support
our teams and business every day.
People and safety
Our business is built on relationships and our
people are our most important asset.
We continue to support our people to
achieve their best. It was very pleasing to
receive the results from a detailed Korn Ferry
survey across our business which ranked the
engagement and enablement of our workforce
above the high performance benchmark. I
commend our leadership team for their ongoing
commitment to attracting and developing the
very best talent in our business, and positioning
Elders as an employer of choice in the
agricultural industry.
As our business continues to grow and our
team expands, the risk of workplace injury
increases. We have an unrelenting commitment
to the safety and wellbeing of our team. It is not
a priority, it is a prerequisite of everything that
we do. In 2021 three lost time injuries occurred
within the business. Whilst this represents
excellent safety performance, injuring any of
our people is an unacceptable outcome and
we maintain our resolve to achieving a no
injury workplace.
It is no secret that the Australian agricultural
industry has some way to go when it comes
to diversity. At Elders, we are working hard
to change this. Whether it’s in our branch
network or in our corporate offices, we are
taking conscious steps to bring the benefits
of a diverse workforce to our clients. We are
tackling this from the most junior levels of the
organisation through to our executive team and
Board. In FY21, the Elders graduate agronomy
program welcomed 9 graduates, 6 of the 9 new
agronomists were female and we increased
women in senior management positions by
3%. We have achieved an 80% increase
in representation of women in management
positions over the last 5 years.
In the face of unprecedented
global uncertainty, the
Australian agricultural
industry has continued
to provide Australians
with security whilst also
delivering its greatest
ever contribution to the
Australian economy.
Elders has played a
critical role in supporting
our primary producers to
achieve this all-time high
production value.
The outlook for the industry
remains overwhelmingly
positive. As the most trusted
partner of Australian primary
producers, we intend to
support them to capitalise
on this opportunity and to
grow our own business into
the future.
Chair's Report
3
Financial performance
Elders has delivered an exceptional financial
result in FY21, Our underlying net profit after
tax (NPAT) of $151.1 million is a 40% increase
on FY20’s decade high result. Underlying
earnings before interest and tax (EBIT) was
$166.5 million.
Key components of our Eight Point Plan
are to capture more margin through
optimised pricing, backward integration and
supply chain efficiency whilst winning more
market share through organic and acquisitive
growth initiatives. These ongoing business
improvement initiatives and the successful
integration of key strategic and bolt on
acquisitions have combined with favourable
seasonal and market conditions to deliver
outstanding growth. In doing so, we have
maintained our strong financial discipline,
delivering return on capital of 22.5%. The Elders
balance sheet continues to strengthen with net
assets of $778.6m, up $106.3m on last year,
whilst our gearing ratio fell from 47.2% to
38.6% and leverage from 2.0to 1.4 times.
The Board has declared a final dividend of
22 cents per ordinary share, taking dividends
for the year to 42 cents, partially franked at
4.4 cents.
Combined with share price growth from $10.85
to $12.23 through the reporting period, we
have delivered Total Shareholder Return (TSR)
of 14.6%.
Governance and culture
The Elders Corporate Governance Statement
outlines our commitment to compliance,
transparency, disclosure, and acting lawfully,
ethically and responsibly. Our One Elders
Values, including integrity, accountability,
teamwork, innovation and customer focus, are
put into action everyday by our people. They
are ingrained in our culture and symbolise what
it means to wear a pink shirt. This culture is
one of the key reasons Elders continues to be
ranked the most trusted agribusiness brand in
Australia according to independent research.
Elders is also proactively applying those
expectations and values to third parties who
we deal with. This year, along with the launch
of our first Modern Slavery Statement, we
launched our Ethical Contracting Framework
and Responsible Sourcing Code. This provides
an important framework to guide decision
making on procurement and third party
dealings having regard to ethical contracting,
human rights, environment and safety matters.
Acknowledgements
I would like to thank my fellow Directors for
their support and contribution throughout the
year. Welcome also to Raelene Murphy who
joined our Board in January 2021.
On behalf of the Board I would like to thank
the entire Elders team who have demonstrated
tremendous resilience to adapt and continue
to provide our clients with the highest
level of service in challenging circumstances.
Your relentless pursuit of excellence and
improvement in our business is delivering
significant value to our shareholders, who we
thank for their continued support.
Finally, thank you to our loyal customers. It is
an exciting time to be working in Australian
agriculture and we look forward to partnering
with you in 2022 as we continue to grow our
industry sustainably into the future.
Your Chair,
Ian Wilton
Chair
4
Elders 2021 Annual Report
CEO’s Report
Elders has delivered
an exceptional result
for shareholders and,
in partnership with our
customers, has played a
critical role in maintaining
the consistent supply
of quality Australian
agricultural products during
a period of continued
disruption and volatility.
Elders is, and will always be,
for Australian Agriculture.
Most trusted agribusiness brand
According to Roy Morgan brand trust research,
Elders has maintained its strong position as
the most trusted agribusiness brand in regional
Australia. Whilst this is an outcome that we are
extremely proud of, it is not a position we take
for granted. I commend all of our team for their
tireless commitment to delivering the very best
service and advice to our many customers day
in day out. It is this commitment to supporting
our customers to achieve their goals which
underpins the performance of our business and
our ongoing growth.
Exceptional financial performance
In FY21 our underlying net profit after-tax
(NPAT) was $151.1 million, an increase of 40%
to the prior corresponding period. Underlying
earnings before interest and tax (EBIT) was
$166.5 million, an increase of 38%.
We have seen growth across all of our
core product and geographic areas, with the
exception of our Feed and Processing business
which was challenged by higher cattle prices.
This excellent performance reflects the
methodical implementation of our Eight Point
Plan, coupled with strong seasonal and
market conditions. We have created significant
value through successfully executing and
integrating strategic acquisitions, including
strong contribution from our AIRR wholesale
business and numerous smaller high return
bolt on acquisitions. Our business improvement
initiatives are generating excellent results,
including our ongoing rural products backward
integration strategy and other margin
initiatives. There is more value to be extracted
as we continue to execute our Eight Point Plan
moving forward.
We have not compromised our unflinching
financial discipline in achieving this growth,
with our commitment to cost and capital
efficiency reflected in underlying return on
capital (ROC) of 22.5%, up from 18.9% in FY20
and outperforming our benchmark target of
15% ROC through the agricultural cycles.
Key highlights of the FY21 results include:
• Sales of $2,548.9 million, up 22%
• Gross margin of $529 million, up 21%
• Rural Products gross margin increase from
13.4% to 14.1%, including 36% growth in
gross margin contribution from our AgChem
sales, where we continue to grow margins
through our backward integration strategy
and other business improvement initiatives
• Agency services outperformed despite lower
volumes, contributing gross margin of
$140.0 million, up 10%
• Real Estate turnover of $3,129.9 million,
up 39%
• Strong recovery of our wool business with
gross margin of $15.9 million, up 44%
• Our Wholesale business contributed
$61.2 million in gross margin in its first full
year of operation post acquisition
• Reduction in debt and improvement of
leverage, interest cover and gearing ratios
Safety and wellbeing
Safety is central to everything that we do at
Elders and is a focus throughout the business,
from the board room to the saleyards.
In FY21 we reported three lost time injuries
(LTIs). Whilst this represents a significant
decrease from 33 LTIs in 2013 (the year that
our first Eight Point Plan was implemented), it
is unacceptable that our people are harmed at
work and we continue to work harder than ever
to achieve a zero injury environment.
We have invested in safety education and the
promotion of our safety culture throughout
the business. We also invested $1.9 million
in safety capital expenditure throughout the
Elders network. In addition to our safety action
framework, we have implemented a safety
monitoring platform which allows us to collect
and analyse safety information across the
business in real time, providing deep insights
into key risk areas. As a result, we have
established three critical risk teams to focus
on livestock handling, driving and manual
handling. These teams have been tasked to
identify further steps we can take to mitigate
those risks and keep our people safe.
CEO’s Report
5
We have continued to support government
and community efforts to limit the impact
of the COVID-19 pandemic and ensure the
health and safety of our team and customers,
whilst also minimising business interruption.
We have implemented travel restrictions, social
distancing measures and deployed protective
equipment where needed. Whilst a number of
our operations have been impacted throughout
the year, we have largely been able to continue
operations safely through the adaption and
resilience of our people.
We have also focussed on mental health and
wellbeing initiatives, with increased resourcing
and new initiatives implemented during the
course of the year, particularly in response to
the impacts of COVID-19 restrictions. Whilst
we have successfully adapted to new ways
of working, it has been crucial to ensure
that our team continue to feel connected
and supported during periods of disruption,
isolation and uncertainty.
Sustainability and innovation
Sustainability is another key focus of the
business. We continue to invest in a dedicated
sustainability team and have been working
hard to identify opportunities to mitigate our
environmental impacts and take a leading
position on sustainability within the agricultural
industry. Our strategy continues to evolve
and our work aligning our climate-related
disclosures with the Task Force on Climate
related Financial Disclosures continues. We
have recently announced the following targets,
and are actively working to achieve them:
• 100% renewable electricity in all Australian
sites by 2025
• 50% reduction in Scope 1 and 2 emissions
intensity (tCO2e/$m revenue) by 2030,
against a baseline year of 2021 (subject
to commercially viable technology being
available to address feedlot cattle emissions)
• Net Zero Scope 1 and 2 emissions by 2050
Full details on our targets and strategy can be
found in our Sustainability Report, available at
Elders Investor Centre.
The challenge of reducing emissions from cattle
is one we share with many of our clients.
This year, we launched our carbon farming
advisory service, which combines our agronomy
and livestock production services with our
carbon farming specialists to advise clients on
best farming practice and registering carbon
farming projects. In the coming years, we aim
to partner with industry on the development
and implementation of technology to tackle the
carbon footprint of our cattle.
We are engaged in numerous partnerships
with educational institutions and government
bodies undertaking projects and trials aimed
at developing innovative farming practices,
including our Struan and Kybybolite best
practice demonstration farm, a joint venture
between Thomas Elders Institute and the State
Government of South Australia.
We are embarking on a systems modernisation
program aimed at establishing a more
customer centric business, whilst also driving
operational efficiencies. This program will be
undertaken in waves over several years and will
ultimately result in the business having state
of the art enabling technologies that are fit
for purpose and provide the business with a
platform to achieve our growth and innovation
ambitions into the future. Most importantly, it
will enhance customer experiences and open
new opportunities for us to understand and
serve our customers better than ever.
Growing our business and people
We continued to strive to strengthen our
service offering through the expansion of
our network in all agricultural regions. Our
branch footprint has grown again in FY21
and we have welcomed many talented client
facing people and technical service advisers
into our business. Our acquisition activity
has added several Rural Products and Real
Estate businesses to the Elders family. We will
continue to target strategic geographic and
product gaps through organic and acquisitive
initiatives in order to grow the network further.
As we grow, it is imperative that we
continue to invest in developing our existing
team and maintaining our One Elders
culture. We have numerous personal and
professional development initiatives in the
business ranging from our traineeships
through to our senior leaders development
program, known as the Thomas Elder
Academy. Notwithstanding ongoing COVID-19
restrictions, we have successfully maintained
engagement with our people, as demonstrated
by our high performance enablement and
engagement scores.
This is a credit to the leadership group
throughout the business and I thank them for
their commitment to our people during these
challenging times.
Closing on a positive outlook
I am proud of what we have achieved in FY21.
Through our geographic and product
diversification strategy we have built our
business to perform well in challenging years
and outperform in better years. We have made
tremendous progress on our current Eight Point
Plan and will continue to work hard to improve
and expand the business and deliver on our
growth ambitions of 5% to 10% per annum
through the cycles.
It is an exciting time to be in agriculture
as our industry continues to respond to the
enormous increase in global demand for quality
and safe Australian agricultural produce. The
outlook is extremely positive and we intend
to be there to support our customers to
increase their productivity sustainably and grow
their enterprises.
Thank you to all our wonderful Elders people
for their hard work and commitment over the
last year and to our clients, shareholders and
suppliers for your ongoing support.
Mark C Allison
Managing Director
and CEO
YEAR IN
BRIEF
Key highlights
3lost time injuries
#1
most trusted agribusiness brand
78%employee engagement
53net promoter score
$2.1m
sponsorships and donations
Financials at a glance
$2.5b
+22%
sales revenue
$167m
+38%
EBIT growth
$529m
+21%
gross margin
$363m
+15%
costs
69%
+3%
cost to earn ratio
94%
-38%
cash conversion
96.7c
+38%
earnings per share
22.5%
+3.6%
return on capital
1.4x
-0.6x
leverage ratio
42.0c
+91%
dividend per share
8
Elders 2021 Annual Report
Picking up after
cyclone Seroja
Support for farming communities
During the ongoing clean-up in the
Northampton and Geraldton branches, Elders
continued to be there for its local
farming community.
George said many growers were facing severe
stress and were struggling to cope, so reaching
out and putting them in touch with friends and
neighbours was critical.
In the following weeks, they were also able to
visit clients and offer disaster relief terms that
would see them through to after harvest.
“That was so important in just taking the
pressure off and helping growers make the
most of the cracking season,” he said.
George said the best way Elders was able
to support local farmers was by continuing
to supply fertilisers, fungicides and everything
else needed to get their crops established and
protected through to harvest.
“In a lot of ways, we’ve had to just push the
cyclone impact aside and get on with the job,”
he said.
“The rain this year has been a blessing for
growers and they are determined to make the
most of it. Everyone’s saying it’s a one in 20
year season.”
Severe tropical cyclone
Seroja crossed the coast
of Western Australia on
11 April, bringing destructive
winds that wrecked
homes, uprooted trees and
left farming communities
isolated and without power.
As always, the wellbeing
of people and communities
were first priorities.
While the most severe impacts were seen
in Kalbarri and Northampton, cyclone Seroja
kept up its intensity for hundreds of
kilometres, causing significant damage to
farming communities at Yuna and Nabawa as
well as further south at Mingenew, Carnamah,
and Coorow.
Elders Geraldton’s Branch Manager, George
Panayotou, said the cyclone tracked over his
place at around 9pm on Sunday evening. By
early Monday morning, he was at the branch to
assess the damage.
“I remember thinking it was strange that the
gates were closed, but the roller doors were
wide open,” he said.
“Then when I came into the yard, I saw that the
roller doors had blown inside on top of all our
merchandise and the wind pressure had blown
out the skylights.”
At this point, his response priorities were
people, power and products.
George was able to hire a generator, which
powered the fridges and protected their stock
of animal health vaccines, worth hundreds of
thousands of dollars. It also powered many
priceless cups of tea and coffee.
“The main thing was to get the kettle on, and
everybody’s spirits rose after that,” he said.
After contacting all the staff from Geraldton
and Northampton to check on their safety,
George and the Elders team also followed
through with practical and emotional support,
including arranging emergency accommodation
where necessary.
“Some of our people had been hit hard. Having
your roof blown off while you’re lying in bed at
night, that’s a major shock,” he said.
“Everybody reacts differently in times of
adversity. Some people need to be busy with
a broom and others need time out, but in the
aftermath, the one thing the cyclone did was
bring us all together. That was probably the
most positive thing to come out of it.”
Support for Elders people
“The support from Elders was sensational,”
said George.
“The company really lived up to its promise of
supporting our people and communities.
“We didn’t feel as though we had to go it alone,
in fact there was an army of support behind us.
We knew that at any time we could pick up the
phone and there was somebody there to help.”
The Elders Staff Foundation fund also provided
much needed monetary support to the 30 local
staff and their families. Up to $2000 was paid
to individuals severely affected by the cyclone,
while a minimum of $150 was provided to staff
to help restock their fridges after nearly a week
without power.
“We were all affected in some way, so
that money deposited straight into our bank
accounts just kept us going when we needed
it,” George said.
All Elders staff are invited to be members of
the Elders Staff Foundation fund for just $1.15
per fortnight, giving them the chance to help
out Elders people in times of natural disaster or
personal tragedy. The funds collected from staff
are matched dollar for dollar by Elders.
Elders and our community
9
“Everybody reacts differently
in times of adversity. Some
people need to be busy
with a broom and others
need time out, but in the
aftermath, the one thing the
cyclone did was bring us
all together."
George Panayotou
Branch Manager
OPERATING & FINANCIAL REVIEW2021 12
Elders 2021 Annual Report
Operating
and Financial
Review1
Elders is for farming families.
For rural communities across
the country. For mateship
and partnerships. For
advice and innovation. For
a sustainable future. Elders
is for Australian Agriculture.
Impacts of COVID-19
At the date of this report, COVID-19 remains
a global pandemic as declared by the World
Health Organisation. Elders has considered
the impact of COVID-19 when preparing the
consolidated financial statements and related
note disclosures, and continues to monitor the
impact on our employees, demand for Elders’
products and services, customers, communities
and supply chains.
Elders fulfilled strong demand for its products
and services by engaging in extended forward
orders, mitigating the international supply
chain constraints for farm supply inputs. Agency
Services did not experience any material
supply chain impacts with Wool and Livestock
markets improving due to strong export
demand and favourable prices. Real Estate
Services benefited from increased residential
and farmland turnover with low market supply
and high demand for properties.
Elders has continued to support government
and community efforts to limit the impact
of the COVID-19 pandemic and ensure the
health and safety of our team and customers,
whilst also minimising business interruption.
Elders has implemented travel restrictions,
social distancing measures and deployed
protective equipment where needed. Whilst a
number of our operations have been impacted
throughout the year, Elders has largely been
able to continue operations safely through the
adaption and resilience of our people.
Impacts of COVID-19 (cont.)
Elders has also focused on mental health and
well-being initiatives, with increased resourcing
and new initiatives implemented during the
course of the year, particularly in response to
the impacts of COVID-19 restrictions. Whilst
Elders has successfully adapted to new ways
of working, it has been crucial to ensure
that our team continue to feel connected
and supported during periods of disruption,
isolation and uncertainty.
Pandemic risk remains on Elders’ risk
register and controls implemented in the
business to mitigate COVID-19 impacts
are operating effectively. Elders' COVID-19
Response Committee held regular meetings to
monitor, track and report business and financial
reporting matters relating to COVID-19.
With Elders’ critical role in agriculture
and rural and regional Australia, Elders
maintained the decision to not stand down
or reduce employment due to COVID-19.
Elders did not access any government support
such as JobKeeper during the year ended
30 September 2021.
Operations
Elders is focused on creating value
for all its people, customers, community
and shareholders in Australia and
internationally. We achieve this with the
expertise and commitment of approximately
2,300 employees.
In Australia, Elders works closely with primary
producers to provide products, marketing
options and specialist technical advice across
rural, wholesale, agency and financial product
and service categories.
Elders is also a leading Australian rural and
residential property agency and management
network. This network includes both company
owned and franchise offices operating
throughout Australia in both major population
centres and regional areas. Our feed and
processing business operates a top-tier beef
cattle feedlot in New South Wales and a small
premium meat distribution model in China.
Strategy
Elders' strategic framework is governed by our
three-year Eight Point Plan.
Our ambitions to 2023 include:
• achieving compelling shareholder returns
(5-10% EBIT and EPS growth and minimum
15% ROC), of which we attained 38% for EBIT
and EPS respectively, while improving ROC to
22.5% in FY21
• industry leading sustainability outcomes,
with targets set to reduce our Scope 1 and
2 greenhouse gas emissions to zero by 2050
• being the most trusted agribusiness brand in
rural and regional Australia, which we have
been proudly awarded for the last two years
Elders continued to make strong progress on
our strategic priorities and enablers:
1. Win market share across all products,
services and geographies through client
focus, effective sales and marketing and
strategic acquisitions
2. Capture more gross margin in
Rural Products through optimised
pricing, backward integration and supply
chain efficiency
3. Strengthen and expand our service
offerings, including Livestock and Wool
Agency, Real Estate, Financial and
Technical Services
4. Optimise our Feed and Processing
Services businesses in Killara Feedlot and
Elders Fine Foods
5. Develop a sustainability program that is
authentic and industry leading
6. Invest in Systems Modernisation program -
best of breed solutions to improve customer
experience, drive process and administration
efficiency and better accommodate change
7. Attract, retain and develop the best
people and provide a safe and inclusive
working environment
8. Maintain unflinching financial discipline and
commitment to cost and capital efficiency
1
The Operating and Financial Review is presented in Australian dollars and is rounded in millions, unless otherwise stated. Rounding differences may be present due to individual amounts rounded to the
nearest thousand dollars in the Financial Report.
Operating and Financial Review
13
Profit and Loss
Profit: Reported and Underlying
$million
Sales
Underlying earnings before interest and tax
Branch Network
Wholesale Products
Feed and Processing Services
Corporate Services and Other Costs
Underlying EBIT
Finance Costs
Underlying profit before tax
Tax
Non-Controlling Interests
Underlying profit to shareholders
Items excluded from underlying profit
Reported profit after tax to shareholders
Underlying EBITDA
Underlying earnings per share (cents)
FY21
2,548.9
FY20
2,092.6
Change
456.3
Change %
22%
205.6
31.4
4.0
(74.5)
166.5
(8.8)
157.7
(2.6)
(4.0)
151.1
(1.3)
149.8
207.4
96.7
150.4
22.0
7.7
(59.5)
120.6
(9.3)
111.3
(1.3)
(2.3)
107.7
15.3
122.9
162.4
69.9
55.2
9.4
(3.7)
(15.0)
45.9
0.5
46.4
(1.3)
(1.7)
43.4
(16.6)
26.9
45.0
26.8
37%
43%
(48%)
25%
38%
(5%)
42%
100%
74%
40%
(108%)
22%
28%
38%
Items Excluded from Underlying Profit
The statutory result included items that are 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.
$million
Tax adjustments
Acquisition /divestment costs
Fair value adjustment on foreign exchange hedges
One-off asset costs
Other adjustments to equity investments
FY21
(1.3)
-
-
-
-
FY20
Commentary
22.5 Recognition of all unbooked tax losses
(3.3) Primarily relates to costs associated with acquisition of AIRR
(2.1) Non-cash losses recognised on thee revaluation of FX hedges
(1.1)
Costs associated with the Killara Feedlot silo collapse for which
proceeds were recognised in FY19
(0.8)
Adjustment of equity accounted investment in relation to FY19
adoption of AASB 15
(1.3)
15.3
14
Elders 2021 Annual Report
Underlying Profit by Product
Change in product margin ($million)1
Product margin by year ($million)1
Key movements in profit by product:
• Retail Products margin uplift largely driven by increased demand for chemical and fertiliser products in line with improved summer and winter cropping,
supported by backward integration strategy
• Wholesale Products margin benefited from a full year of the AIRR acquisition and sales growth in line with seasonal conditions and further uptake from
the Elders network
• Agency Services margin growth mostly in Livestock, primarily due to high prices for cattle and sheep despite reduced volumes, corresponding to
improved seasonal conditions and limited domestic supply
• Real Estate Services margin improvement reflecting ongoing network expansion and high demand for both residential and farmland assets
• Financial Services margin increased on last year, with growth and improved market conditions supporting our Insurance business, as well a full year of
interest income earned on our new livestock funding product
• Feed and Processing Services downside mostly at Killara Feedlot, which was impacted by feeder cattle price pressures on margin and lower cattle
volumes sold
• Costs increased on last year due to investment in additional people, acquisitions and strategic initiatives including the Systems Modernisation project
1
Branch Incentive, which was separately disclosed in FY20 has been reallocated to Retail Products and Agency Services in FY21 (50-50% split).
AgencyServicesInterest,tax & NCIReal EstateServicesCostsFeed andProcessingServicesRetailProducts48.112.812.54.2(2.9)(46.0)(2.5)151.1107.7WholesaleProducts17.2Product marginFinancialServicesFY20FY21175.5RetailProductsFeedand ProcessingServicesFinancialServicesReal EstateServicesAgency ServicesWholesaleProducts223.644.061.2127.2140.038.250.737.141.315.512.6FY20FY21 Operating and Financial Review
15
Underlying Profit by Geography
Change in underlying profit by geography ($million)
Underlying profit by geography ($million)
Key movements in profit by geography:
• Wholesale Products benefited from a full year of the AIRR acquisition and sales growth in line with seasonal conditions and further uptake from the
Elders network
• New South Wales2 increase largely driven by strong demand for fertiliser and chemical products, partially offset by Killara Feedlot with feeder cattle price
pressures and lower cattle volumes sold
• Queensland and Northern Territory uplift benefited from improved fertiliser and chemical sales and margin improvement, as well as high cattle prices
and strong demand for residential and farmland assets
• Victoria and Riverina upside primarily due to improved sales particularly for fertiliser and chemical products, as well as strong cattle prices
• South Australia profiting from increased demand driving higher sales for fertiliser and chemical products, supported by backward integration strategy
and YP Ag acquisition
• Tasmania favourable result mostly due to improved chemical products sales and margin improvement via backward integration strategy
• Western Australia favourable cropping conditions meant strong demand for fertiliser and chemical products as well as strengthened update of
backward integration strategy
• Corporate Overheads increased due to investment in people (including incentives) and strategic initiatives including the Systems Modernisation project
2 New South Wales includes Killara Feedlot.
FY20FY21WholesaleProducts9.4107.7Underlying EBITNSW3QLD& NTVIC&RIVSATASWAInternationalCorporateOverheadsInterest,Tax &NCI151.18.97.513.76.10.714.40.2(15.0)(2.5)22.0FY20FY2131.425.234.114.021.548.862.525.731.85.36.040.354.7(1.2)(1.0)WholesaleProductsNew SouthWales3Queensland& Northern TerritoryVictoria& RiverinaSouthAustraliaTasmaniaWesternAustraliaInternational 16
Elders 2021 Annual Report
Balance Sheet
$million
Inventories
Livestock
Trade and other receivables
Trade and other payables
Working capital
Property, plant and equipment
Right-of-use assets
Other financial assets
Intangibles
Provisions
Capital (net operating assets)
Borrowings: working capital and other facilities
Lease liabilities
Cash and cash equivalents
Net debt
Tax assets
Shareholders' equity
Underlying return on capital
Rolling 12 month average capital (excluding brand name)
Working Capital1
$million
Retail Products
Wholesale Products
Agency Services
Real Estate Services
Financial Services
Feed and Processing Services
Other
Working capital (balance date)
Working capital (average)
FY21
321.7
56.2
734.8
(667.5)
445.2
36.0
105.7
59.2
332.6
(85.0)
893.8
(154.3)
(110.7)
48.1
(216.9)
101.7
778.6
22.5%
739.2
FY21
246.1
83.8
53.8
4.1
32.3
59.7
(34.6)
445.2
487.7
FY20
255.9
44.7
601.8
(524.3)
378.2
32.3
100.8
57.7
306.2
(68.2)
807.0
(183.7)
(104.5)
50.7
(237.5)
102.7
672.3
18.9%
637.4
FY20
196.0
58.9
73.6
1.0
27.6
51.4
(30.3)
378.2
402.7
Change
Change %
65.8
11.5
133.0
(143.2)
67.0
3.7
4.9
1.5
26.4
(16.8)
86.8
29.4
(6.2)
(2.6)
20.6
(1.0)
106.3
3.6%
101.8
26%
26%
22%
27%
18%
11%
5%
3%
9%
25%
11%
(16%)
6%
(5%)
(9%)
(1%)
16%
N/A
16%
Change
Change %
50.1
24.9
(19.8)
3.1
4.7
8.3
(4.3)
67.0
85.0
26%
42%
(27%)
310%
17%
16%
14%
18%
21%
Key movements in working capital:
Working capital as at September 2021 is $445.2 million, which is $67.0 million higher than last year. Similarly, 12 month average working capital increased
by $85.0 million to $487.7 million for the year. Movements relate to:
• Retail Products working capital increased at balance date and on average ($50.1 million and $42.3 million respectively), mostly attributable to higher
debtors in line with increased sales activity, while maintaining stable debtor days, recoverability and ageing profile
• Wholesale Products working capital uplift of $24.9 million and $30.1 million at balance date and on average due to growth in debtors, corresponding to
improved seasonal conditions and higher demand
• Agency Services working capital fell $19.8 million at balance date with an increase in payables more than offsetting the increase in receivables, in part
due to favourable timing of year end, while average working capital increased $3.8 million due to higher livestock prices
• Feed and Processing Services unfavourable movement of $8.3 million at balance date and $8.6 million on average, which relates to increased inventory
due to higher cattle prices
1
Prior year working capital has been restated between Rural Products and Agency Services representing a methodology change in debtor allocation effective 1 October 2020 to ensure consistent
comparison year on year.
Operating and Financial Review
17
FY21
1.4
23.6
38.6%
FY20
2.0
17.5
47.2%
Change
Change %
(0.6)
6.1
(8.6%)
(30%)
35%
N/A
External Borrowings
Key ratios - rolling 12 months
Leverage (average net debt to EBITDA)
Interest cover (EBITDA to net interest)
Gearing (average net debt to closing equity)
Net debt
FY20
FY21
237.5
237.5
216.9216.9
317.6317.6
300.7
300.7
At balance date
Average
Key movements in net debt:
Net debt at balance date declined $20.6 million to $216.9 million. Similarly, 12 month average net debt declined $16.9 million to $300.7 million. Net debt
movement is favourable due to strong operating cash flows and lower net investing and financing cash flows, with the cash flows for the AIRR acquisition
in the prior year exceeding that of the nine businesses acquired this year.
All financial net debt ratios have improved on last year in line with lower debt balances and earnings outperformance. There is also significant headroom
in our banking covenants2, which excludes AASB 16 Leases impact and debtor securitisation facility:
• leverage is (0.2) times (covenant < 2.5 times)
• interest cover is 35.0 times (covenant > 3.5 times)
• net worth is $782.0 million (covenant > $250 million)
Undrawn facilities at 30 September 2021 were $293 million out of total committed facilities of $450 million.
Intangibles
Intangibles increased by $26.4 million to $332.6 million on last year, mainly due to goodwill on acquisitions in FY21.
Provisions
Provisions increased by $16.8 million on last year due to higher employee entitlements, particularly short-term performance incentives in line with EBIT
outperformance, as well as increased leave provisions with less leave taken over the last 18 months due to COVID-19 restrictions.
Shareholders' equity
Shareholders' equity increased by $106.3 million to $778.6 million at September, mostly representing FY21 reported net profit of $149.8 million partially
offset by $49.1 million dividend distribution to shareholders, including tax.
2
Calculated pursuant to definitions in group syndicated facilities, with AASB 16 Leases and debtor securitisation facility as material exclusions.
18
Elders 2021 Annual Report
Return on Capital
Underlying return on capital
Key movements in return on capital:
Elders' underlying ROC was 22.5% at September 2021, up 3.6% from last year. Movements are attributable to:
• higher Rural Products earnings, benefiting from increased sales activity consistent with continued demand for all product offerings, particularly
chemical products
• improved earnings in Real Estate Services on similar capital, due to increased demand for residential and farmland properties
• lower Feed and Processing Services margin on higher capital, largely impacted by strong cattle prices
We achieved a 3-year average ROC of 19.9%, which is above our 15.0% target for the completion of the third Eight Point Plan period.
18.4%18.9%22.5%3 Year Average19.9%FY20FY21FY19 Cash Flow
$million
Underlying EBITDA adjusted for non cash items
Movements in assets and liabilities
Net operating cash flows
Net investing cash flows
Net financing cash flows
Net cash flow
Cash conversion
Operating and Financial Review
19
FY21
244.4
(102.2)
142.2
(35.5)
(109.3)
(2.7)
FY20
187.7
(45.4)
142.3
(123.1)
24.2
43.4
Change
Change %
56.7
(56.8)
(0.1)
87.6
(133.5)
(46.1)
30%
125%
(0%)
(71%)
(552%)
(106%)
Key movements in cash flow:
Operating cash flow is largely comprised of an underlying EBITDA adjusted for non cash items of $244.4 million. This is partially offset by movements in
assets and liabilities of $102.2 million:
• increase in Rural Products (Retail and Wholesale Products) working capital at balance date of $75.0 million, mostly attributable to higher debtors in line
with increased sales activity, while maintaining stable debtor days, recoverability and ageing profile
• Agency Services working capital fell $19.8 million at balance date with an increase in payables more than offsetting the increase in receivables, in part
due to favourable timing of year end
• Feed and Processing Services unfavourable movement of $8.3 million at balance date, which relates to increased inventory due to higher cattle prices
• Other Capital increased $35.2 million mostly due to higher intangibles cash movement of $32.1 million for goodwill on acquisitions made in FY21
Investing cash flow for the year was an outflow of $35.5 million, which is $87.6 million lower than last year. Investing cash flows in the prior year includes
the purchase of the AIRR acquisition, which exceeds the cash flows for the nine businesses acquired this year.
Financing cash flow was an outflow of $109.3 million, compared to an inflow of $24.2 million last year. This is due to repayment of debt of $29.4 million,
compared to $83.5 million proceeds in the prior year, which largely related to funding for the AIRR acquisition. Other financing cash flow movements relate
to dividends paid, which increased $23.3 million to $48.5 million.
Rural Products(75.0)Financial Services(4.7)Real Estate Services(3.1)Agency Services19.8Corporate and Other4.3Feed and Processing Services(8.3)Other Capital(35.2)Working CapitalOperating Cash Flow142.2Depreciation and Amortisation40.9Increasein Receivables(74.5)Decrease in Net Paid Stock(0.5)Increase in Receivables(24.4)Interest, Tax and Dividends(1.0)Movements in Assets and Liabilities(102.2)Underlying Profit after Tax151.1Cash Conversion94%EBIT166.5Increase in Payables44.2Other Non Cash Items38.0 20
Elders 2021 Annual Report
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Operating and Financial Review
21
Material
Business
Risks
Achievement of our business objectives could be affected by a number of risks that might,
individually or collectively, have an impact.
Following is an overview of key risks Elders faces in seeking to achieve its objectives. The risks noted are not exhaustive and are in no particular order.
Elders seeks to identify, analyse, evaluate, treat and monitor all risks, to maximize opportunities and prevent or reduce losses.
Elders’ risk appetite is set by the Board and recorded in the Elders Resilience Policy and Framework. The Executive Committee maintains a keen focus
on those risks that have a higher rating than the desired appetite and continually assesses our operational and strategic environment for new and
emerging risks.
Risks are comprehensively reviewed and reported four times a year (or escalated immediately if certain triggers are met) to the Board Audit, Risk and
Compliance Committee to ensure the Board is adequately informed of the evolving risk environment.
Additionally, during 2021, Elders conducted a comprehensive strategic risk review. This process considered risks to Elders strategic success from a blank
canvas. The outcomes were critically reviewed and approved by the Elders Board. Also, Elders continued to refine its use of CAMMS as the safety and
risk management platform for the organisation. This system facilitates a live and integrated approach to risk monitoring, updates and reporting. It also
enhances the linkages between safety and environmental incidents and risk management.
More detail on Elders’ approach to managing risk is contained in the Corporate Governance Statement on Elders’ website at elders.com.au/
corporate governance.
Elders has categorised our material business risks
as follows:
Economic
The ability to continue operating at a
particular level of economic production
over the long-term.
Environmental
The ability to continue operating in a
manner that does not compromise the
health of the ecosystems in which it
operates over the long-term.
Social
The ability to continue operating in
a manner that meets accepted social
norms and needs over the long-term.
22
Elders 2021 Annual Report
Material Business Risk
Health and safety
Our strategy
Safety risk is inherent in Elders’ business activities. The safety of our people, clients
and the general community with whom we interact is our number one priority.
Key safety risks include livestock handling, remote driving, manual handling and
chemical handling.
The safety of our people and an effective safety culture within Elders is a critical
and non-negotiable corporate objective. Through the implementation of a safety
management system based on continuous improvement, we reduce risks which
might impact our operations.
We recognise and reward safety initiatives and safe behaviours via our monthly One
Elders Awards program. This initiative values and promotes safety and ensures our
positive safety culture is embedded throughout our operations.
Animal welfare
The safety and welfare of livestock is of paramount importance to Elders and the
company has controls in place to ensure the wellbeing and proper treatment of all
animals within our control. Failure to protect the welfare of livestock in our control
might result in stakeholder activity, business disruption and reputational damage.
Elders has “zero tolerance” for poor treatment of livestock. Our people are trained
in safe livestock handling protocols and methods and we comply with and strive
to exceed all government requirements. In addition, we actively engage with the
industry and stakeholders to improve animal welfare practices where possible.
Pandemic
As is the case for many businesses, pandemic conditions have the potential to
impact Elders’ ability to conduct its business.
The safety of our people, clients, the general community and business continuity
are at risk during such events.
Throughout COVID-19, Elders has enacted and operated its business continuity
processes, establishing a COVID-19 Committee which meets frequently and is
comprised of executive level business unit representitives and functional experts
and is chaired by the Company Secretary and General Counsel. To date, the
pandemic has not triggered the activation of the crisis management team
for Elders.
Commodity pricing
Elders has exposure to commodity price fluctuations in its Agency, Retail 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.
Severe weather events
Severe weather events 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 supply of and demand for rural products
and services provided by Elders, resulting in varied revenue levels.
Climate change
To limit the impact of natural weather events, Elders maintains both a geographical
spread of operations and a diverse product and service range.
Maintain robust incident response and business continuity systems.
Climate change has the potential to impact on Elders’ business. Impacts such
as increased temperatures and varied rainfall patterns may have significant
implications for the environment and conditions in which Elders conducts business.
In 2021 Elders has continued to develop:
• our strategy in relation to measuring ESG risks and investigating
opportunities; and
• our reporting framework for climate change impacts and opportunities with the
dedicated sustainability resourcing within the group
Further enhancements include the development of emission reduction targets and
strategies to reduce greenhouse gas emissions.
Detailed Climate change risk assessments were conducted during 2021 and further
information is available in the Elders 2021 Sustainability Report.
Human Resource risk
Elders people are critical to the performance and success of the organisation.
Failure to attract and retain the right people might adversely impact
organisational performance.
Elders has well established processes aligned to our objective to be an employer
of choice and attract outstanding people with the right values. Additional
processes are designed to ensure Elders utilises their individual talents to achieve
sustainable success.
Operating and Financial Review
23
Material Business Risk
Biosecurity threats
Our strategy
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. In addition, Elders also has a business continuity
framework in place to respond to and recover from the risk of disruption.
Food safety
Elders handles livestock and red meat in its Feed and Processing operations which
are destined for human consumption. The risk of contamination to these food
products exists.
This risk is managed through HACCP accreditation in meat processing plants and
strict animal health controls in the feedlot.
During 2021, Elders has developed a business continuity framework specifically for
the Killara feedlot.
Fraud and corruption
Elders is exposed to fraud, bribery and corruption risks, including in foreign markets
in which it operates.
Counterparty risk
Elders deals with numerous counterparties of different types. We provide credit
to approved counterparties, both domestically and internationally, and may be
exposed to losses associated with a client’s inability to repay debt as well as
exposure to supplier and partner counterparty risks.
Geopolitical risk
Elders has several controls to counter these risks, including appropriate
segregation of duties, the terms of its Code of Conduct, compliance policies,
anti-fraud policy, anti-bribery and corruption policy, training throughout the
business, financial reconciliation processes, whistle-blower policy and reporting
hot-line, leave management protocols and an Internal Audit program which is
complemented by periodic reviews conducted by the external auditor.
This risk is managed by individual counterparty credit risk assessments,
maintaining credit policies and procedures, oversight by the Credit Committee,
debtors monitoring and reporting, trade credit insurance (major livestock
processors debtor) and high level reviews of significant credit issues by the CEO
and CFO, and if sufficiently material, the Board. To address counterparty risk
through its foreign operations, Elders performs counterparty risk assessments,
undertakes due diligence processes and seeks to establish long-term strategic
relationships with key customers.
Elders operates in domestic and foreign jurisdictions where the business may be
affected by changes implemented by 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 in new jurisdictions.
Cyber risk
Elders' operations rely on information technology solutions which expose us to the
threat of cyber disruption and loss of data.
Elders maintains a strong focus on its information technology capabilities and we
continue to implement and embed stronger security for our IT infrastructure on a
continuous improvement basis. During 2021 this has included NIST and Essential 8
Cyber Audits and dedicated vulnerability management.
Supply chain risk
Due to the nature of our operations, we operate with complex supply chain
challenges and work with numerous logistics suppliers in a dynamic operational
and regulatory environment.
Global and Domestic economic shocks
This operational risk continues to be a strong focus in 2021 and work with
government regulators and other parties will continue to improve our processes
across our supply chain as well as educate and inform the logistics providers we
operate with.
Elders has conducted a comprehensive review of its retail supply chain risks and is
establishing a dedicated supply chain team to reduce supply chain vulnerability.
Elders is exposed to rapid changes in economic conditions that impact prices, sales
volumes, growth and or overhead costs.
Exposures are managed through diversification of income streams by product and
geography, controlled inventory levels and flexible remuneration models for the
Agency business and appropriate debt facility management.
Social Licence risk
Elders operates in jurisdictions where the business may be affected by changes
to stakeholder expectations which and require the business to modify its
activities. This includes expectations relating to human rights, animal welfare, the
environment and product and services mix.
Elders controls consequential exposure to this risk through continuous monitoring
of social trends that have the potential to impact the business. Various resources,
including our sustainability team, are responsible for identifying, analysing and
responding to social shifts. The Board maintains control and oversight over
activities in all jurisdictions.
REVIEW OF OPERATIONS2021 26
Elders 2021 Annual Report
OPERATING
HIGHLIGHTS
Digital & Technical Services
183agronomists
0.7musers of eldersrural.com.au
69k
followers across social media platforms
7.6mElders Weather users
78%
increase in AuctionsPlus website audience
Review of Operations
27
Key Statistics by Product
$1.7b
Retail Products sales
$0.3b
Wholesale Products sales
1.6mhead of cattle
9.4mhead of sheep
$1.6b
farmland sales
$1.5b
residential sales
$0.9b
gross written premiums
$17mlivestock funding product
60kKillara head of cattle
$18mElders Fine Foods sales
28
Elders 2021 Annual Report
Rural Products
Elders is one of Australia’s leading suppliers of rural farm inputs including seeds, fertilisers, agricultural chemicals, animal health products
and general rural merchandise.
Our Retail Products division supplies these rural products to primary producers and corporate farm customers through 223 Elders owned
retail stores. Additionally, we also provide professional production and cropping advice with over 183 agronomists nationwide, including
additional specialists operating through Elders Technical Services.
Elders also operates a Wholesale Products business supplying independently owned member stores, utilising the AIRR branding. AIRR also
provides retail services through corporate owned stores and the Tuckers Pet and Produce brand to independently owned member stores.
Our backward integration strategy is facilitated through various brands.
Performance
Rural Products margin increased $65.3 million (30%) to $284.8 million, of which $48.1 million is attributable to Retail Products. This uplift in Retail
Products is largely driven by sales activity (up 22%), boosted by strengthened cropping demand. Retail Products also produced a 0.6% improvement on
gross margin percentage, which has been supported by our backward integration strategy, preferred supplier ranging and enhanced pricing and margin
management. Titan AG also contributed a further $13.7 million of manufacturing margin year on year, supported by a 34% increase in sales through the
Elders network.
Wholesale Products margin is up $17.2 million (39%) to $61.2 million, benefiting from a full year of results from the AIRR acquisition, coupled with sales
growth of 34% due to favourable seasonal conditions and increased support from the Elders network.
Strategy
To deliver capital light and profitable growth by executing our backward integration strategy, capturing more gross margin from optimised pricing and
supply chain efficiency, and winning market share through customer centricity, sales force effectiveness and strategic acquisitions.
Strategy
Achievement
Plan
Expand own brand
product segment
• Increased own brand share of sales
• Launch of new products and brands via Titan AG, Pastoral Ag and
Hunter River, and new Optifert speciality fertiliser product range
• Continue to expand own brand product portfolio through new
product launches and marketing investment
• Re-launch own brand “EPG Seed” offering and expand into
wholesale channels
Margin management and
efficiency improvements
• Increased average Rural Products margins through enhanced price
and margin management and commitment to preferred suppliers
• Continued improvement in pricing and margin
management sophistication
• Establish a new national supply chain function to deliver supply
chain efficiencies and support risk management
Customer focus and
expanded store footprint
• Invested in frontline sales staff and initiated a national sales
training program through the Thomas Elder Academy
• Deliver sales training to a further 200+ frontline employees
• Continue to fill geographic gaps with strategic acquisitions and
• Added 14 new retail locations, 10 through acquisitions and four
greenfield developments
greenfield developments across the country
• Continued promotional campaigns with an increased focus on
• Successful execution of marketing campaigns across catalogue,
content based marketing
print, online and in-store
Growth of
Wholesale Products
• Significant growth with key strategic suppliers
• Improved loyalty with spend per member increasing on prior year
• Successfully delivered Year 2 synergies in line with expectations
• Grew private label brands into wholesale and retail networks
• Grow member base and deliver initiatives to enhance member
loyalty and increase spend
• Increase the warehouse footprint in key strategic areas, including
Tasmania and Central Queensland
• Build on the private label brand position
• Expand retail footprint through strategic acquisitions
Rural Products margin ($million)
Margin by product
Margin split by geography
284.8
284.8
219.5
219.5
134.3
134.3
148.8
148.8
152.9
152.9
FY17
FY18
FY19
FY20
FY21
67%
Farm
Supplies
21%
Wholesale
Products
12%
Fertiliser
QLD & NTNSWVIC & RIVTASSAWA15%22%25%4%13%21% Review of Operations
29
Agency Services
Elders provides a range of marketing options for livestock, wool, and grain. The 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.
Elders is one of the largest wool 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.
Elders also has a 50% interest in AuctionsPlus, an online livestock auction platform, and a 30% interest in Clear Grain Exchange (CGX), which
is an online grain trading platform.
Performance
Agency Services margin improved $12.8 million (10%) to $140.0 million, which is mostly attributable to Livestock (up $7.6 million). This is due to strong
livestock prices for both cattle and sheep (up 31% and 9% respectively), due to limited domestic supply. This is however partially offset by improved
seasonal conditions driving herd and flock rebuild, which has seen volumes reduce by 9% and 2% head for cattle and sheep.
Wool margin is favourable $4.9 million (45%) to last year, due to recoveries in the wool market. This was mainly contributed by the Eastern Market
Indicator (EMI) increasing approximately 34%, coupled with improved demand from China. Despite the lower number of sheep shorn nationally,
favourable conditions supported fleece weight production, which enabled a further 41% increase in bales sold, with many of the bales previously held in
store also traded throughout the year.
Strategy
To deliver profitable growth of the Agency Services portfolio through business improvement, recruitment and acquisition for our Livestock and Wool
businesses and through focused growth of our investments in AuctionsPlus and CGX.
Strategy
Achievement
Plan
Operating model
• Business efficiency and growth through implementation of
• Continued investment in Livestock, Wool and Grain product
initiatives, including digitisation of processes
development to improve and expand offering
• Further growth in AuctionsPlus channel in livestock and
machinery transactions
• Record year for CGX for volumes sold through the platform
• Further footprint expansion through targeted agency acquisitions
• Continue to grow listings through AuctionsPlus
• Leverage 30% shareholding in CGX to improve grain value
proposition and grow revenue
People
• Relaunched livestock trainee program
• Implemented national livestock training program
• Selective recruitment of Livestock and Wool personnel
• Geographical expansion through recruitment of high
performing people
Agency Services margin ($ million) 1
Margin by product
Margin split by geography
122.9
122.9
119.6119.6
116.5
116.5
140.0
140.0
127.2
127.2
FY17
FY18
FY19
FY20
FY21
1 Includes equity earnings from investments.
89%
Livestock
11%
Wool
0%
Grain
17%11%33%3%19%17%QLD & NTNSWVIC & RIVTASSAWA
30
Elders 2021 Annual Report
Real Estate Services
Elders’ Real Estate Services include company owned rural agency services primarily involved in the marketing of farms, stations and
lifestyle estates. It also includes a network of residential real estate agencies providing agency and property management services in major
population centres and regional areas through company owned and franchise offices. Other services include water and home loan broking.
Performance
Real Estate Services margin increased by $12.5 million (33%) to $50.7 million compared to last year, with sales turnover up across most service offerings.
Margin from residential and farmland agency has contributed most of the uplift (up 68% and 26% respectively) due to high demand and is favourable
across most geographies. This was supported by ongoing network expansion, acquisitive growth and favourable market conditions.
Property management has also outperformed last year as a result of ongoing rent roll growth. Key agent retention and net growth in agent numbers has
been maintained at strong levels through delivery of a compelling attraction and retention proposition.
Strategy
To deliver profitable growth of the Real Estate Services portfolio through driving business improvement, recruitment and acquisition for all real
estate services.
Strategy
Achievement
Plan
Operating model
• Implementation of numerous business improvement initiatives,
primarily focused at brand enhancement, digital strategy and
people development
• Grown a significant rent roll asset through organic and
acquisitive growth
• Continue to grow company owned farmland agency, residential
agency and property management presence in major
regional centres
• Continue to grow market share in water broking
• Enhance productivity and efficiency initiatives in our property
• Positioned the business as a transaction adviser of choice in
management business
corporate agriculture and facilitated numerous on and off-market
investment scale farmland transactions
• Adoption of state-of-the-art CRM systems for agency operations
• Continued enhancement of digital marketing and lead
• Implemented Console Cloud property management platform to
generation activity
drive efficiency improvement in rent roll operations
People
• Positioned key personnel as leading transaction advisers for
• Ongoing recruitment of high performing real estate sales
corporate scale transactions
• Maintained a strong attraction and retention proposition
• Retained all high performing sales agents
• Significant increase in participation levels in a modern learning
and development program
representatives and water brokers
• Recruitment of real estate franchisees
• Increased productivity through technology initiatives and training
• Ongoing investment in capability in the farmland investment space
to provide a whole of investment lifecycle service offering
Real Estate Services margin ($ million)
Margin by product
Margin split by geography
50.750.7
31.931.9
33.633.6
34.334.3
38.238.2
FY17
FY18
FY19
FY20
FY21
72%
Agency
28%
Property
Management
24%12%19%1%19%25%QLD & NTNSWVIC & RIVTASSAWA
Review of Operations
31
Financial Services
Elders distributes a wide range of banking and insurance products and services through its Australian network. We work together with a
number of partners to deliver these offerings; Rural Bank and StockCo for banking and livestock funding products and Elders Insurance (a QBE
subsidiary) for general insurance. Collectively, these relationships enable us to offer a broad spectrum of products designed that help our
customers grow their business and manage cash flow and risk.
Performance
Financial Services margin improved $4.2 million (11%) to $41.3 million on last year. This uplift is largely contributed by our Insurance business (up
$3.0 million), driven by increased gross written premiums as supported by favourable market conditions.
Growth in our Livestock in Transit (LIT) delivery warranty and new livestock funding products has also contributed to the overall uplift ($0.9 million and
$1.5 million respectively).
Strategy
To deliver profitable growth of the Financial Services portfolio through business improvement, product development and upstream investment in our
services business.
Strategy
Achievement
Plan
Deeper, more
productive partnerships
• Launched engagement program with Rural Bank to further enhance
• Building on existing and new relationships with Rural Bank
local relationships and drive growth
• Worked with StockCo on multiple growth projects across
specific geographies
staff located in Elders branches to bring finance solutions to
Elders' clients
• Engage with StockCo to expand product offerings
• Joint strategic marketing and referral campaigns with Elders
Insurance to grow gross written premiums
Expand Elders issued
product offerings
• Further growth in Livestock and Wool in Transit delivery warranty
• Further development of new and existing on-balance sheet finance
associated with Elders’ Agency Services business
• Further enhancement of livestock funding product for
<$100,000 facilities
products to improve efficiency and client experience
• Grow Livestock and Wool in Transit delivery warrant revenue
through increased uptake and further digitisation
• Elders' StockCo balances exceeded $100 million for first time
• Expand Elders' finance footprint and capability through recruitment
and training
Financial Services margin ($ million)1
Margin by product
Margin split by geography
38.338.3
35.135.1
37.137.1
33.433.4
41.341.3
FY17
FY18
FY19
FY20
FY21
1 Includes equity earnings from investments.
41%
Agri Finance
40%
Insurance
19%
LIT Delivery
Warranty
16%15%29%2%19%19%QLD & NTNSWVIC & RIVTASSAWA
32
Elders 2021 Annual Report
Feed and Processing Services
In Australia, Elders operates Killara Feedlot, a beef cattle feedlot near Tamworth in New South Wales. Elders also imports, processes and
distributes premium Australian meat in China.
Performance
Killara feedlot margin is unfavourable to last year $3.3 million falling 22% to $11.9 million. Feeder cattle price pressures on margin and lower cattle
volumes sold adversely impacted our principal trading business. Despite difficult trading conditions, Killara was able to maintain steady throughput to
major domestic and export customers, with growth in our backgrounding operations via early purchasing of young stock to support the supply chain.
Further investment in Killara's farming operations and capital expenditure has also seen improved efficiencies and sustainability across the business.
We are seeing improvements in our China business post major COVID-19 disruptions, with margin improving $0.4 million to $0.7 million (133%) on last
year. This is driven largely by increased sales in line with recovering market conditions, partially offset by higher cost of inputs.
Strategy
To deliver continuous improvement in EBIT and ROC for all businesses with active portfolio composition management.
Strategy
Achievement
Plan
Grow Killara Feedlot
• Continued investment in capital improvements to drive high
utilisation and efficiencies
• Steady cattle supply chain management via backgrounding and
external facilities
• Enhanced irrigated farming operations to better utilise farming
country and available effluent and licensed bore water
• Diversified customer portfolio with major market wins with Kilcoy,
Coles and further gains with Woolworths
• Continued improvements in animal health outcomes through pre
vaccination and backgrounding strategy
• World first feedlot trial work in the early detection of bovine
respiratory disease
• Extensive capital investment in new feeding technologies
• Staged roll out of centre pivot irrigation systems for the production
of corn silage to be used as part of cattle feeding at the feedlot and
backgrounding operations
Grow Elders Fine Foods
• Captured market opportunity to promote processed meat business
• New restaurant chains recruited with stable sales
• Drive further growth and margin improvement through execution of
business improvement initiatives
• Partnership with Australian suppliers to improve volume, price
and quality
• Increase production capacity through automation
Feed and Processing Services margin
($ million)
Margin by product
14.214.2
12.912.9
15.015.0
15.515.5
12.612.6
FY17
FY18
FY19
FY20
FY21
94%
Killara
6%
Elders Fine
Foods
Outlook
Following ongoing
favourable rainfall events,
Elders is expected to
benefit from continued high
livestock prices and a
positive cropping outlook.
Elders will continue to invest
in initiatives to deliver
outcomes for its people,
customers, community
and shareholders.
Review of Operations
33
COVID-19
• COVID-19 remains a disruptor to global and
Real Estate Services
• High levels of demand for farmland is
domestic markets, however the business and
broader industry continues to be adaptable
Rural Products
• Positive summer crop outlook, with area
planted forecast to rise 24% to 1.3 million
hectares1, expected to drive strong demand
in the first half for cropping inputs,
particularly agricultural chemicals, fertiliser
and seed
• Current 2021-22 winter crop expected to
produce 54.8 million tonnes1, which supports
continued optimism for the following winter
crop season next year
• Constrained global supply chains will
continue to drive higher cost of goods sold
for fertiliser, agricultural chemicals and steel
products and present security of supply
challenges. Active management is underway
and at this point we do not anticipate
material business impacts - orders have
been brought forward to secure supply,
risk diversified across suppliers and pricing
adjusted to protect margins
• Completion of Sunfam acquisition to grow
presence in the Bundaberg region, as well as
expanding our operations around irrigation
design and fabrication
Agency Services
• Prices for beef and lamb in 2021-22 are
anticipated to remain high in the medium
term (up year on year 3% to 703c/kg
and 1% to 791c/kg respectively2) driven
by limited supply and strong domestic re
stocker demand
• Continued wool market recovery expected
in 2021-22, with a 16% increase year
on year in EMI to 1,390c/kg2, driven by
increased demand in China and Europe,
which is supported by favourable conditions
for production
expected to continue, fuelled by favourable
commodity price outlook, low interest rates
and good seasonal conditions3
• Strong demand for residential and rental
properties likely to continue, with potential
for increased activity due to the cessation of
COVID-19 lockdowns3
Financial Services
• Second year of earnings and continued
uptake of our livestock funding product
forecasted to provide margin upsides
• Significant room for continued growth in
our Livestock in Transit product, promoted
by further customer opt ins to the add
on product
• Favourable market conditions to support
demand for our Insurance and other Agri
Finance offerings
Feed and Processing Services
• Positive start and strong demand from
customers with increases in margins for both
domestic and export supply chains despite
ongoing high feeder cattle prices
• Backgrounding and irrigated farming
operations are expected to support the
Killara supply chain to ensure high utilisation
and throughput at the feedlot
• Investment in environmentally sustainable
and growth initiatives to drive efficiencies
at Killara
Costs and Capital
• Costs are expected to increase in line with
sales growth while maintaining a stable cost
to earn ratio
• Footprint and acquisition growth, continued
investment in our Eight Point Plan
and the first phases of our System
Modernisation program
• Continued low interest rate environment
1 Department of Agriculture, Water and the Environment, ABARES Australian Crop Report: September edition.
2 Department of Agriculture, Water and the Environment, ABARES Australian Agricultural Outlook: September quarter 2021.
3
CoreLogic Residential Real Estate Property Data: September 2021.
34
Elders 2021 Annual Report
Harnessing
technology
for greater
productivity
Elders is working alongside
a new generation of
farmers in their quest
for greater efficiency and
higher productivity.
Clint Neville and his younger brother, Scott, are
farming in partnership with their parents, Barry
and Kaye Neville at ‘Romani’, near Forbes in
central New South Wales.
Their 1,800-hectare enterprise is built on
growing canola, wheat, barley and oats
and they also run first cross ewes for the
lamb market.
Like many farmers around the country, the
Nevilles have been following best practice
guidelines to manage their worst winter weed
problem, annual ryegrass.
Their solution has been forged in collaboration
and research.
This season, Clint and Scott hosted a large
scale trial featuring the latest pre-emergent
herbicides on their farm, to compare how they
performed under local conditions and share
their findings with other young farmers in
the district.
Elders agronomists led by Lauren Marchant*
set up the trial site on 120 hectares of
Flanker wheat sown in May 2021, taking plant
counts and monitoring the trials throughout
the growing season in partnership with
the brothers.
The trials featured six herbicides from a
range of suppliers, including Overwatch® from
FMC and Mateno® Complete, a new product
from Bayer CropScience which is awaiting
registration for use in Australia.
“Annual ryegrass is by far our worst weed, but
broadleaved weeds such as capeweed are also
common,” says Clint.
“With plenty of follow-up rain since sowing,
the herbicides have all worked well, but the
downside is that the two farm walks we
planned during the season were both rained
out. We are now looking into hosting a virtual
tour of the site online.”
Despite the wet conditions, Clint is sure that
the large-scale trial was a valuable way to
assess the latest chemistry for managing
weeds, share the opportunity with other local
farmers, and guide their decision making in the
seasons ahead.
“Scott is actively involved in the local branch
of NSW Young Farmers, so we like to host field
days and take part in other farm walks and
infrastructure days to learn about the newest
developments with other young farmers,”
Clint said.
“Having two Elders agronomists on the ground
has been really helpful with the trials and our
merchandise representative, Jasen Bennett, has
also been on the ball securing products for us.”
he said.
Next up, the brothers are looking into variable
rate technology to improve fertiliser use
efficiency, address soil acidity and grow more
uniform, higher yielding crops.
Clint and Scott utilise soil sampling and tissue
testing to guide their crop nutrition programs
as a matter of routine, but they are also turning
to satellite imagery known as NDVI (Normalized
Difference Vegetation Index) imagery to identify
variability and problem areas in their paddocks.
“With the increasing costs of inputs such as
fertilisers, lime and gypsum, we want to take
a more targeted approach instead of using a
blanket rate across each paddock,” Clint said.
“For example, some areas are quite acidic,
so rather than applying 2.5 t/ha of lime over
whole paddocks, we only want to treat those
areas that require it to increase soil pH levels
above 5.”
With so many developments in new technology
and plenty of new products and services to
assess, Clint turns to Elders for guidance.
“When it comes to putting together all the
pieces of the puzzle, that’s where Elders
advisors are invaluable.” he said.
(*Lauren Marchant has since taken up a more
senior role at Elders as State Rural Products
Manager, NSW).
Harnessing technology for greater productivity
35
“When it comes to putting
together all the pieces of the
puzzle, that’s where Elders
advisors are invaluable”
Clint Neville,
Grower, 'Romani' Central NSW
SUSTAINABILITYto reduce greenhouse gas emissions12025100% renewable electricity in all Australian sites by 2025203050% reduction in Scope 1 and 2 emissions intensity (tCO2e/$m revenue) by 2030, against a baseline year of 202122050Net Zero Scope 1 and 2 emissions by 20501 Targets are based on Elders’ financial year ending 30 September.2 Subject to commercially viable technology being available to address feedlot cattle emissions.CLIMATE TARGETSIn FY21 $2.1m78%Employee engagement score, a record high for Elders#1Most trusted agribusiness brand among regional Australians for the second year running41,000+Agricultural chemical containers diverted from landfillTCFDProgressed alignment of climate-related disclosures with TCFD Recommendations535New hires50%Board positions held by womenRFDSRenewed partnership with the Royal Flying Doctor ServiceAnnual Modern Slavery Statement published840Local community sports teams and events sponsoredIn donations and sponsorships1STKey Highlights 38
Elders 2021 Annual Report
Sustainability at Elders
Our key sustainability principles
We provide our customers
and clients with the goods
and services they need
We support our people
and the industries and
communities in which
we operate
We do our part to look after
the environment and the
animals in our care
We operate ethically and to
the highest standard
Our Material Topics
Our sustainability program includes the following topics, which are regularly reviewed to ensure we continue to address the issues our stakeholders
consider to be material to our business.
Topic
Focus
Community impact
and investment
Supporting local communities and managing community expectations and relations
Health and safety
Maintaining our commitment to providing a safe work environment
Employee attraction
and retention
Investing in the present and the next generation of our workforce and ensuring that our people are enabled to support service delivery and create
meaningful work outcomes
Climate change
Addressing the risks and opportunities presented by climate change mitigation and adaptation
Water availability
Addressing the issue of water availability to the communities in which Elders operates and its impact on the operation and performance of
Elders’ business
Animal welfare
Ensuring the well-being and proper treatment of livestock
Severe
weather events
Addressing the issue of severe weather events and their impact on the operation and performance of Elders’ business
Energy
Managing our energy consumption and greenhouse gas emissions through the responsible use and reliable sourcing of energy
Waste management
Responsibly managing waste in our own operations and our role in managing agricultural waste from our customers’ operations
Corporate governance Delivering on our commitment to high quality governance, transparency and ethical business practices
Innovation
and technology
Demonstrating our investment in innovation and technology in the agriculture industry
Our ambition is to develop and then deliver an authentic and industry leading sustainability program which acknowledges and builds on the initiatives in
which Elders participates and leads throughout rural and regional Australia, for and on behalf of the entire agriculture industry.
This is highlighted in our current Eight Point Plan, which sets out Elders' key strategic priorities from 1 October 2020 through to 30 September 2023. Our
Eight Point Plan was developed by our Board and Executive through a series of workshops and strategy sessions over the course of 2020. Following the
success of our last two plans which focused on survival and growth, our latest plan represents the next level of sophistication for our business.
Full details of our sustainability program and actions during FY21 can be found in our Sustainability Report, available at our Sustainability Centre.
Community Impact and Investment
Through assisting generations of Australian farmers over the course of more than 180 years in business, we recognise that our long-term sustainability is
dependent on us maintaining strong relationships with the communities in which we operate and connected to their economic prosperity and resilience.
Our rural communities continue to face a number of challenges presented by changing agribusiness models, increasing automation and corporatisation of
farms, the environmental impacts of drought and more broadly, climate change.
As a key member of the agriculture industry and our rural communities, we recognise our role in providing support. We primarily do this through:
• investments in local events and organisations, and by participating in local community programs
• supporting local businesses and employing local workers
• maintaining a physical presence in the communities we serve, through good times and bad
• adapting and providing the goods and services our local customers and clients need at any given time
Sponsorships and Donations (numbers rounded)
To local communities - including rural schools, clubs and more than 840 local community sports teams and events.
To industry and innovation - including Australian Research Council, national growers associations, industry bodies and several grass roots organisations.
$2.1m
$0.9m
$0.7m
To health and well-being - including RFDS and Beyond Blue, local emergency services and events raising awareness and funding for a variety of health issues. $0.2m
To sporting teams and events - including North Queensland Cowboys, North Melbourne Football Club and New South Wales Country Eagles.
$0.2m
Sustainability
39
Climate change
Australia's changing climate presents systemic challenges to the agricultural sector, as well as to our clients and farming activities. Hotter and drier
conditions, prolonged droughts and more extreme weather events have profound effects on farmers, associated businesses, the communities in which we
operate and Australia’s economy more broadly.
As a valued partner of the agriculture sector, we have an important role to play in contributing to the sector’s resilience and helping develop technologies
to assist with emissions mitigation and climate change adaptation. We also acknowledge our responsibility to address climate change and manage and
reduce our own emissions.
To increase transparency with our stakeholders and investors, and to bring a spotlight on Elders’ actions, the Board has set a target of fully aligning our
disclosure of climate-related risks with the TCFD Recommendations by 30 September 2023, in alignment with the completion of our third Eight Point Plan.
Our actions to date are set out below.
This year, we completed our assessment of climate change risks and opportunities. We also commissioned an independent review of our energy use
and scope 1 and 2 emissions and ahead of our 2022 ambitions, accelerated the development of targets and strategies to reduce the greenhouse gas
emissions across our organisation.
Elders' staged action plan for full alignment with the TCFD Recommendations by 30 September 2023
Governance
Risk Management
Strategy
Comprehensive disclosure
of our climate-risk
management process, roles
and responsibilities.
Initiated internal and
independent review of
climate-related risks
and opportunities.
Detailed our climate-risk
assessment methodology
and disclosed our climate
related risks and current
mitigation actions.
FY20
FY21
FY22
FY23
Detailed the role risk plays in our
decision making.
Identified climate
related opportunities.
Qualitatively assess future climate
related risks and impacts using
appropriate climate scenarios.
Disclose impacts of, and
business resilience to, climate
related risks and opportunities
including commentary on financial
implications under each scenario.
Metrics & Targets
Reported our Scope
1 and 2 emissions
from energy use and
feedlot cattle.
Reported our Scope
1 and 2 emissions,
including emissions from
feedlot waste and
fertiliser management.
Develop our Scope 3
emissions profile.
Set climate related
targets and metrics.
Report on performance
against targets.
Our targets
• 100% renewable electricity in all Australian sites by 2025
• 50% reduction in Scope 1 and 2 emissions intensity (tCO2e/$m revenue) by 2030, against a baseline year of 2021 (subject to commercially viable
technology being available to address feedlot cattle emissions)
• Net zero Scope 1 and 2 emissions by 2050
Our targets apply to the sites over which Elders has operational control and are based on our financial year ending 30 September. Full details on our
emissions profile, targets and strategy to reduce emissions are set out in our Sustainability Report.
Our strategy to achieve our emissions reduction targets involves investment in renewable energy, technology and innovation to improve energy efficiency
and reduce greenhouse gas emissions. We are particularly reliant on innovation to support a greater uptake of electric and hybrid vehicles in our fleet, and
a reduction in enteric emissions from our feedlot cattle. In the coming years, we aim to partner with industry on the development and implementation of
technology to tackle the carbon footprint of our cattle. We also recognise that carbon offsets may have a role to play. We will further develop our strategy
and position on carbon offsets in the coming years and communicate this in future annual and sustainability reports. We will aim to reduce and eliminate
our emissions where possible and commercially sensible, without the use of carbon offsets in the first instance.
Our emissions profile4
Scope 1 emissions - Source
Killara Feedlot cattle
Fleet transport fuel - diesel
Killara Feedlot equipment fuel - diesel
Other (including fleet transport fuel (LPG), forklift fuel and natural gas)
Total: 60,828 tCO2e
4
Between 1 July 2020 and 30 June 2021.
Scope 2 emissions - Source
Electricity - Australian sites
tCO2e
4,982
Electricity - Elders Fine Foods, China
427
8%
1%
tCO2e
37,462
15,364
2,062
531
62%
25%
3%
1%
40
Elders 2021 Annual Report
A rewarding
career serving
farming
communities
From her first job in
merchandise sales at
Lake Grace to managing
Elders branches at Albany
and Mount Barker in
southern Western Australia
today, Karel Walker has
always been impressed
by Elders’ commitment
to servicing farmers and
rural communities.
Through the ups and downs, Karel says that
Elders has always recognised its role as a vital
supply chain link to farmers who rely on its
services to get the job done.
“The people we service are our highest priority,"
says Karel.
Karel has never forgotten how tough it was
when she took on her first merchandise sales
job at Elders in Lake Grace back in 2005.
“Back then, local farmers grew cereals and ran
sheep, but seasonal conditions were tough,
grain and wool prices were low, and livestock
weren’t bringing in the prices they are today,”
she said.
“However, I was a young mother from a farming
background with experience in banking, so I
saw Elders as a good career opportunity and
quickly learned how important the company
was to the local community.
Eighteen months later I took on the very
challenging role of branch manager, adding
livestock agency, insurance, real estate, and
banking in those days, to the merchandise
function, plus a much bigger area to look after.
I was also responsible for eight staff at Lake
Grace and two more employees at a satellite
branch at Newdegate.
And despite all the change at Elders in those
days, the training was excellent and I had a lot
of opportunities to develop my career.”
In 2012, Karel took up a new challenge as
merchandise manager at Mount Barker, at the
request of Matt Ericsson, Elders area manager
for WA’s south-west.
The business there is a joint venture between
Elders and the Mount Barker Cooperative, one
of Australia’s oldest cooperatives at more than
a century old.
It is a dedicated merchandise operation
supplying agricultural chemicals, animal health
products, cropping and pasture seeds,
fertilisers, as well as shearing gear and plants,
field bins and silos.
“Mount Barker is a diverse region supporting
cattle, sheep and cropping; and as farmers
have expanded their operations, so too has our
team and our services.” Karel said.
The Elders team there now includes an
agronomist and a salesperson on the road,
to provide advice and arrange supplies for
farmer clients.
The Company is also a major sponsor of
Stirlings to Coast Farmers, a farmer-led research
and extension group helping South Coast
farmers to adapt research findings to local
conditions and run more productive and more
profitable farm businesses.
“Whether it’s helping out with trials and
agronomy support or guiding the career choices
of the next generation, we are actively involved
in our community.” Karel said.
Karel has no doubt that Elders has been the
right choice for her career.
“No matter how tough it is, our clients are
always our first priority,” she said.
“People like me who are the face of Elders in
the country are highly valued by our leadership
team and there are plenty of opportunities
for training and development and meeting
new people.
Once again, Karel’s role grew in June 2020 to
take on the management of both the Mount
Barker and Albany branches, including 12 staff.
“Elders is an innovative company that is
growing and there’s no better company to work
for in agriculture.”
It’s meant spending time in both locations and
looking at ways to do things better for farmers.
“A lot of our growth comes from employing
people who are very good at what they do and
are willing to go the extra mile to assist our
clients,” Karel said.
“The COVID-19 era has seen our people go
above and beyond to ensure our farmers
have the merchandise needed to keep their
operations running, anywhere from Cranbrook
further north to Albany, 100 kilometres south.
We are also servicing farmers in more
remote areas like Bremer Bay, 180 kilometres
north-east of Albany, through an agency at
Boxwood Hill.
By stocking this depot and offering on-farm
deliveries, farmers are saving valuable time
because they don’t need to drive 140
kilometres coming into town when they are
busy seeding or spraying.”
Beyond its service to farmer clients, Elders is
continuing to support local communities.
It is a major sponsor of the Boxwood Hill
Football Club and Elders people regularly take
part in information days for students at the WA
College of Agriculture, Denmark.
A rewarding career serving farming communities
41
“Whether it’s helping out
with trials and agronomy
support or guiding the
career choices of the next
generation, we are actively
involved in our community”
Karel Walker
Branch Manager
DIRECTORS’REPORT2021 44
Elders 2021 Annual Report
Directors’
Report
Mr Ian Wilton
MSc, FCCA, FCPA, FAICD, CA
Appointed Chair on 11 September 2019 and Non
Executive Director since April 2014, Mr Wilton is also
Chair (appointed 11 September 2019) of the Work
Health and Safety Committee and the Nomination and
Prudential Committee and a member of the Audit, Risk
and Compliance Committee (former Chair) and the
Remuneration and Human Resources Committee.
Mr Wilton is an experienced Non-Executive Director
and former senior executive with extensive knowledge
of the agricultural sector. He has held Chief Financial
Officer positions with Ridley Corporation Limited, CSR
Sugar and GrainCorp Limited and was President and
Chief Executive Officer of GrainCorp Malt.
Mr Wilton is a Non-Executive Director of Namoi Cotton
Limited (since 17 June 2020) and Chair of the advisory
board of MacKay’s Banana Marketing.
Mr Wilton was previously a Non-Executive Director and
Chair of the Sheep CRC Ltd (18 November 2015 –
3 September 2020).
Mr Wilton is a resident of New South Wales.
Mr Mark Charles Allison
BAgrSc, BEcon, GDM, AMP (HBS), FAICD
Mr Allison joined Elders Limited as a Non-Executive
Director in December 2009, served as Chairman and
Executive Chairman, before being appointed Managing
Director and Chief Executive Officer in May 2014.
Mark’s 40-year agribusiness career spans technical,
manufacturing, supply and distribution roles and
businesses. Previous roles include Managing Director/
CEO of GrainGrowers Limited, Jeminex Limited, Farmoz
Pty Ltd, Wesfarmers Landmark Limited, Wesfarmers
CSBP Limited, CropCare Australasia Pty Ltd and
General Manager of Incitec Fertilisers.
Mark is currently Chair of Agribusiness Australia,
AuctionsPlus, the Agriculture and Natural Resources
End-User Advisory Board of the SmartSat CRC, the
Agrifood and Wine Advisory Board of Adelaide
University, a Non-Executive Director of GrainGrowers
Limited and a member of the Rabobank Food and
Agriculture Advisory Board.
Mark oversaw the development and implementation
of Elders’ Eight Point Plan in 2014 which returned the
company to pure play agribusiness and resulted in the
first shareholder distribution in nearly a decade. Since
2014 Elders has grown from a market capitalisation of
$50 million to $1.9 billion.
Ms Robyn Clubb
BEc, CA, F Fin, MAICD
Non-Executive Director since September 2015, Ms
Clubb is Chair of the Audit, Risk and Compliance
Committee (appointed on 11 September 2019)
and a member of the Remuneration and Human
Resources Committee (former Chair), the Work Health
and Safety Committee and the Nomination and
Prudential Committee.
Ms Clubb 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.
Ms Clubb is currently a Director of Craig Mostyn
Holdings Pty Limited (since 1 February 2017), Essential
Energy (since 15 March 2018), Chair of the Australian
Wool Exchange Limited (a director since 24 August
2016), Chair of ProTen Limited (a director since 30 April
2019) and Chair of FCFA Leasing Limited (a director
since 3 August 2021).
Ms Clubb was formerly Chair of V&V Walsh Limited,
Chair and Member of the Rice Marketing Board
for the State of NSW, Non-Executive Director of
Rural Bank Ltd (19 September 2007 – 3 February
2011), Beef CRC Limited (23 November 2007 –
11 June 2014), UrbanGrowth (a NSW state-owned
corporation responsible for urban land development)
and Murray Irrigation Limited (20 October 2011 –
19 November 2015).
Ms Clubb is a resident of New South Wales.
Directors’ Report
45
Ms Diana Eilert
BSc (Syd), MCom (UNSW), GAICD, Member of Chief Executive Women
Non-Executive Director since November 2017, Ms Eilert
was appointed Chair of the Remuneration and Human
Resources Committee on 11 September 2019. She is
also a member of the Audit, Risk and Compliance
Committee, the Work Health and Safety Committee and
the Nomination and Prudential Committee.
With an executive career of more than 25 years, Ms
Eilert brings four main skills to the Elders board – CEO
level operational leadership, strategy, technology and
digital disruption and customer experience/marketing.
Ms Eilert’s career includes roles as Group Executive for
Suncorp’s entire insurance business and subsequently
Group Executive for Technology, People and Marketing.
In her 10 years with Citibank, Diana’s roles included
Head of Credit Risk Policy, running the Mortgage
business, and Lending Operations for Australia and
Mr Matthew Quinn
BSc, ACA
Non-Executive Director since February 2020, Mr Quinn
is a member of the Audit, Risk and Compliance
Committee, Remuneration and Human Resources
Committee, Work Health and Safety Committee and
Nomination and Prudential Committee.
Mr Quinn holds a BSc in Chemistry and Management
Science and is a Chartered Accountant. He also has
senior executive experience having been the Managing
Director of Stockland for thirteen years.
Mr Quinn has extensive Non-Executive Director
experience in the Australian listed company
New Zealand. She was also a Partner with IBM. In her
final executive role as Head of Strategy and Corporate
Development for News Limited, Diana developed a
deep understanding of digital trends, disruption and
alternate strategies for a large traditional business.
Ms Eilert is currently a Non-Executive Director of
listed company Domain Holdings Australia Limited
(since 16 November 2017) and Non-Executive Director
and Chair of Keypath Education International Inc
(since 11 May 2021). Ms Eilert is also a member
of Genpact Advisory Council and the Australian
Competition Tribunal. Ms Eilert was previously a
director of Super Retail Group Limited (21 October
2015 – 31 January 2021), Navitas Limited (28 July 2014
– 5 July 2019), realestate.com.au (REA Group) (30 June
2010 – 17 February 2012), Veda (data and analytics)
(4 October 2013 – 25 Feb 2016).
environment. His current Non-Executive Director
positions are at CSR Limited (since 20 August
2013) and Class Limited (Chairman, Director since
1 July 2015). He is also Chairman of unlisted TSA
Management Holdings Limited (since 11 June 2018). Mr
Quinn was previously a Non-Executive Director of Regis
Healthcare Limited (1 March 2018 - 26 October 2021).
Mr Quinn is a resident of New South Wales.
Ms Raelene Murphy
BBus, FCA, GAICD
The Board appointed Ms Murphy in January 2021.
She is a member of the Audit, Risk and Compliance
Committee, Remuneration and Human Resources
Committee, Work Health and Safety Committee and
Nomination and Prudential Committee.
Raelene holds a Bachelor of Business (Accounting),
is a Fellow of the Institute of Chartered Accountants
and a Graduate of the Australian Institute of Company
Directors. She also has many years’ experience
as a senior executive, having previously been the
CEO of The Delta Group and Managing Director of
333 Management.
Raelene has strong Non-Executive Director experience
in the Australian listed company environment, across a
range of industry sectors.
Her current ASX Non-Executive Director roles are at
Bega Cheese Limited (since 1 June 2015), Integral
Diagnostics Limited (since 1 October 2017) and Altium
Limited (since 21 September 2016). She was also
previously a Non-Executive Director of Clean Seas
Seafood Limited (1 July 2018 – 19 October 2020),
and Service Stream Limited (18 November 2015 –
23 October 2019).
Raelene is a resident of Victoria.
Events Subsequent
to Balance Date
There was no matter or circumstance that
has arisen since 30 September 2021 which
is not otherwise dealt with in this report
or in the consolidated financial statements,
that has significantly affected or may affect
the operations of Elders, the results of those
operations or the state of affairs of Elders
and its controlled entities in subsequent
financial periods.
Likely Developments
and Future Results
Discussion of other likely developments in the
operations of the consolidated entity and the
expected results for those operations in future
financial years is included on page 33 of
this report.
Remuneration of Directors and
Senior Executives
Details of the remuneration arrangements in
place for Elders’ Key Management Personnel
are set out in the Remuneration Report
commencing on page 50. In compiling
this report Elders has met the disclosure
requirements prescribed in the Accounting
Standards and Corporations Act 2001.
46
Elders 2021 Annual Report
Directors and Secretaries
Elders’ Directors in office during the financial
year and until the date of this report were:
Non-Executive Directors
• Ian Wilton, Chair
• Robyn Clubb
• Diana Eilert
• Matthew Quinn
• Raelene Murphy (appointed
28 January 2021)
Executive Director
• Mark Charles Allison, Managing Director and
Chief Executive Officer
Company Secretaries
• Peter Gordon Hastings,
BA, LLB, GDLP, FGIA, Grad Dip Applied
Corporate Governance, GAICD
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. He has also
held the position of General Counsel since
February 2010. Peter is also Chair of Walford
Anglican School for Girls.
• Shannon Hope Doecke,
BAcc, Grad Dip Applied Corporate
Governance, MAICD, AGIA
Ms Doecke was appointed as a Company
Secretary in July 2020. Ms Doecke has
served as the Assistant Company Secretary
since April 2019. Ms Doecke previously
worked for AustCham Shanghai, between
2014 and 2019, as Governance Manager,
then Company Secretary.
Principal Activities
The principal activities of Elders during the
year were:
• the provision of retail products and
associated services to the rural sector
• the provision of wholesale products to
independent rural and regional farm
supplies retailers
• the provision of livestock and wool
agency services
• the provision of real estate
sales agency services (both company
owned and franchised) and property
management services
• arrangements for the provision of financial
services to rural and regional customers,
including a 20% investment in Elders
Insurance (Underwriting Agency) Pty Ltd
• the provision of digital and technical
services, agricultural market information and
investments in the AuctionsPlus and Clear
Grain online trading platforms
• feedlotting of cattle
Results and Review
of Operations
The consolidated entity recorded a profit for the
year, after tax and non-controlling interests, of
$149.8 million (2020: profit of $122.9 million).
A review of the operations and results of the
consolidated entity and its principal businesses
during the year is contained in pages 24 to 33.
Significant Changes
in the State of Affairs
There were no significant changes in the
state of affairs of the consolidated entity that
are not otherwise disclosed elsewhere in this
annual report.
Impacts of COVID-19
As in FY20, Elders' response to COVID-19 has
been a “safety first” programme aimed at
keeping our employees, customers, contractors
and other stakeholders as protected from
COVID-19 infection in the workplace as
possible. This approach has also focused
on the mental health consequences of
the pandemic and responses to it on
our employees.
We have introduced a range of measures that
have helped us manage the risk of COVID-19
infection in our workplaces, and the mental
health issues that can be a consequence of
COVID-19 and societal restrictions introduced
to combat it. These measures have kept our
people safe in the workplace but unfortunately
several of our employees have contracted
COVID-19 in the community. Whilst these
employees have largely recovered from their
infections, short term closures of some branch
locations in New South Wales, and deep
cleaning before reopening, was required as a
result of these infections.
While COVID-19 has introduced significant
uncertainty, both globally and domestically,
Elders fulfilled strong demand for its products
and services by engaging in extended forward
orders, mitigating the international supply
chain constraints for farm supply inputs. Agency
Services did not experience any material
supply chain impacts with Wool and Livestock
markets improving due to strong export
demand and favourable prices. Real Estate
Services benefited from increased residential
and farmland turnover with low market supply
and high demand for properties.
Given the uncertainty caused by COVID-19,
Elders chose in May 2020 to secure an
additional 2 year $50 million working capital
facility. Elders has since terminated the
COVID-19 facility, effective 19 November 2020.
Elders did not access any government support
such as JobKeeper during the year ended
30 September 2021.
Further disclosures relating to the impacts
of COVID-19 are included on page 12 of
this report.
Directors’ Report
47
Attendance at Meetings by Directors
Director attendance at scheduled meetings in the 12 months to 30 September 2021 is set out below.
Committee attendance is only recorded where a director is a member of the relevant committee. Although Mr Allison is recorded as a non-member for
some committees, he attended all meetings held for each of those committees.
Board of Directors
Work Health and
Safety Committee
Audit, Risk and
Compliance Committee
Remuneration and Human
Resources Committee
Nomination and
Prudential Committee
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
15
15
15
15
15
10
15
15
15
15
15
10
2
-
2
2
2
1
2
-
2
2
2
2
5
-
5
5
5
4
5
-
5
5
5
4
4
-
4
4
4
2
4
-
4
4
4
3
3
3
3
3
3
2
3
3
3
3
3
2
I Wilton
M C Allison
R Clubb
D Eilert
M Quinn
R Murphy
Share and Other Equity Issues During the Year
Relevant Date
16 November 2020
17 November 2020
18 December 2020
18 June 2021
No. of ordinary
shares issued
Reason for issue
465,000
25,732
109,195
122,922
Shares issued upon vesting of performance rights in accordance with Elders' FY18 Long-Term Incentive Plan
Shares issued pursuant to Elders' FY18 Long-Term Incentive Plan for dividends not received
Shares issued in accordance with Elders’ Dividend Reinvestment Plan for the dividend paid on 18 December 2020
Shares issued in accordance with the Elders’ Dividend Reinvestment Plan for dividend paid 18 June 2021
The total number of ordinary shares on issue at the date of this report is 156,476,574.
Restricted Securities and Voluntary Escrow
As at the date of this report, Elders has no restricted securities on offer. A total of 3,163,430 securities were held in voluntary escrow by certain vendors of
shares in AIRR Holdings Limited, pursuant to the scheme implementation deed between Elders and AIRR Holdings Limited released to ASX on 15 July 2019.
The voluntary escrow period ended on 13 November 2021, meaning that no shares are held in voluntary escrow as at the date of this report.
Dividends and Other Equity Distributions
On 12 November 2021, the Directors determined to pay a final dividend of $0.22 per ordinary share, franked at 20%, bringing dividends for FY21 to $0.42
per share. In accordance with a determination made by the Directors, Elders’ Dividend Reinvestment Plan remains in operation.
Dividends paid during the year were
Dividend
Date Determined
Date Paid
Final Dividend for Half Year Ended 30 September 2020
13 November 2020
18 December 2020
Interim Dividend for Half Year Ended 31 March 2021
14 May 2021
18 June 2021
Dividend per
Share
Franking Rate Total Dividend
$0.13
$0.20
100%
20%
$20,336,660.96
$31,308,293.80
Directors’ Interests
The relevant interests of the Directors in shares and other equity securities of Elders, as at the date of this report, are detailed on page 68 of the
Remuneration Report.
48
Elders 2021 Annual Report
Share Options and Performance Rights
Share options and rights may be granted to company executives under the Long-Term Incentive Plan that is part of Elders’ remuneration structure.
Information about the Long-Term Incentive Plan can be found in the Remuneration Report on pages 62 to 63 of this Annual Report.
The number of performance rights on issue at 30 September 2021, which were held by 20 Long-Term Incentive Plan participants, is disclosed in note 26 to
the Financial Statements. If each of these rights vested, this would represent 0.79% of the Company’s current issued ordinary shares.
These performance rights are Elders’ only unquoted equity securities and represent the number of performance rights outstanding at the date of this
report. The representation below differs from Note 26 in the financial statements which does not take into account performance rights that vested after
the reporting date. The closing performance rights per Note 26 of the financial statements includes the 389,750 rights that vested on 15 November
2021.* The opening number of rights below includes 226,000 rights that lapsed in November 2020, excluded from the opening balance in Note 26 of the
financial statements.
1,659,000
(465,000)
361,000
(316,334)
(389,750)
848,916
No. of rights as at 30
Sept 2020
No. of rights vested on
16 Nov 2020
No. of rights granted
since the AGM on 17
Dec 2020
No. of rights lapsed from
30 Sept 2020 to date of
report
No. of rights vested on
15 Nov 2021*
No. of rights outstanding
at the date of report
* in accordance with the accounting standards
The performance rights granted to the five most highly remunerated officers as part of their remuneration, between 30 September 2020 and the date of
this report, are shown below.
Name of Officer
Mark Charles Allison
Richard Ian Davey
Malcolm Leonard Hunt
Peter Gordon Hastings
Thomas Benjamin Russo
Number of Rights Granted between 30 September 2020 and 15 November 2021
101,000
-
19,000
19,000
19,000
Directors’ Report
49
clean-up work. The DWER confirmed with
Elders that no further action was required, and
this incident did not constitute a breach of
environmental regulations.
Elders is not aware of any breaches of
environmental regulations affecting Elders’
retail or wholesale operations that were
reported during the year ended 30 September
2021 or to the date of this report.
Rounding of Amounts
The parent entity is a Group of the kind
specified in ASIC Corporations (Rounding
in Financial/Directors Report) Instrument
2016/191 issued by the Australian Securities
and Investments Commission. In accordance
with that class order, amounts in the Financial
Report and Directors’ Report have been
rounded to the nearest thousand dollars unless
otherwise stated.
Non-Audit Services
Based on advice received from the Audit, Risk
and Compliance Committee, the Directors are
satisfied that the provision of non-audit and
audit-related services is compatible with the
general standard of independence for auditors
imposed under the Corporations Act 2001 for
the following reasons:
• all non-audit and audit-related 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
• the nature and scope of the non-audit
services provided means that auditor
independence was not compromised
The amount received or due to be received
for the provision of non-audit services is
disclosed in note 27 of the financial report,
Auditors’ Remuneration.
A copy of the auditor’s independence
declaration as required under section 307C
of the Corporations Act 2001 is set out on
page 126.
This report, including the Remuneration Report
commencing on page 50, is made in
accordance with a resolution of Directors.
Ian Wilton
Chair
Mark Allison
Managing
Director
15 November 2021
Indemnification of Officers
and Auditors
The consolidated entity paid an insurance
premium in respect of a contract insuring each
of the Directors of Elders named earlier in this
report and each full time Executive Officer,
Director and Secretary of Australian group
entities against 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 disclosure of the
premiums paid.
Each Director and Officer has entered into
a Deed of Access, Insurance and Indemnity
which provides:
• that Elders will maintain an insurance policy
insuring the Officer against any liability
incurred by the Officer in the Officer’s
capacity as an Officer of Elders or another
group entity 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
• for access to company documents and
records, subject to undertakings as
to confidentiality
Environmental
Performance Regulation
A number of Elders' operations are subject to
environmental legislation. Such legislation is
diverse and varies between states, territories,
local authorities and various regulators.
Compliance with relevant legislation is
managed on the ground by our branches and
overseen and guided by our internal Safety,
Risk and Environment Business Partners.
Environmental risks and hazards are managed
in accordance with our Resilience Framework.
Our performance in relation to environmental
management and the various applicable
environmental regulations across our various
businesses over the reporting period is
as follows.
Killara Feedlot
Elders operates Killara Feedlot, a beef cattle
feedlot, in Quirindi, New South Wales. Killara
is subject to both state and local government
environmental legislation, and its operation is
conditional on it maintaining its environment
protection and water licences.
In accordance with its environment protection
licence (EP Licence), Killara is required
to undertake a significant number of
environmental management activities to ensure
that it is managing its waste, dust and
odour emissions to minimise pollution of
the surrounding community and to avoid
groundwater and soil contamination. Failure to
manage these emissions can affect the amenity
of the local community and contaminate private
and public property.
Emissions are monitored internally by Killara,
and externally by the New South Wales
Environment Protection Authority (NSW EPA)
and the National Pollutant Inventory (NPI).
Killara submits reports to the NPI detailing
emissions of NPI substances (including
ammonia, carbon monoxide and oxides of
nitrogen) and activities Killara has participated
in to reduce these emissions. Killara also
submits annual reports to the New South
Wales EPA describing (amongst other things)
any pollution complaints received in the
reporting year. These reports are prepared
by an external consultant. No breaches
of environmental regulations or pollution
complaints affecting Killara were reported
during the reporting period.
Killara is also subject to licence requirements
for water consumption and waste management.
No breaches of environmental regulations
affecting Killara were reported during the year
ended 30 September 2021 or to the date of
this report.
Saleyards
Saleyards are subject to various state,
territory and local government environmental
requirements, particularly relating to effluent
management, dust and noise. These obligations
vary from place to place 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.
No breaches of environmental regulations
affecting Elders’ saleyards were reported during
the year ended 30 September 2021 or to the
date of this report.
Retail and Wholesale Operations
Elders’ retail and wholesale operations are
subject to state environmental regulations
relating to the storage, handling, transport
and sale of dangerous goods, which include
some of the agricultural chemicals, fertilisers
and poisons we supply. 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. Elders' Safety, Risk and Environment
Business Partners monitor compliance with
these regulations. In addition, many of Elders’
branches and personnel participate in an
accreditation, training and audit program
operated by AgSafe. These assurance activities
continue to be progressively rolled out to
our wholesale operations as COVID-19 related
social distancing and travel restrictions ease.
In April 2021, the Department of Water and
Environmental Regulation (DWER) in Western
Australia attended a roadside fungicide
chemical spill incident in Hyden. The incident
was caused by a trailer that rolled over
during transit, allowing fungicide to leak
from an intermediate bulk container onto
a gravel road. The DWER issued a Clean
up Advisory Form and Elders engaged a
professional agency to complete the required
REMUNERATION REPORT 52
Elders 2021 Annual Report
Remuneration
Report
Following is the
Remuneration Report for the
consolidated entity for the
year ended 30 September
2021. The remuneration
report provides shareholders
with an understanding of
Elders’ remuneration policies
and the link between
our remuneration approach
and our performance,
in particular regarding
Elders’ Key Management
Personnel (KMP).
This year’s remuneration outcomes reflect
the results of the Financial Year 2021, not
only the business performance, but also
strong alignment with the outcomes for our
shareholders and customers.
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.
Remuneration at a Glance
Our Year
Our FY21 underlying EBIT of $166.5 million,
represents an increase of 38% on FY20.
Our continued growth strategy to expand in
strategic gap areas plus our organic growth in
each of our service offerings and products have
driven the strong growth.
KMP Changes
The following changes were made to the
Executive team during FY21:
• Tania Foster joined 31 May 2021 as Chief
Financial Officer (CFO)
• Malcolm Hunt was appointed 8 March 2021
as Executive General Manager National &
Victoria/Riverina (EGM National & VIC/RIV)
• James Cornish, General Manager Network,
left Elders 31 January 2021
• Richard Davey, Chief Financial Officer, served
in a special advisor capacity when T Foster
commenced until he retired 30 June 2021
• Richard Norton, General Manager Rural
Supplies, left Elders 31 October 2020
The only change to Non-Executive Directors
was Raelene Murphy joining as Non-Executive
Director 28 January 2021.
Remuneration Changes
Implemented in FY21
In FY20 a review of Elders' Reward Framework
was conducted and the following has been
implemented in FY21:
• a Minimum Shareholding requirement
for MD & CEO of 100% of Total Fixed
Remuneration (TFR) and Senior Executives
50%. NEDs requirement increased to 100%
of base fees. For Senior Executives a five-
year period is allowed for acquiring the
Elders shares. For current shareholdings see
section 7.
• For the Short-Term Incentive (STI)
increased the financial performance
weighting to 60% (from 40%). STI awards
will be 60% cash and 40% deferred into
equity for two years (50% vesting after year
one and 50% after year two). This supports
increased share ownership and facilitates
clawback during the deferral period. Further
details are in section 3.1.
• FY21 Long-Term Incentive (LTI) changed to
two performance measures of relative Total
Shareholder Return (TSR) and Earnings per
Share (EPS) growth. Relative TSR comparator
peer group is companies in the S&P/ASX200
index excluding companies in the S&P/
ASX100. Rights that vest are subject to a
12 month holding lock and participants are
no longer compensated for the value of
dividends not received. Further details are in
section 3.1.
Remuneration Changes
for FY22
• FY22 Long-Term Incentive relative TSR
comparator peer group will comprise all
companies in the S&P/ASX 200.
Remuneration Report
53
Long-Term Incentives vesting
The 2019 LTI grant 3 year performance period
ended 30 September 2021. 100% of this grant
vested based on:
• an absolute TSR outcome of 23.6% exceeded
the stretch target of 14%
• an EPS CAGR outcome of 20.6% exceeded
the stretch target of 10%
• a ROC outcome of 22.5% exceeded the
target of 20%
Further details are in section 2.2.
Non-Executive Director Fees
The Board reviewed NED fees to the market and
applied an increase of 12.5% to the Chair fee
(the Chair's fee had previously been unchanged
since 2014) and 4.5% increase to member
Board fees effective 1 January 2021. Further
details are in section 5.2.
Contents
Key Management Personnel
1 Overview of FY21 Executive Remuneration
2 Link Between Elders’ Financial Performance
and FY21 Remuneration Outcomes
3 Details of the Executive
Remuneration Framework
4 Remuneration Governance
5 Non-Executive Director Remuneration and
Statutory Remuneration
6 Key Terms of Executive KMP Employment
Contracts and Statutory Remuneration
7 Additional Required Disclosures
54
55
56
61
64
65
66
67
Overview of FY21
Remuneration Outcomes
Total Fixed Remuneration (TFR)
The MD & CEO’s TFR increased 5.1%
1 January 2021. External benchmarking against
comparative listed companies was undertaken
by Guerdon Associates and the Board approved
a 10% TFR increase effective 1 April 2021.
Senior Executives at remuneration review
received an average 1.1% effective
1 January 2021.
All increases considered market movements,
individual performance and benchmarking to
relevant peers.
Variable Remuneration
Short-Term Incentives
Elders' Short-Term Incentive pool is
aligned with company performance and
shareholders interest.
The MD & CEO’s FY21 STI outcome was 91.6%
of maximum opportunity. The average current
Senior Executives STI outcome was 95%. The
STI outcomes reflects Elders’ strong underlying
EBIT result plus strong performance in all key
performance indicators.
Further details are in section 2.1.
54
Elders 2021 Annual Report
Key Management Personnel
In this report, KMP are determined in accordance with the definition under the Accounting Standard AASB124 Related Party Disclosures as those persons
with authority and responsibility for planning, directing, and controlling the activities of Elders during the financial year.
The MD & CEO and Senior Executives considered KMP are referred to collectively as “Executive KMP” in this report.
Table 1 – Key Management Personnel
Name
Position
Non-Executive Directors
I Wilton
R Clubb
D Eilert
R Murphy
M Quinn
Executive KMP
M C Allison
T Foster
M L Hunt
Chair
Director
Director
Director
Director
Managing Director and CEO
Chief Financial Officer
Executive General Manager National & Victoria/Riverina
Former Executive KMP
J H Cornish
R I Davey
R L Norton
General Manager Network
Chief Financial Officer
General Manager Rural Supplies
Status
Date as KMP (if not a full year)
Full year
Full year
Full year
Part year
Full year
Full year
Part year
Part year
Part year
Part year
Part year
Commenced 28 January 2021
Commenced 31 May 2021
Commenced in role 8 March 2021
Ceased 31 January 2021
Ceased 30 June 2021*
Ceased 31 October 2020
*Richard Davey served in a special advisor capacity when T Foster commenced until he retired 30 June 2021.
Remuneration Report
55
Section 1 – Overview of FY21 Executive Remuneration
Elders’ remuneration framework is designed to attract, retain and motivate whilst driving Elders’ culture and delivering our business strategy, long-term
company performance and creation of shareholder value.
1.1 Remuneration Principles
To drive and
support delivery of
Elders’ strategy and
create long-term
shareholder value.
Drive outcomes and
provide a balance
between motivation,
risk and reward.
Market competitive
to attract and retain
key talent.
Reward is
commensurate
with performance.
Decisions
are objective
and consistent.
Simple and flexible
– allowing for
business growth.
Reinforces Elders'
culture, vision
and values.
1.2 Remuneration Structure and Mix
Remuneration is structured so a portion of an Executive KMP’s and other Senior Executive’s reward depends on meeting individual, business unit and
Elders’ targets and objectives, including maximising returns for shareholders.
Chart 1 – Executive KMP and other Senior Executives remuneration elements, structure and delivery
Chart 2 – Executive KMP FY21 remuneration mix at maximum
Fixed RemunerationYear 1Year 2Year 3100% paid in cashAttracts and retains executives with the capability and experience to deliver our strategy.Individual remuneration is reviewed annually and set with regard to:⋅ market position compared to similar roles in comparable companies⋅ Executive’s role and responsibilities and individual experience and performanceThe Board monitors the CEO’s performance on an ongoing basis throughout the year through regular management reporting and reporting of the various Board Committees.Assessment of Executive KMP performance against the relevant KPIs is determined by the MD & CEO (except for himself which is determined by the Remuneration and Human Resources Committee) with recommendations referred by the Committee to the Board for approval.Table 2 summaries the key components of the STI Plan.LTI grants are made to the MD & CEO and selected senior management. These offers are made under the Elders Executive Incentive Plan (Plan), adopted in December 2014. Participation is at the Board’s discretion.Table 9 summaries the current LTI grants.Short-Term IncentiveMotivates and rewards for achievement of annual performance against Elders’ overall results and individual key performance indicators .60% paid in cash and 40% deferred to equity Long-Term IncentiveSupports alignment to long-term overall company performance rewarding for delivery of longer term strategy and creating shareholder value.100% delivered in performance rightsBase salary, superannuation and other benefits50% subject to relative TSR (and additional requirement of absolute TSR is greater than or equal to zero)50% subject to EPS growthYear 43 year performance period1 year holding lockSTI CashSubject to performance targets across the performance yearDeferred STI vests in 2 equal tranches over 2 yearsCEOPerformance BasedPerformance BasedSenior ExecutivesTotal Fixed Remuneration 32%Maximum STI 32%Maximum LTI 36%Total Fixed Remuneration 49%Maximum STI 24%Maximum LTI 27% 56
Elders 2021 Annual Report
Section 2 – Link Between Elders’ Financial Performance and FY21 Remuneration
Outcomes
2.1 Overview of FY21 STI Outcomes
Table 2 – Executive KMP FY21 STI performance measures
Category
Performance measure
Weighting
Why was it chosen?
How is it measured?
Gateway
Financial
measures
Strategic
measures
Achievement of
threshold performance
for underlying EBIT,
ROC and zero fatalities
Financial and
operational
performance
Strategic Priorities
-
60%
20%
Ensures Executive KMP will only be awarded
where threshold financial performance and safety
has been achieved
Key indicators of Elders’ financial performance
and aligned to Elders’ Eight Point Plan objectives.
Threshold is based on achievement of 90% of the
Board approved underlying EBIT budget, targeted
ROC and zero fatalities. Below the EBIT threshold
no STI is payable to Executive KMP.
Achievement of Board approved budget financial
outcomes, including underlying EBIT, Operating
Cash Flow and ROC targets.
The Board believes the strategic priorities of
Elders’ Eight Point Plan are fundamental key
drivers of long-term value creation.
The MD & CEO is measured by the overall key
milestones of the Eight Point Plan which is
translated into an Annual Operating Plan.
People and safety
10%
Customer
10%
Focusing on our people through diversity and
employee engagement is critical to continue to
attract and retain the talent needed to deliver
our strategy.
Safety is about driving significant progress in
achieving a “zero harm” workplace.
Focusing on building and maintaining effective
customer relationship is key to a long term
sustainable business.
Other Executive KMP are measured on
achievement of their Business Unit’s key
milestones in this Plan.
People is measured through positive movement
in the representation of women in management
and employee engagement and enablement.
Safety is measured through reduction in total lost
time injuries and maintenance or improvement in
Employee Effectiveness Survey safety questions.
Measured through the Roy Morgan Trust Survey
and increase in clients.
Table 3 – MD & CEO FY21 STI outcomes
Key Priority Measures
Target
Outcome
FY21 Performance Commentary
Underlying EBIT
$128.6m
$166.5m
Operating Cashflow (over 12- month period)
$94.8m
$142.2m
Financial
Measures
(60%)
Strategic
Priorities
(20%)
Return on Capital
Deliver Business Improvement initiatives to improve
rural product margin
System modernisation business case approved
Deliver Business Development
Initiatives (acquisitions)
Lost time injuries
Employee Effectiveness outcomes for safety
People &
Safety (10%)
Positive trend towards Board endorsed diversity
objective; 25% of women in management positions
across the organisation.
Customer
(10%)
Roy Morgan Trust Survey Results for most Trusted
Brand in Regional Australia
Increase client base
17%
22.5%
+1%
+0.7%
Board
Assessed
Board
Assessed
Exceeded
Target
Exceeded
Target
<4
3
Board
Assessed
Exceeded
Target
17%
18%
No 1
No 1
300
Exceeded
Target
FY21 Underlying EBIT was higher than FY20 and
substantially exceeded budget and prevailing market
expectations at the start of the year. Supported by
strong Operating Cashflow and ROC result. 100% of this
KPI was awarded.
Rural product margin growth fell short of target. System
modernisation project a key business transformation
has been approved and meeting key project milestones.
Business development initiatives through acquisition
growth seeking synergies through backward integration
was achieved. 65% of this KPI was awarded.
Three lost time injuries, strong outcomes for employee
effectiveness outcomes for safety and a continued
increase in women in management. 86% of this KPI
was awarded.
Elders continues to be the most trusted brand in
Regional Australia through the efforts of our employees.
There was a significant increase in the number of our
client base. 100% of this KPI was awarded.
Maximum performance achieved
Threshold/Minimum performance achieved
Threshold/Minimum performance not met
Remuneration Report
57
2.1 Overview of FY21 STI Outcomes continued
Table 4 – Executive KMP FY21 STI outcomes and performance against targets
KMP
Name
M C Allison, MD & CEO
T Foster, CFO1
M Hunt, EGM National &
VIC/RIV2
Former KMP3
R I Davey, CFO
Financial Measures
(60%)
People and Safety
(10%)
Strategic Priorities
(20%)
Customer
(10%)
Maximum STI
Opportunity
Awarded
STI as % of
Maximum
Forfeited
STI as % of
Maximum
Company
Company
Business
Unit
-
Business
Unit
-
Company
Business
Unit
-
-
-
-
$
%
%
1,101,178
91.6
8.4
104,664
124,624
95
95
204,000
1004
5
5
0
1 Maximum STI opportunity is pro-rata from commencement date with Elders.
2 Maximum STI opportunity is pro-rata from appointment as EGM National & VIC/RIV.
3 R Davey was the only Former KMP eligible for a STI in FY21 and is pro-rata to leaving date.
4 MD & CEO exercised discretion, approved by Board, to award 100% of STI to the former CFO. This reflects the pro-rata period that R Davey was undertaking the role of CFO,
Maximum performance achieved
Threshold/Minimum performance achieved
Threshold/Minimum performance not met
2.2 Overview of FY21 LTI Outcomes
The FY19 LTI grant, with a performance period of 3 years, concluded 30 September 2021. The testing resulted in 100% vesting.
Outcome of testing
Elders’ absolute TSR over the performance period was 23.6%.
Resulting in 100% vesting of this tranche.
Notes regarding calculation:
The starting price to calculate the Compound Average Growth Rate was
Elders' 5 trading day VWAP up to and including 30 September 2018 of
$7.00 and the closing share price of Elders' 5 trading day VWAP as at
30 September 2021 of $12.062.
Dividends paid over the performance period were $0.69 per share.
An external consultant was engaged to calculate the TSR outcome.
Table 5 – Finalised LTI – 2019 grant
2.2 Overview of FY21 LTI Outcomes
% of total grant Performance measures
Tranche 1 – Total Shareholder Return (TSR)
50%
Based on Elders’ average annual compound TSR over the
three year performance period 1 October 2018 ending on
30 September 2021. TSR rights were subject to a target goal
and a stretch goal. The percentage of TSR rights that vest were
determined as follows:
Absolute TSR over the
performance period
Less than 10%
Equals 10%
% of Rights that vest
Nil
50%
Greater than 10% but less
than 14%
50-100%, on a straight-line
sliding scale
Equal to or greater than 14%
100%
Absolute TSR was measured using opening and closing share
prices determined as follows:
• the opening share price value of $7.00
• the closing share price value based on the 5 trading day
Volume Weighted Average Price (VWAP) up to and including
the last day of the performance period
• dividends paid in the performance period
Trance 2 – Earnings per Share Growth
58
Elders 2021 Annual Report
2.2 Overview of FY21 LTI Outcomes
% of total grant Performance measures
Outcome of testing
25%
EPS rights vest subject to achievement of Target or above EPS
Compound Annual Growth Rate (CAGR) over the performance
as follows.
Elders' EPS growth over the performance period was 20.6%.
Resulting in 100% vesting of this tranche.
EPS CAGR over the
performance period
Less than 7%
Equals 7%
As communicated in FY20, EPS for the purposes of LTI will be calculated
using the weighted average shares as the denominator and underlying
NPAT as numerator to determine the EPS measure. The EPS outcome for
FY21 was determined as follows:
% of Rights that vest
FY18
FY19
FY20
FY21
Nil
50%
Weighted avg. no. of
shares1 (000)
Underlying NPAT ($ million)
115,523
121,006
154,094
156,305
63.7
55.1
63.6
52.6
109.02
151.1
70.72
Greater than 7% but less
than 10%
50-100%, on a straight-line
sliding scale
EPS (cents)
CAGR
Equal to or greater than 10%
100%
Reconciliation of statutory profit to underlying profit used
to calculate EPS for this LTI grant
Statutory Profit ($ million)
Adjustment for non-underlying profit ($ million)
Underlying profit ($ million)
Weighted average shares (millions of shares)
Basic EPS (cents) – Statutory Profit
96.7
20.6%
FY21
149.8
1.3
151.1
156.3
95.8¢
Tranche 3 – Return on Capital (ROC)
25%
ROC rights vest in full if ROC was greater than or equal to 20%
for the financial year ending 30 September 2021.
For a reconciliation between underlying and reported NPAT please see the
Operating and Financial Review section of the Annual Report.
The weighted average shares are displayed in note 4 of the
Financial Statements.
Elders’ return on capital as at 30 September 2021 was 22.5%.
Resulting in 100% vesting of this tranche.
ROC = Underlying EBIT/Average Net Operating Assets
Average Net Operating Assets = Working Capital, PP&E, Investments,
Intangibles, Tax Balances Recognised on Acquisitions and Provisions
(Excludes Elders Brand Name)
Additional Vesting Condition
In addition to the performance conditions above, the performance rights will only vest
if the share price on the vesting date is greater than or equal to the 5 trading day
VWAP up to and including 30 September 2018, being a day prior to the start of the
performance period.
The VWAP as at 30 September 2018 was $7.00 therefore it is expected,
based on the share price as at the date of this Report, that the vesting
condition will be met.
1 Shares exclude dilutive performance rights which have not yet vested
2 Pre-AASB 16 Leases, the FY20 EPS outcome applying AASB 16 Leases is 69.9c.
One fully paid share in Elders will be allocated for each vested performance right. The total number of vested performance rights under the 2019 grant is
389,750. In addition, 24,804 additional shares will be allocated at time of vesting for the value of dividends not received on the vested rights during the
performance period. Individual vesting outcomes are outlined in section 7.
22,163
11,316
13,432
7,231
22,163
14,463
Remuneration Report
59
2.3 Summary of FY21 Executive KMP Outcomes
This table presents actual remuneration paid or payable, or vested for the Executive KMP in respect of FY21. The information is voluntary, unaudited and
different from and additional to that required by Accounting Standards and statutory requirements which is provided in section 6.2.
Table 6 – Executive KMP Remuneration outcomes for FY21 (unaudited and non-IFRS)
Base salary
Total STI1
Values of
Shares
Vested2
Super-
annuation
Other3
Termination
benefits
$
$
$
$
M C Allison
MD & CEO
1,015,969
1,008,800
1,715,994
T Foster4
M Hunt5
CFO
EGM National & VIC/RIV
183,934
223,155
98,430
118,393
-
218,966
Total
$
3,762,926
311,945
591,608
$
-
18,265
17,662
$
-
-
-
Former KMP
J H Cornish
R I Davey
R L Norton
Total
GM Network
CFO
GM Rural Products
151,577
390,096
41,570
-
204,000
-
386,099
514,792
-
412
-
459,006
1,004,325
261,588
1,392,639
2,830
249,419
308,282
2,006,301
1,429,623
2,835,851
90,768
39,169
970,013
7,371,725
1 STI cash and deferral component that will be paid for performance in FY21.
2 Value of any performance rights (LTI) that vested in FY21 based on the 5 day VWAP as at the date of vesting (vested 16 November 2020).
3 Provision of car parking or tool of trade car (M Hunt, J Cornish, R Norton) and sign on bonus paid to T Foster.
4 T Foster's data pro-rata from commencement with Elders, 31 May 2021.
5 M Hunt's data pro-rata from commencment in role, 8 March 2021.
2.4 Historical Five Year Performance
Highlights Elders’ key financial performance over the past five years and the link to the Senior Executive KMPs' STI and LTI remuneration outcomes.
Chart 3 – Elders' Performance
Table 7 – Elders’ Remuneration Outcomes
Remuneration outcomes
STI – average % received of maximum opportunity
LTI – vesting %
2017
88%
100%
2018
81%
100%
2019
0%
75%
2020
94%
75%
2021
95%
100%
FY17 FY18 FY19 FY20 FY21Sales Revenue ($m)1,5831,5991,6262,0932,549+ 12.7%FY17 FY18 FY19 FY20 FY21Underlying EBIT ($m)717574121167+ 23.8%FY17 FY18 FY19 FY20 FY21Underlying Earnings per Share (cents) 5155537097+ 17.2%FY17 FY18 FY19 FY20 FY21Underlying NPAT ($m)64108151+ 26.8%5864FY17 FY18 FY19 FY20 FY21Return on Capital (%)181923- 4.3%2724 60
Elders 2021 Annual Report
2.4 Historical Five Year Performance continued
This chart shows Elders’ annual TSR performance over the last five years against the ASX/S&P 200 Accumulation Index. Elders’ LTI Plans for FY17, FY18,
FY19 and FY20 include an absolute TSR performance condition. Full vesting of the TSR tranche (50% of total grant) was achieved for grants vesting under
the FY17, FY18 and FY19 LTI Offers.
Chart 4 – Absolute TSR %
ASX200
Elders
%
R
S
T
e
t
u
o
s
b
A
l
26.8%26.8%
9.20%9.20%
48.1%48.1%
14.00%
14.00%
12.50%
12.50%
77.1%77.1%
30.60%
30.60%
14.6%14.6%
2017
2018
2019
2020
2021
-7.0%-7.0%
-10.20%
-10.20%
Chart 5 compares Elders’ total LTI vesting results for grants in FY15-19 to Elders’ share price during the same period.
Chart 5 – LTI Plan performance outcomes relative to Elders' share price
Elders share priceLTI award (% vested)100%100%75%75%100%0%10%20%30%40%50%60%70%80%90%100%0246810121401/10/201601/10/2017LTI Grant: FY1501/10/2018LTI Grant: FY1601/10/2019LTI Grant: FY1701/10/2020LTI Grant: FY1801/10/2021LTI Grant: FY19Elders share price ($)LTI award (% vested)
Remuneration Report
61
Section 3 – Details of the Executive Remuneration Framework
3.1 Current Short-Term and Long-Term Incentive Plan Structures
Table 8 – FY21 STI Plan
MD & CEO
Senior Executives
Performance period
Annual aligned with financial year – 1 October 2020 to 30 September 2021
Maximum STI opportunity as % of TFR
100% of TFR
50% of TFR
Performance measure(s)
Gateway: Underlying EBIT (90% of Target), ROC hurdles and zero fatalities are achieved.
Equity Deferral
Once the gateway has been achieved, individual STI for the Executive KMPs are awarded based on achievement of
individual KPIs which contain a balance of challenging financial and operational targets and are aligned to business
strategy. Refer to section 2.1 for further details on Executive KMP FY21 STI performance measures.
40% of any STI earned by Executive KMP is delivered in Elders shares with half released at the end of year one
and the balance released at the end of year two. These shares are held in trust subject to trading restrictions
and are contingent on the Executive KMP remaining employed at the end of each period. During the restriction
periods, the shares are subject to forfeiture if the Executive KMP resigns or is terminated for cause, unless the Board
determines otherwise. No further performance conditions apply and shares fully vest to the participant at the end of
the restriction period if the continued service requirement is met.
As the shares are awarded in lieu of cash and relate to an incentive that has already been earned, during the
restriction period Executive KMP are entitled to all dividend and voting entitlements applying to the shares held in
trust in their name.
Exercise of discretion
The MD & CEO may recommend discretionary incentive payments to Senior Executives for approval by the Board.
The Board has overriding discretion in determining an Executive KMP’s individual STI outcome and may take into
account factors such as any material risk events identified and the impact and accountability of the Executive in those
events, any other special circumstances (e.g. acquisitions and divestments).
The Board has discretion to reduce or deny individual STI outcomes in relation to any significant breach of Elders’
Code of Conduct , One Elders values or significant environmental events.
Clawback
Elders may recover amounts paid, where the STI was calculated on financial results due to:
• a material non-compliance with any financial reporting requirement; or
• misconduct of any employees, contractors or advisers; and
as a result of which the actual metrics and outcomes used to determine the STI were incorrect, and as such a lower
payment would have been made based on the restated results.
62
Elders 2021 Annual Report
3.1 Current Short-Term and Long-Term Incentive Plan Structures continued
Table 9 – Current LTI Plans
FY20
FY21
Performance period (3 years)
1 October 2019 to 30 September 2022
1 October 2020 to 30 September 2023
Maximum LTI Opportunity % of TFR
Grant date
12-Dec-19
21-Feb-20
MD & CEO – 110% Senior Executives – 55%
MD & CEO
17-Dec-20
MD & CEO
other participants
12-Mar-21
other participants
As at 30 September 2021
166,000 Rights
MD & CEO
101,000 Rights
MD & CEO
No. of rights outstanding and no. of participants
321,916 Rights
15 other participants
260,000 Rights
18 other participants
Grant methodology
Performance rights allocated under this plan are determined using “face value methodology” being the 5 trading day
VWAP at the day prior to the start of the performance period (i.e. 30 September).
Performance conditions
The performance rights are split into three tranches.
The performance rights are split into two tranches.
Tranche 1
Absolute TSR
50% weighting
Tranche 2
EPS Growth
25% weighting
Tranche 3
Return on
Capital
25% weighting
Tranche 1
Tranche 2
Relative TSR
50% weighting
EPS growth
50% weighting
Performance measures and vesting
Tranche 1 – Absolute TSR Performance Rights
50% of rights vest subject to an absolute TSR
performance condition. The absolute TSR performance
condition is tested based on Elders’ average annual
compound TSR over the three-year performance period.
Tranche 1 – Relative TSR against Comparator
Companies Performance Rights
50% of rights vest subject to Elders' TSR performance
relative to the TSR performance of the Comparator
Companies over the Performance Period (subject to
Elders' absolute TSR over the performance period being
greater than or qual to zero).
Absolute TSR
10%
14%
% of tranche
that vest
Elders' TSR
percentile rank
50% 50th Percentile
100% 75th Percentile or above
Target
Stretch
% of tranche that vest
50%
100%
• less than Target no rights vest
• if greater than Target but less than Stretch is achieved,
50-100% of rights vest on a straight line sliding scale
• less than Target no rights vest
• if greater than Target but less than Stretch is
achieved, 50-100% of rights vest on a straight line
sliding scale
Absolute TSR will be measured using opening and closing
share prices (including dividends paid in the performance
period) determined as follows:
• the opening share price value, being the 5 trading day
VWAP up to and including 30 September the day prior
to the first day of the performance period
• the closing share price value will be based on the 5
trading day VWAP up to and including the last day of
the performance period
The Comparator Companies for the purposes of this
tranche comprises of the companies in the S&P/ASX
200 index excluding the companies in the S&P/ASX 100
as at the start of the Performance Period.
Tranche 2 – EPS Growth Performance Rights
Tranche 2 – EPS Growth Performance Rights
25% of rights vest in full if Earnings Per Share Compound
Annual Growth Rate (EPS CAGR) is greater than or equal to
Target for the performance period. The starting EPS value
is EPS as at 30 September prior to the commencement of
the performance period.
50% of rights vest in full if EPS CAGR is greater than
or equal to Target for the performance period. The
starting EPS value is EPS as at 30 September prior to
the commencement of the performance period.
Target
Stretch
EPS CAGR
EPS CAGR
% of tranche that vest
7%
10%
7.5%
10%
50%
100%
• less than Target no rights vest
• if greater than Target but less than Stretch is achieved, 50-100% of rights vest on a straight line sliding scale
Tranche 3 – ROC Performance Rights
Not Applicable for FY21 Grant
Target
Stretch
Measure
15% average ROC over
the performance period
18% average ROC over
the performance period
% of tranche
that vest
50%
100%.
• less than Target no rights vest
• if greater than Target but less than Stretch is achieved,
50-100% of rights vest on a straight line sliding scale
Remuneration Report
63
3.1 Current Short-Term and Long-Term Incentive Plan Structures continued
FY20
FY21
Additional vesting condition
Not Applicable
In addition to the performance conditions above,
performance rights will only vest if the share price on the
vesting date is greater than or equal to the 5 trading day
VWAP up to and including 30 September in the financial
year prior to the start of the performance period.
Upon vesting of performance rights one fully paid share in
Elders will be allocated for each performance right.
Holding Lock
Not Applicable
For the FY21 grant onwards, a 12 month holding lock on
shares awarded under the LTI. A participant is entitled to
receive dividends and other distributions and exercise
full voting rights.
Performance testing
Testing of the performance conditions will occur once the results for the relevant performance period have been
audited and approved by the Board. There will be no re-testing of performance.
Other
Clawback
Dividends
Treatment of unvested rights on cessation
of employment
Dealing in Securities
Change of Control
Corporate actions/reconstructions
Board discretion
Future considerations
The Board may determine that any unvested rights will lapse or be forfeited, and/or the participant must pay or
repay as a debt, proceeds from shares allocated in certain circumstances such as, but not limited to, fraud, gross
misconduct, breach of duties or obligations.
For each fully paid ordinary share allocated on vesting,
participants will receive additional ordinary shares
equivalent to the value of the dividends paid (but not
received) over the performance period.
Not Applicable
The Board has overriding discretion over the treatment of unvested performance rights when a participant ceases
employment. On cessation of employment the Board may, amongst other options, allow the participant to retain a
pro-rated number of rights based on the portion of the performance period the participant has worked or to lapse
all rights.
Participants are prohibited from taking out derivatives over performance rights. In addition, after vesting of
performance rights, all dealings in shares issued to a participant are regulated by Elders’ Securities Dealing Policy
which requires, amongst other things, that dealings only take place during open periods specified by Elders.
In the event of a transaction, event or state of affairs that, in the Board’s opinion, is likely to result in a change
of control of the Company, the Board may, in its absolute discretion, determine that all or a specified number of
a participant’s unvested performance rights and/or options vest or cease to be subject to restrictions. If the Board
does not make a determination, participants will retain all of their incentive securities and the incentive securities
will continue to be subject to the original terms of the grant.
Prior to allocation of shares to a participant upon vesting of performance rights or exercise of options (as the case
may be), the Board may make any adjustments it considers appropriate to the terms of a performance right and/
or option granted to a participant in order to minimise or eliminate any material advantage or disadvantage to a
participant resulting from a corporate action or capital reconstruction.
The Board may exercise its discretion to make adjustments it considers appropriate in light of the purpose and
intent of the Plan and the performance conditions. This may include making adjustments to ensure that the interests
of the relevant Participant are not, in the opinion of the Board, materially prejudiced or advantaged relative to the
position reasonably anticipated at the time of the grant. The Board uses a number of principles to assess whether to
make an adjustment, including:
• maintaining the desired level of stretch for targets
• maintaining the integrity and intention of the reward
• aligning outcomes with general market and shareholder expectations
• consistent treatment across remuneration elements and performance period
• preserving the success and intent of transactions or other actions that have materially benefitted the company
If discretion is to be exercised, it may be a result of events such as:
• acquisitions and acquisitions costs
• divestments
• changes to tax treatments
• legislative or accounting standard changes
• capital reconstructions or corporate actions
• internal reorganisation of the business and/or group assets
• events affecting comparator companies including, but not limited to, takeovers, mergers or de-mergers that might
occur during the Performance Period
• events, circumstances or significant items outside of the control of management or which are not reflective of
management performance
From FY22 onwards, Elders has resolved to include all items of tax expense and/or benefit in Underlying NPAT.
As Elders has recognised all tax losses on balance sheet in FY21, the Underlying tax expense will no longer be
offset by an income tax benefit as a result of tax losses recognition. The Board will seek to exercise its discretion
on the EPS outcomes of future LTI plans by adjusting the tax expense across the performance period to ensure
comparability across the performance period. The performance measures will be as intended as the Board originally
set. Shareholders will be provided with a reconciliation.
64
Elders 2021 Annual Report
Section 4 – Remuneration Governance
The Board Remuneration and Human Resources Committee (RHRC) operates in accordance with the guidance set out in the 4th Edition of the ASX
Corporate Governance Council Principles and Recommendations.
Further information on the role and responsibilities of the Committee is set out in the Corporate Governance Statement, which along with the Committee’s
Charter, is published at elders.com.au.
The Committee is comprised entirely of independent Non-Executive Directors.
4.1 Independent remuneration advice
The Committee is briefed by management, however, the Committee makes all decisions free of the influence of management.
Further to the management briefings, to assist in its decision-making, the Committee may, from time to time, seek independent advice from remuneration
advisors, and in so doing will directly engage with the consultant without management involvement.
In the year ending 30 September 2021, the Committee engaged EY to assist with market data and Guerdon Associates to assist with MD & CEO
and NED fee remuneration benchmarking. However, no remuneration recommendations, as defined by the Corporations Act 2001 (Cth), were made by
remuneration advisors.
BoardReviews the performance of individual directors and the executive team, and approves the CEO’s remuneration.ManagementProvides briefs or recommendations to the RHRC on the remuneration strategy and framework.Remuneration and Human Resources Committee (RHRC)Makes recommendations to the Board on people management and remuneration strategies and policies.Ensures KMP remuneration outcomes are appropriate and aligned to company performance and shareholder expectations.Audit, Risk and Compliance CommitteeAdvises the RHRC of material risk management issues or compliance breaches.Independent external advisorsProvide independent advice to the RHRC on remuneration and market practice. Remuneration Report
65
Section 5 – Non-Executive Director Remuneration and Statutory Remuneration
5.1 Remuneration Framework and Policy
Non-Executive Directors are remunerated by way of fees in the form of cash and superannuation. Elders’ Non-Executive Director remuneration practices
are in accordance with Recommendation 8.2 of the ASX Corporate Governance Council Principles and Recommendations.
NEDs do not participate in Elders’ cash or equity incentive plans and do not receive retirement benefits other than superannuation contributions disclosed
in this report.
NEDs 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 information from external remuneration advisors.
The Board believes Elders’ NEDs should own securities in Elders to further align their interests with the interests of other shareholders. Elders’ Minimum
Shareholding Policy was updated effective 1 October 2020 and now requires NEDs to hold at least 100% of NED Base fees (including superannuation)
within three years from appointment. Details of NEDs’ shareholdings in Elders can be found in section 7.
5.2 Non-Executive Director Fees in FY21
Total fees for the financial year ended 30 September 2021 remain well within the aggregate fee limit of $1,200,000 per annum, (including superannuation
guarantee), approved by the Board following Elders’ 2013 Annual General Meeting.
Guerdon Associates were engaged to provide current market benchmarking for NED Board fees to ensure they remain competitive to market and aligned
with the growth in Elders' business. The fees were compared to a peer group of 20 ASX -listed companies of similar size, scope and operations to Elders.
The Board approved the following changes to NED fees during FY21 effective 1 January 2021:
• the Board Chair fee increased from $240,000 to $270,000 (12.5% increase), which had remained unchanged since 2014
• the base Board fee increased to $117,000 (4.5%)
Table 10 – Non-Executive Director fee
FY21 fee excluding superannuation1
Chair
$
270,0002
30,000
Nil
20,000
Nil
Short-term payments
Post-employment
Base Board fee Board Committee fees
Superannuation
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
$
262,500
240,000
115,750
112,000
115,750
112,000
78,929
-
115,750
68,600
-
84,907
688,679
617,507
$
-
-
40,000
40,000
36,000
36,000
17,540
-
26,000
15,925
-
19,688
119,540
111,613
$
22,163
21,176
14,992
14,440
14,608
14,060
9,343
-
13,645
8,030
-
9,991
74,751
67,697
Board
Audit, Risk and Compliance Committee
Work Health and Safety Committee
Remuneration and Human Resources Committee
Nomination and Prudential Committee
1 Showing fees effective 1 January 2021.
2 The Chair of the Board does not receive additional Committee fees.
Table 11 – Non-Executive Director remuneration
I Wilton
R Clubb
D Eilert
R Murphy1
M Quinn2
M Carroll3
Total
1 R Murphy commenced as Non-Executive Director on 28 January 2021.
2 M Quinn commenced as Non-Executive Director on 20 February 2020.
3 M Carroll ceased as Non-Executive Director on 2 July 2020.
Member
$
117,000
16,000
Nil
10,000
Nil
Total
$
284,663
261,176
170,742
166,440
166,358
162,060
105,812
-
155,395
92,555
-
114,586
882,970
796,817
66
Elders 2021 Annual Report
Section 6 – Key Terms of Executive KMP Employment Contracts and Statutory
Remuneration
6.1 Contractual Arrangements of Executive KMP
Table 12 – Contractual arrangements
Component
Contract Duration
Notice (without cause) initiated by:
MD & CEO
Senior Executives
Ongoing until terminated by either party
Elders
Individual
12 months
6 months
6 months
3 months
Payment in lieu of notice may be made equivalent to the remuneration the MD & CEO and Senior Executive would
have received over the notice period.
Payment may be awarded under a Short-Term or Long-Term Incentive Plan in accordance with plan rules.
Notice for Serious Misconduct
Elders may terminate immediately. No payment in lieu of notice or other termination payments are payable under the
employment agreement.
Redundancy
Not applicable
Due to genuine redundancy, as defined by the Fair Work Act 2010, the Senior
Executive is entitled to a retrenchment payment in accordance with Elders’
policy. This payment is also subject to the rules and limitations specified in the
Corporations Act 2001 (Cth) and Corporations Regulations.
Change of Control
Not specifically referenced
in contract.
In the event of a Change of Control or Disposal of Business resulting in a material
diminution in the roles and responsibility of the Senior Executive, the Senior
Executive may terminate their contact on three months’ notice.
6.2 Executive KMP Statutory Remuneration
Table 13 – Executive KMP remuneration
Short-term payments
Post-
employment
Share-based payments
Long-term
payments
Termination
benefits1
Total
Base
salary
Cash STI
Annual
Leave3
Other4
Super-
annuation
Deferred
STI rights
LTI
Performance
rights
Long
service
leave5
%
performance
related2
$
$
$
$
$
$
$
$
$
$
$
M C Allison
2021
1,015,969
605,280
87,795
924,373
894,268
-
183,934
98,4307
4,455
18,265
n/a
n/a
-
n/a
-
-
22,163
403,520
756,751
21,176
11,316
n/a
-
-
n/a
630,829
-
n/a
71,103
47,188
-
n/a
223,155
71,036
4,434
17,662
13,432
47,357
163,693
15,836
n/a
n/a
-
n/a
n/a
n/a
n/a
n/a
-
-
-
n/a
-
n/a
2,945,889
2,517,834
311,945
n/a
568,007
n/a
60%
61%
32%
n/a
50%
n/a
151,577
-
52,685
412
453,825
201,875
-
21,950
390,096
204,000
158,365
515,901
269,205
-
-
-
41,570
-
35,195
2,830
499,356
249,419
-
6,306
7,231
21,176
22,163
21,176
14,463
21,176
-
-
-
-
-
-
(169,908)
198,910
459,006
699,913
-24%
152,568
67,350
-
918,744
109,472
248,509
261,588
1,394,193
171,568
26,371
-
1,004,221
-
(37,800)
-
-
249,419
343,477
-
738,457
39%
22%
44%
0%
29%
Total
2021
2,006,301
978,746
342,929
39,169
90,768
450,877
860,008
534,358
970,013
6,273,169
2020
2,393,455
1,614,767
-
28,256
84,704
-
917,165
140,909
-
5,179,256
1 Can comprise redundancy payments under Elders’ redundancy policy and/or payments in lieu of notice and comply with Part 2D.2 of the Corporations Act 2001 (Cth).
2 Performance related remuneration consists of STI and share based payments as a percentage of total remuneration.
3 Annual leave movement was previously not disclosed, former KMP data is statutory leave entitlements paid on separation.
4 Includes car parking (M Hunt, J Cornish, R Norton), living away from home allowance (J Cornish), company leased vehicles (M Hunt, R Norton) and sign on bonus (T Foster).
5 Former KMP data is statutory leave entitlements paid on separation.
6 T Foster's data pro-rata from commencement with Elders, 31 May 2021.
7 For FY21 only T Foster's STI is paid 100% cash, future years will have a deferral component.
8 M Hunt's data pro-rata from date of commencement in EGM National & VIC/RIV role, 8 March 2021.
T Foster6
M Hunt8
Former KMP
J H Cornish
R I Davey
R L Norton
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
Remuneration Report
67
Section 7 – Additional Required Disclosures
Table 14 – Details of Executive KMP current LTI grants
Grant date1
Balance
at start
of
period
Granted Vesting
Vested2
Lapsed
Balance3
date
Expensed
at end of
period
Fair
Value at
grant
date4
Rights
maximum
value
yet to
vest5
No.
No.
No.
%
No.
%
No.
$
$
$
M C Allison
13-Dec-18 146,000
12-Dec-19 166,000
-
-
Nov-22
Nov-21 146,000
100
17-Dec-20
- 101,000
Nov-23
312,000 101,000
146,000
-
-
-
-
T Foster6
M L Hunt
-
15-Feb-19
29,000
21-Feb-20
30,000
-
-
-
-
Nov-21
29,000
100
Nov-22
12-Mar-21
-
19,000
Nov-23
59,000
19,000
29,000
Former KMP7
J H Cornish
R I Davey
15-Feb-19
29,000
21-Feb-20
41,000
70,000
15-Feb-19
39,000
21-Feb-20
41,000
80,000
R L Norton
15-Feb-19
30,000
-
-
-
-
-
-
-
Nov-21
Nov-22
-
-
-
Nov-22
-
35,750
Nov-21
21-Feb-20
-
41,000
Nov-22
30,000
41,000
Nov-21
35,750
92
3,250
-
-
-
-
-
-
-
-
-
29,000
41,000
70,000
-
-
-
-
-
-
-
-
17,084
20,334
30,000
41,000
71,000
-
-
-
-
-
-
-
100
100
8
42
100
100
- 264,503 793,510
-
166,000 264,493 793,480 264,493
101,000 227,755 683,265 455,510
267,000 756,751 2,270,255 720,003
-
-
-
-
36,540 109,620
-
-
30,000
70,850 212,550
70,850
19,000
56,303 168,910 112,606
49,000 163,693 491,080 183,456
-
-
(73,080) 109,620
(96,828) 290,485
- (169,908) 400,105
-
36,855 147,420
23,916
72,617 290,485
23,916 109,472 437,905
-
-
-
(37,800) 113,400
- 290,485
(37,800) 403,885
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 The grant dates are aligned to the requirements under the Accounting Standards.
2 For the LTI grant expected to vest November 2021, additional shares of 13,413 will be allocated to the Executive KMP at the time of vesting for the value of dividends not received during the performance
period on the vested rights.
3 Balance is as at the date of this report and includes November 2021 vesting.
4 Fair value is used to calculate the value of performance rights 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.
5 The maximum value of the performance rights yet to vest has been determined as the fair value amount at grant date that is yet to be expensed. The minimum value of deferred shares yet to vest is nil, as
the shares will be forfeited if the vesting conditions are not met.
6 No LTI grants were made to T Foster in FY21 as commencement with Elders was from 1 May 2021.
7 LTI grants for Former KMP - Grants for R Norton all lapsed in FY20 and grants for J Cornish all lapsed in FY21. R Davey retired on 30 June 2021, as per the LTI Plan Rules a portion of R Davey's rights has
continued on foot, based on the percentage of performance completed for each grant.
Note: below shows the fair value per performance right at grant date, with the grant date under the Accounting Standards differing for the MD & CEO and
Senior Executives grants, resulting in a different fair value.
Performance Rights
13 December 2018
Performance Rights
12 December 2019
Performance Rights
17 December 2020
MD & CEO Grant
Senior Executive Grant
Tranche 1
Tranche 2 & 3
Tranche 1
Tranche 2 & 3
Tranche 1
Tranche 2
$4.92
$5.95
$4.47
$5.09
$4.30
$9.23
Tranche 1
Tranche 2 & 3
Tranche 1
Tranche 2 & 3
Tranche 1
Tranche 2
$3.23
$4.33
$6.76
$7.41
$6.51
$11.27
68
Elders 2021 Annual Report
Table 15 – Executive KMP shareholding
M C Allison
T Foster
M Hunt
Former KMP
J H Cornish
R I Davey
R L Norton
Total
Shares held at
start of year
1 October 2020
Shares acquired
during the year as
part
of remuneration
Shares acquired
during the
year through
the vesting of LTI
Other shares
acquired
(disposed of)
during the year
Balance of shares
held at end of
financial period1
1,274,880
-
56,970
-
90,000
-
-
192
-
-
-
-
158,302
-
35,618
35,618
47,490
-
(633,182)
-
(47,665)
-
(67,490)
-
800,000
19
44,923
35,618
70,000
-
1,421,850
19
277,028
(748,337)
950,560
1 Balance of shares helds at end of financial period for former KMP is date of cessation.
2 Reflects shares acquired through the Deferred Employee Share Plan for August 2021.
Table 16 – Non-Executive Directors shareholding
I Wilton
R Clubb
D.Eilert
M Quinn
R Murphy
Total
Shares held at
start of year
1 October 2020
Shares acquired
during the year as
part
of remuneration
Other shares
acquired
(disposed of)
during the year
Balance of shares
held at end of
financial period
131,193
10,400
13,769
15,135
-
170,497
-
-
-
-
-
-
-
2,000
-
462
4,000
6,462
131,193
12,400
13,769
15,597
4,000
176,959
Note: No other changes occurred during the year. None of the shares in tables 15 and 16 are held nominally by the Non-Executive Directors or Executive
KMP. Elders takes its obligations to prevent insider trading very seriously. In conformity with that approach, Directors take a conservative view of when they
can deal in Elders shares (even when trading windows are open), seeking to avoid both real and perceived trading on inside information. This approach
limits the opportunities for Non-Executive Directors to acquire Elders’ shares.
Table 17 – Other equity schemes in which one or more KMP participate
Description
Eligibility
Criteria
Number of particpants
as at
Number of outstanding
shares as at
30 Sept
2020
30 Sept
2021
30 Sept 2020 30 Sept 2021
Deferred
Employee
Share Plan
(DESP)1
This plan enables participants to salary sacrifice remuneration up to
$5,000 to acquire restricted shares. Tax can be deferred up to 15
years. Elders makes no contribution to this plan other than funding the
costs of administration.
All permanent
employees
175
There are no further performance or service conditions once shares
are purchased.
1 No KMP participated in the DESP in 2020. T Foster participated in 2021 and holds 19 shares under this Plan accumulated in FY21.
7.1 Other transactions with KMP
There are no loans to KMP outstanding in the current or prior year.
241
171,282
170,881
From time to time, sales and purchases occur during the year between subsidiaries in the Group and entities that certain directors of Elders have direct or
indirect control over. These transactions are conducted on the same terms and conditions as those entered into by other Elders’ employees or customers
on an arm’s length basis and are trivial or domestic in nature.
Remuneration Report
69
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70
Elders 2021 Annual Report
Executive
Management
Mr Mark Charles Allison
Managing Director & Chief Executive Officer
BAgrSc, BEcon, GDM, FAICD, AMP (HBS)
Mr Allison joined Elders Limited as a Non-Executive
Director in December 2009, served as Chairman and
Executive Chairman, before being appointed Managing
Director and Chief Executive Officer in May 2014.
Mark’s 40-year agribusiness career spans technical,
manufacturing, supply and distribution roles and
businesses. Previous roles include Managing Director/
CEO of GrainGrowers Limited, Jeminex Limited, Farmoz
Pty Ltd, Wesfarmers Landmark Limited, Wesfarmers
CSBP Limited, CropCare Australasia Pty Ltd and
General Manager of Incitec Fertilisers.
Mark is currently Chair of Agribusiness Australia,
AuctionsPlus, the Agriculture and Natural Resources
Tania Foster
Chief Financial Officer
BComm, MBA (Melbourne), FCA, GAICD
Tania was appointed Chief Financial Officer in
May 2021.
Tania has more than 30 years of experience across
numerous regions and industries, including mining,
manufacturing, accounting, transport, engineering,
utilities, payments and banking. She holds a Masters
of Business Administration, Bachelor of Commerce,
is a Fellow of the Institute of Chartered Accountants
and a Graduate of the Australian Institute of Company
Directors. Tania has spent the last 21 years working
in Financial Services in a broad range of roles,
including finance, product and sales management,
transformation, data and operations.
End-User Advisory Board of the SmartSat CRC, the
Agrifood and Wine Advisory Board of Adelaide
University, a Non-Executive Director of GrainGrowers
Limited and a member of the Rabobank Food and
Agriculture Advisory Board.
Mark oversaw the development and implementation
of Elders’ three Eight Point Plans commencing in
2014, which returned the company to a pure play
agribusiness and resulted in the growth of Elders
market capitalisation from $50 million in 2014 to
$1.9 billion in 2021.
Prior to joining Elders Tania spent 11 years at NAB,
where she has most recently held the role of Executive,
CFO for Business and Private Banking
Tania has strong ties to the agricultural sector, having
grown up on a sheep and cattle property at Casterton
in Western Victoria and remains actively involved in
owning and managing rural properties
Tania also brings experience of running regional
banking territories at ANZ. This background gives
Tania insight into the needs of Elders’ customers and
Australian farmers more generally.
Malcolm Hunt
Executive General Manager National & Victoria, Riverina
GCM, SMDP (AGSM), Wool Classer, Licensed RE Agent VIC, NSW, TAS, ACT, MAICD
Malcolm was appointed as Executive General Manager
National and Victoria, Riverina in March 2021. Prior to
this appointment, Malcolm was Zone General Manager
South, where he led a key business unit that has
played a significant role in Elders’ resurgence and
has continued to expand the Elders footprint, whilst
assisting producers increase the productivity and
profitability of their businesses.
Malcom has close to 40 years of agricultural
experience under his belt as a wool broker, stock &
station agent and network manager.
Executive Management
71
Peter Hastings
Company Secretary & General Counsel
BA, LLB, GDLP, FGIA, Grad Dip Applied Corporate Governance, GAICD
Peter was appointed Elders’ Company Secretary and
General Counsel in 2010. He has responsibility for the
Company’s legal and compliance, company secretarial,
risk and insurance functions.
Peter was an integral member of the Elders’ team
that worked hard to protect shareholder interests
through many years of financial distress and
which, subsequently, has successfully implemented
stabilisation, and now growth strategies.
Peter has nearly three decades of experience gained
in legal and governance roles with Elders, other in
house legal positions and in private and government
legal practice.
Viv Da Ros
Chief Information Officer
MBA (Manchester), MPM, GAICD
Viv was appointed to the position of CIO in February
2021 and is responsible for leading the technology/
business transformation program at Elders – a multi
year change program that will see the introduction
of modern technologies to simplify and enhance
interactions with our customer base through traditional
and digital channels.
In addition to his CIO remit, Thomas Elder Institute
(TEI) and Thomas Elder Consulting (TEC) also report
into Viv.
Olivia Richardson
Executive General Manager People, Culture & Safety
BMgmt (Hons), GAICD
Olivia was appointed General Manager People and
Culture in 2018, with the Safety function included in
her portfolio from 1 October 2020.
Olivia’s priorities include maintaining an engaged
and enabled workforce, investment in learning and
development programs, creating a diverse and
inclusive workforce, building on the pride in the pink
shirt and driving a zero harm workplace.
Having been with Elders for 13 years, she is well
acquainted with Elders people, appreciating that
they are loyal and committed to doing the best for
their communities.
With the emergence of the ag-tech space, there are
many implications and opportunities for Elders and our
customers. Moving the TEI and TEC services into the
CIO portfolio allows us to take a broader view of this
space and incorporate viable opportunities into our
technology roadmap.
Viv’s 30 years of experience includes senior leadership
positions in Australia, Asia and Europe, predominantly
in the retail sector with the AS Watson Group, Tesco,
KPMG and Dairy Farm International. More recently Viv
spent four years running the technology and digital
functions for Caltex Australia, based out of Sydney.
Notable achievements include refreshing the learning
and development framework to ensure people are
equipped with the relevant skills and technical
expertise to do their job; and the refresh of our
Employee Value Proposition aimed at promoting Elders
as a great place to work to drive retention and
attraction of high calibre staff.
Prior to Elders, Olivia has worked across Human
Resources in FMCG, Financial Services and
Telecommunications throughout Australia, the UK
and Europe.
72
Elders 2021 Annual Report
Tom Russo
Executive General Manager Real Estate, Brand & Communications
LLB (Hons), BA, Grad Dip LP, Dip Prop Serv (Agency Mgt)
Tom was appointed General Manager Real Estate
in 2016.
Since assuming responsibility for the real estate
product, Tom has focused on building the capability of
the product team to deliver outstanding support to the
real estate business and establish a foundation upon
which to grow it.
The team has created a compelling attraction
and retention proposition by vastly improving the
marketing, digital strategy, training capability and
transaction support. Tom has also established himself
as a leading transaction adviser in the farmland
investment space.
Liz Ryan
Executive General Manager Strategy & Retail
BCom/DipArts, MBA (Cambridge), GAICD
Liz was appointed Executive General Manager
Strategy & Retail in March 2021. Liz is responsible
for developing and driving the Retail business
strategy, with focus on growing Elders market share
and capturing gross margin efficiencies through
improvements in our end-to-end supply chain model.
Prior to Liz’s recent appointment, Liz was General
Manager Strategy, Customer & Digital, focussed on
customer experience across all channels integrated
with digital solutions, marketing and strategy.
Tom previously played a pivotal role in devising
and implementing the turnaround strategy for Elders,
including executing a number of large and complex
divestment initiatives.
Prior to Elders, Tom was the Chief Executive of
a specialist international law firm and practiced
as a corporate lawyer with a focus on mergers
and acquisitions, corporate finance, complex
contractual projects, corporate governance and
intellectual property.
Liz joined Elders in 2016, as General Manager Financial
Services, and during her tenure in this role she led
the Rural Bank contract renegotiation, StockCo and
Elders Insurance equity acquisitions and the Livestock
in Transit delivery warranty launch. Financial Services
contribution to Elders earnings grew significantly
during this period.
Prior to Elders, Liz worked in the management
consulting sector and across strategy, business
development and marketing roles at General Electric
and Singapore Airlines.
David Adamson
Executive General Manager Agency & Financial Services
MBus (Acct), BAgBus, GAICD, Cert Pastoral Production – Longreach Pastoral College
David was appointed General Manager Agency in
2014, with Financial Services included in his portfolio
from 2019.
He is responsible for product strategy and
implementation across the livestock, wool, grain and
financial services product suite.
David sits on the boards of our joint venture partners
Elders Insurance and Clear Grain Exchange.
With a background in agricultural production, agri
finance and operations, David is well positioned to
lead product development across all parts of the
agency and financial services businesses.
Executive Management
73
Kiim Lim
Executive General Manager Business Development
BCom, CPA , GAICD
Kiim was appointed to the role in 2018.
She has successfully led the completion and
integration of many acquisitions underpinning the
growth of Elders, including Australian Independent
Rural Retailers (AIRR), Titan AG, Livestock and Wool in
Transit delivery warranty and various retail, agency and
real estate bolt-ons.
Her focus is to ensure long term sustainable growth
through the acquisition of high quality businesses in
strategic areas throughout the network and through
the supply chain.
Kiim commenced with Elders in March 2006, and has
held various roles within the finance team.
Prior to Elders, Kiim worked with PwC in Malaysia
and Adelaide.
Nick Clark
Executive General Manager Business Improvement
BCom, CA, GAICD
Nick was appointed General Manager Business
Improvement in 2019.
He is responsible for supporting the organic growth
portion of Elders stated 5-10% EBIT growth through the
cycles at 15% return on capital.
Nick’s current priorities are capturing more gross
margin in Rural Products through optimised pricing,
backward integration and supply chain efficiency.
He also has responsibility for the Company’s
sustainability function, both building on the wide
range of activities we already do, and developing
an industry leading authentic sustainability program
and outcomes.
Having been with Elders since 2010 in a variety
of Finance roles, Nick’s experience ensures that the
business maintains unflinching financial discipline and
a commitment to cost and capital efficiency.
74
Elders 2021 Annual Report
Gold standard
wool lifting
returns for
Grenwich Pastoral
Tasmanian graziers Chris
and Hannah Downie are
now reaping the rewards
from their commitment to
sustainable and responsible
wool production, after
achieving certification under
an internationally recognised
standard with help from the
Elders wool team.
Developed by a number of wool clothing
apparel retailers and brands from Europe,
America and Japan, the The Responsible Wool
Standard (RWS) certification recognises the
Downies’ progressive approach to managing
sheep welfare and protecting the environment.
It is the gold standard for wool, providing them
and their consumers with confidence that they
are sourcing product from reputable producers.
According to Lachie Brown, State Wool
Manager for Elders across Victoria, Tasmania
and the Riverina, the premium for RWS certified
wool ranges from 5 to 15% and demand is
across the full range of wool types.
Lachie says that the Elders wool service team is
currently working with a number of progressive
graziers to help them achieve RWS certification
and market their wool for better returns.
The Downies run a pure merino flock, shearing
15,000 sheep a year in June and averaging 18.5
to 19.5 micron, with 70-72% yield and a staple
length of 100 to 105 mm.
Their farm is based around Hamilton in the
Derwent Valley on 5,000 hectares, with country
ranging from irrigated river flats to native
pasture on steep hills at up to 400 metres
above sea level.
“For wool growers who have stopped mulesing,
being RWS certified not only certifies this,
but highlights their sustainable and ethical
production systems, resulting in increased
recognition and rewards in the market,” he said.
“It’s a challenging environment,” Chris said.
“Our winters are quite harsh and the summers
are hot and dry. We only have a short
growing season and a low 400 mm annual
average rainfall.”
Lambing is timed for late winter to coincide
with the start of the spring growing season and
they keep stocking rates low at approximately 5
DSE/ha, to maintain pasture cover and protect
the soil from erosion.
They have a good, reliable team of
local shearers and work closely with the
team at Elders Bothwell, including Damien
Whiteley on sheep classing and David Dare
for merchandise.
“Damien plays an important role in guiding
breeding decisions and continues to assist with
our transition to non-mulesing,” said Chris.
“Overall, our number one focus is passing the
farm on to the next generation, as it has been
passed on to me.
“I’m a sixth-generation farmer and we have two
young boys, Henry and William. We’re always
trying to operate as sustainably as we can.”
Chris and Hannah Downie from Greenwich
Pastoral at Hamilton in southern Tasmania
decided to go down the non-mulesing path
several years ago, starting with their wethers.
It has now been 12 months since they stopped
mulesing in all their sheep.
“While it hasn’t been long, it’s been successful
for us so far,” said Chris.
“It has meant adjusting our shearing dates
slightly, and we are shearing all our hoggets
and lambs three times in their first two years to
keep wool length under control, but we are in a
good environment for it and our sheep are bred
to suit non-mulesing.”
While not mulesing is an important step
to achieving certification, it isn’t the
only requirement.
Lachie worked with Chris to complete an
extensive on-farm audit, ensuring Greenwich
Pastoral fulfilled all the requirements for
RWS certification.
This included setting up environmental
monitoring sites, meeting a range of
progressive animal handling standards and
complying with best practice workplace
employment and health and safety standards.
Chris says it has made a big difference to
their returns and estimates they are achieving
a premium of 5 to 10% on all their wool thanks
to the RWS certification.
“One week recently we sold 80 bales before
the auction that potentially wouldn’t have sold
at all or would have gone for a significant
discount,” he said.
Greenwich Pastoral
75
"Our number one focus is
passing the farm on to the
next generation, as it has
been passed on to me. We’re
always trying to operate as
sustainably as we can"
Chris Downie
Greenwich Pastoral, Tasmania
76
Elders 2021 Annual Report
Elders Limited Annual Financial Report
77
FINANCIALREPORT2021 78
Elders 2021 Annual Report
Elders
Limited
Annual
Financial
Report
30 September 2021
Elders Limited Annual Financial Report
79
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
About this report
Group Performance
1 Segment Information
2 Revenue and Expenses
3
Income Tax
4 Earnings Per Share
Working Capital
5 Receivables
6 Livestock
7
Inventory
8 Trade and Other Payables
Capital Employed
9 Property, Plant and Equipment
10 Leases
11
Intangibles
12 Equity Accounted Investments
13 Provisions
Net Debt
14 Cash Flow Statement Reconciliation
15
Interest Bearing Loans and Borrowings
Risk Management
16 Financial Instruments
Equity
17 Contributed Equity
18 Reserves
19 Dividends
Group Structure
20
Investments in Controlled Entities
21 Parent Entity
22 Business Combinations – Changes in the Composition of the Entity
Other Notes
23 Expenditure Commitments
24 Contingent Liabilities
25 Related Party Disclosures
26 Share Based Payment Plans
27 Auditor's Remuneration
28 Key Management Personnel
29 Subsequent Events
Directors' Declaration
80
81
82
83
84
84
87
89
90
92
93
94
95
96
97
99
101
103
104
106
107
108
113
113
114
115
119
120
121
122
122
123
124
124
124
125
80
Elders 2021 Annual Report
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2021
Sales revenue
Cost of sales
Gross profit
Equity accounted profits
Distribution expenses
Administrative expenses
Finance costs
Profit before income tax (expense)/benefit
Income tax (expense)/benefit
Net profit for the period
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations
Net gains on cash flow hedges
Other comprehensive profit/(loss) for the period, net of tax
Note
2
12
2
3
2021
$000
2020
$000
2,548,924
2,092,618
(2,030,501)
(1,662,371)
518,423
10,897
430,247
7,281
(287,090)
(256,554)
(75,767)
(8,755)
157,708
(3,924)
153,784
343
932
1,275
(67,584)
(9,325)
104,065
21,221
125,286
(742)
-
(742)
Total comprehensive income for the period
155,059
124,544
Profit for the period is attributable to:
Non-controlling interest
Owners of the parent
Net profit for the period
Total comprehensive income for the period is attributable to:
Non-controlling interest
Owners of the parent
Total comprehensive income for the period
Reported 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.
4,007
149,777
153,784
4,007
151,052
155,059
2,339
122,947
125,286
2,339
122,205
124,544
4
4
95.8¢
95.5¢
79.8¢
79.3¢
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2021
Elders Limited Annual Financial Report
81
Note
2021
$000
2020
$000
Current assets
Cash and cash equivalents
Trade and other receivables
Livestock
Inventory
Total current assets
Non current assets
Other financial assets
Equity accounted investments
Property, plant and equipment
Right-of-use assets
Intangibles
Deferred tax assets
Total non current assets
Total assets
Current liabilities
Trade and other payables
Interest bearing loans and borrowings
Lease liabilities
Current tax payable
Provisions
Total current liabilities
Non current liabilities
Other payables
Interest bearing loans and borrowings
Lease liabilities
Provisions
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed 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.
14
5
6
7
12
9
10
11
3
8
15
10
3
13
8
15
10
13
17
18
48,063
734,769
56,237
321,683
1,160,752
1,269
57,936
36,018
105,739
332,643
102,673
636,278
50,741
601,834
44,734
255,930
953,239
1,269
56,473
32,268
100,802
306,247
103,767
600,826
1,797,030
1,554,065
648,294
154,265
37,972
974
81,870
923,375
19,204
-
72,705
3,154
95,063
517,120
158,691
28,500
1,034
65,485
770,830
7,177
25,000
76,001
2,731
110,909
1,018,438
881,739
778,592
672,326
1,651,006
1,645,561
(26,887)
(848,694)
775,425
3,167
778,592
(27,670)
(946,890)
671,001
1,325
672,326
82
Elders 2021 Annual Report
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 September 2021
Cashflows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest and other finance costs paid
Income tax (paid)/refunded
Net operating cash flows
Cash flows from investing activities
Payments for property, plant and equipment
Payments for equity accounted investments
Payments for intangibles
Note
2021
$000
2020
$000
10,638,812
8,566,990
(10,495,672)
(8,424,483)
9,584
(7,727)
(2,840)
7,097
(7,820)
557
14
142,157
142,341
(6,378)
(150)
(1,845)
(7,378)
(3,300)
(1,511)
Payments for acquisitions through business combinations, net of cash acquired
22
(28,028)
(111,883)
Proceeds from sale of property, plant and equipment
Net investing cash flows
Cash flows from financing activities
(Repayment)/proceeds of borrowings
Payments of lease liabilities
Dividends paid
Partnership profit distributions/dividends paid
Net financing cash flows
Net (decrease)/increase 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.
911
924
(35,490)
(123,148)
(29,426)
(29,286)
(48,468)
(2,165)
(109,345)
(2,678)
50,741
48,063
83,504
(31,835)
(25,194)
(2,240)
24,235
43,428
7,313
50,741
14
Elders Limited Annual Financial Report
83
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2021
Issued capital
Reserves
Retained
earnings
Non-controlling
interest
Total equity
As at 1 October 2020
Profit for the period
Other comprehensive income/(loss):
Exchange differences on translation of foreign operations
Cash flow hedge and fair value of derivatives, net of tax
Total comprehensive income/(loss) for the period
Transactions with owners in their capacity as owners:
Dividends paid
Dividend reinvestment plan
Partnership profit distributions/dividends paid
Cost of share based payments
Reallocation of equity (note 18)
As at 30 September 2021
As at 1 October 2019
Profit for the period
Other comprehensive income/(loss):
Foreign currency translation differences for foreign operations
Total comprehensive income/(loss) for the period
Transactions with owners in their capacity as owners:
Issued capital
Dividends paid
Dividend reinvestment plan
Partnership profit distributions/dividends paid
Cost of share based payments
Reallocation of equity
As at 30 September 2020
$000
$000
$000
1,645,561
(27,670)
(946,890)
-
149,777
-
-
-
-
-
2,520
-
-
2,925
343
932
1,275
-
-
-
2,433
(2,925)
$000
1,325
4,007
-
-
$000
672,326
153,784
343
932
-
-
149,777
4,007
155,059
(49,061)
(2,520)
-
-
-
-
-
(2,165)
-
-
(49,061)
-
(2,165)
2,433
-
1,651,006
(26,887)
(848,694)
3,167
778,592
1,562,377
(27,230)
(1,043,490)
-
-
-
80,388
-
2,796
-
-
-
-
122,947
(742)
(742)
-
122,947
-
-
-
-
1,945
(1,643)
-
(25,194)
(2,796)
-
-
1,643
1,226
2,339
-
2,339
-
-
-
(2,240)
-
-
492,883
125,286
(742)
124,544
80,388
(25,194)
-
(2,240)
1,945
-
1,645,561
(27,670)
(946,890)
1,325
672,326
The accompanying notes form an integral part of this consolidated statement of changes in equity.
84
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
ABOUT THIS REPORT
Corporate information
The consolidated financial report of Elders Limited for the year ended 30 September 2021 was authorised for issue in accordance with a resolution of the
Directors on 15 November 2021. Elders Limited (the Parent) is a for profit company limited by shares incorporated and domiciled 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 1. References in this consolidated
financial report to ‘Elders’ are to Elders Limited and each of its controlled entities unless the context requires otherwise.
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) and International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). 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 under the ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument 2016/191,
issued by the Australian Securities and Investments Commission, all values are rounded to the nearest thousand dollars ($000) unless otherwise stated.
Both the functional and presentation currency of Elders and its Australian subsidiaries is Australian Dollars (AUD). Subsidiaries incorporated in countries
other than Australia (see note 1), which have a functional currency other than Australian Dollars, are translated to the presentation currency.
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 the statement of comprehensive income. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction.
The financial report has been prepared on a going concern basis.
Comparative information which relates to prior periods is restated to be comparable with current year disclosures.
Basis of consolidation
The consolidated financial statements comprise the financial statements of Elders Limited and its subsidiaries as at 30 September 2021. 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. 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.
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. 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 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.
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.
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. Judgements, estimates and assumptions which are material to the financial report are found in the following notes:
Note 3
Note 7
Note 9
Note 10
Note 11
Recovery of deferred tax assets
Accounting for rebates
Impairment of non-financial assets other than brand names and goodwill
Accounting for leases
Impairment of brand names and goodwill
Elders Limited Annual Financial Report
85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
ABOUT THIS REPORT
Impact of COVID-19
At the date of this report, COVID-19 remains a global pandemic as declared by the World Health Organisation. Elders has considered the impact of
COVID-19 when preparing the consolidated financial statements and related note disclosures, and continues to monitor the impact on our employees,
demand for Elders’ products and services, customers, communities and supply chains.
Elders fulfilled strong demand for its products and services by engaging in extended forward orders, mitigating the international supply chain constraints
for farm supply inputs. Agency Services did not experience any material supply chain impacts with Wool and Livestock markets improving due to strong
export demand and favourable prices. Real Estate Services benefited from increased residential and farmland turnover with low market supply and high
demand for properties.
Elders has continued to support government and community efforts to limit the impact of the COVID-19 pandemic and ensure the health and safety of our
team and customers, whilst also minimising business interruption. Elders has implemented travel restrictions, social distancing measures and deployed
protective equipment where needed. Whilst a number of our operations have been impacted throughout the year, Elders has largely been able to continue
operations safely through the adaption and resilience of our people.
Elders has also focused on mental health and wellbeing initiatives, with increased resourcing and new initiatives implemented during the course of the
year, particularly in response to the impacts of COVID-19 restrictions. Whilst Elders has successfully adapted to new ways of working, it has been crucial to
ensure that our team continue to feel connected and supported during periods of disruption, isolation and uncertainty.
Pandemic risk remains on Elders’ risk register and controls implemented in the business to mitigate COVID-19 impacts are operating effectively. Elders'
COVID-19 Response Committee held regular meetings to monitor, track and report business and financial reporting matters relating to COVID-19.
With Elders’ critical role in agriculture and rural and regional Australia, Elders maintained the decision to not stand down or reduce employment due to
COVID-19. Elders did not access any government support such as JobKeeper during the year ended 30 September 2021.
While the effects of COVID-19 do not change the significant estimates, judgements and assumptions in the preparation of consolidated financial
statements, it has increased the accounting estimation uncertainty and resulted in application of further judgement within those identified areas. Elders
has used accounting estimates based on forecasts developed on market information available at balance date.
Elders has reviewed the following material accounting judgements, estimates and assumptions within the accounting policies that have potential to be
impacted by the COVID-19 outbreak:
• Impairment of financial assets, specifically trade receivables: Elders assessed its trade receivables expected credit losses, given COVID-19 uncertainties.
This assessment did not indicate a material change to trade receivables and loss allowances. Refer to note 5 for further detail.
• Valuation of inventory: Elders has performed an assessment of inventory on hand at balance date to assess whether inventories are valued at the lower
of cost and net realisable value. Refer to note 7 for further detail.
• Impairment of non-financial assets, including brand names and goodwill: Elders has reviewed the conditions specific to the company and the assets
subject to impairment to assess whether any impairment triggers that may lead to impairment have been identified. Refer to note 11 for further detail.
• Financial Instruments risks. Elders has reviewed its' financial instruments to consider any material impacts of COVID-19 on its liquidity risk and credit
risk. Refer to note 16 for further detail.
Elders will continue to monitor and manage the impact of COVID-19 on its financial position and performance.
Changes to Accounting Policies
(i) Hedge accounting policy
From 1 October 2020, Elders applied the hedge accounting principles contained within AASB 9 Financial Instruments. As a result, the way Elders accounts
for the movements in fair values for derivative financial instruments, primarily cash flow hedges, has changed. For all effective cash flow hedges entered
into from 1 October 2020, Elders now recognises the movements in fair value of the derivative financial instruments in equity and only recognises the
cumulative difference in the statement of comprehensive income when the hedged item is recognised. Amounts accumulated in equity are included within
the initial cost of the asset where the hedged item subsequently results in the recognition of a non-financial asset such as inventory. Any ineffective
portion of a cashflow hedge is recognised immediately in the profit and loss. Hedge effectiveness is determined at the inception of the hedge relationship,
and prospectively assessed to ensure economic relationships remain between the hedging instrument and hedged item.
Effective 1 October 2020, at inception of a hedge relationship Elders documents the economic relationship between hedging instruments and hedged
items, including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items. Elders
also documents its risk management objective and strategy for undertaking its hedge transactions.
(ii) New and Revised Accounting Standards and Interpretations
A number of new amendments to standards and interpretations became operative for the financial year ended 30 September 2021. None of these have
materially impacted Elders and its policies.
(iii) Accounting Standards and Interpretations issued but not yet effective
Elders has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective. Elders has assessed the upcoming
standards, interpretations or amendments and concluded there is no material impact expected from the adoption of these new standards, interpretations
or amendments.
86
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
ABOUT THIS REPORT
The notes to the financial statements
The notes include information which is required to understand the financial statements and is material and relevant to the operations, financial position
and performance of Elders. They include the applicable accounting policies applied and significant estimates and judgements made. Specific accounting
policies are disclosed in their respective notes to the financial statements.
The notes are organised into the following sections:
Group Performance
Provides additional information regarding financial statement lines that are most relevant to explaining Elders’ performance during
the period.
Working Capital
Capital Employed
Net Debt
Risk Management
Equity
Provides additional information regarding financial statement lines that are most relevant to explaining the assets used to generate Elders’
trading performance during the period and liabilities incurred as a result.
Provides additional information regarding financial statement lines that are most relevant to explaining the capital investment made that
allows Elders to generate its operating result during the period and liabilities incurred as a result.
Provides additional information regarding financial statement lines that are most relevant to explaining Elders’ net debt position and
borrowings for the period.
Provides information relating to Elders’ exposure to various financial risks, its impact on the financial position and performance of Elders
and how these risks are managed.
Provides additional information regarding financial statement lines that are most relevant to explaining the equity position of Elders at the
end of the period, including the dividends declared and/or paid during the period.
Group Structure
Summarises how the group structure affects the financial position and performance of Elders as a whole.
Other Notes
Includes other notes that must be disclosed to comply with the accounting standards and other pronouncements, but that is not
immediately related to individual line items in the financial statements.
Elders Limited Annual Financial Report
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP PERFORMANCE – NOTE 1: SEGMENT INFORMATION
Identification of reportable segments
Elders has identified its operating segments to be Branch Network, Wholesale Products, Feed and Processing Services and Corporate Services and Other
Costs. These operating segments are 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
• Branch Network includes the provision of a range of products and services through a common distribution channel, including agricultural retail
products, agency and real estate services and financial services.
• Wholesale Products includes the AIRR business based in Shepparton, Victoria, supported by a network of warehouses to supply independent retail
stores throughout Australia.
• Feed and Processing Services includes Killara feedlot, a beef cattle feedlot near Tamworth in New South Wales. In China, Elders imports, processes and
distributes premium Australian meat.
• Corporate Services and Other Costs 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 Elders in reporting segments internally are the same as those contained in the financial statements. Segment results have
been determined on a consolidated basis and represent the earnings before corporate net financing costs and income tax expense.
2021
Sale of goods and biological assets
Debtor interest associated with sales
Interest revenue from related party advances
Commission revenue
Sales revenue
Equity accounted profits
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation
Depreciation on right-of-use assets
Segment result
Interest expense
Unwinding discount expense in regards to liabilities
Interest on lease liabilities
Finance costs
Profit before income tax benefit/(expense)
Segment assets
Segment liabilities
Net assets
Carrying value of equity accounted investments
Acquisition of non current assets (cash outflow)
Non cash income/(expense) other than depreciation and amortisation
Profit/(loss) on sale of non current assets
Branch
Network
Wholesale
Products
Feed and
Processing
Services
Corporate
Services and
Other Costs
Total
$000
$000
$000
$000
$000
1,689,152
328,642
161,991
1,160
2,180,945
7,552
2,585
357,842
-
-
-
-
-
-
-
-
-
7,552
2,585
357,842
2,057,131
328,642
161,991
1,160
2,548,924
10,897
-
-
-
10,897
234,039
(3,725)
(24,674)
205,640
39,023
(4,355)
(3,274)
31,394
5,462
(1,423)
(66)
3,973
(71,136)
(897)
(2,511)
(74,544)
207,388
(10,400)
(30,525)
166,463
(5,355)
(1,028)
(2,372)
(8,755)
157,708
1,157,142
608,714
548,428
302,488
87,687
214,801
57,936
32,476
(5,075)
423
-
-
-
-
87,668
12,291
75,377
-
2,197
58
-
249,732
309,746
1,797,030
1,018,438
(60,014)
778,592
-
1,728
57,936
36,401
(45,039)
(50,056)
-
423
88
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP PERFORMANCE – NOTE 1: SEGMENT INFORMATION
2020
Sale of goods and biological assets
Debtor interest associated with sales
Interest revenue from related party advances
Commission revenue
Sales revenue
Equity accounted profits
Earnings before interest, tax, depreciation and amortisation
Depreciation and amortisation
Depreciation on right-of-use assets
Segment result
Interest expense
Unwinding discount expense in regards to liabilities
Fair value adjustments of financial instruments
Interest on lease liabilities
Finance costs
Profit before income tax benefit/(expense)
Segment assets
Segment liabilities
Net assets
Carrying value of equity accounted investments
Acquisition of non current assets (cash outflow)
Non cash income/(expense) other than depreciation and amortisation
Profit/(loss) on sale of non current assets
Branch
Network
Wholesale
Products
Feed and
Processing
Services
Corporate
Services and
Other Costs
Total
$000
$000
$000
$000
$000
1,382,798
245,619
149,645
860
1,778,922
7,410
4,226
302,060
-
-
-
-
-
-
1,696,494
245,619
149,645
7,281
-
-
180,816
(2,903)
(28,254)
149,659
28,392
(3,729)
(2,660)
22,003
8,149
(1,127)
(416)
6,606
969,071
485,566
483,505
56,473
120,147
(7,270)
524
265,616
74,297
191,319
-
-
-
-
79,805
13,511
66,294
-
2,197
(440)
-
-
-
-
860
-
(62,175)
(855)
(1,848)
(64,878)
239,573
308,365
(68,792)
-
1,728
7,410
4,226
302,060
2,092,618
7,281
155,182
(8,614)
(33,178)
113,390
(5,197)
(1,289)
(216)
(2,623)
(9,325)
104,065
1,554,065
881,739
672,326
56,473
124,072
(13,472)
(21,182)
-
524
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP PERFORMANCE – NOTE 2: REVENUE AND EXPENSES
Sales revenue
Sale of goods and biological assets
Debtor interest associated with sales
Interest revenue from related party advances
Commission revenue
Total sales revenue
Finance costs
Interest expense
Unwinding discount expense in regards to liabilities
Fair value adjustments of financial instruments
Interest on lease liabilities
Total finance costs
Specific expenses: depreciation and amortisation
Depreciation and amortisation
Depreciation on right-of-use assets
Total depreciation and amortisation
Specific expenses: employee benefit expense
Salaries, wages and incentives
Superannuation and other employee costs
Share based payments
Total employee benefit expense
Elders Limited Annual Financial Report
89
Note
25
2021
$000
2020
$000
2,180,945
1,778,922
7,552
2,585
357,842
2,548,924
7,410
4,226
302,060
2,092,618
5,355
1,028
-
2,372
8,755
10,400
30,525
40,925
190,702
37,928
2,433
231,063
5,197
1,289
216
2,623
9,325
8,614
33,178
41,792
166,538
32,231
1,945
200,714
Operating lease expenditure
1,766
1,569
Accounting Policy
Elders recognises revenue as or when each performance obligation from contracts with customers are satisfied and considers whether there are
separate elements of each transaction to which a portion of the transaction price needs to be allocated. The majority of Elders’ revenue is recognised
at a point in time and attributable to the sale of retail products, wholesale products, provision of agency services and real estate services, with
the exception being certain financial services revenue which is recognised over a period of time. There were no significant judgements in revenue
recognition. The following specific recognition criteria must also be met before revenue is recognised:
(i) Sale of goods and biological assets
Revenue from the sale of goods predominantly relates to sale of agricultural retail products and wholesale products, and is recognised at the point in
time when control has been transferred to the customer, generally through the execution of a sales agreement at point of sale or when the delivery of
goods has occurred.
(ii) Commission revenue
Commission revenue is derived from the rendering of agency services, real estate services and financial services and is generally recognised
at the point in time when the service is provided. In some cases, Elders will enter into contracts with customers that contain multiple
performance obligations and revenue will be recognised as each of these is satisfied. The transaction price is allocated to each performance
obligation accordingly.
(iii) Interest revenue
Interest income predominantly relates to revenue derived from trade receivables related to the sale of agricultural retail products and is recognised
as it accrues using the effective interest rate method.
90
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP PERFORMANCE – NOTE 3: INCOME TAX
Significant Accounting Judgements, Estimates and Assumptions
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.
(a) Major components of income tax expense are:
Income statement
Current income tax expense
Adjustments in respect of current income tax of previous years
Deferred income tax benefit
Income tax (expense)/benefit reported in the statement of comprehensive income
2021
$000
(52,098)
360
47,814
(3,924)
2020
$000
(1,337)
(103)
22,661
21,221
(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:
Total accounting profit before tax
Income tax expense at 30% (2020: 30%)
Adjustments in respect of current income tax of previous years
Share of equity accounted profits
Non-assessable losses
Recognition of previously unrecognised losses
Other
Income tax (expense)/benefit as reported in the statement of comprehensive income
157,708
104,065
(47,312)
(31,220)
360
3,269
(419)
42,461
(2,283)
(3,924)
(103)
1,957
(944)
53,324
(1,793)
21,221
Current tax payable
974
1,034
Tax losses not recognised as an asset
In the current year, Elders has recognised the full value of deferred tax assets relating to revenue tax losses in the statement of financial position. In the
prior period, Elders held $42.7 million of tax losses for which no deferred tax asset was recognised in the statement of financial position. The tax losses are
available indefinitely for offset against future taxable profits subject to continuing to meet relevant statutory tests.
Tax losses carried forward at the end of the year
Value of tax losses carried forward (net)
109,946
116,113
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.
Tax Transparency Report
Elders has prepared a voluntary tax transparency report which is available to view online or to download from the Elders’ website at elders.com.au. The
report sets out relevant tax information for Elders and its controlled entities for the year ended 30 September 2021. The tax transparency report has not
been audited and does not form part of the Financial Report.
Elders Limited Annual Financial Report
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP PERFORMANCE – NOTE 3: INCOME TAX
(c) Major components of deferred income tax:
Statement of
Financial Position
Movement
Deferred income tax assets
Losses available to offset against future taxable income
Provision for employee entitlements
Other provisions
Capitalised expenses
Lease liabilities
Other
2021
$000
109,946
24,431
4,342
3,187
32,992
1,129
2020
$000
116,113
19,189
3,498
3,563
31,334
636
Gross deferred income tax assets
176,027
174,333
Deferred income tax liabilities
Inventory
Intangibles
Right-of-use assets
Other
Gross deferred income tax liabilities
Net deferred tax asset
Movement in net deferred tax asset
Deferred income tax benefit recognised in the statement of
comprehensive income
Utilisation of booked tax losses
Deferred income tax assets/(liabilities) recognised for acquisitions of
businesses (principally related to acquired intangibles)
Deferred income tax (expense)/benefit recognised in equity
(1,601)
(37,202)
(32,269)
(2,282)
(73,354)
102,673
(1,695)
(38,080)
(30,254)
(537)
(70,566)
103,767
2021
$000
(6,167)
5,242
844
(376)
1,658
493
1,694
94
878
(2,015)
(1,745)
(2,788)
2020
$000
15,500
6,123
551
(267)
31,334
(597)
52,644
(224)
(15,567)
(30,254)
(16)
(46,061)
(1,094)
6,583
47,814
22,661
(48,628)
120
(400)
(1,094)
-
(16,078)
-
6,583
Accounting Policy
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.
Deferred income tax is recognised on temporary differences. Deferred income tax assets are recognised for taxable temporary differences and
unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences.
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.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST. Receivables and payables are stated inclusive of the amount of GST
receivable or payable. The net amount of GST recoverable from, or payable to, the 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.
92
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP PERFORMANCE – NOTE 4: EARNINGS PER SHARE
Weighted average number of ordinary shares (‘000) used in calculating basic EPS
Dilutive performance rights (‘000)
Adjusted weighted average number of ordinary shares used in calculating dilutive EPS (‘000)
2021
156,305
579
156,884
2020
154,094
975
155,069
The following reflects the net profit/(loss) and share data used in the calculations of earnings per share (EPS):
2021
$000
2020
$000
Reported operations
Basic and dilutive
Net profit attributable to members (after tax)
149,777
122,947
Reported operations earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
95.8¢
95.5¢
79.8¢
79.3¢
Accounting Policy
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
WORKING CAPITAL – NOTE 5: RECEIVABLES
Current
Trade debtors
Loss allowance
Amounts receivable from equity accounted investments
Livestock deferred receivables
Prepayments
Other receivables
Total current receivables
Elders Limited Annual Financial Report
93
2021
$000
2020
$000
695,274
(9,257)
686,017
17,520
16,276
3,909
11,047
571,620
(8,245)
563,375
21,185
6,523
2,375
8,376
734,769
601,834
Included in trade debtors is $93.9 million (2020: $74.1 million) which is subject to credit insurance with various terms and conditions.
Trade debtors are generally on 30 to 90 day terms with the exception of Livestock debtors which are on 10 day terms. In some instances, deferred terms in
excess of 90 days are offered, where Elders also receives extended creditor terms.
In line with AASB 9, trade debtors are reviewed in accordance with the simplified approach to measuring expected credit losses based on the payment
profile of sales over a period of five years and the corresponding historical credit losses experienced within this period, which is reassessed annually. The
historical loss rates are adjusted to reflect current and forward-looking information (including agricultural specific macroeconomic factors) affecting the
ability of the customers to settle the debtors. Elders assessment of trade receivables and loss allowances, given COVID-19 uncertainties, did not indicate a
material change to trade receivables and loss allowances. On that basis, the loss allowance for trade debtors was determined as follows:
Current
1-30 days
past due
31-60 days
past due
61-90 days
past due
+91 days
past due
Total
$000
$000
$000
$000
$000
$000
2021
Expected loss rate
Gross carrying amount
Loss allowance
2020
Expected loss rate
Gross carrying amount
Loss allowance
< 1%
597,142
1,483
< 1%
472,309
309
< 1%
72,683
218
< 1%
65,611
156
< 2%
9,345
182
< 1%
8,052
78
< 1%
2,918
6
< 1%
8,732
76
56%
13,186
7,368
45%
16,916
7,626
Reconciliation of loss allowances for trade debtors at beginning and end of period:
Opening loss allowance
Increase in loss allowance recognised in profit or loss
Trade debtors written off
Increase in loss allowance through acquisitions
Closing loss allowance
2021
$000
8,245
2,172
(1,254)
94
9,257
695,274
9,257
571,620
8,245
2020
$000
4,641
3,741
(727)
590
8,245
Related party receivables
For terms and conditions of related party receivables, including from equity accounted investments, refer to note 25.
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 16.
Foreign exchange and interest rate risk
Details regarding the foreign exchange and interest rate risk exposure are disclosed in note 16, including those relating to derivative related balances.
94
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
WORKING CAPITAL – NOTE 5: RECEIVABLES
Accounting Policy
Trade receivables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest rate method,
less expected credit losses. To measure the expected credit losses, trade receivables have been grouped on days past due.
The expected credit loss rates are based on payment profile over a historical period and the credit losses experienced within this period. The
historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of the customers to
settle the receivables.
Livestock deferred receivables are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest
rate method. All balances hold a maturity of less than 12 months. Interest on livestock deferred receivables is recognised as it accrues using the
effective interest rate method.
WORKING CAPITAL – NOTE 6: LIVESTOCK
Current
Total livestock
Reconciliation of fair value of livestock at beginning and end of period:
Opening fair value
Purchases
Cost of sales
Fair value increment/(decrement)
Closing fair value
2021
$000
2020
$000
56,237
44,734
44,734
131,925
35,310
124,032
(120,480)
(114,168)
58
56,237
(440)
44,734
At balance date 22,265 head of cattle (2020: 20,178) are included in livestock. This represents cattle held in Australia for feedlotting purposes.
Elders 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 is exposed to risks arising from fluctuations in
price and sales volumes, and product substitution. Where possible, Elders manages these risks by aligning volumes with market supply and demand, and
through the sale of livestock on forward contracts.
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.
Accounting Policy
Elders holds biological assets in the form of livestock. Livestock is measured at fair value internally as there is no observable market for them. Where
there are unobservable inputs for an asset or liability, these are classified as Level 3 Price Inputs. The value is based on the estimated exit price per
kilogram and the value changes for the weight of each animal as it progresses through the feedlot program. The key factors affecting the value of
each animal are price/kg, days on feed and the feed conversion ratio. The market value increments or decrements are recorded in profit and loss.
Significant changes in any of the significant unobservable valuation inputs for feedlot cattle in isolation would result in significantly higher or lower
fair value measurement.
Elders Limited Annual Financial Report
95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
WORKING CAPITAL – NOTE 7: INVENTORY
Significant Accounting Judgements, Estimates and Assumptions
Accounting for rebates
Elders receives rebates associated with the purchase of retail goods from suppliers. These vary in nature and include price and volume rebates.
Rebates received, in line with the relevant contractual arrangements, are recognised as a reduction to cost of sales when the sale of the particular
product occurs. Inventory on hand is recognised net of rebates.
Elders pays rebates associated with the sales of wholesale goods to suppliers. These vary in nature and include price and volume rebates.
Rebates paid, in line with the relevant contractual arrangements, are recognised as a reduction to sales revenue when the sale of the particular
product occurs.
Current
Retail and Wholesale
Other
Provision for obsolescene
Total inventory
2021
$000
2020
$000
315,180
9,750
(3,247)
321,683
245,771
11,608
(1,449)
255,930
Inventory write-downs recognised as an expense totalled $4.2 million (2020: $3.0 million). There were no additional write-downs recognised to the
carrying values of inventories from the impact of COVID-19 at 30 September 2021.
Accounting Policy
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.
Supplier rebates received are recognised as a reduction in the cost of inventory and are recorded as a reduction in cost of sales when the inventory
is sold.
96
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
WORKING CAPITAL – NOTE 8: TRADE AND OTHER PAYABLES
Current
Trade creditors
Payables associated with supplier financing arrangements
Other creditors and accruals
Payables to associated companies
Non current
Other creditors and accruals
Total trade and other payables
2021
$000
2020
$000
546,997
26,050
73,541
1,706
648,294
19,204
667,498
452,775
8,257
54,539
1,549
517,120
7,177
524,297
Interest rate, foreign exchange and liquidity risk
Information regarding interest rate, foreign exchange and liquidity risk exposure is set out in note 16, including those relating to derivative
forward contracts.
Accounting Policy
Trade and other payables are carried at amortised cost and due to their short term nature they are not discounted. The carrying amount of trade and
other payables are assumed to be the same as their fair values. They represent liabilities for goods and services provided to 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. Information regarding financial guarantees is set out in note 24.
Payables associated with supplier financing arrangements
To manage the cash flow conversion cycle on some products procured and to ensure that suppliers receive payment in a time period that suits
their business model, Elders offers some suppliers the opportunity to use supplier financing arrangements. Elders evaluates supplier financing
arrangements against a number of indicators to assess if the balance continues to hold the characteristics of a payable or is required to be
reclassified as borrowings. These indicators include whether the payment terms exceed customary payment terms within the industry of typically
less than 90 days. During the course of the year and as at 30 September 2021, none of the balances subject to supplier financing arrangements
met the characteristics to be reclassified as borrowings and the balances remained in other payables. Balances associated with supplier financing
arrangements are unsecured. In the statement of cash flows supplier financing is classified within cash flows from operating activities.
Elders Limited Annual Financial Report
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
CAPITAL EMPLOYED – NOTE 9: PROPERTY, PLANT AND EQUIPMENT
Significant Accounting Judgements, Estimates and Assumptions
Impairment of non-financial assets other than brand names and goodwill
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.
Freehold land
Buildings
Leasehold
improvements
Plant and
equipment
(owned)
Plant and
equipment
(leased)
Assets under
construction
Total
$000
$000
$000
$000
$000
$000
$000
2021
Carrying amount at beginning of period
Additions
Additions through business combinations
Disposals
Depreciation expense
Exchange fluctuations
Transfers from assets under construction
3,516
10
-
(42)
-
-
-
11,419
1,128
-
(29)
(740)
-
-
4,502
547
92
(7)
(851)
-
113
12,473
4,096
2,787
(410)
(3,438)
10
239
Carrying amount at end of period
3,484
11,778
4,396
15,757
Cost
Accumulated depreciation and impairment
2020
Carrying amount at beginning of period
Transfers to right-of-use assets
Additions
Additions through business combinations
Disposals
Depreciation expense
Exchange fluctuations
Transfers from assets under construction
Other
3,484
-
3,484
3,418
-
-
102
(4)
-
-
-
-
20,242
(8,464)
11,778
13,536
(9,140)
4,396
39,251
(23,494)
15,757
7,860
-
3,623
-
(105)
(605)
-
646
-
5,207
-
161
-
(15)
(853)
-
-
2
8,780
-
3,352
2,876
(276)
(2,338)
81
-
(2)
Carrying amount at end of period
3,516
11,419
4,502
12,473
Cost
Accumulated depreciation and impairment
3,516
-
3,516
19,222
(7,803)
11,419
12,817
(8,315)
4,502
30,541
(18,068)
12,473
All property, plant and equipment is pledged as security, refer to note 15 for interest bearing loans and borrowings.
-
-
-
-
-
-
-
-
-
-
-
1,378
(1,378)
-
-
-
-
-
-
-
-
-
-
-
358
597
-
-
-
-
(352)
603
603
-
603
762
-
242
-
-
-
-
(646)
-
358
358
-
358
32,268
6,378
2,879
(488)
(5,029)
10
-
36,018
77,116
(41,098)
36,018
27,405
(1,378)
7,378
2,978
(400)
(3,796)
81
-
-
32,268
66,454
(34,186)
32,268
98
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
CAPITAL EMPLOYED – NOTE 9: PROPERTY, PLANT AND EQUIPMENT
Accounting Policy
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
Network infrastructure
Life
50 years
Lease term
3 to 10 years
5 to 25 years
Method
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 depreciation 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.
Elders Limited Annual Financial Report
99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
CAPITAL EMPLOYED – NOTE 10: LEASES
Significant Accounting Judgements, Estimates and Assumptions
Accounting for leases
In determining the lease term, Elders considers all facts and circumstances that create an economic incentive to exercise an extension option, or not
exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably
certain to be extended (or not terminated). Elders holds leases of operational importance (e.g. rural cornerstone property leases) which are expected
to be extended for the maximum available lease term. Leases of this nature have been assessed using the extended lease term. For all other leases,
the lease term excluding extension and termination options has been applied. The assessment is reviewed if a significant event or a significant
change in circumstances occurs which affects this assessment and that is within the control of Elders.
Where Elders is a lessee:
(a) Amounts recognised in the balance sheet
Reconciliation of carrying amounts of right-of-use assets at beginning and end of period:
2021
Carrying amount at beginning of period
Additions
Depreciation expense
Lease reassessments
Carrying amount at end of period
2020
Carrying amount at beginning of period
Reclassification of lease incentives on transition
Additions
Additions through business combinations
Depreciation expense
Lease modifications
Carrying amount at end of period
Reconciliation of carrying amounts of lease liabilities at beginning and end of period:
Carrying amount at beginning of period
Additions
Additions through business combinations
Interest expense
Lease reassessments
Lease modifications
Repayments of principal and interest
Carrying amount at end of period
Lease liabilities of which are:
● Current lease liabilities
● Non current lease liabilities
Properties
Motor
vehicles
Other
Total
$000
$000
$000
$000
86,722
12,099
13,343
5,436
737
-
100,802
17,535
(19,942)
(10,380)
(203)
(30,525)
10,907
89,786
7,020
15,419
-
534
17,927
105,739
20,172
1,065
117,892
96,655
(2,356)
-
14,761
-
4,819
-
(21,262)
(11,648)
(1,076)
86,722
-
13,343
-
-
-
(268)
(60)
737
2021
$000
104,501
17,535
-
2,372
17,927
-
(31,658)
110,677
37,972
72,705
110,677
(2,356)
4,819
14,761
(33,178)
(1,136)
100,802
2020
$000
117,892
4,819
14,761
2,623
-
(1,136)
(34,458)
104,501
28,500
76,001
104,501
100
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
CAPITAL EMPLOYED – NOTE 10: LEASES
Accounting Policy
Elders leases various offices, warehouses, retail stores and motor vehicles. Rental contracts are typically made for an average period of three years
but may have extension options as described below. Lease terms are negotiated on an individual basis and contain a wide range of different terms
and conditions. The lease agreements do not impose any covenants, however leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset with a corresponding liability at the date at which the leased asset is available for use. Each lease
payment is allocated between the liability and interest expense. The interest expense is charged to profit or loss over the lease period to produce a
constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the
asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the
following lease payments:
• fixed payments (including in-substance fixed payments), less any lease incentives receivable
• variable lease payment that are based on an index or a rate
• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option
Lease payments are discounted using Elders incremental borrowing rate, being the rate Elders would have to pay to borrow the funds necessary to
obtain an asset of similar value in a similar economic environment with similar terms and conditions.
Elders is exposed to potential future increases in variable lease payments based on an index or rate, which are not included in the lease liability until
they take effect. When adjustments to lease payments based on an index or rate take effect, the lease liability is reassessed and adjusted against the
right-of-use asset.
Right-of-use assets are measured at cost comprising the following:
• the amount of the initial measurement of lease liability
• any lease payments made at or before the commencement date less any lease incentives received
Payments associated with leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Low-value assets
comprise of IT equipment and office equipment. Elders does not have any short term leases with a lease term of 12 months or less.
Extension and termination options
Extension and termination options are included in Elders’ property leases. These terms are used to maximise operational flexibility in terms of
managing contracts. The majority of the extension and termination options held are exercisable only by Elders and not by the respective lessor.
Elders Limited Annual Financial Report
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
CAPITAL EMPLOYED – NOTE 11: INTANGIBLES
Significant Accounting Judgements, Estimates and Assumptions
Impairment of brand names and goodwill
Elders assesses impairment of 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 for
indicators of impairment. If indicators exist, assets are tested for impairment through determination of recoverable amounts of assets using the
higher of value in use and fair value less cost to sell.
Elders determines whether the brand names and goodwill are impaired or whether it is appropriate to reverse any previous impairments on an
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 names or goodwill is allocated.
Reconciliation of carrying amounts at beginning and end of period:
Non current
Goodwill
Rent rolls &
loan books
Brand names
Distribution
rights
Customer
intangibles
Other
Total
$000
$000
$000
$000
$000
$000
$000
2021
Carrying amount at beginning of period
Additions
Additions through business combinations
Amortisation
Impairment
146,952
305
27,894
-
-
8,214
1,540
865
(1,294)
-
79,162
23,000
44,476
4,443
306,247
-
1,078
-
-
-
-
-
-
-
-
(3,497)
-
415
-
(580)
(330)
2,260
29,837
(5,371)
(330)
Carrying amount at end of period
175,151
9,325
80,240
23,000
40,979
3,948
332,643
Cost
Accumulated amortisation and impairment
175,151
-
175,151
14,098
(4,773)
9,325
80,240
23,000
-
-
80,240
23,000
2020
Carrying amount at beginning of period
59,977
8,576
71,360
23,000
Additions
Additions through business combinations
Amortisation
Impairment
-
86,975
-
-
491
278
(1,131)
-
-
7,802
-
-
-
-
-
-
47,621
(6,642)
40,979
-
-
47,621
(3,145)
-
5,085
345,195
(1,137)
(12,552)
3,948
332,643
3,941
1,220
142
(542)
(318)
166,854
1,711
142,818
(4,818)
(318)
Carrying amount at end of period
146,952
8,214
79,162
23,000
44,476
4,443
306,247
Cost
Accumulated amortisation and impairment
146,952
-
146,952
11,693
(3,479)
8,214
79,162
23,000
-
-
79,162
23,000
47,621
(3,145)
44,476
5,574
(1,131)
4,443
314,002
(7,755)
306,247
For impairment testing purposes, all intangibles except for the Elders’ Brand Name have been allocated to the Branch Network and Wholesale Products
cash generating units as applicable. For Branch Network, $119.4 million of goodwill, $12.0 million of brand names and $23.0 million of distribution rights
were allocated for impairment testing. For Wholesale Products, $74.3 million of goodwill and $7.6 million of brand names were allocated for impairment
testing. The Elders Brand Name has not been allocated to individual cash generating units but rather assessed against all cash generating units expected
to benefit from it.
The recoverable amount of cash generating units has been determined based on a value in use calculation using cash flow projections approved by
management that covers a period of 5 years. Future cash flows are based on budgets and forecasts taking into account current market conditions and
known future business events that will impact cash flows. The discount rate applied to the cash flow projections is 10.0% pre-tax (2020: 10.0% 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.
102
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
CAPITAL EMPLOYED – NOTE 11: INTANGIBLES
The calculation of value in use for cash generating units was based on the following key assumptions:
Gross margin
Gross margin is expected to increase in financial year 2022 due to:
• increased earnings from geographical expansion through acquisitions and footprint growth
• higher earnings from continued organic growth focus across our product and service portfolio
• additional growth through the continued expansion of the backward integration strategy
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 2022 budget. No growth rate 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.
Elders has reviewed the key assumptions in its impairment assessment to assess whether any changes to the assumptions, including in relation to the
COVID-19 outbreak, would result in an impairment loss at 30 September 2021. Elders concluded that there were no reasonably possible changes to
assumptions which would result in an impairment loss at 30 September 2021.
Accounting Policy
(i) Brand Names
The brand name intangibles are deemed to have an indefinite useful life and are not amortised. The brand name value represents the value
attributed to brands when acquired through business combinations and is carried at cost less accumulated impairment losses. The brand names
have been determined to have an indefinite useful life due to there being no foreseeable limit to the period over which they are expected to generate
net cash inflows, given the strength and durability of the brands and the level of marketing support. The brands have 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.
Expenditure incurred in developing, maintaining or enhancing the brand names is expensed in the year that it occurred.
(ii) Goodwill
After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated impairment losses. Goodwill is not
amortised but is subject to impairment testing on an annual basis or whenever there is an indicator of impairment.
(iii) Rent rolls and loan books
Rent rolls and loan books have been acquired and are carried at cost less accumulated amortisation and impairment losses. These intangible assets
have been determined to have finite useful lives and are amortised over their useful lives of 10 years and tested for impairment whenever there is an
indicator of impairment.
(i)v Distribution rights
Amount relates to a livestock and wool delivery guarantee distribution right. After initial recognition, distribution rights are measured at cost less any
accumulated impairment losses. These intangible assets have been assigned an indefinite life and are subject to impairment testing on an annual
basis or whenever there is an indicator of impairment.
(iv) Customer intangibles
Customer intangibles relates to wholesale and member relationships recognised as part of the AIRR acquisition and are carried at cost less
accumulated amortisation and impairment losses. These intangible assets have been determined to have finite useful lives and are amortised over
their useful lives of 10 to 15 years and tested for impairment whenever there is an indicator present.
(vi) Other
Other intangibles mainly relate to software and development of IT infrastructure and are carried at cost less accumulated amortisation and
impairment losses. Software and IT intangible assets have been determined to have finite useful lives and are amortised over their useful lives of 5
years and tested for impairment whenever there is an indicator of impairment. Other intangibles also include indefinite life assets.
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
CAPITAL EMPLOYED – NOTE 12: EQUITY ACCOUNTED INVESTMENTS
Elders Limited Annual Financial Report
103
Balance
date
30-Jun
31-Dec
30-Jun
30-Jun
30-Jun
30-Jun
30-Sep
Ownership interest
2021
%
2020
%
50
20
30
30
33
33
49
50
20
30
30
-
-
49
Consolidated entity
investment
Contribution to
net profit
Dividends received
2021
$000
2,637
42,653
10,916
1,580
100
50
2020
$000
2,176
42,116
10,826
1,355
-
-
2021
$000
1,954
8,449
89
405
-
-
2020
$000
1,699
6,012
(1,339)
152
-
-
2021
$000
1,491
7,913
-
180
-
-
2020
$000
821
6,258
-
18
-
-
57,936
56,473
10,897
6,524
9,584
7,097
Auctions Plus Pty Ltd
Elders Insurance (Underwriting Agency) Pty Ltd
StockCo Holdings Pty Ltd
Clear Grain Pty Ltd
Agcrest Holdings Pty Ltd
Agcrest Land Holdings Pty Ltd
Elders Financial Planning Pty Ltd
Auctions Plus Pty Ltd
Elders Insurance (Underwriting Agency) Pty Ltd
StockCo Holdings Pty Ltd
Clear Grain Pty Ltd
Agcrest Holdings Pty Ltd
Agcrest Land Holdings Pty Ltd
Equity accounted investments
All equity accounted investments are Australian resident companies.
In addition to the contribution to Elders’ net profit from its investment in StockCo Holdings Pty Ltd, Elders also receives income from other revenue
streams. Further details are provided in note 25.
Summary financial information for equity accounted investees is as follows:
2021
Auctions Plus Pty Ltd
Elders Insurance (Underwriting Agency) Pty Ltd
StockCo Holdings Pty Ltd
Clear Grain Pty Ltd
Total
2020
Auctions Plus Pty Ltd
Elders Insurance (Underwriting Agency) Pty Ltd
StockCo Holdings Pty Ltd
Clear Grain Pty Ltd
Total
Profit/(loss) after
income tax
Assets
Liabilities
$000
$000
$000
3,907
42,247
298
1,350
47,802
3,399
30,058
(4,465)
506
29,498
8,415
97,610
294,274
5,178
405,477
6,835
75,753
224,855
1,614
309,057
3,140
88,000
292,838
3,827
387,805
2,484
66,425
223,357
1,118
293,384
Accounting Policy
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.
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 statement of comprehensive income reflects Elders’ share of the results of operations of the equity accounted investments.
104
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
CAPITAL EMPLOYED – NOTE 13: PROVISIONS
Reconciliation of carrying amounts at beginning and end of period:
2021
As at beginning of period
Arising during year
Utilised
Unused amounts reversed
Discount rate adjustment
Provisions arising from entities acquired
Disclosed as:
Current
Non current
Total
2020
As at beginning of period
Arising during year
Utilised
Unused amounts reversed
Discount rate adjustment
Provisions arising from entities acquired
Disclosed as:
Current
Non current
Total
Employee
benefits
Restructuring
provisions
Make good
Onerous
contracts
Other
Total
$000
$000
$000
$000
$000
$000
64,148
38,953
(23,422)
-
426
1,477
81,582
78,428
3,154
81,582
43,774
25,638
(7,858)
-
405
2,189
64,148
61,417
2,731
64,148
1,193
-
(709)
-
-
-
484
484
-
484
2,535
380
(1,722)
-
-
-
1,193
1,193
-
1,193
694
675
(199)
(174)
-
-
996
996
-
996
271
570
(47)
(100)
-
-
694
694
-
694
-
-
-
-
-
-
-
-
-
-
59
-
(59)
-
-
-
-
-
-
-
2,181
339
(433)
(125)
-
-
1,962
1,962
-
1,962
132
2,181
(122)
(10)
-
-
2,181
2,181
-
2,181
68,216
39,967
(24,763)
(299)
426
1,477
85,024
81,870
3,154
85,024
46,771
28,769
(9,808)
(110)
405
2,189
68,216
65,485
2,731
68,216
Elders Limited Annual Financial Report
105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
CAPITAL EMPLOYED – NOTE 13: PROVISIONS
Accounting Policy
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. The non-current
portion of this liability relates to the entitlement that Elders does not expect employees to take within 12 months of the reporting date.
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 corporate bonds with terms to maturity and currencies that match,
as closely as possible, the estimated future cash outflows.
(iii) Incentives
Includes corporate, network and other incentives. These are accrued throughout the reporting period, according to performance based measures.
Restructuring provisions
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 into leasing arrangements that require the leased asset to be returned at the end of the lease term in its original condition,
an estimate is made of the costs of restoration or dismantling of any improvements and a provision is raised.
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.
106
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
NET DEBT – NOTE 14: CASH FLOW STATEMENT RECONCILIATION
(a) Reconciliation of net profit after tax to net cash flows from operations
Profit after income tax expense
Adjustments for non cash items:
Depreciation and amortisation
Unwinding of discount in regards to payables
Equity accounted profits
Dividends from equity accounted investments
Other fair value adjustments
Impairments
Doubtful debts
Employee entitlements
Other provisions
Other write downs
Net profit on sale of non-current assets
Net tax movements
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
(c) Net debt reconciliation
Cash and cash equivalents
Borrowings - repayment within one year
Borrowings - repayment after one year
Lease liabilities
Net debt
Cash and liquid investments
Gross debt - fixed interest rates
Gross debt - variable interest rates
Net debt
2021
$000
2020
$000
153,784
125,286
40,925
1,028
(10,897)
9,584
(58)
330
2,172
39,379
715
4,216
(423)
1,154
2,433
41,792
1,289
(6,524)
7,097
2,525
318
3,741
26,043
3,021
2,956
(524)
(21,229)
1,945
244,342
187,736
(142,404)
(59,087)
99,306
142,157
(73,654)
(61,905)
90,164
142,341
48,063
50,741
48,063
50,741
(154,265)
(158,691)
-
(25,000)
(110,677)
(104,501)
(216,879)
(237,451)
48,063
50,741
(110,677)
(164,501)
(154,265)
(123,691)
(216,879)
(237,451)
Non-cash investing and financing activities disclosed in other notes are:
• acquisition of right-of-use assets – note 10
• shares issued a part of purchase consideration of a business combination – note 22
• dividend distributions through the issue of shares under the dividend reinvestment plan – note 19
• shares issued to eligible executives under Elders Long-Term Incentive Plan – note 26
At balance date, Elders held $52.6 million (2020: $29.8 million) of client monies in trust which are off balance sheet. The funds are held on behalf of
clients in the Real Estate business and Elders is bound by the relevant legislation in each state in relation to controls and governance over the funds.
Accounting Policy
Cash and cash equivalents in the statement of financial position comprise cash at bank 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
NET DEBT – NOTE 15: INTEREST BEARING LOANS AND BORROWINGS
Current
Unsecured loans
Trade receivables and other working capital funding
Non current
Secured loans
Total current and non current
Elders Limited Annual Financial Report
107
2021
$000
2020
$000
4,265
150,000
154,265
-
154,265
3,467
155,224
158,691
25,000
183,691
Elders has complied with all applicable bank covenants throughout the reporting period.
Elders also has an ancillary facility in relation to contingent funding, such as bank guarantees. As at 30 September 2021, $6.7 million had been issued
(2020: $6.5 million).
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). Trade receivables and
other working capital funding is secured over the underlying debtors. This facility expires in December 2023.
Fair value
The carrying value of interest bearing liabilities approximates fair value.
Accounting Policy
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.
108
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
RISK MANAGEMENT – NOTE 16: FINANCIAL INSTRUMENTS
Elders’ 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. Elders 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 15. At 30 September
2021 there was nil value of secured loans hedged under a floating to fixed arrangement (2020: $60.0 million), 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
Financial liabilities
Interest bearing loans and liabilities
Net exposure
2021
$000
2020
$000
48,063
50,741
(154,265)
(106,202)
(123,691)
(72,950)
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 balance dates, if interest rates had
moved as illustrated in the table below, with all other variables held constant, post tax profit and equity would have been affected as follows:
Post tax profit/equity
Higher/(lower)
+ 100 basis points
- 100 basis points
(1,062)
1,062
(730)
730
Elders Limited Annual Financial Report
109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
RISK MANAGEMENT – NOTE 16: 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 committed available lines of credit.
Elders manages its liquidity risk by monitoring the total cash inflows and outflows expected on a daily 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. Elders has not
identified or experienced additional liquidity risk as a result of COVID-19. As at 30 September 2021, Elders has $293.0 million of undrawn facilities (2020:
$258.0 million).
(i) 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 2021. 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 Elders can be required
to pay. When committed to make amounts available in instalments, each instalment is allocated to the earliest period in which Elders is required to pay.
For financial guarantee contracts, the maximum amount of the guarantee is allocated to the earliest period in which the guarantee can be called. The risk
implied from the values shown in the table below, reflects a balanced view of cash inflows and outflows of non-derivative financial instruments.
Carrying amount
Contractual
cash flows
$000
$000
6 months
or less
$000
6-12 months
> 1 years
$000
$000
2021
Non derivative financial assets:
Trade and other receivables
Non derivative financial liabilities:
Interest bearing loans and borrowings
Lease liabilities
Trade and other payables
Financial guarantees
Net inflow/(outflow)
2020
Non derivative financial assets:
Trade and other receivables
Non derivative financial liabilities:
Interest bearing loans and borrowings
Lease liabilities
Trade and other payables
Financial guarantees
Net inflow/(outflow)
744,026
744,026
(154,265)
(110,677)
(667,498)
-
(932,440)
(188,414)
610,079
610,079
(183,691)
(104,501)
(524,297)
-
(812,489)
(202,410)
744,026
744,026
(154,265)
(116,506)
(667,498)
(6,709)
(944,978)
(200,952)
610,079
610,079
(183,691)
(110,330)
(524,297)
(6,526)
(824,844)
(214,765)
744,026
744,026
(154,265)
(19,178)
(640,612)
(6,709)
(820,764)
(76,738)
610,079
610,079
(158,691)
(14,442)
(513,473)
(6,526)
(693,132)
(83,053)
-
-
-
(19,178)
(7,682)
-
(26,860)
(26,860)
-
-
-
(14,442)
(3,647)
-
(18,089)
(18,089)
-
-
-
(78,150)
(19,204)
-
(97,354)
(97,354)
-
-
(25,000)
(81,446)
(7,177)
-
(113,623)
(113,623)
110
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
RISK MANAGEMENT – NOTE 16: FINANCIAL INSTRUMENTS
(ii) 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 following table details the liquidity risk arising from derivative financial assets and liabilities held by Elders at balance date. Net settled
derivatives comprise interest rate hedges, which are recognised within receivables on the statement of financial position.
2021
Derivative assets/(liabilities) – net settled
Net inflow/(outflow)
2020
Derivative assets/(liabilities) – net settled
Net inflow/(outflow)
Carrying amount
Contractual
cash flows
$000
$000
6 months
or less
$000
6-12 months
1-5 years
$000
$000
-
-
(262)
(262)
-
-
(262)
(262)
-
-
(262)
(262)
-
-
-
-
-
-
-
-
(c) Credit risk
Credit risk arises from Elders’ financial assets, which comprise cash and cash equivalents, trade and other receivables, and derivative instruments. Elders’
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 5. The credit risk associated with cash and derivatives is located primarily
in Australia.
Trade receivables are reviewed in accordance with the simplified approach to measuring expected credit losses which uses a lifetime expected loss
allowance. To measure expected losses, trade receivables have been grouped on days past due. Expected credit losses are based on the payment profile
of sales over a period of 5 years and the historical default experience within this period. The historical loss rates are adjusted to reflect current and
forward-looking information on macroeconomic factors affecting the ability of the customers to settle the receivables. Elders assessment of additional
credit risk, given COVID-19 uncertainties, did not indicate a material change to trade receivables and loss allowances.
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, limits and insurance positions. The amounts disclosed do not reflect expected losses and are shown gross of provisions. The
maximum exposure to credit risk at the reporting date was:
Cash and cash equivalents
Trade and other receivables
Location of credit risk
Australia
Asia
Other
Total
2021
$000
48,063
744,026
792,089
2020
$000
50,741
610,079
660,820
785,604
653,672
6,210
275
6,956
192
792,089
660,820
Elders Limited Annual Financial Report
111
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
RISK MANAGEMENT – NOTE 16: FINANCIAL INSTRUMENTS
(d) Foreign currency risk
Elders is exposed to movements in the exchange rates of a number of currencies. 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
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 applied effective 1 October 2020. Elders uses cash flow financial
instruments to offset foreign currency exposures on purchases of AgChem products from international suppliers, denominated in US Dollars. The cash
flow financial instruments are not speculative investments. As at 30 September 2021, Elders held designated cash flow hedges with a notional value of
$82.9 million with a fair value asset of $3.3 million (2020: $1.2 million fair value liability). The maturity dates for designated cash flow hedges ranges from
October 2021 to August 2022.
As at 30 September 2021, Elders had the following AUD exposures to foreign currencies that were not designated in cash flow financial instruments:
Financial assets
Cash and cash equivalents – CNY
Cash and cash equivalents – IDR
Cash and cash equivalents – other
Receivables – CNY
Receivables – IDR
Financial liabilities
Payables – CNY
Payables – IDR
Interest bearing loans and borrowings – CNY
Net exposure
2021
$000
1,864
669
275
3,378
299
6,485
(941)
(240)
(4,265)
(5,446)
1,039
2020
$000
1,949
815
192
3,300
893
7,149
(1,187)
(240)
(3,467)
(4,894)
2,255
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:
Post tax profit
Higher/(lower)
CNY
IDR
Other
(4)
(73)
(28)
(60)
(147)
(19)
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.
112
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
RISK MANAGEMENT – NOTE 16: FINANCIAL INSTRUMENTS
Accounting Policy
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.
From 1 October 2020, Elders applied the hedge accounting principles contained within AASB 9 Financial Instruments. As a result, the way Elders
accounts for the movements in fair values for derivative financial instruments, primarily cash flow hedges has changed. For all effective cash flow
hedges entered into from 1 October 2020, Elders now recognises the movements in fair value of the derivative financial instruments in equity and
only recognises the cumulative difference in the statement of comprehensive income when the hedged item is recognised. Amounts accumulated
in equity are included within the initial cost of the asset where the hedged item subsequently results in the recognition of a non-financial asset
such as inventory. Any ineffective portion of a cashflow hedge is recognised immediately in the profit and loss. Hedge effectiveness is determined at
the inception of the hedge relationship, and prospectively assessed to ensure economic relationships remain between the hedging instrument and
hedged item.
Effective 1 October 2020, at inception of a hedge relationship Elders documents the economic relationship between hedging instruments and
hedged items, including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged
items. Elders also documents its risk management objective and strategy for undertaking its hedge transactions.
(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.
The fair value of financial instruments as well as the method used to estimate the fair values are summarised in the table below:
2021
2020
Quoted
market price
(Level 1)
Valuation
technique
– market
observable inputs
(Level 2)
Valuation
technique –
non market
observable inputs
(Level 3)
Quoted
market price
(Level 1)
Valuation
technique
– market
observable inputs
(Level 2)
Valuation
technique –
non market
observable inputs
(Level 3)
$000
$000
$000
$000
$000
$000
-
-
-
-
3,292
3,292
-
-
-
-
-
-
(262)
(1,201)
(1,463)
-
-
-
Financial assets and liabilities
Interest rate derivatives
Foreign currency derivatives
Elders Limited Annual Financial Report
113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
EQUITY – NOTE 17: CONTRIBUTED EQUITY
2021
$000
2020
$000
Issued and paid up capital
156,476,574 ordinary shares (September 2020: 155,753,725)
1,651,006
1,645,561
The movement in the dollar balance of share capital is a result of:
• $2.5 million of dividends where the shareholders have participated in the dividend reinvestment plan
• $2.9 million of shares issued upon vesting of performance rights in accordance with Elders’ Long-Term Incentive Plan
The following ordinary shares were issued during the year:
• 490,732 shares issued upon vesting of performance rights in accordance with Elders’ Long-Term Incentive Plan, including additional shares of 25,732
representing the value of dividends forgone during the performance period
• 232,117 shares issued in accordance with Elders’ dividend reinvestment plan
Elders 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.
Accounting Policy
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.
EQUITY – NOTE 18: RESERVES
Reconciliation of carrying amounts at beginning and end of period:
Business
combination
reserve
$000
Employee
equity
benefits
reserve
$000
2021
Carrying amount at beginning of period
(27,495)
5,311
Exchange differences on translation of foreign operations
Fair value movement in cash flow hedge
Reclassified to inventory
Less deferred tax impact
Cost of share based payments
Transfer to issued capital
-
-
-
-
-
-
Carrying amount at end of period
(27,495)
2020
Carrying amount at beginning of period
(27,495)
Exchange differences on translation of foreign operations
Cost of share based payments
Transfer to retained earnings
-
-
-
Carrying amount at end of period
(27,495)
-
-
-
-
2,433
(2,925)
4,819
5,009
-
1,945
(1,643)
5,311
Hedge
reserve
$000
-
-
3,292
(1,960)
(400)
-
-
932
-
-
-
-
-
Foreign
currency
translation
reserve
$000
(5,486)
343
-
-
-
-
-
(5,143)
(4,744)
(742)
-
-
(5,486)
Total
$000
(27,670)
343
3,292
(1,960)
(400)
2,433
(2,925)
(26,887)
(27,230)
(742)
1,945
(1,643)
(27,670)
114
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
EQUITY – NOTE 18: RESERVES
Nature and purpose of reserves
(i) Business combination reserve
This 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.
Under agreements entered into with a number of non-controlling interests, the non-controlling shareholders have put options over their interests. These
options are exercisable in accordance with the terms of each agreement. The potential liability for Elders under the put options is based on expectations
of the exercise price and timing, discounted to present value using Elders’ incremental borrowing rate. The recognition of the put options is reflected in the
business combination reserve and as a financial liability within current liabilities.
(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) Hedge reserve
The hedge reserve is used to record the effective portion of gains or losses on derivative financial instruments. Amounts are subsequently included within
the initial cost of the asset where the hedged item subsequently results in the recognition of a non-financial asset such as inventory or profit and loss
as appropriate.
(iv) 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, including exchange differences arising from loans which are deemed to be net investments in a foreign operation.
Accounting Policy
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 disposed of, the proportionate share of exchange differences would be transferred out of equity and
recognised in profit or loss.
EQUITY – NOTE 19: DIVIDENDS
On 18 December 2020, Elders paid a fully franked dividend of 13 cents per share. These distributions totalled $20.3 million (December 2019:
$14.0 million). The cash outflow was $19.2 million (December 2019: $12.0 million), with the difference reinvested by shareholders under dividend
reinvestment plan.
On 18 June 2021, Elders paid a partially franked (20%) interim dividend of 20 cents per share. This distribution totalled $30.7 million (June
2020: $14.0 million). The cash outflow was $29.3 million (June 2020: $13.2 million), with the difference reinvested by shareholders under dividend
reinvestment plan.
Subsidiary equity dividends on ordinary shares:
Dividends paid to non-controlling interests during the year
2021
$000
2020
$000
2,165
2,240
Franking credits available to the parent for subsequent financial years based on tax rate of 30% (2020: 30%)
10,700
12,800
Elders Limited Annual Financial Report
115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP STRUCTURE – NOTE 20: INVESTMENTS IN CONTROLLED ENTITIES
(a) Schedule of controlled entities
Ace Ohlsson Pty Limited
Agsure Pty Ltd
AI Asia Pacific Operations Holding Limited
Air International Asia Pacific Operations Pty Ltd
AIRR Apparent Pty Ltd
AIRR Belmark Pty Ltd
AIRR Holdings Limited
AIRR iO Pty Ltd
APO Administration Limited
APT Projects Pty Ltd
Aqa Oysters Pty Ltd
Ashwick (Vic) No 102 Pty Ltd
Australian Independent Rural Retailers Pty Ltd
B & W Rural Pty Ltd
BWK Holdings Pty Ltd
Chemseed Australia Pty Ltd
Eastern Rural Pty Ltd
Elders Automotive Group Pty Ltd
Elders Burnett Moore WA Pty Ltd
Elders China Trading Company
Elders Communications Pty Ltd
Elders Finance Pty Ltd
Elders Fine Foods (Shanghai) Company
Elders Fine Foods Vietnam Company Limited
Elders Forestry Finance Pty Ltd
Elders Forestry Management Pty Ltd
Elders Forestry Pty Ltd
Elders Global Wool Holdings Pty Ltd
Elders Home Loans Pty Ltd
Elders Management Services Pty Ltd
Elders PT Indonesia
Elders Real Estate (Tasmania) Pty Ltd
Elders Real Estate (WA) Pty Ltd
Elders Rural Services Australia Limited
Elders Rural Services Limited
Elders Telecommunications Infrastructure Pty Ltd
Family Hospitals Pty Ltd
ITC Timberlands Pty Ltd
JS Brooksbank & Co Australasia Ltd
JSB New Zealand Limited
Keratin Holdings Pty Ltd
Killara Feedlot Pty Ltd
Manor Hill Pty Ltd
New Ashwick Pty Ltd
Northern Rural Supplies Pty Ltd
Prels Pty Ltd
Prestige Property Holdings Pty Ltd
Country
of Incorporation
Australia
Australia
Hong Kong SAR
Australia
Australia
Australia
Australia
Australia
Hong Kong SAR
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
China
Australia
Australia
China
Vietnam
Australia
Australia
Australia
Australia
Australia
Australia
Indonesia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
New Zealand
New Zealand
Australia
Australia
Australia
Australia
Australia
Australia
Australia
(a)
(a)
(c)
(d)
(a)
(a)
(a)
(a)
(d)
(d)
(d)
(a)
(d)
(d)
(d)
(d)
(d)
(d)
(a)
(c)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(d)
(a)
(d)
(d)
(d)
(d)
(a)
(d)
(d)
(d)
(d)
(d)
% Held by Group
2021
2020
100
100
100
100
100
100
100
100
100
100
77
100
100
100
100
100
100
100
100
100
100
100
100
77
100
100
75.5
75.5
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
116
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP STRUCTURE – NOTE 20: INVESTMENTS IN CONTROLLED ENTITIES
Primac Exports Pty Ltd
Primac Pty Ltd
PT Agri Integrasi Mandiri
Redray Enterprises Pty Ltd
SDEA Nominees Pty Ltd
Sunfam Pty Ltd
The Hunter River Company Pty Ltd
Titan Ag Pty Ltd
Ultrasound Australia Pty Ltd
Victorian Producers Co-operative Company Pty Ltd
YP Agricultural Services Pty Ltd (Formerly Elders Victorian Feedlot Pty Ltd)
Country
of Incorporation
% Held by Group
2021
2020
Australia
Australia
Indonesia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
(d)
(d)
(e)
(d)
(a)
(b) (d)
(a)
(a)
(a)
(d)
(d)
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
• The parties that comprise the Closed Group are denoted by (a)
• Entities acquired or registered during the period are denoted by (b)
• Entities exempted from audit requirements due to overseas legislation or non-corporate status are denoted by (c)
• Entities classified by the Corporations Act as small proprietary companies relieved from audit requirements are denoted by (d)
• Entities denoted by (e) were disposed of, deregistered or liquidated during the year
Accounting Policy
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.
Elders Limited Annual Financial Report
117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP STRUCTURE – NOTE 20: INVESTMENTS IN CONTROLLED ENTITIES
(b) Deed of Cross Guarantee
Pursuant to ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 dated 29 September 2016, 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.
In the prior year, AIRR Holdings Limited became party to the deed of cross guarantee, joined the closed group and was granted relief analogous to that
available under ASIC Corporations (Wholly-owned Companies) Instrument 2016/785 after obtaining approval from ASIC under s340 of the Corporations
Act 2001. In the current year, AIRR Holdings Limited satisfied all conditions required under ASIC instrument 2016/785 and has obtained relief under ASIC
instrument 2016/785 as a controlled entity of Elders Limited.
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 15. A consolidated statement of comprehensive income and consolidated statement of financial position, comprising Elders
Limited 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 2021 is set out as follows:
Statement of comprehensive income of the Closed Group
Sales revenue
Cost of sales
Gross profit
Other revenue
Distribution expenses
Administrative expenses
Other items of income/(expense)
Finance costs
Profit/(loss) before income tax benefit/(expense)
Income tax benefit/(expense)
Profit/(loss) after income tax benefit/(expense)
2021
$000
2020
$000
848,747
(725,678)
123,069
75,000
(48,795)
(11,417)
56,775
(2,658)
191,974
(6,592)
185,382
837,803
(745,167)
92,636
15,000
(19,498)
(100,484)
114,036
(2,445)
99,245
15,068
114,313
118
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP STRUCTURE – NOTE 20: INVESTMENTS IN CONTROLLED ENTITIES
Consolidated statement of financial position of the Closed Group
Current assets
Cash and cash equivalents
Trade and other receivables
Livestock
Inventory
Total current assets
Non current assets
Other financial assets
Property, plant and equipment
Right-of-use assets
Intangibles
Deferred tax assets
Total non current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Current tax payable
Provisions
Total current liabilities
Non current liabilities
Interest bearing loans and borrowings
Lease liabilities
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
2021
$000
2020
$000
6,867
216,623
55,556
95,390
374,436
302,360
18,361
13,625
136,584
108,854
579,784
954,220
157,262
4,097
-
6,334
167,693
-
7,935
7,935
175,628
778,592
10,786
102,520
44,929
78,230
236,465
293,111
18,098
13,181
132,936
113,500
570,826
807,291
89,133
3,349
790
6,608
99,880
25,000
10,085
35,085
134,965
672,326
1,651,006
1,645,561
5,751
(878,165)
778,592
5,312
(978,547)
672,326
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP STRUCTURE – NOTE 21: PARENT ENTITY
Information relating to the parent entity of the Group, Elders Limited:
Results:
Net profit for the period after income tax expense
Total comprehensive income
Financial position:
Current assets
Non current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Retained earnings
Profit reserve
Hedge reserve
Employee equity reserve
Total equity
Elders Limited Annual Financial Report
119
2021
$000
2020
$000
151,963
151,963
374
780,176
780,550
1,958
1,958
122,305
122,305
221
674,742
674,963
2,637
2,637
778,592
672,326
1,651,006
1,645,561
(929,838)
(1,006,801)
51,673
932
4,819
778,592
28,254
-
5,312
672,326
Guarantees
As disclosed in note 20, 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 extended to the Group as disclosed in note 24.
120
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP STRUCTURE – NOTE 22: BUSINESS COMBINATIONS – CHANGES IN THE COMPOSITION OF THE ENTITY
(a) Acquisitions
(i) Current period acquisitions
During the current period, Elders acquired a number of small to medium retail and agency businesses for a total consideration of $49.0 million, including
$28.6 million of deferred consideration. These transactions resulted in the recognition of $27.9 million of goodwill.
(ii) Prior period acquisitions
Acquisition of AIRR Holdings Limited
In the prior period, Elders acquired AIRR Holdings Limited, a wholesale business based in Shepparton, Victoria, supported by a network of warehouses to
supply independent retail stores throughout Australia.
Other acquisitions during the period
In the prior period, Elders acquired a number of small retail and agency businesses for a total consideration of $18.3 million, including $6.5 million of
deferred consideration. These transactions resulted in the recognition of $12.6 million of goodwill.
Details of the purchase consideration, net assets acquired and goodwill are:
Purchase consideration
Cash paid
Deferred consideration
Shares issued
Cash advance for repayment of debt facility
Total purchase consideration
The total assets and liabilities recognised as a result of acquisitions are:
Cash and cash equivalents
Trade and other receivables
Inventory
Property, plant and equipment
Rent roll
Brand name
Customer intangibles
Other intangibles
Trade and other payables
Provisions
Deferred tax assets/(liabilities)
Net identifiable assets acquired
Goodwill on acquisition
2021
$000
20,352
28,645
-
48,997
-
48,997
8,324
3,805
10,882
2,879
865
1,078
-
-
(5,381)
(1,465)
116
21,103
27,894
48,997
2020
$000
86,844
6,446
80,388
173,678
21,689
195,367
2,101
64,228
50,560
2,978
278
7,802
47,621
142
(49,051)
(2,189)
(16,078)
108,392
86,975
195,367
Payments for acquisitions through business combinations, net of cash acquired
The cash outflow for payments for acquisitions through business combinations, net of cash acquired of $28.0 million represents cash paid, net of cash
acquired in respect of businesses acquired during the period of $12.0 million and payments of deferred consideration relating to acquisitions from prior
periods of $16.0 million.
At 30 September 2021, Elders has $36.8 million of deferred consideration amounts related to acquisitions which are included in current and non current
other creditors and accruals in note 8.
(b) Disposals
There were no disposals during the current or prior period.
Elders Limited Annual Financial Report
121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
GROUP STRUCTURE – NOTE 22: BUSINESS COMBINATIONS – CHANGES IN THE COMPOSITION OF THE ENTITY
Accounting Policy
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.
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 9 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 9, it is measured in accordance with the
appropriate AASB standard.
OTHER NOTES – NOTE 23: EXPENDITURE COMMITMENTS
Operating lease commitments – Elders as a lessee
As a result of the application of AASB 16, Elders expenditure commitments relating to leases have been recognised as lease liabilities, with an
associated right-of-use asset and are presented in note 10 , except for low value leases. Elders operating lease commitments for low value leases are
presented below.
Operating lease commitments:
● Within one year
● After one year but not later than five years
Total minimum lease payments
2021
$000
1,316
1,372
2,688
2020
$000
948
865
1,813
122
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
OTHER NOTES – NOTE 24: CONTINGENT LIABILITIES
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.
• Elders has contingent obligations in respect of an agency agreement which carries a minimum fulfillment clause. This agreement expires
December 2022.
• Benefits are payable under service agreements with 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.
• Subsidiaries of Elders have, from time to time in the ordinary course, provided parent company guarantees in respect of certain contractual obligations
of their subsidiaries. The contingent exposure under those guarantees on a consolidated basis is no greater than the exposure of the subsidiary having
the principal contractual obligation.
• 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 of indemnities.
• Various legal claims for damages resulting from the use of products or services of Elders, and from the contracts entered into or alleged to have been
entered into by 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 is likely to
be material.
Other guarantees
As disclosed in note 20, 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 extended to Elders.
OTHER NOTES – NOTE 25: RELATED PARTY DISCLOSURES
The ultimate controlling entity of the Group is Elders Limited.
From time to time, Directors of Elders, or third parties of which a Director of Elders is also a Director, engage in transactions with Elders or entities in which
Elders has an investment. These transactions are immaterial and generally in the nature of the acquisition of goods or services from Elders or an entity in
which Elders has an investment or the supply of services to Elders or an entity in which Elders has an investment. Such transactions are on arm’s length
commercial terms and procedures are in place to manage any actual or potential conflicts of interest.
As part of sharing office space with branches within the Branch Network segment, Elders incurred costs on behalf of Elders Insurance (Underwriting
Agency) Pty Ltd and recharged these at arm’s length.
During the year, Elders received a net repayment of $5.0 million on its advance to StockCo Holdings Pty Ltd (2020: repayment of $9.0 million). Elders
advances to StockCo Holdings Pty Ltd are made out on a 12 month term rolling basis with an effective interest rate of 15% per annum. As at balance date,
Elders has a total receivable from StockCo Holdings Pty Ltd of $15.1 million (2020: $20.2 million) and recognised interest revenue of $2.6 million (2020:
$4.2 million) during the period. Elders also received trail and exclusivity fees of $1.5 million (2020: $2.3 million).
During the year, Elders assumed property lease contracts and made lease payments (comprising principal and interest) totalling $2.8 million to related
entities of the Managing Director of AIRR Holdings Limited (2020: $2.1 million). As at balance date, there is a right-of-use asset of $9.8 million (2020:
$9.6 million) and lease liability of $7.8 million (2020: $9.6 million) associated with these property lease contracts. Such transactions are on arm’s length
commercial terms and procedures are in place to manage any actual or potential conflicts of interest.
Elders Limited Annual Financial Report
123
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
OTHER NOTES – NOTE 26: SHARE BASED PAYMENT PLANS
Long-Term Incentive Performance Rights
Performance rights were granted to eligible executives with a three year performance period and split into tranches, each carrying a different performance
condition. Upon vesting of performance rights one fully paid share in Elders will be allocated for each performance right.
Set out below are a summary of rights granted under the plans:
MD & CEO Grant
Senior Executive Grant
MD & CEO Grant
Senior Executive Grant
MD & CEO Grant
Senior Executive Grant
MD & CEO Grant
Senior Executive Grant
Total
Grant Date
Vesting date Balance at start
of period
Granted
Vested
Lapsed Balance at end
of period
14-Dec-17
16-Feb-18
13-Dec-18
15-Feb-19
12-Dec-19
21-Feb-20
17-Dec-20
12-Mar-21
Nov-20
Nov-20
Nov-21
Nov-21
Nov-22
Nov-22
Nov-23
Nov-23
150,000
315,000
146,000
276,000
166,000
380,000
-
-
1,433,000
-
-
-
-
-
-
101,000
260,000
361,000
150,000
315,000
-
-
-
-
-
-
-
-
-
32,250
-
58,084
-
-
-
-
146,000
243,750
166,000
321,916
101,000
260,000
465,000
90,334
1,238,666
Current year vested rights and future years’ Absolute TSR performance rights are considered dilutive.
During the period, long-term incentive performance rights expense of $2,432,638 (2020: $1,945,615) was recognised.
For long-term incentive performance rights vesting in November 2021, additional shares of 42,518 (November 2020: 25,732) will be allocated under the
MD & CEO Grant and Senior Executive Grant at the time of vesting for the value of dividends forgone on the vested rights during the performance period.
The fair value at grant date of the long-term incentive performance rights issued during the year was:
2021
Relative TSR against Comparator Companies Performance Rights
EPS Growth Performance Rights
2020
Absolute TSR Performance Rights
EPS Growth Performance Rights
Return on Capital Performance Rights
MD & CEO
Grant
Senior
Executive Grant
$
$
4.30
9.23
4.47
5.09
5.09
6.51
11.27
6.76
7.41
7.41
Key inputs in calculating the fair value of the long-term incentive performance rights issued during the year include:
• Share price at valuation date: $9.89 for the MD & CEO Grant (2020: $6.34) and $11.89 for the Senior Executive Grant (2020: $8.14)
• Risk free rate: 0.1% for the MD & CEO Grant (2020: 0.7%) and 0.1% for the Senior Executive Grant (2020: 0.6%)
• Volatility: 39% for the MD & CEO Grant (2020: 35%) and 38% for the Senior Executive Grant (2020: 35%)
• Dividend yield: 2.5% for the MD & CEO Grant (2020: 4.1%) and 2.1% for the Senior Executive Grant (2020: 3.2%)
The weighted average remaining life of the long-term incentive performance rights outstanding at the end of the financial year was 1.1 years. (2020:
1.2 years).
Performance rights associated with the 2018 Long-Term Incentive Plan vested during the period. As a result, a total of 465,000 shares were issued to
relevant participants.
124
Elders 2021 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2021
OTHER NOTES – NOTE 27: AUDITOR'S REMUNERATION
Amounts received or due and receivable by the auditor PricewaterhouseCoopers for:
● auditing or review of financial statements
● other compliance and assurance services
● other non-audit services
●
fee paid to subcontractors of the auditor
Total
2021
$
699,000
-
11,500
1,668
712,168
2020
$
774,000
32,000
19,500
-
825,500
OTHER NOTES – NOTE 28: KEY MANAGEMENT PERSONNEL
Remuneration of 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
Total
4,165,618
4,765,598
534,358
165,519
970,013
1,310,885
7,146,394
140,909
152,401
249,419
917,165
6,225,492
OTHER NOTES – NOTE 29: SUBSEQUENT EVENTS
There are no matters or circumstances that have arisen since 30 September 2021 which are not otherwise dealt with in this report or in the consolidated
financial statements, that have 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.
DIRECTORS' DECLARATION
For the year ended 30 September 2021
Elders Limited Annual Financial Report
125
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 2021 are in accordance with the Corporations Act
2001, including:
(i) Giving a true and fair view of its financial position as at 30 September 2021 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
(iii) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in the basis of preparation
(iv) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
(b) This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the
(c)
Corporations Act 2001 for the year ended 30 September 2021.
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 20 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,
Ian Wilton
Chair
Adelaide
15 November 2021
Mark C Allison
Managing Director and CEO
126
Elders 2021 Annual Report
PricewaterhouseCoopers, ABN 52 780 433 757 Level 11, 70 Franklin Street, ADELAIDE SA 5000, GPO Box 418, ADELAIDE SA 5001 T: +61 8 8218 7000, F: +61 8 8218 7999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Auditor’s Independence Declaration As lead auditor for the audit of Elders Limited for the year ended 30 September 2021, I declare that to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and (b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Elders Limited and the entities it controlled during the period. M. T. Lojszczyk Adelaide Partner PricewaterhouseCoopers 15 November 2021 Independent auditor’s report
127
PricewaterhouseCoopers, ABN 52 780 433 757 Level 11, 70 Franklin Street, ADELAIDE SA 5000, GPO Box 418, ADELAIDE SA 5001 T: +61 8 8218 7000, F: +61 8 8218 7999, www.pwc.com.au Liability limited by a scheme approved under Professional Standards Legislation. Independent auditor’s report To the members of Elders Limited Report on the audit of the financial report Our opinion In our opinion: The accompanying financial report of Elders Limited (the Company) and its controlled entities (together the Group or Elders) is in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group's financial position as at 30 September 2021 and of its financial performance for the year then ended (b) complying with Australian Accounting Standards and the Corporations Regulations 2001. What we have audited The Group financial report comprises: the consolidated statement of financial position as at 30 September 2021 the consolidated statement of changes in equity for the year then ended the consolidated statement of cash flows for the year then ended the consolidated statement of comprehensive income for the year then ended the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information the directors’ declaration. Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. 128
Elders 2021 Annual Report
Our audit approach An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates. Materiality For the purpose of our audit we used overall Group materiality of $7.89 million, which represents approximately 5% of the Group’s profit before tax. We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole. We chose Group profit before tax because, in our view, it is the benchmark against which the performance of the Group is most commonly measured. We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly acceptable thresholds. Audit Scope Our audit focused on where the Group made subjective judgements; for example, significant accounting estimates involving assumptions and inherently uncertain future events. Our audit work focused on the Australian operations’ financial information given their financial significance to the Group. We performed further audit procedures at a Group level, including procedures over the consolidation of the Group’s businesses and the preparation of the financial and remuneration reports. Independent auditor’s report
129
Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. The key audit matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context. We communicated the key audit matters to the Audit and Risk Committee. Key audit matter How our audit addressed the key audit matter Recoverability of deferred tax assets (Refer to note 3) Elders has recognised net deferred tax assets of $102.6 million as at 30 September 2021 in the consolidated statement of financial position, of which $109.9 million arises from tax losses carried forward. Australian Accounting Standards require deferred tax assets to be recognised only to the extent that it is probable that sufficient future taxable profits will be generated in order for the benefits of the deferred tax assets to be realised. These benefits are realised by reducing tax payable on future taxable profits. This was a key audit matter due to: the quantum of the accumulated losses recognised as an asset; and the judgement involved by the Group in preparing forecasts to demonstrate the future utilisation of these losses. We performed the following procedures: assessed forecast profits and evaluated whether the forecasts were consistent with approved budgets. We also ensured forecasts had been appropriately adjusted for the differences between accounting and taxable profits. consulting with PwC tax professionals, we examined the ability to carry forward the tax losses for future use and considered the appropriateness of the deductions in the forecasts. tested the mathematical accuracy of the forecasts. reperformed the reconciliation of tax losses recognised and utilised in the current year, as detailed in note 3. evaluated the adequacy of disclosures in note 3 in light of the requirements of Australian Accounting Standards. 130
Elders 2021 Annual Report
Key audit matter How our audit addressed the key audit matter Accounting for supplier rebates (Refer to note 7) Elders receives rebates on purchases of retail goods for resale from suppliers. These rebates are varied in nature and include price and volume rebates. In accordance with Australian Accounting Standards, rebates should only be recognised as a reduction in cost of sales when the associated performance conditions have been met. This requires a detailed understanding by the Group of the various contractual arrangements. We considered rebates to be a key audit matter because: supplier rebates recognised during the year are material to the financial statements; supplier arrangements are complex in nature and vary between suppliers; and judgement is involved by the Group to determine the amount of rebates that should be recognised in the cost of sales and the amount that should be deferred to inventory. We performed the following procedures: for a sample of rebates recognised as a reduction to cost of sales, we: o agreed terms to supplier credit notes or individual supplier agreements and recalculated the amount of the rebate; and o checked if the rebate amount was only recognised as a reduction in cost of sales when a sale of the relevant product had occurred. for a sample of rebates receivable at balance date, we: o agreed the Group’s calculation of the rebate receivable to the terms in the relevant supplier agreement; and o agreed the key components of rebates receivable, including rebate accruals and amounts received over the course of the year, to relevant underlying evidence. to assess the accuracy of rebates being deferred in inventory as at balance date we: o obtained a listing of retail stock on hand and for a sample of items, traced the rebate percentage back to supplier agreements. We also recalculated the rebate amount deferred against inventory; and o for a sample of rebates receivable, checked that when the related inventory was still on hand at balance date, the rebate amount had been appropriately deducted from inventory. Independent auditor’s report
131
Other information The directors are responsible for the other information. The other information comprises the information included in the annual report for the year ended 30 September 2021 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the directors for the financial report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report. A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of our auditor's report. 132
Elders 2021 Annual Report
Report on the remuneration report Our opinion on the remuneration report We have audited the remuneration report included in pages 50 to 69 of the directors’ report for the year ended 30 September 2021. In our opinion, the remuneration report of Elders Limited for the year ended 30 September 2021 complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. PricewaterhouseCoopers M. T. Lojszczyk Adelaide Partner 15 November 2021 Independent auditor’s report
133
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Elders 2021 Annual Report
ASX
Additional
Information
a) Distribution of Ordinary Shares as at 1 November 2021
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Totals
The number of holders holding less than a marketable parcel
Total Units
Percentage FPO
3,688,138
11,130,387
6,070,262
17,862,500
117,725,287
156,476,574
2.357%
7.113%
3.879%
11.415%
75.235%
100.000%
Holders
9,777
4,729
837
679
62
16,084
918
Distribution of Unquoted Equity Securities at 1 November 2021
As noted on page 48 of the Directors' Report, performance rights are the only unquoted equity securities on issue as at the date of this report.
Holdings Ranges
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
Totals
Total Units
Percentage Unquoted
Equity Securities
Holders
0
8,000
20,000
797,666
413,000
1,238,666
0.000%
0.646%
1.615%
64.397%
33.342%
100.00%
0
2
2
15
1
20
All unvested performance rights on issue were acquired under an employee incentive plan
b) Voting Rights
All ordinary shares carry one vote per share without restriction. Unvested performance rights carry no voting rights.
c) Stock Exchange Quotation
Elders has one class of quoted securities, being the ordinary shares (ELD) which is listed on the Australia Securities Exchange. The Home Exchange
is Sydney.
ASX Additional Information
135
d) Twenty Largest Shareholders as at 1 November 2021
The twenty largest holders of Elders Ordinary Shares were as follows:
No, of shares
%
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
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