Elders Limited ABN 34 004 336 636. Registered Office: Level 10, 80 Grenfell Street, Adelaide SA Australia 5000 Monday 13 November 2023 Appendix 4E and Annual Report for the Financial Period Ended 30 September 2023 Elders Limited (ASX:ELD) today reports its results for the financial year ended 30 September 2023. Attached is the Appendix 4E (Results for announcement to the market) and Annual Report for the 12-month period ended 30 September 2023. Further Information: Mark Allison, Managing Director & Chief Executive Officer, 0439 030 905 Authorised by: Elders Limited Board of Directors Elders Limited Appendix 4E (Rule 4.3A) RESULTS FOR ANNOUNCEMENT TO MARKETFor the year ended 30 September 2023Attached is the final report for the year ended 30 September 2023. The consolidated profit after tax and non-controlling interests was $100.8 million (2022: $162.9 million).Additional Appendix 4E disclosure requirements and further details on the results and operations are included in the Annual Report provided to the Australian Securities Exchange.Result12 monthsSeptember2023$000Revenuedown4%to3,321,420Profit after tax for the year attributable to membersdown38%to100,840DividendsAmountper securityFranked amountper security2023Final Dividend23 cents6.9 centsInterim Dividend23 cents6.9 centsTotal46 cents13.8 cents2022Final Dividend28 cents8.4 centsInterim Dividend28 cents8.4 centsTotal56 cents16.8 centsThe record date for the final dividend is 22 November 2023. Dividend payment date is 20 December 2023.September2023September2022$$Net tangible assets backing per ordinary security (156,476,574)12.802.841Assets for the purpose of net tangible assets include right-of-use assets associated with leases recognised in accordance with AASB 16 2023 Elders Annual ReportFor Australian AgricultureElders Limited ABN 34 004 336 636ANNUAL REPORT2023 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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142
Elders 2023 Annual Report2Chair’s ReportElders and its clients have experienced many challenges in the past year, characterised by fluctuations in commodity prices and changing market and seasonal conditions. Despite this we have delivered a strong financial result, the second highest in the last 10 years, with particularly good cash flow generation, allowing us to declare dividends totalling 46 cents per share.Resilience is not a new concept for farmers or Elders. It is an attribute that we are proud to possess and it’s why we are optimistic when assessing fluctuations in commodity markets, unexpected weather patterns or changes to policy that may affect us. All these factors are important, and play into decision making, but the strategic approach to running and governing Elders remains paramount. The business fundamentals of consistent, methodical growth are omnipresent in all our decision making.Although FY23 was a very different year from the previous financial year, the results remain strong and are true to our goal of making great returns in good years and good returns in average years. Elders continues to deliver resilient earnings with geographical, product and service diversification insulating us at a portfolio level against weather and commodity price variability.We are committed to achieving the ambitions set out in our new Eight Point Plan, which include creating compelling shareholder returns, industry leading sustainability outcomes, and being the most trusted agribusiness brand with farmers. The accomplishment of these ambitions depends on many things, some outside of our control, but many within it. As always, our approach at Elders is to control the things that we can, and so we remain focused on the many opportunities where we can continue to build value for shareholders, as well as add value for clients to ensure their businesses prosper and are sustainable for years to come.Led by a talented and passionate team of individuals with a shared vision for the success of the company and sector, Elders is investing in initiatives that will benefit investors, clients, and the more than 2,700 employees who proudly wear the pink shirt. This requires that Elders offers a best-in-class value proposition for current and future employees across all levels of the organisation, particularly in relation to promoting equity, diversity and inclusion. In FY21 we reviewed and began work to address our equal pay gap to ensure that employees with similar skills, knowledge, qualifications, experience and performance are paid equally for the same or comparable work. In FY23 this process continued. To improve further, we are extending our analysis and reporting to quarterly reviews of pay decisions arising from recruitment, promotion and out-of-cycle requests to ensure any systemic biases are identified and corrected.We continue to strive for our diversity targets. By 30 September 2025 we intend to lift the representation of women in senior positions to 25%, from the current 20%, and reach 40% of women in Senior Executive positions from 37.5% at FY23. Pleasingly, the representation of women in Non-Executive Director roles remains above our target of 40% or above. It is our ambition to increase the overall diversity of the Elders workforce generally and in FY23 sponsored a range of diversity leadership programs and women in agriculture initiatives to help support greater industry representation. This year we were tremendously pleased to announce the continuation of Mark Allison as Managing Director and Chief Executive Officer. Mr Allison’s understanding of the business is unparalleled and will hold us in good stead as the business journeys through key transformational projects, including Systems Modernisation, Rural Products supply chain optimisation, and Elders Wool, which will drive significant benefits in cost and capital efficiencies. Chair's Report3Mr Allison’s position is complemented by a very strong executive leadership team whose diverse skill sets and thorough understanding of Australian agriculture will be instrumental in Elders’ next phase of growth. The executive team has grown this year with the appointment of Anna Bennett to the role of Executive General Manager Strategy, Sustainability and Innovation in January. Ms Bennett possesses significant experience in the development of transformational strategies within complex and dynamic businesses and has carriage of Elders’ growing focus on integrating our sustainability and innovation agenda into our everyday operations. She has been instrumental in the development of Elders’ fourth Eight Point Plan, which will encompass the three years concluding FY26. Peter Lourey was appointed to the role of Executive General Manager Wholesale in October, allowing the business to benefit from his broad industry experience to grow the profitability of Elders' wholesale operations. He will be responsible for optimising the product and service offerings provided to the AIRR member network, the Elders retail network and any additional retail customers and distribution channels.In October, Nick Fazekas was appointed to the role of Executive General Manager Rural Products, where he will bring an extensive background in state and retail strategy to strengthen and expand the Elders Retail and Rural Products offering, through the development and implementation of an appropriate capital light, return on capital-driven operating model.During the year we also saw some changes to the Elders Board as we contemplated the board renewal process, as I previously shared in my last term. Matthew Quinn resigned, followed by Diana Eilert’s departure on 30 September. On behalf of shareholders, I thank them for their contribution.In September, we announced the appointment of John Lloyd as Non-Executive Director, effective 1 December 2023. Mr Lloyd possesses significant industry expertise that will complement the skills of our Board and provide deep insight into industry issues as we continue to evolve the Elders business. We are delighted to have him join us. Looking ahead, Elders is well placed to take advantage of current conditions in agriculture and pursue opportunities for growth and diversification. Climatic conditions and commodity prices will always fluctuate through the cycles; our response remains to stay focused on the controllables and delivering value for stakeholders with a strategically diversified business model. Ian WiltonChair Elders 2023 Annual Report4CEO’s ReportIn 2024, Elders will celebrate its 185th year serving Australian agribusiness.We are a company steeped in history that continues to deliver value for its shareholders, customers, and employees, nearly two centuries later. I am very proud to lead Elders through a significant period of modernisation.BrandThe value of 185 years of business tenure cannot be understated. The trust that the Elders brand has built with farming communities over many decades creates a value that we do not take for granted. In 2023, Elders continues to be the most trusted agribusiness brand amongst farmers in rural and regional Australia, according to Roy Morgan brand trust research, showing that regardless of fluctuations in agricultural markets and weather events, Elders remains a trusted and steadfast advisor to farming businesses. We attribute this to employing the best people in rural Australia to deliver valuable advice and products to help farmers grow the highest quality food and fibre in the world. Safety and wellbeingPerhaps the greatest responsibility we have in employing our people is in ensuring that their workplace upholds the highest standards of safety so they can go home safely each day. I am pleased that in FY23 we saw a continued improvement in this area, with Total Recordable Injury Frequency Rate (TRIFR) reduced to 10.1 and an average of 4.7 recordable injuries per month. Lost time injuries reduced by half for the FY23 period down to three. Working with livestock and manual handling continue to be our highest risk areas. To minimise these risks, we implemented a range of initiatives including Safe Livestock Handling Training, which is being delivered to livestock employees and trainees; face to face manual handling training; and tailored driver training programs for mobile plant and equipment. These initiatives have been critical in ensuring Elders continues to provide a safe working environment for its staff.Our commitment to wellbeing extends beyond safety measures. With the support of Elders’ dedicated Wellbeing Committee, we organised resilience training sessions and launched a national staff step challenge which saw 640 employees across the country take over 171 million steps in a six-week period.Resilient financial performanceIn FY23, our underlying earnings before interest and tax (EBIT) was $170.8 million, a decrease of 26% on last year. The year was met with challenging trading conditions and in spite of this, Elders achieved its second highest EBIT result in the last 10 years. This resilience was achieved due to our geographically diverse multi-product portfolio, which generated strong average earnings across the group.We remain committed to achieving our strategic priorities via our Eight Point Plan. We continue to expand our market share through acquisitions and organic growth, and we have further progressed our transformational initiatives, such as Systems Modernisation and Elders Wool, Elders' new wool handling business.Pleasingly, we have not compromised our unflinching financial discipline to achieve this growth. We have finished the year with an underlying return on capital (ROC) of 16.0%, which exceeds our benchmark target of 15%. We have accomplished this result despite adverse market headwinds, including inflation, rising interest rates, falling input prices, and significantly declining livestock prices. CEO’s Report5Summary of the FY23 results includes:•sales of $3,321.4 million (down 4%) and gross margin of $619.0 million (down 5%), with softening input prices offsetting volume growth•costs of $448.2 million, up 7%, driven primarily by people cost inflation•EBIT of $170.8 million, down 26%•return on capital of 16.0%, which exceeds our target benchmark of 15% per the Eight Point Plan•operating cash inflow of $169.2 million, resulting in a cash conversion of 163%•leverage ratio of 1.4 times, which is in line with our capital management frameworkSustainability and innovationThe Elders Eight Point Plan establishes that one of Elders’ strategic ambitions is to have industry leading sustainability outcomes across health and safety, community, environment and governance. The business has excelled in this area in the past year, with full details contained in the FY23 Sustainability Report.During the year we established Thomas Elder Sustainable Agriculture (TESA), a division of the business which will support Elders’ innovation efforts, collaborating with the Elders network, and providing farmers with future-focused solutions that will allow them to achieve productive, profitable, and sustainable outcomes against the backdrop of a changing climate and increasing attention on sustainability.Through our branch network and TESA, Elders aspires to play a greater role in supporting farmers' productivity and sustainability ambitions. This includes supporting farmers with utilising innovative technologies, adopting practices to mitigate the impact of the changing climate, and implementing sustainable land management practices with a view to supporting natural capital. Elders’ geographical spread and customer reach, along with its reputation in the industry and regional communities, means we are in a privileged position to reach farmers with new practices and agricultural technology aimed at improving their productivity and resilience in the face of seasonal variations. This has real and lasting impacts on-farm and at large within the sector. Our work here is complemented by our ongoing relationship with AgriFutures Australia with whom we have continued our platinum sponsorship of evokeAG, Australia’s premium agrifood tech event.Elders is intrinsically linked to rural and regional communities, and we are proud of the role that our people and our business plays in supporting them at a grassroots level and through significant financial contribution. In the past year we channelled $3.3 million into sponsorships and donations, and sponsored over 1,000 local community sports teams and events. To further our community outreach, we announced the Elders Community Giving Project which will offer grants up to $20,000 for charities, not-for-profit and grassroots organisations with an aim to provide sustainable, tangible and long-term benefits for communities.Growth and reinvestmentIn FY23 Elders made significant advances in its growth by acquisition strategy, welcoming 15 points of presence and over 90 employees to its network. These businesses fill strategic or geographic gaps and enhance our diversified business model for greater earnings resilience. I was pleased to open four greenfield sites in Kempsey, Coffs Harbour, Lismore, and Murgon.Our pipeline of bolt on acquisitions remains encouraging for FY24.Wave 1 of the Systems Modernisation project was completed in FY23 and is already creating efficiencies and improvements to ways of working with the delivery of a new Human Resources system, a new intranet and a new website with increased capability to service customers. Wave 1 also included the implementation of the first modules of Microsoft Dynamics 365, encompassing indirect procurement and fixed assets. We expect to see the financial benefits from Systems Modernisation to commence in FY24, but will be more pronounced in FY25 and beyond, following Wave 2 which includes new retail and supply chain systems for both in-branch and back-office operations. Elders reached significant milestones in the new Elders Wool business, which will streamline the wool supply chain, introduce efficiencies for clients, and aims to be best in class in terms of sustainability and safety credentials. We have opened our new wool handling facility in Rockingham which is already delivering an improved level of customer service in Western Australia. We have reached practical completion on the Ravenhall facility and expect to commence operations in early 2024. This business is a world-first automated wool handling warehouse that is expected to generate in excess of 15% ROC. Looking forwardIn FY23, while conditions have been difficult, Elders continued to advance the ambitions set out in its guiding strategy, the Eight Point Plan. This plan continues to align us towards our goals and ensure we are investing in the right people and initiatives.In this milestone 185th year we are commencing our fourth Eight Point Plan which will take us through to 30 September 2026 and guide us to deliver compelling shareholder returns and industry leading sustainability outcomes, while remaining the most trusted agribusiness brand amongst farmers. This plan is built around the following points;Continuing to optimise the existing business by:•deepening customer relationships to drive loyalty and growth•investing in our people to ensure we have the right people in the right places who are set up for success•maintaining unflinching discipline and commitment to cost and capital efficiencyFuture-proofing our business with our transformational projects:•streamlining our supply chains to fully optimise all parts of our integrated value chains•modernising our systems with leading technology solutions to enhance customer experience, drive efficiencies and support growthContinuing to expand our portfolio by:•growing our portfolio of products, services, geographic footprint and channels•enhancing margins through value chain expansion and integration•innovating to create sustainable solutions for our customers and communitiesThank you to our valued clients for trusting Elders. I am proud to say that Elders has been a source of continuous and reliable support for agricultural communities across Australia in FY23. I also thank our committed team throughout the country, our exceptional leaders, and our Board, who have together made this possible. Thank you to our shareholders and industry colleagues whose support has been invaluable this year. With your backing, I am confident the strong foundations of this business will take us towards achieving our ambitions in FY24.Mark C AllisonManaging Director and CEO 3LOST TIMEINJURIES#1MOST TRUSTED AGRIBUSINESS BRANDamongst farmers for the fourth year in a row77%EMPLOYEEENGAGEMENT48 NET PROMOTER SCOREElders 2023 Annual Report6 YEARIN BRIEF$3.3bSales revenuevolume growth offset by softening input prices$448.2mCosts investment in people and transformational projects1.4xLeverage ratiowithin target range per capital management framework$170.8mUnderlyingEBITsecond highest result in the last 10 years$619.0mGross margindiversified portfolio mitigating adverse headwinds16.0%Return on capitalexceeds target of 15% per Eight Point Plan46cDividends per shareresulting in a dividend payout ratio of 69%163%Cash conversionexceeds target of 90% per capital management frameworkYear in Brief7 Elders 2023 Annual Report8Sustainable practices key to profitabilityAAuussttrraalliiaa’’ss pprroodduucceerrss kknnooww tthhaatt lloonngg--tteerrmm eeffifficciieennccyy aanndd pprroofifittaabbiilliittyy iiss rreelliiaanntt oonn hhooww tthheeyy ooppttiimmiissee tthhee ppeerrffoorrmmaannccee ooff tthheeiirr llaanndd,, wwhhiicchh iinncclluuddeess pprriioorriittiissiinngg ssuussttaaiinnaabbiilliittyy aanndd ccoonnsseerrvvaattiioonn..Elders shares in this commitment with Australian farmers, as evidenced in work underway across the country. One such example lies in the eastern Gippsland region of Victoria, where Bairnsdale branch manager and horticultural agronomist Noel Jansz works with clients to optimise their cropping regimes. Mr Jansz spends most days on farm, completing crop checks and farm scouts, conducting specialist testing, and developing tailored plans and programs. “Some days I will be performing soil tests to determine soil health and nutrient levels, and others I could be using drones to analyse data on crop yields and plant health,” Mr Jansz said.“I also develop and implement full-scale crop management plans, including planting schedules, irrigation strategies using moisture probes, and pest management techniques.“But the most important part of my role is helping farmers improve their yields, reduce environmental impact and ensure sustainable practices.”Elders’ network of agronomists and Thomas Elder consultants supports thousands of clients across Australia in managing the productivity and sustainability of their farms, facilitating thousands of soil tests every year.A growing segment of Mr Jansz's workday is helping his clients transition to farming practices with enhanced sustainability outcomes. In his region, escalating resistance to some forms of crop protection is increasing willingness for horticulture producers to try new, alternative practices. His emphasis is on helping growers solve such issues, improving their yield and profitability, while also demonstrating stewardship of their land. “The main focus is on improving soil health for my clients by making incremental changes in machinery or products used. The goal is to benefit the whole farming system, from soil health to water conservation and biodiversity,” Mr Jansz said.“Not only does this have a positive environmental impact, but it also improves business success, driving higher yields and improved profitability.“Practices can also drive better nutrient density in a crop, which could support future market access and product premiums.”The Gippsland horticulture industry has experienced significant growth over the past few years, making it an even more exciting and rewarding industry to be part of. “With favourable conditions, an increased focus on sustainability, and technological advancements, the Gippsland horticulture industry is well-positioned for growth and has the potential to become a significant player in the market,” Noel said. “There is an increasing trend in the use of technologies such as precision agriculture, automation, and accelerating genetic improvement in farming practices. As farmers begin to incorporate these advanced technologies, it is likely that the industry will become even more efficient and productive.”Elders Executive General Manager of Sustainability, Strategy & Innovation, Anna Bennett, said that Elders is at the forefront of understanding producer needs and wants around sustainable agriculture. “If there is one learning to be extracted from the work that agronomists like Noel do, and the RD&E work that Elders is involved in, it’s that there is incredible potential for the implementation of decision agriculture to generate major lifts in the gross value of agricultural production, estimated at $20.3 billion11. Here lies a crucial role for Elders to improve access to technology, information, and markets to help them extract this value,” Ms Bennett said. “We aim to do this through Thomas Elder Sustainable Agriculture (TESA), dedicating a purposefully built arm of our business to ensuring that innovation has meaningful economic and environmental outcomes for producers.” 1Accelerating Precision to Decision Agriculture, Cotton Research and Development Corporation (CRDC) Sustainable practices key to profitability
9
“The main focus is on
improving soil health for
my clients, through making
incremental changes in
machinery or products
used. The goal is to
benefit the whole farming
system, from soil health
to water conservation
and biodiversity."
Noel Jansz
Branch Manager and Horticultural Agronomist,
Elders Bairnsdale
OPERATING AND FINANCIAL REVIEW2023 12
Elders 2023 Annual Report
Operating and
Financial Review
Elders reported its second
highest underlying earnings
before interest and tax
(EBIT) in the last 10 years,
notwithstanding challenging
market conditions, including
volatile input prices,
significantly declining
livestock prices, inflationary
pressures, and rising
interest rates.
We have benefited from
our product, channel and
geographical diversification,
which has partly mitigated
the impacts of market
volatility. We continue to
invest in our Eight Point
Plan ambition of 5-10%
growth in underlying EBIT
and underlying earnings per
share (EPS) through the
agricultural cycles.
Key metrics for the full year ended
30 September 2023:
Elders expects continued resilience
in FY24:
• second highest underlying EBIT at
$170.8 million
• resilient gross margin result of
$619.0 million, with softening input prices
offsetting volume growth
• cost increase of 7%, driven primarily by
people cost inflation
• return on capital of 16.0% and leverage
ratio of 1.4, in line with our capital
management framework
• our diversified portfolio is anticipated to
mitigate expected market headwinds
– dry seasonal outlook may see reduced
summer crop planting in FY24,
however, Rural Products margins are
forecast to benefit from the rebasing of
fertiliser and crop protection prices
– while cattle and sheep price pressure
may persist, volumes are forecast to
increase on FY23
• operating cash inflow of $169.2 million
– inflation is expected to decline through
and cash conversion of 163%
• nine new businesses acquired and 21
additional points of presence to expand
our product and geographical footprint
• providing shareholder returns of
underlying EPS of 66.3 cents and
dividends per share of 46.0 cents
• ongoing commitment to safety with the
total recordable injury frequency rate
decreasing to 10.1
• delivering on sustainability priorities,
including achieving key milestones
relating to climate change, energy, and
waste reduction
• diverse working environment, with 43%
women in the workforce and 20% in
leadership positions
• awarded Australia's most trusted
agribusiness brand amongst farmers for
the fourth year in a row
FY24 in line with the Reserve Bank
forecast, and pressure on the cost base
is expected to be partially offset by
disciplined focus on cost management
• we continue to explore key product and
geographical opportunities to increase
our points of presence via acquisition or
greenfield expansion
• acquisition of toll formulation business
Eureka!, which is a step further in Elders'
backward integration strategy
• 100% capacity expected at our Elders
wool handling facilities
• ongoing investment in our Systems
Modernisation project, as well as other
transformational initiatives to enhance
capabilities and capture efficiencies
Profit and Loss
Profit: Reported and Underlying
$$mmiilllliioonn
Sales
Gross margin
Retail Products
Wholesale Products
Agency Services
Real Estate Services
Financial Services
Feed and Processing Services
Total gross margin
Costs (distribution and administration)
Underlying earnings before interest and tax
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 earnings before interest, tax, depreciation and amortisation
Underlying earnings per share (cents)
Operating and Financial Review
13
FY23
3,321.4
FY22
3,445.3
Change
(123.9)
Change %
(4%)
306.9
71.7
113.7
59.5
53.5
13.7
619.0
(448.2)
170.8
(22.9)
147.9
(39.1)
(5.0)
103.7
(2.9)
100.8
228.4
66.3
310.0
73.1
147.0
61.6
44.2
16.8
652.7
(420.6)
232.1
(8.6)
223.5
(64.1)
(7.1)
152.2
10.7
162.9
279.3
97.3
(3.1)
(1.4)
(33.3)
(2.1)
9.3
(3.1)
(33.7)
(27.6)
(61.3)
(14.3)
(75.6)
25.0
2.1
(48.5)
(13.6)
(62.1)
(50.9)
(31.0)
(1%)
(2%)
(23%)
(3%)
21%
(18%)
(5%)
(7%)
(26%)
(166%)
(34%)
39%
30%
(32%)
(127%)
(38%)
(18%)
(32%)
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 are 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
Business transformation costs
Business closure costs and reversals
Platform and system modernisation
Profit on sale
Tax adjustments
Other
Total
FY23
(4.5)
1.5
(5.4)
-
6.1
(0.6)
(2.9)
FY22
Commentary
- Recognition of one off costs for transformational activity
(7.0)
Current year includes reversal of unused/excess provisions raised
in FY22 to exit the China business
(0.7)
Relates to platform modernisation costs that are one off in nature
and cannot be capitalised
22.0 Profit on sale of StockCo investment
(3.6)
Tax benefits from temporary differences on one off costs and
reversal of prior your provisions for closure costs
- Other one off costs
10.7
14
Elders 2023 Annual Report
Sales
Sales decreased $123.9 million or 4% compared to the prior year, which was a strong result, despite adverse market headwinds, including
softening input prices for key agricultural chemical and fertilisers, significantly declining livestock prices, as well as inflationary pressures and
rising interest rates. Retail Products increased volumes sold across most categories, however, this was more than offset by lower prices. Key
upsides during FY23 include strong performances in animal health and seed, as well as in our Elders Insurance investment.
Gross Margin
Retail Products
Retail Products benefited from the progression of our backward integration strategy through Titan AG, however, margin was negatively impacted
by softening input prices, particularly for crop protection and fertiliser. Pleasingly, Elders achieved volume growth across most products, which
has contributed to organic and market share growth in this business unit.
Wholesale Products
Wholesale Products achieved sales growth in the animal health and general merchandise portfolio, notwithstanding margin pressure in key crop
protection products from falling input prices and a softening market.
Agency Services
Agency Services margin decreased largely driven by declining sheep and cattle prices and reduced cattle head sold, partially offset by improved
sheep volumes.
Real Estate Services
Real Estate Services margin declined predominantly due to rising interest rates slowing broadacre and residential turnover. This was partially
offset by increased property management, which benefited from acquisitions and ongoing rent roll growth.
Financial Services
Financial Services earnings improved mostly attributable to improved performance within the Elders Insurance business (20% Elders, 80% QBE)
and own balance sheet livestock lending. This was partially offset by our LIT (Livestock in Transit) Delivery Warranty margin, which has declined
in line with reduced livestock activity.
Feed and Processing Services
Feed and Processing Services margins were adversely impacted in FY23 by the lag effect of higher cattle prices at Killara Feedlot.
Costs
Costs grew $27.6 million or 7% compared to last year, although H2 costs declined $1.8 million from FY22 to FY23. People costs were the key
driver in the increase in costs ($11.8 million or 4%), as well as acquisitions ($9.6 million). This is mainly due to an additional 184 full time
equivalents (FTE), with +94 FTE acquisitions, +36 FTE network and business growth, +29 FTE graduates, +25 FTE transformational projects,
coupled with inflationary wage growth.
Net Profit After Tax
Net profit after tax includes the recognition of underlying tax expense ($39.1 million), effective from 1 October 2021. The physical payment of tax
is forecast to commence in FY25.
EBIT by Geography
$$mmiilllliioonn
Wholesale Products
New South Wales
Queensland and Northern Territory
Victoria and Riverina
South Australia
Tasmania
Western Australia
International (China)
Corporate Overheads
Underlying earnings before interest and tax
Operating and Financial Review
15
FY23
32.1
44.6
21.0
57.1
36.4
5.0
50.5
-
(75.9)
170.8
FY22
Change
Change %
37.3
52.4
34.4
80.6
43.7
6.9
63.7
(0.8)
(86.1)
232.1
(5.2)
(7.8)
(13.4)
(23.5)
(7.3)
(1.9)
(13.2)
0.8
10.2
(61.3)
(14%)
(15%)
(39%)
(29%)
(17%)
(28%)
(21%)
100%
12%
(26%)
Wholesale Products
Wholesale Products EBIT was lower than last year primarily due to Apparent product underperformance, in line with falling commodity prices.
Strategic investment in warehouse expansion to grow market share has also added cost during the year.
New South Wales
Real Estate gross margin was a key upside, with favourable broadacre and residential turnover. This was more than offset by costs, due to 76
additional FTE and 58 additional motor vehicles (42 FTE and 37 motor vehicles relate to the Emms Mooney acquisition) and higher property
costs. Killara Feedlot also contributed a further margin decline, impacted by the lag effect of higher cattle prices.
Queensland and Northern Territory
Queensland and Northern Territory EBIT fell predominantly due to gross margin declines across most products, and inflation in people costs.
Victoria and Riverina
Livestock margin decreased in line with falling prices and lower cattle volumes, while softening commodity prices resulted in downsides in Retail
margin. Inflation in people and motor vehicle costs have also further contributed to EBIT reduction.
South Australia
Livestock margins were significantly impacted by both lower prices and volumes, however, this was partially offset by increased crop protection
sales, supporting an improved Retail result. Inflation in people and motor vehicle costs also impacted the EBIT decline.
Tasmania
Tasmania's EBIT fell primarily due to lower cattle price and volumes, and inflation in people and motor vehicle costs.
Western Australia
Lower cattle volumes and falling sheep prices drove down Livestock margins, while fertiliser and crop protection sales were negatively impacted
by softening commodity prices. Inflation in people costs and motor vehicle costs also contributed to the EBIT decrease.
Corporate Overheads
Corporate Overheads declined mainly due to lower incentives in line with performance. This was partially offset by inflation in people costs, and
increased strategic initiative spend, including acquisitions and the Systems Modernisation project.
16
Elders 2023 Annual Report
Capital Management
Balance Sheet
$$mmiilllliioonn
Trade and other receivables
Inventory
Livestock
Trade and other payables
Working capital
Property, plant and equipment
Right-of-use assets
Equity accounted investments and 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
Working Capital
$$mmiilllliioonn
Retail Products
Wholesale Products
Agency Services
Real Estate Services
Financial Services
Feed and Processing Services
Other
Working capital (balance date)
Working capital (average)
FY23
738.2
491.7
49.1
(646.2)
632.8
70.6
199.2
79.9
409.3
(76.6)
1,315.2
(281.2)
(203.6)
21.5
(463.3)
14.9
866.8
FY23
463.8
116.1
40.9
1.3
10.4
54.8
(54.5)
632.8
733.8
FY22
819.5
484.5
73.4
(752.5)
624.9
47.0
119.3
48.8
364.3
(98.2)
1,106.1
(179.2)
(123.5)
17.8
(284.9)
39.5
860.7
FY22
401.9
99.9
58.7
0.4
9.4
83.4
(28.8)
624.9
606.5
Change
(81.3)
7.2
(24.3)
106.3
7.9
23.6
79.9
31.1
45.0
21.6
209.1
(102.0)
(80.1)
3.7
(178.4)
(24.6)
6.1
Change %
(10%)
1%
(33%)
14%
1%
50%
67%
64%
12%
22%
19%
(57%)
(65%)
21%
(63%)
(62%)
1%
Change
Change %
61.9
16.2
(17.8)
0.9
1.0
(28.6)
(25.7)
7.9
127.3
15%
16%
(30%)
225%
11%
(34%)
(89%)
1%
21%
Key movements in working capital
Working capital as of balance date closed at $632.8 million, up $7.9 million or 1%, primarily due to the decrease in trade and other payables
more than offsetting movements in trade and other receivables and inventory:
• trade and other receivables decreased $81.3 million or 10%, mainly due to reduced livestock debtors (down 39%), mostly in line with
livestock turnover (down 25%)
• inventory (including livestock) declined $17.1 million or 3% on last year, mostly at Killara Feedlot ($24.1 million or 33%), with the key driver
pertaining to lower cattle prices (31%)
• trade and other payables fell $106.3 million or 14%, predominantly due to reduced livestock creditors (down 43%), in line with livestock
turnover (down 25%)
Key movements in net operating assets
Net operating assets at balance date increased a further $209.1 million or 19% on last year to close at $1,315.2 million:
• intangibles grew $45.0 million or 12%, driven by goodwill on acquisitions in FY23
• provisions declined $21.6 million or 22%, pertaining mostly to lower incentives, in line with EBIT decline year on year
• property, plant and equipment increased $23.6 million or 50%, largely relating to investment spend in our transformational initiatives
• right-of-use assets are up $79.9 million or 67%, resulting from renegotiated lease contracts, which resets the right-of-use value, as well as
new locations such as Elders Wool (Ravenhall), which contributed $29.4 million of the increase
Operating and Financial Review
17
Net Debt
Net debt at balance date was $463.3 million, which is up $178.4 million or 63% on the prior year. Lease liabilities comprises $203.6 million of
the total balance and $80.1 million of the movement. Despite a positive operating cash inflow, this is mainly offset by acquisition spend on nine
businesses, as well as further capital expenditure on our transformational initiatives.
Capital management ratios
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Underlying return on capital (%)
Leverage ratio (balance date net debt to EBITDA) (times)
Interest cover ratio (EBITDA to net interest) (times)
Gearing ratio (balance date net debt to closing equity) (%)
FY23
16.0%
1.4
9.2
30.0%
FY22
26.2%
0.7
41.1
18.7%
Change
(10.2%)
0.8
(31.9)
11.2%
Change %
n/m
116%
(78%)
n/m
Leverage excluding AASB 16 (Elders' preferred measure) totalled 1.4 times and bank covenant leverage, which excludes the Rabobank debtor
facility 0.1 times against a covenant limit of less than 2.5 times. Our undrawn facilities as at 30 September 2023 were $314.2 million out of total
committed facilities of $600.0 million.
Tax Assets
Tax assets balance, which includes both deferred tax assets and tax liabilities, decreased $24.6 million or 62% to $14.9 million at balance date.
This is driven by the recognition of underlying tax expense of $39.1 million.
Shareholders' Equity
Shareholders’ equity at balance date closed at $866.8 million, an increase of $6.1 million or 1% on last year. This movement primarily pertains
to FY23 reported net profit of $100.8 million, partially offset by dividend distribution to shareholders of $79.8 million.
Return on Capital
Elders’ underlying return on capital finished the year at 16.0%, which is a decrease of 10.2% compared to last year. Despite the significant
investment spend on our strategic initiatives increasing average capital, as well as a decline in EBIT due to challenging conditions, we have
maintained our return on capital in excess of our benchmark target of 15%.
18
Elders 2023 Annual Report
Cash Flow
$$mmiilllliioonn
Operating cash flows
Investing cash flows
Financing cash flows
Net cash flow
Cash conversion (%)
FY23
169.2
(132.1)
(33.5)
3.6
163%
FY22
113.7
(45.1)
(98.7)
(30.2)
75%
Change
55.5
(87.0)
65.2
33.8
88%
Change %
49%
(193%)
66%
n/m
n/m
Operating cash flow
Operating cash flow was a net inflow of $169.2 million, represented by a strong underlying EBITDA adjusted for non-cash items of $239.1 million,
partially offset by movements in assets and liabilities of $69.9 million:
• trade and other receivables decreased $81.3 million or 10%, mainly due to reduced livestock debtors (down 39%), mostly in line with
livestock turnover (down 25%)
• inventory (including livestock) declined $17.1 million or 3% on last year, mostly at Killara Feedlot ($24.1 million or 33%), with the key driver
pertaining to lower cattle prices (31%)
• trade and other payables fell $106.3 million or 14%, predominantly due to reduced livestock creditors (down 43%), mainly in line with
livestock turnover (down 25%)
• remaining $62.0 million, which includes movements in provisions and balances acquired via business acquisitions
Despite an EBIT decline year on year, operating cash flow increased $55.5 million or 49% from the prior year, mostly due to favourable
movement in asset and liabilities. The operating cash inflow resulted in a strong cash conversion of 163%, up 88% on last year, which was
achieved on lower earnings.
Investing cash flow
Investing cash flow was a net outflow of $132.1 million at balance date, driven by acquisition spend on nine businesses and the strategic
investment in PGG Wrightson, as well as further capital expenditure on our transformational initiatives.
Financing cash flow
Financing cash flow was an outflow of $33.5 million, primarily representing full year FY22 and half year FY23 dividends paid to shareholders of
$73.3 million and $44.5 million payment for lease liabilities, largely offset by $102.0 million proceeds from borrowings.
Operating and Financial Review
19
Material
Business
Risks
EEllddeerrss ffaacceess aa vvaarriieettyy ooff fifinnaanncciiaall aanndd nnoonn--fifinnaanncciiaall rriisskkss tthhaatt mmiigghhtt iimmppaacctt iittss ooppeerraattiioonnss
aanndd oouuttccoommeess..
While some of these risks are unique to Elders, others are general risks associated with any stock market investment. Elders has an established
risk appetite set by the Board and has implemented a Resilience and Risk Management Framework and strategy with internal checks and
balances to address these risks. Nonetheless, the nature and severity of these risks can evolve, and Elders' approach to managing them
is adaptive.
The following overview lists key risks faced in pursuit of Elders' objectives. This list is not exhaustive and does not rank the risks by materiality.
Elders continues to identify, analyse, evaluate, manage and monitor risks, aiming to capitalise on opportunities and minimise potential losses.
More detail on Elders’ approach to managing risk is contained in the Corporate Governance Statement on Elders’ website at elders.com.au/
for-investors/performance/periodic-reports/.
In line with ASX Corporate Governance Council recommendation 7.4, Elders has identified those risks of a specific environmental or social risk type:
Environmental
The potential negative consequences to a listed entity if its activities adversely affect the natural environment or if its activities are adversely affected
by changes in the natural environment.
Social
The potential negative consequences to a listed entity if its activities adversely affect human society or its activities are adversely affected by changes
in human society.
Material Business Risk
Our risk management approach
Health and safety
Safety risk is inherent in Elders' business activities. Key safety risks include
livestock handling, remote driving, manual handling, and chemical handling.
Beyond these physical risks, we recognise the impact of psychosocial risks
in the workplace. These include challenges like excessive workloads, limited
job control, unsupported organisational environments, and issues such as
bullying and harassment.
The safety of our people, and an effective safety culture, at Elders are
critical and non-negotiable corporate objectives. Elders' Health, Safety and
Environment team provides guidance on culture, behaviours, processes,
metrics and reporting.
Our One Elders Awards program, held monthly, celebrates and rewards safe
practices and initiatives. This program not only acknowledges safety but also
deepens its significance across all our operations. We also hold an annual
safety week, concentrating on fundamental safety aspects within Elders.
Elders has Critical Risk Teams to facilitate a team-based approach to identify
and implement improved controls for safety risks across the business. Safety
is a standing agenda item in each team meeting.
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 a "zero tolerance" policy for poor treatment of livestock. We
ensure our people are trained and adhere to safe livestock handling
procedures, aiming to surpass government requirements. Beyond compliance
we're committed to proactive engagement with the broader industry and
stakeholders, pushing for enhanced animal welfare practices where possible.
20
Elders 2023 Annual Report
Material Business Risk
Our risk management approach
Pandemic
Pandemic events can jeopardise health and wellbeing, and can lead
to considerable economic, operational and societal upheavals, with the
potential to impact Elders' ability to conduct its business. The safety of
our people, customers and clients, the general community and business
continuity are at risk during such events.
To address such events, Elders mobilises our Business Continuity
and Incident Response teams. Throughout COVID-19, Elders established
a COVID-19 Committee, comprised of executive level business unit
representatives and functional experts, chaired by the Company Secretary and
General Counsel.
Commodity pricing
Elders has exposure to commodity price fluctuations in its Agency, Rural
Products, 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,
channel and geography, controlled inventory levels and flexible remuneration
models for the Agency business which allow for cost base adjustments in
response to fluctuations.
Climate variability and severe weather events
Adverse weather conditions and other natural catastrophe events can cause
variability in the volume production of agricultural yields, which may reduce
the output of relevant agricultural products and affect the operation of Elders’
business. Natural events, particularly those that are influenced by weather
conditions, 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.
Elders manages its exposure to cyclical weather conditions and events via
its geographical spread of operations and the diversification of its product,
channel and service range.
In its operational planning, Elders integrates forecasting and supply
management, taking into account usual weather patterns. These strategies
are designed to bolster the flexibility of our supply chain, enabling us to
swiftly adapt to weather-induced challenges.
Climate change
Physical risks (such as hotter and drier conditions and more extreme weather
events) and transitional risks (such as those relating to the reduction
of greenhouse gas emissions) may have significant implications for the
environment and conditions in which Elders operates.
In FY23, Elders continued to develop its approach to identifying and managing
climate related risks.
This included progress on climate change scenario analysis and maintaining
100% renewable electricity at its Australian sites through LGC procurement
and onsite solar generation.
Further detail on our management of climate related risks and performance
on managing energy and emissions is available in Elders' 2023 Sustainability
Report. Our disclosures are reported with reference to the recommendations
of the Taskforce on Climate-related Financial Disclosures.
Biosecurity
Australia's expansive agricultural landscape means companies like Elders are
vulnerable to biosecurity threats impacting crops and livestock. An outbreak
can trigger quarantine measures across rural areas, potentially halting trading
and transport operations.
Such outbreaks can also initiate or exacerbate international trade restrictions,
directly influencing market access and profitability. Furthermore, producers
might curtail their demand for goods and services due to these biosecurity
challenges, or even find their operational capacities severely hampered.
Elders is committed to being a proactive part of the solution to biosecurity
challenges. We have instated disease management protocols and maintain a
robust business continuity framework to ensure resilience against unforeseen
disruptions. We scan for and recognise threats, especially from Foot-and-
Mouth Disease and Lumpy Skin Disease occurring in regions near Australia.
Beyond our internal measures, we actively engage with regulators who
monitor these biosecurity threats, ensuring that we not only stay informed
but also adhere to their recommendations and directives. We are dedicated
to safeguarding our operations and contributing positively to the broader
agricultural community.
Food
Elders' Feed and Processing operations handle livestock destined for human
consumption, presenting a possible risk of food product contamination.
Elders enforces strict animal health controls in its feedlot, supported by a
dedicated business continuity framework.
Operating and Financial Review
21
Material Business Risk
Our risk management approach
Fraud and corruption
Elders is exposed to fraud, bribery and corruption risks, including in foreign
markets in which it operates.
Global and domestic economic conditions
The demand for Elders' products and services can be influenced by worldwide
and local demographic and economic trends, encompassing factors like
population growth and shifts in living standards. A pronounced global
economic decline or recession in key areas could result in altered consumer
demands, affecting the demand for products and services.
Counterparty
Elders engages with numerous counterparties. We extend credit to approved
parties and may experience losses from a customer's inability to settle debts.
Additionally, we are exposed to supply counterparty risk where there is
potential for suppliers or partners to default or not meet their service, supply,
or contractual obligations.
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, whistleblower policy and
reporting hotline, leave management protocols and an Internal Audit
program which is complemented by periodic reviews conducted by the
external auditor.
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.
Elders manages counterparty risks through credit assessments, underpinned
by credit policies and procedures. Oversight is provided by the Credit
Committee, complemented by monitoring, reporting of debtors and trade
credit insurance. The CEO, CFO, and when relevant, the Board review notable
credit issues. To address supply counterparty risks, Elders incorporates
standard contract clauses, conducts due diligence, adheres to procurement
procedures and emphasises the establishment of long-term relationships with
trusted suppliers.
Geopolitical
Elders operates in domestic and foreign jurisdictions and is an importer
of agricultural commodities and inputs. Elders is vulnerable to geopolitical
tensions and 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.
Key personnel and human resource
The loss of critical employees, or difficulties in recruiting, retaining, or
motivating skilled talent, can affect Elders. As a company with a national
footprint across various regions, Elders faces increased talent complexities
compared to businesses operating in a single location. Staff changes,
particularly in pivotal and senior roles, has the potential to create disruptions,
impacting Elders' financial standing and its forward-looking strategy.
Essential personnel and positions with Elders have been identified, with
corresponding succession and retention plans formulated.
Compensation and incentive guidelines have been established to assist
Elders in effectively attracting and retaining skilled talent.
Compliance and regulation
Elders' adherence to local laws and regulations is paramount to maintaining
our licence to operate. Non-compliance could expose us to investigations,
penalties, liabilities, reputational damage and other adverse consequences.
Elders has established policies and procedures to facilitate legislative and
regulatory compliance. Central to these is our Code of Conduct, which
delineates the expected behaviours of our people. In addition to our internal
legal team we have dedicated Compliance resources that support compliance
education and offer insights into legislative and regulatory compliance
matters. To further enhance our commitment to ethical operations, we operate
a whistleblower program, allowing employees to report any conduct that may
be unethical, illegal or fraudulent.
22
Elders 2023 Annual Report
Material Business Risk
Our risk management approach
Social licence
Elders is influenced by shifting stakeholder expectations on human rights,
worker welfare, animal treatment, and environmental stewardship. These
evolving expectations can impact our social licence to operate. Failing to
meet these expectations can lead to reputational consequences, operational
disruptions, and increased scrutiny by regulators.
Elders manages its exposure to risks by monitoring social trends with
potential business implications. Our dedicated sustainability team is at
the forefront of identifying, analysing, and addressing these societal shifts.
While the team spearheads these efforts, the Board provides overarching
supervision across all jurisdictions.
To navigate these complexities, our approach is threefold: proactive
stakeholder engagement, a commitment to sustainable practices, and
transparent communication. This strategy not only mitigates risks but also
ensures our business operations resonate with the broader societal and
Elders specific values we uphold.
Technology and cyber security
Elders is reliant on both its own information technology infrastructure and
third-party systems for daily operations. Risks exist in two main areas: first,
the potential for Elders' technology to become outdated or inadequate in the
face of rapidly evolving industry standards; and second, vulnerabilities in
cyber security which might lead to disruptions or unauthorised data access.
Elders is committed to ensuring our IT infrastructure remains current and safe.
To directly address the risks of technological inadequacy, Elders is running
a Systems Modernisation Program. This initiative aims to elevate customer
experience, enhance people engagement, and streamline processes and
administration for better adaptability to change. We have also heightened our
investment in cyber security and established a Data Governance Committee,
to further enhance data security and privacy controls within the organisation.
Supply chain
Elders operates in complex supply chains, reliant on multiple third-party
suppliers, including those located in China. The availability and cost of
inputs can be affected by disruptions, evolving environmental standards, and
policy shifts. Such interruptions can increase our expenses and impede order
fulfilment. Additionally, extreme weather events, due to changing climatic
conditions, pose risks to our infrastructure and supply chain, which could
impact financial results. Furthermore, our dependence on diverse suppliers
exposes potential risks of modern slavery and labour exploitation, especially
in those regions with lower standards of labour oversight.
In 2023, Elders remains aware of supply chain risks, magnified by the residual
impacts of the pandemic, geopolitical events, economic fluctuations and
climatic events. To fortify against these challenges and ensure alignment
with strategic goals, Elders actively manages its Rural Products supply chain
vulnerabilities. Furthermore, Elders has embarked on a comprehensive multi-
year initiative to enhance resilience and excellence throughout its supply
chain ecosystem. Our actions addressing the risk of modern slavery in
operations and supply chains are explained in our annual Modern Slavery
Statement. We outline the minimum ethical expectations we have of our
suppliers in our Responsible Sourcing Code.
Operating and Financial Review23 REVIEW OF OPERATIONS2023 Elders 2023 Annual Report26 OPERATING HIGHLIGHTS$2.4bRetail Products Salesdown 2% on FY22 results$0.4bWholesale Products Salesdown 2% on FY22 results$1.7bResidential Sales Turnoverdown 3% on FY22 results$2.0bBroadacre Sales Turnoverdown 20% on FY22 results1.3mHead of Cattle Solddown 5% on FY22 results9.8mHead of Sheep Soldup 9% on FY22 results$1.2bGross Written Premiumsup 23% on FY22 results57kKillara Head of Cattle Solddown 14% on FY22 resultsReview of Operations27 Elders 2023 Annual Report28Rural Products margin ($million)152.9152.9219.5219.5284.7284.7383.1383.1378.6378.6FFYY1199FFYY2200FFYY2211FFYY2222FFYY2233Margin by product5577%%CropProtection1133%%Other FarmSupplies1199%%WholesaleProducts1111%%FertiliserMargin split by geographyQLD & NTNSWVIC & RIVTASSAWA15%22%27%3%15%18%Rural ProductsElders 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 242 Elders owned retail stores. Additionally, we also provide professional production and cropping advice with 256 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 Ag, Horse & Pet brand to independently owned member stores.Our backward integration strategy is facilitated through various brands and channels.PerformanceRetail Products margin declined $3.1 million or 1% compared to the prior year. Crop protection benefited from the maturing of our backward integration strategy, with Titan AG sales increasing as a percentage of the total crop protection portfolio. This resulted in a gross margin uplift of $8.3 million or 17%. Overall, we achieved volume growth across most categories (sales uplift of $315.3 million), however this was offset by a negative sales impact from commodity price declines (sales reduction of $340.0 million), particularly in herbicide crop protection products and fertiliser. Other Retail gross margin increased $15.3 million or 39%, mainly due to sales outperformance in seed.Wholesale Products margin fell $1.4 million or 2% year on year, largely due to Apparent product underperformance, in line with falling commodity prices. This was partially offset by gross margin improvement in animal health products and pet food, driven by sales growth.StrategyTo deliver profitable growth through execution of our backward integration strategy, capturing more gross margin through optimised pricing and supply chain efficiency, and winning market share through customer centricity, sales force effectiveness and strategic acquisitions.StrategyAchievementPlanExpand own brand product segment•Increased crop protection share of Titan AG brand across most actives•12 new Titan AG product registrations in FY23•Increased focus on sales of Elders' seed varieties•Employed formulation specialists at Titan AG•Continued focus on Titan AG share of wallet growth within branches•Expand the innovation function and identify strategic opportunities•Acquired Eureka! on 1 October 2023 to enhance toll formulation capabilitiesMargin management and efficiency improvements•Resilient performance amidst softening commodity market•Increased sales volume growth across most product categories, offset by declining commodity prices•Growth in animal health and seed portfolio•Ongoing improvement in margin management sophistication through technology solutions•Develop an enhanced pricing strategy•Establish national supply chain function to deliver supply chain efficiencies and support risk managementCustomer focus and expanded store footprint•Added 12 new retail locations, through six acquisitions and four greenfield developments across the country•Customers supported by 256 agronomists (including 21 graduates) and 16 livestock production advisors•Continue to fill geographic gaps with strategic acquisitions and greenfield developments, combined with organic growth from capturing additional market shareGrowth of Wholesale Products•Ongoing warehouse footprint expansion to grow market share•Continued success in delivering procurement synergies and enhanced maturity of sales through the Elders network•Three new Corporate Ag, Horse & Pet locations, as well as further expansion of private label brands and Brookfield acquisition•Growth of online presence via Farmers Mailbox acquisition•Launch range of member services via Fetch Pet Insurance referral program•Continue to increase the warehouse footprint in Brisbane and Rockhampton, and streamline with robotics within Queensland warehouse•Implement POS scanning with current retail sites•Expand retail footprint through strategic acquisitions in key areas•Grow the member base Review of Operations
29
Agency Services
Elders provides a range of marketing options for livestock, wool and grain. Elders' livestock network comprises livestock employees and
agents 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.
In 2023, Elders commenced its wool handling operations, a $25 million investment in the Australian wool industry with operations in Perth
and Melbourne. Its operations are expected to reach full capacity in FY24, which will deliver greater efficiency and longer-term cost savings
within the wool supply chain.
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 decreased $33.3 million or 23% on last year, mainly due to Livestock, with gross margin declining $33.2 million or
26%. Livestock prices experienced significant declines in FY23 with the average transacted cattle price down 22% and 29% for sheep. FY23
experienced the fastest revision in the Eastern States Young Cattle Indictator (EYCI) prices this century (down 64%), while mutton prices have
fallen 77% since September 2022. However, whilst there was a reduction in cattle volumes of 5% during the period, sheep volumes increased
9% on the prior year.
Wool gross margin was mostly in line with the prior year (slightly down $0.3 million or 2%), with a small reduction in bales sold (3%), offset by a
higher earn per bale (2%), despite a lower Eastern Market Indicator (EMI).
Grain margin increased as a result of higher shareholder distributions from CGX driven by higher grain volume transacted.
Strategy
To deliver profitable growth of the Agency Services portfolio through business improvement, recruitment and acquisition for our Livestock and
Wool businesses and through focused growth of our investments in AuctionsPlus and CGX.
Strategy
Achievement
Plan
Operating model
• Commencement of Elders wool handling operations
• Acquisition of Emms Mooney and a business in key
geographic area, Dubbo
• Launched new digital livestock hub, Livestock Now
• Launched new livestock handling and animal welfare policies
and procedures
People
• Continued growth and uptake of our Livestock trainee program
• Commenced roll out of national livestock safety and
handling training
• Launched Livestock Academy
• Elders wool handling to reach 100% capacity in FY24
• Continue to strengthen, expand and improve our livestock
finance and livestock production advice offerings
• Identify and capture strategic opportunities in key geographic
locations via acquisitions
• Increased investment in training young staff through Elders
Livestock Academy
• Increase wool handling capability and knowledge through
recruitment and training
• Continued recruitment of high performing staff in key
geographical areas
Agency Services margin ($ million) 1
Margin by product
Margin split by geography
127.1
127.1
116.4116.4
139.9
139.9
147.0147.0
113.7113.7
FFYY1199
FFYY2200
FFYY2211
FFYY2222
FFYY2233
1 Includes equity earnings from investments.
4488%%
Cattle
3377%%
Sheep
1144%%
Wool
11%%
Grain
QLD & NT
NSW
VIC & RIV
TAS
SA
WA
17%
18%
16%
14%
31%
4%
30
Elders 2023 Annual Report
Real Estate Services
Elders’ Real Estate Services includes company owned rural agencies primarily involved in the marketing of farms, stations and lifestyle
estates. It also includes a network of residential real estate agencies providing sales and property management services in major population
centres and regional areas through company owned and franchise offices. Other services include water broking and commercial real estate.
Performance
Real Estate Services margin declined by $2.1 million or 3% year on year. Turnover for both broadacre and residential properties was adversely
impacted by rising interest rates (down 20% and 3% respectively), although demand for quality property remains strong. Property management
gross margin increased $4.0 million or 22% year on year, benefiting from acquisitions, rental inflation and ongoing rent roll growth.
Strategy
To increase market share and deliver profitable growth of the Real Estate Services portfolio, through increased productivity, recruitment and
acquisition across rural, residential and property management.
Strategy
Achievement
Plan
Operating model
• Three key acquisitions, including Emms Mooney and two
• Continue to grow company owned broadacre agency,
businesses in key geographical areas, Rockingham and Dubbo
• Continued implementation of numerous business
improvement initiatives, primarily focused on brand
enhancement, digital strategy, system modernisation and
people development
• Increased rent roll assets via organic and acquisitive growth
• Remained transaction adviser of choice in corporate
agriculture and facilitated numerous on and off-market
investment scale broadacre transactions
residential agency and property management market share in
major regional centres and capital cities through acquisition,
franchise and agent recruitment
• Continue to grow market share in water broking
• Enhance productivity and efficiency initiatives in our property
management business
• Leverage new proptech solutions for agency operations,
including use of data, and driving cross referral opportunities
• Grow the number of properties under management for
• Successfully onboarded several new real estate
company owned operations
businesses through acquisition, and new agents through
targeted recruitment
• Deliver new campaigns to drive brand awareness of the real
estate business
• Continued enhancement of digital marketing and lead
generation activity
People
• Continued to position key personnel as leading transaction
• Ongoing recruitment of high performing real estate sales
advisers for corporate scale transactions
• Maintained a strong attraction and retention proposition
• Retained high performing sales agents
• Significant increase in participation levels in a modern
representatives and water brokers
• Recruitment of real estate franchisees
• Increased productivity through technology initiatives
and training
learning and development program
• Ongoing investment in capability in the broadacre investment
space to provide a whole of investment life cycle
service offering
Real Estate Services margin ($ million)
Margin by product
Margin split by geography
61.661.6
59.559.5
50.150.1
37.637.6
33.733.7
FFYY1199
FFYY2200
FFYY2211
FFYY2222
FFYY2233
3300%%
Broadacre
3333%%
Residential
3377%%
Property
Management
29%
18%
21%
17%
14%
1%
QLD & NT
NSW
VIC & RIV
TAS
SA
WA
Review of Operations
31
Financial Services
Elders distributes a wide range of banking, finance, insurance and warranty products and services through its Australian network. We work
together with a number of partners to deliver some of these offerings; Rural Bank for banking, StockCo for livestock funding products and
Elders Insurance (a QBE subsidiary) for general insurance.
In addition, Elders provides Livestock Funding and a Livestock in Transit Delivery (LIT) Warranty Service, both which complement our Agency
business, and Home Loans and Commercial Finance brokerage model. Collectively, these relationships and business units enable us to offer a
broad spectrum of products designed to help our customers grow their business and manage cash flow and risk.
Performance
Financial Services margin increased $9.3 million or 21% in comparison to the prior year, of which the largest benefit was seen in our Insurance
business ($9.1 million or 49%). Elders' own Livestock Funding, as well as via StockCo, were other key upsides in the Financial Services portfolio,
with head numbers financed up 30%. LIT Delivery Warranty margin declined year on year, in line with reduced livestock turnover, however this
was partially offset by growth in client penetration rates.
Strategy
To deliver profitable growth of the Financial Services portfolio through business improvement, product development, and enhanced referral
culture in our services business.
Strategy
Achievement
Plan
Deeper, more
productive partnerships
• Launched re-engagement program with all partners to
• Increase Financial Services product suite further into the
optimise joint operations and deliver mutual growth and profit
AIRR business
• Established new distribution agreement with Fetch
• Introduce financial services product suite to bolt-on
Pet Insurance
acquisitions in a systematic manner
• Increase joint management initiatives between Elders and
partners to capitalise on opportunities
Grow Elders
issued offerings
• Significant growth in livestock financing earn
• Improvement in LIT Delivery Warranty penetration rate
• Doubled Home Loan Broker numbers through business
• Continue to increase Livestock Funding, subject to normal
capital allocation processes
• Establish Commercial Finance product to compliment home
development activities and acquisition
loan offering
Referral culture and
staff training
• Established formal internal referral system for Home Loans
• Led first round of internal training to bolster staff
understanding and marketing approaches to financial
service offerings
• Expand referral systems and processes to all Financial
Services offerings and adjacencies
• Expand internal training program
Financial Services margin ($ million)1
Margin by product
Margin split by geography
53.553.5
42.142.1
44.244.2
34.134.1
37.837.8
FFYY1199
FFYY2200
FFYY2211
FFYY2222
FFYY2233
1 Includes equity earnings from investments.
3366%%
Agri Finance
5522%%
Insurance
1122%%
LIT Delivery
Warranty
19%
18%
18%
15%
29%
1%
QLD & NT
NSW
VIC & RIV
TAS
SA
WA
32
Elders 2023 Annual Report
Feed and Processing Services
In Australia, Elders operates Killara Feedlot, a diversified business incorporating grain-fed beef distribution, grass-fattening operations, cow
manure processing and irrigated corn production in Quirindi, New South Wales.
Performance
Feed and Processing Services margin declined $3.1 million, or 18% year on year, mainly due to Killara Feedlot which was $2.4 million or 15%
down. The key driver was margin erosion due to the lag effect of higher cost of goods on principally-owned cattle, despite high residency, as well
as a reduction in cattle exits (down 14%). Operations in Elders Fine Foods in China ceased in FY23.
Strategy
To deliver continuous improvement in EBIT and ROC for all businesses with active portfolio composition management.
Strategy
Achievement
Plan
Grow Killara Feedlot
• Completion of new batching shed to expand grass
• Progressing implementation of new feed mill and steam flake
fed operations
processing facility
• Purchased two additional neighbouring properties to expand
• Expansion of feedlot capacity and licence by 10% for
farming and grass finishing operations
residency levels
• Finalisation of new livestock induction facility to improve
• New hay processing facility
safety of people and the animal welfare of cattle
• Construction of two new centre pivots to expand irrigation corn
silage business
• Completion of manure processing facility on site to expand
diversification of the business
• Commenced implementation of solar farming to transition
towards carbon neutrality
Closure of Elders Fine
Foods (China) in FY23
• Ceased trading operations during the year
Feed and Processing Services margin
($ million)
Margin by product
15.015.0
15.515.5
16.816.8
13.713.7
12.612.6
FFYY1199
FFYY2200
FFYY2211
FFYY2222
FFYY2233
110000%%
Killara
00%%
Elders Fine
Foods
Outlook
Elders expects some of
the market headwinds
encountered in FY23 to
continue in FY24.
We anticipate much of
this can be mitigated by
our product, channel and
geographical diversification,
as well as growth via
acquisitions and capturing
further market share.
We will continue to invest
in our strategic initiatives,
in line with our Eight Point
Plan strategy, particularly in
our Systems Modernisation
project with benefits
commencing from FY24.
Review of Operations
33
Rural Products
• Dry and El Niño outlook expected to see
more caution from growers and potential
decrease in crop plantings
• Gross margin expected to improve on
FY23 as fertiliser and crop protection
prices stabilise at more sustainable levels
• Summer crop conditions will continue to
be favourable with full water allocations
in most irrigated areas. However, summer
dryland crops may be constrained by the
anticipated drier conditions
• Further progress on our backward
integration strategy via acquisition
of Eureka! to enhance our toll
formulation capabilities
• Continued expansion of our store
footprint, as well as our own
brand product segment through
strategic opportunities
Agency Services
• Cattle and sheep volumes are expected
to increase underpinned by currently high
national herd and flock numbers and
increased production
• Cattle prices anticipated to remain under
pressure in the short-term but forecast to
increase in the medium-term, as export
prices rise underpinned by the expected
US herd rebuild
• Lamb and mutton prices are expected
to remain subdued into 2024 due
to increased supply and limited
processor capacity
• Wool prices are expected to remain steady
Real Estate Services
• Interest rate pressures may see potential
for subdued demand for regional
residential properties
• Continued challenging market conditions
and lower livestock prices may place
further pressure on broadacre turnover
• Full year benefit of Emms Mooney and
other acquisitions
Financial Services
• Continued uptake of livestock funding
product forecast to increase margin
• Home Loans and Commercial Finance
Brokerage model relaunch to drive
referrals activity from network
Feed and Processing Services
• High residency, continued strong demand
for both grain and grass finished product,
and lower cattle prices are expected
to provide margin relief across all
feeding programs
• Expansion in grass operations via
additional land acquisition
• Ration prices forecast to rise but expected
to pass through supply chain
• Further growth and demand for irrigated
corn operations and Killara branded
organic fertiliser
Costs and Capital
• Maintain unflinching financial discipline
for cost and capital efficiency
• Cost savings expected to mitigate interest
rate and inflationary pressures
• Continued investment spend on
acquisition growth, as well as on
our transformational initiatives such as
Systems Modernisation, which we expect
to deliver returns in excess of 15%
return on capital incrementally from
FY24 onwards
Eight Point Plan
• Elders commences its fourth Eight Point
Plan in FY24; our three-year strategy
taking us through to FY26
• We continue to strive for compelling
shareholder returns, industry leading
sustainability outcomes, being the most
trusted agribusiness brand in rural and
regional Australia
• Our strategic priorities are categorised
in three key areas: Run, Transform, and
Innovate & Grow, focusing on optimising
the existing business, future-proofing our
business, and expanding and innovating
our portfolio
34
Elders 2023 Annual Report
Innovation essential
for livestock productivity
IInn 22002233 tthhee AAuussttrraalliiaann
lliivveessttoocckk iinndduussttrryy hhaass
ccoonnttiinnuueedd ttoo ddeelliivveerr pprroodduuccee
ooff hhiigghh qquuaannttiittyy aanndd qquuaalliittyy,,
ttoo ffeeeedd aa ggrroowwiinngg gglloobbaall
ppooppuullaattiioonn aanndd ddeemmaanndd
ffoorr pprrootteeiinn..
The engine room of this supply chain is the
Australian farming sector, which continues
to grow amidst ongoing challenges
presented by a changing climate, and global
market pressures.
New products and practices that support
more efficient and sustainable animal
husbandry are key to ensuring the sector
reaches its growth ambitions. At the
forefront of agricultural innovation, Elders
livestock production advisors provide future
focused solutions for clients, ensuring their
businesses remain resilient and profitable.
Keen to help solve this issue for his
clients, Mr Donaldson began researching
emerging supplementation systems, and
after extensive systematic trials, developed
an innovative new lick block containing
chromium, now known as KEMTRACE™.
He explained that this new adaptation to
a supplement, which was co-developed
with Olsson’s, will help increase
glucose utilisation.
“The first thing that really caught my eye
with chromium was the ability to stimulate
insulin receptors and increase glucose
availability,” Mr Donaldson said.
“And the deeper I have gone into the
research, the more I realised this condition
can become a real problem for my clients –
heat stressed cows are at a much higher risk
of developing leaky gut.
“KEMTRACE stimulates insulin receptors,
allowing more opened pathways in the
animal’s cells so that more glucose, and
therefore energy, can be absorbed into its
cells system, in turn removing impacts of
that stress.”
Townsville based Todd Donaldson is one
such specialist. With over two decades of
experience in ruminant nutrition and animal
health, his passion lies in helping clients
enhance the productivity and profitability
of their livestock businesses; ensuring they
remain productive and resilient for years
to come.
Mr Donaldson has been instrumental in
the development of an innovative new
product which is showing measurable
results in cattle’s ability to increase glucose
utilisation, reducing the effects of both
heat and cold stress and other flow-
on conditions.
He works closely with cattle producers
across northern Australia, who experience
warm conditions almost year-round.
With overnight temperatures sometimes
remaining at up to 25 degrees centigrade,
it is not uncommon for cattle to become
heat stressed, which in turn exacerbates
other conditions such as leaky gut. Leaky
gut is a condition where bad bacteria and
toxins are let into the animal’s wider system.
According to Mr Donaldson, 70 per cent of
immune system functionality resides in the
gastrointestinal tract.
“When bad bacteria are let in, the animal
goes into an immune response to try
to remove the toxins, using significant
nutrients, which would normally go towards
producing fat, muscle, or milk,” he said.
“This is where producers may see declines
in the health of the animal, and the
productivity of their herd.”
Innovation essential for livestock productivity
35
While chromium supplementation has
existed in the feedlot and dairy industry for
some time, Elders is expanding its use.
“This kind of supplement is being used
by a few select nutritionists in total mixed
rations,” Mr Donaldson said.
“But we are really trying to bring it
mainstream, pioneering its extension.”
Extension work like Mr Donaldson's is far
from isolated, with Elders staff participating
in research and development work around
the country each year to develop new
products and practices that improve the
productivity of the agriculture sector.
With extensive geographical spread and an
outstanding reputation in the industry ,
Elders is well placed to reach producers with
new practices, products, and technologies
that add significant long-term value to
their operations.
1 Targets are based on Elders’ financial year ending 30 September.2 Subject to commercially viable technology being available to address feedlot cattle emissions.SUSTAINABILITY PERFORMANCETARGETFY232025100% renewable electricity in all Australian sites by 2025Target achieved through on-site solar generation and procurement and retirement of Large-scale Generation Certificates (LGCs)30 new solar installations at our branches203050% reduction in Scope 1 and 2 emissions intensity (tCO2e/$m revenue) by 2030, against a baseline year of 202122050Net zero Scope 1 and 2 emissions by 205025% reduction in Scope 1 and 2 emissions intensity against baseline year of 202117.93 tCO2e/$m revenue in 2023Down from 18.80 tCO2e in 2022 and 23.86 tCO2e in 202159,551 tCO2e this year(Scope 1 and 2)Down from 64,772 tCO2e in 2022CLIMATE TARGETS TO REDUCE GREENHOUSE GAS EMISSIONS1 60%Board positions held by women For more information, please see the ‘Governance’ section of this report20%Women in senior management Improvement programs in placeDIVERSITY AND INCLUSIONHEALTH AND SAFETY3Lost Time Injuries (down from 6 in FY22) $2m invested in safety capital expenditure10.1TRIFRDown from 12.6 in FY22$3.33mDonations and sponsorships1,000+Local community sports teams and events sponsoredCOMMUNITY IMPACT AND INVESTMENTWASTE MANAGEMENT46,000+Agricultural chemical containers collected for reuse or recycling2.18tBags collected for recycling. Elders now a member of Big Bag Recovery Elders 2023 Annual Report38Elders Sustainability FrameworkOOuurr aammbbiittiioonn iiss ttoo lleeaadd ssuussttaaiinnaabbiilliittyy aanndd pprroodduuccttiivviittyy ttoo bbeenneefifitt oouurr ccuussttoommeerrss,, ccoommmmuunniittiieess,, iinndduussttrryy,, ppeeooppllee aanndd sshhaarreehhoollddeerrss..This is highlighted in our latest Eight Point Plan, which sets out Elders' key strategic priorities from 1 October 2023 through to 30 September 2026. Our Eight Point Plan was developed by our Board and Executive Committee through a series of workshops and strategy sessions in 2023.We provide our customers and clients with the goods and services they needWe support our people and industries and communities in which we operateWe do our part to look after the environment and animals in our careWe operate ethically and to the highest standard1 HEALTH AND SAFETYPrioritise the safety and wellbeing of our people2 SUSTAINABLE FARMINGEnable customers to achieve sustainability and productivity goals amid diverse and demanding conditions, leveraging innovation and technology3 EMPLOYEE ATTRACTION AND RETENTIONInvest in our people and cultivate diversity, inclusion and growth for collective empowerment and success4 CLIMATE CHANGEReduce our carbon footprint and support our customers in climate adaptation and resilience5 ANIMAL WELFARESafeguard the wellbeing of animals in our care and collaborate with our industry to promote livestock welfare and responsible stewardship6 CORPORATEGOVERNANCESecure our standing as the most trusted agribusiness brand by upholding ethical operations7 COMMUNITY IMPACT AND INVESTMENTSupport rural and regional Australia to positively impact our communities8 WASTE MANAGEMENTCollaborate with industry to minimise waste for positive environmental outcomes Sustainability
39
Climate Change
AAuussttrraalliiaa''ss cchhaannggiinngg cclliimmaattee
pprreesseennttss ssyysstteemmiicc cchhaalllleennggeess
ttoo tthhee aaggrriiccuullttuurree sseeccttoorr,, aass
wweellll aass ttoo oouurr cclliieennttss aanndd
ffaarrmmiinngg aaccttiivviittiieess..
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.
Reducing emissions and benefiting
the environment, while improving farm
productivity and building resilience presents
challenges as well as opportunities. 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 own
responsibility to address climate change
and in particular, manage and reduce
greenhouse gas emissions associated with
our own operations.
Our climate-related disclosures presented
within this report are supplemented
with additional information, including
disclosures relating to climate change
scenario analysis and metrics and targets,
in our 2023 Sustainability Report.1
1
Available at https://elders.com.au/for-investors/performance/periodic-reports/.
FY20Published our first Sustainability Report including our emissions profile and our climate-risk management processes,roles and responsibilitiesInitiated internal and independent review of climate-related risks and opportunities Set action plan for full alignment with the TCFDRecommendationsFY21Disclosed our climate-related riskassessment methodology and ourclimate-related risks and mitigation actionsIdentified climate-relatedopportunitiesSet climate change targets FY22Qualitatively assessed futureclimate-related risks and impacts using appropriate climate scenariosReported on performanceagainst our targetsAchieved 100% renewable electricity in all Australian sites*Developed our Scope 3 emissions profileFY23Undertook quantitative analysis of climate-related risks and impactsMaintained 100% renewable electricity in all Australian sites*Increased the numberof sites with onsite solargeneration capabilityWE’RE HEREFY24Further explore transitionalclimate-related risks and opportunities through scenario analysisBegin quantifying ourScope 3 emissions, beginning with key categoriesFY25 ONWARDSMaintain 100% renewable electricityin all Australian sitesDevelop and implement a strategy to reduce fleet fuel related emissionsFY25 ONWARDSContinue to support research, development and extension to the agriculture sector in the areas of emissions reduction and climate change resilienceQuantify our Scope 3 emissions and aim to set appropriate targetsAim to reduce our emissions in line with our 2030 climate target2050AIMING FOR NET ZERO SCOPE 1 AND SCOPE 2 EMISSIONSEldersClimate ActionRoadmap*Achieved through procurement and retirement of Large-scale Generation Certificates and onsite solar generation.Elders 2023 Annual Report40 Sustainability41Climate change governanceElders considers climate change to be a material business risk with potential impacts on our economic, environmental, and social sustainability. Our Climate Change Policy2 sets out:•our commitment to supporting the global effort to reduce greenhouse gas emissions in alignment with the recommendations of the Paris Agreement established by the UNFCCC (United Nations Framework Convention on Climate Change)•the role of our Board and Executive in managing climate change strategy, risks and opportunitiesBoth the operational and strategic risks posed by climate change are captured under our current governance, risk management and resilience frameworks.We aim to align our disclosure of climate-related risks with the TCFD Recommendations and in the coming years, with the International Sustainability Standards Board's (ISSB) standards, as they are adopted in Australia. Our Board has been briefed on the requirements of the TCFD recommendations and is responsible for reviewing and approving the climate-related disclosures contained within this report.Strategy and risk managementClimate change presents both risks and opportunities to Elders’ businesses. We recognise that it will impact regions within Australia differently, requiring targeted strategies for adaptation. We manage the impact of climate change through:•the implementation of emissions reduction targets that guide business activities•our diverse product and service offerings across our national footprint, which supports risk mitigation and the ability to meet our clients' needs as they adapt and respond to climate-related impacts•due diligence processes that facilitate the evaluation of potential business acquisitions against our key sustainability principles, relevant climate trends and impacts (i.e. industry and geography) and our emissions profileAssessing risks and opportunitiesIn assessing the specific climate-related risks and opportunities for our business, we consider both short-term (0-3 years) and medium to long-term (3-30 years) physical and transition impacts. Climate-related risks are then assessed in accordance with our Resilience and Risk Framework, with added analysis on the shift in risk ratings projected over the long term.Below is an overview of the key risks identified by Elders. The risks noted are not exhaustive and are in no particular order.TCFD risk categoriesPhysical risks: A – Acute C – ChronicTransitional risks: PL – Policy & Legal M – Markets R – Reputation L – LiabilityTCFD opportunity categoriesRE – Resource efficiency E – Energy source PS – Products/Services M – Markets R - ResilienceClimate-related risks and strategiesRisks and impactsOur strategyCrop yieldsCCrop yields may be adversely impacted by a fall in total annual rainfall; prolonged drought; future rainfall occurring in fewer, heavier events; higher temperatures; increased fire risk and an increased prevalence of pests, diseases and weeds. These events could impact farm profitability and the demand for the goods and services which Elders supplies.PSContinue to offer supportive rural products, including water-efficient and heat-tolerant plant varieties and plants with shorter growing seasons.PSContinue to offer agronomic advisory services and supportive AgTech assisting farmers with effective cropping, pest, disease and weed management and farm adaptation.RMaintain effective inventory management practices to mitigate the impact of demand variability.PSInvestigate opportunities to partner with additional suppliers providing climate-resilient plant varieties.Health and safetyCIncreased frequency and severity of extreme heat days may result in reduced productivity, increased changes of heat-related illness, exposure to heat-related injury and exposure to diseases which may become more prevalent, such as mosquito-borne diseases.RContinue to implement and improve our WHSMS, provide appropriate, sun-safe uniforms and PPE and maintain appropriate and effective incident management plans.Livestock productionCLivestock production may be affected by variability in pasture quality driven by prolonged drought, higher temperatures and heat stress and flood-related mortality. This could impact the demand for animal health, feed products and agency services. Killara Feedlot may also be impacted due to increased mitigation requirements.MRetain our geographically diverse livestock agency base to serve clients across the country and mitigate the impacts of regional adverse conditions.PSContinue to offer supportive rural products, including pasture varieties that maximise water use efficiency, heat tolerance and shorter growing seasons, and feed supplements that mitigate the effects of heat stress, dehydration and physical stress in animals in extreme weather.PSContinue to offer livestock production advisory services, advising farmers on the selection of animals based on genetic resilience, and appropriate seedstock and commercial replacements.RFurther scenario analysis and an increased understanding of the likely geographical shifts of livestock production may identify further opportunities and controls.2Available at https://investors.elderslimited.com/investor-centre/?page=corporate-governance. 42
Elders 2023 Annual Report
A
A
C
R
PL
Risks and impacts
Severe weather
Our strategy
Tropical storms and cyclones may increase the risk of heavy,
prolonged rainfall events and the potential for widespread
flooding and destruction of infrastructure, physical assets,
crops and livestock.
M Retain and grow our national footprint to serve customers and clients across the
country in responding to the impacts of severe weather.
R Maintain our incident management, emergency evacuation and business
continuity plans.
Storm impacts
Coastal events like cyclones, storms and associated storm
surges may result in damage to port infrastructure, vessels
or goods, which could impact Elders’ supply chains.
Water availability
Decreases in average rainfall and an increase in the
frequency and duration of drought conditions limits the
replenishment of dams, reservoirs and aquifers. This could
impact both water supply for on-site usage (drinking and
irrigation), trading, and could see changes to licence terms.
Water scarcity could impact farm operations and reduce the
demand for the goods and services which we supply.
Demand for key products
Consumer preferences shifting to ‘green’ labelled products
may result in a decreased demand for some of Elders’
product lines.
Climate change policy and carbon charges
International pressure or changes at a Federal government
level have the potential to rapidly shift the types of
obligations faced by Australian companies in the coming
years. Changes may include the introduction of a carbon
charge, which may impact Elders’ operational costs and
that of its customer base. International changes may
also impact customers' ability to conduct business in
foreign jurisdictions, which may impact the demand for the
products and services which we supply.
Achieving our climate-related targets
R Maintain effective inventory management practices to mitigate the impact of
demand variability.
M Maintain and diversify our supplier base to mitigate supply chain disruptions.
R
Continue working with suppliers to manage risks and implement effective inventory
management practices, including holding stock in our Australia-based AIRR
warehouses and working with local suppliers.
RE Monitor and maintain Killara Feedlot’s water licences, centre pivot irrigation system
and relationships with third party feed suppliers.
M Continue to explore opportunities to increase our offering of water capture and
storage equipment, including through our business, Sunfam, which provides
irrigation and pumping equipment from its base in Bundaberg, Queensland.
PS Maintain and grow our diverse product offering.
M Continue to investigate opportunities to expand our range to accommodate changes
in demand.
R
Align our climate-related disclosures with the recommendations of the Task Force
on Climate-related Financial Disclosures, and other emerging reporting standards
as required.
RE Implement strategies to reduce Elders’ greenhouse gas emissions in alignment with
our emissions reduction targets.
PS Continue to offer products and services which support sustainable farming practices
which deliver climate change mitigation and adaptation.
R
Delayed or lack of innovation could affect Elders' ability to
meet its 2030 and 2050 climate-related emissions targets,
which may require an investment in carbon offsets.
RE Continue to monitor developments in technology through industry partnerships and
aim to implement innovative technology as it becomes commercially viable.
Sustainability43Our Emissions ProfileEnergy is essential to our business. Understanding how it is used and the associated greenhouse gas emissions produced is key to reducing Elders' impact on the environment and ensuring our ability to transition to a low carbon economy.Scope 1 and 2 emissionsOur emissions profile reflects our emissions between 1 July 2022 and 30 June 2023, and was calculated using the following methodologies:•For electricity use in our Australian sites: We have procured and retired a number of Large-scale Generation Certificates (LGCs) equivalent to our usage, less a number of LGCs which we have assumed have been surrendered by our electricity retailers on our behalf•For fuel use: the methodology set out in the National Greenhouse and Energy Reporting (Measurement) Determination 2008 (as updated from time to time)•For cattle production: the methodology set out in the Greenhouse Gas Accounting Framework for Feedlots produced by the University of Melbourne and based on the Australian National Greenhouse Gas Inventory methodology,3 with global warming potential factors updated to align with the IPCC 5th Assessment Report.4 This methodology is unable to account for sequestered carbon from minimum till farming practices at the feedlot, cattle in Killara's "grass fed" program, or specific manure and fertiliser management practices used by the feedlot.65%31%2%1.5%0.5%OUREMISSIONSPROFILEKillara Feedlot cattleElectricity - ChinaKillara Feedlot equipmentdiesel & gasolineOtherincluding fleet transport fuel (gasoline), stationary forklift fuel (LPG) and natural gasFleet transport fuel - dieselOur emissions profileScope 1 Emissions - SourcetCO2eScope 2 Emissions - SourcetCO2eKillara Feedlot cattle38,786Electricity - Australian sites0Fleet transport fuel - diesel18,616Electricity - China Sites3301Killara Feedlot equipment fuel (diesel and gasoline)828Other (including fleet transport fuel (gasoline), stationary forklift fuel (LPG) and natural gas)991Total Scope 1 and 2: 59,551 tCO2e1In FY22, Elders made the decision to close its Shanghai-based meat distribution business, Elders Fine Foods. Its operations have been progressively wound down throughout FY23. As a result, whilst the emissions data related to Elders Fine Foods has been included in this report, Elders does not intend to include this in future reports.3Available at www.piccc.org.au/resources/Tools.4The Fifth Assessment Report of the United Nations Intergovernmental Panel on Climate Change. Elders 2023 Annual Report44Elders, for stronger regional communitiesAA tthhrriivviinngg aaggrriiccuullttuurree sseeccttoorr iiss ddeeppeennddeenntt oonn ssttrroonngg ssuuppppoorrttiinngg rreeggiioonnss aanndd ccoommmmuunniittiieess.. IInnvveessttiinngg iinn rreeggiioonnaall eeccoonnoommiieess eennccoouurraaggeess bbootthh ssuussttaaiinnaabbllee ggrroowwtthh iinn tthhee sseeccttoorr aanndd tthhee lloonngg--tteerrmm rreessiilliieennccee aanndd vviiaabbiilliittyy ooff llooccaall ccoommmmuunniittiieess aaccrroossss AAuussttrraalliiaa.. The Elders culture is true to the value of community spirit. Whether facing drought, fire, flood, or something else, Elders people are on the frontlines in our communities.This year, the team at Elders Albury joined forces with Paull & Scollard Nutrien to hold a dedicated store sale in support of mental health organisation This Is A Conversation Starter (TIACS). Staff from both branches replaced their pink and green shirts with loud and colourful TradeMutt shirts for the sale, with the aim of making an invisible issue impossible to ignore.Further north, the Elders branch in Griffith was responsible for organising the largest fundraising event for Angel Flight in the charity’s 20-year history. 250 people attended a gala dinner hosted by the branch, raising almost $64,000. To highlight and build on this community focus, this year Elders was pleased to launch the brand-new Community Giving Project. Structured across six pillars, grants of up to $20,000 will be offered to not-for-profit and other organisations investing in and supporting regional initiatives with impact at a grassroots level. Elders is proud to invest in initiatives centred around people, environmental consciousness, innovation, healthy lifestyles, diversity and safety. These six pillars make up the key areas and spaces that will have targeted impact; encouraging sustainable, focused, and long-term change in communities.In FY23, Elders gave $3.3 million in sponsorships and donations, and sponsored over 1,000 local community sports teams and events. Elders also re-signed a long-standing partnership with the Royal Flying Doctor Service (RFDS) Central Operations, further boosting investment in the health and wellbeing of rural and regional communities. The Elders-sponsored RFDS plane, ‘Whiskey’, flew 588,481 kilometres this financial year, transporting 1,177 patients from 62 rural and remote locations. CEO & MD Mark Allison said that partnerships with other community focused organisations, including Motherland, Rural Aid, and the Regional Australia Institute, allowed Elders to further extend its impact in rural Australia and create meaningful change. “Investing in regional economies encourages sustainable growth in our sector; Australian agriculture is only as strong as its supporting townships and communities,” Mr Allison said.“Elders’ links to communities go far beyond our agricultural products and services, and we are invested in supporting discussion and decision-making about the issues that affect them now and into the future.“Community spirit is something our people embody and we are proud to foster this across our business.” Elders, for stronger regional communities
45
“Investing in regional
economies encourages
sustainable growth in our
sector; Australian agriculture
is only as strong as
its supporting townships
and communities."
Mark Allison
MD & CEO, Elders
DIRECTORS’REPORT2023 Ian WiltonMSc, FCCA, FCPA, CA, FAICDAppointed Chair on 11 September 2019 and Non-Executive Director since 2014, Ian is also Chair (appointed 11 September 2019) of the Nomination and Prudential Committee. Ian is a member of the Audit, Risk and Compliance Committee (former Chair), the Remuneration, People and Culture Committee and the Safety and Sustainability Committee (Chair September 2019 to February 2023, re-appointed 22 September 2023). Ian 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. He was President and Chief Executive Officer of GrainCorp Malt. Ian is a Non-Executive Director of Namoi Cotton Limited (since June 2020). Ian was previously Chair of the advisory board of Mackay’s Banana Marketing and Non-Executive Director of Sheep CRC Ltd (Nov 2015 – Sept 2020).Ian is a resident of New South Wales.Mark AllisonBAgrSc, BEcon, GDM, AMP (HBS), DUniv (hc) (Adel), FAICDMark joined Elders Limited as a Non-Executive Director in November 2009, served as Chairman and Executive Chairman, before being appointed Managing Director and Chief Executive Officer in May 2014.Mark’s 43-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 the Agriculture and Natural Resources End-User Advisory Board of the SmartSat CRC, the Agrifood and Wine Advisory Board of the University of Adelaide, and a member of the Rabobank Food and Agriculture Advisory Board. He is the previous Chair of Agribusiness Australia, AuctionsPlus, CropLife, Agsafe, the APVMA, as well as a number of other agricultural and industrial and safety businesses.Mark oversaw the development and implementation of the four Elders’ Eight Point Plans from 2014. This strategic plan returned the company to a pure play agribusiness and resulted in the first shareholder distribution in nearly a decade in 2017. Since 2014 Elders has grown from a market capitalisation of $50 million to a peak of $2.3 billion.On 19 September 2023 he was awarded an Honorary Doctorate from the University of Adelaide for his experience and lifelong contribution to agriculture and agribusiness.Mark is from far north Queensland, and is a passionate advocate of agriculture, and regional and rural Australia.Directors’ReportYour Directors present their report on the consolidated entity consisting of Elders Limited (Elders) and the entities it controlled at the end of, or during, the year ended 30 September 2023.Elders 2023 Annual Report48 Directors’ Report49Robyn Clubb AMBEc, CA, F Fin, MAICDNon-Executive Director since September 2015, Robyn is Chair of the Audit, Risk and Compliance Committee (appointed 11 September 2019) and a member of the Remuneration, People and Culture Committee (former Chair), the Safety and Sustainability Committee and the Nomination and Prudential Committee.Robyn is an experienced Non-Executive Director, a Chartered Accountant and Fellow of the Finance and Securities Institute of Australia. She has over 20 years’ experience as a senior executive in the financial services industry, working for organisations including AMP Limited and Citibank Limited.Robyn is currently Chair of ProTen Limited (Director since Apr 2019), Non-Executive Director of Essential Energy (since Apr 2018), and a Director of Australia Post (since Sept 2022). Robyn was previously a Director of Craig Mostyn Holdings Pty Ltd (Feb 2017 - Dec 2022), Chair of the Australian Wool Exchange Limited (Aug 2016 - Nov 2022) and Chair of FCFA Leasing Limited (Director Aug 2021 - Mar 2023).Robyn is a resident of New South Wales.Raelene MurphyBBus, FCA, GAICDNon-Executive Director since January 2021, Raelene is Chair of the Remuneration, People and Culture Committee (appointed 22 September 2023) and a member of the Audit, Risk and Compliance Committee, Safety and Sustainability Committee and Nomination and Prudential Committee.Raelene has strong non-executive director experience in the Australian listed company environment, across a range of industry sectors. She 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's current ASX non-executive director roles are at Bega Cheese Limited (since June 2015), Integral Diagnostics Limited (since Oct 2017) and Tabcorp Holdings Limited (since Aug 2022). Raelene was also previously a non-executive director of Altium Limited (Sept 2016 - Nov 2022) and Clean Seas Seafood Limited (July 2018 - Oct 2020).Raelene is a resident of Victoria. Elders 2023 Annual Report50Directors and SecretariesElders’ Directors in office during the financial year and until the date of this report were:Non-Executive Directors•Ian Wilton, Chair•Robyn Clubb•Raelene MurphyExecutive Director•Mark Charles Allison, Managing Director and Chief Executive OfficerCeased Directors•Diana Eilert was a Non-Executive Director of Elders from the beginning of the financial year until 30 September 2023•Matthew Quinn was a Non-Executive Director of Elders from the beginning of the financial year until 4 June 2023New Director•On 22 September 2023, the Board resolved to appoint a new Director, John Lloyd (BSc, MBA). His appointment is effective 1 December 2023. John Lloyd will stand for election by Shareholders at the 2023 Annual General Meeting.Elders' Company Secretaries during the financial year and until the date of this report were:Company Secretaries•Peter Gordon Hastings, BA, LLB, GDLP, FGIA, Grad Dip Applied Corporate Governance, GAICDMr 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, AGIAMs 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 ActivitiesThe 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 and investments in the AuctionsPlus and Clear Grain Exchange online trading platforms•feedlotting of cattle•co-ordinating the manufacture, blending, and importation of, and selling, own-brand agricultural chemicals and animal health products.Results and Review of OperationsThe consolidated entity recorded a profit for the year, after tax and non-controlling interests, of $100.8 million (2022: profit of $162.9 million). A review of the operations and results of the consolidated entity and its principal businesses during the year is contained in pages 25 to 32.Significant Changes in the State of AffairsThere 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-19Throughout Elders' network we have, through our COVID-safe plans, worked to minimise the spread of COVID-19. Fortunately, the impact to our business has been minimal and contingency plans have enabled Elders to continue to service our customers.In May 2023, the World Health Organisation determined that COVID-19 no longer fits the definition of a Public Health Emergency of International Concern. Notwithstanding that, the pandemic is not over. 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.Events Subsequent to Balance DateThere was no matter or circumstance that has arisen since 30 September 2023 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 ResultsDiscussion 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.Insurance of Officers and IndemnitiesThe 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.As at 30 September 2023, Elders has provided each Director and Officer a Deed of Access, Insurance and Indemnity. These deeds provide:•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, or other entity (where required by the Officer's employment with Elders) to the 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 confidentialityDirectors’ InterestsThe relevant interests of the Directors in shares and other equity securities of Elders, as at the date of this report, are detailed on page 73 of the Remuneration Report.Remuneration of Directors and Senior ExecutivesDetails of the remuneration arrangements in place for Elders’ Key Management Personnel are set out in the Remuneration Report commencing on page 56. In compiling this report, Elders has met the disclosure requirements prescribed in the Australian accounting standards and Corporations Act 2001. Directors’ Report
51
Attendance at Meetings by Directors
Director attendance at meetings in the 12 months to 30 September 2023 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
Safety and
Sustainability
Committee
Audit, Risk and
Compliance Committee
Remuneration, People and
Culture Committee
Nomination and
Prudential Committee
Attended
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Held
11
11
10
11
8
11
11
11
11
11
8
11
3
-
3
3
2
3
3
-
3
3
2
3
5
-
5
5
3
5
5
-
5
5
3
5
4
-
3
4
2
4
4
-
4
4
2
4
2
2
2
2
1
2
2
2
2
2
1
2
I Wilton
M Allison
R Clubb
D Eilert
M Quinn
R Murphy
Dividends and Other Equity Distributions
On 10 November 2023, the Directors determined to pay a final dividend of $0.23 per ordinary share, franked at 30%, bringing dividends for FY23
to $0.46 per share. In accordance with a determination made by the Directors, Elders’ Dividend Reinvestment Plan (DRP) remains in operation.
To encourage participation in the DRP, for the FY23 final dividend a discount of 1.5% has been offered on the DRP price.
Dividends paid during the year were
Dividend
Date Determined
Date Paid
Final Dividend for Half Year Ended 30 September 2022
11 November 2022
16 December 2022
Interim Dividend for Half Year Ended 31 March 2023
12 May 2023
22 June 2023
Dividend per
Share
Franking Rate Total Dividend
$0.28
$0.23
30%
30%
$43,813,440.72
$35,989,612.02
Share and Other Equity Issues During the Year
The total number of ordinary shares on issue at the date of this report is 156,476,574.
During FY23, shares allocated under Elders' incentive plans and the DRP were purchased on market. There has been no change to the number of
ordinary shares on issue between 1 October 2022 and the date of this 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 56 to 73 of this Annual Report.
The number of performance rights on issue at 30 September 2023, which were held by 26 Long-Term Incentive Plan participants, is disclosed in
note 27 to the Financial Statements. If each of these rights vested, this would represent 0.67% 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 27 in the financial statements which does not take into account performance rights that
vested after the reporting date. The closing performance rights per note 27 of the financial statements includes the 94,035 rights that vested on
13 November 2023.*
1,150,683
(487,916)
379,500
(346,011)
(94,035)
948,232
No. of rights as at 30
Sept 2022
No. of rights vested on
14 Nov 2022*
No. of rights granted
since the AGM on 15
Dec 2022
No. of rights lapsed from
30 Sept 2022 to date of
report
No. of rights vested on
13 Nov 2023*
No. of rights outstanding
at the date of report
* in accordance with Australian accounting standards
Elders 2023 Annual Report52The performance rights granted to the five most highly remunerated officers as part of their remuneration, between 30 September 2022 and the date of this report, are shown below.Name of OfficerNumber of Rights Granted between 30 September 2022 and 13 November 2023Mark Allison107,000Thomas Russo25,900Vivian Da Ros21,200Peter Hastings19,400Anna Bennett18,000Restricted Securities and Voluntary EscrowAs at the date of this report, Elders has no restricted securities on offer.Nonetheless, pursuant to the FY22 Short-Term Incentive (STI) plan, 40% of the STI earned by executives was delivered in shares that are subject to trading restrictions. As at the date of this report, a total of 39,573 shares that were allocated to STI plan participants remain subject to trading restrictions.Further information about the FY22 STI plan is included in the 2023 Remuneration Report, commencing on page 55.Rounding of AmountsThe 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 ServicesIn accordance with the Company policy, 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 and 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 compromisedThe amount received or due to be received for the provision of non-audit services is disclosed in note 28 of the financial report, Auditor's Remuneration.A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 131.Environmental Performance RegulationA 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, Legal Team and Compliance Team. Environmental risks and hazards are managed in accordance with our Resilience and Risk Framework. Our performance in relation to environmental management and the various applicable environmental regulations across our businesses over the reporting period is as follows.Killara FeedlotElders 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) management systems in place to manage soil health and nutrient levels, odour and dust, waste, protection of local waterways and any pollution complaints received in the reporting year. These reports are prepared by an external consultant.No confirmed breaches of environmental regulations or pollution complaints relating to Killara were reported during the year ended 30 September 2023. Killara's performance on water management and consumption and waste management is detailed on pages 20 and 53 of Elders' 2023 Sustainability Report.SaleyardsSaleyards 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 2023.Retail and Wholesale OperationsElders’ 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 are being progressively rolled out to our wholesale operations.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 2023.This report, including the Remuneration Report commencing on page 56, is made in accordance with a resolution of Directors.Ian WiltonChairMark AllisonManaging Director13 November 2023 Directors’ Report53 REMUNERATION REPORT2023 56
Elders 2023 Annual Report
Remuneration
Report
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pprroovviiddeess sshhaarreehhoollddeerrss wwiitthh
aann uunnddeerrssttaannddiinngg ooff EEllddeerrss’’
rreemmuunneerraattiioonn ppoolliicciieess aanndd
tthhee lliinnkk bbeettwweeeenn oouurr
rreemmuunneerraattiioonn aapppprrooaacchh
aanndd oouurr ppeerrffoorrmmaannccee,, iinn
ppaarrttiiccuullaarr wwiitthh rreeggaarrdd ttoo
EEllddeerrss’’ KKeeyy MMaannaaggeemmeenntt
PPeerrssoonnnneell ((KKMMPP))
The remuneration outcomes presented in
this report reflect the results of Financial
Year 2023, and demonstrates the strong
alignment of remuneration arrangements at
Elders with the shareholder experience.
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
Elders recorded a strong FY23 earnings
performance, despite adverse market
headwinds, including softening input prices
for key agricultural chemicals and fertilisers,
significantly declining livestock prices, as
well as inflationary pressures and rising
interest rates. Elders' product, channel
and geographical diversification was key
to mitigating those headwinds, which
contributed to Elders' second highest
earnings before interest and tax (EBIT) in the
last 10 years. We continue to invest in our
Eight Point Plan ambition of 5-10% growth in
underlying EBIT and underlying earnings per
share (EPS) through the agricultural cycles.
Our FY23 underlying EBIT of $170.8 million
represents a decrease of 26% on FY22.
As a result of the decline in underlying
EBIT in FY23 the threshold EBIT target
was not met and no short term incentives
were awarded to Executive KMP and
Senior Executives.
The FY21 Long-Term Incentive (LTI) grant,
which has a 3 year performance period
concluding on 30 September 2023, resulted
in 28% of the plan vesting as tested against
EPS compound annual growth rate (CAGR)
over the period, with strong EBIT growth
from the base year (FY20).
KMP Changes
The Board reviewed the KMP for FY23 and
determined the following persons are KMP:
• Non-Executive Directors
• Managing Director and Chief Executive
Officer (MD & CEO)
• Chief Financial Officer (CFO)
The following changes to Non-Executive
Directors were announced during FY23:
• Matthew Quinn resigned as a Non-
Executive Director effective 4 June 2023
• Diana Eilert resigned as a Non-Executive
Director effective 30 September 2023
The following changes were made to the
Executive KMP during FY23:
• Paul Rossiter was announced as Acting
Chief Financial Officer (CFO) on 9 August
2022, and then appointed to the role of
CFO on 7 July 2023
• Mark Allison was confirmed as continuing
in the role as Managing Director and Chief
Executive Officer effective 1 June 2023
Remuneration Changes
Implemented in FY23
Elders' Reward Framework was reviewed in
FY23 and remains relevant to Elders, with
recent changes:
• FY23 Short-Term Incentive (STI) changes
to gateways:
– removal of a greater than prior year
EBIT gateway
– EBIT threshold gateway increased from
90% to 95% of EBIT budget
– MD & CEO performance scorecard
to reflect Elders' focus on
sustainability objectives
Further details are in section 3.1 of this
Remuneration Report.
• FY23 Long-Term Incentive relative total
shareholder return (TSR) comparator peer
group to comprise all companies in the
S&P/ASX 200 to align with shareholder
expectations. Previously, this peer group
included S&P/ASX 200 with the exclusion
of companies in the S&P/ASX 100.
Further details are in section 3.1 of this
Remuneration Report.
Remuneration Report
57
incentives were awarded to Executive KMP
and Senior Executives.
Further details are in section 2.1 of this
Remuneration Report.
Long-Term Incentives vesting
The FY21 LTI grant 3 year performance period
ended 30 September 2023. 28.0% of this
grant vested. This outcome was the result of:
• an absolute TSR outcome of -38.9% which
resulted in a ranking at less than the 50th
percentile of the comparator group. As
this was below the minimum performance
hurdle none of tranche 1 vested.
• an EPS CAGR outcome of 7.8% which
resulted in 56.0% of tranche 2 vesting.
Further details of this outcome are in section
2.2 of this Remuneration Report.
Remuneration Changes
for FY24
FY24 Short-Term Incentive
• No changes to FY24 STI arrangements for
Executive KMP.
• For FY24, equity deferral for non-KMP
Senior Executive has been revised to 20%
of any STI earned being awarded via
restricted Elders shares, to be held for
one year before being released. All other
requirements for deferral and restrictions
remain unchanged.
Contents
Key Management Personnel
1 Overview of FY23
Executive Remuneration
2 Link Between Elders’
Financial Performance and FY23
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
58
59
60
66
69
70
71
72
MD & CEO
Remuneration Arrangements
As communicated to shareholders on 5 June
2023, with Mr Allison agreeing to continue
in the role as MD & CEO, the following
arrangements were put in place as part of
his continued employment:
Total Fixed Remuneration (TFR)
Increased to $1,500,000.
Retention Bonus
Two cash retention bonuses:
1. $500,000 cash (gross) if Mr Allison
remains employed by Elders on 1 June
2024; and
2. $500,000 cash (gross) if Mr Allison
remains employed by Elders on
1 June 2025.
Grant of Service Rights
Subject to approval of shareholders at
Elders 2023 AGM, Mr Allison will be
granted the following service rights under
Elders' Long Term Incentive Plan for
no consideration:
1. 90,000 service rights. Each service right
will vest, entitling Mr Allison to one
Ordinary Fully Paid share if Mr Allison
remains employed by Elders on 1 June
2024; and
2. 90,000 service rights. Each service
right will vest, entitling Mr Allison to
one Ordinary Fully Paid share, if Mr
Allison remains employed by Elders on
1 June 2025.
The Board, in its discretion, may choose
to satisfy conversion of the service rights
by the issue of new shares or purchase of
shares on market.
These retention arrangements were
considered by the Board as necessary and
appropriate to retain Mr Allison, in order to
ensure stability of leadership, and in the
best interests of shareholders.
In November 2022, Mr Allison announced
his intention to retire from Elders Limited on
or before 14 November 2023. Through the
comprehensive domestic and international
search process for a suitable candidate to
succeed Mr Allison, it became apparent
that the time frame for the placement
of candidates with the requisite skills
and industry experience would create an
unacceptable risk in the delivery of Elders
systems modernisation and supply chain
streamline projects. In addition, delays in
the appointment of a successor would
continue to create uncertainty in the market
at a time when El Niño and broader macro-
economic conditions were beginning to
impact our customer purchasing patterns
and business outlook.
The Board asked, and Mr Allison agreed to
continue in the role, in order to enable the
CEO succession process to continue on a
different timeline than originally planned.
In the process of determining a successor
for Mr Allison it was also clear that
the candidate pool and market generally
had moved in relation to remuneration
expectations. For these reasons, the Board
felt it was appropriate to adjust Mr
Allison’s remuneration arrangements and
to put in place a package that has been
assessed for market competitiveness and
alignment with shareholders, to ensure
that his services were retained beyond his
planned retirement.
The current CEO succession program
will continue to focus on the further
development of suitable internal candidates
and the addition of new talent to the
executive leadership team to complement
the existing skill base and external
search, as determined through the CEO
succession program.
Overview of FY23
Remuneration Outcomes
Non Executive Directors
Non- Executive Director Fee Pool
At the 2022 AGM, shareholders voted to
approve an increase in the Fee Pool by
$300,000, from $1,200,000 to $1,500,000.
In addition to Mr Lloyd, who will join the
Board on 1 December 2023, the Board
expects to appoint new directors in FY24.
Non-Executive Director Fees
The Board reviewed Non-Executive Director
(NED) fees against market data and applied
an increase of 3.0% to the Chair fee and
Board member fees effective 1 January
2023. The Committee fee structure was
revised, as detailed in section 5.2 of this
Remuneration Report.
Executive KMP
Total Fixed Remuneration (TFR)
TFR for the MD & CEO increased by 3.2%
to $1,159,000 following the FY23 annual
review process, effective 1 January 2023,
and then as communicated to shareholders,
increased to $1,500,000 from 1 June
2023 as part of the arrangements put in
place to retain Mr. Allison in the role.
The full package of Mr Allison's revised
remuneration arrangements are outlined
under the details of remuneration changes
implemented in FY23.
TFR for the Chief Financial Officer was
unchanged during FY23.
The review of TFR for the MD & CEO
and CFO considers market movements,
individual performance and benchmarking
to relevant peers.
Variable Remuneration
Short-Term Incentives
Elders' Short-Term Incentive pool for
executive participants is aligned with
company performance and shareholders'
interests. As a result of the decline in
underlying EBIT in FY23 the threshold EBIT
target was not met and no short term
58
Elders 2023 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.
FY23 Key Management Personnel
Name
Position
Non-Executive Directors
Chair
Director
Director
Director
Director
I Wilton
R Clubb
D Eilert
R Murphy
M Quinn
Executive KMP
M C Allison
P Rossiter
Status
Date as KMP (if not a full year)
Full year
Full year
Full year
Full year
Resigned 30 September 2023
Part year
Resigned 4 June 2023
Managing Director and CEO
Chief Financial Officer
Full year
Part year
Acting CFO from 9 August 2022, then
considered KMP when appointed to the role
of CFO permanently on 7 July 2023
Remuneration Report59Section 1 – Overview of FY23 Executive RemunerationElders’ 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 PrinciplesTo 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 MixRemuneration 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.Executive KMP and other Senior Executives remuneration elements, structure and deliveryFixed RemunerationYear 1Year 2Year 3100% paid in cashAttracts and retains executives with the capability and experience to deliver our strategy.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 yearsExecutive KMP FY23 remuneration mix at maximumMD & CEO Performance BasedPerformance BasedSenior Executives(including Executive KMP other than the MD & CEO)Total Fixed Remuneration 32%Maximum STI 32%Maximum LTI 36%Total Fixed Remuneration 49%Maximum STI 24%Maximum LTI 27% Elders 2023 Annual Report60Section 2 – Link Between Elders’ Financial Performance and FY23 Remuneration Outcomes2.1 Overview of STI Outcomes for FY23Senior Executive KMP (other than MD & CEO) FY23 STI performance measuresCategoryPerformance measureWeightingWhy was it chosen?How is it measured?GatewayAchievement of threshold performance for underlying EBIT, greater than prior year EBIT outcome, zero fatalities, adherence to Elders Code of Conduct and no significant environmental event-Ensures Executive KMP will only be awarded where threshold financial, Code of Conduct, safety and environmental performance has been achieved.Threshold is based on achievement of:•95% of the Board approved underlying EBIT budget•adherence to Elders Code of Conduct•zero fatalities•no significant environmental event.Below the EBIT threshold no STI is payable to Executive KMP.Financial measuresFinancial and operational performance40%Key indicators of Elders’ financial performance and aligned to Elders’ Eight Point Plan objectives.Achievement of Board approved budget financial outcomes, including underlying EBIT, Operating Cash Flow and ROC targets.Strategic measuresStrategic Priorities30%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.Other Executive KMP are measured on achievement of their Business Unit’s key milestones in this Plan.People and safety10%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.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 recordable injury frequency rate and completion of risk radar actions.Sustainability10%Focusing on delivering sustainability priorities as identified.Achievement of FY23 Sustainability action plan, including:• Climate Change – Scenario Analysis Phase 2• Climate Change – TCFD disclosure alignment• Energy – emissions reduction/sustainable facilities strategy implementation• Waste reduction – strategy implementationCustomer10%Focusing on building and maintaining effective customer relationships is key to a long-term sustainable business.Measured through the Roy Morgan Trust Survey and customer Net Promoter Score. Remuneration Report61MD & CEO FY23 STI outcomesThe FY23 threshold EBIT performance was not met and as a result no STI was awarded.Key PriorityMeasuresTargetOutcomeFY23 Performance CommentaryFinancial Measures (60%)Underlying EBIT$232m$170.8mEBIT gateway not achieved, so none of this key priority was awarded.Operating cash flow exceeded stretch target.ROC target not achieved.Operating Cash Flow (over 12-month period) 90% - 100% of net profit after tax (NPAT)90%163%Return on Capital22.3%16.0%Strategic Priorities (10%)Deliver System Modernisation project as per Board approved business caseKey Milestones DeliveredTargetProject milestones delivered at or below budget.Project milestones delivered at or below budget.Deliver Project CasinoKey Milestones DeliveredTargetSustainability (10%)Deliver sustainability priorities as identifiedAchievement of FY23 Sustainability action planClimate Change – Scenario Analysis Phase 2Climate Change – TCFD disclosure alignmentEnergy – emissions reduction/sustainable facilities strategy implementationWaste reduction – strategy implementation Key milestones achieved as per FY23 Sustainability Action PlanTarget AchievedElders’ actions on a variety of sustainability-related initiatives are reflected in Elders’ 2023 Sustainability Report. This includes progress on climate-related disclosures, climate change scenario analysis, sustainable facilities strategy implementation and waste strategy development.People & Safety (10%)Total recordable injury frequency rate (TRIFR)11.010.1Target performance generally achieved or exceeded.Key diversity objectives on track for achievement.Severity Measure (average lost work days per million employee hours worked)65.938.5Achievement of four diversity objectives by 2025:Maintain representation of women in Senior Exec positions > 40%40%On TrackIncrease representation of women in senior positions > 25%121%On TrackIncrease overall diversity of workforce234%On TrackMaintain the feeling of belonging85%On TrackOverall Employee Engagement79%77%Customer (10%)Roy Morgan Trust Survey Results for most Trusted Brand in Regional AustraliaNo. 1No. 1Target performance achieved.Customer Net Promoter Score(average across year)50%50.5%Maximum performance achievedThreshold/Minimum performance achievedThreshold/Minimum performance not metExecutive KMP FY23 STI outcomes and performance against targetsKMPFinancial Measures (60%)Sustainability(10%))Strategic Priorities (20%)People and Safety (10%))Customer(10%)Maximum STI OpportunityAwardedSTI as % of MaximumForfeited STI as % of MaximumCompanyCompanyCompanyBusiness UnitCompanyCompany$%%M C Allison, MD & CEOGateway not metMeets targetMeets target-Meets targetMeets Target1,123,2000.0%100.0%P Rossiter, CFOGateway not metMeets Target-Meets TargetMeets TargetMeets Target127,5000.0%100.0% 62
Elders 2023 Annual Report
2.2 Overview of LTI Outcomes for FY23
The FY21 LTI grant, with a performance period of 3 years, concluded 30 September 2023. The testing resulted in 28% vesting.
Finalised LTI – FY21 grant
2.2 Overview of FY23 LTI Outcomes
% of Total Grant Performance Measures
Tranche 1 – Total Shareholder Return (TSR)
Outcome of Testing
50% Based on Elders’ TSR performance relative to the TSR performance of
Elders’ absolute TSR over the performance period was (38.9%).
comparator companies over the three year performance period 1 October
2020 ending on 30 September 2023. The percentage of TSR rights that vest
were determined as follows:
Absolute TSR over the
performance period
Less than 50th percentile
At 50th percentile
% of Rights that vest
Nil
50%
Resulting in 0% vesting of this tranche.
Notes regarding calculation:
The starting share price to calculate the Elders TSR was Elders' 5
trading day VWAP up to and including 30 September 2020 of $10.84
and the closing share price of Elders' 5 trading day VWAP as at
30 September 2023 of $5.81.
Dividends paid over the performance period were $1.34 per share.
Between 50th and 75th percentile
50-100%, on a straight-line
sliding scale
An external consultant (PFS Consulting) was engaged to calculate the
TSR outcome.
At 75th percentile or greater
100%
Absolute TSR was measured using opening and closing share prices
determined as follows:
• the opening share price value of $10.84
• the closing share price value based on the 5 trading day Volume
Weighted Average Price (VWAP) up to and including the last day of the
performance period
• dividends paid in the performance period
Tranche 2 – Earnings per Share Growth
50% EPS rights vest subject to achievement of Target or above EPS Compound
Annual Growth Rate (CAGR) over the performance period as follows:
Elders' EPS CAGR over the performance period was 7.8%.
Resulting in 56.0% vesting of this tranche.
As communicated in FY20, EPS for the purposes of LTI will be
calculated using the weighted average shares as the denominator
and underlying NPAT2 as numerator. The EPS outcome for FY23 was
determined as follows:
EPS CAGR over the
performance period
Less than 7.5%
Equals 7.5%
% of Rights that vest
FY20
FY21
FY22
FY23
Nil
50%
Weighted avg. no. of
shares1 (000)
Underlying NPAT
($ million)
154,094 156,305
156,477
156,477
107.7
151.1
152.2
137.02
Greater than 7.5% but less than 10% 50-100%, on a straight-line
EPS (cents)
69.93
96.7
97.3
Equal to or greater than 10%
100%
sliding scale
CAGR
87.62
7.8%
For a reconciliation between underlying and 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.
1 Shares do not include performance rights which have not yet vested. For FY23 , no rights were deemed to be dilutive. Refer to note 4 of the finanical statements.
2 As approved by the Board, the underlying NPAT component of the EPS calculation was adjusted for certain tax charges recognised during the year. This is to present the underlying NPAT on a
comparable basis to align tax treatment across the periods.
3 Elders adopted the accounting standard AASB 16 Leases from 1 October 2019. Underlying EPS was 69.9c in FY20 including the impact of this standard (70.7c excluding the impact from AASB
16 Leases). This standard has been applied consistently across the performance period of the FY21 LTI grant.
One fully paid share in Elders will be allocated for each vested performance right. The total number of vested performance rights under the FY21
grant is 94,035. Individual vesting outcomes are outlined in section 7.
Remuneration Report
63
Finalised LTI - FY21 grant (continued)
Reconciliation of statutory profit to underlying profit used to calculate EPS for the FY21 LTI grant vesting FY23
Statutory Profit ($ million)
Basic EPS (cents) – Statutory Profit
Adjustment for non-underlying items ($ million)
Underlying NPAT ($ million)
Basic EPS (cents) - Underlying NPAT
Adjustment for tax expense
Adjusted NPAT ($ million)
Basic EPS (cents) - Adjusted NPAT
Weighted average shares (millions of shares)
Reconciliation of tax expense adjustment
Statutory tax expense
Add back of tax expense
relating to entity outside the tax
consolidated group
Add back of non-underlying
tax expense
Adjustment for tax expense
100.8
64.4
2.9
103.7
66.3
33.3
137.0
87.6
156.5
33.0
(5.8)
6.1
33.3
For a reconciliation between underlying and 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.
64
Elders 2023 Annual Report
2.3 Summary of FY23 Executive KMP Outcomes
This table presents actual remuneration paid or payable, or vested for the Executive KMP in respect of FY23. The information is voluntary,
unaudited, different from and additional to that required by Australian accounting standards and statutory requirements, which is provided in
section 6.2.
Executive KMP Remuneration outcomes for FY23 (unaudited and non-IFRS)
M C Allison
MD & CEO
P Rossiter4
CFO
Total
Base salary
Total STI11
Values of
Shares
Vested22
Super-
annuation
Other33
Termination
benefits
$$
1,237,064
399,222
1,636,286
$$
-
-
-
$$
$$
1,884,248
-
1,884,248
25,819
25,819
51,638
$$
-
100,000
100,000
$$
-
-
-
Total
$$
3,147,131
525,041
3,672,172
1 STI cash and deferral component not awarded in FY23 as threshold EBIT performance not met.
2 Value of the FY20 LTI grant that vested in the FY23 year. Value based on total number of shares issued as a result of FY20 LTI vesting and 5 day VWAP of price prior to vesting date.
3 Cash payment awarded for initial period as Acting CFO, in lieu of salary adjustment.
4 (i) In the interests of transparency, the amounts reported are for the full period of FY23 (12 months).
(ii) The portion of the amounts relating to the period as KMP can be calculated by dividing the amount in the table by 365 days and multiply by 85 days (being the period from 7 Jul 23 to 30
Sep 23).
2.4 Historical Five Year Performance
Highlights Elders’ key financial performance over the past five years and link to the Senior Executive KMPs' STI and LTI remuneration outcomes.
Elders' CAGR Performance FY19 to FY231
Sales Revenue ($m)
Underlying EBIT ($m)
+ 19.6%
CAGR
3,445
3,321
2,549
2,093
1,626
232
+ 23.3%
CAGR
167
171
121
74
Underlying Earnings
per Share (cents)
Adjusted Underlying Earnings
per Share for Vesting (cents)1
+5.8%
CAGR
+13.2%
CAGR
134
97
97
97
97
70
55
66
70
53
87
66
FY19 FY20 FY21 FY22 FY23
FY19 FY20 FY21 FY22 FY23
FY19 FY20 FY21 FY22 FY23
FY19 FY20 FY21 FY22 FY23
Adjusted underlying EPS
Underlying NPAT ($m)1
Return on Capital (%)
Dividends per Share (cents)
Share Price Movement (cents)
+12.8%
CAGR
26
23
151
152
16
19
18
56
+26.4%
CAGR
42
46
453
138
(68)
(38)
108
104
64
22
18
FY19 FY20 FY21 FY22 FY23
FY19 FY20 FY21 FY22 FY23
FY19 FY20 FY21 FY22 FY23
FY19 FY20 FY21 FY22 FY23
(607)
1 As approved by the Board, the underlying NPAT component of the EPS calculation was adjusted for certain tax charges recognised during the year. This is to present the underlying NPAT on a
comparable basis to align tax treatment across the periods. The Board utilised its discretion on the treatment of tax.
Elders’ Remuneration Outcomes
Remuneration outcomes
STI – average % received of maximum opportunity
LTI – vesting %
2019
0%
75%
2020
94%
75%
2021
95%
100%
2022
87%
100%
2023
0%
28%
Remuneration Report652.4 Historical Five Year Performance (cont.)This chart shows Elders’ annual TSR performance over the last five years against the S&P/ASX 200 Accumulation Index. Elders’ LTI Plans for FY18, FY19 and FY20 include an absolute TSR performance condition. Full vesting of the TSR tranche (50% of total grant for FY18 and FY19, and 33.3% of FY20) was achieved for grants under the FY18, FY19 and FY20 LTI Offers.Absolute TSR %Absolute TSR %12.5%12.5%-10.2%-10.2%30.6%30.6%-7.7%-7.7%13.5%13.5%-7.0%-7.0%77.1%77.1%14.6%14.6%2.6%2.6%-48.0%-48.0%ASX200Elders20192020202120222023This chart compares Elders’ total LTI vesting results for grants made in FY17 to FY21, and vesting in FY19 to FY23, to Elders’ share price during the same period.LTI Plan performance outcomes relative to Elders' share priceElders share priceLTI award (% vested)75%75%100%100%0%10%20%30%40%50%60%70%80%90%100%0246810121401/10/201801/10/2019LTI Grant: FY1701/10/2020LTI Grant: FY1801/10/2021LTI Grant: FY1901/10/2022LTI Grant: FY2001/10/2023LTI Grant: FY21Elders share price ($)LTI award (% vested)1628% Elders 2023 Annual Report66Section 3 – Details of the Executive Remuneration Framework3.1 Current Short-Term and Long-Term Incentive Plan StructuresCurrent STI StructureMD & CEOSenior ExecutivesPerformance PeriodAnnual aligned with financial year – 1 October 2022 to 30 September 2023Maximum STI Opportunity as % of TFR100% of TFR50% of TFRPerformance Measure(s)Gateway: Underlying EBIT (95% of Target), zero fatalities, adherence to Elders Code of Conduct and no significant environmental events are achieved.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 FY23 STI performance measures.Equity Deferral40% of any STI earned by Executive KMP is delivered in locked 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 DiscretionThe 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, and 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.ClawbackElders 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; andas 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. Remuneration Report
67
3.1 Current Short-Term and Long-Term Incentive Plan Structures (continued)
Current LTI Plan Structure
Maximum LTI
Opportunity % of TFR
Performance Period
(3 years)
Grant Date
FFYY2222
FFYY2233
MD & CEO – 110%,
Senior Executives (including Executive KMP other than the MD & CEO)– 55%
1 October 2021 to 30 September 2024
1 October 2022 to 30 September 2025
16-Dec-21
22-Dec-21
MD & CEO (M C Allison)
15-Dec-22
MD & CEO (M C Allison)
Other participants
23-Dec-22
Other participants
As at 30 September 2023
MD & CEO (M C Allison)
102,400 Rights MD & CEO (M C Allison)
CFO (P Rossiter)
19 other participants
0 Rights
CFO (P Rossiter)
223,700 Rights
21 other participants
107,000 Rights
0 Rights
272,500 Rights
Executive KMP &
Other Participants
No. of
Rights Outstanding
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 two tranches.
Performance Measures
and Vesting
Tranche 1
Tranche 2
Relative TSR
EPS Growth
50% weighting
50% weighting
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 equal to zero).
Elders' TSR Percentile Rank
Target: 50th Percentile
Stretch: 75th Percentile or above
% 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
The Comparator Companies for this tranche comprises the companies in the S&P/ASX 200 index as at the start of the Performance
Period. Any companies that are delisted from the ASX during the Performance Period or suspended from trading at the end of the
Performance Period will be removed from the vesting assessment.
Tranche 2 – EPS Growth Performance Rights
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
% of Tranche that Vest
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
68
Elders 2023 Annual Report
3.1 Current Short-Term and Long-Term Incentive Plan Structures (continued)
Current LTI Plans Structure
Holding Lock
A 12 month holding lock on shares awarded under the LTI plan. 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.
Clawback
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.
Dividends
No compensation for the value of dividends not received.
Treatment of Unvested
Rights on Cessation
of Employment
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.
Dealing in Securities
Change of Control
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.
Corporate
Actions/Reconstructions
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.
Board Discretion
Future Considerations
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 benefited the company
If discretion is to be exercised, it may be a result of events such as:
• acquisitions and acquisition 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 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 vesting 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.
3.2 Current Retention Arrangements
In addition to these incentive arrangements the Board has put in place specific retention arrangements to secure the continued services of Mr
Allison as Managing Director and Chief Executive Officer.
Retention Bonus
Two cash retention bonuses:
1. $500,000 cash (gross) if Mr Allison remains employed by Elders on 1 June 2024; and
2. $500,000 cash (gross) if Mr Allison remains employed by Elders on 1 June 2025.
Grant of Service Rights
Subject to approval of shareholders at Elders' 2023 AGM, Mr Allison will be granted the following service rights under Elders' Long Term
Incentive Plan for no consideration:
1. 90,000 service rights. Each service right will vest, entitling Mr Allison to one Ordinary Fully Paid share, if Mr Allison remains employed by
Elders on 1 June 2024; and
2. 90,000 service rights. Each service right will vest, entitling Mr Allison to one Ordinary Fully Paid share, if Mr Allison remains employed by
Elders on 1 June 2025.
The Board in its discretion may choose to satisfy conversion of the service rights by the issue of new shares or purchase of shares on market.
Remuneration Report69Section 4 – Remuneration GovernanceThe Board Remuneration, People and Culture Committee 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 on the Elders Investor Centre1.The Committee is comprised entirely of independent Non-Executive Directors.BoardReviews the performance of individual Directors and the Executive team, and approves the CEO’s remuneration.ManagementProvides briefs or recommendations to the BRHRC on the remuneration strategy and framework.Board Remuneration,People and Culture Committee (BRPCC)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.Independent external advisorsProvide independent advice to the BRPCC on remuneration and market practice.4.1 Independent remuneration adviceThe 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 advisor without management involvement.In the year ending 30 September 2023, the Committee has not sought independent advice from remuneration advisors, therefore no remuneration recommendations, as defined by the Corporations Act 2001 (Cth), were made by remuneration advisors.1Elders' 2023 Corporate Governance Statement can be found online at https://elders.com.au/for-investors/performance/periodic-reports/ Elders 2023 Annual Report70Section 5 – Non-Executive Director Remuneration and Statutory Remuneration5.1 Remuneration Framework and PolicyNon-Executive Directors are remunerated by way of fees in the form of cash and superannuation.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.NED 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 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 FY23Total fees for the financial year ended 30 September 2023 remain within the aggregate fee limit of $1,500,000 per annum, (including superannuation guarantee), as approved by shareholders at the 2022 AGM .The Board reviewed the NED fees during FY23 and applied a 3.0% increase to the Board Chair and Member fees from 1 January 2023, and revised the Committee fee structure per the schedule below.Non-Executive Directors feesFY23 fee including superannuation11CChhaaiirrMMeemmbbeerr$$$$Board307,9002135,200Audit, Risk and Compliance Committee25,00012,500Remuneration, People and Culture Committee25,00012,500Safety and Sustainability Committee25,00012,500Nomination and Prudential CommitteeNilNil1Showing fees effective 1 January 2023. NED Board fees previously presented excluding superannuation.2The Chair of the Board does not receive additional Committee fees.Non-Executive Director remunerationShort-term paymentsPost-employmentTotalBBaassee BBooaarrdd ffeeeeBBooaarrdd CCoommmmiitttteeee ffeeeessSSuuppeerraannnnuuaattiioonn$$$$$$$$I Wilton2023279,848-25,819305,6672022273,619-23,999297,618R Clubb2023121,32744,04017,572182,9402022118,62040,55416,117175,291D Eilert12023121,32743,02417,465181,8152022118,62036,49815,706170,824R Murphy2023121,32732,01416,295169,6372022118,62026,36014,680159,660M Quinn2202381,06725,79611,277118,1402022118,62026,36014,680159,660Total2023724,896144,87488,429958,1982022748,099129,77285,182963,0531Resigned 30 September 20232Resigned 4 June 2023 Remuneration Report
71
Section 6 – Key Terms of Executive KMP Employment Contracts
and Statutory Remuneration
6.1 Contractual Arrangements of Executive KMP
Contractual arrangements
Component
Contract Duration
Notice (without cause) initiated by:
Elders
Individual
MD & CEO
Senior Executives
Ongoing until terminated by either party
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 (Cth),
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 contract on three months’ notice.
6.2 Executive KMP Statutory Remuneration
Executive KMP remuneration
Short-term payments
Post-
employment
Share-
based payments11
Long-term
payments
Termination
benefits
22
Total
%
performance
related33
CCaasshh SSTTII
BBaassee
ssaallaarryy
AAnnnnuuaall
LLeeaavvee
OOtthheerr
SSuuppeerr--
aannnnuuaattiioonn
DDeeffeerrrreedd
SSTTII sshhaarreess
LLTTII
RRiigghhttss
OOtthheerr
LLoonngg
sseerrvviiccee
lleeaavvee
$$
$$
$$
$$
$$
$$
$$
$$
$$
$$
2023 1,237,064
- 36,827
2022 1,093,695 502,183 (63,655)
-
-
25,819
166,294 370,4044
231,599
243,5785
23,999
310,075 619,801
(219,140)
M C
Allison
P
Rossiter
20236 399,222
3,562 100,0007
25,819
2022
Former KMP
T Foster8
2023
-
-
-
-
-
-
-
-
-
-
2022
573,850
313,7009 32,726
50,570
23,999
-
-
-
-
-
-
-
81,695
11,444
-
-
-
-
-
-
-
-
-
-
-
2,311,585
2,266,958
540,047
-
-
301,053
1,377,593
%
23%
63%
0%
0%
0%
29%
Total
2023 1,636,286
- 40,389 100,000
51,638
166,294 370,404
243,043 243,578
-
2,851,632
2022 1,667,545 815,883 (30,929)
50,570
47,998
310,075 701,496
(219,140)
- 301,053
3,644,551
1 Includes the value of Service Rights announced on 5 June 2023, as part of retention arrangements for the MD & CEO, and subject to shareholder approval.
2 Comprised of any 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).
3 Performance related remuneration consists of cash STI and share based payments (including deferred STI) as a percentage of total remuneration.
4 Includes the FY23 value of both LTI performance rights ($117,862) and Service Rights announced 5 June 2023 ($252,542).
Service Rights are subject to shareholder approval, and the benefit value attributable to FY23 is reported pending this approval; value is based on share price as at 29-Sep-23.
5 FY23 value of cash retention arrangements announced on 5 June 2023.
6 (i) In the interests of transparency, the amounts reported are for the full period of FY23 (12 months).
(ii) The portion of the amounts relating to the period as KMP can be calculated by dividing the amount in the table by 365 days and multiply by 85 days (being the period from 7 Jul 23 to 30
Sep 23).
7 Cash payment awarded for initial period as Acting CFO, in lieu of salary adjustment.
8 Employment with Elders ceased on 31 August 2022.
9 For FY22 T Foster's STI was paid fully in cash.
72
Elders 2023 Annual Report
Section 7 – Additional Required Disclosures
7.1 KMP equity
Details of Executive KMP current LTI grants and STI restricted shares
Type11
Grant date22
Balance
at start
of period
Granted
Vesting
date33
Vested44
Lapsed
Balance55
Expensed
at end of
period
Fair Value
at grant
date66
Rights
maximum
value yet to
vest77
NNoo..
NNoo..
NNoo..
%%
NNoo..
%%
NNoo..
$$
$$
$$
M C Allison
LTI
LTI
LTI
LTI
12-Dec-19 166,000
17-Dec-20 101,0008
16-Dec-21 102,400
-
-
-
Nov-23
Nov-24
15-Dec-22
107,000
Nov-25
Nov-22 166,000
100
LTI Total
369,400 107,000
166,000
100
STI
STI
STI
STI
22-Dec-21
16,727
22-Dec-21
16,726
-
-
Sep-23
Sep-22
16,727
100
23-Dec-22
23-Dec-22
-
-
14,082
Sep-23
14,082
Sep-24
STI Total
33,453
28,164
16,727
100
P Rossiter
LTI
LTI Total
STI
STI Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
793,480
-
101,000
16,319
683,265
133,889
102,400
(65,249)
797,184
136,581
107,000
166,792
694,965
528,173
310,400
117,862 2,968,894
798,643
-
-
204,738
16,726
68,242
204,726
14,082
58,831
142,510
-
-
-
14,082
39,221
142,510
47,503
44,890
166,294
694,484
47,503
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1 Planned issue of Service Rights to Mr Allison, as detailed elsewhere in this report, are not reported in this table as they are still subject to shareholder approval at the 2023 AGM. These have
been expensed on a pro-rata basis, pending this approval.
2 The grant dates are aligned to the requirements under the Accounting Standards.
3 The vesting date for LTI performance rights does not include the 12 month holding lock period which is a vesting requirement in relation to the service requirement.
4 The exercise price for the rights was nil.
5 The balance represents unvested rights as of 30 September 2023.
6 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 option for TSR tranche. A discounted cash flow model was used for the fair value of the EPS tranche.
Fair value utilised for FY23 LTI Grant- Tranche 1- $3.95 and Tranche 2- $9.04 (for more information see note 27 financial statements).
Fair value is used to calculate the value of restricted shares for the STI Plan. Fair value for FY22 STI restricted shares is $10.12 per share, based on market share price at grant date.
7 The maximum value of yet to vest of performance rights and restricted shares represents the fair value amount at grant date that is yet to be expensed. The minimum value of performance
rights and deferred shares yet to vest is nil, as the rights/shares will be forfeited if the vesting conditions are not met.
8 It is expected that this offer will vest in November 2023, with 28,280 rights vesting and 72,720 rights being forfeited. This outcome will be updated in FY24 reporting.
Executive KMP shareholding
M C Allison
P Rossiter
Total
1 Represents the deferred component of FY21 STI in restricted shares.
Shares held at
start of year
1 October 2022
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 period
988,746
28,1641
180,104
-
-
-
988,746
28,164
180,104
-
-
-
1,197,014
-
1,197,014
Remuneration Report
73
Shares held at
start of year
1 October 2022
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
14,000
13,769
21,339
6,500
186,801
-
-
-
-
-
-
15,6521
1,000
-
7,8374
2,500
26,989
146,845
15,000
13,769
29,176
9,000
213,790
Non-Executive Directors shareholding
I Wilton
R Clubb
D Eilert2
M Quinn3
R Murphy
Total
1 Includes 652 shares acquired via Deferred Employee Share Plan.
2 Resigned 30 September 2023.
3 Resigned 4 June 2023 and balance of shares held as at that date.
4 Includes 249 shares acquired via Deferred Employee Share Plan.
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, in accordance with the Securities Dealing Policy, seeking to avoid both real and perceived trading on inside
information. This approach limits the opportunities for Non-Executive Directors to acquire Elders’ shares.
7.2 Other equity schemes in which one or more KMP participate
Deferred Employee Share Plan (DESP)
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. There are no further performance or service conditions
once shares are purchased.
For NED participants, amounts are sacrificed from monthly Board fees and shares are purchased on market during share trading windows after
announcement of full year and half year results.
7.3 Other transactions and loans with KMP
There are no loans to KMP outstanding in the current or prior year.
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’
customers on an arm’s length basis and are trivial or domestic in nature.
Mark AllisonManaging Director and Chief Executive Officer BAgrSc, BEcon, GDM, FAICD, AMP (HBS), DUniv (hc) (Adel)Mark joined Elders Limited as a Non-Executive Director in November 2009, served as Chairman and Executive Chairman, before being appointed Managing Director and Chief Executive Officer in May 2014.Mark’s 43-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 the Agriculture and Natural Resources End-User Advisory Board of the SmartSat CRC, the Agrifood and Wine Advisory Board of the University of Adelaide, and a member of the Rabobank Food and Agriculture Advisory Board. He was the previous Chair of Agribusiness Australia, AuctionsPlus, CropLife, Agsafe, the APVMA, as well as a number of other agricultural and industrial and safety businesses.Mark oversaw the development and implementation of the four Elders’ Eight Point Plans from 2014. This strategic plan returned the company to a pure play agribusiness and resulted in the first shareholder distribution in nearly a decade in 2017. Since 2014 Elders has grown from a market capitalisation of $50 million to a peak of $2.3 billion.On 19 September 2023 he was awarded an Honorary Doctorate from the University of Adelaide for his experience and lifelong contribution to agriculture and agribusiness.Mark is from far north Queensland, and is a passionate advocate of agriculture, and regional and rural Australia.Paul RossiterChief Financial Officer BAcc, CPA, FINSIAPaul was appointed to the role of Chief Financial Officer in July 2023, after serving the business since 2004. Paul has been Group Treasurer since 2012. Prior to joining Elders, Paul worked for employers in the finance sector including Credit Suisse in Sydney and Morgan Stanley in London.Paul is a Certified Practising Accountant, with a Bachelor of Accountancy from the University of South Australia, and a Fellow of the Financial Services Institute of Australasia (FINSIA). Paul is an experienced finance, accounting and risk management professional in the fields of banking, financial markets and agriculture.Tom RussoExecutive General Manager Network LLB (Hons), BA, Grad Dip LP, Dip Prop Serv (Agency Mgt)Tom was appointed Executive General Manager Network in 2022, prior to which he held several other roles within the Elders group. Most recently, Tom was Executive General Manager Real Estate, Brand & Communications. During his tenure in that role the gross margin contribution of the real estate product more than doubled and Tom established himself as a leading transaction adviser in the broadacre investment space. He is a trusted adviser to many of Elders’ largest clients. 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.Executive ManagementElders 2023 Annual Report74 Executive Management75Peter HastingsCompany Secretary & General CounselBA, LLB, GDLP, FGIA, Grad Dip Applied Corporate Governance, GAICDPeter was appointed Elders’ Company Secretary and General Counsel in 2010. He has responsibility for the Company’s legal, 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, successfully implemented stabilisation, and now growth strategies. Peter has three decades of experience gained in legal and governance roles with Elders, other inhouse legal positions and in private and government legal practice.Viv Da RosChief Information OfficerMBA (Manchester), MPM, GAICDViv was appointed to the position of Chief Information Officer (CIO) in 2021 and is responsible for leading the technology/business transformation program at Elders – a strategic multiyear change program that introduces enabling technologies to simplify and enhance interactions with its customer base through traditional and digital channels. The transformation is well underway and has already successfully delivered new capabilities for people management, finance and operations, reporting and analytics, public websites and our intranet. The next wave of change will see exciting transformations in retail, supply chain and livestock operations. 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.Kiim LimExecutive General Manager Business DevelopmentBCom, CPA , GAICDKiim was appointed Executive General Manager Business Development 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 and over 70 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 supply chain. Her team has also embedded a systemised business development process at Elders which will allow the business to continue this business discipline into the future.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. Elders 2023 Annual Report76Anna BennettExecutive General Manager Strategy, Sustainability and InnovationMBA, M.Eng, B.Eng (Hons)Anna was appointed Executive General Manager Strategy, Sustainability and Innovation in January 2023. She has responsibility for overall group strategy as well as leading Elders’ sustainability and innovation agendas. This includes the establishment of Thomas Elder Sustainable Agriculture, an external innovation venture with a focus on sustainable farming solutions that benefit our customers and broader industry. Prior to joining Elders, Anna was General Manager Corporate Strategy at Australia Post, where she led the development of transformation strategies during a period of significant growth and disruption of the core business. Anna was a management consultant with Bain & Company for over five years with a focus on customer experience, performance improvement, and response to digital disruption. Anna started her career as an engineer and project manager in the engineering and construction sector before completing an MBA.Nick FazekasExecutive General Manager Rural ProductsBAgrSc, GAICDNick was appointed to the position of Executive General Manager Rural Products, effective 1 October 2023. Since joining Elders in early 2009, Nick has held numerous key roles including General Manager Key Accounts. He also held a similar role of General Manager Retail, prior to taking up his most recent geographic role. Nick was the State General Manager Western Australia from October 2019 to September 2023, during which period he led the team to more than double WA’s EBIT. He was also responsible for the addition of eight new businesses to WA’s footprint. Nick has 32 years of experience in agricultural services, and in his new role he will focus on driving efficiencies within supply chain, with improved sales and operation planning processes. This will assist with better working capital usage and profitability.Peter LoureyExecutive General Manager WholesalePeter Lourey was appointed to the role of EGM Wholesale in September 2023, with 36 years of experience within the agriculture, retail and manufacturing industries. Prior to his current position, Peter was AIRR General Manager where he demonstrated his ability to drive sales, build a strategic procurement team and foster strong client relationships that saw the business double in three years since being acquired by Elders. His journey also includes a successful 19 years as the Business Unit Manager Ruminant division at MSD Animal Health. Executive Management77This page has been intentionally left blank. 78
Elders 2023 Annual Report
Japanese wool
delegation visits
Queensland wool producer
EEllddeerrss’’ ccoommmmiittmmeenntt ttoo tthhee
AAuussttrraalliiaann wwooooll iinndduussttrryy hhaass
oonnllyy ggrroowwnn ssiinnccee tthhee EEllddeerr
ffaammiillyy fifirrsstt bbeeggaann bbuuyyiinngg,,
fifinnaanncciinngg aanndd hhaannddlliinngg wwooooll
iinn tthhee mmiidd--11880000ss..
Having handled approximately 350,000
bales of wool in FY23, Elders continues
to adapt and innovate in a changing wool
industry, with a key focus on clients at every
stage of the wool growing process.
Wool is a desirable fibre for retailers
who service increasingly environmentally
conscious customers seeking to understand
the origin and provenance of their clothing.
Elders District Wool Manager and Walgett
wool grower, Brett Smith, is a leader in the
wool industry who this year welcomed a
Japanese delegation from fashion brand and
retailer, Uniqlo.
As a global retailer with over 2,000 stores
globally, Uniqlo is a brand committed to
better understanding and optimising the
sustainability of their clothing supply chain.
Mr Smith, who both works with wool clients
and on his family property, “Tralee”, said
that fashion brands like Uniqlo are looking
to better understand the environmental
footprint of wool and its credentials as a
sustainable fibre.
“They hear all of this terminology associated
with wool quality, but I think what helped
them is making a qualitative story out of
quantitative data by walking them through
that supply chain process,” Mr Smith said.
The delegation was very impressed by
practices that Australian growers use on-
farm, particularly in the areas of methane
emission reduction and traceability.
“Wool is the quintessential renewable
product, it’s very clean and low impact, and
sheep can utilise a lot of country that is
otherwise unusable,” he said.
“This makes it desirable for consumers and
brands seeking a more sustainable fibre. It’s
our job to ensure we meet the standards
as growers, and work with industry to put
in place processes that keep stakeholders
accountable across the supply chain.”
Part of this sustainability journey involves
the responsible and efficient handling of
wool once it leaves the farm. In FY23, Elders
commenced its new wool handling business
opening the first of two new facilities in its
Elders Wool business.
Elders Wool will provide clients a full
end-to-end service and a quick and easy
delivery experience from farm-gate. The
new business will improve efficiency and
outcomes, aiming to get wool to market
faster and with exceptional service. The
centralised business model also puts Elders
in the best place possible to keep growers’
costs down over the long-term.
Elders General Manager Agency Dave
Adamson said the business will offer
cutting-edge innovations.
“The project’s efficiency improvements end
to end aim to increase speed to market and
keep costs down over time for clients," Mr
Adamson said.
Elders Wool will also be underpinned by key
sustainability objectives. The business will
aim to mitigate scope 1 and 2 greenhouse
gas emissions through the use of solar
power, renewable energy, LED lighting and
energy efficient equipment.
“Emissions can’t be looked at in isolation
and reduction should be viewed as part
of the larger farming system, where we
examine not just output from the animal,
but what is happening on-farm that is
sequestering carbon or reducing the overall
footprint,” he said.
“I’ve worked with many clients on carbon
accounting, which is the process of
calculating their footprint, how much
they can sequester, and the potential of
attaining credits.
“At the end of the day, it’s about working
out net emissions and where you sit with
carbon year-to-year to get a baseline. From
there you can figure out emissions intensity
and what drives that. It’s a whole of
system approach.”
To better understand traceability, the
delegation was taken through some of
the initiatives currently in place to make
Australian wool more traceable to origin. In
2023, Elders introduced QR code tracking on
Elders bales.
“The wool that we produce on-farm is a very
long way from a consumer buying a garment.
The chain is long and it’s important to
understand the whole system, to work out
traceability,” Mr Smith said.
With an already well-established brand
and reputation for being environmentally
friendly, Australian wool has strong legs to
stand on in terms of its 'clean' credentials.
Mr Smith states that understanding what
the end consumer is looking for in this
regard is important for brands to be able
to strengthen their supply chain, and to
ensure that as many growers as possible
are working on their product and business
being sustainable.
Japanese wool delegation visits Queensland wool producer
79
The Melbourne facility, which is targeting
a 4-Star Green Star Design and As Built
Certification rating, will move bales using
Autonomous Guided Vehicles (AGVs), a
world-first for the wool industry. AGVs are
low-energy self-driving vehicles which use
significantly less energy than human-driven
forklifts. The AGVs also reduce safety risks to
people and are intended to be powered by
on-roof solar.
Mr Adamson explained these initiatives will
improve sustainability outcomes within the
wool supply chain.
“The use of electric handling equipment
and investment in solar power generation
will reduce greenhouse emissions compared
with an equivalent-sized traditional wool
handling operation, with the aim of being
fully powered by solar over time,” he said.
“This, paired with the introduction of
new technology to improve efficiency and
drive down costs, will make measurable
improvements to sustainability across the
supply chain.”
In making this $25 million investment
in Australian wool, the largest single
investment in wool handling this century,
Elders stands with its clients, striving
to deliver the best, sustainable wool
supply globally.
Elders 2023 Annual Report80 FINANCIALREPORT2023Elders Limited Annual Financial Report81 Elders
Limited
Annual
Financial
Report
30 September 2023
Elders Limited Annual Financial Report
82
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 Other Financial Assets
14 Provisions
Net Debt
15 Cash Flow Statement Reconciliation
16
Interest Bearing Loans and Borrowings
Risk Management
17 Financial Instruments
Equity
18 Contributed Equity
19 Reserves
20 Dividends
Group Structure
21
Investments in Controlled Entities
22 Parent Entity
23 Business Combinations – Changes in the Composition of the Entity
Other Notes
24 Expenditure Commitments
25 Contingent Liabilities
26 Related Party Disclosures
27 Share Based Payment Plans
28 Auditor's Remuneration
29 Key Management Personnel
30 Subsequent Events
Directors' Declaration
83
84
85
86
87
87
90
92
93
95
96
97
98
99
100
102
104
106
107
108
110
111
112
117
118
119
120
124
125
126
127
127
128
129
129
129
130
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2023
Elders Limited Annual Financial Report
83
Continuing operations
Sales revenue
Cost of sales
Gross profit
Equity accounted profits
Distribution expenses
Administrative expenses
Finance costs
Other items of income/(expense)
Profit before income tax expense
Income tax expense
Net profit for the period
NNoottee
2
12
2
2
3
Items that may be reclassified to profit and loss
Exchange differences on translation of foreign operations
Net gains on cash flow hedges
Items that will not be reclassified to profit and loss
Changes in the fair value of financial assets at fair value through other comprehensive income
13
Other comprehensive profit/(loss) for the period, net of tax
2023
$$000000
2022
$$000000
3,321,420
3,445,254
(2,716,576)
(2,805,343)
604,844
14,116
639,911
12,725
(370,478)
(333,221)
(77,682)
(23,019)
(8,913)
138,868
(33,028)
105,840
636
(594)
(6,251)
(6,209)
(87,334)
(8,571)
14,227
237,737
(67,727)
170,010
(84)
(357)
-
(441)
Total comprehensive income for the period
99,631
169,569
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.
5,000
100,840
105,840
5,000
94,631
99,631
7,144
162,866
170,010
7,144
162,425
169,569
4
4
64.4¢
64.4¢
104.1¢
104.1¢
84
Elders 2023 Annual Report
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2023
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.
NNoottee
2023
$$000000
2022
$$000000
15
5
6
7
13
12
9
10
11
3
8
16
10
3
14
8
16
10
14
18
19
21,483
738,169
49,120
491,660
17,840
819,504
73,371
484,482
1,300,432
1,395,197
32,586
47,332
70,583
199,216
409,314
15,049
774,080
1,269
47,547
46,953
119,304
364,320
45,406
624,799
2,074,512
2,019,996
636,696
265,814
36,041
149
72,183
736,373
179,210
32,716
5,869
94,348
1,010,883
1,048,516
9,469
15,356
167,583
4,386
196,794
16,059
-
90,827
3,877
110,763
1,207,677
1,159,279
866,835
860,717
1,643,419
1,646,630
(37,387)
(743,551)
862,481
4,354
866,835
(27,705)
(764,066)
854,859
5,858
860,717
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 September 2023
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Payments to suppliers and employees (inclusive of GST)
Dividends received
Interest and other finance costs paid
Income tax (paid)
Net operating cash flows
Cash flows from investing activities
Payments for property, plant and equipment
Payments for equity accounted investments
Payments for intangibles
Payments for acquisitions through business combinations, net of cash acquired
Proceeds from sale of property, plant and equipment
Proceeds from sale of equity accounted investments
Acquisition of other financial assets
Net investing cash flows
Cash flows from financing activities
Purchase of shares
(Repayment)/proceeds of borrowings
Payments of lease liabilities
Dividends paid
Partnership profit distributions/dividends paid
Net financing cash flows
Net increase/(decrease) in cash held
Cash at the beginning of the financial period
Cash at the end of the financial period
The accompanying notes form an integral part of this consolidated statement of cash flows.
Elders Limited Annual Financial Report
85
NNoottee
2023
$$000000
2022
$$000000
12,037,814
12,885,381
(11,852,325)
(12,769,549)
12
15
9
11
23
13
15
14,330
(22,060)
(8,516)
169,243
(30,099)
-
(17,663)
(47,022)
1,206
-
(38,568)
(132,146)
(11,047)
101,960
(44,526)
(73,337)
(6,504)
(33,454)
3,643
17,840
21,483
11,806
(7,941)
(6,036)
113,661
(16,361)
(123)
(8,803)
(53,965)
716
33,400
-
(45,136)
(9,584)
24,945
(35,908)
(73,748)
(4,453)
(98,748)
(30,223)
48,063
17,840
86
Elders 2023 Annual Report
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2023
Issued capital
Reserves
Retained
earnings
Non-controlling
interest
Total equity
As at 1 October 2022
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
Changes in the fair value of financial assets at fair
value through other comprehensive income
Total comprehensive income/(loss) for the period
Transactions with owners in their capacity as owners:
Dividends paid
Dividend reinvestment plan
Other movements in retained earnings
Partnership profit distributions/dividends paid
Cost of share based payments
Reallocation of equity
Shares purchased
As at 30 September 2023
As at 1 October 2021
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:
Put option revaluation
Dividends paid
Dividend reinvestment plan
Deferred performance shares
Partnership profit distributions/dividends paid
Cost of share based payments
Reallocation of equity
Shares purchased
As at 30 September 2022
$$000000
1,646,630
-
-
-
-
-
-
4,762
-
-
-
3,074
(11,047)
$$000000
(27,705)
-
636
(594)
(6,251)
(6,209)
-
-
-
-
(399)
(3,074)
-
1,651,006
(26,887)
-
-
-
-
-
-
3,383
112
-
-
1,713
(9,584)
-
(84)
(357)
(441)
(2,234)
-
-
-
-
3,570
(1,713)
-
$$000000
(764,066)
100,840
$$000000
5,858
5,000
-
-
-
-
-
-
100,840
5,000
(75,043)
(4,762)
(520)
-
-
-
-
(848,694)
162,866
-
-
-
-
-
(6,504)
-
-
-
4,354
3,167
7,144
-
-
-
(74,855)
(3,383)
-
-
-
-
-
-
-
-
-
(4,453)
-
-
-
1,643,419
(37,387)
(743,551)
$$000000
860,717
105,840
636
(594)
(6,251)
99,631
(75,043)
-
(520)
(6,504)
(399)
-
(11,047)
866,835
778,592
170,010
(84)
(357)
(2,234)
(74,855)
-
112
(4,453)
3,570
-
(9,584)
860,717
162,866
7,144
169,569
The accompanying notes form an integral part of this consolidated statement of changes in equity.
1,646,630
(27,705)
(764,066)
5,858
Elders Limited Annual Financial Report
87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
ABOUT THIS REPORT
Corporate information
The consolidated financial report of Elders Limited for the year ended 30 September 2023 was authorised for issue on 13 November 2023 by the
Directors. 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. 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 and fair value of financial assets at fair value through
other comprehensive income 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, 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 rearranged 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 2023.
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 7
Note 9
Note 10
Note 11
Accounting for rebates
Impairment of non-financial assets other than brand names and goodwill
Accounting for leases
Impairment of brand names and goodwill
88
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
ABOUT THIS REPORT
Impacts of climate change
Elders has considered climate change risk and the necessary measures to meet its emissions reduction targets. While the effects of climate
change risk and the implementation of the emissions reduction targets do not materially change the significant judgements, estimates, and
assumptions used in the preparation of the 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 climate change risk and the implementation of Elders' emissions reduction targets:
Impairment testing
Cash flow projections used in the impairment testing process are based upon financial budgets approved by the Board, external forecasts
of market growth rates and expected operating margins and capital expenditure, including projected expenditure required to meet Elders’
emissions reduction targets.
Capital expenditure and research and development
Elders’ research and development and capital expenditures are aligned to Elders’ strategy focusing on new and alternative technologies and
products, in line with Elders' emissions reduction targets, impacting either capital expenditure or the Statement of Comprehensive Income.
Taxes
Climate-related matters have been considered in the assessment of the future taxable profits on which the recognition of deferred tax assets
are based. Business plans used for the recognition of deferred tax assets have been aligned with those used in the impairment testing process
taking into account Elders’ emissions reduction targets.
Provisions and contingent liabilities
Elders’ provisions and contingent liabilities for the 2023 financial year have taken into consideration Elders’ current climate-related
risk assessments.
Insurance
The change in climate might result in more regular and intense climate events which can have a significant impact on Elders’ operations with
business interruption, accident or damages. This may increase Elders’ insurance costs due to higher premium rates or Elders’ costs with more
frequent uninsurable events.
Changes to accounting policies
(i) New and Revised Accounting Standards and Interpretations
A number of amendments to standards and interpretations became operative for the financial year ended 30 September 2023. None of these
have materially impacted Elders and its policies.
(ii) Accounting Standards and Interpretations and Amendments issued but not yet effective
Elders has not early adopted any standards, interpretations or amendments that has been issued but is not yet effective. Elders has assessed
the upcoming standards and interpretations or amendments and concluded there is no material impact expected from the adoption of these
new standards, interpretations or amendments.
Elders Limited Annual Financial Report
89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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.
90
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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 Managing Director and 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 Managing Director and 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 Australian Independent Rural Retailers (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 diversified business incorporating grain-fed beef distribution, grass-fattening
operations, cow manure processing and irrigated corn production in Quirindi, New South Wales.
• 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.
Branch
Network
Wholesale
Products
Feed and
Processing
Services
Corporate
Services and
Other Costs
Total
$$000000
$$000000
$$000000
$$000000
$$000000
2023
Sale of goods and biological assets
2,389,665
391,971
181,660
1,271
2,964,567
Debtor interest associated with sales
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
9,481
347,372
-
-
-
-
-
-
9,481
347,372
2,746,518
391,971
181,660
1,271
3,321,420
14,116
-
-
-
14,116
250,758
(5,803)
(35,696)
209,259
42,518
(4,395)
(5,974)
32,149
7,890
(1,223)
(591)
6,076
(81,667)
(1,196)
(2,734)
(85,597)
1,471,664
698,258
773,406
47,332
94,784
(45)
316
363,803
122,120
241,683
-
-
-
-
88,667
11,450
77,217
-
-
78
-
150,378
375,849
(225,471)
-
-
(76,043)
(76,010)
-
316
219,499
(12,617)
(44,995)
161,887
(18,815)
(836)
(3,368)
(23,019)
138,868
2,074,512
1,207,677
866,835
47,332
94,784
Elders Limited Annual Financial Report
91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
GROUP PERFORMANCE – NOTE 1: SEGMENT INFORMATION
Branch
Network
Wholesale
Products
Feed and
Processing
Services
Corporate
Services and
Other Costs
Total
$000
$000
$000
$000
$000
2022
Sale of goods and biological assets
2,432,147
400,258
202,443
1,433
3,036,281
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
10,052
1,492
397,429
2,841,120
12,725
328,002
(4,792)
(28,282)
294,928
1,397,501
679,887
717,614
47,547
75,327
(284)
22,376
-
-
-
-
-
-
-
-
-
10,052
1,492
397,429
400,258
202,443
1,433
3,445,254
-
-
-
12,725
46,012
(4,443)
(4,283)
37,286
2,577
(1,838)
(583)
156
(83,042)
(723)
(2,297)
(86,062)
338,188
109,369
228,819
-
-
-
-
105,500
5,606
99,894
-
2,197
288
-
178,807
364,417
(185,610)
-
1,728
(132,802)
(132,798)
-
22,376
293,549
(11,796)
(35,445)
246,308
(5,226)
(630)
(2,715)
(8,571)
237,737
2,019,996
1,159,279
860,717
47,547
79,252
92
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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
Other items of income/(expense)
Sale of equity accounted investment
(Impairment)/Reversal of impairment of foreign operation
System Modernisation costs
One-off costs associated with business transformation
Other costs
Total other items of income/(expense)
Finance costs
Interest expense
Unwinding discount expense in regards to liabilities
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
Operating lease expenditure
NNoottee
26
10
2023
$$000000
2022
$$000000
2,964,567
3,036,281
9,481
-
347,372
10,052
1,492
397,429
3,321,420
3,445,254
-
1,504
(5,438)
(4,483)
(496)
(8,913)
(18,815)
(836)
(3,368)
(23,019)
(12,617)
(44,995)
(57,612)
(233,366)
(51,934)
651
21,956
(6,982)
-
-
(747)
14,227
(5,226)
(630)
(2,715)
(8,571)
(11,796)
(35,445)
(47,241)
(222,267)
(43,865)
(3,570)
(284,649)
(269,702)
(1,304)
(2,011)
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.
Elders Limited Annual Financial Report
93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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 prior periods
Deferred income tax benefit
Income tax expense reported in the statement of comprehensive income
2023
$$000000
2022
$$000000
(19,310)
(390)
(13,328)
(33,028)
(70,982)
596
2,659
(67,727)
(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% (2022: 30%)
Adjustments in respect of current income tax of prior periods
Share of equity accounted profits
Non-assessable profits/(losses)
Reversals of impairment/(Impairment expense)
Other
Income tax expense as reported in the statement of comprehensive income
113388,,886688
223377,,773377
(41,660)
(71,321)
(390)
4,235
2,852
2,954
(1,019)
(33,028)
596
3,825
4,148
(3,604)
(1,371)
(67,727)
Current tax payable
149
5,869
Capital losses not recognised as an asset
Elders held $103.5 million of capital losses (2022: $103.5 million) measured at 30% of gross value for which no deferred tax asset was
recognised in the consolidated statement of financial position. The capital losses are available indefinitely for offset against future capital
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)
33,518
49,928
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 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 2023. The tax transparency
report has not been audited and does not form part of the Financial Report.
94
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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
Lease liabilities
Provision for employee entitlements
Other provisions
Capitalised expenses
Other
2023
$$000000
33,518
61,087
23,005
2,719
499
338
2022
$$000000
49,928
36,962
29,106
5,350
3,817
838
Gross deferred income tax assets
121,166
126,001
Deferred income tax liabilities
Right-of-use assets
Intangibles
Plant and equipment temporary differences
Inventory
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
(59,681)
(36,004)
(6,763)
(2,302)
(1,367)
(106,117)
15,049
(35,780)
(36,760)
(3,540)
(2,121)
(2,394)
(80,595)
45,406
2023
$$000000
(16,410)
24,125
(6,101)
(2,631)
(3,318)
(500)
(4,835)
2022
$$000000
(60,018)
3,970
4,675
1,008
630
(291)
(50,026)
(23,901)
(3,511)
756
(3,223)
(181)
1,027
(25,522)
442
341
(520)
(3,992)
(7,240)
(30,357)
(57,266)
13,328
16,904
380
(255)
(2,659)
59,450
627
(152)
30,357
57,266
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.
Current tax assets and liabilities are offset if there is a legally enforceable right to offset and the Group intends to either settle on a
net basis, or to realise the asset and settle the liability simultaneously. Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and when the deferred tax balances relate to income taxes levied by the same
tax authority.
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 consolidated statement of financial position.
Cash flows are included in the consolidated 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
GROUP PERFORMANCE – NOTE 4: EARNINGS PER SHARE
Weighted average number of ordinary shares (‘000) used in calculating basic EPS
Dilutive performance rights (‘000)
Elders Limited Annual Financial Report
95
2023
156,477
-
2022
156,477
-
Adjusted weighted average number of ordinary shares used in calculating dilutive EPS (‘000)
156,477
156,477
For rights issued under the Long-Term Incentive Plan, Elders will purchase the required shares on the market, rather than issuing new shares,
hence there is no dilution from the recognition of these performance rights.
The following reflects the net profit/(loss) and share data used in the calculations of earnings per share (EPS):
2023
$000
2022
$000
Reported operations
Basic and dilutive
Net profit attributable to members (after tax)
100,840
162,866
Reported operations earnings per share:
Basic earnings per share (cents per share)
Diluted earnings per share (cents per share)
64.4¢
64.4¢
104.1¢
104.1¢
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 rights issued under a Long-Term
Incentive Plan into ordinary shares.
96
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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
2023
$$000000
2022
$$000000
664,989
(4,580)
660,409
9,490
42,146
12,046
14,078
770,528
(7,034)
763,494
2,515
33,817
8,328
11,350
738,169
819,504
Included in trade debtors is $60.2 million (2022: $107.3 million) of debt, which is covered by trade credit insurance on various terms
and conditions.
Trade debtors are generally on 30 to 90 day terms with the exception of Livestock debtors which are generally on 10 day terms. In some
instances, deferred terms in excess of 90 days are offered, on commercial terms agreed by Elders.
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
was determined as follows:
1-30 days
past due
$$000000
31-60 days
past due
$$000000
61-90 days
past due
$$000000
+91 days
past due
$$000000
Total
$$000000
2023
Expected loss rate
Gross carrying amount
Loss allowance
2022
Expected loss rate
Gross carrying amount
Loss allowance
Current
$$000000
< 1%
540,668
301
< 1%
651,748
406
< 1%
81,488
105
< 1%
84,620
127
< 1%
16,553
49
< 1%
11,664
35
< 1%
7,716
7
< 1%
8,083
1
Reconciliation of loss allowances for trade debtors at beginning and end of period:
Opening loss allowance
Increase/(decrease) in loss allowance recognised in profit or loss
Trade debtors written off
Closing loss allowance
22%
18,564
4,118
44%
14,413
6,465
2023
$$000000
7,034
(169)
(2,285)
4,580
664,989
4,580
770,528
7,034
2022
$$000000
9,257
(1,226)
(997)
7,034
Related party receivables
For terms and conditions of related party receivables, including from equity accounted investments, refer to note 26.
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 17.
Foreign exchange and interest rate risk
Details regarding the foreign exchange and interest rate risk exposure are disclosed in note 17, including those relating to derivative
related balances.
Elders Limited Annual Financial Report
97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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
2023
$$000000
2022
$$000000
49,120
73,371
73,371
148,363
56,237
168,395
(172,692)
(152,315)
78
49,120
1,054
73,371
At balance date, 22,057 head of cattle (2022: 22,789) are included in livestock. This represents cattle held in Australia for feedlotting and grass
feeding 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 to 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 sales 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 diseases and other natural forces. Elders has 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.
Material changes in any of the significant unobservable valuation inputs for feedlot cattle in isolation would result in significantly higher or
lower fair value measurement.
98
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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 obsolescence
Total inventory
2023
$$000000
2022
$$000000
487,640
484,801
8,117
(4,097)
5,357
(5,676)
491,660
484,482
Inventory write-downs recognised as an expense totalled $1.7 million (2022: $2.4 million).
Accounting Policy
Inventories are valued at the lower of cost and net realisable value. Costs are assigned to individual items of inventory predominantly 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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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
Elders Limited Annual Financial Report
99
2023
$$000000
2022
$$000000
514,726
617,044
41,127
79,122
1,721
47,114
70,590
1,625
636,696
736,373
9,469
646,165
16,059
752,432
Interest rate, foreign exchange and liquidity risk
Information regarding interest rate, foreign exchange and liquidity risk exposure is set out in note 17, 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 25.
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 2023, 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.
100
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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
Assets under
construction
$$000000
$$000000
$$000000
$$000000
$$000000
2023
Carrying amount at beginning of period
Additions
Additions through business combinations
Disposals
Depreciation expense
Impairment/writedown expense
Transfers from assets under construction
Other
3,569
3,667
-
(32)
-
-
-
-
11,456
254
-
-
5,076
2,104
15
(37)
(781)
(1,299)
-
83
-
-
42
(14)
18,297
10,417
444
(821)
(3,643)
(331)
755
30
8,555
13,657
-
-
-
-
(880)
-
Total
$$000000
46,953
30,099
459
(890)
(5,723)
(331)
-
16
Carrying amount at end of period
7,204
11,012
5,887
25,148
21,332
70,583
19,587
(13,700)
5,887
54,275
(29,127)
25,148
Cost
Accumulated depreciation and impairment
7,204
-
7,204
2022
Carrying amount at beginning of period
3,484
Additions
Additions through business combinations
Disposals
Depreciation expense
Impairment/writedown expense
Exchange fluctuations
Transfers from assets under construction
Other
90
-
(5)
-
-
-
-
-
21,359
(10,347)
11,012
11,778
748
-
-
4,396
1,697
36
(31)
(1,102)
(1,027)
-
-
32
-
-
(2)
7
-
15,757
5,818
1,415
(273)
(3,715)
(766)
24
17
20
21,332
-
21,332
603
8,008
-
-
-
-
-
(56)
-
123,757
(53,174)
70,583
36,018
16,361
1,451
(309)
(5,844)
(766)
22
-
20
Carrying amount at end of period
3,569
11,456
5,076
18,297
8,555
46,953
Cost
Accumulated depreciation and impairment
3,569
-
3,569
21,022
(9,566)
11,456
15,231
(10,155)
5,076
45,197
(26,900)
18,297
8,555
-
8,555
93,574
(46,621)
46,953
All property, plant and equipment is pledged as security, refer to note 16 for interest bearing loans and borrowings.
Elders Limited Annual Financial Report
101
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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
Network infrastructure
Life
Method
50 years
Straight line
Lease term
Straight line
3 to 10 years
Straight line
5 to 25 years
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
consolidated statement of comprehensive income.
102
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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 consolidated statement of financial position
Reconciliation of carrying amounts of right-of-use assets at beginning and end of period:
2023
Carrying amount at beginning of period
Additions
Depreciation expense
Lease modifications and reassessments
Carrying amount at end of period
2022
Carrying amount at beginning of period
Additions
Depreciation expense
Lease modifications and reassessments
Carrying amount at end of period
Properties
Motor vehicles
$$000000
$$000000
99,072
52,530
(29,155)
43,025
165,472
89,786
10,268
(22,760)
21,778
99,072
19,953
20,569
(15,617)
8,783
33,688
15,419
9,382
(12,430)
7,582
19,953
Reconciliation of carrying amounts of lease liabilities at beginning and end of period:
Other
$$000000
279
-
(223)
-
56
534
-
(255)
-
279
2023
$$000000
Total
$$000000
119,304
73,099
(44,995)
51,808
199,216
105,739
19,650
(35,445)
29,360
119,304
2022
$$000000
Carrying amount at beginning of period
123,543
110,677
Additions
Interest expense
Lease modifications and reassessments
Repayments of principal and interest
Carrying amount at end of period
Lease liabilities of which are:
● Current lease liabilities
● Non current lease liabilities
73,099
3,368
51,508
(47,894)
203,624
36,041
167,583
203,624
19,650
2,715
29,124
(38,623)
123,543
32,716
90,827
123,543
Elders Limited Annual Financial Report
103
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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 on any banking 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.
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.
104
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
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
Software
Assets
Other
Total
$$000000
$$000000
$$000000
$$000000
$$000000
$$000000
$$000000
$$000000
2023
Carrying amount at beginning
of period
Additions
Additions through
business combinations
Disposals
Amortisation
Carrying amount at end
of period
199,254
-
15,925
5,975
32,437
1,791
-
-
-
(2,383)
80,993
23,000
37,385
-
-
-
-
-
-
-
-
4,235
11,688
-
-
-
-
-
(3,594)
(223)
3,528
364,320
-
-
(3)
(694)
17,663
34,228
(3)
(6,894)
231,691
21,308
80,993
23,000
33,791
15,700
2,831
409,314
Cost
231,691
30,221
80,993
23,000
47,620
15,923
4,948
434,396
Accumulated amortisation
and impairment
2022
Carrying amount at beginning
of period
Additions
Additions through
business combinations
Amortisation
Other
Carrying amount at end
of period
-
231,691
(8,913)
21,308
-
-
(13,829)
(223)
(2,117)
(25,082)
80,993
23,000
33,791
15,700
2,831
409,314
175,151
786
23,181
-
136
9,325
4,407
3,949
(1,756)
-
80,240
23,000
40,979
-
753
-
-
-
-
-
-
-
-
(3,594)
-
-
4,235
3,948
182
332,643
9,610
-
-
-
-
(602)
-
27,883
(5,952)
136
199,254
15,925
80,993
23,000
37,385
4,235
3,528
364,320
Cost
199,254
22,455
80,993
23,000
47,620
4,235
5,127
382,684
Accumulated amortisation
and impairment
-
199,254
(6,530)
15,925
-
-
(10,235)
-
(1,599)
(18,364)
80,993
23,000
37,385
4,235
3,528
364,320
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, $150.7 million (2022: $125.0 million) of goodwill, $12.8 million (2022:
$12.8 million) of brand names and $23.0 million (2022: $23.0 million) of distribution rights were allocated for impairment testing. For Wholesale
Products, $81.0 million (2022: $74.3 million) of goodwill and $7.8 million (2022: $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.
Elders Limited Annual Financial Report
105
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
CAPITAL EMPLOYED – NOTE 11: INTANGIBLES
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 11.4% pre-tax
(2022: 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. The estimated recoverable amount of each of the CGU’s is greater than the carrying values at
30 September 2023. Carrying values are not sensitive to a reasonable change in discount rate of +/- 1% and significant headroom remains.
The calculation of value in use for cash generating units was based on the following key assumptions:
Gross margin
• 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
Gross margin assumptions are subject to risk factors associated with the agriculture industry, many of which are beyond the control of Elders
such as weather and rainfall conditions, commodity prices and international trade relations. These factors are highly dependent on the outlook
and prospects of the Australian farm sector, and the values and volume growth in internationally traded livestock and fibre.
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 2024 budget. Growth rate of 2-3% 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.
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.
(iv) 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.
(v) 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) Software assets
Software assets relates to internally generated software and associated assets that form part of the System Modernisation program and are
carried at cost until project milestones are completed. When a project milestone is completed, the asset is ready for use and amortised
over the asset's useful life of 10 years in line with Elders' policy for core IT systems.
(vii) 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.
106
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
CAPITAL EMPLOYED – NOTE 12: EQUITY ACCOUNTED INVESTMENTS
AuctionsPlus 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
AuctionsPlus 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
Balance
date
30-Jun
31-Dec
30-Jun
30-Jun
30-Jun
30-Jun
Ownership interest
2023
%%
50
20
-
30
33
33
2022
%%
50
20
*
30
33
33
Consolidated entity
investment
Contribution to
net profit
Dividends received
2023
$$000000
1,395
43,596
-
2022
$$000000
2,507
42,982
-
2,340
2,020
1
-
38
-
2023
$$000000
316
12,917
-
920
(37)
-
2022
$$000000
1,486
10,195
516
740
(212)
-
2023
$$000000
1,426
12,304
-
600
-
-
2022
$$000000
1,617
9,889
-
300
-
-
47,332
47,547
14,116
12,725
14,330
11,806
* Elders sold its 30% equity stake in StockCo holdings during the prior period.
All equity accounted investments are Australian resident companies. Summary financial information for equity accounted investees is
as follows:
2023
AuctionsPlus Pty Ltd
Elders Insurance (Underwriting Agency) Pty Ltd
Clear Grain Pty Ltd
AgCrest Holdings Pty Ltd
AgCrest Land Holdings Pty Ltd
Total
2022
AuctionsPlus 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
Total
Profit/(loss) after
income tax
Assets
Liabilities
$$000000
$$000000
$$000000
630
64,591
3,068
(124)
-
6,715
128,670
19,609
-
-
(3,511)
(119,441)
(13,572)
-
-
68,165
154,994
(136,524)
2,972
51,095
1,719
2,466
(642)
-
7,636
109,708
-
7,747
896
-
(2,508)
(98,645)
-
(4,810)
(4)
-
57,610
125,987
(105,967)
Elders Limited Annual Financial Report
107
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
CAPITAL EMPLOYED – NOTE 12: EQUITY ACCOUNTED INVESTMENTS
Accounting Policy
Elders’ equity accounted investments are accounted for using the equity method of accounting in the consolidated financial statements
and at cost in the parent. Equity accounted investments are entities over which Elders has significant influence and that are neither
subsidiaries nor joint ventures.
Under the equity method, equity accounted investments are carried in the consolidated financial statements at cost plus post acquisition
changes in Elders’ share of net assets of the investment. Goodwill relating to the investment is included in the carrying amount of the
investment and is neither amortised nor individually tested for impairment.
The statement of comprehensive income reflects Elders’ share of the results of operations of the equity accounted investments.
CAPITAL EMPLOYED – NOTE 13: OTHER FINANCIAL ASSETS
Accounting Policy
Financial assets at fair value through other comprehensive income (FVOCI) comprise equity securities which are not held for trading
and which Elders has irrevocably elected at initial recognition to recognise in this category. These are strategic investments and Elders
considers this classification to be more relevant.
PGG Wrightson Limited
Others
Total other financial assets
Gains/(losses) recognised in other comprehensive income
2023
$$000000
32,317
269
32,586
(6,251)
2022
$$000000
-
1,269
1,269
-
During the period, Elders purchased a 12.5% equity interest in PGG Wrightson Limited (NZX:PGW) for a total consideration of $38.6 million.
108
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
CAPITAL EMPLOYED – NOTE 14: PROVISIONS
Reconciliation of carrying amounts at beginning and end of period:
Employee benefits
Restructuring
provisions
Make good
$$000000
$$000000
$$000000
2023
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
2022
As at beginning of period
Arising during year
Utilised
Unused amounts reversed
Provisions arising from entities acquired
Disclosed as:
Current
Non current
Total
92,415
46,304
(67,293)
-
959
548
72,933
68,547
4,386
72,933
81,582
62,731
(52,514)
-
616
2,033
-
(1,907)
-
-
-
126
126
-
126
484
1,559
(10)
-
-
92,415
2,033
88,538
3,877
92,415
2,033
-
2,033
Other
$$000000
3,394
1,293
(2,917)
(532)
-
-
Total
$$000000
98,225
52,268
(74,899)
(532)
959
548
383
4,671
(2,782)
-
-
-
2,272
1,238
76,569
2,272
-
2,272
996
-
(32)
(581)
-
383
383
-
383
1,238
-
1,238
1,962
2,675
(1,190)
(53)
-
72,183
4,386
76,569
85,024
66,965
(53,746)
(634)
616
3,394
98,225
3,394
-
3,394
94,348
3,877
98,225
Elders Limited Annual Financial Report
109
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
CAPITAL EMPLOYED – NOTE 14: PROVISIONS
Accounting Policy
Provisions are recognised when Elders has a present obligation (legal or constructive) as a result of a past event, which makes it 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.
110
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
NET DEBT – NOTE 15: 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
Total non cash items
Total after 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
2023
$$000000
2022
$$000000
105,840
170,010
57,612
47,241
836
630
(14,116)
(12,725)
14,330
(1,582)
331
(169)
47,263
5,432
-
11,806
(1,054)
766
(1,226)
62,731
3,599
2,429
(316)
(22,376)
24,336
(651)
133,306
239,146
114,235
62,272
3,570
157,663
327,673
(99,163)
(2,498)
(165,228)
(181,640)
50,379
169,243
113,661
21,483
17,840
21,483
17,840
(265,814)
(179,210)
(15,356)
-
(203,624)
(123,543)
(463,311)
(284,913)
21,483
17,840
(203,624)
(123,543)
(281,170)
(179,210)
(463,311)
(284,913)
Non-cash investing and financing activities disclosed in other notes are:
• acquisition of right-of-use assets – note 10
• dividend distributions through the issue of shares under the dividend reinvestment plan – note 20
• shares issued to eligible executives under Elders Long-Term Incentive Plan – note 27
At balance date, Elders held $41.2 million (2022: $46.3 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 2023
NET DEBT – NOTE 16: INTEREST BEARING LOANS AND BORROWINGS
Current
Secured loans
Trade receivables and other working capital funding
Non current
Secured loans
Total current and non current
Elders Limited Annual Financial Report
111
2023
$$000000
2022
$$000000
-
265,814
265,814
15,356
281,170
4,230
174,980
179,210
-
179,210
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 2023, $5.0 million had been
issued (2022: $10.1 million).
Assets pledged as security
Secured loans are secured by various fixed and floating charges over all the assets of Elders (either directly or indirectly) except debtors carried
out for trade receivables funding. Trade receivables and other working capital funding is secured over the underlying debtors. This facility
expires in December 2025.
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.
112
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
RISK MANAGEMENT – NOTE 17: 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 and long-term debt obligations. The level of debt is disclosed in note 16.
At 30 September 2023 there was nil value of secured loans hedged under a floating to fixed arrangement (2022: nil), 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
2023
$$000000
2022
$$000000
21,483
17,840
(281,170)
(259,687)
(179,210)
(161,370)
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
HHiigghheerr//((lloowweerr))
+ 100 basis points
- 100 basis points
(2,597)
2,597
(1,614)
1,614
Elders Limited Annual Financial Report
113
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
RISK MANAGEMENT – NOTE 17: 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. As at 30 September 2023, Elders has $314.2 million of undrawn facilities (2022: $290.0 million).
(i) Non-derivative financial assets and 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 2023. 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
$$000000
$$000000
6 months
or less
$$000000
6-12 months
> 1 years
$$000000
$$000000
2023
Non-derivative financial assets:
Trade and other receivables
Non-derivative financial liabilities:
Interest bearing loans and borrowings
Lease liabilities
Trade and other payables
Net inflow/(outflow)
2022
Non-derivative financial assets:
Trade and other receivables
Non-derivative financial liabilities:
Interest bearing loans and borrowings
Lease liabilities
Trade and other payables
Net inflow/(outflow)
742,749
742,749
(281,170)
(203,624)
(646,165)
742,749
742,749
(281,237)
(208,712)
(646,165)
(1,130,959)
(1,136,114)
(388,210)
(393,365)
826,538
826,538
(179,210)
(123,543)
(752,432)
826,538
826,538
(179,210)
(126,281)
(752,432)
(1,055,185)
(1,057,923)
(228,647)
(231,385)
742,749
742,749
(265,814)
(15,759)
(635,816)
(917,389)
(174,640)
826,538
826,538
(179,210)
(15,280)
(734,081)
(928,571)
(102,033)
-
-
-
(23,716)
(880)
(24,596)
(24,596)
-
-
-
(15,280)
(2,292)
(17,572)
(17,572)
-
-
(15,423)
(169,237)
(9,469)
(194,129)
(194,129)
-
-
-
(95,721)
(16,059)
(111,780)
(111,780)
114
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
RISK MANAGEMENT – NOTE 17: FINANCIAL INSTRUMENTS
(ii) Derivative financial instruments
Due to the unique characteristics and inherent risks of derivative instruments, Elders separately monitors liquidity risk arising from transacting
in derivative instruments. Net settled derivatives comprise interest rate hedges. Net settled derivatives held by Elders at balance date were nil
(2022: nil).
(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 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
2023
$$000000
21,483
742,749
764,232
2022
$$000000
17,840
826,538
844,378
761,567
840,712
1,659
1,006
3,447
219
764,232
844,378
Elders Limited Annual Financial Report
115
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
RISK MANAGEMENT – NOTE 17: FINANCIAL INSTRUMENTS
(d) Foreign currency risk
Elders is exposed to movements in the exchange rates of a number of currencies. These are primarily generated from the following activities:
• purchase and sale contracts written in foreign currency
• receivables and payables denominated in foreign currencies
• commodity cash prices that are partially determined by movements in exchange rates
Foreign exchange risk is managed within Board approved limits using forward foreign exchange and foreign currency contracts. Where possible,
exposures are netted off against each other to minimise the cost of hedging. Hedge accounting is applied effective 1 October 2020. Elders
uses cash flow financial instruments to offset foreign currency exposures on purchases of crop protection products from international suppliers,
denominated in US Dollars. The cash flow financial instruments are not speculative investments. As at 30 September 2023, Elders held
designated cash flow hedges with a notional value of $56.0 million with a fair value asset of $1.1 million (2022: $5.3 million fair value asset). The
maturity dates for designated cash flow hedges ranges from October 2023 to May 2024.
As at 30 September 2023, Elders had the following AUD exposures to foreign currencies that were not designated in cash flow
financial instruments:
Financial assets
Cash and cash equivalents – CNY
Cash and cash equivalents – IDR
Cash and cash equivalents – other
Receivables – CNY
Receivables – IDR
Financial liabilities
Payables – CNY
Payables – IDR
Net exposure
2023
$$000000
718
413
1,006
82
446
2,665
(188)
(240)
(428)
2,237
2022
$$000000
1,873
464
223
471
639
3,670
(2,527)
(240)
(2,767)
903
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
HHiigghheerr//((lloowweerr))
CNY
IDR
Other
(61)
(62)
(100)
18
(86)
(22)
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.
116
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
RISK MANAGEMENT – NOTE 17: 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.
Elders applies the hedge accounting principles contained within AASB 9 Financial Instruments. For all effective cash flow hedges entered
into, Elders 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 cash flow 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.
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) Financial assets and liabilities measured at fair value
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.
The fair value of financial instruments as well as the method used to estimate the fair values are summarised in the table below:
2023
2022
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)
$$000000
$$000000
$$000000
$$000000
$$000000
$$000000
Financial assets and liabilities
Foreign currency derivatives
-
1,169
-
-
5,264
-
Elders Limited Annual Financial Report
117
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
EQUITY – NOTE 18: CONTRIBUTED EQUITY
2023
$$000000
2022
$$000000
Issued and paid up capital
156,476,574 ordinary shares (September 2022: 156,476,574)
1,643,419
1,646,630
The movement in the dollar balance of share capital is a result of:
• $11.0 million of treasury shares purchased (2022: $9.6 million)
• $4.8 million of dividends where the shareholders have participated in the dividend reinvestment plan (2022: $3.4 million)
• $3.0 million of shares transferred from treasury upon vesting of performance rights in accordance with Elders’ Long-Term Incentive Plan
(2022: $1.8 million)
Elders considers both capital and net debt as relevant components of funding, and hence, part of its capital management. When managing
capital and net debt, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to
shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital
available to the entity.
Treasury Shares
Treasury shares are shares in Elders Limited that are held for the purpose of allocating shares under the Elders Executive Long-Term Incentive
and Short-Term Incentive plans (see note 27 for further information).
Shares issued are recognised on a first-in-first-out basis.
Balance 1 October
Acquisition of shares - average price $8.86 per share (2022: $12.40)
Allocation of deferred shares under executive performance schemes
Allocation of dividend reinvestment plan shares
Balance 30 September
2023
2022
NNuummbbeerr ooff SShhaarreess
$$000000 NNuummbbeerr ooff SShhaarreess
-
1,247,168
(608,523)
(638,645)
-
11,047
(6,285)
(4,762)
-
-
772,838
(501,077)
(271,761)
-
$$000000
-
9,584
(6,201)
(3,383)
-
Accounting Policy
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are included in equity
as a deduction, net of tax, from the proceeds.
118
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
EQUITY – NOTE 19: RESERVES
Reconciliation of carrying amounts at beginning and end of period:
Business
combination
reserve
$$000000
Employee
equity
benefits
reserve
$$000000
(29,730)
6,676
-
-
-
-
-
-
-
-
-
-
-
(399)
(3,074)
-
3,203
2023
Carrying amount at beginning
of period
Exchange differences on
translation of foreign operations
Fair value movement in cash
flow hedge
Reclassified to inventory
Less deferred tax impact
Cost of share based payments
Transfer to issued capital
Changes in the fair value
of financial assets at
fair value through other
comprehensive income
Carrying amount at end of period
(29,730)
2022
Carrying amount at beginning
of period
Exchange differences on
translation of foreign operations
Fair value movement in cash
flow hedge
Reclassified to inventory
Less deferred tax impact
Cost of share based payments
Transfer to issued capital
Revaluation of put option
Carrying amount at end of period
(27,495)
4,819
-
-
-
-
-
-
(2,235)
(29,730)
-
-
-
-
3,570
(1,713)
-
6,676
Hedge
reserve
$$000000
576
-
1,143
(1,992)
255
-
-
-
Foreign
currency
translation
reserve
$$000000
(5,227)
636
-
-
-
-
-
-
(18)
(4,591)
932
-
6,757
(7,265)
152
-
-
-
(5,143)
(84)
-
-
-
-
-
-
576
(5,227)
Financial
assets
at FVOCI
Total
$$000000
$$000000
-
-
-
-
-
-
-
(27,705)
636
1,143
(1,992)
255
(399)
(3,074)
(6,251)
(6,251)
(6,251)
(37,387)
-
-
-
-
-
-
-
-
-
(26,887)
(84)
6,757
(7,265)
152
3,570
(1,713)
(2,235)
(27,705)
Elders Limited Annual Financial Report
119
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
EQUITY – NOTE 19: 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) Financial assets at fair value through other comprehensive income
Elders has elected to recognise changes in the fair value of certain investments in financial assets in OCI. These changes are accumulated
within the FVOCI reserve within equity. The group transfers amounts from this reserve to retained earnings when the relevant equity securities
are derecognised.
(v) 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 20: DIVIDENDS
On 16 December 2022, Elders paid a partially franked (30%) final dividend of 28 cents per share. This distribution totalled $43.8 million
(December 2021: $33.9 million). The cash outflow was $41.2 million (December 2021: $32.5 million), with the difference reinvested by
shareholders under dividend reinvestment plan.
On 22 June 2023, Elders paid a partially franked (30%) interim dividend of 23 cents per share. This distribution totalled $36.0 million (June
2022: $43.2 million). The cash flow was $32.1 million (June 2022: $41.2 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
2023
$$000000
2022
$$000000
6,504
4,453
Franking credits available to the parent for subsequent financial years based on tax rate of 30% (2022: 30%)
12,006
11,007
120
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
GROUP STRUCTURE – NOTE 21: 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 Asset Finance 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 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
Elders Toll Formulation Pty Ltd
Emmobi Pty Ltd
Family Hospitals Pty Ltd
ITC Timberlands Pty Ltd
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
Australia
China
Australia
Australia
China
Australia
Australia
Australia
Australia
Australia
Australia
Indonesia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
(a)
(a)
(c)
(d)
(a)
(a)
(a)
(a)
(e)
(e)
(d)
(a)
(e)
(d)
(d)
(b) (d)
(d)
(e)
(e)
(a)
(d)
(d)
(d)
(e)
(d)
(d)
(d)
(d)
(a)
(e)
(b) (d)
(b) (d)
(d)
(d)
(d)
(a)
(d)
(e)
(d)
(d)
(d)
% Held by Group
2023
2022
100
100
100
100
100
100
100
100
100
-
-
100
100
76
-
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
77
100
100
76
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
Elders Limited Annual Financial Report
121
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
GROUP STRUCTURE – NOTE 21: INVESTMENTS IN CONTROLLED ENTITIES
Country
of Incorporation
% Held by Group
2023
2022
Primac Exports Pty Ltd (in liq)
Primac Pty Ltd
Redray Enterprises Pty Ltd
Robian Holdings 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
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
(d) (f)
(d)
(d)
(d)
(a)
(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
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
• Entities denoted by (f) entered members voluntary liquidation 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.
122
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
GROUP STRUCTURE – NOTE 21: 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 (Deed). The effect of the Deed is that Elders Limited has guaranteed to pay any deficiency in the event of the winding up of
any member of the Closed Group, and each member of the Closed Group has given a guarantee to pay any deficiency, in the event that Elders
Limited or any other member of the Closed Group is wound up.
Certain members of the Closed Group, in addition to certain controlled entities, are guarantors in connection with the consolidated entity’s
borrowings facilities disclosed at note 16. 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, for the year ended 30 September 2023 is set out as follows. The prior period has been adjusted to ensure comparability:
Statement of comprehensive income of the Closed Group
Sales revenue
Cost of sales
Gross profit
Other revenue
Distribution expenses
Administrative expenses
Finance costs
Profit/(loss) before income tax benefit/(expense)
Income tax benefit/(expense)
Profit/(loss) after income tax benefit/(expense)
2023
$$000000
2022
$$000000
1,360,290
1,425,122
(1,142,967)
(1,202,050)
217,323
59,279
(53,804)
(12,920)
(6,963)
202,915
(29,913)
173,002
223,072
197,476
(52,970)
(14,831)
(1,865)
350,882
(59,459)
291,423
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
GROUP STRUCTURE – NOTE 21: INVESTMENTS IN CONTROLLED ENTITIES
Consolidated statement of financial position of the Closed Group
Current assets
Cash and cash equivalents
Trade and other receivables
Livestock
Inventory
Total current assets
Non current assets
Other financial assets
Property, plant and equipment
Right-of-use assets
Intangibles
Deferred tax assets
Total non current assets
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Provisions
Total current liabilities
Non current liabilities
Interest bearing loans and borrowings
Lease liabilities
Total non current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
Elders Limited Annual Financial Report
123
2023
$$000000
2022
$$000000
21,099
290,786
52,194
144,832
508,911
274,179
24,582
25,659
156,811
21,513
502,744
26,154
332,259
73,722
135,845
567,980
274,179
20,721
21,326
161,338
49,703
527,267
1,011,655
1,095,247
514,474
591,952
6,396
4,130
6,712
8,990
525,000
607,654
15,000
18,805
33,805
558,805
452,850
-
13,424
13,424
621,078
474,169
1,643,419
1,646,630
2,691
6,163
(1,193,260)
(1,178,624)
452,850
474,169
124
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
GROUP STRUCTURE – NOTE 22: PARENT ENTITY
Information relating to the parent entity of the Group, Elders Limited:
Results:
Net profit for the period after income tax expense
Total comprehensive income
Financial position:
Current assets
Non current assets
Total assets
Current liabilities
Total liabilities
Net assets
Issued capital
Retained earnings
Employee equity reserve
Total equity
2023
$$000000
24,154
24,154
176,821
198,857
375,678
1,601
1,601
2022
$$000000
151,869
151,869
209,215
228,880
438,095
1,684
1,684
374,077
436,411
1,643,419
1,646,630
(1,272,033)
(1,216,382)
2,691
374,077
6,163
436,411
Guarantees
As disclosed in note 21, the parent entity has entered into a Deed of Cross Guarantee with certain controlled entities. The effect of this Deed is
that Elders Limited and each of these controlled entities has guaranteed to pay any deficiency of any of the companies party to the Deed in the
event of any of those companies being wound up.
The parent entity is a party to various guarantees and indemnities pursuant to bank facilities extended to the Group as disclosed in note 25.
Elders Limited Annual Financial Report
125
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
GROUP STRUCTURE – NOTE 23: BUSINESS COMBINATIONS – CHANGES IN THE COMPOSITION OF THE ENTITY
(a) Acquisitions
(i) Prior period acquisitions
In the prior period, Elders acquired a number of small to medium retail and real estate businesses for a total consideration of $39.2 million,
including $10.4 million of deferred consideration. These transactions resulted in the recognition of $23.2 million of goodwill.
(ii) Current period acquisitions
During the current period, Elders acquired a number of small to medium retail, livestock and real estate businesses for a total consideration of
$42.0 million, including $16.5 million of deferred consideration. These transactions resulted in the recognition of $32.4 million of goodwill.
Purchase consideration
Cash paid
Deferred consideration
Total purchase consideration
The total assets and liabilities recognised as a result of acquisitions are:
Cash and cash equivalents
Trade and other receivables
Inventory
Property, plant and equipment
Rent roll
Brand name
Trade and other payables
Provisions
Deferred tax assets/(liabilities)
Net identifiable assets acquired
Goodwill on acquisition
Total purchase consideration
2023
$$000000
25,516
16,504
42,020
-
8,098
4,680
459
1,791
-
(4,517)
(548)
(380)
9,583
32,437
42,020
2022
$$000000
28,849
10,383
39,232
206
-
11,670
1,451
4,014
753
(800)
(616)
(627)
16,051
23,181
39,232
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 $47.0 million (2022: $54.0 million)
represents cash paid, net of cash acquired in respect of businesses acquired during the period of $25.5 million (2022: $28.6 million) and
payments of deferred consideration relating to acquisitions from prior periods of $21.5 million (2022: $23.7 million).
At 30 September 2023, Elders has $27.8 million (2022: $31.3 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 other than for equity accounted investments (refer to note 12).
126
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
GROUP STRUCTURE – NOTE 23: 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 24: EXPENDITURE COMMITMENTS
(a) 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
2023
$$000000
2,134
3,321
5,455
(b) Capital commitments
Significant capital expenditure contracted for at the end of the reporting period but not recognised as liabilities is as follows:
Capital expenditure commitments:
● Within one year
Total minimum payments
2023
$$000000
2,859
2,859
2022
$$000000
1,221
1,464
2,685
2022
$$000000
27,217
27,217
Elders Limited Annual Financial Report
127
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
OTHER NOTES – NOTE 25: 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.
• 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 21, 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 26: 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.
In the prior period, Elders sold its 30% equity stake in StockCo holdings and received a net repayment of $5.0 million on its advance to StockCo
Holdings Pty Ltd. As at previous balance date, Elders has no receivable from StockCo Holdings Pty Ltd. As a result, Elders has recognised
interest revenue of nil (2022: $1.5 million) and also received trail and exclusivity fees of nil (2022: $1.1 million) from StockCo Holdings Pty Ltd.
128
Elders 2023 Annual Report
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
OTHER NOTES – NOTE 27: 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
12-Dec-19
21-Feb-20
17-Dec-20
12-Mar-21
16-Dec-21
22-Dec-21
15-Dec-22
23-Dec-22
Nov-22
Nov-22
Nov-23*
Nov-23*
Nov-24*
Nov-24*
Nov-25*
Nov-25*
166,000
321,916
101,000
235,667
102,400
223,700
-
-
1,150,683
-
-
-
-
-
-
107,000
272,500
379,500
166,000
321,916
-
-
-
-
-
-
487,916
-
-
-
-
-
-
-
-
-
-
-
101,000
235,667
102,400
223,700
107,000
272,500
1,042,267
*The vesting date does not include the 12 month holding lock period which is an additional service requirement.
During the period, Long-Term Incentive performance rights benefit of $(0.8) million (2022: $3.0 million expense) was recognised.
For Long-Term Incentive performance rights vesting in November 2023, no additional shares (November 2022: 41,455) will be allocated under the
MD & CEO Grant and Senior Executive Grant at the time of vesting for the value of dividends paid but not received 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:
2023
Relative TSR against Comparator Companies Performance Rights
EPS Growth Performance Rights
2022
Relative TSR against Comparator Companies Performance Rights
EPS Growth Performance Rights
MD & CEO
Grant
Senior
Executive Grant
$ per right
$ per right
3.95
9.04
5.13
10.44
3.78
8.84
5.99
11.15
Key inputs in calculating the fair value of the Long-Term Incentive performance rights issued during the year include:
• Share price at valuation date: $10.36 for the MD & CEO Grant (2022: $11.54) and $10.12 for the Senior Executive Grant (2022: $12.24)
• Risk free rate: 3.3% for the MD & CEO Grant (2022: 1.0%) and 3.3% for the Senior Executive Grant (2022: 0.8%)
• Volatility: 33% for the MD & CEO Grant (2022: 30%) and 33% for the Senior Executive Grant (2022: 30%)
• Dividend yield: 5.0% for the MD & CEO Grant (2022: 3.6%) and 5.0% for the Senior Executive Grant (2022: 3.4%)
The weighted average remaining life of the Long-Term Incentive performance rights outstanding at the end of the financial year was 1.2 years.
(2022: 1.0 years).
Performance rights associated with the 2020 Long-Term Incentive Plan vested during the period. As a result, a total of 487,916 shares were
issued to relevant participants.
Short-Term Incentive Restricted Shares
Restricted shares issued to employees are part of the Short-Term Incentive plan. During the period, a total expense of $0.2 million (2022:
$0.5 million) was recognised in relation to this.
A total of 79,151 (2022: 86,523) restricted shares were allocated to the plan participants and remain unvested at the end of the year.
The weighted average fair value at the grant date is $10.12 (2022: $12.24).
Other Service Rights
Subject to approval of shareholders at Elders' 2023 AGM, the MD & CEO will be granted service rights under Elders' Long Term Incentive Plan for
no consideration as part of the retention plan. During the period, a total expense of $0.2million (2022: Nil) was recognised in relation to this. A
total of 180,000 (2022: Nil) service rights were allocated to MD & CEO and remain unvested at the end of the year.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2023
OTHER NOTES – NOTE 28: AUDITOR'S REMUNERATION
Amounts received or due and receivable by the auditor PricewaterhouseCoopers for:
● auditing or review of financial statements *
● other audit related services
● other non-audit services
Total
Elders Limited Annual Financial Report
129
2023
$$
894,630
100,113
-
994,743
2022
$$
788,300
-
10,695
798,995
* Fees include amounts paid to overseas PricewaterhouseCoopers offices in relation to the statutory audits of the subsidiaries in China
and Indonesia.
OTHER NOTES – NOTE 29: KEY MANAGEMENT PERSONNEL
Remuneration of Directors and other Key Management Personnel
For information on the Remuneration Policy, Structure and the relationship between remuneration payment and performance please refer to the
Remuneration Report.
Short-term
Long-term
Post employment
Termination benefits
Share based payments
Total
2023
$$
2022
$$
1,776,675
2,503,069
486,621
51,638
-
536,698
2,851,632
(219,140)
47,998
301,053
1,011,571
3,644,551
For details of Key Management Personnel, see section 6.2 of the Remuneration Report.
OTHER NOTES – NOTE 30: SUBSEQUENT EVENTS
On 1 November 2023, Elders a acquired livestock and real estate business, consisting of five locations across south-west Victoria – Colac,
Camperdown, Warrnambool, Hamilton and Ballarat.
Apart from the above, there are no other matters or circumstances that have arisen since 30 September 2023 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.
130
Elders 2023 Annual Report
DIRECTORS' DECLARATION
For the year ended 30 September 2023
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 2023 are in accordance with the
Corporations Act 2001, including:
(i) Giving a true and fair view of its financial position as at 30 September 2023 and of its performance for the year ended on that
date; and
(ii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001
(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in the basis of preparation
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
(c)
2. This declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the
Corporations Act 2001 for the year ended 30 September 2023.
3. In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the Closed
Group identified in note 21 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
13 November 2023
Mark C Allison
Managing Director and CEO
Auditor’s Independence Declaration
131
Auditor’s Independence Declaration
As lead auditor for the audit of Elders Limited for the year ended 30 September 2023, 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 13 November 2023
PricewaterhouseCoopers
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.
132
Elders 2023 Annual Report
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) 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 2023 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 2023
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of changes in equity 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.
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
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report
133
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 $6.9 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 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.
134
Elders 2023 Annual Report
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, Risk and Compliance Committee.
Key audit matter
How our audit addressed the key audit matter
Accounting for supplier rebates
(Refer to note 7)
Elders receive 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 the accounting for supplier 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
o
agreed terms to supplier credit notes
or individual supplier agreements
and recalculated the amount of the
rebate; and
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.
o
to assess the accuracy of rebates being
deferred in inventory as at balance date we:
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
135
Key audit matter
How our audit addressed the key audit matter
Existence and Valuation of inventory
(Refer to note 7)
We performed the following procedures amongst
others:
At 30 September 2023, the Group held inventory
balances of $491.7 million, as disclosed in Note 7
Inventories.
Inventories are valued at the lower of cost and net
realisable value (‘NRV’). 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.
We considered this a key audit matter due to the
judgement required by the Group in estimating the net
realisable value and the provision for obsolescence in
relation to the inventory.
In addition, the distribution of the Group’s inventory
across a large number of locations may result in an
increased risk in relation to existence.
developed an understanding of the Group’s
process for the procurement and accounting
for inventory.
for a sample of inventory items, we
reperformed the calculation of weighted
average cost using the Group’s methodology.
attended stocktakes at selected locations.
selected a sample of inventory items from the
Group’s inventory records and compared the
quantity recorded to the actual amount
counted during the stock takes.
for a sample of inventory items, traced the
inventory quantity counted during the
stocktakes to the Group’s inventory records.
for a sample of inventory purchases and sales
made between the stocktake date and
balance sheet date, we checked the inventory
movements to the relevant supporting
documentation.
for a sample of inventory items sold after the
year end, we compared the selling price net of
estimated selling costs to the cost of the
inventory items at the balance date.
assessed the reasonableness of the financial
report disclosures against the requirements of
Australian Accounting Standards
136
Elders 2023 Annual Report
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 2023 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 through our opinion on the financial report. We
have issued a separate opinion on the remuneration report.
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.
Independent auditor’s report
137
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 56 to 73 of the directors’ report for the
year ended 30 September 2023.
In our opinion, the remuneration report of Elders Limited for the year ended 30 September 2023
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
Partner
Adelaide
13 November 2023
138
Elders 2023 Annual Report
This page has been intentionally left blank.
ASX Additional Information
139
ASX
Additional
Information
a) Distribution of Ordinary Shares as at 1 November 2023
HHoollddiinnggss RRaannggeess
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
TToottaallss
The number of holders holding less than a marketable parcel
TToottaall UUnniittss
PPeerrcceennttaaggee FFPPOO
5,400,675
19,784,992
12,008,852
26,724,268
92,557,787
3.45%
12.64%
7.68%
17.08%
59.15%
115566,,447766,,557744
110000..0000%%
HHoollddeerrss
13,697
8,035
1,634
1,143
75
2244,,558844
2,089
Distribution of Unquoted Equity Securities at 1 November 2023
As noted on page 51 of the Directors' Report, performance rights are the only unquoted equity securities on issue as at the date of this report.
HHoollddiinnggss RRaannggeess
1-1,000
1,001-5,000
5,001-10,000
10,001-100,000
100,001-9,999,999,999
TToottaallss
TToottaall UUnniittss
PPeerrcceennttaaggee UUnnqquuootteedd
EEqquuiittyy SSeeccuurriittiieess
HHoollddeerrss
0
8,600
15,133
708,134
310,400
11,,004422,,226677
0.00%
0.83%
1.45%
67.94%
29.78%
110000..0000%%
0
2
2
21
1
2266
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.
140
Elders 2023 Annual Report
d) Twenty Largest Shareholders as at 1 November 2023
TThhee ttwweennttyy llaarrggeesstt hhoollddeerrss ooff EEllddeerrss OOrrddiinnaarryy SShhaarreess wweerree aass ffoolllloowwss::
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
CITICORP NOMINEES PTY LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
NATIONAL NOMINEES LIMITED
BNP PARIBAS NOMINEES PTY LTD
BNP PARIBAS NOMS PTY LTD
MR MARK CHARLES ALLISON
BNP PARIBAS NOMINEES PTY LTD
VENN MILNER SUPERANNUATION P/L
BNPP NOMS PTY LTD HUB24 CUSTODIAL SERV LTD
NETWEALTH INVESTMENTS LIMITED
CITICORP NOMINEES PTY LIMITED
CERTANE CT PTY LTD
MR RAYMOND JAMES ALLAN
G HARVEY NOMINEES PTY LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
PACIFIC AGRIFOODS INVESTMENTS PTY LTD
MR KWOK CHING CHOW & MS PIK YUN PEGGY CHAN
MR JAMES STUART FOLEY
LEUTENEGGER INVESTMENTS PTY LTD
TToottaall SSeeccuurriittiieess ooff TToopp 2200 HHoollddiinnggss
NNoo.. ooff sshhaarreess
%%
28,655,679
18.313%
19,285,456
12.325%
17,139,642
10.953%
5,652,131
3,309,677
3,086,961
1,152,124
895,407
800,000
615,062
412,895
411,409
395,436
390,000
378,000
348,900
335,456
310,000
300,000
280,000
3.612%
2.115%
1.973%
0.736%
0.572%
0.511%
0.393%
0.264%
0.263%
0.253%
0.249%
0.242%
0.223%
0.214%
0.198%
0.192%
0.179%
8844,,115544,,223355
5533..778811%%
The number of shares held by substantial shareholders in the Company, as disclosed in substantial holding notices given to the Company as at
1 November 2023.
Shareholder
No. of shares
Percentage of shares held at date of notice
Vanguard Group
7,839,970
State Street Corporation 9,520,409
5.010%
6.08%
Date of notice
19 October 2022
4 October 2023
e) Corporate Governance Statement
Elders’ 2023 Corporate Governance Statement can be found online at elders.com.au/for-investors/performance/periodic-reports/
Shareholder Information141Shareholder InformationShare RegistryBoardroom Pty LimitedLevel 8, 210 George Street,Sydney, NSW, 20001300 737 760+61 (0)2 9279 0664enquiries@ boardroomlimited.com.auboardroomlimited.com.auEnquiriesShareholders with enquiries about their shareholdings should contact the Company’s share registry, Boardroom, on the above contact details.Online shareholder informationShareholders can obtain information about their holdings or view their account instructions online.For identification and security purposes, you will need to know your Reference Number (HIN/SRN), Surname/Company Name and Post/Country Code to access. This service is accessible via the Investor Centre on the Company’s website or direct via the Boardroom website at investorserve.com.au.Tax and dividend/interest paymentsElders is obliged to deduct tax from dividend/ interest payments (which are not fully franked) to holders registered in Australia who have not quoted their Tax File Number (TFN) to the Company. Shareholders who have not already quoted their TFN can do so by contacting Boardroom.Change of addressIssuer Sponsored Shareholders who have changed their address should advise Boardroom in writing. Written notification can be emailed or posted to Boardroom at the address shown adjacent and must include both old and new addresses and the Securityholder Reference Number (SRN) of the holding.Alternatively, holders can amend their details online via Boardroom’s website. Shareholders who have broker sponsored holdings should contact their broker to update these details.Annual Report mailing listShareholders who wish to vary their Annual Report mailing arrangements should advise Boardroom online or in writing.Electronic versions of the report are available to all via the Company’s website. Annual Reports will be mailed to all shareholders who have elected to be placed on the mailing list for this document.Investor informationInformation about the Company is available from a number of sources:Website:elders.com.auSubscribe:Shareholders can nominate to receive company information electronically via the Company’s website.Additionally, shareholders may elect to receive official company information through InvestorServe on Boardroom’s website.Publications:The Annual Report is the major printed source of company information. Other publications include the half-yearly report, Sustainability Report, Corporate Governance Statement, company press releases and investor presentations.All publications can be obtained either through the Company’s website or by contacting the Company. Elders 2023 Annual Report142Company DirectoryDirectorsIan Wilton — MSc, FCCA, FCPA, CA, FAICDMark C Allison — BAgrSc, BEcon, GDM, AMP (HBS), DUniv (hc) (Adel), FAICDRobyn Clubb AM — BEc, CA, F Fin, MAICDRaelene Murphy — BBus, FCA, GAICDSecretariesPeter G Hastings — BA, LLB, GDLP, FGIA, Grad Dip Applied Corporate Governance, GAICDShannon Doecke — BAcc, Grad Dip Applied Corporate Governance, AGIA, MAICDRegistered OfficeLevel 10, 80 Grenfell Street, Adelaide, South Australia, 5000P (08) 8425 4000CompanySecretary@elders.com.auelders.com.auShare RegistryBoardroom Pty Limited, Level 8, 210 George Street, Sydney, NSW, 2000P 1300 737 760F +61 (0)2 9279 0664boardroomlimited.com.auAuditorPricewaterhouseCoopersBankersAustralia & New Zealand Banking GroupNational Australia BankCooperatieve Rabobank U.A., Australia BranchStock Exchange ListingElders Limited ordinary shares are listed on the Australian Securities Exchange under the ticker code “ELD”.