Farm Pride Foods Ltd.
ABN: 42 080 590 030
551 Chandler Rd Keysborough
VIC 3173 Australia
T: 1300 361 993
farmpride.com.au
Annual Report 2019
Proud Heritage
Positive Future
FPR0007 AR19_PFO.indd 2-3
5/9/19 12:24 pm
Farm Pride Foods Limited and Controlled Entities
Corporate Information
Farm Pride Foods Ltd.
ABN 42 080 590 030
Directors
Peter Bell (Non-Executive Chairman)
Malcolm Ward (Non-Executive Director)
Bruce De Lacy (Non-Executive Director)
Management Team
Daryl Bird (CEO)
Geeta Kulkarni (CFO)
Company Secretary
Bruce De Lacy
Registered office and principal place of business
551 Chandler Road
Keysborough, Victoria 3173
(+61-3) 9798 7077
Solicitors
Gadens
Level 25 Bourke Place
600 Bourke Street
Melbourne, Victoria 3000
Bankers
Westpac Banking Corporation
Level 7, 150 Collins Street
Melbourne, Vic 3000
Share Registery
Computershare Registry Services Pty. Ltd.
Yarra Falls, 452 Johnston Street
Abbotsford, Victoria 3067
ASX: FRM
Auditors
Ernst & Young
8 Exhibition Street
Melbourne, Victoria 3000
Internet Address
www.farmpride.com.au
Farm Pride Foods Limited and Controlled Entities
TABLE OF CONTENTS
Chairman’s Report
Directors’ Report
Auditor’s Independence Declaration
Financial Report for the year ended 30 June 2019
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors’ Declaration
Independent Auditor’s Report
ASX Additional Information
2
4
16
17
18
19
20
21
55
56
62
1
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Chairman’s Report
The Company’s net revenue increased by 0.6% to $86.641m (2018: $86.116m).
Loss after tax was $3.858m (2018: $0.503m profit). Underlying EBITDA of $1.092m was down from
$5.386m in 2018.
These results are reflective of the increased national egg supply and high wheat prices throughout
the year and reductions in contracted shell egg volume supplied to key retailers impacting our
operating margins.
The increase in borrowings at 30 June 2019 to $14.667m (2018: $12.023m) was applied to the
purchase of capital plant and equipment associated with factory and farm upgrades.
Net cash used in investing activities totalled $4.242m in 2019 (2018: $20.040m).
Inventory levels have reduced by approximately 30% from the same time last year, a reflection on
the shift from egg over-supply to under-supply which occurred in March 2019. The under-supply
cycle has been exacerbated with recent Salmonella outbreak issues affecting the industry and the
corresponding withdrawal of additional egg capacity from the national market which was not
expected.
As our results show, it has been a difficult year. The national increase in egg production that
continued up until March led to a surplus of egg with downward pressure on price and profitability.
This downward cycle over the last twelve months is typical of what is seen in many agricultural
industries and it is normally followed by a period of recovery which has now started.
The early recovery phase is being thwarted in some part by the persistence of drought and an
uncertain outlook for the new wheat crop and with the back drop of global agricultural uncertainty.
While wheat prices have dropped from historical highs over the course of the year, prices still remain
relatively unfavourable.
Currently, national egg inventory is extremely low. While this has meant some improvement in
wholesale prices for egg, the cost to purchase egg as a raw material for our value-added activities
has increased because this is also in short supply.
The company’s view is that these supply conditions will continue through the first half of the new-
year’s trading. The company is seeking price adjustments for its produce wherever possible and has
implemented various operational initiatives to improve productivity and efficiency to buttress the
business against these variable market conditions.
Under new management’s direction, the business has undertaken a review of operations and trading
and has developed a detailed plan to align operations with the market outlook and our business
objectives. A three-part plan over three years known as ‘Managing for Value’, includes a sustained
period of renewal and directed investment with our farm assets being a key focus for these
initiatives. Our plan emphasises the importance of our people and our farms providing the
necessary capacity, quality and efficiency to support sustainable growth and development over the
next three years and beyond. The business has successfully recovered volumes previously reduced
by some customers in the first half of FY19 and has also increased business with others. These new
sales will gather momentum through the first half of the new-year’s trading. Management has
invested in new systems, processes and people to provide the necessary capacity and capability to
drive the three-year plan and to deliver sustainable growth and profitability in the future.
The business continues to invest in developing its cage free offer, and to this end, is engaging new
contract farms and will also add new company operated farm capacity in the new-year. Farm and
flock capacity increases will be in line with new business awarded to Farm Pride and to remain
ahead of the supermarkets’ timetable to convert from cage to cage free eggs over coming years.
2
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
The business is continuing to align egg supply with our market focus and our objectives are to
increase profitable share of shell egg, primarily in supermarkets, and to drive the growth and
business share of our value-added product business. These value-added products are sold to
industrial users and significant foodservice customers. Management has continued to exit low profit
business as part of this new market alignment. Innovation and new product development are key for
future growth to allow the company to advance our eggs as a raw material base for new product
formats and to enter new sales channels as part of our three-year plan.
Efficiency, productivity and profitable business are the key tenets of our plan moving forward and
management continue to implement programs designed to maximise productivity and contribution
from all our assets company wide. Farm Pride has significant purchasing power and management
are also investing in additional capability to enhance procurement. This is another area where we will
drive additional value for the business.
Investment in our staff is also seen as a fundamental principle for improved performance. The
business is developing its talent pool through targeted recruitment, staff performance and retention
programs. Together with the development of ‘best practice’ policies and procedures, these programs
will enable our business to project a positive and value driven culture. The establishment of key
performance indicators across all functional areas of the business, both targeted and cascaded, and
aligning with the over-arching company objectives is a key part of this ‘value’ journey.
In summary, trading conditions will remain fluid for at least the first half of the new-year. The
directors have reviewed management’s plan and key assumptions are already being realised. The
directors are confident the business can implement its plans over the next twelve months and we
remain cautiously optimistic that this should provide a solid result in FY20.
Whilst we are optimistic, we acknowledge the nature of the industry within which we operate. We are
involved in the agricultural production and manufacture of egg and egg products and their distribution
around Australia. As we have seen in the egg industry more recently, all of this activity is subject to
operational risks such as drought, increased feed costs, flock disease and hen welfare concerns.
The transition to non-cage egg requirements by our customers is also a challenge given the current
margins and the potential timeline and capital required to satisfy that demand.
Our approach to managing these inherent risks and challenges is consistent with our Company risk
management framework. The new management team has increased the focus on how we manage
these risks throughout the business both operationally and strategically to ensure the ongoing
success of our business.
Once again, the Board wishes to thank all our customers for their continued support and our
employees who have worked very hard to ensure that our business can supply a quality product that
our customers can continue to enjoy.
Peter Bell
Chairman
Farm Pride Foods Ltd
29 August 2019
3
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
The Directors present their report together with the financial report of the consolidated entity consisting
of Farm Pride Foods Limited (‘the Company’) and the entities it controlled (‘Farm Pride Foods’, the
‘consolidated entity or the ‘Group’), for the financial year ended 30 June 2019 and auditor’s report
thereon.
Directors
The names of directors in office at any time during or since the end of the year are:
Peter Bell
Malcolm Ward
Bruce De Lacy
Non-executive Director, Chair
Non-executive Director
Non-executive Director
The directors have been in office since the start of the year to the date of this report unless otherwise
stated.
Principal activities
The principal activities of the consolidated entity during the financial year were the production,
processing, manufacturing and sale of eggs and egg products.
There has been no significant change in the nature of these activities during the financial year.
Review of operations and financial results
Statutory consolidated net profit after tax attributable to the members of Farm Pride Foods
(“Statutory Profit”) for the year ended 30 June 2019 was a loss of $3.858 million (2018: $0.503
million profit). Underlying earnings before interest, tax, depreciation and amortisation (“Underlying
EBITDA”) was $1.092 million (2018: $5.386 million).
Underlying EBITDA represents statutory earnings before interest, tax, depreciation and amortisation
adjusted for items that are material to revenue or expense that are unrelated to the underlying
performance of the business (‘significant items’). Farm Pride believes that presenting Underlying
EBITDA provides a better understanding of its financial performance by facilitating a more
representative comparison of financial performance between financial periods. The results are
presented with reference to the Australian Securities and Investment Commission Regulatory Guide
230 “Disclosing non-IFRS financial information”.
The following table reconciles the Statutory Profit to Underlying EBITDA for the year ended 30 June
2019:
Statutory (loss) / profit
Add back:
- Interest (finance costs)
- Income tax (benefit) / expense
- Depreciation
EBITDA
Significant items:
Impairment expense
Transaction costs on Darling Downs acquisition
Underlying EBITDA
30 June 2019
$’000
30 June 2018
$’000
(3,858)
503
738
(1,466)
4,136
(450)
1,542
-
1,092
331
355
3,762
4,951
-
435
5,386
4
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Operating and financial review (continued)
For further discussion of the review and results of operations of the Group reference should be made to
the Chairman’s Report dated 29 August 2019.
Significant changes in the state of affairs
There have been no significant changes in the consolidated entity’s state of affairs during the financial
year, other than as disclosed in this report.
Subsequent events
On 31 May 2019, the Group commenced a competitive process to refinance with an alternative
lender with a view to transfer out of the facility with our current lenders. The process was completed
successfully and a new finance agreement has been signed with a new lender effective16 August
2019. The total facility is $23.5 million comprising of Tranche A $15 million to be drawn-down in full
and Tranche B of $8.5 million to be drawn down as required to meet the needs of the business.
Tranche B includes a $3.5 million limit exclusively for capitalised interest, if any. The term of the
facility is three years with first drawdown to be executed by 31 August 2019.
There are no other matters or circumstances which have arisen since 30 June 2019 that have
significantly affected or may significantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in future financial periods.
Likely developments
Refer to the Chairman’s Report on page 2 for information on likely developments and future prospects
of the Group.
Environmental regulation
The consolidated entity’s operations are not subject to any significant environmental, Commonwealth or
State regulations or laws. The consolidated entity is not aware of any significant breaches of
environmental regulations during the financial year.
Dividend paid, recommended and declared
No dividends were paid, declared or recommended since the start of the financial year.
Share options
No options over unissued shares or interests in the consolidated entity were granted during or since
the end of the financial year and there were no options outstanding at the end of the financial year.
Information on directors and company secretary
The qualifications, experience and special responsibilities of each person who has been a director
of Farm Pride Foods Limited at any time during the year and up to the date of this report is provided
below, together with details of the company secretary as at the year end.
5
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Peter Bell
(Non-executive Chairman - Appointed 30 May 2008, Member of the Audit Committee
until 22 November 2018)
Peter has been involved in the egg industry for more than 50 years and comes from a
third generation poultry farming family. He continues to be directly involved in the
management of commercial egg farms and has wide experience in all aspects of the egg
industry.
He is the Managing Director of AAA Egg Company Pty Ltd and its subsidiary West
Coast Eggs Pty Ltd, a director of Novo Foods Pty Ltd, a director of Days Eggs Pty Ltd,
a director of Hy-Line Australia Pty Ltd, a director of Specialised Breeders Australia Pty Ltd, Lohmann
Layers Australia Pty Ltd and Pure Foods Eggs Pty Ltd.
Malcolm Ward
(Non-executive Director – Appointed 30 May 2008, Member of the Audit Committee)
Malcolm has been in the egg industry for over 30 years having owned and
operated cage and free-range farms and has served on industry related boards
in the area of farm management and feed supply. He is also a director of AAA
Egg Company Pty Ltd and its subsidiary West Coast Eggs Pty Ltd as well as
being a director on a number of other private companies. Malcolm is the
Managing Director of his family’s independent supermarkets and also has
commercial interests in property. He is also a director of Australian United Retailers Limited, appointed
17 November 2010.
Bruce De Lacy
(Company Secretary – Appointed 30 October 1997, Chief Financial Officer –
Appointed 10 June 2013, Executive Director – Appointed 30 April 2014,
Chief Executive Officer – Appointed 19 March 2015, Resigned as CEO, CFO and
Executive Director 30 November 2018, Non-executive director – Appointed 30
November 2018, Chairman of the Audit Committee – Appointed 22 November
2018)
Bruce has over 35 years’ experience in the egg industry and has previously been
employed in a number of positions at the Company including General Manager
and Chief Operating Officer.
Bruce has a Bachelor of Business Studies from Swinburne University, majoring in Accounting, is a
CPA and is a Fellow of the Governance Institute of Australia.
Directors’ meetings
Peter Bell
Malcolm Ward
Bruce De Lacy
Board of Directors
Audit Committee
Eligible to
attend
Attended
Eligible to
attend
Attended
15
15
15
14
15
15
3
8
5
7*
8
8*
* Messrs. Bell and De Lacy attended some meetings by invitation.
6
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Information on directors and company secretary (continued)
Directors’ interests in shares
Directors’ relevant interests in shares of Farm Pride Foods or options over shares in the Company
are detailed below:
Directors’ relevant interests in:
Ordinary shares of
Farm Pride Foods
Limited.
Options over shares in
Farm Pride Foods
Limited.
Peter Bell
Malcolm Ward
Bruce De Lacy
2,314,250
2,031,772
195,502
-
-
-
Indemnification and Insurance of directors and officers
During the financial year, the Company has paid premiums to insure each of the Directors and
Officers against liabilities for costs and expenses incurred by them in defending any legal
proceedings arising out of their conduct while acting in the capacity of Director or Officer of the
Company.
The contracts as held by the Company do not permit premiums to be disclosed.
Further disclosure required under section 300(9) of the Corporations Act 2001 is prohibited under the
terms of the contract.
Auditor’s independence declaration
A copy of the Auditor’s Independence declaration as required under section 307C of the Corporations
Act 2001 in relation to the audit for the financial year is provided within this report.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to indemnify its auditors, Ernst & Young
Australia, as part of the terms of its audit engagement agreement against claims by third parties
arising from the audit (for an unspecified amount). No payment has been made to indemnify Ernst &
Young during or since the financial year.
Non-audit services
The following non-audit services were provided by the entity's auditor, Ernst & Young
Australia. The directors are satisfied that the provision of non-audit services is compatible with
the general standard of independence for auditors imposed by the Corporations Act 2001.
The nature and scope of each type of non-audit service provided means that the auditor
independence was not compromised.
Ernst & Young Australia received, or are due to receive, the following amounts for provision of
non-audit services:
Taxation services
Debt advisory services
2018
$
12,000
-
12,000
2019
$
12,000
100,000
112,000
7
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Remuneration Report (Audited)
The directors present the consolidated entity’s 2019 remuneration report which details the
remuneration information for Farm Pride Foods’ key management personnel (‘KMP’) in accordance
with the Corporations Act 2001 and its Regulations (‘Remuneration Report’). The Remuneration
Report has been audited by Farm Pride Foods’ external auditors, Ernst & Young.
(a)
Key management personnel
The Remuneration Report discloses the remuneration arrangements and outcomes for people listed
in the table below who are those individuals who have been determined as KMP as defined by AASB
124 Related Party Disclosures.
Name
Non-Executive
Directors
Peter Bell
Malcolm Ward
Bruce De Lacy1
Senior Executives
Daryl Bird
Geeta Kulkarni
Position
Term as KMP
Full financial year
Non-executive Chairman
Non-executive Director
Full financial year
Non-executive Director, Company secretary Full financial year
Group Chief Executive Officer
Group Chief Financial Officer
Appointed 1 December 2018
Appointed 5 February 2019
1Bruce De Lacy was the Chief Executive Officer, Chief Financial Officer and Executive Director to 30 November 2018. He
resigned as Chief Executive Officer and Chief Financial Officer on 30 November 2018 and remained a Non-executive
Director and Company Secretary from this date.
(b)
Remuneration policy
The performance of the Group depends upon the quality of its directors and executives. To be
successful, the Group must attract, motivate and retain highly skilled directors and executives. To this
end, the Group adopts the following principles in its remuneration framework:
–
–
Provide competitive rewards to attract high caliber executives;
Link executive rewards to the performance of the Group and the creation of shareholder
value;
Establish appropriate performance hurdles for variable executive remuneration;
–
– Meet the Company’s commitment to a diverse and inclusive workplace;
–
–
Promote the Company as an employer of choice;
Comply with relevant legislation and corporate governance principles.
In accordance with best practice corporate governance, the structure of non-executive director and
executive remuneration is separate and distinct.
The board of directors are responsible for determining and reviewing compensation arrangements for
directors and executives. The board of directors assess the appropriateness of the nature and amount
of remuneration of directors and executives on a periodic basis by reference to relevant market
conditions, as well as whether performance targets have been met, with the overall objective of
ensuring maximum shareholder benefit from the retention of a high-quality board and executives.
8
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Remuneration Report (continued)
(c)
Use of Remuneration Consultants
To ensure the board of directors are fully informed when making remuneration decisions, the Group
seeks external remuneration advice. Remuneration consultants are engaged by, and report directly
to, the board of directors. In selecting remuneration consultants, the Board of directors considers
potential conflicts of interest and requires independence from the Group’s key management personnel
and other executives as part of their terms of engagement.
During the year ended 30 June 2019, the Group did not engage external remuneration consultants.
(d)
Non-Executive Director Remuneration
Objective
The board aims to set aggregate remuneration at a level which provides the Group with the ability to
attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to
shareholders.
Structure
The Group’s Constitution and the ASX Listing Rules specify the aggregate remuneration of non-
executive directors shall be determined from time to time by a general meeting. An amount not
exceeding the amount determined is then divided between the directors as agreed.
The cap on aggregate non-executive director’s remuneration (which requires shareholder approval),
and the manner in which it is apportioned amongst non-executive directors, is reviewed annually. The
board will consider advice from external consultants as well as fees paid to non-executive directors of
comparable companies when undertaking the annual review process.
Non-executive directors receive fees and do not receive share-based remuneration or bonus
payments.
Superannuation contributions are made by the Group on behalf of non-executive directors in line with
statutory requirements and are included in the remuneration package amount allocated to individual
directors.
The remuneration of non-executive directors for the year ended 30 June 2019 is detailed in the table
titled KMP Remuneration on page 10 (the ‘Remuneration Table’).
(e)
Executive Director Remuneration
Executive directors are paid for their services as part of their employment contracts.
9
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Remuneration Report (continued)
(f)
Executive Remuneration
Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their
position and responsibilities within the Group. This involves:
–
–
–
–
Rewarding executives for company, business unit and individual performance against targets
set by reference to appropriate benchmarks
Aligning the interest of executives with those of shareholders
Linking reward with the strategic goals and performance of the Group
Ensuring total remuneration is competitive by market standards.
Structure
In determining the level and make-up of executive remuneration, the board of directors engage
external consultants on market levels of remuneration for comparable roles. Remuneration consists of
the following key elements:
–
–
Fixed remuneration
Variable remuneration.
The proportion of fixed remuneration and variable remuneration is established for each executive by
the board of directors. The variable portion consists of a short-term cash bonus which is performance-
based and is disclosed separately in the Remuneration Table.
The board of directors also considers current market conventions with regards to the splits between
fixed, short-term and long-term incentive elements.
Fixed Remuneration
Objective
The level of fixed remuneration is set to provide an appropriate and market-competitive base level of
remuneration. Fixed remuneration is reviewed annually by the board of directors consisting of a
review of Group, business and individual performance, relevant comparative remuneration in the
market and internal and external advice on policies and practices where necessary.
Structure
Total fixed remuneration (‘TFR’) is the non-variable component of an executive’s annual
remuneration. It consists of the base salary plus any superannuation contributions paid to a complying
super fund on the executive’s behalf, and the cost (including any component for fringe benefits tax) for
other items such as novated vehicle lease payments.
Linking remuneration to performance - variable remuneration
Remuneration is linked to performance to retain high calibre executives by motivating them to achieve
performance goals which are designed to increase shareholders value.
Variable remuneration
Objective
The objective of executive variable remuneration is to link executive remuneration to the achievement
of the Group’s annual operational and financial targets through a combination of both company and
individual performance targets.
10
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Remuneration Report (continued)
Structure
Variable remuneration is expressed as a percentage of a participant’s TFR comprising base salary,
superannuation contributions and may include other non-cash benefits, and are based on the
achievement of Group-wide budgeted revenue and profit targets each financial year and individual
performance targets at the board’s discretion.
For executives, the Group provides a remuneration package that incorporates annual cash bonuses,
payable at the discretion of the board of directors.
11
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D
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Remuneration Report (continued)
(h)
Shareholdings of KMP
Balance
1 July 2018
Received as
remuneration
Options
exercised
Other
On market
purchases/
(sales)
Balance
30 June 2019
Peter Bell
Malcolm Ward
Bruce De Lacy
2,314,250
2,031,772
195,502
4,541,524
-
-
-
-
-
-
-
-
-
-
-
-
2,314,250
2,031,772
195,502
4,541,524
Messrs. Peter Bell and Malcolm Ward have an indirect interest in the 27,486,302 shares held by West
Coast Eggs Pty Ltd (2018: 27,486,302 shares) and the 1,000 shares held by Southern Egg Pty Ltd
(2018: 1,000).
(i)
Other transactions with KMP
The value of transactions (inclusive of GST) and amounts receivable/(payable) between Directors and
their related entities and Farm Pride Foods Limited and its controlled entities.
Director related entities1
Transaction
Revenue
Expenditure
2019
$’000
2018
$’000
2019
$’000
2018
$’000
Balance
Receivable /
(Payable)
2019
$’000
2018
$’000
AAA Egg Company Pty Ltd
Purchases
(P. Bell / M. Ward)
Specialised Breeders Australia
Pty Ltd (P. Bell)
Purchases
-
-
-
9
46
(1)
(2)
234
332
643
1
(43)
Days Eggs Pty Ltd
(P. Bell)
Hy-line Australia Pty Ltd
(P. Bell)
Pure Foods Eggs Pty Ltd
(P. Bell)
West Coast Eggs Pty Ltd
(P. Bell / M. Ward)
Lohmann Layers Australia Pty
Ltd
(P. Bell)
Egg supply /
Purchases
Purchases /
Packaging
sales
Egg sales /
Purchases
Egg sales /
Purchases
158
180
87
365
18
(2)
-
-
3,230
3,486
(437)
(402)
23
30
90
296
8
(10)
877
1,116
909
245
127
366
Purchases
-
-
136
162
-
-
1 Messrs. Bell and Ward through their related entities provide birds, eggs and egg products to and acquire eggs, egg product and
packaging from Farm Pride Foods Limited and its controlled entities These transactions are on normal trading terms and conditions..
Director’s administrative expenses are reimbursed at cost.
13
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Remuneration Report (continued)
(j)
Service Agreements
The contracts for service between the Group and executives are on a continuing basis, the terms of
which are not expected to change in the immediate future. Remuneration and other terms of
employment for key management personnel are formalised in service agreements as follows:
Chief Executive Officer, Chief Financial Officer and Company Secretary
Bruce De Lacy was the Chief Executive Officer and Chief Financial Officer of the Company to 30
November 2018. Bruce was employed under a standard employment contract with no defined
length of tenure. Under the terms of his employment contract:
Bruce had to resign from his position by providing the Group with four weeks written notice
If the Group had to terminate this agreement it was required to provide four weeks written
notice or payment in lieu of the notice period, or the unexpired part of any notice period,
based on Bruce’s total remuneration
The Group could have terminated at any time without notice if serious misconduct occurred
Details of Bruce De Lacy’s salary are detailed in the Remuneration Table.
Chief Executive Officer
Daryl Bird is the Chief Executive Officer of the Company appointed on 1 December 2018. Daryl is
employed under a standard employment contract with no defined length of tenure. Under the terms
of his employment contract:
Daryl may resign from his position by providing the Group with three months written notice,
The Group may terminate this agreement by providing three months written notice or
provide payment in lieu of the notice period, or the unexpired part of any notice period,
The Group may terminate at any time without notice if serious misconduct has occurred,
Daryl’s total remuneration includes $20,000 car allowance per annum,
For the financial year ending 30 June 2019, Daryl participated in the Group’s bonus
scheme with a maximum entitlement of $54,000 which is subject to the Group achieving its
results,
For the financial years commencing 1 July 2019 onwards, Daryl will participate in the
Group’s Short-Term Incentive and Long-Term Incentive programs.
Details of Daryl Bird’s salary are detailed in the Remuneration Table.
Chief Financial Officer
Geeta Kulkarni is the Chief Financial Officer of the Company appointed on 5 February 2019. Geeta
is employed under a standard employment contract with no defined length of tenure. Under the
terms of her employment contract:
Geeta may resign from her position by providing the Group with three months written notice
The Group may terminate this agreement by providing three months written notice or
provide payment in lieu of the notice period, or the unexpired part of any notice period,
The Group may terminate at any time without notice if serious misconduct has occurred
Geeta will receive a performance review at the completion of the initial financial year and
based on agreed KPI’s will be assessed on this initial performance period, and may receive
an increase of $2,500 in her remuneration package.
For the financial years commencing 1 July 2019 onwards, Geeta participates in the
Group’s Short-Term Incentive program and is entitled to a performance bonus of up to 15%
of the cash salary at the time of payment of the bonus.
Details of Geeta Kulkarni’s salary are detailed in the Remuneration Table.
14
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Revenue and Other Income
(k)
The Group’s revenue, profit before tax and earnings per share for the last five financial years is
presented in the table below:
Revenue
Net (loss)/profit before tax
Net (loss)/profit after tax
Share price at end of year in dollars
Basic (loss)/earnings cents per share
Diluted (loss)/earnings cents per share
2019
$’000
86,641
(5,324)
(3,858)
0.21
(6.99)
(6.99)
2018
$’000
86,116
858
503
0.88
0.91
0.91
2017
$’000
97,778
12,232
8,481
1.16
15.37
15.37
2016
$’000
93,765
11,485
8,127
2.45
14.73
14.73
2015
$’000
91,341
7,218
5,053
0.30
9.16
9.16
This is the end of the audited remuneration report.
Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/Director’s Reports) Instrument
2016/191, the amounts in the directors’ report and in the financial report have been rounded to the
nearest thousand dollars, or in certain cases, to the nearest dollar (where indicated).
Signed in accordance with a resolution of the Directors.
Director
29 August 2019
15
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor’s Independence Declaration to the Directors of Farm Pride Foods
Limited
As lead auditor for the audit of the financial report of Farm Pride Foods Limited for the financial year
ended 30 June 2019, I declare 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 Farm Pride Foods Limited and the entities it controlled during the
financial year.
Ernst & Young
BJ Pollock
Partner
29 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
16
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Auditor’s Independence Declaration to the Directors of Farm Pride Foods
Limited
As lead auditor for the audit of the financial report of Farm Pride Foods Limited for the financial year
ended 30 June 2019, I declare 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 Farm Pride Foods Limited and the entities it controlled during the
financial year.
Ernst & Young
BJ Pollock
Partner
29 August 2019
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Profit of Loss and Other Comprehensive Income
Revenue and other income
Revenue from contracts with customers
Interest revenue and other income
Less: Expenses
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Employee benefits expense
Depreciation
Impairment or property, plant & equipment
Finance costs
Other expenses
(Loss)/Profit before income tax
Income tax benefit / (expense)
(Loss)/Profit from continuing operations
(Loss)/Profit for the year
Notes
4
4
5
5
5
5
5
5
6
2019
$’000
86,357
284
86,641
(2,061)
(62,640)
(13,989)
(4,136)
(1,542)
(738)
(6,859)
2018
$’000
85,577
539
86,116
2,347
(62,816)
(13,780)
(3,762)
-
(331)
(6,916)
(5,324)
858
1,466
(3,858)
(3,858)
(355)
503
503
Total comprehensive (loss) / income for the period
(3,858)
503
Basic (loss)/earnings per share (cents per share)
Diluted (loss)/earnings per share (cents per share)
(6.99)
(6.99)
0.91
0.91
The above statement should be read in conjunction with the accompanying notes.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
16
17
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Financial Position
Notes
8
9
10
11
10
6
12
13
14
16
14
16
17
2019
$’000
185
8,203
4,858
8,688
-
406
2018
$’000
7
8,355
6,919
8,565
805
1,359
22,340
26,010
399
2,350
45,213
47,962
416
884
46,649
47,949
70,302
73,959
10,211
14,624
1,938
26,773
43
201
244
27,017
43,285
29,578
13,707
43,285
12,626
1,970
1,937
16,533
10,053
230
10,283
26,816
47,143
29,578
17,565
47,143
Current Assets
Cash and short-term deposits
Trade and other receivables
Inventories
Biological assets
Current tax receivable
Other current assets
Total current assets
Non-current assets
Biological assets
Deferred tax assets
Property, plant and equipment
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Retained earnings
The above statement should be read in conjunction with the accompanying notes.
18
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Changes in Equity
Contributed
equity
$’000
29,578
-
-
-
29,578
Retained
earnings
$’000
Total
$’000
17,565
(3,858)
-
(3,858)
13,707
47,143
(3,858)
-
(3,858)
43,285
29,578
17,062
46,640
-
-
503
-
503
503
-
503
29,578
17,565
47,143
Balance as at 1 July 2018
(Loss)/Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2019
Balance as at 1 July 2017
Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2018
The above statement should be read in conjunction with the accompanying notes.
19
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Cash Flows
Notes
2019
$’000
2018
$’000
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Finance costs paid
Income tax received/(paid)
Interest received
Net cash provided by operating activities
19
Cash flow from investing activities
Payment for property, plant and equipment
Payment for business combination
Net cash used in investing activities
Cash flow from financing activities
Proceeds/(repayments) from borrowings
Repayment of finance leases
Net cash provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
19
86,776
(85,032)
(738)
805
1
1,812
(4,242)
-
(4,242)
3,500
(35)
3,465
1,035
(1,819)
(784)
87,276
(84,140)
(331)
(2,343)
43
505
(13,424)
(6,616)
(20,040)
10,000
(322)
9,678
(9,857)
8,038
(1,819)
The above statement should be read in conjunction with the accompanying notes.
20
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of significant accounting policies
The following is a summary of significant accounting policies adopted by the consolidated entity in
the preparation and presentation of the financial report. The accounting policies have been
consistently applied, unless otherwise stated. Farm Pride Foods Limited (the Company or parent
entity) is a for profit company limited by shares incorporated in Australia whose shares are publicly
traded on the Australian Stock Exchange.
(a) Basis of preparation of the financial report
This 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.
The financial report has been prepared under the historical cost convention, as modified by
revaluations to fair value for certain classes of assets as described in the accounting policies.
The financial report is presented in Australian dollars and all values are rounded to the nearest
thousand ($000), except when otherwise indicated.
The financial report was authorised for issue by the directors as at 29 August 2019.
Compliance with International Financial Reporting Standards (IFRS)
The consolidated financial statements of Farm Pride Foods Ltd also comply with the International
Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB).
Significant accounting estimates
The preparation of the financial report requires the use of certain estimates and judgements in
applying the consolidated entity’s accounting policies. Those estimates and judgements
significant to the financial report are disclosed in Note 2.
(b) Going concern
During the year ended 30 June 2019 the Group incurred a net loss after tax of $3.86 million (2018:
profit $0.50 million). Net cash inflow from operating activities was $1.81 million (2018: $0.50
million). As at 30 June 2019 current liabilities of $26.77 million exceed current assets of $22.34
million by $4.43 million. This is due to the existing finance facility at 30 June 2019 being
reclassified as current following our notification dated 13 February 2019, to Westpac on intention
to refinance. Refer to the Funding facilities note below that covers long term borrowing secured in
August 2019.
The financial report has been prepared on the basis that the Group is a going concern, which
assumes continuity of normal business activities and the realisation of assets and the settlement
of liabilities in the ordinary course of business. The directors in their consideration of the
appropriateness of the going concern basis for the preparation of the financial report have
reviewed the Group’s cash flow forecasts and revenue projections based on current market
conditions and business plans.
To continue as a going concern the Group requires:
– Generation of sufficient funds from its operating activities; and
–
Successful completion and settlement of the new financing agreement.
Cash flows from operating activities
The generation of sufficient funds from operating activities is dependent upon the successful
execution of the operational and financial initiatives described in the ‘Review of operations’
section of the Directors’ Report and on feed prices (particularly wheat as a key component of feed
cost) reducing from current drought affected levels in line with the Group’s forecasts.
21
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
The Group continues to actively manage its cash flows through management of debtors and
creditors within strict terms and the reduction of certain trade rebates. The Group is increasing
internal controls and governance. This includes targeted capital expenditure to improve asset life,
quality and safety with a view to support the Group’s focus on developing its caged-free capacity
and product operations.
Funding facilities
The Group’s financing facilities at 30 June 2019 comprised a $2.5 million bank overdraft and
$16.0 million multi-option loan facility (the “Facilities”). On 31 May 2019, the Group commenced a
competitive refinancing review with a view to exit its current lending facility with Westpac Banking
Corporation. The refinancing process was completed successfully and a new finance agreement
has been signed effective 16 August 2019. The total facility is $23.5 million comprising Tranche A
$15 million to be drawdown in full and Tranche B of $8.5 million to be drawn down to meet the
needs of the business. Tranche B includes $3.5 million limit exclusively for capitalised interest, if
any. The term of the facility is for three years with first drawdown to be undertaken by 31 August
2019.
The Group will continue as a going concern and focus on meeting the reporting and other
commitments under the new finance agreement. The Directors and management believe the new
lending facilities will necessarily support the business in coming years as it seeks to execute its
growth and development plans.
The financial report does not include adjustments, if any, relating to the recoverability and
classification of recorded asset amounts or the amounts and classification of liabilities that might
be necessary should the Group not continue as a going concern.
(c) Changes in accounting policies and disclosures
The Group applied, for the first time, certain standards and amendments which are effective for
from 1 July 2018.The nature and the impact of each new standard and/or amendment is described
below:
(i) AASB 15 Revenue from contracts with customers
The Group applied AASB 15 Revenue from Contracts with Customers (‘AASB 15’) for the first time
from 1 July 2018 in accordance with the modified retrospective transitional approach. The Group
assessed the impact of the new standard by analysing its customer contracts in each of the Group’s
revenue streams described in Note 4, having regard to the requirements of AASB 15 comparing the
Group’s accounting policies and practices for accounting for the rights and obligations identified in
those contracts and identify potential differences. Based on this analysis, there is no material impact
on the recognition and measurement of revenue and contract costs on the adoption of AASB 15 at 1
July 2018.
AASB 15 does however require the Group to include in the financial statements certain additional
information in respect of the Group’s revenue streams. The Group’s activities relate to the
production, processing and manufacturing of egg and egg products for sale.
Sales
The Group’s contracts with customers for the sale of egg products include one performance
obligation. The Group recognises revenue from sale of products at the point in time when control
of the asset is transferred to the customer on delivery of the goods. The normal credit terms are
30 to 60 days.
Variable consideration
Some contracts for the sale of products provide customers with rebates and promotional discounts
which give rise to variable consideration. The variable consideration is estimated at contract
inception using the expected value method based on forecast, timing of settlement and/or volumes
22
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
and is constrained until it is highly probable that a significant revenue reversal in the amount of
cumulative revenue recognised will not occur when the associated uncertainty is subsequently
(i) AASB 15 Revenue from contracts with customers (continued)
resolved. The amount of revenue reflects the consideration to which the Group expects to be
entitled to in exchange for those goods.
Trade receivables
A receivable represents the Group’s right to an amount of consideration that is unconditional (i.e.
only the passage of time is required before payment of the consideration is due).
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the
customer. If the Group performs by transferring products to a customer before payment is due, a
contract asset is recognised for the right to the earned consideration that is conditional.
Contract liabilities
A contract liability is the obligation to transfer products to customers for which the Group has
received consideration from the customer in advance. If a customer pays consideration before the
Group transfers products to the customer, a contract liability is recognised when the payment is
made or the payment is due. Contract liabilities are recognised as revenue when the Group
provides the product under the contract.
(ii) AASB 9 Financial Instruments
The Group has applied AASB 9 retrospectively from 1 July 2018 with no changes in comparatives.
The only impact of the new standard on the Group relates to application of the forward-looking
‘expected credit loss’ model for assessing the impairment of the Group’s trade receivables. The
Group does not currently undertake any hedging activities or apply hedge accounting and does not
have any financial liabilities designated as measured at Fair Value Through Profit and Loss
(FVTPL). Therefore, the new AASB 9 requirements relating to these areas do not result in a material
impact to the Group.
Trade receivables are held to collect contractual cash flows and give rise to cash flows representing
solely payments of principal and interest. These continue to be classified and measured as debt
instruments at amortised cost. The adoption of AASB 9 has changed the Group's accounting for
impairment losses for financial assets by replacing AASB 139's incurred loss approach with a
forward-looking expected credit loss approach. AASB 9 requires the Group to recognise an
allowance for expected credit loss for all debt instruments not held at fair value through profit or loss
and contract assets.
Based on past performance and future expectations of continued minimal bad debts due to the tight
monitoring by management, there was no material impact from the adoption of the expected credit
loss model at 1 July 2018.
(d) Basis of consolidation
The consolidated financial statements are those of the consolidated entity, comprising the financial
statements of the parent entity and of all entities, which the parent entity controls. The parent entity
controls an entity when it is exposed, or has rights, to variable returns from its involvement with the
entity and has the ability to affect those returns through its power over the entity.
The financial statements of subsidiaries are prepared for the same reporting period as the parent
entity, using consistent accounting policies. Adjustments are made to bring into line any dissimilar
accounting policies, which may exist.
23
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
All inter-company balances and transactions, including any unrealised profits or losses have been
eliminated on consolidation. Subsidiaries are consolidated from the date on which control is
established and are derecognised from the date that control ceases.
(e) Interest revenue
Interest revenue is recognised using the effective interest method.
(f) Cash and cash equivalents
Cash and cash equivalents include cash on hand and at banks short term deposits with an
original maturity of three months or less held at call with financial institutions, and bank overdrafts.
Bank overdrafts are shown within borrowings in current liabilities on the consolidated statement of
financial position.
(g) Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured
products includes direct material, direct labour and a proportion of manufacturing overheads
based on normal operating capacity, but excluding borrowing costs.
Costs are assigned on a standard cost basis which approximates actual cost. The standard cost
basis is reviewed by management regularly and adjusted to reflect current conditions, where
necessary.
Net realisable value is an estimated selling price in the ordinary course of business less estimated
costs of completion and estimated costs necessary to make the sale.
(h) Property, plant and equipment
Cost and valuation
Property, plant and equipment are stated at historical cost less accumulated depreciation and
any accumulated impairment losses. Repairs and maintenance are recognised in profit or loss
as incurred.
Depreciation
Land is not depreciated. The depreciable amounts of all other property, plant and equipment are
calculated using the straight-line method over their estimated useful lives commencing from the time
the asset is held ready for use.
Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease
or the estimated useful lives of the improvements.
The useful lives for each class of assets are:
–
–
–
–
Freehold land and land improvements
Buildings on freehold land and building improvements
Plant and equipment
Leased plant and equipment
Up to 40 years
Up to 40 years
1 to 20 years
5 to 20 years
24
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
(i)
Impairment of non-financial assets
For impairment assessment purposes, assets are generally grouped at the lowest levels for which
there are largely independent cash flows (‘cash generating units’). Accordingly, most assets are
tested for impairment at the cash-generating unit level. Because it does not generate cash flows
independently of other assets or groups of assets, any goodwill recognised by the entity is allocated
to the cash generating unit or units that are expected to benefit from the synergies arising from the
business combination that gave rise to the goodwill.
An impairment loss is recognised where the carrying amount of the asset or cash generating unit
exceeds the asset’s or cash generating unit’s recoverable amount. The recoverable amount of an
asset or cash generating unit is defined as the higher of its fair value less costs to sell and value in
use.
Impairment losses in respect of individual assets are recognised immediately in profit or loss.
Impairment losses in respect of cash generating units are allocated first against the carrying amount
of any goodwill attributed to the cash generating unit with any remaining impairment loss allocated
on a pro rate basis to the other assets comprising the relevant cash generating unit.
(j) Leases
Leases are classified at their inception as either operating or finance leases based on the
economic substance of the agreement so as to reflect the risks and benefits incidental to
ownership.
Finance leases
Leases of fixed assets, where substantially all of the risks and benefits incidental to ownership of
the asset, but not the legal ownership, are transferred to the consolidated entity are classified as
finance leases. Finance leases are capitalised, recording an asset and liability equal to the present
value of the minimum lease payments, including any guaranteed residual values. The interest
expense is calculated using the interest rate implicit in the lease and is included in financial costs
in the statement of comprehensive income.
Leased assets are depreciated on a straight-line basis over their estimated useful lives where it is
likely the consolidated entity will obtain ownership of the asset, or over the term of the lease.
Lease payments are allocated between the reduction of the lease liability and the lease interest
expense for the period.
Operating leases
Operating lease payments are recognised as an operating expense on a straight-line basis over the
term of the lease.
Lease incentives received under operating leases are recognised as a liability and amortised on a
straight-line basis over the term of the lease.
25
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
(k) Taxes
Current income tax
Current income tax expenses or revenue is the tax payable on the current period’s taxable income
based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities.
Deferred tax balances
Deferred tax assets and liabilities are recognised for temporary differences at the applicable tax
rates when the assets are expected to be recovered or liabilities are settled. Deferred tax liabilities
are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also
not accounted for if it arises from the initial recognition of an asset or liability in a transaction, other
than a business combination, that at the time of the transaction did not affect either accounting profit
nor taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only
if it is probable that future taxable amounts will be available to utilise those temporary differences
and losses.
Current and deferred tax balances attributable to amounts recognised directly in equity are also
recognised directly in equity.
Tax consolidation
Farm Pride Foods Limited and its wholly owned Australian controlled entities have implemented
the tax consolidation legislation and have formed a tax-consolidated group from 1 July 2005.
The head entity, Farm Pride Foods Limited and its controlled entities in the tax consolidated group
continue to account for their own current and deferred tax amounts. The consolidated group has
applied the group allocation approach in determining the appropriate amount of current taxes and
deferred taxes to allocate to members of the tax consolidated group. In addition to its own current and
deferred tax amounts, Farm Pride Foods Limited also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group. Assets or liabilities arising under tax funding
agreements with the tax consolidated entities are recognised as amounts receivable from or payable
to other entities in the tax consolidated group.
Any difference between the amounts assumed and amounts receivable or payable under the tax
funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax
consolidated entities.
Goods and services tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST.
Revenues, expenses and purchased assets are recognised net of the amount of GST, except where
the amount of GST incurred is not recoverable from the taxation authority. In these circumstances
the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the
expense. Receivables and payables in the statement of financial position are shown inclusive of
GST.
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. Commitments and
contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation
authority.
Cash flows are presented in the consolidated statement of cash flows on a gross basis, except for
the GST component of investing and financing activities, which are disclosed as operating cash
flows.
26
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
(l) Provisions
Provisions are recognised when the consolidated entity has a legal or constructive obligation, as a
result of past events, for which it is probable that an outflow of economic benefits will result and that
outflow can be reliably measured.
If the effect of the time value of money is material, provisions are discounted using a current pre-
tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used,
the increase in the provision due to the passage of time is recognised as a finance cost.
(m) Employee benefits
Short term employee benefit obligations
Liabilities arising in respect of wages and salaries, annual leave, accumulated sick leave and any
other employee benefits (other than termination benefits) expected to be settled wholly before twelve
months after the end of the annual reporting period are measured at the (undiscounted) amounts
based on remuneration rates which are expected to be paid when the liability is settled. The
expected cost of short term employee benefits in the form of compensated absences (i.e. annual
leave) is recognised in the provision for employee benefits. All other short-term employee benefit
obligations are presented as payables in the consolidated statement of financial position.
Other long-term employee benefit obligations
The provision for other long-term employee benefits, including obligations for long service leave and
annual leave, which are not expected to be settled wholly before twelve months after the end of the
reporting period, are measured at the present value of the estimated future cash outflow to be made
in respect of the services provided by employees up to the reporting. Expected future payments
incorporate anticipated future wage and salary levels, duration of service and employee turnover,
and are discounted at rates determined by reference to market yields as the end of the reporting
period on high quality corporate bonds that have maturity dates that approximate the terms of the
obligations. Any re-measurements for changes in assumptions of obligations for other long-term
employee benefits are recognised in profit or loss in the period in which the change occurs.
Other long-term employee benefit obligations are presented as current liabilities in the balance sheet
if the entity does not have an unconditional right to defer settlement for at least twelve months after
the reporting date, regardless of when the actual settlement is expected to occur. All other long-term
employee benefit obligations are presented as non-current liabilities in the statement of financial
position.
Superannuation
The consolidated entity makes contributions to superannuation plans in respect of employee
services rendered during the year. These superannuation contributions are recognised as an
expense in the same period as when the employee services are received.
(n) Borrowing costs
Borrowing costs are expensed as incurred, except for borrowings directly incurred as part of the cost
of the construction of a qualifying asset, in which case the costs are capitalised until the asset is
ready for its intended use or sale.
Borrowing costs can include interest expense calculated using the effective interest method, finance
charges in respect of finance leases and exchange differences arising from foreign currency
borrowings to the extent that they are regarded as an adjustment to interest costs and other costs
that an entity incurs in connection with its borrowing of funds.
27
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
(o) Financial instruments - initial recognition and subsequent measurement
A financial instrument is any contract that gives rise to a financial asset of one entity and a financial
liability or equity instrument of another entity.
Financial assets
Initial recognition and measurement
Financial assets are classified at initial recognition, and subsequently measured at amortised cost or
fair value through other comprehensive income (OCI), and fair value through profit or loss.
The classification of financial assets at initial recognition depends on the financial asset's contractual
cash flow characteristics and the Group's business model for managing them. With the exception of
trade receivables that do not contain a significant financing component, the Group initially measures
a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or
loss, transaction costs. Trade receivables that do not contain a significant financing component are
measured at the transaction price determined under AASB 15. Refer to the accounting policies in
note 1(c)(i)
In order for a financial asset to be classified and measured at amortised cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on
the principal amount outstanding. This assessment is referred to as the SPPI test and is performed
at an instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model determines whether cash flows will
result from collecting contractual cash flows, selling the financial assets, or both.
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
–
–
–
–
Financial assets at amortised cost (debt instruments)
Financial assets at fair value through OCI with recycling of cumulative gains and losses
(debt instruments)
Financial assets designated at fair value through OCI with no recycling of cumulative gains
and losses upon derecognition (equity instruments)
Financial assets at fair value through profit or loss
Financial assets at amortised cost (debt instruments)
The Group measures financial assets at amortised cost if both of the following conditions are met:
–
–
The financial asset is held within a business model with the objective to hold financial assets
in order to collect contractual cash flows, and
The contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest rate (EIR)
method and are subject to impairment. Gains and losses are recognised in profit or loss when the
asset is derecognised, modified or impaired. The Group's financial assets at amortised cost are trade
receivables.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of
financial position) when:
–
–
The rights to receive cash flows from the asset have expired, or
The Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a
‘pass-through’ arrangement.
28
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
(o) Financial instruments - initial recognition and subsequent measurement (continued)
Impairment of financial assets
The Group recognises an allowance for expected credit losses (ECLs) for all debt instruments not
held at fair value through profit or loss. ECLs are based on the difference between the contractual
cash flows due in accordance with the contract and all the cash flows that the Group expects to
receive, discounted at an approximation of the original effective interest rate. The expected cash
flows will include cash flows from the sale of collateral held or other credit enhancements that are
integral to the contractual terms.
For trade receivables and contract assets, the Group applies a simplified approach in calculating
expected credit losses (ECLs). Therefore, the Group does not track changes in credit risk, but
instead recognises a loss allowance based on lifetime ECLs at each reporting date. The Group has
assessed the risk from a provision matrix that is based on its historical credit loss experience,
adjusted for forward-looking factors specific to the debtors and the economic environment including
industry performance and customer concentration.
The Group considers a financial asset in default when contractual payments are 365 days past due.
However, in certain cases, the Group may also consider a financial asset to be in default when
internal or external information indicates that the Group is unlikely to receive the outstanding
contractual amounts in full before taking into account any credit enhancements held by the Group. A
financial asset is written off when there is no reasonable expectation of recovering the contractual
cash flows.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit
or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an
effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings
and payables, net of directly attributable transaction costs.
The Group’s financial liabilities include trade and other payables and loans and borrowings.
Subsequent measurement
After initial recognition, interest-bearing loans and borrowings are subsequently measured at
amortised cost using the effective interest rate (EIR) method. Gains and losses are recognised in
profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition and fees
or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the
statement of profit or loss.
Derecognition
A financial liability is derecognised when the obligation under the liability is discharged or cancelled
or expires. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognition of
a new liability. The difference in the respective carrying amounts is recognised in the statement of
profit or loss.
29
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
(p) Foreign currency translations and balances
The financial statements of each entity within the consolidated entity are measured using the
currency of the primary economic environment in which that entity operates (the functional
currency). The consolidated financial statements are presented in Australian dollars which is the
consolidated entity’s functional and presentation currency.
Transactions and balances
Transactions in foreign currencies of entities within the consolidated entity are translated into
functional currency at the rate of exchange ruling at the date of the transaction.
Foreign currency monetary items that are outstanding at the reporting date (other than monetary
items arising under foreign currency contracts where the exchange rate for that monetary item is
fixed in the contract) are translated using the spot rate at the end of the financial year.
Except for certain foreign currency hedges, all resulting exchange differences arising on settlement
or restatement are recognised as revenues and expenses for the financial year.
(q) Biological assets
Biological assets comprise flocks of hens. As there is no active market for flocks of hens, the
biological assets are recorded based upon the capitalised cost of the flock less accumulated
amortisation. The cost is amortised over the productive life of the flock. This is between 50 and 60
weeks. The flocks are held for the purposes of producing eggs.
(r) Segment reporting
Management has determined the operating segments based on the reports reviewed by the board of
directors (the chief operating decision maker as defined under AASB 8) that are used to make
strategic and operating decisions. The board of directors considers the business primarily from a
geographic perspective. On this basis the Group has identified one reportable segment, Australia.
The Group does not operate in any other geographic segment.
(s) Comparatives
Where necessary the comparative information has been reclassified and repositioned for
consistency with current year disclosures.
(t) Accounting standards issued but not yet effective
There are a number of Standards and Interpretations that will be mandatory in future reporting
periods. We have not elected to early adopt these standards and interpretations. The Standards
and Interpretations that are most relevant to the consolidated entity are set out below:
(i) AASB 16 Leases (application date 1 July 2019)
AASB 16 replaces AASB 117 ‘Leases’, AASB Interpretation 4 ‘Determining whether an Arrangement
contains a Lease’, AASB Interpretation 115 ‘Operating Leases-Incentives’ and AASB Interpretation
127 ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’. AASB 16 sets
out the principles for the recognition, measurement, presentation and disclosure of leases and
requires lessees to account for all leases under a single on-balance sheet model similar to the
accounting for finance leases under AASB 117. The standard includes two recognition exemptions for
lessees – leases of ’low-value’ assets and short-term leases. At the commencement date of a lease,
a lessee will recognise a liability to make lease payments and an asset representing the right to use
the underlying asset during the lease term. Lessees will be required to separately recognise the
interest expense on the lease liability and the depreciation expense on the right-of-use asset.
30
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
(t)
Accounting standards issued but not yet effective (continued)
Lessees will be also required to remeasure the lease liability upon the occurrence of certain events.
The lessee will generally recognise the amount of the remeasurement of the lease liability as an
adjustment to the right-of-use asset.
AASB 16 requires lessees to make more extensive disclosures than under AASB 117.
The most significant impact identified based on an initial assessment is that the Group will recognise
new right of use assets and financial liabilities for its operating lease commitments for office buildings
and plant and equipment. The current accounting treatment of recognising operating lease expenses
in ‘Other expenses’ in the Statement of Profit or Loss and Other Comprehensive Income will also
change on adoption of AASB 16, with amortisation of the lease expenditure recognised in both
Depreciation expense and Interest expense.
As lessee, the Group can either apply the standard using a:
a) Retrospective approach; or
b) Modified retrospective approach with optional practical expedients.
The Group plans to apply AASB 16 using the modified retrospective approach. The Group will elect
to apply the standard to contracts that were previously identified as a lease applying AASB 117 and
AASB Interpretation 4. The Group will elect to use the exemptions proposed by the standard on lease
contracts for which the lease terms ends within 12 months as of the date of initial application, and
lease contracts for which the underlying asset is of low value. The Group has leases of certain office
equipment that are considered of low value (i.e. less than $1,000).
The Group has completed an initial assessment of the potential impact on its consolidated financial
statements. The impact of AASB 16 has not yet been quantified. The actual impact of applying
AASB 16 on the financial statements from 1 July 2019 is still being determined and is dependent on
the Group’s borrowing rate, the composition of the Group’s lease portfolio, the Group’s assessment
of whether it will exercise any renewal options and the extent to which the Group chooses to use
practical expedients and recognition exemption. Under the modified retrospective approach, the
cumulative impact of application will be recognised as at 1 July 2019.
(ii) IFRIC 23 Uncertain Tax Position (application date 1 July 2019)
The Interpretation clarifies the application of the recognition and measurement criteria in IAS 12
Income Taxes when there is uncertainty over income tax treatments. The Interpretation
specifically addresses the following:
– Whether an entity considers uncertain tax treatments separately.
–
The assumptions an entity makes about the examination of tax treatments by taxation
authorities.
How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and tax rates.
How an entity considers changes in facts and circumstances.
–
–
The impact of IFRIC 23 has not yet been quantified.
31
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 2: Significant accounting judgements, estimates and assumptions
Estimates and assumptions based on future events have a significant inherent risk, and where
future events are not as anticipated there would be a material impact on the carrying amounts of the
assets and liabilities discussed below:
(a)
Impairment of non-current assets other than goodwill
All assets are assessed for impairment at each reporting date by evaluating whether indicators of
impairment exist in relation to the continued use of the asset by the Group. Impairment triggers
include declining product or manufacturing performance, technology changes, adverse changes in
the economic or political environment or future product expectations. If an indicator of impairment
exists the recoverable amount of the asset is determined. Refer to Note 12(b) for further details.
(b)
Estimation of useful lives of assets
The Group determines the estimated useful lives and related depreciation charges for its property,
plant and equipment. The useful lives could change significantly as a result of technical innovations
or some other event. The depreciation charge will increase where the useful lives are less than
previously estimated lives, and technically obsolete or non-strategic assets that have been
abandoned or sold will be written off or written down.
(c)
Income tax
Deferred tax assets are based on the assumption that no adverse change will occur in the income
tax legislation and the anticipation that the Group will derive sufficient future assessable income to
enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.
Deferred tax assets are recognised for deductible temporary differences and tax losses as
management considers that it is probable that future taxable profits will be available to utilise those
temporary differences.
(d)
Biological assets
The cost of flocks of hens are amortised over the productive life of the flock, which is between 50
and 60 weeks. This is based on the characteristics of the flock and the Group’s historical
operating experience.
(e)
Provision for expected credit losses of trade receivables and contract assets
The Group uses a provision matrix to calculate expected credit losses (ECLs) for trade receivables
and contract assets. The provision rates are based on days past due for groupings of various
customer segments that have similar loss patterns. The provision matrix is initially based on the
Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical
credit loss experience with forward-looking information. At every reporting date, the historical
observed default rates are updated and changes in the forward-looking estimates are analysed.
The Group’s historical credit loss experience and forecast of economic conditions may also not be
representative of customer’s actual default in the future.
32
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 2: Significant accounting judgements, estimates and assumptions (continued)
(f)
Rebates and promotional discounts liabilities
Rebates and promotional discounts are either settled monthly on settlement of invoice or accrued at
balance sheet date depending on the exact timing of the customer claim. The Group estimates the
rebate and promotional discount based on the percentage specified in the customer contract and
the timing of settlement and/or volumes sold taking into account previous claims made.
(g)
Inventory provisions
Management's judgement is applied in determining the inventory provisions for obsolescence and net
realisable value, where the estimated selling price of inventory is lower than the cost to sell based on
historical observations and management expectations.
Note 3: Financial instruments risk management objectives and policies
The Group’s activities expose it to a variety of financial risks, including market risk (commodity
prices, foreign currency and interest rate risk), liquidity risk and credit risk.
The Group’s senior management oversees the management of these risks by using various
financial instruments, including derivative financial instruments. It is the Group’s policy that no
trading in derivatives for speculative purposes may be undertaken. The use of financial derivatives
is subject to approval by the Board of Directors.
The Group’s principal financial liabilities, other than derivatives, comprise loans and borrowings,
and trade and other payables. The main purpose of these financial liabilities is to finance the
Group’s operations. The Group’s principal financial assets include trade receivables, and cash
and short-term deposits that derive directly from its operations. The Group is exposed to some
foreign currency risk as the purchase of plant and equipment from time to time is denominated
in foreign currencies.
The Group holds the following financial assets and financial liabilities at reporting date:
Financial assets
Cash and cash equivalents
Receivables
Financial liabilities
Payables
Borrowings
(a) Market risk
2019
$’000
185
8,203
8,388
10,211
14,667
24,878
2018
$’000
7
8,355
8,362
12,626
12,023
24,649
(i) Commodity price risk
The Group is affected by the price variability of certain commodities. The Group’s main sales
product is shell eggs which is a commodity that is subject to market conditions. The Group
manages this exposure utilising forward grain and feed stock commitments within certain price
parameters agreed by the Board of Directors. Where possible the Group enters longer term
relationships with key customers that create more certainty around volumes and price.
33
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 3: Financial instruments risk management objectives and policies (continued)
(i) Commodity price risk (continued)
The Group’s activities also require the ongoing purchase of grain and/or feed stock and is therefore
affected by fluctuations in the price of feed ingredients, primarily wheat and soy. The Group
manages this exposure utilising forward grain and/or feed stock purchase commitments through its
key suppliers, within certain price parameters agreed by the Board of Directors.
(ii) Foreign exchange risk
The majority of the Group’s operations are denominated in Australian dollars, therefore minimising
the impact of foreign currency risk. The Group undertakes some transactions denominated in
foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate
exposures are managed utilising forward foreign exchange contracts, subject to approval by the
Board of Directors.
Forward foreign exchange contracts
It is the policy of the Group to enter into forward foreign exchange contracts to cover specific
foreign currency payments (normally Euro) for future purchases of plant and equipment.
(iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes
in market interest rates relates primarily to the Group’s external debt facilities and cash at bank held
at variable rates.
The Group’s exposure to interest rate risks in relation to future cash flows and the weighted
average effective interest rates on classes of financial assets and financial liabilities is shown in the
table below.
Sensitivity
The following sensitivity analysis is assessed on the interest rate risk exposures in existence at
reporting date. At 30 June 2019, if interest rates had moved as illustrated in the table below, with all
other variables held constant, the post-tax profit and equity would have been impacted as follows:
Interest rates – increase by 100 basis points
Interest rates – decrease by 100 basis points
(b) Liquidity risk
Impact on post-tax
profit and equity
2018
2019
$’000
$’000
95
(95)
70
(70)
Ultimate responsibility for liquidity risk management rests with the Board of Directors, who assess
the Group’s short, medium and long-term funding and liquidity management requirements. The
Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve
borrowing facilities and by continuously monitoring forecast and actual cash flows. Refer to the
Group’s funding arrangements disclosed in Note 15.
34
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 3: Financial instruments risk management objectives and policies (continued)
Maturities of financial liabilities
The following tables detail the Group’s remaining contractual maturity for its financial liabilities. The
tables have been prepared based on the undiscounted cash flows of financial liabilities based on
the earliest date on which the Group can be required to pay.
The table includes both principal and estimated interest cash flows. Cash flows for financial
liabilities without fixed amount or timing are based on the conditions existing at reporting date.
<6
months
$’000
6-12
months
$’000
1-5
years
$’000
Over 5
years
$’000
Total
$’000
Fixed/
Floating
2019
Financial
liabilities
Trade and
other
payables
Loans
Lease liability
(10,211)
(14,469)
(146)
(24,826)
-
-
-
-
(19)
(19)
(33)
(33)
-
-
-
-
2018
<6 months
$’000
6-12
months
$’000
1-5
years
$’000
Over 5
years
$’000
Financial
liabilities
Trade and
other
payables
Loans
Lease liability
(c) Credit risk
(12,626)
(1826)
(134)
-
-
-
(10,000)
(10)
(53)
(14,586)
(10)
(10,053)
-
-
-
-
(10,211)
-
(14,469)
Floating
(198)
(24,878)
Total
$’000
Fixed
Fixed/
Floating
(12,626)
-
(11,826)
Floating
(197)
(24,649)
Fixed
Credit risk refers to the risk that a counterparty will default on its contractual obligations under a
financial instrument or customer contract, resulting in financial loss to the Group. The Group
manages its credit risk by dealing with creditworthy counterparties. The Group’s exposure and the
credit ratings of its counterparties are continuously monitored and the aggregate value of
transactions concluded is spread amongst approved counterparties.
The Group does not have any significant credit risk exposure to any single counterparty or any
group of counterparties having similar characteristics.
The aging analysis of trade and other receivables is provided in Note 8(b). As the Group undertakes
transactions with a large number of customers and regularly monitors payment in accordance with
credit terms, the financial assets that are neither past due nor impaired, are expected to be
received in accordance with credit terms.
The carrying amount of financial assets recorded in the financial statements, net of any allowance
for impairment, represents the Group’s maximum exposure to credit risk.
35
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 3: Financial instruments risk management objectives and policies (continued)
(d) Fair value of financial instruments
The only financial assets or financial liabilities carried at fair value are forward foreign currency
contracts from time to time. These instruments are considered to be Level 2 financial instruments
as their measurement is derived from inputs other than quoted prices that are observable for the
assets or liabilities, either directly (as prices) or indirectly (derived from prices).
The fair value of forward foreign currency is obtained from third party valuations derived from
discounted cash flow forecasts of forward exchange rates at the end of the reporting period and
contract exchange rates.
There were no transfers between levels 1, 2 and 3 for recurring fair value measurements during the
financial year.
The carrying amount of other financial assets and financial liabilities recorded in the financial
statements approximate their fair values.
Note 4: Revenue
Disaggregation of revenue
In the following table, revenue is disaggregated by major product.
Type of product2
Shell egg
Egg product
Others
Total revenue from contracts with customers
Interest revenue and other income
Total revenue
Consolidated
2019
$’000
20181
$’000
64,520
21,523
314
86,357
284
86,641
65,568
19,720
289
85,577
539
86,116
1 As described in Note 1(c), the Group applied AASB 15 from 1 January 2018 using the modified
retrospective approach. As there was no material impact resulting from the adoption of this new
standard, comparative information on disaggregation of revenue has been presented to provide a like-
for-like and comparable view. In the 2018 financial statements, all revenue was classified as ‘sale of
products.
2 The majority of sales (99.5%) are made in Australia. Revenue is recognised at a point in time, upon
satisfaction of the Group’s performance obligation, being delivery of the products to the customer.
36
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 5: Profit from continuing operations
Profit from continuing operations before income tax has been determined after the following specific
expenses:
Cost of goods sold
Changes in inventories of finished goods and work in
process
Raw materials and consumables used
Employee benefits expenses
Salaries and wages
Employee superannuation contributions
Total employee benefits expenses
Depreciation of non-current assets
Land and buildings
Plant & equipment
Total depreciation of non-current assets
Foreign exchange translation loss
Flock amortisation (note 10)
Finance costs – interest expense
Operating lease rentals
Net (loss) / gain on disposal of property, plant and equipment
Impairment of property, plant and equipment
Consolidated
2019
$’000
2018
$’000
2,061
62,639
64,700
12,895
1,094
13,989
1,207
2,929
4,136
(2,347)
62,816
60,469
12,756
1,024
13,780
955
2,807
3,762
1
11
12,096
11,094
738
3,540
-
(1,542)
331
3,492
3
-
37
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Consolidated
2019
$’000
2018
$’000
Note 6: Income tax
(a) Components of tax expense:
Current tax (benefit) / expense
Deferred tax (benefit) / expense
Under/(over) provision in prior years
Income tax expense
(b) Numerical reconciliation between income tax expense in
the income statement and that calculated
(Loss) / profit before income tax
At the statutory income tax rate of 30% (2018: 30%)
Amounts which are not deductible in calculating taxable income
Under/(over) provision in prior years
Income tax (benefit) / expense
(c) Deferred tax assets and (liabilities) relate to the
following:
Employee benefits
Provisions and accruals
Fixed assets
Building Impairment
Carry forward tax losses
Gross deferred tax assets
(d) Movement in deferred tax assets and (liabilities)
Balance at beginning of year
Recognised in profit or loss
Deferred taxes acquired in business combinations
Current year losses
Over provision in prior years
Balance at the end of the year
(e) Movement in current tax liability or (receivable):
Balance at beginning of year
Current tax expense
Tax (received)/paid
Under/(over) provision in prior years
Balance at the end of the year
38
(1,071)
(526)
131
(1,466)
(5,324)
(1,597)
0
131
(1,466)
641
72
104
462
1,071
2,350
884
525
-
1,071
(131)
2,350
(805)
-
805
-
-
424
(68)
(1)
355
858
258
98
(1)
355
650
148
86
-
-
884
859
68
(43)
-
-
884
1,115
424
(2,343)
(1)
(805)
Note 7: Dividends
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(a) Dividends proposed and recognised as a liability
Consolidated
2019
$’000
Nil
2018
$’000
Nil
(b) Franking credit balance
Balance of franking account at year end
11,485
12,290
Note 8: Receivables
Trade receivables
Provisions for expected credit loss
Other receivables
2019
$’000
7,751
(6)
7,745
458
8,203
2018
$’000
7,855
(17)
7,838
517
8,355
(a) Terms and conditions
Trade receivables are non-interest bearing and generally on 30 to 60 day terms.
Other receivables are non-interest bearing and have repayment terms between 30 and 60 days.
(b) Provision for expected credit loss (contracts with customers)
Movements in the provision for impairment were:
Opening balance at 1 July
Decrease in provision for impairment of trade receivables
Consolidated
2019
$’000
17
(11)
6
2018
$’000
50
(33)
17
39
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 8: Receivables (continued)
Trade and other receivables ageing analysis at 30 June is:
Not past due
Past due 31-60 days
Past due 61-90 days
Past due more than 91 days
Gross
2019
$’000
8,148
16
14
31
8,209
Impairment
2019
$’000
-
4
2
-
6
Gross
2018
Impairment
2018
$’000
8,198
-
112
62
$’000
17
-
-
-
8,372
17
Due to the short-term nature of these receivables, their carrying value approximates their fair value.
The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as
security.
Note 9: Inventories
Raw materials - at cost
Finished goods
Total inventories
Consolidated
2019
$’000
3,169
1,689
4,858
2018
$’000
3,530
3,389
6,919
Of the total inventories $501,000 is held at net realisable value (2018: $1,891,000).
40
Note 10: Biological assets
Current
Non-current
Total
(a) Flocks
Flock stock at fair value as at 30 June
Less: Accumulated amortisation
Flock stock
Opening flock stock written down value
Additions
Amortisation
Closing flock stock at 30 June
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Consolidated
2019
$’000
2018
$’000
8,565
416
8,981
16,443
(7,462)
8,981
8,152
11,923
(11,094)
8,981
8,688
399
9,087
16,060
(6,973)
9,087
8,981
12,202
(12,096)
9,087
The number of birds held by the Company as at 30 June 2019 was1,591,223 (2018:1,563,656).
The average output per bird is approximately 5 eggs per week during their productive period.
Note 11: Other current assets
Prepayments
Consolidated
2019
$’000
406
2018
$’000
1,359
41
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 12: Property, plant and equipment
2019
Cost
Accumulated depreciation
Net book value
Consolidated
Land and
buildings
Plant and
equipment
$’000
$’000
34,877
(9,326)
25,551
47,900
(31,723)
16,177
Capital
works in
progress
$’000
Total
$’000
3,485
86,262
-
(41,049)
3,485
45,213
Opening net book value at 1 July 2018
26,230
14,306
Additions
Transfers
Depreciation
Impairment loss1
Net book value at 30 June 2019
-
2,070
(1,207)
(1,542)
25,551
-
4,800
(2,929)
-
6,113
4,242
(6,870)
-
-
46,649
4,242
-
(4,136)
(1,542)
45,213
16,177
3,485
2018
Cost
Accumulated depreciation
Net book value
32,807
(6,577)
26,230
43,100
(28,794)
14,306
6,113
82,020
-
(35,371)
6,113
46,649
Opening net book value at 1 July 2017
16,224
13,348
Additions
Acquired in business combination
Transfers
Disposals
Depreciation
Net book value at 30 June 2018
-
-
10,961
-
(955)
26,230
-
-
3,767
(2)
(2,807)
14,306
710
13,423
6,708
(14,728)
-
6,113
30,282
13,423
6,708
-
(2)
(3,762)
46,649
1The Group engaged an independent valuer to assess the fair value of Darling Downs operation
post acquisition and subsequent to initial capital works being undertaken. The value assessed
was lower than the carrying value and the Company recorded an impairment loss of $1.542 million
in the current period.
The carrying value of plant and equipment held under finance leases and hire purchase contracts
as 30 June 2019 was $260,000 (2018: $234,000). Additions during the year include $37,000 (2018:
$27,000) of plant and equipment under finance lease and hire purchase contracts.
(a)
Assets pledged as security
Included in the balances of freehold land and buildings and plant and equipment are assets over
which first mortgages have been granted as security over bank loans (see note 14). The terms of
the first mortgage preclude the assets from being sold or being used as security for further
mortgages without the permission of the first mortgage holder. The mortgage also requires buildings
that form part of the security to be fully insured at all times.
42
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 12: Property, plant and equipment (continued)
Impairment testing of non-current assets
(b)
The Group performed an impairment test in June 2019. The Group considers the relationship
between its market capitalisation and its book value, among other factors, when reviewing for
indicators of impairment. As at 30 June 2019, the market capitalisation of the Group was below the
book value of its equity, indicating a potential impairment of the Group’s non-current assets. In
addition, the unfavourable trading conditions and drought impacted grain prices have unfavourably
impacted the Group.
The recoverable amounts for the cash generating units (‘CGU’) have been determined based on a
value in use basis. The value-in-use valuations use cash flow projections based on financial budgets
covering a 5-year forecast period, and a terminal value based upon an extrapolation of cash flows
beyond the 5-year period using a constant growth rate of 9% per annum, that is the same as the long-
term average growth rate for the Australian egg industry combined with the business plans of the
Group.
In performing value in use calculations, estimated future cash flows are discounted to their present
value using a post-tax discount rate that reflects the current market assessment of the time value of
money adjusted for a risk premium to reflect the risk of the specific CGU and individual risks of the
underlying assets that have not been incorporated in the cash flow estimates. The discount rate
calculation is based on the specific circumstances of the Group and is derived from its weighted
average cost of capital (WACC). The WACC takes into account both debt and equity. The cost of
equity is derived from the expected return on investment by the Group’s investors.
As a result of the analysis, management did not identify an impairment.
Key assumptions used in value in use calculations and sensitivity to changes in assumptions
Key drivers which impact the recoverable amount aggregated over the five year impairment assessment
period include:
–
The price of eggs sold to customers;
The price of grain/feed for the Group’s flock
–
– WACC Discount rate
The Group has performed a sensitivity analysis by considering reasonable possible changes in the
key assumptions. The changes in the following assumptions used in the impairment assessment
would, in isolation, lead to a change in the recoverable amount at 30 June 2019 as shown in the table
below.
Key assumption
Egg selling prices
Grain/feed prices
Discount rate %
Sensitivity
+5%
- 5%
+1%
-1%
+0.5%
- 0.5%
Impact on
valuation
$’000
$13,200
($13,200)
($11,000)
$11,000
($4,295)
$4,900
Changes in one assumption could be accompanied by a change in another assumption, which may
increase or decrease the recoverable amount. None of these tests resulted in the carrying amount of
the CGU exceeding its recoverable amount.
43
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 13: Payables
Trade creditors
Other payables and accruals
(a) Terms and conditions
Our standard terms are 30 days from end of month.
Note 14: Borrowings
Current
Secured
Borrowings:
Non-current
Secured
Borrowings:
Interest Rate
Maturity
Bank loans1
Bank overdraft1
Lease liability2
BBSY+1.30% On demand
BBOR+3.30% On demand
Various
Various
Bank loans
Lease liability2
BBSY+1.30% 31 Jan 2020
Various
Various
Consolidated
2019
$’000
2018
$’000
8,591
10,080
1,620
2,546
10,211
12,626
Consolidated
2019
$’000
2018
$’000
13,500
969
155
14,624
-
1,826
144
1,970
-
43
43
10,000
53
10,053
1 Secured by a fixed and floating charge (mortgage debenture) over all assets and uncalled
capital.
2 Secured by the assets leased.
44
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 15: Financing facilities
At the reporting date, the consolidated entity’s financing are as follows.
(i) Bank overdraft
Facilities available
Facilities used
Facilities unused
(ii) Bank loan (multi-option)
Facilities available
Facilities used
Facilities unused
(ii) Equipment finance
Facilities available
Facilities used
Facilities unused
Consolidated
2019
$’000
2,500
969
1,531
16,000
13,500
2,500
-
-
-
2018
$’000
2,500
1,826
674
20,000
10,000
10,000
1,000
-
1,000
On 6 August 2018 the Group entered a long-term borrowing facility arrangement with its financiers.
The facilities comprised of $2.5 million bank overdraft, $16 million multi-option long-term loan facility
comprising a cash advance and equipment finance facility and $0.3 million equipment finance facility
for specified capital expenditure items. From September 2019 the facility limit of the multi-option long-
term loan facility is permanently reduced by $0.75 million per quarter until the maturity date of the
facility on 31 January 2020. The facilities are subject to various financial covenants related to the
Group’s financial performance and position
In December 2018, the Group advised its lender that continuing unfavourable trading conditions had
impacted operating profits and it was likely the Group would fail its Gearing Ratio Covenant in the
December 2018 quarter. On 27 December 2018 the lender issued a letter of forbearance, agreeing
to waive the measurement of this covenant for the 31 December 2018 quarter on the condition that
the multi option loan facility became repayable on demand and an unused $0.3 million equipment
financing facility was cancelled.
On 31 May 2019, the Group commenced a competitive process to refinance with an alternative
lender with a view to transfer out of the facility with our current lender. The process was completed
successfully and a new finance agreement has been signed with a new lender effective 16 August
2019. The total facility is $23.5 million comprising of Tranche A $15 million to be drawn-down in full
and Tranche B of $8.5 million to be drawn down to meet the needs of the business. Tranche B
includes a $3.5 million limit exclusive for capitalised interest, if any. The term of the facility is for
three years with first drawdown to be executed by 31 August 2019.
As at the date of this report the Group’s facilities comprise:
(i) Long term loan – Tranche A
Facilities available
Facilities used
Facilities unused
15,000
15,000
-
45
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(ii) Working capital loan – Tranche B
Facilities available
Facilities used
Facilities unused
Note 16: Provisions
Current
Employee benefits
Annual leave
Long service leave
Non-current
Employee benefits
Long service leave benefits
Total employee benefits provisions
Note 17: Contributed Equity
Issued and paid up capital
55,180,175 (2018: 55,180,175) Ordinary shares fully paid
Each share is entitled to 1 vote per share
(a)
Capital management
8,500
2,860
5,640
Consolidated
2019
$’000
2018
$’000
1,049
889
1,938
1,147
790
1,937
201
230
2,139
2,167
Consolidated
2019
$’000
2018
$’000
29,578
29,578
29,578
29,578
The Board reviews the capital structure on an ongoing basis. The Group’s objective is to maintain
an optimal capital structure which seeks to reduce the cost of capital and safeguard the Group’s
ability to continue as a going concern, so that they can continue to provide returns for shareholders
and benefits for other stakeholders. In order to maintain or adjust the capital structure the Group
may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue
new shares.
(b)
Dividends
During the year ended 30 June 2019 no dividends were paid (2018: Nil)
Note 18: (Loss)/Earnings per share
The following reflects the income and share data used in calculations of basic and diluted
(loss)/earnings per share computations:
Net (loss) / profit from continuing operations
46
Consolidated
2019
$’000
(3,858)
2018
$’000
503
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Weighted average
Weighted average number of ordinary shares used in
calculating basic (loss)/earnings per share
Weighted average number of shares used to calculate
diluted (loss)/earnings per share
Note 19: Cash Flow Information
2019
No. of shares
2018
No. of shares
55,180,175
55,180,175
55,180,175
55,180,175
Consolidated
2019
$’000
2018
$’000
(a) Reconciliation of cash flow from operations with profit
after tax:
(Loss)/profit from ordinary activities after tax
(3,858)
503
Non-cash items
Depreciation
Impairment
Flock amortisation
Loss on disposal of property, plant and equipment
Non-cash movement on loan/lease
Changes in operating assets and liabilities net of effects
from acquisition of businesses:
(Increase) / decrease in trade and other receivables
(Increase) / decrease in inventory
(Increase) / decrease in biological assets
(Increase) / decrease in current tax receivable
(Increase) / decrease in deferred tax asset
(Increase) / decrease in other assets
Increase / (decrease) in trade and other creditors
Increase / (decrease) in employee entitlements
Increase / (decrease) in current tax liability
Net cash flow from operating activities
(b) Reconciliation of cash and cash equivalents for the
purposes of the Consolidated Statement of Cash Flows
Cash at bank
Bank overdraft
47
4,136
1,542
12,096
-
36
152
2,061
(12,202)
805
(1,466)
953
(2,415)
(28)
-
1,812
3,762
-
11,094
3
22
980
(2,231)
(11,923)
(805)
(68)
o(314)
630
(33)
(1,115)
505
185
(969)
(784)
7
(1,826)
(1,819)
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 19: Cash Flow Information (continued)
(c) Reconciliation of liabilities arising from financing activities
2019
Non-Cash Changes
New
leases-
other
New leases-
arising from
business
combination
$’000
As at
30 June
2019
$’000
$’000
-
-
-
-
165
165
-
37
37
-
27
27
13,500
198
13,698
10,000
197
10,197
As at
1 July
Financing
cash
flows
Operating
cash flows
- interest
paid
$’000 $’000
$’000
10,000
197
10,197
-
-
-
3500
(36)
3,464
Bank loans
Finance leases
Total liabilities from
financing activities
2018
Bank loans
Finance leases
Total liabilities from
financing activities
-
10,000
332
332
(322)
9,678
-
(5)
(5)
48
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 20: Commitments
(a)
Operating leases (non-cancellable)
The property leases are non-cancellable leases with terms varying from one to eleven years, with rent
payable monthly in advance. Contingent rental provisions within the lease agreements require the
minimum lease payments shall be increased with reference to the CPI or market.
Minimum lease payments
Not later than one year
Later than one year and not later than five years
Later than five years
Aggregate lease expenditure contracted for at reporting date
Consolidated
2019
$’000
2018
$’000
4,539
12,501
2,120
19,160
4,050
12,339
3,404
19,793
(b)
Finance leases
The Group has finance leases and hire purchase contracts for various items of plant and machinery.
The Group’s obligations under finance leases are secured by the lessor’s title to the leased assets.
Future minimum lease payments under finance leases and hire purchase contracts, together with the
present value of the net minimum lease payments are, as follows:
Consolidated
2019
$’000
2018
$’000
Minimum
payment
Present
value of
payments
Minimum
payments
Present
value of
payments
Within one year
After one year but not more than
five years
More than five years
Total minimum lease payments
Less amounts representing
finance charges
Present value of minimum lease
payments
Recognised in the financial statements:
- Current liability
- Non-current liability
Total
155
43
-
198
(5)
193
49
154
39
-
193
-
193
144
53
-
197
(31)
166
119
47
-
166
-
166
Consolidated
2019
$’000
2018
$’000
155
43
198
144
53
197
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 20: Commitments (continued)
(c)
Farm cost commitments
Farm commitments relate to commitments for flock replenishment and other farm operating
expenditure commitments
Farm cost commitments
Note 21: Controlled Entities
Consolidated
2019
$’000
4,372
2018
$’000
3,054
The consolidated financial statements include the financial statements of Farm Pride Foods Limited
and its controlled entities listed below:
List of companies in the group
Parent entity:
Farm Pride Foods Limited
Country of
incorporation
Percentage owned
2019
2018
Australia
100%
100%
Controlled entities of Farm Pride Foods Limited
Big Country Products Pty Ltd
Farm Pride Property Pty Ltd
Mooroopna Farm Trading Pty Ltd
Farm Pride North Pty Ltd
Carton Packaging Pty Ltd
Australia
Australia
Australia
Australia
Australia
Note 22: Related party disclosures
(a) Parent entity and equity interests in related parties
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
The parent entity of the Group is Farm Pride Foods Limited, a listed public company, incorporated
in Australia.
Details of the percentage of ordinary share held in subsidiaries are disclosed in Note 21.
(b) Key management personnel
Disclosures relating to key management personnel are set out in the Directors’ report.
50
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 22: Related party disclosures (continued)
(c) Key management personnel compensation
The aggregate compensation of the key management personnel of the Group is set out below:
Short-term employee benefits
Long term employee benefits
Post-employment benefits
Consolidated
2019
$’000
2018
$’000
656
-
41
697
526
7
28
561
Detailed remuneration disclosures are provided in the Remuneration Report on page 10.
(d) Transactions with directors and director-related entities
The value of transactions (inclusive of GST) and amounts receivable / (payable) between Directors and
their related entities and Farm Pride Foods Limited and its controlled entities.
Director related entities1
Transaction
Revenue
Expenditure
2019
$’000
2018
$’000
2019
$’000
2018
$’000
Balance
Receivable /
(Payable)
2019
$’000
2018
$’000
AAA Egg Company Pty Ltd
Purchases
(P. Bell / M. Ward)
Specialised Breeders Australia Pty
Ltd (P. Bell)
Purchases
-
-
-
9
46
(1)
(2)
234
332
643
1
(43)
Days Eggs Pty Ltd
(P. Bell)
Hy-line Australia Pty Ltd
(P. Bell)
Pure Foods Eggs Pty Ltd
(P. Bell)
West Coast Eggs Pty Ltd
(P. Bell / M. Ward)
Egg supply /
Purchases
Purchases /
Packaging
sales
Egg sales /
Purchases
Egg sales /
Purchases
158
180
87
365
18
(2)
-
-
3,230
3,486
(437)
(402)
23
30
90
296
8
(10)
877
1,116
909
245
127
366
Lohmann Layers Australia Pty Ltd
Purchases
-
-
136
162
-
-
(P. Bell)
1 Messrs. Bell and Ward through their related entities provide birds, eggs and egg products to and acquire eggs, egg product and
packaging from Farm Pride Foods Limited and its controlled entities. Director’s administrative expenses are reimbursed at cost.
These transactions are on normal trading terms and conditions.
51
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 23: Parent entity information
Information relating to Farm Pride Foods Limited:
Summarised statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Total equity of the Parent comprises of the following:
Share capital
Retained earnings
Total shareholder’s equity
Summarised statement of comprehensive income
(Loss)/profit of the parent entity
Total comprehensive (loss)/profit of the parent entity
2019
$’000
22,340
70,302
13,274
25,918
29,578
14,806
44,384
(3,319)
(3,319)
2018
$’000
26,003
73,952
16,083
26,249
29,578
18,125
47,703
556
556
Farm Pride Foods Limited as parent has provided security over the loans of its subsidiaries by a
fixed and floating charge (see note 14).
Note 24: Auditor’s remuneration
Audit and other assurance services
Audit and review of the financial report of the entity and
any other entity in the consolidated entity
Other services
Debt advisory services
Taxation services
Consolidated Entity
2019
$
2018
$
138,000
124,500
100,000
12,000
250,000
-
12,000
136,500
Note 25: Business Combinations
There were no business combinations during the period ended 30 June 2019
(a) Acquisition of Darling Downs Fresh Eggs in 2018
On 6 November 2017, the Company acquired the business and associated assets of Darling Downs
Fresh Eggs from Clearmedal Pty Ltd (Administrators Appointed) (‘Darling Downs Fresh Eggs’).
Darling Downs Fresh Eggs is based in Queensland.
52
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 25: Business Combinations (continued)
Identifiable assets acquired and liabilities assumed
The fair value of the identifiable assets and liabilities of Darling Downs Fresh Eggs at the date of
acquisition were:
Assets
Inventories
Property, Plant and equipment
Total assets
Liabilities
Borrowings
Deferred tax liability
Total liabilities
Total identifiable net assets at fair value (i)
Purchase consideration transferred
Net cash outflow on acquisition of businesses
Purchase consideration paid in cash
$’000
116
6,708
6,824
165
43
208
6,616
6,616
6,616
6,616
(i) The initial accounting was provisionally determined at 30 June 2018 and there has been no
subsequent fair value adjustments through to 30 June 2019 in the post-acquisition period. As at
30 June 2018 the valuation of property, plant and equipment was to be finalised. Any changes to
the fair value of the identifiable assets and liabilities would have result in any residual amount
being recognised as goodwill or a gain on acquisition. In accordance with the requirements of
AASB 3 Business Combinations the consolidated entity has 12 months to finalise its acquisition
accounting
From the date of acquisition, Darling Downs Fresh Eggs contributed nil revenue and nil to profit
before tax of the Group.
From the date of acquisition, the Group has undertaken various activities including the upgrade of the
site to meet the Group’s production standards.
It is impractical to measure the contribution of Darling Downs Fresh Eggs to the revenue and profit
before tax of the Group if the acquisition had taken place at the beginning of the year (1 July 2017) as
the business was not operational.
Transaction costs of $0.435m have been recognised within other expenses in the 2018 Consolidated
Statement of Profit or Loss and Other Comprehensive Income and recognised within operating cash
flows in Consolidated Statement of Cash Flows.
53
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 26: Subsequent Events
On 31 May 2019, the Group commenced a competitive process to refinance with an alternative
lender with a view to transfer out of the facility with our current lenders. The process was completed
successfully and a new finance agreement has been signed with a new lender effective 16 August
2019. The total facility is $23.5 million comprising of Tranche A $15 million to be drawn-down in full
and Tranche B of $8.5 million to be drawn down to meet the needs of the business. Tranche B
includes a $3.5 million limit exclusive for capitalised interest, if any. The term of the facility is for
three years with first drawdown to be executed by 31 August 2019.
There are no other matters or circumstances which have arisen since 30 June 2019 that have
significantly affected or may significantly affect the operations of the Group, the results of those
operations or the state of affairs of the Group in future financial periods.
54
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
Directors’ Declaration
The Directors declare that the financial statements and notes set out on pages 17 to 54 in
accordance with the Corporations Act 2001:
(a) Comply with Australian Accounting Standards and the Corporations Regulation 2001,
and other mandatory professional reporting requirements;
(b) As stated in Note 1(a) the consolidated financial statements also comply with
International Financial Reporting Standards and;
(c) Give a true and fair view of the financial position of the consolidated entity as at 30
June 2019 and of its performance for the year ended on that date.
In the Directors’ opinion there are reasonable grounds to believe that Farm Pride Foods Limited
will be able to pay its debts as and when they become due and payable.
This declaration has been made after receiving the declarations required to be made by the
Chief Executive Officer and Chief Financial Officer to the Directors in accordance with sections
295A of the Corporations Act 2001 for the financial year ending 30 June 2019.
This declaration is made in accordance with a resolution of the Directors.
Director
29 August 2019
Melbourne
55
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent Auditor's Report to the Members of Farm Pride Foods Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Farm Pride Foods Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2019, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors'
declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019
and of its consolidated financial performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
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 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 and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Valuation of flock assets
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 of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
A member firm of Ernst & Young Global Limited
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57
Going concern
Why significant
How our audit addressed the key audit matter
As at 30 June 2019 current liabilities of
$26.7 million exceed current assets of
In assessing the Group’s going concern
determination our audit procedures included the
$22.3 million by $4.4 million. The Group’s
following:
borrowings under its existing debt facilities at 30
June 2019 are classified as current liabilities.
On 16 August 2019 the Group refinanced its
► We considered the Group’s access to the long-
term funding facilities as disclosed in Note 15
to the financial statements, considering the
borrowing facilities as disclosed in Note 1(b) and
limits of the new funding facilities entered into
Note 15 to the financial statements.
on 16 August 2019, and the Group’s
compliance with the financial covenant in the
The Group’s determination of going concern
involves complex judgements in the determination
forecast period.
of forecasts which include a range of assumptions
► We analysed the key assumptions in the
that will be impacted by future performance and
Group’s cash flow forecasts, such as expected
market conditions.
The assessment of the Group’s going concern
determination was considered a key audit matter
given the complex judgements and estimates
involved.
cash inflows from the sale of shell egg and egg
product and cash outflows from purchases of
hens, feed costs and other operating and
capital expenditure compared to historical
operating performance, historic capital
expenditure profile, future commitments, and
market data.
► We conducted sensitivity analyses to ascertain
the impact of reasonably possible changes to
key assumptions on the available headroom
including the ability to defer and or not spend
discretionary capital expenditure.
► We assessed the adequacy of the disclosures
in Note 1(b) and Note 15 of the financial
report.
Why significant
How our audit addressed the key audit matter
The carrying value of flock assets at 30 June 2019
Our audit procedures in respect of the valuation of
was $9.1 million as disclosed in Note 10.
flock assets included the following:
The valuation of flock assets was considered a key
► We selected a sample of costs capitalised in
audit matter given the complex judgements and
flock costs during the year and agreed costs
estimates involved in relation to the estimated
to supporting documentation such as supplier
productive life of the flock and determination of
invoices. We also assessed the
the directly attributable costs of establishing the
appropriateness of the capitalisation of these
flock.
costs against the requirements of Australian
accounting standards.
► We assessed the Group’s assumptions in
respect of the productive life of the flock by
considering the age of the specific flock, the
Group’s prior experience and industry studies.
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000 Australia
GPO Box 67 Melbourne VIC 3001
Tel: +61 3 9288 8000
Fax: +61 3 8650 7777
ey.com/au
Independent Auditor's Report to the Members of Farm Pride Foods Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Farm Pride Foods Limited (the Company) and its subsidiaries
(collectively the Group), which comprises the consolidated statement of financial position as at
30 June 2019, the consolidated statement of comprehensive income, consolidated statement of
changes in equity and consolidated statement of cash flows for the year then ended, notes to the
financial statements, including a summary of significant accounting policies, and the directors'
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
(a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2019
and of its consolidated financial performance for the year ended on that date; and
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
declaration.
Act 2001, including:
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 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 and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (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.
for our opinion.
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 of the current year. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, but we do not provide
a separate opinion on these matters. For each matter below, our description of how our audit
addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the
Financial Report section of our report, including in relation to these matters. Accordingly, our audit
included the performance of procedures designed to respond to our assessment of the risks of
material misstatement of the financial report. The results of our audit procedures, including the
procedures performed to address the matters below, provide the basis for our audit opinion on the
accompanying financial report.
Going concern
Why significant
As at 30 June 2019 current liabilities of
$26.7 million exceed current assets of
$22.3 million by $4.4 million. The Group’s
borrowings under its existing debt facilities at 30
June 2019 are classified as current liabilities.
On 16 August 2019 the Group refinanced its
borrowing facilities as disclosed in Note 1(b) and
Note 15 to the financial statements.
The Group’s determination of going concern
involves complex judgements in the determination
of forecasts which include a range of assumptions
that will be impacted by future performance and
market conditions.
The assessment of the Group’s going concern
determination was considered a key audit matter
given the complex judgements and estimates
involved.
How our audit addressed the key audit matter
In assessing the Group’s going concern
determination our audit procedures included the
following:
► We considered the Group’s access to the long-
term funding facilities as disclosed in Note 15
to the financial statements, considering the
limits of the new funding facilities entered into
on 16 August 2019, and the Group’s
compliance with the financial covenant in the
forecast period.
► We analysed the key assumptions in the
Group’s cash flow forecasts, such as expected
cash inflows from the sale of shell egg and egg
product and cash outflows from purchases of
hens, feed costs and other operating and
capital expenditure compared to historical
operating performance, historic capital
expenditure profile, future commitments, and
market data.
► We conducted sensitivity analyses to ascertain
the impact of reasonably possible changes to
key assumptions on the available headroom
including the ability to defer and or not spend
discretionary capital expenditure.
► We assessed the adequacy of the disclosures
in Note 1(b) and Note 15 of the financial
report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
Valuation of flock assets
Why significant
How our audit addressed the key audit matter
The carrying value of flock assets at 30 June 2019
was $9.1 million as disclosed in Note 10.
Our audit procedures in respect of the valuation of
flock assets included the following:
The valuation of flock assets was considered a key
audit matter given the complex judgements and
estimates involved in relation to the estimated
productive life of the flock and determination of
the directly attributable costs of establishing the
flock.
► We selected a sample of costs capitalised in
flock costs during the year and agreed costs
to supporting documentation such as supplier
invoices. We also assessed the
appropriateness of the capitalisation of these
costs against the requirements of Australian
accounting standards.
► We assessed the Group’s assumptions in
respect of the productive life of the flock by
considering the age of the specific flock, the
Group’s prior experience and industry studies.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
56
57
Impairment of non-current assets
Net realisable value of inventories
Why significant
How our audit addressed the key audit matter
Why significant
How our audit addressed the key audit matter
Property, plant and equipment of $45.2 million as
disclosed in Note 12 represents 64% of total
assets.
As required by Australian Accounting Standards,
the Group assesses at the end of each reporting
period whether there is any indication that an
asset may be impaired.
The Group recorded an impairment charge during
the financial year relating to land and buildings of
$1.5 million as disclosed in Note 12.
The carrying value of property, plant and
equipment (“PPE”) was a key audit matter due to
the significance of these balances, the complex
judgements in the impairment assessment process
such as forecast egg prices and feed cost pricing
that are affected by future market or economic
conditions.
The Group’s disclosures are included in Note 12,
which specifically explain the key operating
assumptions used and sensitivity of changes in the
key assumptions which could give rise to an
impairment loss or impairment reversal of the PPE
balance in the future
Our audit procedures included an evaluation of the
assumptions and methodologies utilised in the
assessment, with an emphasis on those relating to
the determination of cash generating units,
forecast cash flows, growth rates, discount rates,
comparative industry valuation multiples and
other market evidence.
In respect of the Group’s cash flow forecasts we:
► Assessed key assumptions such as forecast
shell egg, egg product and feed prices in
comparison to external independent data.
► Assessed the Group’s results in comparison to
historical forecasts to assess forecast
accuracy.
► Compared future cash flows to board
approved budgets.
► Assessed the Group’s assumptions for long
term growth rates in comparison to economic
and industry forecasts.
► Assessed the adequacy of capital expenditure
forecasts.
► Assessed discount rates through comparing
the cost of capital for the Group with
comparable businesses.
► Considered the EBITDA multiples against
comparable companies as a valuation
crosscheck.
► Tested the mathematical accuracy of the
discounted cash flow model.
We performed sensitivity analysis in respect of the
assumptions noted above, which were considered
to have the most significant impact on carrying
values, to ascertain the extent of changes in those
assumptions which either individually or
collectively would be required for the PPE to be
impaired. We assessed the likelihood of these
changes in assumptions arising.
We also considered the adequacy of the financial
report disclosures regarding the impairment
testing approach, key assumptions and sensitivity
analysis as disclosed in Note 12.
As at 30 June 2019, the Group held $4.9 million in
Our audit procedures in respect of the valuation of
inventories representing 7.0% of total assets of the
inventories included the following:
Group.
As detailed in Note 1(g) of the financial report,
agreed the cost price of inventory recorded to
inventories are valued at the lower of cost and net
supporting documentation such as supplier
realisable value.
invoices.
► Selected a sample of inventory items and
Judgement was required to be exercised by the
► Assessed the basis for inventory provisions
Group to determine the net realisable value for
items which may be ultimately sold below cost.
These judgements include consideration of
recorded by the Group for slow moving and
surplus inventories. In doing so, we examined
the Group’s forecast sales volumes and price
expectations for future sales based on historical
assumptions.
experience.
► Considered the impact of sales subsequent to
year end on the value of inventories at
balance date by comparing the actual selling
price to the carrying value of the relevant
product line.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2019 Annual Report, 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, with the exception of the Remuneration Report
and our related assurance opinion.
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, 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.
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
58
59
Impairment of non-current assets
Net realisable value of inventories
Why significant
How our audit addressed the key audit matter
Why significant
How our audit addressed the key audit matter
Property, plant and equipment of $45.2 million as
Our audit procedures included an evaluation of the
disclosed in Note 12 represents 64% of total
assumptions and methodologies utilised in the
assets.
As required by Australian Accounting Standards,
the Group assesses at the end of each reporting
period whether there is any indication that an
asset may be impaired.
The Group recorded an impairment charge during
assessment, with an emphasis on those relating to
the determination of cash generating units,
forecast cash flows, growth rates, discount rates,
comparative industry valuation multiples and
other market evidence.
In respect of the Group’s cash flow forecasts we:
the financial year relating to land and buildings of
► Assessed key assumptions such as forecast
$1.5 million as disclosed in Note 12.
The carrying value of property, plant and
shell egg, egg product and feed prices in
comparison to external independent data.
equipment (“PPE”) was a key audit matter due to
► Assessed the Group’s results in comparison to
the significance of these balances, the complex
historical forecasts to assess forecast
judgements in the impairment assessment process
accuracy.
such as forecast egg prices and feed cost pricing
that are affected by future market or economic
conditions.
► Compared future cash flows to board
approved budgets.
The Group’s disclosures are included in Note 12,
which specifically explain the key operating
assumptions used and sensitivity of changes in the
key assumptions which could give rise to an
► Assessed the Group’s assumptions for long
term growth rates in comparison to economic
and industry forecasts.
► Assessed the adequacy of capital expenditure
impairment loss or impairment reversal of the PPE
forecasts.
balance in the future
► Assessed discount rates through comparing
the cost of capital for the Group with
comparable businesses.
► Considered the EBITDA multiples against
comparable companies as a valuation
crosscheck.
► Tested the mathematical accuracy of the
discounted cash flow model.
We performed sensitivity analysis in respect of the
assumptions noted above, which were considered
to have the most significant impact on carrying
values, to ascertain the extent of changes in those
assumptions which either individually or
collectively would be required for the PPE to be
impaired. We assessed the likelihood of these
changes in assumptions arising.
We also considered the adequacy of the financial
report disclosures regarding the impairment
testing approach, key assumptions and sensitivity
analysis as disclosed in Note 12.
As at 30 June 2019, the Group held $4.9 million in
inventories representing 7.0% of total assets of the
Group.
Our audit procedures in respect of the valuation of
inventories included the following:
► Selected a sample of inventory items and
As detailed in Note 1(g) of the financial report,
inventories are valued at the lower of cost and net
realisable value.
agreed the cost price of inventory recorded to
supporting documentation such as supplier
invoices.
Judgement was required to be exercised by the
Group to determine the net realisable value for
items which may be ultimately sold below cost.
These judgements include consideration of
expectations for future sales based on historical
experience.
► Assessed the basis for inventory provisions
recorded by the Group for slow moving and
surplus inventories. In doing so, we examined
the Group’s forecast sales volumes and price
assumptions.
► Considered the impact of sales subsequent to
year end on the value of inventories at
balance date by comparing the actual selling
price to the carrying value of the relevant
product line.
Information Other than the Financial Report and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the
information included in the Company’s 2019 Annual Report, 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, with the exception of the Remuneration Report
and our related assurance opinion.
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, 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.
A member firm of Ernst & Young Global Limited
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A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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59
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating 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 this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 15 of the directors' report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Farm Pride Foods Limited for the year ended
30 June 2019, 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.
Ernst & Young
BJ Pollock
Partner
Melbourne
29 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
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61
In preparing the financial report, the directors are responsible for assessing the Group’s ability to
continue as a going concern, disclosing, as applicable, matters relating 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 this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
•
•
•
•
•
Identify and assess the risks of material misstatement of the financial report, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not
detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Group’s ability to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in
our auditor’s report to the related disclosures in the financial report or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s report. However, future events or conditions may cause the Group
to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and events
in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group audit. We remain solely
responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated to the directors, we determine those matters that were of most
significance in the audit of the financial report of the current year and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 15 of the directors' report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Farm Pride Foods Limited for the year ended
30 June 2019, 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.
Ernst & Young
BJ Pollock
Partner
Melbourne
29 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
60
61
Farm Pride Foods Limited and Controlled Entities
ASX Additional information
ASX Additional Information
Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in
this report is as follows. The information is current as at 28 August 2019.
(a)
Distribution of equity security
The number of shareholders, by size of holding, in each class of share are:
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
100,001 +
The number of shareholders holding less than a marketable parcel of
shares are:
(b)
Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
Normpat Pty Ltd
Oakmeadow Pty Ltd
Markcamp No 2 Pty Ltd
Glenmon No2 Pty Ltd
Merrill Lynch (Australia) Nominees Pty Limited
Debuscey Pty Ltd
Mr Clinton James Quay
David Ricardo Asset Management Pty Ltd
Zero Nominees Pty Ltd
Brazil Farming Pty Ltd
LZ New Century Pty Ltd
1 West Coast Eggs Pty Ltd
2
3
4
5
6
7
8
9
10
11
12
13 Mr Tomasso Montalto & Estate Late Mauro Montalto
Neweconomy Com Au Nominees Pty Limited
14
Dr Harry Hirschowitz & Mrs Fariba Yeroshalmi
15
16 Mrs Trisha Marie Verran
17 Mrs Francesca D’Alberto
18 Miss Jean Shiong Li Ho
Zenith Business Pty Ltd
19
Auxilium Capital Pty Ltd
20
62
No. of
shareholders
No. of
shares
516
997
343
308
41
330,811
2,783,430
2,543,699
8,100,379
41,421,856
819
754,862
Listed ordinary
shares held
Percentage of
ordinary
shares
27,486,302
2,064,250
2,011,772
1,071,716
1,003,057
607,740
503,710
500,000
495,804
464,244
388,106
372,196
316,861
260,938
255,295
250,000
241,994
224,000
218,499
200,000
38,936,484
49.81
3.74
3.65
1.94
1.82
1.10
0.91
0.91
0.90
0.84
0.70
0.67
0.57
0.47
0.46
0.45
0.44
0.41
0.40
0.36
70.56
Farm Pride Foods Limited and Controlled Entities
ASX Additional information
ASX Additional Information (continued)
(c)
Substantial shareholders
The names of substantial shareholders listed in the Company’s register.
West Coast Eggs Pty Ltd
27,486,302
49.81
No. held
Percentage of
ordinary shares
(d)
Voting rights
The voting rights are set out in Article Number 10 of the Company’s Articles of Association. In
summary, voting by or on behalf of members at a meeting shall be by show of hands or upon poll
exercised by one vote for each fully paid ordinary share held or proportionate to the amount paid
on each partly paid ordinary share held.
(e)
Unquoted securities
Nil share options are on issue (2018: Nil).
(f)
Stock Exchange listing
Quotation has been granted for all the ordinary shares of the Company on all members Exchanges
of the Australian Stock Exchange Limited.
Publicly accessible information
For information on corporate governance policies adopted by Farm Pride Foods Ltd refer to our
website:
www.farmpride.com.au
63
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TO BE A TRUSTED AND RESPECTED EGG GROWER AND PROCESSOR DELIVERING SUSTAINABLE VALUE FOR OUR SHAREHOLDERS, CUSTOMERS AND STAKEHOLDERS…OUR PURPOSERIDEPPROUD OF WHAT WE DORESPECT FOR OUR BUSINESS AND OTHERSINTEGRITY IS OUR FOUNDATIONDETERMINED TO SUCCEEDEXCELLENCE THROUGH DOING IT RIGHT AND DOING IT WELLWE ARE FARM…Drawing on our long heritage and experienceManaging our farm and processing assets proactively and to the highest quality and performance standardsEnsuring our farming practices are to the highest animal welfare and bio-security standardsInvesting in and developing our peopleDeveloping strong and sustainable relationships with our trading and supply partnersBeing ethical and transparent in all our activitiesWe do this by:
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TO BE A TRUSTED AND RESPECTED EGG GROWER AND PROCESSOR DELIVERING SUSTAINABLE VALUE FOR OUR SHAREHOLDERS, CUSTOMERS AND STAKEHOLDERS…OUR PURPOSERIDEPPROUD OF WHAT WE DORESPECT FOR OUR BUSINESS AND OTHERSINTEGRITY IS OUR FOUNDATIONDETERMINED TO SUCCEEDEXCELLENCE THROUGH DOING IT RIGHT AND DOING IT WELLWE ARE FARM…Drawing on our long heritage and experienceManaging our farm and processing assets proactively and to the highest quality and performance standardsEnsuring our farming practices are to the highest animal welfare and bio-security standardsInvesting in and developing our peopleDeveloping strong and sustainable relationships with our trading and supply partnersBeing ethical and transparent in all our activitiesWe do this by:
Farm Pride Foods Ltd.
ABN: 42 080 590 030
551 Chandler Rd Keysborough
VIC 3173 Australia
T: 1300 361 993
farmpride.com.au
Annual Report 2019
Proud Heritage
Positive Future
FPR0007 AR19_PFO.indd 2-3
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