Fa rm Pride F oods Lt d.
A BN: 4 2 080 590 030
551 CH A NDL ER ROA D
K E YSBOROUGH, V IC 3173
AUS T R A L I A
T: 1300 693 3 47
farmpride.com.au
Proudly Resilient
Annual Rep or t 2020
FPR0028 AR20_PFO.indd 4-1
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We are committed to exceeding
Farm Pride Foods Limited and Controlled Entities
Corporate Information
the expectations of our customers
by providing safe, compliant and
quality food products while ensuring
Farm Pride Foods Ltd.
we meet our responsibility to food
ABN 42 080 590 030
safety at all times.
Directors
Peter Bell (Non-Executive Chairman)
Malcolm Ward (Non-Executive Director)
Bruce De Lacy (Non-Executive Director)
QUALITY AND FOOD SAFETY POLICY
Management Team
Daryl Bird (CEO)
Geeta Kulkarni (CFO)
Our Food Safety Management System is an integral part of who we are and what we do. It guides us to deliver
products that are produced to consistently high standards, to meet and exceed our customer’s expectations.
Company Secretary
All our products are made in accordance with legislative requirements as set out in the latest Food Standards
Bruce De Lacy
Code of Australia & New Zealand, SQF, HACCP, ESA, Customer Standards and relevant Export Control Orders.
Registered office and principal place of business
Management Systems policies are regularly reviewed and measured against objectives to ensure continual
551 Chandler Road
compatibility with the needs of a business that operates in a challenging commercial environment.
Keysborough, Victoria 3173
(+61-3) 9798 7077
Solicitors
Gadens
Our commitment to consistently achieving high standards
Level 25 Bourke Place
of quality and food safety in all aspects of our production
600 Bourke Street
Melbourne, Victoria 3000
requires that we undertake the following:
Regularly review and audit our
Financiers
Quality and Food Safety systems
MC FP Pty Ltd
We encourage participation and
Level 18, 90 Collins Street
promotion of quality and food
Melbourne, Victoria 3000
safety responsibilities amongst all
employees and related third parties
Share Registry
Ensure and monitor continuous
training in Food Safety for all
employees
Maintain a high standard of our
Good Manufacturing Practices to
meet customer and regulatory
to nurture a culture of continuous
Computershare Registry Services Pty. Ltd.
compliance
Yarra Falls, 452 Johnston Street
improvement and food safety
Abbotsford, Victoria 3067
Continuously challenge
our Quality and Food Safety
Management System, to
identify gaps and to improve
our performance to even
higher levels of product safety
and quality
ASX: FRM
Auditors
Pitcher Partners
Level 13, 664 Collins Street
Docklands, Victoria 3008
Internet Address
www.farmpride.com.au
Farm Pride’s Management
and Staff are committed to
continuous improvement of
our operations at Farm Pride
Foods and actively drive the
organisation's mission
to be the leading supplier
and marketer of egg-based
products in Australia.
1
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23/9/20 3:55 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
Financiers
MC FP Pty Ltd
Level 18, 90 Collins Street
Melbourne, Victoria 3000
Share Registry
Computershare Registry Services Pty. Ltd.
Yarra Falls, 452 Johnston Street
Abbotsford, Victoria 3067
ASX: FRM
Auditors
Pitcher Partners
Level 13, 664 Collins Street
Docklands, Victoria 3008
Internet Address
www.farmpride.com.au
1
Farm Pride Foods Limited and Controlled Entities
Farm Pride Foods Limited and Controlled Entities
Chairman’s Report
TABLE OF CONTENTS
Chairman’s Report
Directors’ Report
Auditor’s Independence Declaration
Financial Report for the year ended 30 June 2020
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
3
5
18
19
20
21
22
23
Directors’ Declaration 59
Independent Auditor’s Report
ASX Additional Information
60
66
Chairman’s Report
The Company’s net revenue increased by 4.25% to $90.327 million (2019: $86.641 million).
Loss after tax was $2.169 million (2019: $3.858 million loss). Underlying EBITDA of $2.672 million
was up from $1.092 million in 2019.
The results reflect the continuing high feed price for much of the year, increased egg prices and
tighter supply from external supply sources.
While we indicated in last year’s report such conditions were likely to continue into FY20, we
believed that much of the impact would have subsided by the end of the first half and trading
conditions would be on a stronger footing in the second half of FY20.
Unfortunately, these unfavourable trading conditions have persisted in the second half of FY20 and
were made more difficult by the onset of COVID 19. The ensuing shutdown of the foodservice and
hospitality sectors and continuing restrictions on these industries in Victoria particularly, have had a
negative impact on our ingredient sales and margin derived from these channels in H2. The loss of
sales in these sectors has impacted year on year ingredient sales by 7%.
The increase in borrowings as at 30 June 2020 to $19.441 million (2019: $14.667 million) was
primarily applied to the purchase of capital plant and equipment associated with factory and farm
upgrades.
Net cash used in investing activities was lower in FY20 at $3.664 million (2019: $4.242 million),
demonstrating a tighter and more efficient application of capital during the year. An increase in
inventory to $6.011 million (2019: $4.858 million) was a result of lower ingredient sales due to
COVID in H2 which has been managed during this period.
Progress made
Overall, the business has made great progress during this past 12 months growing its share of
market in the supermarket channel and, despite COVID, strengthening its relationships with key
ingredient customers. The business is confident that this will result in further new business in the
near future for this important income stream. Much work has been undertaken developing our farm
network and capacity to meet the forward needs of an evolving focus on cage free eggs and to
ensure the business remains relevant in this developing market.
Capex in the past year has been focused on developing farm capacity and key infrastructure
reliability at grading and processing level as part of our 3-year plan ‘Managing for Value’. Much of
this plan focuses on improving productivity and efficiency of our assets, realising asset value where
required and necessary, and developing our people, the business IP and planning capability in order
to be a more proactive business. The last twelve months has seen the business advance its
functional and strategic management ranks to support this plan in the next two years and beyond.
Subsequent event
As we report our FY20 results we also need to update on a ‘subsequent event’ which has been
recently advised and reported. In August, the business was impacted by an Avian Influenza outbreak
centred on the company’s farm operations in the Lethbridge area South West of Melbourne. As we
have previously stated we operate in an agriculture-based industry which from time to time is subject
to operational risks such as drought, increased feed costs, flock disease and hen welfare concerns.
The impact is restricted to two of our farms in Lethbridge. Farm Pride operates a dispersed
geographical model for its farm operations ensuring our farms are protected from any single disease
outbreak or biosecurity breach and that any outbreak is limited to a single area of operation.
On this occasion this model has protected our other farms and operations and limited the issue to
two farms at Lethbridge.
2
3
Farm Pride Foods Limited and Controlled Entities
Farm Pride Foods Limited and Controlled Entities
Chairman’s Report
TABLE OF CONTENTS
Chairman’s Report
Directors’ Report
Auditor’s Independence Declaration
Financial Report for the year ended 30 June 2020
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 59
Independent Auditor’s Report
ASX Additional Information
3
5
18
19
20
21
22
23
60
66
Chairman’s Report
The Company’s net revenue increased by 4.25% to $90.327 million (2019: $86.641 million).
Loss after tax was $2.169 million (2019: $3.858 million loss). Underlying EBITDA of $2.672 million
was up from $1.092 million in 2019.
The results reflect the continuing high feed price for much of the year, increased egg prices and
tighter supply from external supply sources.
While we indicated in last year’s report such conditions were likely to continue into FY20, we
believed that much of the impact would have subsided by the end of the first half and trading
conditions would be on a stronger footing in the second half of FY20.
Unfortunately, these unfavourable trading conditions have persisted in the second half of FY20 and
were made more difficult by the onset of COVID 19. The ensuing shutdown of the foodservice and
hospitality sectors and continuing restrictions on these industries in Victoria particularly, have had a
negative impact on our ingredient sales and margin derived from these channels in H2. The loss of
sales in these sectors has impacted year on year ingredient sales by 7%.
The increase in borrowings as at 30 June 2020 to $19.441 million (2019: $14.667 million) was
primarily applied to the purchase of capital plant and equipment associated with factory and farm
upgrades.
Net cash used in investing activities was lower in FY20 at $3.664 million (2019: $4.242 million),
demonstrating a tighter and more efficient application of capital during the year. An increase in
inventory to $6.011 million (2019: $4.858 million) was a result of lower ingredient sales due to
COVID in H2 which has been managed during this period.
Progress made
Overall, the business has made great progress during this past 12 months growing its share of
market in the supermarket channel and, despite COVID, strengthening its relationships with key
ingredient customers. The business is confident that this will result in further new business in the
near future for this important income stream. Much work has been undertaken developing our farm
network and capacity to meet the forward needs of an evolving focus on cage free eggs and to
ensure the business remains relevant in this developing market.
Capex in the past year has been focused on developing farm capacity and key infrastructure
reliability at grading and processing level as part of our 3-year plan ‘Managing for Value’. Much of
this plan focuses on improving productivity and efficiency of our assets, realising asset value where
required and necessary, and developing our people, the business IP and planning capability in order
to be a more proactive business. The last twelve months has seen the business advance its
functional and strategic management ranks to support this plan in the next two years and beyond.
Subsequent event
As we report our FY20 results we also need to update on a ‘subsequent event’ which has been
recently advised and reported. In August, the business was impacted by an Avian Influenza outbreak
centred on the company’s farm operations in the Lethbridge area South West of Melbourne. As we
have previously stated we operate in an agriculture-based industry which from time to time is subject
to operational risks such as drought, increased feed costs, flock disease and hen welfare concerns.
The impact is restricted to two of our farms in Lethbridge. Farm Pride operates a dispersed
geographical model for its farm operations ensuring our farms are protected from any single disease
outbreak or biosecurity breach and that any outbreak is limited to a single area of operation.
On this occasion this model has protected our other farms and operations and limited the issue to
two farms at Lethbridge.
2
3
Farm Pride Foods Limited and Controlled Entities
Chairman’s Report
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Proactive response
The company took immediate proactive and precautionary steps prior to any formal detection of the
virus to ensure supply chain integrity for our customers and consumers, staff safety and to minimise
any impact on brand or business reputation. We believe these proactive decisions and the
professional manner in which Farm Pride management and staff have worked with and assisted the
authorities has helped limit the impact to volume and revenue interruption only.
The business is now focused on implementing a recovery program for the farms affected with the
view to re-establish production at these farms as quickly as possible. The company continues to
work with authorities in support of this recovery plan and to finalise compensation for the outbreak.
The company is also working with its key customers and we thank them for their continuing support
during this difficult time. As outlined under ‘Subsequent Events’, the management are also
implementing a number of initiatives to increase working capital during this time of recovery including
the sale and potential lease back of selected farming assets. The company has briefed and
continues to keep its lender updated on the plans and timetable for recovery including a range of
initiatives to support this program. The lender is supportive of the recovery plan based on the plan
outlined.
Challenging Times
In summary, a challenging year for Farm Pride Foods and the industry. At our last AGM our CEO
outlined the need for Farm Pride to implement initiatives and processes that would help buttress the
business against continuing unfavourable conditions. Certainly, we have done much of this during
the last twelve months.
The Board and management believe the underlying business operational and structural
fundamentals are now better placed and more resilient to manage and recover from the subsequent
event and return the business to an upward trajectory in the coming twelve months.
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
16 October 2020
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 (the ‘group’), for the
financial year ended 30 June 2020 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
stated.
Principal activities
The directors have been in office since the start of the year to the date of this report unless otherwise
The principal activities of the group 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 2020 was a loss of $2.169 million (2019: $3.858
million loss). Underlying earnings before interest, tax, depreciation and amortisation (“Underlying
EBITDA”) was $2.672 million (2019: $1.092 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
2020:
Statutory (loss) / profit
Add back:
- Interest (finance costs)
- Income tax (benefit) / expense
- Depreciation
- Lease adjustment AASB16
EBITDA
Significant items:
Impairment expense
Underlying EBITDA
30 June 2020
30 June 2019
$’000
(2,169)
2,291
(930)
8,069
(4,589)
2,672
-
2,672
$’000
(3,858)
738
(1,466)
4,136
-
(450)
1,542
1,092
4
5
Farm Pride Foods Limited and Controlled Entities
Chairman’s Report
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Proactive response
The company took immediate proactive and precautionary steps prior to any formal detection of the
virus to ensure supply chain integrity for our customers and consumers, staff safety and to minimise
any impact on brand or business reputation. We believe these proactive decisions and the
professional manner in which Farm Pride management and staff have worked with and assisted the
authorities has helped limit the impact to volume and revenue interruption only.
The business is now focused on implementing a recovery program for the farms affected with the
view to re-establish production at these farms as quickly as possible. The company continues to
work with authorities in support of this recovery plan and to finalise compensation for the outbreak.
The company is also working with its key customers and we thank them for their continuing support
during this difficult time. As outlined under ‘Subsequent Events’, the management are also
implementing a number of initiatives to increase working capital during this time of recovery including
the sale and potential lease back of selected farming assets. The company has briefed and
continues to keep its lender updated on the plans and timetable for recovery including a range of
initiatives to support this program. The lender is supportive of the recovery plan based on the plan
outlined.
Challenging Times
In summary, a challenging year for Farm Pride Foods and the industry. At our last AGM our CEO
outlined the need for Farm Pride to implement initiatives and processes that would help buttress the
business against continuing unfavourable conditions. Certainly, we have done much of this during
the last twelve months.
The Board and management believe the underlying business operational and structural
fundamentals are now better placed and more resilient to manage and recover from the subsequent
event and return the business to an upward trajectory in the coming twelve months.
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
16 October 2020
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 (the ‘group’), for the
financial year ended 30 June 2020 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 group 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 2020 was a loss of $2.169 million (2019: $3.858
million loss). Underlying earnings before interest, tax, depreciation and amortisation (“Underlying
EBITDA”) was $2.672 million (2019: $1.092 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
2020:
Statutory (loss) / profit
Add back:
- Interest (finance costs)
- Income tax (benefit) / expense
- Depreciation
- Lease adjustment AASB16
EBITDA
Significant items:
Impairment expense
Underlying EBITDA
30 June 2020
$’000
30 June 2019
$’000
(2,169)
(3,858)
2,291
(930)
8,069
(4,589)
2,672
-
2,672
738
(1,466)
4,136
-
(450)
1,542
1,092
4
5
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
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 16 October 2020.
Significant changes in the state of affairs
There have been no significant changes in the group’s state of affairs during the financial year, other
than as disclosed in this report.
Subsequent events
On 6 August 2020, Agriculture Victoria confirmed that the Lethbridge facility had tested positive for the H7N7
Avian Influenza virus. On 25 August 2020, a second farm leased and operated by the company, also
located in the Lethbridge area, tested positive to H7N7. To control the spread of Avian Influenza, the farms
(consisting of a total of 380,000 layers hens) were depopulated with the process completed in the month of
August 2020. This represents 33% of the productive layer capacity of the business. The impact over the
balance of FY21 is expected to be a revenue loss of $18 million. Agriculture Victoria is working with the
business on compensation for loss of hens, poultry products (eggs), feed and any other eligible assets lost
or disposed as part of the disease control order.
As a result, the company has implemented a number of remediation strategies to facilitate a return to
full production as soon as possible including:
- Claiming and receiving compensation in respect of the birds lost.
- Taking immediate steps to restore lost bird capacity.
- Restoration of the affected farms in line with applicable regulations to replace production. This
is expected to occur in the second half of the 2021 financial year.
- The sale and or sale & leaseback of company owned farms to provide additional funds.
- Keeping our financiers briefed on the company’s progress and strategies to return to full
production.
Environmental regulation
The group’s operations are not subject to any significant environmental, Commonwealth or State
regulations or laws. The group 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.
Peter Bell
until 22 November 2018)
(Non-executive Chairman - Appointed 30 May 2008, Member of the Audit Committee
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 Days Eggs 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
(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
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
17 November 2010.
Bruce De Lacy
2018)
Officer.
Directors’ meetings
Board of Directors
Audit Committee
Eligible to
attend
Attended
Attended
Eligible to
attend
Peter Bell
Malcolm Ward
Bruce De Lacy
15
15
15
14
15
15
-
9
9
9*
9
9
* Mr Bell attended meetings by invitation.
6
7
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
For further discussion of the review and results of operations of the group reference should be made to
Operating and financial review (continued)
the Chairman’s Report dated 16 October 2020.
Significant changes in the state of affairs
than as disclosed in this report.
Subsequent events
There have been no significant changes in the group’s state of affairs during the financial year, other
On 6 August 2020, Agriculture Victoria confirmed that the Lethbridge facility had tested positive for the H7N7
Avian Influenza virus. On 25 August 2020, a second farm leased and operated by the company, also
located in the Lethbridge area, tested positive to H7N7. To control the spread of Avian Influenza, the farms
(consisting of a total of 380,000 layers hens) were depopulated with the process completed in the month of
August 2020. This represents 33% of the productive layer capacity of the business. The impact over the
balance of FY21 is expected to be a revenue loss of $18 million. Agriculture Victoria is working with the
business on compensation for loss of hens, poultry products (eggs), feed and any other eligible assets lost
or disposed as part of the disease control order.
As a result, the company has implemented a number of remediation strategies to facilitate a return to
full production as soon as possible including:
- Claiming and receiving compensation in respect of the birds lost.
- Taking immediate steps to restore lost bird capacity.
- Restoration of the affected farms in line with applicable regulations to replace production. This
is expected to occur in the second half of the 2021 financial year.
- The sale and or sale & leaseback of company owned farms to provide additional funds.
- Keeping our financiers briefed on the company’s progress and strategies to return to full
production.
Environmental regulation
The group’s operations are not subject to any significant environmental, Commonwealth or State
regulations or laws. The group 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.
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 Days Eggs 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.
Directors’ meetings
Board of Directors
Audit Committee
Eligible to
attend
Attended
Eligible to
attend
Attended
Peter Bell
Malcolm Ward
Bruce De Lacy
15
15
15
14
15
15
-
9
9
9*
9
9
* Mr Bell attended meetings by invitation.
6
7
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Directors’ interests in shares
Non-audit services
Directors’ relevant interests in shares of Farm Pride Foods Limited 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
-
-
-
Messrs. Peter Bell and Malcolm Ward have an indirect interest in the 27,486,302 shares held by West
Coast Eggs Pty Ltd (2019: 27,486,302 shares) and the 1,000 shares held by Southern Egg Pty Ltd
(2019: 1,000).
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.
Taxation services
Debt advisory services
Proceedings on behalf of the company
No person has applied for leave of Court to bring proceedings on behalf of Farm Pride Foods Limited or
any of its subsidiaries.
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
No indemnities have been given or insurance premiums paid during or since the end of the financial
year for the auditors of the Group.
Non-audit services are approved by resolution of the audit committee and approval is provided in
writing to the board of directors. Non-audit services were provided by the auditors of entities in the
consolidated group during the year, namely Pitcher Partners (Melbourne), network firms of Pitcher
Partners, and other non-related audit firms, as detailed below. The directors are satisfied that the
provision of the non-audit services during the year by the auditor is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001 for the following
reasons:
all non-audit services were subject to the corporate governance procedures adopted by Farm
Pride Foods Ltd and have been reviewed and approved by the Audit Committee to ensure they do
not impact on the integrity and objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did
not involve reviewing or auditing the auditor’s own work, acting in a management or decision
making capacity for Farm Pride Foods Ltd or any of its related entities, acting as an advocate for
Farm Pride Foods Ltd or any of its related entities, or jointly sharing risks and rewards in relation
to the operations or activities of Farm Pride Foods Ltd or any of its related entities.
Amounts paid and payable to Pitcher Partners (Melbourne) (2019: Ernst & Young Australia) for non-
audit services:
2020
$
-
14,000
14,000
2019
$
12,000
100,000
112,000
Services for the FY19 period were performed by Ernst & Young.
Services for the FY20 period have been performed by Pitcher Partners (Melbourne).
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).
8
9
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Directors’ interests in shares
Non-audit services
Peter Bell
Malcolm Ward
Bruce De Lacy
(2019: 1,000).
Directors’ relevant interests in shares of Farm Pride Foods Limited 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.
2,314,250
2,031,772
195,502
-
-
-
Messrs. Peter Bell and Malcolm Ward have an indirect interest in the 27,486,302 shares held by West
Coast Eggs Pty Ltd (2019: 27,486,302 shares) and the 1,000 shares held by Southern Egg Pty Ltd
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.
Proceedings on behalf of the company
any of its subsidiaries.
Auditor’s independence declaration
No person has applied for leave of Court to bring proceedings on behalf of Farm Pride Foods Limited or
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
No indemnities have been given or insurance premiums paid during or since the end of the financial
year for the auditors of the Group.
Non-audit services are approved by resolution of the audit committee and approval is provided in
writing to the board of directors. Non-audit services were provided by the auditors of entities in the
consolidated group during the year, namely Pitcher Partners (Melbourne), network firms of Pitcher
Partners, and other non-related audit firms, as detailed below. The directors are satisfied that the
provision of the non-audit services during the year by the auditor is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001 for the following
reasons:
all non-audit services were subject to the corporate governance procedures adopted by Farm
Pride Foods Ltd and have been reviewed and approved by the Audit Committee to ensure they do
not impact on the integrity and objectivity of the auditor; and
the non-audit services provided do not undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional Accountants, as they did
not involve reviewing or auditing the auditor’s own work, acting in a management or decision
making capacity for Farm Pride Foods Ltd or any of its related entities, acting as an advocate for
Farm Pride Foods Ltd or any of its related entities, or jointly sharing risks and rewards in relation
to the operations or activities of Farm Pride Foods Ltd or any of its related entities.
Amounts paid and payable to Pitcher Partners (Melbourne) (2019: Ernst & Young Australia) for non-
audit services:
Taxation services
Debt advisory services
2020
$
14,000
-
14,000
2019
$
12,000
100,000
112,000
Services for the FY19 period were performed by Ernst & Young.
Services for the FY20 period have been performed by Pitcher Partners (Melbourne).
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).
8
9
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Remuneration Report (Audited)
The directors present the group’s 2020 remuneration report which details the remuneration
information for Farm Pride Foods Limited’s 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, Pitcher Partners.
(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
Position
Term as KMP
Non-Executive Directors
Peter Bell
Malcolm Ward
Bruce De Lacy
Senior Executives
Daryl Bird
Geeta Kulkarni
Non-executive Chairman
Non-executive Director
Non-executive Director, Company secretary
Full financial year
Full financial year
Full financial year
Group Chief Executive Officer
Group Chief Financial Officer
Full financial year
Full financial year
(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:
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 2020, the group did not engage external remuneration consultants.
(d)
Non-Executive Director Remuneration
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
Objective
shareholders.
Structure
payments.
directors.
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
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
The remuneration of non-executive directors for the year ended 30 June 2020 is detailed in the table
titled KMP Remuneration on page 14 (the ‘Remuneration Table’).
(e)
Executive Director Remuneration
Executive directors are paid for their services as part of their employment contracts.
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.
10
11
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Remuneration Report (Audited)
The directors present the group’s 2020 remuneration report which details the remuneration
information for Farm Pride Foods Limited’s 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, Pitcher Partners.
(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
Position
Term as KMP
Non-Executive Directors
Peter Bell
Malcolm Ward
Bruce De Lacy
Senior Executives
Daryl Bird
Geeta Kulkarni
(b)
Remuneration policy
Non-executive Chairman
Non-executive Director
Full financial year
Full financial year
Non-executive Director, Company secretary
Full financial year
Group Chief Executive Officer
Group Chief Financial Officer
Full financial year
Full financial year
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.
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 2020, 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 2020 is detailed in the table
titled KMP Remuneration on page 14 (the ‘Remuneration Table’).
(e)
Executive Director Remuneration
Executive directors are paid for their services as part of their employment contracts.
10
11
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.
payable at the discretion of the board of directors.
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
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
For executives, the group provides a remuneration package that incorporates annual cash bonuses,
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.
12
13
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
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.
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.
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
–
–
–
–
–
Structure
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.
12
13
3
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’
R
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p
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r
t
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Remuneration Report (continued)
(h)
Shareholdings of KMP
Peter Bell
Malcolm Ward
Bruce De Lacy
2,314,250
2,031,772
195,502
4,541,524
(i)
Other transactions with KMP
Balance
Received as
Options
1 July 2019
remuneration
exercised
Balance
30 June 2020
Other
On market
purchases/
(sales)
-
-
-
-
-
-
-
-
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 (2019: 27,486,302 shares) and the 1,000 shares held by Southern Egg Pty Ltd (2019: 1,000).
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
Balance
Receivable /
(Payable)
2020
$’000
2019
$’000
-
(1)
2020
$’000
2019
$’000
2020
$’000
10
2019
$’000
9
107
332
(83)
195
158
420
87
(4)
-
-
-
-
-
-
AAA Egg Company Pty Ltd
Purchases
(P. Bell / M. Ward)
Specialised Breeders
Australia Pty Ltd 2 (P. Bell)
Days Eggs Pty Ltd
Purchases
Egg supply /
Purchases
Purchases /
Packaging
sales
Egg sales /
Purchases
Egg sales /
Purchases
Hy-line Australia Pty Ltd 2
5,319
3,230
(850)
(437)
Pure Foods Eggs Pty Ltd
27
23
90
3
West Coast Eggs Pty Ltd
(P. Bell / M. Ward)
776
877
154
909
71
127
Lohmann Layers Australia
Purchases
136
-
(P. Bell)
(P. Bell)
(P. Bell)
Pty Ltd 2
(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. These transactions are on normal trading terms and conditions. Director’s administrative
expenses are reimbursed at cost.
effective 31 Oct 2019.
2 Mr Bell resigned as director of Specialised Breeders Australia Pty Ltd, Hy-Line Australia Pty Ltd and Lohmann Layers Australia Pty Ltd
Transactions in the above table represent related party transactions for the full financial year from July 19 – June 20.
1
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’
R
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p
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r
t
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Remuneration Report (continued)
(h)
Shareholdings of KMP
Balance
1 July 2019
Received as
remuneration
Options
exercised
Other
On market
purchases/
(sales)
Balance
30 June 2020
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 (2019: 27,486,302 shares) and the 1,000 shares held by Southern Egg Pty Ltd (2019: 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
Balance
Receivable /
(Payable)
2020
$’000
2019
$’000
-
(1)
2020
$’000
10
2019
$’000
9
2020
$’000
2019
$’000
-
-
-
-
107
332
(83)
195
158
420
87
(4)
1
18
-
-
5,319
3,230
(850)
(437)
27
23
-
90
3
8
776
877
154
909
71
127
-
-
-
136
-
-
AAA Egg Company Pty Ltd
Purchases
(P. Bell / M. Ward)
Specialised Breeders
Australia Pty Ltd 2 (P. Bell)
Days Eggs Pty Ltd
(P. Bell)
Hy-line Australia Pty Ltd 2
(P. Bell)
Pure Foods Eggs Pty Ltd
(P. Bell)
West Coast Eggs Pty Ltd
(P. Bell / M. Ward)
Lohmann Layers Australia
Pty Ltd 2
(P. Bell)
Purchases
Egg supply /
Purchases
Purchases /
Packaging
sales
Egg sales /
Purchases
Egg sales /
Purchases
Purchases
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.
2 Mr Bell resigned as director of Specialised Breeders Australia Pty Ltd, Hy-Line Australia Pty Ltd and Lohmann Layers Australia Pty Ltd
effective 31 Oct 2019.
Transactions in the above table represent related party transactions for the full financial year from July 19 – June 20.
15
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Voting and comments made at the company’s 2019 Annual General Meeting (AGM)
At the company’s most recent AGM, a resolution to adopt the prior year remuneration report was put to the vote and
at least 75% of ‘yes’ votes were cast for adoption of that report. No comments were made on the remuneration report
that was considered at the AGM.
This is the end of the audited remuneration report.
Signed in accordance with a resolution of the directors.
Peter Bell
Director
Melbourne
16 October 2020
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
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 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,
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.
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
2020
$’000
90,327
(3,099)
(2,169)
0.27
(3.93)
(3.93)
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
16
17
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
Voting and comments made at the company’s 2019 Annual General Meeting (AGM)
At the company’s most recent AGM, a resolution to adopt the prior year remuneration report was put to the vote and
at least 75% of ‘yes’ votes were cast for adoption of that report. No comments were made on the remuneration report
that was considered at the AGM.
This is the end of the audited remuneration report.
Signed in accordance with a resolution of the directors.
Peter Bell
Director
Melbourne
16 October 2020
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
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 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
contract:
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
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,
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.
The group’s revenue, profit before tax and earnings per share for the last five financial years is presented in the table
(k)
Revenue and Other Income
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
2020
$’000
90,327
(3,099)
(2,169)
0.27
(3.93)
(3.93)
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
16
17
FARM PRIDE FOODS LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF FARM PRIDE FOODS LIMITED
In relation to the independent audit for the year ended 30 June 2020, to the best of my knowledge and
belief there have been:
(i)
(ii)
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
No contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence
Standards).
This declaration is in respect of Farm Pride Foods Limited and its controlled entities during the year.
STEPHEN SCHONBERG
Partner
Date: 15 October 2020
PITCHER PARTNERS
Melbourne
Consolidated Statement of Profit of Loss and Other Comprehensive Income
Farm Pride Foods Limited and Controlled Entities
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 of property, plant & equipment
Finance costs
Other expenses
Income tax benefit / (expense)
(Loss)/Profit from continuing operations
(Loss)/Profit for the year
Notes
4
4
5
5
5
5
5
5
6
2020
$’000
90,234
93
90,327
1,153
(66,543)
(15,811)
(8,069)
-
(2,291)
(1,865)
2019
$’000
86,357
284
86,641
(2,061)
(62,640)
(13,989)
(4,136)
(1,542)
(738)
(6,859)
930
(2,169)
(2,169)
1,466
(3,858)
(3,858)
(Loss)/Profit before income tax
(3,099)
(5,324)
Total comprehensive (loss) / income for the period
(2,169)
(3,858)
Basic (loss)/earnings per share (cents per share)
Diluted (loss)/earnings per share (cents per share)
(3.93)
(3.93)
(6.99)
(6.99)
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
The above statement should be read in conjunction with the accompanying notes.
19
FARM PRIDE FOODS LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF FARM PRIDE FOODS LIMITED
In relation to the independent audit for the year ended 30 June 2020, to the best of my knowledge and
belief there have been:
(i)
(ii)
Standards).
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
No contraventions of APES 110 Code of Ethics for Professional Accountants (including Independence
This declaration is in respect of Farm Pride Foods Limited and its controlled entities during the year.
STEPHEN SCHONBERG
Partner
Date: 15 October 2020
PITCHER PARTNERS
Melbourne
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 of 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
2020
$’000
90,234
93
90,327
1,153
(66,543)
(15,811)
(8,069)
-
(2,291)
(1,865)
2019
$’000
86,357
284
86,641
(2,061)
(62,640)
(13,989)
(4,136)
(1,542)
(738)
(6,859)
(3,099)
(5,324)
930
(2,169)
(2,169)
1,466
(3,858)
(3,858)
Total comprehensive (loss) / income for the period
(2,169)
(3,858)
Basic (loss)/earnings per share (cents per share)
Diluted (loss)/earnings per share (cents per share)
(3.93)
(3.93)
(6.99)
(6.99)
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
The above statement should be read in conjunction with the accompanying notes.
19
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Financial Position
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Changes in Equity
Balance as at 1 July 2019
(Loss)/Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2020
Balance as at 1 July 2018
(Loss)/Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2019
Contributed
equity
$’000
29,578
Retained
earnings
$’000
Total
$’000
-
-
-
-
-
-
29,578
29,578
29,578
13,707
(2,169)
-
(2,169)
11,538
17,565
(3,858)
-
(3,858)
13,707
43,285
(2,169)
(2,169)
41,116
47,143
(3,858)
-
(3,858)
43,285
Current Assets
Cash and short-term deposits
Trade and other receivables
Inventories
Biological assets
Other current assets
Total current assets
Non-current assets
Biological assets
Deferred tax assets
Lease assets
Property, plant and equipment
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Retained earnings
Notes
8
9
10
11
10
6
13
12
14
13
15
16
15
13
16
17
2020
$’000
4,412
7,439
6,011
6,382
812
2019
$’000
185
8,203
4,858
8,688
406
25,056
22,340
3,146
3,280
15,581
45,020
67,027
399
2,350
-
45,213
47,962
92,083
70,302
13,303
4,380
-
1,983
19,666
19,441
11,648
212
31,301
50,967
41,116
29,578
11,538
41,116
10,211
-
14,624
1,938
26,773
43
-
201
244
27,017
43,285
29,578
13,707
43,285
The above statement should be read in conjunction with the accompanying notes.
The above statement should be read in conjunction with the accompanying notes.
20
21
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Financial Position
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Changes in Equity
Balance as at 1 July 2019
(Loss)/Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2020
Balance as at 1 July 2018
(Loss)/Profit for the year
Other comprehensive income
Total comprehensive income
Balance as at 30 June 2019
Contributed
equity
$’000
29,578
-
-
-
29,578
29,578
-
-
-
29,578
Retained
earnings
$’000
Total
$’000
13,707
(2,169)
-
(2,169)
11,538
17,565
(3,858)
-
(3,858)
13,707
43,285
(2,169)
(2,169)
41,116
47,143
(3,858)
-
(3,858)
43,285
Current Assets
Cash and short-term deposits
Trade and other receivables
Inventories
Biological assets
Other current assets
Total current assets
Non-current assets
Biological assets
Deferred tax assets
Lease assets
Property, plant and equipment
Total non-current assets
TOTAL ASSETS
Current liabilities
Trade and other payables
Lease liabilities
Borrowings
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Provisions
Total non-current liabilities
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Retained earnings
Notes
8
9
10
11
10
6
13
12
14
13
15
16
15
13
16
17
25,056
22,340
92,083
70,302
2020
$’000
4,412
7,439
6,011
6,382
812
3,146
3,280
15,581
45,020
67,027
13,303
4,380
-
1,983
19,666
19,441
11,648
212
31,301
50,967
41,116
29,578
11,538
41,116
2019
$’000
185
8,203
4,858
8,688
406
-
-
399
2,350
45,213
47,962
10,211
14,624
1,938
26,773
43
-
201
244
27,017
43,285
29,578
13,707
43,285
The above statement should be read in conjunction with the accompanying notes.
The above statement should be read in conjunction with the accompanying notes.
20
21
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Cash Flows
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Notes
2020
$’000
2019
$’000
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Finance costs paid
Income tax received/(paid)
Interest received
91,240
(82,069)
(2,291)
-
2
Net cash provided by operating activities
19
6,882
Cash flow from investing activities
Payment for property, plant and equipment
Net cash used in investing activities
Cash flow from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
Net cash provided by financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at end of the year
19
(3,664)
(3,664)
19,441
(13,500)
(3,963)
1,978
5,196
(784)
4,412
86,776
(85,032)
(738)
805
1
1,812
(4,242)
(4,242)
3,500
-
(35)
3,465
1,035
(1,819)
(784)
Note 1: Summary of significant accounting policies
The following is a summary of significant accounting policies adopted by the consolidated entity in the
preparation and presentation of the financial report. The accounting policies have been consistently
applied, unless otherwise stated. Farm Pride Foods Limited (the Company or parent entity) is a for
profit company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Stock Exchange.
(a) Basis of preparation of the financial report
This financial report is a general-purpose financial report, which has been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board (AASB).
The financial report has been prepared under the historical cost convention, as modified by
revaluations to fair value for certain classes of assets as described in the accounting policies.
The financial report is presented in Australian dollars and all values are rounded to the nearest
thousand ($’000), except when otherwise indicated.
The financial report was authorised for issue by the directors as at 16 October 2020.
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
(b) Going concern
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.
During the year ended 30 June 2020 the Group incurred a net loss after tax of $2.169 million (2019:
loss $3.858 million). Considering the recent outbreak of Avian Influenza at Lethbridge farm and its
short-term impact on loss of farm yield up to 33%, the directors and management have commenced
an ongoing assessment of the Group’s costs and cash commitments.
Net cash inflow from operating activities was $6.882 million (2019: $1.812 million). As at 30 June
2020 current assets of $25.056 million exceed current liabilities of $19.666 million by $5.390 million.
Borrowings of $19.441 million are classified as non-current.
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.
The above statement should be read in conjunction with the accompanying notes.
22
23
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Cash Flows
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Net cash provided by operating activities
19
6,882
Cash flow from operating activities
Receipts from customers
Payments to suppliers and employees
Finance costs paid
Income tax received/(paid)
Interest received
Cash flow from investing activities
Payment for property, plant and equipment
Net cash used in investing activities
Cash flow from financing activities
Proceeds from borrowings
Repayment of borrowings
Repayment of lease liabilities
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
Notes
2020
$’000
2019
$’000
91,240
(82,069)
(2,291)
-
2
(3,664)
(3,664)
19,441
(13,500)
(3,963)
1,978
5,196
(784)
4,412
86,776
(85,032)
(738)
805
1
1,812
(4,242)
(4,242)
3,500
-
(35)
3,465
1,035
(1,819)
(784)
Note 1: Summary of significant accounting policies
The following is a summary of significant accounting policies adopted by the consolidated entity in the
preparation and presentation of the financial report. The accounting policies have been consistently
applied, unless otherwise stated. Farm Pride Foods Limited (the Company or parent entity) is a for
profit company limited by shares incorporated in Australia whose shares are publicly traded on the
Australian Stock Exchange.
(a) Basis of preparation of the financial report
This financial report is a general-purpose financial report, which has been prepared in accordance
with the requirements of the Corporations Act 2001, Australian Accounting Standards and other
authoritative pronouncements of the Australian Accounting Standards Board (AASB).
The financial report has been prepared under the historical cost convention, as modified by
revaluations to fair value for certain classes of assets as described in the accounting policies.
The financial report is presented in Australian dollars and all values are rounded to the nearest
thousand ($’000), except when otherwise indicated.
The financial report was authorised for issue by the directors as at 16 October 2020.
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 2020 the Group incurred a net loss after tax of $2.169 million (2019:
loss $3.858 million). Considering the recent outbreak of Avian Influenza at Lethbridge farm and its
short-term impact on loss of farm yield up to 33%, the directors and management have commenced
an ongoing assessment of the Group’s costs and cash commitments.
Net cash inflow from operating activities was $6.882 million (2019: $1.812 million). As at 30 June
2020 current assets of $25.056 million exceed current liabilities of $19.666 million by $5.390 million.
Borrowings of $19.441 million are classified as non-current.
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.
The above statement should be read in conjunction with the accompanying notes.
22
23
Note 1: Summary of Significant Accounting Policies (continued)
Note 1: Summary of Significant Accounting Policies (continued)
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(b) Lease liabilities are accounted for on a similar basis to other financial liabilities, whereby interest
expense is recognised in respect of the lease liability and the carrying amount of the lease
liability is reduced to reflect the principal portion of lease payments made.
AASB 16 substantially carries forward the lessor accounting requirements of the predecessor
standard, AASB 117. Accordingly, under AASB 16 a lessor continues to classify its leases as
operating leases or finance leases subject to whether the lease transfers to the lessee substantially
all of the risks and rewards incidental to ownership of the underlying asset, and accounts for each
type of lease in a manner consistent with the current approach under AASB 117.
In accordance with the transition requirements of AASB 16, the group has elected to apply AASB 16
retrospectively to those contracts that were previously identified as leases under the predecessor
standard, with the cumulative effect, if any, of initially applying the new standard recognised as an
adjustment to opening retained earnings at the date of initial application (i.e. as at 1 July 2019).
Accordingly, comparative information has not been restated.
The group has also elected to apply the following practical expedients to the measurement of right-of-use
assets and lease liabilities in relation to those leases previously classified as operating leases under the
predecessor standard:
To recognise each right-of-use asset at the date of initial application at an amount equal to the lease
liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease
recognized in the statement of financial position immediately before the date of initial application;
To not recognise a right-of-use asset and a lease liability for leases for which the lease term ends
within 12 months of the date of initial application;
To exclude initial direct costs from the measurement of each right-of-use asset at the date of initial
To use hindsight, such as in determining the lease term if the contract contains options to extend or
application; and
terminate the lease.
The application of AASB 16 resulted in the recognition of right-of-use assets with an aggregate carrying
amount of $19,479k (referred to in these financial statements as “lease assets”) and corresponding
lease liabilities with an aggregate carrying amount of $19,479k. The weighted average incremental
borrowing rate applied in the calculation of the initial carrying amount of lease liabilities was 3%.
Avian Influenza
As announced to the market, in August 2020 approximately 33% of the company’s productive bird
capacity was lost due to Avian Influenza (Bird Flu). As a result, the company has implemented a
number of remediation strategies to facilitate a return to full production as soon as possible including:
-
-
-
-
Claiming and receiving compensation in respect of the birds lost.
Taking immediate steps to restore lost bird capacity which should be completed late in 2021
financial year.
The sale and or sale & leaseback of company owned farms to provide additional funds.
Keeping our financiers briefed on plans and strategies to return to full production. We note that
our financiers have expressed ongoing support for the Company and that there has been no
change to the existing terms of our facilities at this time. However, they continue to reserve their
rights in respect of their loan facilities, which includes classifying the facility at call. The
company believes its proposed strategy is reasonable.
Cash flow management
The Group continues to actively manage its cash flows through management of debtors and
creditors within strict terms and improving productivity across farms, grading and manufacturing.
The Group continues its focus on review and development of internal controls and governance. This
includes targeted capital expenditure to extend or 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 as at 30 June 2020 comprised a total of $23.5 million comprising
Tranche A $15 million that has been drawdown in full and Tranche B of $8.5 million drawn down by
$4.861 million. Tranche B includes $3.5 million limit exclusively for capitalised interest, if any. The
term of the facility is for three years from the date of the first drawdown on by 16 August 2019.The
Group’s financier has confirmed its support of the proposed recovery strategy.
The directors recognise that there are uncertainties regarding the forecast quantum and timing of the
major strategic initiatives described above and accordingly continue to liaise with and regularly update
the Group’s financiers.
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) New and revised accounting standards effective as at 30 June 2020
The Group has applied all new and revised Australian Accounting Standards that apply to annual
reporting periods beginning on or after 1 July 2019, including AASB 16 Leases.
AASB 16 replaces AASB 117 Leases and introduces a single lessee accounting model that requires
a lessee to recognise right-of-use assets and lease liabilities for all leases with a term of more than
12 months, unless the underlying asset is of low value. Right-of-use assets are initially measured at
cost and lease liabilities are initially measured on a present value basis. Subsequent to initial
recognition:
(a) Right-of-use assets are accounted for on a similar basis to non-financial assets, whereby
the right-of-use asset is accounted for on a cost basis unless the underlying asset is
accounted for on a revaluation basis, in which case if the underlying assist is:
(i)
(ii)
Investment property, the lessee applies the fair value model in AASB 140 Investment
Property to the fight-of-use asset; or
Property, plant or equipment, the lessee applies the revaluation model in AASB 116
Property, Plant and Equipment to all of the right-of-use assets that relate to that class of
property, plant and equipment, and
24
25
Note 1: Summary of Significant Accounting Policies (continued)
Note 1: Summary of Significant Accounting Policies (continued)
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(b) Lease liabilities are accounted for on a similar basis to other financial liabilities, whereby interest
expense is recognised in respect of the lease liability and the carrying amount of the lease
liability is reduced to reflect the principal portion of lease payments made.
AASB 16 substantially carries forward the lessor accounting requirements of the predecessor
standard, AASB 117. Accordingly, under AASB 16 a lessor continues to classify its leases as
operating leases or finance leases subject to whether the lease transfers to the lessee substantially
all of the risks and rewards incidental to ownership of the underlying asset, and accounts for each
type of lease in a manner consistent with the current approach under AASB 117.
In accordance with the transition requirements of AASB 16, the group has elected to apply AASB 16
retrospectively to those contracts that were previously identified as leases under the predecessor
standard, with the cumulative effect, if any, of initially applying the new standard recognised as an
adjustment to opening retained earnings at the date of initial application (i.e. as at 1 July 2019).
Accordingly, comparative information has not been restated.
The group has also elected to apply the following practical expedients to the measurement of right-of-use
assets and lease liabilities in relation to those leases previously classified as operating leases under the
predecessor standard:
To recognise each right-of-use asset at the date of initial application at an amount equal to the lease
liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease
recognized in the statement of financial position immediately before the date of initial application;
To not recognise a right-of-use asset and a lease liability for leases for which the lease term ends
within 12 months of the date of initial application;
To exclude initial direct costs from the measurement of each right-of-use asset at the date of initial
application; and
To use hindsight, such as in determining the lease term if the contract contains options to extend or
terminate the lease.
The application of AASB 16 resulted in the recognition of right-of-use assets with an aggregate carrying
amount of $19,479k (referred to in these financial statements as “lease assets”) and corresponding
lease liabilities with an aggregate carrying amount of $19,479k. The weighted average incremental
borrowing rate applied in the calculation of the initial carrying amount of lease liabilities was 3%.
Avian Influenza
As announced to the market, in August 2020 approximately 33% of the company’s productive bird
capacity was lost due to Avian Influenza (Bird Flu). As a result, the company has implemented a
number of remediation strategies to facilitate a return to full production as soon as possible including:
-
-
-
-
Claiming and receiving compensation in respect of the birds lost.
Taking immediate steps to restore lost bird capacity which should be completed late in 2021
financial year.
The sale and or sale & leaseback of company owned farms to provide additional funds.
Keeping our financiers briefed on plans and strategies to return to full production. We note that
our financiers have expressed ongoing support for the Company and that there has been no
change to the existing terms of our facilities at this time. However, they continue to reserve their
rights in respect of their loan facilities, which includes classifying the facility at call. The
company believes its proposed strategy is reasonable.
Cash flow management
The Group continues to actively manage its cash flows through management of debtors and
creditors within strict terms and improving productivity across farms, grading and manufacturing.
The Group continues its focus on review and development of internal controls and governance. This
includes targeted capital expenditure to extend or 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 as at 30 June 2020 comprised a total of $23.5 million comprising
Tranche A $15 million that has been drawdown in full and Tranche B of $8.5 million drawn down by
$4.861 million. Tranche B includes $3.5 million limit exclusively for capitalised interest, if any. The
term of the facility is for three years from the date of the first drawdown on by 16 August 2019.The
Group’s financier has confirmed its support of the proposed recovery strategy.
The directors recognise that there are uncertainties regarding the forecast quantum and timing of the
major strategic initiatives described above and accordingly continue to liaise with and regularly update
the Group’s financiers.
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) New and revised accounting standards effective as at 30 June 2020
The Group has applied all new and revised Australian Accounting Standards that apply to annual
reporting periods beginning on or after 1 July 2019, including AASB 16 Leases.
AASB 16 replaces AASB 117 Leases and introduces a single lessee accounting model that requires
a lessee to recognise right-of-use assets and lease liabilities for all leases with a term of more than
12 months, unless the underlying asset is of low value. Right-of-use assets are initially measured at
cost and lease liabilities are initially measured on a present value basis. Subsequent to initial
recognition:
(a) Right-of-use assets are accounted for on a similar basis to non-financial assets, whereby
the right-of-use asset is accounted for on a cost basis unless the underlying asset is
accounted for on a revaluation basis, in which case if the underlying assist is:
(i)
Investment property, the lessee applies the fair value model in AASB 140 Investment
Property to the fight-of-use asset; or
(ii)
Property, plant or equipment, the lessee applies the revaluation model in AASB 116
Property, Plant and Equipment to all of the right-of-use assets that relate to that class of
property, plant and equipment, and
24
25
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
The following is a reconciliation of non-cancellable operating lease commitments disclosed at the end of
the prior reporting period (i.e. at 30 June 2019) to the aggregate carrying amount of lease liabilities
recognised at the end of the initial application (i.e. as at 1 July 2019):
Note 1: Summary of Significant Accounting Policies (continued)
(e) Basis of consolidation
Aggregate non-cancellable operating lease commitments as at 30 June 2019
Plus: lease payments included in the measurement of lease liabilities and not
previously included in non-cancellable operating lease commitments
Less: lease payments previously included in non-cancellable lease commitments
for leases with remaining terms of less than 12 months and leases of low value
assets
Less: impact of discounting lease payments to their present value as at 1 July
2019
Carrying amount of lease liabilities recognized as at 1 July 20191
2019
$’000
19,160
1,743
-
(1,424)
19,479
1 In accordance with AASB 16, $198k of finance lease liabilities as at 30 June 2019 were reclassified to
lease liabilities on 1 July 2019.
Further details of the group’s accounting policy in relation to accounting for leases under AASB 16 are
contained in Note 1(l)
(d) Accounting Standards issued but not yet effective as at 30 June 2020
AASB 2018-7: Amendments to Australian Accounting Standards – Definition of Material
AASB 2018-7 principally amends AASB 101: Presentation of Financial Statements and AASB 108:
Accounting Policies, Changes in Accounting Estimates and Errors. The amendments refine the definition
of material in AASB 101. The amendments clarify the definition of material and its application by
improving the wording and aligning the definition across AASB Standards and other publications. The
amendment also includes some supporting requirements in AASB 101 in the definition to give it more
prominence and clarifies the explanation accompanying the definition of material.
AASB 2018-7 mandatorily applies to annual reporting periods commencing on or after 1 January 2020
and will be first applied by the Group in the financial year commencing 1 July 2020.
AASB 2020-1: Amendments to Australian Accounting Standards – Classification of Liabilities as
Current or Non-current
AASB 2020-1 amends AASB 101 Presentation of Financial Statements to clarify requirements for the
presentation of liabilities in the statement of financial position as current or non-current.
AASB 2020-1 mandatorily applies to annual reporting periods commencing on or after 1 January 2022
and will be first applied by the Group in the financial year commencing 1 July 2022.
AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018 –
2020 and Other Amendments
AASB 2020-3 amends AASB 1 First-time Adoption of Australian Accounting Standards, AASB 3
Business Combinations, AASB 9 Financial Instruments, AASB 116 Property, Plant and Equipment,
AASB 137 Provisions, Contingent Liabilities and Contingent Assets and AASB 141 Agriculture as a
consequence of the recent issuance by IASB of the following IFRS: Annual Improvements to IFRS
Standards 2018-2020, Reference to the Conceptual Framework, Property, Plant and Equipment:
Proceeds before Intended Use and Onerous Contracts – Cost of Fulfilling a Contract.
AASB 2020-3 mandatorily applies to annual reporting periods commencing on or after 1 January 2022
and will be first applied by the Group in the financial year commencing 1 July 2022.
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.
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.
(f) Revenue from contracts with customers
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 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 resolved.
The amount of revenue reflects the consideration to which the Group expects to be entitled to in
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).
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.
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
exchange for those goods.
Trade receivables
Contract assets
Contract liabilities
under the contract.
(g) Interest revenue
Interest revenue is recognised using the effective interest method.
26
27
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
The following is a reconciliation of non-cancellable operating lease commitments disclosed at the end of
the prior reporting period (i.e. at 30 June 2019) to the aggregate carrying amount of lease liabilities
recognised at the end of the initial application (i.e. as at 1 July 2019):
Note 1: Summary of Significant Accounting Policies (continued)
(e) Basis of consolidation
2019
$’000
19,160
1,743
-
Aggregate non-cancellable operating lease commitments as at 30 June 2019
Plus: lease payments included in the measurement of lease liabilities and not
previously included in non-cancellable operating lease commitments
Less: lease payments previously included in non-cancellable lease commitments
for leases with remaining terms of less than 12 months and leases of low value
assets
2019
Less: impact of discounting lease payments to their present value as at 1 July
(1,424)
Carrying amount of lease liabilities recognized as at 1 July 20191
19,479
1 In accordance with AASB 16, $198k of finance lease liabilities as at 30 June 2019 were reclassified to
lease liabilities on 1 July 2019.
contained in Note 1(l)
Further details of the group’s accounting policy in relation to accounting for leases under AASB 16 are
(d) Accounting Standards issued but not yet effective as at 30 June 2020
AASB 2018-7: Amendments to Australian Accounting Standards – Definition of Material
AASB 2018-7 principally amends AASB 101: Presentation of Financial Statements and AASB 108:
Accounting Policies, Changes in Accounting Estimates and Errors. The amendments refine the definition
of material in AASB 101. The amendments clarify the definition of material and its application by
improving the wording and aligning the definition across AASB Standards and other publications. The
amendment also includes some supporting requirements in AASB 101 in the definition to give it more
prominence and clarifies the explanation accompanying the definition of material.
AASB 2018-7 mandatorily applies to annual reporting periods commencing on or after 1 January 2020
and will be first applied by the Group in the financial year commencing 1 July 2020.
AASB 2020-1: Amendments to Australian Accounting Standards – Classification of Liabilities as
Current or Non-current
AASB 2020-1 amends AASB 101 Presentation of Financial Statements to clarify requirements for the
presentation of liabilities in the statement of financial position as current or non-current.
AASB 2020-1 mandatorily applies to annual reporting periods commencing on or after 1 January 2022
and will be first applied by the Group in the financial year commencing 1 July 2022.
AASB 2020-3 Amendments to Australian Accounting Standards – Annual Improvements 2018 –
2020 and Other Amendments
AASB 2020-3 amends AASB 1 First-time Adoption of Australian Accounting Standards, AASB 3
Business Combinations, AASB 9 Financial Instruments, AASB 116 Property, Plant and Equipment,
AASB 137 Provisions, Contingent Liabilities and Contingent Assets and AASB 141 Agriculture as a
consequence of the recent issuance by IASB of the following IFRS: Annual Improvements to IFRS
Standards 2018-2020, Reference to the Conceptual Framework, Property, Plant and Equipment:
Proceeds before Intended Use and Onerous Contracts – Cost of Fulfilling a Contract.
AASB 2020-3 mandatorily applies to annual reporting periods commencing on or after 1 January 2022
and will be first applied by the Group in the financial year commencing 1 July 2022.
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.
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.
(f) Revenue from contracts with customers
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 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 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.
(g) Interest revenue
Interest revenue is recognised using the effective interest method.
26
27
Note 1: Summary of Significant Accounting Policies (continued)
Note 1: Summary of Significant Accounting Policies (continued)
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(h) 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.
(i)
Inventories
Accounting policy applied to the information presented for the current period under AASB 16
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.
(j) 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:
–
–
–
Buildings
Plant and equipment
Leased plant and equipment
(k) Impairment of non-financial assets
2020
Up to 40 years
1 to 20 years
5 to 20 years
2019
Up to 40 years
1 to 20 years
5 to 20 years
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.
28
29
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 rata basis to the other assets comprising the relevant cash generating unit.
(l) Leases
Leases:
Lease assets
At the commencement date of a lease (other than leases of 12-months or less and leases of low
value assets), the group recognises a lease asset representing its right to use the underlying asset
and a lease liability representing its obligations to make lease payments.
Lease assets are initially recognised at cost, comprising the amount of the initial measurement of
the lease liability, any lease payments made at or before the commencement date of the lease, less
any lease incentives received, any initial direct costs incurred by the group, and an estimate of costs
to be incurred by the group in dismantling and removing the underlying asset, restoring the site on
which it is located or restoring the underlying asset to the condition required by the terms and
conditions of the lease, unless those costs are incurred to produce inventories.
Subsequent to initial recognition, lease assets are measured at cost (adjusted for any
remeasurement of the associated lease liability), less accumulated depreciation and any
accumulated impairment loss.
Lease assets are depreciated over the shorter of the lease term and the estimated useful life of the
underlying asset, consistent with the estimated consumption of the economic benefits embodied in
the underlying asset.
Lease liabilities
Lease liabilities are initially recognised at the present value of the future lease payments (i.e. the
lease payments that are unpaid at the commencement date of the lease). These lease payments
are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or
otherwise using the group’s incremental borrowing rate.
Subsequent to initial recognition, lease liabilities are measured at the present value of the remaining
lease payments (i.e. the lease payments that are unpaid at the reporting date). Interest expense on
lease liabilities is recognised in profit or loss (presented as a component of finance costs). Lease
liabilities are remeasured to reflect changes to lease terms, changes to lease payments and any
lease modifications not accounted for as separate leases.
Variable lease payments not included in the measurement of lease liabilities are recognised as an
expense when incurred.
Leases of 12-months or less and leases of low value assets
Lease payments made in relation to leases of 12-months or less and leases of low value assets (for
which a lease asset and a lease liability has not been recognised) are recognised as an expense on
a straight-line basis over the lease term.
Accounting policy applied to the information presented for the prior period under AASB 117 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.
Note 1: Summary of Significant Accounting Policies (continued)
Note 1: Summary of Significant Accounting Policies (continued)
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(h) 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.
(i)
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.
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
(j) Property, plant and equipment
Cost and valuation
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:
–
–
–
Buildings
Plant and equipment
Leased plant and equipment
(k) Impairment of non-financial assets
2020
2019
Up to 40 years
Up to 40 years
1 to 20 years
5 to 20 years
1 to 20 years
5 to 20 years
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 rata basis to the other assets comprising the relevant cash generating unit.
(l) Leases
Accounting policy applied to the information presented for the current period under AASB 16
Leases:
At the commencement date of a lease (other than leases of 12-months or less and leases of low
value assets), the group recognises a lease asset representing its right to use the underlying asset
and a lease liability representing its obligations to make lease payments.
Lease assets
Lease assets are initially recognised at cost, comprising the amount of the initial measurement of
the lease liability, any lease payments made at or before the commencement date of the lease, less
any lease incentives received, any initial direct costs incurred by the group, and an estimate of costs
to be incurred by the group in dismantling and removing the underlying asset, restoring the site on
which it is located or restoring the underlying asset to the condition required by the terms and
conditions of the lease, unless those costs are incurred to produce inventories.
Subsequent to initial recognition, lease assets are measured at cost (adjusted for any
remeasurement of the associated lease liability), less accumulated depreciation and any
accumulated impairment loss.
Lease assets are depreciated over the shorter of the lease term and the estimated useful life of the
underlying asset, consistent with the estimated consumption of the economic benefits embodied in
the underlying asset.
Lease liabilities
Lease liabilities are initially recognised at the present value of the future lease payments (i.e. the
lease payments that are unpaid at the commencement date of the lease). These lease payments
are discounted using the interest rate implicit in the lease, if that rate can be readily determined, or
otherwise using the group’s incremental borrowing rate.
Subsequent to initial recognition, lease liabilities are measured at the present value of the remaining
lease payments (i.e. the lease payments that are unpaid at the reporting date). Interest expense on
lease liabilities is recognised in profit or loss (presented as a component of finance costs). Lease
liabilities are remeasured to reflect changes to lease terms, changes to lease payments and any
lease modifications not accounted for as separate leases.
Variable lease payments not included in the measurement of lease liabilities are recognised as an
expense when incurred.
Leases of 12-months or less and leases of low value assets
Lease payments made in relation to leases of 12-months or less and leases of low value assets (for
which a lease asset and a lease liability has not been recognised) are recognised as an expense on
a straight-line basis over the lease term.
Accounting policy applied to the information presented for the prior period under AASB 117 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.
28
29
Note 1: Summary of Significant Accounting Policies (continued)
Note 1: Summary of Significant Accounting Policies (continued)
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
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.
(m) 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 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.
(n) 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.
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.
(o) 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.
The amount recognised as a provision is the best estimate of the expenditure required to settle the
present obligation at the end of the reporting period.
(p) 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 such as
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 date. 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.
(q) 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 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.
30
31
Note 1: Summary of Significant Accounting Policies (continued)
Note 1: Summary of Significant Accounting Policies (continued)
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
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
term of the lease.
(m) Income tax
Operating lease payments are recognised as an operating expense on a straight-line basis over the
Lease incentives received under operating leases are recognised as a liability and amortised on a
straight-line basis over the term of the lease.
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 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
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
Current and deferred tax balances attributable to amounts recognised directly in equity are also
taxable profit or loss.
losses.
recognised directly in equity.
(n) 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.
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.
(o) 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.
The amount recognised as a provision is the best estimate of the expenditure required to settle the
present obligation at the end of the reporting period.
(p) 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 such as
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 date. 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.
(q) 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 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.
30
31
Note 1: Summary of Significant Accounting Policies (continued)
Note 1: Summary of Significant Accounting Policies (continued)
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(r)
Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the group becomes party to the
contractual provisions of the instrument. For financial assets, this is equivalent to the date that the
group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value adjusted for transaction costs, except where the
instrument is classified as fair value through profit or loss, in which case transaction costs are
immediately recognised as expenses in profit or loss.
Classification of financial assets
Financial assets recognised by the group are subsequently measured in their entirety at either amortised
cost or fair value, subject to their classification and whether the group irrevocably designates the
financial asset on initial recognition at fair value through other comprehensive income (FVtOCI) in
accordance with the relevant criteria in AASB 9.
Financial assets not irrevocably designated on initial recognition at FVtOCI are classified as
subsequently measured at amortised cost, FVtOCI or fair value through profit or loss (FVtPL) on the
basis of:
(a)
(b)
The group’s business model for managing the financial assets; and
The contractual cash flow characteristics of the financial asset.
Classification of financial liabilities
Financial liabilities classified as held-for-trading, contingent consideration payable by the group for the
acquisition of a business, and financial liabilities designated at FVtPL, are subsequently measured at fair
value.
All other financial liabilities recognised by the group are subsequently measured at amortised cost.
Trade and other receivables
Trade and other receivables arise from the group’s transactions with its customers and are normally
settled within 30 days.
Consistent with both the group’s business model for managing the financial assets and the contractual
cash flow characteristics of these assets, trade and other receivables are subsequently measured at
amortised cost.
Impairment of financial assets
The following financial assets are tested for impairment by applying the ‘expected credit loss’ impairment
model:
(a)
debt instruments measured at amortised cost;
(b)
debt instruments classified at fair value through other comprehensive income; and
receivables from contracts with customers, contract assets and lease receivables.
The group applies the simplified approach under AASB 9 to measuring the allowance for credit losses
for receivables from contracts with customers, contract assets and lease receivables. Under the AASB
9 simplified approach, the group determines the allowance for credit losses for receivables from
contracts with customers, contract assets and lease receivables on the basis of the lifetime expected
credit losses of the financial asset. Lifetime expected credit losses represent the expected credit
losses that are expected to result from default events over the expected life of the financial asset.
The group determines expected credit losses based on the group’s historical credit loss experience,
adjusted for factors that are specific to the financial asset as well as current and future expected
economic conditions relevant to the financial asset. When material, the time value of money is
incorporated into the measurement of expected credit losses. There has been no change in the
estimation techniques or significant assumptions made during the reporting period.
The group has identified contractual payments more than 365 days past due as default events for the
purpose of measuring expected credit losses. These default events have been selected based on the
group’s historical experience. Because contract assets are directly related to unbilled work in
progress, contract assets have a similar credit risk profile to receivables from contracts with
customers. Accordingly, the group applies the same approach to measuring expected credit losses of
receivables from contracts with customers as it does to measuring impairment losses on contract
assets.
The measurement of expected credit losses reflects the group’s ‘expected rate of loss’, which is a
product of the probability of default and the loss given default, and its ‘exposure at default’, which is
typically the carrying amount of the relevant asset. Expected credit losses are measured as the
difference between all contractual cash flows due and all contractual cash flows expected based on the
group’s exposure at default, discounted at the financial asset’s original effective interest rate.
Financial assets are regarded as ‘credit-impaired’ when one or more events have occurred that have a
detrimental impact on the estimated future cash flows of the financial asset. Indicators that a financial
asset is ‘credit-impaired’ include observable data about the following:
significant financial difficulty of the issuer or the borrower;
breach of contract;
(a)
(b)
(c)
the lender, for economic or contractual reasons relating to the borrower’s financial difficulty, has
granted concessions to the borrower that the lender would not otherwise consider; or
(d)
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation.
The gross carrying amount of a financial asset is written off (i.e, reduced directly) when the
counterparty is in severe financial difficulty and the group has no realistic expectation of recovery of
the financial asset. Financial assets written off remain subject to enforcement action by the group.
Recoveries, if any, are recognised in profit or loss.
(s)
Foreign currency translations and balances
Functional and presentation currency
The financial statements are presented in Australian dollars which is the group’s functional and
presentation currency.
Transactions and balances
Transactions undertaken in foreign currencies are recognised in the group’s functional currency, using
the spot rate 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 restated to the spot rate at the reporting date.
Except for certain foreign currency hedges, all resulting exchange gains or losses are recognised in
profit or loss for the period in which they arise.
32
33
Note 1: Summary of Significant Accounting Policies (continued)
Note 1: Summary of Significant Accounting Policies (continued)
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(r)
Financial instruments
Initial recognition and measurement
Financial assets and financial liabilities are recognised when the group becomes party to the
contractual provisions of the instrument. For financial assets, this is equivalent to the date that the
group commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).
Financial instruments are initially measured at fair value adjusted for transaction costs, except where the
instrument is classified as fair value through profit or loss, in which case transaction costs are
immediately recognised as expenses in profit or loss.
Classification of financial assets
Financial assets recognised by the group are subsequently measured in their entirety at either amortised
cost or fair value, subject to their classification and whether the group irrevocably designates the
financial asset on initial recognition at fair value through other comprehensive income (FVtOCI) in
accordance with the relevant criteria in AASB 9.
Financial assets not irrevocably designated on initial recognition at FVtOCI are classified as
subsequently measured at amortised cost, FVtOCI or fair value through profit or loss (FVtPL) on the
The group’s business model for managing the financial assets; and
The contractual cash flow characteristics of the financial asset.
Classification of financial liabilities
Financial liabilities classified as held-for-trading, contingent consideration payable by the group for the
acquisition of a business, and financial liabilities designated at FVtPL, are subsequently measured at fair
basis of:
(a)
(b)
value.
All other financial liabilities recognised by the group are subsequently measured at amortised cost.
Trade and other receivables arise from the group’s transactions with its customers and are normally
Consistent with both the group’s business model for managing the financial assets and the contractual
cash flow characteristics of these assets, trade and other receivables are subsequently measured at
Trade and other receivables
settled within 30 days.
amortised cost.
Impairment of financial assets
model:
The following financial assets are tested for impairment by applying the ‘expected credit loss’ impairment
(a)
debt instruments measured at amortised cost;
(b)
debt instruments classified at fair value through other comprehensive income; and
receivables from contracts with customers, contract assets and lease receivables.
The group applies the simplified approach under AASB 9 to measuring the allowance for credit losses
for receivables from contracts with customers, contract assets and lease receivables. Under the AASB
9 simplified approach, the group determines the allowance for credit losses for receivables from
contracts with customers, contract assets and lease receivables on the basis of the lifetime expected
credit losses of the financial asset. Lifetime expected credit losses represent the expected credit
losses that are expected to result from default events over the expected life of the financial asset.
The group determines expected credit losses based on the group’s historical credit loss experience,
adjusted for factors that are specific to the financial asset as well as current and future expected
economic conditions relevant to the financial asset. When material, the time value of money is
incorporated into the measurement of expected credit losses. There has been no change in the
estimation techniques or significant assumptions made during the reporting period.
The group has identified contractual payments more than 365 days past due as default events for the
purpose of measuring expected credit losses. These default events have been selected based on the
group’s historical experience. Because contract assets are directly related to unbilled work in
progress, contract assets have a similar credit risk profile to receivables from contracts with
customers. Accordingly, the group applies the same approach to measuring expected credit losses of
receivables from contracts with customers as it does to measuring impairment losses on contract
assets.
The measurement of expected credit losses reflects the group’s ‘expected rate of loss’, which is a
product of the probability of default and the loss given default, and its ‘exposure at default’, which is
typically the carrying amount of the relevant asset. Expected credit losses are measured as the
difference between all contractual cash flows due and all contractual cash flows expected based on the
group’s exposure at default, discounted at the financial asset’s original effective interest rate.
Financial assets are regarded as ‘credit-impaired’ when one or more events have occurred that have a
detrimental impact on the estimated future cash flows of the financial asset. Indicators that a financial
asset is ‘credit-impaired’ include observable data about the following:
(a)
(b)
(c)
(d)
significant financial difficulty of the issuer or the borrower;
breach of contract;
the lender, for economic or contractual reasons relating to the borrower’s financial difficulty, has
granted concessions to the borrower that the lender would not otherwise consider; or
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation.
The gross carrying amount of a financial asset is written off (i.e, reduced directly) when the
counterparty is in severe financial difficulty and the group has no realistic expectation of recovery of
the financial asset. Financial assets written off remain subject to enforcement action by the group.
Recoveries, if any, are recognised in profit or loss.
(s)
Foreign currency translations and balances
Functional and presentation currency
The financial statements are presented in Australian dollars which is the group’s functional and
presentation currency.
Transactions and balances
Transactions undertaken in foreign currencies are recognised in the group’s functional currency, using
the spot rate 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 restated to the spot rate at the reporting date.
Except for certain foreign currency hedges, all resulting exchange gains or losses are recognised in
profit or loss for the period in which they arise.
32
33
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
(t) 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.
(u) 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.
(v) Comparatives
Where necessary the comparative information has been reclassified and repositioned for
consistency with current year disclosures.
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
(w) Rounding of amounts
The group have applied the relief under ASIC Corporates (Rounding in Financial/Directors’
Reports) Instrument 2016/191 and accordingly, the amounts in the consolidated financial
statements and in the directors’ report have been rounded to the nearest thousand dollars, or in
certain cases, to the nearest dollar (where indicated).
Note 2: Significant accounting estimates and judgements
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)
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.
temporary differences.
(c)
Fair value measurements
Certain financial assets and liabilities are measured at fair value. Fair values have been determined in
accordance with fair value measurement hierarchy. Refer to Note 3(d): Fair Value Measurements for the
details of the fair value measure key assumptions and inputs.
(d)
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.
(e)
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.
34
35
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 1: Summary of Significant Accounting Policies (continued)
(t) 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.
(u) 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.
Where necessary the comparative information has been reclassified and repositioned for
consistency with current year disclosures.
(v) Comparatives
(w) Rounding of amounts
The group have applied the relief under ASIC Corporates (Rounding in Financial/Directors’
Reports) Instrument 2016/191 and accordingly, the amounts in the consolidated financial
statements and in the directors’ report have been rounded to the nearest thousand dollars, or in
certain cases, to the nearest dollar (where indicated).
Note 2: Significant accounting estimates and judgements
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)
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.
(c)
Fair value measurements
Certain financial assets and liabilities are measured at fair value. Fair values have been determined in
accordance with fair value measurement hierarchy. Refer to Note 3(d): Fair Value Measurements for the
details of the fair value measure key assumptions and inputs.
(d)
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.
(e)
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.
34
35
Note 2: Significant accounting estimates and judgements (continued)
Note 3: Financial instruments risk management objectives and policies
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(f)
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.
(g) 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.
(h)
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.
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
Lease assets
Receivables
Financial liabilities
Payables
Lease liabilities
Borrowings
(a) Market risk
(i) Commodity price risk
2020
$’000
4,412
15,581
7,439
27,432
13,303
16,028
19,441
48,772
2019
$’000
185
-
8,203
8,388
10,211
-
14,667
24,878
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/or feed stock purchase commitments through its key suppliers,
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.
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.
(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.
36
37
Note 2: Significant accounting estimates and judgements (continued)
Note 3: Financial instruments risk management objectives and policies
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(f)
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.
(g) 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.
(h)
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.
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
Lease assets
Receivables
Financial liabilities
Payables
Lease liabilities
Borrowings
(a) Market risk
(i) Commodity price risk
2020
$’000
4,412
15,581
7,439
27,432
13,303
16,028
19,441
48,772
2019
$’000
185
-
8,203
8,388
10,211
-
14,667
24,878
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/or feed stock purchase commitments through its key suppliers,
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.
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.
(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.
36
37
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 3: Financial instruments risk management objectives and policies (continued)
Note 3: Financial instruments risk management objectives and policies (continued)
Forward foreign exchange contracts
Maturities of financial liabilities
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 2020, 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
2020
$’000
149
(149)
2019
$’000
95
(95)
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.
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
(13,303)
-
-
(13,303)
-
-
-
(19,441)
(19,441)
Fixed at 9%
Lease liability
(2,250)
(2,130)
(10,884)
(16,028)
Fixed at 3%
(15,553)
(2,130)
(30,325)
(48,772)
(764)
(764)
-
-
-
-
-
-
<6
months
$’000
6-12
months
$’000
1-5
years
$’000
Over 5
years
$’000
Total
$’000
Fixed/
Floating
(10,211)
(14,469)
(146)
(24,826)
-
-
-
-
(19)
(19)
(33)
(33)
(10,211)
-
(14,469)
Floating avg
rate of 3.5%
(198)
Fixed at 3%
(24,878)
2020
Financial
liabilities
Trade and
other
payables
Loans
2019
Financial
liabilities
Trade and
other
payables
Loans
Lease liability
(c) Credit risk
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.
38
39
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.
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
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
(iii) Interest rate risk
variable rates.
below.
Sensitivity
The following sensitivity analysis is assessed on the interest rate risk exposures in existence at
reporting date. At 30 June 2020, 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:
Impact on post-tax
profit and equity
2020
$’000
149
(149)
2019
$’000
95
(95)
Interest rates – increase by 100 basis points
Interest rates – decrease by 100 basis points
(b) Liquidity risk
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.
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 3: Financial instruments risk management objectives and policies (continued)
Note 3: Financial instruments risk management objectives and policies (continued)
Forward foreign exchange contracts
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
2020
Financial
liabilities
Trade and
other
payables
Loans
(13,303)
-
-
-
-
(19,441)
-
-
(764)
(764)
Lease liability
(2,250)
(2,130)
(10,884)
(15,553)
(2,130)
(30,325)
<6
months
$’000
6-12
months
$’000
1-5
years
$’000
Over 5
years
$’000
(10,211)
(14,469)
(146)
(24,826)
-
-
-
-
(19)
(19)
(33)
(33)
-
-
-
-
2019
Financial
liabilities
Trade and
other
payables
Loans
Lease liability
(c) Credit risk
(13,303)
-
(19,441)
Fixed at 9%
(16,028)
Fixed at 3%
(48,772)
Total
$’000
Fixed/
Floating
(10,211)
-
(14,469)
Floating avg
rate of 3.5%
(198)
Fixed at 3%
(24,878)
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.
38
39
Note 3: Financial instruments risk management objectives and policies (continued)
Note 5: Profit from continuing operations
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(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 product1
Shell egg
Egg product
Others
Total revenue from contracts with customers
Interest revenue and other income
Total revenue
Consolidated
2020
$’000
2019
$’000
69,264
20,025
945
90,234
93
90,327
64,520
21,523
314
86,357
284
86,641
1 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.
Profit from continuing operations before income tax has been determined after the following specific
expenses:
Consolidated
Cost of goods sold
progress
Changes in inventories of finished goods and work in
Raw materials and consumables used
Employee benefits expenses
Salaries and wages
Employee superannuation contributions
Total employee benefits expenses
Depreciation of non-current assets and leased assets
Land and buildings
Plant & equipment
Right of use asset
Total depreciation of non-current assets
Foreign exchange translation loss
Flock amortisation (note 10)
Finance costs – interest expense
Operating lease rentals
Impairment of property, plant and equipment
2020
$’000
(1,153)
66,543
65,390
14,555
1,256
15,811
1,205
2,438
4,426
8,069
12,449
2,291
4
-
-
2019
$’000
2,061
62,640
64,701
12,895
1,094
13,989
1,207
2,929
4,136
-
1
12,096
738
3,540
1,542
40
41
Note 3: Financial instruments risk management objectives and policies (continued)
Note 5: Profit from continuing operations
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
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
progress
Raw materials and consumables used
Employee benefits expenses
Salaries and wages
Employee superannuation contributions
Total employee benefits expenses
Depreciation of non-current assets and leased assets
Land and buildings
Plant & equipment
Right of use asset
Total depreciation of non-current assets
Foreign exchange translation loss
Flock amortisation (note 10)
Finance costs – interest expense
Operating lease rentals
Impairment of property, plant and equipment
Consolidated
2020
$’000
2019
$’000
(1,153)
66,543
65,390
14,555
1,256
15,811
1,205
2,438
4,426
8,069
4
12,449
2,291
-
-
2,061
62,640
64,701
12,895
1,094
13,989
1,207
2,929
-
4,136
1
12,096
738
3,540
1,542
(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
There were no transfers between levels 1, 2 and 3 for recurring fair value measurements during the
The carrying amount of other financial assets and financial liabilities recorded in the financial
statements approximate their fair values.
contract exchange rates.
financial year.
Note 4: Revenue
Disaggregation of revenue
In the following table, revenue is disaggregated by major product.
Type of product1
Shell egg
Egg product
Others
Total revenue from contracts with customers
Interest revenue and other income
Total revenue
Consolidated
2020
$’000
69,264
20,025
945
90,234
93
90,327
2019
$’000
64,520
21,523
314
86,357
284
86,641
1 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.
40
41
Note 6: Income tax
Note 7: Dividends
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(a) Components of tax expense:
Current tax (benefit) / expense
Deferred tax (benefit) / expense
Under/(over) provision in prior years
Income tax expense
Consolidated
2020
$’000
2019
$’000
-
(930)
-
(930)
(1,071)
(526)
131
(1,466)
(b) Numerical reconciliation between income tax expense in
the income statement and that calculated
(Loss) / profit before income tax
(3,099)
(5,324)
Note 8: Receivables
(a) Dividends proposed and recognised as a liability
(b) Franking credit balance
Balance of franking account at year end
11,485
11,485
At the statutory income tax rate of 30% (2019: 30%)
Under/(over) provision in prior years
Income tax (benefit) / expense
(c) Deferred tax assets and (liabilities) relate to the
following:
(930)
(1,597)
-
131
(930)
(1,466)
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
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
Tax (received)/paid
Balance at the end of the year
659
208
280
-
2,133
3,280
2,350
930
-
-
3,280
-
-
-
641
72
104
462
1,071
2,350
884
525
1,071
(131)
2,350
(805)
805
-
42
43
Consolidated
2020
$’000
Nil
2019
$’000
Nil
Consolidated
2020
$’000
7,115
(6)
7,109
330
7,439
2020
$’000
6
-
6
2019
$’000
7,751
(6)
7,745
458
8,203
2019
$’000
17
(11)
6
Trade receivables
Provisions for expected credit loss
Other receivables
(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)
Consolidated
Movements in the provision for impairment were:
Opening balance as at 1 July
Decrease in provision for impairment of trade receivables
Note 6: Income tax
Note 7: Dividends
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(a) Dividends proposed and recognised as a liability
Consolidated
2020
$’000
Nil
2019
$’000
Nil
(b) Franking credit balance
Balance of franking account at year end
11,485
11,485
(b) Numerical reconciliation between income tax expense in
the income statement and that calculated
(Loss) / profit before income tax
(3,099)
(5,324)
Note 8: Receivables
At the statutory income tax rate of 30% (2019: 30%)
(930)
(1,597)
Under/(over) provision in prior years
Income tax (benefit) / expense
(c) Deferred tax assets and (liabilities) relate to the
(930)
(1,466)
Trade receivables
Provisions for expected credit loss
Other receivables
Consolidated
2020
$’000
7,115
(6)
7,109
330
7,439
2019
$’000
7,751
(6)
7,745
458
8,203
(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 as at 1 July
Decrease in provision for impairment of trade receivables
Consolidated
2020
$’000
6
-
6
2019
$’000
17
(11)
6
(a) Components of tax expense:
Current tax (benefit) / expense
Deferred tax (benefit) / expense
Under/(over) provision in prior years
Income tax expense
following:
Employee benefits
Provisions and accruals
Fixed assets
Building Impairment
Carry forward tax losses
Gross deferred tax assets
Balance at beginning of year
Recognised in profit or loss
Current year losses
Over provision in prior years
Balance at the end of the year
Balance at beginning of year
Tax (received)/paid
Balance at the end of the year
(d) Movement in deferred tax assets and (liabilities)
(e) Movement in current tax liability or (receivable):
Consolidated
2020
$’000
2019
$’000
(930)
(1,071)
(526)
131
(930)
(1,466)
-
-
-
-
-
-
-
-
659
208
280
-
2,133
3,280
2,350
930
3,280
131
641
72
104
462
1,071
2,350
884
525
1,071
(131)
2,350
(805)
805
-
42
43
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 8: Receivables (continued)
Trade and other receivables ageing analysis as at 30 June is:
Not past due
Past due 31-60 days
Past due 61-90 days
Past due more than 91 days
Gross
2020
$’000
7,247
101
65
32
7,445
Impairment
2020
$’000
-
-
-
6
6
Gross
2019
Impairment
2019
$’000
8,148
16
14
31
8,209
$’000
-
4
2
-
6
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
CURRENT
Raw materials - at cost
Finished goods
Total inventories
Consolidated
2020
$’000
3,622
2,389
6,011
2019
$’000
3,169
1,689
4,858
Note 10: Biological assets
Current
Non-current
Total
(a) Flocks
Cost
Less: Accumulated amortisation
Opening written down value
Additions
Amortisation
Closing written down value
Note 11: Other current assets
Prepayments and deposits
Consolidated
2020
$’000
6,382
3,146
9,528
16,809
(7,281)
9,528
9,087
12,890
2019
$’000
8,688
399
9,087
16,060
(6,973)
9,087
8,981
12,202
(12,449)
(12,096)
9,528
9,087
Consolidated
2020
$’000
812
2019
$’000
406
The number of birds held by the Company as at 30 June 2020 was 1,427,375 (2019: 1,591,223).
The average output per bird is approximately 5 eggs per week during their productive period.
44
45
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 8: Receivables (continued)
Trade and other receivables ageing analysis as at 30 June is:
Not past due
Past due 31-60 days
Past due 61-90 days
Past due more than 91 days
Note 9: Inventories
CURRENT
Raw materials - at cost
Finished goods
Total inventories
Gross
2020
$’000
7,247
101
65
32
7,445
Impairment
2020
$’000
Impairment
2019
$’000
Gross
2019
$’000
8,148
16
14
31
8,209
-
-
-
6
6
-
4
2
-
6
Consolidated
2020
$’000
3,622
2,389
6,011
2019
$’000
3,169
1,689
4,858
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 10: Biological assets
Current
Non-current
Total
(a) Flocks
Cost
Less: Accumulated amortisation
Opening written down value
Additions
Amortisation
Closing written down value
Consolidated
2020
$’000
2019
$’000
6,382
3,146
9,528
8,688
399
9,087
16,809
(7,281)
9,528
9,087
12,890
(12,449)
9,528
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 2020 was 1,427,375 (2019: 1,591,223).
The average output per bird is approximately 5 eggs per week during their productive period.
Note 11: Other current assets
Prepayments and deposits
Consolidated
2020
$’000
812
2019
$’000
406
44
45
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 12: Property, plant and equipment
2020
Cost
Accumulated depreciation
Net book value
Opening net book value as at 1 July
2019
Reclassifications to ‘lease assets’2
Additions
Transfers
Depreciation
Net book value as at 30 June 2020
2019
Cost
Accumulated depreciation
Net book value
Consolidated
Land and
buildings
Plant and
equipment
$’000
35,457
(10,531)
24,926
$’000
48,995
(34,161)
14,834
Capital
works in
progress
$’000
Total
$’000
5,260
89,712
-
(44,692)
5,260
45,020
25,551
16,177
3,485
45,213
-
-
580
(1,205)
24,926
(214)
-
1,309
(2,438)
14,834
-
3,664
(1,889)
-
5,260
(214)
3,664
-
(3,643)
45,020
34,877
(9,326)
25,551
47,900
(31,723)
16,177
3,485
86,262
-
(41,049)
3,485
45,213
Opening net book value as at 1 July
2018
26,230
14,306
6,113
46,649
Additions
Transfers
Depreciation
Impairment loss1
Net book value as at 30 June 2019
-
2,070
(1,207)
(1,542)
25,551
-
4,800
(2,929)
-
4,242
(6,870)
-
-
16,177
3,485
4,242
-
(4,136)
(1,542)
45,213
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 Group recorded an impairment loss of $1.542 million in the
prior period.
2On the initial application of AASB 16 Leases, as at 1 July 2019, the carrying amount of equipment
under finance lease arrangements was reclassified from ‘property, plant and equipment’ to ‘lease
assets’
(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 loans (see note 15). 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.
Note 12: Property, plant and equipment (continued)
(b)
Impairment testing of non-current assets
The Group performed an impairment test in June 2020. 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 2020, 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 4% per annum and a terminal growth rate of
2.5%. These rates are in line with 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 of 9%
has been applied. This rate 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 movement in revenue driven by volume and price of goods 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 as at 30 June 2020 as shown in the table below.
Key assumption
Revenue movement
Grain/feed prices
Discount rate %
Sensitivity
+5%
- 5%
+1%
-1%
+0.5%
- 0.5%
Impact on
valuation
$’000
$7,914
($11,963)
($3,738)
$3,738
($4,707)
$5,485
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.
46
47
Note 12: Property, plant and equipment
Note 12: Property, plant and equipment (continued)
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Impairment testing of non-current assets
(b)
The Group performed an impairment test in June 2020. 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 2020, 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 4% per annum and a terminal growth rate of
2.5%. These rates are in line with 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 of 9%
has been applied. This rate 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 movement in revenue driven by volume and price of goods 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 as at 30 June 2020 as shown in the table below.
Key assumption
Revenue movement
Grain/feed prices
Discount rate %
Sensitivity
+5%
- 5%
+1%
-1%
+0.5%
- 0.5%
Impact on
valuation
$’000
$7,914
($11,963)
($3,738)
$3,738
($4,707)
$5,485
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.
46
47
2020
Cost
Accumulated depreciation
Net book value
Consolidated
Land and
buildings
Plant and
equipment
$’000
35,457
(10,531)
24,926
$’000
48,995
(34,161)
14,834
Capital
works in
progress
$’000
Total
$’000
5,260
89,712
-
(44,692)
5,260
45,020
Opening net book value as at 1 July
25,551
16,177
3,485
45,213
Reclassifications to ‘lease assets’2
2019
Additions
Transfers
Depreciation
Net book value as at 30 June 2020
-
-
580
(1,205)
24,926
(214)
-
1,309
(2,438)
14,834
3,664
(1,889)
-
-
5,260
(214)
3,664
-
(3,643)
45,020
2019
Cost
Accumulated depreciation
Net book value
34,877
(9,326)
25,551
47,900
(31,723)
16,177
3,485
86,262
-
(41,049)
3,485
45,213
Opening net book value as at 1 July
26,230
14,306
6,113
46,649
2018
Additions
Transfers
Depreciation
Impairment loss1
prior period.
assets’
-
2,070
(1,207)
(1,542)
25,551
4,800
(2,929)
-
-
4,242
(6,870)
-
-
4,242
-
(4,136)
(1,542)
45,213
Net book value as at 30 June 2019
16,177
3,485
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 Group recorded an impairment loss of $1.542 million in the
2On the initial application of AASB 16 Leases, as at 1 July 2019, the carrying amount of equipment
under finance lease arrangements was reclassified from ‘property, plant and equipment’ to ‘lease
(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 loans (see note 15). 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.
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 13: Lease assets and liabilities
Lease arrangements (30 June 2020)
The following information relates to the current reporting period only and is presented in accordance
with AASB 16 Leases (which was applied by the group for the first time in the current reporting
period).
The group has lease obligations for land and buildings and plant and equipment with lease terms
varying from one to five years, with rent payable monthly in advance.
Lease assets
2020
Cost
Accumulated depreciation
Net book value
Opening net book value as at 1 July 2019
Reclassifications from PPE1
Recognition of leased assets as at 1 July
2019
Recognition of leased assets - additions
Depreciation
Net book value as at 30 June 2020
Land and
buildings
$’000
Plant and
equipment
$’000
Total
$’000
18,684
(4,081)
14,603
-
-
18,684
-
(4,081)
14,603
1,323
(345)
978
-
214
795
314
(345)
978
20,007
(4,426)
15,581
-
214
19,479
314
(4,426)
15,581
1 On the initial application of AASB 16 Leases, as at 1 July 2019, the carrying amount of equipment
under finance lease arrangements was reclassified from ‘property, plant and equipment’ to ’lease
assets’.
Lease liabilities
Current lease liabilities
Non-current lease liabilities
Lease expenses and cashflows
Interest expense on lease liabilities
Depreciation expense on lease assets
Repayment of lease liability
Consolidated
2020
$’000
4,380
11,648
16,028
2020
$’000
537
4,426
3,963
Finance lease arrangements (30 June 2019)
The following information relates to finance lease arrangements of the prior reporting period only and is
presented in accordance with the predecessor accounting standard AASB 117 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:
The following is a reconciliation of the total undiscounted future lease payments
to be made by the group in relation to finance leases to the carrying amount of
finance lease liabilities.
Undiscounted future lease payments to be made:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Total undiscounted future lease payments to be made
Less: future finance charges
Carrying amount of finance lease liabilities
Finance lease liabilities are included in the carrying amount of borrowings in the statement of financial
position. Refer to Note 15 for further information about the group’s borrowings.
The carrying amount of equipment under finance lease arrangements is included in the carrying amount
of property, plant and equipment in the statement of financial position. Refer to Note 12 for further
information about the group’s property, plant and equipment.
Non-cancellable operating lease arrangements (30 June 2019)
The following information relates to non-cancellable operating lease arrangements of the prior reporting
period only and is presented in accordance with the predecessor accounting standard AASB 117 Leases.
Future minimum lease payments to be made:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Aggregate lease payments contracted for at reporting date
2019
$’000
155
43
-
198
(5)
193
2019
$’000
4,539
12,501
2,120
19,160
48
49
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 13: Lease assets and liabilities
Lease arrangements (30 June 2020)
The following information relates to the current reporting period only and is presented in accordance
with AASB 16 Leases (which was applied by the group for the first time in the current reporting
The group has lease obligations for land and buildings and plant and equipment with lease terms
varying from one to five years, with rent payable monthly in advance.
period).
Lease assets
2020
Cost
Accumulated depreciation
Net book value
Land and
buildings
$’000
Plant and
equipment
$’000
Total
$’000
18,684
(4,081)
14,603
-
-
-
(4,081)
14,603
1,323
(345)
978
-
214
795
314
(345)
978
20,007
(4,426)
15,581
-
214
19,479
314
(4,426)
15,581
Opening net book value as at 1 July 2019
Reclassifications from PPE1
Recognition of leased assets as at 1 July
18,684
Recognition of leased assets - additions
2019
Depreciation
Net book value as at 30 June 2020
1 On the initial application of AASB 16 Leases, as at 1 July 2019, the carrying amount of equipment
under finance lease arrangements was reclassified from ‘property, plant and equipment’ to ’lease
assets’.
Lease liabilities
Current lease liabilities
Non-current lease liabilities
Lease expenses and cashflows
Interest expense on lease liabilities
Depreciation expense on lease assets
Repayment of lease liability
Consolidated
2020
$’000
4,380
11,648
16,028
2020
$’000
537
4,426
3,963
Finance lease arrangements (30 June 2019)
The following information relates to finance lease arrangements of the prior reporting period only and is
presented in accordance with the predecessor accounting standard AASB 117 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:
The following is a reconciliation of the total undiscounted future lease payments
to be made by the group in relation to finance leases to the carrying amount of
finance lease liabilities.
Undiscounted future lease payments to be made:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Total undiscounted future lease payments to be made
Less: future finance charges
Carrying amount of finance lease liabilities
2019
$’000
155
43
-
198
(5)
193
Finance lease liabilities are included in the carrying amount of borrowings in the statement of financial
position. Refer to Note 15 for further information about the group’s borrowings.
The carrying amount of equipment under finance lease arrangements is included in the carrying amount
of property, plant and equipment in the statement of financial position. Refer to Note 12 for further
information about the group’s property, plant and equipment.
Non-cancellable operating lease arrangements (30 June 2019)
The following information relates to non-cancellable operating lease arrangements of the prior reporting
period only and is presented in accordance with the predecessor accounting standard AASB 117 Leases.
Future minimum lease payments to be made:
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Aggregate lease payments contracted for at reporting date
2019
$’000
4,539
12,501
2,120
19,160
48
49
(i) Bank overdraft
Facilities available
Facilities used
Facilities unused
(ii) Bank loan (multi-option)
Facilities available
Facilities used
Facilities unused
Facilities available
Facilities used
Facilities unused
Facilities available
Facilities used
Facilities unused
(iv) Working capital loan – Tranche B
Consolidated
2020
$’000
2019
$’000
2,500
969
1,531
16,000
13,500
2,500
-
-
-
-
-
-
-
-
-
-
-
-
-
15,000
15,000
8,500
4,861
3,639
Group’s financing facilities as at 30 June 2020 were $23.5 million, comprising Tranche A $15 million
that has been drawdown in full and Tranche B of $8.5 million drawn down by $4.861 million. Tranche
B includes $3.5 million limit exclusively for capitalised interest, if any. The term of the facility is for
three years from the date of the first drawdown, 16 August 2019.
Note 14: Payables
At the reporting date, the consolidated entity’s financing are as follows.
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Trade creditors
Other payables and accruals
(i) Terms and conditions
Our standard terms are 30 days from the end of month.
Consolidated
2020
$’000
11,519
1,784
2019
$’000
8,591
1,620
13,303
10,211
Interest Rate
Maturity
Consolidated
2020
$’000
2019
$’000
(iii) Loan Term Loan – Tranche A
Note 15: Borrowings
Current
Secured
Borrowings:
Bank loans1
Bank overdraft1
Lease liability2
Non-current
Secured
Borrowings:
BBSY+1.30% On demand
BBOR+3.30% On demand
Various
Various
-
-
-
-
13,500
969
155
14,624
-
15,000
4,441
19,441
43
-
-
43
Lease liability2
Long term loan4 – Tranche A
Working capital loan – Tranche B3
Various
Various
1 Secured by a fixed and floating charge (mortgage debenture) over all assets and uncalled capital.
2 Secured by the assets leased.
3 In line with AASB 9, Working capital loan – Tranche B is measured net of transaction costs of $420k.
4 Secured by fixed charge over selected property and company assets.
50
51
Note 14: Payables
At the reporting date, the consolidated entity’s financing are as follows.
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Trade creditors
Other payables and accruals
(i) Terms and conditions
Our standard terms are 30 days from the end of month.
Note 15: Borrowings
Current
Secured
Borrowings:
Bank loans1
Bank overdraft1
Lease liability2
Non-current
Secured
Borrowings:
Interest Rate
Maturity
Consolidated
2020
$’000
2019
$’000
BBSY+1.30% On demand
BBOR+3.30% On demand
Various
Various
Lease liability2
Long term loan4 – Tranche A
Working capital loan – Tranche B3
Various
Various
1 Secured by a fixed and floating charge (mortgage debenture) over all assets and uncalled capital.
2 Secured by the assets leased.
3 In line with AASB 9, Working capital loan – Tranche B is measured net of transaction costs of $420k.
4 Secured by fixed charge over selected property and company assets.
Consolidated
2020
$’000
11,519
1,784
2019
$’000
8,591
1,620
13,303
10,211
-
-
-
-
-
15,000
4,441
19,441
13,500
969
155
14,624
43
-
-
43
(i) Bank overdraft
Facilities available
Facilities used
Facilities unused
(ii) Bank loan (multi-option)
Facilities available
Facilities used
Facilities unused
(iii) Loan Term Loan – Tranche A
Facilities available
Facilities used
Facilities unused
(iv) Working capital loan – Tranche B
Facilities available
Facilities used
Facilities unused
Consolidated
2020
$’000
-
-
-
-
-
-
15,000
15,000
-
8,500
4,861
3,639
2019
$’000
2,500
969
1,531
16,000
13,500
2,500
-
-
-
-
-
-
Group’s financing facilities as at 30 June 2020 were $23.5 million, comprising Tranche A $15 million
that has been drawdown in full and Tranche B of $8.5 million drawn down by $4.861 million. Tranche
B includes $3.5 million limit exclusively for capitalised interest, if any. The term of the facility is for
three years from the date of the first drawdown, 16 August 2019.
50
51
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 19: Cash Flow Information
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
Consolidated
2020
$’000
1,031
952
1,983
2019
$’000
1,049
889
1,938
212
201
2,195
2,139
Consolidated
2020
$’000
29,578
29,578
2019
$’000
29,578
29,578
Issued and paid up capital
55,180,175 (2019: 55,180,175) Ordinary shares fully paid
Each share is entitled to 1 vote per share.
(a)
Capital management
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 2020 no dividends were paid (2019: 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
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
52
Consolidated
2020
$’000
2019
$’000
(2,169)
(3,858)
2020
No. of shares
2019
No. of shares
55,180,175
55,180,175
55,180,175
55,180,175
(a) Reconciliation of cash flow from operations with profit
after tax:
(Loss)/profit from ordinary activities after tax
(2,169)
(3,858)
(Increase) / decrease in biological assets
(12,890)
(12,202)
Non-cash items
Depreciation
Impairment
Flock amortisation
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 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
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
Consolidated
2020
$’000
2019
$’000
8,069
12,449
-
-
764
(1,153)
-
(930)
(406)
3,092
56
6,882
4,136
1,542
12,096
36
152
2,061
805
(1,466)
953
(2,415)
(28)
1,812
4,412
-
4,412
185
(969)
(784)
53
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
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
Consolidated
2020
$’000
1,031
952
1,983
2019
$’000
1,049
889
1,938
212
201
2,195
2,139
Consolidated
2020
$’000
29,578
29,578
2019
$’000
29,578
29,578
Issued and paid up capital
55,180,175 (2019: 55,180,175) Ordinary shares fully paid
Each share is entitled to 1 vote per share.
(a)
Capital management
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 2020 no dividends were paid (2019: 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
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
52
Consolidated
2020
$’000
2019
$’000
(2,169)
(3,858)
2020
2019
No. of shares
No. of shares
55,180,175
55,180,175
55,180,175
55,180,175
Note 19: Cash Flow Information
(a) Reconciliation of cash flow from operations with profit
after tax:
(Loss)/profit from ordinary activities after tax
(2,169)
(3,858)
Consolidated
2020
$’000
2019
$’000
Non-cash items
Depreciation
Impairment
Flock amortisation
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
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
8,069
-
12,449
-
4,136
1,542
12,096
36
764
(1,153)
152
2,061
(12,890)
(12,202)
-
(930)
(406)
3,092
56
6,882
4,412
-
4,412
805
(1,466)
953
(2,415)
(28)
1,812
185
(969)
(784)
53
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(c) Reconciliation of liabilities arising from financing activities
2020
As at
1 July
Financing
cash flows
Operating cash
flows - interest
paid
$’000
13,500
$’000
5,941
198
(3,963)
13,698
1,978
Bank loans
Lease liabilities
Total liabilities from
financing activities
2019
Bank loans
Finance leases
Total liabilities from
financing activities
10,000
197
10,197
-
-
-
Note 20: Commitments
(a)
Farm cost commitments
$’000
-
(537)
(537)
3500
(36)
3,464
Non-Cash
Changes
New leases-
other
$’000
-
20,330
As at
30 June
$’000
19,441
16,028
Note 22: Related party disclosures
(a) Parent entity and equity interests in related parties
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.
20,330
35,469
(c) Key management personnel compensation
The aggregate compensation of the key management personnel of the Group is set out below:
-
37
37
13,500
198
13,698
Short-term employee benefits
Long term employee benefits
Post-employment benefits
Detailed remuneration disclosures are provided in the Remuneration Report on page 14.
Consolidated
2020
$’000
688
-
53
741
2019
$’000
656
-
41
697
Farm commitments relate to commitments for flock replenishment and other farm operating expenditure
commitments:
Farm cost commitments
Note 21: Controlled Entities
Consolidated
2020
$’000
2019
$’000
10,063
4,372
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
2020
2019
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
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
54
55
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Note 22: Related party disclosures
(a) Parent entity and equity interests in related parties
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.
13,698
1,978
20,330
35,469
(c) Key management personnel compensation
The aggregate compensation of the key management personnel of the Group is set out below:
Bank loans
Finance leases
Total liabilities from
financing activities
10,000
197
10,197
-
-
-
-
37
37
13,500
198
13,698
Short-term employee benefits
Long term employee benefits
Post-employment benefits
Consolidated
2020
$’000
688
-
53
741
2019
$’000
656
-
41
697
Detailed remuneration disclosures are provided in the Remuneration Report on page 14.
55
(c) Reconciliation of liabilities arising from financing activities
Financing
Operating cash
cash flows
flows - interest
As at
1 July
$’000
13,500
$’000
5,941
198
(3,963)
Non-Cash
Changes
New leases-
other
$’000
-
20,330
As at
30 June
$’000
19,441
16,028
2020
2019
Bank loans
Lease liabilities
Total liabilities from
financing activities
paid
$’000
-
(537)
(537)
3500
(36)
3,464
The consolidated financial statements include the financial statements of Farm Pride Foods Limited and
Farm commitments relate to commitments for flock replenishment and other farm operating expenditure
Note 20: Commitments
(a)
Farm cost commitments
commitments:
Farm cost commitments
Note 21: Controlled Entities
its controlled entities listed below:
List of companies in the group
Parent entity:
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
Controlled entities of Farm Pride Foods Limited
Consolidated
2020
$’000
10,063
2019
$’000
4,372
Country of
incorporation
Percentage owned
2020
2019
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Australia
Australia
Australia
Australia
Australia
54
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(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
Balance
Receivable /
(Payable)
2020
$’000
2019
$’000
-
(1)
2020
$’000
10
2019
$’000
9
2020
$’000
2019
$’000
-
-
-
-
195
158
420
87
(4)
18
-
-
5,319
3,230
(850)
(437)
27
23
-
90
3
8
776
877
154
909
71
127
-
-
-
136
-
-
AAA Egg Company Pty Ltd
Purchases
(P. Bell / M. Ward)
Specialised Breeders Australia
Pty Ltd 2 (P. Bell)
Purchases
Days Eggs Pty Ltd
(P. Bell)
Hy-Line Australia Pty Ltd 2
(P. Bell)
Pure Foods Eggs Pty Ltd
(P. Bell)
West Coast Eggs Pty Ltd
(P. Bell / M. Ward)
Lohmann Layers Australia Pty
Ltd 2
(P. Bell)
Egg supply /
Purchases
Purchases /
Packaging
sales
Egg sales /
Purchases
Egg sales /
Purchases
Purchases
107
332
(83)
1
Total equity of the Parent comprises of the following:
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.
2 Mr Bell resigned as director of Specialised Breeders Australia Pty Ltd, Hy-Line Australia Pty Ltd and Lohmann Layers Australia Pty
Ltd effective 31 Oct 2019.
Transactions in the above table represent related party transactions for the full financial year from July 19 – June 20.
56
57
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
Share capital
Retained earnings
Total shareholder’s equity
2020
$’000
25,476
89,557
18,293
48,441
29,578
11,538
41,116
(3,268)
(3,268)
2019
$’000
22,340
70,302
13,274
25,918
29,578
14,806
44,384
(3,319)
(3,319)
Consolidated Entity
2020
$
2019
$
129,000
138,000
-
14,000
143,000
100,000
12,000
250,000
Summarised statement of comprehensive income
(Loss)/profit of the parent entity
Total comprehensive (loss)/profit of the parent entity
fixed and floating charge (see note 15).
Note 24: Auditor’s remuneration
Farm Pride Foods Limited as parent has provided security over the loans of its subsidiaries by a
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
Services for the FY19 period were performed by Ernst & Young.
Services for the FY20 period have been performed by Pitcher Partners (Melbourne).
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
(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.
Note 23: Parent entity information
Information relating to Farm Pride Foods Limited:
Director related entities1
Transaction
Revenue
Expenditure
Receivable /
Summarised statement of financial position
Balance
(Payable)
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
2020
$’000
25,476
89,557
18,293
48,441
29,578
11,538
41,116
(3,268)
(3,268)
2019
$’000
22,340
70,302
13,274
25,918
29,578
14,806
44,384
(3,319)
(3,319)
Farm Pride Foods Limited as parent has provided security over the loans of its subsidiaries by a
fixed and floating charge (see note 15).
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
2020
$
2019
$
129,000
138,000
-
14,000
143,000
100,000
12,000
250,000
Services for the FY19 period were performed by Ernst & Young.
Services for the FY20 period have been performed by Pitcher Partners (Melbourne).
AAA Egg Company Pty Ltd
Purchases
2020
$’000
2019
$’000
2020
$’000
10
2019
$’000
2020
$’000
2019
$’000
9
-
(1)
Specialised Breeders Australia
Purchases
107
332
(83)
1
195
158
420
87
(4)
18
Hy-Line Australia Pty Ltd 2
-
5,319
3,230
(850)
(437)
-
-
-
-
-
Pure Foods Eggs Pty Ltd
27
23
-
90
3
8
West Coast Eggs Pty Ltd
(P. Bell / M. Ward)
776
877
154
909
71
127
Lohmann Layers Australia Pty
Purchases
-
-
-
136
-
-
Egg supply /
Purchases
Purchases /
Packaging
sales
Egg sales /
Purchases
Egg sales /
Purchases
(P. Bell / M. Ward)
Pty Ltd 2 (P. Bell)
Days Eggs Pty Ltd
(P. Bell)
(P. Bell)
(P. Bell)
Ltd 2
(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.
2 Mr Bell resigned as director of Specialised Breeders Australia Pty Ltd, Hy-Line Australia Pty Ltd and Lohmann Layers Australia Pty
Ltd effective 31 Oct 2019.
Transactions in the above table represent related party transactions for the full financial year from July 19 – June 20.
56
57
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
Note 25: Subsequent Events
On 6 August 2020, Agriculture Victoria confirmed that the Lethbridge facility had tested positive for the H7N7
Avian Influenza virus. On 25 August 2020, a second farm leased and operated by the company, also located
in the Lethbridge area, tested positive to H7N7. To control the spread of Avian Influenza, the farms (consisting
of a total of 380,000 layers hens) were depopulated with the process completed in the month of August 2020.
This represents 33% of the productive layer capacity of the business. The impact over the balance of FY21 is
expected to be a revenue loss of $18 million. Agriculture Victoria is working with the business on
compensation for loss of hens, poultry products (eggs), feed and any other eligible assets lost or disposed as
part of the disease control order.
As a result, the company has implemented a number of remediation strategies to facilitate a return to
full production as soon as possible including:
-
-
-
-
-
Claiming and receiving compensation in respect of the birds lost.
Taking immediate steps to restore lost bird capacity.
Restoration of the affected farms in line with applicable regulations to replace production. This
is expected to occur in the second half of the 2021 financial year.
The sale and or sale & leaseback of company owned farms to provide additional funds.
Keeping our financiers briefed on the company’s progress and strategies to return to full
production.
Directors’ Declaration
The Directors declare that the financial statements and notes set out on pages 19 to 58 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 2020 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 2020.
This declaration is made in accordance with a resolution of the Directors.
Director
16 October 2020
Melbourne
58
59
Farm Pride Foods Limited and Controlled Entities
Notes to the financial statements
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
Note 25: Subsequent Events
On 6 August 2020, Agriculture Victoria confirmed that the Lethbridge facility had tested positive for the H7N7
Avian Influenza virus. On 25 August 2020, a second farm leased and operated by the company, also located
in the Lethbridge area, tested positive to H7N7. To control the spread of Avian Influenza, the farms (consisting
of a total of 380,000 layers hens) were depopulated with the process completed in the month of August 2020.
This represents 33% of the productive layer capacity of the business. The impact over the balance of FY21 is
expected to be a revenue loss of $18 million. Agriculture Victoria is working with the business on
compensation for loss of hens, poultry products (eggs), feed and any other eligible assets lost or disposed as
part of the disease control order.
As a result, the company has implemented a number of remediation strategies to facilitate a return to
full production as soon as possible including:
-
-
-
-
-
Claiming and receiving compensation in respect of the birds lost.
Taking immediate steps to restore lost bird capacity.
Restoration of the affected farms in line with applicable regulations to replace production. This
is expected to occur in the second half of the 2021 financial year.
The sale and or sale & leaseback of company owned farms to provide additional funds.
Keeping our financiers briefed on the company’s progress and strategies to return to full
production.
Directors’ Declaration
The Directors declare that the financial statements and notes set out on pages 19 to 58 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 2020 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 2020.
This declaration is made in accordance with a resolution of the Directors.
Director
16 October 2020
Melbourne
58
59
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
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 controlled
entities “the Group”, which comprises the consolidated statement of financial position as at 30 June
2020, the consolidated statement of comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, and 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)
(b)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year then ended; and
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 (including Independence Standards) “the Code” that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1(b) in the financial report, which indicates that the Group incurred a net
loss of $2.169 million during the year ended 30 June 2020 and subsequent to year-end the
significant effects of Avian Influenza outbreak on future production. These events or conditions,
along with other matters as set forth in Note 1(b), indicate that a material uncertainty exists that
may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
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 period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the key audit matter
Valuation of flock assets
Valuation of flock assets - $9,528,694
Refer to Note 10: Biological Assets
The Group has $9.53 million ($9.09 as at 30
Our testing of the flock assets valuation focused
on assessing the appropriateness of
management’s judgements when determining
the flock assets’ estimated life.
June 2019) of biological assets, “the flock
Our procedures included, amongst others:
assets”.
The flock assets should be valued at market
value consistent with AASB 141 Agricultural
assets, however, the lack of an active or liquid
market for flock assets means the flock assets
are measured at cost less accumulated
amortisation and impairment losses. The
amortisation rate is based on the estimated
life of an individual flocks within the flock
assets, and consequently the valuation of the
flock assets as a whole is subject to
judgement.
We have focused on this balance given it is
based on significant estimates involving
subjective judgements and uncertainties over
the estimated flock assets life due to the
impact of factors such as disease and
productive capacity of the individual flocks.
• Obtained client schedule for total flock
assets as at 30 June 2020 and agreeing
to the general ledger;
• Assessed the underlying mathematical
accuracy of the client schedule by
performing a recalculation of the written
down value of the flock assets as at 30
June 2020 based on the total capitalised
cost, age and production life of each
flock asset as at 30 June 2020;
• Tested the appropriateness and accuracy
of costs capitalised to flock assets by
verifying a sample of costs back to
supporting invoices/documentation;
• Held discussions with management and
analysed the key assumptions used to
determine productive life for each flock
asset as at 30 June 2020.
• Assessed the adequacy of the
presentation and disclosure of the flock
assets in the financial report as at 30
June 2020.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
60
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
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 controlled
entities “the Group”, which comprises the consolidated statement of financial position as at 30 June
2020, the consolidated statement of comprehensive income, the consolidated statement of changes
in equity and the consolidated statement of cash flows for the year then ended, and 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)
(b)
giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its
financial performance for the year then ended; and
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 (including Independence Standards) “the Code” that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
time of this auditor’s report.
for our opinion.
Material Uncertainty Related to Going Concern
We draw attention to Note 1(b) in the financial report, which indicates that the Group incurred a net
loss of $2.169 million during the year ended 30 June 2020 and subsequent to year-end the
significant effects of Avian Influenza outbreak on future production. These events or conditions,
along with other matters as set forth in Note 1(b), indicate that a material uncertainty exists that
may cast significant doubt on the Group’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
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 period. These matters were addressed in the context
of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not
provide a separate opinion on these matters.
Key Audit Matter
How our audit addressed the key audit matter
Valuation of flock assets
Valuation of flock assets - $9,528,694
Refer to Note 10: Biological Assets
The Group has $9.53 million ($9.09 as at 30
June 2019) of biological assets, “the flock
assets”.
The flock assets should be valued at market
value consistent with AASB 141 Agricultural
assets, however, the lack of an active or liquid
market for flock assets means the flock assets
are measured at cost less accumulated
amortisation and impairment losses. The
amortisation rate is based on the estimated
life of an individual flocks within the flock
assets, and consequently the valuation of the
flock assets as a whole is subject to
judgement.
We have focused on this balance given it is
based on significant estimates involving
subjective judgements and uncertainties over
the estimated flock assets life due to the
impact of factors such as disease and
productive capacity of the individual flocks.
Our testing of the flock assets valuation focused
on assessing the appropriateness of
management’s judgements when determining
the flock assets’ estimated life.
Our procedures included, amongst others:
• Obtained client schedule for total flock
assets as at 30 June 2020 and agreeing
to the general ledger;
• Assessed the underlying mathematical
accuracy of the client schedule by
performing a recalculation of the written
down value of the flock assets as at 30
June 2020 based on the total capitalised
cost, age and production life of each
flock asset as at 30 June 2020;
• Tested the appropriateness and accuracy
of costs capitalised to flock assets by
verifying a sample of costs back to
supporting invoices/documentation;
• Held discussions with management and
analysed the key assumptions used to
determine productive life for each flock
asset as at 30 June 2020.
• Assessed the adequacy of the
presentation and disclosure of the flock
assets in the financial report as at 30
June 2020.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
61
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
Valuation of Property, plant and equipment
Valuation of property, plant and equipment -
$45,020,275
Refer to Note 12: Property, plant and
equipment
The Group has $45.0 million ($45.2 as at 30
June 2019) of property, plant and equipment,
which represents approximately 49% of total
assets.
Australian Accounting Standards require the
Group to assess, at the end of each reporting
period, whether there is any indication of
impairment to assets.
The Group has not recorded any impairment
during the financial year.
We have focused on this balance due to the
significance of the balance and the
determination that property, plant and
equipment is a single cash-generating unit.
The assumptions and methodologies used in
the discounted cash-flow for the impairment
assessment are complex judgements made by
management such as forecasting egg prices
and costings for feed that are affected by
future economic and market conditions as
well as farm capacity.
Our testing of property, plant and equipment
valuation focused on assessing the
appropriateness of management’s judgements in
relation to its determination of cash-generating
units and the associated discounted cash flow.
Our procedures included, amongst others:
• Evaluated the assumptions and
methodologies utilised in the discounted
cash flow prepared by management,
including determination of discount rate,
growth rates and other key assumptions
such as egg prices and costings for feed;
• Evaluated the determination of cash-
generating units;
• Assessed the Group’s results in
comparison to historical actuals and
forecasts and the relatively low impact
of COVID-19 to determine the
reasonableness of the discounted cash
flow;
• Compared forecast future cash flows to
Board approved budgets;
• Tested the mathematical accuracy of the
discounted cash flow model;
• Assessed the impact of sensitivities to
sales, cost of sales and gross margin.
• Assessed the adequacy of the
presentation and disclosure of property,
plant and equipment in the financial
report as at 30 June 2020.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2020, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of 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.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
62
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
Valuation of Property, plant and equipment
Our testing of property, plant and equipment
The Group has $45.0 million ($45.2 as at 30
Our procedures included, amongst others:
Valuation of property, plant and equipment -
$45,020,275
equipment
Refer to Note 12: Property, plant and
June 2019) of property, plant and equipment,
which represents approximately 49% of total
assets.
Australian Accounting Standards require the
Group to assess, at the end of each reporting
period, whether there is any indication of
impairment to assets.
The Group has not recorded any impairment
during the financial year.
We have focused on this balance due to the
significance of the balance and the
determination that property, plant and
equipment is a single cash-generating unit.
The assumptions and methodologies used in
the discounted cash-flow for the impairment
assessment are complex judgements made by
management such as forecasting egg prices
and costings for feed that are affected by
future economic and market conditions as
well as farm capacity.
valuation focused on assessing the
appropriateness of management’s judgements in
relation to its determination of cash-generating
units and the associated discounted cash flow.
• Evaluated the assumptions and
methodologies utilised in the discounted
cash flow prepared by management,
including determination of discount rate,
growth rates and other key assumptions
such as egg prices and costings for feed;
• Evaluated the determination of cash-
generating units;
• Assessed the Group’s results in
comparison to historical actuals and
forecasts and the relatively low impact
of COVID-19 to determine the
reasonableness of the discounted cash
flow;
• Compared forecast future cash flows to
Board approved budgets;
• Tested the mathematical accuracy of the
discounted cash flow model;
• Assessed the impact of sensitivities to
sales, cost of sales and gross margin.
• Assessed the adequacy of the
presentation and disclosure of property,
plant and equipment in the financial
report as at 30 June 2020.
Other Information
The directors are responsible for the other information. The other information comprises the
information included in the Group’s annual report for the year ended 30 June 2020, but does not
include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with the Australian Auditing Standards will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of 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.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
63
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
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.
STEPHEN SCHONBERG
Partner
Date: 15 October 2020
PITCHER PARTNERS
Melbourne
• 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, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period 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 Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 16 of the directors’ report for the
year ended 30 June 2020. In our opinion, the Remuneration Report of Farm Pride Foods Limited and
controlled entities, for the year ended 30 June 2020, complies with section 300A of the Corporations
Act 2001.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
64
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting
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.
STEPHEN SCHONBERG
Partner
Date: 15 October 2020
PITCHER PARTNERS
Melbourne
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, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period 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 Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 16 of the directors’ report for the
year ended 30 June 2020. In our opinion, the Remuneration Report of Farm Pride Foods Limited and
controlled entities, for the year ended 30 June 2020, complies with section 300A of the Corporations
Act 2001.
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Pitcher Partners. An independent Victorian Partnership ABN 27 975 255 196. Level 13, 664 Collins Street, Docklands, VIC 3008
Pitcher Partners is an association of independent firms. Liability limited by a scheme approved under Professional Standards Legislation.
Pitcher Partners is a member of the global network of Baker Tilly International Limited, the members of which are separate and independent legal entities
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
Adelaide Brisbane Melbourne Newcastle Sydney Perth
pitcher.com.au
65
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 (2019: Nil).
(f)
Stock Exchange listing
Publicly accessible information
website:
www.farmpride.com.au
Quotation has been granted for all the ordinary shares of the Company on all members Exchanges
of the Australian Stock Exchange Limited.
For information on corporate governance policies adopted by Farm Pride Foods Ltd refer to our
Farm Pride Foods Limited and Controlled Entities
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 16 October 2020.
(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 Ltd
David Ricardo Asset Management Pty Ltd
Mr Clinton James Quay
Zero Nominees Pty Ltd
1 West Coast Eggs Pty Ltd
2
3
4
5
6
7
8
9
10 Mr Tomasso Montalto + Estate Late Mauro Montalto
11
12
13
14 Mrs Trisha Verran
15
16 Mrs Francesca D’Alberto
17 Miss Jean Shiong Li Ho
18
19 Mr Matthew David Beale
20 Mr Gavin Bruce De Lacy
Brazil Farming Pty Ltd
Neweconomy Com Au Nominees Pty Ltd
Dr Harry Hirschowitz + Mrs Fariba Yeroshalmi
Tangent Value Investors Pty Ltd
Ago Pty Ltd
No. of
shareholders
No. of
shares
452
890
312
317
45
280,850
2,493,224
2,304,996
8,616,041
41,485,064
888
1,012,090
Listed ordinary
shares held
Percentage of
ordinary
shares
27,486,302
2,064,250
2,011,772
1,071,716
1,003,057
608,443
545,804
500,000
464,244
316,861
296,614
260,938
255,295
250,000
242,500
241,994
224,000
204,061
197,000
195,502
38,440,353
49.81
3.74
3.65
1.94
1.82
1.10
0.99
0.91
0.84
0.57
0.54
0.47
0.46
0.45
0.44
0.44
0.41
0.37
0.36
0.35
69.66
66
67
Farm Pride Foods Limited and Controlled Entities
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 (2019: 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
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 16 October 2020.
(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 +
shares are:
The number of shareholders holding less than a marketable parcel of
(b)
Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
1 West Coast Eggs Pty Ltd
Normpat Pty Ltd
Oakmeadow Pty Ltd
Markcamp No 2 Pty Ltd
Glenmon No2 Pty Ltd
Merrill Lynch (Australia) Nominees Pty Ltd
David Ricardo Asset Management Pty Ltd
Mr Clinton James Quay
Zero Nominees Pty Ltd
10 Mr Tomasso Montalto + Estate Late Mauro Montalto
Brazil Farming Pty Ltd
Neweconomy Com Au Nominees Pty Ltd
Dr Harry Hirschowitz + Mrs Fariba Yeroshalmi
2
3
4
5
6
7
8
9
11
12
13
14 Mrs Trisha Verran
15
Tangent Value Investors Pty Ltd
16 Mrs Francesca D’Alberto
17 Miss Jean Shiong Li Ho
18
Ago Pty Ltd
19 Mr Matthew David Beale
20 Mr Gavin Bruce De Lacy
No. of
shareholders
No. of
shares
452
890
312
317
45
280,850
2,493,224
2,304,996
8,616,041
41,485,064
888
1,012,090
Listed ordinary
Percentage of
shares held
ordinary
shares
27,486,302
49.81
2,064,250
2,011,772
1,071,716
1,003,057
608,443
545,804
500,000
464,244
316,861
296,614
260,938
255,295
250,000
242,500
241,994
224,000
204,061
197,000
195,502
3.74
3.65
1.94
1.82
1.10
0.99
0.91
0.84
0.57
0.54
0.47
0.46
0.45
0.44
0.44
0.41
0.37
0.36
0.35
38,440,353
69.66
66
67
We are committed to exceeding
the expectations of our customers
by providing safe, compliant and
quality food products while ensuring
we meet our responsibility to food
safety at all times.
QUALITY AND FOOD SAFETY POLICY
Our Food Safety Management System is an integral part of who we are and what we do. It guides us to deliver
products that are produced to consistently high standards, to meet and exceed our customer’s expectations.
All our products are made in accordance with legislative requirements as set out in the latest Food Standards
Code of Australia & New Zealand, SQF, HACCP, ESA, Customer Standards and relevant Export Control Orders.
Management Systems policies are regularly reviewed and measured against objectives to ensure continual
compatibility with the needs of a business that operates in a challenging commercial environment.
Our commitment to consistently achieving high standards
of quality and food safety in all aspects of our production
requires that we undertake the following:
Regularly review and audit our
Quality and Food Safety systems
We encourage participation and
promotion of quality and food
safety responsibilities amongst all
employees and related third parties
to nurture a culture of continuous
improvement and food safety
Ensure and monitor continuous
training in Food Safety for all
employees
Maintain a high standard of our
Good Manufacturing Practices to
meet customer and regulatory
compliance
Continuously challenge
our Quality and Food Safety
Management System, to
identify gaps and to improve
our performance to even
higher levels of product safety
and quality
Farm Pride’s Management
and Staff are committed to
continuous improvement of
our operations at Farm Pride
Foods and actively drive the
organisation's mission
to be the leading supplier
and marketer of egg-based
products in Australia.
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Fa rm Pride F oods Lt d.
A BN: 4 2 080 590 030
551 CH A NDL ER ROA D
K E YSBOROUGH, V IC 3173
AUS T R A L I A
T: 1300 693 3 47
farmpride.com.au
Proudly Resilient
Annual Rep or t 2020
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