Farm Pride Foods
Limited
ABN 42 080 590 030
and Controlled Entities
Financial Report
For the year ended 30 June 2024
Farm Pride Foods Limited and Controlled Entities
1
Corporate Information
Farm Pride Foods Ltd.
ABN 42 080 590 030
Directors
George Palatianos (Non-Executive Chairman)
Malcolm Ward (Non-Executive Director)
Darren Lurie (Managing Director)
Management Team
Darren Lurie (Managing Director)
Tony Enache (Chief Financial Officer)
Company Secretary
Justin Mouchacca (appointed 10 October 2023)
Registered office and principal place of business
551 Chandler Road
Keysborough, Victoria 3173
+61 3 9798 7077
Solicitors
QR Lawyers
Level 6
400 Collins Street
Melbourne, Victoria 3000
Financiers
MC FP Pty Ltd
Level 18, 90 Collins Street
Melbourne, Victoria 3000
Tradeplus24 Australia
Level 2, 696 Bourke St
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
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
2
TABLE OF CONTENTS
Chairman’s Report
3
Directors’ Report
4
Auditor’s Independence Declaration
18
Financial Report for the year ended 30 June 2024
•
Consolidated Statement of Profit or Loss and Other Comprehensive
Income
19
•
Consolidated Statement of Financial Position
20
•
Consolidated Statement of Changes in Equity
21
•
Consolidated Statement of Cash Flows
22
•
Notes to the Consolidated Financial Statements
23
Consolidated Entity Disclosure Statement
50
Directors’ Declaration
51
Independent Auditor’s Report
52
ASX Additional Information
57
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
3
Chairman’s Report
The Company achieved substantial improvement in the financial year ending 30 June 2024 (FY24).
Management appointments during FY24 played a pivotal role in the improved operating and financial
performance and focus by the whole team is assisting the Company to recover as quickly as possible
from the impact of avian influenza on our 3 farms in the Lethbridge, Victoria area.
The Company continued to invest in capital expenditure and repairs and maintenance to drive
operational improvements and the profitability and reliability of the business. During FY24, $1.2m and
$2.7m was spent respectively compared to $0.5m and $2.2m in FY23. These expenditures will
contribute to further improved financial performance in FY25.
Total Revenue increased by 23% to $101.85m (FY23: $82.78m) with an improvement in Earnings
before tax, interest, depreciation and amortisation of $7.25m and a Net Profit improvement of $6.77m
on FY23.
The Company has taken a number of actions during and post FY24 to improve the Company’s
balance sheet including:
a)
Completion of the sub-division and sale of the Company’s surplus non-arable land at
its Lethbridge property receiving $2.35m (net of costs) of which $2.00m was used to repay
borrowings.
b)
Renewal of the Company’s existing debt facility for $12.55m with MC FP Pty Ltd
(arranged by Merricks Capital) for 18 months until 31 December 2025.
As part of the renewal of this facility, three Company owned farm properties were valued by
external valuers at $25.9m for mortgage purposes. The three properties are in the balance
sheet at historical cost less accumulated depreciation of $18.22m.
c)
Renewal of the Company’s existing debt facility of $2m on 7 August 2024 with
Tradeplus24 Australia until 31 August 2025.
d)
Conversion of $1.035m of Director related loans to equity following approval at the
General Meeting on 31 July 2024; and
e)
A non-renounceable, fully underwritten pro rata entitlement rights issue to raise
approximately $6.17m before costs. This is expected to be completed in the first week of
September 2024.
In June 2024, after many years of service to the Company, Mr Bruce De Lacy resigned from the
Board. The Board on behalf of all Farm Pride Foods Ltd stakeholders thank Bruce for his significant
contribution over many years and wish him the very best for the future.
The Board thanks all our customers and suppliers for their continued support, particularly following
the avian influenza event in June 2024. Thanks also to all our employees who have worked tirelessly
turning around the business and placing the Company in a stronger position and now striving to return
quickly to normal production levels and improved profitability.
George Palatianos
Chairman
30 August 2024
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
4
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 2024 and auditor’s report thereon.
Directors
The names of directors in office at any time during or since the end of the year are:
George Palatianos
Non-executive Director, Chair
Malcolm Ward
Non-executive Director
Bruce De Lacy
Non-executive Director (resigned 25 June 2024)
Darren Lurie
Managing 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 Ltd
(“Statutory Profit”) for the year ended 30 June 2024 was a loss of $2.345 million (2023: $9.112
million loss). Earnings before interest, tax, depreciation and amortisation (EBITDA) was $7.045
million (2023: $0.205 million loss).
The following table reconciles the Statutory Profit to EBITDA for the year ended 30 June 2024:
30 June 2024
$’000
30 June 2023
$’000
Statutory (loss)
(2,345)
(9,112)
Add back:
- Interest (finance costs)
3,221
2,518
- Depreciation
6,169
6,389
EBITDA
7,045
(205)
For further discussion of the review and results of operations of the group reference should be made to
the Chairman’s Report dated 30 August 2024.
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
Rights Issue: On 11 June 2024, the Company announced a proposed non-renounceable fully
underwritten pro-rata entitlement offer to raise approximately $6.17m before costs (Rights Issue). The
Rights Issue offer booklet was sent to shareholders on 1 July 2024 and the offer closed on 16 August
2024. The Rights Issue was underwritten by Willow Heights Pty Ltd, an entity associated with Mr.
George Palatianos, the Group’s Chair. All funds are to be received by 6 September 2024. Funds
raised under the Rights Issue will be used to support the Group’s operations while it recovers from the
impacts of Avian Influenza (AI) and to further enhance and expand the Group’s farming, grading and
manufacturing operations
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
5
On 23 August 2024 the Company issued 9,114,626 Rights Issue shares with the balance of the
Rights Issue shares to be issued to the underwriters in September 2024.
Conversion of Loans to Equity: At the General Meeting held on 31 Jul 2024 approval was given for
the conversion of loans to equity. On 6 August 2024, part or all of the following loans (as indicated)
that were provided to the Group by interests associated with the Group’s board of directors were
converted.
•
$835,000 of the $1,750,000 loan provided by Ackenberg Holdings Pty Ltd (an interest
associated with Mr. George Palatianos) was converted into equity. 8,350,000 fully paid
ordinary shares were issued to Ackenberg Holdings Pty Ltd at a deemed issue price of $0.10
per share.
•
The $200,000 loan provided by LDL Custodians Pty Ltd (an interest associated with Mr.
Darren Lurie) was converted into equity. 2,000,000 fully paid ordinary shares were issued to
LDL Custodians Pty Ltd at a deemed issue price of $0.10 per share.
Issue of shares to LDL Custodians Pty Ltd (an interest associated with Mr. Darren Lurie -
Managing Director): At the General Meeting held on 31 July 2024, approval was given for the issue
of 1,090,000 fully paid ordinary shares,1,090,000 Performance Rights and 3,600,000 options for nil
consideration to LDL Custodians Pty Ltd. These were issued on 6 August 2024.
Prior to the issue of new shares for the loan conversions, Rights Issue and shares issued to LDL
Custodians Pty Ltd, described above, the Group’s largest shareholder was West Coast Eggs Pty Ltd,
holding 43,519,979 or 30.25% of the shares in the Group. Subsequent to the issue of the new shares
described above, West Coast Eggs Pty Ltd continues to be the Group’s largest shareholder, holding
43,519,979 or 26.47% of the shares in the Group. Further new Rights Issue shares allocated to the
underwriters will be issued in September 2024.
Refinancing of Working Capital Loan: On 7 August 2024, the Group successfully refinanced its
existing working capital loan of $2 million with Tradeplus24 Australia for a period of 12 months until 31
August 2025.
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 and performance rights granted to directors and officers
Options and performance rights over unissued ordinary shares granted during or since the end of the
financial year to directors and any of the 5 most highly remunerated officers of the Group (other than the
directors) as part of their remuneration, are outlined in the following table:
Number of performance
rights granted
Number of options
granted
LDL Custodians Pty Ltd (an
interest associated with Mr.
Darren Lurie)
1,090,000 (i)
3,600,000 (i)
i) Mr Darren Lurie was appointed as the Managing Director of the Group by shareholders at an
extraordinary general meeting of the Group held on 23 February 2023 (2023 EGM). Further resolutions
were passed by shareholders at the 2023 EGM relating to the grant and issue to LDL Custodians Pty
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
6
Ltd of 2,180,000 performance rights (Performance Rights) and 3,600,000 options (Options) (together,
Securities).
Due to an administrative oversight, the 2,180,000 Performance Rights and 3,600,000 Options were not
issued to LDL Custodians Pty Ltd within one month after the date of the 2023 EGM as required by ASX
Listing Rule 10.13.5. As the Securities were not issued within the period required by the ASX Listing
Rules pursuant to the approval at the 2023 EGM, the Group was unable to issue the Securities pursuant
to the approval at the 2023 EGM. The first two tranches of the Performance Rights would have
otherwise vested during the Financial Year.
Consequently, following approval at the General Meeting of 31 July 2024 the Group reissued 1,090,000
Performance Rights and 3,600,000 Options to LDL Custodians Pty Ltd. The Group also issued
1,090,000 ordinary Shares to LDL Custodians Pty Ltd.
Unissued shares under options and performance rights
There are 3,600,000 unissued shares under share options and 1,090,000 unissued shares under
performance rights that are outstanding at the date of the directors’ report.
Tranche
Number of
share options
Exercise
Price
Vesting Condition
Expiry Date
1
1,200,000
$0.055
Achieving EBITDA of $4m during any
financial year before 30 June 2025
3 years from
vesting
2
1,200,000
$0.055
Achieving EBITDA of $6m during any
financial year before 30 June 2026
3 years from
vesting
3
1,200,000
$0.055
Achieving EBITDA of $8m during any
financial year before 30 June 2027
3 years from
vesting
Total
Options
3,600,000
Tranche
Number of performance rights
Exercise Price
Vesting Date
1
545,000
-
23rd August 2024
2
545,000
-
23rd February 2025
Total Rights
1,090,000
Shares issued on exercise of options:
No shares or interests were issued during or since the end of the financial year as a result of the
exercise of an option over unissued shares or interest.
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.
George Palatianos
Non-executive Chairman – Appointed 23 February 2023
George is a highly experienced Investment Director and Group CFO. He has held prominent roles in
major organisations within various business sectors including agri-business, construction, property
investment and finance. These roles include Group CFO of the Costa Group, Hickory Construction
Group Commercial Director of Prudential Equity Partners and Director of Integration and Growth at
MaxCap Group.
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
7
Malcolm Ward
Non-executive Director – Appointed 30 May 2008, Chair of the Audit Committee
Malcolm has been in the egg industry for over 35 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
Non-executive director– Appointed 30 November 2018, Resigned 25 June 2024
Company Secretary – Appointed 16 December 2022, Resigned 10 October 2023
Bruce has extensive experience in the egg industry and has previously been employed in a number of
positions at the Company including Chief Executive Officer, General Manager and Chief Operating
Officer.
Darren Lurie
Managing Director – Appointed 23 February 2023
Darren is a former non-executive director and Chair of Farm Pride Foods Ltd. He is an experienced
leader of businesses and management teams and has previously held positions as Managing
Director, Chair and CFO in a number of companies, including ASX listed company Optiscan Imaging
Ltd (ASX:OIL) and EduCo International Group.
Darren has 15 years’ experience as a corporate advisor leading finance, strategy and merger and
acquisition assignments across a range of finance and investor communities.
Justin Mouchacca
Company Secretary – Appointed 10 October 2023
Directors’ meetings
Board of Directors
Audit Committee
Eligible to
attend
Attended
Eligible to
attend
Attended
Malcolm Ward
15
15
3
3
Bruce De Lacy
14
14
3
3
George Palatianos
15
15
3
3
Darren Lurie
15
15
3
3
Directors’ interests in shares
Directors’ relevant interests in shares of Farm Pride Foods Limited or options over shares in the
Company are detailed below:
Ordinary
shares of
Farm Pride
Foods
Limited
Options over
shares in Farm
Pride Foods
Limited
Rights over
shares in Farm
Pride Foods
Limited
Malcolm Ward (i)
3,809,576
-
-
Bruce De Lacy
2,214,748
-
-
George Palatianos
22,465,547
-
-
Darren Lurie (ii)
14,545,454
3,600,000
1,090,000
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
8
(i) Malcolm Ward has an indirect interest in the 43,519,979 shares held by West Coast Eggs Pty Ltd
(2023: 43,519,979 shares) and the 1,584 shares held by Southern Egg Pty Ltd (2023: 1,584).
(ii) As described on Page 5 of the Directors Report, due to an administrative oversight, the issue of
2,180,000 Performance Rights and 3,600,000 Share Options to LDL Custodians Pty Ltd did not comply
with ASX Listing Rules. Following approval at the General Meeting of 31 July 2024 the Group issued the
Performance Rights and Options to LDL Custodians Pty Ltd. The Group also issued 1,090,000 fully paid
ordinary shares for nil consideration to LDL Custodians Pty Ltd as described in Note 27.
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
Group.
Under the Directors and Officers Liability Insurance Policy the company shall not release to any third party or
otherwise publish details of the nature of the liabilities insured by the policy or the amount of the premium.
Accordingly, the Group relies on section 300 (9) of the Corporations Act 2001 to exempt it from the
requirement to disclose the nature of the liability insured against and the premium amount of the policy.
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
Non-audit services are approved by resolution of the Audit and Risk 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 and Risk 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 (including
independence Standards), 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) for non-audit services:
2024
$
2023
$
Taxation services
15,000
40,109
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
9
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).
Remuneration Report (Audited)
The directors present the group’s 2024 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 Ltd 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.
(b)
Remuneration policy
The performance of the group depends upon the quality of its directors and executives. To be
successful, the group must attract, motivate and retain highly skilled directors and executives. To this
end, the group adopts the following principles in its remuneration framework:
–
Provide competitive rewards to attract high caliber executives;
–
Link executive rewards to the performance of the group and the creation of shareholder value;
–
Establish appropriate performance hurdles for variable executive remuneration;
–
Meet the Group’s commitment to a diverse and inclusive workplace;
–
Promote the Group 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.
Name
Position
Term as KMP
Non-Executive Directors
Malcolm Ward
Non-executive Director
Full financial year
Bruce De Lacy
Non-executive Director
Company Secretary
Until 25 June 2024
Until 10 October 2023
George Palatianos
Non-executive Director
Full financial year
Executive Directors
Darren Lurie
Managing Director
Full financial year
Senior Executives
Tony Enache
Group Chief Financial Officer
Full financial year
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
10
(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 2024, 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 2024 is detailed in the table
titled KMP Remuneration on page 12 (the ‘Remuneration Table’).
(e)
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 the group, business unit and individual performance against targets
set by reference to appropriate benchmarks
–
Aligning the interest of executives with those of shareholders
–
Linking reward with the strategic goals and performance of the group
–
Ensuring total remuneration is competitive by market standards.
Structure
In determining the level and make-up of executive remuneration, the board of directors engage
external consultants on market levels of remuneration for comparable roles. Remuneration consists of
the following key elements:
–
Fixed remuneration
–
Variable remuneration.
The proportion of fixed remuneration and variable remuneration is established for each executive by
the board of directors. The variable portion consists of a short-term cash bonus which is performance-
based and is disclosed separately in the Remuneration Table.
The board of directors also considers current market conventions with regards to the splits between
fixed, short-term and long-term incentive elements.
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
11
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 group and
individual performance targets.
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.
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
12
(f)
Directors’ remuneration
Short Term Benefits
Long Term
Benefits
Post-
Employment
Share based
payments
Salary and
fees
Performance
Based
Payment
Non-cash
Benefits
Long Service
Leave
Superannuation
Options &
Performance
Rights
Performance
Based
Total
remuneration
$
$
$
$
$
$
%
$
2024
Malcolm Ward
72,398
-
-
-
7,964
-
-
80,362
Bruce De Lacy
63,609
-
-
-
6,968
-
-
70,577
George Palatianos
70,000
-
-
-
-
-
-
70,000
Darren Lurie
356,165
-
-
-
27,399
212,092
-
595,656
562,172
-
-
-
42,331
212,092
-
816,595
2023
Malcolm Ward
67,420
-
-
-
7,079
-
-
74,499
Bruce De Lacy
200,272
-
-
-
16,315
-
-
216,587
George Palatianos
25,757
-
-
-
-
-
-
25,757
Darren Lurie
118,462
-
-
-
10,281
115,273
-
244,016
Peter Bell
22,414
-
-
-
2,354
-
-
24,768
Beth Mathison
48,258
-
-
-
5,067
-
-
53,325
Roland Roccioletti
91,483
-
-
9,606
-
-
101,089
574,066
-
-
-
50,702
115,273
-
740,041
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
13
(g)
Executives’ remuneration
Short Term Benefits
Long Term
Benefits
Post-
Employment
Salary and
fees
Performance
Based Payment
Non-cash
Benefits
Long Service
Leave
Superannuation
Performance
Based
Total
remuneration
$
$
$
$
$
%
$
2024
Tony Enache3
196,138
-
-
-
21,450
-
217,588
196,138
-
-
-
21,450
-
217,588
2023
Daryl Bird1
178,142
-
-
-
12,063
-
190,205
Robin Donohue2
120,209
-
-
-
11,106
-
131,315
Tony Enache3
32,250
-
-
-
3,386
-
35,636
330,601
-
-
-
26,555
-
357,156
1 Appointed as Chief Operating Officer on 8 October 2018, Chief Executive Officer on 1 December 2018, Resigned 27 December 2022
2 Appointed as Chief Financial Officer on 31 May 2021, Resigned 16 Dec 2022
3 Appointed as Chief Financial Officer on 26 April 2023
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
14
Share options included in remuneration The remuneration of Mr. Darren Lurie (Managing Director) includes the share options and performance rights granted to LDL
Custodians Pty Ltd (an interest associated with Mr. Darren Lurie) that vest upon the satisfaction of specified performance conditions as detailed in the following tables:
Tranche
(iii)
Number of
Share
options (i)
Grant Date
Fair value
per option
(at grant
date) (ii)
Total value of
options (ii)
Vesting Condition
Exercise
price per
option
Expiry Date
Number of
options
vested
during the
year
Number of
options
lapsed during
the year
1
1,200,000
23rd February
2023
$0.070
$84,000
Achieving EBITDA of $4m
during any financial year
before 30 June 2025
$0.055
3 years from
vesting
1,200,000
-
2
1,200,000
23rd February
2023
$0.075
$90,000
Achieving EBITDA of $6m
during any financial year
before 30 June 2026
$0.055
3 years from
vesting
1,200,000
-
3
1,200,000
23rd February
2023
$0.079
$94,800
Achieving EBITDA of $8m
during any financial year
before 30 June 2027
$0.055
3 years from
vesting
-
-
Total
Options
3,600,000
$268,800
Tranche
(iii)
Number of
Performance
rights (i)
Grant Date
Fair value
per right
(at grant
date) (ii)
Total value of
rights granted (ii)
Vesting Condition
Exercise
Price per
right
Number
of rights
vested
during
the year
(iii)
Number
of rights
lapsed
during
the year
Expiry
Date
Vesting Date
1
545,000
23rd February
2023
$0.11
$59,950
Remaining employed at
the group
-
-
23rd August
2023
2
545,000
23rd February
2023
$0.11
$59,950
Remaining employed at
the group
-
-
23rd February
2024
3
545,000
23rd February
2023
$0.11
$59,950
Remaining employed at
the group
-
-
23rd August
2024
4
545,000
23rd February
2023
$0.11
$59,950
Remaining employed at
the group
-
-
23rd February
2025
Total
Rights
2,180,000
$239,800
(i) Options and rights are granted over ordinary shares of the Group. Vested options and rights are exercisable on a one-for-one basis.
(ii) The fair value of options and rights granted is determined at grant date, using the Black-Scholes model. This amount is included in remuneration of executive directors and other key management personnel over the vesting period (i.e., a portion is
allocated to each financial year within the vesting period).
(iii)As described on Page 5 of the Directors Report, Due to an administrative oversight, the issue of 2,180,000 Performance Rights and 3,600,000 Share Options didn’t comply with ASX Listing Rules. Consequently, the Group issued the Performance
Rights and Options subsequent to 30 June 2024. The first two tranches of the Performance Rights would have otherwise vested during the Financial Year. The Group also issued 1,090,000 of fully paid ordinary shares for nil consideration to LDL
Custodians Pty Ltd subsequent to 30 June 2024 as described in Note 27.
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
15
(h)
Shareholdings of KMP
Balance
1 July 2023
Received as
remuneration
Options
exercised
Other
On market
purchases/
(sales)
Balance
30 June 2024
Malcolm Ward
3,809,576
-
-
-
3,809,576
Bruce De Lacy
2,214,748
-
-
-
2,214,748
George Palatianos
21,818,182
-
-
647,365
22,465,547
Darren Lurie
14,545,454
-
-
-
14,545,454
Tony Enache
-
-
-
-
-
42,387,960
-
-
647,365
43,035,325
Malcolm Ward has an indirect interest in the 43,519,979 shares held by West Coast Eggs Pty Ltd (2023: 43,519,979
shares) and the 1,584 shares held by Southern Egg Pty Ltd (2023: 1,584).
(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 entities
Transaction
Revenue
Expenditure
Balance
Receivable /
(Payable)
2024
$’000
2023
$’000
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Ackenberg Holdings Pty Ltd1
(G. Palatianos)
Loan Interest
-
-
118
-
(1,750)
-
Oakmeadow Pty Ltd2
(M. Ward)
Loan Interest
-
-
7
6
(300)
-
LDL Custodians Pty Ltd3
(D. Lurie)
Loan Interest
-
-
6
-
(200)
-
West Coast Eggs Pty Ltd2
(P. Bell/M. Ward)
Egg sales /
Purchases
-
141
-
331
-
(46)
AAA Egg Company Pty Ltd2
(P.Bell/M. Ward)
Loan Interest
-
-
-
12
-
-
Siamje Pty Ltd4
(D. Lurie)
Consulting
-
-
-
84
-
-
Bruce De Lacy5
Loan Interest
-
-
3
-
-
-
Days Eggs Pty Ltd2
(P. Bell/ M. Ward)
Egg sales /
Purchases
-
8
149
223
-
(52)
Pure Foods Eggs Pty Ltd2
(P. Bell)
Egg sales /
Purchases
-
-
-
-
-
-
Morago Holdings Pty Ltd2
(P. Bell)
Loan Interest
-
-
-
17
-
-
1George Palatianos through his related entity provided unsecured interest-bearing loans during the year.
2Malcolm Ward and Peter Bell through their related entities provides eggs and egg products to and acquire eggs, egg product and packaging from Farm
Pride Foods Limited and its controlled entities. Malcolm Ward and Peter Bell through their related entities also provided unsecured interest-
bearing loans. These transactions are on normal trading terms and conditions. Peter Bell resigned as director in September 2022.
3Darren Lurie through his related entity (LDL Custodians) provided unsecured interest-bearing loans during the year.
4Darren Lurie through his related entity (Siamje) had provided consulting services before his appointment as director in February 2023.
5Bruce De Lacy provided unsecured interest-bearing loans during the year.
Transactions in the above table represent related party transactions for the full financial year from July ‘23 – June ’24 and comparatives for July ’22 -
June ‘23.
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
16
(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:
Managing Director
Darren Lurie is the Managing Director of the Group appointed on 23 February 2023. Darren is employed under a
standard employment contract with no defined length of tenure. Under the terms of his employment contract:
•
Darren may resign from his position by providing the group with six months written notice,
•
The group may terminate this agreement by providing six 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,
•
Darren is awarded share options and performance rights that vest upon the satisfaction of specified
performance conditions.
Details of Darren Lurie’s salary are detailed in the Remuneration Table.
Chief Financial Officer
Tony Enache is the Chief Financial Officer of the Group appointed 26 April 2023. Tony is employed under a
standard employment contract with no defined length of tenure.
•
Tony may resign from his position by providing the group with six weeks written notice,
•
The group may terminate this agreement by providing six weeks 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.
Details of Tony Enache’s salary are detailed in the Remuneration Table.
(k)
Revenue and Other Income
The group’s revenue, profit before tax and earnings per share for the last five financial years is presented in the table
below:
2024
$’000
2023
$’000
2022
$’000
2021
$’000
2020
$’000
Revenue
101,854
82,842
76,577
76,991
90,327
Net (loss)/profit before tax
(2,345)
(9,112)
(13,955)
(14,518)
(3,099)
Net (loss)/profit after tax
(2,345)
(9,112)
(19,782)
(11,971)
(2,169)
Share price at end of year in dollars
0.097
0.12
0.115
0.42
0.27
Basic (loss)/earnings cents per share
(1.63)
(9.89)
(35.85)
(21.69)
(3.93)
Diluted (loss)/earnings cents per share
(1.63)
(9.89)
(35.85)
(21.69)
(3.93)
Farm Pride Foods Limited and Controlled Entities
Directors’ Report
17
Voting and comments made at the company’s 2023 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 votes were cast as ‘yes’ 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.
George Palatianos
Director
Melbourne
30 August 2024
FARM PRIDE FOODS LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
TO THE DIRECTORS OF FARM PRIDE FOODS LIMITED
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
In relation to the independent audit for the year ended 30 June 2024, to the best of my knowledge and
belief there have been:
(i)
No contraventions of the auditor independence requirements of the Corporations Act 2001; and
(ii)
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
PITCHER PARTNERS
Partner
Melbourne
Date: 30 August 2024
18
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Profit or Loss and Other Comprehensive Income
19
Notes
2024
$’000
2023
$’000
Revenue and other income
Revenue from contracts with customers
4
97,069
82,677
Other income
4
4,785
165
101,854
82,842
Less: Expenses
Changes in inventories of finished goods and work in progress
5
1,355
(307)
Raw materials and consumables used
5
(70,255)
(59,922)
Employee benefits expense
5
(22,531)
(18,635)
Depreciation
5
(6,169)
(6,389)
Loss on disposal of property, plant & equipment and lease
assets
-
(46)
Finance costs
5
(3,221)
(2,518)
Other expenses
(3,378)
(4,137)
(Loss) before income tax
(2,345)
(9,112)
Income tax (expense)
6
-
-
(Loss) from continuing operations
(2,345)
(9,112)
(Loss) for the year
(2,345)
(9,112)
Total comprehensive (loss) for the period
(2,345)
(9,112)
Basic (loss) per share (cents per share)
19
(1.63)
(9.89)
Diluted (loss) per share (cents per share)
19
(1.63)
(9.89)
The above statement should be read in conjunction with the accompanying notes
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Financial Position
20
Notes
2024
$’000
2023
$’000
Current Assets
Cash and short-term deposits
21
1,686
1,987
Trade and other receivables
8
12,005
8,619
Inventories
9
5,900
4,545
Biological assets
10
5,301
9,662
Other current assets
11
677
757
Assets held for sale
12
-
1,822
Total current assets
25,569
27,392
Non-current assets
Biological assets
10
433
349
Property, plant and equipment
13
20,549
21,838
Lease assets
14
14,260
6,336
Total non-current assets
35,242
28,523
TOTAL ASSETS
60,811
55,915
Current liabilities
Trade and other payables
15
12,333
14,327
Lease liabilities
14
3,635
3,305
Borrowings
16
4,455
190
Provisions
17
2,290
1,874
Total current liabilities
22,713
19,696
Non-current liabilities
Borrowings
16
12,659
15,624
Lease liabilities
14
22,519
15,429
Provisions
17
98
115
Total non-current liabilities
35,276
31,168
TOTAL LIABILITIES
57,989
50,864
NET ASSETS
2,822
5,051
EQUITY
Contributed equity
18
34,307
34,307
Share option reserve
20
187
71
Retained losses
(31,672)
(29,327)
2,822
5,051
The above statement should be read in conjunction with the accompanying notes.
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Changes in Equity
21
Contributed
equity
Share
Option
Reserve
Retained
losses
Total
$’000
$’000
$’000
$’000
Balance as at 1 July 2023
34,307
71
(29,327)
5,051
Loss for the year
-
-
(2,345)
(2,345)
Total comprehensive income
-
-
(2,345)
(2,345)
Transactions with owners in their
capacity as owners
Share based payments
116
116
Balance as at 30 June 2024
34,307
187
(31,672)
2,822
Balance as at 1 July 2022
29,578
-
(20,215)
9,363
Loss for the year
-
-
(9,112)
(9,112)
Total comprehensive income
-
-
(9,112)
(9,112)
Transactions with owners in their
capacity as owners
Issue of ordinary shares
4,877
-
-
4,877
Shares issue costs
(148)
-
-
(148)
Share based payments
71
-
71
Balance as at 30 June 2023
34,307
71
(29,327)
5,051
The above statement should be read in conjunction with the accompanying notes.
Farm Pride Foods Limited and Controlled Entities
Consolidated Statement of Cash Flows
22
Notes
2024
$’000
2023
Restated
$’000
Cash flow from operating activities
Receipts from customers
104,261
88,959
Payments to suppliers and employees
(98,401)
(88,650)
Finance costs paid
(2,929)
(2,417)
Net cash provided by/(used in) operating activities
21
2,931
(2,108)
Cash flow from investing activities
Proceeds from sale of asset held for sale net of transaction costs
2,345
-
Payment for property, plant and equipment
(1,207)
(529)
Proceeds from sale of property, plant and equipment
-
6
Net cash provided by/(used in) investing activities
1,138
(523)
Cash flow from financing activities
Proceeds from Issue of new shares net of transaction costs
-
4,729
Repayment of borrowings
(4,211)
(5,805)
Proceeds from borrowings
4,000
8,050
Repayment of lease liabilities
(4,159)
(4,506)
Net cash provided by/ (used in) financing activities
(4,370)
2,468
Net (decrease)/increase in cash and cash equivalents
(301)
(163)
Cash and cash equivalents at beginning of the year
1,987
2,150
Cash and cash equivalents at end of the year
21
1,686
1,987
The above statement should be read in conjunction with the accompanying notes.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
23
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.
The financial report was authorised for issue by the directors as at 30 August 2024.
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 group’s accounting policies. Those estimates and judgements significant to the
financial report are disclosed in Note 2.
(b) Going concern
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.
During the year ended 30 June 2024 (FY24) the Group incurred a net loss after tax of $2.345
million (2023: loss $9.112 million). This improved financial performance was also reflected in the
EBITDA of the Group which improved from negative $0.205 million in FY23 to positive $7.045m in
FY24. Net cash flow from operating activities was an inflow of $2.931 million (2023: cash outflow
$2.108 million). As at 30 June 2024 current assets of $25.569 million exceeded current liabilities of
$22.713 million by $2.856 million. (2023: current assets of $27.392 million exceeded current
liabilities of $19.696 million by $7.696 million). Borrowings of $12.659 million (2023 $15.624 million)
are classified as non-current.
As described in Note 16 the Group has four debt facilities at 30 June 2024 providing funding of up
to $17.154 million. These facilities were drawn to $17.114 million as at 30 June 2024. The largest
facility expires on 31 December 2025.
In determining the basis for preparation of the financial report, the directors have assessed the
financial performance, future operating plans, financial forecasts, existing financial position and
recent equity raising by the Group. The directors believe there are reasonable grounds to expect
the Group to be able to continue as a going concern for at least 12 months from the date of issue of
the financial report, which contemplates continuity of normal business activities and the realisation
of assets and the settlement of liabilities in the ordinary course of business. It is acknowledged
however that there are uncertainties associated with the forecast assumptions including the ability
to achieve forecast revenue levels and gross profit margins, and to achieve forecast cost
reductions and efficiencies.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
24
As a result of the above, the directors have concluded that the going concern basis is appropriate.
Given the circumstances detailed above and conditions affecting the Australian egg and grain
industry more broadly, there exists uncertainty that could cast doubt on the ability of the Group to
continue as a going concern and therefore, whether it will be able to realise its assets and
extinguish its liabilities in the normal course of business, and at
the amounts stated in the financial report.
(c) 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 approximately 60
weeks. The flocks are held for the purposes of producing eggs.
(d) 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.
(e) Cash and cash equivalents
Cash and cash equivalents include cash on hand, demand deposits, short-term deposits with an
original maturity of three months or less, and bank overdrafts. Bank overdrafts are shown within
borrowings in current liabilities in the statement of financial position.
(f) Restatement of prior year statement of cash flow:
In June 2023, the Group originally recognised a trade payable for insurance premium funding and
the payments associated with the insurance premium funding as cash outflows from operating
activities. In June 2024, it was identified that the liability should have been recognised in
borrowings and the associated cashflows should have been presented as cash outflows from
financing activities. The comparative figures for the year ended 30 June 2023 have been restated
as follows:
2023
2023
Restated
Cash flow from operating activities
$’000
$’000
Receipts from customers
88,959
88,959
Payments to suppliers and employees
(89,945)
(88,650)
Finance costs
(2,417)
(2,417)
Net cash (used in) operating activities
(3,403)
(2,108)
Cash flow from investing activities
Proceeds from sale of property, plant and equipment
6
6
Payment for property, plant and equipment
(529)
(529)
Net cash (used in) investing activities
(523)
(523)
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
25
Cash flow from financing activities
Proceeds from Issue of new shares net of transaction costs
4,729
4,729
Repayment of borrowings
(4,510)
(5,805)
Proceeds from borrowings
8,050
8,050
Repayment of lease liability
(4,506)
(4,506)
Net cash provided by financing activities
3,763
2,468
Net (decrease) in cash and cash equivalents
(163)
(163)
Cash and cash equivalents at beginning of the half-year
2,150
2,150
Cash and cash equivalents at end of the half-year
1,987
1,987
In summary, this resulted in a reduction in net cash outflows from operating activities of $1.295
million and a reduction in net cash inflows from financing activities of $1.295 million.
(g) Employee benefits
Provisions for short-term employee benefits, including annual leave that are expected to be settled
wholly within twelve months after the end of the reporting period, are measured at the (undiscounted)
amount of the benefit expected to be paid.
Provisions for other long-term employee benefits, including long service leave and annual leave that
are not expected to be settled wholly within twelve months after the end of the reporting period, are
measured at the present value of the expected benefit to be paid in respect of the services provided
by employees up to the reporting date.
(h) Events after the reporting period
Events after the reporting period are those events, favourable or unfavourable, that occur between the
end of the reporting period and the date when the financial report is authorised for issue.
The amounts recognised in the financial statements reflect events after the reporting period that
provide evidence of conditions that existed at the reporting date. Whereas events after the reporting
period that are indicative of conditions that arose after the reporting period (i.e. which did not exist at
the reporting date) are excluded from the determination of the amounts recognised in the financial
statements.
(i) Financial instruments
Financial assets
Financial assets are measured at either amortised cost or fair value on the basis of the Group’s
business model for managing the financial asset and the contractual cash flow characteristics of the
financial asset.
Payables
Contingent consideration payable by the Group for the acquisition of a business is measured at fair
value. All other payables are measured at amortised cost.
Borrowings
Borrowings are measured at amortised cost.
Impairment of financial assets
The Group recognises an allowance for expected credit losses in respect of receivables from
contracts with customers, contract assets and lease receivables on the basis of the lifetime expected
credit losses of the financial asset, reflecting credit losses that are expected to result from default
events over the life of the financial asset.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
26
The Group recognises an allowance for expected credit losses for all other financial assets subject to
impairment testing on the basis of:
•
the lifetime expected credit losses of the financial asset, for those other receivables for
which a significant increase in credit risk has been identified, reflecting credit losses that are expected
to result from default events over the life of the financial asset; and
•
the 12-month expected credit losses of the financial asset, for those other receivables for
which no significant increase in credit risk has been identified, reflecting the portion of lifetime
expected credit losses that are expected to result from default events within twelve months after the
end of the reporting period.
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 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.
(j) 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.
(k) Foreign currency translations and balances
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.
(l) 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.
(m) Impairment of non-financial assets
Non-financial assets, including property, plant and equipment and lease assets are tested for impairment
whenever events or circumstances indicate that the asset may be impaired.
For impairment assessment purposes, assets are generally grouped at the lowest levels for which there
are largely independent cash inflows (‘cash generating units’). Accordingly, most assets are tested for
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
27
impairment at the cash generating unit level. An impairment loss is recognised when the carrying amount
of an asset or cash generating unit (to which the asset belongs) exceeds its recoverable amount.
(n) Income tax
Current income tax expense 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.
(o) 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.
(p) Leases
Lease assets are measured at cost less accumulated depreciation and any accumulated impairment
losses. Lease assets are depreciated over the shorter of the lease term and the estimated useful life
of the underlying asset, on a basis that is consistent with the expected pattern of consumption of the
economic benefits embodied in the underlying asset.
Lease liabilities are measured at the present value of the remaining lease payments. Interest expense
on lease liabilities is recognised in profit or loss. Variable lease payments not included in the
measurement of lease liabilities are recognised as an expense in the period in which they are
incurred.
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.
(q) Other revenue
Interest revenue is recognised using the effective interest method.
Other revenue is recognised when the right to receive income or other distribution has been
established.
(r) Principles of consolidation
The consolidated financial statements are those of the group, comprising the financial statements of
the parent entity and of all entities, which the parent entity controls. The parent entity controls an entity
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
28
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.
(s) Non-current assets and disposal groups held for sale
Non-current assets and disposal groups are classified as held for sale if it is highly probable their
carrying amounts will be recovered principally through a sale transaction rather than through continuing
use. Non-current assets (and disposal groups) classified as held for sale are measured at the lower of
their carrying amounts and fair value less costs of disposal.
(t) 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:
2024
2023
–
Buildings
Up to 40 years
Up to 40 years
–
Plant and equipment
1 to 20 years
1 to 20 years
–
Leased plant and equipment
5 to 20 years
5 to 20 years
(u) Research and development expenditure
Expenditure on research activities is recognised as an expense when incurred.
Development costs are capitalised when the group can demonstrate all of the following: the technical
feasibility of completing the asset so that it will be available for use or sale; the intention to complete
the asset and use or sell it; the ability to use or sell the asset; how the asset will generate probable
future economic benefits; the availability of adequate technical, financial and other resources to
complete the development and to use or sell the asset; and the ability to measure reliably the
expenditure attributable to the asset during its development. Capitalised development costs are
amortised over their estimated useful lives commencing from the time the asset is available for use.
The amortisation method applied to capitalised development costs is consistent with the estimated
consumption of economic benefits of the asset. Subsequent to initial recognition, capitalised
development costs are measured at cost, less accumulated amortisation and any accumulated
impairment losses.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
29
(v) 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 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.
(w) 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.
(x) Share-based payments
Options granted to employees are measured at fair value, determined at grant date using a binomial
option pricing model. The grant date fair value of options granted to employees is recognised as an
expense on a straight-line basis over the vesting period, based on the estimated number of options
expected to vest (with a corresponding increase in equity). The impact of any revision of the estimated
number of options expected to vest is recognised in profit or loss, so that the cumulative expense (and
equity) recognised reflects the actual number of options that eventually vest.
(y) 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.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
30
(z) Comparatives
Where necessary the comparative information has been reclassified and repositioned for
consistency with current year disclosures.
(aa) 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 Financial Reports and in the
Directors’ Report have been rounded to the nearest thousand dollars, or in certain cases, to the
nearest dollar (where indicated).
(bb)
Adoption of new and revised Accounting Standards:
The group has applied all new and revised Australian Accounting Standards that apply to annual
reporting periods beginning on or after 1 July 2023. These standards do not have a material
impact on the Group’s financial results or position.
(cc) Standards and interpretations issued but not yet effective:
The AASB has issued a number of new and amended Accounting Standards and Interpretations
that have mandatory application dates for future periods. The Group has decided not to early
adopt any of these new and amended pronouncements. These pronouncements are not expected
to have a material impact on the entity in the current or future reporting periods or on foreseeable
future transactions.
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 could 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 13(b) for further details.
(b)
Income tax
Deferred tax assets and liabilities 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 to the extent
that management considers that it is probable that future taxable profits will be available to utilise
those temporary differences.
(c)
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.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
31
(d)
Biological assets
The cost of flocks of hens are amortised over the productive life of the flock, which is
approximately 60 weeks. This is based on the characteristics of the flock and the Group’s
historical operating experience.
(e)
Provision for expected credit losses of trade receivables and contract assets
The Group uses a provision matrix to calculate expected credit losses (ECLs) for trade receivables
and contract assets. The provision rates are based on days past due for groupings of various
customer segments that have similar loss patterns. The provision matrix is initially based on the
Group’s historical observed default rates. The Group will calibrate the matrix to adjust the historical
credit loss experience with forward-looking information. At every reporting date, the historical
observed default rates are updated and changes in the forward-looking estimates are analysed.
The Group’s historical credit loss experience and forecast of economic conditions may also not be
representative of customer’s actual default in the future.
(f)
Rebates and promotional discounts liabilities
Rebates and promotional discounts are either settled monthly on settlement of invoice or accrued at
balance sheet date depending on the exact timing of the customer claim. The Group estimates the
rebate and promotional discount based on the percentage specified in the customer contract and
the timing of settlement and/or volumes sold taking into account previous claims made.
(g)
Inventory provisions
Management's judgement is applied in determining the inventory provisions for obsolescence and net
realisable value, where the estimated selling price of inventory is lower than the cost to sell based on
historical observations and management expectations.
(h)
Share Based Payments:
The Group measures the cost of equity settled transactions with employees by reference to the fair
value of the equity instruments on the date at which they are granted. The value of equity instruments
granted is determined according to the fair value of goods or services received unless that fair value
cannot be estimated reliably, in which case the fair value is determined by reference to the underlying
value of equity instruments granted.
Note 3: Financial instruments risk management objectives and policies
The Group’s activities expose it to a variety of financial risks, including market risk (commodity
prices, foreign currency and interest rate risk), liquidity risk and credit risk.
The Group’s senior management oversees the management of these risks by using various
financial instruments, including derivative financial instruments. It is the Group’s policy that no
trading in derivatives for speculative purposes may be undertaken. The use of financial derivatives
is subject to approval by the Board of Directors.
The Group’s principal financial liabilities, other than derivatives, comprise loans and borrowings,
and trade and other payables. The main purpose of these financial liabilities is to finance the
Group’s operations. The Group’s principal financial assets include trade receivables, and cash
and short-term deposits that derive directly from its operations. The Group is exposed to some
foreign currency risk as the purchase of plant and equipment from time to time is denominated
in foreign currencies.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
32
The Group holds the following financial assets and financial liabilities at reporting date:
2024
$’000
2023
$’000
Financial assets
Cash and cash equivalents
1,686
1,987
Receivables
12,005
8,619
13,691
10,606
Financial liabilities
Payables
12,333
14,327
Lease liabilities
26,154
18,734
Borrowings
17,114
15,814
55,601
48,875
(a) Market risk
(i)
Commodity price risk
The Group is affected by the price variability of certain commodities. The Group’s main sales product
is shell eggs which is a commodity that is subject to market conditions. 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. The
Group manages this exposure utilising forward grain and/or feed stock purchase commitments
through its key suppliers, within certain price parameters agreed by the Board of Directors.
(ii) Foreign exchange risk
The majority of the Group’s operations are denominated in Australian dollars, therefore minimising
the impact of foreign currency risk. The Group undertakes some transactions denominated in
foreign currencies; consequently, exposures to exchange rate fluctuations arise. Exchange rate
exposures are managed utilising forward foreign exchange contracts, subject to approval by the
Board of Directors.
Forward foreign exchange contracts
It is the policy of the Group to enter into forward foreign exchange contracts to cover specific
foreign currency payments (normally Euro) for future purchases of plant and equipment.
(iii) Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Group’s exposure to the risk of changes
in market interest rates relates primarily to the Group’s external debt facilities and cash at bank held
at variable rates. The Group’s exposure to interest rate risks in relation to future cash flows and the
weighted average effective interest rates on classes of financial assets and financial liabilities is
shown in the table below.
Sensitivity
The following sensitivity analysis is assessed on the interest rate risk exposures in existence at
reporting date. At 30 June 2024, 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
2024
2023
$’000
$’000
Interest rates – increase by 100 basis points
(86)
(89)
Interest rates – decrease by 100 basis points
86
89
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
33
(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 16.
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.
2024
<6
months
6-12
months
1-5 years
Over 5
years
Total
Fixed/
Floating
$’000
$’000
$’000
$’000
$’000
Financial liabilities
Trade and other
payables
(12,333)
-
-
-
(12,333)
-
Long Term Floating
Loan
-
-
(12,515)
-
(12,515)
Floating 12.9%
Long Term Fixed Loan
(101)
(104)
(144)
-
(349)
Fixed at 7.5%
Working Capital Loan
(2,000)
-
-
-
(2,000)
Floating 10.9%
Short Term Fixed Loans
(2,250)
-
-
-
(2,250)
Fixed at 10.3%
Lease liability
(1,867)
(1,768)
(8,642)
(13,877)
(26,154)
Fixed at 3% to
10.3%
(18,551)
(1,872)
(21,301)
(13,877)
(55,601)
2023
<6
months
6-12
months
1-5 years
Over 5
years
Total
Fixed/
Floating
$’000
$’000
$’000
$’000
$’000
Financial liabilities
Trade and other
payables
(14,327)
-
-
-
(14,327)
-
Long Term Floating
Loan
-
-
(14,225)
-
(14,225)
Floating 12.6%
Long Term Fixed Loan
(93)
(97)
(349)
-
(539)
Fixed at 7.5%
Working Capital Loan
-
-
(1,050)
-
(1,050)
Floating 10.5%
Lease liability
(1,837)
(1,423)
(5,537)
(9,937)
(18,734)
Fixed at 3%
(16,257)
(1,520)
(21,161)
(9,937)
(48,875)
(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.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
34
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.
Note 4: Revenue
Disaggregation of revenue
In the following table, revenue is disaggregated by major product.
Consolidated
2024
2023
$’000
$’000
Type of product1
Shell egg
54,241
44,648
Egg product
38,774
35,547
Packaging
4,054
2,482
Total revenue from contracts with customers
97,069
82,677
Compensation due to Avian Influenza event2
4,232
-
Gain on sale of asset held for sale3
486
-
Other income
67
165
Total other income
4,785
165
Total revenue and other income
101,854
82,842
1 The majority of sales (99.9%) 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.
2In June 2024, hens on three laying farms operated by the Group in the Lethbridge, Victoria area
returned positive results for Avian Influenza and were depopulated. The Group lodged a compensation
claim of $4.2m with Agriculture Victoria under the Emergency Animal Disease Compensation Scheme.
The compensation was received by the Group in August 2024.
3Refer note 12.
Note 5: Loss from continuing operations
Loss from continuing operations before income tax has been determined after the following specific
expenses:
Consolidated
2024
$’000
2023
$’000
Cost of goods sold
Changes in inventories of finished goods and work in progress
(1,355)
307
Raw materials and consumables used
70,255
59,922
68,900
60,229
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
35
Employee benefits expenses
Salaries and wages
20,704
17,163
Employee superannuation contributions
1,827
1,472
Total employee benefits expenses
22,531
18,635
Depreciation of non-current assets and leased assets
Land and buildings
716
887
Plant & equipment
1,780
1,764
Right of use and leased assets
3,673
3,738
Total depreciation of non-current assets
6,169
6,389
Foreign exchange translation loss
11
3
Flock amortisation (note 10)
12,548
10,745
Loss on disposal of flock (note 10)
3,129
104
Finance costs – interest expense
3,221
2,518
Note 6: Income tax
Consolidated
2024
$’000
2023
$’000
(a)
Components of tax expense:
Current tax expense
-
-
Deferred tax expense
-
-
-
-
(b)
Income tax reconciliation
(Loss) / profit before income tax
(2,345)
(9,112)
At the statutory income tax rate of 30% (2023:30%)
(704)
(2,734)
Non-deductible expenses and timing differences
(163)
(223)
Tax losses not brought to account
867
2,957
Income tax (benefit)/expense
-
-
Deferred tax assets not bought to account
Operating losses at 30%
9,027
8,160
Deductible temporary differences not recognized
5,809
5,985
Total deferred tax assets not bought to account
14,836
14,145
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
36
Note 7: Dividends
Consolidated
2024
$’000
2023
$’000
(a) Dividends proposed and recognised as a liability
Nil
Nil
(b) Franking credit balance
Balance of franking account at year end
11,485
11,485
Note 8: Receivables
Consolidated
2024
$’000
2023
$’000
Trade receivables
7,719
8,133
Allowance for expected credit losses
(52)
(22)
7,667
8,111
Compensation receivable from Agriculture Victoria due to Avian
Influenza event
4,232
-
Other receivables
106
508
12,005
8,619
(a) Terms and conditions
Trade receivables are non-interest bearing and generally on 30-day terms.
Other receivables are non-interest bearing and have repayment terms between 30 and 60 days.
(b) Allowance for expected credit losses
Consolidated
2024
2023
$’000
$’000
Movements in the allowance for expected credit losses were:
Opening balance as at 1 July
22
6
Increase in allowance for expected credit losses
30
16
52
22
Trade and other receivables ageing analysis as at 30 June is:
Gross
2024
Loss
Allowance
2024
Gross
2023
Loss
Allowance
2023
$’000
$’000
$’000
$’000
Not past due
11,928
1
8,482
1
Past due
129
51
159
21
12,057
52
8,641
22
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.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
37
Note 9: Inventories
Consolidated
2024
$’000
2023
$’000
Raw materials
3,501
3,274
Finished goods
2,399
1,271
Total inventories
5,900
4,545
Note 10: Biological assets
Consolidated
2024
$’000
2023
$’000
Current
5,301
9,662
Non-current
433
349
Total
5,734
10,011
Flocks
Cost
11,166
16,318
Less: Accumulated amortisation
(5,432)
(6,307)
5,734
10,011
Opening written down value
10,011
6,300
Additions
11,400
14,560
Amortisation
(12,548)
(10,745)
Disposal
(3,129)
(104)
Closing written down value
5,734
10,011
The number of birds held by the Group as at 30 June 2024 was 739,617 (2023: 1,163,255).
The average output per bird is approximately 5.5 eggs per week during their productive period.
Note 11: Other current assets
Consolidated
2024
$’000
2023
$’000
Prepayments and deposits
677
757
Note 12: Assets held for sale
Consolidated
2024
$’000
2023
$’000
Assets held for sale
-
1,822
The Group finalised the sale of its surplus non-arable land during FY24. The Group received disposal
proceeds of $2.345 million (net of costs). $2.000 million of the proceeds were used to repay Group’s
borrowings. $0.486 million of gain on sale of asset held for sale was recognised in the consolidated
statement of profit or loss.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
38
Note 13: Property, plant and equipment
2024
Land and
buildings
Plant and
equipment
Capital
works in
progress
Total
$’000
$’000
$’000
$’000
Cost
24,121
48,451
280
72,852
Accumulated depreciation
and impairment
(9,588)
(42,715)
-
(52,303)
Net book value
14,533
5,736
280
20,549
Opening net book value as at
1 July 2023
15,200
6,068
570
21,838
Additions
-
207
1,000
1,207
Disposal
-
-
-
-
Transfers
49
1,241
(1,290)
-
Depreciation
(716)
(1,780)
-
(2,496)
Net book value as at 30
June 2024
14,533
5,736
280
20,549
2023
Land and
buildings
Plant and
equipment
Capital
works in
progress
Total
$’000
$’000
$’000
$’000
Cost
24,073
46,982
570
71,625
Accumulated depreciation
and impairment
(8,873)
(40,914)
-
(49,787)
Net book value
15,200
6,068
570
21,838
Opening net book value as at
1 July 2022
17,900
7,418
195
25,513
Additions
-
-
1,050
1,050
Disposal
(23)
(229)
-
(252)
Transfers
32
643
(675)
-
Transfer to assets held for
sale
(1,822)
-
-
(1,822)
Depreciation
(887)
(1,764)
-
(2,651)
Net book value as at 30
June 2023
15,200
6,068
570
21,838
(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 16). 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
Directors’ Declaration
39
(b)
Impairment testing of non-current assets
The Group performed an impairment test as at June 2024. The recoverable amount of the Group’s
property, plant and equipment was determined on a value-in-use basis, using cash flow forecasts
covering a 5-year period and perpetual cash flow projections beyond the 5-year budget period using
a growth rate of 3.0% (2023: 3.0%) that approximates the long-term average growth rate for the
sector, and a post-tax discount rate of 12% (2023: 12%). Based on this determination, management
concluded that the recoverable amount of the Group’s property, plant and equipment was greater
than its carrying amount at 30 June 2024 and that the Group’s non-current assets were not
impaired.
(c)
Fair value of farm property
As part of the re-financing process of the Group’s debt facilities, an independent valuation of three
of the Group’s owned farm properties was conducted. This valuation indicated that the fair value of
these farms as at 30 June 2024 was $25.900 million. The farms are split between land and
buildings and plant and equipment. The carrying value of these farms as at 30 June 2024 was
$18.216 million.
Note 14: Lease assets and liabilities
Lease assets
2024
Land and
buildings
Plant and
equipment
Total
$’000
$’000
$’000
Cost
23,022
1,182
24,204
Accumulated depreciation
(9,426)
(518)
(9,944)
Net book value
13,596
664
14,260
Opening net book value as at 1 July 2023
6,087
249
6,336
Depreciation
(3,454)
(219)
(3,673)
Recognition of leased assets –
additions/modifications
10,963
634
11,597
Disposal
-
-
-
Net book value as at 30 June 2024
13,596
664
14,260
Lease assets
2023
Land and
buildings
Plant and
equipment
Total
$’000
$’000
$’000
Cost
21,680
1,381
23,061
Accumulated depreciation
(15,593)
(1,132)
(16,725)
Net book value
6,087
249
6,336
Opening net book value as at 1 July 2022
9,640
451
10,091
Depreciation
(3,553)
(185)
(3,738)
Disposal
-
(17)
(17)
Net book value as at 30 June 2023
6,087
249
6,336
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
40
Lease liabilities
2024
2023
Lease liabilities
$’000
$’000
Current lease liabilities
3,635
3,305
Non-current lease liabilities
22,519
15,429
Total carrying amount of lease liabilities
26,154
18,734
Lease expenses and cashflows
Depreciation expense on lease assets
3,673
3,738
Interest expense on lease liabilities
911
616
Repayment of lease liability
4,159
4,506
Total cash outflow relating to leases
5,070
5,122
Note 15: Payables
Consolidated
2024
$’000
2023
$’000
Trade creditors
10,322
11,349
Other payables and accruals
2,011
2,978
12,333
14,327
(i) Terms and conditions
Group’s standard terms are 30 days from the end of month.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
41
Note 16: Borrowings
Consolidated
2024
$’000
2023
$’000
Current
Short term loans (unsecured)1
2,250
-
Working Capital Loan2
2,000
-
Long term loan (unsecured)3
205
190
4,455
190
Non-current
Long term loan (secured)4
12,515
14,225
Long term loan (unsecured)3
144
349
Working capital loan2
-
1,050
12,659
15,624
1 Short term loans have been provided by interests associated with the Group’s board of directors. The
facilities are unsecured. The maturity date of the facilities is 31st December 2024. $1.035 million of
these loans were converted into equity in August 2024 as described in Note 27.
2 The facility is secured over the Group’s receivables. The maturity date of the facility as at 30 Jun 2024
was 31 August 2024.The facility was renewed till 31 August 2025 in August 2024.
3 The facility is unsecured. The maturity date of the facility is 28th February 2026.
4 The facility is secured by a fixed charge over selected property and company assets. The maturity
date of the facility is 31 December 2025.
At the reporting date, the Group’s financing are as follows.
Consolidated
2024
$’000
2023
$’000
(i)
Long Term Loan (secured)
Facilities available
12,555
14,342
Facilities used
12,515
14,225
Facilities unused
40
117
(ii) Short Term Loans (unsecured)
Facilities available
2,250
-
Facilities used
2,250
-
Facilities unused
-
-
(iii) Working Capital Loan
Facilities available
2,000
2,000
Facilities used
2,000
1,050
Facilities unused
-
950
(iv) Long Term Loan (unsecured)
Facilities available
349
539
Facilities used
349
539
Facilities unused
-
-
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
42
Note 17: Provisions
Consolidated
2024
$’000
2023
$’000
Current
Employee benefits
Annual and other leave entitlements
1,328
997
Long service leave
962
877
2,290
1,874
Non-current
Employee benefits
Long service leave benefits
98
115
Total employee benefits provisions
2,388
1,989
Note 18: Contributed Equity
Consolidated
2024
$’000
2023
$’000
Issued and paid-up capital
143,857,856 (2023: 143,857,856) Ordinary shares fully paid
34,307
34,307
34,307
34,307
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 2024 no dividends were paid, declared or recommended (2023: Nil).
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
43
Note 19 (Loss)/Earnings per share
The following reflects the income and share data used in calculations of basic and diluted
(loss)/earnings per share computations:
Consolidated
2024
$’000
2023
$’000
Net (loss) / profit from continuing operations
(2,345)
(9,112)
Weighted average
2024
No. of shares
2023
No. of shares
Weighted average number of shares used in
calculating basic (loss)/earnings per share
143,857,856
92,129,209
Weighted average number of shares used to
calculate diluted (loss)/earnings per share1
143,857,856
92,129,209
1 Share Options and performance rights issued to LDL Custodians Pty Ltd (an interest associated with
Mr. Darren Lurie) are not dilutive because their conversion to ordinary shares would increase loss per
share.
Note 20: Share Based Payments
As described in the Director’s Report, the company has granted share options and performance rights
to LDL Custodians Pty Ltd (an interest associated with the Mr. Darren Lurie - Managing Director). The
expense recognised in relation to these share-based payment transactions was recognised within
other expenses within profit or loss were as follows:
Consolidated
2024
$’000
2023
$’000
Balance of Share Option Reserve as at 1 July
71
-
Total expense recognised during the year
116
71
Balance of Share Option Reserve as at 30 June
187
71
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
44
Note 21: Cash Flow Information
Consolidated
2024
$’000
2023
Restated
$’000
(a) Reconciliation of cash flow from operations with profit
after tax:
(Loss)/profit from ordinary activities after tax
(2,345)
(9,112)
Non-cash items
Depreciation
6,169
6,389
Flock amortisation
12,548
10,745
Net loss on disposal of flock
3,129
104
Net loss/(profit) on disposal of property, plant and equipment
and leased assets
-
46
Net loss/(profit) on sale of asset held for sale
(486)
-
Non-cash movement on loan
1,221
1,895
Share options expense
116
71
Provision for doubtful debts
30
16
Non-cash interest
290
99
Non-cash movement on property, plant and equipment and
leases
(55)
(304)
Changes in operating assets and liabilities net of effects
from acquisition of businesses:
(Increase) / decrease in trade and other receivables
(3,416)
(715)
(Increase) / decrease in inventory
(1,355)
306
(Increase) / decrease in biological assets
(11,400)
(14,560)
(Increase) / decrease in other assets
80
1,162
Increase / (decrease) in trade and other creditors
(1,994)
1,767
Increase / (decrease) in employee entitlements
399
(17)
Net cash flow from operating activities
2,931
(2,108)
(b) Reconciliation of cash and cash equivalents for the
purposes of the Consolidated Statement of Cash Flows
Cash at bank
1,686
1,987
1,686
1,987
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
45
(c) Reconciliation of liabilities arising from financing activities
As at
1 July
Financing
cash flows
Non-Cash
Changes Other
As at
30 June
2024
$’000
$’000
$’000
$’000
Bank loans
15,814
(211)
1,511
17,114
Lease liabilities
18,734
(4,159)
11,579
26,154
Total liabilities from
financing activities
34,548
(4,370)
13,090
43,268
2023 (Restated) 1
Bank loans
11,575
2,245
1,994
15,814
Lease liabilities
23,240
(4,506)
-
18,734
Total liabilities from
financing activities
34,815
(2,261)
1,994
34,548
1 In June 2023, the Group originally recognised a trade payable for insurance premium funding and
the payments associated with the insurance premium funding as cash outflows from operating
activities. In June 2024, it was identified that the liability should have been recognised in borrowings
and the associated cashflows should have been presented as cash outflows from financing activities.
Refer Note 1(f) for more details.
Note 22: Commitments
Farm cost commitments
Farm commitments relate to commitments for flock replenishment and other farm operating
expenditure commitments:
Consolidated
2024
$’000
2023
$’000
Farm cost commitments
2,134
1,849
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
46
Note 23: Controlled Entities
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
Country of
incorporation
Percentage owned
2024
2023
Parent entity:
Farm Pride Foods Limited
Australia
100%
100%
Controlled entities of Farm Pride Foods Limited
Big Country Products Pty Ltd
Australia
100%
100%
Farm Pride Property Pty Ltd
Australia
100%
100%
Mooroopna Farm Trading Pty Ltd
Australia
100%
100%
Farm Pride North Pty Ltd
Australia
100%
100%
Carton Packaging Pty Ltd
Australia
100%
100%
Note 24: 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 23.
(b) Key management personnel
Disclosures relating to key management personnel are set out in the Directors’ report.
(c) Key management personnel compensation
The aggregate compensation of the key management personnel of the Group is set out below:
Consolidated
2024
2023
$’000
$’000
Short-term employee benefits
758
907
Long term employee benefits
116
71
Post-employment benefits
64
77
938
1,055
Detailed remuneration disclosures are provided in the Remuneration Report on page 12 to 14.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
47
Note 24: Related party disclosures
(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 entities
Transaction
Revenue
Expenditure
Balance
Receivable /
(Payable)
2024
$’000
2023
$’000
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Ackenberg Holdings Pty Ltd 1
Loan Interest
-
-
118
-
(1,750)
-
(G. Palatianos)
Oakmeadow Pty Ltd 2
Loan Interest
-
-
7
6
(300)
-
(M. Ward)
LDL Custodians Pty Ltd 3
Loan Interest
-
-
6
-
(200)
-
(D. Lurie)
West Coast Eggs Pty Ltd 2
(P. Bell/M. Ward)
Egg sales /
Purchases
-
141
-
331
-
(46)
AAA Egg Company Pty Ltd 2
(P. Bell/M. Ward)
Loan Interest
-
-
-
12
-
-
Siamje 4
(D. Lurie)
Consulting
-
-
-
84
-
-
Bruce De Lacy5
Loan Interest
-
-
3
-
-
-
Days Eggs Pty Ltd2
(P. Bell/M. Ward)
Egg sales /
Purchases
-
8
149
223
-
(52)
Pure Foods Eggs Pty Ltd2
(P. Bell)
Egg sales /
Purchases
-
-
-
-
-
-
Morago Holdings Pty Ltd2
(P. Bell)
Loan Interest
-
-
-
17
-
-
1George Palatianos through his related entity provided unsecured interest-bearing loans during the year.
2Malcolm Ward and Peter Bell through their related entities provides eggs and egg products to and acquire eggs, egg product and packaging
from Farm Pride Foods Limited and its controlled entities. Malcolm Ward and Peter Bell through their related entities also provided unsecured
interest-bearing loans. These transactions are on normal trading terms and conditions. Peter Bell resigned as director in September 2022.
3Darren Lurie through his related entity (LDL Custodians) provided unsecured interest-bearing loans during the year.
4Darren Lurie through his related entity (Siamje) had provided consulting services to the business before his appointment as
director in February 2023.
5Bruce De Lacy provided unsecured interest-bearing loans during the year.
Transactions in the above table represent related party transactions for the full financial year from July ‘23 – June ’24 and
comparatives for July ’22 - June ‘23.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
48
Note 25: Parent entity information
Information relating to Farm Pride Foods Limited:
2024
$’000
2023
$’000
Summarised statement of financial position
Current assets
25,569
27,392
Total assets
60,811
55,914
Current liabilities
21,820
18,991
Total liabilities
57,067
50,113
Total equity of the Parent comprises of the following:
Share capital
34,307
34,307
Retained (losses)
(30,750)
(28,577)
Share option reserve
187
71
Total shareholder’s equity
3,744
5,801
Summarised statement of comprehensive income
(Loss) of the parent entity
(2,173)
(9,083)
Total comprehensive (loss) of the parent entity
(2,173)
(9,083)
Farm Pride Foods Limited as parent has provided security over the loans of its subsidiaries by a
fixed and floating charge (see note 16).
Note 26: Auditor’s remuneration
Consolidated Entity
2024
$
2023
$
Audit and other assurance services
Audit and review of the financial report of the entity
and any other entity in the consolidated entity
195,145
222,587
Other services
Taxation services
15,000
40,109
210,145
262,696
Note 27: Subsequent Events:
Rights Issue: On 11 June 2024, the Company announced a proposed non-renounceable fully
underwritten pro-rata entitlement offer to raise approximately $6.17m before costs (Rights Issue). The
Rights Issue offer booklet was sent to shareholders on 1 July 2024 and the offer closed on 16 August 2024.
The Rights Issue is underwritten by Willow Heights Pty Ltd, an entity associated with the Group’s Chair. All
funds are to be received by 6 September 2024. Funds raised under the Rights Issue will be used to support
the Group’s operations while it recovers from the adverse impacts of Avian Influenza (AI) and to further
enhance and expand the Group’s farming, grading and production operations.
On 23 August 2024 the Company issued 9,114,626 Rights Issue shares with the balance of the Rights
Issue shares to be issued to the underwriters in September 2024.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
49
Conversion of Directors Loans to Equity: At the General Meeting held on 31 Jul 2024 approval was
given for the conversion of loans to equity. On 6 August 2024, part or all of the following loans (as indicated)
that were provided to the Group by interests associated with the Group’s board of directors were converted
to equity.
•
$835,000 of the $1,750,000 loan provided by Ackenberg Holdings Pty Ltd (an interest associated
with Mr. George Palatianos) was converted to equity. 8,350,000 fully paid ordinary shares were issued to
Ackenberg Holdings Pty Ltd at a deemed issue price of $0.10 per share.
•
The $200,000 loan provided by LDL Custodians Pty Ltd (an interest associated with Mr. Darren
Lurie) was converted to equity. 2,000,000 fully paid ordinary shares were issued to LDL Custodians Pty Ltd
at a deemed issue price of $0.10 per share.
Issue of shares to LDL Custodians Pty Ltd (an interest associated with Mr. Darren Lurie): At the
General Meeting held on 31 July 2024 approval was given for the issue of 1,090,000, fully paid ordinary
shares, 1,090,000 Performance Rights and 3,600,000 options for nil consideration to LDL Custodians Pty
Ltd. These were issued 6 August 2024.
Prior to the issue of new shares for the loan conversions, Rights Issue and shares issued to LDL
Custodians Pty Ltd, described above, the Group’s largest shareholder was West Coast Eggs Pty Ltd,
holding 43,519,979 or 30.25% of the shares. Subsequent to the issue of the new shares described above,
West Coast Eggs Pty Ltd continues to be the Group’s largest shareholder, holding 43,519,979 or 26.47% of
the shares in the Group. The new Rights Issue shares allocated to the underwriters will be issued in
September 2024.
Refinancing of Working Capital Loan: On 07 August 2024, the Group successfully refinanced its existing
working capital loan of $2 million with Tradeplus24 Australia for a period of 12 months until 31 August 2025.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
50
Consolidated Entity Disclosure Statement:
Farm Pride Foods Ltd is required by Australian Accounting Standards to prepare consolidated financial
statements in relation to the company and its controlled entities (the consolidated entity).
In accordance with subsection 295(3A) of the Corporations Act 2001, this consolidated entity disclosure
statement provides information about each entity that was part of the consolidated entity at the end of the
financial year.
Name of entity
Type of entity
Place formed
or incorporated
Percentage
of share
capital held
Australian tax
resident or foreign
tax resident
Foreign tax
jurisdiction
Farm Pride Foods
Limited
Company
Australia
N/A
Australian
N/A
Big Country
Products Pty Ltd
Company
Australia
100%
Australian
N/A
Farm Pride
Property Pty Ltd
Corporate
Trustee
Australia
100%
Australian
N/A
Mooroopna Farm
Trading Pty Ltd
Company
Australia
100%
Australian
N/A
Farm Pride North
Pty Ltd
Company
Australia
100%
Australian
N/A
Carton Packaging
Pty Ltd
Company
Australia
100%
Australian
N/A
At the end of the financial year, no entity within the consolidated entity was a trustee of a trust within the
consolidated entity (other than described above) a partner in a partnership within the consolidated entity, or
a participant in a joint venture within the consolidated entity.
Farm Pride Foods Limited and Controlled Entities
Directors’ Declaration
51
Directors’ Declaration
The Directors declare that the financial statements and notes set out on pages 23 to 49 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 Group as at 30 June 2024 and
of its performance for the year ended on that date;
(d) The consolidated entity disclosure statement included in the financial statements is true and
correct.
In the Directors’ opinion there are reasonable grounds to believe that the Group 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 2024.
This declaration is made in accordance with a resolution of the Directors.
Director
30 August 2024
Melbourne
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
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
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
2024, the consolidated statement of profit or loss and other 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 material accounting policies, the
consolidated entity disclosure statement and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
(a)
giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its
financial performance for the year then ended; and
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Report section of our report. We are independent of the Group in accordance with the auditor
independence requirements of the Corporations Act 2001 and the ethical requirements of the
Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional
Accountants (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
Without modifying our opinion expressed above, attention is drawn to the matters set out in Note 1(b)
– Going Concern in the financial report.
The conditions, as set forth in Note 1(b), indicate the existence of a material uncertainty that may cast
significant doubt about the Group’s ability to continue as a going concern and therefore, the Group
may be unable to realise its assets and discharge its liabilities in the normal course of business.
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.
52
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
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
Key Audit Matter
How our audit addressed the key audit matter
Valuation of flock assets
Valuation of flock assets - $5,734,000
Refer to Note 10: Biological Assets
The Group has $5.7 million ($10.0 million as at
30 June 2023) 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 2024 and agreed 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 2024 based on the total capitalised
cost, age and production life of each flock
asset as at 30 June 2024;
•
Tested the appropriateness 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 2024.
•
Obtained an understanding of the design
and implementation of the controls over
the valuation of flock assets.
•
Held discussions with management
regarding the process for the disposal of
flocks affected by AI in June 2024,
including obtaining supporting
compensation claims from the
Department of Agriculture and vouching
the lodged claims to the amount
recognised in the general ledger.
•
Assessed the adequacy of the
presentation and disclosure of the flock
assets in the financial report as at 30
June 2024.
53
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
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
Valuation of Property, plant and equipment
Valuation of property, plant and equipment -
$20,549,000. Refer to Note 13: Property, plant
and equipment
The Group has $20.5 million ($21.8 million as
at 30 June 2023) of property, plant and
equipment, which represents approximately
34% 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.
No impairments have been recorded.
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 revenue
growth rate, terminal growth rate and discount
rate.
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,
revenue growth rate, terminal growth rate
and other key assumptions;
•
Evaluated the determination of cash-
generating units;
•
Assessed the reasonableness of the
discounted cash flow forecast in
comparison to historical actuals and the
forthcoming years Board approved
detailed budget;
•
Tested the mathematical accuracy of the
discounted cash flow model;
•
Assessed the impact of sensitivities to
sales, cost of sales, margins and
discount rate.
•
Obtained an understanding of the design
and implementation of the controls over
the valuation of Property, plant and
equipment.
•
Assessed the adequacy of the
presentation and disclosure of property,
plant and equipment in the financial
report as at 30 June 2024.
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 2024, 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.
54
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
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
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of:
a) the financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001; and
b) the consolidated entity disclosure statement that is true and correct in accordance with the
Corporations Act 2001; and for such internal control as the directors determine is necessary to
enable the preparation of:
(i) the financial report (other than the consolidated entity disclosure statement) that gives a
true and fair view and is free from material misstatement, whether due to fraud or error; and
(ii) the consolidated entity disclosure statement that is true and correct and is free of
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.
• 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
55
FARM PRIDE FOODS LIMITED
ABN 42 080 590 030
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF
FARM PRIDE FOODS LIMITED
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
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 9 to 16 of the directors’ report for the year
ended 30 June 2024. In our opinion, the Remuneration Report of Farm Pride Foods Limited and
controlled entities, for the year ended 30 June 2024, complies with section 300A of the Corporations
Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration
Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express
an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian
Auditing Standards.
STEPHEN SCHONBERG
PITCHER PARTNERS
Partner
Melbourne
Date: 30 August 2024
56
Farm Pride Foods Limited and Controlled Entities
ASX Additional Information
57
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 31 July 2024.
(a)
Distribution of equity security
The number of shareholders, by size of holding, in each class of share are:
No. of
shareholders
No. of
shares
1 - 1,000
351
195,662
1,001 - 5,000
573
1,569,920
5,001 - 10,000
220
1,625,659
10,001 - 100,000
263
7,784,052
100,001 +
57
132,682,563
The number of shareholders holding less than a marketable parcel of
shares are:
942
1,859,048
(b)
Twenty largest shareholders
The names of the twenty largest holders of quoted shares are:
Listed ordinary
shares held
Percentage of
ordinary
shares
1
West Coast Eggs Pty Ltd
43,519,979
30.25
2
Bait of Brets Pty Ltd
22,481,615
15.63
3
Dr Philip James Currie + Mrs. Anne Jennifer Currie
21,918,182
15.24
4
LDL Custodians Pty Ltd
14,545,454
10.11
5
Oakmeadow Pty Ltd
3,772,075
2.62
6
Jadig Superannuation Pty Ltd
3,636,364
2.53
7
HSBC Custody Nominees (Australia) Ltd – A/C 2
3,291,756
2.29
8
Mr Gavin Bruce De Lacy
2,230,990
1.55
9
Normpat Pty Ltd
2,064,250
1.43
10
Markcamp No 2 Pty Ltd
2,009,468
1.40
11
David Ricardo Asset Management Pty Ltd
1,385,415
0.96
12
Glenmon No2 Pty Ltd
1,003,057
0.70
13
Mr Clinton James Quay
937,500
0.65
14
Merrill Lynch (Australia) Nominees Pty Limited
667,001
0.46
15
Vivre Investments Pty Ltd
605,000
0.42
16
Mrs Leanne Susan Hargrave
483,500
0.34
17
Fusion Electrics (Aust) P/L
475,000
0.33
18
Scolexia Pty Ltd
438,000
0.30
19
Mr Bill Papaioannou and Mrs Maria Papaioannou
400,000
0.28
20
Dr Walid Mohammed Abdel-Maksoud Aly
393,002
0.27
126,257,608
87.76
Farm Pride Foods Limited and Controlled Entities
ASX Additional Information
58
ASX Additional Information (continued)
(c)
Substantial shareholders
The names of substantial shareholders listed in the Company’s register.
No. of shares
held
Percentage of
ordinary
shares
West Coast Eggs Pty Ltd
43,519,979
30.25
Bait of Brets Pty Ltd
22,481,615
15.63
Dr Philip James Currie + Mrs Anne Jennifer Currie
21,918,182
15.24
LDL Custodians Pty Ltd
14,545,454
10.11
(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
3,600,000 share options are on issue (2023: 3,600,000).
(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