ANNUAL REPORT 2021
HUON AQUACULTURE GROUP LIMITED
SOME HUON SALMON
SERVE UP
Contents
02
Chairman’s and
Managing Director’s Review
04
Review of operations
16
Operating in unique environments
18
Growing Salmon
20
Whale Point Salmon Nursery
22
Huon’s approach to marketing
24
Trends in the Global Salmon Market
26
Financial Summary
30
Board of Directors
32
Sustainability
39
Directors’ Report
56
Auditor’s Independence Declaration
57
Corporate Governance Statement
69
Risk Management
73
Financial Report
79
Notes to the Financial Statements
126 Director’s Declaration
127 Independent Auditor’s Report
134 Shareholder Information
136 Glossary of Terms
138 Corporate Directory
HUON CHANNEL MIX
BALANCING THE
Annual General Meeting 2021
The Annual General Meeting of Huon Aquaculture Group Limited
will be held online as a Virtual AGM on 29 October 2021.
Details on how to participate will be included in the Notice of Meeting.
1
Dear shareholder,
This has been a turbulent year for Huon. On the one
hand operational performance has continued to meet
or exceed expectations with overall volumes boosted
by strong fish performance including a record average
weight of 5.77/HOG kg for the harvest in the first half.
Offsetting this there were significant challenges in relation
to the functioning of the global salmon market due to
COVID-19 induced disruptions to traditional market
segments. This was reflected in an 10% decline in the
average salmon price received by Huon in FY2021
compared to the previous year.
The arrival of COVID-19 in early 2020 coincided
with a significant increase in Huon’s production, the
groundwork for which had been laid two years earlier.
2020 was also the culmination of a five year capital
investment programme designed to modernise Huon’s
infrastructure and increase its production capacity
to meet the expected growth in demand for at least
the next five years. The impact on demand in the last
quarter of FY2020 and throughout most of FY2021,
particularly on the food service sector globally, has
meant that alternative markets have had to be found
with the excess supply creating significant downward
pressure on the salmon price. Around half of Huon’s
increased production in FY2021 was destined for the
international market.
Huon’s ability to access new markets offshore was
also constrained by the closing of many international
borders including the imposition of tight restrictions on
air travel by the Australian government. With limited
access to commercial flights the government provided
industry support via the International Freight Assistance
Mechanism. Despite this, Huon’s cost of freight for export
markets more than doubled over the past year with
serious implications for profitability. These restrictions
remain in place and are unlikely to be lifted or return to
more ‘normal’ pre-COVID levels until FY2023.
The domestic market recovered during FY2021 from the
initial shock of the lockdown in March 2020. Huon’s strong
focus on increased sales and volumes into the domestic
market succeeded in capturing the majority of volume
growth in the market including increasing its share of the
retail segment. As hospitality and food service businesses
progressively re-opened, particularly in the second half
of the year, the Company experienced a steady increase
in demand from the domestic wholesale market. By the
end of the financial year wholesale volumes were close to
matching the previous record achieved in FY2017.
Huon’s record production volumes for FY2021 shifted the
Company’s strategic focus to growing the market and
locking in contracted sales to the domestic retail channel
and internationally. Early expectations of an annual
harvest of at least 36,000 tonnes were revised down to
35,000 tonnes following a decision to manage the number
of fish in the water to a more consistent harvest profile
across the year. Nevertheless this harvest represents a 39%
increase on FY2020 and is a record for the Company.
Business performance
The strong performance of Huon’s farming operations
in FY2020 was replicated in FY2021 as good growing
conditions, combined with further productivity gains
from the infrastructure delivered through the investment
program, produced excellent fish performance. However
the COVID related disruption to the global salmon
market, in the form of reduced demand from the food
service sector, higher freight costs and a lower salmon
price, persisted throughout the year.
Huon delivered revenues of $426.4 million, an increase
of 25% on the previous year largely due to the 39%
increase in harvest volumes from 25,566 tonnes to
35,611 tonnes. Revenues were impacted by an average
10% fall in salmon prices to $11.97/HOG kg due to the
increased volumes sold through the lower priced export
market and lower domestic wholesale pricing.
Huon’s statutory net result after tax (NPAT) recorded a
loss of $128.1 million, including a $79.9 million after-tax
non-cash impairment charge, a decline on the $4.9 million
profit in FY2020. This was influenced by a $16.0 million
decrease in the Fair Value Adjustment (FVA) due to the
reduction in the value of biological assets over the year.
The lower pricing environment resulted in a 65% fall in
Operating EBITDA from $47.3 million to $16.7 million.
The decrease in the FVA reflects the 17% decline in the
overall fair value of biological assets during FY2021
from $264.0 million to $218.3 million. Huon continues to
manage its harvest in response to the disruption being
caused by the pandemic and as a result it expects the
harvest for FY2022 to stabilise around 34,000 tonnes.
During the year net debt fell from $167.3 million to
$133.3 million as a result of the capital raising. Gearing
levels were maintained at 54.3% as a consequence of
the reduction in total equity arising from the $79.9 million
after-tax impairment charge.
Strategy
Huon’s long term strategy remains unchanged with
its growth path guided by its commitment to grow the
market; increase production and improve operational
efficiency; and to operate safely and sustainably.
Nevertheless the spread of the coronavirus across
the globe since February 2020 and the containment
measures put in place by the Australian government
to restrict international air travel put a halt to the
momentum that had been building in the business.
Huon’s production volumes in FY2021 reflected
decisions made in FY2019 to increase harvest capacity
from around 20,000 tonnes that year to 40,000
tonnes. At that time market dynamics locally and
Chairman’s and
Managing Director’s
Review
PETER BENDER
NEIL KEARNEY
Huon Aquaculture Group Limited
Annual Report 2021
2
internationally pointed to the increasing demand for
salmon outstripping the rate of growth in supply. While
this position remains fundamentally unchanged over
the medium to long term, it is clear that the short term
disruption to the market due to COVID-19 has required
a reset to the pace at which we pursue this growth.
The record volumes produced over the past year also
saw the successful implementation of a marketing
strategy focused on increasing Huon’s market share
domestically and accelerating its push to develop new
markets offshore. Certainty of supply has also provided
the first opportunity in many years for Huon to address
its long term goal of delivering a better balance to the
mix of channels through which it sells salmon. As a result
Huon will, over the next two years, deliver a significant
reduction in risk to the business from price fluctuations,
particularly from the export channel.
The outlook for FY2022 currently remains one of
continued restrictions globally in the face of emerging
COVID variants. A return to ‘normal’ domestically
is also dependent on the completion of a national
vaccination program, the freeing up of supply chain
blockages globally and the return of international travel
which is not expected until at least March 2022. As a
consequence the strategic focus is likely to remain similar
to the past twelve months.
Capital Management
The onset of COVID-19 in late FY2020 was followed
by a second wave in Melbourne which led to a four
month lockdown from July to the end of October. This
heightened the level of uncertainty surrounding the
outlook for both the domestic and global economies
over the following 12-18 months. The Board took
the view that decisive action was needed to ensure
the company remained well capitalised during the
period in which the negative impacts of COVID-19 on
the salmon industry were likely to remain in effect. In
September 2020 Huon raised $66 million in equity
through a placement and Share Purchase Plan (SPP),
enabling the business to focus on its core strategy, pay
down debt and meet the capital requirements of the
Group through 2021.
The Board also indicated that the dividend remains
suspended until the business returns to profitability with
cash flow prioritised for operational requirements and
the repayment of debt.
Downward revisions to the outlook for production
volumes have eased capital expenditure requirements
in the short term. This, together with the significant
investment in new infrastructure over recent years,
resulted in annual capex of $9 million in FY2021
reflecting maintenance expenditure.
People
As Huon expanded production capacity and increased
its marketing efforts during the year, the number
of employees increased by 10% to 797. With the
pandemic remaining an ever present potential threat
throughout the year, COVID-19 safe workplace practices
were embedded across the business enabling both
operational and office-based employees to continue
working in a COVID-safe way. A review was also
undertaken of all existing training practices, embedding
new approaches to ensure training was not impacted.
The business continued to operate ‘as normal’ with no
disruptions to the ongoing operations of the business.
It is particularly pleasing that this focus on constantly
updating and developing the health and safety
programs within the business translated into a significant
improvement in safety performance during FY2021.
Conclusion
There is no question that the business has faced some
of the most significant challenges in its history over
the last eighteen months. The temporary closure of
markets due to the coronavirus pandemic, together with
the ongoing disruption to international trade and the
grounding of international flights have been costly.
Huon has however also delivered some milestone
achievements during this time as it rose to the challenge.
A national advertising campaign, directed at growing
per capita consumption in the domestic market, was
launched in late 2020. As a result we saw growth in
demand for salmon in the second half return to its pre
COVID growth rate of 10%pa. Huon also increased its
capability to supply fresh salmon to outlets in Western
Australia following the opening of the Forrestdale
processing facility. It was also successful in winning
tenders to supply the national supermarket chains, with
supply contracts commencing in April and May 2021.
Over the next two years however the business will
be managed to meet the growth in domestic market
demand and our growing share of the retail and
wholesale channels. To do that our production volumes
will be maintained at current levels with a continued
focus on driving further production efficiencies.
While your board is confident that the investments made
in recent years will support the growth of the business over
the long term, the financial impact on the business from
COVID-19 led to a number of unsolicited approaches
from third parties earlier during the year. As a result a
strategic review was initiated in February to assess the
potential for corporate level transactions. On 6 August
2021 Huon announced that it had entered into a Scheme
Implementation Deed with JBS, a global producer of land
based proteins with significant operations in Australia, to
acquire 100% of Huon shares by way of two alternative
Schemes of Arrangement (Schemes). On 13 August 2021
Huon entered a process agreement with JBS to provide
for the making of a recommended takeover bid (Offer).
The Offer will be in parallel but not in substitution to the
Scheme and will be subject to the Schemes not becoming
effective (among other conditions). Huon shareholders are
expected to have the opportunity to vote on the Scheme
in October 2021.
On behalf of the Board I wish to extend our appreciation
to all Huon employees for their efforts and commitment
shown during the current pandemic. Our thanks also go
to our customers, suppliers, local communities, and our
shareholders for their support over the past year.
Neil Kearney
Chairman
Peter Bender
Managing Director and
Chief Executive Officer
3
1
Fish Pool Price Index
Operating overview
Huon Aquaculture’s financial performance in FY2021
continued to be affected by the significant disruption
in late FY2020 to its two main channels to market –
wholesale and export. Sales to the wholesale channel
progressively recovered during the year as restaurants
opened, workers returned to their offices and the food
services sector began to recover. By year end, volumes
sold into the wholesale channel had increased 18% on
pcp to levels not seen since FY2017, however weaker
pricing saw revenue unchanged on the previous year.
The majority of the increased supply of fish, which
resulted from the planned increase in production, was
intended for sale into the export market in FY2021
and FY2022. This would provide a period of transition
until new contracted markets were established both
domestically and offshore. A key component of the
strategy to grow the market therefore has been for Huon
to find new and reliable markets offshore. During the
year contracted volumes sold into the international
market increased 150%, accounting for 11% of revenue,
with Huon now selling into nine different markets across
the Asian region as well as the US. Volumes sold into
the spot export market in FY2021 increased 32% on the
previous year to 11,418 tonnes, however revenue was
adversely affected by a 20% fall in the salmon price to
an average 47 NOK(1) for the first eight months of the
year compared to the same period the previous year
(cf 59 NOK). With increasing diversification of markets
over time the aim is to reduce Huon’s exposure to the
more volatile pricing environment of the spot export
market to around 10% by 2023.
Growth rates during the first half of FY2021 were
excellent with fish size more competitive in the wholesale
market and more acceptable for export markets. With
exports accounting for 27% of revenue, the low export
price throughout the first, second and third quarters
was the main contributor to the 10% drop in Huon’s
overall weighted average sales price to $11.97/HOG kg
for FY2021.
In November 2020, Huon experienced two separate
incidents involving damage to the netting of fish pens
resulting in fish escapes. The loss represented 0.2% of
the biomass with an estimated cost of around $2 million.
The organised theft of salmon during the first half
from the Ingleburn processing facility in Sydney was
uncovered in December leading to a number of arrests
with charges laid and legal proceedings underway.
The overall net cost is expected to be around $2 million.
Performance improvement
Growing conditions during the first half were excellent with
overall volumes boosted by strong fish performance which
resulted in a record average weight of 5.77/HOG kg for
the harvest. This weight is the best in over a decade and
well above the average over that time of 4.53/HOG kg.
Harvest volumes in the second half declined, reflecting
the decision to keep some stock in the water longer and
to start flattening the production profile through FY2022.
Conditions were also not as favourable in the second
half with elevated average water temperatures through
to April, resulting in slower growth and an average weight
at harvest of 4.73/HOG kg.
A key indicator of the gains being achieved from
changing the way Huon farms is the reduced cost of
production per HOG kg. In the first half this fell 16%
to $8.86/HOG kg (excluding freight) assisted by the
significant increase in volumes. Although production
costs per HOG kg were higher in the second half (+8%
on pcp) due to slower growth and less fish in the water,
the overall cost of production fell 5% year on year to
$9.65/HOG kg.
A key contributor to this trend has been the integration
of the Whale Point Salmon Nursery into the Huon
Farming Method. Since 2019 when Whale Point
opened the average size of the smolt put to sea has
steadily increased from 211 grams for the 17 Year Class
salmon up to 342 grams for the 20 Year Class salmon.
The key productivity benefit of this is that it has reduced
the amount of time that the salmon spend at sea to
achieve minimum harvest weight from 14 months down
to 9-10 months.
In the short term, however, one of the most significant
impacts from COVID on the business has been the
additional freight costs applied to the sale into export
and international markets of 44% of all salmon produced
during the year. This resulted in freight charges doubling
over the year to $66 million, compared to $32 million
in FY2020. The export freight costs alone equated to
an extra $1.85/HOG kg on top of the $9.65/HOG kg
cost of production.
Huon Smolt to Sea
Average size (grams)
2020: 342 g
9-10 MONTHS AT SEA
2019: 293 g
WHALE POINT SALMON
NURSERY SMOLT
2018: 226 g
14 MONTHS AT SEA
2017: 211 g
HATCHERY SMOLT
Review of
operations
Huon Aquaculture Group Limited
Annual Report 2021
4
5
Review of operations
NET CLEANING (ABOVE)
RONJA STORM
(PHOTO: AARON BRAITHWAITE)
STORM BAY
(PHOTO: RICK CHAMPION)
6
Huon Aquaculture Group Limited
Annual Report 2021
New processing facility in
Western Australia
In November 2020 Huon opened its value-added
processing facility in Forrestdale, Western Australia.
It represents an important milestone for the Company
as it strengthens Huon’s ability to fulfill major retail
contracts and create value-added products on-site to
meet local demand.
The Forrestdale site has been fitted out with specialised
equipment similar to its sister facility at Ingleburn in
New South Wales. In line with Huon’s biosecurity
plan, Forrestdale has been designed with a strong
focus on food safety and biosecurity. The site will be
independently audited multiple times per year to comply
with the industry’s stringent certification requirements.
Huon’s long term plan is to install a second processing
line in the facility which will allow for multiple species
to be processed using state of the art equipment. This
will provide another stepping stone towards farming
Yellowtail Kingfish in the state.
Capacity
From 2017-2019 Huon invested in new infrastructure
that would support a significant expansion in production
capacity from around 20,000 tonnes up to 40,000
tonnes. The timing of the first stage of this expansion,
with the 2019 Year Class ready for harvest in 2021,
ran headlong into the first wave of the pandemic.
The global pandemic had an immediate impact on the
harvest program in 2H2020 as the significant disruption
to the wholesale and export markets in the final months
of the year slowed the harvest. This resulted in some fish
remaining in the water for longer with their harvest carried
into FY2021. A similar pattern played out in FY2021 as
early expectations that markets and international travel
would begin opening up by calendar year end were
quickly put to rest. Projections of a harvest of at least
36,000 tonnes were adjusted down as a result of changes
to production planning and scheduling designed to move
the annual harvest to around 35,000 tonnes, starting
in FY2021. While markets continue to be impacted by
restrictions placed on freedom of movement by the
pandemic, Huon will hold production levels below
capacity for the next two years.
FORRESTDALE PROCESSING FACILITY
PROCESSING FACILITY PACKING ROBOTS
7
Huon’s channels to market
Achieving balance in the channel mix through
rebuilding and growing supply through the domestic
retail channel was the main priority for Huon during
FY2021, and will remain so in the current year. The
domestic retail channel continued to grow strongly and
in FY2021 accounted for 7,226 tonnes or 20% of sales
volume compared to 4,421 tonnes (17% of sales) the
previous year. Huon made strong, direct gains in the
retail segment with salmon sales up 61% as a result of
new supply agreements, the launch of a new range of
value-added products and increased focus on customer
development. Importantly, average pricing into this
channel fell only slightly (-1%) on the previous year.
A new processing facility was opened in Western
Australia in December to strengthen Huon’s ability to
meet major retail contracts and create value-added
products on-site to meet local demand. Such initiatives
reflect Huon’s commitment to growing supply through
the retail channel, a focus which will accelerate through
2021 with the support of an intensive advertising
campaign nationally.
The wholesale market remains an important channel
for Huon in the domestic market, accounting for 38%
of revenue in FY2021. Volumes sold through this market
were significantly disrupted in the second half of FY2020
(-20% on pcp) due to COVID. While they quickly
recovered in 1H2021, with volumes sold through this
channel now 18% higher in FY2021 compared to the
previous year, pricing was significantly impacted (-15%
on pcp). This was largely due to the ongoing disruption to
the food service sector from COVID, including the second
lockdown in Victoria which lasted for almost four months
and stunted a faster recovery. Huon responded with
the launch of nationwide advertising and marketing
campaigns which will run throughout 2021, designed
to stimulate demand through this channel and continue
growing the size of the market.
Huon’s strong focus on increased sales and volumes
into the domestic market succeeded in capturing the
majority of volume growth in the market during the year
and increasing its share of both the wholesale and
retail segments.
The work put in over the past five years into building a
network of close relationships with a range of overseas
distributors and retail clients resulted in contracted
sales to the international retail channel continuing to
grow strongly. Huon now sells into a diverse range of
markets with volumes increasing 150% on pcp and
sales as a percentage of revenue close to doubling
from 6% to 11% over the year. Growing this market and
limiting Huon’s exposure to the more volatile pricing
environment of the spot export market is a key focus
now that Huon is able to guarantee consistent supply
from its increased production capacity.
Review of operations
FY2021 Channel Mix
% of total revenue
Wholesale 38% (47%)
Retail: Domestic 25% (19%)
Retail: International 11% (6%)
Export 26% (28%)
FY21
FY20
Wholesale Channel
Sales volume
+18%
% of total revenue
-18%
Impacted by sales
pricing and freight
Huon Aquaculture Group Limited
Annual Report 2021
8
9
Salmon prices
Pricing in the domestic market was mixed in the first
half with the wholesale channel experiencing a
21% fall to $12.05/kg in response to the weakened
international salmon price and discounting to stimulate
demand. Sales into the retail channel on the other hand
grew strongly with prices increasing by 5% on pcp to
$15.14/kg due to a shift in sales mix to higher priced
value-added products.
The situation reversed in the second half with domestic
prices falling on average by 8% on pcp due to a 9% fall
in the wholesale price. Across the year Huon experienced
a 15% fall in its average wholesale price ($12.44/kg)
compared to pcp while retail prices fell slightly from
$14.91/kg in FY2020 to an average $14.65/kg.
International salmon prices remained depressed
throughout most of FY2021, averaging 47 NOK/kg(1)
until February 2021. With most of Huon’s sales occurring
during this period, the average spot export price
received over the year fell 7% to $9.96/kg and the
contracted retail price for sales to international customers
fell 15% to $11.43/kg.
Since February 2021 average prices have returned
to pre-pandemic levels of around 64 NOK/kg. This
is consistent with the Fish Pool Index futures price for
salmon of an average 62-63 NOK/kg in FY2022 due
to underlying supply constraints affecting the major
producing countries.
Impact of COVID-19 in FY2021
Huon continued to operate ‘as normal’, albeit with
modified policies and procedures to contain any
potential outbreaks of COVID-19 within the business,
throughout the year. Huon participated in the
Government’s JobKeeper Scheme up to September
2020. There were no disruptions to the ongoing
operations of the business.
The closure of Australia’s border and the grounding
of international commercial flights remained in place
throughout the year. This created a major problem
for companies like Huon that rely on delivering their
product fresh to consumers within days of harvest. While
access to international markets was maintained with the
support of government through the International Freight
Assistance Mechanism, freight costs more than doubled
during the year to $66 million.
Domestic demand increased during the year, despite the
extended lockdown in Victoria from July until October
and other State by State localised, snap lock-downs as
part of the strategy to keep community transmission at
bay. However while Huon experienced increased sales
volume across all channels, prices dropped on average
by 10% relative to FY2020 due to the significant decline
in the international salmon price for the majority of the
year. It is estimated that approximately $43 million in
revenue was forgone due to that factor alone.
One positive benefit to come out the pandemic is a
much greater awareness of salmon as an alternative
protein to chicken, beef or pork. This is evidenced by
the 61% growth in domestic retail sales, including retail
fish shops and e-commerce channels, compared to the
previous year. A significant investment by the salmon
industry, including Huon, on advertising in the second
half of FY2021 contributed to this but it is also expected
to deliver long term benefits through increased per capita
consumption with more consumers now familiar with
salmon as a weekly family menu item.
Review of operations
1
Fish Pool Price Index
Retail: Domestic
$/HOG kg
Six months ended
15.30
14.23
15.14
14.43
DEC
2019
JUNE
2020
DEC
2020
JUNE
2021
Freight Costs
$ million
Six months
ended
DEC
2019
JUNE
2020
DEC
2020
JUNE
2021
17.8
26.4
39.7
14.0
Wholesale
$/HOG kg
Six months ended
14.08
12.79
12.05
15.21
DEC
2019
JUNE
2020
DEC
2020
JUNE
2021
10
Huon Aquaculture Group Limited
Annual Report 2021
11
Review of operations
12
Huon Aquaculture Group Limited
Annual Report 2021
People and Safety
Developing People, Culture and Leadership
This year, Huon invested in its future by placing strong
emphasis on the recruitment of new talent and the retention
of existing talent through recruiting for positions across all
divisions. The total headcount increased 10% during the
year to 797 employees (June 2020: 723), primarily across
processing and marine operations due to the increase
in capacity and harvest, as well as the addition of the
Forrestdale processing facility in Western Australia.
Huon continued to focus on employee engagement with
an Engagement Survey being completed in late 2020.
As a consequence several key actions were implemented
including more varied communication methods, change
management training, and activities designed to help our
employees understand how their role helps Huon live its
values. Huon continues to engage with employees and
managers alike in enhancing the everyday employee
experiences; this included broadening the way it manages
communications with employees to account for the wide
variety of locations and functions in which they operate.
A review was undertaken during the year of all our existing
training practices, embedding new approaches to ensure
training continues despite the COVID-19 pandemic.
There was continued focus on compliance training with
many employees completing training such as First Aid,
Oxy Resuscitation and other role-specific training. There
are currently 79 employees completing VET sector
qualifications in aquaculture, seafood processing,
engineering fabrication, work health and safety, supply
chain operations, and electrical apprenticeships.
Language, literacy, and numeracy support continue
to be made available to employees requesting support
to assist them in their everyday work and life.
Safety and Wellbeing
Huon’s priority over the last year has been the safety
and welfare of its people throughout this unprecedented
period of uncertainty. COVID-19 safe workplace
practices have been embedded across the business
enabling both operational and office-based employees
to continue working in a COVID-safe way.
A major achievement during the year was the introduction
of Huon’s own Hazard Reporting App. This was designed
to make it easier for employees to report incidents or
hazards and has also improved the assessment and
reporting of these incidents. The introduction of the app
resulted in a significant increase in the number of hazards
and incidents reported, particularly near-miss incidents,
due to the ease of reporting. This has allowed underlying
issues in the safety of operations to be addressed before
an incident occurs, enabling Huon to continually improve
the way it operates.
In alignment with ISO45001:2018, Huon has reviewed
its OHS Policies, procedures and SOPs with a
focus on high risk work. It has made these updated
documents available on the dedicated OHS portal on
Huon’s intranet.
Overall safety performance continued to improve,
particularly the LTIFR which fell 32% from 5.1 injuries
per 1 million hours worked down to 3.4. Another
achievement was the 21% fall in the Incident Rate from
0.79 Lost Time Incidents per 100 employees in the
previous year to 0.62.
Incident
Rate
(IR)
Lost Time
Injuries per
100 employees
FY19 FY20
0.97
0.79
FY21
0.62
Lost Time
Injury
Frequency
Rate (LTIFR)
Per million
hours worked
FY19 FY20
4.1
5.1
FY21
3.4
Average
Lost Time
Rate
(ALTR)
Hours lost
per employee
FY19 FY20
10
13
FY21
14
Employees
FY19 FY20
665
723
FY21
797
13
Outlook
Huon's focus in FY2022 will be to manage production
within the expanded capacity established in
FY2021, to continue to grow the market and to lock
in contracted sales both domestically and offshore.
Annual production volumes for the next two years are
therefore planned to average 35,000 tonnes.
Huon’s channel mix is likely to see a reduction in
sales volumes through the spot export market from
32% in FY2021 to around 20% in FY2022. This will
be in no small measure due to Huon’s success in
winning new contracts with the major supermarkets
and other independent outlets to supply the domestic
retail market from late in 2H2021. Retail sales should
at least reflect the growth in demand (+10%pa),
supported by Huon’s increased capability to supply
fresh salmon to outlets in Sydney and the regions
through its processing facility in NSW and, from
November 2020, to Western Australia following
the opening of a similar facility in Forrestdale, south
of Perth.
Huon’s success in increasing contracted volume sales
(+150% on pcp) into international markets, despite the
travel restrictions imposed by COVID during the year,
will further underpin the reduction in volumes that are
channelled into the spot export market. Within the next
2-3 years this, together with the increase in domestic
retail sales, will assist in delivering more stable Group
financial performance.
The strong performance of the 20 Year Class salmon
is expected to deliver a similar above average HOG
weight in FY2022 to that achieved in FY2021 (5.24 kg).
This, together with the reduced cost of managing
Year Classes since 2019 due to the productivity
gains delivered from investing in new infrastructure, is
expected to result in a cost of production (excluding
freight) averaging around $10.50/HOG kg.
Revenue will depend on pricing which, compared to the
outlook at the beginning of FY2021, is currently looking
much more promising for FY2022. While uncertainties
remain regarding the pace and scale of the economic
recovery globally, Huon is confident of recording an
increase in both revenue and operating EBITDA given
the forecast volume and improving price expectations.
Review of operations
DOVER OFFICE VIEW
14
Huon Aquaculture Group Limited
Annual Report 2021
15
Operating in unique environments
Map Key
Office or sales team
Processing facilities
Farming regions
A Bridport Hatchery
B Springfield Hatchery
C Millybrook Hatchery
D SALTAS Hatchery
E Meadowbank Hatchery
F
New Norfolk Brood Facility
G Bagdad Brood Facility
H Lonnavale Hatchery
I
Forest Home Hatchery
J
Whale Point Salmon Nursery
Huon is fortunate to farm in Tasmania’s
unique environment, allowing the Company
to raise salmon in locations in which they
thrive. From the time Huon Salmon start
their life in hatcheries up until they are
harvested, their environment plays a vital
role in their health, growth and quality.
Onshore
Hatcheries
Hatcheries allow Huon to mimic
the natural lifecycle of salmon,
synchronising batches of salmon to go
out to sea at different times of the year,
enabling the supply of fresh healthy
fish all year round. Located throughout
Tasmania, they allow Huon to take
advantage of different water and
environmental conditions and maintain
high standards of biosecurity.
Whale Point Salmon Nursery
Whale Point Salmon Nursery is the
southern hemisphere’s first onshore
salmon nursery and represents a
step change in Huon’s production
capability.
Processing
The Paramatta Creek (Devonport),
Ingleburn (Sydney) and Forrestdale
(Perth) processing facilities are three
of the most advanced in the world,
ensuring the fish are as fresh as
possible when they go to market.
The Forrestdale facility was opened
in November 2020 ensuring the
Western Australian retail market
also has access to fresh, top
quality salmon.
Marine regions
Macquarie Harbour
Less than 10% of Huon’s production
comes from Macquarie Harbour
with stocking densities kept low
in order to manage sustainable
farming in this unique water system.
Huon River and
D’Entrecasteaux Channel
Hideaway Bay on the Huon River
operates as the shorebase for
Huon’s operations. This sheltered
bay, with its calm waters, is where
Huon manages its harvest as well
as undertaking Australia’s only
experimental and pre-commercial
use fish feed trials.
Storm Bay
Huon began farming Storm Bay in
2014 as part of its long term growth
strategy to shift salmon farming
into high-energy offshore sites. The
East of Yellow Bluff lease in Storm
Bay allowed Huon to restructure
the offshore farming operations
resulting in comfortably increased
annual harvests of approximately
35,000 tonnes with the ability to
increase further within the existing
lease sites.
Western Australia
The Western Australian Government
is undertaking development of the
Geraldton-based finfish nursery
project, allowing Huon to unlock
the next chapter of its plans to
commercially farm Yellowtail Kingfish
(YTK) in WA’s Midwest. Huon is now
fully licensed to begin aquaculture
operations in the mid-west once
development is complete.
Storm Bay
Hideaway Bay
Macquarie
Harbour
C
D
F
B
TASMANIA
A
LAUNCESTON
DEVONPORT
HOBART
E
H
I
J
G
PARRAMATTA CREEK
PERTH
MELBOURNE
TASMANIA
HOBART
SYDNEY
BRISBANE
AUSTR ALIA
ADELAIDE
GERALDTON
Huon Aquaculture Group Limited
Annual Report 2021
16
East of
Yellow Bluff
(late smolt)
Storm Bay
(growout)
Two
unused
sites
Whale Point
(nursery)
Port Huon
(engineering workshop)
D’
E
nt
r
ec
a
s
t
ea
ux
C
ha
nn
el
Flathead Bay
(early smolt)
Roaring
(early smolt)
Garden Island
(early smolt)
Hideaway Bay
(service, research and
harvesting)
Police Point
(early smolt)
Zuidpool North
(growout)
Zuidpool South
(growout)
Hu
on R
ive
r
Tasman
Sea
Hideaway
Bay
Map Key
Lease zones
High-energy lease zones
Land base facilities
Separation of
smolt and growout
by lease zone
Storm Bay
17
Growing Salmon
H
a
t
c
h
e
r
i
e
s
F
i
s
h
H
u
s
b
a
n
d
r
y
L
i
g
h
t
i
n
g
P
r
o
c
e
s
s
i
n
g
N
u
r
s
e
r
i
e
s
M
a
r
i
n
e
F
a
r
m
s
H
a
r
v
e
s
t
i
n
g
P
r
o
c
e
s
s
i
n
g
M
a
r
k
e
t
F
e
e
d
i
n
g
F
a
l
l
o
w
i
n
g
V
a
l
u
e
A
d
d
e
d
N
e
t
M
a
n
a
g
e
m
e
n
t
P
r
e
d
a
t
o
r
B
a
t
h
i
n
g
Maintenance
P
r
o
g
r
a
m
S
e
l
e
c
t
i
v
e
B
r
e
e
d
i
n
g
M
a
n
a
g
e
m
e
n
t
As a vertically integrated salmon producer,
Huon’s operations span hatcheries, nurseries,
marine farming, maintenance, harvesting,
processing, value adding, marketing, sales
and distribution.
RONJA STORM
GILL CHECK
Huon Aquaculture Group Limited
Annual Report 2021
18
Wellboats
Regular bathing and
grading of salmon
and harvest grade
fish transferred to
Hideaway Bay.
Fortress Pens
Designed to operate in one
of the roughest farmable
waters in the world with a
double net system, which
has reduced predator risk.
Harvesting
There is a direct relationship between
harvesting and the quality and freshness
of the end-products and by focussing
on low-stress, humane, night-harvesting,
using RSPCA-UK certified equipment,
Huon consumers experience fresher,
high quality salmon year-round.
Whale Point Salmon Nursery
By growing our salmon larger on land,
we improve the efficiency of our overall
production cycle by reducing the time
our salmon spend at sea from 14 months,
to 9-10 months. Importantly the reduced
time at sea reduces Huon’s agricultural
and environmental risks.
Forest Home Hatchery
A second generation recirculation
hatchery that delivers outstanding smolt
quality and larger smolt sizes with a
reduced environmental footprint.
Feed Barges
Two of the largest unstaffed
fully automated feed barges
are moored at Storm Bay.
Feed control-room
Feeding is monitored from
Huon’s central feed control-room
in Hobart. Automated feeding
software ensures fish are
fed 24/7, 365 days a year,
in all weather conditions.
High-energy offshore sites
Deeper, high-energy sites at
Storm Bay mean that pens are
located in areas with stronger currents
and greater water movement.
Resulting in better fish performance.
Hobart
F
e
e
d
i
n
g
B
a
t
h
i
n
g
Huon has a reputation for
leading innovation across all areas
of its operations.
F
e
e
d
i
n
g
Tasman
Sea
Hideaway
Bay
Storm
Bay
19
Whale Point Salmon Nursery –
Generating Results
WATER FILTRATION
FISH TANKS
The
Whale Point
Salmon Nursery
uses world-leading water
recirculation technology
that recycles up to 98%
of the freshwater in which
the fish are grown.
98%
20
Huon Aquaculture Group Limited
Annual Report 2021
WHALE POINT SMOLT (~300 GRAMS) PHOTO: BIILUND PATRICK TIGGERS
Huon opened the technologically-advanced Whale
Point Salmon Nursery in February 2019. Since then, it
has revolutionised the way salmon is farmed, from
lifting operational efficiency to improving fish health,
welfare and biosecurity. Here we look at what has been
achieved at Whale Point in the past two years.
Huon’s decision to build the Whale Point Salmon
Nursery enabled the Company to increase its capacity
to grow smolt on land to a larger size before transferring
them to sea. This allows Huon to make the best use of
the increased capacity delivered by the expansion into
Storm Bay.
Two years after Whale Point was commissioned, not only
has it delivered on that goal but it has also increased
the operational efficiency at both Lonnavale and Forest
Home, our southern freshwater hatcheries. Both of
these hatcheries are now growing fish to 50-100 grams
before being transferred to Whale Point to grow up to
300 grams or more before their transfer to sea. This allows
more fish to be grown at our hatcheries, increasing overall
biomass production. The average time Huon salmon now
spends at sea has either been reduced, or allowed the
harvesting of larger fish for the same time at sea, and at
the same time the harvesting schedule is able to deliver
a more even harvest weight profile all year round.
The nursery includes a one kilometre-long over/
underground ‘fish-out pipe’ which transfers smolt
directly from Whale Point to the 116m-long wellboat,
the Ronja Storm. In 2020, the fish-out pipe saved 478
truck movements. This keeps trucks off the road, easing
traffic congestion and reducing noise pollution which
lessens our impact on the surrounding community.
Over a six-day period in March 2021, the team
transferred 560 tonnes of smolt (approximately
1.8 million fish) from the Nursery to the Ronja Storm via
the fish-out pipe. This was the first time this had been
done at this scale and it resulted not only in time being
saved but fish stress-levels being reduced.
Environmental efficiencies are at the forefront of Whale
Point’s modus operandi. The Recirculation Aquaculture
System (RAS) enables 98% of the freshwater to be
repeatedly treated and reused. As well as resulting in
no direct discharge to the surrounding environment, the
waste solids extracted from the waste-water treatment
system are delivered to Hanson’s Cherry Orchards to be
used in organic compost.
Improvements are ongoing, including the recent
installation of a cooling tower to keep the dam water
cool over the warmer months. This will reduce electricity
usage and overall running costs as well as increasing
reliability. The tower also takes ammonia out of the water,
making it safer for reuse. Huon is committed to innovation
and continuous improvement at Whale Point and the
facility has become what it is today because of that
dedication.
Whale Point
Smolt Transfer
System
Saved
478
truck movements
in 2020
Whale Point
Smolt Transfer
System
Transferred
560T
of smolt over a
six-day period
(~1.8 million fish)
'FISH OUT PIPES' TO RONJA STORM
21
Huon’s Approach to Marketing
Long term shift in channel mix begins
in FY2022
During FY2021 there was a major focus on the
realignment of Huon’s sales channels as it brought
online the planned step up in production volumes just
at the time when demand from the wholesale channel
plummeted due to lockdown measures associated
with COVID-19. Particular attention was placed on
forging new relationship in international markets and
tendering for a number of major retail contracts with
the Australian supermarket giants that were due to
roll-over in mid-2021.
Domestic retail sales volume grew by 63% in FY2021
largely on the strength of a significant investment in
marketing to drive increased per capita consumption.
Huon predominantly operates in the highest value
segment of the salmon market (fresh) but this year
also took advantage of strategic opportunities to
grow sales of frozen and smoked salmon to increase
market share. In FY2022 Huon’s growth in retail sales
will benefit significantly from its success in winning
two new 3 year contracts to supply deli salmon to
Coles and Woolworths and a new MAP contract with
Woolworths. Volume sales are expected to increase
by around 80% in FY2022, lifting the retail channel’s
share of Huon’s total volume sales from 20% to around
32% and Huon’s overall share of the domestic market
from 33% to an estimated 39%.
Huon has continued to invest in the development of
its e-commerce capability, building on the significant
increase in sales recorded in the second half of
FY2020 when COVID first took hold. In FY2021 sales
almost tripled (+184% on pcp) underpinning our initial
confidence in the potential to be gained from continued
growth in this channel. The majority of sales are through
Huon’s online store with an average order value of $104.
Huon’s dedication to customer service has also driven
further growth in the returning customer rate to 40%.
International retail sales continued to grow strongly in
FY2021 with 150% volume sales growth from new and
existing contracted customers in international markets as
a result of the strong foundations built with retail partners
throughout Asia. Huon will continue to grow this channel,
which now accounts for 12% of volume, selling into nine
different markets across the Asian region as well as the
US. Increasing volumes and diversification of markets
over time is key to limiting Huon’s exposure to the more
volatile pricing environment of the spot export market.
Huon’s wholesale business was the most impacted by
lockdown measures in the first six months of COVID-19.
It recovered quickly however in FY2021 with volumes
exceeding pre-COVID levels for the year and matching
the record volumes sold in FY2017. By the end of FY2021
the food service sector in Australia had made significant
progress in recovery, despite hotels, events and catering
industries yet to return to pre-COVID operating levels .
In response to this, Huon is using its strategically located
processing facilities, including a new one opened in Perth
in November 2020, to move closer to the end customer.
As expected, FY2021 experienced high levels of trading
volume internationally, given the large planned increase
in production volume for this year. Volumes increased 32%,
with exports representing a third of Huon’s channel mix. In
FY2022, however, as the domestic market accounts for an
increasing share of sales, exports are expected to fall to
around 20%. This should progressively decline to 5-10%
over the following 3 years.
63%
Domestic
retail sales
volume growth
184%
Volume increase
in e-commerce
channel sales
150%
International
retail sales
volume growth
22
Huon Aquaculture Group Limited
Annual Report 2021
Investing in marketing to drive growth
in per capita consumption
Huon remains focused on expanding branded
distribution both domestically and internationally in
FY2022. In the domestic market this was supported
by a significant above the line investment in marketing
in the second half of FY2021 to drive Huon Salmon
consumption. This centred on the launch of a national
advertising campaign, “Give Chicken the Night Off”,
targeting the c.20% of consumers that purchase chicken
and salmon at least weekly, to eat more salmon.
In October 2020 the launch of the entire Huon Salmon
and Ocean Trout fresh pre-packed range into NSW
Coles and Woolworths stores in Western Australia
was accompanied by a revamped “Harvested By
Night, Fresher By Day” campaign. This built on Huon’s
already strong freshness credentials (a key purchase
driver for consumers in seafood) and was supported by
the RSPCA which promoted the launch through a blog
highlighting Huon’s credentials as a salmon farmer with
a focus on good fish welfare.
In the five years prior to 2021, the Australian salmon
market had been constricted by supply issues from local
producers and, as a consequence, underinvestment in
marketing. The expansion in domestic supply in FY2021
provided the first opportunity to start addressing salmon’s
low share of voice in the Australian protein market.
Compared to poultry consumption (46 kg per person in
2021), and pork, beef and other seafood which each
have annual per person consumption levels of 20-28 kg,
Australians eat only 2.4 kg of salmon per person.
The investment is expected to drive single year, double
digit volume growth whilst maintaining price, an objective
which has been delivered in its first six months. Huon is
therefore confident that this initiative, together with a
trend during COVID to eating more home cooked meals,
can deliver a major increase in domestic per capita
consumption in the years to come.
Sources:
• ABARES Annual Commodities March Quarter 2021
• IBIS World Seafood Consumption 2020
Protein consumption in Australia
Per person (kg)
2018 2020
5%
change
+15%
change
–9.5%
change
Salmon
Pork
Other Seafood
Beef
Lamb
Poultry
2.1
8.6
21.9
23.4
21.3
44.0
2.4
5.5
19.8
23.9
27.7
46.4
23
Reduced smolt numbers in Chile responsible
for tight global salmon supply in 2021
The global salmon market is dominated by Norway
and Chile which together represent an estimated 77%
of production in 2021. The UK, Canada, the Faroe
Islands and Australia are the next biggest group, each
producing 90,000-200,000 tons annually to account for
c.19% of the global market.
In 2020 the global salmon market continued to expand,
with farmed Atlantic salmon growing by 5.2% on the
previous year to 2.7 million tonnes. Australian production,
however, rose 34% in that time, accounting for 8% of the
growth in global salmon supply.(1)
In the immediate future, supply will be dependent
on a number of factors including the price of salmon
and a further easing of lockdown measures related to
COVID-19. Kontali is expecting supply to be tight with
global salmon supply forecast to grow by 2.3% in 2021
and averaging growth of 4-5% in the following two years.
COVID-19 and low prices in Chile’s main export markets
– the US, Brazil, and Russia – led to lower smolt numbers
in Chile in 2020. As a result supply from Chile in 2021
has contracted, with Kontali forecasting a 14% fall in the
current year. Norway on the other hand has increased
supply by an estimated 7% in 2021, accounting for the
majority of the fall in volume from Chile.
The price outlook for 2021, having increased 25% to
average 59 NOK over the first six months of the year
compared to an average 47 NOK in the second half of
2020, is that it will continue to increase for the remainder
of 2021, peaking at 64 NOK. Forward estimates for
2022 suggest prices will remain at this level, averaging
around 62-63 NOK.(2)
Growth in global demand is dependent on
the recovery of the food services segment
Despite challenging market conditions in 2020,
consumption of salmon per capita has continued to
increase in all major markets. According to Pareto
Securities, the US led the way in growing salmon
consumption which was 1.7 kg in 2020, implying an
8% growth on 2019 levels. Long term factors have
driven this trend including a better selection of salmon
in supermarkets and a growing preference for fresh
pre-packed salmon products in these stores.
Other mature markets like Western Europe and
Scandinavia, where per capita consumption is up to
6-8 kg, also reported robust growth in consumption
of 5% in 2020.
The lockdown measures put in place with COVID-19
led to a sharp decline in global demand from the
hotel, restaurant, and catering segment (HoReCa) in
2020. This is an important segment of the salmon market
responsible for an estimated 45% of global consumption.
In many Asian markets, including China, consumption
is driven by this sector. Since the introduction of lockdown
measures, the reopening of restaurants has been slow.
In China (one of the first countries to ease restrictions)
only half of all restaurants initially re-opened, and those
that did, operated at 40-50% of ‘normal’ capacity. As
restrictions are further eased in 2021, a return to normal
demand conditions is expected in the HoReCa segment.
This has been observed by Pareto Securities, where
demand from China has grown 50% so far in 2021.
Rabobank also expects a positive impact on long term
demand in Europe and the US from COVID-19. As
in Australia, salmon was largely an ‘at-home’ eating
experience during 2020, with consumers in these markets
becoming confident in cooking salmon at home. There
is an expectation that this will lead to further long-term
‘at home’ growth in demand even when HoReCa returns.
In Australia demand for salmon recovered strongly in
FY2021 with volume growth estimated at over 10% pa.
There was an expectation that this would continue into
FY2022, however a surge in cases of the coronavirus
since June resulted in further lockdowns, particularly in
NSW, which has clouded the outlook.
The long-term demand dynamics for salmon remains
strong with its increasing competitiveness as an alternative
protein and low levels of penetration in many markets
indicating there is room for growth.
30
40
50
60
70
80
JAN
FEB
MAR
MAY
APR
JUN
JUL
AUG SEP
OCT NOV DEC
FY2021
FY2020
FY2019
Trends in the Global Salmon Market
1
Kontali.
2
Pareto Securities Seafood Weekly 3 May 2021.
Fish Pool Index (NOK kg)
Monthly average
Year on year change in global Atlantic Salmon
supply and forecast (%)
5.0%
2018
4.2%
2015
22.4%
2012
7.3%
2019
-6.7%
2019
2.1%
2013
5.2%
2020
2.3%
2021E
4.7%
2022F
2023F
4.0%
2017
5.8%
2014
9.1%
-1.1%
2010
2011
12.5%
24
Huon Aquaculture Group Limited
Annual Report 2021
25
Financial Summary
» Harvest tonnage rose 39% to 35,611 tonnes reflecting
Huon's investment to rebuild biomass over the past few
years. This together with optimal growing conditions in
the first half of the financial year resulted in excellent
fish performance.
» Favourable growing conditions also contributed to an
above average harvest weight of 5.24 kg, improving on
previous year's record average harvest weight of 5.04 kg.
This also confirms that the changes to salmon farming
practices made by Huon in recent years are contributing
to sustained superior fish performance.
» A 20% fall in global salmon prices during the first eight
months of the year, heavily impacted the overall return
for FY2021. While revenue increased by 25% on pcp,
revenue per HOG kg fell 10% from $13.30 to $11.97.
» Operating EBITDA fell 65% to $16.7 million as margins
were squeezed from 13.9% to 3.9%. The average
cost of production (excluding freight) fell 5% from
$10.20/HOG kg in FY2020 to $9.65/HOG kg, while
the average price received for Huon salmon fell 10%
over the same period.
» Operating NPAT recorded a loss of $36.9 million
due to the recognition of a $79.9 million after tax
impairment charge. Higher finance costs further
reduced earnings already weakened by lower average
prices. Statutory NPAT recorded a $128.1 million loss.
» Volumes sold into the domestic market increased by
31% to 20,089 tonnes and export volumes increased to
15,523 tonnes. While the plan was to sell the majority of
the increase in production into the export market, Huon
has succeeded in selling more through the domestic
market by increasing its market share of both the retail
and wholesale segments.
» The fair value of Huon's biomass at year end decreased
by $45.7 million to $218.3 million. Biomass in the water
at 30 June 2021 was 23% lower at 20,336 tonnes
compared to 30 June 2020.
» Dividends were again suspended in 2021 to preserve
cash flow for operations.
Statutory Earnings
Twelve months for the year ended
FY2021
FY2020
FY2019
Tonnage
t
35,611
25,566
18,849
Revenue(1)
$M
426.4
339.9
282.0
Revenue per HOG kg
$/kg
11.97
13.30
14.96
EBITDA(2)
$M
(113.2)
48.8
38.2
EBITDA per HOG kg
$/kg
(3.18)
1.91
2.03
EBITDA margin
%
(26.5%)
14.4%
13.5%
EBIT
$M
(170.0)
9.7
12.5
NPAT
$M
(128.1)
4.9
9.5
Fair value adjustment of Biological Assets
$M
(16.0)
1.5
(9.1)
Related income tax refund/(expense)(3)
$M
4.8
(0.5)
2.7
Biological assets
$M
218.3
264.0
209.1
Earnings per share
c
(120.79)
5.63
10.82
Return on assets(4)
%
(24.3%)
1.4%
2.2%
Operating cash flow
$M
(3.0)
8.4
14.5
Net debt(5)
$M
133.3
167.3
138.8
Total gearing ratio(6)
%
54.2%
54.3%
44.2%
Operating Earnings
FY2021
FY2020
FY2019
Operating EBITDA(7)
$M
16.7
47.3
47.3
Operating EBIT
$M
(40.1)
8.2
21.6
Operating NPAT(8)
$M
(36.9)
3.9
15.9
1
Revenue from the sale of goods.
2
EBITDA is a non-IFRS financial measure which is used to measure
business performance, using net depreciation and amortisation
recognised in the income statement.
3
Related income tax at current tax rate.
4
Return on Assets is measured as statutory EBIT/total assets.
5
Net Debt is total debt net of cash and cash equivalents.
6
Total Gearing Ratio is measured as debt (net of cash)/net assets.
7
Operating EBITDA excludes the impact of the Fair Value Adjustment
of Biological Assets.
8
Operating NPAT excludes the impact of the Fair Value Adjustment
of Biological Assets and related tax impact.
Huon Aquaculture Group Limited
Annual Report 2021
26
Summary of Operational Performance
Despite the impact of COVID-19 on pricing and demand
in global salmon markets, there were a number of
operational highlights during FY2021. These included:
» winning major tenders to supply the domestic
supermarket chains with fresh (deli) salmon under three-
year contracts commencing in April and May 2021.
» commencement in December 2020 of a twelve month
national advertising campaign targeting Australian
consumers, that boosted volumes sold into the retail
segment by 63% in the second half of FY2021.
» the successful launch of a new range of higher priced
value-added salmon and trout products into the
domestic retail market.
» the opening of a new processing facility in Forrestdale,
Western Australia to further build Huon's capacity to
supply fresh salmon to outlets in the state.
These achievements follow five years of significant
investment in new infrastructure, putting Huon in a stronger
position to guarantee increased supply into domestic and
international retail markets.
Biomass in the water at 30 June 2021 was 20,336
tonnes, a 23% decrease on the 26,429 tonnes in FY2020.
Huon plans to manage production within this expanded
capacity, with harvest volumes expected to be held
around 35,000 tonnes in FY2022 and FY2023. The
fair value of Huon's biomass at year end decreased by
$46 million from 30 June 2020 to $218 million primarily
due to harvest volumes in excess of production volumes
with a portion of the FY2020 harvest being deferred
to FY2021.
The first half of FY2021 provided excellent growing
conditions which increased overall volumes by 45% to
19,293 tonnes (13,321 in 1H2020) and resulted in a
record average weight of 5.77 kg. In the second half of
FY2021, growing conditions were impacted by warmer
water temperatures through to April, slowing growth
and reducing the average weight to 4.73 kg. Cost of
production per HOG kg fell 5% over the year to $9.65
($10.20 pcp) as a result of increased production and
continued productivity gains.
1
Revenue from the sale of goods.
2
Operating EBITDA excludes the impact of the Fair Value Adjustment of Biological Assets.
3
Operating NPAT excludes the impact of the Fair Value Adjustment of Biological Assets and related tax impact.
Sales
Revenue(1)
$426.4m
FY2020: $339.9m
Operating
NPAT(3)
($36.9m)
FY2020: $3.9m
Operating
EBITDA(2)
$16.7m
FY2020: $47.3m
Operating
Cash Flow
($3.0m)
FY2020: $8.4m
Sales Revenue
by Channel
% of total revenue
FY17 FY18 FY19
FY20
FY20 FY21
FY18
FY17
FY19
FY17 FY18 FY19 FY20
FY18
FY17
FY19
FY20
Wholesale 38% (47%)
Retail: Domestic 25% (19%)
Retail: International 11% (6%)
Export 27% (28%)
FY21
FY20
FY21
FY21
FY21
Operating Earnings and Cash Flow
A lower pricing environment for salmon led to Adjusted Cash
Flow from Operations falling from $17.4 million to $9.7 million.
Capital raised during the year ($66 million) was partially used
for debt repayment, with net debt falling from $167.3 million to
$133.3 million. Repayment of debt will continue to be a priority
over the next two years.
The increase in production volume in FY2021 was, as planned,
largely sold into the export market. However this was mitigated
by stronger than expected recovery during the year, and
overall growth year on year, in both the domestic retail and
wholesale markets. Sales into the domestic retail channel
continued to grow strongly as Huon implemented a number
of initiatives to grow its domestic retail footprint. Importantly,
average pricing into this channel was effectively maintained
on the previous year. The recovery in the wholesale channel
continued to be impacted by COVID-19 with a second
lockdown in Melbourne slowing the reopening of food services
and hospitality businesses. Nevertheless despite hotels, events
and catering businesses remaining closed throughout the year,
Huon increased its sales and overall share of the wholesale
channel as restrictions eased. The international retail channel
grew 150% on pcp reflecting Huon's efforts to build a network
of close relationships with a range of overseas distributors and
retail clients. Huon now sells into nine countries throughout
South-East Asia and the US.
Lower salmon prices in FY2021, particularly in Huon's
dominant domestic wholesale and export channels, resulted
in revenue increasing by only 25% off a 39% increase in
tonnage. The reduction in pricing and high freight costs during
the year resulted in operating margins being squeezed from
13.9% to 3.9% and Operating EBITDA falling by 65% to
$16.7 million.
Huon's primary focus in FY2022 will be to manage production
levels established in FY2021, to meet the growth in domestic
market demand and to lock in additional contracted sales
both in Australia and offshore. The company will also
continue to focus on driving further production efficiencies.
As international markets continue to open-up and the salmon
price stabilises around current levels, Huon believes the
foundations are in place to deliver further growth in revenue
and a strong recovery in operating earnings in FY2022.
27
Biological Assets
Six months ended
30 Jun
2021
31 Dec
2020
30 Jun
2020
31 Dec
2019
Biological assets at fair value
$M
218.3
260.1
264.0
252.1
Fair value adjustment (FVA)
$M
12.1
32.4
28.1
52.8
Biological assets (excluding FVA)
$M
206.2
227.7
235.9
199.3
Total weight of live finfish at sea
t
20,336
28,883
26,429
23,001
Biological asset value/kg (live)
$/kg
10.73
9.01
9.99
10.96
Fair value adjustment/kg (live)
$/kg
0.60
1.12
1.06
2.30
Biological assets/kg (live) (excluding FVA)
$/kg
10.14
7.88
8.93
8.66
Number of fish (harvest)
000’s
3,451
3,342
2,445
2,629
Sales volume (HOG kg)
t
16,318
19,293
12,245
13,321
Average HOG weight
kg
4.73
5.77
5.01
5.07
Average price/HOG kg (net sales)
$/kg
12.64
11.41
13.21
13.37
Net sales
$M
206.3
220.1
161.8
178.1
Fish weight and price
– The fair value of biological assets fell 17% on 30 June 2020
to $218.3 million while the value at cost fell 13% over the same
period to $206.2 million. This reflects the significant drop in the
salmon price during that time despite the increase in production
– The average value of biological assets at cost increased by
14% from $8.93/HOG kg (pcp) to $10.14/HOG kg as growing
conditions were impacted by warmer water temperatures.
– Live weight at sea decreased 23% from 26,429 tonnes
to 20,336 tonnes however the average weight continued to
improve (+4% on pcp).
– Excellent growing conditions in 1H2021 benefited average
harvest weight which rose 14% on pcp to a record 5.77 kg.
Warmer sea temperatures in 2H2021 slowed growth and reduced
the average harvest weight (-6% on pcp) to 4.73 kg.
10.00
11.00
12.00
13.00
14.00
15.00
16.00
$/HOG kg
DEC 2018 JUN 2019 DEC 2019 JUN 2020 DEC 2020 JUN 2021
kg
3.00
3.50
4.00
4.50
5.00
5.50
6.00
Average price/HOG kg
Average HOG weight (kg)
* Operating EBITDA excludes the impact of the Fair Value Adjustment of Biological Assets.
Key Financials
Operational Performance
Six months ended
30 Jun
2021
31 Dec
2020
30 Jun
2020
31 Dec
2019
Harvest volume HOG
t
16,318
19,293
12,245
13,321
Revenue from operations
$M
206.3
220.1
161.8
178.1
Revenue $/HOG kg
$/kg
12.64
11.41
13.21
13.37
Cost of production
$M
(172.8)
(170.9)
(119.7)
(141.1)
Cost of production $/HOG kg
$/kg
(10.59)
(8.86)
(9.78)
(10.59)
Freight and distribution
$M
(26.3)
(39.7)
(17.8)
(14.0)
Freight and distribution $/HOG kg
$/kg
(1.61)
(2.06)
(1.45)
(1.05)
Operating EBITDA*
$M
7.2
9.5
24.3
23.0
Operating EBITDA $/HOG kg
$/kg
0.44
0.49
1.98
1.73
Margin
%
3.5%
4.3%
15.0%
12.9%
Fair value adjustment
$M
(20.3)
4.3
(24.7)
26.2
Operational Performance
– The increase in harvest volumes reflects Huon's strategy to increase
production capacity up to 40,000 tonnes.
– The cost of production per kg fell in the first half to $8.86/HOG kg
compared to 1H2020 ($10.59/HOG kg) due to improved
operating efficiencies and higher volumes. Costs rose in the
second half to $10.59/HOG kg as elevated water temperatures
slowed fish growth and the shift in production mix to retail drove
processing costs higher.
– The proportion of revenue from export markets grew to 43%
in 1H2021, from 32% in 1H2020. The lower prices realised in
the export market contributed to the 14% fall in the average
price in 1H2020 to $11.41/HOG kg. As volumes exported are
typically much lower in the second half, the average price rose to
$12.64/HOG kg for 2H2021, albeit still 4% down on pcp.
– The higher proportion of exports doubled freight costs per
HOG kg in the first half to $2.06 compared to pcp. Freight costs
for the year of $66 million increased by $34 million over FY2020.
0
4
8
12
16
$/HOG kg
Revenue
Cost of production
Freight and distribution
Operating EBITDA
DEC 2018
JUN 2019
DEC 2019
JUN 2020
DEC 2020
JUN 2021
Huon Aquaculture Group Limited
Annual Report 2021
28
Sales Channel
Six months ended
30 Jun
2021
31 Dec
2020
30 Jun
2020
31 Dec
2019
Wholesale HOG
t
6,729
6,134
4,815
6,045
Retail Domestic HOG
t
3,927
3,298
2,407
2,014
Retail International HOG
t
2,268
1,837
1,032
601
Export HOG
t
3,394
8,024
3,991
4,662
Total HOG
t
16,318
19,293
12,245
13,322
Wholesale % of revenue
%
42%
34%
42%
52%
Retail Domestic % of revenue
%
27%
23%
23%
16%
Retail International % of revenue
%
13%
9%
8%
5%
Export % of revenue
%
18%
34%
27%
27%
Wholesale $/HOG kg
$/kg
12.79
12.05
14.08
15.21
Retail Domestic $/HOG kg
$/kg
14.23
15.14
15.30
14.43
Retail International $/HOG kg
$/kg
11.60
11.22
13.12
14.03
Export $/HOG kg
$/kg
11.22
9.42
11.37
10.85
Distribution Channels by Price and
Contribution to Sales
– Increased production continued to grow the export market maintaining
it at 27% of the sales mix for FY2021. International salmon prices
remained low until March 2021 but have since returned to pre-
pandemic levels due to global supply constraints, particularly in Chile.
– The international retail channel grew strongly, contributing to 11% of
revenue compared to 6% in FY2020. This reflects the growing diversity
of markets across Asia and in the US that are looking to secure
contracted sales of Huon salmon.
– The wholesale market remains one of Huon's most important channels
and while that market has yet to fully recover from the impact of
COVID, Huon increased its market share with volumes up 18% in
FY2021 on pcp. Weaker pricing saw its contribution to revenue fall to
38% (47% pcp).
– A shift in sales mix to higher priced value-added products in the retail
market, together with some large contract wins late in FY2021 led
to this channel increasing its contribution to sales from 19% to 25%.
An advertising campaign in 2021, targeting the nutritional benefits of
salmon, will continue to support growth in retail sales per capita.
International
$/HOG kg
% of sales
Wholesale Domestic
Retail:
Retail:
Export
0.00
4.00
8.00
12.00
16.00
$/HOG kg
DEC 2018 JUN 2019 DEC 2019 JUN 2020 DEC 2020 JUN 2021
0%
20%
40%
60%
80%
100%
% of revenue
Cash Generation
Six months ended
30 Jun
2021
31 Dec
2020
30 Jun
2020
31 Dec
2019
Operating EBITDA*
$M
7.2
9.5
24.3
23.0
Cash flow from operations
$M
1.4
(4.4)
(10.9)
19.3
Add – net interest paid
$M
2.4
2.4
3.9
2.6
– net lease interest paid
$M
4.1
4.2
3.6
2.3
– tax paid/(refunded)
$M
(0.4)
–
(3.7)
0.3
Adjusted cash flow from operations
$M
7.5
2.2
(7.1)
24.5
EBITDA conversion
%
104%
23%
-29%
107%
Capex
$M
5.0
4.0
9.1
12.5
Cash at end of period
$M
5.9
4.9
5.9
15.5
Operational Cash Flow
– Operational cash flow improved in the period despite operating
EBITDA reducing by 65% to $16.7 million. The increased weighting
of sales to the lower priced export channel and the higher cost of
freight due to restrictions on commercial flights, contributed to the
overall reduction in the average net margin and low cash flow for
the year.
– Cash flow from operations improved as the investment in biological
assets was eased. The increased exposure to the retail channel,
with longer payment terms, partly offset this improvement with trade
receivables increasing $15.5 million on pcp.
– Conversion of EBITDA to cash flow increased to 104% in 2H2021
despite higher export volumes generating increased freight costs,
up 107% to $66 million in FY2021.
– Huon spent $9.0 million in capex in FY2021, with annual spend
decreased due to the scale of recent capital spent during FY2018
to FY2020 period.
-10
0
10
20
30
$M
-50%
0%
50%
100%
150%
%
Adjusted Cash Flow from Operations
EBITDA Conversion
DEC 2018 JUN 2019 DEC 2019 JUN 2020 DEC 2020 JUN 2021
29
Huon Board of Directors
Neil Kearney B.Ec
– Chairman
– Director since August 2014
Peter Bender
– Managing Director and
Chief Executive Director
– Director since May 2005
Frances Bender
– Non-independent
Executive Director
– Director since May 2005
Founder of Huon with over 30 years’
experience in fish farming operations.
Peter is responsible for the leadership,
operations and strategic direction
of Huon and has always been
committed to delivering high quality
salmon that is raised responsibly. He
sets business strategy and leads the
executive team to deliver growth.
He is well recognised for farming
innovation both in Australia and
internationally and his extensive
knowledge of aquaculture coupled
with a strong continuous improvement
ethic is the foundation on which
Huon’s success is built.
Peter is a Non-executive Director
of Salmon Enterprises of Tasmania
Pty Ltd.
Founder of Huon with over 30 years’
experience in fish farming operations.
Frances has been instrumental in the
design of the Huon brand and its
marketing direction and continues to
be responsible for these areas.
Frances was a Member of the
New South Wales Primary Industry
Ministerial Advisor Council.
Frances’ former directorships and
committees include Board member
of Tasmanian Aquaculture and
Fisheries Institute, member of the
Huon Valley Economic Development
Advisory Committee, member of Huon
Valley Council Rural Health Advisory
Committee, member of Tasmanian
Food Industry Council and member
of Tasmanian Regional Reference
Group – South.
Neil has significant leadership
experience in major Australian and
international food companies with
prior senior roles at Goodman Fielder
Limited and National Foods Limited.
He is currently the Non-executive
Chairman of Felton Grimwade
Bosisto’s Pty Ltd, a Non-executive
director of Craig Mostyn Holdings Pty
Ltd and a Non-executive director of
Simonds Group Limited.
Neil’s most recent executive role was
Chief Strategy Officer of ASX-listed
company Goodman Fielder Limited
from 2011–2014 and before that
he was Chief Executive Officer and
Managing Director of Warrnambool
Cheese & Butter Factory Co. Holdings
Limited from 2007–2009.
Neil has previously been a Board
member for Warrnambool Cheese &
Butter Factory Co. Holdings Limited
and Colorpak Limited as well as
being a Director of National Foods
Holdings Ltd 2005–2007 and Vitasoy
Australia Products Pty Ltd 1999–2007
and Non-executive director of
Brainwave Australia.
Special Responsibilities
– Independent Non-executive Director
– Member of the Audit and Risk
Management Committee
– Member of the Remuneration and
Nomination Committee
Huon Aquaculture Group Limited
Annual Report 2021
30
Simon Lester
CA, BCom, MAppFinInv
– Independent
Non-executive Director
– Director since August 2014
Tony Dynon
CPA
– Independent
Non-executive Director
– Director since August 2016
Simon had previously been an
adviser to Huon and has extensive
experience within the salmon industry.
He has over 30 years’ experience
in corporate finance and corporate
tax, having advised the Tasmanian
Government and State owned
business enterprises.
His former roles include Partner at
Deloitte Touche Tohmatsu and PBS
Partners as well as senior management
roles at Price Waterhouse and KPMG
and previously held the position of
Board member of CatholicCare
Tasmania.
Simon is currently the Chief Risk
Officer of The Royal Automobile Club
of Tasmania.
He is a member of the Financial
Services Institute of Australasia,
Chartered Accountants Australia and
New Zealand, the Tax Institute and the
Australian Risk Policy Institute.
Special Responsibilities
– Chairman of the Remuneration
and Nomination Committee
– Member of the Audit and Risk
Management Committee
Tony has extensive leadership
and finance experience gained
largely in food, beverage and
stockfeed businesses with senior
roles in international and ASX-listed
companies.
The majority of Tony’s career was
with international food company
H J Heinz, covering a 20 year period,
including roles for Heinz Australia as
Joint Managing director from 1994 to
1997 and Chief Financial Officer from
1988 to 1994. He was also Managing
Director of Farm Pride Foods Ltd and
Executive Chairman of Palm Springs
Ltd, both ASX listed companies.
More recently Tony has had leadership
roles in privately owned stockfeed
businesses based in Australia, New
Zealand and the UK. Tony was also a
Non-executive director for Colorpak
Ltd from 2004 to 2010 and a Non-
executive director of Murray River
Organics Limited from 2019 to 2020.
Tony is a member of CPA Australia.
Special Responsibilities
– Chairman of the Audit and
Risk Management Committee
– Member of the Remuneration
and Nomination Committee
31
Sustainability
Huon has identified key sustainability
issues relevant to business operations.
These issues have been identified
by listening to community concerns,
customer feedback, expert
knowledge, benchmarking against
like-minded companies, alignment
with the UN Sustainable Development
Goals (SDGs) and with reference to
both the Global Reporting Initiative
(GRI) standards and Sustainable
Accountability Standards Board
(SASB) industry standards.
It is important Huon understands
what sustainability means to all key
stakeholders before implementing
change. Therefore it is Huon’s
intention to undertake a Materiality
Assessment Process with its internal
and external stakeholder groups
to identify their key sustainability
concerns. It has always been
Huon’s position that engagement
and disclosure is the only way to
build and develop a sustainable
business; by engaging with key
stakeholder groups, a fuller
understanding will be gained of
where improvements are needed
as both a business in, and member
of, the relevant communities.
A formal Sustainability Report
aligned with Huon’s environmental,
social, and corporate governance
(ESG) reporting requirements will be
prepared in 2022, allowing a clear
sustainability vision to be presented
for the future.
At Huon, fish farming is undertaken in an environmentally, socially and economically
responsible manner. Sustainability, fish welfare and biosecuirity are at the forefront
of the Company’s business risk management; by implementing sustainable practices,
both current and future operational risks are minimised. Huon’s holistic approach is
governed by its core values underpinned by a strong focus on animal welfare.
Huon Aquaculture Group Limited
Annual Report 2021
32
Huon’s approach to farming
Huon has proactively taken steps to manage and mitigate
the impacts of climate change on its operations, including:
— A selective breeding program for thermotolerant
and disease-resitant fish began in 2004, selecting
fish that display a natural amoeba resistance and
are more tolerant of warmer water temperatures.
Huon works in conjunction with the CSIRO which has
developed SNP chip technology for use in livestock
breeding programs; principles that have now been
transferred to salmon.
— Investment of $100 million in the development
of double-netted patented Fortress Pens that
can tolerate high energy environments, frequently
being exposed to six metre storm swells and gale
force winds in offshore sites at Storm Bay. These pens
include light-weight and super-strong nets, allowing
improved water flow and dissolved oxygen levels.
— Huon continues to participate in feed trials to
develop improved summer diets for salmon that
are easier to digest. The joint trial between Huon and
Biomar aims to reduce the impact of warming ocean
waters on salmon by helping the fish to digest and
convert the feed in summer temperatures that are
above their preferred range; this will directly improve
fish health and performance.
— Participation in the ongoing Fisheries Research
and Development Corporation (FRDC) project
on Storm Bay (Storm Bay Decision Support Tools
Project) partnered with Commonwealth Scientific
and Industrial Research Organisation (CSIRO) and
Institute for Marine and Antartic Studies (IMAS), to
characterise primary sources of nutrients into Storm
Bay in order to detect larger-scale ocean impacts
on the aquaculture industry, modelling short-medium
term oceanic changes. This will help to assess future
operating levels of the aquaculture industry in these
areas and also support seasonal analysis predictions.
Huon is committed to understanding how its business
interacts with a changing climate and how climate
risks can be mitigated to secure its future. Practices will
continue to be adapted and innovative and sustainable
solutions applied.
Climate action
Climate change is expected to have significant impacts
on Australia’s seafood industry via projected sea
temperature rises, increases in ocean acidification and
shifts in the frequency and severity of extreme weather
events. These changes may have negative impacts on
salmonid production including disruptions to fish growth
and development, increased likelihood of disease
spread and damage to offshore infrastructure.
33
Energy use and management
Salmon farming is one of the most efficient ways of
using natural resources to produce healthy protein.
Comparable to other forms of food production, it has a
low carbon footprint, high energy and protein retention
and low water footprint.
Huon incurs significant energy consumption to power
feed barges and vessels used in marine operations,
these are typically diesel-powered. Huon’s fuel usage
has increased in accordance with increased production.
A significant portion of electricity used in Huon’s
Tasmanian operations is from hydro generation, with
the Whale Point Salmon Nursery (“Whale Point”) a
significant contributor to overall energy consumption.
Following an in-depth audit of all energy inputs and
outputs, Whale Point’s energy usage between January
and May 2021 fell by 31.7 per cent compared to the
same time the previous year.
Huon also participates in the Blue Economy
Cooperative Research Centre, partnering with other
research institutions to examine current and future
renewable energy options. Current projects include
exploration of hydrogen power as a fuel source and
the viability of using tidal power at the marine leases.
Huon’s goal is to continue to review opportunities
to increase electricity and fuel efficiency across all
operations, including in the supply chain, and to
proactively pursue opportunities to introduce more
efficient technologies.
Managing water
Climate change is known to be causing disruption to
rainfall patterns globally which is expected to cause
reduced or more infrequent rainfall in Australia. It
is vital that Huon seeks to understand how our use
and consumption of fresh water impacts local water
catchments and how changes to water availability
may impact Huon’s operations in the long-term.
Freshwater hatcheries
While Huon’s freshwater facilities use freshwater the
majority are non-consumptive; those that are flow-
through hatcheries directly discharge water to their
source following appropriate filtration and treatment.
Huon uses Recirculation Aquaculture Systems (RAS)
designed for low water usage by using an extensive
filtration system that removes nutrients from the water
before circulating back through the facility and
eventually to waste. The newest RAS at Whale Point
enables up to 98 per cent of water to be repeatedly
treated and reused. The remaining 2 per cent is used in
Huon’s offshore bathing programme for the treatment of
Amoebic Gill Disease (AGD).
Marine Operations
Freshwater is used routinely in marine operations as a
safe treatment of AGD. The use of our wellboats has
enabled a reduction of freshwater use through the ability
to reuse bathing water, and with the introduction of
reverse osmosis systems on the Ronja Storm, the reliance
on freshwater is expected to reduce further.
Processing Facilities
Huon’s processing facilities use freshwater for hygiene
purposes. A project is underway to assess the water
consumption of these facilities and cost effective methods
of reducing or reusing freshwater waste streams.
Managing waste
Responsible waste disposal is a key challenge for both
the aquaculture industry and its consumers. Being a
vertically-integrated company means Huon’s waste
streams are varied; including waste from farming
operations, product processing, organic by-product
and general office waste. Reducing waste generation
and increasing opportunities for recycling is an
ongoing priority.
Operational waste
Huon’s main waste streams across farming operations
include high density polyethylene pipe, netting,
polystyrene and rope that is no longer fit for repurpose.
Huon’s goal is to formally review all operational waste
streams and set targets that maximise reuse and recycling
opportunities. Progress towards waste reduction and
recycling of these key streams to date includes:
— Continual reuse and upcycling of materials and
equipment until end of life
— Recycling of high density polyethylene (HDPE)
components and polystyrene from retired marine
farming infrastructure
— Donation of retired nets within local communities for
upcycling and reuse (e.g. crop protection, fencing
and cargo retention)
— Exploring options for recycling of Dyneema rope
including partnerships with local businesses
Electricity
Consumption
(KwH per
sales kg)
FY20 FY21
1.05
0.71
Huon Aquaculture Group Limited
Annual Report 2021
34
Sustainability
continued
Organic waste
In FY2021 Huon produced 35,611 tonnes of fish for
food production (FY2020: 25,566 tonnes) meaning
a large component of Huon’s waste is fish by-product,
including salmon skins, viscera, heads and frames,
offcuts, graded-off smolt and fry as well as hatchery
water and fish waste.
These waste products are rich and nutrious but don’t
currently have a role in Huon’s existing product streams.
Alternative pathways are, therefore, being pursued
including pet food and composting, to redirect this
waste from landfill to more renewable and potentially
revenue-generating uses.
Huon’s current reuse of fish by-product includes:
— Reuse of fingerlings and smolt from Whale Point,
Lonnavale and Forest Home hatcheries for pet treats
— Reuse of processing offcuts (e.g. salmon skins) from
Parramatta Creek processing factory for pet treats
— Reuse of heads and frames, offcuts and viscera for
incorporation into pet foods
— Reuse of macerated morts and sludge from
hatcheries to increase soil health and agricultural
production through approved land-spreading
— Reuse of low grade fish morts for composting at all
freshwater hatcheries
Huon’s ultimate goal is to achieve 100 per cent reuse
of fish by-product by 2025. It is well on the way to
achieving this with 100 per cent of organic waste from
the Company’s Tasmanian operations either going to
pet treats, composting, rendering or direct farmland-
spreading projects. Huon will now focus on rolling out
these processes across other operational sites as well
as reducing the distances that waste travels in order to
reach reuse locations.
Packaging
Huon is highly aware of the environmental impacts of
its packaging. As a member of Australian Packaging
Covenant Organisation (APCO) Sustainable Packaging
Guideline (SPG) assessments are undertaken annually for
Huon’s product packaging. For the APCO Annual Report
(calendar year 2020) Huon achieved Performance
level 3 (Advanced). This underscores Huon’s leadership
in improving the integration of sustainable packaging
across its business. Huon’s sustainable packaging targets
are aligned with APCO’s 2025 National Packaging
Targets. Packaging highlights so far include:
— Huon has transitioned all Value Added (smoked
lines) from foil board to 100 per cent recyclable card.
— Huon has transitioned 99 per cent of Huon
own-brand Modified Atmospheric Packaging
(MAP) sleeves from C-wrap (plastic) to Cardboard
(recyclable) and has incorporated the Australian
Recycling Logo (ARL) on these sleeves.
— Huon is in the process of tendering its MAP trays to
improve the recyclability of this packaging option;
circa 9 million trays are used annually.
— Huon now utilises PREP (Packaging Recyclability
Evaluation Portal) to verify that packaging is or
isn’t recyclable in Australian and New Zealand
kerbside collections.
— The majority of Huon’s secondary packaging
(e.g. cardboard shippers and shelf-ready trays) are
100 per cent recyclable.
Huon will continue to monitor its performance against
National Guidelines and seek opportunities to
implement more sustainable packaging options across
its full product range. Future packaging projects include:
— Product innovation – streamlining and standardising
its packaging (resulting in less waste).
— Alternative insulated packaging trials – opportunities
to phase out polystyrene.
— Phasing out absorbent pads in MAP trays (the
absorbent pad is single use plastic and cannot
be recycled).
Tasmanian
by-product reuse
Summary FY2021
Compost 43%
Rendering 8%
Pet Treats 5%
Land Spreading 44%
35
Freshwater ecosystems
Huon has freshwater facilities across Tasmania; all facilities
are licensed by both the Inland Fisheries Service and
the EPA. This licensing requires compliance with strict
environmental conditions including monitoring of site outputs
and downstream flows.
Huon has implemented a Freshwater Improvement Plan (FIP)
for all freshwater sites to ensure uniformity of operational
requirements across all Huon sites. This includes a cap
on discharge limits and site biomass capacities to reduce
the potential for adverse environmental impacts. The FIP
does not increase production levels at these facilities from
current maximum levels and data is provided monthly
to the EPA directly from the NATA-approved laboratory
conducting the analysis. This allows Huon to continually look
for opportunities to improve practices and implement new
technologies to further reduce its environmental impact.
Marine ecosystems
Huon farms fish in three marine regions in Tasmania;
the Huon and D’Entrecasteaux Channel, Macquarie
Harbour, and off Bruny Island’s east coast in Storm Bay.
The impact of finfish aquaculture on the Tasmanian marine
environment has been the subject of over thirty years of
rigorous scientific investigation. Numerous scientific surveys,
reports and research exists covering a range of potential
influences, from benthic (seabed) changes, near-farm
seafloor, and broad scale (intermediate and far from farm)
water quality changes.
Huon complies with a range of environmental monitoring
processes for the regulator (the EPA), and other government
departments (such as the Natural Values Conservation
Branch, and Marine Farming Branch of DPIPWE).
Additionally, monitoring is also undertaken for ethical
reasons, and some is linked to research collaboration
projects. Ongoing monitoring programs have resulted in
the following approaches being adopted to minimise its
impact on the marine environment:
— Maintain low stocking density levels in pens that are
below the regulatory compliance threshold;
— Baseline video surveys at and around new farming sites
to allow monitoring for change;
— Monthly video surveys under stocked pens to assess
benthic influence and annual video surveys submitted to
the EPA as per environmental licence requirements;
— Good fallow practices to ensure separation of year
classes and adequate periods for benthic recovery;
— Pellet detection technology to minimise fish food losses
to seafloor;
— Managing stocking profiles and feeding practices
to comply with the Marine Farm Development Plans
Total Permissible Dissolved Nitrogen Output (TPDNO)
allowances;
— Participation in comprehensive annual Broadscale
Environmental Monitoring Programs for marine growing
regions;
— Significant investment in a feed R&D program to
improve feed efficiencies and reduce nutrient output to
the environment;
— In-pen water quality monitoring with live reporting to
the Control Room; and
— Regular algal sampling at all marine leases by trained
employees.
Conducting routine monitoring and surveys of Huon’s leases
has allowed a comprehensive record to be compiled of the
history of Huon’s interactions with the environment in which
it operates. This has allowed for better planning of the
fallowing process and understanding of the environment. It
also drives the innovation of practices to continually minimise
the influence of Huon’s farming activities to the environment
both within its leases, and more broadly.
Huon will continue its monitoring programs and
collaborations with research institutions to identify further
potential areas of improvement to ensure there are minimal
environmental impacts from its operations.
Wildlife interactions
Huon has a dedicated Wildlife team which actively works
to minimise animal interactions on its farms. This team
spends a lot of time checking equipment and pens to
make sure everything is maintained to a high standard.
All wildlife and predator interactions are reported to
relevant authorities and monthly updates are released via
Huon’s Sustainability Dashboard. Huon also undertakes the
following practices to protect wildlife that may come into
contact with its operations:
— Routine remotely operated underwater vehicle (ROV)
and dive inspections of underwater infrastructure to
identify net integrity issues;
— Pen and barge camera inspections to monitor pen
integrity and reduce wildlife interactions;
— Bird escape hatches to enable self-release in the event
of pen entry;
— Cessation of beanbags and scare caps as seal
deterrents from 2018;
— Adherence to DPIPWE’s Seal Management Framework
for the aquaculture industry; and
— Adherence to Huon’s Whale Migratory Interaction Plan
and training in whale interaction protocols.
Protecting environments
where we operate
Huon’s operations are wide-ranging and have the
potential to interact with both freshwater and marine
environments. Huon monitors its environmental impacts
through monitoring and survey programs, both
voluntarily and in line with Environment Protection
Agency (EPA) licencing requirements.
Huon Aquaculture Group Limited
Annual Report 2021
36
Sustainability
continued
Animal Care
Achieving certification through the RSPCA Approved
Farming Scheme is testament to Huon’s philosophy
and long-standing commitment to animal welfare.
As farmers, we know that fish perform best if they
are treated with respect and given the best possible
environments to grow. Huon is committed to practices
that promote positive welfare outcomes and a
comprehensive Veterinary Health Plan is maintained
that forms the basis of all Huon’s protocols and
procedures to address fish health, welfare and
biosecurity matters.
Vaccines play an important role in managing fish
welfare by protecting against disease and maintaining
healthy stock. The salmon industry, alongside DPIPWE,
has pioneered the development and use of fish
vaccines within Australia and this technology and
expertise will continue to play an important role in
protecting Huon’s fish into the future.
Huon also operates with one of the lowest stocking
densities in the world, at less than 1 per cent across
its pens. This is approximately two-thirds under the
15kg/m3 maximum stocking density allowed under the
RSPCA Approved Standard for farmed Atlantic salmon
in marine environments. This low density encourages
good growth and minimises disease because the fish
have ample space to swim freely and dissolved oxygen
levels are also higher.
Huon’s wellboats have wells or tanks for transporting
live fish. Wellboats are used to transport smolt to sea,
transfer fish from farm sites to harvest pens, and to
bathe them in freshwater; bathing helps to protect
the fish from AGD in the most low-stress environment
possible. Ronja Storm, Huon’s second wellboat, arrived
in February 2020 joining Huon’s first wellboat (the
first in Tasmania), the Ronja Huon. Huon was the first
company globally to use a wellboat for the purpose
of bathing fish in freshwater. The state-of-the-art
technology integrated into the wellboats allows optimal
conditions to be maintained for the fish while they are
on-board.
Biosecurity
Huon’s biosecurity practices are based on a detailed
Risk Assessment Review across Huon’s operations,
consolidated with the collective experience and standard
operating procedures of its employees over 35 years, and
an extensive review of biosecurity practices in overseas
salmon-producing countries.
Huon has implemented Fish Farm Management Plans
for all Freshwater hatchery operations, compliant with
the Inland Fisheries Service biosecurity requirements,
ensuring standardisation of processes across all freshwater
operations. Huon also participates in the Tasmanian
Salmonid Health Surveillance Program (TSHSP) to support
the sustainability of the Tasmanian salmonid industry
by investigating diseases and understanding disease
management.
Antibiotics
Huon’s investments in RAS facilities combined with the
continuing development of vaccines, and improvements to
farming practices ensure any use of antibiotics is very rare.
In fact, Huon has not used antibiotics at sea since 2016,
when a single pen was treated. Furthermore, we have
not used antibiotics at any Huon-owned hatcheries since
January 2019. Any antibiotic use is strictly supervised by
registered Veterinarins, reported to State Government and
voluntarily publicly disclosed on Huon’s website.
Huon also participates in the independent National
Residue Survey to monitor levels of therapeutants and
contaminants. Results are published annually on the
National Residues Survey website and there have never
been antibiotic residues detected in Huon Aquaculture
products.
Humane Harvesting
Harvesting fish humanely is crucial to ensuring a
high-quality, which is why every Huon fish are grown
and harvested under the principle of “no pain, no fear”;
it was Huon that led the salmon farming world in their
harvest principles. Huon’s humane harvest method
was developed in-house, has been rated world’s
best-practice, was RSPCA UK awarded and has been
adopted internationally by other salmon farmers.
Healthy fish
At Huon, the approach to fish health and welfare is
proactive and holistic; it involves quality diets, good
site management, fish husbandry, biosecurity, and
vaccinations. Fish health and welfare is critical to the
long-term success of Huon’s operations.
37
Sustainable feed
Huon fish are fed specialised diets that optimise health and
performance at every stage of their lifecycle. All of Huon’s
feed is now sourced from Tasmanian-based suppliers which
reduces the risk of relying on imports, supporting the supply
chains for Tasmanian primary producers.
Quality feed is imperative in maintaining good fish health.
The ingredients in Huon’s salmon feed, like all stock feed
in Australia, are rigorously controlled and audited. All
feed ingredients used by Huon are approved under the
Australian Stockfeed and Pet Food Regulations, governed
by the Australian Pesticides and Veterinary Medicines
Authority (APVMA).
Equally as important as what is in Huon’s feed, is what
is left out—it does not contain ingredients of genetically
modified (transgenic) origin. Growth hormones or growth
promoters are never fed to Huon salmon, nor does the feed
contain any pork or pork by-products.
In Australia, feed companies are legally required to
disclose ingredient details which is why Huon salmon is
a safe, nutritious, healthy, and sustainable food. Huon
continues to work with fish feed manufacturers to ensure
high quality feed that is sustainably sourced.
Huon’s progress towards sustainable feed includes:
— Full traceability of the raw materials in its feed
— Use of feeds that lower feed conversion ratios (FCR)
— Reduction in the climate footprint of feed raw materials
— Ongoing feed trials with food manufacturers to improve
food quality
— Use of pellet recognition software to minimise feed
wastage.
FIFO ratios
Salmon need to eat a certain amount of fish meal and fish
oil to obtain the appropriate level of Omega-3. Most fish
meal and oil is extracted from fast-growing bony pelagic
fish which are classified as forage fish. Forage fish, also
called prey or bait fish, are eaten by larger predators
including other fish, seabirds and marine mammals.
An ideal FIFO (fish-in/fish-out) ratio should be less than 1.0
(meaning more fish protein is produced than consumed).
Huon’s forage fish FIFO ratio (fish-in/fish-out) is 0.87.
Meaning that for every 1kg of salmon grown, 870g of
forage fish is utilised. The global industry average is 1.68kg
(standard calculation across industry).
Huon’s ratio is low in comparison as its feed includes
alternative proteins and starch (such as vegetable and
land-animal by-products) which increases the sustainability
of its operations. The methodology used to calculate the
above figures is in line with global reporting standards used
by the GSI and ASC.
Certifications
Huon seeks independent certification of its processes
both as a means of validating compliance with global
best-practice, and building trust and transparency
through the external auditing process. Huon’s current
certifications are shown below and further detail on the
requirements for achieving these certifications is available
on its website.
Huon Aquaculture Group Limited
Annual Report 2021
38
Sustainability
continued
Directors
The Directors of the Company during the whole of
the financial year and up to the date of this report
are as follows:
— Neil Kearney, Chairman
— Peter Bender, Managing Director and
Chief Executive Officer
— Frances Bender
— Simon Lester
— Tony Dynon
The qualification, experiences and special responsibilities
of the Directors are provided on pages 30 to 31.
Directors’ Interests
Particulars of Directors’ interests as at 30 June 2021 were:
Shareholdings
Ordinary
Shares
Performance
Rights
Peter Bender(i)
57,881,567
283,352
Frances Bender(i)
57,881,567
–
Neil Kearney
16,590
–
Simon Lester
14,516
–
Tony Dynon
12,930
–
(i)
Includes direct and indirect interests.
Company Secretary
Thomas Haselgrove B.Ec. CA
Thomas Haselgrove is the Chief Financial Officer and
Company Secretary with 29 years’ experience in audit,
statutory accounting and commerce across a number of
organisations including Ernst & Young, and in the food,
beverage and FMCG sectors, including Southcorp Wines
and Chiquita Brands. Thomas was appointed Company
Secretary in 2006.
Principal Activities
During the year the principal activities of the Consolidated
Group were hatching, farming, processing, sales and
marketing of Atlantic salmon and ocean trout.
There were no significant changes in the nature of the
activities of the Consolidated Group during the year.
Dividends
Dividends paid to members during the financial year were
as follows:
$’000
Final ordinary dividend for the year ended
30 June 2020 of nil cents (2019 – 3.0 cents)
per ordinary share
Nil
Interim ordinary dividend for the year ended
30 June 2021 of nil cents (2020 – nil cents)
per ordinary share
Nil
The Directors have not recommended the payment of a
final ordinary dividend for the year ending 30 June 2021.
Review of Operations
Information on the operations and financial position of
the Consolidated Group, and the Business Strategy and
outlook are set out in the Chairman’s and Managing
Director’s Review on pages 2 to 3 and the Review of
Operations on pages 4 to 15 of this Annual Report.
Changes in State of Affairs
Significant changes in the state of affairs of the group
during the financial year was the increase in share
capital by $65,608,000 as a result of the issue of shares
under the Share Placement and Share Purchase Plan
completed during August and September 2020. Details
of the changes in share capital are disclosed in note
16(b) to the financial statements.
The net cash received from the increase in share capital
was used principally to repay borrowings.
Directors’ Report
The Directors of Huon present the annual financial report
of the consolidated entity consisting of the Company
and the entities it controlled (Consolidated Group) for
the financial year ended 30 June 2021.
39
Board of Directors
meetings
Audit and Risk Management
Committee meetings
Remuneration and
Nominations Committee
meetings
Director
Number
Held
Number
Attended
Number
Held
Number
Attended
Number
Held
Number
Attended
Neil Kearney
16
16
6
6
4
4
Peter Bender
16
16
*
*
*
*
Frances Bender
16
15
*
*
*
*
Simon Lester
16
16
6
6
4
4
Tony Dynon
16
16
6
6
4
4
* Not a member of the Committee
Share Options and Performance Rights
During or since the end of the financial year, 365,613
performance rights were granted to Directors and Key
Management Personnel. Refer to the remuneration report
for further details of the performance rights granted
and outstanding.
Environmental Regulation
The Consolidated Group is subject to significant regulation
at both State and Commonwealth levels in respect of its
hatchery operations, marine operations, land and use
tenure and environmental requirements. This includes
specific environmental permits, licences and statutory
authorisations, trade and export and workplace health
and safety.
The Consolidated Group has well established
management frameworks for routinely and regularly
monitoring compliance with the relevant regulatory
requirements and to monitor and manage environmental
compliance in relation to new regulations as they come
into effect. Compliance within the regulatory framework is
routinely reported to the Board.
The Consolidated Group employs a cross-functional team
to manage compliance within the regulatory framework
and guide a strategy of continuous improvement in
environmental management and sustainability.
Further details regarding the Consolidated Group’s
sustainability and environmental management credentials
and policies are outlined in the Chairman’s and Managing
Director’s Review and the Review of Operations.
During the prior year the Huon Aquaculture Company
Pty Ltd was fined $40,000 in the Hobart Magistrates
Court for one charge of depositing a pollutant in a
place where it could reasonably be expected to cause
material environmental harm and five charges of
contravening conditions of its Environment Protection
Notice at its Whale Point net wash facility in early 2018.
Huon Aquaculture Company Pty Ltd had pleaded guilty
to the charges which were laid under the Environmental
Management and Pollution Control Act 1994.
The Court made no finding of environmental harm and
commented that this was not a case where it was alleged
that Huon Aquaculture Company Pty Ltd offended to
actively avoid environmental regulations. The Court
noted that Huon Aquaculture Company Pty Ltd had
taken active steps to improve processes in order to avoid
future breaches.
The Directors are not aware of any significant environmental
incidents arising from the operations of the Consolidated
Group during the financial year and believe that all
regulations have otherwise been materially met during the
period covered by the Annual Report.
Matters Subsequent to the end of the
Financial Year
On 6 August 2021 Huon announced that it had entered
into a Scheme Implementation Deed with JBS, a global
producer of land based proteins with significant operations
in Australia, to acquire 100% of Huon shares by way of
two alternative Schemes of Arrangement (Schemes).
On 13 August 2021 Huon entered a process agreement
with JBS to provide for the making of a recommended
takeover bid (Offer). The Offer will be in parallel but not
in substitution to the Scheme and will be subject to the
Schemes not becoming effective (among other conditions).
Huon shareholders are expected to have the opportunity
to vote on the Scheme in October 2021.
No other matter or circumstance has arisen since
30 June 2021 that has significantly affected the group’s
operations, results or state of affairs, or may do so
in future years.
Future Developments
Likely developments for the Consolidated Group are
addressed through the Company’s Business Strategy.
Further information on these developments are
included in the Chairman’s and Managing Director’s
Review and the Review of Operations.
Directors’ and Directors’ Meetings
The following table sets out the number of Directors’
meetings (including meetings of Committees of
Directors) held during the financial year and the
number of meetings attended by each Director
(while they were a Director or Committee Member).
Huon Aquaculture Group Limited
Annual Report 2021
40
Directors’ Report
continued
This Remuneration Report for the financial year ended
30 June 2021 outlines the Company’s remuneration
structure in accordance with the requirements of
the Corporations Act 2001 (Cth) (the Act), and the
Corporations Regulations 2001 (Cth). This report provides
remuneration information in relation to the Company’s
Key Management Personnel (KMP) including for the
Non-executive Directors (NEDs), Executive Directors
(EDs), and Executive Management Group (EMG). KMP
are those persons having authority and responsibility for
planning, directing and controlling the activities of the
Company, directly or indirectly, including any Director
(whether executive or otherwise) of the Company. This
Remuneration Report has been audited as required by
section 308(3C) of the Act.
Key Management Personnel (KMP)
The table below outlines the KMP for the financial year
ended 30 June 2021 unless otherwise indicated.
Executive Directors
— Peter Bender (Managing Director and
Chief Executive Officer)
— Frances Bender (Executive Director)
Non-executive Directors
— Neil Kearney (Chairman and Non-executive Director)
— Simon Lester (Non-executive Director)
— Tony Dynon (Non-executive Director)
Executive Management Group
— Philip Wiese (Deputy Chief Executive Officer)
— Thomas Haselgrove (Chief Financial Officer
and Company Secretary)
— David Morehead (General Manager Marine
Operations)
— Charles Hughes (General Manager Commercial
and Planning)
— David Mitchell (General Manager Freshwater
Operations)
— Anthony Baker (General Manager People,
Safety and Sustainability)
Remuneration Governance
Huon’s remuneration framework, policies and practices
are designed to create value for shareholders by
ensuring the Company attracts, rewards and retains
employees responsibly and fairly, with a focus on
business outcomes, individual performance, the
organisation’s risk management policy, and applicable
regulations. The Company’s Remuneration Policy
is reviewed annually. Further information on the
Company’s Remuneration Policy can be viewed on the
Company website.
Remuneration and Nomination Committee
(RNC)
The Remuneration and Nomination Committee (RNC)
comprises of three independent NEDs (including the
Chairman). As at 30 June 2021 the RNC comprised:
— Simon Lester (RNC Chairman),
— Neil Kearney and
— Tony Dynon.
The RNC has the responsibility for delivering
remuneration recommendations to the Board to ensure
that the Company is adopting appropriate and coherent
remuneration policies that will attract, motivate and retain
qualified and experienced KMP of the highest calibre.
The Board reviews and, where appropriate, approves
the remuneration arrangements of the KMP after
considering the recommendations of the RNC (including
awards made under the short term incentive (STI) plans
and long term incentive (LTI) plans). The Board also
sets the combined remuneration pool for NEDs which is
subject to shareholder approval. The RNC approves the
level of the Consolidated Group’s STI plan pool, having
regard to recommendations made by the CEO. The
RNC meets throughout the year and the CEO and/or
DCEO attends these meetings (by invitation only) when
management input is required. The CEO is not present
during discussions relating to his own remuneration.
The RNC reviews the performance of KMP and reviews
the assessment processes to ensure alignment of
assessments towards the execution of the Company’s
strategy. The RNC’s Charter can be viewed on the
Company website.
Use Remuneration Consultants
From time to time the Board directly engage external
advisers to provide input into the Company’s remuneration
policies and into the process of reviewing KMP
remuneration arrangements. During the current year no
external advisors were engaged to provide services
for the Board. In the prior year, the Board engaged
Godfrey Remuneration Group to provide market data,
analysis, modelling and recommendations on executive
and non-executive remuneration and paid $39,425 for
these services.
Securities Trading Policy
A Securities Trading Policy is in place to ensure that
employees understand their obligation in relation to
dealing in Huon shares. Huon Directors and all employees
must comply with the insider trading prohibitions of the
Corporations Act 2001. The policy imposes share trading
blackouts on Directors and Restricted Employees prior
to financial results announcements and other times as
required. In addition, Directors and Restricted Employees
with potential access to inside information are required to
seek approval before dealing in Huon shares. The policy
also restricts employees from entering into transactions
which limit their economic risks, including in relation to the
long-term incentive (LTI) plans. The Securities Trading Policy
can be viewed on the Company website.
Remuneration Report
41
KMP Remuneration Arrangements – Executive Directors and Executive Management Group
The following information relates to the remuneration arrangements for the Executive Directors and Executive Management
Group KMP. The NEDs remuneration structure is a separate and distinct framework in accordance with best practice corporate
governance and is detailed in a separate section of this Remuneration Report.
Remuneration Principles and Strategy
Huon’s Remuneration Strategy is designed to attract, motivate, and retain qualified and experienced KMP and align the
interests of KMP with Huon’s shareholders. Huon’s objective is to build long-term shareholder value by continuing to be a
recognised leader in the aquaculture industry though sustained growth and continuous improvement as a Tasmanian producer
of world class salmon. Huon sees the retention of KMP as crucial to achieving this objective.
Remuneration consists of Fixed Remuneration and Performance-based Remuneration. Payments and awards of Performance-
based Remuneration under the STI Cash bonus plan and, in certain circumstances, under the LTI Performance Rights plan, are
subject to Board discretion as well as being subject to performance targets being met.
In the event of serious misconduct or a material misstatement in the Company’s financial statements the Remuneration Committee
can cancel or defer Performance-based Remuneration and may also claw back Performance-based Remuneration paid in
previous financial years.
Components of Remuneration
In the financial year ended 30 June 2021, the KMP remuneration structure comprised of market competitive fixed and variable
remuneration including STI and LTI plans as detailed in the following table:
Component
Performance Measures
Weighting as
% of TFR
Link to Performance
Fixed remuneration
includes base salary,
superannuation
contributions, long service
and annual leave and
other benefits
Multiple sources of data used to
determine annual changes in fixed
remuneration including competitive
market data and each individual’s
performance and contribution during
the year
N/A
Consolidated Group
performance as well as
individual performance are
considered during the annual
remuneration review of Fixed
Remuneration
STI Cash bonus
— Operating earnings (earnings
excluding adjustments for
biological assets) before interest
and tax (80%)
— Lost time injury frequency rate
(20%)
— DCEO
Target = 40%
— EMG
Target = 30%
To provide short term incentive
for KMP to remain in the
Company and to recognise and
reward contribution to short-term
Company outcomes
LTI Performance Rights
— Operating earnings (earnings
excluding adjustments for
biological assets) per share
growth (50%)
— Return on assets (50%)
— MD/CEO
Target = 100%
— DCEO
Target = 40%
— EMG
Target = 30%
The LTI plan provides a reward
to KMP for their contribution to
the achievement of forecasted
objectives and long-term
shareholder value. The LTI
plan also rewards KMP for
their continued service with the
Company and seeks to retain
KMP in the long-term
Remuneration Overview
Huon aims to attract, motivate, and retain qualified and experienced KMP by aligning KMP interests with those of shareholders
and by providing reward through market competitive fixed and variable remuneration. The proportion of fixed and variable
remuneration is established for KMP by Board approval following recommendations from the RNC.
The following summarises the target remuneration mix of KMP for the financial year ended 30 June 2020 and 2021:
Fixed
Target STI
Target LTI
Total %
Chief Executive Officer
50%
–
50%
100%
Executive Director
100%
–
–
100%
Deputy Chief Executive Officer
56%
22%
22%
100%
Executive Management Group
62%
19%
19%
100%
The percentages in this table are based on a split of fixed remuneration and incentives for achieving STI and LTI plan targets
as determined by the Board.
Huon Aquaculture Group Limited
Annual Report 2021
42
Directors’ Report
Remuneration Report continued
Changes to STI and LTI performance hurdles
As noted in the FY2020 remuneration report, the performance measures for the STI and LTI had not been adjusted to account
for the impact from the adoption of AASB16. As such, the prior year performance measures were calculated on a pre-AASB16
basis for the purpose of determining remuneration outcomes.
In FY2021, the Board (through the Remuneration & Nominations Committee) has revised the performance hurdles to ensure
they now appropriately reflect the impacts of AASB16 on the earnings and assets of the Company and the corresponding
impact on the relevant performance metrics. No changes were made to performance hurdles prior to FY2021.
The key changes are as follows:
— the EBITDA performance hurdle for the STI plan will be changed to EBIT and will be set during the annual budget process.
The change will ensure the depreciation expenses of the ROU assets are included in the earnings measure, and the targets
of employees align to those of shareholders; and
— the return on assets (ROA) performance hurdle for the LTI plan is impacted by changes to both the profit measure and
the increase in the asset base with the inclusion of the ROU assets. The measure remains relevant to the business and
shareholders, so the targets have been reset with consideration to historical achievement and forecast modelling. It was
deemed appropriate to change the lower bound hurdle to 9% (previously 10%) and the upper bound hurdle to 11%
(previously 15%).
The current remuneration strategy and framework remains well positioned to support the business strategy and objectives
for the current year and foreseeable future. The Board is cognisant of uncertainties and unforeseen challenges posed by the
current economic climate and will continue to monitor and review the remuneration framework to ensure it continues to align
with shareholder interests.
FY2021 Employee Shares
In FY2021 the evolving COVID-19 situation and corresponding economic uncertainty, including the impact on global salmon
prices, caused the Company to seek options for reducing its cash cost base. In August 2020, all employees (excluding those
under award schemes) were asked to take any agreed increase in their annual remuneration in the form of shares in the
Company instead of cash payments, this included employees who are considered key management personnel (KMP). The
price of these shares of $3.00 per share was the 5 day weighted average price up to 27 August 2020, discounted by 7%.
The issuance of shares aimed to reduce cash costs whilst ensuring retention of our employees who are critical to the long-term
future of our business. This approach also aligned employee engagement with shareholder value as more of our employees
became shareholders of the Company.
Fixed Remuneration
Total Fixed Remuneration (TFR) includes base salary, superannuation contributions, long service and annual leave, and other
benefits (such as termination benefits).
Remuneration levels are reviewed annually to ensure KMP are offered market competitive fixed remuneration that reflects the
responsibility, qualifications and experience required of the KMP.
There are a range of fringe benefits which KMP can incorporate into the total cost of their remuneration package. These fringe
benefits may include, but are not limited to, motor vehicles and car parking. Whatever the cash component and fringe benefit
value, the total employment cost of any KMP remuneration package is taken into account when determining fixed annual
remuneration for KMP.
Details of 2020 and 2021 fixed remuneration levels are provided below:
Fixed remuneration
KMP
2021
$
2020
$
Peter Bender
642,996
626,044
Frances Bender
216,977
208,553
Philip Wiese
575,950
569,096
Thomas Haselgrove
350,640
355,662
David Morehead
348,915
335,787
Charles Hughes
305,345
300,787
David Mitchell
355,298
323,479
Anthony Baker(i)
298,612
99,266
(i) From March 2020.
43
Variable Remuneration – STI Plan
KMP, except for the CEO, Executive Director and Non-Executive Directors, are eligible to participate in Huon’s STI plan. Huon’s
annual STI plan is designed to recognise the contribution and achievement of financial and operational targets as determined
by the Board and CEO.
The target annual STI that may be awarded to KMP is expressed as a percentage of their respective Total Fixed Remuneration
(TFR).
Key Features of STI Plan
Who participates?
KMP (Except for the CEO, Executive Director and Non-Executive Directors).
How is the STI plan
delivered?
Payment of cash incentive. Payment will be made subject to Board discretion and subject to
performance targets being met.
What is the STI plan
opportunity?
An opportunity for KMP (except CEO, Executive Director and Non-Executive Directors)
to earn an annual incentive payment calculated as a percentage of their annual TFR
conditional on the achievement of financial and non-financial measures. Target STI
maximum opportunity of 40% of TFR for the DCEO and maximum opportunity of 30% of
TFR for the EMG.
What are the performance
conditions for FY2021?
Actual STI plan payments awarded to each member of KMP depend on the extent to
which specific targets set at the beginning of the financial year are met. The CEO, Executive
Director and Non-Executive Directors do not participate in the STI Plan. The target consists
of key performance indicators (KPIs) including financial objectives. For FY2021 the
performance measures under the STI plan were as follows:
— Operating earnings (earnings excluding adjustment for biological assets) before interest
and tax;
— Lost time injury frequency rate.
Why the financial
measures were chosen?
The financial and operational measures were chosen as they represent the key drivers for
the short-term success of Huon’s business and provide a framework for delivery of long-term
value to shareholders from Huon’s strategy.
How is performance
assessed?
The RNC considers the performance against financial and operational targets at the end
of the financial year (with the financial target calculations based on audited accounts) and
makes recommendations to the Board for the amount, if any, to be paid to the KMP.
What happens if KMP
leave?
Where cessation of employment occurs, the Board may determine the treatment of any
award that has been granted to KMP in accordance with Plan Rules which may include
forfeiture.
The Board has discretion to award an STI plan amount on a pro-rata basis taking into
account time and current level of performance of the KMP against the performance hurdles.
The following table represents the target annual STI opportunity as a percentage of TFR for KMP in 2020 and 2021.
KMP
STI value
as % of
TFR 2021
STI value
as % of
TFR 2020
Philip Wiese
40%
40%
Thomas Haselgrove
30%
30%
David Morehead
30%
30%
Charles Hughes
30%
30%
David Mitchell
30%
30%
Anthony Baker(i)
30%
30%
(i) From March 2020.
Huon Aquaculture Group Limited
Annual Report 2021
44
Directors’ Report
Remuneration Report continued
Variable Remuneration – LTI Plan
Huon’s LTI plan applies to KMP (except for the Executive Director and Non-Executive Directors) and is designed to align
remuneration with long term shareholder value and assist in the motivation, retention and reward of KMP. The RNC reviews all
LTI plan offers made to KMP. Shareholder approval is obtained before any LTI plan grants are made to the CEO in accordance
with ASX Listing Rules.
Key Features of the LTI Plan
Who participates?
KMP (except for the Executive Director and Non-Executive Directors).
How is the LTI plan
delivered?
Granting of performance rights to KMP. These rights provide the KMP with the ability to
convert the rights to ordinary shares of the Group upon meeting the performance conditions.
What are the performance
hurdles under the FY2021
LTI performance rights
grant?
Performance rights issued under the FY2021 LTI Plan are subject to two separate
performance measures:
— 50% of the performance rights will be subject to a vesting condition based on earnings
per share compound annual growth rate (EPS CAGR) over the performance period; and
— 50% of the performance rights will be subject to a vesting condition based on return on
assets (ROA) over the performance period.
Both performance hurdles have threshold levels which need to be achieved before vesting
commences. Details of these hurdles and thresholds are outlined in the following section.
When do the FY2021 LTI
plan performance rights
vest?
The performance period for the 2021 LTI plan is the period from 1 July 2020 to 30
June 2023. The performance rights granted will vest subject to the performance hurdles
associated with the grant and to the extent that certain performance-based conditions are
achieved in the relevant performance period.
Performance rights that have vested may be exercised until the applicable expiry date. If any
shares are issued following exercise of a vested performance right prior to the applicable
expiry date, then they may not be sold or transferred before 1 July 2023.
How are grants treated on
termination?
Where cessation of a KMP’s employment occurs, any unvested LTI plan performance rights
(or vested and unexercised performance rights) are forfeited, unless deemed otherwise by
the Board. For any other reason, the Board may at its discretion retain a pro-rated (based
on time) portion of awards on-foot and subject to original performance hurdles.
How are grants treated
if a change of control
occurs?
In the event of a change of control, the performance rights may vest at the Board’s
discretion. In determining whether to exercise its discretion, the Board will have regard to
all relevant circumstances, including the level of satisfaction of the performance conditions
over the performance period from the grant date to the date of the relevant change in
control event.
If a company obtains control of the Company as a result of a takeover bid or another
corporate action, the company acquiring control (Acquiring Company) and the KMPs
may agree together that on the vesting of performance rights, the KMP receive shares in
the Acquiring Company in lieu of shares in the Company, on substantially the same terms
as before.
Do participants receive
distributions or dividends
on unvested LTI grants?
Participants do not receive distribution or dividends on unvested LTI plan grants.
The following table represents the annual LTI allocation as a percentage of TFR for KMP in 2020 and 2021:
KMP
LTI value
as % of
2021
LTI value
as % of
2020
Peter Bender
100%
100%
Philip Wiese
40%
40%
Thomas Haselgrove
30%
30%
David Morehead
30%
30%
Charles Hughes
30%
30%
David Mitchell
30%
30%
Anthony Baker(i)
30%
30%
(i) From March 2020.
45
2021 LTI Plan Hurdles explained
Performance rights issued under the 2021 LTI Plan are subject to two separate performance measures: 50 percent of the
performance rights will be subject to an EPS CAGR vesting condition; and 50 percent will be subject to a ROA vesting
condition. These performance hurdles were chosen by the Board as they believe both EPS CAGR and ROA are transparent,
well understood, and appropriate mechanisms to measure performance and provide a strong link between KMP reward and
shareholder wealth creation. Both hurdles are explained in more detail below:
EPS compound annual growth rate (‘CAGR’)
Vesting outcome
Less than 7.5% CAGR
Nil
7.5% CAGR
50%
Above 7.5% CAGR but below 10% CAGR
Pro-rata from 50-99%
10% CAGR or greater
100%
Earnings per share compound annual growth is calculated as the net profit after income tax (NPAT) (excluding adjustment
for biological assets) divided by the weighted average number of ordinary shares on issue. Compared to an absolute profit
measure, EPS takes into account changes in the equity base and for this reason it is preferred to other profit-based metrics.
ROA (return for the reporting period)
Vesting outcome
Less than 10% return
Nil
10% return
50%
Above 10% return but below 15% return
Pro-rata from 50-99%
15% return or greater
100%
Return on assets (ROA) is calculated as statutory earnings before interest and tax (EBIT) (excluding adjustment for biological
assets), divided by total assets excluding cash and fair value adjustment on biological assets (average of opening and closing
balance). ROA is an appropriate measure for asset intensive industries which reinforces the need to invest capital on projects
with a superior return. The changes to the ROA hurdles have been made to reflect the uplift in total assets as a result of the
adoption of AASB16. These changes have been discussed earlier in this remuneration report.
Huon Aquaculture Group Limited
Annual Report 2021
46
Directors’ Report
Remuneration Report continued
KMP Remuneration Outcomes (including Link to Performance)
Huon’s Financial and Operational Performance
Performance measure
Unit
2021
2020(i)
2019
2018
Operating earnings before interest, tax,
depreciation and amortisation (EBITDA)
$m
16.7
40.8
47.3
71.8
Operating earnings before interest and
tax (EBIT)
$m
(40.1)
8.3
21.6
47.1
Cash flow from operations (CF)
$m
(3.0)
(5.0)
14.5
57.9
Lost Time Injury Frequency Rate (LTIFR)(ii)
hours/million
3
5
4
4
Earnings per share (EPS) (Operating)(iii)
Cents
(33.65)
6.26
18.13
40.53
Return on Assets (ROA) (Operating)(iv)
%
(5.7%)
1.4%
4.1%
10.4%
Dividend
$m
Nil
2.6
5.2
8.7
Dividend payout ratio (Operating)
%
n/a
47.9%
33.1%
24.7%
Share price (30 June)
$
3.25
2.92
4.50
4.46
(i)
Performance measures before the adoption of AASB16 (Pre AASB16).
(ii) Long term injury frequency rate is the number of lost time injuries within a given year relative to the total number of hours worked in the same period
multiplied by 1 million).
(iii) Earnings per share compound annual growth is calculated as the net profit after income tax (NPAT) (excluding adjustment for biological assets)
divided by the weighted average number of ordinary shares on issue.
(iv) Return on assets (ROA) is calculated as statutory earnings before interest and tax (EBIT) (excluding adjustment for biological assets), divided by total
assets excluding cash and fair value adjustment on biological assets (average of opening and closing balance).
Consolidated Group performance and its link to STI
Performance against STI plan targets
The following table shows the Company’s 2021 STI performance scorecard measures, weightings and outcomes as applied
to the KMP.
Performance Measures
Description
Weighting
Outcome
Comment
Operating earnings
before interest and tax
(Operating EBIT)
Statutory EBIT excluding
adjustment for biological assets.
80%
Target not
achieved
Operating EBIT is seen as a good guide
of the current trading performance of
the Company as it is the profitability
adjusted for finance cost.
Lost time injury
frequency rate (LTIFR)
Lost time injury frequency rates
are the number of lost time
injuries within a given year
relative to the total number
of hours worked in the same
period multiplied by 1 million.
20%
Target not
achieved
Staff are a key asset to Huon and
as such their safety is paramount. A
reduction in LTIFR is a key part of the
safety program.
STI Outcomes for KMP for 2021
The following table provides a summary of STI outcomes and payments for the 2021 performance year.
KMP
STI target
$
Target
STI as %
of TFR
Total STI
Foregone
$
Total STI
forfeited
$
Total STI
achieved
as % of
STI target
Philip Wiese
182,409
40%
–
182,409
0%
Thomas Haselgrove
85,409
30%
–
85,409
0%
David Morehead
85,414
30%
–
85,414
0%
Charles Hughes
78,436
30%
–
78,436
0%
David Mitchell
78,436
30%
–
78,436
0%
Anthony Baker
68,058
30%
–
68,058
0%
47
Consolidated Group performance and its link to LTI
Performance Against LTI Plan Targets
The following table shows the performance periods and outcomes for the 2018 LTI Plan which covers the performance period
1 July 2018 to 30 June 2021 and is assessed in FY2021. The total vesting outcome for the three year period is nil performance
rights issued. Any performance rights under the 2018 LTI Plan that do not vest as result of the vesting outcomes will lapse.
The 2019 and 2020 LTI Plans will be assessed against their performance periods and outcomes at the completion of FY2022
and FY2023 respectively:
LTI Plan
Performance Period/Outcome
Measure
FY2019
FY2020(i)
FY2021
Vesting %
2018
Measure
EPS (cents)
EPS (CAGR)
ROA (%)
18.13c
(25.8%)
4.1%
6.26c
(42.5%)
1.4%
(33.65c)
(194.0%)
(5.7%)
Outcome
EPS
N/A
N/A
0%
0%
1 July 2018 – 30 June 2021
ROA
0%
0%
0%
0%
(i) Performance measures before the adoption of AASB 16 (Pre AASB 16).
LTI transactions for KMP for 2021
The following table details the Performance Rights made to KMP during FY2021.
KMP – Performance rights granted
Grant date
Units
granted
Fair value(i)
$
Total
fair value
of grant
2021
$
Peter Bender
30 Oct 2020
172,015
2.47
425,446
Philip Wiese
30 Oct 2020
60,003
2.47
148,406
Thomas Haselgrove
30 Oct 2020
28,095
2.47
69,488
David Morehead
30 Oct 2020
28,097
2.47
69,492
Charles Hughes
30 Oct 2020
25,801
2.47
63,814
David Mitchell
30 Oct 2020
25,801
2.47
63,814
Anthony Baker
30 Oct 2020
25,801
2.47
63,814
(i) Fair value has been rounded to 2 decimal places.
KMP – Performance rights held
The following table details the Performance Rights held and the movement during FY2021.
Name
Grant Date
Held
at Start
of Year
Other
Granted
During
Year
Forfeited
Vested
Unvested
at End
of Year
Peter Bender
— 30 November 2017
8,692
–
–
–
(8,692)
–
— 31 October 2018
108,595
–
–
(108,595)
–
–
— 23 October 2019
111,337
–
–
–
–
111,337
— 30 October 2020
–
–
172,015
–
–
172,015
Philip Wiese
— 30 November 2017
2,627
–
–
–
(2,627)
–
— 31 October 2018
32,819
–
–
(32,819)
–
–
— 23 October 2019
38,837
–
–
–
–
38,837
— 30 October 2020
–
–
60,003
–
–
60,003
Thomas Haselgrove
— 30 November 2017
1,420
–
–
–
(1,420)
–
— 31 October 2018
17,737
–
–
(17,737)
–
–
— 23 October 2019
18,184
–
–
–
–
18,184
— 30 October 2020
–
–
28,095
–
–
28,095
Huon Aquaculture Group Limited
Annual Report 2021
48
Directors’ Report
Remuneration Report continued
KMP – Performance rights held (continued)
Name
Grant Date
Held
at Start
of Year
Other
Granted
During
Year
Forfeited
Vested
Unvested
at End
of Year
David Morehead
— 30 November 2017
1,420
–
–
–
(1,420)
–
— 31 October 2018
17,738
–
–
(17,738)
–
–
— 23 October 2019
18,186
–
–
–
–
18,186
— 30 October 2020
–
–
28,097
–
–
28,097
Charles Hughes
— 30 November 2017
1,304
–
–
–
(1,304)
–
— 31 October 2018
16,289
–
–
(16,289)
–
–
— 23 October 2019
16,700
–
–
–
–
16,700
— 30 October 2020
–
–
25,801
–
–
25,801
David Mitchell
— 30 November 2017
1,304
–
–
–
(1,304)
–
— 31 October 2018
16,289
–
–
(16,289)
–
–
— 23 October 2019
16,700
–
–
–
–
16,700
— 30 October 2020
–
–
25,801
–
–
25,801
Anthony Baker
— 30 November 2017
870
–
–
–
(870)
–
— 31 October 2018
11,604
–
–
(11,604)
–
–
— 23 October 2019
14,490
–
–
–
–
14,490
— 30 October 2020
–
–
25,801
–
–
25,801
KMP Contracts
Remuneration arrangements for KMP (excluding NEDs) are formalised in employment agreements. The following section of this
Remuneration Report outlines key contractual details for Executives and KMP.
Contractual arrangements
The following table shows the key contractual arrangements for KMP:
KMP Member
Contract Type
Fixed
Remuneration(i)
$
Access
to STI
Access
to LTI
Peter Bender
Ongoing contract
522,926
No
Yes
Frances Bender
Ongoing contract
169,915
No
No
Philip Wiese
Ongoing contract
456,022
Yes
Yes
Thomas Haselgrove
Ongoing contract
284,696
Yes
Yes
David Morehead
Ongoing contract
284,714
Yes
Yes
Charles Hughes
Ongoing contract
261,454
Yes
Yes
David Mitchell
Ongoing contract
261,454
Yes
Yes
Anthony Baker
Ongoing contract
261,454
Yes
Yes
(i)
Superannuation is paid in addition to fixed remuneration.
49
Managing Director (MD) and CEO
The MD and CEO (the CEO) is employed under an ongoing contract which can be terminated with notice by either the
Company or the CEO. Termination provisions are as follows:
Notice Period
and/or
Notice in Lieu
Restraint
Period
Treatment
of STI
Treatment
of LTI
Resignation
12 months
3 months
Nil
Unvested awards forfeited
Termination for cause
None
3 months
Nil
Vested and unexercised
awards forfeited
Termination in cases of death, disablement,
redundancy or notice without cause
12 months
3 months
Nil
Pro-rated for time and remain
on-foot subject to original
performance hurdles
Executive Director (ED)
The Executive Director (ED) is employed under an ongoing contract which can be terminated with notice by either the Company
or the ED. The ED may be entitled to receive incentive payments or additional benefits (such as performance rights under the
Long-Term Incentive Plan in the future, subject to law and compliance with Listing Rules). Termination provisions are as follows:
Notice Period
and/or
Notice in Lieu
Restraint
Period
Treatment
of STI
Treatment
of LTI
Resignation
12 months
3 months
Nil
Nil
Termination for cause
None
3 months
Nil
Nil
Termination in cases of death,
disablement, redundancy or notice
without cause
12 months
3 months
Nil
Nil
Executive Management Group
Members of the Executive Management Group are employed under ongoing contracts which can be terminated with notice
by either the Company or the employee. Termination provisions are as follows:
Notice Period
and/or
Notice in Lieu
Restraint
Period
Treatment
of STI
Treatment
of LTI
Resignation
3 months
3 months
Unvested awards
forfeited
Unvested awards forfeited
Termination for cause
None
3 months
Unvested awards
forfeited
Vested and unexercised
awards forfeited
Termination in cases of death,
disablement, redundancy or notice
without cause
3 months
3 months
Pro-rated for time
and performance
Pro-rated for time and remain
on-foot subject to original
performance hurdles
Huon Aquaculture Group Limited
Annual Report 2021
50
Directors’ Report
Remuneration Report continued
KMP Remuneration for the Financial Year ended 30 June 2021
The following table of KMP remuneration has been prepared in accordance with accounting standards and the Corporations
Act 2001 requirements. The amounts shown relating to share based remuneration are equal to the accounting expense
recognised in the Company’s financial statements in respect of the LTI grants to KMP. The amounts disclosed do not reflect the
actual cash amount received in this year or in future years:
Fixed Remuneration
Variable Remuneration
Year
Salary
and Fees
$
Non-
Monetary
$
Other
$
Long
Service and
Annual
Leave
$
Super-
annuation
$
Cash
Bonus
$
Performance
Rights(i)
$
Total
$
Performance
related
%
Executive Directors
Peter Bender
2021
547,821
15,280
–
54,895
25,000
–
(5,075)
637,921
(1%)
2020
568,050
15,324
–
16,708
25,962
–
73,905
699,949
11%
Frances Bender
2021
169,915
–
–
22,133
24,929
–
–
216,977
0%
2020
176,260
–
–
6,340
25,953
–
–
208,553
0%
Key Management Personnel
Philip Wiese
2021
466,469
42,608
–
42,834
24,039
–
8,299
584,249
1%
2020
516,693
28,937
–
(573)
24,039
–
27,541
596,637
5%
Thomas Haselgrove
2021
288,124
12,233
–
26,987
23,296
–
(830)
349,810
0%
2020
248,729
45,817
–
35,108
26,008
–
12,071
367,733
3%
David Morehead
2021
284,714
8,541
–
28,612
27,048
–
(829)
348,086
0%
2020
295,345
–
–
12,384
28,058
–
12,073
347,860
3%
Charles Hughes
2021
261,454
7,845
–
11,208
24,838
–
(762)
304,583
0%
2020
291,329
–
–
(14,397)
23,855
–
11,085
311,872
4%
David Mitchell
2021
274,797
7,845
–
46,550
26,106
–
(762)
354,536
0%
2020
271,217
–
–
26,496
25,766
–
11,085
334,564
3%
Anthony Baker (from March 2020)
2021
241,652
27,647
–
4,475
24,838
–
6,341
304,953
2%
2020
78,085
4,572
–
8,757
7,852
–
3,830
103,096
4%
Total
2021
2,534,946
121,999
–
237,694
200,094
–
6,382
3,101,115
0%
2020
2,445,708
94,650
–
90,823
187,493
–
151,590
2,970,264
5%
(i)
Amounts recognised for Performance Rights relate to the expense recognised for the period.
51
Non-executive Director (NED) Remuneration
The RNC seeks to set a combined remuneration level that provides the Company with the capability to attract and retain NEDs
of the highest calibre and meets acceptable costing levels for shareholders.
The combined remuneration level sought to be approved by shareholders and the NED fee structure will be reviewed annually
against fees paid to NEDs from equivalent companies (S&P ASX 200 listed companies with market capitalisation of 50%
to 200% of the Company as well as similar sized industry comparators). The RNC may also take advice from independent
remuneration consultants when undertaking the annual review process.
The Company’s Constitution stipulates that the Board shall determine the total amount paid to each NED as remuneration for
their services to the Company. Under the ASX Listing Rules, the total amount of fees paid to NEDs must not, in any financial
year, exceed the amount determined by the Company in a general meeting or until so determined by the Board. This amount
has been determined by the Board to be $800,000.
NEDs receive a Board fee and fees for chairing or participating on Board Committees (refer table below). NEDs do not receive
remuneration that is calculated as a commission or a percentage of operating revenue or profits. Superannuation is included
in all NED remuneration. NEDs do not participate in any incentive programs.
From
1 September
2017
$
From
1 August
2014
$
Base fee
Chair (no other fees receivable)
160,000
160,000
Other non-executive directors
70,000
70,000
Additional fees
Audit and Risk Management Committee – Chair
20,000
20,000
Audit and Risk Management Committee – member
10,000
–
Remuneration and Nomination Committee – Chair
20,000
20,000
Remuneration and Nomination Committee – member
10,000
–
Non-executive Directors
— Neil Kearney (Chairman and Non-executive Director)
— Simon Lester (Non-executive Director)
— Tony Dynon (Non-executive Director)
The table below shows the actual NED remuneration for FY2020 and FY2021.
Base
$
ARC
$
RNC
$
Super-
annuation
$
Total
$
Neil Kearney (Chairman)
2021
146,119
–
–
13,881
160,000
2020
146,119
–
–
13,881
160,000
Simon Lester
2021
61,324
10,000
20,000
8,676
100,000
2020
61,324
10,000
20,000
8,676
100,000
Tony Dynon
2021
61,324
20,000
10,000
8,676
100,000
2020
61,324
20,000
10,000
8,676
100,000
Total Non-executive Director remuneration
2021
268,767
30,000
30,000
31,233
360,000
2020
268,767
30,000
30,000
31,233
360,000
Huon Aquaculture Group Limited
Annual Report 2021
52
Directors’ Report
Remuneration Report continued
Director and KMP Shareholdings
The table below refers to shareholdings of Directors, KMP and their related parties.
Balance
at start of
FY2021
Acquired
during
FY2021
Received on
vesting of rights
to deferred
shares
Other
changes
during
FY2021
Balance
at end of
FY2021
Neil Kearney(i)
6,316
10,274
–
–
16,590
Simon Lester(i)
14,516
–
–
–
14,516
Tony Dynon(i)
6,080
6,850
–
–
12,930
Peter Bender
13,257,829
–
8,692
–
13,266,521
Frances Bender
5,794
–
–
–
5,794
Peter and Frances Bender(i)
44,609,252
–
–
–
44,609,252
Philip Wiese(i)
34,087
14,831
2,627
(24,614)
26,931
Thomas Haselgrove
41,042
2,847
1,420
–
45,309
David Morehead
38,630
2,847
1,420
–
42,897
Charles Hughes(i)
14,528
5,143
1,304
(14,528)
6,447
David Mitchell
30,746
2,615
1,304
(8,000)
26,665
Anthony Baker
6,720
2,615
870
(9,335)
870
(i)
Includes indirect holdings.
Transactions with KMP and their Related Parties
Loans to KMP and their Related Parties
The Company has not issued any loans to its Directors or KMP or their related parties.
Other Transactions and Balances with KMP and their Related Parties
Related Entity Name
Relevant KMP
Nature of transaction
Amount transacted
during the financial
year period
$
James Bender Contracting Pty Ltd (JBC)*
Peter, Frances Bender
Lease of equipment to Huon
656,982
PAB Contracting Pty Ltd (PAB)*
Peter, Frances Bender
Lease of equipment to Huon
96,000
* Based on commercial terms.
53
Indemnification of Directors, Officers and Auditors
The Company indemnifies current and former Directors and officers for any loss arising from any claim by reason of any
wrongful act committed by them in their capacity as a director or officer (subject to certain exclusions as required by law).
During the 2021 financial year, Huon paid a total of $103,790 in premiums for Directors and Officers Liability insurance. The
Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified
or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as
such by an officer or auditor.
Auditor’s Independence Declaration
There were no former partners or directors of PricewaterhouseCoopers, the Company’s auditor, who are or were at any time
during the financial year an officer of the Company.
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on
page 56 and forms part of this Directors’ Report.
Non-Audit Services
The Company may decide to employ the auditor for assignments additional to their statutory audit duties where the auditor’s
expertise and experience with the Company and/or the Consolidated Group are important.
During the year the following fees were paid or payable for non-audit services provided by the auditor (PricewaterhouseCoopers
Australia), its related practices and non-related audit firms are set out below:
Consolidated
2021
$
Consolidated
2020
$
PricewaterhouseCoopers Australia
Audit and other assurance services
Audit and review of financial statements
376,888
223,500
Other assurance services
–
–
Total remuneration for audit services
376,888
223,500
Taxation & other advisory services
Taxation & other advisory services
34,680
149,518
Other advisory services
52,380
19,026
Total remuneration for taxation & other advisory services
87,060
168,544
Total remuneration of PricewaterhouseCoopers Australia
463,948
392,044
The Board of Directors has considered the position and, in accordance with advice received from the Audit and Risk
Management Committee, is satisfied that the provision of the non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act 2001.
The Directors are satisfied that the provision of non-audit services by the auditor, as set out above, did not compromise the
auditor independence requirements of the Corporations Act 2001 for the following reasons:
(i) All non-audit services have been reviewed by the Audit and Risk Management Committee to ensure they do not impact the
impartiality and objectivity of the auditor.
(ii) None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of
Ethics for Professional Accountants.
Huon Aquaculture Group Limited
Annual Report 2021
54
Directors’ Report
continued
Proceedings on Behalf of the Company
There were no proceedings brought, or intervened in, on behalf of the Company
with leave under section 237 of the Corporations Act 2001.
Rounding of Amounts
The Company is of a kind referred to in ASIC Corporations Instrument 2016/191,
issued by the Australian Securities and Investments Commission, relating to the
‘rounding off’ of amounts in the directors’ report and financial report. Amounts in
the directors’ report and financial report have been rounded off to the nearest
thousand dollars in accordance with that Class Order, or in certain cases, to the
nearest dollar.
This report is made in accordance with a resolution of Directors.
Neil Kearney
Chairman
26 August 2021
Peter Bender
Managing Director and CEO
26 August 2021
55
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Auditor’s Independence Declaration
As lead auditor for the audit of Huon Aquaculture Group Limited for the year ended 30 June 2021, I
declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Huon Aquaculture Group Limited and the entities it controlled during
the period.
Alison Tait
Melbourne
Partner
PricewaterhouseCoopers
26 August 2021
Huon Aquaculture Group Limited
Annual Report 2021
56
Auditor’s Independence Declaration
The Board of Directors (Board) of Huon Aquaculture
Group Limited (Huon) is responsible for the corporate
governance of the Company. The Board guides and
monitors the business and affairs of the Company
on behalf of the shareholders. Strong corporate
governance is an important aspect in ensuring
that Huon creates sustainable long-term value for
its shareholders.
Huon is committed to ensuring high standards of corporate
governance. This statement outlines the key aspects
of Huon’s governance framework and its principal
governance practices.
The Board believes that Huon’s policies and practices comply
in all material respects with the ASX Corporate Governance
Council’s Corporate Governance Principles (4th Edition)
(ASX Principles and Recommendations) with the exception
of Recommendations 3.4 (Anti-bribery and Corruption) and
7.3 (Internal Audit function) as detailed in this Statement.
The relevant reporting period for this Corporate
Governance Statement is Huon’s 2021 financial year which
commenced on 1 July 2020 and ended on 30 June 2021.
This Corporate Governance Statement was approved by
the Board and is current as at 26 August 2021.
Further information about Huon’s corporate governance
practices and policies can be found in the Investor Centre/
Corporate Governance on the Company’s website.
Principle 1:
Lay solid foundations for management
and oversight
Role of Board and Management
The Board represents shareholders’ interests and is
accountable for the overall operation and stewardship of
the Company and, in particular, for its long-term growth
and profitability. The Board is responsible for evaluating
and setting the strategic direction of the Company,
establishing goals for management and monitoring the
achievement of these goals.
Huon’s Board Charter sets out the Board’s key
responsibilities as follows:
Strategy
— providing input to, and approval of, the Company’s
strategic direction and budgets as developed by
management;
— directing, monitoring and assessing the Company’s
performance against strategic and business plans;
— reviewing the adequacy of resources for management
to properly carry out approved strategies and business
plans; and
— approving and monitoring capital management and
major capital expenditure, acquisitions and divestments.
Risk management and reporting
— identifying the principal risks and overseeing appropriate
control and management frameworks for them;
— reviewing and ratifying the Company’s system of risk
management, legal compliance and internal compliance
and control;
— determining, via the oversight and risk management
processes of the Audit and Risk Management Committee,
in accordance with the Audit and Risk Management
Committee Charter as determined by the Board, that
satisfactory arrangements are in place for auditing the
Company’s financial affairs; and
— approving and monitoring material internal and external
financial and other reporting.
Relationship with management
— appointment and removal of the Chief Executive Officer
(CEO) and Company Secretary;
— ratifying the appointment and removal of Senior
Executives which includes all executives who report
directly to the CEO;
— approving the remuneration framework and overseeing
remuneration policies and Executive Management
performance including determining whether the
remuneration and conditions of service of Senior
Executives are appropriate and consistent with the
approved policies and framework;
— establishing and monitoring executive succession
planning;
— setting specific limits of authority for Management; and
— delegating day-to-day decision making and
implementation of the approved strategy to Executive
Management within the limits of the approved
management authority.
Monitoring of performance
— approving criteria for assessing performance of
Executive Management and monitoring and evaluating
their performance; and
— undertaking an annual evaluation of the performance
of the Board, each Board Committee and individual
Directors; and
— establish goals and objectives for the Board for the
upcoming year and effect any amendments to the Board
Charter or any Board Committee Charter considered
necessary
Corporate governance
— ensuring that policies and compliance systems are in
place consistent with the Company’s objectives and
best practice;
— ensuring that the Company and its employees act
legally, ethically and responsibly on all matters in
accordance with the Company’s own governing
documents, including the Company’s Code of
Conduct; and
— selecting and appointing the Board Chair, and if
the Company has one, the Deputy Chair or Senior
Independent Director.
Board Committees
— establishing such committees of the Board as may be
appropriate, including:
i. Audit and Risk Management Committee; and
ii. Remuneration & Nomination Committee
— adopting Charters setting out the membership,
responsibilities and reporting obligations of each Board
Charter, including evaluating performance of those
Committees; and
— undertaking an annual performance evaluation of
each Board Committee, comparing the performance
of the Board Committee with the requirements of the
Board Committee for the upcoming year and effecting
any amendments to the relevant Committee charter as
deemed necessary.
Corporate Governance Statement
57
Delegation to Management
The Board has adopted a Delegated Authority Policy
which outlines the reserved and delegated responsibilities
of the Board and the responsibilities of the Executive
Management when delegated authority. The CEO and
Executive Management are responsible for matters
primarily relating to the day-to-day operations and
management of the Company and are accountable to the
Board. The delegated authority includes responsibility for:
— developing business plans, budgets and strategies for
the Company for consideration by the Board;
— implementing the business plans, budgets and strategies
to the extent approved by the Board;
— operating the Company’s business within the parameters
set by the Board and keeping the Board informed of
material developments in the Company’s business;
— referring any matters that exceed the parameters
set by the Board to the Board for its consideration
and approval, including but not limited to, proposed
transactions, commitments or material arrangements;
— identifying and managing operational risks and
where those risks could have a material impact on
the Company’s businesses, formulating strategies for
managing these risks for consideration by the Board;
— implementing the policies, processes, frameworks and
codes of conduct as approved by the Board; and
— managing the Company’s current financial and other
reporting mechanisms and control and monitoring
systems to ensure that these mechanisms and systems
function effectively and capture all relevant material
information on a timely basis.
The Board’s role and the Company’s corporate governance
practices and policies are being continually reviewed and
improved as the business grows and develops.
Board appointments
The responsibility for the selection of potential Directors lies
with the Board of the Company. Appropriate background
and other checks are undertaken before candidates
are considered and appointed by the Board. Directors
are initially appointed by the Board subject to election
by shareholders at the next Annual General Meeting.
Shareholders are provided with all material information
on whether or not to elect or re-elect a person as a
Director including whether the person will qualify as an
independent Director.
Under the Company’s Constitution the tenure of Directors
is subject to reappointment by shareholders not later than
the third anniversary following his/her appointment.
Written agreements with Directors and
Executive Management
Directors have a formal letter of appointment that sets
out the key terms and conditions of their appointment. All
Directors also sign a Deed which covers issues including
indemnity, directors’ and officers’ liability insurance, the right
to obtain independent advice, policy and procedure for
trading in Company shares including strict blackout periods,
Director independence and any matters that could affect
independence, and requirements concerning confidential
information. Executive Management are also engaged
under a written agreement setting out the terms of their
employment.
Company Secretary
The Company Secretary is accountable to the Board,
through the Chairman of the Board, on all matters to
do with the proper functioning of the Board and Board
Committees. This includes:
— Board agendas
— Board papers and minutes
— advising the Board and its Committees on governance
matters
— monitoring the implementation of Board and Committee
policies and procedures; and
— statutory and other filings and communication with
regulatory bodies and the ASX.
Diversity policy
In 2014, Huon’s Board endorsed its Diversity Policy.
The Diversity Policy reflects the Company’s approach to
managing its greatest asset, its people.
Huon is recognised as an Employer of Choice by the
Tasmanian Government in acknowledgement of the highly
innovative working culture, opportunities for career growth
and the family culture within the workforce.
Huon’s workforce is made up of many individuals with
diverse skills, values, experiences and backgrounds.
The Company is committed to supporting and further
developing this diversity through attracting, recruiting,
engaging and retaining diverse talent and aligning its
culture and systems with this commitment.
The Company believes that commitment to diversity
creates competitive advantage and enhances employee
participation which is essential to the success of the
business. The Board has set measurable objectives and
the aim of these is to create an environment conducive
to the appointment of well qualified and experienced
Board members, Executive Management Group, Senior
Management team and employees.
Huon Aquaculture Group Limited
Annual Report 2021
58
Corporate Governance Statement
continued
Measurable Objective
Achievements in FY2021
Foster an inclusive culture of
workplace diversity
Huon recognises that having a workforce of individuals with unique skills, experiences and
backgrounds and values provides a depth of skill and knowledge that can give Huon a
competitive advantage through enhanced employee engagement. We want to foster an
environment where everyone can feel comfortable bringing their true self to work.
Huon has a diversity policy that is communicated to all employees and the tone at the top
that cascades through the teams is one of inclusion and family.
In March 2021, Huon celebrated International Women’s Day and shared information
on global gender equality progress and facts with the various teams to enhance their
understanding of the need for gender equality, the progress made to-date and the
importance of continued work in this space.
In FY2022, Huon plans to undertake diversity and inclusiveness training and take part in
awareness days around mental health (RUOK) and sexual orientation and identity (Pride).
Apply and promote Flexible
Work Practices Policy
The Company does not currently have a formal flexible work policy. However, for those of
our employees who can work remotely, the last year has seen remote and flexible working
achieved on a scale we have never experienced before due to the COVID-19 pandemic.
Our office-based staff worked remotely from March 2020 until July 2021, at which point
teams were able to come back to our offices if they felt safe to do so. Flexible working has
remained part of our way of working now and is organised between employees and their
managers on a case-by-case basis; this allows our people to get more balance between
their work and home life whilst still getting the people and team interaction that is required
for optimal performance.
Flexible and remote working practices are opportunities considered as part of the
recruitment process in order to attract the best candidates, Huon has a formal Recruitment
and Selection Policy that includes Flexible working practices as a key principle.
In FY2022, a flexible working policy will be formally implemented to ensure a consistent
and transparent approach across all of Huon.
Present diversity data
on Huon’s sustainability
dashboard
Information is presented on the sustainability dashboard showing the gender diversity
results for the company. This data is presented on a quarterly basis.
Gender diversity data is not currently presented by department; this is something Huon
plans to implement in FY2022.
Ensure appropriately
qualified and relevantly
experienced women are
considered at short list stage
for Board appointments
Huon is committed to an equal, fair and merit-based recruitment and selection process.
Short-listing of candidates is a key part of our recruitment process and the skill set and
experience that a candidate brings to a role will always be the top priority. Huon did
not have any change in the structure of the Board in the current year but any Board
appointments will always be performed fairly and in accordance with the Huon principles
and values.
Progressively increase female
representation where the
business unit is at less than
20% with specific focus on
operational areas
The female representation across the Company has dropped to 21% (FY2020: 22%).
However, within departments there are still significant gender imbalances. Huon continues
to consider diversity throughout its recruitment process and actively seeks to address these
imbalances. A key part of this is to ensure the pipeline of candidates is balanced, this
happens by engaging with both genders at an earlier stage of the career lifecycle; Huon
works with primary and secondary schools, hosting student placements and facilitating site
tours as well as providing guidance to VET and tertiary Aquaculture students.
It is hoped that engaging with more females at this stage will ensure more gender balance
in the applications received for operational roles.
Progressively increase female
participation in Huon’s
Leadership Education and
Development Programs
Due to the COVID-19 pandemic and the focus on the health and safety of Huon’s people
during this tumultuous time, the leadership program planned for the current year was
unable to go ahead.
This will be run again in FY2022 and will be structured with gender balance. Huon
recognises that the lack of female representation in the executive management team is an
area that needs addressing however the increase in female representation at the Senior
Management level up to 21% from 13% five years ago shows that the pipeline is growing
and the leadership initiatives to-date have succeeded.
Align selection practices
to deliver an equal mix
of male and female
students for school-based
apprenticeships
As previously noted, the Recruitment and Selection Policy on Huon’s intranet sets out the
principles that Huon employees must apply when selecting students for apprenticeship
programs. Ensuring diversity across the short-list of candidates is an important requirement.
59
The Company continues to prioritise merit and
competency-based selection criteria at the same
time recognising diversity in each application of its
recruitment and promotion methods. The Company
anticipates a long and steady increase in female
workforce proportion particularly in key leadership roles
and as such has not set a gender target. Additional
information on gender diversity and progress towards
improved gender balance is included below.
Gender diversity as at 30 June 2021
Board
Executive Management
Senior Management
Management
Total workforce
Female Male:
2021
80%
20%
100%
0%
79%
21%
87%
13%
79%
21%
2020
80%
20%
100%
0%
76%
24%
85%
15%
78%
22%
2019
80%
20%
100%
0%
79%
21%
86%
14%
80%
20%
2018
80%
20%
100%
0%
85%
15%
87%
13%
81%
19%
2017
80%
20%
100%
0%
87%
13%
87%
13%
79%
21%
20%
80%
100%
21%
79%
13%
87%
21%
79%
Subsequent to 30 June 2021 but before the date of this
report, the gender balance of the executive management
group changed to 83% Male and 17% Female with
the appointment of a new GM of Sales and Marketing.
This is a great step for Huon’s drive to improving gender
balance and reflects the improvements seen through the
management and senior management groups over recent
years and the investment in leadership programs for
internal development.
Workplace Gender Equality Agency WGEA Report
The Company lodged its annual public report with the
Workplace Gender Equality Agency (WGEA) including
gender pay equity and achieved compliance status. A copy
of the report can be viewed on the Company website.
Board performance evaluation
The Board adopted a self-evaluation process to
review its own, its Committees’ and individual Directors
performance during FY2021. This process includes written
surveys completed by all Directors which are discussed
with the Chairman, as well as detailed analyses on
the performance and effectiveness of each committee,
completed by the relevant committee Chair and discussed
with the Chairman to ensure the Board and its Committees
remain effective. The Board also reviews the composition
and skills mix of the Directors on an ongoing basis to
ensure that the Board has the necessary and desirable
competencies to govern effectively.
Executive Management performance evaluation
The performance of the CEO and Executive Management
is assessed each financial year. These include but are not
limited to:
— a review of the Company’s financial and operating
performance against targets; and
— performance appraisals incorporating an analysis of the
key performance indicators with each individual.
The Board conducts the performance evaluation of the
CEO annually and this forms the basis for determining
the CEO’s performance-based remuneration; the
Remuneration Report starting on page 41 contains further
detail on this assessment for the current financial year.
Throughout the year, the Chairman conducts regular check-
ins with the CEO to discuss current business performance,
direction and required actions. These check-ins are
informal and ensure progress against goals is monitored
in a timely manner. The CEO conducts the performance
evaluations of the Executive Management; this includes
regular individual check-ins with each member of Executive
Management to ensure progress against goals and action
taken to reflect feedback, these then culminate in the
annual performance evaluation process which drives the
performance-based remuneration.
Huon Aquaculture Group Limited
Annual Report 2021
60
Corporate Governance Statement
continued
Principle 2:
Structure the Board to add value
Board composition, skills and experience
The Constitution of the Company provides that the number
of Directors must at any time be no more than ten and
no less than three. As at the date of this report, the Huon
Board comprised of five Directors including three Non-
Executive Directors. A profile of each Director can be found
in the on pages 30 to 31 of this Annual Report.
In order to govern effectively, Directors must have a clear
understanding of the Company’s overall strategy, together
with knowledge of the Company and the industry in
which it operates. Directors must collectively possess the
appropriate skills and experience to enable the Board to
effectively discharge its responsibilities.
The current skills matrix of the Directors of the Board brings
together extensive expertise and experience in relation to
all areas of the day-to-day and commercial elements of
the Company. The table below outlines the percentage of
current Directors possessing those skills and experience:
Category
Percentage of
Directors (substantial or
extensive experience)
Industry knowledge
Expertise and experience in the salmon, aquaculture
and food industry at a very senior level
100%
International & Domestic markets
Expertise and experience operating in both
domestic and international food markets
100%
Executive leadership
Significant business experience and successful
leadership at a senior executive level
100%
Strategic, risk and operational development
Proven track record in identifying, developing and
implementing a successful strategic plan and risk
management including challenging managements’
views and assumptions to deliver long-term growth
and shareholder returns
100%
Governance
Commitment to the highest standards of corporate
governance, including ASX listing rules and practices
100%
Financial acumen
Expertise in financial accounting and reporting,
corporate finance and internal financial controls
including an ability to challenge the adequacies of
financial and risk controls
80%
Brand, marketing and product development
Expertise in marketing, brand maximisation and new
product development to drive strategic objectives
and growth
100%
Sustainability practices
Commitment to leading the way in industry
sustainability practices and providing transparency
to various stakeholders to minimise impact on the
environment and communities
100%
People, health and safety
Expertise in workplace health and safety and
commitment to prioritising the physical and mental
welfare of the workforce
100%
The Company actively seeks a variety of skills, experience
and expertise to ensure the Board can meet its current and
future needs.
Board and Director independence
Huon has adopted a definition of independence which is
consistent with the ASX Principles and Recommendations.
The Non-executive Chairman of the Board, Neil Kearney,
and Non-executive Directors, Simon Lester and Tony
Dynon, are considered to be independent, meaning that
each is free from any management role or business interest
or other relationship that could materially interfere with their
ability to act in the best interests of Huon as a whole. The
Board is confident that each of the Non-executive Directors
brings objectivity and makes sound individual contributions
to the Company through their deep understanding of
Huon’s business.
The two Executive Directors, Peter Bender (CEO and
Managing Director) and Frances Bender are not
independent by virtue of being substantial shareholders
in the Company and employed by the Company in an
executive capacity.
Details of the Directors of the Board, appointment dates of
each Director, and the members of the Board Committees
are set out in the Directors’ Report on pages 30 to 31 of
this Annual Report.
The Directors are satisfied that there is no individual or
group of individuals who dominate the Board’s decision-
making, and that the current composition of the Board
maximises the likelihood that the decisions of the Board
will reflect the best interests of the Company and its
shareholders.
Only those transactions permitted by Huon’s Constitution
and the Corporations Act are conducted with Directors
or their related parties. These are on the same terms and
conditions applying to any other external party, supplier or
customer. Directors are required to disclose in writing any
related party transactions.
Directors are also required to identify any conflicts of
interest they may have in dealing with Huon’s affairs and
subsequently to refrain from participating in any discussion
or voting on those matters. If a potential conflict of interest
is likely to arise, the Director concerned does not receive
copies of relevant Board papers and withdraws from the
Board meeting while those matters are considered. The
Director concerned therefore takes no part in the discussion
and does not exercise any influence over other members of
the Board.
The Board has determined that individual Directors have
the right in connection with their duties and responsibilities
as Directors to seek independent professional advice at
the Company’s expense. The engagement of an outside
adviser is subject to prior approval of the Chairman. If
appropriate, any advice received will be made available
to all Board members.
61
Remuneration and Nomination Committee
The Board has a Remuneration and Nomination Committee
(RNC) comprising three Non-executive Directors, with the
Chairman being an independent Non-executive Director.
The current members of the RNC are:
— Simon Lester (Chairman);
— Neil Kearney (Member); and
— Tony Dynon (Member).
Consistent with ASX Recommendations, the Chairman
of the Company does not chair the RNC and so a
separate chair is not required should the Remuneration
and Nomination Committee deal with the appointment
of a successor to the Chairman. Details regarding the
frequency of and attendance at RNC meetings throughout
the financial year can be found on page 40 of this
Annual Report.
The RNC Charter is available on the Company’s website
and outlines the Committee’s role in assisting the Board
with decisions regarding the composition and structure
of the Board. It does this by reviewing and making
recommendations to the Board in relation to:
— the appointment and re-election of Directors as
members of the Board and its Committees;
— the induction and continuing professional development
of Directors;
— Board succession planning;
— the recruitment process for a new Director;
— Board, Committees and Director performance
evaluation;
— the Company’s superannuation arrangements;
— the Company’s recruitment, retention and termination
policies;
— those aspects of the Company’s remuneration policies
and packages, including equity-based incentives, which
should be subject to shareholder approval;
— the size and composition of the Board and strategies
to address Board diversity and the Company’s
performance in respect of the Company’s Diversity
Policy; and
— succession plans for the CEO and other Senior
Management.
The Committee comprises of only Non-executive Directors
with a majority of independent Directors and must have
an independent chairperson as nominated by the Board
and includes at least one member with expertise in
remuneration. Members of the RNC are appointed for a
fixed period of no more than three years with Committee
members generally being eligible for re-appointment.
Director induction and ongoing professional
development
The induction of Directors is the role of the Remuneration
and Nomination Committee and includes ensuring
an effective orientation program is in place including
providing induction information such as key corporate
governance policies and charters of the Company.
Directors are encouraged to engage in professional
development activities and to develop and maintain the
skills and knowledge needed to perform their role as a
Director effectively.
Principle 3:
Act ethically and responsibly
The Company is committed to maintaining ethical standards
in the conduct of its business activities. The Company
strongly believes that its reputation as an ethical business
organisation is important to its ongoing success.
Code of Conduct
The Board has adopted a Code of Conduct which applies
to all Directors and employees of the Company and where
relevant and to the extent possible, consultants, secondees
and contractors of the Company.
The Code addresses issues including;
— ethics; including openness, honesty, fairness, integrity
and acting in the best interests of the Company;
— personal and business conduct; including giving and
accepting business courtesies;
— conflicts of interest; including trading in Company shares
and financial and other inducements;
— compliance with laws and regulations;
— privacy and intellectual property; including
confidentiality and control of information;
— corporate opportunities;
— financial integrity;
— mutual respect; and
— business agreements and contracts.
All suspected breaches of the Code will be thoroughly
investigated by the Company. If these investigations
reveal breaches of the Code appropriate disciplinary and
remedial action will be taken depending on the nature of
the breach.
If an employee suspects that a breach of the Code
has occurred or will occur, he or she must report that
breach to the appropriate person. No employee will be
disadvantaged or prejudiced if he or she reports, in good
faith, a suspected breach. All reports will be acted upon
and kept confidential where appropriate.
The Huon Code of Conduct can be viewed on the
Company website.
Company Values
At Huon we have six key values that represent what the
Board, management and our employees believe are
important principles in order for the Company to achieve
its purpose of being a workforce that seeks excellence and
innovation, sustainably and efficiently producing the highest
quality product, striving to be leaders within the industry
and providing our customers with the best quality and
service possible.
Huon Aquaculture Group Limited
Annual Report 2021
62
Corporate Governance Statement
continued
Company Values
Community
We are responsible neighbours
helping to build and support
sustainable communities.
Integrity
We are ethical, transparent, and
inclusive in all our dealings.
Creativity
We embrace the challenge of
innovation and are driven by an
improvement culture.
Safety
We provide a safe and healthy
workplace for all our staff, contractors
and visitors.
Care
We are passionate about our
business, working together to achieve
quality outcomes.
People
We value our employees and work
together to develop our industry.
These values have been in place for the duration of the
reporting period. They are embedded in the Company
by the executive leadership and management groups
across Huon through everyday leadership behaviour,
goals and KPIs linked to the Company values, and
being established throughout both internal and external
communications. The Company lives these values
in a transparent way through the publication of the
Sustainability Dashboard published on the Company’s
website. This Dashboard was the first of its kind for our
industry and uses data to help our communities better
understand what we do, including information such
as company gender diversity, safety statistics, wildlife
mortalities, sea temperatures, and fish stock statistics.
Employees receive training on these values and they are
integrated throughout the recruitment of new employees
as they underpin the performance evaluation process.
Whistle-blower Policy
In 2019 the Company implemented a Whistle-blower
Policy; the aim of this policy is to:
— recognise the Company’s commitment to operating
legally (with any Applicable laws), in line with the
Company’s policies and procedures, and ethically;
— direct and guide employees regarding their mutual
obligations to comply with the aforementioned
compliance and commitments;
— encourage voluntary reporting of non-compliance
without the fear of adverse action;
— provide a fair, confidential, anonymous and flexible
approach and process to encouraging, supporting
and responding to ‘whistle-blowers’;
— establish procedures for protecting whistle-blowers
against adverse action or detriment;
— implement appropriate plans and processes to
support and implement both the policy and whistle-
blowers; and
— implement corrective action where required.
This policy covers all employees, contractors and other
persons at the workplace and managers are required to
promote the whistler-blower policy within their area of
responsibility. The Company is required to reasonably
investigate whistler-blower reports, provide support
to the whistler-blower and take appropriate action
where necessary. Any findings from investigations must
be recorded and, if required, any non-compliance
with Applicable Laws must be reported to the relevant
agency or authority. The full whistler-blower policy is
available on the Company website.
Anti-Bribery and Corruption
In June 2021, the Company implemented a standalone
Anti-bribery and Corruption Policy as recommended by
the 4th Edition ASX Recommendations. The provisions of
the Code of Conduct covered anti-bribery and corruption
for the period up to the adoption of the standalone policy,
this included:
— giving and accepting business courtesies; including
specific value thresholds for reportable gifts,
entertainment or personal favour and the reporting and
approval process for said gifts;
— financial and other inducements; including reference to
federal legislation for committing such offences;
— financial integrity; including ensuring all entries in the
Company’s books are in accordance with Company
policies and Applicable Laws and Regulations; and
— reporting processes for disclosing potential conflicts
of interest.
The stand-alone policy expands on those topics discussed
within the Code of Conduct and addresses the key
responsibilities of those individuals covered by the policy;
this includes but is not limited to:
— compliance with laws and policies;
— maintaining appropriate records of any gifts;
— obtaining appropriate approvals before entering
into any transactions that can be seen to benefit an
individual;
— being vigilant and reporting breaches or suspicious
behaviour;
— promoting the anti-bribery and corruption policy and
procedures across the Company;
— conducting risk assessments to identify areas of the
business most at risk from bribery and/or corruption to
focus efforts on high-risk areas; and
— conducting periodical reviews to ensure the policy
remains effective in achieving its purpose.
The full policy is available in the Corporate Governance
section on the Company website.
63
Principle 4:
Safeguard integrity in corporate reporting
Audit and Risk Management Committee
An Audit and Risk Management Committee (ARMC) is
in place to assist the Board of the Company in fulfilling
its corporate governance and oversight responsibilities in
relation to the Company’s financial reports and financial
reporting process and internal control structure, risk
management systems (financial and non-financial), and the
internal and external audit process.
The ARMC consists of three Non-executive Directors
and a majority of independent Directors. The Chairman
of the Committee is an independent Director and is not
the Chairman of the Board, this is consistent with ASX
Recommendations. The current members of the Audit and
Risk Management Committee are:
— Tony Dynon (Chairman);
— Neil Kearney (Member); and
— Simon Lester (Member).
The Audit and Risk Management Committee Charter is
available on the Company’s website and outlines the
Committee’s key responsibilities as follows:
— review and approve internal audit and external audit
plans – including making recommendations to the Board
on the appointment, reappointment, replacement,
remuneration, effectiveness and independence of the
external auditors, considering the scope and adequacy
of the external audit and discussing this with the external
auditors and considering audit partner and audit firm
rotation to maintain actual and/or perceived auditor
independence.
— update the internal and external audit plans – meet
with external audit as well as management to ensure
adequacy of accounting and financial controls including
testing scope, significant accounting estimates and
judgements and issues and concerns warranting
Committee attention such as control effectiveness or
process improvement.
— review and approve financial reports – including
reviewing significant accounting policies and judgements
to ensure compliance with relevant accounting standards
and recommending the accounts for approval by the
Board.
— review the effectiveness of the Company’s compliance
and risk management functions – including making
recommendations to the Board on the adequacy of the
Company’s processes for risk management, reporting
and making recommendations on any incident involving
fraud or a failure of the Company’s controls, making
recommendations on the Company’s insurance program
and making recommendations on the Company’s risk
management policy.
The relevant skills and experience of each committee
member can be found on pages 30 to 31 of this Annual
Report and details regarding the frequency of and
attendance at ARMC meetings throughout the financial
year can be found on page 40 of this Annual Report.
Integrity of Financial Reporting –
CEO and CFO Certification
The CEO, Deputy CEO and CFO respectively provide
assurance to the Board that:
— Huon’s financial reports for each half year and full year
present a true and fair view of the financial position and
performance of the Company and are in accordance
with the accounting standards;
— the financial records of the Company have been
properly maintained;
— their opinion is based on a sound system of risk
management and internal compliance and control; and
— the Company’s risk management and internal
compliance and control system is operating effectively.
This declaration process is consistent with the requirements
of the Corporations Act 2001 (cth) and the ASX
Recommendations. Before these declarations are made
the CEO, Deputy CEO and CFO receive representation
letters from appropriate management verifying material
issues relating to their respective areas of responsibility and
disclosing factors that may have a material effect on the
financial performance and/or position of the Company.
Integrity verification of unaudited or
unreviewed information
Where the Company releases to the market any periodic
corporate report that has not been audited or reviewed
by an external auditor it adopts processes to ensure the
integrity of these reports. These reports are prepared by
Management with reference to the Company’s records and
systems with external assistance where required. Reports
of this nature, such as those included within the unaudited
sections of this Annual Report, are submitted to the relevant
Board committee for review and approval after having
been through a rigorous internal review process which
is covered by the certifications made to the Board by
Executive Management.
Role of the External Auditor at the AGM
The Company’s external auditor attends the Company’s
AGM and is available to answer questions about the
conduct of the audit and the preparation and content of
the auditor’s report.
Huon Aquaculture Group Limited
Annual Report 2021
64
Corporate Governance Statement
continued
Principle 5:
Make timely and balanced disclosure
Continuous Disclosure
The Company is committed to complying with its continuous
disclosure obligations under the Corporations Act 2001
(Cth) and the ASX Listing Rule 3.1 to ensure that the market
is fully informed of information concerning the company
that a reasonable person would expect to have a material
effect on the price or value of Huon’s securities. Where
information is disclosed to the ASX under the continuous
disclosure legislation this will then be made available to all
stakeholders, market participants and the wider community
via the Company’s website.
The Board has adopted a Continuous Disclosure Policy
to ensure the Company complies with all disclosure
obligations. The Policy addresses all continuous disclosure
requirements under the Listing Rules and Corporations Act
and incorporates best practice guidelines recommended
by ASX, ASIC and the Australasian Investor Relations
Association (AIRA). The Company Secretary is responsible
for the overall administration and monitoring of the
Continuous Disclosure Policy. Huon’s Continuous Disclosure
Policy can be viewed on the Company website.
The Board receives copies of all announcements under
Listing Rule 3.1 promptly after they have been made.
Investor Presentations
The Company releases a copy of presentation materials
on the ASX Market Announcements Platform ahead of new
and substantive investor presentations.
During the reporting period, the Company released a copy
of presentation materials on the ASX Market Announcements
Platform on three occasions; 27 August 2020, 30 October
2020 and 26 February 2021. In each case, the materials
were released ahead of the presentation.
Shareholders and other interested parties are able to
participate in all Company hosted investor events, and
webcast details are made available in advance on the ASX
Market Announcements Platform. In addition, audio replays
of these presentations are available at Huon’s Investor
Centre website at investors.huonaqua.com.au
Principle 6:
Respect the rights of security holders
Information about Huon and its
Governance for Investors
Huon places considerable importance on effective
engagement and communications with shareholders.
It recognises the value of providing current and relevant
information to its shareholders. The Board has adopted
a Communications Policy which is designed to ensure
that the Company:
— provides timely and accurate information equally to all
shareholders and market participants regarding the
Company including its financial situation, performance,
ownership, strategies, activities and governance; and
— adopts channels for disseminating information that are
fair, timely and cost efficient.
This information is made available through:
— the Company’s website;
— the Huon Aquaculture Sustainability Dashboard;
— briefings and the investor relations program;
— the media;
— continuous disclosure to the ASX;
— Company meetings; and
— the Annual Report.
The Annual Report (which includes Huon’s Corporate
Governance Statement) can be viewed on the Company
website.
Investor Relations Program
Huon is committed to the promotion of investor confidence
by ensuring trading in the Company’s shares takes place in
an efficient, competitive and informed market. The Deputy
CEO of the Company leads the investor relations program
and is responsible for the Company’s relationship with
major shareholders, institutional investors and analysts and
is the primary point of contact for those parties. Huon’s
Continuous Disclosure Policy and its Communications Policy
are integral elements of the investor relations program.
Any written material containing new price-sensitive
information to be used in briefing the media, institutional
investors and analysts are lodged with ASX prior to the
briefing commencing. On confirmation of receipt by ASX,
the briefing material is posted to Huon’s website. Briefing
materials may also include information that may not strictly
be required under the continuous disclosure requirements.
Huon will not disclose price-sensitive information in any
meeting with investors or analysts before formally disclosing
it to the market. The Company considers that one-on-one
discussions and meetings with investors and analysts are an
important part of pro-active investor relations.
65
Policies and processes to facilitate
and encourage participation at meetings of
security holders
The Company strongly encourages all shareholders to
attend meetings and uses and relies on its Communications
Policy to ensure awareness and accessibility of those
meetings. The Board encourages full participation of
shareholders at the Annual General Meeting to ensure
a high level of accountability and understanding of the
Company’s strategy and goals. Full participation at these
events is facilitated by:
— the ability for shareholders to take part via webcast
as well as in physical attendance (excluding events
impacted by COVID-19 restrictions);
— allowing proxy forms to be submitted via multiple means
(electronically, fax or post);
— allowing shareholders to submit questions prior to the
Annual General Meeting if they are unable to attend
in person.
Voting at the Annual General Meeting is completed via
confidential polls rather than by a show of hands, this is
consistent with ASX Listing Rules regarding voting rights.
Give security holders the option to receive
communications from, and send communications
to, the entity and its security registry
electronically
Shareholders are able to receive and send communications
to the Company and its share registry electronically via
the Link Investor Centre. Shareholders are also able to
sign up for regular email alerts which include notification
of announcements, reports, presentations and summaries.
Huon posts all reports, ASX and media releases and copies
of significant business presentations on its website. Both
email alerts and the Link Investor Centre can be accessed
via the Investor section of the Company website.
Principle 7:
Recognise and manage risk
Committee to oversee Risk
The Board is responsible for risk oversight and the
management and internal control of the processes by
which risk is considered for both ongoing operations
and prospective actions. In specific areas the Board is
assisted by the Audit and Risk Management Committee
which is responsible for establishing procedures
which provide assurance that major business risks are
identified, consistently assessed and appropriately
addressed. The Committee’s focus is on risk assessment,
including the identification and management of risks as
they relate to:
— operational and environmental risk;
— market and economic risk;
— workplace health and safety management; and
— financial risk.
The Committee consists of three Non-executive Directors
and a majority of independent Directors. The Chairman
of the Committee is an independent Director and is not the
Chairman of the Board. Further information on the Audit
and Risk Management Committee, including the charter
and members, is included within the Principle 4 section of
this Corporate Governance Statement.
Review Huon’s Risk Management Framework
The Board, with the support of the Audit and Risk
Management Committee, manages the Company’s Risk
Management Policy and Risk Management Framework
which are reviewed on an annual basis. Any amendments
to the Policy and/or Risk Management Framework must be
approved by the Board. In addition, Management reports
to the Audit and Risk Management Committee on risks,
thus allowing the Committee to make recommendations
to the Board. The Board reviews the Company’s risk
management at Board meetings, and where required,
makes improvements to its risk management and internal
compliance control systems.
The risk management policy ensures there is consistency
in the methods used for assessing, monitoring and
communicating risks in the Company as well as promoting
a balanced approach to monitoring risk and return.
Material risks to the Company are discussed further in the
following section of this report.
Management of material exposure to economic,
environmental and social sustainability risks
A key pillar of the Company’s business strategy is to grow
safely and sustainably. Sustainability and environmental
measures continue to be a priority for Huon with significant
time invested in community consultation and the refinement
of systems and procedures directed at positive economic,
environmental, animal welfare and social outcomes across
the business operations. Risk recognition and management
are viewed by the Company as integral to its objectives
of creating and maintaining shareholder value and to the
successful execution of the Company’s strategies.
Huon Aquaculture Group Limited
Annual Report 2021
66
Corporate Governance Statement
continued
There are a number of risks, both specific to Huon
and of a general nature which may threaten the future
operating and financial performance of the Company
and its investment value including:
Risk Type
Identified Risk
Agricultural and
Environmental
Supply, growth and mortality of fish
Biosecurity and farming practices
Disease management
Fish feed availability and formulation
Climate change
Predator threats
Social
Stakeholder engagement and
responding to misinformation
Regulatory and permitting risk
Animal welfare
Market and
Economic
Market disruption due to pandemics
Pricing and demand
Trade embargos affecting export
markets
Cyber security
Fuel and energy prices
Foreign exchange and interest rates
Liquidity and funding
Workplace
health & safety
Staff recruitment and retention
Equipment and work practices
Staff training, professional
development and policies
These risks may change over time as the external
environment changes and as the Company expands its
operations. The Company’s Risk Management Policy
outlines processes Huon has adopted for the regular
assessment and identification of risks as well as providing
a management and response framework including the
mitigation of risks where appropriate. Further information
on Huon’s assessment of the principal risks which could
have a material impact on the Company are set out on
page 69 in this Annual Report.
Internal Audit Function
The Company does not have an internal audit function
due to the nature and size of the Company and the extent
of its Risk Management Policy. The Company currently
relies on oversight by management, the Audit and Risk
Management Committee and the Board to ensure
compliance with Huon’s Risk Management Policy. The
Audit and Risk Management Committee will continue to
assess the need for an internal audit function based upon
the risk and size of Huon’s operations.
Principle 8:
Remunerate fairly and responsibly
Remuneration and Nominations Committee
The Remuneration and Nomination Committee
(RNC) assists the Board by reviewing and making
recommendations on remuneration arrangements for
Directors and Executives of the Company including:
— the Company’s remuneration framework;
— the Company’s recruitment, retention and termination
policies;
— the Company’s remuneration policies including as
they apply to Directors;
— equity based remuneration plans for Executive
Management and other employees; and
— the remuneration packages for Directors, the CEO
and Executive Management.
When needed, the Company has also sought advice
from external advisers in relation to the development
of appropriate incentive plans for Key Management
Personnel (KMP). Further information on the Remuneration
and Nomination Committee, including the charter and
members, is included within the Principle 1 section of this
Corporate Governance Statement.
Policies and practices regarding the
remuneration of Non-executive Directors and
the remuneration of Executive Directors and
other Executive Management
The Company is committed to attracting and retaining the
best people to work in the organisation including Directors
and Executive Management. The Board adopted a
Remuneration Policy which aims to:
— ensure that coherent remuneration policies and practices
are observed which enable the attraction and retention
of Directors and management who will create value for
shareholders;
— fairly and responsibly reward Directors and Executive
Management having regard to the Company’s
performance, the performance of the Executive
Management and the general pay environment; and
— comply with all relevant legal and regulatory provisions.
The full Remuneration Policy is available on the Company’s
website; this should be read in conjunction with the
Securities Trading Policy.
Remuneration for Executive Directors and Executive
Management incorporates fixed and variable (or ‘at risk’)
pay performance elements with both a short and long-term
focus. Remuneration packages may contain any or all of
the following:
— annual base salary;
— performance based remuneration;
— equity-based remuneration;
— other benefits such as holidays, sickness benefits,
superannuation payments and long service benefits;
— expense reimbursement; and
— termination payments.
67
The mix of remuneration components and performance
measures ensures that there is a strong link between
Executive remuneration and achievement of the Company’s
strategy and objectives; ensuring positive shareholder
returns and broader stakeholder management in
accordance with the Company’s values.
The remuneration of Non-executive Directors is
determined by the Board as a whole reflecting the value
of the individual’s time commitment and responsibilities.
Remuneration packages may contain any or all of the
following:
— annual fees;
— equity based remuneration; and
— other benefits such as superannuation payments.
The total remuneration of Non-executive Directors must
not exceed the maximum annual amount approved by
Company’s shareholders (currently $800,000). Detailed
information on the Company’s remuneration policy and key
principles and also the remuneration received by Directors
and Key Management Personnel (KMP) in FY2021 is set
out in the Remuneration Report on pages 41 to 53 in this
Annual Report.
Equity-based remuneration
Both the Remuneration and Nomination Committee Charter
and the Remuneration Policy contain oversight regarding
equity-based remuneration. Huon’s long term incentive (LTI)
plan is delivered through the granting of performance rights
which convert to shares in the Company on achievement
of specified performance conditions. If a participant in an
equity-based scheme enters into any transaction designed
to limit the economic risk of participating in such a scheme,
then the following applies:
— the participant must disclose details of the transaction
to the Company Secretary;
— the Company Secretary will disclose to the Board
all details of any such economic risk management
transactions; and
— the Board will consider whether the participant is a
KMP and if so whether there has been a breach of any
law, whether the equity-based remuneration scheme
should be amended, or whether future participation of
the senior executives in the equity-based remuneration
scheme should be amended in any way.
Securities issued via these remuneration schemes are
subject to the Securities Trading Policy. This policy details
the scenarios when shares can and cannot be traded,
scenarios that are prohibited by law, and disciplinary
actions that can be taken, including termination
of employment, where the policy is found to have
been breached.
Huon Aquaculture Group Limited
Annual Report 2021
68
Corporate Governance Statement
continued
Supply, growth & mortality of fish
Huon takes a multiple site approach to broodstock
supply; Huon has broodstock facilities located at five,
geographically separate sites around Tasmania, thereby
guaranteeing supply and reducing biosecurity risk.
Huon has multiple freshwater facilities, the Whale Point
Salmon Nursery is the only one of its kind in the southern
hemisphere. Huon’s success in growing salmon to a
larger size on land (in a controlled environment) has
reduced the time spent at sea by 30–40%. Larger smolt
are more robust and less vulnerable to predation. This
provides increased capacity to manage existing leases,
lowering the environmental and biosecurity risk. Refer to
pages 20–21 of this report for more information on our
Whale Point nursery.
Biosecurity
Good biosecurity is critical in preventing and managing
disease which is why Huon has been actively involved in
the joint industry-government review and implementation
of improved biosecurity measures.
Huon’s decision to shift the focus of operations to Storm
Bay was reinforced by the benefits provided by tighter
management of biosecurity across its operations. Huon
now operates in three distinct biosecurity zones – Storm
Bay; the Huon River and D’Entrecasteaux Channel;
Macquarie Harbour. To ensure good biosecurity,
different yearclass of fish have always been held on
separate lease sites. The reorganisation of our leases last
year allowed for greater distance separation between
different year class fish. Huon’s separation of smolt and
growout by lease and zone is illustrated on page 17.
Disease management
Huon’s Veterinary Health Plan (VHP) is a living
document that underpins good fish health and welfare
practices to ensure the prevention of diseases. Huon
also utilises in-situ net cleaners to minimise the build-up
of biofouling on the Fortress Pens. This ensures high
water flow through pens, maintaining maximum oxygen
levels to fish.
Huon was the first company globally to use a wellboat
for the purpose of bathing fish in freshwater and
now has two wellboats in service both designed to
Huon specifications.
Both these vessels have supported Huon’s proactive
approach to managing risk – by enabling safe farming
operations in more exposed sites, improving operational
efficiency (more fish can be bathed at one time) and
minimising fish losses by treating fish more quickly and
efficiently (reducing AGD impact).
Additional information on our fish welfare practices is
included in the sustainability section of this report starting
on page 32.
Fish feed availability and formulation
Over 50% of the input costs to salmon production is feed.
Huon mitigates this risk by maintaining multiple sources of
feed supply which are all sourced from Tasmanian-based
suppliers. This reduces the risk of relying on imports and
supports the supply chains for Tasmanian primary producers.
With access to regular supply of the right type of feed,
production is not compromised.
Huon works closely and continuously with our feed
suppliers to ensure our fish are getting the best possible
diet, more detail on our fish feed formulation can be
found on page 38 of this report.
Climate change
Huon recognises that climate change is a significant risk for
all businesses and communities, as such Huon has proactively
taken steps to identify those risks and then work to manage
and mitigate the impact of climate change on our operations.
The key risks that Huon has identified to our operations are:
— higher ocean temperatures; warm summer temperatures
cause slower growth in salmon;
— increased extreme weather events, particularly storms
impacting our high-energy marine environments
increasing the risk for infrastructure damage; and
— lack of freshwater for nursery operations due to reduced
or infrequent rainfall.
This is being managed by:
— a joint feed trial with BioMar to create an easily
digestible summer diet;
— selective breeding programs for thermotolerant fish;
— continuous innovation in our farming infrastructure to
withstand significant weather events; and
— continuous investment in water recycling activities.
For more information on these activities refer to our
sustainability section on page 32 of this report.
Predator threats
Huon’s operations attract wildlife that prey on salmon,
particularly birds and seals. Huon’s solution to this is good
barrier technology to restrict access to the pens both below
and above the water line.
When introduced, Huon’s in-house developed Fortress
Pens were a world first. Key elements of the design include
a fully enclosed walkway; nets made from the same
material used to make bullet proof vests to withstand the
buffeting Tasmanian winds; and a design which minimises
predation from seals and birds by restricting their access
to the pens below and above the waterline.
Huon also utilises in-situ net cleaners to minimise the
build-up of biofouling on the Fortress Pens, this removes
excess weight and mitigates the risk of holes and tears
which can result in wildlife incursion or fish escape. More
detail on our wildlife interactions during the year can be
found on page 36 of this report.
Risk Management
Agricultural and Environmental Risks
Huon has been farming sustainably for 35 years and, as with any farming endeavour, it is subject to a range of events with
outcomes that can impact the supply of smolt, fish growth and mortality. The most effective strategy to minimise exposure to
such risk is good animal husbandry which demands care and innovation throughout the lifecycle of the fish. Preventing disease
and the effective management of outbreaks, if they do occur, is integral to Huon’s farming methods. Huon undertakes a range
of measures to proactively and successfully manage its agricultural and environmental risks.
69
Stakeholder engagement and responding
to misinformation
Huon encourages engagement with the community
and others connected to, or invested in, activities
associated with Huon’s operational footprint. However,
misinformation about our operations and the aquaculture
industry is growing; risking increasing uncertainty within
our communities.
Dedicated teams at Huon proactively manage
relationships with all stakeholders including government,
regulators, investors, suppliers, customers, and
communities. We believe the best way to counter
misinformation and educate our stakeholders about
our sustainable farming practices is through transparent
communication.
We manage this through:
— transparent complaint management with
evidence-based data regularly published on our
website in a bid to better inform stakeholders;
— social media campaigns including videos and facts
about Huon’s approach to fish farming;
— engaging with education providers to educate
and attract the next generation of salmon farmers;
— dedicated phone, email and web forms for
community feedback and questions;
— working with other Tasmanian salmon producers
as part of the Tasmanian Salmonid Growers
Association (TSGA) to communicate an industry-
wide information campaign across various media
platforms including print and online; and
— Huon are planning to release our first Sustainability
Report next year, including specific targets and
strategies to further increase the transparency of our
operations, impacts and sustainable strategy.
For more information on our operations, we encourage
you to visit Huon’s Sustainability Dashboard at
dashboard.huonaqua.com.au or our operational fact
sheets at huonaqua.com.au/our-approach/fact-sheets.
Regulatory and permitting risk
Changes in government policy may affect Huon’s
business operations and financial position. The permits
held by Huon to operate in the Tasmanian waterways
are also subject to the granting and approval of relevant
governing bodies and are subject to Huon remaining
compliant with the permit terms and conditions.
Huon monitors all changes in relevant regulations and
engages with regulators and governing bodies to ensure
policy and law changes are understood. Huon also has
strict processes and standard operating procedures
regarding its operations (both owned and leased) in
order to minimise the risk of losing tenure in these sites.
Animal welfare
Huon’s approach to fish welfare is holistic and
proactive; healthy fish are essential to producing the
top-quality products associated with our brand.
Key risk management processes include:
— very low stocking densities, with a maximum of
1% fish density;
— good fallowing practices to allow for benthic
recovery;
— remotely operated underwater vehicle (ROV)
inspections every month with results provided to
the environmental regulator;
— development and use of national award-winning
pellet-recognition software to ensure fish are
only fed to-appetite. This reduces food waste and
improves the health of the sea floor improving the
health of the fish;
— our own veterinary team who maintain Huon’s
VHP and oversee fish welfare across both freshwater
and marine operations;
— collaboration with DPIPWE to develop a fish
vaccination program to control five serious disease
pathogens;
— remotely operated feeding with feed spreader that
ensures less dominant fish equal access to food, this
replicates natural fish behaviour; and
— lift-up systems in Fortress Pens, automatically
retrieving fish mortalities to reduce the risk of disease
spread or wildlife attraction.
Additional detail on our animal welfare procedures is
included on page 37 of this report.
Social Risks
As a fully vertically-integrated company, Huon’s compliance obligations span across all aspects of our operations. At the same
time, Huon has a responsibility to ensure that our activities are understood by the communities in which we operate, and that
our communication is transparent and authentic. Being part of any community brings with it a responsibility to do things that will
help keep the community safe and connected, as such Huon undertakes a range of measures to proactively and successfully
manage its social risks.
70
Risk Management
continued
Huon Aquaculture Group Limited
Annual Report 2021
Market disruption due to COVID-19
The key risks posed to Huon from the ongoing global
COVID-19 pandemic include operational, safety and
market disruption. Huon has adhered to government
guidelines with no disruptions to the ongoing operations
of the business.
Huon’s priority during this time was the safety and
welfare of our people; we are pleased to confirm that
there have been no confirmed cases of COVID-19 within
our workforce.
The Australian food services sector of the wholesale
market has been disrupted by the closure or severe
restrictions placed on the operations of restaurants,
clubs and the food catering industry, as a result of
government-imposed lockdowns. Access to international
salmon export markets was also interrupted due to the
ongoing disruption to international air freight services.
Huon’s diversified presence in both the domestic and
international markets has enabled it to react and adapt
to the changing conditions with growth in Huon’s own
e-commerce business continuing to perform well. Huon
will continue to monitor the on-going COVID-19 situation.
As both national and global vaccination rates increase
it is hoped that the likelihood and impact of future
lockdowns will be minimised.
Pricing and demand
Huon’s profitability and the market value of its biological
assets are sensitive to salmon prices in both the domestic
and international market. Prices are dependent on short-
and long-term supply and demand variations, and market
conditions. This risk is managed by:
— Huon’s diverse customer channel through customer
supply contracts and category marketing investment;
— diversification of revenue channels by selling into
the wholesale market, the retail sector (both domestic
and offshore via contracted sales), as well as the
export channel; and
— diversification of products with Salmon to Go
aimed at everyday affordable and convenient meals
through to Chef Series, as well as the introduction of
pet treats to our product range.
The quality of Huon Salmon is central to our brand and
reputation. Huon mitigates the risk of quality control issues
through the implementation of rigorous quality assurance
systems and continuous product testing.
Cyber security risk
Cyber risk is increasing as technology becomes more
embedded in our everyday operations and those of our
customers.
Huon manages this risk by having a dedicated IT team who
implement and maintain cyber security systems and provide
training to our people on data security protocols.
Trade embargos affecting export markets
During the year, China has implemented trade blocking
manoeuvres against a number of Australian industries.
Whilst the salmon and trout industry has not yet been
directly impacted by restrictions or tariffs this remains a
risk to the industry.
Huon identified its overreliance on the China export
market and diversified into a wider range of export
countries including North America where market interest
and volume growth was strong. Historically Huon’s
exports to China have averaged around 75% of exported
volume, this has now reduced to 30%. Locally, Huon
has also focused on driving the domestic consumption
of salmon within Australia to boost demand from the
domestic retail market.
Fuel and energy prices
Huon is exposed to energy price risk through the use of
electricity at freshwater and processing operations as well
as fuel for marine operations, particularly the vessel fleet.
There is a company wide focus to reduce the costs of
energy from the supply side where possible; the majority
of electricity consumption is from the Tasmanian
hydro-electric scheme. Huon is also involved in the Blue
Economy – Cooperative Research Centre, partnering with
other research institutions to examine current and future
renewable energy options.
Foreign exchange and interest rate risk
As Huon’s operations in the export market increases, the
Company is increasingly exposed to fluctuations in foreign
exchange rates. Huon is also exposed to movements in
interest rates as the long-term borrowings held by Huon
are subject to floating interest rates.
Huon enters into derivative arrangements to hedge
the exposure of changes in future exchange or interest
rates and provide certainty on the future cash flows of the
business. More detail on the nature of these transactions
is in note 21.
Liquidity and funding
The aquaculture industry requires significant capital
investment to build future production capacity and
innovative aquaculture processes. Huon relies on cash
flows from operating activities, long-term debt and
offerings of equity securities to finance this investment.
Huon’s Board has approved a financial risk
management policy covering areas such as liquidity,
investment management and debt management including
the process for capex budget and spend approval.
Market and Economic Risks
The key market risks relate to the ability to maintain supply of product, market disruption factors, consumer confidence in the
quality and safety of Huon’s product, and regulatory and financial risks that could impact the viability of Huon’s operations.
This is successfully managed in a number of ways.
71
Workplace Health and Safety
Providing a workplace that is safe and ensuring that staff
return home un-injured each day is a fundamental duty of
all employers. It is also essential for attracting and retaining
staff and providing an environment which supports learning,
team work and innovation. Across the business, strengthening
automation and use of technology has helped manage our
operational safety risks, we continue to invest in this going
forward to make further improvements.
Equipment and work processes
Huon’s approach to farming has developed, enabling
us to provide safer operational environments as follows:
— Fortress Pens protect staff from interactions with
seals by creating fully enclosed walkways;
— remote net cleaning and repair reduces the need
for divers to spend time in the water reducing wildlife
interactions;
— introduction of our Hazard Reporting App making
it easier for our people to report incidents or hazards
and improving the reporting and assessment of these
incidents so we can continue to improve the way we
operate;
— review of OHS Policies, Procedures and SOP’s
with a focus on High Risk Work in alignment with
ISO45001:2018. These documents are made
available to all employees via Huon’s OHS Portal
on the intranet;
— onsite manual handing program provided by an
exercise physiologist to ensure that correct physical
techniques are used when undertaking manual tasks;
— a review of pre-employment medical assessments
to ensure potential employees are physical suited to
the inherent role requirements;
— the introduction of unmanned feed barges moored
onsite at leases together with automated feeding
controlled from our Hobart control centre, reduces
the number of vessel movements and time employees
spend on water; and
— continuous modification to processes has included the
introduction of automation and robot packers at
our processing facilities, minimising manual handling.
Training, professional development
and policies
Development of staff through training, increases
productivity, reduces the risk of injury and accidents, and
increases the rate of staff engagement and retention.
Huon develops its workforce through:
— participation in development programs including
undergoing VET sector training courses specific to
their role;
— Apprenticeship to Success program to provide
up-skilling of staff who wish to develop their industry
knowledge and skills; and
— a company-wide employee engagement survey
was undertaken to gather feedback from our people
on what they need from us.
In addition, general literacy, numeracy and digital
literacy support is offered to all employees and Huon
continues to engage with the tertiary education sector to
identify future workforce development requirements.
In the next year, we will update our diversity and
inclusion training and leadership courses for further
development of our people.
72
Risk Management
continued
Huon Aquaculture Group Limited
Annual Report 2021
Huon Aquaculture Group Limited
Annual Report 2021
Consolidated financial statements
Consolidated income statement
74
Consolidated statement of comprehensive income
75
Consolidated balance sheet
76
Consolidated statement of changes in equity
77
Consolidated statement of cashflows
78
Notes to the consolidated financial statements
About this report
Basis of preparation
79
Critical estimates and judgements
79
Principles of consolidation
79
Application of new and revised Accounting Standards
80
Performance
1.
Revenue
82
2.
Other Income
82
3.
Profit for the year before tax
83
4.
Biological assets
84
5.
Earnings per share (EPS)
86
6.
Dividends
87
Investment in growth strategy
7.
Property, plant and equipment
88
8.
Other non-current assets
90
9.
Leases
91
Net debt and working capital
10.
Notes to the statement of cashflows
93
11.
Trade and other receivables
94
12.
Inventories
95
13.
Other assets
96
14.
Trade and other payables
96
15.
Borrowings
97
16.
Issued capital
99
17.
Share-based payment reserve
100
18.
Profit distribution reserve
100
Other
19.
Investments in financial assets
101
20.
Derivative assets
101
21.
Fair value measurements
102
22.
Financial risk management
104
23.
Parent information
108
24.
Deed of cross guarantee
109
25.
Income tax
110
26.
Key management personnel compensation
113
27.
Share-based payment
113
28.
Related party transactions
116
29.
Remuneration of auditors
117
30.
Goodwill
118
31.
Impairment
119
32.
Other intangible assets
121
33.
Interests in subsidiaries
122
34.
Derivative liabilities
122
35.
Provisions
123
36.
Other liabilities
124
37.
Contingent liabilities and contingent assets
124
38.
Segment information
125
39.
Subsequent events
125
40.
Company details
125
73
Signed reports
Directors’ Declaration
126
Independent Auditor’s Report to the Members
127
Shareholder information
134
Financial Report
For the year ended 30 June 2021
Consolidated income statement
For the year ended 30 June 2021
Note
Consolidated
2021
$’000
Consolidated
2020
$’000
Revenue from operations
1
426,408
339,869
Other income
2
23,401
13,594
Expenses
Fair value adjustment of biological assets
4
(15,959)
1,507
Changes in inventories of finished goods and work in progress
(28,390)
59,896
Raw materials and consumables used
(214,189)
(218,997)
Employee benefits expense
3
(102,081)
(80,764)
Depreciation and amortisation expense
3
(50,230)
(52,089)
Impairment losses
31
(113,958)
–
Finance costs
3
(12,667)
(8,370)
Freight & distribution expenses
(65,956)
(31,764)
Other expenses
(29,024)
(21,588)
Total expenses
(632,454)
(352,169)
(Loss)/profit before income tax expense
(182,645)
1,294
Income tax benefit
25
54,576
3,621
Net (loss)/profit for the period attributable to members of the Company
(128,069)
4,915
Note
Cents
per share
2021
Cents
per share
2020
Earnings per ordinary share
Basic (cents per share)
5
(120.79)
5.63
Diluted (cents per share)
5
(120.79)
5.63
The number of shares used to determine statutory and underlying earnings per ordinary share (EPS) is disclosed in note 5 to
the accounts.
The above consolidated income statement should be read in conjunction with the accompanying notes.
Annual Report 2021
74
Huon Aquaculture Group Limited
Huon Aquaculture Group Limited
Annual Report 2021
Consolidated
2021
$’000
Consolidated
2020
$’000
(Loss)/profit for the period
(128,069)
4,915
Other comprehensive income
–
–
Total comprehensive (loss)/income for the period (net of tax)
(128,069)
4,915
Total comprehensive (loss)/income attributable to:
Owners of Huon Aquaculture Group Limited
(128,069)
4,915
(128,069)
4,915
Consolidated statement of comprehensive income
For the year ended 30 June 2021
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
75
Note
Consolidated
2021
$’000
Consolidated
2020
$’000
Assets
Current assets
Cash and cash equivalents
10
5,877
5,934
Trade and other receivables
11
39,951
24,472
Inventories
12
20,741
19,321
Biological assets
4
218,252
264,021
Derivative assets
20
–
2,255
Current tax receivable
25
3
382
Other assets
13
13,554
12,844
Total current assets
298,378
329,229
Non-current assets
Investments in financial assets
19
1,996
1,342
Property, plant and equipment
7
229,800
305,581
Right of use assets
9
97,799
162,590
Other non-current assets
8
7,969
8,411
Intangible assets
30,32
–
3,325
Deferred tax assets
25
1,957
–
Total non-current assets
339,521
481,249
Total assets
637,899
810,478
Liabilities
Current liabilities
Trade and other payables
14
71,080
82,865
Borrowings
15
12,469
23,413
Lease liabilities
9
16,691
16,777
Derivative liabilities
34
2,585
3,025
Current tax liabilities
25
–
–
Provisions
35
10,878
8,688
Other current liabilities
36
1,017
3,534
Total current liabilities
114,720
138,302
Non-current liabilities
Borrowings
15
126,680
149,772
Lease liabilities
9
143,153
152,459
Deferred tax liabilities
25
–
53,186
Provisions
35
6,008
5,506
Other non-current liabilities
36
1,621
3,022
Total non-current liabilities
277,462
363,945
Total liabilities
392,182
502,247
Net assets
245,717
308,231
Equity
Contributed equity
16
230,607
164,999
Other reserves
17
757
810
Profit distribution reserve
192,805
–
Retained earnings
(178,452)
142,422
Total equity
245,717
308,231
Consolidated balance sheet
As at 30 June 2021
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
Annual Report 2021
76
Huon Aquaculture Group Limited
Huon Aquaculture Group Limited
Annual Report 2021
Note
Contributed
Equity
$’000
Retained
Earnings
$’000
Profit
Distribution
Reserve
$’000
Share-based
Payment
Reserve
$’000
Total
Equity
$’000
Balance at 1 July 2019
164,302
148,494
–
1,324
314,120
Adjustment on adoption of AASB 16
(net of tax)
–
8,367
–
–
8,367
Restated total equity at beginning
of period
164,302
140,127
–
1,324
305,753
Profit for the period
–
4,915
–
–
4,915
Total comprehensive income for
the year, net of tax
–
4,915
–
–
4,915
Contributions of equity, net of
transactions costs
–
–
–
–
–
Issue of shares pursuant to executive
long-term incentive plan
17
697
–
–
(697)
–
Share-based payment expense
3(b)
–
–
–
183
183
Dividends paid or provided for
6
–
(2,620)
–
–
(2,620)
Balance at 30 June 2020
164,999
142,422
–
810
308,231
Note
Contributed
Equity
$’000
Retained
Earnings
$’000
Profit
Distribution
Reserve
$’000
Share-based
Payment
Reserve
$’000
Total
Equity
$’000
Balance at 1 July 2020
164,999
142,422
–
810
308,231
Transfer to profit distribution reserve
18
–
(192,805)
192,805
–
–
(Loss)/profit for the period
–
(128,069)
–
–
(128,069)
Total comprehensive income for
the year, net of tax
–
(128,069)
–
–
(128,069)
Contributions of equity, net of
transactions costs
16
64,680
–
–
–
64,680
Issue of shares pursuant to executive
long-term incentive plan
17
–
–
–
(46)
(46)
Issue of shares under Huon Employee
Share Scheme
16(b)
928
–
–
–
928
Share-based payment reversal
3(b)
–
–
–
(7)
(7)
Dividends paid or provided for
6
–
–
–
–
–
Balance at 30 June 2021
230,607
(178,452)
192,805
757
245,717
Consolidated statement of changes in equity
For the year ended 30 June 2021
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
77
Consolidated statement of cashflows
For the year ended 30 June 2021
Note
Consolidated
2021
$’000
Consolidated
2020
$’000
Cash flows from operating activities
Receipts from customers
432,220
362,080
Payments to suppliers and employees
(422,481)
(344,709)
9,739
17,371
Interest received
7
115
Interest and other costs of finance paid
(4,825)
(6,626)
Interest on lease liabilities
(8,273)
(5,883)
Income tax (paid)/refunded
378
3,399
Net cash inflow/(outflow) from operating activities
10
(2,974)
8,376
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
25
–
Payments for property, plant and equipment
(9,062)
(21,554)
Payments for other assets
(654)
–
Net cash inflow/(outflow) from investing activities
(9,691)
(21,554)
Cash flows from financing activities
Proceeds from issues of shares
66,000
–
Payment for share issue costs
(1,886)
–
Proceeds from borrowings
17,522
37,834
Repayment of borrowings
(51,558)
(6,043)
Payment of lease liabilities
(17,424)
(12,670)
Dividends paid to company’s shareholders
–
(2,620)
Payment of shares for employee share plan
(46)
–
Net cash inflow/(outflow) from financing activities
12,608
16,501
Net increase/(decrease) in cash held
(57)
3,323
Cash and cash equivalents at beginning of financial year
5,934
2,611
Cash and cash equivalents at end of financial year
10
5,877
5,934
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
Annual Report 2021
78
Huon Aquaculture Group Limited
About this report
These consolidated financial statements and notes
represent those of Huon Aquaculture Group Limited and
Controlled Entities (the ‘Consolidated Group’). Huon
Aquaculture Group Limited is a company incorporated in
Australia, and whose shares are publicly traded on the
Australian Securities Exchange (ASX).
The separate financial statements and notes of Huon
Aquaculture Group Limited have been presented within this
financial report as an individual Parent Entity (‘Parent Entity’).
The financial statements were authorised for issue on
26 August 2021 by the Directors of the Company.
All press releases and other information are available on
our website www.huonaqua.com.au.
Basis of preparation
These general purpose financial statements have been
prepared in accordance with the Corporations Act 2001,
Australian Accounting Standards and Interpretations of
the Australian Accounting Standards Board and also
comply with International Financial Reporting Standards
as issued by the International Accounting Standards
Board. The Consolidated Group is a for-profit entity for
financial reporting purposes under Australian Accounting
Standards. Material accounting policies adopted in the
preparation of these financial statements are presented
below and have been consistently applied unless
stated otherwise.
The financial statements except for cash flow information,
have been prepared on an accruals basis and are based
on historical costs (unless otherwise stated).
The functional currency of each group entity is measured
using the currency of the primary economic environment
in which that entity operates. The consolidated financial
statements are presented in Australian dollars which is the
Parent Entity’s functional and presentation currency.
Critical estimates and judgements
The areas involving significant estimates or judgements are:
— Borrowings (forecast for compliance with covenants –
note 15)
— Recognition of deferred tax asset and carried-forward
tax losses (note 25)
— Estimation uncertainties and judgements made in
relation to lease accounting (note 9)
— Impairment of assets (note 31)
— Fair value less costs to sell of biological assets (note 4)
The Group has prepared the financial statements for the
year ended 30 June 2021 on a going concern basis,
this assumes continuity of current business activities and
the realisation of assets and settlement of liabilities in the
ordinary course of business. The Group’s business activities,
together with factors which the Directors consider are
likely to affect its development, financial performance
and financial position are set out in the Chairman’s and
Managing Director’s Review and the Review of Operations
on pages 2 to 4 of this report. The key risks and the Group’s
risk management processes are also discussed on pages
69 to 72 of this report.
Specific consideration of the impact COVID-19 has had
on the Group’s accounting policies has been documented
in the following notes:
— Government grants – note 2 (Other Income) and
note 36 (Other liabilities)
— Credit risk – note 11 (Trade Receivables)
— Inventory valuation – note 12 (Inventories)
— Liquidity risk – note 15 (Borrowings) and note 22
(Financial Risk Management)
— Impairment assessment of non-financial assets –
note 31 (Impairment)
Principles of consolidation
The consolidated financial statements incorporate the
assets and liabilities of all subsidiaries of Huon Aquaculture
Group Limited (Parent Entity) as at 30 June 2021 and
the results of all subsidiaries for the year then ended.
Huon Aquaculture Group Limited and its subsidiaries
together are referred to in this financial report as the
Consolidated Group.
Subsidiaries are all entities over which the group has control.
The group controls an entity when the group is exposed to,
or has rights to, variable returns from its involvement with
the entity and has the ability to affect those returns through
its power to direct the activities of the entity. Subsidiaries
are fully consolidated from the date on which control is
transferred to the group. They are deconsolidated from the
date that control ceases.
The acquisition method of accounting is used to account
for business combinations by the group.
Intercompany transactions, balances and unrealised gains
on transactions between group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with the
policies adopted by the group.
Notes to the Consolidated Financial Statements
For the year ended 30 June 2021
79
Application of new and revised Accounting Standards
Amendments to AASBs and the new Interpretation that are mandatorily effective for the current year:
Amendments to AASBs and the new Interpretation that are mandatorily effective for the current year:
In the current year, the Consolidated Group has applied a number of amendments to AASB’s and new Interpretations issued
by the Australian Accounting Standards Board (AASB) that are mandatorily effective for an accounting period that begins on
or after 1 July 2020, and therefore relevant for the current year end.
The Group adopted all of the following new and revised Standards and Interpretations issued by the AASB that are relevant
to its operations and effective for the current annual reporting period.
New and revised Standards and Interpretations effective for the current year relevant to the Group include:
(i) AASB 2018-6 Amendments to Australian Accounting Standards – Definition of a Business
The adoption of this standard did not have any impact on the disclosures or the amounts recognised in the Group’s annual
financial report.
(ii) AASB 2018-7 Amendments to Australian Accounting Standards – Definition of Material
The adoption of this standard did not have any impact on the disclosures or the amounts recognised in the Group’s annual
financial report.
(iii) AASB 2019-1 Amendments to Australian Accounting Standards – References to Conceptual Framework
The adoption of this standard did not have any impact on the disclosures or the amounts recognised in the Group’s annual
financial report.
(iv) AASB 2019-3 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform
The adoption of this standard did not have any impact on the disclosures or the amounts recognised in the Group’s annual
financial report.
(v) AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of the Effect of New IFRS Standards
Not Yet Issued in Australia
The adoption of this standard did not have any impact on the disclosures or the amounts recognised in the Group’s annual
financial report.
(vi) AASB 2019-7 Amendments to Australian Accounting Standards – Disclosure of GFS Measures of Key Fiscal
Aggregates and GAAP/GFS Reconciliations
The adoption of this standard did not have any impact on the disclosures or the amounts recognised in the Group’s annual
financial report.
The standards did not require any retrospective adjustments.
Huon Aquaculture Group Limited
Annual Report 2021
80
Notes to the financial statements
continued
Standards and Interpretations in issue not yet adopted:
Effective for annual
reporting periods
beginning on or after
Expected to be
initially applied in the
financial year ending
AASB 2020-8 ‘Amendments to Australian Accounting Standards –
Interest Rate Benchmark Reform – Phase 2’
1 January 2021
30 June 2022
AASB 2014-10 ‘Amendments to Australian Accounting Standards
– Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture’
1 January 2022
30 June 2023
AASB 2015-10 ‘Amendments to Australian Accounting Standards –
Effective Date of Amendments to AASB 10 and AASB 128’
1 January 2022
30 June 2023
AASB 2017-5 ‘Amendments to Australian Accounting Standards
– Effective Date of Amendments to AASB 10 and AASB 128
Editorial Corrections’
1 January 2022
30 June 2023
AASB 2020-3 ‘Amendments to Australian Accounting Standards –
Annual Improvements 2018-2020 and Other Amendments
1 January 2022
30 June 2023
AASB 2020-1 ‘Amendments to Australian Accounting Standards –
Classification of Liabilities as Current or Non-Current
Deferred by – AASB 2020-6 ‘Amendments to Australian
Accounting Standards – Classification of Liabilities as Current or
Non-Current – Deferral of Effective Date
1 January 2023
30 June 2024
AASB 2020-5 ‘Amendments to Australian Accounting Standards –
Insurance Contracts
1 January 2023
30 June 2024
There are no other standards or interpretations that are not yet effective and that would be expected to have a material impact
on the entity in the current or future reporting periods and on foreseeable future transactions.
81
1. Revenue
Sale of Goods
Domestic
$’000
Export
$’000
Total
$’000
2021
Segment Revenue
265,823
160,585
426,408
Revenue from external customers
265,823
160,585
426,408
Timing of revenue recognition
At a point in time
265,823
160,585
426,408
265,823
160,585
426,408
2020
Segment Revenue
225,657
114,212
339,869
Revenue from external customers
225,657
114,212
339,869
Timing of revenue recognition
At a point in time
225,657
114,212
339,869
225,657
114,212
339,869
Revenue recognition and measurement
Sale of goods
The Consolidated Group hatches, farms, processes, markets and sells Atlantic salmon and ocean trout. Sales are recognised
when control of the products has been transferred, being when the products are delivered to the customer.
Delivery occurs when the products have been delivered to their final destination, the risk of loss and obsolescence has been
transferred and acknowledged by the customer.
Revenue from the sale of goods is measured at the fair value of the consideration received or receivable after taking into
account any trade discounts and volume rebates allowed. Amounts relating to future performance obligations under Huon’s
loyalty program are deferred and recognised when the obligation is performed (i.e. at a point in time). Amounts are estimated
using judgement, historical experience and the specific terms of the agreement with the customer to determine the amount and
timing of revenue recognised.
All revenue is stated net of the amount of goods and services tax.
2. Other income
Consolidated
2021
$’000
Consolidated
2020
$’000
Interest income
7
115
Supplier rebates and freight income
6,948
5,423
Government grants
11,378
4,181
Lease concessions
2,492
–
Other
2,576
3,875
23,401
13,594
Revenue recognition and measurement
Interest income
Interest income is recognised using the effective interest method. When a receivable is impaired, the Consolidated Group
reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective
interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is
recognised using the original effective interest rate.
Rebates and freight income
Rebates and freight income are recognised as income when the right to receive the payment has been established. This is
generally when the Company has satisfied the necessary regulatory requirements. Rebates received that are recognised as
Other Income do not relate to the purchase of inventory; inventory-related rebates are recognised as a reduction in the Group’s
cost of raw materials and consumables used.
Performance
Huon Aquaculture Group Limited
Annual Report 2021
82
Notes to the financial statements
continued
2. Other income (continued)
Government grants
Government grants are assistance by the government (including JobKeeper) in the form of transfers of resources to the
Consolidated Group in return for past or future compliance with certain conditions relating to the operating activities of the
Consolidated Group. Government grants include government assistance where there are no conditions specifically relating to
the operating activities of the Consolidated Group other than the requirement to operate in certain regions or industry sectors.
Government grants relating to income are recognised as income over the periods necessary to match them with the related
costs which they are intended to compensate. Government grants that are receivable as compensation for expenses or losses
already incurred or for the purpose of giving immediate financial support to the Consolidated Group with no future related
costs are recognised as income of the period in which it becomes receivable.
Government grants relating to assets are treated as deferred income and recognised in profit and loss over the expected
useful lives of the assets concerned. Refer to note 36 for the impact of Government grants on the Group’s financial position. The
amounts recognised in the profit and loss statement in relation to JobKeeper are disclosed in note 3.
3. Profit for the year before tax
Profit before income tax from continuing operations includes the following items of income and expense:
Consolidated
2021
$’000
Consolidated
2020
$’000
(a) Significant income and expenses
The following significant income and expense items are relevant in explaining
the financial performance:
Income:
— JobKeeper wage subsidy
10,250
2,709
— Supplier rebates and claims
1,765
543
— Insurance and supplier claims
227
2,846
Expense:
— Impairment of non-current assets
113,958
–
— Legal fees
54
396
— Costs associated with strategic review
919
–
(b) Expenses
Gross Depreciation of non-current assets
32,518
36,359
Gross Depreciation of right of use assets
17,270
15,288
Gross Amortisation of non-current assets
442
442
Total Gross depreciation and amortisation
50,230
52,089
Depreciation – net impact recognised in changes in inventories
of finished goods and work in progress
6,530
(12,938)
Net depreciation and amortisation
56,760
39,151
Interest & fees
2,531
3,815
Interest rate swap
2,294
3,025
Lease interest
8,273
5,883
Total Gross finance costs
13,098
12,723
Lease interest – net impact recognised in changes in inventories
of finished goods and work in progress
(431)
(4,353)
Net finance costs
12,667
8,370
Employee benefits expense
102,081
80,581
Share-based payment expense
(7)
183
Total employee benefits costs
102,074
80,764
Net (gain)/loss on disposal of property, plant and equipment
41
–
83
4. Biological assets
Consolidated
2021
$’000
Consolidated
2020
$’000
Biological assets at fair value(i)
Opening balance
264,021
209,129
Increase due to production
341,749
350,407
Decrease due to sales/harvest/mortality
(371,559)
(297,022)
Movement in fair value of biological assets
(15,959)
1,507
218,252
264,021
Closing fair value adjustment on biological assets
12,106
28,065
Total weight of live finfish at sea (kg 000’s)
20,336
26,429
(i) Members of the Consolidated Group, Huon Aquaculture Company Pty Ltd and Springfield Hatcheries Pty Ltd grow fish from juveniles through to harvest.
Fair value measurement
30 June 2021
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Recurring fair value measurements
Biological Assets
–
–
218,252
218,252
Total financial assets recognised at fair value
–
–
218,252
218,252
30 June 2020
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
Recurring fair value measurements
Biological Assets
–
–
264,021
264,021
Total financial assets recognised at fair value
–
–
264,021
264,021
Fair value measurements using significant unobservable input
The following table summarises the quantitative information about the significant unobservable inputs used in level 3 fair value
measurements:
Description
30 June 2021
30 June 2020
Biological assets at fair value ($’000)
218,252
264,021
Unobservable Inputs
Adjusted weight of live finfish for fair
value measurement: 18,161 tonne
Price per HOG kg $12.83 to $13.33
Adjusted weight of live finfish for fair
value measurement: 23,361 tonne
Price per HOG kg $12.57 to $13.07
Relationship of Unobservable
Inputs to Fair value
Increase in price would increase
fair value
Increase in price would increase
fair value
Huon Aquaculture Group Limited
Annual Report 2021
84
Notes to the financial statements
continued
4. Biological assets (continued)
Recognition and measurement
Biological assets include broodstock, eggs, juveniles, smolt and live finfish. Biological assets are measured at fair value less
costs to sell in accordance with AASB 141. Where fair value cannot be reliably measured biological assets are measured at
cost less impairment losses.
For broodstock, eggs, juveniles, smolt and live finfish below 1kg, these biological assets are measured at cost, as the fair
value cannot be measured reliably. Live finfish between 1kg and 4kg are measured at fair value less cost to sell, including a
proportionate expected net profit at harvest. Live finfish above 4kg are measured at fair value less cost to sell.
The valuation is completed for each year class of finfish, for each species and, each significant location and takes into
consideration input based on biomass in sea, estimated growth rate and mortality. The market prices are derived from
observable market prices (when available), achieved prices and estimated future prices for harvest finfish. The prices are
reduced for harvesting costs and freight costs to market, to arrive at a net fair value at farm gate.
The change in estimated fair value is charged to the income statement on a separate line as fair value adjustment of biological
assets.
Sensitivity analysis – Biological assets
Based on the market prices and weights utilised at 30 June 2021, with all other variables held constant, the consolidated
group’s pre-tax profit for the period would have been impacted as follows:
— A pricing increase/decrease of $0.10 would have been a change of $1,206,274 higher/lower (2020: $1,993,164)
— A weight increase/decrease of 5% would have been a change of $605,292 higher/lower (2020: $1,403,239)
Critical accounting estimates
Biological assets are measured at fair value less costs to sell in accordance with AASB 141. Broodstock, eggs, juveniles, smolt
and live fish below 1kg are measured at cost, as the fair value cannot be measured reliably. Biomass beyond this is measured
at fair value in accordance with AASB 141, and the measurement is categorised into Level 3 in the fair value hierarchy, as the
input is an unobservable input. Live fish over 4kg are measured to fair value less cost to sell, while a proportionate expected
net profit at harvest is incorporated for live fish between 1kg and 4kg. The valuation is completed for each year class of finfish,
for each species and, each significant location.
The valuation is based on a market approach and takes into consideration inputs based on biomass in sea for each significant
location, estimated growth rates, mortality and market price. There is no effective market for live finfish produced by the
Consolidated Group so market price is determined on a model based on market prices for both salmon and trout, derived
from observable market prices (when available), achieved prices and estimated future prices for harvest finfish.
85
5. Earnings per share (EPS)
Consolidated
2021
cents per share
Consolidated
2020
cents per share
Statutory earnings per ordinary share
Basic (cents per share)(i)
(120.79)
5.63
Diluted (cents per share)(ii)
(120.79)
5.63
Underlying earnings per ordinary share (non-IFRS measure)
Basic (cents per share)(iii)
(13.31)
5.63
Diluted (cents per share)(iv)
(13.31)
5.63
(i) Basic statutory earnings per share is calculated by dividing the (loss)/profit attributable to owners of the company by the weighted average number
of ordinary shares of the company
(ii) Diluted statutory earnings per share is calculated by dividing the (loss)/profit attributable to owners of the company by the weighted average
number of ordinary shares outstanding including dilutive potential ordinary shares.
(iii) Basic underlying earnings per share is calculated by dividing the (loss)/profit attributable to owners of the company, adjusted to remove the
impairment expense incurred in the period, by the weighted average number of ordinary shares of the company
(iv) Diluted underlying earnings per share is calculated by dividing the (loss)/profit attributable to owners of the company, adjusted to remove the
impairment expense incurred in the period, by the weighted average number of ordinary shares outstanding including dilutive potential ordinary
shares.
Weighted average number of ordinary shares used as the denominator in the calculation of EPS
2021
2020
Number for basic EPS
106,030,126
87,372,077
Number for diluted EPS
106,030,126
87,372,077
Earnings used as the numerator in the calculation of EPS
2021
$’000
2020
$’000
Earnings for basic EPS(i)
(128,069)
4,915
Earnings for diluted EPS(i)
(128,069)
4,915
Earnings for underlying basic EPS(ii)
(14,111)
4,915
Earnings for underlying diluted EPS(ii)
(14,111)
4,915
(i) Earnings used in the calculation of statutory basic and diluted earnings per share is as per net (loss)/profit in the consolidated income statement.
(ii) Earnings used in the calculation of underlying basic and diluted earnings per share is as per net (loss)/profit in the consolidated income statement
adjusted to exclude the impact of the non-cash impairment.
Huon Aquaculture Group Limited
Annual Report 2021
86
Notes to the financial statements
continued
6. Dividends
Consolidated
2021
$’000
Consolidated
2020
$’000
Fully paid ordinary shares
Final dividend for the year ended 30 June 2020 of 0 cents (2019 – 3 cents)
per fully paid share
–
2,620
Interim dividend for the year ended 30 June 2021 of 0 cents (2020 – 0 cents)
per fully paid share
–
–
Total dividends provided for or paid
–
2,620
The Directors have not recommended the payment of a final ordinary dividend for the year ending 30 June 2021.
Consolidated
2021
$’000
Consolidated
2020
$’000
Franking credits available for subsequent reporting periods based on
a tax rate of 30% (2020: 30%)
5,992
5,989
5,992
5,989
The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax or the receivable of income
tax refund after the end of year,
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date, and
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The consolidated amounts include franking credits that would be available to the Parent Entity if distributable profits of
subsidiaries were paid as dividends.
Recognition and measurement
Provision is made for the amount of any dividend declared, being appropriately authorised and no longer at the discretion of
the Consolidated Group, on or before the end of the reporting period but not distributed at the end of the reporting period.
87
7. Property, plant and equipment
Note
Consolidated
2021
$’000
Consolidated
2020
$’000
Land and buildings
Freehold land
Cost
5,294
5,294
Total land
5,294
5,294
Buildings
Cost
68,682
67,552
Accumulated depreciation
(15,666)
(12,346)
Accumulated impairment losses
31
(649)
–
Total buildings
52,367
55,206
Total land and buildings
57,661
60,500
Plant and equipment
Plant and equipment
Cost
435,747
422,640
Accumulated depreciation
(217,237)
(188,272)
Accumulated impairment losses
31
(51,613)
–
Total plant and equipment
166,897
234,368
Capital work in progress
Cost
5,242
10,713
Total capital work in progress
5,242
10,713
Total plant and equipment
172,139
245,081
Total property, plant and equipment
229,800
305,581
Huon Aquaculture Group Limited
Annual Report 2021
88
Notes to the financial statements
continued
Investment in growth strategy
7. Property, plant and equipment (continued)
Land and Buildings
Plant and Equipment
Consolidated
Freehold
$’000
Buildings
$’000
Plant and
equipment
$’000
Capital work
in progress
$’000
Total
$’000
Year ended 30 June 2021
Cost
5,294
68,682
435,747
5,242
514,965
Accumulated depreciation
–
(15,666)
(217,237)
–
(232,903)
Accumulated impairment losses
–
(649)
(51,613)
–
(52,262)
Net carrying amount
5,294
52,367
166,897
5,242
229,800
Movement
Net carrying amount at the beginning of the year
5,294
55,206
234,368
10,713
305,581
Additions
–
–
663
–
663
Disposals and write-offs
–
–
(64)
–
(64)
Work in Progress Additions
–
–
–
8,399
8,399
Depreciation and amortisation
–
(3,321)
(29,197)
–
(32,518)
Acquisition in business combination
–
–
–
–
–
Capitalisation to asset categories
–
–
–
–
–
Transfers between classes
–
1,131
12,740
(13,870)
–
Impairment losses
–
(649)
(51,613)
–
(52,262)
Net carrying amount at the end of the year
5,294
52,367
166,897
5,242
229,800
Land and Buildings
Plant and Equipment
Consolidated
Freehold
$’000
Buildings
$’000
Plant and
equipment
$’000
Capital work
in progress
$’000
Total
$’000
Year ended 30 June 2020
Cost
5,294
67,552
422,640
10,713
506,199
Accumulated depreciation
–
(12,346)
(188,272)
–
(200,618)
Net carrying amount
5,294
55,206
234,368
10,713
305,581
Movement
Net carrying amount at the beginning of the year
5,294
58,044
237,312
19,736
320,386
Additions
–
–
598
–
598
Disposals and write-offs
–
–
–
–
–
Work in Progress Additions
–
–
–
20,956
20,956
Depreciation and amortisation
–
(3,307)
(33,052)
–
(36,359)
Acquisition in business combination
–
–
–
–
–
Capitalisation to asset categories
–
469
29,510
(29,979)
–
Transfers between classes
–
–
–
–
–
Net carrying amount at the end of the year
5,294
55,206
234,368
10,713
305,581
89
7. Property, plant and equipment (continued)
Capital expenditure commitment
Consolidated
2021
$’000
Consolidated
2020
$’000
Capital expenditure commitments
Plant and equipment
–
–
Capital expenditure projects
–
–
–
–
Payable:
Not longer than 1 year
–
–
Longer than 1 year and not longer than 5 years
–
–
Longer than 5 years
–
–
–
–
Recognition and measurement
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly
attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Consolidated Group and the cost of the item can be measured reliably.
Assets are derecognised when replaced. All other repairs and maintenance are charged to the profit and loss during the
period in which they are incurred.
Assets are depreciated on a straight line basis.
Land is not depreciated. The following estimated useful lives are used in the calculation of depreciation:
Class of Fixed Asset
Useful Life
Buildings
10 – 40 years
Leasehold improvements
5 – 20 years
Plant and equipment
2 – 30 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount. Refer to note 31 (Impairment) for more information on the impairment loss recognised in the
current financial year.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are
recognised in consolidated income statement when the item is derecognised. When revalued assets are sold, amounts included
in the revaluation surplus relating to that asset are transferred to retained earnings.
8. Other non-current assets
Consolidated
2021
$’000
Consolidated
2020
$’000
Marine farming sites
Cost
16,244
16,244
Accumulated amortisation
(8,275)
(7,833)
7,969
8,411
Recognition and measurement
Marine farming sites are recorded at cost. Amortisation is based on the term of the lease and the expense is charged through
the consolidated income statement. All marine sites are held for a term of 15–30 years.
Huon Aquaculture Group Limited
Annual Report 2021
90
Notes to the financial statements
continued
9. Leases
The Group has leases primarily in relation to buildings, marine leases and equipment including boats, motor vehicles and office
equipment.
Set out below are the carrying amounts of the right-of-use assets and movements during the financial year.
Right-of-use assets
Buildings
$’000
Plant and
Equipment
$’000
Marine
Leases
$’000
Total
$’000
Year ended 30 June 2021
Cost
30,277
149,456
5,630
185,363
Accumulated depreciation
(2,666)
(25,946)
(581)
(29,193)
Accumulated impairment losses
(7,655)
(48,814)
(1,902)
(58,371)
Net carrying amount
19,956
74,696
3,147
97,799
Movement
At 1 July 2020
21,587
135,395
5,608
162,590
Additions
7,458
3,724
21
11,203
Disposals
(14)
–
(339)
(353)
Depreciation and amortisation
(1,420)
(15,609)
(241)
(17,270)
Impairment losses
(7,655)
(48,814)
(1,902)
(58,371)
Net carrying amount at the end of the year
19,956
74,696
3,147
97,799
Right-of-use assets
Buildings
$’000
Plant and
Equipment
$’000
Marine
Leases
$’000
Total
$’000
Year ended 30 June 2020
Cost
22,943
148,640
5,949
177,532
Accumulated depreciation
(1,356)
(13,245)
(341)
(14,942)
Net carrying amount
21,587
135,395
5,608
162,590
Movement
At 1 July 2019 (restated)
20,738
62,348
5,720
88,806
Additions
2,205
86,638
229
89,072
Depreciation and amortisation
(1,356)
(13,591)
(341)
(15,288)
Net carrying amount at the end of the year
21,587
135,395
5,608
162,590
Set out below are the carrying amounts of the lease liabilities and the movements during the year.
2021
$’000
2020
$’000
Consolidated
At 1 July
169,236
99,429
Additions
8,032
82,477
Accretion of interest
8,273
5,883
Lease payments
(25,697)
(18,553)
Carrying amount at 30 June
159,844
169,236
Current
16,691
16,777
Non-current
143,153
152,459
159,844
169,236
91
9. Leases (continued)
There were no amounts recognised in profit or loss during the period in relation to leased assets and liabilities other than
depreciation, impairment and interest as disclosed above.
Recognition and Measurement
The Group leases various assets. Rental contracts are typically made for fixed periods, but may have extension options as
described below. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions.
The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right of use asset and a corresponding liability at the date at which the leased asset is available
for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to
profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability
for each period. The right of use asset is depreciated over the shorter of the asset’s useful life and the lease term on a straight
line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present
value of the following lease payments:
— Fixed payments (including in-substance fixed payments), less any lease incentives receivable
— Variable lease payment that are based on an index or a rate
— Amounts expected to the payable by the lessee under residual value guarantees.
The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the Group’s
incremental borrowing rate.
Right of use assets are measured at cost compromising the following:
— The amount of the initial measurement of lease liability
— Any lease payments made at or before the commencement date, less any lease incentives received
— Any initial direct costs, and
— Restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an
expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
Extension Options
Extension and termination options are included in a number of property and equipment leases across the Group. These terms
are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options
held are exercisable only by the Group and not by the respective lessor.
Critical Estimates
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is
exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying
asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included
in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an
extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered
may include the importance of the asset to the consolidated entity’s operations; comparison of terms and conditions to prevailing
market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption
to replace the asset. The Group reassesses whether it is reasonably certain to exercise an extension option, or not exercise a
termination option, if there is a significant event or significant change in circumstances.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than
its estimated recoverable amount. Refer to note 31 (Impairment) for more information on the impairment loss recognised in the
current financial year.
Huon Aquaculture Group Limited
Annual Report 2021
92
Notes to the financial statements
continued
10. Notes to the statement of cashflows
Consolidated
2021
$’000
Consolidated
2020
$’000
(a) Cash and cash equivalents as at the end of the financial year
as shown in the consolidated statement of cashflows is reconciled
to the related items in the consolidated balance sheet as follows:
Cash and cash equivalents
5,877
5,934
5,877
5,934
(b) Reconciliation of (loss)/profit for the period to net cash inflow
from operating activities:
(Loss)/profit for the period
(128,069)
4,915
Non-cash items
Depreciation and amortisation
50,229
52,089
Net (gain)/loss on disposal of non-current assets
41
–
Share-based payment expense
921
183
Impairment of non-current assets
113,958
–
(Increase)/decrease in assets
Trade and other receivables
(13,273)
3,797
Biological assets and inventories
44,349
(61,403)
Current tax receivable
379
1,196
Deferred tax assets
(1,391)
–
Prepayments
(710)
(3,676)
Increase/(decrease) in liabilities
Trade and other payables
(14,996)
7,187
Current tax liabilities
–
–
Deferred tax liabilities
(53,186)
(1,418)
Provisions
2,692
1,374
Other liabilities
(3,918)
4,132
Net cash inflow from operations
(2,974)
8,376
Recognition and measurement
For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held
at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are
readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
93
Net debt and working capital
11. Trade and other receivables
Consolidated
2021
$’000
Consolidated
2020
$’000
Trade receivables
37,231
22,168
Loss allowance
(285)
(237)
Goods and services tax (GST) receivable
2,900
2,266
Other receivables
105
275
39,951
24,472
Recognition and measurement
Trade receivables include amounts due from customers for goods sold and services performed in the ordinary course of
business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current
assets. All other receivables are classified as non-current assets. Trade and other receivables are initially recognised at fair
value and subsequently measured at amortised cost using the effective interest method, less any loss allowance.
The Group holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them
subsequently at amortised cost using the effective interest rate method. Details about the Group’s impairment policies and the
calculation of the loss allowance are provided below.
Fair values of trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount approximates to fair value.
Credit risk
The Consolidated Group has no significant concentration of credit risk with respect to any single counterparty or group of
counterparties other than those receivables specifically provided for and mentioned above. The main source of credit risk to the
Consolidated Group is considered to relate to the class of assets described as ‘trade and other receivables’.
The Consolidated Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables.
To measure expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the
days past due. The expected loss rates are based on historical loss rates, adjusted to reflect current information and credit
quality of the customer.
The Group’s exposure to credit risk is influenced by the individual characteristics of each customer. COVID-19 related business
closures, particularly in the hospitality sector, prompted the Group to review the key factors impacting the credit risk of its
customer base throughout the year and at the balance sheet date. The Group’s reassessment of credit risk for existing and new
customers included the following procedures:
— reassessment of approved trade credit terms of customers trading in perceived high risk and high COVID-19 impacted
industries such as hospitality and catering;
— review of standard payment terms for all customers;
— review of payment patterns of all customers to assess whether there was a material change in payment behaviour across
the customer base; and
— where increased risk was identified for customers, move to higher monitoring by credit team to ensure payments were
received in line with the credit terms.
No change in the payment capabilities or behaviours of our customers has been identified during the financial year that would
indicate the current expected credit loss methodology is insufficient, as such the ECL rates remain materially in line with the
prior comparative period. Management will continue to monitor customer behaviour and risk to ensure this assessment remains
relevant.
Trade receivables are written off where there is no reasonable expectation of recovery. Indicators that there is no reasonable
expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan and a failure to make
contractual payments in line with agreed terms.
Huon Aquaculture Group Limited
Annual Report 2021
94
Notes to the financial statements
continued
11. Trade and other receivables (continued)
Impairment losses on trade receivables are presented as net impairment losses within operating profit. Subsequent recoveries
of amounts previously written off are credited against the same line item.
On this basis, the loss allowance as at 30 June 2021 was determined as follows for trade receivables:
Current
More than
30 days
past due
More than
60 days
past due
Total
30 June 2021
Expected loss rate
0.28%
6.24%
48.6%
Gross carrying amount – Trade and other receivables
36,272
673
286
37,231
Loss allowance
104
42
139
285
30 June 2020
Expected loss rate
0.43%
6.58%
80%
Gross carrying amount – Trade and other receivables
20,454
76
180
20,710
Loss allowance
88
5
144
237
The closing loss allowances for trade receivables as at 30 June 2021 reconcile to the opening loss allowances as follows:
Consolidated
2021
$’000
Consolidated
2020
$’000
Loss allowance
(237)
(304)
Increase in loss allowance recognised in profit or loss during the year
(48)
(48)
Receivables written off as uncollectable
–
115
Loss allowance at year end
(285)
(237)
12. Inventories
Consolidated
2021
$’000
Consolidated
2020
$’000
Processed fish & finished goods
10,258
9,129
Feed and packaging
11,171
10,499
Inventory provisions
(688)
(307)
20,741
19,321
Recognition and measurement
Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct
materials, direct labour and an appropriate portion of variable and fixed overheads. Overheads are applied on the basis of
normal operating capacity. Costs are assigned on the basis of weighted average costs.
95
13. Other assets
Consolidated
2021
$’000
Consolidated
2020
$’000
Prepayments
9,970
8,984
Rights to smolt(i)
3,584
3,860
13,554
12,844
(i)
Includes rights to selective breeding program with Saltas.
14. Trade and other payables
Consolidated
2021
$’000
Consolidated
2020
$’000
Trade payables
64,490
71,141
Other payables
6,304
11,724
Contract liabilities
286
–
Goods and services tax (GST) payable
–
–
71,080
82,865
Recognition and measurement
Trade and other payables represent the liabilities for goods and services received by the Consolidated Group that remain
unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within
45 days of recognition of the liability.
Contract liabilities represent deferred revenue under the Group’s rewards scheme; Fresher Rewards. Assumptions have been
made regarding redemption behaviours and breakage based on historical experience and contractual terms.
Fair values of trade and other payables
Due to the short-term nature of trade and other payables, their carrying amount approximates to fair value.
Huon Aquaculture Group Limited
Annual Report 2021
96
Notes to the financial statements
continued
15. Borrowings
Consolidated
2021
$’000
Consolidated
2020
$’000
Current
Secured
Bank Loans
8,836
19,404
Other Loans
3,633
4,009
Unsecured
Other loans
–
–
12,469
23,413
Non-current
Secured
Bank Loans
126,634
149,726
Other Loans
–
–
Unsecured
Other loans
46
46
126,680
149,772
139,149
173,185
The weighted average effective interest rate on the bank loans is 1.51% per annum (2020: 2.45% per annum).
2021
$’000
2020
$’000
Limit
Undrawn
Balance
Limit
Undrawn
Balance
Amortising Term Loan
40,000
–
45,000
–
Term Loan
110,000
18,000
110,000
–
Term Loan (expires October 2021)(i)
20,000
20,000
20,000
15,000
Working Capital
15,000
11,000
15,000
5,500
Bank Guarantee
7,500
6,889
7,500
7,500
Uncommitted foreign exchange contracts
–
Discretionary
–
Discretionary
Uncommitted interest rate swaps
–
Discretionary
–
Discretionary
Aggregate Facility Limit
192,500
–
197,500
–
Aggregate Undrawn Balance
–
55,889
–
28,000
(i)
The term loan, which expires on 31 October 2021, is available to the Consolidated Group under certain terms and conditions and consent from
the lenders.
The borrowings are secured by means of a charge over the Consolidated Group’s total assets. The carrying amounts of assets
pledged as security are as recognised in the Consolidated Group’s balance sheet.
The Consolidated Group has facility agreements (“Facilities”) in place with its key banking partners to source debt and working
capital funding. The Facilities are reviewed periodically to maintain an optimal capital structure consistent with the Consolidated
Group’s Capital Management strategy.
The Facilities have a variable interest rate on amounts drawn calculated at a variable rate by reference to the Australian dollar
BBSY and are subject to line fees on drawn and undrawn facilities.
97
15. Borrowings (continued)
Facility Renewal:
The Consolidated Group entered into an agreement to refinance its debt facilities in October 2018 for a maximum of five years.
Loan covenants:
Under the terms of the Facilities, the Group was required to comply with the following financial covenants up to 31 December
2020:
— Equity Ratio (Tangible Net Worth/Total Tangible Assets) greater than 50% (measured annually on 30 June);
— Leverage Ratio (Net Debt/Operating EBITDA) less than 6.50 times at 31 December 2020 (measured quarterly on a rolling
12 month basis);
— Interest Cover Ratio (Operating EBITDA/Total Finance Costs) greater than 3.5 times at 31 December 2020 (measured quarterly
on a rolling 12 month basis); and
— Actual capital expenditure not more than 110% of the annual capital expenditure budget approved by financiers.
Revised banking agreement – February 2021:
In February 2021, the Group agreed to revised terms for its banking Facilities for the period 31 March to 31 December 2021.
Under these revised terms the loan covenants described above were suspended and replaced with a liquidity covenant to be
measured monthly.
Compliance with loan covenants:
The Group complied with the loan covenants throughout the reporting period.
Revised banking agreement – August 2021:
Subsequent to year end the revised terms for its banking Facilities were extended to 30 June 2022. Under these revised terms
the loan covenants described above were suspended and replaced with a liquidity covenant to be measured monthly for the
period 31 March 2021 to 30 June 2022.
Under the revised Facility agreement the headroom, based upon the Group’s cash flow forecasts over the required Liquidity
covenant, for the forecast period is a minimum of $15 million in any one month.
Under the revised terms of the Facilities the loan covenants described above will be reapplied on and from 30 September
2022 as follows:
— Equity Ratio (Tangible Net Worth/Total Tangible Assets) greater than 50% (measured annually on 30 June);
— Leverage Ratio (Net Debt/Operating EBITDA) less than 2.75 times (measured quarterly on a rolling 12 month basis);
— Interest Cover Ratio (Operating EBITDA/Total Finance Costs) greater than 3.5 times (measured quarterly on a rolling
12 month basis); and
— Actual capital expenditure not more than 110% of the annual capital expenditure budget approved by financiers.
Recognition and measurement
Borrowings
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at
amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised
in consolidated income statement over the period of the borrowings using the effective interest method. Fees paid on the
establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all
of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence
that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services
and amortised over the period of the facility to which it relates.
Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or
expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to
another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in the
consolidated income statement as other income or finance costs.
Borrowings are classified as current liabilities unless the Consolidated Group has an unconditional right to defer settlement of
the liability for at least 12 months after the reporting period.
Borrowing Costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale.
Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.
All other borrowing costs are recognised in consolidated income statement in the period in which they are incurred.
Huon Aquaculture Group Limited
Annual Report 2021
98
Notes to the financial statements
continued
15. Borrowings (continued)
Critical accounting estimates
The ability for the Consolidated Group to operate within the revised terms of the banking Facilities is based on the Group’s
forecast cash flow over the period. The Group’s forecast cash flows include assumptions relating to harvest volumes, sales
channel mix, price and freight costs. The cash flow forecast does not include any unforeseen impact on the biomass and
harvest volumes over the forecast period. A critical assumption is the ability to meet operating cash flow forecasts, which include
assumptions for channel mix and assumptions for price per kg for the domestic and export sales. If net sales price per HOG
kg or channel mix was to adversely impact cash flows, the Group has other cash flow initiatives to ensure headroom in the net
debt facilities is maintained.
Based on the forecast the Directors and management believe the Group will continue to trade within the limits of the available
Facilities and comply with the Group’s loan covenants.
16. Issued capital
Consolidated
2021
Consolidated
2020
Number
$’000
Number
$’000
(a) Ordinary share capital (fully paid):
Ordinary shares
109,872,959
230,607
87,545,281
164,999
The Company has authorised share capital amounting to 109,872,959 ordinary shares of no par value.
2021
2020
Note
Number
$’000
Number
$’000
(b) Movements in ordinary share capital
At the beginning of the reporting period
(i)
87,545,281
164,999
87,337,207
164,302
Issue of shares pursuant to executive long-term
incentive plan
–
–
208,074
697
Issue of shares to trustee of employee share plan
(ii)
309,348
928
–
–
Proceeds from contribution of equity (net of tax)
22,018,330
64,680
–
–
At the end of the reporting period
109,872,959
230,607
87,545,281
164,999
(i) Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
Ordinary shares participate in dividends and the proceeds on winding up of the Parent Entity in proportion to the number
of shares held.
The voting rights attaching to ordinary shares are, on a show of hands every member present at a meeting in person or by
proxy shall have one vote, and upon a poll each share shall have one vote.
There are no unquoted equity securities on issue.
There is no current on-market buy-back in respect of the Company’s ordinary shares.
(ii) In August 2020, all employees (excluding those under award schemes) were asked to take any agreed increase in their
annual remuneration in the form of shares in the Company instead of cash payments, with a total value of $928 thousand.
(c) Capital Management
Management controls the capital of the Consolidated Group in order to maintain a good debt to equity ratio, provide the
shareholders with adequate returns and ensure that the Consolidated Group can fund its operations and continue as a going
concern.
The Consolidated Group’s debt and capital include ordinary share capital and financial liabilities, supported by financial
assets.
There are no externally imposed capital requirements.
Management effectively manages the Consolidated Group’s capital by assessing the Consolidated Group’s financial risks
and adjusting its capital structure in response to changes in these risks and in the market. These responses include the
management of debt levels, distributions to shareholders and share issues.
There have been no changes in the strategy adopted by management to control the capital of the Consolidated Group since
the prior year.
99
16. Issued capital (continued)
Consolidated
2021
$’000
Consolidated
2020
$’000
Total borrowings
139,149
173,185
Less cash and cash equivalents
(5,877)
(5,934)
Net debt
133,272
167,251
Total equity
245,717
308,231
Gearing ratio
54.2%
54.3%
Recognition and measurement
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from
the proceeds.
Where any group company purchases the Company’s equity instruments, for example as the result of a share buy-back or a
share based payment plan, the consideration paid, including any directly attributable incremental costs (net of income taxes)
is deducted from equity attributable to the owners of Huon Aquaculture Group Limited as ordinary share capital until the
shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any
directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the
owners of Huon Aquaculture Group Limited.
17. Share-based payment reserves
Consolidated
2021
$’000
Consolidated
2020
$’000
Balance at the beginning of financial year
810
1,324
Shares issued under employee share plan
(46)
(697)
Share-based payment expense
(7)
183
Balance at the end of financial year
757
810
The share-based payment reserve is used to recognise the grant date fair value of performance rights issued to employees.
The performance rights are issued to the Chief Executive Officer and Management as part of the LTI plan. Refer to note 27 for
further details.
18. Profit distribution reserve
Consolidated
2021
$’000
Consolidated
2020
$’000
Balance at the beginning of financial year
–
–
Dividends paid
–
–
Transfer from retained earnings
192,805
–
Balance at the end of financial year
192,805
–
The profit distribution reserve consists of $2,256 thousand in Huon Aquaculture Group Limited and $190,549 thousand in
Huon Aquaculture Company Pty Ltd. The profit distribution reserve represents retained earnings preserved for future dividend
payments and not the amount of actual dividends that could be paid by the Parent entity.
Huon Aquaculture Group Limited
Annual Report 2021
100
Notes to the financial statements
continued
19. Investments in financial assets
Consolidated
2021
$’000
Consolidated
2020
$’000
Investment in Salmon Enterprises of Tasmania Pty Ltd (“Saltas”)(i)
1,995
1,341
Investment in Commercial Fishermans Co-operative
1
1
1,996
1,342
(i)
The Consolidated Group holds ordinary share capital of Salmon Enterprises of Tasmania Pty Ltd (“Saltas”).
The Directors of Huon Aquaculture Group Limited do not believe that the Consolidated Group is able to exert significant
influence over Saltas.
Recognition and Measurement
Investments in financial assets are classified as financial assets at fair value through other comprehensive income (FVOCI).
The investments are not held for trading, and which the Consolidated Group has irrevocably elected at initial recognition to
recognise in this category. These are strategic investments and the Consolidated Group considers this classification to be more
relevant.
At initial recognition, the Consolidated Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.
On disposal of these investments, any related balance within the FVOCI reserve is reclassified to retained earnings.
20. Derivative assets
Consolidated
2021
$’000
Consolidated
2020
$’000
Derivatives carried at fair value:
Foreign currency forward contracts
–
2,255
Commodity forward contract
–
–
–
2,255
Refer to note 21 for fair value measurement and hierarchy.
101
Other
21. Fair value measurements
The Consolidated Group measures and recognises the following assets at fair value on a recurring basis after initial recognition:
— Biological assets (refer to note 4)
— Derivative assets (refer to note 20)
— Investments in financial assets (refer to note 19)
— Derivative liabilities (refer to note 34)
The Consolidated Group does not subsequently measure any liabilities at fair value on a recurring basis, or any assets or
liabilities at fair value on a non-recurring basis.
Fair value hierarchy
AASB 13 requires the disclosure of fair value information by level of the fair value hierarchy, which categorises fair value
measurements into one of three possible levels based on the lowest level that an input that is significant to the measurement
can be categorised into as follows:
Level 1:
Measurements based on quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date.
Level 2:
Measurements based on inputs other than quoted prices included in Level 1 that are observable for the asset or
liability, either directly or indirectly.
Level 3:
Measurements based on unobservable inputs for the asset or liability.
The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation
techniques. These valuation techniques maximise, to the extent possible, the use of observable market data. If all significant
inputs required to measure fair value are observable, the asset or liability is included in Level 2. If one or more significant inputs
are not based on observable market data, the asset or liability is included in Level 3.
Valuation techniques
The Consolidated Group selects a valuation technique that is appropriate in the circumstances and for which sufficient data is
available to measure fair value. The availability of sufficient and relevant data primarily depends on the specific characteristics
of the asset or liability being measured.
There has been no change in the valuation technique(s) used to calculate the fair values disclosed in the financial statements.
There has been no transfers between the fair value measurement levels during the financial year.
Recognition and measurement
Financial instruments
The Consolidated Group enters into a variety of derivative financial instruments to manage its exposure to foreign exchange
rate risk, including forward foreign exchange contracts. The derivative financial instruments do not qualify for hedge accounting.
Changes in the fair value of the derivative financial instruments are recognised immediately in consolidated income statement.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured
to their fair value at each reporting date. In accordance with Level 2 of the fair value hierarchy.
The Consolidated Group classifies its financial assets in the following measurement categories:
— those to be measured subsequently at fair value (either through OCI or through profit or loss), and
— those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the
cash flows.
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity
instruments that are not held for trading, this will depend on whether the Consolidated Group has made an irrevocable election
at the time of initial recognition to account for the equity investment at fair value through other comprehensive income (FVOCI).
The Consolidated Group reclassifies debt investments when and only when its business model for managing those assets
changes.
Huon Aquaculture Group Limited
Annual Report 2021
102
Notes to the financial statements
continued
21. Fair value measurements (continued)
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Consolidated
Group commits to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the
financial assets have expired or have been transferred and the Consolidated Group has transferred substantially all the risks
and rewards of ownership.
Measurement
At initial recognition, the Consolidated Group measures a financial asset at its fair value plus, in the case of a financial asset
not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are
solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Consolidated Group’s business model for managing the asset
and the cash flow characteristics of the asset. There are three measurement categories into which the group classifies its debt
instruments:
— Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments
of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance
income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or
loss and presented in other gains/(losses) together with foreign exchange gains and losses. Impairment losses are presented
as separate line item in the statement of profit or loss.
— FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’
cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount
are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign exchange
gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or
loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest
income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange
gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in the
statement of profit or loss.
— FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt
investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within other gains/(losses)
in the period in which it arises.
Impairment
The Consolidated Group assesses on a forward looking basis the expected credit losses associated with its debt instruments
carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.
For trade receivables, the Consolidated Group applies the simplified approach permitted by AASB 9, which requires expected
lifetime losses to be recognised from initial recognition of the receivables, see note 11 for further details.
103
22. Financial risk management
The Consolidated Group’s activities expose it to a variety of financial risks: market risk (including currency risk, interest rate
risk and price risk), credit risk and liquidity risk. The Consolidated Group’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the
Consolidated Group. The Consolidated Group uses derivative financial instruments such as foreign exchange contracts
and interest rate swaps to manage certain risk exposures. i.e. not used as trading or other speculative instruments. The
Consolidated Group uses different methods to measure different types of risk to which it is exposed. These methods include
sensitivity analysis in the case of interest rate, foreign exchange and other price risks, aging analysis for credit risk and beta
analysis in respect of investment portfolios to determine market risk. Risk management is carried out under policies approved
by the Board. The Consolidated Group holds the following financial instruments:
Consolidated
2021
$’000
Consolidated
2020
$’000
Financial Assets
Cash and cash equivalents
5,877
5,934
Trade and other receivables
39,951
24,472
Investments in financial assets
1,996
1,342
Derivative assets
–
2,255
Total Financial Assets
47,824
34,003
Financial Liabilities
Trade and other payables
71,080
82,865
Borrowings
139,149
173,185
Lease liabilities
159,844
169,236
Derivative liabilities
2,585
3,025
Total Financial Liabilities
372,658
428,311
(a) Credit risk
Credit risk is managed on a Consolidated Group basis. Credit risk arises from cash and cash equivalents, favourable derivative
financial instruments and deposits with banks exposures to wholesale, commercial and retail customers, including outstanding
receivables and committed transactions.
Credit risk also arises in relation to financial guarantees given to certain parties (see notes 24 and 28(c)(ii) for details). Such
guarantees are only provided in exceptional circumstances and are subject to specific Board approval.
The most material source of credit risk for the Group is through trade receivable balances from commercial and retail customers.
Refer to note 11 for an assessment of the impact of COVID-19 on the Group’s expected credit losses from customers.
(b) Liquidity risk
Liquidity risk is the risk that the Group is unable to meet its financial obligations as and when they fall due. The Group manages
liquidity risk by Management monitoring rolling forecasts of the Consolidated Group’s liquidity reserve (comprising the undrawn
borrowing facilities below) and cash and cash equivalents (note 10) on the basis of expected cash flows. The Group seeks
to mitigate its exposure to liquidity risk by the early refinancing of debt facilities to ensure continued access to capital over the
medium term.
During the period, the Group lowered projections for operating EBITDA for FY2021 due to the decline in salmon prices, high
freight costs and global economic uncertainty, all driven by the COVID-19 pandemic. As a result, the Group agreed to revise
the terms for its banking facilities with its banking partners for the period until 31 March 2022. Under the revised terms, the
financial covenants have been waived for the period 31 March to 31 December 2021 and have been replaced with a Liquidity
covenant to be measured monthly, this liquidity covenant has been set based on financial forecasts for net debt approved by
the Board. If the group does not meet agreed liquidity levels the borrowings may become immediately repayable. Refer to
note 15 for further details on the new Liquidity covenant.
The Directors and management have considered and assessed reasonably possible changes in key assumptions and has other
cash flow initiatives to effectively manage the Group’s liquidity risk during this period of economic uncertainty.
Huon Aquaculture Group Limited
Annual Report 2021
104
Notes to the financial statements
continued
22. Financial risk management (continued)
Financing arrangements
The Consolidated Group had access to the following undrawn borrowing facilities at the end of the reporting period:
Consolidated
2021
$’000
Consolidated
2020
$’000
Floating rate
Expiring within one year (bank loans)
31,000
20,500
Expiring beyond one year (bank loans)
18,000
–
49,000
20,500
Maturities of financial liabilities
The table below analyses the Consolidated Group’s financial liabilities into relevant maturity groupings as follows:
(a) based on their contractual maturities:
(i) all non derivative financial liabilities
(ii) net and gross settled derivative financial instruments for which the contractual maturities are essential for an
understanding of the timing of cash flows.
(b) based on the remaining period to the expected settlement date:
(i) derivative financial liabilities for which the contractual maturities are not essential for an understanding of the timing of
cash flows.
The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their
carrying balances as the impact of discounting is not significant
Contractual maturities of financial liabilities
Within
1 year
$’000
1 to 5
years
$’000
Over
5 years
$’000
Total
$’000
Carrying
Amount
$’000
At 30 June 2021
NON DERIVATIVES
Borrowings
14,796
129,614
–
144,410
139,149
Lease liabilities
24,326
88,607
96,392
209,325
159,844
Trade and other payables
71,080
–
–
71,080
71,080
Total expected outflows
110,202
218,221
96,392
424,815
370,073
DERIVATIVES
Net settled (forward foreign exchange
contracts and interest rate swaps)
– (inflow)
–
–
–
–
–
– outflow
1,115
849
–
1,964
1,964
Total expected outflows
1,115
849
–
1,964
1,964
105
22. Financial risk management (continued)
Contractual maturities of financial liabilities
Within
1 year
$’000
1 to 5
years
$’000
Over
5 years
$’000
Total
$’000
Carrying
Amount
$’000
At 30 June 2020
NON DERIVATIVES
Borrowings
26,187
155,595
–
181,782
173,555
Lease liabilities
24,929
130,214
68,307
223,450
164,236
Trade and other payables
82,865
–
–
82,865
82,865
Total expected outflows
133,981
285,809
68,307
488,097
420,656
DERIVATIVES
Net settled (forward foreign exchange
contracts and interest rate swaps)
– (inflow)
–
–
–
–
–
– outflow
1,115
1,910
–
3,025
3,025
Total expected outflows
1,115
1,910
–
3,025
3,025
(c) Market risk management
(i) INTEREST RATE RISK MANAGEMENT
The Consolidated Group’s main interest rate risk arises from long-term borrowings with variable rates, which expose the
Consolidated Group to cash flow interest rate risk. Group policy is to maintain up to 50% of its borrowings at fixed rate using
floating-to-fixed interest rate swaps to achieve this when necessary. Generally, the Consolidated Group enters into long-term
borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Consolidated Group
borrowed at fixed rates directly.
At 30 June 2021: 97% (2020: 98%) of Consolidated Group debt is floating. The Consolidated Group also manages interest
rate risk by ensuring that, whenever possible, payables are paid within any pre-agreed credit terms.
The net effective variable interest rate borrowings (i.e. unhedged debt) expose the Consolidated Group to interest rate risk
which will impact future cash flows and interest charges and is indicated by the following floating interest rate financial liabilities:
The following table details the notional principle amounts at the end of the reporting period.
Weighted average
interest rate
Consolidated notional
principal value
2021
%
2020
%
2021
$’000
2020
$’000
Floating rate instruments
Bank Loans
1.51%
2.45%
136,000
169,500
136,000
169,500
Interest rate sensitivity analysis
Profit or loss is sensitive to higher/ lower interest income from cash and cash equivalents, and higher/ lower interest expense on
variable rate borrowings as a result of changes in interest rates.
Impact on
post-tax profit
2021
$’000
2020
$’000
Interest rates – increase by 50 basis points
(211)
(638)
Interest rates – decrease by 50 basis points
211
(707)
Huon Aquaculture Group Limited
Annual Report 2021
106
Notes to the financial statements
continued
22. Financial risk management (continued)
(ii) FOREIGN EXCHANGE RISK
The Consolidated Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, predominantly with respect to the US Dollar and Euro.
Foreign exchange risk arises when future commercial transactions and recognised financial assets and financial liabilities
are denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
The Consolidated Group hedges its foreign exchange risk exposure arising from future commercial transactions and
recognised assets and liabilities using forward contracts. The Consolidated Group’s risk management policy is to hedge
between 75% – 125% of cash flows arising from known inventory purchase commitments, mainly denominated in US dollars
for the subsequent six months.
The Consolidated Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian
dollar, was as follows:
Consolidated
2021
$’000
Consolidated
2020
$’000
Trade payables (import creditors)
240
12,521
Trade receivable (import debtors)
10,246
4,408
Forward exchange contracts
Buy foreign currency
12,396
6,903
Sell foreign currency
6,797
30,017
Consolidated Group sensitivity
Based on the financial instruments held at 30 June 2021, had the Australian dollar weakened/strengthened by 10% against
the US dollar and the Japanese Yen with all other variables held constant, the Consolidated Group’s pre-tax profit for the
period would have been $2,077,370 higher /$1,785,659 lower (2020: $6,160,804 higher /$1,515,777 lower), mainly as a
result of foreign exchange gains/losses on translation of US dollar and JPY Yen denominated financial instruments as detailed
in the above table.
Recognition and measurement
Foreign Currency Transactions and Balances
FUNCTIONAL AND PRESENTATION CURRENCY
The functional currency of each group entity is measured using the currency of the primary economic environment in which that
entity operates. The consolidated financial statements are presented in Australian dollars which is the Parent Entity’s functional
and presentation currency.
TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the
transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at
historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair
value are reported at the exchange rate at the date when fair values were determined.
Exchange differences arising on the translation of monetary items are recognised in consolidated income statement, except
where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income
to the extent that the underlying gain or loss is directly recognised in other comprehensive income, otherwise the exchange
difference is recognised in consolidated income statement.
107
23. Parent information
The following information has been extracted from the books and records of the parent and has been prepared in accordance
with Australian Accounting Standards.
Consolidated
2021
$’000
Consolidated
2020
$’000
Statement of financial position
Assets
Current assets
3
382
Non-current assets
233,622
170,766
Total assets
233,625
171,148
Liabilities
Current liabilities
–
–
Total liabilities
–
–
Equity
Issued capital
230,607
164,999
Share-based payment reserve
757
810
Retained earnings
2,261
7,959
Dividends provided for or paid
–
(2,620)
Total equity
233,625
171,148
Financial performance
Profit for the period
5
10,298
Total comprehensive income
5
10,298
Parent Entity financial information
The financial information for the Parent Entity, Huon Aquaculture Group Limited, disclosed above has been prepared on the
same basis as the consolidated financial statements, except as set out below. Huon Aquaculture Group Limited is the ultimate
parent entity.
Transactions with related entities
Investments in subsidiaries, associates, and joint venture entities are accounted for at cost in the financial statements of Huon
Aquaculture Group Limited. Dividends received from associates are recognised in the Parent Entity’s consolidated income
statement when its right to receive the dividend is established.
Huon Aquaculture Group Limited
Annual Report 2021
108
Notes to the financial statements
continued
23. Parent information (continued)
Tax consolidation legislation
Huon Aquaculture Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation.
The head entity, Huon Aquaculture Group Limited, and the controlled entities in the tax Consolidated Group account for their
own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax Consolidated Group
continues to be a stand-alone taxpayer in its own right.
In addition to its own current and deferred tax amounts, Huon Aquaculture Group Limited also recognises the current tax
liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from controlled
entities in the tax Consolidated Group. In the current year tax losses of $8,425,087 (tax effected at 30%) (2020: $15,226,061
(tax effected at 30%)) have been assumed from controlled entities in the tax Consolidated Group.
The entities have also entered a tax funding agreement under which the wholly-owned entities fully compensate Huon
Aquaculture Group Limited for any current tax payable assumed and are compensated by Huon Aquaculture Group Limited
for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to
Huon Aquaculture Group Limited under the tax consolidation legislation. The funding amounts are determined by reference to
the amounts recognised in the wholly-owned entities’ financial statements.
The amounts receivable/payable under the tax funding agreement are due upon receipt of the funding advice from the head
entity, which is issued as soon as practicable after the end of each financial year. The head entity may also require payment of
interim funding amounts to assist with its obligations to pay tax instalments.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as current amounts
receivable from or payable to other entities in the Consolidated Group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement are
recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
24. Deed of cross guarantee
The wholly-owned subsidiaries disclosed in note 33 are parties to a deed of cross guarantee under which each company
guarantees the debts of the others. By entering into the deed, the wholly-owned entities have been relieved from the
requirement to prepare a financial report and directors’ report under Instrument 2016/785 issued by the Australian Securities
and Investments Commission.
The closed group financial information for 2020 and 2021 is identical to the financial information included in the consolidated
financial statements. The wholly-owned subsidiaries became a party to the deed of cross guarantee dated 28 June 2016.
The companies disclosed in note 33 represent a ‘closed group’ for the purposes of the Instrument, and as there are no
other parties to the deed of cross guarantee that are controlled by Huon Aquaculture Group Limited, they also represent the
‘extended closed group’.
109
25. Income tax
Consolidated
2021
$’000
Consolidated
2020
$’000
(a) Income tax recognised in profit or loss:
Tax (expense)/income comprises:
Current tax (expense)/income
3
382
Adjustments for current tax of prior periods
(16)
3,543
Increase in deferred tax assets
8,584
17,164
Decrease/(increase) in deferred tax liabilities
46,005
(17,468)
Total tax benefit/(expense)
54,576
3,621
The prima facie tax on profit from ordinary activities before income tax
is reconciled to the income tax expense as follows:
Profit from continuing operations before income tax expense
(182,645)
1,294
Prima facie tax receivable/(payable) on profit from ordinary activities before
income tax at 30% (2020: 30%) for the Consolidated Group.
54,794
(389)
Adjustment recognised in the current year in relation to prior years:
Research and development tax credit
–
4,007
Other
(12)
7
Non-tax deductible items
Goodwill impairment
(209)
–
Other
3
(4)
Income tax benefit
54,576
3,621
The applicable weighted average effective tax rates are as follows:
(29.9%)
(279.8%)
(b) Income tax recognised directly in equity:
Deferred tax:
Share issue costs
566
–
(c) Current tax balances:
Current tax receivables comprise:
Income tax receivable attributable to:
Entities in the tax-Consolidated Group
3
382
Net current tax balance
3
382
Current tax liabilities comprise:
Income tax payable attributable to:
Entities in the tax-Consolidated Group
–
–
Net current tax balance
–
–
Huon Aquaculture Group Limited
Annual Report 2021
110
Notes to the financial statements
continued
25. Income tax (continued)
(d) Deferred tax balances:
Taxable and deductible temporary differences, comprise of the following and arise from the following movements:
2021
Opening
balance
$’000
Adjustments
for current tax
of prior periods
$’000
Charged
to income
$’000
Charged
to equity
$’000
Closing
balance
$’000
Gross deferred tax liabilities:
Biological assets
(72,215)
–
15,026
–
(57,189)
Property, plant and equipment
(62,627)
(481)
32,871
–
(30,237)
Trade and other receivables
(85)
–
53
–
(32)
Other non-current assets
(3,355)
–
871
–
(2,484)
Other financial assets
(107)
–
2
–
(105)
Lease liabilities
50,771
–
(2,818)
–
47,953
(87,618)
(481)
46,005
–
(42,094)
Gross deferred tax assets:
Provisions
3,096
–
1,970
–
5,066
Other financial assets
–
–
–
–
–
Trade and other receivables
(605)
–
691
–
86
Property, plant and equipment
152
–
108
–
260
Other intangibles
3
–
4
–
7
Share issue expenses
67
–
(135)
566
498
Tax Losses
25,399
469
8,425
–
34,293
Research and development
1,804
–
–
–
1,804
Borrowing costs
–
–
–
–
–
Share-based payments
243
–
(16)
–
227
Deferred Revenue
1,967
–
(1,175)
–
792
Trade and other payables
2,306
–
(1,288)
–
1,018
34,432
469
8,584
566
44,051
Net deferred tax asset/(liability)
(53,186)
(12)
54,589
566
1,957
2020
Gross deferred tax liabilities:
Biological assets
(56,746)
–
(15,469)
–
(72,215)
Property, plant and equipment
(14,686)
(24,688)
(23,253)
–
(62,627)
Trade and other receivables
(85)
–
–
–
(85)
Other non-current assets
(1,804)
(1,716)
165
–
(3,355)
Other financial assets
(254)
–
147
–
(107)
Lease liabilities
–
29,829
20,942
–
50,771
(73,575)
3,425
(17,468)
–
(87,618)
Gross deferred tax assets:
Provisions
2,684
–
412
–
3,096
Other financial assets
–
–
–
–
–
Trade and other receivables
92
–
(697)
–
(605)
Property, plant and equipment
166
–
(14)
–
152
Other intangibles
3
–
–
–
3
Blackhole expenditure
–
–
67
–
67
Tax Losses
10,493
(320)
15,226
–
25,399
Research and development
–
1,804
–
–
1,804
Borrowing costs
–
–
–
–
–
Share-based payments
397
–
(154)
–
243
Deferred Revenue
727
–
1,240
–
1,967
Trade and other payables
823
399
1,084
–
2,306
15,385
1,883
17,164
–
34,432
Net deferred tax asset/(liability)
(58,190)
5,308
(304)
–
(53,186)
111
25. Income tax (continued)
Recognition and measurement
(Refer to note 23 for Tax Consolidation legislation)
The income tax expense/income for the year comprises current income tax expense/income and deferred tax expense/income.
Current income tax expense charged to the consolidated income statement is the tax payable on taxable income. Current tax
liabilities/assets are measured at the amounts expected to be paid to/recovered from the relevant taxation authority.
Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as
well as unused tax losses.
Huon Aquaculture Group Limited and its wholly-owned Australian controlled entities have implemented the tax consolidation
legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these
entities are set off in the consolidated financial statements.
Current and deferred tax is recognised in consolidated income statement, except to the extent that it relates to items recognised
in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or
directly in equity, respectively.
Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability,
excluding a business combination, where there is no effect on accounting or taxable consolidated income statement.
Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is
realised or the liability is settled and their measurement also reflects the manner in which management expects to recover
or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and
equipment measured at fair value and marine leases, the related deferred tax liability or deferred tax asset is measured on the
basis that the carrying amount of the asset will be recovered entirely through sale.
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable
that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.
Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred
tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and
it is not probable that the reversal will occur in the foreseeable future.
Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement
or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are
offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes
levied by the same taxation authority on either the same taxable entity or different taxable entities, where it is intended that net
settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which
significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.
The Group is subject to income taxes and is entitled to claims for certain tax deductions. Judgements and estimates are required
in determining the provision for income taxes and claims for deductions. Where the final tax outcome of these matters is
different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which
such determination is made.
Companies within the Consolidated Group may be entitled to claim special tax deductions for investments in qualifying assets
or in relation to qualifying expenditure (e.g. the Research and Development Incentive regime in Australia). The Consolidated
Group accounts for such allowances as tax credits, which means that the allowance reduces income tax payable and current
tax expense. A deferred tax asset is recognised for unclaimed tax credits that are carried forward.
Critical accounting estimates
Based on the Group’s forecast taxable profit the Directors and management believe that sufficient future taxable profit will be
available to utilise the deferred tax assets relating to temporary differences and unused tax losses.
Huon Aquaculture Group Limited
Annual Report 2021
112
Notes to the financial statements
continued
26. Key management personnel compensation
The totals of remuneration for key management personnel (KMP) of the Consolidated Group during the year are as follows:
Consolidated
2021
$
Consolidated
2020
$
Short-term employee benefits
3,223,406
2,959,948
Post-employment benefits
231,327
218,726
Long-term benefits
–
–
Termination benefits
–
–
Share-based payments
6,382
151,590
3,461,115
3,330,264
No remuneration was paid by the Parent Entity to the KMP.
27. Share-based payment
(a) Share-based payment arrangements
The Consolidated Group offers the Chief Executive Officer, Executive Management Group and senior management the
opportunity to participate in the Long-Term Incentive Plan (“the Plan”), which involves performance rights to acquire shares in
Huon Aquaculture Group Limited. The Plan is designed to:
— assist in the motivation, retention and reward of employees, including the Chief Executive Officer and members of
management; and
— align the interests of employees participating in the Plan more closely with the interests of shareholders by providing an
opportunity for those employees to receive an equity interest in Huon Aquaculture Group Limited through the granting of
performance rights.
Performance period
Under the Plan, performance rights were issued to the Chief Executive Officer and members of management as the LTI
component of their remuneration. Performance rights granted under the LTI offer have the following vesting conditions:
— 50% of the performance rights will be subject to a vesting condition based on the Company’s earnings per share (EPS); and
— 50% of the performance rights will be subject to a vesting condition based on the Company’s return on assets (ROA)
If the specific performance criteria are satisfied, the Board has resolved to issue, or procure the transfer of Shares, or alternatively
pay the cash amount of equivalent value, to Mr Bender and management on the vesting of those performance rights.
In the event that a performance right holder ceases to be an employee prior to the completion of the performance period
due to a qualifying reason (i.e. other than for dismissal for cause) and such cessation occurs within the first twelve months of
the grant of the performance rights, then the performance rights will be forfeited on a pro-rata basis for the number of months
employed in the full year.
Performance rights that have vested may be exercised until the applicable expiry date. If any shares are issued following
exercise of a vested performance right prior to the applicable expiry date then they may not be sold or transferred before three
years after the beginning of the performance period.
113
Number of Shares to be Allocated
The percentage of performance rights that vest at the end of each applicable performance period will be determined by
reference to the following schedule:
Earnings Per Share (EPS) – 50% of LTI
EPS compound annual growth rate (‘CAGR’)
Vesting outcome
Less than 7.5% CAGR
Nil
7.5% CAGR
50%
Above 7.5% CAGR but below 10% CAGR
Pro-rata from 50-99%
10% CAGR or greater
100%
Return On Assets (ROA) – 50% of LTI
ROA (return for the reporting period)
Vesting outcome
Less than 9% return
Nil
9% return
50%
Above 9% return but below 11% return
Pro-rata from 50-99%
11% return or greater
100%
Earnings per share compound annual growth is calculated as the net profit after income tax (NPAT) (excluding adjustment
for biological assets) divided by the weighted average number of ordinary shares on issue. Compared to an absolute profit
measure, EPS takes into account changes in the equity base and for this reason it is preferred to other profit based metrics.
Return on Assets (ROA) is calculated as statutory earnings before interest and tax (EBIT) (excluding adjustment for biological
assets), divided by total assets excluding cash and fair value adjustment on biological assets (average of opening and closing
balance). ROA is an appropriate measure for asset intensive industries which reinforces the need to invest capital on projects
with a superior return.
As noted in the FY2020 remuneration report, the performance measures for the STI and LTI had not been amended to account
for the impact of the adoption of AASB16. During the year, the Board has revised the performance hurdles for the Return
on Assets measure to appropriately reflect the AASB16 impact on the earnings and assets of the Group. It was deemed
appropriate to change the lower bound hurdle to 9% (previously 10%) and the upper bound hurdle to 11% (previously 15%).
Refer to the Remuneration Report starting on page 41 of this Annual Report for additional detail on this change.
(b) Performance rights granted
Set out below is a summary of performance rights granted under the LTI plan.
2021
Performance Period
Balance
at Start
of Year
Other
Granted
During
Year
Forfeited
Vested
Balance
at End
of Year
FV per
Share
Grant Date
From
To
30 Nov 17
1 Jul 17
30 Jun 20
18,941
–
–
–
(18,941)
–
$4.01
31 Oct 18
1 Jul 18
30 Jun 21
237,360
–
–
(237,360)
–
–
$4.26
23 Oct 19
1 Jul 19
30 Jun 22
263,502
–
–
(12,368)
–
251,134
$4.30
30 Oct 20
1 Jul 20
30 Jun 23
–
–
409,966
(18,552)
–
391,414
$2.47
2020
Performance Period
Balance
at Start
of Year
Other
Granted
During
Year
Forfeited
Vested
Balance
at End
of Year
FV per
Share
Grant Date
From
To
30 Nov 16
1 Jul 16
30 Jun 18
110,424
–
–
–
(110,424)
–
$3.71
30 Nov 16
1 Jul 16
30 Jun 19
97,650
–
–
–
(97,650)
–
$3.71
30 Nov 17
1 Jul 17
30 Jun 20
210,429
–
–
(191,488)
–
18,941
$4.01
31 Oct 18
1 Jul 18
30 Jun 21
237,360
–
–
–
–
237,360
$4.26
23 Oct 19
1 Jul 19
30 Jun 22
–
–
263,502
–
–
263,502
$4.30
Huon Aquaculture Group Limited
Annual Report 2021
114
Notes to the financial statements
continued
27. Share-based payment (continued)
(c) Fair value of performance rights granted
For the performance rights granted during the current financial year, the fair values were measured at the grant date of
30 October 2020 for those granted to the Chief Executive Officer and to management.
The fair value of the performance rights granted under the Plan was calculated using the Black-Scholes option pricing
methodology. The fair value of these performance rights do not take into account the EPS and ROA hurdles being met, as they
are non-market related vesting conditions.
The following were the key assumptions used in determining the valuation:
Chief
Executive
Officer
Senior
Management
Share price at grant date
$2.65
$2.65
Dividend yield (per annum effective)
2.30%
2.30%
Risk free discount rate (per annum)
1.14%
1.14%
Expected price volatility
61.15%
61.15%
Term of performance right
3 years
3 years
Fair value of performance right
$2.47
$2.47
The expense recognised in relation to performance rights applicable to the Chief Executive Officer and management for the
year ended 30 June 2021 is ($6,787) (2020: $182,742).
Recognition and measurement
The Consolidated Group provides benefits to the Chief Executive Officer and certain management in the form of share-based
payment, whereby services are rendered in exchange for rights over shares (performance rights). These benefits are provided
as part of the Consolidated Group’s long-term incentive plan.
The fair value of the performance rights is recognised as an employee benefits expense, with a corresponding increase in
equity. The total amount to be expensed is determined by reference to the fair value of the performance rights granted, which
includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any
service and non-market performance vesting conditions. Non-market vesting conditions are included in assumptions about the
number of performance rights that are expected to vest.
The total expense is recognised over the period in which the performance and/or service conditions are fulfilled (the vesting
period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date).
At the end of each reporting period, the Consolidated Group revises its estimates of the number of awards that are expected
to vest based on the non-market vesting conditions. The impact of the revision to original estimates, if any, is recognised in profit
or loss, with a corresponding adjustment to equity.
115
27. Share-based payment (continued)
28. Related party transactions
Identity of related parties
The following persons and entities are regarded as related parties:
(a) Controlled entities:
Refer to note 33 for details of equity interests in entities controlled by Huon Aquaculture Group Limited.
(b) Key Management Personnel:
Directors and other Key Management Personnel (KMP) also include close members of the families of Directors and other KMP.
In determining the disclosures noted below, the KMP have made appropriate enquiries to the best of their ability and the
information presented reflects their knowledge.
All transactions entered into during the year were on normal commercial terms and conditions no more favourable than those
if the entity was dealing with an unrelated party at on an arm’s length basis.
Consolidated
2021
$
Consolidated
2020
$
(i) Compensation of KMP
Details of KMP compensation are disclosed in the Remuneration Report
and in note 26 to the financial statements.
(ii) Compensation of close family members
Other transactions
Short-term employee benefits
335,205
331,433
Superannuation Contributions
Contributions to superannuation funds on behalf of employees
29,840
28,995
(iii) Dividend revenue
Key Management Personnel
–
–
(iv) Purchases from entities controlled by Key Management Personnel
The group acquired the following goods and services from entities that are controlled
by members of the group’s Key Management Personnel:
Land, Buildings and Property, Plant and Equipment
–
–
Leases of assets
752,982
693,416
752,982
693,416
(v) Outstanding balances arising from sales/purchases of goods and services
Current Payables:
Entities controlled by close family members
215,280
233,393
Entities controlled by key management personnel
–
–
215,280
233,393
(c) Investments
(i) Purchase (sales) of goods and services
The Consolidated Group entered into transactions with Salmon Enterprises of Tasmania Pty Ltd for the supply of smolt (juvenile
salmon) and the sale of other goods and services. These transactions were conducted on normal commercial terms and
conditions.
Consolidated
2021
$
Consolidated
2020
$
Salmon Enterprises of Tasmania Pty Ltd
2,673,256
3,394,611
(ii) Financial guarantee contract
During the 2012 financial year the Consolidated Group became party to a $7.02 million facility that Salmon Enterprises of
Tasmania Pty Ltd entered into with BankWest through a financial guarantee contract. The facility was amended during the
2018 financial year. The Consolidated Group’s guarantee is for $0.98 million.
Huon Aquaculture Group Limited
Annual Report 2021
116
Notes to the financial statements
continued
29. Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the Parent Entity, its related
practices and non-related audit firms:
Consolidated
2021
$
Consolidated
2020
$
(a) PricewaterhouseCoopers Australia
(i) Audit and other assurance services
Audit and review of financial statements
376,888
223,500
Other assurance services
–
–
Total remuneration for audit and other assurance services
376,888
223,500
(ii) Taxation & other advisory services
Taxation advisory services
34,680
149,518
Other advisory services
52,380
19,026
Total remuneration for taxation and other advisory services
87,060
168,544
Total remuneration of PricewaterhouseCoopers Australia
463,948
392,044
(b) Non PricewaterhouseCoopers firms
(i) Audit and other assurance services
Other
–
–
Total remuneration for audit and other assurance services
–
–
(ii) Taxation and other advisory services
Taxation advisory services
31,670
70,580
Other advisory services
18,704
87,110
Total remuneration for taxation services
50,374
157,690
(iii) Other services
Legal services
–
–
Total remuneration for other services
–
–
Total remuneration of non-PricewaterhouseCoopers firms
50,374
157,690
The Parent Entity’s audit fees were paid for by Huon Aquaculture Company Pty Ltd, a wholly owned subsidiary.
117
30. Goodwill
Consolidated
2021
$’000
Consolidated
2020
$’000
Gross carrying amount
Balance at the beginning of financial year
4,496
4,496
Additions
–
–
Balance at the end of financial year
4,496
4,496
Accumulated impairment losses
Balance at the beginning of financial year
(1,601)
(1,601)
Impairment losses for the year
(2,895)
–
Balance at the end of financial year
(4,496)
(1,601)
Net book value
Balance at the beginning of financial year
2,895
2,895
Balance at the end of financial year
–
2,895
Goodwill relates to the Consolidated Group’s acquisition of the wholly-owned controlled entities, Huon Ocean Trout Pty Ltd,
Southern Ocean Trout Pty Ltd, Morrison’s Seafood Pty Ltd, Meadowbank Hatchery Pty Ltd.
Recognition and measurement
Goodwill
Goodwill acquired in a business combination is initially measured at fair value, being the excess of the cost of the business
combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
recognised. Goodwill is subsequently measured at its deemed cost less any impairment losses.
Goodwill is not amortised but is reviewed for impairment at least annually, or more frequently if events or changes in
circumstances indicate that they might be impaired. For the purpose of impairment testing, goodwill is allocated to each of
the Consolidated Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating
units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other
assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for
goodwill is recognised immediately in the consolidated income statement and is not reversed in a subsequent period.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Impairment tests for goodwill
During the year the Consolidated Group identified indicators of impairment and performed an impairment assessment.
The recoverable amount of the cash generating unit was determined based on a value in use calculation. The calculation
uses cash flow projections based on financial budgets approved by the Board, over a 5 year period, before any fair value
adjustment of biological assets. The key assumptions regarding volumes, price and discount rates applicable to the CGU and
the critical accounting estimates and judgements are included in note 31.
An impairment loss was recognised in the period that reduced the carrying value of the Group’s goodwill to nil.
Huon Aquaculture Group Limited
Annual Report 2021
118
Notes to the financial statements
continued
31. Impairment
Impairment of assets
At the end of each reporting period, the Consolidated Group assesses whether there is any indication that an asset may be
impaired. The assessment will include considering external sources of information and internal sources of information. If such
an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the
higher of the asset’s fair value less costs of disposal and value in use to the asset’s carrying amount. Any excess of the asset’s
carrying amount over its recoverable amount is recognised immediately in the consolidated income statement.
Where it is not possible to estimate the recoverable amount of an individual asset, the Consolidated Group estimates the
recoverable amount of the cash-generating unit (CGU) to which the asset belongs. The Consolidated Group identified one
CGU representing the activities of generating its revenue output of aquaculture (Atlantic salmon and ocean trout).
At the interim reporting period (for the six months ended 31 December 2020), the Consolidated Group identified indicators of
impairment and performed an impairment assessment.
The recoverable amount of the CGU was determined using a value-in-use calculation. The calculation used cash flow projections
based on financial budgets approved by the Board, over a 5-year period, before any fair value adjustments of biological
assets.
The following table sets out the key assumptions used in the calculation:
Volume
Volume growth over the five-year forecast period has been set at 7.8% average annual growth,
consisting of industry recognised growth rates plus growth based on resources available to the
Group to allow expansion of production at a rate greater than the industry average.
Price
Pricing growth over the five-year forecast period has been set at 2.2% average annual growth,
recognising a period of lower average prices in FY2021 and progressive increase as markets
recover from COVID-19 restrictions and the underlying improvement driven by more favourable
channel mix for the Group.
Freight & distribution
expense
The five-year forecast period has reflected material variations in Freight & Distribution costs in
line with the Groups assumptions on COVID-19 disruptions to the international airfreight market.
International airfreight costs are expected to remain at elevated levels until FY2023, after which
they are expected to progressively reduce and return to pre-COVID-19 levels during FY2024.
Production costs
Production costs per hog kg are expected to remain stable. Following the completion of Huon’s
two-year program of investing in infrastructure to drive the expansion of its production capacity,
drive biological performance improvements and reduce production risk. Production costs are
expected to remain stable as the rate of average annual volume growth eases from 11.0%
to 7.8%.
Annual Capital Expenditure
Capital expenditure requirements estimated to maintain the current production assets which are
in operation and able to meet forecast volume projections.
Long-term growth rate
The weighted average growth rate used to extrapolate cash flows beyond the budget period.
The rates are consistent with economic forecast growth rates published by the Reserve Bank of
Australia.
Post-tax discount rates
Discount rates represent the current market assessment of the risks relating to the CGU.
In performing the value-in-use calculations for the CGU, the Consolidated Group has applied
post-tax discount rates to discount the forecast future attributable post-tax cash flows. The
equivalent pre-tax discount rates are disclosed in the table below.
2021
2020
Long-term growth rate
2.00%
1.75%
Post-tax discount rate
8.37%
8.44%
Pre-tax discount rate
12.0%
12.1%
119
31. Impairment (continued)
The Group had substantially lowered projections for operating earnings (EBITDA) for FY2021, due to the decline in salmon
prices, high freight costs and uncertainty around the global economy as well as expected uncertainty in the international
salmon market and international air freight market having an adverse impact on future cash flows. Consequently, the annual
average volume growth assumption was downgraded, and production and freight & distribution cost assumptions were
increased and reflected in management’s expectations of future cash flows. At 31 December 2020, this resulted in the
carrying amount of the CGU exceeding the estimated recoverable amount by $113.9 million and an impairment loss was
recognised as follows:
$’000
Goodwill
2,895
Other intangible assets
430
Property, plant & equipment
51,613
Buildings
649
Right-of-use assets
58,371
Total impairment loss
113,958
Impact on deferred taxes
(34,187)
Net impairment loss
79,771
As a consequence of the impairment loss recognised at the interim reporting period, the carrying value of the Group’s indefinite
life intangible assets has been reduced to nil.
At 30 June 2021, the Directors and management are required to consider if there are any indicators of impairment that could
signal the carrying value of the Group’s assets may be in excess of their value in use.
The Directors and management have considered whether there are any indicators of impairment that necessitate additional
impairment testing; no such indicators existed.
Critical accounting estimate
The determination of impairment involves the use of judgements and estimates that include, but are not limited to, the cause,
timing and measurement of impairment. Management is required to make judgements concerning future cash flows, including
volume and price assumptions. Inputs into the valuation require assumptions to be made about forecast earnings before interest
and tax and related future cash flows, growth rates and the discount rate.
Huon Aquaculture Group Limited
Annual Report 2021
120
Notes to the financial statements
continued
32. Other Intangible Assets
Consolidated
2021
$’000
Consolidated
2020
$’000
Gross carrying amount
Balance at the beginning of financial year
430
100
Additions
–
330
Balance at the end of financial year
430
430
Accumulated impairment losses
Balance at the beginning of financial year
–
–
Impairment losses for the year
(430)
–
Balance at the end of financial year
(430)
–
Net book value
Balance at the beginning of financial year
430
100
Balance at the end of financial year
–
430
Other intangible assets relate to hatchery establishment costs and trademarks.
Licences and trademarks recognised by the Consolidated Group have an indefinite useful life and are not amortised. They are
recorded at cost less any impairment.
Refer to note 31 for impairment tests for other intangible assets.
121
33. Interests in subsidiaries
The subsidiaries listed below have share capital consisting solely of ordinary shares, which are held directly by the Consolidated
Group. The proportion of ownership interests held equals the voting rights held by the Consolidated Group. Each subsidiary’s
principal place of business is also its country of incorporation or registration.
Ownership interest
held by the
Consolidated Group
Name of subsidiary
Principal place of business
Note
2021
%
2020
%
Huon Aquaculture Company Pty Ltd
961 Esperance Coast Road, Dover, TAS, 7117
100%
100%
Springs Smoked Seafoods Pty Ltd
961 Esperance Coast Road, Dover, TAS, 7117
(i)
100%
100%
Springfield Hatcheries Pty Ltd
32-36 Headquarters Road, South Springfield, TAS, 7260
(i)
100%
100%
Huon Ocean Trout Pty Ltd
961 Esperance Coast Road, Dover, TAS, 7117
(i)
100%
100%
Huon Shellfish Co Pty Ltd
961 Esperance Coast Road, Dover, TAS, 7117
(i)
100%
100%
Huon Salmon Pty Ltd
961 Esperance Coast Road, Dover, TAS, 7117
(i)
100%
100%
Huon Smoked Seafoods Pty Ltd
961 Esperance Coast Road, Dover, TAS, 7117
(i)
100%
100%
Huon Smoked Salmon Pty Ltd
961 Esperance Coast Road, Dover, TAS, 7117
(i)
100%
100%
Huon Seafoods Pty Ltd
961 Esperance Coast Road, Dover, TAS, 7117
(i)
100%
100%
Huon Tasmanian Salmon Pty Ltd
961 Esperance Coast Road, Dover, TAS, 7117
(i)
100%
100%
Springs Smoked Salmon Pty Ltd
961 Esperance Coast Road, Dover, TAS, 7117
(i)
100%
100%
Southern Ocean Trout Pty Ltd
2 Esplanade, Strahan, TAS, 7468
(i)
100%
100%
Morrison's Seafood Pty Ltd
2 Esplanade, Strahan, TAS, 7468
(i)
100%
100%
Meadowbank Hatchery Pty Ltd
2 Esplanade, Strahan, TAS, 7468
(i)
100%
100%
Significant restrictions
There are no significant restrictions over the Consolidated Group’s ability to access or use assets, and settle liabilities, of the
Consolidated Group.
The wholly-owned subsidiaries above are relieved from the Corporations Act 2001 requirements for the preparation, audit and
lodgement of financial reports. Refer to note 23 for further details.
(i) Subsidiary became a party to the deed of cross guarantee on 28 June 2016.
34. Derivative Liabilities
Consolidated
2021
$’000
Consolidated
2020
$’000
Derivatives carried at fair value:
Foreign currency forward contracts
621
–
Interest rate swap
1,964
3,025
2,585
3,025
Refer to note 21 for fair value measurement and hierarchy.
Huon Aquaculture Group Limited
Annual Report 2021
122
Notes to the financial statements
continued
35. Provisions
2021
Current
$’000
2021
Non-current
$’000
2021
Total
$’000
2020
Current
$’000
2020
Non-current
$’000
2020
Total
$’000
Annual Leave
7,197
–
7,197
6,257
–
6,257
Long-Service Leave
2,745
1,810
4,555
2,431
1,633
4,064
Make good provision(i)
936
4,198
5,134
–
3,873
3,873
10,878
6,008
16,886
8,688
5,506
14,194
(i)
At the conclusion of the leases of both the Ronja Huon and Ronja Storm, the Consolidated Group is required to return the vessels to their original
location. A provision has been recognised for the present value of the estimated expenditure required. These costs have been capitalised as part
of the respective right of use assets, and are being amortised over the life of the related lease.
Make
good
$’000
Annual
leave
$’000
Long-service
leave
$’000
Total
$’000
Carrying amount at start of year
3,873
6,257
4,064
14,194
Additional provisions recognised
1,261
4,474
636
6,371
Amounts used during the year
–
(3,534)
(145)
(3,679)
Carrying amount at end of year
5,134
7,197
4,555
16,886
Amounts not expected to be settled within the next 12 months
The current provision for employee benefits includes accrued annual leave and long service leave. For long service leave it
covers all unconditional entitlements where employees have completed the required period of service and also those where
employees are entitled to pro-rata payments in certain circumstances. The entire amount of the annual leave provision of
$7,197.0 thousand (2020: $6,257.0 thousand) is presented as current, since the Consolidated Group does not have an
unconditional right to defer settlement for any of these obligations. However, based on past experience, the Consolidated
Group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months.
The following amounts reflect leave that is not to be expected to be taken or paid within the next 12 months.
Consolidated
2021
$’000
Consolidated
2020
$’000
Leave obligations expected to be settled after 12 months
8,163
7,116
Recognition and measurement
Provisions are recognised when the Consolidated Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that the Consolidated Group will be required to settle the obligation, and a reliable estimate can be made
of the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at
reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using
the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, the
receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable
can be measured reliably.
123
35. Provisions (continued)
Employee Benefits
Short-term employee benefits
Provision is made for the Consolidated Group’s obligation for short-term employee benefits. Short-term employee benefits
are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the
annual reporting period in which the employees render the related service, including wages and salaries. Short-term employee
benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.
The Consolidated Group’s obligations for short-term employee benefits such as wages and salaries are recognised as a part
of current trade and other payables in the statement of financial position.
Other long-term employee benefits
Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within
12 months after the end of the annual reporting period in which the employees render the related service. Other long-term
employee benefits are measured at the present value of the expected future payments to be made to employees. Expected
future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are
discounted at rates determined by reference to market yields at the end of the reporting period on corporate bond rates that
have maturity dates that approximate the terms of the obligations. Upon the remeasurement of obligations for other long-term
employee benefits, the net change in the obligation is recognised in consolidated income statement as a part of employee
benefits expense.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer
settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
The Consolidated Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement
of financial position, except where the Consolidated Group does not have an unconditional right to defer settlement for at least
12 months after the end of the reporting period, in which case the obligations are presented as current provisions.
36. Other liabilities
Consolidated
2021
$’000
Consolidated
2020
$’000
Deferred government grants
Current
1,017
3,534
Non-Current
1,621
3,022
2,638
6,556
During the 2015 financial year government grants of $5 million were received relating to the Parramatta Creek Smokehouse
and Product Innovation Centre. The nature of the grants related to both income and to assets. During the financial year $464.0
thousand (2020: $464.0 thousand) was recognised in the income statement. Future compliance with certain conditions relating
to jobs creation could impact $773.0 thousand of the deferred government grants amount.
There were no amounts included in the provision relating to JobKeeper grant income at year end (2020: $3,024.5 thousand).
37. Contingent liabilities and contingent assets
There are no contingent liabilities or contingent assets at the date of this Annual Financial Report.
Huon Aquaculture Group Limited
Annual Report 2021
124
Notes to the financial statements
continued
38. Segment information
The chief operating decision maker for the Consolidated Group is the Chief Executive Officer of the Parent Entity. The Parent
Entity determines operating segments based on information provided to the Chief Executive Officer in assessing performance
and determining the allocation of resources within the Consolidated Group. Consideration is given to the Consolidated
Group’s products, the manner in which they are sold, the organisational structure of the Consolidated Group and the nature
of customers.
The Consolidated Group hatches, farms, processes, markets and sells Atlantic salmon and ocean trout. Revenue associated
with exports meets the quantitative thresholds and management concludes that this segment is reportable.
The chief operating decision maker only reviews export market sales. The total of the reportable segments’ results, profit,
assets and liabilities is the same as that of the Consolidated Group as a whole and as disclosed in the consolidated income
statement, the consolidated statement of comprehensive income and the consolidated balance sheet.
All of the non-current assets are located in Australia being the domicile country of the Consolidated Group.
Note
Consolidated
2021
$’000
Consolidated
2020
$’000
Revenue from the sale of goods
Domestic market
265,823
225,657
Export market
160,585
114,212
Total revenue from the sale of goods
1
426,408
339,869
39. Subsequent events
On 6 August 2021 Huon announced that it had entered into a Scheme Implementation Deed with JBS, a global producer of
land based proteins with significant operations in Australia, to acquire 100% of Huon shares by way of two alternative Schemes
of Arrangement (Schemes).
On 13 August 2021 Huon entered a process agreement with JBS to provide for the making of a recommended takeover bid
(Offer). The Offer will be in parallel but not in substitution to the Scheme and will be subject to the Schemes not becoming
effective (among other conditions). Huon shareholders are expected to have the opportunity to vote on the Scheme in
October 2021.
40. Company details
The registered office of the company is:
The principal place of business is:
Huon Aquaculture Group Limited
Level 13, 188 Collins Street
Hobart
Tasmania 7000
Huon Aquaculture Group Limited
961 Esperance Coast Road
Dover
Tasmania 7109
125
In the directors’ opinion;
(a) The financial statements and notes set out on pages 73 to 125 are in
accordance with the Corporations Act 2001 including:
a. Complying with Accounting Standards, the Corporations Regulations
2001 and
other mandatory professional reporting requirements; and
b. Giving a true and fair view of the Consolidated Group’s financial position
as at 30 June 2021 and of its performance for the financial year ended
on that date; and
(b) There are reasonable grounds to believe that the company will be able to
pay its debts as and when they become due and payable; and
(c) At the date of this declaration, there are reasonable grounds to believe that
the members of the extended closed group identified in note 33 will be able
to meet any obligations or liabilities to which they are, or may become subject
by virtue of the deed to cross guarantee described in note 23.
The Basis of Preparation note in the notes to the financial statements confirms
that the financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board.
The directors have been given the declarations by the chief executive officer,
deputy chief executive officer and the chief financial officer required by section
295A of the Corporations Act 2001.
Signed in accordance with a resolution of the Directors made pursuant to section
298(2) of the Corporations Act 2001.
On behalf of the Directors
Neil Kearney
Chairman
26 August 2021
Peter Bender
Managing Director and CEO
26 August 2021
Huon Aquaculture Group Limited
Annual Report 2021
126
Directors’ Declaration
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001
T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Independent auditor’s report
To the members of Huon Aquaculture Group Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of Huon Aquaculture Group Limited (the Company) and its
controlled entities (together the Consolidated Group) is in accordance with the Corporations Act 2001,
including:
(a) giving a true and fair view of the Consolidated Group's financial position as at 30 June 2021 and
of its financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Consolidated Group financial report comprises:
●
the consolidated balance sheet as at 30 June 2021
●
the consolidated statement of comprehensive income for the year then ended
●
the consolidated statement of changes in equity for the year then ended
●
the consolidated statement of cash flows for the year then ended
●
the consolidated income statement for the year then ended
●
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
●
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Consolidated Group in accordance with the auditor independence
requirements of the Corporations Act 2001 and the ethical requirements of the Accounting
Professional & Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the financial report in
Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
Independent auditor’s report
127
Independent auditor’s report
continued
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
●
For the purpose of our audit we used overall Consolidated Group materiality of $770,000, which
represents approximately 2.5% of the earnings before interest, tax, depreciation and amortisation
(EBITDA) adjusted for impairment and the fair value adjustment for biological assets and averaged for the
current and two previous financial years. The depreciation and amortisation used in our materiality
calculation is as outlined in note 3(b) to the financial report.
●
We applied this threshold, together with qualitative considerations, to determine the scope of our audit
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on
the financial report as a whole.
●
We chose EBITDA prior to any fair value adjustment for biological assets because, in our view, it is the
metric against which the performance of the Consolidated Group is most commonly measured. An average
was used due to fluctuations in EBITDA from year to year caused by a number of factors, which include
(but are not limited to) environmental conditions and domestic and export pricing and demand. We also
adjusted for impairment as it is an unusual or infrequently occurring item impacting profit and loss.
●
We utilised a 2.5% threshold based on our professional judgement, noting it is within the range of
commonly acceptable thresholds.
Audit Scope
●
Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
●
The Consolidated Group’s accounting processes are performed by a central finance function at the
corporate head office in Hobart
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
Huon Aquaculture Group Limited
Annual Report 2021
128
Key audit matter
How our audit addressed the key audit
matter
Impairment of plant and equipment and
right of use assets
Refer to note 31
The Consolidated Group has $229.8 million of plant
and equipment and $97.8 million of right of use
assets as at 30 June 2021. Australian Accounting
Standards require the Consolidated Group to assess
the carrying value of assets if impairment indicators
exist.
During the year the Consolidated Group identified
indicators of impairment and therefore performed
an impairment assessment by preparing a financial
model to determine if the carrying value of the
assets was supported by forecast future cash flows,
discounted to present value (the "model").
As a result, the Consolidated Group recognised an
impairment loss of $114 million as at 31 December
2020 as detailed in note 30. No additional
indicators were subsequently identified by the
Consolidated Group.
This was a key audit matter due to the financial
significance of the plant and equipment and the
right of use asset balances and the significant
judgements and assumptions applied in estimating
future cash flows and the assessment of subsequent
indicators for impairment.
We performed the following procedures amongst
others:
●
Assessed whether the Consolidated Group’s
determination of Cash Generating Units
(CGUs) was consistent with our knowledge of the
nature of the Consolidated Group’s operations
and internal Group reporting.
●
Tested the mathematical accuracy, on a sample
basis, of the calculations in the model.
●
Compared the forecast future cash flows used in
the model with the forecasts formally approved by
the Board.
●
Evaluated the Consolidated Group's ability to
forecast future cash flows by comparing historical
budgets with reported actual results for the past
3 years.
●
Assessed whether the forecast growth rate
assumptions used in the model were appropriate
with reference to our understanding of the key
drivers, such as forecast harvest volumes and
pricing.
●
Compared the terminal growth rate used in the
models to historical growth rates achieved and
external economic forecasts.
●
With the assistance of PwC valuation experts,
assessed whether the discount rates used in the
model were appropriate by comparing them to
market data, comparable companies, and
industry research.
●
Considered the allocation of the impairment loss
recognised during the year to the Group’s assets.
●
Evaluated the reasonableness of the disclosures
made in note 31, including key assumptions, in
light of the requirements of Australian
Accounting Standards
●
Assessed the Consolidated Group's determination
that there were no further indicators of
impairment as at 30 June 2021, including
comparing the actual results for 30 June 2021 to
forecast results and comparing market
capitalisation versus net assets at 30 June 2021.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
129
Independent auditor’s report
continued
Our procedures included, but were not limited to the
following procedures:
●
Obtained confirmations directly from the
Consolidated Group’s financiers to confirm
the borrowing’s balance, tenure and
conditions.
●
Read the borrowing agreements between
the Consolidated Group and its financiers to
develop an understanding of the terms
associated with the facilities, including
covenants.
●
Where debt was regarded as non-current,
we evaluated the Consolidated Group's
assessment that they had the unconditional
right to defer payment such that there were
no repayments required within 12 months
from the balance date.
●
Evaluated the appropriateness of the
Consolidated Group’s assessment of
compliance with covenants.
●
Evaluated whether the disclosures were
consistent with the requirements of
Australian Accounting Standards.
Borrowings
Refer to note 15
At 30 June 2021, the Consolidated Group held
interest bearing debt of $12.5 million in current
liabilities with $126.7 million classified as non-current
liabilities. Borrowings represent the largest liability on
the consolidated balance sheet.
Borrowings is a key balance on the balance sheet and
is an important funding mechanism. There is
judgement in relation to the ongoing compliance with
covenants as such compliance is based on financial
budgets which include assumptions for forecast
Operating EBITDA.
As a result, we consider accounting for borrowings to
be a key audit matter at 30 June 2021.
●
The total weight of live finfish at sea (based
on number of fish and weight);
●
expected mortalities of finfish prior to
harvesting; and
●
selling price per HOG/kg
Our procedures in relation to the Consolidated
Group’s fair value calculation of live finfish above 1kg,
included, but were not limited to, the following
procedures:
●
Considering the valuation methodology
against the requirements of the relevant
Australian Accounting Standard.
●
Testing the mathematical accuracy, on a
sample basis, of the calculations.
●
Assessing the historical accuracy of
forecasting and estimation by comparing
the prior year estimate to actual
performance.
We performed the following procedures over specific
valuation inputs, amongst others:
Number and weight of live finfish at sea
●
We performed a reconciliation of the
number of live finfish by obtaining the
opening balance and comparing the known
movements (fish intakes, harvest and
mortalities for the year) to underlying
documentation on a sample basis in order to
assess the reasonableness of the number of
live finfish at year end.
Key audit matter
How our audit addressed the key audit
matter
Fair value of biological assets
Refer to note 4
The Consolidated Group held biological assets of
$218.3 million at 30 June 2021. The biological assets
include broodstock, eggs, juveniles, smolt and live
finfish.
Australian Accounting Standards require biological
assets to be measured at fair value less costs to sell or,
in the absence of a fair value, at cost less impairment.
The Consolidated Group has valued each of the
biological assets. We considered the valuation of live
finfish above 1kg to be a key audit matter due to the
significant judgement involved in estimating:
Huon Aquaculture Group Limited
Annual Report 2021
130
●
We assessed the reasonableness of fish loss
adjustments made to either the count or
weight by comparing them to prior periods.
●
We assessed the weight assumption at 30
June 2021 based on actual weights of finfish
harvested subsequent to the year end and
bath weight data recorded during the year
(independently of the finance function).
●
We assessed the sensitivity of the
calculations to changes in the Consolidated
Group’s estimate of weight by applying
other values within a reasonably possible
range.
Expected mortalities of finfish
●
We assessed the expected mortality rates
applied at year-end by comparing them to
actual mortality rates recorded by the
Consolidated Group over the year and
subsequent to year end.
Selling price per HOG/kg
●
We agreed the sales included in the fair
value calculation to the sales for the 12
months recorded by the Consolidated
Group.
●
We compared the 12-month actual average
selling price per HOG/kg for domestic and
export sales to the price per HOG/kg
included in the calculation of fair value of
finfish and considered the impact of any
post year end price changes.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 June 2021 but does not include the
financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
Key audit matter
How our audit addressed the key audit
matter
131
Independent auditor’s report
continued
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Huon Aquaculture Group Limited
Annual Report 2021
132
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Alison Tait
Melbourne
Partner
26 August 2021
Our opinion on the remuneration report
We have audited the remuneration report included in pages 41 to 53 of the directors’ report for the
year ended 30 June 2021.
In our opinion, the remuneration report of Huon Aquaculture Group Limited for the year ended
30 June 2021 complies with section 300A of the Corporations Act 2001.
Report on the remuneration report
133
Shareholder information
The shareholder information set out below was applicable as at 20 August 2021.
Voting rights
The voting rights attaching to ordinary shares fully paid are, on a show of hands every member present at a meeting in person
or by proxy shall have one vote, and upon a poll each share shall have one vote.
Substantial shareholders
Substantial shareholders in the Company pursuant to notices lodged with the ASX in accordance with section 671B of the
Corporations Act:
Ordinary shares
Number
of shares
%
PETER JAMES BENDER
13,266,521
12.07%
FRANCES ROBYN BENDER (spouse of Peter Bender)
5,794
0.01%
SURVEYORS INVESTMENTS PTY LTD ACN 602 004 179 (i)
44,527,252
40.53%
MR PETER BENDER & MRS FRANCES BENDER
60,000
0.05%
P & F BENDER SUPER PTY LTD
22,000
0.02%
Australian Super Pty Ltd
13,868,563
12.62%
Tattarang Agrifood Pty Ltd ACN 651 126 153 (TAPL), Forrest & Forrest Pty Ltd
ABN 38 088 052 180 (FFPL) and John Andrew Henry Forrest (AF)
20,334,166
18.51%
Total
92,084,296
83.81%
Balance of register
17,788,663
16.19%
Grand total
109,872,959
100.00%
(i) JBS Australia Pty Ltd ACN 011 062 338 (change in substantial holding notice 17/08/21)
44,527,252
40.53%
Distribution of securities
Range
Number
of Holders
Securities
%
100,001 and Over
17 102,447,486
93.24%
10,001 to 100,000
131
3,262,250
2.97%
5,001 to 10,000
210
1,561,886
1.42%
1,001 to 5,000
823
1,966,961
1.79%
1 to 1,000
1,440
634,376
0.58%
Total
2,621 109,872,959
100.00%
The number of holders of less than a marketable parcel of ordinary shares, equivalent to 130 ordinary shares, was 144 and
they held 6,833 shares (based on a market price of $3.82 at the close of trading on 20 August 2021).
Huon Aquaculture Group Limited
Annual Report 2021
134
Top 20 largest shareholders
Rank Name
20 August 2021
%
1
SURVEYORS INVESTMENTS PTY LTD ACN 602 004 179
44,527,252
40.53%
2
TATTARANG AGRIFOOD PTY LTD
20,339,729
18.51%
3
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
14,163,222
12.89%
4
PETER JAMES BENDER
13,266,521
12.07%
5
UBS NOMINEES PTY LTD
2,368,600
2.16%
6
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED – A/C 2
2,119,467
1.93%
7
CITICORP NOMINEES PTY LIMITED
1,685,823
1.53%
8
NATIONAL NOMINEES LIMITED
1,284,085
1.17%
9
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
790,461
0.72%
10
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
525,995
0.48%
11
MS DANIELLE SHARON TUDEHOPE
330,000
0.30%
12
NEWECONOMY COM AU NOMINEES PTY LIMITED <900 ACCOUNT>
319,220
0.29%
13
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
271,738
0.25%
14
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
121,279
0.11%
15
MR ERNST KOHLER
117,383
0.11%
16
NETWEALTH INVESTMENTS LIMITED
115,267
0.10%
17
BNP PARIBAS NOMINEES PTY LTD
101,444
0.09%
18
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 5
98,727
0.09%
19
MATRAVILLE INVESTMENT CO PTY LIMITED
80,274
0.07%
20
MR MICHAEL GREGORY PETERSON & MS SAMANTHA ANNE WAKE
80,200
0.07%
Total
102,706,687
93.48%
Balance of register
7,166,272
6.52%
Grand total
109,872,959
100.00%
Restricted equity securities
There are no equity securities subject to restriction.
Unquoted equity securities
There are no unquoted equity securities on issue.
On market buy-back
There is no current on-market buy-back in respect of the Company’s ordinary shares.
Managing shareholding online
Shareholders are able to manage their shareholdings online through the Link Investor Centre which is available on the Investor
section of the Huon website, http://investors.huonaqua.com.au/investors/?page=My-Shareholding.
The Link Investor Centre can be contacted on 1300 554 474 or registrars@linkmarketservices.com.au.
135
Glossary of Terms
$
Australian dollars
AASB
Australian Accounting Standards Board
AASBs or Australian Accounting
Standards or Accounting Standards
Australian Accounting Standards
AASB141
Relates to the fair value adjustment of biological assets required by AASB 141
ABS
Australian Bureau of Statistics
AGD
Amoebic Gill Disease, a fish disease that compromises gill function
ASIC
Australian Securities and Investments Commission
ASX
ASX Limited (ABN 98 008 624 691) and, where the context requires, the
Australian Securities Exchange operated by ASX Limited
Atlantic salmon or salmon
A fish in the family Salmonidae, which is typically found in the northern Atlantic
Ocean and in rivers that flow into the north Atlantic
Bender Family
Peter Bender and Frances Bender, the founders of Huon and (as applicable)
Surveyors Investments Pty Ltd (an entity controlled by Peter and Frances Bender)
Biological assets
Farm animals that are classified as assets which, according to International
Accounting Standards, must be recorded on balance sheets at their market value.
Once the assets have either been slaughtered or harvested, then the assets will
become agricultural produce
Bonus Plan
A component of the LTI plan whereby the Board may determine to offer KMP
LTI plan performance rights in lieu of a bonus where the Employee agrees to
contractually forgo part of their future pre-tax bonus.
British Retail Consortium (BRC)
BRC Global Standard A leading safety and quality certification program
Broodstock
A group of mature fish used in aquaculture for breeding purposes
CAGR
Compound annual growth rate
CBA
Commonwealth Bank of Australia
Constitution
The constitution of the Company
Control event refers to:
(a) A Court orders a meeting to be convened in relation to a proposed
compromise or arrangement for the purposes of, or in connection with:
a. a scheme which would, if it becomes effective, result in any person (either
alone or together with its related bodies corporate) owning all of the
shares in the Company; or
b. a scheme for the reconstruction of the Company or its amalgamation with
any other company or companies;
(b) members of the Company approve any compromise or arrangement referred
to in paragraph (a);
(c) any person becomes bound or entitled to acquire shares in the Company
under:
a. any compromise or arrangement referred to in paragraph (a) which has
been approved by the Court;
b. section 414 of the Corporations Act; or
c. Part 6A.1 or Part 6A.2 of the Corporations Act;
(d) a resolution is proposed to be put to shareholders proposing a voluntary
winding up; or
(e) an order is sought for the compulsory winding up of the Company.
Controlled Growth Strategy
The strategy under which Huon planned to roll out a number of strategic capital
projects across its operations which are intended to expand production, increase
efficiency and maintain the consistency and high quality of fish produced
Corporations Act
Corporations Act 2001 (Cth)
DPIPWE
Tasmanian Department of Primary Industries, Parks, Water and Environment
EBIT
Earnings before interest and tax. This is a non-IFRS measure
EBITDA
Earnings before interest, tax, depreciation and amortisation.
This is a non-IFRS measure
FAO
Food and Agriculture Organisation is specialised agency of the United Nations
Fortress Pens
Fish pens which have been designed by Huon in order to be predator resistant
and incorporate a patented stanchion design
Huon Aquaculture Group Limited
Annual Report 2021
136
GLOBAL G.A.P.
Non-governmental organisation that sets voluntary standards for the certification
of agricultural products around the globe
GSI
Global Salmon Initiative, a leadership initiative by global farmed salmon
producers focused on making significant progress towards a shared goal of
providing a highly sustainable source of healthy protein to feed a growing
global population, whilst minimising the environmental footprint and continuing
to improve our social contribution
GST
Goods and services tax
Hatchery
A facility where eggs are hatched under artificial conditions
HOG
Head-on gutted fish
Huon or the Company or
the Consolidated Group
Huon Aquaculture Group Limited (ACN 114 456 781) and its subsidiaries as the
context requires
Huon Method
Huon’s unique method of farming salmon which places the welfare of fish at
the centre of operations and ensures salmon are provided an environment
which mimics their natural habitat and are raised i) stress free; ii) well nourished;
iii) clean and healthy; and iv) responsibly
Husbandry
The care, cultivation and breeding of crops and animals
IASB
International Accounting Standards Board
IFRSs
International Financial Reporting Standards
Listing
Admission to the official list of the ASX, 23 October 2014
NPAT
Net profit after tax
NOK
Norwegian Krone
OECD
Organisation for Economic Co-operation and Development
Operating EBITDA
Operating EBITDA refers to Earnings Before Interest, Tax, Depreciation and
Amortisation exclusive of the fair value adjustment of biological assets.
Performance Right
Performance Right means a right to acquire one Share in the capital of the
Company in accordance with Plan Rules and an Invitation
Plan
Plan refers to the Huon Aquaculture Group Ltd Long Term Incentive Plan and
Bonus Plan as set out in the Plan Rules
POMV
Pilchard Orthomyxovirus
PwC
PricewaterhouseCoopers
R&D
Research and development
Rabobank
Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A.
RAS
Recirculation Aquaculture System
Related Body Corporate
Has the meaning given by section 50 of the Corporations Act
Rules
Rules refer to the terms and conditions of the Plan
Salmonids
Collective name for all salmon fish species, including trout
Smolt
A young salmon
Sustainability Dashboard
A dashboard on Huon’s website which provides information concerning Huon’s
salmon farming practices, management of the welfare of its fish and the impact
on the environment
TPD
Total permanent disability
TPDNO
Total Permissible Dissolved Nitrogen Output
TSGA
Tasmanian Salmonid Growers’ Association, Tasmania’s peak body representing
salmon growers throughout Tasmania
Value added products
Raw fish which undergo processing in order to be turned into other products such
as skin-on or skin-off fillets, portions, cutlets, smoked products, pate or caviar
WFE
Whole fish equivalent
Year Class
The calendar year in which the smolt (salmon) or fingerling (trout) enters the sea
for on-growing
137
Corporate Directory
Directors
— Neil Kearney, Chairman
— Peter Bender, Managing Director and CEO
— Frances Bender, Executive Director
— Tony Dynon, Non-executive Director
— Simon Lester, Non-executive Director
Senior Executives
— Peter Bender, Managing Director and CEO
— Frances Bender, Executive Director
— Philip Wiese, Deputy CEO
— Thomas Haselgrove, CFO
— David Morehead, General Manager
Marine Operations
— Charles Hughes, General Manager
Commercial and Planning
— David Mitchell, General Manager
Freshwater Operations
— Anthony Baker, General Manager
People, Safety and Sustainability
Company Secretary
— Thomas Haselgrove
Registered Office
Huon Aquaculture Group Limited
Level 13, 188 Collins Street
Hobart TAS 7000
+61 3 6295 4200
huonaqua@huonaqua.com.au
www.huonaqua.com.au
Principal Place of Business
Huon Aquaculture Group Limited
961 Esperance Coast Road
Dover TAS 7109
Auditor
PricewaterhouseCoopers
2 Riverside Quay
Southbank VIC 3006
Bankers
Commonwealth Bank of Australia
Level 20, Tower One
Collins Square, 727 Collins Street
Melbourne VIC 3008
Rabobank
Darling Park Tower 3
Level 13, 201 Sussex Street
Sydney NSW 2000
Stock Exchange Listing
Huon Aquaculture Group Limited is listed
on the Australian Securities Exchange (ASX)
The Home Exchange is
Melbourne, Victoria
ASX Code: HUO
Share Registry
Link Market Services
Level 12, 680 George Street
Sydney NSW 2000
Huon Aquaculture Group Limited
Annual Report 2021
138
Designed and produced by FIRST Advisers
www.firstadvisers.com.au
Huon Ocean Trout,
Salmon and
Yellowtail Kingfish
www.huonaqua.com.au
HUON AQUACULTURE GROUP LIMITED
ANNUAL REPORT 2021