new
growth
Annual Report for the financial year ending 2017
annual report
for the year ended 30 June 2017
DIRECTORS
Chairman-non-executive,
John F Pressler OAM MAICD
Managing Director and Chief Executive Officer
Michael K Lindsay
Non-executive Directors
Richard A Anderson OAM BCom FCA FCPA
Gregory D Farrell BEcon
Broderick T Jones LLB
Nathan L King BBus, CPA, ACIS, GAICD
Computershare Investor Services Pty Ltd
117 Victoria Street, West End, QLD 4101
Telephone: 1300 552 270
Website: www.computershare.com.au
152 Postle St, Acacia Ridge, QLD 4110
Telephone: (07) 3240 4900
Fax: (07) 3054 0240
Website: www.lindsayaustralia.com.au
Pitcher Partners
Level 38 Central Plaza 1, 345 Queen Street,
Brisbane, QLD, 4000
Westpac Banking Corporation
65 Molesworth Street, Lismore, NSW, 2480
GENERAL LEGAL COUNSEL
& COMPANY SECRETARY
CHIEF FINANCIAL OFFICER &
COMPANY SECRETARY
SHARE REGISTER
REGISTERED & PRINCIPAL
ADMINISTRATIVE
OFFICE
AUDITOR
BANKER
STOCK EXCHANGE LISTING
Lindsay Australia Limited shares are listed on
the Australian Securities Exchange, code LAU.
contents
ABOUT LINDSAY AUSTRALIA
CHAIRS’ REPORT
OVERVIEW OF DIRECTORS AND COMPANY SECRETARIES
OPERATING AND FINANCIAL REPORT
DIRECTORS’ REPORT
Remuneration report
AUDITOR’S INDEPENDENCE DECLARATION
ANNUAL FINANCIAL REPORT
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors’ declaration
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF LINDSAY AUSTRALIA LIMITED
CORPORATE GOVERNANCE STATEMENT
SHAREHOLDER INFORMATION
2
4
6
8
13
17
26
27
29
30
31
32
33
67
68
73
82
our business
Lindsay Australia is an integrated transport,
logistics and rural supply company with a
specific focus on servicing customers in the food
processing, food services, fresh produce, rural and
horticultural sectors.
From planting crops, through fertiliser, chemicals,
supply of packaging, and then transportation,
fumigation and export. The two divisions offer
customers an end to end solution with one point of
contact and accountability.
Lindsay Australia comprises of two divisions
Rural and Transport. When combined these
divisions offer products and services covering the
key needs of growers (customer) throughout their
production cycle.
site locations
Lindsay Rural
Brisbane Warehouse
Berri
Bowen
Brandon
Bundaberg North
Bundaberg Wyllie
Childers
Coffs Harbour
Emerald
Gatton
Innisfail
Kyabram
Mareeba
Adelaide
Mildura
Mundubbera
Murwillumbah
Nambour
Invergordon
Stanthorpe
Tully
Lindsay Transport
Adelaide
Bowen
Brisbane
Bundaberg
Coffs Harbour
Emerald
Gatton
Innisfail
Mackay
Mareeba
Melbourne
Mildura
Mundubbera
Nambour
Stanthorpe
Sydney
Tully
Lindsay Fresh Logistics
Brisbane Markets
2
Lindsay Australia Limited | Annual Report 2017 | About Lindsay Australia
the lindsay solution
Lindsay Australia’s business units share common
customers within the horticulture industry which
gives the Group a strategic advantage by providing
a unique end-to-end service solution.
With the recent addition of the Lindsay Fresh
Logistics facility, Lindsay Australia continues
to build on the Lindsay Solution by increasing
our service offerings to our customers and now
provide an integrated logistics service from port to
paddock and everything in-between.
Lindsay Rural
Inputs
Grower
Lindsay Rural
Inputs
Grower
Horticulture
Agronomy
Irrigation Services
Carton Erection
Warehousing
Storage
Distribution
Supplier
Cartons
Packaging
Fertilisers
Chemicals
Irrigation Equipment
Packaging
Fertilisers
Chemicals
Irrigation Equipment
Advice
The
Lindsay
Solution
Outputs
Palletised Produce
Bin Produce
Temperature Sensitive
Time Sensitive
Multi-Temperature
Outputs
Palletised Produce
Bin Produce
Temperature Sensitive
Time Sensitive
Multi-Temperature
Lindsay Transport
& Fresh Logistics
Transport and Logistics
Warehousing
Cold Storage
Distribution
Ripening
Horticulture
Agronomy
Irrigation Services
Carton Erection
Warehousing
Storage
Distribution
Supplier
Cartons
Packaging
Fertilisers
Chemicals
Irrigation Equipment
Outputs
Palletised Produce
Bin Produce
Temperature Sensitive
Time Sensitive
Multi-Temperature
Packaging
Fertilisers
Chemicals
Irrigation Equipment
Advice
Outputs
Palletised Produce
Bin Produce
Temperature Sensitive
Time Sensitive
Multi-Temperature
The
Lindsay
Solution
Lindsay Fresh
Logistics
Lindsay
Transport
Transport and Logistics
Warehousing
Cold Storage
Distribution
Ripening
Transport and Logistics
Warehousing
Cold Storage
Distribution
Ripening
Lindsay Australia Limited | Annual Report 2017 | About Lindsay Australia
3
chairs’ report
The Group achieved an operating profit
after tax of $6.43 million and grew
operating revenue to $332.86 million.
chairs’ report
This year, Lindsay Australia Group,
delivered a result that was impacted
by many unfavourable weather events,
flat economic environment and
competition.
Despite these conditions, the company stuck to its strategic
plan, delivering all of the planned initiatives. These delivered
initiatives will provide the engine of growth in coming years.
The network of locations helps lessen the impact of major
weather events allowing different regions to meet end
consumer needs. This year’s weather events, while harsh,
would have been worse if not for a network of locations
across much of the country. For example, in November,
floods impacted the Adelaide growing regions. In response,
growers in Bowen and Bundaberg provided more produce,
albeit less than Adelaide, to meet end consumer demand.
This was repeated with a heat wave in southern Queensland
and Cyclone Debbie in March this year. Other events such as
the white spot prawn disease and banana glut were harder to
mitigate against. The group continues to invest in the network
to provide growth and mitigate against risks specific to one
region.
During the year, a new site was commissioned in Mareeba.
Mareeba is located less than one hour south-west of Cairns
International Airport. The area is sheltered from cyclones,
behind the Great Dividing Range and offers growers high
levels of sunny days and good water supply from Tinaroo
Falls Dam. The Dam feeds water to our customers through an
irrigation scheme covering 365km of channels. We expect the
utilisation of this site to increase each year over the coming
five years.
The consolidation of Brisbane sites began in November with
the opening of our Postle Street site. The new site, located at
Acacia Ridge, is adjacent to Queensland’s interstate rail line
and within 15 minutes’ drive of the southbound highway. The
new facilities offers 45,000 sq metres of space for our Rural,
Transport and Head Office divisions, and includes a purpose
built workshop with additional washbays for the maintenance
of our vehicles, almost 10,000 sq meters of storage (dry and
refrigerated) for our Rural and Transport divisions, a 360 sq
metre showroom for our Rural division, drivers quarters for
our off duty drivers and 2 floors of office space which includes
board rooms, meeting rooms and training rooms. Over
FY18 we expect to complete the consolidation and improve
utilisation of the site.
Information technology is the enabler that supports continual
efficiency gains and lean operations. It delivers improved
customer experiences, reliability of service and better safety
outcomes. This year the completed logistics systems began
to deliver on these aspirations, and although we have a
long way to go, we can see the competitive advantage our
integrated systems offer. Over the coming years we will
continue to invest in our systems.
Our export operations, Lindsay Fresh Logistics, continues to
grow. The facility located in the Brisbane Markets offers:
– Unloading, cross-docking and local delivery;
– Short and long term storage solutions;
– Ripening service for specific produce lines; and
– Quarantine, inspection and fumigation of produce for
import, export and interstate.
During the year we also began servicing new groups of
end consumers in overseas markets. This is an exciting
opportunity that integrates our businesses, offering new
markets to growers who use our Rural and Logistic
operations. While this currently represents a small portion of
our revenue, the Group is focused on growing this overseas
market and increasing the integrated offering to our existing
customers.
The 2017 result, although lower than planned, reflects a year
of tough climatic conditions. The Lindsay Group achieved an
operating profit after tax of $6.43 million and grew operating
revenue to $332.86 million. Off the back of this result the
board has declared a full year dividend of 1.6 cents per
share. The final year dividend is 0.8 cents.
The Board has high expectations of the year ahead. As major
capital works are completed, the focus will turn to improving
utilisation, operational efficiency and growing our export
markets. I thank our CEO Kim Lindsay and Lindsay Australia
employees for their hard work and dedication throughout
the year.
John F Pressler
Brisbane, Queensland, 30th August 2017
Lindsay Australia Limited | Annual Report 2017 | Chairs’ Report
5
overview of directors and company secretaries
Mr John Frederick Pressler OAM
Mr Gregory Damien Farrell
Mr Richard Andrew Anderson OAM
Chairman-non-executive
Non-executive Director
Non-executive Director
Mr Pressler has had a highly successful
involvement in the agricultural and
horticultural industries for over 40 years,
and is recognised as one of the industry’s
leading participants in both the Bundaberg
and Emerald regions.
Mr Pressler was a non-executive director
of Wide Bay Australia Limited from 1988 to
2013, and Chairman from 1997 to 2009.
Mr Pressler is a member of the Australian
Institute of Company Directors. He was
awarded the medal of the Order of Australia
in 2004 for services to the horticultural
industry.
Mr Pressler has held no other directorships
with other listed companies during the last
three years.
Mr Farrell is the Managing Director of
Mulawa Holdings Pty Limited – a family
company with interests in the Australian
tourism, gaming and road transport
industries.
In 1988 Mr Farrell was appointed to the
position of Managing Director of Mulawa
Holdings following his transfer from the
IPEC Transport Group.
Whilst at IPEC, Mr Farrell participated
in all areas of the business, gaining
valuable experience and insight into every
department. He held senior positions,
including those of Industrial Relations
Manager and National Freight Manager and
was a key member of the IPEC Board of
Management.
In 1990 Mulawa Holdings established, and
still operates, Cope Transport a significant
road transport company operating in all
States and Territories throughout Australia.
Mr Farrell has a Bachelor of Economics
degree from the University of New South
Wales and in 1999 successfully completed
a three-year executive education program
at the Harvard Business School.
Mr Farrell has held no other directorships
with other listed companies during the last
three years.
Mr Anderson is a former partner of
PriceWaterhouseCoopers having served as
the firm’s managing partner in Queensland
for nine years and also as a member of the
firm’s national committee.
Mr Anderson holds a Bachelor of
Commerce degree from the University of
Queensland and is a Fellow of the Institute
of Chartered Accountants and a Fellow of
CPA Australia.
Mr Anderson is the current chairman of
Data #3 Limited. He is also a member of
the board of Namoi Cotton Cooperative
Limited and is the current president of the
Guide Dogs for the Blind Association of
Queensland.
Mr Anderson was awarded the medal of the
Order of Australia in 1997 for services to
the Guide Dogs for the Blind Association of
Queensland and the Queensland Art Gallery
Foundation.
Mr Anderson has held no other
directorships with other listed companies
during the last three years.
6
Lindsay Australia Limited | Annual Report 2017 | Overview of Directors and Company Secretaries
Mr Michael Kim Lindsay
Mr Nathan King
Mr Broderick Jones
Managing Director and
Chief Executive Officer
Chief Financial Officer and
Company Secretary
Group Legal Counsel and
Company Secretary
B.Bus (Banking & Finance), CPA, ACIS
(Company Secretarial Practice), GAICD.
Mr Jones holds a bachelor of laws degree
from Queensland University of Technology.
Mr King commenced as Chief Financial
Officer in January 2015. He brings
experience from various industries,
geographies, and company sizes.
Previous companies include Rio Tinto,
Sydney Airport, Hilton, and Hyatt hotels.
Nathan also sits as a non-executive director
on the board of RACQ Bank.
He has 20 years’ professional experience
within law, finance, property and markets
gained from a number senior roles both
domestically and offshore.
Broderick joined Lindsay Australia Limited
in September 2014 and was appointed
Company Secretary 30 October 2014.
Mr Lindsay has over 30 years’ experience
in the Australian transportation and rural
merchandising industries. From 1974 to
1983 he worked for Lindsay Transport,
gaining a hands-on knowledge of the
transportation industry through an
involvement in all areas of the Group’s
operations.
In 1983 Mr Lindsay established Lindsay
Rural, a specialist rural merchandising
business with operations in Central and
South East Queensland. As Managing
Director of the Company he was
responsible for expanding it from a small
local operation to a major regional business.
Mr Lindsay has been Managing Director
and Chief Executive Officer of Lindsay
Australia since 2002.
Mr Lindsay has held no other directorships
with other listed companies during the last
three years.
Lindsay Australia Limited | Annual Report 2017 | Overview of Directors and Company Secretaries
7
operating and
financial report
Throughout the year the Group
continued to invest in sites and systems
to support sustainable future growth.
Operating and Financial Report
Summary of Operating Results
For the financial year ended 30 June 2017, the Lindsay Group of companies included Lindsay Australia Limited (the ‘Group’) achieved
an operating profit after tax of $6.43 million and grew operating revenue to $332.86 million. The 2017 financial year was characterised
by flat economic conditions, adverse weather and fierce competitive pressures affecting both Transport and Rural divisions.
Throughout the year the Group continued to invest in sites and systems to support sustainable future growth and improve the customer
experience across both businesses.
Key Metrics
Operating Revenue
EBITDA
Depreciation & Amortisation
EBIT
Finance Costs
Income Tax
Reported NPAT
Key Finance Metrics
Capital Expenditure
Operating Cash flow
Divisional Contribution
Transport
Rural
2017
$’000
2016 % Change
$’000
332,858
324,796
35,904
35,690
(22,086)
(19,642)
2.5%
0.6%
12.4%
(13.9%)
18.1%
(42.7%)
(20.4%)
16,048
(4,644)
(3,331)
8,072
58,129
29,789
(39.5%)
33.3%
22,768
3,544
10.5%
(3.9%)
13,818
(5,483)
(1,909)
6,426
35,160
39,702
25,153
3,405
(a) Transport profit contribution includes fuel tax credits relating to prior periods refer to note 6(a).
The Group succeeds when our customers succeed in their
businesses. This year customers faced varied conditions. In
November 2016, floods hit Adelaide’s growing regions. Then
in December 2016 Queensland’s prawn industry was hit with
an outbreak of White Spot disease carried by imported
products. The outbreak decimated production, which in turn
decreased storage and transportation requirements.
Throughout FY2017 banana growers experienced an
oversupplied market and depressed pricing, which reduced
volumes shipped and increased bad debts. These debts have
been provided for in the 2017 accounts. Banana prices are
now increasing and without new supply growers are looking at
a more positive 2018 financial year.
In March 2017, Cyclone Debbie hit Bowen and then turned into
a rain depression, travelling south across the Wide Bay district,
Nambour and Gatton dumping large falls. Longer term the
quenching rains will support future plantings. However, in the
short term, the timing delayed planting which decreased
demand for rural inputs and transport. Despite these region
specific climatic conditions, other regions within the network of
sites continued to provide stable and, in some areas,
increasing revenue. Maintaining revenue through these
challenges underscored the value of a geographically spread
network covering different regions.
Group EBITDA
36
36
NPAT Reconciliation
29
28
30
s
n
o
i
l
l
i
M
2013
2014
2015
2016
2017
9
Lindsay Australia Limited | Annual Report 2017 | Operating and Financial Report
During the period, the Group finished development of the new
Transport and Rural sites in Mareeba and Acacia Ridge. The
completion of the Mareeba site provides the Group with
greater access to the Atherton Tablelands, one of the fastest
growing horticultural regions in Australia. The tropical growing
conditions within the region makes it essential for growers to
have immediate access to cold storage and logistic services to
preserve produce shelf life. The new site is strategically
positioned to provide these services and will continue to
develop as a key freight consolidation point within the Group’s
network in coming years. A new facility in Acacia Ridge, South
East Queensland finished construction in November 2016
providing the Group with a new centre of operations,
consolidating Rural, Transport and Corporate functions on a
single site with direct access to railway lines. The site provides
much needed storage space for both Rural and Transport with
dry, chiller and freezer storage capabilities.
Cash generated from operating cash activities increased $9.9
million on the previous financial year largely a result of several
working capital initiatives on stock, debtors and creditors.
Refer to note 25 for detailed movements
These investments initially resulted in increased depreciation
and interest charges, without increased revenue and profit.
However, it is expected that returns on this investment will
gradually improve, as utilisation of these facilities increases
and the consolidation of Brisbane sites is completed. Our
new logistics system was also successfully implemented
during the year. Combined with systems installed last year,
we now have access to more data which has facilitated
accurate fuel tax claims. Evidence of these claims are
included in this year’s results. Looking forward, more
accurate, timely and detailed data will also support
improved utilisation and customer experiences.
Our push into exporting produce continues to gain new
customers and support integration initiatives through
Rural and Transport. These exports also support local
growers by providing exposure to international markets.
330
320
310
300
290
s
n
o
280
M
i
l
l
i
270
Group Operating Revenue
11.00%
333
325
10.50%
310
308
283
10.00%
9.50%
9.00%
2013
2014
2015
2016
2017
Group Revenue
EBITDA Margin
Lindsay Transport & Rural in Mareeba, Queensland
John F Pressler Centre, Acacia Ridge, Queensland
Lindsay Australia Limited | Annual Report 2017 | Operating and Financial Report
10
CAPEX Spend
Capital expenditure for FY2017 was $35.2 million. Plant and equipment spend of $22.3 million largely represents sustaining spend,
which is the spend the Group must make to maintain the age and condition of the fleet and supporting infrastructure. Property spend
largely relates to the new sites in Brisbane and Mareeba.
Divisional performance Transport & Rural
Segment Overview
External Sales
Transport
Rural
Profit Contribution
Transport
Rural
2017
$’000
2016 % Change
$’000
227,400
105,458
224,331
100,465
25,153
3,405
22,768
3,544
1.4%
5.0%
10.5%
(3.9%)
Transport profit contribution includes fuel tax credits relating to prior periods refer to note 6(a).
Summary of Transport result
During the year Transport made a profit contribution of $25.2 million, an increase of 10.5% on the previous corresponding period. The
Transport division has a fleet of 390 prime movers and rigids and 650 trailers. The fleet is configured to carry chilled and frozen
produce. Measures of success are to move our customers freight safely, on-time performance, while preserving its quality. Costs are
managed by optimising each assets value through its life cycle, and maximising freight utilisation through a hub and spoke model. The
Rural division provides freight into regional centres and reduces imbalances caused by moving produce from farms to cities.
As discussed, weather events in particular challenged Transport’s ability to maximise freight utilisation. While revenue was consistent
between 2016 and 2017, additional repositioning moves, where the prime mover and trailers are moved with low volumes of freight,
increased costs.
Summary of Rural result
Rural’s profit for the year decreased 3.9% on the previous financial year, down to $3.4 million, while sales increased 5.0%. The main
contributor to the margin compression was increased sales of high value low margin fertilisers and chemicals as a proportion of total
sales. The additional volumes helped reduce freight imbalances within Transport in regional towns. The Rural division adds value to
customers by providing advice and products that help grow and package fruit, vegetables and seafood. The division is successful when
it competitively purchases, manages stock levels and turnover and gives customers the products and services they value the most.
Strategy, risk & governance
Business strategies and prospects for future years
The Group’s overall business model remains consistent with last year. Plans and initiatives to grow the export service, improve
productivity and utilisation of our assets remain in place. Over the coming year the Group will be increasingly focused on profitability
through operational excellence (scalable, repeatable processes), a stronger network, and new sources of revenue within the Lindsay
solution. We will realise the benefits of our recent capital investment and will focus on utilisation. Achieving further growth in the export
division also remains a high priority.
11
Lindsay Australia Limited | Annual Report 2017 | Directors’ Report
Continue investing for future growth and sustainability:
New international customers to support integration of Rural and Transport
Sales teams skilled to sell the full Lindsay solution (i.e. Rural, Transport and export)
Systems that allow real time measurement and decision making
Reduce the transactional costs through improved systems and processes
Review customers to better align the service offering with the customer
Transport Division:
Maintaining a young fleet that delivers optimal efficiency and safe outcomes
Increase year round fleet utilisation
Complete the consolidation of several sites into one at Acacia Ridge
Innovate within LFL. New export customers for perishable goods
Rural Division:
Concentrate on back to basics with smart purchasing, strong inventory management and customer engagement
Deliver improved benefits to the Group through the integrated offering to customers
Utilise key supplier partnerships to drive further value
Focusing on growing volume and reducing operating costs in new regions
Risk Management
The consolidated entity takes a proactive approach to risk management. The board is responsible for ensuring that risks, and also
opportunities, are identified on a timely basis.
The board adopts the “three lines of defence” model for management of risks and controls:
1.
Accountability and ownership of risks within the operation. Implementation of board approved operating plans and budgets and
board monitoring of progress against these budgets, including the establishment and monitoring of KPIs of both a financial and
non-financial nature;
2. Monitor and management of risks. Committees to report on specific business risks including, for example, such matters as
environmental issues and concerns, and occupational health and safety; and
3.
Testing and assurance of the risk systems.
Risks and uncertainties that could impact future results
External risks include: weather, commodity prices, credit risk with Growers and regulatory regime particularly with fuel credits.
Strategic risks include: making unsuccessful acquisitions and not adapting to continually changing technologies.
Operational risks include: labour force management, fleet safety, and succession planning of key personnel.
Funding and dividend strategy
This year total dividends of 1.6 cents (0.8 cents interim, 0.8 cents final) for a total payout of $4,665,000 representing 73% of profit. The
board continually evaluates the payout ratio to ensure there are sufficient funds to sustain and grow the company while considering
shareholders best interest.
Committee Membership
As at the date of this report, the Group has an Audit and Risk Committee, an Environmental & Occupational Health and Safety
Committee, and a Remuneration Committee of the board of directors. Membership of the committees is as follows:
Audit & Risk
Remuneration
Environmental & Occupational Health & Safety
R A Anderson (Chairman)
G D Farrell (Chairman)
J F Pressler (Chairman)
J F Pressler
G D Farrell
J F Pressler
R A Anderson
R A Anderson
G D Farrell
M K Lindsay
Lindsay Australia Limited | Annual Report 2017 | Directors’ Report
12
directors’ report
The directors of Lindsay Australia
Limited present their report for the
year ended 30 June 2017.
Directors’ Report
The directors of Lindsay Australia Limited present their report (including the Remuneration Report) together with the Financial Report of
the consolidated entity, being Lindsay Australia Limited and its controlled entities, for the year ended 30 June 2017, referred to
throughout the report as the Group.
Directors
All of the directors of Lindsay Australia Limited were in office for the full year ending 30 June 2017 financial year. Information on
directors (including qualifications and experience and directorships of listed companies held by the directors at any time in the last three
years), are set out on page 6 to 7.
The table below outlines the number of directors’ meetings held (including meetings of committees of the Board) and the number of
meetings attended by each of the directors of Lindsay Australia Limited during the financial year.
Directors’
Meetings
Audit & Risk
Committee
Remuneration
Committee
Environmental &
Occupational Health
& Safety Committee
Held
Attended
Held
Attended
Held
Attended
Held
Attended
J F Pressler
M K Lindsay
R A Anderson
G D Farrell
18
18
18
18
18
18
13
16
4
-
4
4
4
-
4
4
3
-
3
3
3
-
3
3
12
12
12
12
12
12
10
11
Details of director and senior executive remuneration are set out in the Remuneration Report. The particulars of directors’ interests in
shares of the company as at the date of this report are set out on page 16.
Principal Activities
The principal activities and operations of the Group during the financial year were transportation of refrigerated and general freight,
merchandising of rural supplies and export and import of horticultural goods through Lindsay Fresh Logistics.
There were no significant changes in the nature of the activities of the consolidated entity during the year.
Consolidated Results
The consolidated operating profit attributable to the company’s shareholders after provision for income tax was $6,426,000.
Review of Operations
A review of the operations of Lindsay Australia Limited during the financial year and the results of those operations are set out on page
9 to 12.
Significant changes in state of affairs
There were no significant changes to state of affairs during the period.
Events after the reporting date
There have been no matters or circumstance arise since the year end that has significantly affected the Group’s operations, results or
state of affairs, or may do so in future years. When there are events they are outlined in Note 36 of the financial report.
Likely developments and expected results
Refer to Strategy, Risk and Governance section set out on page 11 to 12.
Environmental Compliance
The Group’s operations are subject to the National Greenhouse Energy Reporting Act 2007. The Group complies with this Act. Other
than this Act, the Group’s operations are not subject to any particular and significant environmental regulation under law of the
Commonwealth or of a State or Territory.
Lindsay Australia Limited | Annual Report 2017 | Directors’ Report
14
Company Secretaries
The Company Secretaries of Lindsay Australia Limited in office at any time during or since the end of the 2017 financial year and their
information (including qualifications and experience and directorships of listed companies held in the last three years), are set out on
page 7.
Share Options
During the financial year 400,000 performance rights (options) were granted over unissued shares as part of an employee remuneration
contract. All share options are held by key management personnel. Refer to the remuneration report for further information on share
options issued during the year and existing at year-end.
No share option entitles the holder to participate in any share issue of the Group.
Since the end of the financial year up to the date of this report, no options over ordinary shares in Lindsay Australia Limited have been
granted to any person or compensated.
Shares issued on the exercise of options
There were no shares issued pursuant to the exercise of options since the beginning of the financial year up to the date of this report.
Dividends Paid or Recommended
Dividends paid to members are as follows:
Final ordinary dividend per share paid on 30th September
Interim ordinary dividend per share paid on 31st March
2017
cents
1.1
0.8
2016
cents
0.9
1.1
Since the end of the financial year the directors have recommended payment of a final ordinary dividend of $2,337,000 (0.8 cents per
share fully franked) for the year ended 30 June 2017.
Insurance of officers and indemnities
Lindsay Australia agrees to indemnify each director, officer, and company secretaries of the Group and of its Australian based
subsidiaries against any liability:
a.
b.
to a party other than Lindsay Australia Limited or a related body corporate, but only to the extent that the liability arises out of
conduct in good faith, and
for legal costs incurred in connection with proceedings for relief to the director or secretary under the Corporations Act 2001 in
which the court grants the relief.
The amount payable under the agreement is the full amount of the liability. No liability has arisen under these indemnities as at the date
of this report.
Lindsay Australia Limited has paid a premium to insure each of the directors against liabilities for costs and expenses incurred by them
in defending any legal proceedings arising out of their conduct while acting in the capacity of director, other than conduct involving a
wilful breach of duty. The amount of the premium for 2017 financial year was $55,797 exclusive of GST.
Rounding of Amounts
Unless otherwise stated, the amounts in this report and in the financial report have been rounded to the nearest $1,000 (where
rounding is applicable) relying on rounding relief under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument
(2016/191). The Group is an entity to which the Instrument applies.
Audit Independence Declaration
A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is attached on page 26
of this report.
Non-Audit Services
The company may decide to employ the auditor on assignments additional to their statutory audit duties where the auditor’s expertise
and experience with the company and/or the Group are important.
Details of the amounts paid or payable to the auditor, Pitcher Partners, for audit and non-audit services provided during the year are set
out below.
15
Lindsay Australia Limited | Annual Report 2017 | Directors’ Report
The Board of Directors has considered the position and, in accordance with advice received from the audit 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 the non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:
All non-audit services have been reviewed by the Audit Committee to ensure they do not impact on the impartiality and objectivity
of the auditor; and
None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for
Professional Accountants.
Pitcher Partners received or is due to receive the following amounts for the provision of non-audit services during the year ended
30 June 2017:
Non-audit services
Tax compliance services
Other services
Interests in Shares of the Company
At the date of this report the interests of current directors in securities of the Group are as follows:
Director
J F Pressler
M K Lindsay
R A Anderson
G D Farrell
2017
$
26,870
-
2016
$
22,850
20,000
Ordinary Shares
2,659,356
11,335,581
391,869
14,857,038
Lindsay Australia Limited | Annual Report 2017 | Directors’ Report
16
Remuneration Report (Audited)
The Remuneration Report details the nature and amount of remuneration for non-executive directors, the executive director and other
key management personnel of Lindsay Australia Limited and its controlled entities.
The Remuneration Report is set out under the following main headings:
Contents
A.
B.
C.
D.
E.
F.
G.
H.
Principles used to Determine the Nature and Amount of Remuneration
Service Agreements
Details of Remuneration Paid to Key Management Personnel
Other Transactions with Key Management Personnel
Share-Based Compensation
Equity Holdings of Key Management Personnel
Loans to Key Management Personnel
Additional Information
18
21
21
22
23
24
24
25
The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001.
17
Lindsay Australia Limited | Annual Report 2017 | Remuneration Report (Audited)
A. Principles used to determine the Nature and Amount
of Remuneration
Remuneration Philosophy
It is the Group’s objective to provide maximum shareholder benefit via the attraction and retention of a high quality board and executive
team (key management personnel). This is in part achieved by remunerating directors and executives fairly and appropriately with
reference to relevant employment market conditions and results delivered.
Remuneration Committee
The board’s Remuneration Committee is responsible for determining and reviewing compensation arrangements for directors and
executives of the Group. To assist in achieving this objective, the Remuneration Committee takes into account the nature and amount
of executive directors’ and officers’ emoluments and the Group’s achieved financial and operational performance when determining and
reviewing compensation arrangements.
Remuneration Structure
The structure of non-executive director and senior management remuneration is separate and distinct.
Non-executive Director Remuneration
Objective
The board seeks to set aggregate remuneration at a level which provides the Company with the ability to attract and retain suitably
qualified and experienced directors, whilst incurring a cost which is acceptable to shareholders.
Structure
The Constitution of the Company and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be
determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the
directors as agreed. The latest determination was at the General Meeting held on 19 November 2007 when shareholders approved an
aggregate remuneration of $450,000 per year. The actual amount paid including statutory superannuation during the financial year
ended 30 June 2017 was $225,570 (2016: $225,570).
The amount of aggregate remuneration sought (subject to the approval of shareholders) and the manner in which it is apportioned
amongst directors is reviewed annually. The board considers the fees paid to non-executive directors of comparable companies when
undertaking the annual review process. There is no scheme to provide retirement benefits, other than statutory superannuation, to non-
executive directors. No additional fees are paid for board committee membership.
Details of the nature and amount of the emolument of each director of the Company for the years ended 30 June 2017 and 30 June
2016 are set out on page 22.
Executive Director and other Key Management Personnel Remuneration
Objective
The Group aims to reward executives with a level and mix of remuneration commensurate with their position and responsibilities within
the Group and results achieved.
The executive pay and reward framework has three components:
Component
Vehicle(s)
Rewarding
Fixed remuneration
Base salary, superannuation and salary
packaged benefits
Skills and experience relative to the market
Short term incentives (STI)
Discretionary bonus payments
Performance relative to annual goals
Long-term incentives (LTI)
Grants of performance options
New plan being rolled out in 2018
Long term performance of the Group
Lindsay Australia Limited | Annual Report 2017 | Remuneration Report (Audited)
18
Structure
Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash, superannuation and fringe
benefits such as motor vehicles, and expense payment plans. It is intended that the manner of payment chosen will be optimal for the
recipient without creating undue cost for the Group. The Fixed Remuneration is not dependent upon the satisfaction of any
performance conditions.
In 2016 a review of the Groups remunerations structures recommended the introduction of new short and long term incentive plans
linked to underlying performance. In 2017 the new LTI plan was passed by shareholders and implemented for the CEO. During 2017
all other staff remained on existing remuneration structures. During 2018 the remaining KMP’s are expected to move to the new STI
and LTI plans.
In relation to the payment of STI (other than where an STI provision is included in one executive service contract), options/performance
rights and other incentive payments, discretion is exercised by the board remuneration committee, having regard to the overall
performance of the Group and the performance of the individual during the period.
The STI earned and paid to the CEO under the new plan during 2017 was measured against delivery of the strategic objectives
including:
Safety outcomes. Benchmarked internally.
Delivering an updated network with new sites, systems, updating the fleet.
Completing Brisbane and Mareeba sites. Implementing new logistics systems. Maintaining fleet age below five years.
Growing new sources of revenue, particularly in export.
Maintaining a profitable business.
Preparing to export new lines of produce to overseas markets.
Building staff skills and retaining KMP’s.
These short term objectives were chosen because of the need to renew infrastructure and set the Group on a future path of growth. In
2017 these conditions were largely met.
The new LTI plan was outlined to shareholders at the October 2017 AGM. Measures included an initial stage gate of annual profit of
$9.1 million for the 2017 financial year, followed by improvement in Earnings per Share to 4.42 cents over the following three years.
This year the options issued to the CEO will lapse in full because the initial profit target was not achieved. Therefore there will be no
impact on future periods. It is expected that the scheme will be rolled out further to KMP’s during 2018 financial year with refinement to
the measures.
Existing contracts remain in place for Mr King and Mr Lorenz. Mr Lorenz was head of the Rural division throughout 2017 and his STI
and LTI were calculated based the following areas:
Sales growth adjusted for inflation. Achieved above inflation.
Divisional profit growth adjusted for inflation. Did not achieve above inflation growth.
Stock turns to profit (gross margin return on investment). Achieved.
And discretionary effort. Achieved.
These measures were chosen because they balance growth in profitability, revenue and working capital. The method used to
calculate each KPI is an agreed formulae understood and able to be referenced. The discretionary amount covers safety, people, and
sustainability. As a result of the above measures, Mr. Lorenz achieved 25% of the possible STI.
Mr King’s STI and LTI were not reviewed by the remuneration committee in FY2017 and will be updated as part of the implementation
of the updated remuneration and performance framework. Elements of the STI & LTI are based on overall business performance,
delivery of the strategy, contribution to profit and overall leadership as determined by the remuneration committee.
The Key Management Personnel are eligible to participate in the Employee Share Option Plans, with no grants made during 2017 in
relation to LTI being shown below. The terms and conditions under the plans which regulate the issue of options/performance rights
are:
Total options on issue must not exceed 5% of total shares on issue;
The exercise prices and exercise period are determined by directors;
The employee must be employed at the commencement of the exercise period or the options will lapse;
During the exercise period the options lapse if an employee resigns or the employee is lawfully terminated;
If an employee dies during the exercise period, his estate may exercise the options prior to the expiry date;
If an employee becomes disabled during the exercise period, the employee may exercise the options prior to the expiry date;
If an employee is made redundant during the exercise period, the directors may specify a period not exceeding the expiry date for
the employee to exercise the options.
During the 2017 financial year a new LTI option plan was approved by shareholders. The terms and conditions under the plans which
regulate the options are:
each option is to acquire one ordinary share in the Company;
19
Lindsay Australia Limited | Annual Report 2017 | Remuneration Report (Audited)
the options will be issued for nil consideration;
the employee must remain an employed by Company;
the exercise price to acquire a share is $nil;
the options will vest if the employee reaches a number of performance targets. Targets are set each year by the Board. In 2017
the target set were:
–
–
Initial hurdle of Net Profit After Tax of $9.1million for the financial year 2016-17
Second hurdle, Earnings Per Share Target of 4.42c over the next 3 years – (EPS Hurdle), with a further retest at 4 years
against a 4 year target (to be determined by the Board) if the hurdle is not met at the 3 year mark
notwithstanding the vesting conditions outlined above, in accordance with the LTI Plan rules, the Board may, in its absolute
discretion, waive some or all of the vesting conditions such that the options may vest despite a vesting condition not being
satisfied;
the options will not be transferrable other than with the written consent of the Board;
the options will expire on the date which is seven years after the issue date; and
in the event an employee leave the Company, the Board will determine their status as a Good Leaver or Bad leaver and
determine the treatment of any equity instruments in accordance with the Plan rules.
The table below lists the executive directors and non-executive directors of Lindsay Australia Limited during the financial year:
Name
J F Pressler
M K Lindsay
R A Anderson
G D Farrell
Position
Chairman (Non-Executive)
Managing Director and Chief Executive Officer
Director (Non-Executive)
Director (Non-Executive)
Appointment Date
8 January 1997
26 November 1996
16 December 2002
17 November 2005
The following people employed by Lindsay Australia Limited also had authority and responsibility for planning, directing and controlling
the activities of the Group, directly or indirectly, during the financial year:
Name
M K Lindsay
T G Lindsay
N King
B Jones
W T Lorenz
Position
Managing Director and Chief Executive Officer
General Manager Lindsay Fresh Logistics
Chief Financial Officer and Company Secretary
General Counsel and Company Secretary
General Manager Rural
Term as KMP
Full financial year
Ceased 1 July 2016
Full financial year
Full financial year
Full financial year
Details of the nature and amount of remuneration and all monetary and non-monetary components for each key management
personnel during the years ended 30 June 2017 and 30 June 2016 are provided later in this report.
Lindsay Australia Limited | Annual Report 2017 | Remuneration Report (Audited)
20
Use of external consultants
During 2017, the remuneration committee continued with the engagement of an external consultancy, The Indelible Link, to complete
the implementation of recommendations made in the 2016 financial year. It is the expected implementation will be completed during
2018 financial year. The review entailed reviewing key management existing salaries to ensure they remain within market. The cost of
the engagement in 2017 was $8,140 for these services.
The Remuneration Committee approved the engagement of The Indelible Link to provide remuneration recommendations regarding the
remuneration mix and quantum for executives. Following assurances from the Indelible Link and the remuneration committee, the
Board is satisfied the advice received from The Indelible Link is free from undue influence from the KMP to whom the remuneration
recommendations apply. The remuneration recommendations were provided to the Group as an input into decision making only. The
Remuneration Committee considered the recommendations, along with other factors, in making its remuneration decisions.
The Indelible Link was introduced by the CFO, and then engaged by the chairman of the Remuneration Committee. All reports were
passed directly to the chair of that committee and subsequently reviewed with all members of the Remuneration Committee. The
committee is satisfied that the review was objective.
Additionally, The Indelible Link were engaged to assist in designing the future performance and remuneration framework to cover the
Group’s executives. This resulted in a review of the executive performance and remuneration policy and the implementation of a new
Long Term Incentive Plan. The cost of the engagement was $19,885 for these services.
Voting and comments made at the Group’s 2016 Annual General Meeting
Lindsay Australia received more than 97% of “yes” votes on eligible votes cast by shareholder present or by proxy on its remuneration
report for the 2016 financial year. The company did not receive any specific feedback at the AGM or throughout the year on its
remuneration practices.
B. Service Agreements
The Group’s policy in operation during 2017 is that service contracts for CEO and other key management personnel are unlimited in
term but capable of termination of twelve months and four weeks’ notice respectively. Key management personnel are also entitled to
receive on termination of employment their statutory entitlements of accrued annual and long service leave, together with any
superannuation benefits. Short term incentives (STI) are based on performance against a key set of performance measures which are
aligned to shareholder outcomes. Long term incentives (LTI) include a combination of performance measures and tenure.
Compensation levels are reviewed each year to meet the principles of the remuneration policy.
During 2017 a new CEO contract was implemented with accompanying STI and LTI schemes. The STI earned and paid to the CEO
during 2017 was measured against delivery of the strategic objectives outlined under “structure” above. STI is paid as a portion of fixed
remuneration between 0 and 60%. The LTI Plan involves a grant each year of up to 400,000 options once presented and passed by
shareholders. There is currently no expected impact in future years.
Mr. Lorez has a specific contract containing fixed remuneration and an STI between 0 and 40% of fixed remuneration. An LTI is
determined using the STI percentage.
Mr. King has STI & LTI determined by the remuneration committee and based without specific measure against overall business
performance, delivery of the strategy, contribution to profit and overall leadership.
All remaining management receive STI’s at the description on the CEO and remuneration committee based on non-contracted
discretionary measures.
As mentioned above, following the approval of the updated CEO contract in 2017, paves the way to cascade the performance
framework further. Updated service agreements will be negotiated for KMP during 2018 financial year, the details of which will be
provided subsequently.
C. Details of Remuneration Paid to Key Management
Personnel
The persons listed are the only persons to have authority and responsibility for the planning, directing and controlling the activities of
Lindsay Australia Limited and the Group. There are no other executives who are key management personnel. Amounts disclosed for
cash salary, fees and superannuation include amounts accrued during the year in respect of leave entitlements. Total remuneration
expense may vary, as compared to base salary, with the movements in annual and long service leave.
21
Lindsay Australia Limited | Annual Report 2017 | Remuneration Report (Audited)
Short-term
benefits
Long-term
benefits
Post-
employment
benefits
Share-
based
payments(a)
Total
Performance
related
Salary and
fees
$
Cash
Bonus(c)
$
Non-monetary
benefits
$
Long service
leave
$
Superannuation
Options
$
$
$
Non-executive directors
J F Pressler (Chairman)
2017
2016
R A Anderson
2017
2016
G D Farrell
2017
2016
55,960
55,960
61,800
56,650
61,800
61,800
Sub-Total 2017
179,560
Sub-Total 2016
174,410
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Executive director and other key management personnel
M K Lindsay (Managing Director & Chief Executive Officer)
2017
2016
822,513
127,000
821,788
75,000
N King (Chief Financial Officer)
2017
2016
275,791
7,711
249,000
27,300
B Jones (General Counsel & Company Secretary)
2017
2016
226,600
17,000
206,000
10,000
-
-
-
-
-
12,579
12,614
-
-
-
34,268
34,268
5,871
11,021
5,871
5,871
46,010
51,160
35,000
35,000
27,646
24,000
21,231
20,258
T G Lindsay (Chief Executive Officer – Lindsay Fresh Logistics) (b)
2016
333,661
20,000
19,890
5,178
35,000
W T Lorenz (General Manager Rural)
-
-
-
-
-
-
-
-
-
-
90,228
90,228
67,671
67,671
67,671
67,671
225,570
225,570
997,092
944,402
311,148
12,144
312,444
264,831
236,258
413,729
-
-
2017
2016
Total 2017
Total 2016
358,745
46,424
354,902
56,290
1,863,209
198,135
-
-
-
2,139,761
188,590
19,890
-
-
12,579
17,792
30,000
4,530
439,699
47,424
(12,237)
446,379
159,887
212,842
4,530 2,238,340
(93) 2,578,782
(a) Share-based option payment are the probable number to vest at the grant date value.
(b) T G Lindsay ceased to be a KMP on 1 July 2016
(c) During 2017 W.Lorenz & N.King share options were modified to vest and exercise through cash settlement. See Note 29 for further information.
%
NA
NA
NA
NA
NA
NA
-
-
13
8
2
13
6
4
5
11
10
9
8
D. Other Transactions with Key Management Personnel
Amounts recognised as revenues and expenses:
Revenues
Cartage revenue received / receivable and the sale of rural supplies from entities associated with GD Farrell
Cartage revenue received / receivable and the sale of rural supplies from entities associated with J Pressler
Expenses
Fees for corporate uniform consultancy provided by entities associated with M K Lindsay
2017
$
1,357,862
14,249,297
15,607,160
20,800
Lindsay Australia Limited | Annual Report 2017 | Remuneration Report (Audited)
22
Amounts recognised as revenues and expenses:
Amounts receivable / payable to key management personnel and their related parties at the reporting date
Current receivables – trade debtors
2017
$
312,241
The directors believe transactions with key management personnel were on commercial terms and conditions (unless otherwise
stated). Current receivables and payables are unsecured, to be settled cash and are on the same terms and conditions as non-related
parties as disclosed elsewhere in this report.
E. Share-Based Compensation
Options
Options over shares in Lindsay Australia Limited are granted under the Lindsay Australia Limited Employee Share Option Plans to
provide long term incentives to executives to deliver long-term shareholder returns. In addition, Performance Rights (options) may be
granted to key management personnel as part of a Long Term Incentive (Option) Plan (LTIP). The LTIP is structured as a reward for
length of service and is variable depending upon cumulative annual performance. The terms and conditions of each grant of options
affecting performance in the current or a future reporting period are as follows:
Grant Date
Fair Value per
option (cents)
Date vested and
exercisable
Expiry
Date
Exercise
price
Vested
July 2014
July 2014
July 2015
July 2016
26.5
22.7
41.9
40.8
August 2017
August 2019
August 2016
August 2019
Sept 2017
Sept 2019
Sept 2016
June 2026
-
-
-
-
10%
-
67%
-
All of the above grants of options are performance related to provide long-term incentives. The exercised options were cash settled.
Detail of options over ordinary shares in the company provided as remuneration to each director of Lindsay’s Australia Limited and
each of its key management personnel and other executives of the parent entity and the Group are set out below. When exercisable,
each option is convertible into one ordinary share of Lindsay Australia Limited. Further information on the options is set out in note 29
to the financial report.
Name
Number of options
granted during the
year
Value of options
at grant date (a)
Number of
options
forfeited
Number of
options vested
during the year
K Lindsay
400,000
163,369
400,000
-
(a) The value at the grant date calculated in accordance with AASB2 Share-based Payments of options granted during the year as part of remuneration. The
assessed fair value at grant date of options granted to the individuals is allocated equally over the period from grant date to vesting date, and the amount is included
in the remuneration tables above.
Options granted have an exercise price of zero and no market conditions. The number of options vested ultimately depends on the
performance of the individual and the overall company. Fair values at grant date are determined using the share price at the grant date
less the dividend discounted where the vesting date is great then one year. Probability of achieving the performance objective is also
taken into account.
Name
Balance 30 June 2016
Granted
during year
Modified, vested
and Exercised
during year (a)
Unvested
Vested
Forfeited
% Forfeited
Balance 30 June 2017
Unvested
Vested
157,315
-
-
-
-
-
W Lorenz
300,373
N King
41,364
K Lindsay
-
-
-
-
-
-
(50,373)
(41,364)
(92,685)
-
400,000
-
(400,000)
19%
33%
100%
(a) Modification to cash settle. Refer to note 29 for detailed information.
23
Lindsay Australia Limited | Annual Report 2017 | Remuneration Report (Audited)
F. Equity Holdings of Key Management Personnel
The share and option holdings disclosed for key management personnel are calculated in accordance with AASB 124 Related Party
Disclosures. Accordingly, the holdings for each key management person include holdings of the individual (whether held directly,
indirectly or beneficially) as well as the holdings of their related parties (whether held directly, indirectly or beneficially). As a result,
where key management personnel have related parties in common, the holdings of the related parties may be included in the holdings
of all relevant key management personnel, i.e. holdings may be included more than once in the disclosure.
(i) Options provided as remuneration and shares issue on exercise of such options
Options were provided as remuneration and part of the Long Term Incentive Plan. Vested options above were cash settled.
(ii) Share holdings
The number of ordinary shares in the Company held during the financial year and prior year by each director of Lindsay Australia
Limited and other key management personnel of the Group, including their personally related parties, are set out below.
2017 Shares
Directors of Lindsay Australia Limited
J F Pressler
M K Lindsay
R A Anderson
G D Farrell
Other key management personnel of the Group
T G Lindsay (a)
N L King
B T Jones
W T Lorenz
Balance at
30 June 2016
Net change
other
Balance at
30 June 2017
2,656,432
11,335,581
391,869
14,857,038
14,093,908
-
-
-
2,924
2,659,356
-
-
-
-
-
-
-
11,335,581
391,869
14,857,038
14,093,908
-
-
-
All equity transactions with directors and other key management personnel have been entered into under terms and conditions no more
favourable than those the entity would have adopted if dealing at arm’s length.
(a) T G Lindsay ceased to be a KMP on 1 July 2016
G. Loans to Key Management Personnel
There were no loans to key management personnel during the current or prior reporting period.
Lindsay Australia Limited | Annual Report 2017 | Remuneration Report (Audited)
24
H. Additional Information
The table below shows for the current financial year and previous four financial years the total remuneration cost of the key
management personnel, earnings per ordinary share (EPS) dividends paid or declared, and the closing price of ordinary shares on ASX
at year end.
Financial Year
Total Remuneration
$
2013
2014
2015
2016
2017
1,779,713
2,345,032
2,785,272
2,578,782
2,238,340
EPS
¢
3.3
2.8
2.4
2.8
2.2
Dividends
¢
Share Price
¢
1.9
2.0
2.1
2.2
1.6
17.5
34.0
45.0
47.5
38.0
This report is made in accordance with a resolution of the directors.
John F Pressler
Chairman of Directors
Brisbane, Queensland
30 August 2017
25
Lindsay Australia Limited | Annual Report 2017 | Remuneration Report (Audited)
Contents
Consolidated statement of profit and loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
1.
2.
3.
4.
5.
6.
7.
8.
9.
Significant Accounting Policies
Financial Risk Management
Critical Accounting Estimates & Judgements
Revenues
Other Income
Expenses
Income Tax
Franking Credits / Dividends
Cash and Cash Equivalents
10. Trade and Other Receivables
11.
Inventories
12. Other Current Assets
13. Available-For-Sale Financial Assets
14. Property, Plant and Equipment
15. Deferred Tax Assets
16.
Intangible Assets
17. Trade and Other Payables
18. Borrowings
19. Deferred Tax Liabilities
20. Provisions
21. Other Liabilities
22. Contributed Equity
23. Reserves
24. Retained Earnings
25. Cash Flow Information
26. Earnings Per Share
27. Auditor’s Remuneration
28. Related Party Disclosures
29. Share-based Payments
30. Subsidiaries
31. Segment Information
32. Deed of Cross Guarantee
33. Commitments
34. Contingent Liabilities
35. Parent Company Information
36. Events after the reporting period
37.
Legal Proceedings
Directors’ Declaration
27
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
29
30
31
32
33
33
41
44
44
44
45
46
47
48
48
49
49
49
50
51
51
53
53
54
54
55
55
56
56
57
57
57
58
58
61
62
64
64
65
65
66
66
67
These financial statements cover the consolidated financial statements for the consolidated entity consisting of Lindsay Australia
Limited and its subsidiaries. The financial statements are presented in Australian currency.
Lindsay Australia Limited is a company limited by shares, incorporated and domiciled in Australia. It’s Registered Office and Principal
Place of Business is:
Lindsay Australia Limited
152 Postle Street
ACACIA RIDGE QLD 4110
A description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and
activities in the Directors’ Report which is not part of this financial report.
The financial statements were authorised for issue by the directors on 30 August 2017. The directors have the power to amend and
reissue the financial statements.
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
28
Lindsay Australia Limited
Consolidated statement of profit and loss
and other comprehensive income
for the year ended 30 June 2017
Revenues
Other Income
Gain/(Loss) on sale of plant & equipment
Expenses
Changes in inventories
Purchase of inventories
Employee benefits expense
Subcontractors
Depreciation and amortisation
Vehicle operating charges
Finance costs
Insurance
Pallet charges
Operating lease rentals
Professional fees
Bad debt expense
Other expenses
Profit before income tax
Income tax expense
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Basic earnings per share
Diluted earnings per share
Note
4
5a
5b
2017
$’000
2016
$’000
332,858
324,796
4,854
(861)
5,326
(598)
530
(1,416)
(84,500)
(79,495)
(99,964)
(90,263)
(30,350)
(36,917)
(22,086)
(19,642)
(45,180)
(50,487)
(5,483)
(1,412)
(2,605)
(8,662)
(1,570)
(684)
(4,644)
(1,212)
(2,215)
(6,957)
(1,899)
(4)
(26,549)
(22,970)
8,335
(1,909)
6,426
-
11,403
(3,331)
8,072
-
6,426
8,072
Cents
Cents
2.2
2.2
2.8
2.8
6
6
6
7
24
26
26
The above Consolidated Statement of Profit and Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
29
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
Lindsay Australia Limited
Consolidated statement of financial position
As at 30 June 2017
Current Assets
Cash and Cash Equivalents
Trade and Other Receivables
Inventories
Other
Total Current Assets
Non-Current Assets
Available-For-Sale Financial Assets
Property, Plant and Equipment
Intangible Assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and Other Payables
Borrowings
Current Tax Liabilities
Provisions
Other
Total Current Liabilities
Non-Current Liabilities
Borrowings
Deferred Tax Liabilities
Provisions
Other
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed Equity
Reserves
Retained Earnings
Total Equity
Note
2017
$’000
2016
$’000
9
10
11
12
13
14
16
17
18
20
21
18
19
20
21
22
23
24
25,037
43,946
14,308
4,302
87,593
10,022
50,234
13,588
6,172
80,016
25
25
161,125
153,204
10,630
9,188
171,780
162,417
259,373
242,433
37,074
36,436
684
7,788
2,701
32,854
34,913
941
7,123
2,216
84,683
78,047
84,279
75,654
795
1,074
2,333
1,831
1,056
1,364
88,481
79,905
173,164
157,952
86,209
84,481
70,884
70,044
515
14,810
86,209
536
13,901
84,481
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
30
Lindsay Australia Limited
Consolidated statement of changes in equity
for the year ended 30 June 2017
At 30 June 2015
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transactions costs
Dividends reinvested /(paid) during year
Employee share schemes – value of employee services
At 30 June 2016
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Contributions of equity, net of transactions costs
Dividends reinvested /(paid) during year
Employee share schemes – value of employee services
At 30 June 2017
8
8
Note Contributed
equity
Share-based
payments
reserve
$’000
536
-
-
-
-
-
-
$’000
67,475
-
-
-
1,785
784
-
70,044
536
-
-
-
-
840
-
70,884
-
-
-
-
-
(21)
515
Retained
profits
$’000
11,885
8,072
-
8,072
-
(6,056)
-
13,901
6,426
-
Total
equity
$’000
79,896
8,072
-
8,072
1,785
(5,272)
-
84,481
6,426
-
6,426
6,426
-
-
(5,517)
(4,677)
-
(21)
14,810
86,209
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
31
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
Lindsay Australia Limited
Consolidated statement of cash flows
for the year ended 30 June 2017
Cash flows from Operating Activities
Receipts In the course of operations
Payments In the course of operations
Interest received
Income taxes paid
Finance costs paid
Net Cash Provided by Operating Activities
Cash Flows from Investing Activities
Proceeds from disposal of Property, Plant and Equipment
Payments for Property, Plant and Equipment
Payments for Intangibles
Net Cash (Used In) Investing Activities
Cash flows from Financing Activities
Proceeds from Borrowings
Proceeds from Share Placements
Share Issue Transaction Costs
Repayment of Borrowings
Repayment of Lease Liabilities
Dividends Paid
Net Cash (Used In) Financing Activities
Increase/(Decrease) In Cash and Cash Equivalents
Cash And Cash Equivalents at Beginning of Financial Year
Cash And Cash Equivalents At End Of Financial Year
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Note
2017
$’000
2016
$’000
379,123
356,811
(331,254)
(320,464)
518
(3,202)
(5,483)
39,702
627
(2,625)
(4,560)
29,789
25
2,753
6,306
(15,654)
(11,155)
(566)
(13,467)
(1,805)
(6,654)
22,807
15,491
-
-
1,855
(70)
(9,333)
(23,789)
(20,017)
(16,718)
(4,677)
(5,271)
(11,220)
(28,502)
15,015
10,022
25,037
(5,367)
15,389
10,022
9
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
32
Notes to the consolidated financial statements
Lindsay Australia Group
The Lindsay Australia Group is adding value to the many perishable product value chains that require cold temperatures to extend and
preserve life, with the aim of delivering end consumers products in optimal condition. We currently add value in these chains through
cold logistics and rural merchandise. These businesses have a strong presence in the Eastern states and South Australia.
Lindsay Australia Limited (LAU) is a for-profit entity limited by shares. Shares in the LAU are publicly traded on the Australian
Securities Exchange (ASX). The financial statements relate to the consolidated entity consisting of Lindsay Australia Limited and its
subsidiaries.
The full board of LAU authorised the issuance of the consolidated financial statements for the year ended 30 June 2017, on
30 August 2017.
1. Significant Accounting Policies
1.1
Basis of preparation of the financial statements
These general purpose consolidated financial statements have been prepared in accordance with the requirements of the Corporations
Act 2001, Australian Accounting Standards and other authorised pronouncements of the Australian Accounting Standards Board.
The principal accounting policies adopted in the preparation of the financial report are set out below. These policies have been
consistently applied to all the periods presented, unless otherwise stated.
These financial statements have been prepared under the historical cost basis, except for the revaluation of available-for-sale financial
assets, financial assets and liabilities (including derivative instruments) at fair value through profit or loss, certain classes of property,
plant and equipment and investment property (measured at fair value).
The financial report is presented in Australian dollars and all values are rounded to the nearest ($000), except where whole dollars are
used, relying on rounding relief under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument (2016/191).
Changes in Accounting Standards and Regulatory requirements
There are a number of new and amended accounting standards issued by the AASB which are applicable for reporting periods
beginning on 1 July 2016. We have adopted all the mandatory new and amended accounting standards issued that are relevant to our
operations and effective for the current reporting period. There was no material impact on the financial report as a result of the
mandatory new and amended accounting standards adopted.
Compliance with IFRS
The consolidated financial statements of the Lindsay Australia also comply with International Financial Reporting Standards (IFRS) as
issued by the International Accounting Standards Board (IASB).
Critical accounting estimates
It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a
higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are
disclosed in Note 3.
1.2
Basis of consolidation of the financial statements
The consolidated financial statements contain the financial statements of the LAU and its controlled subsidiaries as at 30 June 2017.
Control occurs when LAU 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 its activities. Generally, there is a presumption that a majority of voting rights results in control.
Supporting this assertion LAU considers the facts and circumstances in assessing whether it has power over the entity including: the
contractual arrangements with other vote holders, rights arising from other contractual arrangements, and LAU’s voting rights and
potential voting rights.
Subsidiaries are fully consolidated from the date on which control is obtained, and deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account for business combinations of the Group.
Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of LAU and to the
non-controlling interests. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting
policies into line with the Group’s accounting policies. All intra-Group assets and liabilities, equity, income, expenses and cash flows
relating to transactions between LAU members are eliminated in full on consolidation.
33
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
1.3
Summary of significant accounting policies
a. Business combinations
The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or
other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the:
fair values of the assets transferred
liabilities incurred to the former owners of the acquired business
equity interests issued by the Group
fair value of any asset or liability resulting from a contingent consideration arrangement, and
fair value of any pre-existing equity interest in the subsidiary.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquired entity on
an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net
identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the sum of the:
consideration transferred,
amount of any non-controlling interest in the acquired entity, and
acquisition-date fair value of any previous equity interest in the acquired entity.
Over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net
identifiable assets of the subsidiary acquired, the difference is recognised directly in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value
as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing
could be obtained from an independent financier under comparable terms and conditions.
Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently
remeasured to fair value with changes in fair value recognised in profit or loss.
If the business combination is achieved in stages, the acquisition date carrying value of the acquirer’s previously held equity interest in
the acquisition is remeasured to fair value at the acquisition date. Any gains or losses arising from such remeasurement are recognised
in profit or loss.
b. Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The
chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has
been identified as the Board of Directors.
c. Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns,
trade allowances and duties and taxes paid. Revenue is recognised for the major business activities as follows:
Revenue from freight cartage and import and export services is recognised when the services are provided. Revenue from the sale of
goods is recognised when the risks and rewards of ownership have been transferred which is taken to be upon the delivery of goods to
customers.
Rental income from operating leases is recognised in income on a straight-line basis over the lease term.
Interest revenue is recognised on a time proportional basis that takes into account the effective yield on the financial asset.
d.
Income Tax
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income adjusted by changes in
deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying
amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are
recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted. The tax rate is applied to the
cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is
made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is
recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time
of the transaction did not affect either accounting profit or taxable profit or loss.
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
34
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it
is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a
legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.
Current and deferred tax is recognised in profit and loss, 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.
e. Leases
Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership are
classified as finance leases. Finance leases are capitalised at the lease’s inception at the fair value of the leased property or, if lower,
the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in
borrowings. 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 property,
plant and equipment acquired under finance leases are depreciated over the estimated useful life of the asset. Where there is no
reasonable certainty that the lessee will obtain ownership, the asset is depreciated over the shorter of the lease term and the assets
useful life.
Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as
operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to profit or loss
on a straight-line basis over the period of the lease.
f.
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.
Other assets that are subject to amortisation are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows
(cash generating units).
g. Cash and cash equivalents
For the statement of cash flows 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, and bank overdrafts. Bank overdrafts are shown within borrowings in
current liabilities to the extent they are drawn on the statement of financial position.
h. Trade and other receivables
Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for
doubtful debts. Trade and other receivables are due for settlement usually no more than 30 to 120 days from the date of recognition.
The Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a Group of financial assets is
impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss
event’), has an impact on the estimated future cash flows of the financial asset or the Group of financial assets that can be reliably
estimated. Evidence of impairment may include indications that the debtors or a Group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial
reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes
in arrears or economic conditions that correlate with defaults. Collectability of trade and other receivables is reviewed on an ongoing
basis. Debts, which are known to be uncollectible, are written off. A provision for doubtful receivables is established when there is
objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount
of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted
at the original effective interest rate. The amount of the provision is recognised in profit or loss.
i.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises cost of purchase and, where applicable, cost of
conversion after deducting trade discounts, rebates and other similar items. Costs are assigned to individual items of inventory on the
basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business less the estimated
costs of completion and the estimated costs necessary to make the sale. Volume rebates are apportioned evenly across the relevant
product purchased. Where the product remains in inventory the rebate reduces its carrying value.
35
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
j.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that
an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of
the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance
contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense
relating to a provision is presented in the statement of profit or loss net of any reimbursement.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present
obligation at the end of the reporting period. The discount rate used to determine the present value is a pre-tax rate that reflects current
market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage
of time is recognised as interest expense.
k.
Investments and other financial assets
The Group classifies investments in the following categories: financial assets at fair value through profit or loss, loans and receivables,
and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired.
Management determines the classification of its investments at initial recognition.
Financial assets at fair value through profit or loss are financial assets held for trading which are acquired principally for the purposes of
selling in the short term with the intention of making a profit. Derivatives are also categorised as held for trading unless they are
designated as hedges.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for those with maturities greater than 12 months after the period end date, which are
classified as non-current assets. Loans and receivables are included in trade and other receivables in the statement of financial
position.
Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in
this category or not classified in any of the other categories. They are included in non-current assets unless management intends to
dispose of the investment within 12 months of the period end date. Investments are designated as available-for-sale if they do not have
fixed maturities and fixed or determinable payments and management intends to hold them for the medium or long term.
Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or
loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value and transaction costs are expensed
in profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have
been transferred and the Group has transferred substantially all the risks and rewards of ownership.
Available-for-sale financial assets and financial assets at fair value through profit and loss are subsequently carried at fair value. Loans
and receivables are carried at amortised cost using the effective interest method. When securities classified as available-for-sale are
sold or impaired, the accumulated fair value adjustments recognised in other comprehensive income are included in profit or loss as
gains and losses from investment securities.
The Group assesses at each period end date whether there is objective evidence that a financial asset or Group of financial assets is
impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security
below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial
assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment
loss on that financial asset previously recognised in profit or loss – is reclassified from equity and recognised in profit or loss.
Impairment losses recognised in profit or loss on equity instruments classified as available-for-sale are not reversed through profit or
loss.
l.
Fair value estimation
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The fair value of financial instruments traded in active markets (such as publicly traded derivatives, and trading and available-for-sale
securities) is based on quoted market prices at the period end date. The quoted market price used for financial assets held by the
Group is the current bid price; the appropriate quoted market price for financial liabilities is the current ask price.
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined
using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing
at each reporting date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held.
Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.
The nominal value less estimated credit adjustments of trade receivables and payables are assumed to approximate their fair values.
The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current
market interest rate that is available to the Group for similar financial instruments.
m. Property, plant and equipment
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.
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
36
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 Group and the cost of the item can be measured reliably.
All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.
Depreciation of assets is calculated on a diminishing value (DV) or straight line (SL) method to allocate their cost, net of their residual
values, over their estimated useful lives. The depreciation rates used for each class of depreciable asset are:
Classification
Buildings
Leasehold improvements
Plant and equipment
Leased plant and equipment
Rate
2.5-5%
20-30%
8-40%
8-40%
Depreciation Basis
SL
SL/DV
SL/DV
SL/DV
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 (Note 1(f)).
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
n.
Intangible assets
Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the
acquired subsidiary at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill acquired
in business combinations is not amortised. Instead, goodwill is tested for impairment annually, or more frequently if events or changes
in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating
units or Groups of cash-generating units that are expected to benefit from the business combination in which goodwill arose, identified
according to operating segments.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a
finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as
appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is
recognised in the statement of profit or loss in the expense category that is consistent with the function of the intangible assets.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-
generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be
supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds
and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.
o. Trade and other payables
Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost.
These amounts represent liabilities for goods and services provided to the Group prior to the end of the year which are unpaid. The
amounts are usually unsecured (except for Orora – refer Note 17) and paid within 7 to 60 days of recognition.
p. Employee benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled
wholly within 12 months after the end of the period in which the employees render the related service are recognised in respect of
employees’ services up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are
settled. The liability for annual leave and accumulating sick leave is recognised in the provision for employee benefits.
The liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the end of the period
in which the employees render the related service. They are therefore measured as the present value of expected future payments to
be made in respect of services provided by employees up to the end of the reporting period using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected
future payments are discounted using market yields at the end of the reporting period of corporate bonds with terms and currencies that
match, as closely as possible, the estimated future cash outflows. Remeasurements as a result of experience adjustments and changes
in actuarial assumptions are recognised in profit or loss.
The Group makes contributions to defined contribution superannuation funds. Contributions are recognised as an expense as they
become payable.
37
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
Share-based compensation benefits are provided to employees via the Lindsay Australia Limited Employee Share Option Plans.
The fair value of options granted under Employee Option Plans 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 options granted, which includes
any market performance conditions but excludes the impact of any service and non-market performance vesting conditions and the
impact of any non-vesting conditions. Non-market vesting conditions are included in assumptions about the number of options that are
expected to vest.
Service and non-market performance conditions are not taken into account when determining the grant date fair value of awards, but
the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the number of equity instruments that will
ultimately vest. Market performance conditions are reflected within the grant date fair value. Any other conditions attached to an award,
but without an associated service requirement, are considered to be non-vesting conditions. Non-vesting conditions are reflected in the
fair value of an award and lead to an immediate expensing of an award unless there are also service and/or performance conditions.
No expense is recognised for awards that do not ultimately vest because non-market performance and/or service conditions have not
been met. Where awards include a market or non-vesting condition, the transactions are treated as vested irrespective of whether the
market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be
satisfied. At the end of each period, the entity revises its estimates of the number of options that are expected to vest based on the non-
marketing vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss with a corresponding
adjustment to equity.
q. 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 profit or loss over the
period of the borrowings using the effective interest method.
Borrowings are derecognised 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 profit or loss as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the reporting period.
r. Contributed equity
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.
s. Earnings per share
Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the company, excluding any costs of
servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted
for bonus elements in ordinary shares issued during the year.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after
income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average
number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary
shares.
t. Dividends
Provision is made for the amount of any dividend declared being appropriately authorised and no longer at the discretion of the entity,
on or before the end of the financial year, but not distributed at reporting date.
u. Financial guarantee contracts
Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is initially measured
at fair value and subsequently at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities
and Contingent Assets and the amount initially recognised less cumulative amortisation, where appropriate. The fair value of financial
guarantees is determined as the present value of the difference in net cash flows between the contractual payments under the debt
instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third
party for assuming the obligations.
v. GST
Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except:
Where the amount of GST incurred is not recoverable from the taxation authority, it is recognised as part of the cost of acquisition
of an asset or as part of an item of expense; or
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
38
For receivables and payables which are recognised inclusive of GST.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables.
w. New accounting standards and interpretations
Relevant accounting standards and interpretations that have recently been issued or amended but are not yet effective and have not
been adopted for the year are as follows:
Standard/Interpretation
Effective for annual
reporting periods
beginning on or after
Expected to be initially
applied in the financial
year ending
AASB 9 ‘Financial Instruments’, and the relevant amending standards
1 January 2018
30 June 2019
AASB 15 ‘Revenue from Contracts with Customers’, AASB 2014-5 ‘Amendments
to Australian Accounting Standards arising from AASB 15’, AASB 2015-8
‘Amendments to Australian Accounting Standards – Effective date of AASB 15’
AASB 16 ‘Leases’
AASB 2014-10 ‘Amendments to Australian Accounting Standards – Sale or
Contribution of Assets between an Investor and its Associate or Joint Venture’,
AASB 2015-10 ‘Amendments to Australian Accounting Standards – Effective Date
of Amendments to AASB 10 and AASB 128’
1 January 2018
30 June 2019
1 January 2019
30 June 2020
30 January 2018
30 June 2019
AASB 2016-1 ‘Amendments to Australian Accounting Standards – Recognition of
Deferred Tax Assets for Unrealised Losses’
1 January 2017
30 June 2018
AASB 2016-2 ‘Amendments to Australian Accounting Standards – Disclosure
Initiative: Amendments to AASB 107’
AASB 2016-5 Amendments to Australian Accounting Standards - Classification
and Measurement of Share-based Payment Transactions
AASB Interpretation 22 Foreign Currency Transactions and Advance
Consideration
1 January 2017
30 June 2018
1 January 2018
30 June 2019
1 January 2018
30 June 2019
AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual
Improvements 2014-2016 Cycle
1 January 2017
30 June 2018
The directors anticipate that the adoption of these Standards and Interpretations in future years may have the following impacts:
AASB 9 – Financial Instruments, addresses the classification, measurement and derecognition of financial assets and financial
liabilities, introduces new rules for hedge accounting and a new impairment model for financial assets. The standard will be applicable
retrospectively.
There will be no impact on the accounting for the Group’s financial liabilities as the new standard only impacts financial liabilities
designated at fair value through profit or loss. The Group has one small holding classified as available for sale financial assets. No
significant accounting impact is anticipated as these holdings are small.
The Group has not yet completed its detail assessment of the classification and measurement of financial assets, debt instruments
currently available for sale how the hedging arrangements and the impairment of financial instruments under the expected credit loss
model will be affected by the new rules; however, the impact is not expected to be material.
The Group does not anticipate any significant accounting impact to the Group’s financial liabilities, as the new standard only impacts
financial liabilities designated at fair value through profit or loss and the Group does not have any such liabilities.
The new standard also introduces expanded disclosure requirements and changes in presentation. The Group’s assessment of the
potential accounting, disclosure and financial impacts on adoption of the standard will continue up to the date of application.
IFRS 15 – Revenue from Contracts with Customers. This new standard replaces AASB 118 and AASB 111. The new standard is
based on the principle that revenue is recognised when control of a good or service transfers to a customer. The standard permits
either a full retrospective or a modified retrospective approach for the adoption. It contains a single model that applies to contracts with
customers and two approaches to recognising revenue. The model features a contract-based five step analysis of transactions to
determine whether, how much and when revenue is recognised.
Initial investigations into the standard show there will not be a material impact from the standard on the Groups accounts. The
requirement to recognise transport revenue over a period of time as the service is carried out, instead of at the commencement of the
service will not significantly change the amount of revenue recognised. The impact of variable consideration through rebates should
also be negligible because rebates are accrued monthly in most cases throughout the Group. It is not expected that there will be a
material impact on the Group’s accounting policies on the adoption of the standard, however there will be new disclosure requirements.
The Group will complete a detailed assessment of the effect over the next twelve months.
AASB 16 Leases – AASB 16 modifies accounting for leases by removing the current distinction between operating and financing
leases. The standard requires recognition of an asset and a financial liability for all leases, with exemptions for short term and low value
39
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
leases. The standard will primarily affect the accounting for the Group’s operating leases. As at the reporting date, the Group has non-
cancellable operating lease commitments of $51.0 million (see note 33). Following implementation, operating leases for which
payments are currently required to be expensed, the Group will recognise right of use assets and corresponding liabilities for the
principal amount of lease payments, which will then result in amortisation and interest expenses being recognised in the income
statement (replacing operating lease expenses). Further, the principal component of lease payments will be reclassified from operating
to financing in the statement of cash flows. Certain performance metrics and ratios will be impacted as a result of the above changes,
including EBITDA, which is a measure used in bank covenant calculations. The Group is still considering the available options for
transition and has not yet forecasted the financial impacts of the new standard, but will do so leading up to application of the standard.
AASB 2014-10 – These amendments clarify the accounting treatment for sales or contributions of assets between an investor and its
associates or joint ventures. They confirm that the accounting depends on whether the contributed assets constitute a business or an
asset. There is no impact from this standard.
AASB 2016-1 – Amendment to AASB 112, clarifies the accounting for deferred tax where an asset is measured at fair value and that
fair value is below the asset’s tax base. This does not change the underlying principles for the recognition of deferred tax assets. The
Group does not have any temporary taxable or deductible differences on assets that are measured at fair value. Therefore, the impact
of the application of the new standard is not expected to be material.
AASB 2016-2 – ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107’ amends AASB
107 ‘Statement of Cash flows’ to require entities to provide disclosures that enable users of financial statements to evaluate changes in
liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes. The changes are
designed to improve the information provided to users and it is not anticipated that the application of these amendments to will have a
material impact on the Group's consolidated financial statements.
AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-based Payment
Transactions. The amendments made to AASB 2 clarify the measurement basis for cash-settled share-based payments and the
accounting for modifications that change an award from cash-settled to equity-settled. They also introduce an exception to the
classification principles in AASB 2. Where an employer is obliged to withhold an amount for the employee’s tax obligation associated
with a share-based payment and pay that amount to the tax authority, the whole award will be treated as if it was equity-settled
provided it would have been equity-settled without the net settlement feature. The impact of this standard will not be material.
AASB 2017-2 Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle. This Standard
clarifies the scope of AASB 12 Disclosure of Interests in Other Entities by specifying that the disclosure requirements apply to an
entity’s interests in other entities that are classified as held for sale or discontinued operations in accordance with AASB 5 Non-current
Assets Held for Sale and Discontinued Operations. The impact of this standard will not be material.
x. Parent entity financial information
The financial information for the parent entity, Lindsay Australia Limited, disclosed in Note 35 has been prepared on the same basis as
the consolidated financial statements, except as set out below.
Investments in subsidiaries are accounted for at cost in the financial statements of Lindsay Australia Limited.
Lindsay Australia Limited and its wholly-owned Australian controlled entities have implemented the tax consolidated legislation.
The head entity, Lindsay Australia 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
tax payer in its own right.
In addition to its own current and deferred tax amounts, Lindsay Australia 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.
The entities have also entered into a tax funding agreement under which the whole-owned entities fully compensate Lindsay Australia
Limited for any current tax payable assumed and are compensated by Lindsay Australia Limited for any current tax receivable and
deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Lindsay Australia 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 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.
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the fair
values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
40
y. General
Lindsay Australia Limited is a public company limited by shares, incorporated and domiciled in Australia. It’s Registered Office and
Principal Place of Business is:
Lindsay Australia Limited
152 Postle Street
ACACIA RIDGE QLD 4110
2.
Financial Risk Management
The 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 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 Group. The 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, and aging analysis for credit risk. Risk management is undertaken by senior management and the board of directors.
Monthly reports of financial assets and financial liabilities including undrawn facilities, analysis and details of significant and/or overdue
debtors are provided to the board of directors for review.
The Group holds the following financial instruments:
2017
$’000
2016
$’000
25,037
43,946
25
10,022
50,234
25
69,008
60,281
37,074
32,854
120,715
110,567
157,789
143,421
Financial assets
Cash and cash equivalents (a)
Trade and other receivables (a)
Available-for-sale financial assets
Financial liabilities
Trade and other payables (b)
Borrowings (b)
(a) Loans and receivables category
(b) Financial liabilities at amortised cost category
Assets pledged as security
Refer to Note 18 for information on assets pledged as security.
(a) Market risk
Foreign exchange risk
The Group does not operate internationally. The Group purchases approximately $2.8 million (3.1%) (2016 - $5.0 million (5.7%)) of its
inventory from overseas sources in overseas currency. The Group is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the US dollar, during the interval, usually not greater than 90 days, between purchase and
settlement. Selling prices can also be adjusted to cover price movements. The Group’s exposure to foreign exchange movements at
30 June 2017 and 30 June 2016 is not significant.
Price risk
The Group is exposed to equity security price risk on unlisted available-for-sale financial assets. The price risk for the unlisted
securities at 30 June 2017 and 30 June 2016 is not significant.
Interest rate risk
The Group’s main interest rate risk arises from borrowings, cash and debtors. Borrowings issued at variable rates expose the Group to
cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. During 2017 and 2016,
the Group’s borrowings at variable rate were denominated in Australian Dollars. The Group’s policy is to fix the rates for plant and
equipment purchases at the time of purchase or leasing. The Group has no significant interest-bearing assets other than cash and
debtors. The Group charges interest on debtor balances that extend beyond agreed terms. Interest is based on fixed loan rates.
41
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
The Group’s cash flow interest rate risk primarily relates to variable rate financial instruments such the bank overdraft, and other
variable rate loans. The proportion of variable rate borrowings to total borrowings of the Group is 15.5% (2016: 6.0%). The increase is
due to a large amount of variable rate borrowings relating to property financing. The Group monitors its interest rate exposure against
movements in market interest rates and future interest rate expectations.
No hedging instruments are used.
As at the reporting date, the Group had the following financial instruments subject to variable interest rates outstanding:
Weighted Average Interest Rate
Cash and cash equivalents
Borrowings
Bank loans
2017
%
0.0%
4.6%
-
2016
%
0.4%
4.4%
-
2017
$’000
2016
$’000
25,037
10,022
18,711
43,748
4,439
16,711
At 30 June 2017, if interest rates had changed by +/-1% from the year-end rates, with all other variables held constant, after-tax profit
for the year would have been $45,000 lower/higher (2016 – change of 1%: $39,000 lower/higher), mainly as a result of higher/lower
interest expense from borrowings and higher/lower interest income from cash and cash equivalents.
(b) Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, and deposits with trading banks, as well as
credit exposures to customers, including outstanding receivables and committed transactions. For customer’s risk control assesses the
credit quality of the customer, taking into account its financial position, past experience and other factors such as credit reports.
Individual risk limits are set based on credit worthiness and sales expectations. Management regularly monitors the compliance of
credit limits by customers. The Group has significant concentrations of credit risk as detailed below. The Group has policies in place to
ensure that sales of products and services are made to customers with an appropriate credit history. The Board of Directors reviews
outstanding customer receivables in excess of $50,000 monthly.
The maximum exposure to credit risk at the reporting date is the carrying amount of the financial assets as summarised above.
There are a number of individually significant receivables. These include Government fuel rebates/subsidies receivable (refer Note 10)
of $671,000 (2016: $998,000).
At 30 June 2017 the largest ten debtors comprised approximately 35% (2016: 37%) of total trade debtors (the largest individual debtor
alone comprised 8% (2016: 10%) of trade debtors). The majority of the trade debtors are involved in the rural industry in Queensland,
New South Wales, Victoria, and South Australia - approximately 68% (2016: 69%).
At the reporting date cash was held with the Group’s banker and principal financier Westpac Banking Corporation.
(c) Liquidity risk
Liquidity risk is managed by maintaining sufficient cash and the availability of funding, through adequate amount of at call committed
credit facilities, to meet obligations when due. The Group manages liquidity risk by continuously monitoring cash flows and the maturity
profiles of financial assets and liabilities. Surplus funds are only invested in deposits with trading banks. The Group maintains un-
drawn limits on equipment facilities.
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
42
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the reporting date:
Available facilities
Bank overdraft
Bank loans
Other loans
Lease Liabilities
Amounts utilised
Bank loans
Other loans
Lease Liabilities
Unused facilities
Bank overdraft
2017
$’000
2016
$’000
5,000
23,770
2,150
5,000
15,882
5,860
109,629
106,880
(22,809)
(11,335)
(2,000)
(2,250)
(95,906)
(96,982)
19,834
23,055
The bank overdraft facility is subject to annual review, may be drawn at any time and may be terminated by the bank without notice.
The interest rate is variable and is based on prevailing market rates.
Bank loans
Bank loans are generally repayable by monthly instalments of principal and interest over periods of between 12 months and 3 years
with options to refinance. The facilities are subject to annual review.
Other loans
The 2016 balance of other loans includes a $2,250,000 signing fee paid by Orora Limited for entering into a Distribution Agreement
executed on the 13 July 2009. The Distribution Agreement has since been terminated, with the balance reclassified to trade payables.
The 2017 amount of $2,000,000 relates to an interest free loan provided by Visy Board Pty Ltd to help fund working capital growth. The
loan is due to be paid in full by July 2020.
Equipment finance facilities
The consolidated entity is able to draw on these facilities for the acquisition of plant and equipment (by way of finance lease). Generally:
The facilities are subject to periodic review;
Fixed monthly repayments of principal and interest are arranged over the term of the agreement at the date of each draw; and
The liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default.
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity Groupings based on the remaining period at the reporting
date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
At 30 June 2016
Trade Payables
Borrowing (excluding finance leases)
Finance Leases
Total
At 30 June 2017
Trade Payables
Borrowing (excluding finance leases)
Finance Leases
Total
Within
1 year
$’000
Between
1 and 2
years
$’000
Between
2 and 5
years
$’000
Greater
than 5
years
$’000
Total
contractual
cash flows
$’000
Carrying
Amount
liabilities
$’000
32,854
9,781
29,040
71,675
-
-
2,139
1,893
24,515
26,654
52,710
54,603
37,074
8,478
-
-
7,362
13,169
31,398
26,973
45,689
-
-
-
-
-
-
-
32,854
13,813
106,265
152,932
37,074
29,009
104,060
32,854
13,585
96,982
143,421
37,074
24,809
95,906
76,950
34,335
58,858
-
170,143
157,789
43
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
(d) Fair value estimation
The fair value of financial assets and financial liabilities must be determined for recognition and measurement or for disclosure
purposes. The Group has no significant financial assets or liabilities measured and recognised at fair value in the financial statements
at year end.
The carrying amounts of financial instruments represent reasonable approximations of their fair values, given their short-term nature.
The net fair value of financial assets and financial liabilities including lease liabilities approximate their carrying amounts.
3. Critical Accounting Estimates & Judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of
future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next financial year are discussed below.
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 1(n).
The recoverable amounts of cash generating units have been determined based on value-in-use calculations. These calculations
require the use of assumptions. Refer to Note 16 for details of these assumptions.
The Group makes judgements as to its ability to collect outstanding receivables and provides for the portion of receivables when
collection becomes doubtful. Evidence of impairment may include indications that the debtors or a group of debtors is experiencing
significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or
other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows,
such as changes in arrears or economic conditions that correlate with defaults. Collectability of trade and other receivables is reviewed
on an ongoing basis. Debts, which are known to be uncollectible, are written off. A provision for doubtful receivables is established
when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of
receivables. Refer note 10 for details of impaired receivables and the allowance provided.
4. Revenues
Freight cartage
Sale of goods
Total revenue
5. Other Income
(a) Other income
Insurance & other recoveries
Rents and sub-lease rentals
Interest
Litigation settlement
Other items
(b) Other income
2017
$’000
2016
$’000
227,400
224,331
105,458
100,465
332,858
324,796
2017
$’000
2016
$’000
2,448
1,852
197
518
-
1,691
4,854
222
627
1,050
1,575
5,326
Net loss on disposal of property, plant and equipment
(861)
(598)
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
44
6. Expenses
Profit before income tax includes the following specific expenses:
Cost of goods sold
Professional fees
Legal fees
Accounting firms
Consultancy fees
Total professional fees
Depreciation
Freehold buildings
Plant and equipment
Leasehold improvements
Amortisation
Plant and equipment under finance lease
Computer software
Customer list
Total depreciation and amortisation
Vehicle Operating Expenses
Vehicle Operating Expenses
Fuel tax credits relating to prior periods (a)
Total vehicle operating expenses
Defined contribution superannuation expense
Impairment losses – trade receivables
Impairment losses - inventory
Minimum Lease payments
(a) Fuel tax credits relating to prior periods
2017
$’000
2016
$’000
83,971
80,911
275
176
1,119
1,570
327
5,682
781
943
215
741
1,899
162
6,540
401
14,285
12,238
257
754
62
239
22,086
19,642
51,338
(6,158)
45,180
6,175
684
56
8,662
50,978
(491)
50,487
5,757
4
49
6,957
During the year, external consultants were engaged to conduct a review of the Group’s fuel tax credit processes. This followed an
internal review in the previous financial year which identified $491,000 of fuel tax credits that could be claimed relating to prior periods.
The external review was conducted to ensure the Lindsay Group was using an accurate and reliable methodology to ensure it was
claiming the correct amount of tax to which it was entitled. The new processes focused on utilising new systems and data, which had
been implemented with the recent IT system upgrades. Using the new processes to review prior periods, external consultants identified
a further $6,158,000 of fuel tax credits to which the business was entitled. Almost the entire amount had been refunded during the year,
with the exception of a $43,000 receivable at the reporting date.
45
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
7.
Income Tax
Income tax expense
Current tax
Deferred tax
Under (over) provision in prior years
Deferred tax is attributable to:
(Increase) decrease in deferred tax assets (Note 15)
Increase (decrease) in deferred tax liabilities (Note 19)
Numerical reconciliation of income tax expense to prima facie tax payable
Profit before income tax
Tax at the Australian tax rate of 30% (2016: 30%)
Tax effects of amounts which are not deductible (taxable) in calculating taxable income:
Non-deductible expenses
R&D claim
Sundry items
Under (over) provision in prior years
Income tax expense
Tax losses
2017
$’000
3,371
(827)
(635)
1,909
(788)
(39)
(827)
8,335
2,500
44
(202)
-
(433)
1,909
2016
$’000
3,547
(216)
-
3,331
(99)
(117)
(216)
11,403
3,421
-
(138)
48
-
3,331
Unused tax losses for which deferred tax assets have not been recognised at 30%
263
263
All unused and unrecognised tax losses were incurred by Australian entities and comprise capital losses.
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
46
8.
Franking Credits / Dividends
2017
$’000
2016
$’000
Franking credits
Franking credits available for subsequent financial years based on a tax rate of 30%
(2016: 30%)
4,155
3,540
The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:
c.
d.
e.
Franking credits that will arise from the payment of the amount of the provision for income tax;
Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
Franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
The impact on the franking account of the dividend recommended by the directors since year end, but not recognised as a liability at
year end, will be a reduction in the franking account of $1,001,000 (2016 - $1,367,000).
Dividends paid
Interim dividend for the year ended 30 June 2017 of 0.8 cents per share fully franked (at 30%)
paid in full on 31 March 2017. (2016: 1.1 cents per share fully franked (at 30%) paid in full on 31
March 2016 fully franked (at 30%).
Interim dividends paid in cash or satisfied by the issue of shares under the dividend re-investment
plan during the years ended 30 June 2017 and 2016 were as follows:
Paid in cash
Satisfied by issue of shares
Final dividend for the year ended 30 June 2016 of 1.1 cents per share fully franked (at 30%) paid
on 30 September 2016 (2015 – 1.0 cents per share fully franked (at 30%) paid in full on 30
September 2015).
Final dividend out of prior year’s profits paid in cash or satisfied by the issue of shares under the
dividend re-investment plan during the years ended 30 June 2016 and 2015 were as follows:
Paid in cash
Satisfied by issue of shares
Dividends not recognised at year end
2,328
3,177
1,956
372
2,328
3,189
2,721
468
3,189
2,731
446
3,177
2,879
2,541
338
2,879
In addition to the above dividends, since year end the directors have recommended the payment
of a final dividend of 0.8 cents per share fully franked fully franked based on tax paid at 30%
(2016: 1.1 cents per share fully franked (at 30%) paid in full on 30 September 2016).
2,337
3,189
47
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
9. Cash and Cash Equivalents
Cash at bank and on hand
Reconciliation of cash and cash equivalents
Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is
reconciled to items in the statement of financial position as follows:
Cash and cash equivalents
The Group’s exposure to interest rate risk is discussed in Note 2.
10. Trade and Other Receivables
Current
Trade receivables
Provision for impairment of receivables
Fuel rebates/subsidies
Future GST recoverable
Other receivables
2017
$’000
2016
$’000
25,037
10,022
25,037
25,037
10,022
10,022
2017
$’000
2016
$’000
41,496
(176)
41,320
671
607
1,348
43,946
47,727
(345)
47,382
998
437
1,417
50,234
Other receivables generally arise from transactions outside the usual operating activities of the Group.
(a) Impaired trade receivables
As at 30 June 2017 current trade receivables of the Group with a nominal value of $194,000 (2016 - $379,000) were impaired. The
amount of the provision was $176,000 (2016 - $345,000). The GST component of the receivables is not considered impaired as this is
refundable. The majority of the individually impaired receivables relate to customers in the rural industry sector who are experiencing
difficulties as a result of seasonal factors.
The ageing of the full balance of these receivables is as follows:
0 to 2 months
3 to 4 months
Over 4 months
Movements in the provision for impairment of receivables are as follows:
At 1 July
Provision for impairment recognised/(reversed) during the year
Receivables written off during the year as uncollectible
At 30 June
2017
$’000
221
1
213
435
2017
$’000
345
515
(684)
176
2016
$’000
192
24
129
345
2016
$’000
19
330
(4)
345
The creation and release of the provision for impaired receivables has been included in “Bad debt expense” in the statement of profit
and loss and other comprehensive income. Amounts charged to the allowance account are generally written off when there is no
expectation of recovering additional cash.
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
48
(b) Past due but not impaired
As of 30 June 2017 trade receivables of $9,179,000 (2016 - $14,873,000) were past due but not impaired. These relate to a number of
independent customers for whom there is no recent history of default. The ageing history of these trade receivables is as follows:
1 to 2 months
3 months
Greater than 3 months
2017
$’000
5,196
648
3,335
9,179
2016
$’000
10,240
776
3,857
14,873
The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on the credit history
of these classes it is expected that these amounts will be received when due. The Group does not hold any collateral in relation to
these receivables.
(c) Foreign exchange and interest rate risk
There are no receivables denominated in foreign currencies. No interest is charged on trade debtors except for certain debtors who
pay late and are charged interest at rates between 1% and 1.5% per month by agreement.
(d) Fair value and credit risk
The carrying amounts of financial instruments represent reasonable approximations of their fair values, given their short-term nature.
The maximum exposure to credit risk at the reporting date is the carrying amount of each class of receivable mentioned above. Refer
Note 2 for more information on the risk management policy of the Group and on the credit quality of the entity’s trade receivables.
11.
Inventories
Raw materials and stores – at cost
Finished goods – at cost
Provision for obsolescence
Of the above inventory, raw materials and stores are expensed and not charged to cost of sales.
12. Other Current Assets
Prepayments
13. Available-For-Sale Financial Assets
Unlisted equity securities
Unlisted equity securities are traded in inactive markets.
2017
$’000
2,779
11,838
14,617
(309)
14,308
2016
$’000
2,589
11,252
13,841
(253)
13,588
2017
$’000
4,302
2016
$’000
6,172
2017
$’000
25
2016
$’000
25
49
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
14. Property, Plant and Equipment
Freehold Land and Buildings
Land - at cost
Buildings - at cost
Accumulated depreciation
Leasehold Improvements
At cost
Accumulated depreciation
Total property
Plant and Equipment
At cost
Accumulated depreciation
Plant and equipment under finance lease
At cost
Accumulated amortisation
Work in progress
Total plant and equipment
Total property, plant and equipment
Movements in carrying amounts
2017
$’000
2016
$’000
6,430
15,468
(716)
21,182
6,430
7,948
(389)
13,989
12,597
5,097
(1,792)
(1,150)
10,805
3,947
31,987
17,936
97,066
92,135
(73,300)
(68,691)
23,766
23,444
142,789
136,572
(37,417)
(30,687)
105,372
105,885
-
5,939
129,138
135,268
161,125
153,204
Movements in the carrying amounts for each class of property, plant and equipment are shown below.
Freehold
Land
Buildings
Leasehold
Improvements
Plant &
Equipment
Carrying amount at 30 June 2015
Additions
Disposals
Transfers
Depreciation/amortisation
$’000
5,601
885
(56)
-
-
Carrying amount at 30 June 2016
6,430
Additions
Disposals
Transfers
Depreciation/amortisation
-
-
-
-
$’000
7,642
291
(212)
-
(162)
7,559
6,091
-
1,429
(327)
$’000
4,348
-
-
-
(401)
3,947
6,203
(31)
1,467
(781)
Carrying amount at 30 June 2017
6,430
14,752
10,805
$’000
28,278
3,030
(3,684)
2,360
(6,540)
23,444
3,410
(2,909)
5,503
(5,682)
23,766
Assets pledged as security. Refer to Note 18 for information on assets pledged as security.
Plant &
Equipment
Under Finance
Lease
$’000
74,420
46,180
(117)
(2,360)
(12,238)
Work In
Progress
Total
$’000
$’000
-
120,289
5,939
56,325
-
-
-
(4,069)
-
(19,341)
105,885
5,939
153,204
18,890
(771)
-
-
34,594
(3,711)
(4,347)
(5,939)
(1,887)
(14,285)
105,372
-
-
(21,075)
161,125
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
50
15. Deferred Tax Assets
The balance comprises temporary differences attributable to:
Impaired receivables
Employee benefits
Depreciation and amortisation
Payables
Other
Stock obsolescence
Other
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions (refer Note 19)
Net deferred tax assets
Movements
At 30 June 2015
(Charged) /credited to profit or loss
Credited to equity
Over provision
At 30 June 2016
(Charged) /credited to profit or loss
Credited to equity
Over provision
At 30 June 2017
Employee
Benefits
$’000
Impaired
Receivables
$’000
Deprec
& Amort
$’000
2,283
252
-
(81)
2,454
204
-
-
2,658
6
97
-
-
103
(50)
-
-
53
88
(41)
-
-
47
-
-
(47)
-
16.
Intangible Assets
Computer software
Accumulated amortisation
Goodwill
Accumulated impairment
Customer list
Accumulated amortisation
Total intangible assets
2017
$’000
53
2,658
-
231
2,942
93
842
935
3,877
(3,877)
-
Payables
Other
$’000
325
(11)
-
-
314
(87)
-
4
231
$’000
208
(199)
156
-
165
721
-
49
935
2017
$’000
4,673
(2,909)
1,764
7,805
(244)
7,561
1,802
(497)
1,305
10,630
2016
$’000
103
2,454
47
314
2,918
15
150
165
3,083
(3,083)
-
Total
$’000
2,910
98
156
(81)
3,083
788
-
6
3,877
2016
$’000
2,220
(2,155)
65
11,138
(3,577)
7,561
1,801
(239)
1,562
9,188
51
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
(a) Movements in carrying amounts
Movements in the carrying amounts for each class of intangible asset are shown below.
Carrying amount at 30 June 2016
Additions – acquired separately
Amortisation
Transfers
Carrying amount at 30 June 2017
Additions – internal development
Amortisation
Transfers from WIP – internal development
Carrying amount at 30 June 2017
(b) Impairment tests for goodwill
Computer
Software
$’000
124
3
(62)
-
65
566
(754)
1,887
Goodwill
$’000
7,561
-
-
-
Customer
List
$’000
-
1,801
(239)
-
Total
$’000
7,685
1,804
(301)
-
7,561
1,562
9,188
-
-
-
-
(257)
-
566
(1,011)
1,887
1,764
7,561
1,305
10,630
Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to the business segments. The carrying amount
of goodwill is attributable to the Rural segment.
The Group tests whether goodwill should be impaired on an annual basis. The recoverable amount of a cash generating unit (CGU) is
determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based
on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are extrapolated
using the estimated growth rates stated below.
(c) Key assumptions used for value-in-use calculations of the Rural CGU
Average Gross margin
Terminal growth rate
Free cash growth rate
Discount rate
2017
$’000
17.9
2.0
17.3
9.6
2016
$’000
17.2
2.0
25.3
9.4
Assumption
Approach used to determining values
Budgeted gross margin
Based on past performance and management’s expectations for the future
Terminal growth rate
Free cash grow rate
Pre-tax discount rate
The growth rate used to extrapolate cash flows beyond the 5 year forecasted period based off
management’s expectations of long-term growth.
The average cash flow growth rate over the five-year forecast period of 17.3% is based off
management’s expectations for the future.
Reflect specific risks relating to the relevant segments and the countries in which they operate based
off management’s expectations for the future.
(d) Impact of possible changes in key assumptions
A sensitivity analysis was performed on key assumptions, which included increasing the discount rate from 9.6 to 11.6% and reducing
product margin growth. Both scenarios did not result in impairment.
(e) Assets pledged as security
Refer to Note 18 for information on current assets pledged as security.
(f) Amortisation methods and useful lives
The Group amortises intangible assets with a limited useful life using the straight-line method over the following periods:
Computer Software
2 - 3 years
Customer list
7 years
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
52
See note 1(f) for the other accounting policies relevant to impairment of assets, and note 1(n) for the Group’s policy regarding intangible
assets.
17. Trade and Other Payables
Trade payables
2017
$’000
37,074
2016
$’000
32,854
A major supplier, Orora Limited, has a registered charge over the assets of Lindsay Rural Pty Ltd up to a maximum amount of
$3,200,000 (2016: $3,200,000). At the reporting date the amount payable to Orora Limited was $3,500,000 (2016: $178,000).
18. Borrowings
Current
Secured
Bank overdraft
Lease liabilities
Bank loans
Total secured current borrowings
Unsecured
Other loans
Total unsecured current borrowings
Total current borrowings
Non-current
Secured
Lease liabilities
Bank loans
Total secured non-current borrowings
Unsecured
Other loans
Total unsecured current borrowings
Total non-current borrowings
Total borrowing
(a) Bank overdraft and bank loans
2017
$’000
2016
$’000
-
27,898
7,741
35,639
797
797
-
25,329
7,334
32,663
2,250
2,250
36,436
34,913
68,008
15,068
83,076
1,203
1,203
84,279
120,715
71,653
4,001
75,654
-
-
75,654
110,567
The bank overdraft and bank loans are secured by guarantees by all companies in the consolidated entity supported by mortgage
charges over all the consolidated entity’s property and other assets.
(b) Lease liabilities
Lease liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default. Certain lease
liabilities are also guaranteed by entities in the consolidated entity in addition to mortgage charges over the property and other assets.
(c) Other loans
The 2016 balance of other loans includes a $2,250,000 signing fee paid by Orora Limited for entering into a Distribution Agreement
executed on the 13 July 2009. The Distribution Agreement has since been terminated, with the balance reclassified to trade payables.
The 2017 amount of $2,000,000 relates to an interest free loan provided by Visy Board Pty Ltd to help fund working capital growth. The
loan is due to be paid in full by July 2020.
53
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
(d) Assets pledged as security
All the assets of the consolidated entity are pledged as security for the facilities as noted above.
(e) Fair value
Information about the Group’s fair value of borrowings is provided in Note 2.
(f) Risk exposure
Information about the Group’s exposure to risks arising from borrowings is provided in Note 2.
19. Deferred Tax Liabilities
The balance comprises temporary differences attributable to:
Prepayments
Inventories
Depreciation and amortisation
Other
Total deferred tax liabilities
Set-off of deferred tax assets pursuant to set-off provisions (refer Note 15)
Net deferred tax liabilities
Movements
Prepayments
Inventories
$’000
$’000
1,048
55
1,103
33
-
1,136
828
(60)
768
58
8
834
Consolidated
At 30 June 2015
Charged /(credited) to profit or loss
At 30 June 2016
Charged /(credited) to profit or loss
Over provision
At 30 June 2017
20. Provisions
Current
Employee benefits
Non-current
Employee benefits
Depreciation &
Amortisation
$’000
3,155
(129)
3,026
(297)
(211)
2,518
2017
$’000
1,136
834
2,518
184
4,672
(3,877)
795
Other
$’000
-
17
17
167
-
184
2016
$’000
1,103
768
3,026
17
4,914
(3,083)
1,831
Total
$’000
5,031
(117)
4,914
(39)
(203)
4,672
2017
$’000
2016
$’000
7,788
7,123
1,074
1,056
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
54
21. Other Liabilities
Current
Deferred revenue
Other
Non-current
Other
2017
$’000
2,620
81
2,701
2016
$’000
1,697
519
2,216
2,333
1,364
Deferred revenue comprises monies paid in advance of delivery of goods or services.
22. Contributed Equity
Fully paid ordinary shares
The movement in fully paid ordinary shares for 2017 and 2016 is reconciled as follows:
2017
$’000
70,884
Balance at 30 June 2015
Issue of shares pursuant to the Dividend Reinvestment Plan
Issue of shares pursuant to the Dividend Reinvestment Plan
Placement of shares
Issue of shares to customers - sign on fee
Share issue transaction costs net of tax benefits
Balance at 30 June 2016
Issue of shares pursuant to the Dividend Reinvestment Plan
Issue of shares pursuant to the Dividend Reinvestment Plan
Balance at 30 June 2017
(a) Dividend Reinvestment Plan
Note No of Shares
Issue Price
(a)
(a)
(b)
(c)
(a)
(a)
283,985,276
850,717
1,028,163
3,942,148
128,640
-
289,934,944
1,061,640
1,094,210
292,090,794
39.80¢
43.39¢
45.00¢
46.64¢
-
44.00¢
34.00¢
2016
$’000
70,044
$’000
67,475
338
446
1,774
60
(49)
70,044
468
372
70,884
The company has established a dividend reinvestment plan under which holders of ordinary shares may elect to have all or part of their
dividend entitlements satisfied by the issue of new ordinary shares rather than by being paid in cash. Shares are issued under the plan
at a discount as determined by the directors but no more than 5% to the market price.
Issues pursuant to the Dividend Reinvestment Plan are:
2016 Dividends
30 September 2015
31 March 2016
2017 Dividends
30 September 2016
31 March 2017
Number of
Shares
Issue Price
850,717
39.80 cents
1,028,163
43.39 cents
Number of
Shares
Issue Price
1,061,640
44.00 cents
1,094,210
34.00 cents
Dividends payable on 30 September 2016 and 31 March 2017 were each settled in to two tranches due to rounding errors in the DRP,
with 1,005,868 and 1,033,423 shares being issued on 30 September 2016 and 31 March 2017 respectively and a further issuance of
60,787 and 55,772 shares issued on 10 April 2017 and 21 June 2017 respectively.
55
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
(b) Placement shares
A placement of 3,942,148 ordinary shares was made to institutional and sophisticated investors at 45 cents per share fully paid to raise
$1,773,967 cash on 8 July 2015. No placements were made during the year ended 30 June 2017.
(c)
Issue of shares to customers – sign on fee
In the 2016 financial year shares were issued to a number of customers pursuant to the Customer Supply Agreement on execution of a
long term supply contract. No shares were issued to customers during the year ended 30 June 2017.
(d) Capital risk management
The Group’s objectives when managing capital are to safeguard their ability to continue as going concern, so that they can continue to
provide returns for shareholders and benefits for other stakeholders and to maintain a cost effective cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, issue new
shares, raise or retire debt finance or sell assets to reduce debt.
The Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt divided by net debt and total equity.
Net debt is calculated as total interest bearing borrowings as shown in the statement of financial position less cash and cash
equivalents. During the year ended 30 June 2017 the Group did not alter its capital management policy.
The gearing ratios at 30 June 2017 and 30 June 2016 were as follows:
Total borrowings
Less cash and cash equivalents
Net debt
Total equity
Gearing ratio
2017
$’000
120,715
(25,037)
95,678
86,209
53%
2016
$’000
110,567
(10,022)
100,545
84,481
54%
Lindsay Australia Limited has complied with the financial covenants of its borrowing facilities during the 2017 and 2016 reporting
periods.
23. Reserves
Movements in the Share-based payments reserve are shown below.
Share-based payment reserve
Open at 1 July
Employee share schemes – value of employee services
Close at 30 June
a. Nature and purposes of reserve
The share-based payments reserve is used to recognise the fair value of options issued to employees.
24. Retained Earnings
Retained earnings at the beginning of the year
Profit for the year
Dividends paid or provided
Retained earnings at the end of the year
2017
$’000
2016
$’000
536
(21)
515
536
-
536
2017
$’000
13,901
6,426
2016
$’000
11,885
8,072
(5,517 ) (6,056)
14,810
13,901
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
56
25. Cash Flow Information
Reconciliation of Cash Flows from Operating Activities with Profit for the Year
Profit for the year
Depreciation/amortisation
Net (gain)/loss on disposal of property, plant and equipment
Non-cash interest expense payment by issue of shares
Non-cash employee benefits expense-share-based payments
Fair value adjustment to financial liabilities
(Increase)/decrease in current taxes
(Increase)/decrease in deferred taxes
(Increase)/decrease in trade and other receivables
(Increase)/decrease in prepayments and other assets
(Increase)/decrease in inventories
(Decrease)/increase in trade and other payables
(Decrease)/increase in other liabilities
(Decrease)/increase in provisions
Cash flows from operating activities
Non-Cash Financing and Investing Activities
Acquisition of plant and equipment by means of finance leases
Dividends satisfied by issue of shares
26. Earnings per Share
Basic earnings per share
Diluted earnings per share
2017
$’000
2016
$’000
6,426
22,086
861
-
(21)
-
(257)
(1,035)
6,054
1,871
(720)
2,300
1,454
683
8,072
19,642
598
-
-
-
995
(289)
(5,910)
(985)
1,589
6,349
(841)
569
39,702
29,789
18,940
46,180
840
785
2017
$’000
2.2
2.2
2016
$’000
2.8
2.8
Earnings used in calculating basic and diluted earnings per share – net profit
6,426
8,072
Weighted average number of ordinary shares used in calculating basic and diluted earnings per share
290,833,967
288,769,334
Number of
Shares
Number of
Shares
27. Auditor’s Remuneration
During the year the auditor of the parent entity earned the following remuneration:
Audit or review of financial reports
Taxation and other services
Total remuneration
There was no other remuneration paid to related practices of the auditor.
2017
$
2016
$
150,000
26,870
176,870
146,500
42,850
189,350
57
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
28. Related Party Disclosures
(a) Key management personnel compensation
Short-term employee benefits
Long-term employee benefits
Post-employment benefits
Share-based payments
Detailed remuneration disclosures are provided in the remuneration report contained in the directors’ report.
(b) Other transactions and balances with key management personnel
Amounts recognised as revenues and expenses:
Revenues
Cartage revenue received / receivable
Sale of rural supplies
Expenses
Fees for corporate uniform consultancy
2017
$
2016
$
2,061,344
2,348,241
12,579
159,887
4,530
17,792
212,842
(93)
2,238,340
2,578,782
2017
$
2016
$
8,235,078
7,521,661
7,372,082
5,197,400
15,607,160
12,719,061
20,800
14,478
Amounts receivable / payable to key management personnel and their related parties at the
reporting date
Current receivables – trade debtors
312,241
1,773,199
The directors believe transactions with key management personnel were on commercial terms and conditions (unless otherwise
stated). Current receivables and payables are unsecured, to be settled cash and are on the same terms and conditions as non-related
parties as disclosed elsewhere in this report.
(c) Loans to key management personnel
There were no loans to key management personnel during the current or prior reporting period.
29. Share-based Payments
Lindsay Australia has a number of share-based incentive plans described in the Remuneration Report. These plans have been
accounted for in accordance with the fair value recognition provisions of AASB 2 “Share-based Payment”.
Expense arising from share-based payment transactions
During the period $4,530 (2016: ($93)) was recognised as employee benefit expense arising from share-based payment transactions.
There was no expense incurred for the issue of shares as sign on payments to customers (2016: $10,000). There was an additional
expense of $13,315 recognised for the modification of a plan outlined further within the note. Therefore, the total expense for share-
based payments was $17,845 (2016: $9,907).
Expense arising from equity settled share-based payment transactions
Expense relating to modification on equity settled share-based plan
Total expense arising from share-based payment transactions
There were no share options converted to shares during the year.
2017
$
4,530
13,315
17,845
2016
$
9,907
-
9,907
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
58
Change in share-based payment reserve
During the year the share-based payment reserve decreased by $20,984 comprising of the modification and cash settlement of $25,514
outlined below and offset by the expense arising from equity settled share-based payment transactions of $4,530.
Employee share option plans
Long Term Incentive (Option) Plan (LTIP)
In 2016 shareholders approved a LTIP and approved to grant the CEO options under the plan. No further grants were made under the
plan in 2017 financial year and it is expected to be progressively rolled out to other staff in future years. The plan has the following
characteristics:
Eligibility
The LTIP will be open to eligible employees (including directors, contractors and consultants) of the
Company who the Board determines in its absolute discretion to issue options.
Grant of options
No amount is payable by eligible employees for the issue of options under the LTIP.
The offer must be in writing and specify, amongst other things, the number of options being issued, the
exercise period, any conditions to be satisfied before the options may be exercised and the exercise
price of the options. The options may also be subject to specific terms established by the Board.
Exercise
Lapse
Right of
participants
The options may be exercised, subject to any exercise conditions, by the participant giving a signed
notice to the Company and paying the exercise price in full. The Company will apply for official quotation
of any Shares issued on exercise of any options.
The options shall lapse in accordance with specific offer terms or events contained in the LTIP rules,
including termination of employment or resignation, redundancy, death or disablement (subject to the
Board’s direction to extend the terms of exercise in restricted cases).
Once shares are allotted upon exercise of the options the participant will hold the shares free of
restrictions (unless the Board determines otherwise). The shares will rank for dividends declared on or
after the date of issue but will carry no right to receive any dividend before the date of issue.
Should the Company undergo any reorganisation of capital, the number of options or shares will be
adjusted in accordance with the Listing Rules as applicable to options at the time of the reorganisation.
In the event of a change of control, and subject to the Listing Rules and any applicable laws, the Board
may determine that:
(a)
a participant’s unvested options will vest notwithstanding some or all of the vesting conditions
have not been satisfied;
that an eligible employee may transfer or otherwise dispose of their options; or
that a disposal restriction will be waived in respect of the options.
(b)
(c)
A holder of options is not entitled to participate in dividends, a new issue of shares or other securities
made by the Company to shareholders merely because he or she holds options.
Assignment
The options are not transferable or assignable without the prior written approval of the Board.
Administration
Termination and
amendment
The LTIP will be administered by the Board which has an absolute discretion to determine appropriate
procedures for its administration and, subject to the Listing Rules and applicable laws, all decisions of
the Board as to the interpretation, effect or application of the plan rules and all calculations and
determinations made by the Board under the plan rules are final, conclusive and binding in the absence
of manifest error.
The LTIP may be terminated or suspended at any time by the Board, or if an order is made or an
effective resolution is passed for the winding up of the Company other than for the purpose of
amalgamation or reconstruction.
The LTIP may be amended at any time by the Board provided that any amendment does not materially
alter the rights of any participant in respect of the issue of options under the plan prior to the date of the
amendments unless:
(a)
(b)
(c)
the amendment is introduced primarily for the purposes of complying with or conforming to
present or future applicable legislation;
to correct any manifest error or mistake; or
to enable the plan or Company to comply with any applicable laws or any required policy.
Fair value of options granted under LTIP
The assessed fair value at grant date of options granted during the year ended 30 June 2017 was $0.4084 per option. The options have
nil exercise price, a three year vesting period where they do not participate in dividends, and two performance criteria (year one NPAT
and year three EPS). There are no direct market criteria incorporated in valuing the option. Under these criteria both the Black Scholes
and a discounted cash model produce a similar result, and are permitted methodologies under ASIC Regulatory Guide 76. The Board
believes this valuation model to be appropriate to the circumstances and has not used any other valuation or other models in proposing
59
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
the terms of the options. Under these valuation methods based on a number of assumptions, set out below, with an adjustment to the
expected life of the options to take account of limitations on transferability. This valuation imputes a total value of $163,369 after tax for
the proposed options over the three year vesting period.
The models used the following assumptions:
risk free rate set at 1.96% is based on the Australian Government bond 10-year bond rate as at the grant date;
a share price of $0.47 being the most recent traded price on ASX on 1st July 2016 before the valuation was completed;
the option exercise price on 30 June 2019 is zero;
volatility of 30% is based on the standard deviation of the monthly Company’s share price movement over the last 4 years; and
no discount has been applied to reflect the fact the options will be unlisted and non-transferrable.
Existing option plan
The existing option plan in place prior to 2017 is expected to be phased out and replaced by the LTIP. The existing plan has the same
characteristics as the LTIP, except exercise conditions are specific to the individual’s performance rather than the performance of the
Group. These are outlined in the Remuneration Report. During the year, two senior employees were a part of long term incentive
programs involving employment contract specific options. No grants were undertaken in 2017 under this plan.
Options granted
The following table summarises options granted under the LTIP and existing option plan. The number and weighted average exercise
price (WAEP) per option in cents of, and movements in, share options during the year: no options expired during the periods covered
by the below table.
2017
2016
Balance at beginning of year
Granted during the year
Forfeited and lapsed during the year
Modified, vested and exercised during the year
Balance at the end of the year
Exercisable at end of year
Summary of options outstanding
WAEP
Number
WAEP
Number
341,737
400,000
(492,685)
(91,737)
157,315
-
-
-
-
-
392,259
62,045
(112,568)
-
341,737
-
- -
-
-
-
-
-
-
The share options outstanding at the end of the year had an exercise price of nil (2016: nil) and a weighted average remaining
contractual life of 1.8 years (2016: 2.2 years).
A summary of the status of the Groups’ equity settled share options plans at 30 June 2017 is presented below. When exercisable,
each option is convertible into one ordinary share of Lindsay Australia Limited at a zero exercise price.
Tranche
Fair Value Per
Option (cents)
Grant
Date
Expiry Date
Number
Issued
Number
Forfeited
Number
Modified,
Vested and
Exercised (a)
Vested Not
Exercisable
First
Second
Third
LTIP
26.5
22.7
41.9
40.8
July 2014
Sept 2018
July 2014
Sept 2020
July 2015
Sept 2017
July 2016
June 2026
250,000
250,000
62,045
400,000
180,139
50,373
-
20,681
400,000
-
41,364
-
-
-
-
-
(a) Refer to modification section below
Determining option value at grant date
All issued and outstanding options contain no market conditions to vest. All options are non-participating zero priced options. These
options have an exercise price of zero and do not participate in dividends until exercised. The fair value at the grant date for the issues
was determined by taking the share price at grant date less the present value of dividends discounted at the risk free rate of 2% where
the vest date is greater than one year from grant date.
Modification of share-based payment arrangements
In September 2016, Lindsay Australia Limited cash settled 91,737 options from the existing option plan in preparation for transition to
the LTIP at a price of 48 cents. The settlement price was based on the 5 day weighted average from 1 September 2016. The change in
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
60
settlement resulted in an additional expense being recognised in income statement of $13,315. This difference is also recognised as a
cash bonus in Remuneration report for each relevant employee.
Existing Option plan
Grant Price
(cents)
Settlement price
(cents)
Options exercised Expensed in
Tranche 1 (Mr. Lorenz)
Tranche 3 (Mr. King)
Total
26.6
41.9
-
48.0
48.0
-
50,373
41,364
91,737
*grant price is rounded in the model from 5 decimal places to 2.
income
$10,809
$7,711
$13,315
Change in share-based
payment reserve
($13,370)
($12,144)
($25,514)
30. Subsidiaries
The Group consists of the ultimate parent entity Lindsay Australia Limited and its wholly owned subsidiaries. Set out below are the
names of the subsidiaries which are included in the consolidated financial statements shown in this report. All entities were
incorporated in Australia.
Name
Lindsay Brothers Holdings Pty Ltd (a), (d)
Lindsay Transport Pty Ltd (a), (d)
Lindsay Brothers Management Pty Ltd (a), (d)
Lindsay Brothers Fuel Services Pty Ltd (a), (d)
Lindsay Brothers Hire Pty Ltd (a), (d)
Lindsay Brothers Plant & Equipment Pty Ltd (a), (d)
P & H Produce Pty Ltd (d)
P & H Produce Trust (d)
Lindsay Rural Pty Ltd (b), (d)
Skinner Rural Pty Ltd (c), (d)
Croptec Fertilizer and Seeds Pty Ltd (c), (d)
Lindsay Fresh Logistics Pty Ltd (d)
Class
Shares/Units
Equity
Holding %
2017
Equity
Holding %
2016
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(a) Lindsay Brothers Holdings Pty Ltd (LBH) is the parent entity of Lindsay Transport Pty Ltd, Lindsay Brothers Management Pty Ltd, Lindsay Brothers
Fuel Services Pty Ltd, Lindsay Brothers Hire Pty Ltd, and Lindsay Brothers Plant and Equipment Pty Ltd. Accordingly, the parent entity’s interest in
these entities (other than LBH) is indirect.
(b) Lindsay Rural Pty Ltd is 50% owned by P&H Produce Trust and 50% owned by the parent entity.
(c) These companies are subsidiaries of Lindsay Rural Pty Ltd.
(d) These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with ASIC Corporations (wholly-owned
companies) Instrument 2016/785. For further information refer to Note 32.
61
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
31. Segment Information
Description of segments
The Group has identified the following reporting segments based on the internal reports that are reviewed and used by the Board of
Directors (chief operating decision maker) in assessing performance and determining the allocation of resources:
Transport – Cartage of general and refrigerated products and ancillary sales, and;
Rural – Sale and distribution of a range of agricultural supply products.
The segments are determined by the type of product or service provided to customers and the operating characteristics of each
segment. The Group operated in these business segments for the whole of the 2017 and 2016 years. All Group revenue is derived
from customers within Australia.
Basis of accounting for purposes of reporting segments
Accounting policies adopted
Unless stated otherwise, all amounts reported to the Board of Directors as chief decision maker with respect to operating segments are
determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Group.
The Group does not allocate assets or liabilities to each segment because management does not include this information in its
measurement of the performance of the operating segments.
Inter-segment transactions
An internally determined transfer price is set for all inter-entity sales. All such transactions are eliminated on consolidation for the
Group’s financial statements. Some corporate charges are allocated to reporting segments based on the segments’ overall proportion
of usage within the Group.
Unallocated items
The following items of revenue and expense are not allocated to operating segments as they are not considered part of the core
operations of any segment:
Interest received;
Borrowing costs;
Corporate costs including bad debt expense; and
Income tax expense.
Major customers
No customer of the Group accounts for more than 10% of external revenue (2016: nil). The largest individual customer accounts for
7.8% of external revenues (2016: 10.0%).
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
62
Segment information
2017
Revenue
External sales
Inter-segment sales
Other income
Other gains/(losses)
Total segment revenue/income
Reconciliation of segment revenue/income to Group revenue/income
Inter-segment elimination
Interest income
Corporate/unallocated income
Total revenue/income
Segment net profit before tax
Reconciliation of segment profit to Group net profit before tax
Corporate/unallocated
Finance costs
Net profit before income tax
Income tax expense
Profit for year
Depreciation and amortisation
Corporate/unallocated cost
2016
Revenue
External sales
Inter-segment sales
Other income
Other gains/(losses)
Total segment revenue/income
Reconciliation of segment revenue/income to Group revenue/income
Inter-segment elimination
Interest income
Corporate/unallocated income
Total revenue/income
Segment net profit before tax
Reconciliation of segment profit to Group net profit before tax
Corporate/unallocated
Finance costs
Net profit before income tax
Income tax expense
Profit for year
Depreciation and amortisation
Corporate/unallocated cost
Transport
$’000
Rural
$’000
Total
$’000
227,400
105,458
332,858
5,415
2,187
(832)
765
406
1
6,180
2,593
(831)
234,170
106,630
340,800
(6,180)
518
1,713
336,851
25,153
3,405
28,558
(14,739)
(5,483)
8,335
(1,909)
6,426
19,805
2,281
22,086
19,327
478
224,331
100,465
324,796
4,727
2,279
(615)
865
258
17
5,592
2,537
(598)
230,722
101,605
332,327
22,768
3,544
18,543
369
(5,592)
627
2,162
329,524
26,312
(10,265)
(4,644)
11,403
(3,331)
8,072
18,912
730
19,642
63
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
32. Deed of Cross Guarantee
The following companies 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 ASIC Corporations (wholly-owned companies) Instrument 2016/785. The companies include: Lindsay Australia Limited,
Lindsay Brothers Holdings Pty Ltd, Lindsay Transport Pty Ltd, Lindsay Brothers Management Pty Ltd, Lindsay Brothers Fuel Services
Pty Ltd, Lindsay Brothers Hire Pty Ltd, Lindsay Brothers Plant and Equipment Pty Ltd, P & H Produce Pty Ltd, P & H Produce Trust,
Lindsay Rural Pty Ltd, Skinner Rural Pty Ltd, Croptec Fertiliser and Seeds Pty Ltd, Lindsay Fresh Logistics Pty Ltd.
The above companies 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 Lindsay Australia Limited, they also represent the ‘extended closed Group’.
33. Commitments
Finance lease commitments
Finance lease liabilities are payable exclusive of GST as follows:
Less than one year
Between one and five years
Minimum lease
payments
Interest
Principal Minimum lease
payments
Interest
Principal
2017
$’000
31,398
72,662
104,060
2017
$’000
3,500
4,654
8,154
2017
$’000
27,899
68,008
95,906
2016
$’000
29,040
77,225
106,265
2016
$’000
3,711
5,572
9,283
2016
$’000
25,329
71,653
96,982
Finance leases comprise leases of items of plant and equipment under normal commercial finance lease terms and conditions.
Finance leases do not contain any contingent rental components. No items subject to finance lease are subleased. Under the leases
there are no escalation clauses and there is an option to acquire the leased assets at the end of the term.
Operating Lease Commitments
Non-cancellable operating leases contracted for but not recognised in the financial statements are
payable inclusive of GST as follows:
Not later than 1 year
Later than 1 year but not later than 5 years
Later than 5 years
2017
$’000
2016
$’000
7,270
12,508
31,229
51,006
7,782
14,579
3,376
25,737
Operating leases primarily comprise leases of premises under normal commercial operating lease terms and conditions. These include
rentals, in certain cases, being subject to periodic review for market and/or for CPI increases as well as options for renewal.
There are no significant items subject to operating leases that are subleased.
Capital Commitments
Commitments for capital expenditure (property, plant, equipment and intangibles) contracted for but
not recognised in the financial statements are as follows:
7,256
15,497
2017
$’000
2016
$’000
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
64
34. Contingent Liabilities
Guarantees to secure lease obligations
Guarantees to cover Workers policy
Total Guarantees
Cross guarantees have been given as described in Note 32.
2017
$’000
4,405
3,090
7,495
2016
$’000
1,462
2,746
4,208
From time to time the consolidated entity is subject to claims and litigation during the normal course of business. The directors have
given consideration to such matters and are of the opinion that there are no further material contingent liabilities as at the reporting date
that are likely to arise. Other than above to the directors’ knowledge no matter or circumstance has arisen since the end of the year that
has significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state
of affairs of the consolidated entity in future financial years.
35. Parent Company Information
Information relating to Lindsay Australia Limited is as follows:
Summary financial information
Statement of financial position
Current assets
Total assets
Current liabilities
Total liabilities
Issued capital
Retained profits
Share-based payments reserve
Total shareholders’ equity
Profit of the parent entity
Total comprehensive income of the parent entity
Contingent liabilities of the parent entity
Contractual commitments
Guarantees entered into by parent entity
2017
$’000
2016
$’000
3,074
351,308
256,389
275,169
70,884
4,740
515
76,139
4,803
4,803
-
-
4,819
303,824
223,461
227,790
70,044
5,454
536
76,034
8,442
8,442
-
-
Lindsay Australia Limited has guaranteed the Groups external debt in respect of bank overdrafts, financial leases, and bank loans of
subsidiaries amounting to $28,049,722 (2016: $20,824,048) secured by registered mortgage charges over property and other assets.
The parent entity has also given unsecured guarantees in respect of financial leases of subsidiaries amounting to $42,000,000 (2016:
$42,223,495).
In addition, there are cross guarantees given by Lindsay Australia Limited as described in Note 32. No deficiencies of assets exist in
any of these companies. No liability has been recognised in relation to these financial guarantees in accordance with the policy set out
in Note 1(u) as the present value of the difference in net cash flows is not significant.
65
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
36. Events after the reporting period
On 30 August 2017 a debtor classified as Trade Receivables, which is under a repayment plan, did not meet a payment
obligation and therefore under the credit agreement the full debt has been called. The Group currently holds securities with an
estimated value greater than the debt and believes no impairment is required to be recognised. The maximum credit exposure
not taking into account collateral held is $2.78 million at 30 August 2017 ($3.46 million at 30 June 2017).
Collateral held to reduce possible credit loss includes registered charges over properties and water rights valued at $11.9
million. A third party holds the first registered charges on the properties and a deed of priority is in place between the
mortgagees to regulate payment priorities. Under the priority deed the third party’s repayment priority is $8.395 million plus
interest, costs or other expenses.
The underlying properties and water rights have been subject to third party valuation and risk analysis which support the value
of the security held.
37. Legal Proceedings
In 2009 the Group executed a seven-year Distribution Agreement with Orora Limited (Orora) which was terminated in 2015 by the
parties prior to the contract term end date. A settlement of the ensuing legal proceedings was agreed in December 2016 and
formally discontinued without admission of liability. Settlement was agreed to avoid litigation risk and the expected expense of a
lengthy trial.
The settlement includes payment to Orora in two tranches:
The first tranche of $2.5 million to cover retirement of a loan and accrued interest repayable under the terms of the Distribution
Agreement between the parties, and
The second tranche of $1 million representing agreed settlement proceeds is due for payment in December 2017 and is held on
the balance sheet as a liability.
Lindsay Australia Limited | Annual Report 2017 | Notes to the consolidated financial statements
66
Directors’ Declaration
In the directors’ opinion:
a.
The attached financial statements and notes are in accordance with the Corporations Act 2001, including:
i.
ii.
Complying with Accounting Standards, the Corporations Regulations 2001; and other mandatory professional reporting
requirements, and
Giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2017 and of its
performance for the financial year ended on that date; and
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
At the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified
in Note 32 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of the deed of
cross guarantee described in Note 32.
b.
c.
Note 1 confirms that the consolidated 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 and chief financial officer required by section 295A of the
Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
John F Pressler
Chairman of Directors
Brisbane, Queensland
30 August 2017
67
Lindsay Australia Limited | Annual Report 2017 | Directors’ Declaration
Corporate Governance Statement Introduction
The board of Directors of Lindsay Australia Limited is responsible for the corporate governance of the consolidated entity. The board
guides and monitors the business and affairs of Lindsay Australia Limited on behalf of the shareholders by whom they are elected and to
whom they are accountable.
Lindsay Australia Limited’s Corporate Governance Statement is structured with reference to the Corporate Governance Council’s
principles and recommendations. Lindsay Australia Limited’s Corporate Governance practices recognise the Company’s market
capitalisation and the complexity of its operations. For further information on corporate governance policies adopted by Lindsay
Australia Limited, refer to our website: www.lindsayaustralia.com.au
Contents
Principle 1.
Principle 2.
Principle 3.
Principle 4.
Principle 5.
Principle 6.
Principle 7.
Principle 8.
74
75
77
77
78
78
79
80
Lindsay Australia Limited’s Corporate Governance practices recognise the Group’s market capitalisation and the complexity of its
operations. For further information on corporate governance policies adopted by Lindsay Australia Limited, refer to our website:
www.lindsayaustralia.com.au
73
Lindsay Australia Limited | Annual Report 2017 | Corporate Governance Statement
Principle 1
Lay solid foundations for management and oversight
Recommendation 1.1
Recognise and publish the respective roles and responsibilities of the board and management.
During the financial year the Company was governed in accordance with its Corporate Governance Charter adopted by the board. The
Corporate Governance Charter is published on the Company’s website.
The Company should establish the functions reserved to the board and those delegates to senior executives and disclose those
functions.
The Corporate Governance Board charter reserves powers for the board. Functions not reserved to the Board are delegated to senior
management.
Recommendation 1.2
Undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for election, as a director.
Provide security holders with all material information in its possession relevant to a decision on whether or not to elect or re-elect a
director.
The Company undertakes appropriate checks and evaluation before appointing or re-appointing a person including putting forward a
candidate for election as a director. The Corporate Governance Charter outlines the process for appointment and retirement of
members of the board including the provision of relevant information to security holders.
Recommendation 1.3
A listed entity should have a written agreement with each director and senior executive setting out the terms of their appointment.
The Company has entered into agreements with Directors and senior executives, these documents together with the Corporate
Governance charter outline roles, responsibilities and expectations.
Recommendation 1.4
The Company Secretary of a listed entity should be accountable directly to the board, through the chair, on all matters to do with the
proper functioning of the board.
The Company Secretary has access to all Board members and the primary functions are to assist and advise the Board on governance
matters and compliance with internal processes. The role of the Company Secretary is outlined in the board charter which support the
recommendations. The Company Secretary’s appointment and engagement terms reflect the requirements of the recommendations.
Recommendation 1.5
A listed entity should:
(a) Have a diversity policy which includes requirements for the board or a relevant committee of the board to set measurable objectives
for achieving gender diversity and to assess annually both the objectives and the entity’s progress in achieving them
(b) Disclose the policy or a summary of it; and
(c) Disclose at the end of each reporting period the measurable objectives for achieving gender diversity set by the board or a relevant
committee of the board in accordance with the entity’s diversity policy and its progress towards achieving them, and either:
(1) The respective proportions of men and women on the board, in senior executive positions and
across the whole organisation (including how the entity has defined senior executive for these
purposes); or
If the entity is a “relevant employer” under the Workplace Gender Equality Act, the entity’s most
recent “Gender Equality Indicators”, as defined in and published under the Act.
(2)
The Diversity Policy is published on the Company’s web site. The Board has established the following objectives in relation to gender
diversity. The intention is to achieve the objectives over time as positions become available. The Board notes that some positions
within the Company have time and physical demands that may make these jobs traditionally unattractive to women.
Percentage of women in Group’s workforce
Percentage of women in management positions
Objective
15%
20%
2017
12%
14%
2016
11%
15%
The Company’s Workplace Gender Equality Act public report for 2017 is available on the Company’s website.
Lindsay Australia Limited | Annual Report 2017 | Corporate Governance Statement
74
Recommendation 1.6
A listed entity should:
(a) Have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and
(b) Disclose in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in
accordance with that process.
The Company has adopted processes concerning the evaluation and development of the board, board committees and individual
directors. Procedures include an internal Board assessment. The Corporate Governance Statement outlines the skills criteria for
Directors of the Company.
During the 2017 financial Year, an internal board performance assessment was performed and reviewed against the criteria. The review
did not result in any governance or other changes.
Recommendation 1.7
A listed entity should:
(a) Have and disclose a process for periodically evaluating the performance of its senior executives; and
(b) Disclose, in relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in
accordance with that process.
The Company’s Corporate Governance Charter details the procedures for performance reviews and evaluation. Senior executives are
subject to formal/informal evaluations against individual performance and business measures either on an ongoing or annual basis.
Principle 2
Structure the board to add value – Have a board of an effective composition, size, and commitment to adequately discharge its
responsibilities and duties.
Recommendation 2.1
The board of a listed entity should:
(a) Have a nomination committee which:
i.
ii.
Has at least three members, a majority of whom are independent directors; and
Is chaired by an independent director; and disclose:
iii.
The charter of the committee;
iv. The members of the committee; and
v.
As at the end of each reporting period, the number of times the committee met throughout the reporting period and the
individual attendances of the members at those meetings
(b)
If it does not have a nomination committee, disclose the fact and the processes it employs to address board succession issues and
to ensure that the board has the appropriate balance of skill, knowledge and experience, independence and diversity to enable it to
discharge its duties responsibly and effectively.
The Company does not have a nomination committee. The board believes that due to the Company’s relatively small size a nominations
committee is not necessary as the board can undertake all functions normally delegated to a nomination committee. The Selection and
Re-appointment of Directors Policy contains procedures for the appointment and resignation of Directors. The Board Charter also
outlines the requirements for the composition of the board.
Recommendation 2.2
A listed entity should have and disclose a board skill matrix setting out the mix of skills and diversity that the board currently has or is
looking to achieve in its membership.
The Company’s objective is an appropriate mix of skills, experience and expertise and attributes relevant to the board in discharging its
responsibilities
Skills/Expertise
Strategy
Financial
Governance
Experience
Transport Industry
Agriculture Industry
Import Export Industry
Risk Management and Safety
Property
Attributes
Integrity
Communication
Commitment
Innovation
75
Lindsay Australia Limited | Annual Report 2017 | Corporate Governance Statement
Experience
Attributes
Influence
Skills/Expertise
Policy, Legal, Compliance
Government & Stakeholders
Culture & Values
Executive Management
Information Technology
Recommendation 2.3
A listed entity should disclose:
(a) The names of directors considered by the board to be independent directors;
(b)
If a director has an interest, position, association or relationship of the type described in box 2.3 of ASX Corporate Governance
Principles and Recommendations, but the board is of the opinion that it does not compromise the independence of the director, the
nature of the interest position, association or relationship in question and an explanation of why the board is of that opinion; and
(c) The length of service of each director.
Director
Status
Date of appointment
Length of Service
Interest/Association
J F Pressler
R A Anderson
Non-Executive. Independent
Director
Non-Executive. Independent
Director
08/01/1997
16/12/2002
M K Lindsay
Executive. Non Independent
26/11/1996
G D Farrell
Non-executive. Non
Independent
17/11/2005
20 years (as at
08/01/2017)
14 years (as at
16/12/2016)
20 years (as at
26/11/2016)
11 years (at
17/11/2016)
Recommendation 2.4
The majority of the board of a listed entity should be independent directors.
Chief Executive Officer
Substantial Shareholder
The Company has not complied with this recommendation, there are four members of the board of directors, two of which are considered
independent directors.
Directors of Lindsay Australia Limited are considered to be independent when they are independent of management and free from any
material business or other relationship that could interfere with, or could reasonably be perceived to interfere with, the exercise of their
unfettered and independent judgement In the context of director independence, a factor is considered “material” if it is greater than 5% of
either sales or purchases of the Group. In accordance with the definition of independence detailed on the Company’s website, the following
Directors of Lindsay Australia Limited are considered to be independent:
J F Pressler
R A Anderson
The board does not consider the expense of increasing the number of independent directors so that a majority of independent directors
is obtained is justified. The board considers the current composition of a board an appropriate blend of skills and experience relevant to
the Company’s business. The board will assess independence when any new appointments are made.
There are procedures in place, agreed by the board, to enable directors, in furtherance of their duties, to seek independent professional
advice at the Company’s expense.
Recommendation 2.5
The chair of the board of a listed entity should be an independent director, and, in particular, should not be the same person as the
Chief Executive Officer of this entity.
The Company complies with this recommendation. Mr J.F. Pressler, an independent director, is the Chair. Mr M.K Lindsay is the Chief
Executive Officer.
Recommendation 2.6
A listed entity should have a program for inducting new directors and provide appropriate professional development opportunit ies for
directors to develop and maintain their skills and knowledge needed to perform their role as directors effectively.
Lindsay Australia Limited | Annual Report 2017 | Corporate Governance Statement
76
The board assumes responsibility for new board member induction, education and development. The Corporate Governance Charter
requires new directors to be provided with relevant information, induction and opportunities for training, and the opportunity to take
independent advice at the expense of the Company.
Principle 3
Promote ethical and responsible decision-making
Recommendation 3.1
A listed entity should:
(a) Have a code of conduct for its directors, senior executives and employees; and;
(b) Disclose the code or a summary of it:
A formal Code of Ethics forms part of the Corporate Governance Charter that is disclosed on the Company’s website. The Company has
a code of conduct, equal opportunity policy and Employee Workplace and Safety Handbook applicable to all employees, a summary of
these policies is disclosed on the Company’s website.
Principle 4
Safeguard integrity in corporate reporting
Recommendation 4.1
The board of a listed entity should:
(a) Have an audit committee which:
(i)
(ii)
(iii)
(iv)
(v)
Has at least three members, all of whom are non-executive directors and a majority of whom are independent directors
Is chaired by an independent director who is not the chair of the board,
and disclose:
The charter of the committee;
The relevant qualifications and members of the committee; and
In relation to each reporting period, the number of times the committee met throughout the period and the individual
attendances of the members at those meetings; or
(b)
If it does not have an audit committee, disclose that fact and the processes it employs that independently verify and safeguard the
integrity of its corporate reporting, including the processes for the appointment and removal of the external auditor and rotation of the
audit engagement partner.
The board has established an audit and risk committee, which operates under a charter approved by the board. The charter is
contained in the Company’s Corporate Governance Charter which is available on the Company’s website.
The Chairman of the committee is Mr RA Anderson, an independent director. The members of the committee, meetings and attendances
are contained in the Directors’ Report to the Annual Report disclosed on the Company’s website. All members of the audit and risk
committee are non-executive Directors. There is a majority of independent directors on the committee.
The board has delegated the responsibility for the establishment and maintenance of a framework of internal controls and ethical standards
for the management of the consolidated entity to the audit and risk committee.
It is the board’s responsibility to ensure that an effective internal control framework and risk identification process exists within the entity.
This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of
assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations
such as the benchmarking of operational key performance indicators.
The committee also provides the board with additional assurance regarding the reliability of financial information for inclusion in the
financial reports.
Recommendation 4.2
The board of a listed entity should, before it approves the entity’s financial statements for a period, receive from its Chief Executive Officer
and Chief Financial Officer a declaration that, in their opinion, the financial records of the entity have been properly maintained and that
the financial statements comply with the appropriate accounting standards and give a true and fair view of the financial position and
performance of the entity and that the opinion has been formed on the basis of a sound system of risk management and control which is
operating effectively.
77
Lindsay Australia Limited | Annual Report 2017 | Corporate Governance Statement
In respect of the relevant financial reporting period the Company’s Chief Executive Officer and Chief Financial Officer provide the board
with a declaration in accordance with S.295A of the Corporations Act which is consistent with Recommendation 4.2.
Recommendation 4.3
A listed entity that has an Annual General Meeting should ensure that its external auditor attends its AGM and is available to answer
questions from security holders relevant to the audit.
Representative of the Company’s auditor attends the Annual General Meeting and be available to answer questions from security holders.
Principle 5
Make timely and balanced disclosure – Promote timely and balanced disclosure of all material matters concerning the Company.
Recommendation 5.1
Establish written policies and procedures designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure
accountability at a senior executive level for that compliance.
The Company has adopted a Continuous Disclosure Policy and has complied with the continuous disclosure requirements of Chapter 3
of the Australian Securities Exchange Listing Rules. The Corporate Governance Charter contains additional requirements. The
continuous disclosure obligations are reviewed at each board meeting.
Principle 6
Respect the rights of security holders
Recommendation 6.1
A listed entity should provide information about itself and its governance to investors via its website.
The Corporate Governance Charter is available on the website together with other Company policies. The website provides details of the
key business divisions, copies of recent annual reports, other relevant publications; and investor information.
Recommendation 6.2
A listed entity should design and implement an investor relations program to facilitate effective two-way communication with investors.
The board encourages attendance at meetings and is available to shareholders at general meetings. General meetings are set well in
advance of their scheduled date to facilitate maximum attendance by shareholders. Investors may communicate directly with the
company in person or electronically via the website.
Recommendation 6.3
A listed entity should disclose the policies and processes it has in place to facilitate and encourage participation at meetings of security
holders
The Company’s notice of meetings is clear, concise and effective, shareholders receive notice of meetings in hard copy. All general
meetings of the Company allow shareholder participation through the opportunity to ask questions directly of the board prior to a poll or
vote.
Recommendation 6.4
A listed entity should give security holders the option to receive communications from, and send communications to, the entity and its
security registry electronically.
The Company’s share registry is maintained electronically through Computershare Limited, a link is provided on the Company’s website.
Contact information for Computershare Limited is also provided in the annual report. Security holders can also contact the Company
electronically via the Company’s website.
Lindsay Australia Limited | Annual Report 2017 | Corporate Governance Statement
78
Principle 7
Recognise and manage risk
Recommendation 7.1
The board of a listed entity should:
(a) Have a committee or committees to oversee risk, each of which:
i.
ii.
Has at least three members, a majority of whom are independent directors;
Is chaired by an independent director and disclose:
iii. The charter of the committee;
iv. The members of the committee;
v.
As at the end of each reporting period, the number of times the committee met throughout the period and the individual
attendances of the members at those meetings
(b)
If it does not have a risk committee or a committee that satisfies (a) above, disclose that fact and the process it employs for
overseeing the entity’s risk management framework.
The board has established an audit and risk committee, which operates under a charter approved by the board. The charter is contained
in the Company’s Corporate Governance Statement which is available on the Company’s website. The chairman of the committee is Mr
RA Anderson, an independent director. The members of the committee, meetings and attendances are contained in the Directors’ Report
to the Annual Report disclosed on the Company’s website. All members of the audit and risk committee are non-executive Directors.
There is a majority of independent directors on the committee.
The board has delegated the responsibility for the establishment and maintenance of a framework of internal controls and ethical standards
for the management of the consolidated entity to the audit and risk committee.
It is the board’s responsibility to ensure that an effective internal control framework and risk identification process exists within the entity.
This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of
assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial considerations
such as the benchmarking of operational key performance indicators.
The committee also provides the board with additional assurance regarding the reliability of financial information for inclusion in the
financial reports. The board considers risks at each board meeting. The Board assesses risk and risk issues at each board meeting
described further under recommendation 7.2.
Recommendation 7.2
The board or a committee of the board should review the entity’s risk management framework at least annually to satisfy itself that it
continues to be sound and disclose, in relation to each reporting period, whether such a review has taken place.
The board is responsible for the Company’s risk management framework. Risks are monitored on a regular basis and prevention or
mitigation measures adopted as appropriate. Policies and procedures have been established for, asset maintenance, workplace health
and safety and inventory control. A business risks checklist is reviewed at each meeting of the board. Details of financial risks are
provided in Note 2 to the Financial Statements.
The board has established an environmental and occupational health and safety committee, details on meetings, membership and
attendance are contained in the Directors Report to the annual Report located on the Company’s website. It is the board’s responsibility
to ensure that the Company observes all regulatory compliance and to provide a safe workplace by identifying and managing risks in the
workplace. The board has delegated the responsibility for these functions to the environmental and occupational health and safety
committee.
Recommendation 7.3
A listed entity should disclose if it has an internal audit function, how the function is structured and what role it performs or if it does not
have an internal audit function, that fact and the processes it employs for evaluating and continually improving the effectiveness of its
risk management and internal control processes.
The Company does not have an internal audit function. The board considers that due to the relatively small size of the Company such a
function would not be cost effective. Details of financial risks are provided in Note 2 to the Financial Statements. The board may
engage an independent third party to undertake the equivalent activities of internal audit at any time if it requires.
Recommendation 7.4
A listed entity should disclose whether it has a material exposure to economic, environmental and social sustainability risks and, if it
does, how it manages or intends to manage those risks.
79
Lindsay Australia Limited | Annual Report 2017 | Corporate Governance Statement
The Company actively considers and monitors business and other risks but does not consider it has material exposure to these risks.
Where possible the Company looks to adopt products or processes that have a positive environmental or social sustainability impact.
The board has established an environmental and occupational health and safety committee, details on meetings, membership and
attendance are contained in the Directors Report to the Annual Report located on the Company’s website. It is the board’s responsibility
to ensure that the Company observes all regulatory compliance, is proactive in achieving environmental outcomes consistent with
sustainable development, and to provide a safe workplace by identifying and managing risks in the workplace. The board has delegated
the responsibility for these functions to the environmental and occupational health and safety committee.
Principle 8
Remunerate fairly and responsibly
Recommendation 8.1
The board of a listed entity should:
(a) Have a remuneration committee which:
i.
ii.
iii.
iv.
v.
has at least three members, a majority of whom are independent directors; and
is chaired by an independent director; And disclose:
the charter of the committee; and
the members of the committee; and
as at the end of each reporting period, the number of times the committee met throughout the period and the individual
attendances of the member at those meetings; or
(b)
If it does not have a remuneration committee, disclose the fact and the processes it employs for setting the level and composition
of remuneration for directors and senior executives and ensuring that such remuneration is appropriate and not excessive
The Company has established a Remuneration Committee. The Remuneration Committee has a formal charter contained in the
Corporate Governance Charter on the Company’s website. The members of the committee, meetings and attendances are disclosed in
the Directors report to the Annual Report disclosed on the Company’s website.
The Company does not meet the recommendation of the Remuneration Committee having an Independent Chairman, however the
committee has a majority of independent directors. The current chairman of the committee is Mr G.D Farrell, as a non-executive director
and material shareholder of the Company. The board considers Mr Farrell appropriately qualified to chair the committee to oversee
matters of remuneration.
It is the Company’s objective to provide maximum security holder benefit from the retention of a high quality board and executive team,
by remunerating Directors and key executives fairly and appropriately with reference to relevant employment market conditions. To
assist in achieving this objective, the Remuneration Committee links the nature and amount of executive Directors’ and officers’
remuneration to the Company’s financial and operational performance.
i.
ii.
iii.
Retention and motivation of key executives;
Attraction of quality management to the Group; and
Performance incentives which allow executives to share the rewards of the success of Lindsay Australia Limited.
For details on the amount of remuneration and all monetary and non-monetary components for each of the key management personnel
during the year and for all Directors, refer to the Remuneration Report contained in the Directors’ Report. In relation to the payment of
bonuses, options and other incentive payments, discretion is exercised by the board, having regard to the overall performance of
Lindsay Australia Limited and the performance of the individual during the period.
There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive Directors. The board is
responsible for determining and reviewing compensation arrangements for the Directors themselves and the Chief Executive Officer and
the key management personnel.
The remuneration policy is disclosed in the Remuneration Report contained in the Directors’ Report. There were no material changes to
that policy during the year. Due to the relatively small size of the Company the only direct link between remuneration and performance
of the Company for the Chief Executive Officer and Senior Executive staff is by the potential issue of options or performance rights over
shares. There were no employee options or performance rights on issue at 30 June 2017 held by key management personnel. At any
review the performance of the Company and the contribution by particular executives form part of the process. Details of the
remuneration of the Directors and the key management personnel of the Group is disclosed in the Remuneration Report.
Recommendation 8.2
A listed entity should separately disclose its policies and practices regarding the remuneration of non-executive directors and the
remuneration of executive directors and other senior executives.
Executives will be remunerated by way of salary and statutory superannuation. Senior Executives may participate in a performance
based incentive structure. The Company complies with the guidelines of the Council, specifically Non-executive Directors do not receive
Lindsay Australia Limited | Annual Report 2017 | Corporate Governance Statement
80
options or bonus payments nor retirement benefits other than statutory superannuation. Refer also to the Remuneration Report
contained in the Directors’ Report.
Recommendation 8.3
A listed entity which has an equity based remuneration scheme should:
(a) Have a policy on whether participants are permitted to enter into transactions (whether through the use of derivatives or otherwise)
which limit the economic risk of participating in the scheme; and
(b) Disclose the policy or a summary of it.
The Company has a limited equity based incentive scheme applying to a small number of senior executives only. Trading in Company
securities is regulated by the Securities Trading Policy disclosed on the Company’s website. Trading activities relating to any short term
or speculative gain is prohibited.
81
Lindsay Australia Limited | Annual Report 2017 | Corporate Governance Statement
Shareholder Information
Information relating to security holders as at 20 August 2017.
Distribution of Shareholders
Range
1- 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
Total
Number of Shareholders
Number of Shares
105
381
258
940
224
1,908
25,814
1,079,911
2,067,219
35,485,733
253,432,117
292,090,794
Number of holdings less than a marketable parcel of shares – 143 (1,334 shares)
Top Twenty Shareholders
Name
WASHINGTON H SOUL PATTINSON
ANKLA PTY LTD
BKI INVESTMENT COMPANY LIMITED
MULAWA HOLDINGS PTY LTD
MILTON CORPORATION LIMITED
SANDHURST TRUSTEES LTD
POLTICK PTY LTD
MR THOMAS KELSALL LINDSAY &
LINDSAY SUPER CO PTY LTD
K & D LINDSAY PTY LTD
RM & DM PELL PTY LTD
HEADING EAST PTY LTD
MS GRETA MARJORIE LINDSAY
NATIONAL NOMINEES LIMITED
PROCO PTY LTD
CAROLINE HOUSE SUPERANNUATION
MR MATTHEW SINGLETON
YESOR PTY LTD
JANALA PTY LTD
SCSJB PTY LTD
Totals: Top 20 holders
Number of Shares
% of Issued Shares
55,526,491
21,189,439
16,783,130
12,937,412
12,843,330
11,718,858
11,667,937
11,364,402
6,219,739
3,222,148
2,994,592
2,549,506
2,328,551
2,300,321
2,100,000
2,000,000
2,000,000
2,000,000
1,919,626
1,757,448
185,422,930
19.01
7.25
5.75
4.43
4.40
4.01
3.99
3.89
2.13
1.10
1.03
0.87
0.80
0.79
0.72
0.68
0.68
0.68
0.66
0.60
63.5
Lindsay Australia Limited | Annual Report 2017 | Corporate Governance Statement
82
Substantial Shareholders
The names of substantial shareholders who have notified the company in accordance with section 617B of the Corporations Act 2001
are:
Name
Mizikovsky Group
Number of Shares
% of Issued Shares
34,086,963
11.7
Voting Rights of Ordinary Shares
The holders of ordinary shares in the Group are entitled at any general meeting, either in person or by proxy, on a show of hands, to
one vote, and on a poll to one vote for each fully paid share.
On-market Buy Back of Shares
There is no current on-market buyback of shares.
83
Lindsay Australia Limited | Annual Report 2017 | Shareholder Information