Lindsay Australia Limited
Annual Report 2023

Plain-text annual report

Lindsay Australia Limited ABN 81 061 642 733 ASX Code LAU Appendix 4E for the year ended 30 June 2023 ASX Rule 4.3A Lindsay Australia Limited: (LAU) Information required by appendix 4E, 30 June 2023 Page 1 Lindsay Australia Limited (ASX: LAU) Results for announcement to the market Up Revenues Profit after tax attributable to members Up 22.4% 79.5% A$000 30 June 2023 682,740 34,517 A$000 30 June 2022 557,659 19,230 From From Dividends Interim 2023 dividend - paid on 14 April 2023 Final 2023 dividend – to be paid on 06 October 2023 Amount per security 1.9 cent 3.0 cent Franked amount per security 0% 100% Conduit Foreign Income Nil Nil The Record Date for determining entitlements to the dividend is 22 September 2023. Management Comments Refer Annual Report 2023 which has been lodged concurrently with App 4E. Comparison of half-year profits Profit (loss) after tax attributable to members for the 1st half-year. Profit (loss) after tax attributable to members for the 2nd half-year. Ratios Profit before tax / revenue Profit before tax as a percentage of revenue Profit after tax / equity interests Profit after tax attributable to members as a percentage of equity (similarly attributable) at the end of the year $A’000 30 June 2023 16,817 17,700 $A’000 30 June 2022 12,235 6,995 30 June 2023 30 June 2022 7.24% 4.94% 27.10% 18.69% Earnings Per Security (EPS) (a) Basic EPS (b) Diluted EPS (c) Weighted average number of ordinary shares outstanding during the period used in the calculation of Basic EPS 30 June 2023 11.4 cents 11.4 cents 30 June 2022 6.4 cents 6.4 cents 302,696,327 300,793,889 Lindsay Australia Limited: (LAU) Information required by appendix 4E, 30 June 2023 Page 2 NTA backing Net Tangible Assets (NTA) $A’000 30 June 2023 $A’000 30 June 2022 118,664 94,490 Net tangible asset backing per ordinary security 39.1 cents 31.3 cents The net tangible asset back per ordinary security of 39.1 cents is inclusive of right-of-use assets and lease liabilities. Dividends Date the dividend is payable Record date to determine entitlements to the dividend If it is a final dividend, has it been declared? Dividend amount per security Final dividend: Interim dividends: Total dividend per security: Current year Previous year Current year Previous year Current year Previous year There is no Conduit Foreign Income in the 2022 or 2023 financial years. 06 October 2023 22 September 2023 Yes Amount per security ¢ 3.0 1.8 1.9 1.4 4.9 3.2 Franked amount per security at 30% tax ¢ 100% 0% 0% 0% Mixed 0% Other disclosures in relation to dividends The company has a dividend reinvestment plan. The last date for election to participate in the plan is 25 September 2023. Shares issued pursuant to the plan are at 5% discount to the volume weighted average price for the five business days prior to and including the record date. Issued and quoted securities at end of current year Category of securities Total number Number quoted Issue price per security (cents) Ordinary securities Changes during current year: Increases through issues: Dividend Re-investment Plan Dividend Re-investment Plan 303,404,886 303,404,886 787,953 629,603 787,953 629,603 58.0 91.0 1,417,556 1,417,556 Lindsay Australia Limited: (LAU) Information required by appendix 4E, 30 June 2023 Page 3 Annual meeting The annual meeting will be held as follows: Place Date / Time It is anticipated the Annual General Meeting will be conducted as a hybrid in-person and virtual meeting. Details will be confirmed in the notice of meeting. To be confirmed. Approximate date the annual report will be available 28 August 2023 – lodged concurrently with app 4E Compliance statement This report has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act. This report and the accounts, upon which the report is based, use the same accounting policies. 1. This report does give a true and fair view of the matters disclosed. 2. The entity has a formally constituted audit committee. 3. There are no entities over which control has been gained or lost during the period. 4. This report is based on accounts that have been audited. Justin Green Chief Financial Officer and Company Secretary Date: 28 August 2023 Lindsay Australia Limited: (LAU) Information required by appendix 4E, 30 June 2023 Page 4 ANNUAL FINANCIAL REPORT 2023 ANNUAL REPORT For the financial year ended 30 June 2023 DIRECTORS Chairman Non-executive Mr Ian M Williams Non-executive Directors Mr Robert L Green Mr Matthew R Stubbs Mr Stephen P Cantwell INTERIM CHIEF EXECUTIVE OFFICER Mr Craig R Baker GROUP LEGAL COUNSEL & COMP ANY SECRETARY Mr Broderick T Jones CHIEF FINANCIAL OFFICER & COMPANY SECRETARY Mr Justin T Green SHARE REGISTER REGISTERED & PRINCIPAL Computershare Investor Services Pty Ltd Level 1, 200 Mary Street, Brisbane QLD 4000 Telephone: 1300 552 270 Website: www.computershare.com.au ADMINISTRATIVE OFFICE 152 Postle St, Acacia Ridge, QLD 4110 Telephone: (07) 3240 4900 Fax: (07) 3054 0240 Website: www.lindsayaustralia.com.au AUDITOR Pitcher Partners Level 38, 345 Queen Street, Brisbane, QLD, 4000 STOCK EXCHANGE LISTING Lindsay Australia Limited shares are listed on the Australian Securities Exchange, code LAU TABLE OF CONTENTS ABOUT LINDSAY AUSTRALIA 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 1 2 27 28 31 32 33 34 35 72 73 77 88 OUR BUSINESS Lindsay Australia Limited’s core divisions share common customers within the agriculture and horticulture industries which gives the Lindsay Group a strategic advantage by providing a unique end-to-end service solution for all our customer needs. The Group continues to remain agile, increasing the range of services it can offer and the regions that it services. In the 2023 financial year the Group continued to expand its rail service offering, with an increase in both refrigerated and dry containers. Lindsay Fresh Logistics Brisbane Markets Our Locations Lindsay Rural Lindsay Transport Adelaide Ayr Atherton Brisbane Shop Brisbane Warehouse Bowen Brandon Bundaberg Childers Coffs Harbour Emerald Gatton Innisfail Invergordon Mareeba Mildura Mundubbera Murwillumbah Nambour Robinvale Stanthorpe Tully Woolgoola Adelaide Ayr Bowen Brisbane Bundaberg Childers Coffs Harbour Emerald Gatton Innisfail Mackay Mareeba Melbourne Mildura Mundubbera Nambour Perth Stanthorpe Sydney Tully DIRECTORS’ REPORT Directors’ Report Lindsay Australia Limited For the year ended 30 June 2023 The Directors of Lindsay Australia Limited present their Directors’ Report together with the Financial Report of the Company and its controlled entities (collectively the Group) for the financial year ended 30 June 2023 and the Independent Auditors’ Report thereon. The Directors’ Report has been prepared in accordance with the requirements of Division 1 of Part 2M.3 of the Corporations Act 2001. Directors and Company Secretary information Mr Ian Williams Chair, Independent Non-Executive Director Mr Williams was appointed to the Lindsay Australia Limited Board in September 2021 as an Independent Non-executive Director and Chair. Mr Williams is currently Chair of NXT Building Group, and a Director of ASX listed New Hope Corporation Limited (ASX: NHC – appointed 01 November 2012), Stoddart Group, National Group Corporation and Baseball Australia. Mr Williams was a corporate partner with international law firms Herbert Smith Freehills and Ashurst for 20 years. Mr Williams is currently Vice-President of the Australia Japan Business Co-operation Committee. Mr Williams is a graduate of Sydney University and Oxford University and the Australian Institute of Company Directors. Mr Robert Green Independent Non-Executive Director Mr Green was appointed to the Board in August 2019 as an Independent Non-executive Director. Mr Green has considerable board relevant experience with key executive roles in the Australian and International agricultural industry over many years. Key areas of experience include Trading and Risk Management, Operations Management and Business Development. Mr Green brings extensive relevant experience to the Group in trading, importing and distribution across a range of industries including the international agriculture industry. Mr Green is currently a Director and Chair of the Safety Committee of Namoi Cotton Co-operative Ltd (ASX: NAM – appointed 27 May 2013). Mr Green is currently Chair of Boomaroo Nurseries. Mr Green has held previous directorships with Louis Dreyfus Australia, Union Dairy Company, Macrofertil Australia, Soy Australia and was previously President of Australian Oilseeds Federation and Director and past President of Australia Grain Exporters Association. Mr Green is a member of the Australian Institute of Company Directors. Other than Lindsay Australia Limited and Namoi Cotton, Mr Green has held no other directorships with other listed companies during the last three years. Mr Matthew Stubbs Independent Non-Executive Director Mr Stubbs was appointed to the Board in September 2021 as an Independent Non-executive Director. Mr Stubbs is the founder and managing director of Allier Capital, a boutique M&A advisory firm. Mr Stubbs has over twenty years’ experience in investment banking and during his career worked on a broad range of both public and private transactions. Mr Stubbs holds an MBA from AGSM and a Bachelor of Laws and Bachelor of Commerce from the University of Queensland. Mr Stubbs held a Non-executive Director role with previously ASX listed Lantern Hotel Group (appointed 7 March 2016) and Everlight Radiology. Mr Stubbs has held no other directorships with other listed companies during the last three years. Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 3 Mr Stephen Cantwell Independent Non-Executive Director Mr Cantwell was appointed to the Board in December 2021 as an Independent Non-executive Director. With almost 40 years’ experience in a broad range of strategic, functional and customer facing roles with major national and international businesses, Mr Cantwell has extensive experience backed by strong commercial acumen. Mr Cantwell is currently a director for the Port of Brisbane and Queensland Rail and a director and Chair of TasRail. Mr Cantwell holds a Business Degree from the University of Southern Queensland, majoring in Operations Research and Information Systems and holds a Graduate Diploma in Transport Management and a Master of Business Degree from the Royal Melbourne Institute of Technology. Mr Cantwell is a Fellow of the Chartered Institute of Transport and Logistics and a Fellow of the Centre for Integrated Engineering Asset Management. Mr Cantwell is a Graduate Member of the Australian Institute of Company Directors. Mr Cantwell has held no other directorships with other listed companies during the last three years Mr Michael Lindsay – Retired 23 June 2023 Managing Director and Chief Executive Officer Mr Lindsay has been Managing Director and Chief Executive Officer of Lindsay Australia Limited since 2002 and retired on the 23 June 2023. Mr Lindsay has 40 years’ experience in the Australian transportation and rural merchandising industries. From 1974 to 1983 he worked for Lindsay Transport, gaining 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 national business. Mr Lindsay has held no directorships with listed companies during the last three years. Mr Justin Green Chief Financial Officer and Company Secretary Mr Green was appointed Chief Financial Officer in January 2018 and Company Secretary in May 2018. Mr Green has been with the Group for 22 years and has held both key Group finance roles and commercial positions for both the Rural and Transport divisions. Mr Green is a member of the Australian Institute of Company Directors. Mr Green holds a Bachelor of Business (accounting) and is a member of CPA Australia. Mr Broderick Jones Group Legal Counsel and Company Secretary Mr Jones joined Lindsay Australia Limited in September 2014 and was appointed Company Secretary in October 2014. Mr Jones holds a Bachelor of Laws degree from Queensland University of Technology and has over 20 years’ professional experience within law, finance, property and markets gained from a number of senior roles both domestically and internationally. Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 4 Meeting of the directors 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 Held Attended Held Attended Held Attended Environmental & Occupational Health & Safety Committee Attended Held I M Williams M K Lindsay (a) R L Green M R Stubbs 22 22 22 22 22 22 22 21 S P Cantwell (a) 22 M K Lindsay retired 23 June 2023 22 4 - 4 4 4 4 - 4 4 4 5 - 5 5 5 5 - 5 4 5 2 2 2 2 2 2 2 2 2 2 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 below. 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 M R Stubbs (Chair) R L Green (Chair) S P Cantwell (Chair) I M Williams R L Green S P Cantwell I M Williams S P Cantwell M R Stubbs I M Williams R L Green M R Stubbs M K Lindsay (Retired 23 June 2023) Director’s Interests As at 30 June 2023 the interests of current directors in securities of the Group are as follows: Director I M Williams R L Green M R Stubbs S P Cantwell Share options Ordinary Shares - - 280,000 - Refer to the Remuneration Report for additional information on share options. Share options do not entitle the holder to participate in any share issue of the Group. During the 2023 financial year there were 550,000 share options granted over unissued ordinary shares under the Long Term Incentive (Option) Plan (LTIP). At the end of the financial year, there were 1,350,000 share options over unissued ordinary shares outstanding, of which 400,000 have vested but not yet exercised. Share options issued in the 2023 financial year: Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 5 Details Quantity Exercise Price J T Green: Unlisted share options over ordinary shares Not Vested (issued December 2022) C R Baker: Unlisted share options over ordinary shares Not Vested (issued December 2022) B T Jones: Unlisted share options over ordinary shares Not Vested (issued December 2022) S K Banfield: Unlisted share options over ordinary shares Not Vested (issued December 2022) M Strong: Unlisted share options over ordinary shares Not Vested (issued December 2022) 200,000 200,000 50,000 50,000 50,000 $nil $nil $nil $nil $nil Shares issued on the exercise of options During the 2023 financial year, no shares were issued on exercise of share options. Refer to the Remuneration Report for additional information on share options. Insurance of officers and indemnities Lindsay Australia Limited agrees to indemnify each Director, Officer, and Company Secretaries of the Group 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, Officer or Company 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, Officers and Company Secretaries against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in their capacity of Director, Officer or Company Secretary of the Group. This does not include such liabilities that arise from their conduct involving a wilful breach of duty. Disclosure of the premium paid is not permitted under the terms of the insurance agreement. Significant changes in state of affairs There were no significant changes to state of affairs during the financial year. Events after the reporting date Dividend recommended after the end of the financial year Since the end of the financial year, the directors have recommended payment of a final fully franked ordinary dividend for the year end 30 June 2023 of 3.00 cents per share (approximately $9,297,000). Acquisition of W.B. Hunter Pty Ltd On 3 July 2023 Lindsay Australia Limited announced it had entered into a binding agreement to acquire 100% of rural merchandising company W.B. Hunter Pty Ltd. The acquisition expands the Rural division’s footprint in Victoria and New South Wales. Refer to the subsequent events Note 37 in the 2023 Annual Report for business combination disclosure. Appointment of Chief Executive Officer Following M K Lindsay’s retirement on 23 June 2023, C R Baker (Chief Operating Officer) was appointed as Interim Chief Executive Officer. Following the end of the financial year, C J McDonald commenced on the 17 July 2023 as Chief Executive Officer. Mr McDonald has extensive leadership experience in the transport and logistics sector and was previously Group Executive Bulk at Aurizon Limited. Mr McDonald has held a number of senior executive positions at Aurizon since 2008, prior to which he was employed at Toll Group between 2001 and 2008. Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 6 Other Other than the events disclosed above, to the directors’ knowledge, no matter or circumstance has arisen since the end of the financial 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. Principal activities The principal activities and operations of the Group during the financial year were the transportation of refrigerated and general freight, logistics services associated with the import and export of horticultural goods and merchandising of rural supplies. There were no significant changes in the nature of the activities of the Group during the year. Likely developments and expected results Refer to the Strategy, Risk and Governance section set out on page 14. Environmental compliance The Group’s operations are subject to environmental laws and the National Greenhouse Energy Reporting Act 2007. The Group complies with this Act. The directors are not aware of any environmental issues which have been raised in relation to the Group’s operations during the 2023 financial year or subsequently up to the date of this report. Dividends paid during the financial year Dividends paid to members are as follows: Final ordinary dividend per share paid on 7th October 2022 for the prior financial year (2022: 8th October 2021) 2023 cents 2022 cents 1.8 0.5 Interim ordinary dividend per share paid on 14th April 2023 (2022: 8th April 2022) 1.9 1.4 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. Auditor’s independence declaration A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is included on page 27 of this report. Non-audit services The Company may decide to engage 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. The Company did not engage Pitcher Partners in the 2022 or 2023 financial years for any non-audit related services. Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 7 Operating and financial review Reconciliation of results from the Group’s operations A summary of the Group’s financial results from its continuing operations for the financial year ending 30 June 2023 and the prior comparative year is set out below. Underlying operations defined in this report are the Group’s reported financial results as set out in the financial statements, adjusted for significant items that are non-recurring or items incurred outside the ordinary operations of the Group. Significant items in the 2023 financial year include a reduction in fuel tax credits from a revised ATO assessment that were expensed in prior years, costs associated with the Chief Executive Officer retirement and executive search costs for the appointment of the new Chief Executive Officer, costs associated with a facility fire in Bundaberg and merger and acquisition costs. Significant items arose in the prior financial include a reduction in fuel tax credit and interest costs from a revised ATO assessment that were expensed in a prior year and facility reinstatement costs associated with the Brisbane market facility due to a flooding event. The below table provides a reconciliation of the Group’s reported profit/(loss) before tax and statutory EBITDA as contained in the financial statements (see Note 32 Segment Information) and non-IFRS (International Financial reporting Standards) underlying operations. The Directors believe the additional information included in the report is useful for measuring the financial performance of the Group. The following non-IFRS reconciliation has not been subject to the Group’s audit but is extracted from the audited financial statements. Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 8 2023 – reconciliation of results from the Group’s operations Reported profit (loss) before tax Underlying adjustments Impact of AASB 16 Leases (a) Depreciation right of use property/other Finance costs right of use property/other Transport Rural Corporate/ Unallocated Group $’000 71,308 $’000 9,674 $’000 $’000 (31,585) 49,397 7,004 2,276 1,154 138 2,546 10,704 784 3,198 Operating lease rental payments (b) (8,236) (1,273) (3,312) (12,821) AASB 16 Leases profit impact 1,044 19 18 1,081 Other underlying adjustments Fuel tax credit provision relating to prior years (c) (1,204) CEO retirement and transition costs Facility reinstatement costs from Bundaberg Fire (d) Asset acquisition costs (e) Merger & acquisition costs Total other underlying adjustments Total underlying adjustments Underlying profit (loss) before tax Reported EBITDA Underlying adjustments Impact of AASB 16 Leases (a) Operating lease rental payments (b) Other underlying adjustments CEO retirement and transition costs Facility reinstatement costs from Bundaberg Fire (d) Asset acquisition costs (e) Merger & acquisition costs Total underlying adjustments Underlying EBITDA - 583 616 - (5) - 583 616 - - - - - - - - (1,204) 1,150 1,150 - - 633 583 616 633 1,783 1,778 1,039 19 1,801 2,859 72,347 9,693 (29,784) 52,256 109,333 11,214 (19,253) 101,294 (8,236) (1,273) (3,312) (12,821) - - - - - - (1,204) 1,150 1,150 - - 633 583 616 633 (8,241) (1,273) (1,529) (11,043) 101,092 9,941 (20,782) 90,251 Fuel tax credit provision relating to prior years (c) (1,204) (a) Eliminates the impact of AASB 16 Leases. (b) Operating lease rental payments were expensed prior to the adoption of AASB 16 Leases. (c) Reversal of fuel tax credit adjustments (FTC) and interest charges that were expensed in FY2021. The adjustments are based on an amended assessment notice from the Australian Taxation Office. The adjustments relate to prior financial years. (d) Costs associated with the reinstatement of the Bundaberg facility. (e) One-off costs associated with the acquisition of second-hand assets. Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 9 2022 – reconciliation of results from the Group’s operations $’000 $’000 $’000 $’000 Transport Rural Corporate/ Unallocated Group Reported profit (loss) before tax Underlying adjustments Impact of AASB 16 Leases (a) Depreciation right of use property/other Finance costs right of use property/other 40,485 10,669 (23,613) 27,541 6,650 2,413 1,042 111 2,416 10,108 849 3,373 Operating lease rental payments (b) (7,789) (1,111) (3,078) (11,978) AASB 16 Leases profit impact 1,274 42 187 1,503 Other underlying adjustments Fuel tax credit provision relating to prior years (c) Interest on fuel tax credit assessment relating to prior years (c) Facility reinstatement costs from Brisbane Flood (d) Total other underlying adjustments Total underlying adjustments Underlying profit (loss) before tax Reported EBITDA Underlying adjustments Impact of AASB 16 Leases (a) Operating lease rental payments (b) Other underlying adjustments Fuel tax credit provision relating to prior years (c) Facility reinstatement costs from Brisbane Flood (d) Total underlying adjustments Underlying EBITDA (a) Eliminates the impact of AASB 16 Leases. (1,866) - 1,138 (728) 546 - - - - - (1,866) (1,546) (1,546) - 1,138 (1,546) (2,274) 42 (1,359) (771) 41,031 10,711 (24,972) 26,770 74,714 12,241 (14,174) 72,781 (7,789) (1,111) (3,078) (11,978) (1,866) 1,138 - - - - (1,866) 1,138 (8,517) (1,111) (3,078) (12,706) 66,197 11,130 (17,252) 60,075 (b) Operating lease rental payments were expensed prior to the adoption of AASB 16 Leases. (c) Reversal of fuel tax credit adjustments (FTC) and that were expensed in FY2021. The adjustments are based on an amended assessment notice from the Australian Taxation Office. The adjustments relate to prior financial years. (d) Costs associated with the reinstatement of Brisbane Market facility and associated costs with the Brisbane floods. Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 10 Summary of operating results In the 2023 financial year, the strategy of integrated road, rail and rural continued to deliver value and growth in a rapidly evolving market. Lindsay Australia’s key focus of safety, quality service and diversification delivered an increasing customer base, resulting in Group revenues increasing by $123.1m to $676.2m, representing growth of 22.3% and driven by strong demand for road and rail services and supported by high fuel price recoveries due to rising diesel prices. Our consistent execution of the Group's strategy, combined with favourable conditions in the Transport sector, delivered underlying EBITDA of $90.3m, an increase of $30.2m or 50.2% from FY2022. Consolidation in the logistics sector led to a surge in demand for Transport services. Thanks to the strong foundations established over recent years and the Group’s strategic capital investments, the Group could effectively meet some of the excess demand requirements in the market. The Group continues to manage rising cost challenges due to inflation and a competitive labour market. Still, these forces have been somewhat mitigated through cost management and favourable trading conditions in some segments. The Rural division, like much of the agriculture retail sector, faced headwinds owing to shifting inventory balances, global price fluctuations and high freight costs, which negatively impacted earnings. The segment's diversified product mix and strong market position partially offset these challenges to deliver positive revenue growth of 4.0% to $163.0m, with underlying profit before tax of $9.7 million, a reduction of 9.5% from the prior year. The Group remains committed to upholding our position as a leading essential service provider and a critical link within Australia's food and agriculture sectors. Lindsay’s top priority remains the safety of all staff, customers, community members and stakeholders. Lindsay will continue investing in safety through its annual fleet renewal plan, increasing road monitoring and compliance resources and utilising technology to deliver positive safety outcomes. . Reported and underlying results Operating Revenue EBITDA Depreciation & Amortisation EBIT 2023 $’000 2022 % Change $’000 676,245 553,070 101,294 72,781 (42,833) (38,614) 58,461 34,167 22.3% 39.2% 10.9% 71.1% 36.8% 79.4% 79.0% 79.5% 50.2% 95.2% Finance Costs (net of bank interest received) (9,064) (6,626) Reported Net Profit Before Tax Income Tax Reported Net Profit After Tax Underlying EBITDA Underlying Net Profit Before Tax 49,397 27,541 (14,880) (8,311) 34,517 90,251 52,256 19,230 60,075 26,770 Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 11 Segment Overview External Revenue Transport – freight services Rural – sale of goods Segment profit before tax Transport – reported Transport – underlying Rural – reported Rural – underlying Transport Segment 2023 $’000 2022 % Change $’000 513,276 396,327 162,969 156,743 676,245 553,070 29.5% 4.0% 22.3% 2023 $’000 2022 % Change $’000 71,308 72,347 40,485 41,031 76.1% 76.3% 9,674 9,693 10,669 10,711 (9.3%) (9.5%) Transport’s revenues grew 29.5% to $513.28 million, following unprecedented demand in road and rail services, accelerated by industry consolidation and high fuel levy recoveries due to increased diesel prices. Execution of the division’s strategy to expand rail, maintain and invest in road assets, and improve our underlying core business, combined with geographical diversification, laid the foundations for the Transport division to meet the surge in demand following the exit of a key competitor. As a result, Transport delivered underlying segment profit before tax contributions of $72.35 million, an increase of 76.3% on the prior period. Transport’s growth continues to be supported by investment in new road and rail equipment which totalled $40m for the reporting period. This investment included the rollout of larger road combinations, which will continue to drive utilisation and support increasing customer demand. The Group also acquired a large parcel of used assets from a major competitor, which ceased operations in the second half of the year for an additional $23 million. This acquisition included 44 prime movers and 350 used containers and other rail assets which have empowered the Group to meet our customers’ ongoing logistical challenges and needs. Ongoing investment in the Transport division remains a key focus for the Group to ensure we maintain our first-class, safe and reliable fleet and can continue to perform our role as an essential service provider and a key player in securing food security for Australia. Rail continues to be a key pillar of growth for Transport, delivering revenues of $102.8 million, an increase of $25.3 million despite disruption from a major rail outage over several months. The revenue growth was driven by additional rail capacity and higher volumes from existing and new customers. During the year, Transport expanded its rail fleet with 35 new refrigerated rail containers in the first quarter, further bolstered by the aforementioned acquisition of 350 second- hand containers in quarter four. The Group will continue to renew its road fleet in line with the replacement plan, which remains a key pillar to the ongoing success of the Transport segment. This plan will ensure the fleet remains first in class while delivering efficiency and safety across Lindsay Australia’s network. In FY2024, the Group will continue to invest in growth in the road fleet, acquiring new larger trailer combinations to improve operational performance. FY2024 will see a renewal program commence after obtaining the used containers in FY2023. Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 12 Rural Segment The Rural division’s external revenue grew by 4.0% to $162.97 million, achieved through an expanded branch footprint and a focus on increasing its dedicated sales team in new and established horticulture regions. The division confronted challenges this year, including inventory shifts, global price volatility, inflationary impacts and steep freight costs, affecting annual earnings. Positively, Rural’s diversified product mix and strong market position were able to mitigate the impact of some of these headwinds, with underlying segment profit before tax reducing only by $1.02 million or 9.5%. Rural continues to drive value across the Group, providing strong returns on capital for the limited investment required and generating value for the broader group through Lindsay Australia’s end-to-end service offering. The division will continue to focus on high-growth horticulture regions and expanding its footprint. This is highlighted by the announcement in July 2023 that the Group executed a binding agreement to acquire leading rural merchandise company W.B. Hunter Pty Ltd, a major retailer operating 8 branches spanning Victoria and New South Wales, for an enterprise value of ~$34.6m. The acquisition is expected to deliver high single digit accretion pre-synergies in pro forma FY2024 earnings per share. Divisional Investment The Group focused its capital expenditure (capex) in FY2023 on delivering long-term growth: • • • • ESG: Solar project completed in Q4 / Edge Impact engagement to deliver Group’s first sustainability report in 1H2024 RAIL: $4.2m invested in new refrigerated containers and the addition of 350 used containers ROAD: $40m investment in new trucks, trailers and road equipment, expanding the Group’s operational capacity coupled with fleet renewals which allow for safety upgrades and efficiency improvements; and FACILITIES: Bundaberg land purchase / Melbourne fitout well progressed / Mackay expanding cold chain Corporate Update Safety, People, Culture During the financial year, the Group employed 1,592 full-time equivalent employees (FTEs), an increase of 98 FTEs from FY2022. Division Corporate Rural Transport Total FTE 2023 82 123 1,387 1,592 2022 Change % 70 117 1,307 1,494 12 6 80 98 17.1% 5.1% 6.1% 6.6% The Board recognises the important leadership role it plays in promoting the Group’s core values. The “Lindsay Way” motto sets a standard through which we hold ourselves accountable to customers, shareholders, partners and employees by honouring commitments and striving for excellence. The Group's core values are both individually significant and in combination, lay the platform for everyday operations and build a sustainable business for the future. SAFETY ALWAYS: Making safety a personal value; think SAFE, act SAFE, be SAFE PEOPLE FOCUSED: Development and support of current and future employees VALUE FAMILY: Recognising the importance and value of family life COMMUNITY SUPPORTIVE: Involved and supportive of the local communities CUSTOMER & SUPPLIER ORIENTED: Maintain and improve high level of service to customers and suppliers INDUSTRY INNOVATORS: Constantly challenging ourselves to provide and develop new innovations Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 13 Strategy, Risk and Governance Business strategies and prospects for future years The Group’s overall business strategy remains consistent with prior years. Plans and initiatives for both service and geographical diversification remain a goal to reduce seasonal revenue risks. Operational performance from equipment utilisation remains a priority as is the continuous review of the latest technology to improve safety and systems. Investing for future growth and sustainability • • • • Upgrading facilities to increase capacity and improve operational efficiencies; Expanding geographical reach to reduce seasonal horticulture production risks; Expanding service range to meet changing customer needs; and Investing in technology to deliver safety outcomes. Transport division • • • • • Rail fleet utilisation to support new freight lanes and customer additions; Road fleet renewal to deliver a modern fleet with latest safety features; Investment in road fleet for larger combinations with increased load capacity; Facility upgrades to deliver increased cold chain capacity; and Technology updates to achieve increased equipment utilisation. Rural division • • • • Expand geographical reach to new major horticulture regions; Expand dedicated sales team; Focus on product sales mix to deliver margin improvements; and Leverage existing Transport geographical reach. Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 14 Risk Management: Increased input costs, labour, cyber security, rising interest rates, volatile fuel pricing, credit management and climate change have been identified as the most significant risks being managed by the Group. These risks were present throughout the year and are expected to persist in future financial years. In the 2023 financial year, the Group has concentrated on refining its existing risk framework to build a more robust framework to meet the ISO 31000:2018 standards. The Group reviews all risks periodically and continuously evaluates its risk environment to proactively identify, measure, monitor and mitigate all significant risks. This is generally achieved by strengthening its control environment. All the key controls are tested periodically to ensure the associated risks are mitigated to the maximum possible extent. The risks mentioned above have been identified as significant as they could impact the group’s ability to deliver its financial plan. • • • • • • • • Increased input costs – Given the recent changes in economic conditions, including inflationary pressures, the Group has witnessed increased costs across most of its outgoings. Significant cost increases affect a wide range of operations including but not limited to property costs, labour force, fleet (purchase and maintenance) and transport costs. Increased input costs are reviewed regularly and form the basis of customer pricing reviews which are typically conducted annually. Labour force management – Sourcing labour in some operational regions remains a risk to the transport industry, which has witnessed a shortage of suitable and qualified resources, impacting seamless supply chain management. The Group proactively manages labour force shortages through subcontracting and engaging with several recruitment and labour-hire providers and aims to be an employer of choice by providing a positive, safe working environment and continuing to invest in compliance, facilities, assets and technology. Labour costs are largely subject to award rates and enterprise agreements. A tightening market will put upward pressure on labour rates. Labour is a major component in transport operations and as such are reviewed regularly and factored into customer pricing reviews. Cyber security – A cyber breach potentially impacts the Groups’ ability to efficiently service its customers, with the risk of financial and reputational damage. The Group mitigates this risk by adopting state-of-the-art technologies. The Group has implemented IT security measures, including multifactor authentication, password management, firewalls, phishing identification, and cloud-hosted solutions. The Group conducts annual penetration testing of its network to identify deficiencies and educates its workforce on changing IT environment risks through its dedicated training modules. Interest rate movements – The Group actively monitors interest rate fluctuations to assess its position to manage its interest bearing liabilities. The Group typically fixes equipment finance interest rates when new equipment is delivered and funded to minimise exposure to interest rate fluctuations. These funding terms range from 3 to 5 years to provide certainty around future funding costs. At 30 June 2023, 71.1% of the Group's borrowings were on fixed interest rates. Fuel pricing volatility – The Group has witnessed ongoing fluctuations in fuel pricing, which may impact revenue and profits. The Group looks to manage fluctuating fuel prices through a fuel levy, a rise and fall mechanism that moves in line with national diesel prices, which is then charged to customers. The Group has a dedicated team that calculates the fuel levy monthly in line with market changes. These calculations are published on the Group website and included in customer rates. Customer credit management – The Group provides credit facilities to its customers for services provided and sales; non-payment could impact cash flows and increase debt collection costs or recognition of bad or doubtful debts. The Group has a dedicated credit management team and credit approval processes to mitigate credit risk. The team actively monitors credit limits and ensures the collection of funds in a timely manner. Large accounts with more than $50,000 balance are provided to the Board on a monthly basis. Climate change – Climate change impacts, such as increasing severe weather events such as drought, fire and flood, may impact performance. The adverse effects of climatic-related events may include reducing the amount of horticultural or agricultural produce that requires transport and logistics-related services and or damage or outage of transport-related infrastructure, including road and rail. The Group considers climate- related factors in commissioning capital towards property and other investments and has a business continuity plan to assist in addressing natural weather events. Funding and dividends – The Board continually evaluates dividend payouts to ensure sufficient funds to sustain and grow the business while considering shareholder interest. Total dividends paid and recommended for 2023 total 4.9 cents per share (1.9 cents interim paid and 3.0 cents final recommended), representing a FY2023 after-tax payout ratio of 43%. Strict capital management ensures sufficient funds are retained as a priority to ensure the Group operations has sufficient resources available to sustain the existing business. Excess funds may be allocated to growth initiatives or returned to shareholders via dividend distributions. Lindsay Australia Limited | Annual Report 2023 | Directors’ Report 15 Remuneration Report (Audited) The Remuneration Report details the nature and amount of remuneration for non-executive directors, the executive director and other executive management personnel of Lindsay Australia Limited and its controlled entities. The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act 2001. The Remuneration Report contains the following sections: 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 Executive Management Personnel Other Transactions with Key Management Personnel Share-Based Compensation Equity Holdings of Key Management Personnel Loans to Key Management Personnel Additional Information 17 23 23 24 24 25 25 26 Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 16 A. Principles used to determine the nature and amount of remuneration Remuneration philosophy It is the Group’s objective to provide maximum shareholder benefit by 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. Engagement of remuneration consultants In accordance with the Corporations Act 2001, an engagement of a remuneration consultant to provide recommendations in respect of key management personnel must be approved by the Remuneration Committee. During the 2023 financial year, remuneration consultants were engaged to provide services to the Group, including executive leadership assessments, job evaluations and profiling, benchmarking executive remuneration. The fees paid for these services were $59,272 (2022: $53,858). Voting and comments made at the Group’s 2022 Annual General Meeting Lindsay Australia Limited received more than 95% of “yes” votes on eligible votes cast by shareholders present or by proxy on its Remuneration Report for the 2022 financial year. The Company did not receive any specific feedback at the Annual General Meeting or throughout the year on its remuneration practices. Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 17 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 shareholders at a General Meeting. An amount not exceeding the amount determined is then divided between the directors as agreed. The latest determination was at the Annual General Meeting held on 04 November 2022 where shareholders approved an aggregate remuneration of $600,000 per year. The actual amount paid including statutory superannuation during the financial year ended 30 June 2023 was $404,956 (2022: $283,889). 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. The directors receive a base fee per annum. In addition to the base fee, if a director holds a Committee Chair role, they will also be entitled to an additional $10,000 fee per annum. Other than a Committee Chair role, no additional remuneration is paid for board committee membership. Non-executive director personnel The table below lists th non-executive directors of Lindsay Australia Limited during the financial year: Name Position Appointment Date I M Williams Director and Chair (Non-Executive) 3 September 2021 R L Green Director (Non-Executive) M R Stubbs Director (Non-Executive) S P Cantwell Director (Non-Executive) 26 August 2019 3 September 2021 17 December 2021 The directors mentioned above held office for the entire financial year and since the end of the year except as otherwise noted. Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 18 Non-Executive director remuneration Details of the nature and amount of the emolument of each director of the Company for the years ended 30 June 2023 and 30 June 2022 are set out in the below table. Short-term benefits Long-term benefits Post-employment benefits Share-based payments Total Performance related Salary and fees $ Cash Bonus $ Non-monetary benefits $ Long service leave $ Superannuation Options $ $ $ Non-executive directors I M Williams (Chair) 2023 2022 R L Green 2023 2022 M R Stubbs 2023 2022 S P Cantwell 2023 2022 110,406 70,471 85,317 63,278 85,317 52,853 87,799 34,912 - - - - - - - - A R Kelly (resigned 5 November 2021) 2023 2022 - 22,305 - - R A Anderson (resigned 31 August 2021) 2023 2022 Sub-Total 2023 Sub-Total 2022 - 14,224 368,839 258,043 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 11,490 7,079 8,881 6,331 8,881 5,285 6,865 3,491 - 2,233 - 1,427 36,117 25,846 - - - - - - - - - - - - - - 121,896 77,550 94,198 69,609 94,198 58,138 94,664 38,403 - 24,538 - 15,651 404,956 283,889 % NA NA NA NA NA NA NA NA NA NA NA NA NA NA Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 19 Executive director and other executive management personnel remuneration Objective The Group aims to reward executive management personnel with a level and mix of remuneration commensurate with their position and responsibilities within the Group to: a) b) c) Link rewards with the strategic goals and performance of the Group; Align the interests of executive management personnel with shareholders; and Ensure total remuneration is market competitive. Executive management personnel 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 2023 and 2022 financial years: Name M K Lindsay J T Green B T Jones C R Baker Position Term as KMP Managing Director and Chief Executive Officer Retired 23 June 2023 Chief Financial Officer and Company Secretary Group Legal Counsel and Company Secretary Chief Operating Officer (i) Full financial year Full financial year Full financial year (i) C R Baker was appointed Interim Chief Executive Officer from 23 June 2023 New Chief Executive Officer appointment Following M K Lindsay’s retirement on 23 June 2023, C R Baker was appointed as Interim Chief Executive Officer. Following the end of the financial year, C J McDonald commenced on the 17 July 2023 as Chief Executive Officer. Key terms of new Chief Executive Officer employment agreement: • • • • • • • Effective: 17 July 2023. Fixed Annual Remuneration (FAR): $830,000 per annum (including superannuation). Short term incentives (STI): possible STI in a range from 0% up to 50% (target) to 100% (maximum) of FAR based on achievement of agreed key performance indicators and relevant targets determined by the board. Long term incentive (LTI): possible LTI in a range from 0% to 50% (target) to 100% (maximum) of FAR based on achievement of relevant key performance indicators and targets determined by the board over defined periods. Sign-on benefits: to be provided as one-off sign on payments in lieu of STIs and LTIs being forgone and subject to service or vesting requirements: $434,000 cash payment over the initial 12 months of service; a. b. A number of zero priced options equal to the value of $437,500 to be determined by a VWAP calculation method vesting in October 2023 and October 2024; and c. A number of zero priced options equal to the value of $699,000 to be determined by a VWAP calculation method vesting in October 2026. Ancillary items: The employment agreement provides for usual ancillary items in addition to remuneration, being phone, laptop and car allowance ($20,000). Termination: Other than for serious misconduct, either party may terminate the employment agreement by giving 6 months’ notice Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 20 Structure The executive management personnel remuneration 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) Cash bonus payments Performance relative to annual goals Long-term incentives (LTI) Grants of performance options Long term performance of the Group Fixed remuneration Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash, superannuation and other benefits such as motor vehicles and expense payments. It is intended that the manner of payment chosen will be optimal for the recipient without creating an undue cost for the Group. The fixed remuneration is not dependent upon the satisfaction of any performance conditions. Short-term incentives (STI) The payment of short-term incentives to executive management personnel is specified in employment agreements or at the discretion of the Chief Executive Officer (CEO) and the Remuneration Committee, having regard to the overall performance of the Group and the performance of the individual during the period. Key financial indicators of profitability, revenue growth, revenue diversification and working capital improvements are factored into short-term incentive remuneration. Other key indicators include safety, employee engagement, employee retention and sustainability. The Board considers this as a balanced approach to align executive management personnel rewards with overall shareholder value creation. Short-term incentive – Chief Executive Officer – M K Lindsay (Retired 23 June 2023) During the 2017 financial year, an employment agreement was entered into with the CEO, M K Lindsay. The agreement provided for STIs between 0% and 60% of fixed remuneration based on achieving goals. The STIs earned and paid to the CEO are measured against the delivery of strategic objectives, including: a) b) c) d) e) Safety outcomes benchmarked and measured internally; Earnings growth measured against historical results and internal management budgets; Diversifying Group operations both in service range and geographical reach; Shareholder returns, including both income and capital; and Succession planning for executive management personnel. The short-term objectives were chosen because of the need to renew infrastructure and set the Group on a future path of growth. In FY2023, M K Lindsay achieved STI cash bonus, inclusive of superannuation of $510,000 (FY2022: $430,000). For the STI paid in FY2022, $80,000 (inclusive of superannuation) related to the FY2021 financial year that was previously deferred. Fixed Remuneration $ Maximum STI $ STI Awarded (i) $ STI Awarded % STI Forfeited % M K Lindsay - Managing Director & Chief Executive Officer 2023 2022 (i) 878,275 849,288 526,965 509,573 510,000 430,000 97% 84% 3% 16% The STI payments detailed above includes superannuation. The STI payments represent both amounts paid or payable at the end of the financial year. At 30 June 2023, there were no STI amounts payable to M K Lindsay (30 June 2022: $350,000 including superannuation). The cash bonus and superannuation amounts are consolidated in the table above. The $430,000 STI awarded in FY2022 includes $80,000 payment that was deferred from FY2021. Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 21 Short-term incentive – Chief Operating Officer / Chief Financial Officer During the 2023 financial year, the COO, C R Baker and CFO J T Green were entitled to receive a maximum STI of $150,000 inclusive of superannuation (2022: $100,000 inclusive of superannuation). The STIs earned and paid are measured against the delivery of strategic objectives, including: a) b) c) Safety outcomes and improvements; Financial benchmarks including growth in Group revenues, EBITDA and returns on invested capital; and Professional development. The short-term objectives were chosen for a balanced approach to align remuneration with the Group’s safety focus and shareholder value creation. The table below details the STI cash bonus that was awarded and how much was forfeited, based on the maximum STI payable in the employment agreements. Fixed Remuneration $ Maximum STI $ STI Awarded $ STI Awarded % STI Forfeited % C R Baker – Chief Operating Officer 2023 2022 J T Green – Chief Financial Officer 2023 2022 476,719 463,300 376,600 372,000 150,000 100,000 150,000 100,000 150,000 100,000 150,000 100,000 100% 100% 100% 100% 0% 0% 0% 0% Long term incentives (LTI) Executive management personnel are eligible to participate in the Long Term Incentive (Option) Plan (LTIP) that was approved by shareholders at the 2022 Annual General Meeting. Refer to section (E) below and Note 30 for additional information on the LTIP. Details of share options issued under the LTIP that have not yet vested or been cancelled are detailed below. 2023 Financial Year Share Options Granted To Share Options Granted Valuation of shares with EPS target at grant date Valuation of shares with TSR target at grant date Grant Date Vesting Period 3 Year Aggregate EPS Target FY2023 C R Baker 200,000 $0.6054 $0.3600 December 2022 30 June 2025 $0.213 per share 3 Year Total Shareholder Return Target 30% 2022 Financial Year Share Options Granted To Share Options Granted Valuation at Grant Date Grant Date Vesting Period FY2022 C R Baker 200,000 $0.3219 October 2021 30 June 2024 FY2023 J T Green 200,000 $0.6054 $0.3600 December 2022 30 June 2025 $0.213 per share 30% FY2022 J T Green 200,000 $0.3219 October 2021 30 June 2024 3 Year Aggregate EPS Target $0.12 cents per share $0.12 cents per share 3 Year Total Shareholder Return Target 30% 30% Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 22 B. Service Agreements The Group’s policy in operation during the 2023 financial year is that service contracts for the Chief Executive Officer (CEO) and other executive management personnel are unlimited in term but capable of termination, either by employer or employee, on giving between one and twelve months’ notice. The notice period varies depending on the position held. Notice period contained in employment agreements for key management positions: Position Employee Notice Period Chief Executive Officer (Retired 23 June 2023) M K Lindsay Chief Financial Officer Group Legal Counsel Chief Operating Officer J T Green B T Jones C R Baker 12 months 12 months 1 month 12 months Executive management personnel are 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. C. Details of Remuneration Paid to Executive Management Personnel The persons listed below are the only persons to have authority and responsibility for planning, directing and controlling the activities of Lindsay Australia Limited and the Group. There are no other executives who are executive management personnel. Amounts disclosed for cash salary, fees and superannuation include amounts paid or payable at the end of the year. Total remuneration expense may vary, as compared to base salary, with the movements in annual and long service leave accruals. Short-term benefits Long-term benefits Post-employment benefits Share-based payments (a) Termination payment on Total Performance related Salary and fees $ Cash Bonus $ Non- monetary benefits $ Long service leave $ Superannuation Options Retirement(c) $ $ $ $ % Executive director and other executive management personnel M K Lindsay – Managing Director & Chief Executive Officer – Retired 23 June 2023 2023 2022 880,074 510,000 27,749 22,406 845,385 391,000(b) 12,110 12,564 J T Green – Chief Financial Officer & Company Secretary 2023 2022 358,316 150,000 5,435 8,872 342,177 110,909 4,732 18,738 B T Jones – Group Legal Counsel & Company Secretary 2023 2022 306,887 290,178 20,000 20,000 - - 7,483 10,795 C R Baker – Chief Operating Officer 2023 2022 452,350 150,000 6,616 9,744 468,838 90,909 4,174 26,694 27,500 48,706 27,500 36,306 27,500 27,624 27,500 35,254 - 894,400 2,362,129 61,958 - 1,371,723 42,121 21,463 5,164 - 42,121 21,463 - - - 592,244 534,325 367,034 - 348,597 - - 688,331 647,332 Sub-total 2023 1,997,627 830,000 39,800 48,505 110,000 89,406 894,400 4,009,738 Sub-total 2022 1,946,578 612,818 21,016 68,791 147,890 104,884 - 2,901,977 (a) (b) (c) Share-based payments are the probable number of options that will vest at the grant date value. The STI payment awarded to M K Lindsay in FY2022 includes a payment of $80,000 (inclusive of superannuation) that was deferred from the FY2021. In lieu of share options being issued in the 2021, 2022 and 2023 financial years and in lieu of notice on resignation, M K Lindsay received a retirement cash settlement of $894,400. The settlement is paid in two tranches. The first tranche of $531k was paid on the 28 June 2023. The second tranche of $363k is due to be paid on the 26 June 2024 subject to certain post-employment conditions being met. 22 33 32 25 7 6 28 17 23 25 Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 23 D. Other Transactions with Key Management Personnel There were no other related party transactions with Key Management Personnel in the 2023 Financial Year. E. Share-Based Compensation Options Options over shares in Lindsay Australia Limited may be granted under the 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 below grants of options are performance related to provide long-term incentives. The terms and conditions of each grant of options affecting performance in the current or future reporting periods are as follows: Grant Date Options issued Fair Value per option (cents) Date vested and exercisable Expiry date Exercise Price October 2019 400,000 October 2021 400,000 December 2022 225,000 December 2022 225,000 30.70 32.19 36.00 60.53 Oct-22 Oct-26 Sep-24 Sep-25 Jun-25 Jun-25 Jun-26 Jun-26 Nil Nil Nil Nil Performance hurdles for new options issued 30 June 2023 400,000 - - - Vested Exercised 30 June 2023 Balance 400,000 400,000 225,000 225,000 - - - - 225,000 share options issued in December 2022 include a Total Shareholder Return (TSR) performance target. TSR target for the period 01 July 2022 to 30 June 2025 is over 30%. The TSR target includes both income (dividends) and capital growth. The TSR target is based off the 30 June 2022 Lindsay Australia Limited share price of $0.41. 225,000 share options issued in December 2022 include an Earnings Per Share (EPS) target. Cumulative EPS target of $0.213 for the period 01 July 2022 to 30 June 2025. EPS target is based on underlying results, adjusted for one-off or non-recurring events. Option details Detail of options over ordinary shares in the company provided as remuneration to each director and executive management personnel of Lindsay Australia Limited and related entities at 30 June 2023 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 30 of the financial report. Name Number of options granted Value of options at grant date (a) Number of options vested during the year Number of options exercised during the year M K Lindsay (October 2019) C R Baker (October 2021) C R Baker (December 2022) J T Green (October 2021) J T Green (December 2022) B T Jones (December 2022) 400,000 200,000 200,000 200,000 200,000 50,000 122,855 400,000 64,389 96,541 64,389 96,541 24,135 - - - - - - - - - - - (a) The value at the grant date is 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 the grant date to vesting date, and the amount is included in the remuneration tables above. Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 24 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 greater than one year. The number and movement for all options issued to executive management personnel during the 2023 financial year are as follows. Name Balance 30 June 2022 Granted during year Vested and exercisable during year Exercised Forfeited Balance 30 June 2023 Unvested Vested M K Lindsay 400,000 C R Baker 200,000 J T Green 200,000 B T Jones - - - - - - 400,000 200,000 200,000 50,000 - - - - - - - - - - - Unvested Vested - 400,000 400,000 400,000 50,000 - - - No shares were issued in the 2023 financial year pursuant to the exercise of share options. In the 2022 financial year, 800,000 shares were issued in Lindsay Australia Limited to M K Lindsay pursuant to the exercise of share options. Refer Note 30 for additional information on share options. F. Equity Holdings of Key Management Personnel 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. Balance at 30 June 2022 Upon resignation Shares issued on exercise of share options Net change other Balance at 30 June 2023 Directors of Lindsay Australia Limited M K Lindsay (Retired 23 June 2023) 13,012,487 (12,668,218) I M Williams M R Stubbs R L Green S P Cantwell Other key management personnel of the Group B T Jones J T Green C R Baker - 280,000 - - - 31,632 72,568 - - - - - - - - - - - - - - - (344,269) - - - - - - 3,816 - - 280,000 - - - 31,632 76,384 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. G. Loans to Key Management Personnel There were no loans to key management personnel during the current or prior financial years. Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 25 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 $ 2019 2020 2021 2022 2023 2,484,462 2,681,842 2,453,607 3,185,866 4,414,694 EPS ¢ 3.0 1.8 0.4 6.4 11.4 Dividends ¢ Share Price ¢ 2.1 1.5 1.7 3.2 4.9 34.5 35.0 37.5 41.0 114.0 This report is made in accordance with a resolution of the directors. Ian M Williams Chair of Directors Brisbane, Queensland 28 August 2023 Lindsay Australia Limited | Annual Report 2023 | Remuneration Report (Audited) 26 The Directors Lindsay Australia Limited 152 Postle Street ACACIA RIDGE QLD 4110 Auditor’s Independence Declaration In relation to the independent audit for the year ended 30 June 2023, to the best of my knowledge and belief there have been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001; and (ii) no contraventions of APES110 Code of Ethics for Professional Accountants (including Independence Standards). This declaration is in respect of Lindsay Australia Limited and the entities it controlled during the year. PITCHER PARTNERS JASON EVANS Partner Brisbane, Queensland 28 August 2023 Lindsay Australia Limited | Annual Report 2023 | Auditor’s Independence Declaration 27 ANNUAL FINANCIAL REPORT 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 Inventories 1. Significant Accounting Policies 2. Financial Risk Management 3. Critical Accounting Estimates & Judgements 4. Revenues 5. Other Income 6. Expenses 7. Income Tax 8. Franking Credits / Dividends 9. Cash and Cash Equivalents 10. Trade and Other Receivables 11. 12. Financial Assets at Fair Value Through Other Comprehensive Income 13. Property, Plant and Equipment 14. Right-of-use Assets 15. Lease Liabilities 16. Deferred Tax Assets 17. Intangible Assets 18. Trade and Other Payables 19. Borrowings 20. Deferred Tax Liabilities 21. Provisions 22. Other Liabilities 23. Contributed Equity 24. Reserves 25. Retained Earnings 26. Cash Flow Information 27. Earnings per Share 28. Auditor’s Remuneration 29. Related Party Disclosures 30. Share-based Payments 31. Subsidiaries 32. Segment Information 33. Deed of Cross Guarantee 34. Capital Commitments 35. Contingent Liabilities 36. Parent Company Information 37. Events after the reporting period Directors’ Declaration Independent Auditor’s Report To the Members of Lindsay Australia Limited Corporate Governance Statement Shareholder Information 31 32 33 34 35 35 42 45 46 46 47 48 49 50 50 51 51 52 53 54 55 55 57 57 58 58 59 59 60 60 61 61 61 62 62 66 67 69 69 69 70 70 72 73 77 88 Lindsay Australia Limited | Annual Report 2023 | Consolidated Financial Statements 29 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 in the Directors’ Report which is not part of this financial report. The financial statements were authorised for issue by the directors on 28 August 2023. The directors have the power to amend and reissue the financial statements. Lindsay Australia Limited | Annual Report 2023 | Consolidated Financial Statements 30 Lindsay Australia Limited Consolidated Statement of Profit and Loss and Other Comprehensive Income for the year ended 30 June 2023 Revenue Other income Expenses Changes in inventories Purchase of inventories Employee benefits expense Subcontractors Depreciation and amortisation Vehicle operating charges Finance costs Rental and equipment hire costs Professional fees Impairment loss on trade receivables Merger and acquisition costs 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 2023 $’000 2022 $’000 4 5 6 6 6 6 6 6 7 25 Note 27 27 676,245 553,070 6,495 4,589 (3,890) 5,380 (130,072) (134,162) (144,934) (127,814) (160,885) (111,852) (42,833) (38,614) (91,799) (75,744) (9,837) (2,247) (2,023) (265) (633) (6,626) (1,502) (1,837) (141) - (43,925) (37,206) 49,397 27,541 (14,880) (8,311) 34,517 19,230 - 34,517 Cents 11.4 11.4 - 19,230 Cents 6.4 6.4 The above Consolidated Statement of Profit and Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes. Lindsay Australia Limited | Annual Report 2023 | Consolidated Financial Statements 31 Lindsay Australia Limited Lindsay Australia Limited Consolidated Statement of Financial Position for the year ended 30 June 2023 Current assets Cash and cash equivalents Trade and other receivables Inventories Prepayments Total current assets Non-current assets Financial assets at fair value through other comprehensive income Property, plant and equipment Right-of-use assets Intangible assets Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Lease liabilities Provisions Other Total current liabilities Non-current liabilities Borrowings Lease liabilities Deferred tax liabilities Provisions Other Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings Total equity Note 2023 $’000 2022 $’000 9 10 11 12 13 14 17 18 19 15 21 22 19 15 20 21 22 23 24 25 51,973 107,591 18,064 7,802 29,041 90,264 22,611 5,489 185,430 147,405 25 25 91,443 67,581 202,192 187,986 8,708 8,425 302,368 264,017 487,798 411,422 68,811 3,696 42,100 12,881 6,591 60,365 9,276 42,873 12,510 6,146 134,079 131,170 42,220 22,782 146,020 131,032 28,299 13,517 2,065 7,743 1,735 8,271 226,347 177,337 360,426 308,507 127,372 102,915 75,427 74,397 788 689 51,157 27,829 127,372 102,915 The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes. Lindsay Australia Limited | Annual Report 2023 | Consolidated Financial Statements 32 Consolidated Statement of Changes in Equity for the year ended 30 June 2023 At 30 June 2021 Profit for the year Other comprehensive income Total comprehensive income for the year Dividends reinvested /(paid) during year Employee share schemes – value of employee services Issue of shares under share option plan At 30 June 2022 Profit for the year Other comprehensive income Total comprehensive income for the year Dividends reinvested /(paid) during year Employee share schemes – value of employee services At 30 June 2023 8 24 24 8 24 Note Contributed equity Share-based payments reserve $’000 Retained earnings Total equity $’000 14,312 19,230 - 19,230 (5,713) - - 27,829 34,517 - $’000 88,877 19,230 - 19,230 (5,297) 105 - 102,915 34,517 - 34,517 34,517 856 - - - - 105 (272) 689 - - - - (11,189) (10,159) 99 788 - 99 51,157 127,372 $’000 73,709 - - - 416 - 272 74,397 - - - 1,030 - 75,427 The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes. Lindsay Australia Limited | Annual Report 2023 | Consolidated Financial Statements 33 Lindsay Australia Limited Consolidated Statement of Cash Flows for the year ended 30 June 2023 Cash flows from operating activities Receipts in the course of operations Payments in the course of operations Interest received Income taxes paid Income taxes reimbursed Finance costs paid Net cash from 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 Repayment of borrowings Repayment of property lease liabilities Repayment of other lease liabilities Repayment of equipment lease liabilities Dividends paid Net cash (used in) financing activities Increase in cash and cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at end of financial year 9 The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes. Note 2023 $’000 2022 $’000 734,116 581,375 (639,682) (535,049) 1,141 (100) - (9,472) 86,003 289 - 668 (7,652) 39,631 26 2,418 3,161 (35,732) (13,704) (793) (99) (34,107) (10,642) 28,774 (9,703) (9,335) (288) 20,099 (5,519) (8,117) (488) (28,253) (28,221) (10,159) (5,296) (28,964) (27,542) 22,932 29,041 51,973 1,447 27,594 29,041 Lindsay Australia Limited | Annual Report 2023 | Consolidated Financial Statements 34 Notes to the Consolidated Financial Statements Lindsay Australia Limited and controlled entities Lindsay Australia Limited and its controlled entities (the Group), is an integrated transport, logistics and rural supply company that has a specific focus on servicing customers in the food processing, food services, fresh produce and horticulture sectors. Lindsay Australia Limited is a for-profit entity limited by shares. Shares in Lindsay Australia Limited are publicly traded on the Australian Securities Exchange (Code: LAU). The financial statements relate to the consolidated entity consisting of Lindsay Australia Limited and its subsidiaries. The full board of Lindsay Australia Limited authorised the issuance of the consolidated financial statements for the year ended 30 June 2023 on 28 August 2023. 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 investments in equity instruments which have been measured at fair value through other comprehensive income. The financial report is presented in Australian dollars and unless otherwise stated 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). New accounting standards and interpretations There are a number of new accounting standards, interpretations and amendments that have been issued but not yet effective. The new accounting standards, interpretations and amendments that are relevant to the activities of the Group are not expected to have a material impact on the financial statements of the Group. The Group has applied all new accounting standards with effect from 1 July 2022, however none of the new standards had a material impact on the financial statements of the Group. The Group has not early adopted any standard, interpretation or amendment that has been issued but not yet effective. The accounting policies applied in the consolidated financial statements are the same as those adopted in the Group’s consolidated financial statements for the year ended 30 June 2022. Compliance with international financial reporting standards The consolidated financial statements of Lindsay Australia Limited also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). Critical accounting estimates The preparation of financial statements in conformity with Australian Accounting Standards and Interpretations requires the use of certain 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. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 35 1.2 Basis of consolidation of the financial statements The consolidated financial statements contain the financial statements of Lindsay Australia Limited (the Company) and its controlled subsidiaries (the ‘Group’) as at 30 June 2023. Control occurs when the Company 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, the Company 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 the Company’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 Company 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 the Group members are eliminated in full on consolidation. 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 re-measurement 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 and other income The Group earns revenue from providing goods and services to customers. Consistent with the requirements of AASB 15 Revenue from Contracts with Customers and the Group’s performance obligations, the Group recognises revenue with respect to the provision of goods at specific points in time (typically when goods are physically transferred to the customers) and recognises revenue with respect to the provision of services over the period in which the services are provided to the customers. Contract liabilities are recognised when advance consideration is received from customers or where revenue is otherwise deferred and the related performance obligations have not yet been met. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 36 The recognition of each of the Group’s major revenue sources is detailed below: Sale of goods Revenue is recognised from the sale of goods on a point in time basis, generally when the goods are delivered to the customers. Transport/logistic services Revenue is recognised from the provision of transport and logistics services generally over a period of time. The Group has adopted the output method of measuring revenue as this approach best reflects the Group’s performance obligations over a period of time. Other revenue Revenue from the provision of short-term warehousing and storage services provided to customers is generally recognised over a period of time as the services are provided. d. Income Tax and tax consolidation The income tax expense or benefit 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. 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. 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 taxpayer 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 wholly-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. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 37 e. Right-of-use property and other The Group operates several leased facilities. Facility rental agreements range in tenure from 1 to 15 years. Lease terms are negotiated on an individual basis and with varying terms and conditions. Leases are recognised as a right-of-use asset with a corresponding lease liability. Each lease payment is allocated between the liability and finance cost. The right-of-use asset is depreciated over the lease term on a straight-line basis or over the useful life where title to the asset transfers at the end of the lease. Assets and liabilities arising from a lease are initially measured on a present value basis. Depreciation on right-of-use assets and interest on lease liabilities is recognised in the consolidated statement of profit and loss and other comprehensive income. Payments associated with short term leases (generally less than 12 month terms) and leases of low value are recognised on a straight- line basis as an expense in the consolidated statement of profit and loss and other comprehensive income. Low value leases include office equipment and short-term leases includes equipment that is utilised by the Group to cover peak operating periods and are on short term rental agreements of less than 12 months in tenure. The principal portion of the lease payments are recognised as a financing cash flow and the interest portion of the lease pay ments are recognised as an operating cash flow in the consolidated statement of cash flows. The Group uses critical judgements in determining the lease term. Extension options are only included in the lease term where management considers that it is reasonably certain that the lease will be extended. f. Impairment of financial assets The Group applies the AASB 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. In measuring the expected credit loss, a provision matrix for trade receivables is used. The provision matrix is based on historical credit losses, adjusted for any material expected changes to future credit risk. Any change in expected credit losses between the previous reporting period and the current reporting period is recognised as an impairment gain or loss in the statement of profit and loss. Collectability of trade receivables is reviewed on an ongoing basis. g. Cash and cash equivalents For the statement of cash flows, cash and cash equivalents include 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. h. Trade and other receivables Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost, less any allowance for expected credit losses. i. Inventories Inventories are stated at the lower of cost and net realisable value. Cost comprises the 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 market the sale. Volume rebates are apportioned evenly across the relevant product purchased. Where the product remains in inventory the rebate reduces its carrying value. 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. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 38 k. Investments and other financial assets Financial assets are measured at amortised cost where the Group holds the asset in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. Financial assets are measured at fair value through other comprehensive income (FVOCI) where the Group holds the asset in order to collect contractual cash flows that arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. Financial assets at FVOCI, comprise principally marketable equity securities which do not have fixed maturities, fixed or determinable payments and management intends to hold them for the medium or long term. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the period end date. The marketable equity securities are irrevocably designated at FVOCI on initial recognition where equity instruments are not held for trading purposes. The Group classifies and measures all other financial assets at fair value through profit and loss. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market 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. 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 equity security financial assets at fair value through other comprehensive income) 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. 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. 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 for current and comparative years are: Classification Buildings Right-of-use assets Leasehold improvements Plant and equipment Leased plant and equipment Rate 2.5-5% 6.5-50% 6.5-30% 5-40% 6.5-40% Depreciation Basis SL 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(o)). Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 39 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. Go odwill 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 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 de-recognition 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. Impairment of assets Goodwill and intangible assets that have an indefinite useful life are not amortised but are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are reviewed 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 carry 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 impairments, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that previously suffered an impairment loss are reviewed for possible reversal of the impairment loss at each subsequent reporting date. p. 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 and paid within 7 to 180 days of recognition depending on the vendor payment terms. q. Employee benefits Liabilities for wages and salaries, including non-monetary benefits and annual 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 is recognised in the current provision for employee benefits. The liabilities for long service leave and annual leave which are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service are 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. Re-measurements as a result of experience adjustments and changes in actuarial assumptions are recognised in profit or loss. The obligations are presented as current liabilities in the balance sheet if there is no unconditional right to defer settlement for at least 12 months after the reporting period, regardless of when the actual settlement is expected to occur. The Group makes contributions to defined contribution superannuation funds. Contributions are recognised as an expense as they become payable. Share-based compensation benefits can be provided to employees under the Lindsay Australia Limited Long Term Incentive (Option) Plan (LTIP). The fair value of options granted under the LTIP 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. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 40 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. r. 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. s. 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. t. 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. u. 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. 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 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. Parent entity financial information The financial information for the parent entity, Lindsay Australia Limited, disclosed in Note 36 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. 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. x. Government grants Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as a reduction of the expense to which it relates. y. General Lindsay Australia Limited is a public company limited by shares, incorporated and domiciled in Australia. The Registered Office and Principal Place of Business is: Lindsay Australia Limited 152 Postle Street ACACIA RIDGE QLD 4110 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 41 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 significa nt and/or overdue debtors are provided to the Board of Directors for review. The Group holds the following financial instruments: Financial assets Cash and cash equivalents (a) Trade and other receivables (a) Equity securities (b) Financial liabilities Trade and other payables (c) Borrowings (c) (d) Lease liabilities (e) Note 2023 $’000 2022 $’000 9 10 12 18 19 15 51,973 29,041 107,591 90,264 25 25 159,589 119,330 68,811 46,060 60,365 32,284 188,158 174,191 303,029 266,840 (a) Financial assets at amortised cost. (b) Fair value through other comprehensive income. (c) Other financial liabilities at amortised cost. (d) The carrying amount of borrowings disclosed excludes offsetting borrowing costs of $144,000 (2022: $226,000) and at amortised cost. (e) The carrying amount of lease liabilities excludes offsetting of fair value gain of $38,000 (2022: $286,000) and at amortised cost. a. Assets pledged as security Refer to Note 19 for information on assets pledged as security. b. Currency risk The Group does not operate internationally; however, does have some revenue generated from internationally based customers denominated in Australian Dollars. Revenue from international customers in FY2023 accounted for 0.1% (2022: 0.1%) of Group revenue. In FY2023 the Group purchased approximately $6.8 million (5.2%) (2022: $7.7 million (5.1%)) of its inventory from overseas sources in foreign 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 2023 is not significant. c. Price risk The Group is exposed to equity security price risk on unlisted equity securities financial assets. The price risk for the unlisted securities at 30 June 2023 and 30 June 2022 is not significant. d. 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 the 2023 and 2022 financial years, the Group’s borrowings at variable rate were denominated in Australian Dollars. The Group has no significant interest- bearing assets other than cash and debtors. The Group charges interest on a small number of debtor balances for seasonal extended payment terms or for debtors that extend beyond agreed payment terms. The Group’s cash flow interest rate risk primarily relates to variable rate financial instruments such as short term and long term variable rate bank loan borrowings. The proportion of variable rate borrowings to total borrowings of the Group at 30 June 2023 is 28.9% (2022: 25.2%). 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: Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 42 Weighted Average Interest Rate Cash and cash equivalents Borrowings Bank and other loans (i) 2023 % 2022 % 2023 $’000 2022 $’000 3.02% 0.00% 51,973 29,041 7.02% 4.19% 46,060 32,284 (i) The carrying amount of borrowings disclosed excludes offsetting borrowing costs of $144,000 (2022: $226,000). At 30 June 2023, 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 $41,000 lower/higher (2022 – change of 1%: $23,000 lower/higher), mainly as a result of higher/lower interest expense from borrowings and higher/lower interest income from cash and cash equivalents. e. 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 customers, 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, excluding the value of any security the Group may hold, at balance for recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The Group has adopted the simplified approach to measuring expected credit losses for trade receivables. In measuring the expected credit loss, a provision matrix is used. The provision matrix is based on historical credit losses, adjusted for any material changes to future credit risk. At 30 June 2023 the largest ten debtors comprised approximately 35% (2022: 39%) of total trade debtors (the largest individual debtor comprised 8.3% (2022: 10.0%) of trade debtors). Around a half of the trade debtors are involved in the rural industry in Queensland, New South Wales, Victoria, and South Australia - approximately 59% (2022: 53%). At the reporting date cash was held with the Group’s principal financiers, including Commonwealth Bank of Australia, Westpac Banking Corporation and the National Australia Bank. f. Liquidity risk Liquidity risk is managed by maintaining sufficient cash and the availability of funding, through an adequate amount of 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 finance facilities. Financing arrangements The Group had access to the following undrawn borrowing facilities at the reporting date: Available facilities Bank loan - working capital finance facility Bank loan Other loans Equipment loans – variable Equipment finance lease liabilities Amounts utilised Bank loan – working capital finance facility Bank loans (a) Equipment loans - variable Equipment finance lease liabilities (b) Unused facilities 2023 $’000 2022 $’000 30,000 13,500 80 10,000 15,500 80 12,561 10,784 162,439 119,216 (20,000) (13,500) (12,560) (113,146) (6,000) (15,500) (10,784) (95,789) 59,374 27,507 (a) (b) The carrying amount of borrowings disclosed excludes offsetting of borrowing costs of $144,000 (2022: $226,000). The carrying amount of equipment finance lease liabilities excludes offsetting of a fair value gain of $38,000 (2022: $286,000). Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 43 Bank loan - variable finance facility The variable finance facility was renegotiated in March 2023 and extended to March 2025 unless the lender demands repayment in accordance with the facility agreement. The available facility limit was also increased for $10 million to $30 million. The interest rate is variable and is based on prevailing market rates. The facility is utilised to fund annual premiums such as registrations and insurances and for other requirements of the Group. The facility is drawn upon and repaid as per the Groups funding requirements. The facility is subject to annual review. Bank loans - corporate finance facility The corporate finance facility is 5 years in tenure and due in March 2025. The facility is repayable by $500,000 quarterly instalments of principal and interest with a balloon payment at maturity. The interest rate is variable and is based on prevailing market rates. The facility is subject to annual review. Other loans Other loans relate to a corporate card facility held with a financial institution. The amounts are payable at the end of each month. The facility is subject to annual review. Equipment finance lease facilities The consolidated entity can draw on these lease facilities for the acquisition of plant and equipment (by way of equipment finance lease). Generally: • • • • The facilities are subject to periodic review; Individual equipment finance agreements generally range in tenure of between 1 and 5 years depending on the equipment type; Fixed monthly repayments of principal and interest are arranged over the term of each agreement at the date of each draw; Depending on the equipment financed by the agreement, balloon residuals are generally refinanced for a further term of between 1 and 3 years; and The liabilities are effectively secured as the rights to the leased assets revert to the lessor in the event of default. • At 30 June 2023, $6,680,000 (30 June 2022: $10,126,000) was included as a current liability for balloon residuals for equipment finance agreements expiring within 12 months of balance date. As per the Group’s equipment finance strategy, these balloon residuals are expected to be refinanced for a further term as they fall due. 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 2022 Trade payables Borrowings (a) Equipment finance leases (b) Equipment loans – variable Lease liabilities – properties/other Total At 30 June 2023 Trade payables Borrowings (a) Equipment finance leases (b) Equipment loans – variable Lease liabilities – properties/other 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 60,365 8,784 - - 2,627 11,908 36,385 24,407 40,477 1,716 1,716 8,338 - - - - 60,365 23,319 101,269 11,770 60,365 21,500 95,789 10,784 12,125 11,334 27,804 44,882 96,145 78,402 119,375 40,084 88,527 44,882 292,868 266,840 68,811 4,390 - - 4,250 31,076 36,950 37,189 50,160 2,613 2,609 9,500 - - - - 12,623 11,494 29,651 36,574 68,811 39,716 68,811 33,500 124,299 113,146 14,722 90,342 12,560 75,012 125,387 55,542 120,387 36,574 337,890 303,029 Total (a) (b) g. The carrying amount of borrowings disclosed excludes offsetting of borrowing costs of $144,000 (2022: $226,000). The carrying amount of equipment finance lease liabilities excludes offsetting of a fair value gain of $38,000 (2022: $286,000). Fair value estimation The Group has no significant financial assets 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. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 44 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. Goodwill 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 17 for details of these assumptions. Allowance for expected losses Trade and other receivables, which are known to be uncollectible, are written off. An allowance for expected credit losses is established. In measuring expected credit losses, a provision matrix for trade receivables is used. The provision matrix is based on historical credit losses, adjusted for any material expected changes to future credit risk. Refer note 10 for details of the allowance for expected credit losses. Lease terms for right-of-use assets and liabilities The Group uses critical judgements in determining the lease term for property leases with renewable extension options. The lease term is determined to be the non-cancellable term of a lease and includes the periods covered by an option to extend the lease term where management considers that it is reasonably certain that the lease extension option will be exercised. The Group recognises a right-of- use asset at the commencement date which is initially measured on a present value basis. The associated lease liabilities have been measured at the present value of future minimum lease payments, using the Group’s incremental borrowing rate. Depreciation of property, plant and equipment The Group makes judgements in determining depreciation rates for property, plant and equipment. 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. Assets are classified into asset groups and depreciated per their classification in the table disclosed under note 1(m). Asset residual values and useful lives are reviewed and adjusted if appropriate at the end of each reporting period. Fuel tax credits The Group uses critical input judgements when determining the Group’s entitlements to fuel tax credits. These judgements are based on continual technology improvements which assist the fuel tax credit input data capture process, which includes key inputs such kilometres travelled, fuel burn rates, idle rates and off-road kilometres and other key inputs which are continually reviewed. Taxation Deferred tax assets, including those arising from tax losses not recouped and temporary differences are recognised in the Consolidated Statement of Financial Position, only where it is considered more likely than not that they will be recovered. Recovery is subject to the generation of sufficient taxable profits in the future. Judgement is required to determine the amount of deferred tax assets that can be recognised based on the timing and amount of future profits. These judgements and assumptions are subject to risk and uncertainty. A change in circumstances will alter expectations which could impact the amount of deferred tax assets and deferred tax liabilities recognised in the Statement of Financial Position. If circumstances do change, some or all of the carrying amounts recognised for deferred tax assets and liabilities may require adjustment, impacting the Consolidated Statement of Profit and Loss and Comprehensive Income. Share-based payments The Group provides benefits to employees (including executive management personnel) in the form of share-based payment incentives. Options over shares in Lindsay Australia Limited (ASX: LAU) may be granted under the Long Term Incentive (Option) Plan (LTIP). The LTIP is structured for reward for length of service and is variable depending upon cumulative annual performance targets. The Group makes estimates and assumptions in determining the fair value of the share options granted. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 45 4. Revenues In the following table, revenue from contracts with customers is disaggregated by customer type. Horticulture customers Customers are classified as horticulture if they are predominately exposed to the primary production of fresh fruit and vegetables. Horticulture customers include primary producers (growers), produce market agents and produce packing groups. Revenues from horticulture customers can fluctuate depending on season and can be impacted by weather related events. Commercial customers All other customers are classified as commercial customers. These customers do not have any direct involvement in the production of fresh fruit and vegetables. They are predominately manufacturers, food processors or distributors and third-party transport operators. 2023 Revenues Horticulture Commercial Revenue from contracts with customers Other revenue (refer note 5) Total revenue 2022 Revenues Horticulture Commercial Revenue from contracts with customers Other revenue (refer note 5) Total revenue 5. Other Income 2023 Insurance & other recoveries Rents and sub-lease rentals Interest revenue – other Interest revenue – bank Warehouse income Sundry/other Income Total other revenue/income 2022 Insurance & other recoveries Rents and sub-lease rentals Interest revenue - other Warehouse income Sundry/other Income Total other revenue/income Transport $’000 Rural $’000 Corp $’000 Group $’000 233,254 162,969 - 396,223 280,022 - - 280,022 513,276 162,969 - 676,245 3,144 754 1,824 5,722 516,420 163,723 1,824 681,697 Transport $’000 Rural $’000 Corp $’000 Group $’000 189,817 156,743 - 346,560 206,510 - - 206,510 396,327 156,743 - 553,070 2,723 774 1,092 4,589 399,050 157,517 1,092 557,659 Transport $’000 27 201 - - 1,300 1,616 3,144 Rural $’000 2 11 - - - 741 754 Corp $’000 Group $’000 1,139 1,168 9 369 - 221 369 773 - 1,300 307 2,664 1,824 6,495 Transport $’000 Rural $’000 Corp $’000 Group $’000 266 142 - 1,247 1,068 2,723 - 761 1,027 12 - - 762 774 9 290 163 290 - 1,247 32 1,092 1,862 4,589 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 46 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 Employee benefits expense Salaries and wages Defined contribution superannuation expense Other wage expenses Total employee benefits expense Finance costs Amortisation of fair value gain on recognition of lease liabilities Finance costs on interest bearing liabilities Finance costs on general interest charges (a) Finance costs on equipment loans Finance costs on equipment lease liabilities Finance costs on other lease liabilities Finance costs on property lease liabilities Total finance costs Depreciation Freehold buildings Plant and equipment Leasehold improvements Right of use asset Amortisation Customer list Computer software Total depreciation and amortisation Vehicle operating expenses Vehicle operating expenses Fuel tax credits relating to prior periods (a) Total vehicle operating expenses Impairment losses – trade receivables Movement in expected credit losses (refer note 10) Trade receivables written off (recovered) during the year Impairment loss on trade receivables Impairment losses/(reversals) – inventory Loss/(gain) on disposal of property, plant and equipment a. Fuel tax credits relating to prior periods 2023 $’000 2022 $’000 133,962 128,782 204 299 1,520 2,023 439 272 1,126 1,837 130,890 116,549 9,864 4,180 8,399 2,866 144,934 127,814 248 1,902 248 1,399 - (1,546) 703 3,786 63 3,135 9,837 250 9,342 1,905 126 3,026 64 3,309 6,626 410 8,400 1,731 30,814 27,447 18 504 257 369 42,833 38,614 93,003 (1,204) 91,799 290 (25) 265 22 (143) 77,610 (1,866) 75,744 151 (10) 141 261 (103) The Group was subject to a fuel tax credit (FTC) audit by the ATO in prior years. During FY2021 the ATO issued a notice of amended assessment relating to FTC’s previously assessed. The notice relates to the review period of May 2017 to June 2019 which included claims for periods dating back to 2006. The amended notice of assessment was for an amount due of $6.16m (excluding interest). In addition to the ATO assessment, the Group has also incurred costs relating to the same review period for FTC claims not submitted to the ATO totalling $918,000. In FY2022, the ATO issued an additional amended assessment notice resulting in the reversal of $1.87m of fuel tax credits relating to prior periods and $1.55m in General Interest Charges (GIC). Since the end of the 2023 financial year, the ATO has issued a further revised assessment notice, resulting in a further reduction of $1.20m. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 47 7. Income Tax Income tax expense Current tax Deferred tax Deferred tax is attributable to: (Increase) decrease in deferred tax assets (Note 16) Increase (decrease) in deferred tax liabilities (Note 20) Numerical reconciliation of income tax expense to prima facie tax payable Profit before income tax Tax at the Australian tax rate of 30% (2022: 30%) Tax effects of amounts which are not deductible (taxable) in calculating taxable income: Non-deductible expenses Income tax expense Tax losses 2023 $’000 98 14,782 14,880 3,093 11,689 14,782 49,397 14,819 61 14,880 2022 $’000 - 8,311 8,311 612 7,699 8,311 27,541 8,262 49 8,311 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 2023 | Notes to the Consolidated Financial Statements 48 8. Franking Credits / Dividends Franking credits Franking credits available for subsequent financial years based on a tax rate of 30% (2022: 30%) 2023 $’000 2022 $’000 - (100) The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for: a. b. c. Franking credits that will arise from the payment or 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. On 07 August 2023, the Group settled the acquisition of W.B Hunter Pty Limited (Hunters). On completion, Hunters joined the Lindsay Australia Limited income tax consolidated group. On completion Hunters have an approximate franking account surplus of $8.1m. 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 approximately $3,975,000 (2022 – nil impact). Dividends paid Interim dividend for the year ended 30 June 2023 of 1.9 cents per share unfranked paid in full on 14 April 2023 (2022: 1.4 cent per share unfranked paid in full on 08 April 2022). 5,753 4,212 Interim dividends paid in cash or satisfied by the issue of shares under the dividend re-investment plan during the years ended 30 June 2023 and 2022 were as follows: • Paid in cash • Satisfied by issue of shares Final dividend for the year ended 30 June 2022 of 1.8 cents per share unfranked paid on 07 October 2022 (2022 – 0.5 cents per share fully unfranked paid in full on 08 October 2021). 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 2023 and 2022 were as follows: • Paid in cash • Satisfied by issue of shares Dividends not recognised at year end 5,180 573 5,753 5,436 4,979 457 5,436 3,899 313 4,212 1,501 1,398 103 1,501 In addition to the above dividends, since year end the board of directors have recommended the payment of a final fully franked dividend of 3.0 cents per share (2022: 1.8 cents per share unfranked paid in full on 07 October 2022). 9,297 5,436 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 49 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 Allowance for expected credit losses Fuel rebates receivable Future GST recoverable Other receivables 2023 $’000 2022 $’000 51,973 29,041 51,973 51,973 29,041 29,041 2023 $’000 2022 $’000 99,556 (455) 99,101 965 352 7,173 107,591 82,817 (180) 82,637 188 391 7,048 90,264 a. Impairment allowance for trade receivables The Group applies the simplified approach under AASB 9 to measuring the allowance for credit losses for trade receivables. The Group determines expected credit losses using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the trade receivables as well as future economic conditions relevant to the trade receivables. The creation and release of the expected credit loss allowance for trade receivables has been included in the “Impairment loss on trade receivables” in the consolidated statement of profit and loss and other comprehensive income. Amounts charged to the loss allowance account are generally written off when there is no expectation of recovering those amounts. The following table provides a reconciliation in the movement during the financial year of the loss allowance for trade receivables: Loss allowance at 30 June 2021 (i) Increase (decrease) in allowance for movements in expected credit losses Trade receivables (written off) during the year against the ECL provision Loss allowance at 30 June 2022 Increase (decrease) in allowance for movements in expected credit losses Trade receivables (written off) during the year against the ECL provision Loss allowance at 30 June 2023 $’000 1,326 151 (1,297) 180 290 (15) 455 (i) The Company has made a provision for a trade receivable for a customer who notified the Company that they had entered administration proceedings. The Company consider this as a one-off transaction that will not impact ongoing ordinary operations. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 50 b. Credit risk profile for trade receivables The following table provides information about the risk profile of trade receivables. The impairment allowance at the end of the reporting period for trade receivables of the Group was $501,000 inclusive of GST of $46,000 (2022: $198,000 inclusive of GST of $18,000). The GST component of trade receivables is not considered impaired as this is refundable. Details of the trade receivable aging and the impairment allowance is detailed in the table shown below: 2023 Trade Receivables 2023 Impairment allowance 2022 Trade Receivables 2022 Impairment allowance $’000 68,781 20,633 3,484 6,658 99,556 $’000 (35) (17) (22) (427) (501) $’000 65,678 12,613 2,864 1,662 82,817 $’000 (30) (15) (13) (140) (198) Not yet due Past due 1 to 30 days Past due 31 to 60 days Past due 61 days or more c. Other receivables Other trade receivables do not contain impaired assets and are not past due. Based on historical analysis and future economic considerations of these receivables, it is expected that these amounts will be received when due. d. Foreign exchange and interest rate risk There are no receivables denominated in foreign currencies. The Group charges interest on a small number of debtor balances for seasonal extended payment terms or for debtors that extend beyond agreed payment terms. Interest charged on these debtors ranges between 0.75% and 1.5% per month by agreement. e. 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 (i) Finished goods – at cost Provision for obsolescence (i) Raw materials and stores are expensed and not charged to cost of sales. 12. Financial Assets at Fair Value Through Other Comprehensive Income Unlisted equity securities 2023 $’000 4,046 14,649 18,695 (631) 18,064 2022 $’000 4,703 18,561 23,264 (653) 22,611 2023 $’000 25 2022 $’000 25 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 51 13. 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 Total property, plant and equipment Movements in carrying amounts Movements in the carrying amounts for each class of property, plant and equipment are shown below. 2023 $’000 2022 $’000 8,798 16,749 (2,998) 22,549 25,296 (9,652) 15,644 38,193 153,654 (100,404) 53,250 91,443 7,034 16,749 (2,748) 21,035 25,296 (7,747) 17,549 38,584 123,793 (94,796) 28,997 67,581 Freehold Land Buildings Leasehold Improvements Plant & Equipment Total Carrying amount at 30 June 2021 Additions Disposals Transfers – right-of-use assets Depreciation $’000 7,034 - - - - $’000 $’000 13,696 19,172 715 108 - - - - (410) (1,731) $’000 25,026 12,880 (1,842) 1,333 (8,400) $’000 64,928 13,703 (1,842) 1,333 (10,541) Carrying amount at 30 June 2022 7,034 14,001 17,549 28,997 67,581 Additions Disposals Transfers – right-of-use assets Depreciation 1,764 - - - - - - - - - 33,968 35,732 (405) 32 (405) 32 (250) (1,905) (9,342) (11,497) Carrying amount at 30 June 2023 8,798 13,751 15,644 53,250 91,443 Assets pledged as security. Refer to Note 19 for information on assets pledged as security. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 52 14. Right-of-use Assets Right-of-use Property Leases At Cost Accumulated depreciation Total right-of-use Property Leases Right-of-use Other Leases At Cost Accumulated depreciation Total right-of-use Other Leases Right-of-use Equipment Leases At Cost Accumulated depreciation Total right-of-use Equipment Lease Total right-of-use assets Movements in carrying amounts Carrying amount at 30 June 2021 Additions/modifications Disposals Transfers – plant and equipment Depreciation Carrying amount 30 June 2022 Additions/modifications Disposals Transfers – plant and equipment Depreciation Carrying amount 30 June 2023 2023 $’000 2022 $’000 109,785 103,784 (46,236) (36,667) 63,549 67,117 2,267 (1,003) 1,264 2,987 (839) 2,148 224,732 191,612 (87,353) (72,891) 137,379 118,721 202,192 187,986 Right-of-use Properties Right-of-use Other Right-of-use Equipment Total Right-of- use Assets $’000 74,736 1,979 - - (9,598) 67,117 6,688 (88) - (10,168) 63,549 $’000 1,912 747 - - (511) 2,148 602 (950) - (536) 1,264 $’000 116,993 21,699 (1,300) (1,333) (17,338) 118,721 40,316 (1,516) (32) (20,110) 137,379 $’000 193,641 24,425 (1,300) (1,333) (27,447) 187,986 47,606 (2,554) (32) (30,814) 202,192 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 53 15. Lease Liabilities Lease liabilities – Current Property Other Equipment lease liabilities (i) Total current lease liabilities Lease liabilities – Non-current Property Other Equipment lease liabilities (i) Total non-current lease liabilities Total lease liabilities 2023 $’000 2022 $’000 9,236 476 32,388 42,100 64,472 828 80,720 8,379 693 33,801 42,873 67,831 1,499 61,702 146,020 131,032 188,120 173,905 (i) The carrying amount of equipment lease liabilities includes an offsetting fair value gain of $38,000 (2022: $286,000). Movements in carrying amounts Lease liabilities properties Lease liabilities other Lease liabilities equipment Total lease liabilities Carrying amount at 30 June 2021 Additions Lease modifications Repayments Interest Fair value gain – movement Carrying amount 30 June 2022 Additions Lease modifications Repayments Interest Fair value gain – movement Carrying amount 30 June 2023 $’000 82,347 1,466 514 (11,426) 3,309 - 76,210 6,687 (86) (12,238) 3,135 - 73,708 $’000 1,933 747 - (552) 64 - 2,192 602 (970) (583) 63 - 1,304 $’000 98,981 24,495 - (31,247) 3,026 248 95,503 45,610 - (32,039) 3,786 248 $’000 183,261 26,708 514 (43,225) 6,399 248 173,905 52,899 (1,056) (44,860) 6,984 248 113,108 188,120 Recognition and measurement – Leases Refer Note 1.3(e) summary of significant accounting policies on the recognition and measurement of leases. The Group leases various properties and equipment. Leases for equipment (trucks, trailers, motor vehicles, material handling equipment and ancillary equipment) do not typically exceed 5 years. Leases for property range in tenure from 3 to 15 years depending on the particular property. Lease terms for both property and equipment are negotiated on an individual basis and contain a wide range of different terms and conditions. Leases are recognised as a right-of-use asset and a corresponding liability at the date which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit and loss. Assets pledged as security Refer to Note 19 for information on assets pledged as security. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 54 16. Deferred Tax Assets The balance comprises temporary differences attributable to: Impaired receivables Employee benefits Payables Other liabilities Other Carried forward losses Total deferred tax assets Set-off of deferred tax liabilities pursuant to set-off provisions (refer Note 20) Net deferred tax assets 2023 $’000 2022 $’000 135 4,485 487 2,079 908 1,462 9,556 53 4,275 441 2,170 613 5,097 12,649 (9,556) (12,649) - - Movements Employee Benefits Impaired Receivables Payables Other Liabilities Other Carried Forward Losses Total At 30 June 2021 (Charged)/credited to: Profit or loss Overprovision $’000 3,903 $’000 $’000 397 341 $’000 2,088 $’000 421 $’000 $’000 6,111 13,261 372 - (344) - 100 - 82 - 192 - (1,903) (1,501) 889 889 At 30 June 2022 4,275 53 441 2,170 613 5,097 12,649 (Charged)/credited to: Profit or loss Overprovision 210 - 82 - 46 - (91) - 295 - (3,691) (3,149) 56 56 At 30 June 2023 4,485 135 487 2,079 908 1,462 9,556 17. Intangible Assets Computer software Accumulated amortisation Goodwill Accumulated impairment Customer list Accumulated amortisation Total intangible assets 2023 $’000 6,244 2022 $’000 5,439 (5,097) (4,593) 1,147 7,805 (244) 7,561 1,802 846 7,805 (244) 7,561 1,802 (1,802) (1,784) - 8,708 18 8,425 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 55 a. Movements in carrying amounts Movements in the carrying amounts for each class of intangible asset are shown below. Carrying amount at 30 June 2021 Additions Amortisation Carrying amount at 30 June 2022 Additions Amortisation Carrying amount at 30 June 2023 Computer Software $’000 1,127 88 (369) 846 805 (504) 1,147 Goodwill $’000 7,561 - - 7,561 - 7,561 Customer List $’000 275 - (257) 18 - (18) - Total $’000 8,963 88 (626) 8,425 805 (522) 8,708 b. Impairment tests for goodwill 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 or more frequently if events or changes in circumstances indicate impairment. 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 product margin Terminal growth rate Free cash growth rate Pre-tax discount rate 2023 % 17.3 2.0 5.6 10.2 2022 % 16.9 2.0 6.4 9.1 Assumption Approach used to determine values Average gross margin Based on past performance and management’s expectations for the future. Terminal growth rate Free cash growth rate Pre-tax discount rate The growth rate used to extrapolate cash flows beyond the five-year forecasted period based on management’s expectations of long-term growth. The average cash flow growth rate over the five-year forecast period is based on management’s expectations for the future. Reflect specific risks relating to the relevant asset or cash generating unit and the economic and regulatory environment 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 pre-tax discount rate from 10.2% to 12.2% (2022: 9.1% to 11.1%) and reducing average product margin from 16.9% to 15.9% (2022: 16.9% to 15.9%). Both scenarios did not result in impairment (2022: no impairment). e. Assets pledged as security Refer to Note 19 for information on current assets pledged as security. f. Amortisation methods and useful lives See note 1.3 (n) for the Group’s policy regarding intangible assets. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 56 18. Trade and Other Payables Trade and other payables 19. Borrowings Current Secured Bank loans Bank loans – borrowing costs offset Equipment loans Total current borrowings Non-current Secured Bank loans Bank loans – borrowing costs offset Equipment loans Total non-current borrowings Total borrowings a. Bank loans 2023 $’000 68,811 2022 $’000 60,365 2023 $’000 2022 $’000 2,000 (82) 1,778 3,696 31,500 (62) 10,782 42,220 45,916 8,000 (82) 1,358 9,276 13,500 (144) 9,426 22,782 32,058 Bank loan – variable finance facility has a $30,000,000 limit of which $20,000,000 was drawn at 30 June 2023 (2022: $10,000,000 limit and $6,000,000 drawn) and is utilised to fund working capital requirements and other requirements of the Group. Bank loan – corporate finance facility has a limit of $13,500,000 which was fully drawn at 30 June 2023 (2022: Limit of $15,500,000, fully drawn) and is utilised to fund freehold properties and leasehold fitouts for key facilities. The facility is repaid at $500,000 each quarter with a balloon repayment of $10,000,000 in March 2025 (if not refinanced prior). The bank loan facilities 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. Equipment loans - secured Equipment loans are effectively secured as the rights to the assets backed by the loan revert to the financier in the event of default. Equipment loans are financed on variable interest rate terms which are revised quarterly. c. Assets pledged as security All the assets of the consolidated entity are pledged as security for the facilities as noted above. d. Fair value Information about the Group’s fair value of borrowings is provided in Note 2. e. Risk exposure Information about the Group’s exposure to risks arising from borrowings is provided in Note 2. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 57 20. Deferred Tax Liabilities The balance comprises temporary differences attributable to: Prepayments Inventories Depreciation and amortisation Other receivables Total deferred tax liabilities Set-off of deferred tax assets pursuant to set-off provisions (refer Note 16) Net deferred tax liabilities Movements Prepayments Inventories At 30 June 2021 Charged /(credited): Profit or loss Overprovision (i) At 30 June 2022 Charged /(credited): Profit or loss Overprovision (i) At 30 June 2023 $’000 1,228 122 - 1,350 220 - 1,570 $’000 382 279 - 661 (247) - 414 2023 $’000 2022 $’000 1,570 414 1,350 661 35,582 24,054 289 37,855 (9,556) 28,299 101 26,166 (12,649) 13,517 Depreciation & Amortisation $’000 Other Receivables $’000 Total $’000 16,562 295 18,467 6,603 889 24,054 11,524 4 35,582 (194) - 6,810 889 101 26,166 188 11,685 - 4 289 37,855 (i) After the end of the 2021 and 2022 financial years the Group reviewed its eligibility to Government tax incentives for accelerated depreciation for assets acquired during the financial year. On review, the Group was able to claim additional depreciation for assets acquired during the period and included the additional depreciation in the Groups tax return lodgements for both periods. 21. Provisions Current Employee benefits Non-current Employee benefits 2023 $’000 2022 $’000 12,881 12,510 2,065 1,735 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 58 22. Other Liabilities Current Contract liabilities Other Non-current Other 2023 $’000 6,481 110 6,591 2022 $’000 5,607 539 6,146 7,743 8,271 Contract liabilities relates to monies received in advance of delivery of goods or services and performance obligations that have not yet been met. The changes in contract liabilities reflect both: (a) The release of deferred revenues to the profit and loss through the performance of delivery of the goods or service; and (b) New monies received where the delivery of the goods or service has not yet been completed and performance obligations have not yet been met. Revenue recognised in the financial year from contract liabilities at the beginning of the period being satisfied was $5,607,000 (2022: $3,934,000). Revenue not recognised in the financial year as performance obligations not yet satisfied and classified as contract liabilities is $6,481,000 (2022: $5,607,000). 23. Contributed Equity Fully paid ordinary shares The movement in fully paid ordinary shares for 2023 and 2022 is reconciled as follows: 2023 $’000 75,427 Balance at 30 June 2021 Issue of shares pursuant to the Dividend Reinvestment Plan Issue of shares under employee incentive plans Issue of shares pursuant to the Dividend Reinvestment Plan Issue of shares under employee incentive plans Balance at 30 June 2022 Issue of shares pursuant to the Dividend Reinvestment Plan Issue of shares pursuant to the Dividend Reinvestment Plan Balance at 30 June 2023 Note No of Shares Issue Price (a) (a) (a) (a) 300,129,488 294,732 35.0 cents 400,000 36.5 cents 763,110 41.0 cents 400,000 31.5 cents 301,987,330 787,953 58.0 cents 629,603 91.0 cents 303,404,886 2022 $’000 74,397 $’000 73,709 103 146 313 126 74,397 457 573 75,427 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 59 a. Dividend reinvestment plan 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: 2022 Dividends 08 October 2021 08 April 2022 2023 Dividends 07 October 2022 14 April 2023 Number of Shares 294,732 763,110 Issue Price 35 cents 41 cents 787,953 629,603 58 cents 91 cents b. Capital risk management The Group’s objectives when managing capital are to safeguard their ability to continue as a 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. Lindsay Australia Limited has complied with the financial covenants of its borrowing facilities during the 2023 and 2022 reporting periods. 24. Reserves Share-based payment reserve Opening balance at 1 July Employee share schemes – value of employee services (note 30) Transferred to share capital on exercise of options (note 23) Closing balance 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. 25. Retained Earnings Retained earnings at the beginning of the year Profit for the year Dividends paid or provided for (note 8) Retained earnings at the end of the year 2023 $’000 689 99 - 788 2022 $’000 856 105 (272) 689 2023 $’000 27,829 34,517 (11,189) 51,157 2022 $’000 14,312 19,230 (5,713) 27,829 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 60 26. Cash Flow Information Reconciliation of Cash Flows from Operating Activities with Profit for the Year Profit for the year Adjustment for non-cash items in profit Depreciation/amortisation Net (gain)/loss on disposal of property, plant and equipment Non-cash employee benefits expense-share-based payments Movement in capitalised borrowing costs Movement in fair value gain (refer note 15) Movement in interest accrual Net changes in assets and liabilities (Increase)/decrease in current 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 (Decrease)/increase in net deferred tax liabilities Cash flows from operating activities Non-Cash Financing and Investing Activities Dividends satisfied by issue of shares Right-of-use equipment acquired via new lease agreements 27. Earnings per Share Basic earnings per share Diluted earnings per share 2023 $’000 2022 $’000 34,517 19,230 42,833 (143) 99 81 248 55 - (17,923) (2,323) 4,547 8,446 83 701 14,782 86,003 1,030 47,606 38,614 (103) 105 81 248 (1,356) 668 (33,547) (704) (7,415) 12,983 1,278 1,240 8,309 39,631 416 24,495 2023 $’000 11.4 11.4 2022 $’000 6.4 6.4 Earnings used in calculating basic and diluted earnings per share – net profit 34,517 19,230 Weighted average number of ordinary shares used in calculating basic and diluted earnings per share (i) 302,696,327 300,793,889 Number of Shares Number of Shares (i) The dilutive effect of options is not significant. 28. Auditor’s Remuneration During the year the auditor of the parent entity earned the following remuneration: Audit or review of financial reports Total remuneration 2023 $ 2022 $ 205,000 205,000 195,000 195,000 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 61 29. Related Party Disclosures a. Key management personnel compensation (including non-executive directors) Short-term employee benefits Long-term employee benefits Post-employment benefits Share-based payments expense Termination payments on retirement Detailed remuneration disclosures are provided in the remuneration report contained in the directors’ report. b. Other transactions and balances with key management personnel Expenses Fees for corporate uniform consultancy 2023 $ 2022 $ 3,236,266 2,838,455 48,505 146,117 89,406 894,400 68,791 173,736 104,884 - 4,414,694 3,185,866 2023 $ 2022 $ - 227,591 The directors believe transactions with entities related to key management personnel were on commercial terms and conditions (unless otherwise stated). Current receivables and payables are unsecured, to be settled in 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. 30. Share-based Payments Lindsay Australia Limited has a Long Term Incentive (Option) Plan (LTIP) as described in the Remuneration Report. The LTIP has 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 2023 financial year $99,735 (2022: $104,884) was recognised as employee benefit expense arising from equity settled share-based payment transactions. There was no additional expense recognised for the modification of a share-based payment plan (2022: $nil). Expense arising from equity settled share-based payment transactions 2023 $ 2022 $ 99,735 104,884 Total expense arising from share-based payment transactions In the 2023 financial year, no share options were exercised. In the 2022 financial year, 800,000 share options were exercised during the year. 99,735 104,884 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 62 Employee share option plans Long Term Incentive (Option) Plan (LTIP) At the 2022 Annual General Meeting, Shareholders approved a LTIP. The plan has the following characteristics: Eligibility Grant of options Exercise Lapse 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. 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. 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). Right of participants 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) 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. (b) (c) Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 63 Options granted under LTIP to executive management personnel In the 2023 financial year, a grant of 200,000 options for shares exercisable at $nil were granted to each of CFO J T Green, COO C R Baker. In addition, a grant of 50,000 options for shares exercisable at $nil were granted to the GLC, B T Jones. All options granted in 2023 financial year are pursuant to the LTIP. Options granted under LTIP to employees or other eligible participants In addition to the KMP share options issued in the 2023 financial year, a further 100,000 options for shares issued to eligible employees under the LTIP. Fair value of options granted under LTIP – 2023 financial year During the 2023 financial year, the Group issued share options under the LTIP to the COO, CFO and other senior executives. The share options issued are subject to the below performance hurdles: • • 50% of the share options will vest if an underlying Earnings Per Share (EPS) target is achieved; and 50% of the share options will vest if a Total Shareholder Return (TSR) target is achieved. A binomial valuation model has been used to determine the fair value at grant date for the share options with an EPS performance hurdle. A trinomial lattice pricing model incorporating a Monte Carlo simulation has been used to determine the fair value at grant date for the share options with a TSR performance hurdle. The below assumptions were used in determining the fair value of the share options granted during the 2023 financial year: Model inputs Number of share options Grant date Exercise price Vesting period Risk-free interest rate % (i) Volatility % (ii) Share price at grant date Fair value per share option – EPS performance hurdle Fair value per share option – TSR performance hurdle FY2023 550,000 13 December 2022 $nil 01 July 2022 to 30 June 2025 3.40% 49.0% $0.6950 $0.3600 $0.6053 (i) Risk-free rate is based on the Australian Government 10 year bond rate as at the grant date. (ii) Expected volatility is based on the historic volatility of Lindsay Australia Limited (LAU) shares over a period of time. Fair value of options granted under LTIP – 2022 financial year During the 2022 financial year, the Group issued share options under the LTIP to the COO and CFO. The share options issued are subject to the below performance hurdles: • • 50% of the share options will vest if an underlying Earnings Per Share (EPS) target is achieved; and 50% of the share options will vest if a Total Shareholder Return (TSR) target is achieved. A Black Scholes option valuation model was used to determine the fair value of the options at grant date. The below assumptions were used in determining the fair value of the share options granted during the 2022 financial year. Model inputs Number of share options Grant date Exercise price Vesting period Risk-free interest rate % (i) Volatility % (ii) Share price at grant date Fair value per share option FY2022 400,000 21 October 2021 $nil 01 July 2021 to 30 June 2024 1.73% 32.8% $0.3800 $0.3219 (iii) Risk-free rate is based on the Australian Government 10 year bond rate as at the grant date. (iv) Expected volatility is based on the historic volatility of Lindsay Australia Limited (LAU) shares over a period of time. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 64 Weighted average exercise price The weighted average exercise price (WAEP) and movements in the options during the year are detailed below. In the 2022 financial year, 800,000 share options were exercised at $nil. Balance at beginning of year Granted during the year Forfeited during the year Exercised during the year Balance at the end of the year Exercisable at end of year 2023 Number 800,000 550,000 - - 1,350,000 400,000 2022 WAEP Number WAEP - - - - - - 1,200,000 400,000 - (800,000) 800,000 - - - - - - - Shares issued pursuant to exercise of options No shares were issued pursuant to exercise of share options in the 2023 financial year. In the 2022 financial year, 800,000 shares were issued pursuant to the exercise of share options. Date Shares issued Share price at issue date Option exercise price 22 November 2021 400,000 31 May 2022 400,000 $0.4100 $0.4000 $nil $nil Summary of options outstanding The share options outstanding at the end of the year had an exercise price of nil (2022: nil). A summary of the status of the Groups equity settled share option plans at 30 June 2023 is presented below. When vested and 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 Exercise Price Number Issued Number Forfeited Number Vested Number Exercised LTIP – FY20 LTIP – FY22 LTIP – FY23 30.7 32.2 36.0 LTIP – FY23 60.5 October 2019 October 2026 October 2021 October 2025 December 2022 December 2022 December 2026 December 2026 $nil $nil $nil 400,000 400,000 275,000 $nil 275,000 1,350,000 - - - - - 400,000 - - - 400,000 - - - - - Balance 30 June 2023 400,000 400,000 275,000 275,000 1,350,000 Modification of share-based payment arrangements No modifications to share based payments occurred in the 2023 or 2022 financial years. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 65 31. 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), (c) Lindsay Transport Pty Ltd (a), (c) Lindsay Brothers Management Pty Ltd (a), (c) Lindsay Brothers Fuel Services Pty Ltd (a), (c) Lindsay Brothers Hire Pty Ltd (a), (c) Lindsay Brothers Plant & Equipment Pty Ltd (a), (c) P & H Produce Pty Ltd (c) Lindsay Rural Pty Ltd (c) Skinner Rural Pty Ltd (b), (c) Croptec Fertilizer and Seeds Pty Ltd (b), (c) Lindsay Fresh Logistics Pty Ltd (c) Class Shares/Units Equity Holding % 2023 Equity Holding % 2022 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 (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) These companies are subsidiaries of Lindsay Rural Pty Ltd. (c) 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 33. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 66 32. 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, warehouse and distribution 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 2023 and 2022 financial years. Group revenues are derived predominately 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; Finance costs (except for interest costs relating to property right-of-use lease liabilities); Corporate costs including impairment of receivables; and Income tax expense. Major customers No customer of the Group accounts for more than 10% of external revenue (2022: none). The largest individual customer accounts for 8.1% of external revenues (2022: 4.16%). Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 67 Segment information 2023 Revenue Revenue for services (i) Revenue for sale of goods (ii) Other income (refer note 5 for a breakdown of other income) Total segment revenue/income Inter-segment revenue elimination Total segment revenue/income EBITDA Total depreciation and amortisation EBIT Finance costs (net of bank interest received – refer note 5 for breakdown) Segment net profit before tax (i) (ii) Revenue from provision of services is recognised over time Revenue from sale of goods is recognised at a point in time 2022 Revenue Revenue for services (i) Revenue for sale of goods (ii) Other revenue (refer note 5 for breakdown of other revenue) Total segment revenue/income Inter-segment revenue elimination Total segment revenue/income EBITDA Total depreciation and amortisation EBIT Finance costs (net of bank interest) Segment net profit before tax (i) (ii) Revenue from provision of services is recognised over time Revenue from sale of goods is recognised at a point in time Transport $’000 Rural $’000 Corporate $’000 Total $’000 519,884 - - 164,503 3,143 754 523,027 165,257 - - 2,598 2,598 519,884 164,503 6,495 690,882 (6,608) (1,534) - (8,142) 516,419 163,723 2,598 682,740 109,333 11,214 (19,253) 101,294 35,749 73,584 2,276 1,402 5,682 42,833 9,812 (24,935) 58,461 138 6,650 9,064 71,308 9,674 (31,585) 49,397 Transport $’000 Rural $’000 Corporate $’000 Total $’000 401,708 - - 157,994 2,723 774 404,431 158,768 - - 1,092 1,092 401,708 157,994 4,589 564,291 (5,381) (1,251) - (6,632) 399,050 157,517 1,092 557,659 74,714 12,241 (14,174) 72,781 31,816 1,461 5,337 38,614 42,898 10,780 (19,511) 34,167 2,413 111 4,102 6,626 40,485 10,669 (23,613) 27,541 Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 68 33. 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, Lindsay Rural Pty Ltd, Skinner Rural Pty Ltd, Croptec Fertiliser and Seeds Pty Ltd and 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’. 34. Capital Commitments Capital Commitments Commitments for capital expenditure (property, plant, equipment and intangibles) contracted for but not recognised in the financial statements are as follows. 5,551 1,806 2023 $’000 2022 $’000 35. Contingent Liabilities Guarantees Guarantees to secure lease obligations Total Guarantees Cross guarantees have been given as described in Note 33. Other 2023 $’000 8,093 8,093 2022 $’000 7,884 7,884 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. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 69 36. 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 2023 $’000 2022 $’000 1,007 427,026 276,280 339,196 75,428 11,614 788 87,830 21,619 21,619 - - 1,542 440,473 317,262 364,203 74,398 1,184 688 76,270 3,701 3,701 - - Guarantees entered into by parent entity Lindsay Australia Limited has guaranteed the Groups external debt in respect of working capital loans, equipment finance leases and bank loans of subsidiaries amounting to $108,563,653 (2022: $95,625,248) which are 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 $17,142,331 (2022: $10,946,514). In addition, there are cross guarantees given by Lindsay Australia Limited as described in Note 33. 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(w) as the present value of the difference in net cash flows is not significant. 37. Events after the reporting period Dividend recommended after year end Since the end of the financial year, the directors have recommended payment of a final ordinary dividend of $9,297,000 (3.0 cents per fully franked) for the year ended 30 June 2023. Appointment of Chief Executive Officer Following M K Lindsay’s retirement on 23 June 2023, C R Baker (Chief Operating Officer) was appointed as Interim Chief Executive Officer. Following the end of the financial year, C J McDonald commenced on the 17 July 2023 as Chief Executive Officer. Mr McDonald has extensive leadership experience in the transport and logistics sector and was previously Group Executive Bulk at Aurizon Limited. Mr McDonald has held a number of senior executive positions at Aurizon since 2008, prior to which he was employed at Toll Group between 2001 and 2008. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 70 Acquisition of W.B. Hunter Pty Ltd On 07 August 2023, the group acquired 100% of the share capital of W.B. Hunter Pty Ltd (“WB Hunter”). The key strategic and commercial rationale for the acquisition include: • • • • • Acquiring a market-leading supplier of rural merchandise and complimentary products and services; Establishing a regional footprint complementary to Lindsay Rural’s store network; Enhanced exposure to the rapidly growing Australian agribusiness segment and the introduction of new products and services to the Lindsay Rural network; Provides a strategic entry point into the Victorian and New South Wales agricultural supply market and a platform for continued pursuit of growth opportunities for Lindsay Longstanding customer base with enduring relationships and loyalty evidenced through strong repeat buying behaviour. As at the date of this report, the group has not completed the initial accounting for the business combination. The following disclosures therefore represent preliminary estimates of the fair value of consideration payable for the acquisition, the carrying value of net assets acquired (prior to any adjustments being recognised to reflect such net assets at their fair values), identifiable intangible assets and goodwill to be recognised as a result of the business combination. The actual amounts arising on completion of the initial accounting for the business combination are expected to vary. Purchase Consideration Cash consideration paid Deferred consideration1 Scrip consideration2 Total purchase consideration Fair value of Identifiable Net Assets Acquired Cash and cash equivalents Trade and other receivables3 Inventories Investments Property, plant and equipment Right-of-use assets Deferred tax assets Trade and other payables Current tax liabilities Employee provisions Lease liabilities Net identifiable assets acquired (excl. intangible assets4) Add: Goodwill and other intangible assets4 Total purchase consideration $’000 22,036 13,541 7,987 43,564 10,298 9,700 14,076 123 3,056 5,146 178 (9,536) (521) (1,090) (5,907) 25,523 18,041 43,564 1 The group is required to pay an agreed amount for inventory held by WB Hunter at the acquisition date in four quarterly instalments over the period ending 12 months from the acquisition date. A discount rate of 6.25% has been applied in measuring the fair value of this deferred consideration, consistent with the group’s prevailing cost of debt at the acquisition date. 2 Total of 6,493,506 shares in Lindsay Australia Limited were issued as part of the consideration, with the fair value of consideration measured with reference to the share price as at the acquisition date. 3 Receivables stated above is the net of gross contractual amounts receivable ($10,570,000) net of the group’s best estimate of contractual cash flows not expected to be received ($870,000). 4 As at the date of this report, the group has not yet identified and valued intangible assets (other than goodwill) acquired. For purposes of the above disclosures, “goodwill” therefore incorporates all such assets. Identifiable assets acquired may include items such as customer relationships, non-compete arrangements, and brand names. Factors that make up the goodwill recognised on the transaction include the expected synergies arising from the transaction as described above, and intangible assets which do not qualify for separate recognition under Australian Accounting Standards, such as the value of the acquired workforce. No amount of goodwill is expected to be deductible for tax purposes. Other Other than the events disclosed above, to the directors’ knowledge, no matter or circumstance has arisen since the end of the financial 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. Lindsay Australia Limited | Annual Report 2023 | Notes to the Consolidated Financial Statements 71 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 2023 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 33 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 33. 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. Ian M Williams Chair of Directors Brisbane, Queensland 28 August 2023 Lindsay Australia Limited | Annual Report 2023 | Directors’ Declaration 72 Independent Auditor’s Report To the Members of Lindsay Australia Limited Report on the Audit of the Financial Report Opinion We have audited the financial report of Lindsay Australia Limited, (“the Company”) and its controlled entities (“the Group”), which comprises the consolidated statement of financial position as at 30 June 2023, the consolidated statement of profit and loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its financial performance for the year then ended; and b) complying with Australian Accounting Standards and the Corporations Regulations 2001. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) “the Code” that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Lindsay Australia Limited | Annual Report 2023 | Independent Auditor’s Report to the Members of Lindsay Australia Limited 73 Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key audit matter Impairment of goodwill Refer to Note 17: Intangible Assets At 30 June 2023 the Group’s balance sheet includes goodwill amounting to $7.561 million relating to historical business acquisitions. In accordance with AASB136 Impairment of Assets, an annual impairment test is performed which requires management to exercise judgement in determining the key assumptions to calculate the recoverable amount using a value-in-use model. Key assumptions in the model include discount rates, average gross margin, free cash growth rate and terminal growth rate. The key assumptions and a sensitivity analysis are included in Note 17. It is due to the use of management judgement in determining the key assumptions that this is a key area of audit focus. How our audit addressed the matter Our procedures included, amongst others: • Understanding and evaluating the design and implementation of management’s processes and controls relevant to the impairment of goodwill; • Checking management’s calculations for accuracy; • Critically assessing the reasonableness of • key assumptions, considering supporting documentation and historic performance, where available; Performing sensitivity analysis on key assumptions used in management’s calculations to assess the level of headroom available; and • Reviewing the adequacy of the Group’s disclosures on goodwill impairment to ensure compliance with Australian Accounting Standards. Other Information The directors are responsible for the other information. The other information comprises the information included in the Group’s annual report for the year ended 30 June 2023, but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so. Lindsay Australia Limited | Annual Report 2023 | Independent Auditor’s Report to the Members of Lindsay Australia Limited 74 Auditor’s Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Lindsay Australia Limited | Annual Report 2023 | Independent Auditor’s Report to the Members of Lindsay Australia Limited 75 Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in pages 16 to 26 of the directors’ report for the year ended 30 June 2023. In our opinion, the Remuneration Report of Lindsay Australia Limited, for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. PITCHER PARTNERS JASON EVANS Partner Brisbane, Queensland 28 August 2023 Lindsay Australia Limited | Annual Report 2023 | Independent Auditor’s Report to the Members of Lindsay Australia Limited 76 Corporate Governance Statement Introduction The Board of Directors of Lindsay Australia Limited (the ‘Company’) is responsible for the corporate governance of the consolidated entity being the Company and its related companies. 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 4th Edition. 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 The following governance related documents can be found on the Lindsay Australia Limited website at https://lindsayaustralia.com.au/corporate-governance a) Constitution; b) Corporate Governance Charter, inclusive of the Board Charter and Committee Charters; c) Code of Conduct; d) Securities Trading Policy; e) Continuous Disclosure Policy; f) Shareholder Communications and Shareholder Meetings Policy; g) Risk Management Policy; h) Diversity Policy; i) Whistleblower Protection Policy; j) Anti-Bribery and Corruption Policy; and k) Modern Slavery Statement 2022. Contents Principle 1 Principle 2 Principle 3 Principle 4 Principle 5 Principle 6 Principle 7 Principle 8 78 80 81 82 83 84 85 86 Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 77 Principle 1 Lay solid foundations for management and oversight. Recommendation 1.1 A listed entity should have and disclose a board charter setting out: a) the respective roles and responsibilities of its board and management; and b) those matters expressly reserved to the board and those delegated to 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 Corporate Governance Board Charter reserves powers for the board. Functions not reserved to the Board are delegated to senior management and the Chief Executive Officer (CEO). The CEO is accountable to the board. Recommendation 1.2 A listed entity should: a) undertake appropriate checks before appointing a director or senior executive or putting someone forward for election as a director; and b) 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 director or senior executive 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 written appointment letters and 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. Each Company Secretary has access to all directors and the primary functions are to assist and advise the board on governance matters and compliance with internal processes and policies. 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. Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 78 Recommendation 1.5 A listed entity should: a) have and disclose a diversity policy; b) through its board or a committee set measurable objectives for achieving gender diversity in the composition of its board, senior executives and workforce generally; and c) disclose in relation to each reporting period: 1. the measurable objectives set for that period to achieve gender diversity; 2. the entity’s progress towards achieving those objectives; and 3. either: the respective proportions of men and women on the board, in the senior executive positions and across the whole A. workforce (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 B. Equality Indicators”, as defined in and published under that Act. The Diversity Policy is published on the Company’s website. The board has established the following objectives in relation to gender diversity (refer to table below). The intention is to achieve the objectives over time as positions become available. There are no women on the board at this time. The Company is actively promoting measures to attract females to its workforce and increase the percentage of women in the workforce and in management positions. The board maintains full transparency of board processes, reviews and appointments and encourages gender diversity. The board notes that while some positions within the Company have perceived time and physical demands that may make these jobs traditionally unattractive to women, these issues are being addressed. Percentage of women in Company’s workforce Percentage of women in management positions Recommendation 1.6 A listed entity should: Objective 15% 20% 2023 12% 11% 2022 10% 11% a) have and disclose a process for periodically evaluating the performance of the board, its committees and individual directors; and b) disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period. The Company has adopted processes concerning the evaluation and development of the board, board committees, individual directors and the CEO. Processes include an internal board review and assessment. The Corporate Governance Statement outlines the Company’s disclosed skills criteria for directors, refer to Recommendation 2.2. During the 2023 financial year, an internal board performance assessment was performed and reviewed, the board assessment criteria itself was also reviewed. Recommendation 1.7 A listed entity should: a) have and disclose a process for evaluating the performance of its senior executives at least once every reporting period; and b) disclose for each reporting period whether a performance evaluation has been undertaken in accordance with that process during or in respect of that period. 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 or both. The CEO is responsible for these reviews. Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 79 Principle 2 Structure the board to be effective and add value. Recommendation 2.1 The board of a listed entity should: a) have a nomination committee which; 1. has at least three members, a majority of whom are independent directors; and 2. is chaired by an independent director, and disclose; 3. the charter of the committee; 4. the members of the committee; and 5. 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; or b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience, independence and diversity to enable it to discharge its duties and responsibilities effectively. The board believes that due to the Company’s size, the board can undertake all functions that would be delegated to a nomination committee and therefore a nomination committee has not been established. The Corporate Governance Charter contains procedures for the appointment of directors and procedures to be followed for a nomination committee, which are discharged by the board. The Board Charter also outlines the requirements for the composition of the board which includes an independent director as chair who also presides over nomination type matters. Recommendation 2.2 A listed entity should have and disclose a board skills matrix setting out the mix of skills 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 personal attributes relevant to the board in discharging its responsibilities. Leadership and Governance Technical and Operations Business, Finance and Risk Publicly listed company experience Road and rail transport experience Legal and regulatory compliance Leadership Strategy Agriculture industry experience Finance, accounting and audit Human resources Risk management Corporate Governance Government, policy and stakeholder management Capital markets Health, safety and environment Merger and acquisitions Recommendation 2.3 A listed entity should disclose: a) the names of the directors considered by the board to be independent directors; b) if a director has an interest, position or relationship of the type described in Box 2.3 of the ASX Corporate Governance Principles and Recommendations but the board is of the opinion that is does not compromise the independence of the director, the nature of the interest, position or relationship in question and an explanation of why the board is of that opinion; and c) the length of service of each director. Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 80 Appointment Resignation Director Status Date Date Length of Service Interest/Association M K Lindsay Executive Non-Independent Director R L Green Non-Executive Independent Director 26/11/1996 23/06/2023 26 years (as at 26/11/2022) Chief Executive Officer 26/08/2019 3 years (as at 26/08/2022) I M Williams Non-Executive 03/09/2021 1 year (as at 03/09/2022) Current Board Chair Independent Director M R Stubbs Non-Executive 03/09/2021 1 year (as at 03/09/2022) Independent Director S P Cantwell Non-Executive 17/12/2021 1 year (as at 17/12/2022) Independent Director Recommendation 2.4 The majority of the board of a listed entity should be independent directors. The Company has complied with this recommendation, with four of the five current directors considered to be independent directors as outlined above in recommendation 2.3. The board considers the current composition of the board has an appropriate blend of skills and experience relevant to the Company’s business. The board will assess independence when any new appointments are made. 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 CEO of the entity. Mr I M Williams an independent director is the current chair. Mr M K Lindsay (upto his retirement on 23 June 2023) was the CEO and is not the chair. Recommendation 2.6 A listed entity should have a program for inducting new directors and for periodically reviewing whether there is a need for existing directors to undertake professional development to maintain the skills and knowledge needed to perform their role as directors effectively. 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 Instil a culture of acting lawfully, ethically and responsibly. Recommendation 3.1 A listed entity should articulate and disclose its values. The corporate values are disclosed on the Company’s website at https://lindsayaustralia.com.au referred to as the “Lindsay Way” they are: Safety Always; People Focused; Value Family; • • • • Community Supportive; • Customer and Supplier Orientated; and • Industry Innovators. Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 81 Recommendation 3.2 A listed entity should: a) have and disclose a code of conduct for its directors, senior executives and employees; and b) ensure that the board or a committee of the board is informed of any material breaches of that code. The Code of Conduct and Corporate Governance Charter outline a broad range of conduct related matters which apply to directors, officers, employees and contractors of the Company. Any material breaches are reported to the board. Recommendation 3.3 A listed entity should: a) have and disclose a whistleblower policy; and b) ensure that the board or a committee of the board is informed of any material incidents reported under that policy. The Whistleblower Policy is disclosed on the Company’s website and demonstrates the commitment of the Company to appropriate standards of behaviour and good corporate governance. The policy outlines the processes for making reports regarding certain conduct. The Company has engaged a third-party independent service provide to receive any such reports offering independent integrity to the process. Any material incidents are reported to the board. Recommendation 3.4 A listed entity should: a) have and disclose an anti-bribery and corruption policy; and b) ensure that the board or a committee of the board is informed of any material breaches of that policy. The Anti-Bribery and Corruption Policy is disclosed on the Company’s website and demonstrates and supports high level of accountability and integrity in the manner in which the Company conducts its business affairs. The policy provides a key framework for the conduct of business. Any material breaches are reported to the board. Principle 4 Safeguard the integrity of corporate reports. Recommendation 4.1 The board of a listed entity should: a) have an audit committee which: 1. has at least three members, all of whom are non-executive directors and a majority of whom are independent directors; and 2. is chaired by an independent director, who is not the chair of the board, and disclose; 3. the charter of the committee; 4. the relevant qualifications and experience of the members of the committee; and 5. 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 the 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. The chair of the committee is Mr M R Stubbs, an independent director. The members of the committee and their details, the number of meetings and attendances are contained in the Directors’ Report to the Annual Report and 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. Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 82 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 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 financial period, receive from its CEO and CFO 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 internal control which is operating effectively. In respect of the relevant financial reporting period the Company’s CEO and CFO 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 should disclose its process to verify the integrity of any periodic corporate report it releases to the market that is not audited or reviewed by an external auditor. The Company currently discloses the annual Directors Report as part of the Annual Report, the annual and half yearly financial statements. These reports are all subject to the auditor review and sign-off in accordance with the Corporations Act. The Company has not released any other periodic report. The Company has sufficient expertise and resources, both human and systems to verify and validate the accuracy of information released to the market. The Company’s auditor is represented at the Annual General Meeting and is available to answer questions from security holders in accordance with the requirements of the Corporations Act. Principle 5 Make timely and balanced disclosure. Recommendation 5.1 A listed entity should have and disclose a written policy for complying with its continuous disclosure obligations under Listing Rule 3.1. 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. Relevant market disclosures are reviewed by the board and at board meetings. These processes enable shareholders and stakeholders to receive information issued by the Company in a timely and appropriate manner. Recommendation 5.2 A listed entity should ensure that its board receives copies of all material market announcements promptly after they have been made. All material Company announcements are approved by the board of directors. Release to the market of material announcements such as periodic reports are confirmed to the board. Recommendation 5.3 A listed entity that gives a new and substantive investor or analyst presentation should release a copy of the presentation materials on the ASX Market Announcements Platform ahead of the presentation. All material Company announcements including investor related presentations are transparent and approved by the board of directors and released to the market ahead of the presentation. Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 83 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 Company provides information about itself and its governance via its website. This information is available to investors and stakeholders. The Company commits to updating its website with relevant information regarding operations and activities and the Company uses other social media platforms to further provide information. The website provides details of the key business divisions, copies of recent annual reports, other relevant publications, disclosures and investor information. The specific governance related codes and policies contained on the Company website are outlined at the beginning of this Corporate Governance Statement. Recommendation 6.2 A listed entity should have an investor relations program that facilitates effective two-way communication with investors. The Company’s Shareholder Communications and Shareholder Meetings Policy supports the boards processes for investor relations. Information is communicated to investors via: • • • • • Periodic reports being the annual and half-year reports; ASX announcements; Annual General Meetings; The Company website; and Investor briefings and disclosure of material relating to such briefings. The board encourages attendance at the meetings and is also available to shareholders at the 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 Company’s website. Recommendation 6.3 A listed entity should disclose how it facilitates and encourages participation at meetings of security holders. The Shareholder Communications and Shareholder Meetings Policy supports the boards processes for investor relations. The board encourages attendance at meetings to ensure accountability to shareholders and to address all matters relevant to shareholders including Company performance and strategy. The Company’s notice of meetings are clear, concise and effective. All general meetings of the Company allow shareholder participation and the opportunity to ask questions directly of the board prior to a poll or vote. Recommendation 6.4 A listed entity should ensure that all substantive resolutions at a meeting of security holders are decided by a poll rather than by a show of hands. Resolutions conducted at Annual General Meetings or other General Meetings of the Company are conducted by a poll, enabling the Company to evidence the decisions and determinations of shareholders accurately and effectively. Recommendation 6.5 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 and visible electronically through Computershare Limited and a link is provided on the Company’s website. Contact information for Computershare Limited is also provided in the Company’s Annual Report. Security holders can also contact the Company electronically via the Company’s website. Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 84 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: 1. has at least three members, a majority of whom are independent directors; and 2. is chaired by an independent director, and disclose 3. 4. the charter of the committee; the members of the committee; and 5. 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; or b) if it does not have a risk committee or committees that satisfy (a) above, disclose that fact and the processes it employs for overseeing the entity’s risk management framework. The board has established an audit and risk committee. The Charter is contained in the Company’s Corporate Governance Charter. The chair of the committee is Mr M R Stubbs, 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 risk management framework, 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. 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. The Risk Management Policy supports the boards initiatives to recognise and manage risk. Recommendation 7.2 The board or a committee of the board should: a) review the entity’s risk management framework at least annually to satisfy itself that it continues to be sound and that the entity is operating with due regard to the risk appetite set by the board; and b) 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 with oversight through the audit and risk committee. Risks are monitored on a regular basis and prevention or mitigation measures adopted as appropriate. The Company has undertaken a review and implemented measures to improve the risk management framework by reference to industry standards. Policies and procedures have been established in relation to a range of risks including asset maintenance, workplace health and safety and inventory control. Details of financial risks are reviewed by the audit and risk committee and also provided in the Notes to the Financial Statements in the Annual Report. The Risk Management Policy supports the boards initiatives to recognise and manage risk. 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. Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 85 Recommendation 7.3 A listed entity should disclose: a) if it has an internal audit function, how the function is structured and what role it performs; or b) 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 governance, risk management and internal control processes. The Company does not have an internal audit function. The board considers that due to the relatively size of the Company such a function would not be cost effective. Details of financial risks are provided in Notes 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 any material exposure to environment or social risks and, if it does, how it manages or intends to manage those risks. The Company actively considers and monitors business and other environmental, social and governance type risks. Physical risks associated with extreme weather events pose a risk to primary producers and supply chain related disruptions including impacts on transport related infrastructure. The Company actively assesses new vehicle and refrigeration related technologies by reference to actual or potential positive environmental and social sustainability impact. The Company has commenced the process to deliver its first sustainability strategy during CY2023. The Company commits to supporting and respecting the protection of the internationally proclaimed human rights. The Company has committed to providing transparency on any risks identified in its supply chain. In accordance with the Modern Slavery Act, in FY2022 the Company published its second Modern Slavery Statement which is available on the Company’s website. 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 responsibility. Recommendation 8.1 The board of a listed entity should: a) have a remuneration committee which: 1. has at least three members, a majority of whom are independent directors; and 2. is chaired by an independent director, and disclose 3. the charter of the committee; 4. the members of the committee; and 5. as at the end of each reporting period, the number of times the committee met throughout the period and the individual attendances of the embers at those meetings; or b) if it does not have a remuneration committee, disclose that 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 members of the committee include all the independent directors of the board. The Chair of the committee is Mr R L Green, is an independent director. Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 86 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. The key expected outcomes of the remuneration structure are: 1. Retention and motivation of key executives; 2. Attraction of quality management to the Company; and 3. Performance incentives which allow executives to share the rewards of the success of the Company. 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 the Annual 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 the Company 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, the CEO and the key management personnel. The remuneration policy is disclosed in the Remuneration Report contained in the Directors’ Report in the Annual Report. There were no material changes to that policy during the year. The only direct link between remuneration and performance of the Company for the CEO and senior executives is by the potential issue of options over shares under the Company’s Long Term Incentive (Option) Plan. All current unquoted options issued to the CEO and senior executives are detailed in the Remuneration Report contained in the Director’s Report in the Annual Report. 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 contained in the Director’s Report in the Annual 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 ASX Corporate Governance Council, specifically non- executive directors do not receive options or bonus payments nor retirement benefits other than statutory superannuation. Refer also to the Remuneration Report contained in the Directors’ Report in the Annual 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 that policy or a summary of it. The Company has a limited equity based incentive scheme approved by shareholders, potentially applying to a small number of senior executive 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. Lindsay Australia Limited | Annual Report 2023 | Corporate Governance Statement 87 Shareholder Information Information relating to security holders as at 30 June 2023. 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 350 738 429 1,291 262 3,070 170,950 2,061,586 3,428,576 45,919,985 251,823,789 303,404,886 Number of holdings less than a marketable parcel of shares – 147 (15,389 shares) Top Twenty Shareholders Name Number of Shares % of Issued Shares WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED NATIONAL NOMINEES LIMITED ANKLA PTY LTD BKI INVESTMENT COMPANY LIMITED CITICORP NOMINEES PTY LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED LINDSAY SUPER CO PTY LTD MR THOMAS LINDSAY KELSELL MR NICHOLAS BARRY DEBENHAM & MRS ANNETTE CECILIA DEBENHAM HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED K & D LINDSAY PTY LTD MR NICHOLAS BARRY DEBENHAM T MITCHELL PTY LTD BNP PARIBAS NOMS(NZ) LTD MS GRETA MARJORIE LINDSAY MANDEL PTY LTD WARBONT NOMINEES PTY LTD UBS NOMINEES PTY LTD MR FRED SALOME SHACK TIME PTY LTD Totals: Top 20 holders 57,941,599 17,632,817 17,258,030 16,783,130 14,929,695 10,245,203 6,668,374 5,912,224 5,564,794 5,243,195 4,022,148 3,205,003 3,082,000 3,047,315 2,328,551 2,325,000 2,013,656 1,705,623 1,500,000 1,314,922 182,723,279 19.10 5.81 5.69 5.53 4.92 3.38 2.20 1.95 1.83 1.73 1.33 1.06 1.02 1.00 0.77 0.77 0.66 0.56 0.49 0.43 60.22 Lindsay Australia Limited | Annual Report 2023 | Shareholder Information 88 Substantial Shareholders The names of substantial shareholders who have notified the company in accordance with section 671B of the Corporations Act 2001 are: Name Date of Notice Number of Shares % of Issued Shares WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED 10/10/2022 57,941,599 MIZIKOVSKY GROUP 16/05/2023 19,693,030 19.14 6.49 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. Other Equity Instruments Details Unlisted share options over ordinary shares Vested (issued October 2019) Unlisted share options over ordinary shares Not vested (issued October 2021) Unlisted share options over ordinary shares Not vested (issued December 2022) Quantity 400,000 400,000 550,000 Exercise Price $nil $nil $nil Lindsay Australia Limited | Annual Report 2023 | Shareholder Information 89