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Canopy Growth Corporation121212ANNUAL
REPORT
2012
ContentS
1 About the Company
2 Five Year Summary
5 Chairman's Address
8 Managing Director's Review
13 Financial Review
16 Ridley AgriProducts
20 Cheetham Salt
24 Property Development
26 Our People
32 Board of Directors
34 Corporate Governance Statement
38 Financial Report
102 Shareholder Information
104 Corporate Directory
2012
features
+ $19.3 million after tax
result for the year
+ More than $50 million of
operating cash generated
+ 7.5c annual dividend
fully franked
+ Construction of new
mill at Pakenham
+ Restructuring activities
to yield future benefits
ABOUT THE COMPANY
Ridley Corporation proudly stands as an Australian
owned company running two successful businesses,
Ridley AgriProducts, the country's largest commercial
provider of high performance animal nutrition
solutions, and Cheetham Salt, Australia's largest
producer and refiner of value added solar salt.
Ridley AgriProducts
Leading the industry in high quality, value added stockfeed. As one of the
largest domestic consumers of Australian grown cereal grains, we are
continually supporting primary producers and rural communities. Ridley
AgriProducts prides itself on providing premier products and nutritional
solutions to animal producers, and is now also producing high quality
rendered products through its recently acquired Camilleri Stockfeeds
business. The operation supports the major food producers in the beef,
dairy, poultry, pig, sheep and aquaculture industries, laboratory animals
and the equine and canines in the recreational sector. Major brands include
Barastoc, Rumevite, Cobber and Ridley Aqua-Feed.
Cheetham Salt
The largest producer and refiner of solar salt in Australia. Cheetham Salt
prides itself on offering superior value-added products and services to a
large range of market segments, and strives to deliver world class quality
to industries such as water treatment, food manufacturing and the pool
sector. Through its Dominion Salt joint venture, it is the largest producer and
refiner of solar salt in New Zealand and is now an established refiner and
distributor of salt products in Indonesia. Major brands include Mermaid,
Kooka, Crown and Saxa (through its 49% owned associate Salpak).
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FIVE YEAR SUMMARY
A’000 Unless Otherwise Stated
Operating results
Revenue
Other income
Earnings before interest, tax, depreciation and
amortisation (EBITDA)*
Earnings before interest and tax (EBIT)*
Net interest expense/finance charge
Operating profit before tax*
Tax expense
Net profit before significant items
Minority interest (MI)
Net profit before significant items after MI
Significant items – net of tax and MI
Net profit after tax and significant items
Loss on sale of Ridley lnc
Profit/loss attributable to members
Financial position
Shareholders’ funds
Minority interest
Total assets
Total liabilities
Net debt
Market capitalisation
Enterprise value
Operating cash flow
Closing share price (cents)
Weighted average number of shares on issue
– non-diluted (thousands)
Number of employees (number)
Key profitability ratios
Return on shareholders’ funds (%) before
significant items*
Earnings per share (EPS) (cents) before significant
items and discontinued operation*
EPS growth (%)
EBIT growth (%)
Operating cash flow/EBITDA (times)
Operating cash flow per share (cents)
Market capitalisation/operating cash flow (times)
EBIT per employee (A$’000)
Capital market and structure ratios
EBITx (market cap/EBIT)
EBITDA per share (cents)*
EBITDA growth (%)
EBITDAx (market cap/EBITDA)
Enterprise value/EBITDA (multiple)*
P/E ratio (times)
Net debt/shareholders’ equity (%)
Equity/total assets (%)
Net debt/EBITDA (times)*
EBIT/net interest (times)
Net tangible asset backing per share (cents)
Dividends per share (cents)
Dividend payout ratio (%)*
Percentage franked (%)
Actual
2012
Actual
2011
Actual
2010
Normalised
2009~
Actual
2009
Actual
2008
734,695
1,674
723,702
1,241
727,968
1,102
819,436
1,379
819,436 1,546,649
1,995
1,379
50,086
35,682
9,327
26,355
7,102
19,253
-
19,253
-
19,253
-
19,253
54,218
39,965
9,725
30,240
924
29,316
-
29,316
-
29,316
-
29,316
58,486
46,234
8,156
38,078
8,985
29,093
-
29,093
-
29,093
-
29,093
290,483
-
516,715
226,232
98,151
313,973
412,124
50,896
102.00
290,970
-
524,034
233,064
102,139
378,615
480,754
35,472
123.00
285,157
-
484,300
199,143
71,981
353,990
425,971
39,426
115.00
55,509
44,424
8,000#
36,424
8,281
28,142
-
28,142
(7,404)
20,738
(52,442)
(31,704)
276,211
-
468,621
192,410
69,414
236,402
305,803
52,966
78.00
48,709
37,624
12,428
25,194
4,881
20,313
-
20,313
(7,404)
12,909
(52,442)
(39,533)
276,211
-
468,621
192,410
69,414
236,402
305,803
52,966
78.00
44,038
32,198
14,700
17,496
1,583
15,913
2,270
13,643
(10,357)
3,286
7,219
10,505
320,519
48,925
803,502
434,058
199,246
344,767
544,013
16,424
116.50
307,817
961
307,817
948
307,817
974
303,080
931
303,080
931
295,938
2,063
6.6%
10.2%
10.4%
9.4%
6.8%
4.2%
6.3
-34.3%
-11%
1.02
0.17
6.2
37.1
8.8x
16.3
-8%
6.3x
8.2
16.3
33.8%
56.2%
1.96
3.83
79.8
7.50
120%
100%
9.5
1.1%
-14%
0.65
0.12
10.7
42.2
9.5x
17.6
-7%
7.0x
8.9
12.9
35.1%
55.5%
1.9
4.1
80.1
7.50
79%
Nil
9.5
39.7%
23%
0.67
0.13
9.0
47.5
7.7x
19.0
20%
6.0x
7.3
12.2
25.2%
58.9%
1.2
5.7
83.1
7.25
77%
Nil
9.3
389.5%
38%
0.95
0.18
4.4
47.7
5.3x
18.6
26%
4.2x
5.5
8.4
25.1%
58.9%
1.3
5.6
83.3
7.00
75%
Nil
6.8
257.9%
17%
1.09
0.18
4.4
40.4
6.3x
16.3
34%
4.7x
6.3
18.3
25.1%
58.9%
1.4
3.0
83.3
7.00
104%
Nil
1.9
-78.7%
-41%
0.37
0.06
21.0
15.6
10.7x
14.9
-43%
7.8x
12.4
61.3
53.9%
39.9%
4.5
2.2
91.0
7.00
195%
50%
* Before significant items but after equity accounted investments.
# Interest – normalised at an assumed $8 million for reduced net debt balance over full year (post sale of Ridley Inc).
~ 2009 actual results normalised to reflect full year outcomes of 2009 debt retirement ($4.4 million), AgriProducts cost saving initiatives ($2.0 million),
Cheetham crude salt write-offs ($3.5 million) and ERP write-offs ($1.3 million), minus the aggregate tax effect ($3.4 million).
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Consolidated operating EBIT*
Ridley AgriProducts volume
Cheetham Salt volume
.
3
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6
4
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3
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* Before significant items and includes
JV NPATs.
Consolidated net profit
(2009 from continuing operations)
Ridley AgriProducts operating EBIT
Cheetham Salt operating EBIT
and equity accounted investments
.
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Consolidated dividends per share
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the RAInFAll
enjoyed by
FARmeRS FoR the
lASt two yeARS
hAS pRoVIded
AbundAnt pAStuRe
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CHAIRMAN'S ADDRESS
Against a backdrop of widespread grazing and significantly higher than usual salt costs
from reductions and delays in salt harvesting, the stockfeed and salt businesses have
again proven themselves to be robust and resilient.
Financial
The operational result of $35.5 million
at the Earnings Before Interest and Tax
(EBIT) level compares respectably to
$40.0 million in the prior year, with a full
year of Camilleri Stockfeeds earnings
helping to partly mitigate lower salt and
stockfeed earnings. Tax has returned to
its historical effective rate following the
prior year’s one-off tax adjustments and
the finance expense for the year reflects
a full year’s borrowings to finance the
Camilleri Stockfeeds acquisition on 1
March 2011 plus a number of interest
rate reductions in the second half year.
The above factors have all combined to
generate a consolidated net profit after
tax for the 2012 year of $19.3 million.
People
The senior management team has been
very active during the year, with a number
of restructuring activities undertaken in
Ridley AgriProducts and in respect of the
preparation for potential sale of the
Cheetham Salt business.
In the second half year, Ridley Managing
Director and Chief Executive Officer John
Murray also assumed the role of Ridley
AgriProducts CEO to accelerate the
bedding down of the Enterprise Resource
Planning (ERP) system and to stimulate
earnings recovery in sectors affected by
the prior year’s events.
Dividend
Directors were delighted in 2012 to be
able to resume the franking of Ridley
dividends, paying a fully franked interim
dividend of 3.75 cents per share in March
2012 and declaring the same for a final
dividend payable on 28 September 2012.
The total dividend for the 2012 year will
therefore be a fully franked amount of
7.50 cents, payable in cash from the
operating cash flows of the business.
Whilst the 2012 dividend payout ratio
exceeds Ridley’s historical average of
approximately 80%, the declaration of
final dividend is reflective of the Ridley
Board’s continuing confidence in the
underlying strength of the business.
The Board
The Ridley Board has been very
active during the year, and following
the announcement in February 2012
of Ridley’s intent to pursue opportunities
for a divestment of the Cheetham Salt
business to unlock underlying value,
a Divestment Committee was established
and has been meeting regularly to
oversee the progress.
During the year the Remuneration
and Nomination Committee was also
restructured to become the Remuneration
Committee, with its former Nomination
responsibilities passed back to the full
Ridley Board.
John M Spark – Chair
Since November 2010, the eastern states
of Australia have experienced an almost
continuous period of well above average
rainfall, peaking around the Christmas
period in 2010 with widespread flooding
in Queensland and northern Victoria.
Many of the sectors serviced by Ridley
spent a considerable part of the 2012
financial year recovering from the
pervasive effects of these floods.
The rainfall enjoyed by farmers for
the last two years has provided abundant
pasture and softened the market in
many sectors for Ridley, particularly
in the Dairy, Packaged Product and
Supplements stockfeed nutrition sectors,
with a corresponding impact on demand
for salt provided by Cheetham Salt as a
key stockfeed ingredient.
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CHAIRMAN'S ADDRESS CONTINUED
2012 has been a challenging year for
both the Board and management, and
has required an increased workload for
everyone. I thank my fellow Directors and
Managing Director John Murray and his
management team for their continuing
efforts this year in seeking to maximise
the value of Ridley for its shareholders.
Cheetham Salt divestment
With reliable earnings from both operating
businesses, strong domestic operations
and market shares, and significant growth
opportunities overseas, particularly for the
salt business in Indonesia, it was becoming
increasingly apparent to the Ridley Board
last year that the underlying value of the
Ridley listed group was not being
adequately reflected in its market price
together with the long term need to reinvest
in the agricultural arm of the business.
The Board consequently embarked upon
an extensive exercise to identify and
evaluate alternative strategies to unlock
the inherent values of the two operating
businesses. Following the conclusion
of this process, and as announced on
22 February 2012, the Board resolved to
pursue transaction opportunities for the
divestment of the Cheetham Salt business.
Any transaction of this type takes
appropriate preparation and involves a
well established and sequential process.
The remainder of the year involved
preparing the business for a transaction
through the conduct of a thorough
vendor due diligence program
and preparation of a comprehensive
Information Memorandum.
Stage 1 of the transaction process
commenced in early July with the release
of the Information Memorandum to select
parties under confidentiality. Those parties
were invited to submit an indicative,
non-binding offer within an appropriate
transaction process timetable, with the
intention of shortlisting a small number
of acceptable parties to proceed to
Stage 2 and detailed due diligence.
By the time this Annual Report is
published, it is anticipated that the
process will be well advanced towards
an announceable outcome.
Outlook
The outlook for Ridley as a whole will in
part depend upon the outcome of the
Cheetham Salt divestment process.
Irrespective of this outcome however,
Ridley will continue to pursue growth
avenues for its AgriProducts business and
development opportunities for its surplus
properties, the most prominent of which
are the former Lara and Moolap salt fields
near Geelong in Victoria. Ownership of
each of these salt fields was transferred
during the year from Cheetham Salt to
Ridley, and these properties, together with
the Bowen salt field, were duly excluded
from the divestment transaction process.
We are excited about the prospect for
our new mill at Pakenham which will be
completed by the end of the calendar
year and which will provide a springboard
for our Dairy business throughout the
Gippsland region in Victoria. The new
mill will facilitate the closure and sale
of the Dandenong mill and will also
service the Tasmanian market accessed
through the December 2011 Monds &
Affleck acquisition. This mill is the first
of a number we expect to roll-out over
the next few years as we reinvest in the
Ridley AgriProducts business.
In addition to its core business focus,
Ridley will continue to seek to identify
and secure ‘bolt-on’ or larger scale
acquisition opportunities in accordance
with its core competencies, strict
disciplines and hurdle rates.
I have seen nothing over the past year
to suggest that the overall outlook for
agriculture is anything other than bright.
Population projections continue to escalate
the issue of long term food security,
and the regional imbalances between
population numbers and animal production
capacity are fully expected to present
long term growth opportunities for Ridley.
So whilst the 2012 financial year result
was below our expectations, I remain
confident of Ridley’s future growth and
ability to deliver value to shareholders.
John M Spark
Chair
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RIDLEY WILL
CONTINUE TO
PURSUE GROWTH
AVENUES FOR ITS
AGRIPRODUCTS
BUSINESS
MANAGING DIRECTOR'S REVIEW
In a world that will be challenged to produce a safe and reliable food supply to feed
its growing population, Ridley is working towards a strategy that links ingredients to
feed and ultimately food supply to meet the growing demand for food security.
2. Asian expansion
Concurrent with the development over
the last three years of a strong, sustainable
domestic business, we have been actively
exploring further expansion in Asia.
The Cheetham Salt operation in Indonesia
has demonstrated that with the right
management in place, strong relationships,
consistently high quality and value-adding
products, and a focus on customer service,
it is possible to establish a presence in
Asia and a platform for future expansion.
During the year, several overseas visits
have been made by Ridley management
to Asian countries to examine opportunities
to leverage Ridley know-how and expertise
in stockfeed and nutrition, raw materials
procurement and supply chain. Whilst there
has been no definitive agreement reached
to date, there are a number of partnering
and joint venture arrangements currently
being explored that may have the potential
to exceed the required Ridley hurdle rates
to cover the overseas transaction risk.
3. Feedstock operational
improvement
Having completed the implementation
of the new ERP system at all sites by
the end of August 2011, the RAP
management team was charged with the
responsibility of uplifting overall operational
performance through delivery of cost
savings, mill efficiencies and restructure.
A program of mill replacement and
upgrade and a strategic review of the
long term viability of the Supplements
business were the first two execution
stages in this process, with mill
replacement to be funded wherever
possible by land sales of redundant
mill sites.
In the first half year, the Monds & Affleck
business was acquired, whilst the under-
performing CCD additives business and
Corowa feedmill were divested. Each of
these initiatives has been covered in
detail in the Ridley AgriProducts section
commencing on page 16 of this 2012
Annual Report and helps to improve the
business outlook for the 2013 financial
year (FY13) and the years ahead.
The Monds & Affleck acquisition
comprises the processing and distribution
of stockfeed products throughout
Tasmania using the Monds & Affleck name
and associated brands. Under the sale
agreement, Ridley is now manufacturing
the Monds & Affleck range at its existing
locations throughout Australia and
distributing the products under a
national supply agreement.
Our detailed operational review of the
Supplements business early in the year
concluded that we had to change the
business model in order to create a
critical mass in the strongest and
most reliable regional market.
Management moved swiftly to acquire the
Livestock Nutrition Technologies (LNT)
business, transfer the acquired plant and
equipment to Ridley’s existing Townsville
site, and consolidate its operations into
Townsville, thereby making the Wacol site
redundant and available for sale. The sale
of the Wacol Supplements site was
executed before the end of the first
half year, and concluded by the 31 March
2012 scheduled completion date.
The combination of relocation north to
the Townsville area, the additional volumes
provided through the acquisition of LNT,
and the cost savings and synergies from
the integration of the two businesses into
a single site, will enable us to take full
advantage of the next supplementary block
season with a business more capable of
generating long term sustainable returns
for Ridley shareholders.
During the second half of FY12, a
significant management restructuring
was undertaken in RAP which will
result in a lower cost and more
efficient structure for coming years.
The RAP restructuring activities conducted
during the year provided cash inflows and
released working capital into the business,
which has contributed to the reduction
at year end in both net debt and working
capital as covered in the Financial Review
section of this 2012 Annual Report.
John Murray – Managing Director
and Chief Executive Officer
On 24 August 2011, we announced
the strategic priorities for the next
phase of Ridley’s growth path to
deliver shareholder value.
The strategic priorities for Ridley are
fourfold:
• Agribusiness consolidation
• Asian expansion
• Feedstock operational improvement
• Property realisation
1. Agribusiness consolidation
Both salt and animal feed products are
vital ingredients in a wide range of food
products for daily human and livestock
consumption, and we can play an important
role in the consolidation that is occurring
within Australian agribusiness. In the prior
year we acquired rendering business
Camilleri Stockfeeds (Camilleri), and
we continue to look for other synergistic
businesses, with a particular interest
in operations that provide Ridley with
security over its supply chain.
Camilleri’s niche poultry and fish rendering
business has proven to be a sound
investment and valuable addition to the
Ridley AgriProducts (RAP) portfolio, and its
full year earnings have been a significant
contributor in RAP achieving its second
highest earnings result on record.
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the StRAtegIC pRIoRItIeS
FoR RIdley ARe FouRFold:
AgRIbuSIneSS ConSolIdAtIon
ASIAn expAnSIon
FeedStoCk opeRAtIonAl ImpRoVement
pRopeRty ReAlISAtIon
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MANAGING DIRECTOR'S REVIEW CONTINUED
4. Property realisation
As previously reported, the Dry Creek
property development remains on hold
and there has been no change in this
status during the year. Efforts have
consequently been focused on expediting
our land sales potential in Victoria and
Queensland, and a broad range of long
term opportunities has been examined
at the Lara salt field site located near
Geelong in Victoria.
Concurrent with our work on Lara, we
also engaged consultants to undertake
preliminary investigations into the feasibility
of developing the Moolap salt field, also
located near Geelong but on the opposite
side to Lara. At the time of writing this
report, the direction for each project
has yet to be finalised, however with a
combined carrying value for both sites
in the vicinity of only $3.5 million and salt
production requirements covered by other
salt producing sites, each of these sites
has the potential to generate significant
long term upside for Ridley shareholders.
The former salt field at Bowen is an
asset held for sale following the cessation
of all operations there after several years
without a successful harvest.
Operating performance for 2012
financial year (FY12)
The FY12 consolidated result after tax
of $19.3 million slightly exceeds the
upper end of the profit guidance range
of $17-19 million released on 22 May
2012. The internal forecasts, which were
prepared following an unexpectedly weak
month in April, have been outperformed
largely due to two stronger than
anticipated months for the rendering and
poultry sectors of the business, which
recorded favourable volume and margin
variances boosted by the fourth quarter
recovery in animal meal prices.
The RAP Earnings Before Interest and Tax
(EBIT) result of $27.2 million is the second
highest result on record and includes an
uplift from having a full year of Camilleri
earnings compared to four months last
year, offset by a sharp decline in earnings
from the Ridley Aqua-feed sector which is
covered in detail in the Ridley AgriProducts
sector of this 2012 Annual Report.
The high salt and freight costs due to
harvest interruptions and delays caused
by the prior year’s weather events have
restricted the Cheetham Salt Ltd (CSL)
core earnings before joint ventures (JVs)
to $11.1 million for the year.
CSL’s share of the JV Net Profit After
Tax (NPAT) for the year of $6.8 million
represents an EBIT value of $9.7 million
and EBIT before Depreciation and
Amortisation (EBITDA) of $10.9 million.
The resumption of 100% distribution
of JV NPAT earnings by way of dividend
resumed during the year following the
completion of the major capital upgrade
at the Mount Maunganui plant operated
by the Dominion Salt JV.
Included in the Corporate result for the
year are non-recurring costs of $1.5 million
associated with the extensive preparation
work undertaken in consideration of the
Cheetham Salt transaction opportunities.
The RAP results include $1.0 million of
costs incurred in restructuring the RAP
management team which will deliver
$1.8 million of savings in 2013.
Safety
As an organisation, Ridley remains
committed to safety, and to making sure
that all tasks performed in the workplace
by ourselves and our contractors, suppliers
and customers are conducted in a safe
and respectful manner. We recognise that
there are workplace hazards in both of our
operating businesses, and our collective
duty is to ensure that appropriate safety
systems and physical safeguards are
designed and implemented at all times
to manage those risks.
To measure our progress in respect of
safety improvements we adopt a number
of performance indicators which are
reported at site, management and Board
meetings. Near misses and incidents
are reported and investigated, solutions
developed and remedial actions taken
to prevent a recurrence not only at that
site, but also other sites capable of
experiencing a similar event.
The long term injury frequency rate,
or LTIFR, measured as the number of
injuries incurring lost time for every million
hours worked, was 4.46 in FY12. This is
an encouraging decrease from the 6.6
recorded in the prior year and represents
a 32% decrease in the rate of incidents
that resulted in lost time to the business.
The Serious Injury Frequency Rate, or
SIFR, represents our total injury rate
and slightly increased to 16.8 in FY12
from the prior year’s 15.2.
Safety is a culture and one that we are
committed to throughout the organisation.
Through a process of continuous
improvement, we endeavour to progress
towards our long term goal of zero
workplace safety incidents.
Cash flow
Despite slight reductions in EBITDA
and EBIT compared to the prior year,
we have improved our working capital
by $14.5 million and our net debt position
by $4 million, whilst at the same time
maintaining full payment in cash of a
7.5 cents per share annual dividend.
We have generated proceeds of $7.9
million from the disposal of surplus assets
and effectively applied these within the
$8.0 million expended to commence the
construction at Pakenham in Victoria of
our first new feedmill since our Terang mill
was built in 1997. This mill is scheduled to
be commissioned prior to the end of the
calendar year and will provide an immediate
quantum shift in our competitiveness
throughout the Gippsland region, as
well as enabling us to close and sell
our Dandenong feedmill.
With the construction of the new mill
in progress, the capital expenditure
outlay for the year has risen by $10.3
million to $22.2 million. A significant
rendering expansion program has also
commenced at Camilleri’s Maroota
facility for completion by the end
of the first half of FY13.
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Our people
During the year, and following the decision
to pursue transaction opportunities for the
Cheetham Salt business, I decided to step
back into the senior operational role at
RAP with the objective of securing greater
traction with regard to the benefits
available from the investment in the new
Enterprise Resource Planning (ERP)
system that we have spent much of the
last three years implementing.
The RAP management structure had
been progressively strengthened to
assist with the cutover to the new system
and to bolster the areas which exposed
the business to the greatest risk during
the transition and change management
processes. A number of roles were
consequently made redundant during
the year at a cost of $1.0 million, including
the position of RAP CEO which had been
capably filled by Peter Weaver since
April 2010. Annualised savings from this
restructure in the vicinity of $1.8 million
will commence from 1 July 2012 as all
of the associated redundancy costs
have been brought to account in the
determination of the FY12 result.
Ridley has made good progress during
the year with regard to its Diversity Policy,
with the continuing focus on improving
Ridley’s talent pipeline and providing an
environment where all employees in the
Ridley workforce are encouraged and
able to reach their career aspirations.
A number of programs were introduced
during the year including emerging leader
and leadership programs, mentoring
and networking, together with the
introduction of a paid parental leave
scheme to eligible employees to
complement the Government Scheme.
More details of each of these initiatives
are provided in the Our People section,
commencing on page 26 of this 2012
Annual Report.
Outlook
We are actively pursuing opportunities
for a transaction for Cheetham Salt to
unlock underlying asset value, and expect
to be in a position to make a formal
announcement by the Annual General
Meeting, if not before. Any divestment
transaction will generate cash proceeds,
the application of which will be included
in any announcement at that time, and may
include a combination of debt retirement,
investment for growth, and return to
shareholders.
We are examining our debt funding
capacity, cost structures, organic and
inorganic growth opportunities, separation
issues, tax cost bases and transaction
structuring opportunities in contemplation
of a Ridley without Cheetham Salt should
the transaction proceed. This preparatory
work is well advanced and our strategy
determined in readiness for any transaction
announcement.
The prospect for the Cheetham Salt
business is positive, regardless of the
ultimate ownership of the business.
Domestically, there are unusually high
salt and freight costs currently being
reported which will normalise back to
historical levels once the business has
had an opportunity to return to traditional
harvest cycles and non-extreme weather
patterns. Ridley expects Queensland
self sufficiency in salt supply and the
progressive sale and averaging down
of the current high cost of salt to provide
a stepped uplift in Cheetham Salt’s
domestic earnings in future years.
The mature domestic market for Cheetham
Salt products provides a stark contrast
with the expansion opportunities open to
Cheetham Salt in Asia, and in particular,
in Indonesia. The issue of additional
importation licences to commercially justify
the Cilegon refinery expansion would
facilitate not only an increase in overall
refining capacity but also a proportionate
switch to higher quality, higher margin
products. The salt field opportunity on the
Indonesian island of Flores provides the
potential to produce 170,000 tonnes of
salt per annum for domestic use. The
opportunities for aggressive and
sustainable growth are evident and
are expected to be a key focus in the
contemplation of a divestment transaction.
With successive EBITDAs of $43 million
or more reported in the last two years and
a positive outlook for both businesses,
unlocking shareholder value is a clear
imperative for the Ridley Board. The Board
will strive to achieve a positive divestment
outcome for all shareholders.
Although we believe we have achieved
a great deal over the last three years to
de-risk Ridley and transform Ridley into
a stand out performer in the agribusiness
sector, there is still significant upside for
the business coming off a year where
we have experienced softer trading
conditions and incurred $2.5 million
of non-recurring restructure and
transaction preparation costs.
For FY13, we expect an improvement in
our RAP operating results. A turnaround
of the Supplements business is anticipated
following the closure of Wacol and
acquisition of the LNT business, and
we should also benefit from six months
of operations from the new Pakenham
ruminant mill and a full year’s impact
from the Monds & Affleck acquisition.
Independent of the ultimate ownership
structure for Cheetham Salt, we expect
a substantial reduction of salt costs and
supply chain costs to start generating the
forecast uplift in Cheetham Salt results.
Although FY12 earnings clearly did
not reach our expectations, a significant
amount of effort has been expended to
provide a more robust business in the
future. My thanks go to management and
employees for their dedication and hard
work and to the Board for their support
in our endeavours.
John Murray
Managing Director and
Chief Executive Officer
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THE OPERATING CASH
INFLOW FOR THE YEAR
WAS $51.9 MILLION,
AN INCREASE OF
$15.2 MILLION FROM
THE $36.7 MILLION
RECORDED IN THE
PRIOR YEAR.
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FINANCIAL REVIEW
Ridley Corporation Limited (Ridley) has recorded a consolidated profit after tax of
$19.3 million for the year ended 30 June 2012 (FY12).
Alan Boyd – Chief Financial Officer
and Company Secretary
Operating result
With two strong months in poultry and
rendering to conclude the year Ridley has
been able to record a net profit after tax
(NPAT) for the year of $19.3 million.
Full year operational earnings before
interest and tax (EBIT) (including the
Ridley share of Cheetham Salt joint
venture (JV) NPATs) of $35.7 million
is $4.2 million down on the prior period
(2011: $39.9 million), of which $1.5 million
represents costs associated with extensive
preparatory work undertaken in pursuit of
the possible Cheetham Salt divestment
transaction which continues to progress
after balance date. Consolidated EBIT
including the JV EBITs is $38.6 million,
compared to $43.2 million in the prior year.
Ridley AgriProducts (RAP) generated
EBIT for the year of $27.2 million, its
second highest result on record, and this
result includes the expensing of $1.0
million of second half restructure costs
which will deliver annualised savings of
$1.8 million effective from 1 July 2012.
The Cheetham Salt business generated
EBIT before joint ventures of $11.1 million,
down $3.1 million on last year and
adversely affected by the significantly
higher salt costs and supply chain
costs incurred as a result of last year’s
record floods.
The Cheetham Salt joint ventures in
New Zealand and Australia delivered an
operating result generally consistent with
the prior year, with the equity accounted
share of net profits after tax being $6.8
million (2011: $7.0 million), and underlying
EBIT of $9.7 million, and EBIT before
depreciation and amortisation (EBITDA)
of $10.9 million.
Sales revenue and gross profit
Consolidated sales revenue for FY12
was $734.7 million (2011: $723.7 million),
1.5% or $11.0 million up on the prior year.
Gross profit was $74.6 million, $0.3 million
below last year’s $74.9 million.
Net finance costs
The net finance costs of $9.3 million is
$0.4 million lower than the prior period
(2011: $9.7 million). The finance cost
includes the first full year of interest on
the $32.2 million of debt associated with
the 1 March 2011 Camilleri acquisition,
the impact being $1.5 million of additional
interest compared to the four month
prior period charge.
The impact of the higher debt levels
was offset by the decrease in loan and
overdraft interest rates between the
years due to a series of four interest rate
decreases, which progressively lowered
the base rate from 4.75% prevailing at
1 July 2011 to the 30 June 2012 rate of
3.5%, which was established on 5 June
2012. A further $0.2 million of finance
costs were capitalised in relation to the
construction of the new mill at Pakenham.
Income tax expense
Following the resolution in FY11 of
a number of prior year tax matters, the
anticipated return to Ridley’s traditional
effective tax rate percentage in the
mid-twenties has occurred in FY12,
with the R&D Tax Concession, tax
depreciation on salt fields, and the once
off sale of the Wacol operations being
the primary favourable deductions from
the prima facie tax rate. The Wacol
operations of the Supplements business
had been impaired down to land and
buildings value for accounting purposes in
a prior year whereas the tax written down
values were only written off on sale of the
asset, giving rise to a positive tax position
compared to the accounting result.
Significant items, discontinued
operations and impairments
There are no items during either FY12
or the prior financial year, favourable or
unfavourable, that are considered to be
outside of the ordinary business and
thereby deserving of separate disclosure
by way of significant items.
$1.0 million of non-recurring restructure
costs and $0.4 million of LNT and Monds
& Affleck acquisition costs were expensed
during the year in RAP. $1.5 million of
Cheetham Salt divestment preparation
costs were expensed within the Corporate
head office. There will be further
divestment related costs incurred in
2013 including the financial advisor
costs which are predicated upon achieving
a successful transaction outcome and
will be recorded as a component of the
overall profit or loss on divestment should
the transaction proceed.
Results summary
Sales revenue
Gross profit
Profit before tax
Profit after tax
2012
A$’000
734,695
74,636
26,355
19,253
2011
A$’000
723,702
74,876
30,240
29,316
Percentage
Change
1.5%
(0.3%)
(12.8%)
(34.3%)
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FINANCIAL REVIEW CONTINUED
Cash flows for the year in $ million
Profit before income tax
Net interest expense
Depreciation and amortisation
EBITDA (including JV NPATs)
Movement in working capital
Maintenance capital expenditure
Operating cash flow
Development capital expenditure
Dividends paid
Proceeds from sale of CCD, Corowa and Wacol mills
(2011: Sale of liquid feeds business)
Net finance cost payments
Net tax payments
Acquisition of LNT and Monds & Affleck businesses
(2011: Camilleri)
Share-based payments
Movement in other balance sheet items
Cash flow for the period
Opening net debt balance at 1 July
Closing net debt balance at 30 June
Year Ended
30 June 2012 30 June 2011
30.2
9.7
14.2
54.1
(7.7)
(9.7)
36.7
(3.4)
(22.9)
26.4
9.3
14.4
50.1
14.8
(13.0)
51.9
(10.6)
(22.9)
7.9
(8.9)
(4.9)
(6.9)
(1.5)
(0.2)
3.9
(102.1)
(98.2)
4.5
(9.1)
(4.1)
(32.7)
(1.7)
2.6
(30.1)
(72.0)
(102.1)
Whilst all Cash Generating Units (CGUs)
in the Ridley consolidated group have been
tested for impairment and have met their
required hurdle rates to support the current
carrying values, the reduction in earnings
for the year for Ridley Aqua-Feed and
the subdued outlook for this sector has
significantly eroded the impairment
headroom. Recent internal reorganisation
and cost-cutting initiatives and relaxation
of production constraints at the Inverell
site are expected to improve the Ridley
Aqua-Feed results in the future.
Dividend
Directors have declared a fully franked,
final dividend of 3.75 cents per share,
payable wholly in cash and unchanged
from the previous final dividend. The
dividend will be payable on Friday 28
September 2012 to shareholders on
the register at 5.00pm on Friday
7 September 2012. The total cash
dividend payable in respect of FY12
is 7.50 cents per share, and the entire
dividend for the first time in several
years will be franked to 100%.
Cash flow and working capital
The operating cash inflow for the year
(after working capital movements and
maintenance capital expenditure) was
$51.9 million, an increase of $15.2 million
from the $36.7 million recorded in the
prior year.
After tax cash dividend payments of
$6.8 million received from the Cheetham
Salt joint ventures in FY12 reflect the
resumption of 100% pay out of NPAT
following completion of the major capital
works at Mount Maunganui.
Development capital expenditure for the
year of $10.6 million (FY11: $3.4 million)
includes $8.0 million associated with the
construction of the new mill at Pakenham
plus $1.2 million to purchase the previously
leased Ridley Aqua-Feed site at Narangba,
whilst depreciation and amortisation for
FY12 increased slightly to $14.4 million
(FY11: $14.2 million).
The positive reduction in working capital of
$14.8 million has been a strong contributor
to an overall $3.9 million reduction in net
debt to $98.2 million at balance date.
The cash flow summary with a prior period
comparison provided in the table adjacent
has been sourced from the audited
accounts but has not been subject to
separate review or audit. The Directors
believe that the presentation of this
non-IFRS financial cash flow is useful for
the users of this document as it reflects
the significant cash flows of the business.
Balance sheet
A sale process had commenced by
balance date for the RAP feedmill at
Dandenong and the former salt field at
Bowen, such that the aggregate carrying
value of $4.0 million has been reflected in
the financial statements as Assets held for
sale. The expectation is for a sale of each
of these sites within 12 months at a value
not less than the current carrying value,
however the extent of any surplus
is presently uncertain and can only
be accurately determined by a sale
transaction.
With the tax effect from sales of
accounting-impaired assets impacting
both revenue and capital account, and
having made tax instalment payments of
$4.9 million during the year, the balance
date domestic income tax position is a
net receivable of $1.6 million.
The combination of a $4.7 million
reduction in receivables, $8.2 million
reduction in inventory and a $2.6 million
increase in creditors have contributed
to an overall reduction in working capital
of $14.8 million.
The $3.6 million of salt inventory created
by the laying of salt floors at the Dry Creek
site in Adelaide has been recorded as
non-current inventory which reflects
management’s current intentions with
regard to the timing of its harvest and to
the satisfactory completion of the national
harvest program.
A large contributor to the $5.6 million
increase in property, plant and equipment
is the $8.0 million of construction work in
progress for the new mill at Pakenham.
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Much of the increase in capital expenditure
for FY12 has been financed by asset
sales, and it is the reduction in working
capital of $14.8 million that has greatly
assisted in the reduction of the net debt
position as shown in the following table.
2012
$’000
105,379
(7,228)
98,151
290,483
33.8%
2011
$’000
115,386
(13,247)
102,139
290,970
35.1%
Gross debt
Less: cash
Net debt
Total equity
Gearing ratio
Capital movements
During FY12, a total of 1,003,418 (FY11:
1,320,489) shares were acquired by the
Company on market for $1.5 million
(FY11: $1.7 million) to satisfy the issue of
462,560 (FY11: 777,609) shares under
the Ridley Performance Rights Scheme
and 540,858 (FY11: 542,880) shares
under the Ridley Employee Share Scheme.
There were no movements in issued
capital during either financial year.
Alan Boyd
Chief Financial Officer and
Company Secretary
Independent valuations of the salt fields
and Ridley land and buildings were
conducted as at 30 June 2012, and the
results and implications for fair value duly
considered by the Board. The carrying
values for the salt fields are within the
valuation range independently calculated
using the long term outlook for the salt
business that was subject to external
vendor due diligence as part of the
Cheetham Salt potiential divestment.
Whilst there are a number of increments
and decrements between existing carrying
values and the independently assessed
values as at balance date, the Board does
not consider these values to reflect
permanent, underlying shifts in fair value
other than for the former salt field at Lara
and the Murray Bridge site, adjacent to
which a brand new shopping centre has
recently been opened which has uplifted
the highest and best use potential for the
site. The fair values for the Dandenong
feedmill and Bowen salt field sites will be
crystallised through a sale transaction in
due course, and their carrying values have
been retained and reported under the
Assets held for sale balance sheet
classification.
Earnings per share
The underlying earnings per share of
6.3 cents per share for FY12 reflects
the fall in operating result on a stable
equity platform.
Earnings per share
Basic earnings per share
2012
Cents
6.3
2011
Cents
9.5
Gearing
The Ridley consolidated group gearing
ratio (debt : equity) was increased in the
prior year through the additional borrowing
of $32.2 million required to finance the
acquisition of Camilleri Stockfeeds Pty Ltd
on 1 March 2011.
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5
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7
20
18
17
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11
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8
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9
1 Townsville
2 Dalby
3 Narangba
4 Toowoomba
5
Inverell
6 Tamworth
7 Taree
8 Mooroopna
9 Maffra
10 Pakenham
11 Dandenong
12 Bendigo
13 Gunbower
14 St Arnaud
15 Noorat
16 Terang
17 Murray Bridge
18 Wasleys
19 Clifton
20 Maroota
1 Townsville
2 Dalby
3 Narangba
4 Toowoomba
5 Wacol
6
Inverell
7 Tamworth
8 Taree
9 Corowa
10 Mooroopna
11 Maffra
12 Pakenham
13 Dandenong
14 Bendigo
15 Gunbower
16 St Arnaud
17 Noorat
18 Terang
19 Murray Bridge
20 Wasleys
2012
highlights
+ $27.2 million of EBIT
+ Third successive year
of poultry tonnage and
revenue growth
+ Supplements business
restructured
+ Construction of new
mill at Pakenham
+ Acquisition of Monds
& Affleck and LNT
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RIDLEY AGRIPRODUCTS
Ridley AgriProducts (RAP) recorded an Earnings Before Interest and Tax (EBIT) of
$27.2 million for FY12, up $2.3 million from the prior year’s $24.9 million and its second
highest result on record.
With high throughput and long production
runs, many of our poultry mills are at or
approaching capacity, particularly in South
Australia, where we are expanding the
intake and storage capacities at Wasleys
to accommodate forecast growth in local
bird numbers from our major clients in the
region. Whilst our Victorian mills continue
to contribute strongly to the business,
expected volume increases at the Clifton
site in Queensland did not eventuate and
we are looking to secure additional
volumes from other sources to increase
throughput at this mill.
Ridley expects the long term consumer
growth trend and switching from red to
white meat to continue, and remains
well placed to service the major growth
processing regions of South Australia,
Victoria and south east Queensland.
Pig
Ridley’s pig sector has stabilised since the
2010 vertical integration of its largest pig
customer, and recorded sales of 197kt for
the year compared to 224kt in the prior
year. With shorter production runs and a
higher number of dietary changes than
the poultry sector, a key driver of pig
sector profitability is the effectiveness
and efficiency of the production run
changeover processes and raw materials
management, and this has been a focus
at mill level during the year.
The domestic pig sector remains stable,
and volumes and margins similar to the
2012 year are expected for FY13.
Ruminant – dairy, beef and sheep
Despite last year’s improvements in the
overall wellbeing of the dairy industry,
the watch out for FY13 is the impact
of continued pasture abundance on
the demand for stockfeed at the start
of the new dairy season.
John Murray – Chief Executive Officer,
Ridley AgriProducts
The two single largest movements from
the prior year are the inclusion of a full
12 months earnings contribution from
Camilleri Stockfeeds (compared to four
months in the prior year) offset by a
substantial decline in Aqua-Feed earnings.
The Supplements business suffered from
a second year of abundant pasture and
also an unsustainable operating structure,
which was overhauled during the year
through the closure and sale of its Wacol
premises near Brisbane and the acquisition
and consolidation of the LNT business into
the Townsville operation.
The Dairy business continued its recovery,
albeit at a slower rate than anticipated,
whilst the Packaged Products volumes
were maintained, with growth in both
sectors stunted by the widespread
availability of natural grazing.
Overall sales for FY12 of $637.4 million
were up $18.4 million (2.9%) on last year,
and reflect 1.6 million tonnes of stockfeed
sold, more than 29,000 tonnes up on last
year. The following is a sector by sector
analysis of performance for FY12 and
outlook for FY13.
Sector performance
Poultry
For the third successive year, Ridley’s
poultry sector sales tonnage (933,000
tonnes for the year) and revenue
increased, reflecting the continuing growth
in domestic demand for poultry products
over and above population growth and in
accordance with a shift to lean, white meat
as a source of value for money protein.
During FY12, renewed optimism within
the industry encouraged dairy farmers
to rebuild herd numbers from the levels
experienced when milk prices were at their
cyclical lows. The launch of a new Ridley
grain mix product range at Maffra, Victoria,
assisted in regaining market share in the
Gippsland region previously lost as farmers
moved to cheaper, lower grade alternatives
during the dairy downturn. In addition,
Ridley entered the Tasmanian market
following the acquisition of the Monds
& Affleck business and expects tonnages
into that market to increase over the
next few years as dairy volumes grow.
Following a review of the Victorian dairy
market in general, a decision was taken
early in the year to service the northern
Victorian dairy and pig markets from our
Gunbower and Mooroopna mills and to exit
the Corowa region in Northern Victoria/
Southern New South Wales. With the
prospect of only marginal returns, a
dwindling customer base and a significant
capital injection within the foreseeable
future, the Corowa mill was sold in
November 2011 to a local supplier as
announced at the 2011 Annual General
Meeting. The overall profit and loss impact
of the sale of the Corowa mill and its
earnings generated prior to sale was
slightly better than break even.
In mid-December 2011, Council planning
approval was received for a new low cost
ruminant mill to be built alongside our
existing monogastric mill at Pakenham.
At the time of writing, construction is well
advanced and the mill is expected to be
commissioned by Christmas 2012.
Australia feeds
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2012
2011
Including sales of Packaged Products.
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RIDLEY AGRIPRODUCTS CONTINUED
Once the new mill becomes fully
operational, the existing Dandenong
mill volumes will be transferred across
to Pakenham, the Dandenong mill
taken off-line and the site sold for
redevelopment. The 1.3 hectare
Dandenong property is now zoned,
and is also ideally located, for high
density residential use, and the sale
process had commenced prior to
balance date.
The recovery in the dairy industry is
expected to continue in FY13, and this
should see Ridley benefit in the medium
term as more normal seasonal conditions
return and stock numbers are increased
across eastern Australia.
Rendering
The poultry and fish rendering business
of Camilleri Stockfeeds (Camilleri) acquired
by Ridley on 1 March 2011 has
contributed strongly throughout the year,
and the additional eight months of trading
compared to the prior year has provided a
significant uplift in year on year earnings.
Having exceeded all of its acquisition
performance hurdles, the full contingent
consideration of $3 million was paid out
during the year. Camilleri forms an integral
part of the RAP business moving forward
and provides supply chain security for a
key source of protein as a stockfeed input.
During the year, a $1.8 million capital
upgrade project at the Camilleri site
was approved and commenced. The
replacement of batch cookers with a
continuous cooker process will provide
an uplift in capacity at the Maroota site,
located 65 kms north of Sydney, and
will enable the business to target new
sources of raw material supply.
Perfectly positioned to service the
rendering requirements of the Sydney
basin, the outlook for the Camilleri
business and its industry is very positive.
Packaged Products
Increased vigilance on margins and supply
chain, coupled with the new branding and
products introduced last year, have upheld
earnings despite the unfavourable market
conditions caused by the continued
abundance of natural pasture.
The Packaged Products team has
completed year two of its three year plan
to establish the foundation for long term,
sustainable growth. The strength of the
brand loyalty continues to impress and be
enhanced through the adoption of
stringent quality control and customer
support processes which facilitate the
consistent delivery of high quality, value
adding products to the market.
The December 2011 purchase of the
Monds & Affleck business has started to
generate additional volumes for distribution
through the Ruralco retail network in the
eastern states. Furthermore, the business
of processing and distributing stockfeed
products throughout Tasmania under the
Monds & Affleck brands acquired by Ridley
has started to build momentum and is
expected to contribute positively to the
FY13 result and thereafter.
Supplements
The lack of a dry season across the
northern, eastern and southern regions
of Australia in the last two years has
had a major impact on the demand
for supplementary feed products
manufactured by the Supplements
business in southern and northern
Queensland. After recording a small
profit in FY11, and then incurring losses
in the early part of FY12, a strategic
review was conducted to identify
initiatives to stem the outflow.
The review concluded to concentrate the
service offering on the higher volume,
more reliable northern Queensland market
and exit the southern Queensland region
altogether. At the Ridley Annual General
Meeting in November 2011, shareholders
were advised that as part of this
consolidation into northern Queensland,
Ridley had acquired the business of
Townsville-based competitor LNT, with
the intention of relocating its operations
into the existing Ridley Townsville
Supplements site.
The management of an orderly wind
down and closure of the Supplements
site at Wacol was conducted and
concluded by the end of March 2012,
with the sale of that site for proceeds in
the vicinity of $5.5 million. A small profit
on the sale was recorded after deduction
of appropriate relocation, contract
termination and transaction costs,
whilst working capital in the vicinity of
$3 million was liberated after settlement
of all Wacol working capital.
It is expected that the outcome of
the collective actions will contribute
to the creation of a more reliable and
profitable Supplements business, with
a commensurately lower cost base,
and capable of generating sustainable
earnings.
Aqua-Feed
The performance of Ridley Aqua-Feed
(Aqua-Feed) for the year suffered from
a number of adverse events and factors
which contributed to a significant decline
in earnings from the levels generated in
recent years.
Salmon
Salmon feed volumes suffered due to
unseasonably cold water temperatures in
Tasmania early in the 2012 financial year
and although tonnages recovered later in
the year, the overall growth in this sector
has declined and relatively flat volumes
are now forecast for FY13.
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Outlook
The overall outlook for RAP is positive,
with Dairy and Packaged Products
expected to benefit from a return to
more traditional seasonal patterns and
with the restructured Supplements
business well positioned for the coming
peak season. The growth trend for poultry
products is expected to continue and we
remain well positioned to be an integral
part of that growth story.
Whilst volume growth opportunities for
Aqua-Feed are currently constrained by
surplus production capacity in the industry,
the purchase of the Aqua-Feed site at
Narangba in FY12 and the recently
granted flexibility to allow the production
of pet food at Inverell, together with
various organisational and supply chain
restructuring initiatives, should deliver
improved earnings in FY13.
The new mill at Pakenham is expected
to provide an earnings uplift in the second
half of FY13 whilst the increased capacity
at Camilleri will enable that business to
aggressively target new volumes.
Prawn and barramundi feed volumes
have been lower than FY11 due to these
sectors facing severe competition from
imported products from Asia. This has
prompted lower biomass levels in these
species and is being exacerbated by the
continuing strength of the Australian dollar.
R&D and innovation
Ridley’s reputation has been established
and relies on being Australia’s leading
supplier of high quality animal nutrition
solutions, with a product range that has
been scientifically formulated to ensure
optimal animal health and performance.
The business faces the prospect of low
priced imported products arising from the
continuing high Australian dollar and
surplus domestic production capacity for
the salmon industry, which is the result of
a major expansion by Aqua-Feed’s main
domestic competitor. Until such time as
the current surplus industry capacity is
absorbed through the progressive growth
in demand as predicted by the salmon
farmers, the medium term outlook for
Australian suppliers to the sector is flat.
The Aqua-Feed division has instigated
cost reduction initiatives and is overseeing
a number of research and development
projects designed to provide an innovative
competitive edge in feed conversion and
to provide a continuing compelling
commercial case for its products.
Enterprise Resource Planning
The new ERP system roll out to each
of the individual sites was concluded
in August 2011, and the change
management program coordinated
across all parts of the business. Whilst
this created some discomfort and
increased training and consulting costs
for the business, the benefits from the
learnings and business improvements
were evident by year end and will be
further enhanced during the coming
months with the resolution of a number
of issues that were deferred until the
conclusion of the roll out process.
The changing world of raw materials
presents challenges and opportunities,
and there is a growing awareness of the
pressures that continuing population
growth will have on scarce resources,
such as arable land for the growing of
food and crops. The food versus fuel
debate is likely to increase as more
cost efficient ways and processes are
developed to extract fuel from agricultural
products and as reserves of fossil fuels
progressively dwindle through extraction.
Asian organisations in particular are
securing ownership positions now which
will provide them with surety of supply
of key raw materials in years to come
when their domestic supply and demand
imbalances become untenable. Ridley
is conscious of these likely developments
and of the need to improve feed
conversion ratios and find new sources
of nutrition. We are looking to develop
research programs which will ensure that
Ridley remains a critical provider in the
world’s increasingly challenging quest
for protein.
Reports on the continuing decline of
world fish stocks continue to raise alarm
bells and there is a very strong likelihood
that the need for aquaculture will increase
significantly over the coming years. With
dwindling wild fish stocks comes a scarcity
of fish meal and fish oil, and a continuing
focus for Aqua-Feed’s R&D is the
development of long term substitutes
for these inputs.
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CHEETHAM SALT
Cheetham Salt profitability for FY12 was $17.9 million, compared with $21.2 million
in FY11. The FY12 result comprised earnings before interest and tax (EBIT) of
$11.1 million (FY11: $14.2 million) generated by the base business, plus after
tax profits of $6.8 million (FY11: $7.0 million) from the joint ventures.
Sector performance
Cheetham Salt supplies a broad number
of industry sectors, providing the business
with a healthy level of diversification. In
some instances these sectors provide
the business with a natural hedge
against variability of demand as a
result of the weather.
Throughout FY12, demand for salt in the
stockfeed and hide sector remained at
cyclical lows. Pasture remained abundantly
available in Queensland throughout the
year, keeping demand for salt used in
supplementary feeds at a similar level to
the prior year. Hide volumes fell slightly
from the prior year with slaughter rates
remaining low.
Whilst the prior year demand for swimming
pool salt was favourably impacted by
the high rainfall, this year’s summer across
the eastern states of Australia was
unseasonably mild. This impact was felt
most at the start of the pool season when
sales into this sector were subdued, and
the stock build necessary to service this
market incurred higher incremental
warehousing and freight costs than
the previous period.
Sales into the food sector remained
steady, with salt reduction initiatives to
reduce the sodium content of processed
food offset by population growth. An
additional bulk shipment increased the
Chemical sector sales by 24,000 tonnes
for FY12, whilst sales to Penrice in the
Soda Ash sector increased by 12,000
tonnes compared to the prior year.
Export sales were favourably impacted by
two additional shipments of crude salt to
our Dominion Salt joint venture in New
Zealand. These additional shipments to
New Zealand were required to compensate
for a harvest shortfall at the joint venture’s
Lake Grassmere salt field on the northern
coast of the South Island.
Andrew Speed – Chief Executive Officer,
Cheetham Salt
Profitability in the base business was
unfavourably impacted by increased
salt costs associated with harvest delays
and a reduction in harvest yields, as a
consequence of last year’s rainfall
dilution and a poor evaporative season.
Manufacturing at the Bajool refinery in
Central Queensland was impacted by
mechanical issues that prevented the
refinery from operating efficiently, and
cost pressures associated with its proximity
to the resource boom. Supply chain costs
were also higher than the prior period
due to increases in warehousing and
freight costs following an unseasonably
cool start to the swimming pool season
on the eastern seaboard, and fuel charges
levied by the industry.
By contrast, offshore earnings from
Indonesia and Japan improved in FY12.
Earnings from the Indonesian business
continued to benefit from recent
investment in the refinery which produced
a richer product mix, with commensurately
improved margins. Despite the high
Australian dollar, earnings from the Japan
business also improved, benefiting from
the increased proportion of high grade
products sold into niche applications that
command premium pricing and margins.
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Despite the high Australian dollar, the
Japanese business continues to grow at
a steady rate in line with our expectations,
given the long lead times necessary to build
relationships in Japan. The profitability
of this business is benefiting from the
sale of higher value products into niche
applications, making the business less
susceptible to currency movements.
The Indonesian business continued to
exceed expectations. Construction of
the greenfield refinery at Cilegon in
FY10, combined with further capital
improvements in FY12, is enabling the
business to target higher quality products
with the commensurate increase in
margins. The growth opportunities
for Cheetham Salt in Indonesia are
considerable, and are covered in the
Indonesia growth section below.
Overview of salt costs
Salt preparation and harvest costs are a
significant part of Cheetham Salt’s cost of
goods sold. Salt costs reflect an allocation
of fixed and variable costs incurred in
growing and harvesting of the salt crop.
Salt costs are calculated for each salt field
on a per tonne basis, determined by the
time it takes to grow the salt and the
volume of the harvest. Salt costs therefore
vary between financial years depending
on the yield and timing of the harvest.
Salt products
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500
400
300
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2012
2011
2012
highlights
+ $17.9 million of earnings
in tough year
+ Reliable JV after tax
earnings
+ Improvement in
Japanese and
Indonesian offshore
earnings
+ Positive harvest
outcomes
+ Significant growth
opportunities ahead
in Indonesia
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Australia
15
15
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14
13
12
11
13
12
13
12
13
12
10
11
8
7
9
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11
10
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7
8
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9
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9
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New Zealand
16
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Cheetham Salt
operations
1 Bowen
2 Bajool
3 Port Alma
4 Brisbane
5 Sydney
6 Wakool
7 Melbourne
8 Lara and Moolap
9 Corio
10 Sea Lake
11 Dry Creek
12 Price
13 Lochiel
14 Kevin
15 Fremantle
16 Mount Maunganui
17 Lake Grassmere
18 Cilegon
19 Surabaya
20 Tokyo
15
• Head office
• Sales office
• Production
• Refinery
• Production and refinery
CHEETHAM SALT CONTINUED
Once harvested the salt is carried as
inventory on a weighted average basis for
each site and recognised in the earnings
statement when sold. As a result there
is a long lag time between the costs
of production being incurred and the
recognition of these salt costs in earnings.
In FY11, the business only harvested
approximately half the historical annual
volume across the fields, resulting in
significantly higher harvest salt costs in
that year. This materially increased the
weighted average salt cost in the business,
eroding earnings in FY12. The impact of
this higher cost inventory on Cheetham
Salt’s earnings will progressively reduce
as lower cost salt is harvested and
weighted into the crude salt inventory.
The weather impact was most pronounced
in central Queensland, where the floods
that occurred during the 2010 Christmas
period significantly impacted production
of salt at Bajool and Port Alma. The impact
was such that no salt was harvested at
Port Alma in FY12, and Bajool harvested
less than half its historical average. As
a consequence, crude salt inventory in
central Queensland reached critically
low levels, necessitating the transfer
of shipments of bulk crude salt to the
site, further increasing the salt cost.
A significant reduction in overall salt costs
is forecast by management once the high
cost salt is progressively sold and averaged
down with lower cost new harvest salt. This
reduction will commence in FY13 and
continue to fall over the next few years.
Manufacturing
Approximately $6.5 million has been
invested in recent years in upgrading
the Bajool refinery to meet the growing
demand for high grade salt in Queensland.
During the first half of FY11, commissioning
of the capital upgrade of the Bajool refinery
was undertaken. Throughout this period,
the commissioning process was
compromised by record high rainfall,
culminating in the flooding of Rockhampton
during the 2010 Christmas period. This
unusually high rainfall impacted plant and
equipment performance, and altered the
product mix demanded by the market. Plant
reliability remained an issue throughout the
year, and combined with the escalating
labour costs in central Queensland,
contributed to deterioration in financial
performance at the site in FY12.
Throughout FY12, Bajool refinery
performance data was collected to
identify the critical components of the
plant adversely impacting efficiency,
solutions identified, and the capital projects
commenced under an all encompassing
Bajool Improvement Plan. The objective
is to establish a reliable and efficient
manufacturing platform that enables
Cheetham Salt to supply the Queensland
market from Bajool with all but a few
specialised grades of salt. These capital
projects will continue into FY13, with
the full benefit of these initiatives
expected in FY14.
Joint ventures
The four joint venture operations
have recorded an aggregate after tax
contribution of $6.8 million for FY12,
which corresponds to an aggregate EBIT
of $9.7 million and EBITDA of $10.9
million. The contribution from the joint
venture businesses remains robust,
albeit slightly down on the prior year.
The Salpak (Australia) and Cerebos-
Skellerup (New Zealand) businesses
continue to operate in challenging retail
environments, impacted by the increase
in private label products, rising supply
chain costs and supermarket discounting.
Despite this, these business have
maintained market share through
investment in the brands, promotional
campaigns and the launch of new
gourmet products.
Dominion Salt Limited’s (Dominion)
volumes and earnings were higher in
FY12, however US dollar earnings from
the pharmaceutical export business were
adversely impacted by the stronger New
Zealand dollar. Export pharmaceutical
sales of the high quality, pure dried vacuum
salt produced by Dominion remain a major
growth opportunity, serviceable from the
recently expanded vacuum plant at Mount
Maunganui. The new business
development program supporting this
investment is progressing as planned,
however receipts are lower than projected
due to the currency impact.
In FY11 and FY10, some dividends were
retained within Dominion to fund the
vacuum plant upgrade. With the upgrade
complete, in FY12 a more normal dividend
stream was resumed, with the full
distribution in cash of Cheetham
Salt’s 50% share of after tax profits.
LEAN manufacturing
Last year Cheetham Salt commenced the
implementation of an efficiency program
designed to reduce waste in the business.
To achieve this, LEAN manufacturing
principles and tools were introduced to
the business to assist in the systematic
identification and elimination of waste.
Each manufacturing facility is now
measuring its Overall Equipment
Effectiveness (OEE) and capturing the
data necessary to identify the key issues
impacting the site’s efficiency. With the
loss data established, proven tools and
techniques are being used to eliminate the
loss and improve manufacturing efficiency.
Whilst management is satisfied with
the progress of this initiative, adoption
of the LEAN manufacturing principles
by the business will continue in FY13.
A continued focus on the elimination
of waste will become the ‘way we do
business’ at Cheetham Salt.
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Indonesia
The Cheetham Salt operation in Indonesia
continues to exceed expectations. In FY12
further capital was invested to improve the
refinery’s ability to manufacture high grade
products that command premium prices
and margins, resulting in a richer sales mix.
Indonesia is a compelling location for
international growth to complement
Cheetham Salt’s leading positions in the
Australian and New Zealand markets. The
Indonesian business is locally managed,
has strong relationships with Indonesian
businesses and Government departments,
which combined with the country’s
favourable structural and economic factors,
provide a stable platform upon which to
launch an expansion program within Asia.
For some years the Indonesian
Government has had a desire to make
Indonesia more self sufficient in large
scale salt production. Indonesia is a net
importer of salt, and improving its salt
production capability in order to substitute
imports is a national priority.
In support of this initiative, Cheetham Salt
has been investigating the feasibility of
constructing a large scale salt field in
Indonesia, with the same attributes as the
Australian salt fields. Discussions with the
Indonesian Government and the feasibility
studies have advanced well during FY12,
with the business actively progressing the
development of a new 170,000 tonnes
per annum solar salt field at Flores in
eastern Indonesia.
Once completed, the Flores field will be
Indonesia’s largest salt field, which will
secure long term domestic supply of high
quality salt volumes materially in excess
of the current import licence, and provide
a key staging point for expansion into the
attractive East Java market. Construction
of this salt field will transform Cheetham
Salt into the largest fully integrated salt
producer in Indonesia.
Alternative sources of salt
Cheetham Salt continues to be in regular
dialogue with the water treatment
companies and major coal seam gas
producers, as this industry may prove to
be a source of commercial quantities of
salt. The coal seam gas industry plans
to establish a large number of wells,
predominantly in Queensland, to extract
the natural gas present in the coal seams.
A by-product of this drilling program is
the release of brackish ‘associated water’
which contains a mixture of salts, including
sodium chloride. Cheetham Salt’s product
and market knowledge, combined with
its complex and efficient supply chain,
uniquely positions the business to
contribute to the associated water solution.
Outlook
The harvest impacts of FY11 have flowed
through to the operating results of FY12
in the form of higher salt costs and
incremental freight costs. It will take the
resumption of normal harvest cycles before
the higher than usual salt costs have
averaged down towards historical levels.
When combined with the operational
improvements of the Bajool refinery,
and the adoption of LEAN manufacturing
principles, there is expected to be a
positive uplift in the earnings from
the mature domestic business.
The outlook for growth in Indonesia is
very encouraging, and recent meetings
with the Indonesian Government have
confirmed its publicly announced intention
to become self sufficient in salt production.
Cheetham Salt has advised Indonesian
Government representatives that approval
has been granted by the Ridley Board for
Cheetham Salt to proceed with the Flores
salt field project subject to the receipt
of the requisite regulatory approvals.
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PROPERTY DEVELOPMENT
Ridley has a diverse property portfolio across Australia, including significant freehold
salt field and feedmill properties which are now surplus to the operational requirements
of the business.
Stephen Butler – Property Development
Manager
2012
highlights
+ Progress on a number
of fronts
+ Design and feasibility
studies for Moolap site
+ Technical investigations
completed for Lara
+ Sale of Wacol site
for $5.5 million proceeds
+ Bowen and Dandenong
marketed for sale
Ridley has developed a strategy to create
shareholder value through the divestment
and/or redevelopment of these surplus
property assets, and further progress
has been made on a number of fronts in
FY12 that is likely to see significant value
created over both the short and long term.
Long term value creation strategies have
been focused on key salt field sites in
Victoria and South Australia, including
the non-operating salt fields at Lara and
Moolap in the Geelong region in Victoria
and the operating salt fields at Dry Creek
in South Australia. The Lara and Moolap
development sites have been transferred
from Cheetham Salt ownership to Ridley
ownership during the year and have
consequently been excluded from the
Cheetham Salt divestment process,
together with the former salt field at
Bowen. In contrast, the Dry Creek salt
field remains a fully operational site
servicing the long term Penrice supply
agreement and is included as an asset
available for purchase within any
divestment transaction.
Operational efficiencies have been
implemented across the stockfeed
business, and restructure opportunities
exist for a number of feedmill sites across
Queensland and Victoria which provide the
potential to generate shorter term returns
through property asset sales. Ridley
expects that several property sales
currently being pursued, including the
Bowen salt field site, will be completed
during FY13.
Moolap
In 2011, Ridley began investigating
alternative use opportunities for the
Cheetham Salt site at Moolap, Victoria.
This 475 hectare site is a mixture of
freehold land and leased land, and
occupies a unique strategic position on
the southern side of Corio Bay, within
three kilometres from the Geelong Central
Business District (CBD). The Geelong
region is experiencing considerable
population growth, and whilst the site is
held as an operating salt field, there has
been increasing land availability pressure
which has led Ridley to investigate
opportunities for redevelopment
of the site.
Consultants were engaged to advise on
alternative land use scenarios, prepare
design concepts and undertake preliminary
feasibility studies. The results of the
preliminary analysis proved encouraging
and Ridley is now undertaking further
work and holding discussions with key
Government stakeholders to confirm
whether it would be feasible to move
forward into the project approvals phase.
Whilst no formal process has commenced,
Ridley is being actively pursued by a
number of prominent developers seeking
to partner with Ridley in redevelopment of
the site. Ridley will commence more formal
discussions with interested parties in
FY13, followed by a more defined planning
process to pursue an alternative land use.
Lara
While property market conditions have
fluctuated in Victoria during FY12,
there have been positive signs for the
Avalon region, which is approximately
55 kilometres west of the Melbourne CBD
and 10 kilometres from the Geelong CBD.
Ridley’s 912 hectare property adjacent to
Avalon Airport is located within a future
employment corridor nominated by the
Victorian State Government’s planning
blueprint ‘Melbourne @ 5 Million’, and
as such is set to directly benefit from
proposed expansion within the area
surrounding the airport.
Recent movements in the local property
market, including sale of a 141 hectare
site directly adjacent to Ridley’s property
as a land-bank opportunity, has spurred
enquiry about Ridley’s landholdings, and
also further confirms the site’s strategic
positioning and future potential.
Preliminary planning and technical
investigations have been completed
for the Lara site, which indicated
that a large portion of the land has
redevelopment potential for industrial
and airport-related uses. Ridley considers
that this opportunity will create significant
value for shareholders and is actively
pursuing all value-creating opportunities.
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Cheetham Salt, Moolap
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Dry Creek
Cheetham Salt owns more than 5,000
hectares of freehold land in the broader
Dry Creek area, generally following the
coastline northwards from Adelaide. In
2008, Ridley and Delfin Lend Lease
(Delfin) entered into a Heads of
Agreement to facilitate investigation into
the redevelopment of the Dry Creek salt
fields. The investigations indicated that
redevelopment of the site would be
commercially viable based on an indicative
design as a Master Planned Community
of approximately 10,000 dwellings.
Whilst Ridley determined not to proceed
into the next stage of the investigations
with Delfin, we remain confident that
redevelopment of the land will occur at an
appropriate time, and that the land will
continue to present a significant strategic
opportunity given its proximity to the heart
of Adelaide and inclusion within the South
Australian State Government’s 30 year
plan for the Greater Adelaide region.
Ridley will continue to monitor this
opportunity and work closely with the
South Australian Government to establish
a pathway for future redevelopment
of the site to maximise its long term
value to Ridley shareholders.
In addition to the Dry Creek site itself,
Cheetham has substantial landholdings
further north of the site, adjacent to the
Buckland Park township, which also
represent further redevelopment
opportunities over the long term. A new
residential master-planned community
called ‘Riverlea’ is currently underway
adjacent to Cheetham’s Buckland Park
landholdings, and which will become home
for over 12,000 families into the future.
Ridley believes that the opportunities
associated with this land will be significant
but with a long term horizon, and
preliminary discussions have been held
with a prominent developer in this regard.
Bowen
In early calendar 2012, Ridley began a
marketing campaign for the sale of the
Cheetham Salt Bowen site, located in
the Whitsunday Islands. Production of
salt at the site has been severely limited
for several years due to severe weather
events. Cheetham Salt consequently
considered the site to no longer be
commercially viable and commenced
the process to close the site and advertise
the 34 hectare site for sale. The site will
be excluded from any Cheetham Salt
divestment transaction and Ridley is
currently pursuing sale of the site which
we believe will be achieved in FY13.
Wacol
In FY12, Ridley completed the sale and
settlement of its Ridley AgriProducts
(RAP) Supplements site at Wacol,
Queensland for $5.5 million, exclusive of
GST. Closure of the 1.83 hectare industrial
site formed part of a broader operational
restructure which included the purchase
of the LNT business in Townsville and
consolidation of that business into RAP’s
Townsville Supplements site. A moderate
profit on divestment was recorded in the
year after allowing for all associated costs.
Dandenong
During FY12, RAP starting planning for
the closure of its mill site in Dandenong,
Victoria, with all site operational activities
to be relocated to a new facility currently
under construction at its existing site in
Pakenham. Transition between the sites
will be completed by the end of calendar
2012, and Ridley has commenced a
process to divest the land at Dandenong.
The 1.3 hectare Dandenong site was
recently rezoned from ‘Industrial’ to a
‘Comprehensive Development Zone
(High Density Residential)’. The change
of zoning of the site is part of local
government’s broader strategic plan to
regenerate Dandenong’s commercial hub
and transform the city centre into a thriving
activities district. Ridley is confident that a
sale of the land can be achieved in FY13
which will deliver considerable uplift in
value for shareholders.
OUR PEOPLE
At Ridley, people are vital to our business. We foster creativity in an open and inclusive
environment in which our people can strive to be their best and achieve their goals.
Anne-Marie Mooney – Group General
Manager, Commercial
2012
highlights
+ 32% decrease in rate
of lost time incidents
+ Embedding of proactive
safety behaviours
+ Commitment to
development of
all employees
+ Learning and
development strategy
aligned to talent
identification
+ Positive initiatives to
promote workplace
diversity
With 80% of our employees located within
rural and remote communities across
Australia, Ridley is committed to investing
in the development of all our people to
build the skills base not only of our
business but also of the rural areas in
which we operate.
We are committed to providing and
maintaining a safe and healthy workplace
for all employees, suppliers, contractors
and visitors. We deal with our people in
good faith, while respecting our
relationships with our people and any
representatives they may choose. These
commitments not only meet all legal
requirements, but also cultivate a highly
motivated, productive and committed
workforce that drives our business
success. We actively promote diversity
and equality in our workplace.
Safety
As a core value at Ridley, safety is critical
to the way we do business. Our safety
focus, which begins at Board and executive
management level, is underpinned by three
elements: embedding proactive safety
behaviours, developing and implementing
a safety management system, and finding
engineering solutions for the physical
safety hazards that are present in the
manufacturing environment. Safety
performance is rigorously monitored,
reported to management and the
Board, and is a component of individual
performance appraisal and management
remuneration.
Group injury frequency rates FY12
The key measures we use to assess
safety performance are the lost time injury
frequency rate (LTIFR) and the serious
injury frequency rate (SIFR). The LTIFR is
the number of injuries incurring lost time
for every million hours worked, whilst the
SIFR is the sum of the number of medical
treatment injuries that did not result in lost
time plus the number of lost time injuries,
per million hours worked.
The overall results for 2012 as reflected
in the following table were as follows:
the LTIFR was 4.46, down from the 2011
result of 6.6 and representing a 32%
decrease in the rate of incidents that
resulted in lost time to the business. The
SIFR, which represents our total injury rate,
slightly increased to 16.8 from 15.2, but
still represents an improvement on
previous years.
While there was a slight increase in injuries
that required medical treatment, the overall
safety performance continues to improve
and we continue to remain focused on
reducing injuries through the effective
management of key hazards and risks in
our workplaces. The long term target for
all safety incidents is zero, however it is
recognised that this can only be achieved
through the development of a culture that
is committed to continuous, progressive
improvement in all aspects of safety. Over
the past year we have made significant
inroads to improving our approach to
safety at all levels, and have conducted a
review of our existing safety management
system to ensure it is aligned to the new
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harmonised safety legislation. Our
approach has been based on identifying
the key risks that could result in the
greatest harm within the workplace.
Through the revision of key documentation
and controls, there has also been a
focus to ensure that all sites have
taken the opportunity to refresh training
of staff on site.
Through Ridley AgriProducts and
Cheetham Salt, Ridley makes significant
financial contributions to select charities,
schools, local sporting clubs and
universities across Australia. These
contributions support many worthwhile
activities, and provide opportunities and
education for a broad range of people in
diverse regions.
Talent identification and development
Ridley continues to deliver its Talent
Development strategy, with the main
objectives being:
• the identification of a talent pipeline
of employees with the potential and
capability to progress into key
management positions in the future;
To support our focus on a proactive
approach to safety, during FY12 we
continued to measure our lead indicators to
ensure that management remains focused
on driving safety system improvements. Our
lead indicators and performance against
these were as follows:
• completion of safety training
– 80% compared to 52% in FY11;
• completion of Good Manufacturing
Practice (GMP) audits on a monthly
basis at each site – 100% compared
with 66% in FY11; and
• closure of priority actions identified
during audits or as a result of incident
investigations – 89% compared to
42% in FY11.
The above improvements are a very
pleasing result for the business and
demonstrate that with diligence, the
inroads made to improving the safety
management systems over the past
12 months have been effective. This
work will continue during FY13.
Community
Ridley recognises that whilst generating
a profit rewards shareholders, it also
creates the ability to support social and
environmental activities within the rural
and regional communities where we
operate. These activities can sustain
business performance by improving
efficiency and the wellbeing of the
community in general, whilst strengthening
the regional networks across Australia.
Operating in diverse communities across
rural Australia, Ridley proudly supports
Australian businesses, suppliers, and
primary producers, allowing them to grow
and develop. As one of the largest national
employers in many rural regions, Ridley is
committed to investing in the development
of all our people and to building the skills
base of the remote communities in which
we operate.
In the 2012 Employee Opinion Survey,
we asked our employees to indicate their
preferences regarding Ridley’s involvement
with charities. The majority of our staff told
us they would prefer Ridley to support
charities that provided rural and/or regional
support and/or those that were linked to
improving health and wellbeing.
In FY13, Ridley has launched two new
charity partnerships with the Garvan Institute
and Aussie Helpers, which will be the main
beneficiaries of charitable donations.
Our support for the Garvan Institute will
involve an education program on health
related issues that will be presented in
country towns throughout Australia.
Our support for Aussie Helpers will involve
Ridley supporting Aussie Helpers assist
struggling farmers. The support will be a
combination of a cash donation and, more
importantly, volunteering by our staff to
help local farmers.
Ridley is very excited about these
new partnerships which will benefit our
employees, suppliers, customers and
the communities in which we operate.
People development
Our people development objectives are
about:
• educating our people, by giving them
on the job experience, training and
opportunities to develop their skills;
• engaging our people, by providing
an environment where they can be
innovative and find new and better
ways of doing things; and
• evolving our people, by providing
a workplace that allows them to
realise their goals.
To deliver on these objectives Ridley
has adopted the following strategies.
• to retain key people through the
provision of career and growth
opportunities; and
• to improve productivity through
considered alignment of people
to the most suitable positions.
Throughout the year we continued to
implement changes to roles through
expanding responsibilities, promoting
staff into more senior roles and offering
the opportunity for employees to broaden
their capability and experience by working
on key projects.
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Learning and development
In FY12, our Learning and Development
strategy was further aligned to our Talent
Identification strategy by focusing on
leadership and management development.
Throughout the year we invested in two
new structured development programs
predominantly targeted at our rising stars
and site managers. These programs will
continue to be implemented throughout
FY13 to support the talent development
objectives, and in addition we are
introducing a job rotation program and
a formal mentoring program, as well as
providing further external networking
opportunities.
We have also implemented an online
learning management system, which
enables the effective delivery of
standardised training across the
business, particularly in the areas of
legal compliance, employee induction,
safety and quality programs. This style
of learning has been well received across
the organisation, is an important part of
the business strategy, and is an effective
way of training a workforce that is so
geographically dispersed.
OUR PEOPLE CONTINUED
Employee opinion survey
This year we conducted an Employee
Opinion Survey across the entire Ridley
business to seek feedback from our
employees with regard to their level of
satisfaction with the business. We had
a 7% improvement in participation rate
compared to the 2010 survey, which
itself is a pleasing result.
The survey focused on 13 themes, and
measured employee satisfaction across
these themes. This year our staff rated
the themes related to Safety, Pride and
Commitment and Diversity the highest.
This means that staff are generally
satisfied with how Ridley manages its
approach to safety and provides a safe
workplace, that staff are proud to work
for Ridley, feel that they are given equal
opportunity, and that their views are
valued and respected.
The areas for improvement centred around
increasing the level of communication
and consultation between managers and
staff; communicating more effectively the
vision and strategy of the Company; and
broadening the opportunities for learning
and development opportunities. In addition,
there was a key theme relating to change
and innovation, which is the focus of an
exciting program to be implemented in
FY13. This program will focus on gathering
the ideas of employees throughout the
organisation for improvements in the
workplace, new product developments and
generally any ideas that will make Ridley
a more efficient and productive place to
work. We look forward to being able to
report positively on the program next year.
Employee/industrial relations
Improving the Industrial Relations
environment at Ridley in 2012 continued
to be a key priority through the
implementation of the Fair Work legislation
and the Award modernisation process.
Industrial negotiations progressed well
throughout the year to reach mutually
agreeable terms and conditions for
employees and Ridley alike. Throughout
the year a number of Enterprise
Agreements were negotiated with
employees across Australia and
duly lodged with and approved by
Fair Work Australia.
Diversity
Ridley strives to foster a working
environment which is not only exciting
and challenging, but is also flexible,
inclusive and supportive. That means
a place where everyone is treated with
respect and dignity, and can work in
an environment where they can achieve
their maximum potential.
We respect diversity in our people, in their
ideas, work styles and perspectives. Ridley
believes that diversity contributes to its
business success and aspires to employing
a workforce reflective of the communities
in which the Company operates.
The ASX’s Corporate Governance
Principles and Recommendations
now require listed entities to formally
comment on diversity measures,
specifically gender diversity.
In 2011, the Ridley Board introduced a
Diversity Policy to guide the Board and
senior management in developing diversity
objectives for Ridley on a national basis.
The Diversity Policy is aimed at achieving a
diverse and inclusive working environment
which provides equal opportunity in respect
of employment and employment conditions
with regard to the following:
• recruitment, selection and promotion;
• talent and succession planning;
• career development;
• flexible work practices;
• gender diversity; and
• employee consultation.
Ridley firmly believes that diversity is about
recognising and valuing the contribution
of people from different backgrounds,
and with difference perspectives and
experiences. Diversity includes, but is not
limited to, gender, age, disability, ethnicity,
religion and cultural background. In terms
of the Ridley diversity strategy for FY12
and FY13 and the associated measurable
objectives, the initial emphasis will be on
gender diversity, with a primary goal being
to strengthen the representation of women
in senior management positions
throughout Ridley.
To meet the objectives of the Diversity
Policy, a strategy was developed which
predominantly focuses on initiatives to
improve Ridley’s talent pipeline and
provides greater opportunities for women
to achieve their career aspirations. The
diversity strategy incorporates Ridley’s
measurable objectives having regard to
key metrics including:
• gender salary comparison by role level;
• parental leave return rates;
• new recruits by gender and role;
• representation by age, role level and
gender on flexible work arrangements;
• outcome of the high potential and high
performance employee assessment;
• voluntary turnover by age and gender;
and
• Employee Opinion Survey results by
gender.
The Board and senior management team
monitor progress and review the initiatives
within the diversity strategy on at least an
annual basis.
FY12 diversity initiatives
During FY12, the diversity initiatives
included:
Pay equity
As part of its annual remuneration review
process, Ridley generally undertakes a
review of pay equity across the Company
and takes appropriate steps to address any
differentials. This process was conducted
in FY12 whereby Ridley conducted a
review of salaries for job groups to ensure
that employees were fairly remunerated.
Development programs
Ridley continues to focus on a range of
initiatives aimed at developing the talent
pipeline and encouraging more women
into senior management roles. These
initiatives include the following:
• a national emerging leader program
where six of the seven participants
were female;
• a national leadership program for site
managers, where one participant was
female;
• the introduction of a formal mentoring
program, where five of the nine mentees
are female; and
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• developing skills for networking, through
regular attendance at networking events.
Parental leave and flexible
work arrangements
During FY12, Ridley introduced a
Paid Parental Leave Scheme to eligible
employees to complement the Government
Scheme. The Ridley scheme offers eight
weeks paid leave for employees with
greater than two years’ service and
18 weeks to those with greater than five
years’ service. This scheme has helped
secure an 86% return rate in relation
to Parental Leave, with six of the seven
employees who accessed Paid Maternity
Leave entitlements returning to work.
A range of flexible work arrangements
continues to be offered to our employees
to assist them meet both their work and
carer responsibilities, including job-sharing,
phased return to full-time employment
after completing Parental Leave, and
working from home.
In FY12, four female employees continue
to be on flexible work arrangements.
Recruitment
Throughout FY12, women represented
24% of all new hires within Ridley, with
the highest proportion of appointments
being made for Technical Specialist,
Administration and Manufacturing roles.
Ridley has continued to increase its
representation of females in positions
that have historically had low female
representation.
Turnover
Employee turnover was 18% across
the entire Ridley group. As a proportion
of total employee turnover, 24% of
those employees who voluntarily left
our business were female, whilst 76%
were male.
Within Ridley AgriProducts, female
turnover was highest in the 25-34 year
old demographic whilst turnover amongst
males was highest between the ages of
35 and 44. For Cheetham Salt, turnover in
the 25-34 year old demographic was
highest for both genders, however male
employees aged between 45 and 54 years
also rated equally. Such turnover rates
reflect the strong demand for labour in the
mining sector that exists in the same
regional areas in which we operate.
Employee Opinion Survey
The Ridley Employee Opinion Survey
(EOS) was undertaken in early 2012,
with an overall response rate achieved
of 67.5%. Females constituted 22%
of the sample size.
For the first time in an EOS, Ridley
sought employee feedback on a range
of workplace diversity issues, including
perceptions on the extent:
• of any discrimination, harassment
and bullying in the workplace;
• to which individual differences in
background and interests are accepted
and embraced within the organisation;
• of sufficient flexibility to enable
employees to achieve an appropriate
work/life balance; and
• to which equal opportunity exists for
promotion and career progression.
Of the 13 themes addressed in the
EOS, diversity rated as the third highest
theme by staff. This response indicates our
employees’ high satisfaction with Ridley’s
approach to diversity within the workplace.
Ridley has utilised the feedback received
to further refine its Diversity Policy, and in
particular, to implement initiatives aimed at
increasing female participation at more
senior levels of the business.
Whilst increased gender diversity is a
current priority for our business, Ridley
will continue to monitor feedback from
multiple demographic groups to ensure
that all views are well captured and
understood by the business.
Female participation
The following table outlines the
female representation within Ridley
as at 30 June 2012.
Female
Representation
Across
The Ridley Group
The Ridley Board
Ridley senior executives
Ridley senior managers
%
20
17
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FY13 diversity initiatives and
measurable objectives
In FY13, Ridley will continue to implement
the initiatives to develop its talent pipeline
to create opportunities for employees to
reach their career aspirations. The focus
for FY13 remains on:
• improving learning and development
to provide a greater opportunity for
career development;
• recruitment and selection to ensure
candidates are recruited based on
their suitability for the role;
• providing flexibility within the workplace
to facilitate a greater proportion of
employees returning to work; and
• providing all employees the opportunity
to give the Company feedback on
improvements to workforce diversity
on all levels.
The Diversity Policy incorporates
Ridley’s measurable objectives having
regard to key metrics, performance
against which will continue to be
reported throughout FY13.
Environment
Energy
The Federal Government’s National
Greenhouse and Energy Reporting
Act 2007 (Cth) (NGER) introduced
a national framework for the reporting
and dissemination of information about
greenhouse gas emissions, greenhouse
gas projects and energy use and
production. To comply with this legislation,
Ridley is required to report annually. As
in prior years, Ridley will again submit a
compliant NGER report for 2012.
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OUR PEOPLE CONTINUED
Ridley is also required to report its
energy usage under the Energy Efficiency
Opportunities Act 2006 (Cth). This
legislation requires any company that
reached the prescribed 0.5PJ total energy
usage threshold to conduct assessments
to identify potential opportunities to reduce
energy use and to then monitor and report
not only on those opportunities, but also
any new opportunities identified within the
context of that company’s total energy
usage. Energy use across the business
includes electricity, Liquid Petroleum Gas
(LPG), natural gas and diesel.
Over the past 12 months, a number of
minor initiatives were implemented that
resulted in improvements and hence a
reduction in energy usage. During FY13
there will be a more structured approach
adopted to drive energy efficiency
improvements throughout Ridley, focusing
largely on three main areas, namely:
improving the efficiency of boilers, pellet
presses and compressors. Progress on
these projects will be reported in next
year’s Annual Report.
Water
We continue to look for opportunities to
reduce our water usage. As detailed in
the 2011 Ridley Annual Report, both
Australian businesses have implemented
water management plans at some of their
key sites and have identified a number of
solutions to reduce water consumption at
the mills and refineries.
Reducing the usage of potable water
has been the focus for most sites, and
all sites are now monitoring and tracking
their water consumption. Initiatives being
used or investigated include the collection,
treatment and use/reuse of rainwater,
stormwater run-off and boiler blowdown,
particularly given that a significant amount
of water is used through our boilers.
Waste
Ridley AgriProducts and Cheetham
Salt continue to reduce waste through
improved efficiencies at refining and feed
mill sites and by diverting as much waste
as possible into recycling streams. The
two businesses do not generate a
significant amount of waste, however each
management team has demonstrated a
real commitment to the recycling program.
Ridley continues to be a signatory of the
Australian Packaging Covenant and
submitted a compliant plan for 2012.
Flora and fauna issues
Salt fields provide important ecosystems
for a variety of flora and fauna, and
a number of the Cheetham Salt sites
contain birds or plants of state, national
or international significance. Over the
coming months, the extent of the
biodiversity issues at the sites, and
the implications for site management,
will be reviewed. Currently the most
significant issues exist at the Dry
Creek and Bajool sites.
At the Bajool site there is a population
of the Capricorn Yellow Chat which is
listed as Critically Endangered under
the Commonwealth Environment and
Biodiversity Conservation Act 1999
(EPBC Act). Work being supported by the
site has shown that the local population of
these birds is larger than originally thought.
Both the Price and Dry Creek salt field
sites are listed as sites of International
Significance for Shorebirds. 208 species
of birds have been recorded at Dry Creek,
together with a total recorded faunal
biodiversity of 375. There are seven
shorebirds listed as having international
significance and three others having
national significance. From a fauna
perspective, 361 plants have been
recorded, with 54 having conservation
interest, including one nationally vulnerable
species that is listed under the EPBC ACT
and two species that are protected at the
State level.
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BOARD OF DIRECTORS
John M Spark
BComm FCA
Chair and Independent
Non-Executive Director
Appointed a Director in
January 2008 and Ridley Chair
on 22 November 2010, John
is a Director of Newcrest
Mining Limited. John was the
Managing Partner of Ferrier
Hodgson Melbourne and a
global partner of Arthur
Andersen Melbourne. He was
a Director and Chairman of the
Audit Committee of ANL
Limited and Baxter Group
Limited. John has an extensive
background in accounting,
auditing and financial analysis.
Other current listed
company directorships
Newcrest Mining Ltd
from 2007.
Former listed company
directorships in the last
three years
None.
Richard J Lee
BEng (Chem) (Hons) MA
(Oxon) FAICD
Independent Deputy
Chairman
A Director since 2001, Rick
is Chairman of Salmat Limited
and an Independent Director
of Newcrest Mining and Oil
Search Limited. Rick is also
Chairman of the Australian
Institute of Company Directors,
and was formerly Chief
Executive of NM Rothschild
Australia Group and prior to
that spent 16 years in the
CSR sugar division.
Other current listed
company directorships
Salmat Ltd from 2002;
Newcrest Mining Ltd from
2007; and Oil Search Ltd
from May 2012.
Former listed company
directorships in the last
three years
CSR Ltd from 2005
to 11 May 2011.
John Murray
GAICD
Patria M Mann
BEc CA MAICD
Independent
Non-Executive Director
Appointed in March 2008,
Patria is currently a Non-
Executive Director of First
State Superannuation Trustee
Corporation, The Doctors’
Health Fund Pty Limited and
Perpetual Superannuation
Limited. Formerly a partner
at KPMG, Patria brings strong
audit, investigation, risk
management and compliance
experience to the Board.
Patria is a member of the
Institute of Chartered
Accountants and the Institute
of Company Directors.
Other current listed
company directorships
None.
Former listed company
directorships in the last
three years
None.
Managing Director
John Murray joined Ridley
as CEO of Cheetham Salt
in December 2005 and was
appointed Managing Director
and Chief Executive Officer
of Ridley Corporation Limited
in May 2008. John was
previously Group General
Manager – International
Operations with Elders
Ltd. Prior to that he was
Managing Director of the
South Australian based grain
business AusBulk Ltd until its
merger with ABB Grain Ltd
in September 2004. John
has an extensive background
of senior management
experience in the food,
industrial and agribusiness
sectors.
Other current listed
company directorships
None.
Former listed company
directorships in the last
three years
None.
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Associate Professor
Andrew L Vizard
BVSc (Hons) MPVM FAICD
Independent
Non-Executive Director
A Director since 2001, Andrew
is a senior consultant and
former Director of the
Mackinnon Project at the
University of Melbourne.
Andrew is an experienced
company Director and has
served on the boards of
numerous companies,
statutory bodies and scientific
organisations. Andrew is
currently a board member
of Animal Health Australia,
Parks Victoria and a trustee
of the Australian Wool
Education Trust.
Other current listed
company directorships
None.
Former listed company
directorships in the last
three years
Phosphagenics Ltd from July
1999 to May 2010.
Professor Robert J
van Barneveld
B.Agr.Sc. (Hon), PhD,
R.An.Nutr., FAICD
Independent
Non-Executive Director
Professor van Barneveld is a
registered animal nutritionist,
has a Bachelor of Agricultural
Science with a major in Animal
Production and a PhD from
University of Queensland.
Appointed in June 2010,
Professor van Barneveld brings
to the Board a wealth of
experience in the agricultural
sector, and currently serves
on the Boards of Pork CRC
Ltd, Australian Pork Limited,
Pig Improvement Company
Australia Pty Ltd and Porkscan
Pty Ltd, and is also Chairman
and President of Autism
Queensland Inc.Professor
van Barneveld is an adjunct
Professor in the school
of environmental and rural
science at the University
of New England.
Other current listed
company directorships
None.
Former listed company
directorships in the last
three years
None.
Dr Gary H Weiss
LLB (Hons) LLM (NZ) JSD
(Cornell, NY)
Non-Executive Director
Appointed in June 2010,
Dr Weiss is an Executive
Director of Ariadne Australia
Ltd and a former executive
Director with the Guinness
Peat Group, an associated
entity of Ridley’s largest
shareholder, GPG Nominees
Pty Ltd. Dr Weiss has LL.B
(Hons) and LLM (Dist.)
degrees from Victoria
University of Wellington,
New Zealand and a JSD
from Cornell University,
New York. Dr Weiss has
extensive experience in
international capital markets
and is a Director of a number
of public companies.
Other current listed
company directorships
Ariadne Australia Limited
from 1989; Premier
Investments Limited from
1994; Tag Pacific Limited from
1988; Mercantile Investment
Company Limited from 2012;
and Pro-Pac Packaging
Limited from 2012.
Former listed company
directorships in the last
three years
Westfield Holdings Ltd (Group)
from 2004 to May 2010.
Guinness Peat Group (UK)
from 1990 to 30 April 2011.
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CORPORATE GOVERNANCE STATEMENT
Ridley Corporation and the Board are committed to achieving the highest standards
of corporate governance.
The Australian Securities Exchange Listing
Rules require companies to disclose the
extent to which they have complied with
the best practice recommendations of the
ASX Corporate Governance Council – the
Corporate Governance Principles and
Recommendations (Recommendations). In
accordance with ASX Listing Rule 4.10.3,
the Company will disclose when it has not
adhered to any of the Recommendations.
The Company considers that it complies
with all Recommendations except
for Recommendation 2.4 and
Recommendation 8.1. These
Recommendations suggest that a
company should have both a Remuneration
Committee and a Nominations Committee,
each with at least three Non-Executive
Director members. The Company has a
Remuneration Committee which the Board
considers, given the size of the Board,
is more appropriate to comprise of two,
rather than three, Non-Executive Directors.
Nominations issues are addressed by
the full Board.
Board responsibilities
The Chair is responsible for leading the
Board, ensuring all Directors are properly
briefed in all matters relevant to their role
and responsibilities, facilitating Board
discussions and managing the Board’s
relationship with the Company’s senior
executives.
The Board is responsible for the overall
governance of the Company, including
setting the strategic direction, establishing
goals for management, and monitoring the
achievement of these goals. Directors are
accountable to shareholders for the
Company’s performance.
The management of the business is
delegated by the Board to the Managing
Director and Chief Executive Officer (in
this statement, referred to hereafter as
Managing Director), within a framework of
financial and non-financial authority limits.
The Board is responsible for appointing
and reviewing the performance of the
Managing Director.
The Board has established an Audit
and Risk Committee, a Remuneration
Committee (formerly the Remuneration
and Nomination Committee) and a Ridley
Innovation and Operational Committee
to assist in the execution of its
responsibilities. The roles of all Board
committees are documented in committee
charters which are reviewed and approved
by the Board annually. The Board has also
established a framework for the
management of the Company, including
a business risk management process,
the establishment of appropriate internal
controls, and the adoption of ethical
standards which are incorporated
within a Code of Conduct.
The Board and committee charters
and risk management framework are
available on the Company’s website
at www.ridley.com.au
Composition of the Board
The names, profiles, qualifications and
experience of the Directors in office
at the date of this statement are set
out on pages 32 and 33.
The composition of the Board is
determined using the following principles:
• The Board should comprise Directors
with a broad range of expertise, both
nationally and internationally.
• The Board should comprise a minimum
of six directors. This number may be
increased where it is felt that additional
expertise is required in specific areas.
• The Chair of the Board will be an
independent Non-Executive Director.
• The Board will comprise a majority of
independent Non-Executive Directors.
Currently, there are six independent
Directors and the Managing Director.
Dr Weiss ceased his association with the
entity responsible for his nomination to
the Board effective from 30 April 2011,
at which time the Board assessed the
relevant circumstances and considered
Dr Weiss to be an Independent Director
from 1 May 2011.
Remuneration of Directors
Non-Executive Directors’ fees are
determined by the full Board within the
aggregate limit of $700,000 approved by
the shareholders at the Annual General
Meeting (AGM) in 2003. Non-Executive
Directors are not entitled to participate
in the Company’s equity participation
schemes outlined in the Remuneration
Report, including share options or
performance rights, nor do they receive
incentive payments. In accordance with
current corporate governance guidance,
the Directors’ retirement scheme was
terminated at the AGM in 2003. Directors’
accrued entitlements at that date will
be paid when they retire. Details of the
remuneration of Directors during the year
are set out in the Remuneration Report.
Board meetings
Board and committee agendas are
structured throughout the year to review
Company strategy and to give the Board
a detailed overview of the performance
and significant issues confronting each
business unit and to identify major risk
elements. The number of meetings held
and the attendance details are set out in
the Directors’ Report (page 41).
Directors receive detailed financial
and operational reports from senior
management during the year and
management is available to discuss
the reports and business issues with
the Board. The Board on occasion
visits and holds some meetings at
the Company’s operating sites.
Independent professional advice
Each Director has the right to seek
independent professional advice relating
to the duties and obligations of a Director
at the Company’s expense, however prior
approval of the Chair is required and is
not to be unreasonably withheld.
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Company Secretary
All Directors have access to the advice
and services of the Company Secretary,
who is responsible to the Board for
ensuring compliance with procedures and
applicable statutes and regulations. To
enable the Board to function effectively,
all Directors have full and timely access to
information that is relevant to the proper
discharge of their duties. This access
includes information such as corporate
announcements, investor communications
and other developments which may affect
the Company and its operations as well as
access to management where required.
The Company Secretary is responsible
for management of Director training. All
new Directors are appropriately inducted
to the Company, which includes briefings
on fiduciary and statutory responsibilities
as well as orientation in respect of the
Company’s operations.
Remuneration Committee
During the year certain of the
responsibilities of the former Remuneration
and Nomination Committee were deemed
by the Board to be matters more
appropriately addressed by the Board.
Consequently, the Remuneration and
Nomination Committee was renamed the
Remuneration Committee, its charter
amended, and the Ridley Board Charter
extended to cover the Board appointment
and composition issues envisaged by the
Recommendations as being covered by a
Nominations Committee. The role of the
Remuneration Committee is to review, and
make recommendations to the Board on,
remuneration packages and policies
applicable to the Managing Director, senior
executives and Directors themselves. This
role also includes responsibility for the
Ridley Corporation Long Term Incentive
Plan, Ridley Employee Share Scheme and
incentive performance arrangements.
With the restructuring of the Remuneration
Committee, the Board has assumed
responsibility for evaluating Board
performance, reviewing Board size and
composition, assessing the necessary
and desirable competencies of Directors,
reviewing Board succession plans,
senior management succession plans
and candidates to fill vacancies. The
Board is responsible for reviewing the
performance of the Chair.
The Remuneration Committee meets
at least twice a year and as required.
All members of the Committee must be
independent Non-Executive Directors.
The Managing Director attends all
meetings of the Committee by invitation.
The members of the Remuneration
Committee throughout the year unless
otherwise stated were:
• J M Spark, Independent Director and
Remuneration Committee Chair
• R J Lee, Independent Director
Details of the Committee members’
experience and technical expertise
are set out in the Directors’ biographies
on pages 32 and 33.
Audit and Risk Committee
Board policy states that the Audit and
Risk Committee must consist of at least
three Non-Executive Directors, the majority
of which are independent as determined
in accordance with the Recommendations.
The role of the Committee is to oversee
financial reporting, internal controls,
the maintenance of an effective risk
management framework, including
compliance and insurance, and the
assurance provided by internal and
external audit.
It is good corporate governance to
review the external audit appointment on
a regular basis. In the 2009 financial year,
KPMG were appointed as the Company’s
Auditor following a competitive tender
process involving all four of the major
Chartered Accounting firms. It is envisaged
that this appointment be similarly reviewed
in the future.
Details of the amounts paid for audit and
other services are set out in note 20 of
the Financial Report. This Committee
meets with the external auditor at least
four times a year to discuss matters
relevant to its terms of engagement and
review any significant disagreements
between management and the auditor.
In addition, the Committee meets with
the auditor without the presence of
management.
The Audit and Risk Committee reviews
the level of non-audit services provided
by the external auditor and ensures it does
not adversely impact on the auditor’s
independence. The auditor also provides
the Committee with written confirmation
of its professional independence. The audit
partner or senior representative also
attends the Ridley Annual General Meeting
and is available to answer any relevant
shareholder questions. The Company
requires that the audit partner be
changed at least every five years.
The Audit and Risk Committee is
responsible for the independent
whistleblower service that is available
to all Australian employees.
The Audit and Risk Committee is
responsible for oversight of the internal
audit program of the Company, which
is totally independent of the external
audit function but designed to be
complementary to it. The Committee sets
and agrees the internal audit program,
receives and reviews all internal audit
reports, and meets with the internal
auditors at least four times a year. In
addition, the Committee meets with the
internal auditors without the presence
of management.
It is considered good corporate
governance to review the internal audit
appointment on a regular basis, and
following an extensive review by the
committee, Deloitte was appointed as
the Company’s internal auditor, and PwC
as the Company’s information technology
internal auditor, both with effect from
1 July 2009 and for an initial two year
period. These appointments were reviewed
in May 2011 and each internal auditor
reappointed for a further two years with
effect from 1 July 2011.
The Audit and Risk Committee also
gives the Board assurance regarding
the accounting policies adopted, any
changes in accounting policies or
practices, and the corresponding
financial and disclosure impacts.
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The members of the Audit and Risk
Committee throughout the year unless
otherwise stated were:
• PM Mann, Independent Director – Chair
• RJ Lee, Independent Director
• GH Weiss, Independent Director
• AL Vizard, Independent Director
Details of the Committee members’
experience and technical expertise are
set out in the Directors’ biographies on
pages 32 and 33.
Ridley Innovation and Operational
Committee
This Committee changed its name to
the Ridley Innovation and Operational
Committee (RIOC) in the prior year to
acknowledge its focus on innovation,
science, research and development, and
commercial opportunities, and to reflect
the transfer of responsibility for oversight
of risk management to the Audit and Risk
Committee.
The role of this Committee is to oversee
the Company’s processes and procedures
for new product development, innovation
and technological and scientific
advancement, aspects of general
operational performance, and quality
assurance. This Committee must comprise
at least three members, being the
Company’s Managing Director plus
two Non-Executive Directors.
The RIOC meets quarterly or as required.
The members of the RIOC throughout the
year unless otherwise stated were:
• AL Vizard, Independent Director – Chair
• J Murray, Managing Director
• RJ van Barneveld, Independent Director
• JM Spark, Independent Director
Details of the Committee members’
experience and technical expertise
are set out in the Directors’ biographies
on pages 32 and 33.
CSL Divestment Committee
Following the announcement on
22 February 2012 that transaction
opportunities for Cheetham Salt Limited
(CSL) were being pursued with the
objective of unlocking the underlying value
of its assets, the Board established a
CSL Divestment Committee comprising
J Spark (Chair), J Murray (Managing
Director), R Lee and G Weiss. The first
meeting of the Committee was held on
16 March 2012 and regular meetings
scheduled thereafter, with management,
financial and legal advisor attendance by
invitation as required.
Risk management
The Company has in place a Strategic
Risk Management Framework, a summary
of which is available on the Ridley
website at www.ridley.com.au
In addition, there are a number of other
arrangements in place to identify and
manage risks that could have a material
impact on the Company’s business,
including the maintenance of Board
committees, detailed and regular
budgetary, financial and management
reporting, established organisational
structures, procedures, manuals, policies,
audits (including internal and external,
environmental and safety) comprehensive
insurance programs and the retention of
specialised staff and external advisors.
The Company also has in place detailed
policies and review processes covering
financial and commodity risk management.
On 1 March 2012, a quarterly certification
process was introduced whereby
management is required to report to the
Board that material business risks are
being managed effectively. At year end and
without exception, the Board received such
certifications, together with assurance from
the Managing Director and Chief Financial
Officer that the declaration provided in
accordance with section 295A of the
Corporations Act is founded on a sound
system of risk management and internal
control and that the system is operating
effectively in all material respects in
relation to financial reporting risks.
The environment
The Company aims to ensure that the
highest standard of environmental care is
achieved, and has in place various policies
and procedures to ensure the Company
is aware of, and is in compliance with, all
relevant environmental legislation. More
information is contained in the Company’s
Environment Review on pages 29 and 30.
Directors’ indemnity
The Company has entered into a Deed of
Indemnity Insurance and Access with all
Directors of Ridley Corporation Limited
and with all executives appointed as
Directors of controlled entities.
The Company also has in place a Directors’
and Officers’ Liability insurance policy,
covering all Directors and officers of the
Company. The liabilities insured against
include costs and expenses that may be
incurred in defending civil or criminal
proceedings that may be brought against
the Directors and officers while working in
such capacity for the Company.
Ethical standards
In pursuance of the promotion of high
standards of corporate governance, the
Company has adopted various internal
standards and policies, which include
additional disclosure of interests by
Directors and guidelines relating to the
dealing in Company securities by Directors
and managers. The Company also has in
place a Code of Conduct for all Directors
and employees, a copy of which is available
on the Ridley website at www.ridley.com.au
The Code of Conduct reflects
the standards of behaviour and
professionalism required to maintain
confidence in the Company’s integrity.
The Code of Conduct requires the
disclosure of conflicts of interest and, if
possible, their elimination. If this is not
possible, Directors are required to abstain
from participation in, and not be present
during, any discussion or decision making
process in relation to the subject matter
of the conflict. Each Director is personally
responsible for the full and proper
disclosure to the Board of all related
party transactions.
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Securities trading
Directors and officers are only ever
permitted to buy and sell Ridley securities
when not in possession of price sensitive
information and in the one month
commencing two days after:
• the AGM;
• the announcement of the full year
results; and
• the announcement of the half year
results.
A copy of the Securities Trading Policy
is available on the Ridley website at
www.ridley.com.au
Hedging of Ridley securities
Directors and senior executives are not
permitted to hedge their exposure to
Company securities.
Margin lending
Directors and senior executives are not
permitted to use Company securities as
collateral in any financial transaction,
including margin loan arrangements.
Continuous disclosure and
shareholder communication
The Company makes timely and balanced
disclosures of all material matters
regarding it. All ASX releases are posted
on the Company’s website at www.ridley.
com.au as soon as disclosure has been
acknowledged by the ASX. Presentation
material used in analysts’ briefings is
contemporaneously released to the ASX
and posted on the Company’s website.
Continuous disclosure is a standing
agenda item for all Board meetings.
Corporate reporting
The Managing Director and the Chief
Financial Officer provide the Board with
an ‘Integrity of the Financial Accounts
Declaration’ in accordance with the Best
Practice Recommendations of Principles
4 and 7 of the ASX Corporate Governance
Guidelines as follows:
• that the Company’s financial reports are
complete and present a true and fair
view in all material respects of the
financial position and performance of
the Company and consolidated entity
and are in accordance with relevant
accounting standards;
• that the above statement is founded
on a sound system of risk management
and internal compliance and controls
designed to provide reasonable
assurance and which, in all material
respects, implements the applicable
policies adopted by the Board; and
• that the risk management and internal
compliance and control systems of the
Company relating to financial reporting
objectives are operating efficiently and
effectively in all material respects.
Compliance with the Company’s financial
risk management and internal control
systems is tested on an ongoing basis
by a formalised internal audit program,
overseen by the Audit and Risk Committee,
and supported by reviews of divisional
compliance performed by Corporate
Office staff. Divisional management
also attest to such compliance.
Diversity and equal employment
opportunity
The Company aims to provide a work
environment in which employees feel
that they are a valued member of the
organisation, that they are treated fairly
and with respect, and are given recognition
for their contribution to Company success.
The Company is committed to ensuring
that all employees enjoy an Equal
Employment Opportunity (EEO), which
means that employees are treated fairly
and equally when employment decisions
are made, that unlawful discrimination does
not take place, and that each employee
enjoys a harassment-free work
environment.
The Company supports and promotes
the principle of equal opportunity for
women in the workplace. In accordance
with Commonwealth laws, the Company
has in place a policy and program which
is aimed at identifying and removing
barriers to employment and promotion
opportunities for women in the workplace.
Further details are provided in the People
section of this Annual Report.
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39 Directors’ Report
43 Remuneration Report – Audited
50 Auditor’s Independence Declaration
51 Consolidated Income Statement
52 Consolidated Statement of Comprehensive Income
53 Consolidated Balance Sheet
54 Consolidated Statement of Changes in Equity
56 Consolidated Statement of Cash Flows
57 Notes to the Financial Statements
99 Directors’ Declaration
100
Independent Auditor’s Report
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DIRECTORS' REPORT
FOR THE YEAR ENDED 30 JUNE 2012
The Directors of Ridley Corporation Limited (the Company) present their report for the Group (the Group), being the Company and its
subsidiaries, and the Group’s interest in equity accounted investments at the end of, or during, the financial year ended 30 June 2012.
1. Directors
The following persons were Directors of Ridley Corporation Limited during the whole of the financial year and up to the date of this report
unless otherwise stated:
JM Spark
RJ Lee
J Murray
PM Mann
AL Vizard
RJ van Barneveld
GH Weiss
2. Principal activities
The principal continuing activities of the Group during the year were the production and marketing of stockfeed and animal feed
supplements and the production of crude salt, salt refining and marketing.
3. Results
Profit before income tax
Income tax expense
Net profit attributable to members of Ridley Corporation Limited
2012
$’000
26,355
(7,102)
19,253
2011
$’000
30,240
(924)
29,316
4. Review of operations
Information on the operations and financial position of the Group and its business strategies and prospects is set out in the Financial
Review section in the Annual Report.
5. Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the financial year.
6. Likely developments
The Group will continue to pursue increasing the profitability and market share of its major business sectors during the next financial
year. Further information about likely developments in the operations of the Group and the expected results of those operations in future
financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable
prejudice to the Group.
7. Dividends
Dividends paid to members during the financial year were as follows:
Final dividend for the year ended 30 June 2011 of 3.75 cents (2011: 3.75 cents) per share paid on
30 September 2011
Interim dividend for the year ended 30 June 2012 of 3.75 cents (2011: 3.75 cents) per share paid
on 31 March 2012
2012
$’000
2011
$’000
11,543
11,543
11,543
23,086
11,543
23,086
In addition to the above, Directors have declared a final dividend of 3.75 cents per share (franked) totalling $11,543,140 to be paid
on 28 September 2012, the financial effect of which has not been brought to account in the financial statements for the year ended
30 June 2012 and will be recognised in subsequent financial reports.
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DIRECTORS' REPORT CONTINUED
FOR THE YEAR ENDED 30 JUNE 2012
8. Environmental regulation
The Group is subject to environmental regulation in respect of its manufacturing activities. Management ensures that any registrations,
licences or permits required for the Group’s operations are obtained and observed.
Ridley has environmental and risk management reporting processes that provide senior management and the Directors with periodic
reports on environmental matters, including rectification actions for any issues as discovered. In accordance with its environmental
procedures the Group monitors environmental compliance of all of its operations on an ongoing basis.
The Directors are not aware of any environmental matters likely to have a material financial impact.
Greenhouse gas and energy data reporting requirements
The Group is subject to the reporting requirements of both the Energy Efficiency Opportunities Act 2006 and the National Greenhouse
and Energy Reporting Act 2007.
The Energy Efficiency Opportunities Act 2006 requires the Group to assess its energy usage, including the identification, investigation
and evaluation of energy saving opportunities, and to report publicly on the assessments undertaken, including what action the Group
intends to take as a result.
The Federal Government’s National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER) introduced a national framework for the
reporting and dissemination of information about greenhouse gas emissions, greenhouse gas projects and energy use and production.
To comply with this legislation Ridley is required to report annually. As in prior years, Ridley will submit a compliant NGER report in 2012.
9. Directors’ and executives’ remuneration
Refer to the Remuneration Report on pages 47 and 48.
10. Share options and performance rights
Unissued ordinary shares of Ridley Corporation Limited and controlled entities under options and performance rights at the date of this
report are as follows:
Ridley Corporation Long Term Incentive Plan (performance rights)
Ridley Employee Share Scheme (options)*
* The share grant and supporting loan together in substance comprise a share option.
Number
Expiry Date
7,443,000
3,225,728
Various
Various
No holder has any right under the plans to participate in any other share issue of the Company or of any other entity. The entity will issue
shares when the options and performance rights are exercised. Further details are provided in note 23 in the Financial Report and the
Remuneration Report.
The names of all persons who currently hold options granted under the option plans are entered in the register kept by the Company,
pursuant to section 215 of the Corporations Act 2001. The register is available for inspection at the Company’s registered office.
11. Information on Directors
Particulars of shares and options held by Directors in the Company together with a profile of the Directors are set out in the Board of
Directors section in the Annual Report and note 22 in the Financial Report.
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12. Meetings of Directors
The number of Directors’ meetings and meetings of Committees of Directors held during the financial year and the number of meetings
attended by each Director are as follows:
Board
A
10
10
10
10
10
10
7
H
10
10
10
10
10
10
10
Audit and Risk
Committee
A
H
Remuneration
Committee1
A
H
Ridley Innovation
and Operational
Committee
A
H
CSL Divestment
Committee2
A
H
4
4
-
-
4
-
4
4
4
-
-
4
-
3
6
-
-
6
-
-
-
6
-
-
6
-
-
-
-
-
3
3
3
3
-
-
-
3
3
3
3
-
6
-
6
6
-
-
6
3
-
6
6
-
-
4
Directors
RJ Lee
PM Mann
J Murray
JM Spark
AL Vizard
RJ van Barneveld
GH Weiss
H. Number of meetings held during period of office.
A. Number of meetings attended.
1. Formerly the Remuneration and Nomination Committee.
2. Specifically constituted to manage the Cheetham Salt sale process.
13. Company Secretary
The Company Secretary during the year was Mr Alan Boyd who was appointed on 27 July 2009. Mr Boyd is the Group’s Chief Financial
Officer and is a Fellow of the Chartered Institute of Company Secretaries and a member of the Institute of Chartered Accountants in
Australia.
14. Post balance date events
Ridley is continuing with its assessment of a potential divestment of the Cheetham Salt business to unlock shareholder value, and a select
number of parties have been invited to proceed to due diligence under Stage 2 of the confidential divestment process.
No decision has been made at the present time by Ridley with regard to the sale of Cheetham Salt and a decision is not expected
to occur until the parties complete their due diligence investigations and submit a binding offer for consideration by the Ridley Board.
For the transaction to proceed to execution, the Ridley Board requires a suitably attractive offer which recognises the intrinsic value
of Cheetham Salt and is otherwise in the best interests of Ridley.
No other matters or circumstances have arisen since 30 June 2012 that have significantly affected, or may significantly affect:
(i) the Group’s operations in future financial years, or
(ii) the results of those operations in future financial years, or
(iii) the Group’s state of affairs in future financial years.
15. Insurance
Regulation 113 of the Company’s Constitution indemnifies officers to the extent now permitted by law.
A Deed of Indemnity (Deed) was approved by shareholders at the 1998 Annual General Meeting. Subsequent to this approval, the
Company has entered into the Deed with all the Directors and the secretary of the Company and the Directors of all the subsidiaries.
The Deed requires the Company to maintain insurance to cover the Directors in relation to liabilities incurred while acting as a Director
of the Company or a subsidiary and costs involved in defending proceedings.
During the year the Company paid a premium in respect of such insurance covering the Directors and secretaries of the Company
and its Australian-based controlled entities, and the general managers of each division of the Group.
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DIRECTORS' REPORT CONTINUED
FOR THE YEAR ENDED 30 JUNE 2012
16. Non-audit services
The Company may decide to employ the auditor (KPMG) 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 Board has considered the non-audit services and, in accordance with the advice received from the Audit and Risk Committee, is
satisfied that the provision is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.
The Directors are satisfied that the provision of non-audit services by the auditor, as set out below, did not compromise the auditor
independence requirements of the Corporations Act 2001 for the following reasons:
• All non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the impartiality and objectivity
of the auditor.
• None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants, including reviewing or auditing the auditor’s own work, acting in a management or a decision-making
capacity for the Company, acting as advocate for the Company or jointly sharing economic risk and rewards.
A copy of the Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 is set out on page 50.
During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
Tax services
Due diligence services
Other services
Total
$
162,330
323,525
5,000
490,855
17. Rounding of amounts to nearest thousand dollars
The Company is of a kind referred to in Class Order 98/100 issued by the Australian Securities and Investments Commission relating
to the ‘rounding off’ of amounts in the Directors’ Report and financial statements. Amounts in the Directors’ Report and the consolidated
financial statements have been rounded off to the nearest thousand dollars in accordance with that Class Order or in certain cases to
the nearest dollar.
Signed in Melbourne on 22 August 2012 in accordance with a resolution of the Directors.
JM Spark
Director
J Murray
Director
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REMUNERATION REPORT Ð AUDITED
The Directors of Ridley Corporation Limited (Ridley or Company) present the Remuneration Report prepared in accordance
with section 300A of the Corporations Act 2001 for the Company and the Group, being the Company and its subsidiaries, and
the Group’s interest in equity accounted investments, for the financial year ended 30 June 2012. This report forms part of the
Directors’ Report for the year ended 30 June 2012.
Remuneration Committee
The Remuneration Committee (the Committee), formerly the Remuneration and Nomination Committee, consisting of at least two
independent Non-Executive Directors, advises the Ridley Board of Directors (Board) on remuneration policies and practices generally
and makes specific recommendations on remuneration packages and other terms of employment for executive Directors, other senior
executives and Non-Executive Directors. The Committee was formerly responsible for evaluating the Board’s performance, reviewing
Board size and composition and setting the criteria for membership and candidates to fill vacancies, however these responsibilities have
reverted to the Ridley Board.
Executive remuneration and other terms of employment are reviewed annually by the Committee, having regard to performance against
goals set at the start of the year, relevant comparative information and independent expert advice.
Remuneration of Directors and executives
Principles used to determine the nature and amount of remuneration
Remuneration packages are set at levels that are intended to attract and retain Directors and executives capable of directing and
managing the Group’s diverse operations and achieving the Group’s strategic objectives.
Executive remuneration is structured to align reward with the achievement of annual objectives, successful business strategy
implementation and shareholder returns. The remuneration strategy is to offer a base total employment package that can attract talented
people, to provide short term performance incentives to encourage exemplary performance, to provide long term incentives to align the
interests of executives more closely with those of Ridley shareholders, and to reward sustained superior performance, foster loyalty and
staff retention.
The overall level of executive reward takes into account the performance of the Group over a number of years, with greater emphasis
given to the current year. Since 2004, the Group’s profit from ordinary activities after income tax and significant items has fluctuated
significantly. The sale of Ridley Inc in the 2009 financial year facilitated the retirement of significant debt and also reduced the Group’s
exposure to the fluctuations in the US markets. Since 2002, when the current remuneration structure was fully implemented, incentive
payments have fluctuated in line with business performance.
Consequences of performance on shareholder wealth
In considering the Group’s performance and benefits for shareholder wealth, the Committee has regard for the following indices in
respect of the current financial year and the previous four financial years.
Profit attributable to owners
of Ridley Corporation Ltd
Dividends paid
Change in share price
Return on shareholders’ funds
before significant items
Short term incentive to KMP
2012
2011
2010
2009
2008
$’000
$’000
$
%
$’000
19,253
23,086
(0.21)
6.6
158
29,316
23,086
0.08
10.2
497
29,093
21,546
0.37
10.4
920
(39,533)
21,075
(0.39)
6.8
815
10,505
20,586
-
4.2
1,194
Non-Executive Directors
Directors’ fees
Non-Executive Directors’ fees are determined within an aggregate Non-Executive Directors’ fee pool limit, which is reviewed periodically
with proposed amendments recommended to shareholders for approval. The maximum currently stands at $700,000 as approved at
the 2003 Annual General Meeting. The Chair of the Audit and Risk Committee, Ridley Innovation and Operational Committee and
Non-Executive Directors who sit on more than one Committee, receive additional fees.
Retirement allowances for Directors
At the 2003 Annual General Meeting, shareholders approved the termination of the retirement allowance scheme. Directors’ accrued
entitlements at 31 October 2003 were frozen and will be paid when they retire.
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REMUNERATION REPORT Ð AUDITED CONTINUED
Executives
The executive pay and reward framework has three components:
• base pay and benefits;
• short term incentives; and
• long term incentives.
The combination of these comprises the executive’s total remuneration.
Services from remuneration consultants
The Committee engaged Godfrey Remuneration Group (Godfrey) on 23 August 2011 for a period of one year as a remuneration
consultant to the Board. Godfrey was engaged to provide remuneration recommendations relating to key management personnel
(KMP) of the Group and its subsidiaries and to provide advice outlining retention strategies for key senior managers in the event
of a change in control event for the Group and provide recommendations in relation thereto.
Godfrey was paid $27,720 for the remuneration recommendations in respect of reviewing the amount and elements of the
KMP remuneration.
The engagement of Godfrey by the Committee was based on a documented set of protocols that would be followed by Godfrey, members
of the Committee and KMP for the way in which the remuneration recommendations would be developed by Godfrey and provided to the
Board and the Committee.
The Board is satisfied that the remuneration recommendations were made by Godfrey free from undue influence by KMP about whom
the recommendations may relate. The Board instructed Godfrey to provide recommendations only to the Board and the Committee and
correspondence through the Chairman. The Board communicated processes and procedures to be followed by Godfrey during the course
of its assignment and is satisfied that its remuneration recommendations were made free from undue influence.
Base pay and benefits
Executives receive a total employment cost package which may be delivered as a mix of cash and, at the executive’s discretion, certain
prescribed non-financial benefits, including superannuation in excess of the superannuation contribution guarantee payments.
External consultants provide analysis and advice to ensure base pay and benefits are set to reflect the market rate for a comparable role.
An executive’s pay may also be reviewed on promotion.
The Group sponsors the Ridley Superannuation Plan – Australia and contributes to other employee nominated superannuation plans.
The fund provides benefits on a defined contribution basis for employees or their dependants on retirement, resignation, total and
permanent disability, death and, in some cases, on temporary disablement. The Group also has a legacy defined benefit plan with
nine members remaining.
Short term incentives
Executives and employees in senior positions are eligible for short term incentive (STI) payments based on two components, being the
financial performance of the Group and the overall performance of the individual as measured against key performance indicators (KPIs).
The STI is payable in cash after the release of the full year financial results.
Each year, appropriate KPIs are set to align the STI plan with the priorities of the Group through a process which includes setting stretch
target and minimum performance levels required to trigger payment of an STI.
The Group financial performance component of the STI is assessed against profit (and potentially other financial measures) targets set
at the commencement of the financial year. Profit, as measured by earnings before interest and tax, was selected as the most appropriate
widespread performance measure for the financial performance component of the STI, as it is considered to be the primary key indicator
of success of the Group over the short term.
The personal KPI component of the STI is earned based on an assessment of each executive’s performance against their individual KPIs
for the year.
For the year ended 30 June 2012, the KPIs were based on Group or individual business unit financial performance and personal
objectives. The KPIs required performance in improving safety throughout the Group, reducing operating costs and achieving specific
targets in relation to returns on assets as well as other key strategic non-financial measures.
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Following the end of the financial year, financial results and each executive’s performance against KPIs have been reviewed to determine
STI payments for each executive. The Group financial performance component hurdle for the year was not met and the Board has
exercised its discretion to award a proportion of the personal performance component only. The Board chose, with the full consent
of the CEO, not to exercise its discretion with regard to any STI award to the CEO.
Long term incentives
In the year ended 30 June 2012, executives’ and employees’ long term incentives were provided by way of participation in the Ridley
Corporation Long Term Incentive Plan, Ridley Employee Share Scheme and one-off retention plans. These long term incentive programs
align the interests of executives more closely with those of Ridley shareholders and reward sustained superior performance, foster loyalty
and staff retention.
Directors and senior executives are not permitted to enter into any transaction that is designed or intended to hedge their exposure to
Ridley securities.
Current long term incentive plans
Ridley Corporation Long Term Incentive Plan (LTIP)
The purpose of the LTIP is to provide long term rewards that are linked to shareholder returns. This plan was introduced in October 2006
and replaced the Ridley Corporation Incentive Option Plan.
Under the LTIP, selected executives and the Managing Director may be offered a number of performance rights (Right). Each Right
provides the entitlement to acquire one Ridley share at nil cost.
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Rights vest subject to Total Shareholder Return (TSR) performance relative to the companies ranked from 101 to 300 in the ASX/S&P
300 as defined at the date of grant. TSR was selected as the performance measure for the LTIP due to its alignment with the value
created for shareholders. Performance is measured over the three-year period from the date of grant. 50% of the Rights vest if Ridley
ranks at the 51st percentile, and 100% vest if Ridley ranks at the 75th percentile or above. There is straight line vesting of the balance
from 50% to 100% between the 51st percentile and 75th percentile. The TSR of Ridley and the comparator companies is measured at
the end of the performance period by an independent third party which submits results to the Remuneration and Nomination Committee
for determination of vesting. To the extent that the performance criteria are met, the Rights are automatically exercised to acquire shares.
If the performance criteria are not satisfied, the Rights lapse.
If Ridley is subject to a change of control during the vesting period, the Rights may vest to participants at that time, subject to
performance testing and the discretion of the Board.
If a participant ceases employment prior to the end of the vesting period due to retirement, redundancy, permanent disability or death,
any unvested Rights may vest to participants, subject to performance testing and the discretion of the Board. If a participant ceases
employment prior to the end of the vesting period due to resignation, dismissal or any other reason that makes the participant no longer
eligible for the plan under the rules of the plan, any unvested Rights will lapse.
The shares to satisfy awards under the plan may be newly issued or purchased on-market.
During the year ended 30 June 2012, 2,400,000 (2011: 2,793,000) Rights were issued under the Long Term Incentive Plan, of which
1,700,000 (2011: 1,643,000) were granted as remuneration to KMP.
Summary of Ridley TSR performance
The following table provides a summary of Ridley TSR performance for each tranche of the Long Term Incentive Plan Rights on issue
at year end measured against the median percentage rankings amongst competitors and using 30 June 2012 as the hypothetical end
date. TSR calculations use a 30 day average period rather than a single day start date for the commencement of each vesting period.
Start Date
5 December 2009
5 December 2010
5 December 2011
TSR
Ridley
11.3%
-11.0%
-6.5%
Median TSR
Comparison
-22.3%
-17.4%
-8.2%
Percentile
70.1
54.9
52.6
Number of
Rights on Issue
300,000
2,493,000
2,350,000
Hypothetically
Vested at
30 June 12
269,400
1,448,433
1,252,550
Hypothetically
Vested at
30 June 12
89.8%
58.1%
53.3%
REMUNERATION REPORT Ð AUDITED CONTINUED
Current long term incentive plans (continued)
Comparison of growth of Ridley Corporation Ltd share price to the ASX Small Ords and ASX 200 Accumulation Index
Ridley Employee Share Scheme
Ridley TSR
Ridley Share Price
ASX 200 Accumulation Index (based to Ridley)
Small Ords Accumulation Index (based to Ridley)
$2.00
$1.50
$1.00
$0.50
64%
53%
42%
35%
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Under the Ridley Employee Share Scheme (Scheme), shares are offered to all permanent Australian employees with a minimum of
12 months’ service, at a discount of up to 50%, financed by an interest-free loan secured against the shares. The maximum discount per
employee is limited to $1,000 annually in accordance with current Australian taxation legislation. Dividends on the Scheme shares are
applied against any loan balance until such balance is fully extinguished. The amount of the discount and number of shares allocated is
at the discretion of the Directors. The purpose of the Scheme is to align employee and shareholder interests. 540,858 (2011: 542,880)
shares were issued under the Scheme during the year. The total market value of the shares issued which were purchased on-market was
$660,000 (2011: $712,000).
Ridley Corporation Special Retention Plan
The Ridley Corporation Special Retention Plan was introduced in May 2012, developed specifically to retain and motivate key executives
for a period covering and extending beyond the current Cheetham Salt divestment process. Under the Special Retention Plan, selected
executives and the Managing Director may be offered a number of performance rights (Right). The Plan offer is made in accordance
with the rules of the Ridley Long Term Incentive Plan except that there are no disposal restrictions and the cessation of employment
has been superseded, such that the Rights under this offer vest in full on the earlier occurrence of either completion of two years of
service from the date of grant; ceasing to be an employee of Ridley because of a sale of a subsidiary entity; and occurrence of a change
of control event. Each Right provides the entitlement to acquire one Ridley share at the end of the service period. During the year ended
30 June 2012, 2,300,000 (2011: Nil) Rights were issued under the Special Retention Plan, of which 1,550,000 (2011: Nil) were granted
as remuneration to KMP.
Share based compensation – Rights
The terms and conditions of each grant of Rights during the year to Directors, key management personnel and senior staff in this financial
year are as follows:
Grant Date
5 December 2011
5 May 2012
Long Term Incentive Plan
Special Retention Plan
Expiry/Exercisable Date
5 December 2014
5 May 2014
Number
2,400,000
2,300,000
Value per Right at Grant Date
$0.21
$1.08
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Directors and key management personnel
The following persons were the Directors and executives with the greatest authority for the strategic direction and management
of the Group (key management personnel or KMP) during the current financial year and include the five highest paid executives
within the Group and the Company:
Name
Directors
JM Spark
RJ Lee
J Murray
PM Mann
AL Vizard
RJ van Barneveld
GH Weiss
Executives
AM Boyd
PJ Weaver
AL Speed
C Klem
AM Mooney
RN Lyons
S Butler
Position
Chairman
Deputy Chairman
Managing Director and Chief Executive Officer – Ridley
Director
Director
Director
Director
Chief Financial Officer and Company Secretary – Ridley
Chief Executive Officer – Ridley AgriProducts
Chief Executive Officer – Cheetham Salt
Strategy and Corporate Development – Ridley
Group General Manager – Commercial – Ridley
General Manager Corporate Development – Ridley AgriProducts
Property Development Manager – Ridley
Resigned 1 July 2012
Details of remuneration
Details of the remuneration of each Director of Ridley Corporation Limited, each of the KMP of the Group and the five most highly
remunerated senior executives of the Company and the Group during the financial year are set out below. In accordance with the
requirements of Section 300A of the Corporations Act 2001 and Regulation 2M.3.03, the remuneration disclosures for financial years
2012 and 2011 only include remuneration relating to the portion of the relevant periods that each individual was considered a KMP.
All values are in Australian dollars unless otherwise stated.
2012
Name
Directors
J M Spark – Chairman
RJ Lee
J Murray –
Managing Director^
PM Mann
AL Vizard
RJ van Barneveld
GH Weiss
Total Directors
Executives
AM Boyd
PJ Weaver3
AL Speed
CW Klem
AM Mooney
RN Lyons
S Butler
Total executives
Total
Short Term Benefits
Directors’
Fees and
Cash Salary
$
STI
$
159,091
106,422
625,500
86,364
86,364
77,273
77,273
1,218,287
355,909
361,850
344,725
237,325
215,379
261,565
191,800
1,968,553
3,186,840
-
-
-
-
-
-
-
-
26,268
70,000
22,538
10,982
11,391
10,643
6,152
157,974
157,974
Post-
Employment
Benefits
Share-
Based
Payments
Other
Super-
annuation
$
Termination
$
Performance
Rights/Options
$
Total
$
%1
%2
15,909
9,578
50,000
8,636
8,636
7,727
7,727
108,213
35,591
25,000
15,775
29,508
22,558
26,156
21,700
176,288
284,501
-
-
-
-
-
-
-
-
-
297,109
-
-
-
-
-
297,109
297,109
-
-
175,000
116,000
-
-
-
-
209,243
-
-
-
-
209,243
884,743 24% 24%
-
95,000
-
95,000
-
85,000
-
85,000
1,535,743
-
-
-
-
87,646
66,604
84,604
40,063
56,708
54,458
37,813
427,896
637,139
505,414 17% 23%
820,563
8% 17%
467,642 18% 23%
317,878 13% 16%
306,036 19% 22%
352,822 15% 18%
257,465 15% 17%
3,027,820
4,563,563
1. Percentage remuneration consisting of performance rights/options.
2. Percentage remuneration performance related.
3. Resigned 1 July 2012.
^ Performance rights/options as approved by shareholders at 2011 AGM.
The salary package may be allocated at the executive’s discretion to cash, superannuation (subject to legislative limits), motor vehicle and
certain other benefits.
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REMUNERATION REPORT Ð AUDITED CONTINUED
2011
Short Term Benefits
Post-
Employment
Benefits
Share-
Based
Payments
Directors’
Fees and
Cash Salary
$
63,856
92,597
603,930
77,839
137,349
70,686
70,176
74,545
1,190,978
328,200
346,995
324,801
235,227
83,712
254,019
183,410
1,756,364
2,947,342
Name
Directors
JS Keniry – Chairman1
RJ Lee
J Murray – Managing
Director
PM Mann
JM Spark2
AL Vizard
RJ van Barneveld
GH Weiss4
Total Directors
Executives
AM Boyd
PJ Weaver
AL Speed
CW Klem
AM Mooney
RN Lyons
S Butler
Total executives
Total
STI
$
-
-
209,258
-
-
-
-
-
209,258
77,000
58,323
52,780
31,500
10,200
33,163
25,200
288,166
497,424
Other
Benefits
$
Super-
annuation Retirement5
$
$
Performance
Rights/Options
$
Total
$
%3
%6
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,706
7,844
235,380
-
-
-
304,942
100,441
-
-
-
-
50,000
7,077
13,692
6,616
7,018
1,288
99,241
42,800
28,355
15,199
23,523
9,595
25,402
17,790
162,664
261,905
-
-
-
-
-
-
235,380
-
-
-
-
-
-
-
-
235,380
124,250
-
-
-
-
-
124,250
51,106
51,023
51,023
12,995
39,162
39,162
12,995
257,466
381,716
987,438 13% 34%
-
84,916
-
151,041
-
77,302
-
77,194
-
75,833
1,859,107
-
-
-
-
-
499,106 10% 26%
484,696 11% 23%
443,803 11% 23%
303,245 4% 15%
142,669 27% 35%
351,746 11% 21%
239,395 5% 16%
2,464,660
4,323,767
1. Resigned 22 November 2010
2. Appointed Chairman from 22 November 2010.
3. Percentage remuneration consisting of performance rights/options
4. Director fee paid to GPG Services Pty Ltd from 1 July 2010 to 30 April 2011.
5. At the 2003 Annual General Meeting, shareholders approved the termination of the retirement allowance scheme. JS Keniry received an accrued entitlement frozen
at 31 October 2003.
6. Percentage remuneration performance related.
Service agreements
Remuneration and other terms of employment for the Managing Director are formalised in a service agreement which includes provision
of performance related bonuses and other benefits, and participation, when eligible, in the Ridley Corporation Long Term Incentive Plan.
Other major provisions of the agreement relating to remuneration are set out below.
J Murray, Managing Director, Ridley Corporation Limited:
• term of agreement – four years ending 19 November 2014;
• base remuneration, inclusive of superannuation, initially of $653,930 but to be reviewed annually commencing on 1 July 2011;
• payment of termination benefit on early termination by the employer, other than for cause, is not to exceed the threshold above which
shareholder approval is required under the Corporations Act 2001, and comprises any amount of the total remuneration package accrued
but unpaid at termination, plus accrued but unpaid leave entitlements, and any other entitlements accrued under applicable legislation; and
• performance incentive payments up to 100% of base salary based on the achievement of certain agreed KPIs as approved by the Board.
Other senior executives have individual contracts of employment but with no fixed term of employment.
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Notice periods
The notice period for terminating employment of key management personnel ranges from three months to six months for executives
and 12 months for the Managing Director. The Managing Director may resign at any time and for any reason by giving Ridley three
months’ notice in writing.
For each STI and grant of options and performance rights included in the above tables, the percentage of the available STI or grant that
was paid, or that vested, in the financial year, and the percentage that was forfeited because the person did not meet the service and
performance criteria, are set out below.
STI Payment
Name
J Murray
AM Boyd
PJ Weaver
AL Speed
CW Klem
AM Mooney
RN Lyons
S Butler
Total Potential of Base Salary %
100
50
50
50
30
30
30
30
2012
Paid %
0
7
19
6
4
4
4
3
2012
Forfeited %
100
43
31
44
26
26
26
27
2011
Paid %
32
20
15
15
12
12
12
12
2011
Forfeited %
68
30
35
35
18
18
18
18
Equity instrument disclosures relating to Directors and executives
Performance rights provided as remuneration
Details of Rights over ordinary shares in the Company provided as remuneration to the Managing Director of Ridley Corporation
Limited and each of the other key management personnel of the Group are set out below. When exercisable, each performance
right is convertible into one ordinary share of Ridley Corporation Limited. Non-Executive Directors do not participate in the LTIP
and are therefore ineligible to receive Rights.
Recipients of Performance Rights
Directors
J Murray3
Key management personnel
AM Boyd
PJ Weaver
AL Speed
CW Klem
AM Mooney
RN Lyons
S Butler
Total issued to Directors and
key management personnel
Balance at
1 July 2011
Granted1
Exercised/
Vested
Lapsed/
Forfeited
Balance at
30 June 20122
Date Exercised
643,000
1,200,000
-
-
1,843,000
-
425,000
350,000
350,000
100,000
250,000
250,000
100,000
400,000
200,000
400,000
275,000
275,000
250,000
250,000
(220,500)
(52,500)
(52,500)
-
(52,500)
(52,500)
-
(4,500)
(22,500)
(22,500)
-
(22,500)
(22,500)
-
600,000
475,000
675,000
375,000
450,000
425,000
350,000
1 May 2012
5 December 2011
5 December 2011
-
5 December 2011
5 December 2011
-
2,468,000
3,250,000
(430,500)
(94,500)
5,193,000
-
1. Performance rights granted on 5 December 2011 and 5 May 2012.
2. Performance rights are due to vest between December 2012 through to December 2014.
3. 600,000 of performance rights granted to J Murray on 5 May 2012 are subject to AGM approval.
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AUDITOR'S INDEPENDENCE DECLARATION
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To: the Directors of Ridley Corporation Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2012 there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
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BW Szentirmay
Partner
Melbourne
22 August 2012
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KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(KPMG International), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2012
Revenue from continuing operations
Cost of sales
Gross profit
Finance income
Other income
Expenses from continuing operations
Selling and distribution
General and administrative
Finance costs
Transaction costs
Share of net profits from equity accounted investments
Note
2
3
4
4
33
2012
$’000
734,695
(660,192)
74,503
202
1,674
(12,997)
(32,436)
(9,529)
(1,902)
6,840
2011
$’000
723,702
(648,826)
74,876
177
1,241
(13,222)
(29,346)
(9,902)
(640)
7,056
Profit from continuing operations before income tax expense
26,355
30,240
Income tax expense
6
(7,102)
(924)
Net profit after tax attributable to members of Ridley Corporation Limited
19,253
29,316
Earnings per share
Basic earnings per share
Diluted earnings per share
29
29
6.3c
6.3c
9.5c
9.5c
The above Consolidated Income Statement should be read in conjunction with the accompanying notes.
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2012
Net profit after tax attributable to members of Ridley Corporation Limited
Other comprehensive income
Actuarial gain/(loss) on defined benefit superannuation
Income tax
Revaluation of land and buildings
Income tax
Deferred tax on disposal of land and buildings
Changes in the fair value of cash flow hedges
Income tax
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
52
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Ridley Corporation Limited
Note
2012
$’000
19,253
2011
$’000
29,316
24
16
16
16
16
(377)
113
4,412
(1,123)
471
-
-
(243)
73
-
-
-
1,236
(371)
(345)
(714)
3,151
(19)
22,404
29,297
22,404
29,297
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
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CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2012
Current assets
Cash and cash equivalents
Receivables
Inventories
Assets held for sale
Tax receivable
Total current assets
Non-current assets
Investments accounted for using the equity method
Property, plant and equipment
Intangible assets
Inventories
Total non-current assets
Total assets
Current liabilities
Payables
Borrowings
Tax liabilities
Provisions
Derivative financial instruments
Total current liabilities
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Retirement benefit obligations
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
Note
2012
$’000
2011
$’000
8
9
5
12
33
10
11
9
13
28
12
14
17
28
12
14
24
15
16
16
7,228
84,259
79,723
4,017
1,588
176,815
52,521
239,033
44,771
3,575
339,900
516,715
95,266
40,712
1,035
10,005
-
147,018
64,667
12,535
1,396
616
79,214
226,232
290,483
237,531
37,484
15,468
290,483
13,247
88,969
91,533
-
-
193,749
52,486
233,383
44,416
-
330,285
524,034
92,695
1,932
1,551
14,267
8
110,453
113,454
7,835
1,050
272
122,611
233,064
290,970
237,531
36,294
17,145
290,970
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2012
Share
Capital
Revaluation
Reserve
Share Based
Payment
Reserve
Foreign
Currency
Translation
Reserve
Note 15
$’000
237,531
-
Note 16
$’000
37,263
-
Note 16
$’000
(44)
-
Note 16
$’000
(925)
-
Retained
Earnings
Note 16
$’000
17,145
19,253
Total
$’000
290,970
19,253
-
-
-
-
-
-
-
-
-
3,289
-
471
-
3,760
-
-
-
(2,940)
-
-
-
-
-
-
715
715
-
671
-
-
-
(345)
-
3,289
(264)
(264)
-
-
471
(345)
(345)
(264)
3,151
-
-
-
-
(23,086)
(520)
(23,606)
2,940
(23,086)
195
(22,891)
-
(1,270)
15,468
290,483
Balance at 1 July 2011
Profit for the year
Other comprehensive income
Revaluation of land and buildings,
net of tax
Actuarial gain/(loss) on defined benefit
superannuation net of tax
Deferred tax on disposal of land
and buildings
Exchange differences on translation
of foreign operations
Total other comprehensive income
for the year
Transactions with owners recorded
directly in equity
Dividends paid
Share based payment transactions
Total transactions with owners
recorded directly in equity
Transfers between equity components
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Balance at 30 June 2012
237,531
38,083
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
FOR THE YEAR ENDED 30 JUNE 2012
Balance at 1 July 2010
Profit for the period
Other comprehensive income
Actuarial gain/(loss) on defined
benefit superannuation net of tax
Changes in the fair value of cash
flow hedges, net of tax
Exchange differences on translation
of foreign operations
Total other comprehensive
income for the year
Transactions with owners
recorded directly in equity
Dividends paid
Share based payment transactions
Share
Capital
Revaluation
Reserve
Share
Based
Payment
Reserve
Cash Flow
Hedge
Reserve
Foreign
Currency
Translation
Reserve
Retained
Earnings
Total
Note 15
$’000
237,531
Note 16
$’000
37,263
Note 16
$’000
(250)
Note 16
$’000
(865)
Note 16
$’000
(211)
Note 16
$’000
11,689
$’000
285,157
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
206
-
-
865
-
29,316
29,316
-
-
(170)
(170)
-
-
865
(714)
-
(714)
865
(714)
(170)
(19)
55
-
-
-
-
-
(23,086)
(604)
(23,086)
(398)
(925)
17,145
290,970
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237,531
37,263
(44)
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2012
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Dividends received
Interest received
Other income received
Interest and other costs of finance paid
Income taxes paid
Note
2012
$’000
2011
$’000
839,761
(782,549)
6,805
202
741
(9,126)
(4,938)
812,159
(769,634)
4,944
177
1,241
(9,283)
(4,132)
Net cash inflow/(outflow) from operating activities
26
50,896
35,472
Cash flows from investing activities
Acquisition of controlled entities and business operations, net of cash acquired
Payments for property, plant and equipment
Payments for intangibles
Proceeds from sale of joint venture operation, net of cash disposed
Proceeds from sale of non-current assets
Net cash inflow/(outflow) from investing activities
34
Cash flows from financing activities
Share based payment transactions
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
(6,871)
(22,422)
(1,144)
-
7,876
(32,706)
(12,099)
(990)
4,367
127
(22,561)
(41,301)
(1,476)
-
(10,007)
(22,871)
(1,709)
121,640
(85,000)
(22,861)
(34,354)
12,070
(6,019)
6,241
13,247
7,006
7,228
13,247
Non-cash financing and investing activities
27
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
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NOTES TO THE FINANCIAL STATEMENTS
Note 1. Summary of significant accounting policies
Ridley Corporation Limited (the Company) is a company limited by shares, incorporated and domiciled in Australia and whose shares are
publicly traded on the Australian Securities Exchange. The consolidated financial statements as at and for the year ended 30 June 2012
comprise Ridley Corporation Limited, the ‘parent entity’, its subsidiaries and the Group’s interest in equity accounted investments. Ridley
Corporation Limited and its subsidiaries together are referred to in this Financial Report as ‘the Group’. The Group is a for-profit entity
and primarily is involved in the manufacture of animal nutrition solutions and solar salt.
The Financial Report was authorised for issue by the Directors on 22 August 2012.
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 years presented, unless otherwise stated. Certain comparative amounts have been reclassified to conform
with the current year’s presentation.
Basis of preparation
Statement of compliance
These consolidated financial statements are general purpose financial statements prepared in accordance with Australian Accounting
Standards (AASBs) (including Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act
2001. The consolidated financial statements comply with International Financial Reporting Standards (IFRSs) and interpretations adopted
by the International Accounting Standards Board (IASB).
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following items in the balance sheet:
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• derivative financial instruments at fair value through profit or loss;
• land and buildings and salt fields, which are measured at fair value; and
• cash settled share based payment arrangements, which are measured at fair value.
Functional and presentation currency
The consolidated financial statements are presented in Australian dollars, which is the Company’s functional and presentation currency.
Rounding of amounts
The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating
to the ‘rounding off’ of amounts in the Financial Report. Amounts in the consolidated financial statements have been rounded off in
accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Use of estimates and judgements
The preparation of the consolidated financial statements in conformity with AASBs requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period
in which the estimates are revised and in any future periods affected.
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:
(i) Estimated impairment of goodwill and other non-current assets
The Group tests annually whether goodwill has suffered any impairment in accordance with the accounting policy for intangible assets.
For the purposes of assessing impairment, 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). The recoverable amounts
of cash generating units have been determined by value in use calculations that require the use of key assumptions including future cash
flows, discount rates and growth rates.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 1. Summary of significant accounting policies continued
(ii) Defined benefit superannuation
The Group has obligations for defined benefit superannuation. The value of the obligations is based on independent actuarial valuations.
(iii) Land and buildings and salt fields valuations
Land and buildings are measured at fair value which is determined from market-based evidence by appraisal that is undertaken by
professionally qualified valuers.
Salt fields are valued on a value in use basis by external independent valuers. The salt field valuations require the use of key assumptions,
being the future cash flows, discount rates and growth rates.
Basis of consolidation
Business combinations
For every business combination, the Group identifies the acquirer, which is the combining entity that obtains control of the other
combining entities or businesses. Control is the power to govern the financial and operating policies of an entity so as to obtain benefits
from its activities. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The
acquisition date is the date on which control is transferred to the acquirer. Judgement is applied in determining the acquisition date
and determining whether control is transferred from one party to another.
Measuring goodwill
The Group measures goodwill as the fair value of the consideration transferred including the recognised amount of any non-controlling
interest in the acquiree, less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed,
all measured as of the acquisition date.
Transaction costs that the Group incurs in connection with a business combination, such as legal, due diligence and other professional
and consulting fees are expensed as incurred.
Subsidiaries
Subsidiaries are all those entities, including special purpose entities, over which the Group has the power to govern the financial and
operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential
voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that
control ceases.
Intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interest in the results and equity of subsidiaries is shown separately in the consolidated income statements and balance
sheet respectively.
Associates and joint venture entities
Associates and joint venture entities are those entities over which the Group has significant influence, but not control, over the financial
and operating policies. Significant influence is presumed when the Group holds between 20% and 50% of the voting rights. Investments
in associates and joint venture entities are in the consolidated financial statements using the equity method of accounting, after initially
being recognised at cost. The Group’s investment in associates and joint venture entities includes goodwill identified on acquisition, net
of any accumulated impairment losses.
The Group’s share of its associates’ and joint venture entities’ post acquisition profits or losses is recognised in the income statement,
and its share of post acquisition movements in reserves is recognised in reserves. The cumulative post acquisition movements are
adjusted against the carrying amount of the investment. Dividends receivable reduce the carrying amount of the investment.
Unrealised gains on transactions between the Group and its associates and joint venture entities are eliminated to the extent of the
Group’s interests in the associates and joint venture entities. Accounting policies of associates and joint venture entities have been
changed where necessary to ensure consistency with the policies adopted by the Group.
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Joint venture operations
A joint venture operation is a joint venture carried on by each venturer using its own assets in pursuit of the joint operations. The
proportionate interests in the assets, liabilities, income and expenses of the joint operation have been incorporated within the financial
statements under the appropriate headings.
Segmental reporting
The Group determines and presents operating segments based on information that internally is provided to the Managing Director, who
is the Group’s chief operating decision maker. An operating segment is a component of the Group that engages in business activities
from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s
other components. All operating segments’ operating results are regularly reviewed by the Group’s Managing Director to make decisions
about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.
Segment results that are reported to the Managing Director include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated items comprise mainly corporate assets, head office expenses and income tax assets and
liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment and intangible
assets other than goodwill.
Foreign currency
(i) Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at
year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.
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(ii) Foreign operations
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition are translated to
Australian dollars at exchange rates at the reporting date. The income and expenses of foreign operations are translated to Australian
dollars at exchange rates at the dates of the transactions.
Foreign currency differences are recognised in other comprehensive income and in the foreign currency translation reserve (FCTR).
When a foreign operation is disposed of, in part or in full, the relevant amount in the FCTR is transferred to the income statement as
part of the profit or loss on disposal.
When the settlement of a monetary item receivable from or payable to a foreign operation is neither planned nor likely in the foreseeable
future, foreign exchange gains and losses arising from such a monetary item are considered to form part of a net investment in a foreign
operation and are recognised in other comprehensive income, and are presented within equity in the FCTR.
Property, plant and equipment
Land and buildings and salt fields are measured at fair value, based on periodic, but at least triennial, valuations by external independent
valuers, less subsequent depreciation for buildings. Any accumulated depreciation at the date of revaluation is restated proportionately
with the change in the gross carrying amount of the asset so that the carrying amount of the asset after revaluation equals its revalued
amount. All other property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses.
Cost includes expenditure that is directly attributable to the acquisition of the asset.
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. The
carrying amount of any component accounted for as a separate asset is derecognised when replaced. All repairs and maintenance
are charged to the income statement during the financial period in which they are incurred.
Increases in the carrying amounts arising on revaluation of land and buildings and salt fields are credited, net of tax, to the revaluation
reserve in equity. To the extent that the increase reverses a decrease previously recognised in the income statement, the increase
is first recognised in the income statement. Decreases that reverse previous increases of the same asset are first charged against
revaluation reserves directly in equity to the extent of the remaining reserve attributable to the asset; all other decreases are charged
to the income statement.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 1. Summary of significant accounting policies continued
Land and salt fields are not depreciated. Depreciation of other assets is calculated using the straight line method to allocate their cost
or revalued amounts, net of their residual values, over their estimated useful lives, as follows:
• Buildings – 13 to 40 years
• Plant and equipment – 2 to 30 years
The assets’ residual values and useful lives are reviewed, and adjusted, if appropriate, at each balance sheet date.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.
When revalued assets are sold, it is Group policy to transfer any amounts included in other reserves in respect of those assets to retained
earnings.
Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale
transaction rather than through continuing use. They are measured at the lower of their carrying amount and fair value less costs to sell,
except for assets such as deferred tax assets and financial assets. A disposal group as a whole is measured at the lower of its carrying
amount and its fair value less cost to sell.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell.
A gain is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any
cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current
asset (or disposal group) is recognised at the date of derecognition.
Current assets, deferred tax assets and liabilities, employee benefits and financial instruments within a disposal group are measured
in accordance with the relevant accounting standards. Non-current assets (including those that are part of a disposal group) are not
depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal
group classified as held for sale continue to be recognised.
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Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately
from the other assets in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from
other liabilities in the balance sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents
a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of
business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are
presented separately on the face of the income statement.
Income tax
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the income tax rate
for each jurisdiction 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 for each jurisdiction. The relevant
tax rates are 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. Deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Tax consolidation
Ridley Corporation Limited and its wholly owned Australian controlled entities are part of a tax consolidated group.
The entities in the tax consolidated group are part a tax sharing agreement which limits the joint and several liability of the wholly-owned
entities in the case of a default by the head entity, Ridley Corporation Limited. The agreement provides for the allocation of income tax
liabilities between the entities should Ridley Corporation Limited default on its payment obligations. At balance date the possibility of
default is considered to be remote.
The entities have also entered into a tax funding agreement under which the wholly-owned entities fully compensate Ridley Corporation
Limited for any current tax payable assumed and are compensated by Ridley Corporation Limited for any current tax receivable and
deferred tax assets relating to unused tax losses or unused tax credits that are transferred to Ridley Corporation Limited under the tax
consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities’
financial statements. Amounts payable and receivable between Ridley Corporation Limited and the wholly-owned entities are settled
through the intercompany accounts.
Financial instruments
Non-derivative financial assets
The Group initially recognises loans and receivables and deposits on the date that they are originated. All other financial assets (including
assets designated at fair value through profit or loss) are recognised initially on the trade date at which the Group becomes a party to the
contractual provisions of the instrument. The Group derecognises a financial asset when the contractual rights to the cash flows from the
asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all
the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or
retained by the Group is recognised as a separate asset or liability.
Financial assets and liabilities are offset and the net amount presented in the balance sheet when, and only when, the Group has a
legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
The Group has the following non-derivative financial assets:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition loans
and receivables are measured at amortised cost using the effective interest method, less any impairment losses.
Cash
Cash and cash equivalents comprise cash balances and call deposits with original maturities of three months or less. Bank overdrafts
that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and
cash equivalents for the purpose of the statement of cash flows.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 1. Summary of significant accounting policies continued
Non-derivative financial liabilities
The Group initially recognises debt securities issued and subordinated liabilities on the date that they are originated. All other financial
liabilities (including liabilities designated at fair value through profit or loss) are recognised initially on the trade date at which the
Group becomes a party to the contractual provisions of the instrument. The Group derecognises a financial liability when its contractual
obligations are discharged or cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the balance
sheet when, and only when, the Group has a legal right to offset the amounts and intends either to settle on a net basis or to realise the
asset and settle the liability simultaneously.
The Group has the following non-derivative financial liabilities: loans and borrowings, bank overdrafts and trade and other payables.
Such financial liabilities are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition
these financial liabilities are measured at amortised cost using the effective interest rate method.
Derivative financial instruments, including hedge accounting
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured to their
fair value at each reporting date. The resulting gain or loss is recognised in the income statement unless the derivative is designated as
a hedging instrument, in an effective cash flow hedge, where the gain or loss is deferred within equity until the underlying hedged item
affects the income statement.
The Group documents, at the inception of the transaction, the relationship between hedging instruments and hedged items, as well as its
risk management objective and strategy for undertaking various hedge transactions. The Group also documents its assessment, both at
hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to
be highly effective in offsetting changes in fair values or cash flows of hedged items.
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Cash flow hedges
The Group enters into interest rate swaps to mitigate the risk associated with changes in the value of future cash flows in relation to
variable rate debt due to fluctuations in the interest rate. The effective portion of changes in the fair value of the interest rate swaps that
are designated and qualify as cash flow hedges are recognised in equity in the hedging reserve. The gain or loss relating to the ineffective
portion is recognised immediately in the income statement within other income or other expenses.
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Amounts accumulated in equity are recycled in the income statement within finance costs in the periods when the hedged item will
affect the income statement. When a hedging instrument expires or is terminated, or when a hedge no longer meets the criteria for
hedge accounting, any cumulative gain or loss existing in equity at that time remains in equity and is recognised when the hedged
item is ultimately recognised in the income statement.
Certain derivative instruments, including foreign exchange contracts and interest rate swaps, may not qualify for hedge accounting.
Changes in the fair value of any derivative instruments that do not qualify for hedge accounting are recognised immediately in the
income statement.
Finance costs
Finance costs include interest, unwinding of the effect of discounting on provisions, amortisation of discounts or premiums relating
to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings, including lease finance
charges. Borrowing costs are expensed as incurred unless they relate to qualifying assets, being assets which normally take more than
12 months from commencement of activities necessary to prepare for their intended use or sale to the time when substantially all such
activities are complete. Where funds are borrowed specifically for the production of a qualifying asset, the interest on those funds is
capitalised, net of any interest earned on those borrowings. Where funds are borrowed generally, borrowing costs are capitalised using
a weighted average interest rate.
Intangible assets
(i) Goodwill
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 or associate at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in intangible assets.
Goodwill on acquisitions of associates is included in investments in associates, accounted for using the equity method. Goodwill acquired
in business combinations is not amortised. Instead, goodwill is tested for impairment annually or more frequently if events or changes
in circumstances indicate that it might be impaired, and is carried at cost less accumulated impairment losses. Gains and losses on the
disposal of an entity include the carrying amount of goodwill relating to the entity sold. Goodwill is allocated to cash generating units for
the purpose of impairment testing.
(ii) Software
Software has a finite useful life and is carried at cost less accumulated amortisation and impaired losses. The cost of system development
including purchased software is capitalised and amortised over the estimated useful life, being three to eight years. Amortisation methods,
useful lives and residual values are reviewed at each financial year end and adjusted if appropriate.
(iii) Other
The other intangible asset represents acquired contractual legal rights and has a finite useful life which is amortised over five years, the
period of the contractual legal rights. Amortisation methods, useful lives and residual values are reviewed at each financial year end and
adjusted if appropriate.
Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment or more frequently
if events or changes in circumstances indicate that they might be impaired. Assets that are subject to amortisation 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 carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows, 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 suffered impairment are reviewed for possible reversal of
the impairment at each reporting date.
Employee benefits
(i) Defined benefit superannuation funds
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The calculations for the Group’s defined
benefit plan are performed annually by a qualified actuary.
A liability or asset in respect of defined benefit superannuation funds is recognised in the balance sheet, and is measured as the present
value of the defined benefit obligation at the reporting date plus unrecognised actuarial gains (less unrecognised actuarial losses) less
the fair value of the fund’s or plan’s assets at that date and any unrecognised past service cost. The present value of the defined benefit
obligation is based on expected future payments which arise from membership of the funds or plans to the reporting date. 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 reporting date on national government bonds with terms to maturity
and currency that match, as closely as possible, the estimated future cash outflows. Actuarial gains and losses are recognised in retained
earnings via the statement of other comprehensive income.
Past service costs are recognised immediately in profit or loss, unless the changes are conditional on the employees remaining in service
for a specified period of time (the vesting period). In this case, the past service costs are amortised on a straight-line basis over the
vesting period. Future taxes, such as taxes on investment income and employer contributions, are taken into account in the actuarial
assumptions used to determine the relevant components of the employer’s defined benefit liability or asset.
(ii) Defined contribution plans
A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity
and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are
recognised as an employee benefit expense in profit or loss in the periods during which services are rendered by employees. Prepaid
contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments is available. Contributions to
a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service are
discounted to their present value.
(iii) Share based payments
Share based compensation benefits are provided to employees via incentive plans described in note 23.
Ridley Corporation Long Term and Special Retention Incentive Plan
The fair value of performance rights granted is recognised as an employee benefit expense with a corresponding increase in equity. The
fair value is measured at grant date and recognised over the vesting period during which the employees become unconditionally entitled
to the performance rights.
The fair value at grant date is independently determined using a binomial option pricing model that takes into account the exercise price,
the term of the option, the vesting and performance criteria, the impact of dilution, the non tradeable nature of the performance rights, the
share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate
for the term of the performance rights.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 1. Summary of significant accounting policies continued
Ridley Employee Share Scheme
Shares issued to employees under the Ridley Employee Share Scheme vest immediately on grant date. Employees can elect to receive
an interest free loan to fund the purchase of the shares. The shares issued are accounted for as ‘in-substance’ options which vest
immediately. The fair value of these ‘in-substance’ options is recognised as an employee benefit expense with a corresponding increase
in equity. The fair value at grant date is independently determined using a binomial option pricing model.
(iv) Wages and salaries, bonuses, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits, bonuses, annual leave and accumulating sick leave expected to
be settled within 12 months of the reporting date, are recognised in accruals and provisions for employee entitlements in respect of
employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled.
Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at the rates paid or payable.
(v) Long service leave
The liability for long service leave expected to be settled within 12 months of the reporting date is recognised in the provision for
employee benefits and is measured in accordance with (iv) above. The liability for long service leave expected to be settled more
than 12 months from the reporting date is recognised in the provision for employee entitlements and measured as the present
value of expected future payments to be made in respect of services provided by employees up to the reporting date.
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 reporting date on national government bonds with terms to maturity and
currency that match, as closely as possible, the estimated future cash outflows.
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(vi) Employee benefit on-costs
Employee benefit on-costs, including payroll tax, are recognised and included in both employee benefit liabilities and costs.
Research and development expenditure
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding is
recognised in the income statement as incurred.
Development activities involve a plan or design for the production of new or substantially improved products and processes. Development
expenditure is capitalised only if development costs can be measured reliably, the product or process is technically and commercially
feasible, future economic benefits are probable, and the Group intends to and has sufficient resources to complete development and
to use or sell the asset. The expenditure capitalised includes the cost of materials, direct labour and overhead costs that are directly
attributable to preparing the asset for its intended use. Capitalised development expenditure is measured at cost less accumulated
depreciation and accumulated impairment losses as part of property, plant and equipment.
Inventories
Inventories are valued at the lower of cost and net realisable value. Costs are determined on the first in, first out and weighted average
cost methods. Costs included in inventories consist of materials, labour and manufacturing overheads which are related to the purchase
and production of inventories. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated
costs of completion and selling expenses.
Revenue recognition
Revenue from the sale of goods in the course of ordinary business is measured at the fair value of the consideration received or
receivable, net of returns, trade allowances and duties and taxes paid. Sales revenue is recognised when the significant risks and
rewards of ownership have been transferred to the customer.
The Group recognises revenue when pervasive evidence exists, usually in the form of an executed sales agreement, that the significant
risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and
possible return of goods can be estimated reliably, there is no continuing management involvement with the goods and the amount of
revenue can be measured reliably. If it is probable that discounts will be granted and the amount can be measured reliably, then the
discount is recognised as a reduction of revenue as the sales are recognised.
Interest income is recognised using the effective interest rate method.
Dividend income is recognised as revenue when the right to receive payment is established.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less allowance for doubtful
debts. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off.
An impairment allowance for doubtful debts is established when there is objective evidence that the Group will not be able to collect
all amounts due according to the original terms of the receivables and where suitable insurance arrangements or collateral do not cover
any uncollected amounts.
The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future
cash flows, discounted at the effective interest rate, and is recognised in the income statement.
The amount of the impairment loss is recognised in the income statement. When a trade receivable for which an impairment allowance
had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries
of amounts previously written off are credited in the income statement.
Leased assets
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and
benefits to ownership of leased non-current assets, and operating leases, under which the lessor effectively retains substantially all
such risks and benefits.
Finance leases are capitalised. A lease asset and liability are established at the lower of the fair value of the leased property and the
present value of minimum lease payments. Lease payments are allocated between the principal component of the lease liability and
finance costs. The lease asset is amortised over the shorter of the term of the lease and the life of the asset.
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Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a
straight line basis over the period of the lease.
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated
reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and
the risks specific to the liability.
Share capital
Ordinary shares are classified as share capital. 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.
Earnings per share
(i) Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to shareholders of the Company, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year.
(ii) Diluted earnings per share
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
shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of GST, unless the GST incurred is not recoverable from the taxation
authority. In this case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the
taxation authority is included as a current receivable or payable in the balance sheet.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which
are recoverable from, or payable to, the taxation authority, are presented as operating cash flows.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 1. Summary of significant accounting policies continued
Determination of fair values
A number of the Group’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial
assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods.
When applicable, further information about the assumptions in determining fair values is disclosed in the notes specific to that asset
or liability.
Land and buildings and salt fields
An external, independent valuation company, having appropriate recognised professional qualifications values the Group’s land and
buildings and salt fields at least every three years.
The fair value of land and buildings is usually determined from market-based evidence by appraisal that is normally undertaken by
professionally qualified valuers. The fair values are based on fair market value based on In Use Value.
Salt fields fair value is the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing but not
anxious buyer and seller acting at arm’s length. The value of an operating business earning a fair rate of return is usually determined with
regard to both asset values and the consistency and quality of earnings. The external, independent valuer believes that the Discounted
Cash Flow (DCF) methodology is the most appropriate primary methodology to assess the fair value of the salt fields on the basis that
medium term budgets are available and the utilisation of such a methodology would not be uncommon for an asset of this nature. The
DCF method calculates the net present value, at the valuation date, of the future net cash flows the business is expected to produce.
The valuer has assessed the discount rate to be in a range between 9.5% to 12.5% and a 2.5% nominal growth rate to perpetuity.
Derivative financial instruments
The fair value of forward exchange contracts is estimated using listed market prices if available. If a listed market price is not available
then the fair value is estimated by discounting the contractual cash flows at their forward price and deducting the current spot rate.
The fair value of interest rate swaps is based on broker quotes. Those quotes are tested for reasonableness by discounting estimated cash
flows based on the terms and maturity of each contract and using market interest rates for similar instruments at the measurement date.
Non-derivative financial assets and liabilities
The net fair value of cash and non interest bearing monetary financial assets and liabilities of the Group approximates their carrying amounts.
New accounting standards and interpretations
None of the new standards and amendments to standards that are mandatory for the first time for the financial year beginning 1 July 2011
affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods. The adoption of
the revised AASB 124 Related Party Disclosures and AASB1054 Australian Additional Disclosures and AASB 2011-1 Amendments to
Australian Accounting Standards arising from the Trans-Tasman Convergence Project did not result in any significant changes.
The following standards, amendments and interpretations are effective for annual periods beginning after 1 July 2012 and have been
identified as those which may impact the entity in the period of initial application. They have not been applied in preparing this
consolidated financial report.
AASB 9 Financial Instruments and AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9
AASB 9 addresses the classification and measurement of financial assets and is likely to affect the group’s accounting for its financial
assets. The standard is not applicable until 1 January 2013 but is available for early adoption. The Group is yet to assess its full impact.
IFRS 11 Joint Arrangements
Addresses the accounting for joint arrangements. The standard outlines whether a joint arrangement is accounted for using the equity
method or partial consolidation. The standard is not applicable until 1 January 2013. The Group is yet to assess its full impact.
AASB 13 Fair value measurement and AASB 2011-8 Amendments to Australian Accounting Standards arising from AASB13
The Group will apply the amended standard from 1 July 2013. The amendment introduces a framework for the application of the fair
value measurement technique.
AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income
The Group will apply the amended standard from 1 July 2012. The amendment makes a number of changes to the presentation of the
statement of comprehensive income.
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Note 2. Revenue
Revenue from continuing operations
Sale of goods
Note 3. Other income
Other income from continuing operations
Profit on sale of property, plant and equipment
Profit on sale of businesses and joint venture operation
Foreign exchange gains – net
Rent received
Other
Note 4. Expenses
Profit from continuing operations before income tax is arrived at after charging the following items:
Depreciation and amortisation
Buildings
Plant and equipment
Software
Other Intangible
Finance costs
Interest expense
Amortisation of borrowing costs
Capitalisation of borrowing costs
Bad and doubtful debt expense – net
Employee benefits expense
Operating lease expense
Loss on disposal of property, plant and equipment
Transaction costs
Legal, professional and valuation services(a)
2012
$’000
2011
$’000
734,695
723,702
625
308
19
28
694
1,674
1,000
11,106
2,199
99
14,404
9,476
216
(163)
9,529
384
73,767
4,520
-
-
439
190
69
543
1,241
988
11,178
2,088
-
14,254
9,463
439
-
9,902
380
72,930
4,725
30
1,902
640
(a) The Group incurred acquisition related costs of $0.4 million and divestment related preparatory costs of $1.5 million relating to external legal fees and vendor due
diligence costs. These legal fees and due diligence costs have been included as transaction costs expensed in the Group’s consolidated income statement for the
year ended 30 June 2012.
Note 5. Assets held for sale
Assets held for sale
4,017
-
The Group has classified $4,017,000 of assets as held for sale relating to the proposed sale of the Ridley AgriProducts site at Dandenong
and the Cheetham Salt site at Bowen. This is following management’s commitment to sell these sites. The sale process for these sites
commenced in the financial year and is expected to be completed within the next 12 months.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 6. Income tax expense
(a) Income tax expense
Current tax
Deferred tax
Under/(over) provided in prior years
Aggregate income tax expense
Income tax expense is attributable to:
Profit from continuing operations
Deferred income tax expense included in income tax expense comprises:
Decrease/(increase) in deferred tax assets (note 12)
Increase/(decrease) in deferred tax liabilities (note 12)
(b) Reconciliation of income tax expense and pre-tax accounting profit
Profit before income tax expense
Income tax using the Group’s tax rate of 30%
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Share of net profit of equity accounted investments
Share based payments
Non-deductible expenses
Non-deductible transaction costs
Under/(over) provision in prior year
Research and development allowance
Difference in overseas tax rates
Other
Income tax expense
2012
$’000
2011
$’000
2,339
4,161
602
7,102
3,421
3,669
(6,166)
924
7,102
924
473
3,688
4,161
351
3,318
3,669
26,355
7,907
30,240
9,072
(2,039)
39
165
417
602
(250)
130
131
7,102
(2,107)
(132)
415
-
(6,166)
(110)
-
(48)
924
(c) Income tax recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or
loss but directly debited or (credited) to equity
539
298
Note 7. Dividends
Dividends paid during the year
Year ended 30 June 2012
Final dividend
Interim dividend
Total dividends
Year ended 30 June 2011
Final dividend
Interim dividend
Total dividends
Unfranked
Fully Franked
Dividend paid
30 September 2011
31 March 2012
Per share
3.75 cents
3.75 cents
Unfranked
Unfranked
30 September 2010
31 March 2011
3.75 cents
3.75 cents
2012
$’000
11,543
11,543
23,086
2011
$’000
11,543
11,543
23,086
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Paid in cash
Non-cash dividends paid on employee in-substance options
Dividends not recognised at year end
In addition to the above dividends, since year end the Directors have approved payment of a final dividend
of 3.75 cents, fully franked (2011: 3.75 cents unfranked) per fully paid share payable on 28 September
2012 (2011: 30 September 2011). The aggregate amount of the proposed dividend expected to be paid
but not recognised as a liability at year end:
Dividend franking account
Amount of franking credits available to shareholders of Ridley Corporation Limited for subsequent
financial years
Note 8. Receivables
Current
Trade debtors
Less: Allowance for doubtful debts(a)
Prepayments
Other debtors
(a) Movements in the allowance for doubtful debts are as follows:
At 1 July
Provision for impairment recognised during the year
Receivables written off during the year
At 30 June
2012
$’000
22,871
215
23,086
2011
$’000
22,861
225
23,086
11,543
11,543
6,956
5,877
81,103
(252)
80,851
3,029
379
84,259
381
255
(384)
252
86,234
(381)
85,853
2,856
260
88,969
601
160
(380)
381
The allowance for doubtful debts is established when there is objective evidence that the Group will not be able to collect all amounts
due according to the original terms of the receivable. In determining the recoverability of the receivables, the Group considers any material
changes in the credit quality of the receivable on an ongoing basis. Debts that are known to be uncollectible are written off. The allowance
for doubtful debts and the receivables written off are included in ‘general and administrative’ expense in the income statement and a
doubtful debts allowance is created to the extent the uncollected receivables are not covered by collateral and/or credit insurance.
As at 30 June 2012, the nominal value of trade receivables impaired is $216,000 (2011: $595,000). There is adequate provision against
these receivables to the extent they are not covered by collateral and/or credit insurance.
Based on historic default rates, the Group believes that, apart from those trade receivables impaired, no further impairment allowance is
necessary in respect of trade receivables not past due or past due by up to 30 days, as receivables relate to customers that have a good
payment record with the Group.
Ageing analysis
As at 30 June 2012, trade receivables of $5,237,000 (2011: $6,088,000) were past due but not impaired. These relate to a number of
independent customers for whom there is no recent history of default. The ageing analysis of these trade receivables is shown as follows.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 8. Receivables continued
Past due by 0-30 days
Past due by 30-60 days
Past due by 60-90 days
Past due by 90 days +
Note 9. Inventories
Current
Raw materials and stores – at cost
Raw materials and stores – at net realisable value
Work in progress – at cost
Finished goods – at cost
Non-Current
Work in progress – at cost(a)
2012
$’000
3,692
386
390
769
5,237
2011
$’000
4,510
640
205
733
6,088
44,029
-
11,449
24,245
79,723
49,829
478
14,709
26,517
91,533
3,575
-
Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2012 amounted to nil
(2011: nil).
(a) Work in progress of salt that is unlikely to be processed within 12 months of the balance sheet date.
Note 10. Property, plant and equipment
Non-Current
Land and buildings
At fair value
Less: Accumulated depreciation
Total land and buildings
Salt fields
Total salt fields at fair value
Plant and equipment
At cost
Under construction
Total cost
Less: Accumulated depreciation
Total plant and equipment
Total property, plant and equipment
2012
$’000
2011
$’000
60,044
(3,695)
56,349
59,094
(2,731)
56,363
97,697
98,812
186,167
16,578
202,745
(117,758)
84,987
183,230
10,564
193,794
(115,586)
78,208
239,033
233,383
Basis of valuation
The basis of valuation of land and buildings and salt fields is fair value. The valuations made by the Directors are based on the
last independent valuation at 30 June 2012 carried out by qualified valuers in Australia. The cost value of land and buildings
was $22.5 million and salt fields was $72.9 million, which are held at fair value.
Current year additions made to land and buildings and salt fields are at cost, which is deemed an appropriate measure of fair value.
Capitalisation of borrowing costs
During the year ended 30 June 2012 capitalised borrowing costs related to the construction of property, plant and equipment amounted
to $163,000 (2011: nil) with a capitalisation rate of 7% (2011: nil).
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Year ended 30 June 2011
At 1 July 2010
Cost or fair value
Accumulated depreciation
Carrying amount at 1 July 2010
Additions
Acquisition of subsidiary
Disposals
Foreign currency exchange differences
Transfers
Depreciation
Carrying amount at 30 June 2011
Year ended 30 June 2012
At 1 July 2011
Cost or fair value
Accumulated depreciation
Carrying amount at 1 July 2011
Additions
Acquisitions of businesses
Disposals
Revaluation
Transfer to Assets held for sale
Foreign currency exchange differences
Transfers
Depreciation
Carrying amount at 30 June 2012
At 30 June 2012
Cost or fair value
Accumulated depreciation
Carrying amount at 30 June 2012
Note 11. Intangible assets
Year ended 30 June 2011
Carrying amount at 1 July 2010
Additions
Acquisition of subsidiary
Amortisation charge
Disposals
Closing balance at 30 June 2011
At 30 June 2011
Cost
Accumulated amortisation/(impairment losses)
Carrying amount at 30 June 2011
Land and
Buildings
$’000
Plant and
Equipment
$’000
Salt
Fields
$’000
Total
$’000
52,342
(883)
51,459
166
5,100
(122)
(147)
895
(988)
56,363
59,094
(2,731)
56,363
1,474
-
(5,034)
4,412
(1,802)
(249)
2,185
(1,000)
56,349
180,631
(105,847)
74,784
11,933
7,153
(3,089)
(500)
(895)
(11,178)
78,208
193,794
(115,586)
78,208
20,947
368
(200)
-
(1,558)
55
(1,727)
(11,106)
84,987
98,936
-
98,936
-
-
(124)
-
-
-
98,812
98,812
-
98,812
-
-
-
-
(657)
-
(458)
-
97,697
331,909
(106,730)
225,179
12,099
12,253
(3,335)
(647)
-
(12,166)
233,383
351,700
(118,317)
233,383
22,421
368
(5,234)
4,412
(4,017)
(194)
-
(12,106)
239,033
60,044
(3,695)
56,349
202,745
(117,758)
84,987
97,697
-
97,697
360,486
(121,453)
239,033
Software
$’000
Goodwill
$’000
Other
$’000
Total
$’000
14,249
990
-
(2,088)
(19)
13,132
18,939
(5,807)
13,132
14,962
-
16,322
-
-
31,284
32,237
(953)
31,284
-
-
-
-
-
-
-
-
-
29,211
990
16,322
(2,088)
(19)
44,416
51,176
(6,760)
44,416
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 11. Intangible assets continued
Year ended 30 June 2012
Carrying amount at 1 July 2011
Additions
Acquisition of businesses
Amortisation charge
Disposals
Closing balance at 30 June 2012
At 30 June 2012
Cost
Accumulated amortisation/(impairment losses)
Carrying amount at 30 June 2012
Software
$’000
Goodwill
$’000
Other
$’000
Total
$’000
13,132
1,144
-
(2,199)
(249)
11,828
19,834
(8,006)
11,828
31,284
-
908
-
-
32,192
33,145
(953)
32,192
-
-
850
(99)
-
751
850
(99)
751
44,416
1,144
1,758
(2,298)
(249)
44,771
53,829
(9,058)
44,771
The amortisation charge is included in general and administrative costs in the income statement.
Impairment testing for goodwill
The Group’s cash generating unit (CGU) level summary is presented below:
2012
2011
Salt
$’000
5,017
5,017
Animal meals
$’000
16,322
16,322
Other
$’000
10,853
9,945
Total
$’000
32,192
31,284
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The recoverable amount of a CGU is based on value-in-use calculations. The following describes each key assumption on which
management has based its cash flow projections to undertake impairment testing of goodwill:
(i) Cash flow forecasts are based on five year business plans presented to the Board, plus a terminal value.
(ii) Forecast growth rates are based on management’s expectations of future performances. The growth rates applied to cash flows
were 3% (2011: 3%). A growth rate of 3% is applied to the terminal value.
(iii) Discount rates used are the weighted average cost of capital for the Group, risk adjusted where applicable for each business
segment and country. The post-tax discount rate applied to cash flows was 9.0% (2011: 10.7%).
These assumptions have been used for the analysis in each CGU of goodwill within the business segment of continuing operations.
Whilst all CGUs in the Group have been tested for impairment and have met their required hurdle rates to support the current carrying
values, the reduction in earnings for the year for Ridley Aqua-Feed and the subdued outlook for this sector has significantly eroded the
impairment headroom. Recent internal reorganisation and cost-cutting initiatives and relaxation of production constraints at the Inverell
site are expected to improve the outlook for this sector, however any significant deterioration of the discount rate or earnings profile for
Ridley Aqua-Feed will raise impairment concerns in the future. The estimated recoverable amount of the Aqua-Feed CGU exceeds its
carrying amount by approximately $600,000. The change required for the Aqua-Feed carrying amount to equal the recoverable amount
is a discount rate increase of 0.1% or a decrease in the growth rate of 0.2%, all other things being equal.
Note 12. Tax assets and liabilities
Current
Tax asset
Tax liability
Non-current
Deferred tax liability
Movement in deferred tax liability:
Balance at 1 July
Credited/(charged) to the income statement (note 6)
Credited/(charged) to comprehensive income
Acquisition of subsidiary credited to the income statement (note 6)
Balance at 30 June
2012
$’000
2011
$’000
1,588
1,035
-
1,551
12,535
7,835
7,835
4,161
539
-
12,535
3,868
3,262
298
407
7,835
The amount of unused tax losses for which no deferred tax asset is recognised in the balance sheet is $2,086,000 (2011: $1,816,000).
These tax losses relate to the Group’s Japanese operations. These tax losses are deductible from taxable income for seven years post
loss incurred, with the last of these tax losses to expire on 30 June 2018.
Recognised deferred tax assets and liabilities
Consolidated
Intangibles
Doubtful debts
Property, plant and equipment
Employee entitlements
Retirement benefit obligations
Provisions
Other
Tax assets/(liabilities)
Assets
Liabilities
Net
2012
$’000
2011
$’000
2012
$’000
2011
$’000
2012
$’000
2011
$’000
284
72
-
3,421
185
587
747
5,296
284
161
-
4,149
91
402
569
5,656
-
-
(17,831)
-
-
-
-
(17,831)
-
-
(13,491)
-
-
-
-
(13,491)
284
72
(17,831)
3,421
185
587
747
(12,535)
284
161
(13,491)
4,149
91
402
569
(7,835)
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 12. Tax assets and liabilities continued
Recognised deferred tax assets and liabilities
Balance
1 July
2010
$’000
Recognised
in Profit
or Loss
$’000
Recognised
in Other
Comprehensive
Income
$’000
Balance
30 June
2011
$’000
Recognised
in Profit
or Loss
$’000
Recognised
in Other
Comprehensive
Income
$’000
Balance
30 June
2012
$’000
Acquisition
of Subsidiary
Consolidated
Intangibles
Doubtful debts
Property, plant
and equipment
Employee
entitlements
Retirement
benefit obligations
Cash flow hedges
Provisions
Other
Tax asset/(liability)
284
209
-
(48)
(10,173)
(2,976)
4,234
(163)
28
370
630
550
(3,868)
(11)
1
(228)
163
(3,262)
74
-
-
-
-
73
(371)
-
-
(298)
-
-
284
161
-
(89)
-
-
284
72
(342)
(13,491)
(3,688)
(652)
(17,831)
78
4,149
(728)
-
3,421
1
-
-
(144)
(407)
91
-
402
569
(7,835)
(19)
-
185
178
(4,161)
113
-
-
-
(539)
185
-
587
747
(12,535)
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Note 13. Payables
Current
Trade creditors and accruals
Note 14. Provisions
Current
Employee entitlements
Contingent consideration
Non-current
Employee entitlements
Movement in provisions
Balance at 30 June 2011
Unwind of discount post acquisition
Payment of contingent consideration
Balance at 30 June 2012
Note 15. Share capital
Fully paid up capital: 307,817,071 ordinary shares with no par value (2011: 307,817,071)
2012
$’000
2011
$’000
95,266
92,695
10,005
-
10,005
11,360
2,907
14,267
1,396
1,050
Contingent Consideration
2,907
93
(3,000)
-
Parent Entity
2012
$’000
2011
$’000
237,531
237,531
(a) Movements in ordinary share capital
Date
June 2011
June 2012
Details
Balance at 30 June 2011
Balance at 30 June 2012
Number of Shares
307,817,071
307,817,071
$’000
237,531
237,531
(b) Ordinary shares
Ordinary shares entitle the holder to receive dividends and the proceeds on winding up the interest in proportion to the number of shares
held. On a show of hands, every shareholder present at a meeting in person or by proxy is entitled to one vote, and upon a poll each share
is entitled to one vote.
(c) Dividend Reinvestment Plan
The Directors suspended the Dividend Reinvestment Plan on the 25 August 2009 and it remains suspended. The Company 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 ordinary shares.
(d) Capital risk management
The Group manages capital to ensure it maintains optimal returns to shareholders and benefits for other stakeholders. The Group also
aims to maintain a capital structure that ensures the optimal cost of capital available to the Group.
The Group reviews and where appropriate adjusts the capital structure to take advantage of favourable costs of capital or high returns
on assets. The Group may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new shares or
sell assets to reduce debt. The Group monitors capital through the gearing ratio (net debt/total equity). The gearing ratios as at 30 June
are as follows.
Gearing ratios
Gross debt
Less: cash
Net debt
Total equity
Gearing ratio
Note 16. Reserves and retained earnings
(a) Reserves
Revaluation reserve
Share based payments reserve
Cash flow hedge reserve
Foreign currency translation reserve
Movements:
Revaluation reserve
Balance at 1 July
Revaluation
Deferred tax on revaluation
Retained earnings transfer on disposal of property, plant and equipment
Deferred tax on disposal of property, plant and equipment
Balance at 30 June
Share based payments reserve
Balance at 1 July
Options and performance rights expense
Share based payment transactions
Retained earnings transfer
Balance at 30 June
2012
$’000
105,379
(7,228)
98,151
290,483
33.8%
2011
$’000
115,386
(13,247)
102,139
290,970
35.1%
38,083
671
-
(1,270)
37,484
37,263
4,412
(1,123)
(2,940)
471
38,083
(44)
1,266
(1,071)
520
671
37,263
(44)
-
(925)
36,294
37,263
-
-
-
-
37,263
(250)
928
(1,326)
604
(44)
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 16. Reserves and retained earnings continued
Cash flow hedge reserve
Balance at 1 July
Changes in fair value of cash flow hedges
Deferred tax
Balance at 30 June
Foreign currency translation reserve
Balance at 1 July
Currency translation differences arising during the year
Balance at 30 June
(b) Retained earnings
Balance at 1 July
Actuarial (losses) on defined benefit superannuation – net of tax
Net profit for the year
Dividends paid
Transfer from revaluation reserve
Share based payments reserve transfer
Balance at 30 June
2012
$’000
-
-
-
-
(925)
(345)
(1,270)
17,145
(264)
19,253
(23,086)
2,940
(520)
15,468
2011
$’000
(865)
1,236
(371)
-
(211)
(714)
(925)
11,689
(170)
29,316
(23,086)
-
(604)
17,145
(c) Nature and purpose of reserves
(i) Revaluation reserve
Revaluation reserve is used to record increments and decrements on the revaluation of certain non-current assets.
(ii) Share based payments reserve
The share based payments reserve is used to recognise the fair value of performance rights and shares under the Employee Share
Scheme which have been issued but not exercised.
(iii) Cash flow hedge reserve
The cash flow hedge reserve is used to record gains and losses on hedging instruments that are recognised directly in equity.
Amounts are recognised in the income statement when the associated hedge transaction affects the income statement.
(iv) Foreign currency translation reserve
Exchange differences arising on translation of the foreign controlled entity are taken to the foreign currency translation reserve.
The reserve is recognised in the income statement when the net investment is disposed of.
Note 17. Financial risk management
Derivative financial instruments
Current
Foreign exchange contracts
2012
$’000
2011
$’000
-
8
Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including currency, fair value interest rate and price), credit,
liquidity and cash flow interest rate risk. The Group’s overall financial risk management policy focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial
instruments, such as foreign exchange contracts and interest rate swaps, to hedge certain risk exposures.
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Risk management is carried out by management under policies approved by the Board of Directors. Management evaluates and hedges
financial risks where appropriate. The Board provides written principles for overall risk management, as well as written policies covering
specific areas, such as mitigating foreign exchange, interest rate and credit risks and investing excess liquidity.
(a) Market risk
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions and recognised assets and liabilities are denominated in a currency
that is not the relevant entity’s functional currency. The Group is exposed to foreign exchange risk through its operations in Indonesia
and Japan, its jointly controlled entity and associate in New Zealand and the purchase and sale of goods in foreign currencies.
Forward contracts are used to manage foreign exchange risk. Management is responsible for managing exposures in each foreign
currency by using external forward currency contracts. Where possible, borrowings are made in the currencies in which the assets are
held in order to reduce foreign currency translation risk.
The Group predominantly does not qualify for hedge accounting on the forward foreign currency contracts.
The portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognised directly in equity.
When the cash flows occur, the Group adjusts the initial measurement of the component recognised in the balance sheet by the related
amount deferred in equity.
Forward exchange contracts
Forward foreign exchange contracts have been entered into in order to fix the cost of purchases and sales denominated in foreign
currencies. The Group classifies forward foreign exchange contracts as financial assets and liabilities and measures them at fair value.
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars, was as follows:
Forward exchange contracts
Buy foreign currency
Sell foreign currency
USD
$’000
1,438
-
2012
JPY
$’000
CHF
$’000
EUR
$’000
USD
$’000
2011
JPY
$’000
-
362
24
-
259
-
774
-
-
138
CHF
$’000
26
-
At 30 June 2012, the net fair value of forward exchange contracts results in a liability of $nil (2011: liability $7,687). This has been
recognised by the Group for the fair value of forward foreign exchange contracts. The terms of the contracts are for less than one year.
Foreign currency sensitivity
The sensitivity of the Group’s financial assets and financial liabilities to reasonably possible foreign currency risk exposures in existence
at the balance sheet date is insignificant.
Cash flow and fair value interest rate risk
As the Group has no significant interest bearing assets, the Group’s income and operating cash flows are substantially independent
of changes in market interest rates.
The Group’s main interest rate risk arises from long term borrowings. 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. The Group policy is to ensure
the interest cover ratio does not fall below the ratio limit set by the Group’s financial risk management policy.
The Group manages its cash flow interest rate risk by using floating to fixed interest rate swaps. Such interest rate swaps have the
economic effect of converting borrowings from floating rates to fixed rates. Generally, the Group raises long term borrowings at floating
rates and swaps them into fixed rates.
Under the interest rate swaps, the Group agrees with other parties to exchange, at specified intervals (mainly quarterly), the difference
between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts. The
settlement dates coincide with the date on which interest is payable on the underlying debt. The contracts are settled on a net basis.
At balance date, bank borrowings of the Group incur an average variable interest rate of 5.58% (2011: 6.80%). The value of interest
rate swaps in place at 30 June 2012 for the Group was nil (2011: nil).
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 17. Financial risk management continued
Interest rate risk exposures
The Group’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets and financial
liabilities is set out below.
Exposures arise predominantly from assets and liabilities bearing variable interest rates as the Group intends to hold fixed rate assets and
liabilities to maturity.
Variable rate instruments
Cash
Bank loans – Australia
Bank loans – Indonesia
2012
2011
Interest
Rate
Balance in
$’000
Interest
Rate
Balance in
$’000
-
5.58%
4.50%
7,228
104,500
1,212
-
6.80%
3.75%
13,247
114,000
1,963
(a) Interest rate sensitivity
A change of 100 basis points in interest rates at the reporting date would have increased or decreased the Group’s reported profit or loss
by $738,000 (2011: $798,000) and the Group’s equity by $738,000 (2011: $798,000).
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual
obligations and arises principally from the Group’s receivables from customers.
The Group has no significant concentrations of credit risk that are not covered by collateral and/or credit insurance. The Group has
policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. The Group holds
collateral and/ or credit insurance over certain trade receivables.
Derivative counterparties and cash transactions are limited to high credit quality financial institutions. The Group has policies that limit the
amount of credit exposure to any one financial institution.
The maximum exposure to credit risk at the reporting date was:
Trade receivables
Other receivables
Cash and cash equivalents
2012
$’000
81,103
379
7,228
88,710
2011
$’000
86,234
260
13,247
99,741
Further credit risk disclosures on trade receivables are disclosed in note 8.
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are
settled by delivering cash or another financial asset.
The ultimate responsibility for liquidity risk management rests with the Board which has established an appropriate risk management
framework for the management of the Group’s short, medium and long term funding and liquidity management requirements. The Group’s
Corporate Treasury function manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities
by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
Details of finance facilities are set out in note 28.
The following tables disclose the contractual maturities of financial liabilities, including estimated interest payments and excluding the
impact of netting agreements.
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2012
Non-derivative financial liabilities
Trade and other payables
Bank loans
Derivative financial liabilities
Forward exchange contracts
2011
Non-derivative financial liabilities
Trade and other payables
Bank loans
Derivative financial liabilities
Forward exchange contracts
Carrying
Amount
$’000
Less Than
One Year
$’000
One to
Two Years
$’000
Two to
Three Years
$’000
Three to
Four Years
$’000
Total
Contractual
Cash Flows
$’000
95,266
105,379
200,645
-
200,645
92,695
115,386
208,081
8
208,089
95,266
47,245
142,511
2,076
144,587
92,695
9,838
102,533
946
103,479
-
6,533
6,533
-
6,533
-
66,828
66,828
-
66,828
-
71,533
71,533
-
71,533
-
7,828
7,828
-
7,828
-
6,533
6,533
-
6,533
-
58,368
58,368
-
58,368
95,266
131,844
227,110
2,076
229,186
92,695
142,862
235,557
946
236,503
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.
(d) Fair values
Fair values versus carrying amounts
The carrying amount of financial assets and liabilities approximates their fair value.
Fair value hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been identified as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (ie. as prices)
or indirectly (i.e. derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
2012
Financial liabilities measured at fair value
Forward exchange contracts
2011
Financial liabilities measured at fair value
Forward exchange contracts
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
8
-
-
-
8
During the years ending 30 June 2012 and 2011, there were no transfers between Level 1 and Level 2 fair value measurements, and
no transfers into and out of Level 3 fair value measurements.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 18. Commitments for expenditure
During the year ending 30 June, the Group entered into contracts to purchase plant and equipment for:
Commitments for non-cancellable operating leases:
Due within one year
Due within one to two years
Due within two to five years
Due after five years
2012
$’000
2011
$’000
2,921
2,703
5,588
4,694
6,247
6,163
22,692
5,834
4,125
5,496
6,925
22,380
The Group has leases for land, buildings and equipment under operating leases.
Note 19. Contingent liabilities
Guarantees
The Group is, in the normal course of business, required to provide guarantees and letters of credit on behalf of controlled entities,
associates and related parties in respect of their contractual performance obligations. These guarantees and letters of credit only
give rise to a liability where the entity concerned fails to perform its contractual obligations.
Bank guarantees
A controlled entity guarantees 50% of an associate’s bank debt to a maximum of $590,000 (2011: $590,000).
2012
$’000
1,102
2011
$’000
1,108
Litigation
At the time of preparing this financial report, some companies included in the Group are parties to pending legal proceedings, the
outcome of which is not known. The entities are defending, or prosecuting, these proceedings as they are entitled to. The Directors
have assessed the impact on the Group from the individual actions to be immaterial. No material losses are anticipated in respect
of any of the above contingent liabilities.
There were no other material contingent liabilities in existence at balance date.
Note 20. Auditors’ remuneration
(a) Audit and review of financial reports
Auditors of the Company
KPMG Australia
Other auditors
(b) Other services
Auditors of the Company
KPMG Australia
In relation to other assurance, taxation and due diligence services
Total remuneration of auditors
2012
$
2011
$
500,813
11,903
512,716
459,330
4,196
463,526
490,855
1,003,571
248,202
711,728
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Note 21. Related party disclosures
Investments
Information relating to investments accounted for using the equity method is set out in note 33.
Transactions with associated entities are on normal commercial terms and conditions in the ordinary course of business, unless terms
and conditions are covered by shareholder agreements.
Other related parties
Contributions to superannuation funds on behalf of employees are disclosed in note 24.
Transactions with related parties
Transactions with related parties were as follows:
Dividend revenue
– associates
– jointly controlled entities
Management fees
– jointly controlled operations
Directors fees
– jointly controlled entities
Sales of products
– associates
– jointly controlled entities
Purchases of products
– jointly controlled entities
Outstanding balances with related parties were as follows:
Current receivables
– associates
Current receivables
– jointly controlled entities
Outstanding balances are unsecured and repayable in cash.
Note 22. Key management personnel disclosures
Key management personnel compensation
Short term employee benefits
Post-employment benefits
Termination benefits
Share based payments
2012
$’000
2011
$’000
2,788
4,017
-
82
2,734
2,210
24
81
10,537
4,169
10,162
2,373
3,456
3,645
849
4
749
5
2012
$’000
2011
$’000
3,344,814
284,501
297,109
637,139
4,563,563
3,444,766
261,905
235,380
381,716
4,323,767
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 22. Key management personnel disclosures continued
Share holdings
The numbers of shares in the parent entity held during the financial year by each Director of Ridley Corporation Limited and each
of the key management personnel of the Group who hold shares, including their personally-related entities, are set out following.
Number of shares held in Ridley Corporation Limited at 30 June 2012
RJ Lee
PM Mann
J Murray
JM Spark
AL Vizard
RJ van Barneveld
GH Weiss
Total Directors
AM Boyd
S Butler
CW Klem
RN Lyons
AM Mooney
AL Speed
PJ Weaver
Total executives
Total key management personnel
Balance at the
Start of the Year1
269,366
76,625
559,024
316,000
48,658
-
-
1,269,673
21,508
3,136
49,374
96,400
81,377
78,136
82,885
412,816
1,682,489
Acquired3/(Disposed)
During the Year2
-
10,000
233,0003
82,500
-
35,000
25,000
385,500
222,154
1,654
1,654
54,154
52,500
54,154
52,500
438,770
824,270
1. Or commencement of employment if not employed throughout the financial year.
2. There were no sales of Ridley securities by key management personnel during the financial year.
3. J Murray and all executives acquired shares through the exercise of performance rights and/or employee share schemes.
Number of shares held in Ridley Corporation Limited at 30 June 2011
JS Keniry
RJ Lee
PM Mann
J Murray
JM Spark
AL Vizard
RJ van Barneveld
GH Weiss
Total Directors
AM Boyd
S Butler
CW Klem
RN Lyons
AM Mooney
AL Speed
PJ Weaver
Total executives
Total key management personnel
Balance at the
Start of the Year1
765,319
269,366
56,625
222,024
276,000
46,658
-
-
1,635,992
20,000
1,628
47,866
19,892
6,377
1,628
6,377
103,768
1,739,760
Acquired4/(Disposed)
During the Year3
(765,319)2
-
20,000
337,0004
40,000
2,000
-
-
(366,319)
1,508
1,508
1,508
76,508
75,000
76,508
76,508
309,048
(57,271)
1. Or commencement of employment if not employed throughout the financial year.
2. At the date of resignation from the Company.
3. There were no sales of Ridley securities by key management personnel during the financial year.
4. J Murray and all executives acquired shares through exercise of performance rights and/or employee share schemes.
Balance at the
End of the Year
269,366
86,625
792,024
398,500
48,658
35,000
25,000
1,655,173
243,662
4,790
51,028
150,554
133,877
132,290
135,385
851,586
2,506,759
Balance at the
End of the Year
-
269,366
76,625
559,024
316,000
48,658
-
-
1,269,673
21,508
3,136
49,374
96,400
81,377
78,136
82,885
412,816
1,682,489
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Performance Rights granted and vested during the financial year ended 30 June 2012
Recipients of
Performance Rights
Directors
J Murray3
Balance at
1 July 2011
Granted1
Exercised/
Vested
Lapsed/
Forfeited
Balance at
30 June
20122
Date
Exercised
Value per
Share at Date
of Exercise
643,000
1,200,000
-
-
1,843,000
-
-
Key management personnel
AM Boyd
PJ Weaver
AL Speed
CW Klem
AM Mooney
RN Lyons
S Butler
Total issued to
Directors and key
management
personnel
425,000
350,000
350,000
100,000
250,000
250,000
100,000
400,000
200,000
400,000
275,000
275,000
250,000
250,000
(220,500)
(52,500)
(52,500)
-
(52,500)
(52,500)
-
(4,500)
(22,500)
(22,500)
-
(22,500)
(22,500)
-
600,000
1 May 2012
475,000 5 December 2011
675,000 5 December 2011
375,000
450,000 5 December 2011
425,000 5 December 2011
-
350,000
$1.22
$1.09
$1.09
$1.09
$1.09
-
2,468,000
3,250,000
(430,500)
(94,500)
5,193,000
-
-
1. Performance rights granted on 5 December 2011 and 5 May 2012.
2. Performance rights are due to vest between December 2012 through to December 2014.
3. 600,000 of performance rights granted to J Murray on 5 May 2012 are subject to AGM approval.
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Note 23. Share based payments
Share based payment arrangements
Ridley Corporation Long Term Incentive Plan
The purpose of the Ridley Corporation Long Term Incentive Plan is to provide long term rewards that are linked to shareholder returns.
This plan was introduced in October 2006 and replaced the Ridley Corporation Incentive Option Plan. Under the Ridley Corporation Long
Term Incentive Plan, selected executives and the Managing Director may be offered a number of performance rights (Right). Each Right
provides the entitlement to acquire one Ridley share at nil cost subject to the satisfaction of performance hurdles.
Ridley Corporation Special Retention Plan
The Ridley Corporation Special Retention Plan was introduced in May 2012, developed specifically to retain and motivate key executives
for a period covering and extending beyond the current Cheetham Salt divestment process. Under the Special Retention Plan, selected
executives and the Managing Director may be offered a number of performance rights (Right). The Plan offer is made in accordance with
the rules of the Ridley Long Term Incentive Plan except that there are no disposal restrictions and the cessation of employment has been
superseded, such that the Rights under this offer vest in full on the earlier occurrence of either completion of two years of service from
the date of grant; ceasing to be an employee of Ridley because of a sale of a subsidiary entity; and occurrence of a change of control
event. Each Right provides the entitlement to acquire one Ridley share at the end of the service period.
Ridley Employee Share Scheme
At the 1999 Annual General Meeting, shareholders approved the introduction of the Ridley Employee Share Scheme. Under the scheme,
shares are offered to all permanent Australian employees with a minimum of 12 months’ service, at a discount of up to 50%, financed by
an interest-free loan secured against the shares. The maximum discount per employee is limited to $1,000 annually in accordance with
relevant Australian taxation legislation. Dividends on the shares are allocated against the loan. The amount of the discount and number
of shares allocated is at the discretion of the Directors. The purpose of the scheme is to align employee and shareholder interests.
(i) Ridley Corporation Long Term Incentive Plan
The model inputs for the performance rights granted during the reporting period included:
Grant date
Expiry date
Share price at grant date
Fair value at grant date
Expected price volatility of the Company’s shares
Expected dividend yield
Risk free interest rate
5 December 2011
5 December 2014
$0.98
$0.21
25%
9.7%
3.2%
5 May 2012
5 May 2014
-
$1.08
-
-
-
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 23. Share based payments continued
The expected price volatility is based on the historic volatility (based on the remaining life of the performance rights), adjusted for any
expected changes to future volatility due to publicly available information.
Details of performance rights outstanding under the plan at balance date are as follows:
30 June 2012
Grant Date
05 December 2008
14 April 2009
05 December 2009
05 December 2010
05 December 2011
05 May 2012
30 June 2011
Grant Date
31 October 2007
07 April 2008
05 May 2008
05 December 2008
14 April 2009
05 December 2009
05 December 2010
Expiry Date
05 December 2011
14 April 2012
05 December 2012
05 December 2013
05 December 2014
05 May 2014
Expiry Date
31 October 2010
07 April 2011
05 May 2011
05 December 2011
14 April 2012
05 December 2012
05 December 2013
1. Shares purchased and allocated to J Murray in July 2011.
Balance
at Start of
the Year
300,000
225,000
300,000
2,593,000
-
-
3,418,000
Balance
at Start of
the Year
712,000
45,000
168,000
375,000
225,000
375,000
-
1,900,000
Granted
During
the Year
-
-
-
-
2,400,000
2,300,000
4,700,000
Granted
During
the Year
-
-
-
-
-
-
2,793,000
2,793,000
Cancelled
During
the Year
(90,000)
(4,500)
-
(67,940)
(50,000)
-
(212,440)
Cancelled
During
the Year
-
-
-
(36,892)
-
(47,499)
(200,000)
(284,391)
Vested
During
the Year
(210,000)
(220,500)
-
(32,060)
-
-
(462,560)
Vested
During
the Year
(712,000)
(45,000)1
(168,000)1
(38,108)
-
(27,501)
-
(990,609)
Balance
at End of
the Year
-
-
300,000
2,493,000
2,350,000
2,300,000
7,443,000
Balance
at End of
the Year
-
-
-
300,000
225,000
300,000
2,593,000
3,418,000
(ii) Ridley Employee Share Scheme
The grant date fair value of the options granted during the year through the Employee Share Scheme was measured based on the
binomial model. The model inputs for the Employee Share Scheme shares granted during the year included:
Grant date
Restricted life
Fair value at grant date
Expected price volatility of the Company’s shares
Expected dividend yield
Risk free interest rate
30 April 2012
3 years
$0.68
25%
6.2%
3.1%
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Employee Share Scheme option movements
30 June 2012
Grant Date
29 January 2002
28 January 2003
13 February 2004
05 April 2005
10 April 2006
13 April 2007
11 April 2008
03 April 2009
30 April 2010
30 April 2011
30 April 2012
Date Shares
Become
Unrestricted
29 January 2005
28 January 2006
13 February 2007
05 April 2008
10 April 2009
13 April 2010
11 April 2011
03 April 2012
30 April 2013
30 April 2014
30 April 2015
Weighted
Average
Exercise Price
$0.82
$0.74
$0.63
$0.77
$0.66
$0.57
$0.56
$0.34
$0.61
$0.66
$0.61
Balance
at Start of
the Year
72,000
147,150
188,615
182,700
215,272
277,922
376,530
750,824
532,356
538,356
-
3,281,725
Number of Shares
Granted
During
the Year
-
-
-
-
-
-
-
-
-
-
540,858
540,858
Exercised
During
the Year
(11,000)
(24,300)
(28,530)
(28,710)
(39,416)
(47,493)
(71,720)
(171,448)
(83,028)
(82,940)
(8,270)
(596,855)
Balance
at End of
the Year
61,000
122,850
160,085
153,990
175,856
230,429
304,810
579,376
449,328
455,416
532,588
3,225,728
Exercisable
at End of
the Year
61,000
122,850
160,085
153,990
175,856
230,429
304,810
579,376
-
-
-
1,788,396
Weighted average exercise price
$0.57
$0.61
$0.55
$0.58
$0.55
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The options outstanding have a weighted average contractual life of three years (2011: three years).
30 June 2011
Grant Date
29 January 2002
28 January 2003
13 February 2004
05 April 2005
10 April 2006
13 April 2007
11 April 2008
03 April 2009
30 April 2010
30 April 2011
Date Shares
Become
Unrestricted
29 January 2005
28 January 2006
13 February 2007
05 April 2008
10 April 2009
13 April 2010
11 April 2011
03 April 2012
30 April 2013
30 April 2014
Weighted
Average
Exercise Price
$0.82
$0.74
$0.63
$0.77
$0.66
$0.57
$0.56
$0.34
$0.61
$0.66
Number of Shares
Balance
at Start of
the Year
72,000
147,150
188,615
182,700
215,272
277,922
376,530
750,824
532,356
538,356
3,257,705
Granted
During
the Year
-
-
-
-
-
-
-
-
-
542,880
542,880
Exercised
During
the Year
(13,000)
(22,950)
(39,625)
(39,150)
(54,576)
(70,360)
(91,443)
(103,460)
(79,772)
(4,524)
(518,860)
Balance
at End of
the Year
72,000
147,150
188,615
182,700
215,272
277,922
376,530
750,824
532,356
538,356
3,281,725
Exercisable
at End of
the Year
72,000
147,150
188,615
182,700
215,272
277,922
376,530
-
-
-
1,460,189
Weighted average exercise price
$0.56
$0.66
$0.57
$0.57
$0.64
Share based payment expense
Shares issued under Employee Share Scheme
Performance rights issued under Long Term Incentive Plan
Total share based payment expense
2012
$’000
368
898
1,266
2011
$’000
411
517
928
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 24. Retirement benefit obligations
Superannuation funds
The Group sponsors the Ridley Superannuation Plan – Australia. The funds provide benefits either on a defined benefit or defined
contribution basis for employees or their dependents on retirement, resignation, total and permanent disability, death and, in some
cases, on temporary disablement. The members and the Group make contributions as specified in the rules of the respective plans.
Group contributions in terms of awards and agreements are legally enforceable and, in addition, contributions for all employees have
to be made at minimum levels for the Group to comply with its obligations. Other contributions are in the main not legally enforceable,
with the right to terminate, reduce or suspend these contributions upon giving written notice to the trustees.
Defined contribution plans
Benefits are based on an accumulation of defined contributions. The amount of contribution expense recognised in the income statement
is $5,910,000 (2011: $5,788,000).
Defined benefit plan
The level of contributions to the defined benefit plan in the future will continue to be reviewed on the advice of the fund actuary from
time to time and at the time of the triennial or annual valuations. The basis of contributions to the plan is determined as a percentage
of members’ salaries or as required by the actuarial valuation. The defined benefit obligation consists entirely of amounts that are wholly
or partly funded.
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The following notes (a) to (f) set out details in respect of the defined benefit section only:
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(a) Balance sheet amounts relating to defined benefit retirement benefit obligations
The amounts recognised in the balance sheet are determined as follows:
Present value of benefit obligation
Fair value of the benefit plan assets
Net retirement benefit obligation liability/(asset)
The Group has no legal obligation to settle these liabilities with immediate or additional one-off contributions.
(b) Categories of defined benefit plan assets
The major categories of plan assets are as follows:
Cash
Equity instruments
Debt instruments
Property
Other
2012
$’000
2,469
(1,853)
616
2011
$’000
2,106
(1,834)
272
2012
%
6
55
18
16
5
2011
%
11
54
14
10
11
(c) Reconciliations
Reconciliation of the present value of the defined benefit obligations:
Balance at the beginning of the year
Current service cost
Interest cost
Actuarial (gains)/losses
Benefits, expenses and insurance premiums paid
Contributions by plan participants
Balance at the end of the year
Reconciliation of the fair value of plan assets:
Balance at the beginning of the year
Expected return on plan assets
Actuarial gains/(losses)
Employer contributions
Contributions by plan participants
Benefits, expenses and insurance premiums paid
Balance at the end of the year
Expense recognised in income statement
Current service cost
Interest cost
Expected return on plan assets
Total included in employee benefits expense/(benefit)
Actual return on plan assets
Actuarial (gains) and losses recognised in other comprehensive income
Cumulative amount at 1 July
Recognised during the period
Cumulative amount at 30 June
(d) Principal actuarial assumptions
The principal actuarial assumptions used by the actuary (expressed as weighted averages) were as follows:
Discount rate
Future salary increases
Expected return on plan assets
2012
$’000
2011
$’000
2,106
79
87
349
(199)
47
2,469
1,834
120
(28)
79
47
(199)
1,853
79
87
(120)
46
92
1,724
377
2,101
2012
%
2.60
4.00
6.75
2,979
97
135
77
(1,238)
56
2,106
2,888
195
(166)
99
56
(1,238)
1,834
97
135
(195)
37
29
1,481
243
1,724
2011
%
4.40
4.00
6.75
The expected rate of return on plan assets has been based on historical and future expectations of returns for each of the major
categories of asset as well as the expected and actual allocation of plan assets to these major categories.
(e) Employer contributions
Employer contributions to the plan are based on recommendations by the plan’s actuary. Full actuarial assessments are made at
no more than three yearly intervals. The last full assessment was completed as at 30 June 2011. An updated valuation by the actuary
has been included at 30 June 2012.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 24. Retirement benefit obligations continued
The objective of funding is to ensure that the benefit entitlements of members and other beneficiaries are fully funded by the time they
become payable. To achieve this objective, the actuaries have adopted a method of funding benefits known as the aggregate funding
method. This funding method seeks to have benefits funded by means of a total contribution which is expected to be a constant
percentage of members’ salaries over their working lifetimes.
Using the funding method described above and particular actuarial assumptions as to the plan’s future experience, the actuaries
recommended in the actuarial review as at 30 June 2011, updated to reflect 30 June 2012 valuations, the payment of employer
contributions to the fund of 10% of salaries for employees who are members of the defined benefit section. These contribution rates
have been adopted by the Group from 30 June 2012 and represent a decrease of 2.4% of salaries in the Group’s contributions from
that previously used. Total employer contributions expected to be paid by Group companies for the year ending 30 June 2013 are
$135,000. Economic assumptions used by the actuary to make the funding recommendations were a long term investment earning
rate and salary increases, together with an age related promotional scale and an inflation rate.
(f) Historic summary
Present value of defined benefit obligation
Fair value of plan assets
(Surplus)/deficit
Experience adjustments arising on plan liabilities
Experience adjustments arising on plan assets
88
2012
$’000
2,469
(1,853)
616
53
28
2011
$’000
2,106
(1,834)
272
35
166
2010
$’000
2,979
(2,888)
91
87
(8)
2009
$’000
3,865
(3,803)
62
(285)
1,426
2008
$’000
4,158
(5,063)
(905)
(1,108)
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Note 25. Segment information
Operating segments
The Group has two reportable segments, as described below, which are the Group’s strategic business units. The Group has identified
its operating segments based on internal reports that are reviewed and used by the Chief Executive Officer (the chief operating decision
maker) in assessing performance and in determining the allocation of resources. The operating segments identified by management
are consistent with the manner in which products are sold. Discrete financial information about each of these operating businesses is
reported to the Chief Executive Officer and his management team on at least a monthly basis.
The following summary describes the operations in each of the Group’s reportable segments:
AgriProducts
Produces and markets stock and poultry feeds, aqua-feeds, animal protein meals, vitamin and mineral supplements and rural merchandise.
Salt
Produces, refines and markets salt and has investments in equity accounted investments.
The basis of inter-segmental transfers is market pricing. Results are calculated on a before net borrowing costs and tax expense basis.
Segment assets exclude deferred tax balances and cash, which have been included as unallocated assets.
Geographical segments
The Group predominantly operates in Australasia. The Group has equity accounted investments located in New Zealand (note 33) and
an operation located in Indonesia.
2012
Business Segments
Sales – external
Sales – internal
Total sales revenue
Other revenue
Total revenue
Share of profits of equity accounted investments
Depreciation and amortisation expense
Interest income
Interest expense
Reportable segment profit before income tax
Segment assets
Investments accounted for using the equity method
Total segment assets
Segment liabilities
Acquisitions of property, plant and equipment, intangibles
and other non-current segment assets (excluding the impact
of business combinations)
2011
Business Segments
Sales – external
Sales – internal
Total sales revenue
Other revenue
Total revenue
Share of profits of equity accounted investments
Depreciation and amortisation expense
Interest income
Interest expense
Reportable segment profit before income tax
Segment assets
Investments accounted for using the equity method
Total segment assets
Segment liabilities
Acquisitions of property, plant and equipment, intangibles
and other non-current segment assets (excluding the impact
of business combinations)
Salt
$’000
108,677
3,104
111,781
187
111,968
AgriProducts
$’000
626,018
-
626,018
1,487
627,505
Unallocated
$’000
-
(3,104)
(3,104)
-
(3,104)
Consolidated
Total
$’000
734,695
-
734,695
1,674
736,369
6,773
(5,159)
-
-
17,834
200,203
50,211
250,414
12,246
67
(8,485)
-
-
27,161
255,229
2,310
257,539
93,195
-
(760)
202
(9,529)
(18,640)
8,762
-
8,762
120,790
6,840
(14,404)
202
(9,529)
26,355
464,194
52,521
516,715
226,231
6,475
16,389
702
23,566
Salt
$’000
107,260
2,848
110,108
298
110,406
AgriProducts
$’000
616,442
-
616,442
943
617,385
Unallocated
$’000
-
(2,848)
(2,848)
-
(2,848)
Consolidated
Total
$’000
723,702
-
723,702
1,241
724,943
7,023
(5,644)
-
-
21,272
199,923
50,243
250,166
12,412
33
(8,588)
-
-
24,886
259,525
2,243
261,768
94,334
-
(22)
177
(9,902)
(15,918)
12,100
-
12,100
126,318
7,056
(14,254)
177
(9,902)
30,240
471,548
52,486
524,034
233,064
4,751
8,171
167
13,089
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 26. Notes to statement of cash flows
Reconciliation of net cash inflow from operating activities to profit after income tax
Profit for the year
Adjustments for non cash items:
Depreciation and amortisation
Profit on sale of businesses and joint venture operation
Net (profit)/loss on sale of non-current assets
Dividends in excess of equity profits
Non-cash share-based payments
Non-cash finance expenses
Doubtful debts
Foreign exchange gains
Other non-cash movements
Change in operating assets and liabilities, net of effects from purchase and sale of controlled
entities and businesses
Decrease/(increase) in receivables
Decrease/(increase) in inventories
Increase/(decrease) in trade creditors
Increase/(decrease) in provisions
Increase/(decrease) in income tax liability
Increase/(decrease) in deferred income tax liability
Net cash inflow from operating activities
Note 27. Non-cash financing and investing activities
There were no non-cash financing and investing activities during the year ended 30 June 2012 and 2011.
Note 28. Finance facilities
Borrowings
Current
Bank loans(a)
Non-current
Bank loans(a)
2012
$’000
2011
$’000
19,253
29,316
14,404
(308)
(625)
(35)
1,266
245
(129)
(19)
1,291
4,710
9,592
2,571
(3,916)
(2,104)
4,700
50,896
14,254
(439)
30
(2,112)
928
619
(220)
(190)
(379)
(2,258)
1,286
(5,785)
3,593
(7,138)
3,967
35,472
2012
$’000
2011
$’000
40,712
1,932
64,667
113,454
(a) These loans are subject to bank covenants based on financial ratios of the Group. As at 30 June 2012, the Group was in compliance with these covenants.
The bank loans are unsecured.
The bank debt facility includes a combination of term debt available to be drawn down in tranches. $110 million of the facility has a
maturity date of 29 December 2014 whilst $59 million has a maturity date of 29 December 2012. The applicable accounting standard
requires that the borrowings drawn against the $59 million tranche be classified as a current liability notwithstanding that sufficient
non-current committed facilities are available to cover outstanding debt at 30 June 2012. There have been no breaches of the
covenants of either facility or any other commercial consequences as a result of the classification.
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Total loan facilities available to the Group
AUD
Australian dollars
Loan
Cash
Overdraft facility
United States dollars
2012
2011
Limits
$’000
Utilised
$’000
Limits
$’000
Utilised
$’000
169,000
-
10,000
4,551
183,551
104,500
(7,818)
590
1,212
98,484
169,000
-
10,000
4,352
183,352
114,000
(13,247)
-
1,932
102,685
Long term loan facilities
Finance facility
On 29 December 2010, a bank debt facility totalling $169 million was established with two Australian banks. The facility includes a
combination of term debt available to be drawn down in tranches. $110 million of the facility has a maturity date of 29 December 2014.
The facility was established with $59 million to mature within two years, with an option to extend for a further two years on 29 December
2012. These unsecured bank loans are floating interest rate debt facilities. These facilities are subject to negative pledge arrangements
which require the Group to comply with certain minimum financial requirements. The key covenants under the facility are interest cover,
debt cover, gearing and consolidated net worth.
United States dollar facility
The Group has a US$2,100,000 term loan facility for three years expiring in March 2013. At 30 June 2012 US$1,225,000 (2011:
US$1,575,000) was utilised.
Short term credit facilities
Australian dollar overdraft facility
The Group has a $10,000,000 (2011: $10,000,000) net overdraft facility, which is due for annual renewal on 31 December 2012.
At 30 June 2012 $590,000 (2011: nil) was utilised on a consolidated basis due to offsetting within this consolidated Group overdraft
facility. At 30 June 2012 $8,732,000 (2011: $9,555,000) was utilised by the parent company of the Group.
United States dollar facility
The Group has a US$2,000,000 (2011: US$2,000,000) revolving credit facility which expires on 31 January 2013. At 30 June 2012
US$nil (2011: US$500,000) was utilised.
The Group has a US$500,000 revolving loan facility which expires on 31 January 2013. At 30 June 2012 US$nil (2011: US$nil)
was utilised.
Trade payable facility
The trade payable facility is an unsecured funding arrangement for the purposes of funding trade related payments associated with the
importation of various raw materials. Trade bills of exchange are paid by the facility direct to the importer and the Group pays the facility
on 180 day terms. It has a facility limit of $20,000,000 (2011:$19,000,000). The amount utilised classified with current payables at
30 June 2012 was $15,624,574 (2011: $10,077,709).
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 29. Earnings per share
Basic earnings per share
Diluted earnings per share
Earnings used in calculating earnings per share
Profit after income tax
Weighted average number of shares
Weighted average number of shares used in
calculating basic and diluted earnings per share
2012
Cents
6.3
6.3
2011
Cents
9.5
9.5
2012
Earnings Per Share
Diluted
Basic
$’000
$’000
2011
Earnings Per Share
Basic
$’000
Diluted
$’000
19,253
19,253
29,316
29,316
Basic
Diluted
Basic
Diluted
307,817,071
307,817,071
307,817,071
307,817,071
Options
There are 7,443,000 (2011: 3,418,000) performance rights outstanding which have been excluded from the determination of diluted
earnings per share calculation. Details relating to the performance rights are set out in note 23.
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Note 30. Investment in controlled entities
The ultimate parent entity within the Group is Ridley Corporation Limited.
Name of Entity
Ridley AgriProducts Pty Ltd and its controlled entities
Camilleri Stockfeeds Pty Ltd
Farmstock Pty Limited and its controlled entity
Farmstock Milling Pty Ltd
Lara Land Development Corporation Pty Ltd
Moolap Land Development Corporation Pty Ltd
Ridley Land Corporation Pty Ltd
Ridley Liquids JV Pty Limited
Barastoc Stockfeeds Pty Ltd and its controlled entity
Rumevite Pty Ltd
Cheetham Salt Limited and its controlled entities
CSL (No.3) Pty Limited
Salt Australia Pty Ltd
Ocsalt Pty Ltd
Queensland Salt Pty Ltd
PT Cheetham Garam and its controlled entity
PT Cheetham International Trading
Sea Lake Salt Pty Ltd
Cheetham (Dry Creek) Pty Ltd
Diamond Salt Pty Limited
RCL Retirement Pty Limited
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Indonesia
Indonesia
Australia
Australia
Australia
Australia
Class of Shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ownership Interest
2012
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2011
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Note 31. Parent entity
As at, and throughout, the financial year ending 30 June 2012 the parent company of the Group was Ridley Corporation Limited.
Result of the parent entity
Profit for the year
Comprehensive income for the year
Total comprehensive income for the year
Financial position of the parent entity at year end
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Total equity of the parent entity comprising of:
Share capital
Share based payment reserve
Retained earnings
Total equity
2012
$’000
766
(264)
502
2,293
366,981
369,274
11,154
105,067
116,221
253,053
237,531
671
14,851
253,053
2011
$’000
10,185
695
10,880
51
367,490
367,541
11,812
105,821
117,633
249,908
237,531
(44)
12,421
249,908
GST liabilities of other entities within the GST group
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198
Parent entity guarantees in respect of debts of its subsidiaries
The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in respect
of its subsidiaries.
Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed, are disclosed in note 32.
Note 32. Deed of Cross Guarantee
Ridley Corporation Limited, Ridley AgriProducts Pty Ltd, Cheetham Salt Limited, Cheetham (Dry Creek) Pty Ltd and Camilleri Stockfeeds
Pty Ltd are parties to a Deed of Cross Guarantee under which each company guarantees the debts of the others.
(a) Consolidated income statement and a summary of movements in retained profits
The above companies represent a Closed Group for the purposes of the Class Order, and as there are no other parties to the Deed
of Cross Guarantee that are controlled by Ridley Corporation Limited, they also represent the Extended Closed Group.
Set out below is a consolidated income statement and a summary of movements in consolidated retained profits of the Closed Group.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 32. Deed of Cross Guarantee continued
Sales revenue from continuing operations
Cost of sales
Gross profit
Other income
Expenses from continuing operations
Selling and distribution
General and administrative
Finance costs
Transaction costs
Profit from continuing operations before income tax expense
Income tax benefit/(expense)
Profit from continuing operations after income tax expense
Summary of movements in retained earnings
Balance at 1 July
Actuarial gains/(losses) on defined superannuation benefit – net of tax
Profit for the year
Share based payment reserve transfer
Dividends paid
Transfer from asset revaluation reserve
Transfers from entities outside Deed of Cross Guarantee group
Balance at 30 June
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(b) Balance sheet
Current assets
Cash and cash equivalents
Receivables
Inventories
Assets held for sale
Tax receivable
Total current assets
Non-current assets
Receivables
Property, plant and equipment
Intangible assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Provisions
Tax liabilities
Total current liabilities
2012
$’000
721,702
(644,847)
76,855
1,674
2011
$’000
709,762
(636,011)
73,751
1,376
(12,997)
(33,575)
(9,266)
(1,902)
20,789
(6,635)
14,154
23,266
(264)
14,154
(520)
(23,086)
2,940
7,533
24,023
4,841
75,609
81,986
4,017
1,588
168,041
823
217,470
44,771
82,778
345,842
(13,214)
(29,485)
(9,751)
(469)
22,208
2,986
25,194
18,328
(170)
25,194
(604)
(23,086)
-
3,604
23,266
12,659
84,466
89,896
-
-
187,021
826
209,632
44,097
68,691
323,246
513,883
510,267
86,971
10,005
-
96,976
85,390
11,317
1,194
97,901
Non-current liabilities
Borrowings
Deferred tax liabilities
Provisions
Retirement benefit obligations
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
Note 33. Investments accounted for using the equity method
Name of Company
Jointly Controlled Entities
Western Salt Refinery Pty Ltd
Dominion Salt Limited and
Dominion Salt (N.I.) Limited
Associates
Salpak Pty Ltd
Cerebos-Skellerup Limited
Consolidated Manufacturing
Enterprise Pty Ltd and
Swanbrook Road Holding Trust
Investments accounted for
using the equity method
Principal
Activity
Country of
Incorporation
Salt production
and distribution
Salt production
and distribution
Australia
New Zealand
Salt marketing
Salt marketing
Australia
New Zealand
Aqua-feed production Australia
2012
$’000
2011
$’000
104,172
13,382
1,396
616
119,566
113,457
7,294
1,050
272
122,073
216,542
219,974
297,341
290,293
237,531
35,787
24,023
237,531
29,496
23,266
297,341
290,293
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Ownership Interest
2011
2012
%
%
Carrying Amount
2012
$’000
2011
$’000
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56
49
25
1,564
1,470
32,148
32,157
13,988
2,511
14,105
2,511
2,310
2,243
52,521
52,486
Investments in associates and jointly controlled entities are accounted for in the consolidated financial statements using the equity
method of accounting and are carried at cost by the respective parent entity. The balance date of Salpak Pty Ltd and Cerebos-Skellerup
Limited is 31 December, and 30 June for Western Salt Refinery Pty Ltd, Dominion Salt Limited, Dominion Salt (N.I.) Limited, Consolidated
Manufacturing Enterprise Pty Ltd and Swanbrook Road Holding Trust. Financial reports prepared as at 30 June are used for equity
accounting purposes.
The Group owns 56% of total shares of Salpak Pty Ltd, however only a 49% interest in total voting shares.
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 33. Investments accounted for using the equity method continued
Carrying amount of investments accounted for using the equity method
Carrying amount at 1 July
Share of associates acquired during the year
Share of operating profits after income tax
Dividends received/receivable
Carrying amount at 30 June
Share of operating profits before income tax, interest and depreciation
Share of depreciation and amortisation expense
Share of operating profits before income tax and interest
Share of net interest expense
Share of operating profits before income tax
Share of income tax expense
Share of operating profits after income tax
Less: Dividends payable/paid
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$’000
52,486
-
6,840
(6,805)
52,521
10,936
(1,244)
9,692
(197)
9,495
(2,655)
6,840
(6,805)
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2011
$’000
50,324
50
7,056
(4,944)
52,486
11,148
(835)
10,313
(212)
10,101
(3,045)
7,056
(4,944)
2,112
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Share of contingent liabilities
-
-
Summarised financial information of equity accounted investees, not adjusted for the percentage
ownership held by the Group:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Revenue
Net profit after tax
16,320
26,466
42,786
9,850
750
10,600
32,186
73,845
13,175
16,407
26,394
42,801
10,533
759
11,292
31,509
83,814
16,103
There are no material reserves of the associated companies.
Note 34. Acquisitions
Acquisitions for the year ended 30 June 2012
Current year acquisition of business assets and liabilities
On 21 October 2011, Ridley AgriProducts Pty Ltd acquired the block business of Livestock Nutrition Technologies (LNT) in Townsville
for a total cash consideration of $2,700,000, including the balances of working capital. Application of the fair value acquisition accounting
principles resulted in goodwill on acquisition of $908,000. This acquisition allowed Ridley to consolidate LNT with its Supplements
business in Townsville to service the northern Australia block market from a more efficient base and critical mass, and to enable the
Wacol premises in southern Queensland to be closed and sold.
Acquisitions for the year ended 30 June 2011
On 1 March 2011 the Group acquired 100% of the share capital of Camilleri Stockfeeds Pty Ltd (Camilleri), a company in the business
of poultry and fish rendering, a process which converts raw animal tissue into various protein, fat and mineral products that are used in
the production of pet food, animal and aquaculture stockfeed. The acquisition provides the Group with a business that is highly compatible
with its core agribusiness activities and the Group expected it would provide synergies with Ridley Aqua-Feed.
In the four months to 30 June 2011 Camilleri contributed $13,100,000 of revenue and profit of $1,400,000 to the consolidated results.
If the acquisition had occurred on 1 July 2010, management estimated that consolidated revenue would have been $31,100,000 and
consolidated profit from the period would have been $5,900,000. In determining these amounts, management assumed that the fair
value adjustments, determined provisionally, that arose on the date of acquisition would have been the same if the acquisition had
occurred on 1 July 2010.
The following summarises the major classes of consideration transferred, and the recognised amount of assets and liabilities assumed at
the acquisition date:
Consideration
Cash
Equity instruments (795,039 shares)1
Contingent cash consideration
$’000
31,162
1,000
2,860
35,022
1. The shares were purchased by the Company on market and transferred to one of the vendors. The fair value of the ordinary shares issued was based on the 20 day
Volume Weighted Average Price (VWAP) of the Company’s traded shares of $1.2578 for the 20 business days prior to the acquisition date.
Contingent consideration
The Company agreed to pay the selling shareholders up to $3,000,000 of contingent consideration during the year ending 30 June 2012
subject to the acquiree reaching earnings performance targets for the first 12 months after 1 March 2011. An amount of $2,860,000
was provided for as contingent consideration, which represents its fair value at acquisition date, based on a discount rate of 4.9%. At 30
June 2011, the contingent consideration had increased to $2,907,000, reflecting the unwind of the discount since acquisition. The full
$3,000,000 contingent consideration was paid during the year ended 30 June 2012.
Identifiable assets acquired and liabilities assumed, and attributable goodwill
The following fair values were determined by the Directors following an independent review undertaken by Deloitte, and independent
valuations of property undertaken by Jones Lang Lasalle and plant and equipment by American Appraisals. Inventory of finished goods was
fair valued at selling prices less the costs of disposal and an estimate of the reasonable profit margin for the selling effort of the acquirer.
Cash and bank balances
Property, plant and equipment
Trade and other receivables
Inventories
Trade and other payables
Employee entitlement provisions
Tax liabilities
Total net identifiable assets
Consideration
Goodwill
2012
-
-
-
-
-
-
-
-
-
-
2011
$’000
359
12,253
5,841
3,113
(796)
(259)
(1,360)
19,151
35,022
15,871
The goodwill is attributable mainly to the rendering and blending skills of the Camilleri management and workforce together with
the synergies expected to be achieved from integrating the business with the Ridley AgriProducts stockfeed Nutrition team and
Ridley Aqua-Feed business. None of the goodwill is deductible for income tax purposes.
Prior year acquisition of business assets and liabilities
Ridley AgriProducts Pty Ltd acquired the assets and liabilities of Primo Aquaculture Pty Ltd for $1,000,000, and this resulted in goodwill
of $451,000. Primo holds an import licence for a key ingredient in fish hatchlings feed, a market segment in which Ridley AgriProducts
Pty Ltd did not have a presence.
Prior year transactions separate from the acquisitions
The Group incurred acquisition related costs of $640,000 relating to external legal fees and due diligence costs. These legal fees
and due diligence costs were included as business acquisition costs in the Group’s consolidated income statement for the year
ended 30 June 2011.
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 35. Events occurring after the balance sheet date
Ridley is continuing with its assessment of a potential divestment of the Cheetham Salt business to unlock shareholder value, and
a select number of parties have been invited to proceed to due diligence under Stage 2 of the confidential divestment process.
No decision has been made at the present time by Ridley with regard to the sale of Cheetham Salt and a decision is not expected
to occur until the parties complete their due diligence investigations and submit a binding offer for consideration by the Ridley Board.
For the transaction to proceed to execution, the Ridley Board requires a suitably attractive offer which recognises the intrinsic value
of Cheetham Salt and is otherwise in the best interests of Ridley.
No other matters or circumstances have arisen since 30 June 2012 that have significantly affected, or may significantly affect:
(i) the Group’s operations in future financial years; or
(ii) the results of those operations in future financial years; or
(iii) the Group’s state of affairs in future financial years.
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DIRECTORS' DECLARATION
1. In the opinion of the Directors of Ridley Corporation Limited (the Company):
(a)
The consolidated financial statements and notes set out on pages 51 to 98 and the Remuneration Report are in accordance
with the Corporations Act 2001, including:
(i)
complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001; and
(ii) giving a true and fair view of the Group’s financial position as at 30 June 2012 and its performance for the financial year
ended on that date.
(b)
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
2. In the opinion of the Directors, as at the date of this declaration, there are reasonable grounds to believe the members of the Extended
Closed Group identified in note 32 will be able to meet any obligations or liabilities to which they are or may be become subject, by
virtue of the Deed of Cross Guarantee, between the Company and those group entities pursuant to ASIC Class Order 98/1418.
3. 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 for the financial year ended 30 June 2012.
4. The financial statements also comply with International Financial Reporting Standards as disclosed in note 1.
This declaration is made in accordance with a resolution of the Directors
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JM Spark
Director
Melbourne
22 August 2012
J Murray
Director
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INDEPENDENT AUDITOR'S DECLARATION
Independent auditor’s report to the members of Ridley Corporation Limited
Report on the financial report
We have audited the accompanying financial report of Ridley Corporation Limited (the Company), which comprises the consolidated
balance sheet as at 30 June 2012, and consolidated income statement and consolidated statement of comprehensive income,
consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, notes 1 to 35
comprising a summary of significant accounting policies and other explanatory information and the Directors’ Declaration of the Group
comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.
Directors’ responsibility 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 is free from material misstatement whether due to fraud or error. In note 1, the
Directors also state, in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the
financial statements of the Group comply with International Financial Reporting Standards.
Auditor’s responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to
audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial
report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation of the financial report that gives a true and fair view 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 entity’s internal control. An audit also
includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the
Directors, as well as evaluating the overall presentation of the financial report.
We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the
Corporations Act 2001 and Australian Accounting Standards, a true and fair view which is consistent with our understanding of the
Group’s financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
Auditor’s opinion
In our opinion:
(a) the financial report of the Group is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2012 and of its performance for the year ended
on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001;
(b) the financial report also complies with International Financial Reporting Standards as disclosed in note 1.
KPMG, an Australian partnership and a member
firm of the KPMG network of independent member
firms affiliated with KPMG International Cooperative
(KPMG International), a Swiss entity.
Liability limited by a scheme approved under
Professional Standards Legislation.
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Report on the Remuneration Report
We have audited the Remuneration Report included in the Directors’ Report for the year ended 30 June 2012. 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 auditing standards.
Auditor’s opinion
In our opinion, the Remuneration Report of Ridley Corporation Limited for the year ended 30 June 2012 complies with Section 300A
of the Corporations Act 2001.
KPMG
Partner
Melbourne
22 August 2012
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SHAREHOLDER INFORMATION
AS AT 22 AUGUST 2012
Holdings of securities – ordinary shares
Each fully paid
Number Held
Distribution of holdings – ordinary shares
1 to 1,000*
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
* There are 686 holders of less than a marketable parcel of shares.
20 Largest Fully Paid Shareholders
McNeil Nominees Pty Limited
GPG Nominees Pty Ltd
Citicorp Nominees Pty Limited
National Nominees Limited
JP Morgan Nominees Australia Limited
RBC Investor Services Australia Nominees Pty Limited
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