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BungeANNUAL REPORT 2013
High performance animal nutrition solutionsFor personal use only Contents
1 About the Company
2 Five Year Summary
5 Chairman’s Address
8 Managing Director’s Review
13 Financial Review
21 Ridley AgriProducts
24 Property Development
29 Our People
36 Board of Directors
38 Corporate Governance Statement
42 Financial Report
1 14 Shareholder Information
116 Glossary
117 Corporate Directory
For personal use only 2013 Features
■ Solid operating result beneath
non-recurring restructuring and
transacting costs
■ Divestment of Cheetham Salt
business
■ Acquisition of Victoria’s largest
rendering business
■ 7.5 cents per share capital return
■ Significant reduction in gearing
■ Restructured to focus
on agribusiness
About the Company
Ridley Corporation proudly stands as an Australian
based company running the business of Ridley
AgriProducts, the country’s leading producer
of premium quality high performance animal
nutrition solutions.
As one of the largest domestic consumers of Australian grown cereal
grains and a significant employer in farming communities, Ridley is
continually providing support to primary producers and rural Australia.
The Ridley AgriProducts operation is a pivotal and trusted supplier of
high performance nutrition to the major food producers in the dairy,
poultry, pig, aquaculture, sheep and beef industries, to the laboratory
animals in the research sector, and to the equine and canine markets
in the recreational sector.
Ridley’s product range includes finished products, in bulk or in bags
and generally in pellet form, raw materials, additives and supplements,
and animal meals. The Ridley animal meals, which include meat and
bone meal, poultry meal, hydrolysed feather meal, blood meal, fish
meal and animal fats, are an important and valuable source of protein
produced from otherwise surplus raw materials which are subjected
to a process called rendering.
With major Ridley AgriProducts brands including Barastoc, Rumevite,
Cobber, Ridley Dairy Feeds and Ridley Aqua-Feed, and with a product
range to accommodate starter feed solutions, Ridley has developed a
portfolio that provides a first class lifecycle solution.
Ridley Corporation Limited – Annual Report 2013 | 1
For personal use only Five Year Summary
A’000 Unless Otherwise Stated
Operating results
Revenue (FY13 including discontinued operation)
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
Significant items – net of tax and MI
Net profit after tax and significant items
Loss from discontinued operation
Profit/(loss) attributable to members
Financial position
Ridley shareholders’ funds#
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 discontinued
operations and 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 (%)
* Before significant items in 2009.
# 2012 and 2011 restated for change in accounting policy for land and buildings.
^ Capital return of 7.50 cents per share paid in July 2013.
2 | Ridley Corporation Limited – Annual Report 2013
Actual
2013
Actual
2012
Actual
2011
Actual
2010
Normalised
2009
783,226
321
734,695
1,674
723,702
1,241
727,968
1,102
819,436
1,379
1,252
(13,272)
7,737
(21,009)
(4,423)
(16,586)
-
(16,586)
(5,108)
(21,694)
207,553
410,626
203,073
17,835
230,863
248,698
52,583
75.00
50,086
35,682
9,327
26,355
7,102
19,253
-
19,253
-
19,253
54,218
39,965
9,725
30,240
924
29,316
-
29,316
-
29,316
58,486
46,234
8,156
38,078
8,985
29,093
-
29,093
-
29,093
278,371
499,561
221,190
98,151
313,973
412,124
50,896
102.00
282,618
510,640
228,022
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
307,817
649
307,817
961
307,817
948
307,817
974
55,509
44,424
8,000
36,424
8,281
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
303,080
931
-6.8%
6.9%
10.3%
10.4%
9.4%
(7.0)
-212.7%
-137.2%
41.99
0.17
4.4
(20.5)
(17.4x)
0.4
-97%
184.4x
198.6
(10.6)
8.6%
50.5%
14.24
(1.72)
42.1
-^
-
-
6.3
-34.3%
-11%
1.02
0.17
6.2
37.1
8.8x
16.3
-8%
6.3x
8.2
16.3
35.3%
55.7%
1.96
3.83
75.9
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
36.1%
55.3%
1.9
4.1
77.4
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
For personal use only EBIT from continuing
operations*
Dividends and distributions
per share #
Consolidated net profit
1
.
9
2
3
.
9
2
7
.
0
2
2
.
9
1
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
9
6
.
1
2
-
s
n
o
i
l
l
i
M
$
60
50
40
30
20
10
0
3
2
.
6
4
2
6
.
7
3
7
9
.
9
3
8
6
.
5
3
4
2
.
6
1
3
1
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
s
t
n
e
C
8
7
6
5
4
3
2
1
0
5
2
.
7
0
0
.
7
0
5
.
7
0
5
.
7
0
5
.
7
n
r
u
t
e
r
l
a
t
i
p
a
C
3
1
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
s
n
o
i
l
l
i
M
$
30
25
20
15
10
5
0
* 2013 before Business restructuring and discontinued operations and 2009 exc Ridley Inc. normalisation
# 2013 distribution to shareholders by way of 7.50 cents capital return
Ridley AgriProducts
volume
Ridley AgriProducts
operating EBIT
7
5
.
1
7
5
.
1
9
5
.
1
5
6
.
1
3
6
.
1
s
e
n
n
o
T
n
o
i
l
l
i
M
2.0
1.5
1.0
0.5
0
7
9
.
8
2
9
8
.
4
2
0
4
.
4
2
7
0
.
8
2
6
1
.
7
2
s
n
o
i
l
l
i
M
$
30
25
20
15
10
5
0
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
Ridley Corporation Limited – Annual Report 2013 | 3
For personal use only
The outlook for
Ridley as a dedicated
agribusiness is a
positive one, with
organic and acquisition
growth avenues for its
AgriProducts business.
4 | Ridley Corporation Limited – Annual Report 2013
For personal use only Chairman’s Address
This has been a particularly complicated and busy
year for Ridley. We started the year in the midst
of a sale process for the Cheetham Salt business,
with our largest shareholder looking to exit the
register, with our new mill at Pakenham midway
through construction, and with high hopes for a
recovery in the Dairy sector.
Whilst all this was happening, a
significant opportunity in the rendering
sector emerged by way of the CSF
Proteins Melbourne rendering business
at Laverton, and already strained
resources were engaged to pursue this
opportunity whilst continuing with the
Cheetham Salt divestment process. The
timing for each potential transaction was
a moving feast and required great agility,
understanding and support from the
Board, management, and our bankers
and advisers.
On 9 November 2012 we announced
that agreement had been reached to
acquire Victoria’s leading rendering
business, which marked Ridley’s entry
into the Victorian rendering sector and
a critical step in the execution of Ridley’s
strategy to secure strategic feed
ingredients by acquiring businesses
with proven track records, good
management and strong conversion
of earnings to cash.
On 29 November 2012 we signed
the agreement to divest the Cheetham
Salt business, excluding the Dry Creek
operating salt field in Adelaide, South
Australia and all the assets associated
with the non-operating Bowen, Lara
and Moolap former salt field sites.
In order for Ridley shareholders to
be able to participate in the potential
significant uplifts in value, the
non-operating salt field assets were
excluded from the sale transaction
and transferred from Cheetham Salt
ownership to a separate property
holding entity established within
the Ridley consolidated group.
In December 2012, the new Pakenham
mill was duly commissioned and the
conditions precedent associated with the
rendering acquisition were also achieved
in order to effect completion of the
acquisition on 31 December 2012 for a
total outlay of approximately $80 million.
The 18 January 2013 announcement by
Penrice of its intention by 30 June 2013
to cease its soda ash production and
requirement for brine produced at Dry
Creek highlighted the uncertainties
associated with the longevity of the
Dry Creek operation that led to its
exclusion from the Cheetham Salt sale
process. The recovery of appropriate
compensation for Ridley shareholders for
the early termination of the Penrice salt
supply agreement became a priority for
the second half year.
On 14 February 2013, the Board
announced the appointment of a new
CEO to provide long term leadership
for the Company through its next phase
of development. An orderly transition
program was developed which led to
Mr John Murray’s resignation from the Ridley
Board on 1 July 2013 and appointment
as Non-Executive Chair of the dedicated
Ridley property holding entity.
With satisfaction of all conditions
precedent achieved, the divestment
of Cheetham Salt duly concluded on
28 February 2013 and consideration of
$150 million was duly received and banked.
On 6 May 2013 announcements were
made that the largest shareholder on
the Ridley register had agreed to sell
19.5% of its 22.1% holding to an
overseas private equity firm with a
reputation for typically seeking minority
interests and looking to cultivate
profitable, long term growth in the
food and agriculture sectors.
With the rendering acquisition and
salt business divestment complete,
the ongoing cash flows, forecast
earnings and borrowing requirements
were duly examined and a capital return
of 7.5 cents per share determined by
the Board. A Notice of General Meeting
to approve the capital return was
issued and released on 21 May 2013,
incorporating a meeting date of
24 June 2013. The capital return
John M Spark
Chair
was duly approved by shareholders
and the return distributed after year
end on 5 July 2013.
The final part of this complex year was
completed on 28 June 2013 with the
execution of an agreement with Penrice
to secure compensation for its early
termination of the Dry Creek salt supply
agreement. The commercial details have
been included in the Managing Director’s
Review and the outcome is considered
by the Board to deliver a fair and
reasonable solution for the shareholders
of each entity. The financial details
associated with the cessation of
operations at Dry Creek have been
incorporated within the Financial Review
section of this Annual Report.
Financial
Against the backdrop of these far
reaching structural changes, the financial
performance of the core business has
been affected during the year by a
number of significant factors, including
continued price pressure in the dairy
industry and ongoing reductions in the
use of compound feed by dairy farmers,
over-supply and fierce competition in the
packaged product sector, and ongoing
restrictions on rendered product exports
to certain Asian countries arising from
Avian Influenza outbreaks.
The Ridley AgriProducts’ underlying
operational result of $28.1 million at
the Earnings Before Interest and Tax
(EBIT) level compares respectably to
the $27.2 million reported in the prior
year, with a half year of earnings from the
Victorian rendering business offsetting
the lower Dairy and Packaged Products
performance.
The profit and loss on the sale and
result of the discontinued operations of
Cheetham Salt are addressed within the
Financial Review section of this Annual
Report, together with the goodwill
movements and asset write offs.
Ridley Corporation Limited – Annual Report 2013 | 5
For personal use only Chairman’s Address continued
I believe Australian agriculture is well
positioned to take advantage of the ever
increasing demand from Asia for protein
from livestock, and to become a leading
player and compelling investment
proposition in the Australian agribusiness
sector. Regional imbalances between
population numbers and animal
production capacity continue to provide
long term growth opportunities for Ridley.
The 2013 financial year was a year of
restructure containing a number of once
off and restructuring-type transactions.
We are hoping that in the year ahead we
can focus on growing our business
without the complexities we have faced
and successfully addressed over the last
couple of years. Whilst we do experience
cyclical variations in earnings, our sector
diversity does provide some insulation
from the fluctuating fortunes of an
Australian agricultural sector strongly
influenced by world markets and harvest
outlooks, exchange rates and overall
sentiment. From 1 July 2013 onwards,
the core business is expected to return
to a ‘normal’ level of ongoing and
sustainable performance levels, with
capacity for growth and a full year
contribution from the CSF Proteins
Melbourne rendering business. I remain
confident of Ridley’s future growth and
ability to deliver value to shareholders.
John M Spark
Chair
People
The appointment of Mr Tim Hart as the
new Ridley Managing Director coincides
with the start of a new era for the
Company as a dedicated agribusiness.
The retention of Mr Murray to provide
continuity in the newly-established
property realisation segment is important
to ensure that no traction is lost in the
critical approvals processes underway
in Victoria and South Australia. I would
like to express my sincere thanks to
John for his extensive achievements in
recent years, including unshackling the
Company from its former constraints
and positioning it well for future growth.
When standing for re-election at the
2012 Annual General Meeting, Deputy
Chairman Mr Rick Lee stated his intent
to see the divestment of Cheetham Salt
through to its completion, whereupon
he would be in a position to retire from
the Board. Mr Lee duly stepped down
from the Board on 30 June 2013 after
12 years of service, and I would like to
thank Rick for his contribution to the
Company throughout that time.
I would like to welcome Mr Ejnar Knudsen
to the Ridley Board as representative of
our new 19.7% shareholder. In addition
to his extensive experience in the
agribusiness sector in the United States
(US), Ejnar’s relationship network and
insights into US best practice are also
expected to provide a valuable
contribution to the Board. The Ridley
Board looks forward to a long and
successful involvement with AGR
Partners as a major shareholder.
2013 has been another challenging year
for Ridley, and has required and achieved
a high degree of commitment and
support from everyone involved, both
internally and also with external service
providers. I thank my fellow Directors,
departing Managing Director Mr Murray
and his management team, and our
bankers and advisers, for their continuing
efforts to help us achieve our objective
of repositioning the Company for future
growth that can maximise the long term
value of Ridley for its shareholders.
Capital return
With the uncertainties associated with
what has been a turbulent year, there
was no interim dividend paid at the end
of March 2013. Shareholder returns
have since been delivered by way of a
7.5 cent per share capital return. Whilst
acknowledging the cash outlay, the
capital return does not have a direct
causal impact on the prospects of future
dividends payable by the Company in
following years. The dividend prospects
are determined by the forecast earnings
and cash flow conversion of the
business, plus the growth opportunities
prevalent and foreseeable at the time of
dividend declaration.
Outlook
The outlook for Ridley as a dedicated
agribusiness is a positive one, with
organic and acquisition growth avenues
for its AgriProducts business. In addition,
Ridley has longer term land sale and
development prospects for its surplus
properties, the most prominent of which
are the former salt fields at Lara and
Moolap, near Geelong in Victoria, and
at Dry Creek in South Australia, the
ownership of which has been retained
by Ridley.
Our newly constructed mill at Pakenham
provides a springboard for our dairy
business throughout the Gippsland
region in Victoria and also in Tasmania,
and we are actively marketing for sale
the former Dandenong mill which was
closed during the year and the volumes
transferred across to Pakenham.
We should note that the Group is
currently focusing on a strategic review
of our existing mill assets as a basis for
modernisation, renewal, consolidation
and expansion.
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.
6 | Ridley Corporation Limited – Annual Report 2013
For personal use only I believe Australian
agriculture is well
positioned to take
advantage of the ever
increasing demand
from Asia for protein
from livestock.
Ridley Corporation Limited – Annual Report 2013 | 7
For personal use only Managing Director’s Review
During a fact finding week in June in the San Joaquin
Valley of California, often referred to as the ‘food
basket of the world’, it was pleasing to observe
that in many aspects of the Ridley AgriProducts
operations, we are aligned with the world’s best
practices and technologies.
In the first six weeks since my 2 April
2013 appointment, I managed to visit
most of the Ridley sites across Australia,
inspect the facilities and meet local
Ridley management and personnel.
During this time I also met many of
our larger customers, our largest
shareholders, and most of the market
analysts who currently cover Ridley.
Whilst I have been impressed with
what I have seen and heard, I believe
there are significant opportunities for
modernisation of our facilities and for the
centralisation of certain operations into
what can become centres of excellence.
During a fact finding week in June in
the San Joaquin Valley of California, often
referred to as the ‘food basket of the
world’, it was pleasing to observe that in
many aspects of the Ridley AgriProducts
operations, we are aligned with the
world’s best practices and technologies.
Not having effectively taken the reins
until the last six weeks of the financial
year, the commentary that follows is a
historical account of the events of the
year together with my initial thoughts on
the outlook for the future. An update on
Ridley strategy will be provided as part
of my address at the 2013 Annual
General Meeting in November.
Safety
As an organisation, and absolutely
consistent with my personal focus,
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 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 3.65 in FY13. This
is another encouraging decrease from
the 4.46 recorded in the prior year. The
Total Recordable Frequency Rate, or
TRFR, represents our total injury rate
and decreased significantly to 8.21
in FY13 from the prior year’s 16.8.
Safety is a culture and a journey 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.
Core business operating
performance for the 2013
financial year (FY13)
The FY13 consolidated result includes
a number of acquisition and divestment
related costs, impairments and other
non-recurring transactions which need
to be segregated and itemised in order
to comprehend the underlying result for
the year. Furthermore, there are the
added complications of eight months of
operating result for the Cheetham Salt
business minus the loss on its disposal,
and of the incremental second half year
earnings from the rendering business
acquisition made on 31 December 2012.
The financial impacts from these activities
have been detailed in the Financial
Review section of this Annual Report.
8 | Ridley Corporation Limited – Annual Report 2013
Tim Hart
Managing Director and
Chief Executive Officer
The FY13 Ridley AgriProducts core
business result after tax of $28.1 million
is consistent with the 22 March 2013
trading update, slightly exceeds the last
year’s result of $27.2 million, and is the
second highest on record.
The Ridley AgriProducts operating result
has been boosted by the six month
contribution from the acquisition of CSF
Proteins Melbourne, the largest rendering
business in Victoria, located on a 6.9
hectare site at Laverton, approximately
14km west of the Melbourne Central
Business District. This business has
managed to achieve its financial
acquisition target for the period despite
being adversely impacted in the first
three months of Ridley ownership by
the closure of the poultry meal export
markets following an outbreak of
Avian Influenza in Newcastle, NSW.
The breadth and diversity of the major
operating sectors for Ridley AgriProducts
continue to provide a diversification and
counterbalancing of risk that underpins a
stability of operating result and eliminates
the extreme highs and lows that would
arise if every sector was at the same
point in an economic cycle.
Starting the year on a cyclically low
base, the Dairy sector was soon
adversely affected by utilities, transport
and raw material cost increases, coupled
with the continuing high Australian dollar
and falls in the farm gate milk prices.
The combination of these influences
caused a sharp downturn in dairy
farmer sentiment in the middle of the
year and a commensurate cut back
in Dairy sales volumes and margins.
Sentiment in the Dairy sector has recently
started to improve, with successive milk
price rises in the fourth quarter and the
recent fall in the Australian dollar uplifting
the outlook for the coming year.
For personal use only 2013 Highlights
■ Improvement in safety performance
■ Acquisition of Victoria’s largest
rendering business
■ Successful divestment
of Cheetham Salt
■ Dedicated focus and clear
direction in agribusiness
Ridley Corporation Limited – Annual Report 2013 | 9
For personal use only Managing Director’s Review continued
Furthermore, the new Pakenham mill
is delivering the business case cost
reductions to improve the margin outlook
for FY14 despite increased competition
amongst the stockfeed participants
as they chase volume throughput for
their mills.
Whilst Ridley’s 2013 financial year
outlook for its Aqua-Feed sector was
conservative given the major domestic
competitor’s need to secure volume for
its new Tasmanian mill, the lifting of the
dog food production restriction at the
Inverell joint venture site facilitated a
restructure of the Ridley Aqua-Feed
operations. The suboptimal dog and
aqua feed production arrangement
caused by the former restriction was
remedied during the year with all dog
food production switched to Inverell,
outsourcing of the production shortfall
terminated, and all aqua-feed production
returned to the Aqua-Feed headquarters
at Narangba, Queensland.
Despite recording lower volumes than
last year following the decision not to
renew the Tassal supply agreement, the
combination of lower production costs,
improved operating shift arrangements
and stable underlying salmon volumes
has generated a positive margin
improvement for the year.
The prior year acquisition of the LNT
business and consolidation of the
Supplements operations around the
Townsville operation has focused the
service offering to the higher volume,
more reliable northern Queensland
market. After successive years of losses,
the restructured business has generated
positive earnings for the year and is well
placed to achieve its targeted return next
year following a more traditional dry
season in the north of Australia.
The contribution from the Camilleri
Stockfeeds business in NSW has again
been solid, and would have been higher
had the NSW outbreak of Avian Influenza
not suspended access to many of
the poultry meal export markets. The
acquisition on 31 December 2012 of
Victoria’s leading rendering business
provides synergistic opportunities and
critical mass, as well as a mammalian
processing facility not currently available
at the Camilleri Stockfeeds operation in
NSW. The Victorian business has been
renamed and is trading as CSF Proteins
Melbourne.
Improvements in the pig and poultry
(Monogastric) sectors over the same
period last year have been offset by
declines in the Packaged Products
sector. With Ridley inherently holding
long positions in its critical raw materials,
the Monogastric sector benefited in the
first half year whilst the short term
inelasticity of selling prices throughout
the retail stores networks adversely
impacted the Packaged Products
business in the same period of
rising raw material prices.
Property realisation
The processes for the redevelopment of
the Dry Creek property have commenced
following the 30 June 2013 termination
of the salt supply agreement for that site.
A formal closure plan has been activated
by Ridley to prepare the site for
redevelopment whilst it concurrently
manages the process of securing the
approvals necessary to turn the site
into a master planned community.
The Dry Creek site and adjacent Ridley
landholdings to the north represent a
unique opportunity for Adelaide, and
we are working with the South Australian
Government to demonstrate the
commercial viability of the indicative
designs for a master planned community
of approximately 10,000 dwellings.
A significant amount of work has been
undertaken with all stakeholders to
understand the redevelopment potential
of the Moolap site. Positive responses
have been received to date with regard
to the planning approvals process and
the concept of creating a major urban
renewal project for the region.
Discussions with the Victorian State
Government on the future of the Crown
land at Moolap are continuing and when
favourably concluded, will facilitate
commencement of the formal rezoning
process and Environmental Effects
Statement study.
A broad range of long and short term
opportunities continues to be examined
at the Lara salt field site located near
Geelong in Victoria, on the opposite
side of Corio Bay to the Moolap site.
The former salt field at Bowen has been
reclassified as an investment property
at balance date, whilst the former feed
mill at Dandenong has been demolished
and the site cleared. The site is in close
proximity to the centre of Dandenong, is
currently being actively marketed, and is
reflected in the balance sheet as an asset
held for sale.
Dry Creek compensation
The formal agreement reached with
Penrice in respect of compensation
payable to Ridley in consideration for
the early termination by Penrice of the
long term take or pay contract to supply
brine from Dry Creek was announced
on 28 June 2013. Under the agreement,
and subject to formal approval from
Penrice’s financiers, for a period of
10 years commencing on 1 July 2013,
Ridley will receive an annual benefit of at
least $0.5 million through a combination
of commercial arrangements.
In addition to the annual benefit,
Penrice granted Ridley an option over
4.5 million tonnes of landfill product at
the Penrice Angaston mine in South
Australia which can be used by Ridley
in the redevelopment of its Dry Creek
site (if that use proves to be a cost
effective landfill solution). Ridley and
Penrice have further agreed to equally
share the gross profits from any sales of
landfill product from the Angaston mine
to major construction projects in excess
of 100,000 tonnes per annum during
the 10 year term of the compensation
agreement. Ridley can exercise its option
over the 4.5 million tonnes of landfill at
any time during a 10 year period and
at zero cost, although Ridley shall be
responsible for the transport cost and
pay Penrice an agreed arm’s length rate
per tonne for truck or rail loading at the
Angaston site.
In order for Ridley shareholders to
participate in any value upside following
Penrice’s business reconstruction,
Penrice has issued Ridley an option,
exercisable over a five year period, to be
10 | Ridley Corporation Limited – Annual Report 2013
For personal use only issued 16,122,621 ordinary shares in
Penrice, representing 15% of the current
issued capital in Penrice. Appropriate
reorganisation and anti-dilution principles
have been included as part of the terms
of the option to adjust for Penrice capital
structure changes before the exercise of
the option. The exercise price shall be
7 cents per share, being approximately
100% of the Volume Weighted Average
Price (VWAP) of Penrice shares for the
10 business days leading up to and
including 27 June 2013.
The compensation arrangements give
Penrice every chance of becoming a
long term sustainable operation under its
new joint venture arrangements and also
delivering value to Ridley shareholders
that would otherwise have been lost in
the event Penrice could not continue as
a going concern.
Our people
During the year, a number of new
personnel have been welcomed into
the business, including myself and all
the employees of the Laverton rendering
business. We have also bid farewell to
our Cheetham Salt colleagues effective
from the end of February 2013. Just
before year end, we consolidated our
head office into a single floor within
the 565 Bourke Street location.
During my site visits I have observed
Ridley employees to be passionate
and proud, innovative and resourceful,
and resilient whilst also being open
to change. I am encouraged by the
quality and loyalty of our people and
will endeavour to provide them with
a working environment where these
attributes are encouraged and
performance duly recognised.
Ridley has made further progress during
the year with regard to its Diversity Policy,
remains focused on improving Ridley’s
talent pipeline, and on providing an
environment where women in the Ridley
workforce are encouraged and able to
reach their career aspirations.
The emerging leader and leadership
programs introduced last year, together
with the mentoring and networking
training, have proven to be successful
and to provide opportunities for career
progression for all staff within Ridley.
The paid parental leave scheme to
eligible employees to complement
the Government Scheme has been
successful in returning two out of
three new mothers to the workforce.
export markets in the six months from
1 January 2013. The additional six
months of earnings associated with a
full year of ownership will automatically
flow through into the FY14 result.
More details of each of these initiatives
are provided in the Our People section
of this 2013 Annual Report.
Our communities
As a proud supporter of Australian
businesses, suppliers and primary
producers, we are increasingly looking
to give something back to our regional
communities. We have partnered with
the Garvan Institute and Aussie Helpers
on three year arrangements to share
important messages about health and
wellbeing and provide support to farmers
by way of both monetary and physical
assistance.
Outlook
The commissioning of the new
Pakenham mill prior to Christmas 2012
marked a milestone for Ridley by being
the first new mill constructed by the
Company since 1997. This mill provides
an excellent platform to target new
volumes in the Gippsland dairy heartland
and in Tasmania which, when coupled
with a continuation of the recent uplift in
Dairy sector sentiment, are expected to
deliver a positive earnings recovery in
FY14. We have also learned from the
construction process and are confident
in our ability to effectively construct new
mills in other locations as part of a long
term feedmill modernisation and growth
program we are planning to embark
upon in the coming year.
The additional rendering capacity
provided by the newly acquired Laverton
facility provides not only a critical mass
and flexibility not otherwise available
through a single site operation based in
Sydney, but also entry to the mammalian
meal market not serviced from Maroota.
A significant capital expenditure program
commenced in FY13 and to be
concluded in FY14 will improve safety,
efficiency and capacity at the Laverton
rendering site, which delivered its
earnings acquisition metric despite the
closure of many of the poultry meal
The FY14 outlook for Ridley AgriProducts
in its other operating sectors is for
steady improvement and although
FY13 earnings clearly did not reach
our expectations, a significant amount
of effort continues to be expended to
provide a more robust business in the
future.
It is expected that the higher FY14 costs
of advancing the property development
approvals may be offset by piecemeal
sales of various parcels of land north
of the former Dry Creek salt operation,
whilst the wind down of the Dry Creek
operation will be supported by the
$0.5 million of annual revenues receivable
under the Penrice compensation
agreement.
In addition to organic growth opportunities,
we will continue to actively pursue
acquisition opportunities of the right
type and at the right price.
My thanks go to former Managing
Director John Murray, management and
employees for their dedication and hard
work as is evident from the achievements
of the year. My thanks also go to the
Board for its faith in appointing me to lead
this great company forward to focus on
being Australia’s premier supplier of
nutrients, ingredients and feed for the
safe and sustainable production of food
from livestock. I share the belief that with
dedicated focus and clear direction,
we are well placed to take advantage
of organic growth and consolidation
opportunities and to deliver strong and
reliable performance in the years to come.
Tim Hart
Managing Director and
Chief Executive Officer
Ridley Corporation Limited – Annual Report 2013 | 11
For personal use only Consolidated sales
revenue for FY13 was
$716.3 million (2012:
$635.8 million), 12.7%
or $80.5 million up
on the prior year
equivalent.
12 | Ridley Corporation Limited – Annual Report 2013
For personal use only Financial Review
Ridley has reported EBIT from continuing
operations and before non-recurring costs
for the year of $23.9 million, a slight increase
on the $23.2 million prior year equivalent.
After accounting for non-recurring,
pre-tax write downs, impairments and
transaction costs of $37.2 million,
Ridley Corporation Limited (Ridley)
has recorded a consolidated loss
after tax of $21.7 million for the year
ended 30 June 2013 (FY13).
The profit and loss summary with a prior
period comparison provided in Table 1
below and Table 2 on page 14, and
the cash flow information provided in
Table 3 on page 16, have each been
sourced from the audited accounts but
have not been subject to separate review
or audit. The Directors believe that the
presentation of this non-IFRS financial
profit and loss and cash flow summary
is useful for the users of this document
as it reflects the significant results of
the business.
Operating result
As advised to the market on 22 March
2013, the operational performance for
FY13 was affected by a number of
headwinds, including continued price
pressure in the dairy industry, ongoing
reductions in the use of compound feed
by dairy farmers, over-supply and fierce
competition in the Packaged Products
sector, and ongoing restrictions on
rendered product exports to certain
Asian countries arising from an Avian
Influenza outbreak. On a positive note,
both rendering businesses performed
satisfactorily in all other respects, and
there was an increase in broiler
placements which flowed through in
the second half year. The Aqua-Feed
division performed above expectations
and the reopening of the export markets
in Thailand and Vietnam for poultry meal
improved the rendering operations in the
fourth quarter. In the March release, we
advised that the subdued trading
conditions were expected to constrain
Ridley AgriProducts’ full year Earnings
Before Interest and Tax (EBIT) to a level
similar to the $27.2 million recorded in
the 2012 financial year.
Alan Boyd
Chief Financial Officer
and Company Secretary
For the year ended 30 June 2013,
Ridley AgriProducts has recorded an
EBIT of $28.1 million, its second highest
result on record, almost $1 million
ahead of the guidance and within a
Ridley consolidated EBIT from continuing
operations of $23.9 million before
non-recurring costs.
The full year consolidated EBIT includes
Ridley Corporate costs of $5.7 million
and property realisation costs of
$1.9 million, whilst the eight month
contribution from Cheetham Salt prior
to its 28 February 2013 divestment is
separately reported in the profit and
loss within the $5.1 million loss from
the discontinued operation.
Sales revenue and gross profit
(excluding Cheetham Salt)
Consolidated sales revenue for
FY13 was $716.3 million (2012:
$635.8 million), 12.7% or $80.5 million
up on the prior year equivalent. Gross
profit was $56.4 million, $1.0 million
above last year’s $55.4 million equivalent.
Table 1
Results summary
Sales revenue
Gross profit
Profit/(loss) before tax – continuing only
Profit/(loss) after tax – statutory total
^ Comparative numbers restated to exclude Cheetham Salt.
# Comparative numbers include Cheetham Salt.
2013
A$’000
716,318
56,418
(21,009)
(21,694)
Restated 2012^
A$’000
635,792
55,405
13,472
7,348
Percentage
Change^
12.7%
1.8%
(255.9%)
(395.2%)
2012#
A$’000
734,695
74,636
26,355
19,253
Ridley Corporation Limited – Annual Report 2013 | 13
For personal use only Financial Review continued
Table 2
Profit and loss account in $ million
Earnings from operations before finance income and expense and tax expense (EBIT):
– Ridley AgriProducts
– Corporate
– Property Realisation
– Salt (Dry Creek)#
EBIT from operations before non-recurring costs and discontinued operation
– Net finance costs
– Income tax expense (excluding non-recurring transactions and discontinued operation)
Net profit from continuing operations after tax before non-recurring costs
Other, Non-recurring costs incurred:
– Write off of Dry Creek goodwill
– Impairment of Dry Creek salt fields
– Write off of Dry Creek fixed assets and inventory
– Transaction costs – rendering business acquisition
– Tax effect of non-recurring transactions
Reported net (loss)/profit from continuing operations
Discontinued operation
Reported net (loss)/profit
Earnings per share (cents):
(i) continuing
(ii) reported
^ FY12 restated to reclassify Cheetham Salt result and tax expense ($1.0 million) as discontinued operation.
# Excludes the costs of restructuring which have been separately reported.
Restated
2013
2012^ Movement
28.1
(5.7)
(1.9)
3.4
23.9
(7.7)
(4.3)
11.9
(5.0)
(14.7)
(14.3)
(3.2)
8.7
(16.6)
(5.1)
(21.7)
(5.4)
(7.0)
27.2
(6.7)
(0.7)
3.4
23.2
(9.3)
(6.1)
7.8
-
-
-
(0.4)
-
7.4
11.9
19.3
2.4
6.3
0.9
1.0
(1.2)
-
0.7
1.6
1.8
4.1
(5.0)
(14.7)
(14.3)
(2.8)
8.7
(24.0)
(17.0)
(41.0)
7.8
(13.3)
Corporate and property
realisation costs
Corporate costs of $5.7 million are
$1.0 million lower than the prior year
comparative due to the share-based
payment expense relating to the Rights
issued under the May 2012 Special
Retention Plan being reported as part
of the profit from the discontinued
operation.
Property realisation costs of $1.9 million
are $1.2 million higher than the prior
period due to an increase in consulting
and advisory activity for the Dry Creek,
Moolap and Lara sites which were
transferred from Cheetham Salt to
Ridley ownership during the year.
Salt
The $3.4 million of earnings from Salt
reflect a full year’s operation for the Dry
Creek salt field in servicing the Penrice
salt supply agreement which terminated
on 30 June 2013. Termination costs are
separately reported below within the
non-recurring costs for the year.
Net finance costs
The net finance costs of $7.7 million
are $1.6 million lower than the prior
period (2012: $9.3 million). The reduction
reflects progressive lowering of the
official interest rate during the year
partially offset by the incremental
three month bridging finance cost
associated with the c.$80 million outlay
on 31 December 2012 to acquire the
CSF Proteins Melbourne rendering
business. Upon receipt of the Cheetham
Salt divestment funds on 28 February
2013, a mandatory $80 million of bank
debt was retired, with the balance of
the proceeds applied to lower the net
borrowing position.
Income tax expense
The tax payable on the profits of the
Cheetham Salt business prior to its
divestment were calculated as being
$1.4 million as at the date of exit, and
this is reflected in the discontinued
operation note (note 4). A taxable loss
of $7.1 million was generated on the
actual divestment and added to existing
brought forward capital losses not
brought to account.
The write off of depreciable assets and
inventory at Dry Creek prior to year
end has contributed to a consolidated
income tax benefit for the year of
$4.4 million, comprising a tax benefit on
Other, Non-recurring costs of $8.7 million
and an expense on ordinary, continuing
operations of $4.3 million.
Absent any event in the coming year
that gives rise to a material difference
between the tax and accounting
treatment, the effective tax rate is
expected to return to slightly below
the prima facie tax rate of 30%.
Non-recurring costs – pre-tax Dry
Creek goodwill, impairment, asset
write offs and transaction costs
(i) $5.0 million – goodwill
The exclusion of the Dry Creek salt
field from the Cheetham Salt sale
process necessitated the write off (at
31 December 2012) of the $5.0 million
of goodwill that arose on the original
acquisition of the Dry Creek business.
14 | Ridley Corporation Limited – Annual Report 2013
For personal use only (ii) $14.7 million – impairment
The highest and best use of the
Dry Creek site was assessed at
31 December 2012 in the context
of its uncertain operating future, and
was determined to be as a property
redevelopment. Based on an
independent external valuation prepared
using the existing site approvals, at
the half year the Board adopted a
carrying value for the Dry Creek site
of $33.9 million, a value which was
reaffirmed at year end.
An impairment charge of $14.7 million
was recorded to write down the
Dry Creek salt field asset to this
value. A provision of $4.5 million was
simultaneously raised to cover the
anticipated costs for the closure of the
site as a salt field and for preparation of
the site for redevelopment. During the
six months to 30 June 2013, a total of
$0.6 million of closure costs had been
incurred, thereby leaving a residual site
closure provision balance of $3.9 million.
(iii) $14.3 million – fixed assets and
inventory
The early termination of the salt supply
agreement rendered much of the plant
and equipment at the Dry Creek
site redundant. Throughout the last
three months of the financial year,
management endeavoured to redeploy
surplus assets or realise as much
value as possible from sales thereof.
A non-cash write off of $3.9 million
was effected to write down the plant
and equipment assets at 30 June 2013
to their recoverable amount.
After exploring all export sales avenues
open to Ridley not otherwise closed
under the non-compete clause of the
Cheetham Salt divestment agreement,
the sale of 180,000 tonnes of salt
at Dry Creek to Cheetham Salt was
contractually confirmed. The net
realisable value of this salt is limited to
an estimated $3 per tonne due to high
transportation costs and the need to
wash the Dry Creek salt prior to sale.
Except for this saleable tonnage, the
remaining inventory at 30 June 2013
has been written down to zero, thereby
generating a non-cash write down of
$10.4 million.
(iv) $3.2 million – transaction costs
Aggregate transaction costs of
$3.2 million were incurred during the
year in the acquisition of the CSF
Proteins Melbourne rendering business,
including $2.4 million of stamp duty.
Aggregate transaction costs of
$9.5 million incurred as part of the
divestment of Cheetham Salt have been
reported in note 4(a) to the accounts and
separately reported in the overall result
from the discontinued operation.
Discontinued operation
The contribution to the profit and loss
arising from the discontinued operation
comprising the part year ownership and
ultimate sale of Cheetham Salt is an after
tax loss of $5.1 million (note 4(a) to the
accounts), and comprises the following
three elements:
(i)
The sale of the Cheetham Salt
business was completed on
28 February 2013, such that the
consolidated Ridley result for the
year includes eight months of salt
business operations. The eight
month profit after tax contribution
from Cheetham Salt is $7.0 million.
(ii) An accounting loss on the sale
of Cheetham Salt of $0.9 million
is reported based on gross sale
proceeds of $150.0 million and the
$150.9 million 28 February 2013
carrying value of the net assets
sold. The capital loss on the sale
of $7.1 million has not been booked
as a tax asset.
(iii) Transaction costs of $9.5 million
have been brought to account, and
include the internal restructuring
of the Ridley consolidated group to
retain ownership of the Dry Creek
operation and the surplus property
assets at Bowen, Lara and Moolap.
(iv) The realisation of reserves has added
a further $1.7 million of effective cost
to the transaction.
Upon the sale of Cheetham Salt, a
$7.5 million contribution to retained
profits arose from the realisation of the
residual Asset Revaluation Reserve
balance not written back in the first
half year.
Cash flow and working capital
The operating cash inflow for the year
(after working capital movements and
maintenance capital expenditure) was
$54.3 million, an increase of $2.4 million
from the $51.9 million recorded in the
prior year.
Development capital expenditure figure
for the year of $10.9 million (FY12:
$10.6 million) includes $3.1 million of
Cheetham Salt activity prior to its sale
and $5.6 million for the completion of
the new Pakenham mill. Depreciation
and amortisation for FY13 increased to
$17.8 million (FY12: $14.4 million), which
includes $3.8 million for Cheetham Salt.
The Company has paid $3.6 million
in tax instalments during the year and
received refunds of prior year tax paid
of $3.3 million for a net outlay of
$0.3 million.
The total outlay on acquisitions for
the period of $80.7 million includes
the acquisition of the CSF Proteins
Melbourne rendering business for
$77.0 million plus working capital
adjustments, as well as the acquisition
of the Bartlett Grain tuna meal business
for a total outlay of $1.4 million.
In addition to the net proceeds of
$144.6 million from the sale of Cheetham
Salt, the positive reduction in working
capital of $26.4 million has been a
secondary contributor to an overall
$80.8 million reduction in net debt
to $17.4 million at balance date.
Ridley Corporation Limited – Annual Report 2013 | 15
For personal use only Financial Review continued
Table 3
Cash flows for the year in $ million
EBIT from operations before non-recurring
costs and discontinued operation
Net cash inflow from discontinued operation
Cash outflow from non-recurring transaction costs
Depreciation and amortisation
EBITDA
Movement in working capital
Maintenance capital expenditure
Operating cash flow
Development capital expenditure
Dividends paid
Net proceeds from sale of Cheetham Salt
Cash assets divested with Cheetham Salt
Net finance cost payments
Net tax payments
Acquisition of CSF Proteins Melbourne rendering
business and Bartlett Grain (2012: LNT and Monds
& Affleck businesses)
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
30 June 2013 30 June 2012
23.9
0.7
(3.2)
17.8
39.2
26.4
(11.3)
54.3
(10.9)
(11.4)
144.6
(5.1)
(8.0)
(0.3)
(80.7)
(2.1)
0.4
80.8
(98.2)
(17.4)
23.2
12.9
(0.4)
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)
Balance sheet
Material movements in balances other
than through the exclusion of the
Cheetham Salt balances comprise a
decrease in debt following the application
of Cheetham Salt sale proceeds and an
increase in goodwill.
The net increase in Intangible assets
comprises $40.0 million of goodwill
arising on the acquisition of the CSF
Proteins Melbourne rendering business
offset by the write off of the $5.0 million
of Dry Creek acquisition goodwill. The
balance of other movements relates to
the acquisitions of the Bartlett Grain
tuna meal importation business and the
animal nutrition business offset by the
exclusion of Cheetham Salt software
balance.
At 30 June 2013, the Group has
retained the classification of the former
Dandenong mill as an asset held for
sale given that a revised marketing
campaign was launched prior to balance
date which is expected to achieve a sale
within the next 12 months. The Bowen
site was withdrawn from sale during the
year due to a lack of interest in the site
and has consequently been reclassified
as an investment property.
After excluding the removal of the
Cheetham Salt balances, movements in
property, plant and equipment primarily
comprise the new mill constructed
at Pakenham plus the fixed assets
of the rendering business acquired
on 31 December 2012.
Change in accounting policy
A new accounting policy was adopted
on 1 July 2012 and has been applied
retrospectively. The new accounting
policy is that land and buildings are
stated at cost or deemed cost less
accumulated depreciation and
impairment, whereas the previous
accounting policy measured land
and buildings at fair value, based
on periodic, but at least triennial,
independent valuations.
The Group considers that the change
in policy will result in the Financial Report
providing more stable, relevant and
equally reliable information, leading to
asset values which more accurately
reflect the underlying reality of the
transactions and events surrounding the
sites, many of which are the cornerstone
of remote rural communities.
The impact of the change in accounting
policy is the reversal of the gross land
and buildings balance in the Asset
Revaluation Reserve of $17.2 million
against the carrying value of the asset,
with the reversal of the tax effect of
$5.0 million applied to reduce the
deferred tax liability balance. Other
movements in the Asset Revaluation
Reserve for the year are reflected in
Table 4 on page 17.
The crystallisation of aggregate asset
values through the Cheetham Salt
divestment transaction also resulted in
an after tax reversal of $18.4 million of
the salt field Asset Revaluation Reserve
balance against the carrying value of the
salt fields. The residual salt field balance
of the consolidated Asset Revaluation
Reserve of $7.5 million at half year was
transferred to retained profits upon
completion of the Cheetham Salt
divestment on 28 February 2013.
16 | Ridley Corporation Limited – Annual Report 2013
For personal use only Table 4
Asset revaluation reserve movements
and balances – in $ million
Opening balance as at 1 July 2012
Change in accounting policy for land and buildings
Fair value reduction of Cheetham Salt salt fields inc.
Dry Creek
Closing balance as at 31 December 2012
28 February 2013 transfer to retained profits on sale of
Cheetham Salt
Closing balance as at 30 June 2013
Gross
54.4
(17.2)
Tax
(16.3)
5.0
(29.5)
7.7
11.1
(0.2)
(7.7)
-
0.2
-
Net
38.1
(12.2)
(18.4)
7.5
(7.5)
-
Acquisitions
On 31 December 2012, Ridley acquired
the rendering business assets of
BPL Melbourne Pty Ltd (CSF Proteins
Melbourne) and the associated Merino
Street and Lincoln Street, Laverton
properties, for a total purchase
consideration of $77.1 million.
The fair values as determined by the
Ridley Board of Directors following an
independent review of plant and
equipment and of land and buildings
comprised $37.5 million of property,
plant and equipment, inventory of
$0.9 million, and tax effected employee
benefits of $1.4 million. Goodwill of
$40.0 million was consequently recorded
after deducting the fair values from
the purchase consideration.
In addition to the acquisition of
CSF Proteins Melbourne, the Bartlett
Grain tuna meal importation business
was acquired during the year for a total
outlay of $1.7 million, which gave rise to
goodwill on acquisition of $0.7 million.
Segments
Operating segments increased in the
year from two to three through the
inclusion of an additional segment for
Property Realisation, as Ridley continues
to pursue value creation strategies for
non-operating sites.
The ongoing salt segment is at Dry
Creek, which is no longer producing
salt following the termination of the
Penrice salt supply agreement but has
significant existing inventories of harvested
salt and magnesium brine which are being
progressively sold over the coming years
under an arm’s length contractual
arrangement with Cheetham Salt. The Dry
Creek site is concurrently being prepared
for a future redevelopment as a residential
community.
The ongoing reportable segments
are now synchronised with the
business as follows:
AgriProducts: Produces and
markets stock and poultry feeds,
aqua feeds, animal protein meals,
vitamin and mineral supplements.
Salt: Dry Creek site.
Property realisation: Realisation of
opportunities in respect of surplus
property assets reflected either as assets
held for sale or investment properties.
Risks
The following is a summary of some
of the key operational risks facing
the business and the way in which
Ridley manages these risks:
• Cyclical fluctuations – by operating
in several business sectors within the
domestic economy, some of which
have a positive or negative correlation
with each other, Ridley is not
dependent upon a single business
sector and spreads the sector risk
across a diversified portfolio.
• Influence of domestic harvest
– unlike many other operators in
Australian agribusiness, subject to
the availability of raw material supply
to its mills, Ridley is not commercially
dependent upon the level of harvest.
Through properly managed
procurement practices and many of
our customers retaining responsibility
for the supply of raw materials, the
impact of fluctuations in raw material
prices associated with domestic and
world harvest cycles is mitigated.
• Influence of natural pasture
on supplementary feed decision
making – whilst Ridley cannot
control the availability of natural
pasture, it believes there is a
compelling commercial justification for
supplementary feeding in each of its
sectors of operation, whether that be
measured in terms of milk yield and
herd wellbeing or feed conversion
ratios in poultry and aqua-feed.
• Impact on domestic and export
markets in the event of disease
outbreak – Ridley has a strategy of
mill segregation in place to effectively
manage its own risk of product
contamination across the various
species sectors. Ridley also has an
extensive footprint of mills dispersed
across the eastern states of Australia
that provides a geographical
segregation of activities. The risk to
Ridley is therefore more of a market
risk such as what happened in FY13
with an outbreak of Avian Influenza
which effectively closed the export
markets for poultry meal products.
• Customer concentration and risk
of regional consolidation – Ridley
endeavours to enter into long term
supply contracts with its suppliers to
provide the surety of volumes required
to plan appropriate shift structures,
procurement and supply chain
activities, and capital expenditure
programs.
Earnings per share
The underlying earnings per share of
(7.0) cents per share ((5.4) cents for
continuing operations only) reflects
the FY13 financial impact of the
non-recurring pre-tax write downs,
impairments and transaction costs
of $37.2 million against a stable
equity platform.
Earnings per share
Basic earnings per share
2013
Cents
(7.0)
2012
Cents
6.3
Ridley Corporation Limited – Annual Report 2013 | 17
For personal use only Financial Review continued
Gearing
Movements between the opening and
closing levels of gearing reflect the
c.$80 million mid-year outlay to acquire
the rendering business and subsequent
application of Cheetham Salt sale
proceeds. The capital return outlay of
$23.1 million has been fully provided
in the accounts at balance date but is
a cash outlay in the 2014 year (FY14).
Gearing is reported as debt to equity.
Gearing
Gross debt
Less: cash
Net debt
Total equity
Gearing ratio
2013
$’000
2012
$’000
34,771 105,379
(7,228)
(16,936)
98,151
17,835
207,533 278,371
8.6% 35.3%
Capital movements and return
The capital return of 7.5 cents per share
as approved by Ridley shareholders on
24 June 2013 was paid to those persons
recorded on the Ridley register as at
7.00pm on Tuesday 2 July 2013. The
accounting entries associated with the
return are to reduce shareholders’
equity and increase group borrowings
by $23.1 million. Although the payment
was effected after year end, with no
outstanding conditions attached to
the payment, it was accrued for in
full as at 30 June 2013.
A tax ruling has been received from the
ATO advising that for all shareholders,
no part of the proposed capital return
will be treated as a dividend for income
tax purposes. A copy of the ATO ruling
is provided on the Ridley website at
www.ridley.com.au
ATO Class Ruling CR2013/57, issued
subsequent to balance date, has
confirmed the tax treatment of the capital
return for Ridley shareholders as outlined
in the Notice for the General Meeting of
Ridley shareholders held on 24 June
2013 to approve the capital return.
The capital return follows the FY12 final
cash dividend payable of 3.75 cents per
share, franked to 100% and paid on
30 September 2012. There was no
FY13 interim dividend payable.
During FY13, a total of 2,244,183 (FY12:
1,216,418) shares were acquired by the
Company on market for $2.1 million
(FY12: $1.5 million) to satisfy the allocation
of 1,403,057 (FY12: 675,560) shares to
Ridley employees under the Ridley Long
Term Incentive and Special Retention
Plans and 841,126 (FY12: 540,858)
shares were allocated under the Ridley
Employee Share Scheme. There
were no movements in issued capital
during either financial year.
Dividend
In the 2011 and 2012 financial years,
Ridley paid an annual dividend of
7.5 cents per share, which was fully
franked in 2012 and unfranked in the
prior year. Following the business
restructure in the 2013 financial year,
a capital return to shareholders was
made in early July 2013 as noted above.
The Board has not declared a final
dividend for the 2013 year and Ridley
does not have a formal dividend policy.
The Ridley Board will endeavour to adopt
a consistent dividend profile in the future
which reflects the earnings and cash
flow conversion of the business and
the growth opportunities prevalent and
foreseeable at the time of dividend
declaration.
Outlook
In addition to organic growth through
a program of mill modernisation, Ridley
intends to continue to actively pursue
acquisition opportunities consistent with
its long term strategy to be Australia’s
leading producer of premium quality, high
performance animal nutrition solutions.
Alan Boyd
Chief Financial Officer and
Company Secretary
18 | Ridley Corporation Limited – Annual Report 2013
For personal use only Ridley Corporation Limited – Annual Report 2013 | 19
For personal use only 2013 Highlights
■ New mill commissioned at
Pakenham
■ Critical mass and synergies
in animal meals
■ Stabilised aqua-feed business
■ Positive earnings and outlook
for supplements
20 | Ridley Corporation Limited – Annual Report 2013
For personal use only Ridley AgriProducts Operating Result
Ridley AgriProducts recorded an Earnings Before
Interest and Tax (EBIT) of $28.1 million for FY13,
up $0.9 million from the prior year’s $27.2 million,
and supersedes the prior year result as being the
second highest on record.
The largest movements from the
prior year are the inclusion of six
months earnings contribution from
the CSF Proteins Melbourne rendering
business acquired on 31 December
2012 offset by the decline in dairy and
Packaged Products sector earnings.
was adversely affected by a number
of extraneous events which were not
repeated in the 2013 financial year. The
rendering businesses at Maroota and
Laverton have shown great resilience in
the face of the second half year closure
of export markets for poultry meal.
The turnaround of the Supplements
business has been successful following
the prior year restructure, with a positive
contribution for the year and an outlook
of sustainable profits. The Ridley
Aqua-Feed business has rebounded
positively from last year’s result which
Overall sales for FY13 of $716.3 million
were up $80.5 million (12.6%) on last
year, and reflect 1.63 million tonnes of
stockfeed sold, 15,000 tonnes down
on last year. The following is a sector
by sector analysis of performance for
FY13 and outlook for FY14.
Australia feeds ’000 tonnes
256.1
265.0
Dairy
Beef
Poultry
Pig
Aqua-feeds
Supplements
Equine
Animal meals
Other
38.2
24.9
186.0
198.5
41.9
47.3
21.9
21.7
25.9
26.7
92.6
34.1
63.0
97.5
909.0
934.4
0
200
400
600
800
1,000
2013 (Total 1,635)
2012 (Total 1,650)
Tim Hart
Managing Director and
Chief Executive Officer
Sector performance
Poultry
After three successive years of volume
growth, Ridley’s Poultry sector sales
tonnage (909,000 tonnes for the year)
decreased by 25,400 tonnes as a
result of a mid-year decline in overall
bird numbers to correct an industry
over-supply. Revenues for the year
have increased by 9.0% to $351.6 million
largely as a result of rising raw material
prices in the first half year to price levels
that were sustained throughout the
second half. The relatively long positions
in many primary raw materials improved
the poultry margins recorded in the first
half year compared to the second half
when prices stabilised at the higher
levels and positions were shortened
accordingly.
Whilst the outlook is for continuing
growth in aggregate domestic demand
for lean white meat sourced from poultry
products, there are some regional
consolidations of bird concentrations
currently in progress that may affect
the spread of production volumes
between individual Ridley feedmills.
The capital expenditure project at
Wasleys in South Australia to expand
the intake and storage capacity was
successfully concluded during the year
and further expansion may be required
in the coming year to accommodate
forecast growth in local bird numbers
from our major clients in the region.
Ridley Corporation Limited – Annual Report 2013 | 21
For personal use only Ridley AgriProducts Operating Result continued
For the second successive year the
expected volume increases at the Clifton
site in Queensland failed to materialise
and that operation is currently under
a broader regional review to develop
a sustainable solution for the South East
Queensland region which currently
services all Ridley sectors of operation
other than Supplements.
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 sales of 186.0kt were
recorded for the year compared to
$198.5kt in the prior year. The domestic
Pig sector remains stable, and volumes
and margins similar to the 2013 year are
expected for FY14.
Ruminant – dairy, beef and sheep
The environment for the dairy farmer at
the start of the year was one of increased
utilities and transport costs, rising raw
material prices, the prospect of a
continuing high Australian dollar, an
inelastic and inherently low milk price,
and dwindling reserves of prior year
silage and fodder. Many farmers were
unable to resist the temptation to pull
back strongly on their variable costs
either knowingly or ignorant of the
implications on milk production
and the wellbeing of the dairy herd.
Despite the negative sentiment associated
with the dairy farmer’s perfect storm, a
stronger than anticipated fourth quarter
boosted sales tonnage to 320.2kt for the
year, 3.6kt ahead of last year. Sales were
boosted in this quarter by the sheep and
beef sectors in NSW and Western and
Northern Victoria, where the lack of
pasture and fodder has been widely
reported.
Throughout the year the Ridley Ruminant
team has grappled with the volume
versus margin equation and undoubtedly
the full year tonnage volume has been
recorded at the expense of some margin,
as increased production and raw material
costs were absorbed in order to maintain
throughput and fixed cost recovery at
the Ruminant mills. An operating loss for
the year has been recorded which is
approximately $2.0 million below last
year’s result.
A Dairy sector success story for FY13
has been the completion of the new
Ruminant mill at Pakenham, which was
commissioned in December 2012 and
in the fourth quarter has been delivering
against the performance metrics included
in the capital expenditure approval.
A full year of operation for this mill will
contribute to an uplift in earnings in
FY14. The Dandenong mill was able
to be closed during the year and its
production volumes transferred to
Pakenham. The old mill has been
demolished and the 1.3 hectare site
rezoned to accommodate high density
residential use and cleared in preparation
for a sale process which commenced
prior to balance date.
For FY14, there are positive signs of a
renewed optimism within the industry
following successive rises in milk prices
and the weakening of the Australian
dollar below parity with the US dollar.
The outlook is for a return to profitability
for Ridley’s Dairy sector through a cyclical
upturn which is likely to take the most
part of FY14 and FY15 to return to the
positive side of the cycle.
Rendering
The NSW poultry and fish rendering
business acquired in 2011 continues to
be a strong performer despite the closure
of the poultry meal export markets
midway through the year. With c.50%
of the poultry meal product ordinarily
being exported, the closure of the export
markets floods the domestic market with
poultry meal product, thereby creating
significant downward pressure on prices
and margins. A follow on effect in the
meat and bone meal markets can also
be felt due to product switching following
any material shift in pricing relativity
between mammalian and poultry
meal products.
During the year, the $1.8 million capital
upgrade project at the NSW Camilleri
Stockfeeds site was completed and this
relieves the production constraints that
have existed at that site for the past two
years. The management team can now
actively look to develop new sources
of raw material input for processing at
the plant.
Whilst certain of the poultry meal export
markets have reopened, the prime
product destinations of China and
Indonesia remain closed at the present
time, with the likely prospect of being
reopened at an unpredictable stage
during FY14. Provided there are no more
instances of overseas market closure,
the FY14 prospects for both rendering
businesses are strong, with additional
value to be created upon the reopening
of the currently closed Indonesian and
Chinese poultry meal markets.
Packaged Products
The Packaged Products sector was
adversely affected by the increases in
raw material prices in the first half year
that were not able to be passed on to the
consumer through the retail outlet pricing
mechanisms which are lagged by up to
six months.
The highly competitive nature of this
sector and the reliance on mill volume
throughput by all industry participants
restricts the ability to pass on cost
increases most notably experienced in
the year in raw materials, utilities and
transport rates. Maintaining a full year
sales volume at the same level as the prior
year has come at the expense of margin.
22 | Ridley Corporation Limited – Annual Report 2013
For personal use only A new sales and marketing team is
injecting new ideas and rigour into this
business where loyal customers continue
to demonstrate strong brand allegiance
which is expected to support a modest
improvement in earnings in FY14.
Supplements
The prior year exit of the southern
Queensland region to concentrate the
service offering from Townsville to the
higher volume, more reliable northern
Queensland market has proven to be a
sound decision, with a solid contribution
to earnings for FY13 and a slightly
improved outlook for the coming year
given the prospect of a more traditional
seasonal cycle.
Aqua-Feed
The prior year performance of Ridley
Aqua-Feed (Aqua-Feed) suffered
from a number of adverse events and
factors which did not recur in FY13.
Furthermore, the restructuring of the
Aqua-Feed business afforded by the
lifting of the dog food production ban
at Inverell and the additional Tassal
volumes recorded prior to termination
of the supply agreement to that entity
have lifted earnings from the five year
low recorded in FY12.
The Australian salmon industry is
expected to remain in a state of
production overcapacity for the
foreseeable future until the forecast
growth in salmon volumes starts to
rebalance capacity with demand. Long
term allegiances have been established
and contracts executed during the
year to stabilise the aqua-feed salmon
volumes in the years ahead whilst
the threat to domestic prawn feed
production is from imported feed
from Asia.
The Aqua-Feed division continues to
oversee a number of research and
development projects designed to
provide an innovative competitive
edge in feed conversion and provide
a continuing compelling commercial
case for its products in its highly
competitive markets.
1
3
4
2
19
5
6
7
20
18
17
13
12
11
14
15
16
8
10
9
Operations
1 Townsville
2 Dalby
3 Narangba
4 Toowoomba
5
Inverell
6 Tamworth
7 Taree
8 Mooroopna
9 Maffra
10 Pakenham
11 Laverton
12 Bendigo
13 Gunbower
14 St Arnaud
15 Noorat
16 Terang
17 Murray Bridge
18 Wasleys
19 Clifton
20 Maroota
Outlook
The overall outlook for Ridley
AgriProducts remains positive, with
Aqua-Feed now stabilised, and with
Dairy and Packaged Products expected
to benefit from the new Ruminant mill
plus a return to more traditional seasonal
patterns. The restructured Supplements
business is well positioned to generate
sustainable profits, even in a year of
unfavourable seasonal conditions, with
significant upside existing in conditions
favourable to supplementary feeding
across northern Australia. The growth
trend for Poultry is expected to continue
and we remain well positioned to be
an integral component of the regional
concentration of bird numbers required
to generate such growth.
R&D and innovation
Ridley’s reputation has been well
established over a long period of time
as 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 and
with an appropriate segregation
of mill activities to minimise the
risk of contamination.
At Ridley, we are very aware of the
mounting pressures that continuing
population growth will have on scarce
resources, such as arable land for the
growing of food and crops, and of the
need to improve efficiency of feed
conversion to provide an effective
and affordable source of protein from
livestock. We are continually looking
for research programs which can
contribute to Ridley maintaining and
improving its position as a critical
supplier in the world’s increasingly
challenging quest for protein.
Ridley Corporation Limited – Annual Report 2013 | 23
For personal use only Property Development
Ridley has been pursuing a strategy to unlock the
value from its significant property portfolio across
Australia, with a focus on former salt field and feed
mill properties which are now surplus to the
operational requirements of the business.
As part of its property strategy, during
the prior year Ridley created a new
wholly owned subsidiary, Ridley Land
Corporation Pty Ltd, as a dedicated
vehicle to hold assets with longer term
value, including the assets located at Dry
Creek, Moolap, Lara and Bowen. This
new company structure, together with a
separate reporting segment for property
related activity, provides Ridley with
greater agility and opportunity to
effectively deal with these property
assets and realise the redevelopment
upside for its shareholders.
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 of Victoria,
and the salt fields at Dry Creek in South
Australia, which were retained by Ridley
after the sale of Cheetham Salt in the
year and are now in the process of
being permanently closed.
Ridley has developed a clear strategy
aimed at adding value to these larger
property holdings. The strategy is to
secure the rezoning and development
approvals necessary to facilitate future
redevelopment for residential,
commercial or industrial use, whichever
can deliver the highest net return for
shareholders over time. Whilst the
opportunities to increase the value of
these sites are significant, the planning
and development approval processes
are complex, and are likely to take
several years to complete. Ridley has
consequently taken a longer term view
towards realisation of these properties,
whilst also pursuing a shorter term
strategy for other surplus assets which
have a more immediate sale potential.
Dry Creek
In FY13, Ridley concluded the sale of its
Cheetham Salt business and through this
process retained ownership of the Dry
Creek operating asset, mining leases and
all freehold land. During the year Penrice
announced its intention to cease the
production of soda ash from its Osborne
plant effective on 30 June 2013, and
advised Ridley that it would no longer
require the supply of salt from Dry
Creek under the long term salt supply
agreement. On 28 June 2013, both
entities announced the termination of
the salt supply agreement, and supply
of brine from the Dry Creek site to
Penrice duly ceased on 30 June 2013.
In the last quarter of the financial year,
Ridley investigated and exhausted
opportunities to continue salt production
from the Dry Creek site for sale into
export markets, being the only markets
open to Ridley under the Cheetham Salt
sale non-compete clauses. Neither a
commercially feasible nor a cash positive
solution was able to be found, and
accordingly, the production of new
salt at the site has now permanently
ceased. During this same period, Ridley
developed a site closure contingency
plan which has now been fully activated
to effect permanent closure of the fields.
An agreement with Cheetham Salt has
been finalised that will see the sale of
180kt of the existing harvested salt
stockpiles on the Dry Creek site over
the next three years.
Given the commencement of the salt
field closure process, Ridley is now
in a position to make the Dry Creek
land available for divestment or
redevelopment, and has commenced
Stephen Butler
Property Development Manager
initial discussions with the South
Australian Government and other
stakeholders. Given the site’s proximity
to the heart of Adelaide and inclusion
within the South Australian State
Government’s 30 year plan for the
Greater Adelaide region, Ridley believes
that redevelopment of the site will deliver
considerable uplift in the value of the site.
Previous investigations with Delfin Lend
Lease in the 2008 and 2009 financial
years indicated that redevelopment of
the southern end of the salt fields at
Dry Creek would be commercially
viable based on an indicative design
as a Master Planned Community of
approximately 10,000 dwellings. At
that time, Ridley announced it would
not proceed with the next stage of the
investigations because of the contractual
commitments to Penrice under the salt
supply agreement.
The closure of the Dry Creek salt fields
presents a significant strategic planning
opportunity for the City of Adelaide
as the salt fields and adjoining lands
occupy both Crown land and over
5,000 hectares of Ridley freehold land
extending some 50km north from Dry
Creek. The potential for redevelopment
of this corridor for a range of land uses
is significant, and Ridley is working
closely with the South Australian State
Government to develop and agree an
appropriate strategy to achieve site
closure and rehabilitation.
Final closure of the Dry Creek salt fields
is expected to take several years to
complete, and Ridley has engaged
expert consultants to assist with the
design, approvals, implementation and
monitoring programs. A closure provision
24 | Ridley Corporation Limited – Annual Report 2013
For personal use only 2013 Highlights
■ Unique opportunities for
Greater Adelaide
■ Activation of Dry Creek
closure plan
■ Moolap progressed to
EES and rezoning
■ Lara, Bowen and Dandenong
available for sale
Ridley Corporation Limited – Annual Report 2013 | 25
For personal use only Property Development continued
of $4.5 million was established at
31 December 2012 and applied against
the $33.9 million Dry Creek salt field
valuation to derive a net carrying value
for the site of $29.4 million as reported
at the half year. During the six months
to 30 June 2013, $0.6 million of this
provision has been applied against
initial closure activities, leaving a
residual closure provision balance
of $3.9 million at 30 June 2013.
Ridley holds over 2,800 hectares of
vacant rural land located north of the
operating salt fields and carried at a
nominal value for accounting purposes.
This land was acquired as contingency
land, has never been used as part of the
salt field operations, is unencumbered
and able to be sold. Ridley has
commenced the process for the sale of
this patchwork of land titles and whilst
the land is generally agricultural rather
than developable, divestment of the first
of these extensive landholdings is likely
to generate proceeds in the coming year.
Geelong salt fields urban
renewal project
In 2011, Ridley began investigating
redevelopment opportunities for the
former Cheetham Salt salt field site at
Moolap in Victoria. Preliminary technical
investigations, concept designs and
feasibility analyses were undertaken,
and extensive consultations held with
relevant Government agencies. With a
positive outlook from this work, Ridley
determined that it would progress into
the next stage of investigations, and
in December 2012 lodged a formal
application to the Victorian State
Planning Minister to determine whether
the ‘Geelong Salt Fields Urban Renewal
Project’ would require an Environmental
Effects Statement (EES) under the
Environment Effects Act 1978.
The Minister determined in January 2013
that an EES would be required for the
Moolap project, and Ridley has started
preparing the EES, a process which
will include undertaking the required
technical investigations, detailed urban
design, master planning and community
consultation. A Planning Scheme
Amendment (rezoning) will also be
required, and this process will run
concurrently with the EES. It is expected
that an outcome on these processes
can be achieved within two years from
commencement.
The Moolap site comprises a mix of
freehold land owned by Ridley and
Crown land held under a long term
lease. Ridley is in discussions with the
Victorian State Government with regard
to the future of Crown land at the site
and expects that these discussions will
conclude during the first half of FY14.
The EES and rezoning processes will
commence upon conclusion of these
discussions.
The Moolap site occupies a unique
strategic position in Geelong with
north facing frontage to Corio Bay,
and is located within 3km from the
Geelong Central Business District.
The Geelong region is experiencing
considerable population growth and
is set to benefit from the renewed
Government focus on investment into
regional areas in Victoria. Ridley
considers there to be a considerable
opportunity for the site to be rezoned
and redeveloped for a master planned
community comprising residential,
employment, community and
conservation based activities.
A significant amount of work has already
been undertaken to understand the
redevelopment potential of the Moolap
site. This work includes discussions
with the wide range of Government
stakeholders involved in the planning
approvals process, and Ridley has
been pleased with the overall positive
response received to date. It is evident
that an urban renewal project at the
site could provide significant benefits
for the Geelong community, importantly
the creation of short and long term
employment as well as providing for
the long term protection of the site and
adjacent areas from rising sea levels
associated with climate change. There
would also be significant environmental
benefits occurring as a result of the
establishment of protected wetland
areas not only at that site but also
through the provision of environmental
offsets at Ridley’s site at Lara, on the
opposite side of Corio Bay.
Ridley has developed a preliminary
Master Plan and project feasibility,
which indicates that development
of the site could feasibly be achieved.
The Master Plan is based around
redevelopment of the site for
approximately 155 hectares of
residential, 80 hectares of employment
and 10 hectares of mixed use
development. Significant areas
of land have also been set aside
for conservation, recreation and
public use purposes.
During the year, Ridley commenced
discussions with potential joint venture
development partners. A private
Expression of Interest process was
held and a range of submissions were
received which presented varying value
propositions and commercial structures.
Negotiations have progressed with
shortlisted parties and Ridley is working
towards finalising a commercial
26 | Ridley Corporation Limited – Annual Report 2013
For personal use only agreement with a preferred partner in
FY14. It is Ridley’s intention to select
a respected developer partner with a
proven track record in delivering master
planned communities, and who will
subsequently add significant value
to the design and planning approvals
processes.
Independent valuation work undertaken
by Ridley’s advisors, Ernst and Young,
indicates that a significant uplift in land
value will be achieved once planning
and environmental approvals have been
received for the Moolap project.
Lara
Ridley’s 912 hectare property at Lara
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.
Avalon Airport announced in FY13
that international flights could soon be
operating out of Avalon Airport after the
Federal Government announced it had
amended the airport’s lease from
domestic-only to international status.
The amendment means that Avalon will
become the state’s second international
airport and its expansion will create
significant opportunities for the
establishment of airport-related industrial
use and support businesses. Other
infrastructure developments currently
being investigated, including the
development of the $250 million rail link
to Avalon Airport, will further strengthen
strategic opportunities in the region.
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 employment and airport-
related uses. Whilst Ridley considers
that this opportunity will create significant
value for shareholders over the longer
term, it will continue to explore shorter
term commercial opportunities for the site.
The southern end of the Lara site located
towards Corio Bay is being set aside by
Ridley to provide for any environmental
offsets that may be required as part of
redevelopment of Ridley’s Moolap site.
Through the offset, this land is an
important strategic asset in relation to
achieving planning approval at Moolap,
and will also create a significant
environmental asset for the Geelong
region once rehabilitated.
Bowen
The former salt field site located at
Bowen in Queensland’s Whitsunday
region was retained by Ridley after the
sale of Cheetham Salt, and is no longer
commercially viable as an operating salt
field. The site is a mix of freehold and
Crown land with coastal frontage, and
Ridley has been pursuing divestment
opportunities for its 34 hectares of
freehold land.
The Bowen region is set for significant
economic growth as a result of the
proposed expansion of the Abbott Point
port, which is located 25km north of
Bowen, at the northern end of the Galilee
and Bowen coal basins. The Port of
Abbott Point is one of Australia’s most
significant emerging bulk ports and is
undergoing a major transformation into
a port precinct of global importance.
The Bowen township is expected to
benefit from the Abbott Point port
expansion and accommodate much of
the forecast growth in residential and
commercial development in the region.
Ridley’s landholdings are strategically
located adjacent to the Bowen township
with frontage to both the Bruce Highway
and the coast. The site provides future
opportunities for rezoning for either
residential of industrial use, and whilst
Ridley is pursuing divestment
opportunities in the short term,
divestment of the site at acceptable
terms may take some time to complete.
Activities to divest the Bowen site
will continue in the coming year.
Dandenong
With the transfer of production volumes
to the new stockfeed mill at Pakenham,
the old mill at Dandenong was closed
and decommissioned during the year.
Ridley has been preparing the site for
sale and has commenced a marketing
and sales program for sale of the land.
The Dandenong site, which comprises
1.3 hectares in the heart of the
municipality, 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 has completed demolition of all
buildings at the site to prepare the site
for sale, and is seeking to complete
sale of the land during the coming year.
Ridley Corporation Limited – Annual Report 2013 | 27
For personal use only 2013 Highlights
■ Management remains focused on
continuous safety improvements
■ Alignment of risk management
to national codes
■ New initiatives in diversity
and people development
■ Community partnering
with Garvan Institute
and Aussie Helpers
28 | Ridley Corporation Limited – Annual Report 2013
For personal use only Our People
Over the past year we have continued to make
significant inroads in improving our approach to
safety at all levels of the business, and we remain
on our journey to develop a safety culture where
continuous, progressive improvement is embedded
and sustainable.
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 the executive team and the
Board, and is a component of individual
performance appraisal and management
remuneration.
The key measures we use to assess
safety performance are lost time injury
frequency rate (LTIFR) and the total
recordable frequency rate (TRFR). The
LTIFR is the number of injuries incurring
lost time for every million hours worked,
whilst the TRFR 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.
As the following graph shows, LTIFR
was 3.65, down from the 2012 result of
4.46. This represents an 18% decrease
in the rate of incidents that resulted in
lost time to the business. The TRFR,
which represents our total injury rate,
also decreased to 8.21, down from
16.8 in 2012, a reduction of 51%.
These results once again represent
a significant improvement.
Key drivers for the improvement in
lowering injury rates across the business
in 2013 have included our relentless
focus on reducing injuries through the
effective management of key hazards
and risks in our workplaces and the
emphasis placed on training to improve
skills, capability and engagement. As we
continue to strive towards our long term
objective of zero injuries, we will maintain
our focus on these key drivers.
Group injury frequency rates FY13
20
15
10
5
0
2
1
0
2
l
u
J
2
1
0
2
g
u
A
2
1
0
2
p
e
S
2
1
0
2
t
c
O
2
1
0
2
v
o
N
2
1
0
2
c
e
D
3
1
0
2
n
a
J
3
1
0
2
b
e
F
3
1
0
2
r
a
M
3
1
0
2
r
p
A
3
1
0
2
y
a
M
3
1
0
2
n
u
J
FY13 LTIFR
FY13 TRFR
Anne-Marie Mooney
Group General Manager, Commercial
Over the past year we have continued
to make significant inroads in improving
our approach to safety at all levels of
the business, and we remain on our
journey to develop a safety culture where
continuous, progressive improvement
is embedded and sustainable.
Our safety approach has been based
on assessing and controlling key risks
that could result in the greatest harm
within the workplace, and this has led
to the development of processes and
risk controls aligned to the new national
codes of practice and regulations, and
also to the commencement of external
audits to validate compliance at the
operating sites.
To support our focus on a proactive
approach to safety during FY13, we
continued to measure our lead indicators
to ensure that management remained
focused on driving safety system
improvements. Our lead indicators
and performance against these were
as follows:
• Completion of safety training –
94% compared to 80% in FY12;
• Completion of Good Manufacturing
Practice audits on a monthly basis
at each site – 100% compared with
100% in FY12; and
• Closure of Priority Actions identified
during audits or as a result of incident
investigations – 96% compared to
89% in FY12.
The reductions in injury rates and lead
indicators are a very pleasing result for
the business and demonstrate that
with diligence and application, the
inroads made to improving the safety
management systems over the past
12 months have been effective. This
work will continue during FY14.
Ridley Corporation Limited – Annual Report 2013 | 29
For personal use only
Our People continued
People
This year we have welcomed new people
into our business, from new acquisitions
to a new CEO. We have also farewelled
our colleagues from Cheetham Salt.
Through all the changes we remain
committed to providing a safe and
healthy workplace for all employees,
suppliers, contractors and visitors.
We strive to cultivate a highly motivated,
productive and committed workforce
that drives our business success in a
workplace where diversity and equality
are actively promoted.
On 31 December 2012, the CSF Proteins
Melbourne team at Laverton, Victoria
officially became part of Ridley when
it acquired the rendering business of
BPL Melbourne. It was the last day
of the calendar year but the first day of
integration, and we began the induction
process for the new Ridley employees
with a session on safety. Since then,
the team at Laverton has completed
online training across a range of safety
modules. In the second half year we
have been working together to develop
the strategy for the entire Ridley
rendering business unit, aligning
objectives across the organisation as
part of the performance management
system.
It is nearly 12 months since we
received the feedback from our Ridley
AgriProducts employees in the Employee
Opinion Survey (EOS). The three main
areas for improvement centred on
improving communication and
consultation between managers and
staff, communicating more effectively
the vision and strategy of the Company,
and improving change potential. In
response to the EOS, 26 action plans
were developed at site level and several
initiatives implemented across the
organisation, three of which are outlined
below. In the coming year management
will undertake a review to determine if
there are any additional actions required
and to ensure that appropriate focus is
directed to the actions required prior to
the next EOS in 2014.
1. Developing an innovation culture
Across the organisation, we realise
we need to improve our cooperation
in order to implement change more
effectively. To improve our organisation’s
ability to become more agile and
adaptive to changing requirements,
the management team identified the
need to drive a culture of innovation,
and duly embarked on a series of
innovation challenges to kickstart
the generation of ideas.
In September 2013, we had the first
of the innovation challenges, whereby
through videos disseminated on our
intranet, Ridley employees were
challenged to submit ideas for
improvement and innovation. The
response was better than expected
with more than 150 ideas being
submitted. The ideas ranged from
fairly simple ideas, with relatively
straightforward implementation plans,
to more complex and far-reaching
ideas, with the potential to become
real ‘game changers’.
Pleasingly 30 ideas have been
implemented and another 50 ideas
are in the process of being implemented.
Our focus will continue on implementation
and encouraging our staff to continue
generating new ideas to make Ridley
a better place to work.
Recognising the need for continuous
improvement and innovation, in 2011
the Ridley Board restructured its
committees and refocused the role
of the renamed Ridley Innovation and
Operational Committee. The Committee
was delegated the responsibility to
oversee processes and procedures
for new product development, innovation
and technological and scientific
advancement, aspects of general
operational performance, and quality
assurance.
2. Internal communication
In response to the feedback on
communication and coordination, we
have assembled a communications
working group comprising
representatives from a wide range of
teams across the organisation. This
group helps to close the communication
loop and provide useful feedback to the
executive team. It is a working group,
and as such takes on actions to improve
communication across the organisation.
For example, the Group coordinates a
quarterly business update by the CEO
which is delivered face to face in
Melbourne and also made available
via video to other sites across the
organisation. In FY14, the Group
will coordinate workshops for every
employee to consider the Ridley strategy
and how his or her work is aligned to
the achievement of the strategic goals.
3. Corporate sponsorship
This year, Ridley coordinated its
corporate sponsorship and it has been
satisfying to work with Aussie Helpers
and the Garvan Institute to make a
difference in the communities in which
we operate. Aussie Helpers works
directly with farmers who are struggling
financially, whereas the Garvan Institute is
well known for its breakthrough medical
research. We have been able to work
with the Garvan Institute to roll out
health education and disease prevention
programs to regional communities.
Learning and development
We have continued our focus
on leadership and management
development with further investment
in the two structured development
programs focused on rising stars
and site managers.
We have delivered 10 programs on
our online learning management system
which now forms an integral part of the
induction program for our newly acquired
businesses and employees.
30 | Ridley Corporation Limited – Annual Report 2013
For personal use only FY13 diversity initiatives
Ridley’s Workplace Diversity Initiatives
during FY13 continued to focus on the
achievement of a diverse and inclusive
working environment which provides
equal opportunity in the following areas:
• gender diversity;
• recruitment, selection and promotion;
The effectiveness of Ridley’s gender
diversity initiatives is monitored and
measured using the following metrics:
• 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
• talent and succession planning;
performance assessment;
In FY14, we will implement an online
performance management system,
which will include development plans.
This will encourage more focus on
individual learning and development
planning and improve general workforce
capability.
Careers in agriculture
Across Australia, the number of
Agriculture graduates is diminishing
and the experts in the field are inevitably
aging, with a significant proportion
approaching retirement. This is a
significant issue for the industry and for
Ridley as we need to go further afield
to attract candidates for positions within
our business. A project team has been
assembled to coordinate the effort
across Ridley and promote careers in
Agriculture. We have also partnered
with some key interested parties for the
benefit of both Ridley and the industry
in general. In FY14, we will focus on an
internship program to attract talent to
Ridley and promote careers in
Agriculture.
Workforce 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.
• career development;
• flexibility; and
• employee consultation.
Gender diversity
Developing the talent pipeline and
encouraging more women into senior
management roles continues to be
a priority at Ridley. Initiatives adopted
during the year include:
1. introducing a formal mentoring
and coaching program;
2. developing skills for networking
and encouraging women to develop
their skills;
3. identifying learning opportunities for
key women within Ridley through the
current talent identification process;
and
4. providing flexible work practices
to encourage women back to
the workplace.
As at 30 June 2013, female representation
within Ridley was as follows:
We respect diversity in our people, in
their ideas, work styles and perspectives.
Diversity recognises and values the
contribution of people with differences in
background, experience and perspective.
Diversity includes, but is not limited to,
gender, age, ethnicity and cultural
background.
Female representation
within Ridley
Company
Board
Senior executives
Senior managers
%
18
14
33
18
• voluntary turnover by age and gender;
and
• employee opinion survey results by
age and gender.
Such details are reported to the Board on
an annual basis as a matter of protocol.
Recruitment
Women represented 21% of all new
hires within Ridley in FY13, 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.
Parental leave and flexible work
arrangements
Ridley offers Paid Maternity Leave to
eligible employees to complement the
Government Scheme. Under the Ridley
scheme, employees with greater than
two years of unbroken service are offered
eight weeks paid leave which increases
to 18 weeks for those employees with
greater than five years of service. This
scheme has helped generate a 67%
return rate in relation to Parental Leave,
with two (2) of the three (3) employees
who accessed Paid Maternity Leave
entitlements returning to work.
Ridley Corporation Limited – Annual Report 2013 | 31
For personal use only Our People continued
A range of Flexible Work Arrangements
continues to be offered to our employees
to assist them in managing both their
work and carer responsibilities. These
arrangements include job-sharing,
phased return to full-time employment
after completing Parental Leave, and
working from home.
Turnover
Employee turnover throughout Ridley
was 20% across the total group, with
21% female versus 79% 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. Turnover rates were highest
in the regions where there is strong
competitive demand for labour in the
mining sector.
Diversity initiatives 2013-14
Increased gender diversity continues to
be a focus of our business. Initiatives
aimed at promoting greater participation
by women in our industry will remain a
priority, however Ridley will continue to
monitor feedback from multiple
demographic groups to ensure that all
views and needs are well captured and
understood by the business. An
organisation-wide EOS in the latter half of
FY14 will capture the views and opinions
of the Ridley workforce.
As part of the transitional requirements of
the Workplace Gender Equality Act 2012
(Act), Ridley was required to lodge its
Annual Compliance Report which details
the gender composition of each level of
its workforce as at 31 March 2013. This
report was duly lodged with the
Workplace Gender Equality Agency on
29 May 2013 and a copy of this report
has been published on the Ridley
website.
Whilst the FY13 metrics will also be
utilised to measure the effectiveness of
FY14 Diversity Initiatives, from 1 April
2014 Ridley will also need to utilise a new
set of performance measures legislated
under the recently introduced Workplace
Gender Equality Act 2012 (Cth). Unlike
the former Equal Opportunity for Women
in the Workplace Act 1999, which
focused on female participation in the
workplace, the new legislation will require
Ridley to report annually on the following
set of indicators aimed at improving
gender equality outcomes for both
men and women:
• gender composition of the workforce;
• gender composition of governing
bodies of relevant employers;
• equal remuneration between women
and men;
• availability and utility of employment
terms, conditions and practices
relating to flexible working
arrangements for employees and
working arrangements which support
employees with family or caring
responsibilities;
• consultation with employees on issues
concerning gender equality in the
workplace; and
• any other matters specified by the
Minister for the Status of Women.
Ridley is currently reviewing its human
resources and payroll systems to ensure
that such information can be accurately
captured and reported.
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 in 2013.
Ridley is also required to report its
energy usage under the Energy Efficiency
Opportunities Act 2006 (Cth). The
legislation required any company that
reached the 0.5PJ total energy usage
threshold to conduct assessments to
identify potential opportunities to reduce
energy use and to then monitor and
report on those opportunities, and any
new opportunities identified within the
context of the group’s total energy
usage. Energy use across the business
includes electricity, LPG, natural gas
and diesel.
Over the past 12 months Ridley has
focused on a number of energy efficiency
initiatives and notably was recently
successful in obtaining a Government
grant for a project at the new mill in
Pakenham, Victoria. During FY14, Ridley
will continue to look for opportunities to
drive energy efficiency improvements
throughout the Company.
32 | Ridley Corporation Limited – Annual Report 2013
For personal use only Water
At Ridley, we continue to look for
opportunities to reduce our water
usage. As detailed in last year’s report,
Ridley continues to implement water
management plans and has identified
a number of solutions to reduce water
consumption at the mills.
Reducing the usage of potable water
has been the focus for most sites and
all sites are now monitoring and tracking
their water consumption. Some of the
initiatives being used or investigated are
the collection, treatment and use/reuse
of rainwater, stormwater run-off and
boiler blowdown.
Waste
With sites in the major Australian
markets of Victoria and New South
Wales, Ridley’s rendering businesses
are fulfilling an important role in creating
valuable products from material which
would otherwise be condemned as
waste and sent to landfill.
One-third to one-half of each animal
produced for meat, milk, egg and fibre
food products is not consumed by
humans, and the global rendering
industry has consequently been a key
component to sustainable agriculture
for decades. Otherwise surplus raw
materials are subjected to rendering
processes which result in many useful
and valuable products, including meat
and bone meal, poultry meal, hydrolysed
feather meal, blood meal, fish meal and
animal fats. The most important and
valuable use for these by-products is
as feed ingredients for livestock, poultry,
aquaculture and companion animals.
Without the continuing efforts of the
rendering industry, the accumulation of
unprocessed animal by-products would
impede the meat industries and pose a
serious potential hazard to animal and
human health. By processing the low
economic value organic matter from the
meat processing, food processing, and
food service industries and by reducing
the amount of wastes deposited in
landfills and discharged to municipal
wastewater treatment facilities, the
rendering industry plays a positive social
role in sustainable agriculture.
In addition to rendering, Ridley
AgriProducts continues to reduce the
level of operational waste through
improved efficiencies at its feed mill and
rendering sites, and by diverting as much
waste as possible into recycling streams.
Whilst the business does not generate a
significant amount of waste, we continue
to demonstrate a commitment to our
recycling program. This year we
participated in a new recycling initiative
that was trialled at one of our Victorian
sites, whereby Ridley partnered with
the RED Group and RePlas to pilot a
closed-loop plastics recycling initiative.
The result of the trial was very
encouraging and as a result we are now
looking to replicate this at other sites.
The initiative involves collecting post-
industrial materials such as feed additive
bags and pallet shrink-wrap. The material
is then reprocessed by our partners into
products ranging from school chairs,
benches, speed humps to board-walks
and signage. Our short term goal is to
redirect plastic waste materials away
from landfill so that it can be effectively
recycled.
Ridley continues to be a signatory of
the Australian Packaging Covenant and
submitted a compliant plan for 2013.
Another example of Ridley’s energy
efficiency and recycling initiatives can be
seen at our site in Maroota, NSW, which
has two covered anaerobic ponds and
a series of cooling ponds. The ponding
system not only produces biogas but
treats water to a reusable standard,
thereby avoiding any discharge of
waste water or sludge from the site
and generating self sufficiency in water
usage. The recycled waste water is used
as condenser cooling water and for wash
down whilst boiler water and water for
domestic use is supplied from onsite
bores and rainwater tanks.
The biogas and waste treatment system
at Maroota is not only environmentally
sustainable by recycling waste to
produce energy, but also helps the
site to control odour as well as giving
the business two other sources of
competitive advantage, namely:
• the ability to produce biogas, which
in turn powers one of the boilers
and saves on energy costs; and
• the ability to treat water to a reusable
standard and to re-use all sludge
on site, thereby providing significant
savings on what would otherwise
be significant water and trade waste
costs.
Ridley Corporation Limited – Annual Report 2013 | 33
For personal use only Our People continued
Community sponsorship
Ridley recognises that generating a
profit provides a positive return for its
shareholders but also creates the ability
to support social and environmental
activities within the rural and regional
communities where we operate. These
local activities sustain business
performance by improving efficiency
and wellbeing whilst strengthening the
regional networks across the southern
and eastern states of Australia.
Operating in diverse communities across
rural Australia, Ridley proudly supports
Australian businesses, suppliers, and
primary producers. As one of the largest
employers in many rural regions, (80%
of our workforce is employed in regional
locations,) Ridley is committed to
investing in the development of all our
people and notably building the skills
base of the remote communities in which
we operate. We do our utmost to ensure
that we will continue to be a key
contributor to Australian communities.
Ridley makes financial contributions
to charities, schools, local sporting
clubs and universities across Australia,
supporting many worthwhile activities
and providing opportunities and
education for a vast range of people
in diverse regions.
Ridley launched two new charity
partnerships in FY13, with the Garvan
Institute and Aussie Helpers. These two
charities are now the main beneficiaries
of Ridley’s charitable donations.
Garvan Institute
In late 2012, Ridley AgriProducts
launched a new three-year national
awareness and education partnership
with world leading medical research
organisation the Garvan Institute of
Medical Research (Garvan).
Together, Garvan and Ridley AgriProducts
will extend Garvan’s Public Engagement
Program into rural and regional Australia,
sharing important messages about health
and medical research with the community
through a ‘Healthy Families, Healthy
Communities’ program.
The Healthy Families, Healthy
Communities forum gives our employees
an affiliation they can be proud of: a
partnership with a leading organisation
committed to improving the diagnosis,
treatments and prevention of many of
the diseases that currently have the
biggest impact on our communities.
The partnership with Garvan reflects
Ridley AgriProducts’ position as a key
employer in rural communities across
Australia. Through our network
established in many regional
communities, we can help Garvan
educate and build awareness of
important health messages. The
community forums are free and will cover
a range of topics which will benefit our
employees, suppliers, customers and
the communities in which we operate.
In the first year of the Garvan initiative,
we jointly launched the ‘Cancer in the
Community’ forums that are deliberately
taking a positive approach to dealing
with cancer as part of its Healthy
Families, Healthy Communities initiative.
The forums explore cancer, both
the facts and the fiction, and advise
of important new research being
undertaken in this area. Cancer is a
major cause of illness in Australia and
the impact of cancer is far reaching,
affecting individuals, their families,
friends, colleagues and the local
community. The aim of the forums is
to demystify cancer, promote prevention
and build awareness about medical
research in rural and regional Australia.
Aussie Helpers
Aussie Helpers is a national charity that
provides support to struggling farmers.
The charity was originally started by a
husband and wife team and has rapidly
expanded over recent years. The unique
attribute of Aussie Helpers is its desire
to not only encourage monetary support,
but also the giving of time and physical
assistance. We believe this charity will go
a long way to improving engagement and
pride throughout Ridley. Aussie Helpers
has a direct link to rural communities in
which we operate and enables us to
engage our employees at all of our sites
to make a difference to farmers in need.
Ridley AgriProducts has been actively
helping Aussie Helpers since becoming
a corporate sponsor of this charity during
the year. To date, we have donated
many thousands of dollars of packaged
stockfeed to:
• fire victims in the 2012 Queensland
gulf country fires;
• fire victims in the 2012 New South
Wales bushfires;
• fire victims in the 2012 Tasmanian
fires; and
• fire victims in the 2013 Victorian fires.
In January 2013 we held a staff morning
tea in our head office and raised more
than $1,500 towards Aussie Helpers.
Through our contributions to Aussie
Helpers, we are able to actively assist
those families and animals recently
affected by recent natural disasters.
Our relationship with Aussie Helpers’
volunteer network has also helped us
to ensure that our donations are going
directly to the farmers most in need
and that our sponsorship is productively
helping families in the wake of the
devastating fires of recent years.
34 | Ridley Corporation Limited – Annual Report 2013
For personal use only Ridley launched
two new charity
partnerships in
FY13, with the
Garvan Institute
and Aussie Helpers.
Ridley Corporation Limited – Annual Report 2013 | 35
For personal use only 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
Chair of the Audit
Committee of ANL
Limited and Baxter
Group Limited. He has
an extensive background
in accounting, company
reconstruction and
financial analysis.
Other current listed
company directorships
Newcrest Mining Limited
from 2007.
Former listed company
directorships in the last
three years
None.
Richard J Lee
Resigned on 30 June 2013
BEng (Chem) (Hons) MA
(Oxon) FAICD
Independent Deputy
Chairman
A Director since 2001,
Rick is a Director and
former Chair of Salmat
Limited and an
Independent Director
of Newcrest Mining and
Oil Search Limited. He
is also Chairman of the
Australian Institute of
Company Directors.
He 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 Limited from
2002. Newcrest Mining
Limited from 2007. Oil
Search Limited from
May 2012.
Former listed company
directorships in the last
three years
CSR Limited from 2005
to 11 May 2011.
John Murray
Resigned on 1 July 2013
GAICD
Professor Andrew
L Vizard
BVSc (Hons) MPVM FAICD
Managing Director
(resigned on 1 July 2013)
John 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
Limited. 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.
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 board
of numerous companies,
statutory bodies and
scientific organisations.
He is currently a board
member of Parks
Victoria, a trustee of
the Australian Wool
Education Trust and
Chair of The Vizard
Foundation.
Other current
listed company
directorships
None.
Former listed company
directorships in the last
three years
Phosphagenics Ltd from
July 1999 to May 2010.
Tim Hart
Appointed on 24 June 2013
BSc, MM(T), MMkting, MEd
(Melb), PGDIPSI (Oxon),
GAICD, FAIM
CEO Designate
(from 2 April 2013)
Chief Executive
Officer and
Managing Director
(appointed on 1 July 2013)
Tim commenced
employment with Ridley
on 2 April 2013 as
CEO Designate and was
appointed a Director on
24 June 2013. Tim was
formally appointed as
Chief Executive Officer
and Managing Director
on 1 July 2013. He was
previously CEO of Sugar
Australia and Sugar
New Zealand, being
joint ventures between
Wilmar/CSR and Mackay
Sugar Limited. Prior
to that, Tim held
management positions
with SCA Hygiene
Australasia, Carter
Holt Harvey, ACI
Plastics Packaging,
Amcor Limited and
Pasminco Limited.
Other current
listed company
directorships
None.
Former listed company
directorships in the last
three years
None.
36 | Ridley Corporation Limited – Annual Report 2013
For personal use only 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.
Professor Robert
J van Barneveld
BAgr Sc (Hon), PhD,
RAn 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, Sunpork Pty Ltd,
Sunpork Fresh Foods
Pty Ltd and Roseworthy
Piggery 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)
Ejnar Knudsen
Appointed on 24 June 2013
CFA
Independent
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. 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.
Pro-Pac Packaging
Limited from 2012.
Clearview Wealth Limited
from October 2012.
Former listed company
directorships in the last
three years
Westfield Holdings
Limited (Group) from
2004 to May 2010.
Guinness Peat Group
(UK) from 1990 to
30 April 2011.
Non-Executive
Director
Mr Knudsen
represents the
interests of 19.73%
shareholder Insitor
Holdings LLC and
AGR Partners LLC
Appointed on 24 June
2013, Ejnar is the
managing member
of AGR Partners,
an associated entity
of Ridley’s largest
shareholder, Insitor
Holdings. Ejnar has
more than 20 years of
experience investing in
and operating food and
agriculture companies.
Ejnar was Executive
Vice President of
Western Milling, a startup
California grain and feed
milling company that
grew to over $1 billion in
sales. He spent 10 years
as Vice President for
Rabobank in New York
where he managed a
loan portfolio, equity
investments, and
corporate advisory
services. Prior to
founding AGR Partners,
Ejnar was Co-Portfolio
Manager of Passport
Capital’s Agriculture
Fund.
Other current
listed company
directorships
None.
Former listed company
directorships in the last
three years
None.
Ridley Corporation Limited – Annual Report 2013 | 37
For personal use only 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 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 36 and 37.
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 five independent
Directors, a Director representing the
interests of 19.73% shareholder Insitor
Holdings LLC, 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 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 October 2003 AGM.
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 on page 52.
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 45).
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.
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.
38 | Ridley Corporation Limited – Annual Report 2013
For personal use only 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.
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 meetings
of the Committee by invitation.
The members of the Remuneration
Committee throughout the year unless
otherwise stated were:
• J Spark, Independent Director and
Remuneration Committee Chair;
• R Lee, Independent Director
(resigned on 30 June 2013); and
• A Vizard and G Weiss, Independent
Directors (appointed on 21 May 2013).
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.
Remuneration Committee
During the prior 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 packages.
With the restructuring of the
Remuneration Committee, the Board
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.
Details of the Committee members’
experience and technical expertise are
set out in the Directors’ biographies on
pages 36 and 37.
The Audit and Risk Committee is
responsible for the independent
whistleblower service that is available to
all Australian employees of the Company.
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 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.
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 auditors without the presence of
management.
It is considered good corporate
governance to review the internal audit
appointment on a regular basis. The
second two year term of appointment
of Deloitte and PwC as the Company’s
internal auditors concluded on 30 June
2013. Following a review conducted in
the 2013 financial year, the Board
resolved to bring the internal audit
function in-house. An appropriately
qualified resource to manage the
internal audit function and risk for the
Company as a whole was recruited and
commenced employment on 15 July
2013. 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.
Ridley Corporation Limited – Annual Report 2013 | 39
For personal use only Corporate Governance Statement continued
The members of the Audit and Risk
Committee throughout the year unless
otherwise stated were:
• P Mann, Independent Director – Chair
Details of the Committee members’
experience and technical expertise
are set out in the Directors’ biographies
on pages 36 and 37.
• R Lee, Independent Director
(resigned on 30 June 2013)
• G Weiss, Independent Director
• A Vizard, Independent Director
• J Spark, Independent Director
(appointed on 21 May 2013)
Details of the Committee members’
experience and technical expertise are
set out in the Directors’ biographies on
pages 36 and 37.
Ridley Innovation and
Operational Committee
The role of the Ridley Innovation and
Operational Committee (RIOC) 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:
• A Vizard, Independent Director – Chair
• J Murray, Managing Director
(resigned on 1 July 2013)
• R van Barneveld, Independent Director
• J Spark, Independent Director
• T Hart, Managing Director
(appointed on 1 July 2013)
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 up to 29 November
2012, when agreements to sell CSL
were duly executed. Management,
financial and legal adviser attendance
at meetings of this Committee was
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.
In the prior year, 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
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 Our
People section under Environment
on pages 32 to 33.
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.
40 | Ridley Corporation Limited – Annual Report 2013
For personal use only 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.
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 periods other than:
• from balance date to the release of
half year and full year results; and
• in the two week period prior
to the AGM or any other shareholder
meeting.
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 Our
People section of this Annual Report.
Ridley Corporation Limited – Annual Report 2013 | 41
For personal use only Financial Report
43 Directors’ Report
47 Remuneration Report – Audited
57 Auditor’s Independence Declaration
58 Consolidated Statement of Profit or Loss
59 Consolidated Statement of Comprehensive Income
60 Consolidated Balance Sheet
61 Consolidated Statement of Changes in Equity
63 Consolidated Statement of Cash Flows
64 Notes to the Financial Statements
111 Directors’ Declaration
112 Independent Auditor’s Report
42 | Ridley Corporation Limited – Annual Report 2013
For personal use only Directors’ Report
For the year ended 30 June 2013
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 2013.
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 (resigned 30 June 2013)
TJ Hart (appointed 24 June 2013)
J Murray (resigned 1 July 2013)
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen (appointed 24 June 2013)
2. Principal activities
The principal continuing activities of the Group during the year were the production of high quality, high performance animal
nutrition solutions and the recycling of animal and fish by-products into high performance feed ingredient solutions for the
pet food, aquaculture and livestock industries.
3. Results
Profit/(loss) from continuing operations before income tax
Income tax benefit/(expense)
Profit/(loss) from continuing operations after income tax expense
Profit/(loss) from discontinued operation after tax
Net profit/(loss) attributable to members of Ridley Corporation Limited
2013
$’000
(21,009)
4,423
(16,586)
(5,108)
(21,694)
2012
$’000
13,472
(6,124)
7,348
11,905
19,253
4. Review of operations
The Review of Operations is provided in the Financial Review section of this Annual Report as set out on pages 13 to 18.
5. Significant changes in the state of affairs
Significant changes in the state of affairs of the Group during the year ended 30 June 2013 are as follows:
• The sale of the Cheetham Salt business was completed on 28 February 2013, such that the consolidated result for the year
includes eight months of Cheetham Salt business operations and 12 months of the Dry Creek salt operation which was excluded
from the sale and retained by the Group.
• On 31 December 2012, the Group acquired the rendering business assets of BPL Melbourne Pty Ltd and the associated Merino
Street and Lincoln Street, Laverton properties of BPL Nominees Pty Ltd, for a total purchase consideration of $77,078,000.
• Dry Creek was retained by Ridley after completion of the Cheetham Salt sale on the 28 February 2013 and Ridley continued to
service the Penrice Supply Agreement until the termination of the supply agreement by Penrice on 1 July 2013. The early termination
of the Penrice Supply Agreement rendered most of the asset values at the Dry Creek site redundant on 30 June 2013.
6. Likely developments
Likely developments and the expected results of operations are covered generally in the Review of Operations on page 11. 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.
Ridley Corporation Limited – Annual Report 2013 | 43
For personal use only Directors’ Report continued
For the year ended 30 June 2013
7. Dividends and distributions to shareholders
Dividends paid to members during the financial year were as follows:
Final dividend in respect of the prior financial year paid on 30 September 2012 of 3.75 cents, fully franked
Capital return to members during the financial year was as follows:
Capital return of 7.5 cents per share paid on 5 July 2013 but fully provided for at 30 June 2013.
2013
$’000
11,543
23,086
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.
9. Directors’ and executives’ remuneration
Refer to the Remuneration Report on pages 52 and 53.
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 and Special Retention Plan (performance rights)
Ridley Employee Share Scheme (options)*
*The share grant and supporting loan together in substance comprise a share option.
Number Expiry Date
Various
Various
5,443,000
3,324,010
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.
44 | Ridley Corporation Limited – Annual Report 2013
For personal use only 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:
Directors
JM Spark
RJ Lee
TJ Hart
J Murray
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen
Board
Audit and Risk
Committee
Remuneration
Committee
Ridley Innovation
and Operational
Committee
H
16
16
2
16
16
16
16
16
2
A
16
16
2
14
15
16
15
15
2
H
-1
4
-
-
4
4
-
4
-
A
-1
3
-
-
4
4
-
4
-
H
6
6
-
-
11
-
-
11
-
A
6
6
-
-
11
-
-
11
-
H
3
-
-
3
3
-
3
-
-
A
3
-
-
3
3
-
3
-
-
H. Number of meetings held during period of office.
A. Number of meetings attended.
1. Appointed to the respective Committee on 21 May 2013.
2. In addition a CSL Divestment Committee was specifically constituted to manage the Cheetham Salt sale process and meetings were attended by JM Spark, J Murray,
RJ Lee and GH Weiss.
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
Subject to receipt of approval from the financiers of Penrice, effective from 1 July 2013, Ridley has a formal Deed of Termination
and release (Agreement) with Penrice Soda Holdings Limited (Penrice) with regard to compensation payable to Ridley by Penrice in
consideration for the early termination by Penrice of the long term take or pay contract to supply brine from the Ridley salt field at
Dry Creek, South Australia to Penrice’s soda ash plant at Osborne, South Australia. This follows Penrice’s announcement in March
2013 that it will cease production of soda ash at that plant, and as such no longer requires brine from Ridley from 1 July 2013.
Under the terms of the Agreement, for a period of 10 years, Ridley is expected to receive an annual benefit of at least $500,000
through a combination of commercial arrangements, plus the option to procure up to 4.5 million tonnes of zero cost landfill product
from the Penrice Angaston mine in South Australia which can be used by Ridley in the redevelopment of its Dry Creek site. In
addition, in order for Ridley shareholders to participate in any value upside following Penrice’s business reconstruction, Penrice has
issued Ridley an option, exercisable at 7 cents per share at any time over a five year period, for Ridley to be issued 16,122,621
ordinary shares in Penrice, representing 15% of the 30 June 2013 issued capital in Penrice.
No other matters or circumstances have arisen since 30 June 2013 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 the 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.
Ridley Corporation Limited – Annual Report 2013 | 45
For personal use only Directors’ Report continued
For the year ended 30 June 2013
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 57.
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
$
143,815
135,360
6,600
285,775
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 21 August 2013 in accordance with a resolution of the Directors.
JM Spark
Director
TJ Hart
Director
46 | Ridley Corporation Limited – Annual Report 2013
For personal use only Remuneration Report – 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
(Group), and the Group’s interest in equity accounted investments, for the financial year ended 30 June 2013. This report
forms part of the Directors’ Report for the year ended 30 June 2013.
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 and 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 core business operations have changed substantially and the
resulting profit has fluctuated significantly, periodically affected by non-recurring restructure costs. The sale in the 2013 financial
year of Cheetham Salt facilitated the acquisition of Victoria’s largest rendering business and the retirement of significant debt, and
fundamentally repositioned the business to move forward as a dedicated agricultural business. Incentive payments have fluctuated
throughout this period 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/(loss) attributable to owners
of Ridley Corporation Ltd
Dividends paid
Capital return
Change in share price
Return on shareholders’ funds
before significant items
Short term incentive to KMP
2013
2012
2011
2010
2009
$’000
$’000
$’000
$
%
$’000
(21,694)
11,543
23,086
(0.27)
(6.7)
862
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
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 and Ridley Innovation and Operational
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. Professor Andrew Vizard has the sole
remaining entitlement of $35,000 at 30 June 2013 following the retirement on 30 June 2013 of Mr Rick Lee.
Ridley Corporation Limited – Annual Report 2013 | 47
For personal use only Remuneration Report – Audited continued
Executives
The executive pay and reward framework comprises the following three components:
• base pay and benefits;
• short term incentives; and
• long term incentives.
Services from remuneration consultants
The Committee engaged the Godfrey Remuneration Group (GRG) on 23 August 2012 for a period of one year as a remuneration
consultant to the Board. GRG was engaged to provide remuneration recommendations relating to key management personnel
(KMP) of the Group 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.
GRG was paid $62,755 for the remuneration recommendations in respect of reviewing the amount and elements of KMP
remuneration.
The engagement of GRG by the Committee was based on a documented set of protocols to be followed by GRG, members of the
Committee and KMP for the way in which the remuneration recommendations would be developed by GRG and provided to the
Board and the Committee.
The Board is satisfied that the remuneration recommendations were made by GRG free from undue influence by KMP about whom
the recommendations may relate. The Board instructed GRG to provide recommendations only to the Board and the Committee
and to direct all correspondence through the Chairman.
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 five 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 personal 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 his or her
individual KPIs for the year.
For the year ended 30 June 2013, the KPIs were based on Group or individual business unit financial performance and personal
objectives. The KPIs included 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.
48 | Ridley Corporation Limited – Annual Report 2013
For personal use only 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, capped at 50% of the
aggregate at risk STI entitlements. Exceptions were made in respect of the STI payment awarded to former Chief Executive Officer
(CEO) John Murray to incrementally reflect performance of an effective transition to the new CEO and to incoming CEO Tim Hart,
for whom financial measures were considered to be inappropriate given his short period of tenure in FY13.
Long term incentives
In the year ended 30 June 2013, executives’ and employees’ long term incentives were provided by way of participation in the
Ridley Employee Share Scheme. There was no annual issue of performance rights under the Ridley Long Term Incentive Plan given
the prior year issue on 5 May 2012 of rights under the Special Retention Plan. The amended terms of this issue comprised a two
year term with no disposal restriction or performance hurdle other than continuation of employment on the 5 May 2014 second
year anniversary of the issue.
The 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.
Under the LTIP, which was introduced in October 2006, 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.
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 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 to participate 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, with the practice in recent years
to purchase the shares on-market.
During the year ended 30 June 2013, nil (2012: 2,400,000) Rights were issued under the LTIP, of which nil (2012: 1,700,000)
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 LTIP Rights on issue at year end
measured against the median percentage rankings amongst competitors and using 30 June 2013 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 Dec 10
5 Dec 11
TSR
Ridley
-26.0%
-18.0%
Median TSR
Comparison
-39.0%
-24.0%
Percentile
53.6
53.1
Number of
Rights on Issue
1,843,000
1,750,000
Hypothetically
Vested at
30 June 2013
1,021,022
952,000
Hypothetically
Vested at
30 June 2013
55.4%
54.4%
Ridley Corporation Limited – Annual Report 2013 | 49
For personal use only Remuneration Report – 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
37%
45%
-1%
74%
0
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J
1
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2
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1
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a
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1
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1
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D
1
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1
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1
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%, and 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. 841,126 (2012: 540,858) shares were acquired and allocated to participating employees under the Scheme during
the year. The total market value of the shares issued which were purchased on-market was $713,000 (2012: $660,000).
Ridley Corporation Special Retention Plan (SRP)
The SRP was introduced in May 2012 specifically to retain and motivate key executives for a period covering and extending beyond
the Cheetham Salt divestment process. Under the SRP, selected executives and the Managing Director were offered a number of
performance rights (SRP Rights). The Plan offer was made in accordance with the rules of the Ridley LTIP except that there are no
disposal restrictions and the cessation of employment has been superseded, such that the SRP Rights under this offer vest in full
on the earlier occurrence of (i) completion of two years of service from the date of grant, (ii) ceasing to be an employee of Ridley
because of a sale of a subsidiary entity, and (iii) occurrence of a change of control event. Each SRP Right provides the entitlement
to acquire one Ridley share at the end of the service period.
During the year ended 30 June 2013, nil (2012: 2,300,000) Rights were issued under the Special Retention Plan, of which none
(2012: 1,550,000) were granted as remuneration to KMP. Following the removal of material uncertainty through the successful
completion of the Cheetham Salt divestment and acquisition of CSF Proteins, the Board exercised its discretion to vest on 1 July
2013 50% of the SRP Rights to those employees still employed within the Group at the 5 May 2013 first year anniversary of issue.
Cheetham Salt SRP participants employed at the 28 February 2013 date of divestment received their full entitlement of shares
pertaining to the SRP Rights.
50 | Ridley Corporation Limited – Annual Report 2013
For personal use only
Shares purchased on-market
The following table reflects the number and total market value of shares that were acquired on-market and allocated to participating
employees under the incentive plans during the financial year.
Incentive Plan
Employee Share Scheme
Long Term Incentive Plan
Special Retention Plan
Number of Shares
Market Value
2013
841,126
1,003,057
400,000
2012
540,858
675,560
-
2013
$’000
713
955
384
2012
$’000
660
811
-
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.
Name
Directors
JM Spark
RJ Lee
TJ Hart
J Murray
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen
Executives
AM Boyd
PJ Weaver
AL Speed
C Klem
AM Mooney
RN Lyons
S Butler
Position
Chairman
Deputy Chairman
CEO Designate – Ridley
Managing Director and CEO – Ridley
Director
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
General Manager – Ridley Land Corporation
(a) TJ Hart joined Ridley on 2 April 2013 as CEO Designate and was appointed to the Board on 24 June 2013.
(b) AL Speed ceased being an employee of the Group on 28 February 2013 as a result of the sale of the Cheetham Salt business.
Resigned 30 June 2013
Appointed 24 June 2013 (a)
Resigned 1 July 2013
Appointed 24 June 2013
Resigned 1 July 2012
28 February 2013 (b)
Ridley Corporation Limited – Annual Report 2013 | 51
For personal use only Remuneration Report – Audited continued
Details of remuneration
Details of the remuneration of each Director of Ridley Corporation Limited and each of the KMP of 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 the 2012 and 2013 financial years 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.
2013
Short Term Benefits
Post-
Employment
Benefits
Other
Directors’
Fees and
Cash Salary
$
Other
Benefits
$
STI
$
Super-
annuation
$
Retirement/
Termination
$
Share-
Based
Payments
Performance
Rights/
Options
$
Total
$ %1 %2
Name
Directors
JM Spark – Chairman
RJ Lee 5
TJ Hart –
Managing Director3
J Murray –
Managing Director 7, 8,10
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen9
Total Directors
Executives
AM Boyd 7
PJ Weaver 4
AL Speed 6,7
CW Klem 7
AM Mooney
RN Lyons
S Butler
Total executives
Total
159,091
106,422
-
-
-
-
15,909
9,578
-
26,481
- 175,000
- 142,481
-
-
-
-
160,705 125,000
70,000
12,500
-
- 368,205
- 34%
636,318 480,423 137,264
-
-
-
-
-
1,397,007 605,423 207,264
93,561
86,364
77,273
77,273
-
-
-
-
-
-
-
238,208
250,211
250,101
269,191
207,474
81,988
378,970 112,734
-
-
67,120
-
55,860
41,895
-
27,520
-
37,788
-
36,300
1,594,155 256,237 204,968
2,991,162 861,660 412,232
50,000
1,439
8,636
7,727
7,727
-
113,516
25,000
-
10,980
25,021
24,600
25,000
21,363
131,964
245,480
629,124
-
-
-
-
-
655,605
-
-
-
-
-
-
-
-
655,605
388,743 2,321,872 17% 37%
-
95,000
-
95,000
-
85,000
-
85,000
-
-
388,743 3,367,558
-
-
-
-
-
-
-
-
-
-
-
-
-
127,737 726,429 18% 33%
-
294,861 611,169 48% 59%
84,153 457,140 18% 28%
88,500 390,721 23% 30%
80,570 412,549 20% 29%
75,153 340,290 22% 33%
750,974 2,938,298
1,139,717 6,305,856
1. Percentage remuneration consisting of performance rights/options.
2. Percentage remuneration performance related.
3. Employed by Ridley on 2 April 2013 and appointed to the Board on 24 June 2013. Other benefits comprises a sign on bonus.
4. Resigned 1 July 2012.
5.
Resigned 30 June 2013. At the 2003 Annual General Meeting, shareholders approved the termination of the retirement allowance scheme. RJ Lee received an accrued
entitlement frozen at 31 October 2003.
6. AL Speed ceased being an employee of the Group on 28 February 2013 as a result of the sale of the salt business.
7. Other benefits consist of performance incentives paid upon successful completion of the Cheetham Salt divestment process.
8.
In accordance with contractual entitlements, Mr J Murray’s contract provided for a 12 month period of notice, of which one month was worked in June 2013 and the
remaining 11 months accrued at 30 June 2013 and paid to Mr Murray in July 2013.
9. Appointed 24 June 2013.
10. Resigned 1 July 2013.
The salary package may be allocated at the executive’s discretion to cash, superannuation (subject to legislative limits), motor
vehicle and certain other benefits.
52 | Ridley Corporation Limited – Annual Report 2013
For personal use only 2012
Name
Directors
JM Spark – Chairman
RJ Lee
J Murray – Managing Director ^
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
Total Directors
Executives
AM Boyd
PJ Weaver 3
AL Speed
CW Klem
AM Mooney
RN Lyons
S Butler
Total executives
Total
Directors’
Fees and
Cash Salary
$
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
Short Term Benefits
Post-
Employment
Benefits
Super-
Other
STI
$
annuation Termination
$
$
Share-
Based
Payments
Performance
Rights/
Options^
$
Total
$ %1 %2
-
-
-
-
-
-
-
-
26,268
70,000
22,538
10,982
11,391
10,643
6,152
157,974
157,974
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
-
-
209,243
-
-
-
-
209,243
87,646
66,604
84,604
40,063
56,708
54,458
37,813
427,896
637,139
-
-
-
175,000
116,000
-
884,743 24% 24%
-
-
-
-
95,000
95,000
85,000
85,000
1,535,743
-
-
-
-
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.
Ridley Corporation Limited – Annual Report 2013 | 53
For personal use only Remuneration Report – Audited continued
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 LTIP.
Other major provisions of the agreements relating to remuneration are set out below.
TJ Hart, appointed CEO Designate on 2 April 2013, and appointed CEO and Managing Director on 1 July 2013:
• Base remuneration, inclusive of superannuation and any elected benefits, initially of $700,000 but to be reviewed annually
commencing on 1 July 2014.
• Sign-on bonus of $70,000 paid in the year ended 30 June 2013.
• Pro rata participation in the Ridley STI scheme for the period of employment from 2 April 2013 to 30 June 2013 with non-financial
key performance measures and thereafter participation up to 100% of total base remuneration based on the achievement of
certain agreed KPIs as approved by the Board, including Ridley financial performance measures.
• Eligible to participate in the Ridley LTIP effective from 1 July 2013 and Ridley to use its best endeavours to obtain shareholder
approval for the issue of equity securities under the scheme.
• Ridley may terminate the contract immediately for cause and with a 12 month period of notice without cause, being inclusive of
any redundancy benefits payable to the executive. Payment of termination benefit on early termination by the employer 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.
• The executive may resign at any time and for any reason by giving Ridley three months notice in writing.
J Murray, Managing Director until 1 July 2013:
• Mr Murray’s contract of employment as CEO and Managing Director of Ridley was for a four year tenure ending on 19 November
2014. During the year, separation arrangements were agreed between Ridley and Mr Murray about arrangements for Mr Murray
to cease being employed in that position and to be employed in a new role by Ridley from 2 July 2013.
• Mr Murray participated in the Ridley LTIP for the entire 2013 financial year and his awarded entitlement been brought to account
at 30 June 2013 ($480,423) and reflected in the remuneration table for the year, together with the benefit paid to Mr Murray for
the successful completion of the Cheetham Salt divestment ($137,264). Mr Murray’s key performance measures were reset
during the year to provide an appropriate incentive to facilitate a seamless transition and exit.
• Under the separation arrangements, Mr Murray worked one month (June 2013) of his contracted 12 month notice period with
the remaining 11 months accrued at 30 June 2013 and paid out in July 2013. Payments to Mr Murray under the separation
arrangements have not exceeded the threshold above which shareholder approval is required under the Corporations Act 2001.
• Mr Murray’s performance and retention rights awarded to him under the Ridley LTIP and SRP have been preserved given his
continued employment within the Group.
• Mr Murray’s Non-Executive role as Chair of the Ridley property realisation holding entity Ridley Land Corporation Pty Ltd includes
oversight of the Group’s surplus land realisation developments in Victoria, South Australia and Queensland, for which Mr Murray
will receive remuneration of $150,000 per annum.
Other senior executives have individual contracts of employment but with no fixed term of employment.
54 | Ridley Corporation Limited – Annual Report 2013
For personal use only 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 remuneration 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
TJ Hart
J Murray
AM Boyd
PJ Weaver1
AL Speed 2
CW Klem
AM Mooney*
RN Lyons
S Butler
Total potential of base salary %
100
100
50
50
50
30
30
30
30
2013
Paid %
71
70
27
-
-
15
14
13
13
2013
Forfeited %
29
30
23
-
-
15
16
17
17
2012
Paid %
-
0
7
19
6
4
4
4
3
2012
Forfeited %
-
100
43
31
44
26
26
26
27
* Eight months following return from maternity leave.
1. Resigned 1 July 2012.
2. Ceased being an employee of the Group on 28 February 2013 as a result of the sale of the salt business.
Ridley Corporation Limited – Annual Report 2013 | 55
For personal use only Remuneration Report – Audited continued
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.
Long Term Incentive Plan (LTIP)
Recipients of LTIP Rights 1 July 2012 Granted
Balance at
Balance at
Vested Forfeited 30 June 20131
Value per
Date Share at Date
of Exercise
Exercised
Directors
J Murray
Key management personnel
AM Boyd
PJ Weaver 2
AL Speed 3
CW Klem
AM Mooney
RN Lyons
S Butler
Total issued to Directors
and key management
personnel
1,243,000
-
-
-
1,243,000
-
-
400,000
475,000
475,000
225,000
300,000
300,000
225,000
-
-
- (109,727)
-
(365,273)
- (226,170)
-
-
-
-
-
-
-
-
(248,830)
-
-
-
-
400,000
-
-
225,000
300,000
300,000
225,000
-
11 July 2012
05 December 2012,
28 March 2013
-
-
-
-
-
$1.01
$1.14
$0.95
-
-
-
-
3,643,000
-
(335,897) (614,103)
2,693,000
-
-
1. Performance rights are due to vest between December 2013 through to December 2014.
2. Resigned 1 July 2012.
3. Ceased being an employee of the Group on 28 February 2013 as a result of the sale of the salt business.
Ridley Corporation Special Retention Plan (SRP)
Recipients of SRP rights
Balance at
1 July 2012 Granted
Vested Forfeited
Balance at
30 June 2013
Date
Exercised
Value per
Share at Date
of Exercise
Directors
J Murray
Key management personnel
AM Boyd
AL Speed 1
CW Klem
AM Mooney
RN Lyons
S Butler
Total issued to Directors
and key management
personnel
600,000
-
-
200,000
200,000
150,000
150,000
125,000
125,000
-
-
- (200,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
600,000
-
-
200,000
-
150,000
150,000
125,000
125,000
-
28 March 2013
-
-
-
-
-
$0.95
-
-
-
-
1,550,000
-
(200,000)
-
1,350,000
-
-
1. Ceased being an employee of the Group on 28 February 2013 as a result of the sale of the salt business.
56 | Ridley Corporation Limited – Annual Report 2013
For personal use only
Lead 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 2013 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
BW Szentirmay
Partner
Melbourne
21 August 2013
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.
Ridley Corporation Limited – Annual Report 2013 | 57
For personal use only Consolidated Statement of Profit or Loss
For the year ended 30 June 2013
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
Business restructuring
2013
$’000
716,318
(659,900)
56,418
74
309
(9,320)
(23,309)
(7,811)
(37,254)
2012
$’000
Restated*
635,792
(580,387)
55,405
202
1,487
(9,723)
(24,062)
(9,529)
(375)
Note
2
2
3
3
Share of net profits/(losses) from equity accounted investments
33
(116)
67
Profit/(loss) from continuing operations before income tax expense
(21,009)
13,472
Income tax benefit/(expense)
Profit/(loss) from continuing operations after income tax expense
Profit/(loss) from discontinued operation (net of tax)
5
4
4,423
(6,124)
(16,586)
7,348
(5,108)
11,905
Net profit/(loss) after tax attributable to members of Ridley Corporation Limited
(21,694)
19,253
Earnings per share
Basic earnings per share – continuing*
Basic earnings per share
Diluted earnings per share – continuing*
Diluted earnings per share
29
29
29
29
(5.4c)
(7.0c)
(5.4c)
(7.0c)
2.4c
6.3c
2.4c
6.3c
* The 2012 Consolidated Statement of Profit or Loss has been restated for the effect of Cheetham Salt being classified as discontinued (refer note 4).
The above Consolidated Statement of Profit or Loss should be read in conjunction with the accompanying notes.
58 | Ridley Corporation Limited – Annual Report 2013
For personal use only
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2013
Net profit/(loss) after tax attributable to members of Ridley Corporation Limited
Note
2013
$’000
(21,694)
2012
$’000
Restated*
19,253
Other comprehensive income
Items that will not be reclassified to profit or loss:
Actuarial gain/(loss) on defined benefit superannuation
Income tax
Revaluation of salt fields
Income tax
24
10
372
(112)
(29,529)
11,099
Exchange differences on translation of foreign operations
16
(352)
Other comprehensive income for the year, net of tax
(18,522)
(377)
113
-
-
(345)
(609)
Total comprehensive income for the year
(40,216)
18,644
Total comprehensive income for the year is attributable to:
Ridley Corporation Limited
(40,216)
18,644
* The 2012 Consolidated Statement of Comprehensive Income has been restated for the effect of Cheetham Salt being classified as discontinued (refer note 4) and to show
the effect of the voluntary change in accounting policy (refer note 1).
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
Ridley Corporation Limited – Annual Report 2013 | 59
For personal use only Consolidated Balance Sheet
As at 30 June 2013
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
Investment properties
Property, plant and equipment
Intangible assets
Inventories
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Payables
Borrowings
Tax liabilities
Provisions
Retirement benefit obligations
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
7
8
4
12
33
9
10
11
8
12
13
28
12
14
24
17
28
12
14
24
15
16
16
2013
$’000
16,936
91,852
60,412
670
412
170,282
2,194
38,451
118,079
77,979
360
3,281
240,344
410,626
152,574
-
-
12,702
109
-
165,385
34,771
-
2,917
-
37,688
203,073
207,553
214,445
1,487
(8,379)
207,553
2012
$’000
Restated*
2011
$’000
Restated*
7,228
84,259
79,723
4,017
1,588
176,815
52,521
-
221,879
44,771
3,575
-
322,746
499,561
95,266
40,712
1,035
10,005
-
-
147,018
64,667
7,493
1,396
616
74,172
221,190
278,371
237,531
25,372
15,468
278,371
13,247
88,969
91,533
-
-
193,749
52,486
-
219,989
44,416
-
-
316,891
510,640
92,695
1,932
1,551
14,267
-
8
110,453
113,454
2,793
1,050
272
117,569
228,022
282,618
237,531
25,002
20,085
282,618
* See note 1 – The comparative statements as at 30 June 2012 and 2011 have been restated to show the effect of the voluntary change in accounting policy.
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
60 | Ridley Corporation Limited – Annual Report 2013
For personal use only Consolidated Statement of Changes in Equity
For the year ended 30 June 2013
Share
Capital
Revaluation
Reserve
Share
Based
Payment
Reserve
Foreign
Currency
Translation
Reserve
Retained
Earnings
Total
Note 15
$’000
237,531
-
-
-
-
-
-
-
(23,086)
-
(23,086)
-
Note 16
$’000
25,971
-
(29,529)
11,099
-
-
(18,430)
-
-
-
-
(7,541)
Note 16
$’000
671
-
Note 16
$’000
(1,270)
-
Note 16
$’000
15,468
(21,694)
$’000
278,371
(21,694)
-
-
-
-
-
-
-
816
816
-
-
-
-
(352)
(352)
-
-
-
-
-
(29,529)
11,099
260
-
260
(352)
260
(18,522)
(11,543)
-
(11,543)
(23,086)
(190)
626
-
1,622
(11,733)
9,320
(34,003)
3,401
Balance at 1 July 2012 1
Profit/(loss) for the year
Other comprehensive income
Revaluation of salt fields, net of tax
Deferred tax on disposal of salt fields
Actuarial gain/(loss) on defined benefit
superannuation and pension plans,
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
Capital return
Share based payment transactions
Total transactions with owners
recorded directly in equity
Disposal of subsidiary
Balance at 30 June 2013
214,445
-
1,487
-
(8,379)
207,553
1. See note 1: The comparative statements as at 30 June 2012 and 2011 have been restated to show the effect of the voluntary change in accounting policy.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Ridley Corporation Limited – Annual Report 2013 | 61
For personal use only 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
Retained
Earnings
Total
Note 15
$’000
237,531
Note 16
$’000
25,971
Note 16
$’000
(44)
Note 16
$’000
(925)
Note 16
$’000
20,085
$’000
282,618
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
715
715
-
19,253
19,253
-
(264)
(345)
(345)
-
(264)
(264)
(345)
(609)
-
-
-
(23,086)
(520)
(23,086)
195
(23,606)
(22,891)
Balance at 1 July 2011 1
Profit for the period
Other comprehensive income
Actuarial gain/(loss) on defined benefit
superannuation and pension plans,
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
Total transactions with owners
recorded directly in equity
Balance at 30 June 2012
237,531
25,971
671
(1,270)
15,468
278,371
1. See note 1: The comparative statements as at 30 June 2012 and 2011 have been restated to show the effect of the voluntary change in accounting policy.
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
62 | Ridley Corporation Limited – Annual Report 2013
For personal use only Consolidated Statement of Cash Flows
For the year ended 30 June 2013
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
2013
$’000
2012
$’000
857,904
(805,575)
8,287
74
321
(8,095)
(333)
839,761
(782,549)
6,805
202
741
(9,126)
(4,938)
Net cash inflow from operating activities
26
52,583
50,896
Cash flows from investing activities
Acquisition of business operations
Payments for property, plant and equipment
Payments for intangibles
Proceeds from disposal of discontinued operations, net of cash disposed
Proceeds from sale of non-current assets
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Share based payment transactions
Repayment of borrowings
Dividends paid
Net cash (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
34
(80,740)
(22,260)
(533)
144,640
-
(6,871)
(22,422)
(1,144)
-
7,876
41,107
(22,561)
(2,056)
(70,499)
(11,427)
(1,476)
(10,007)
(22,871)
(83,982)
(34,354)
9,708
(6,019)
7,228
13,247
16,936
7,228
Non-cash financing and investing activities
27
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
Ridley Corporation Limited – Annual Report 2013 | 63
For personal use only 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 2013 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 having divested its salt business during the year, is primarily involved in the manufacture of animal
nutrition solutions.
The Financial Report was authorised for issue by the Directors on 21 August 2013.
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, except for the change in accounting policy outlined below. 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).
Change in accounting policy
The following change in accounting policy has been made in the financial year.
Land and buildings valuation
A new accounting policy was adopted on 1 July 2012 and has been applied retrospectively. The new accounting policy is that land and
buildings are stated at cost or deemed cost less accumulated depreciation and impairment. The previous accounting policy was that
land and buildings are measured at fair value, based on periodic, but at least triennial, valuations by external independent valuers.
The Group considers that the change in policy will result in the Financial Report providing more relevant and no less reliable
information because it leads to asset values which more accurately reflect the nature and intended use of the assets and the
way in which future economic benefits arising from the assets are expected to flow to the Group, thereby also improving reliability
of measurement.
Given that for most of the Group’s properties, there is limited comparable sales information available due to their remote location,
it was considered appropriate to change the accounting policy.
The policy change is also reflective of the fact that land and buildings are associated with core ongoing operations of the business
(other than those held for sale which are separately accounted for under AASB 5 Non-current Assets Held for Sale and discontinued
operations). The historical cost less depreciation model is also consistent with that adopted by the majority of companies operating
in Ridley’s agribusiness sector.
The impact of the change in accounting policy on the Consolidated Balance Sheet is as follows:
$’000
Balance as reported at 30 June 2011
Effect of policy change
Restated balance at 30 June 2011
Balance as reported at 30 June 2012
Effect of policy change
Restated balance at 30 June 2012
Property, Plant
and Equipment
233,383
(13,394)
219,989
Deferred
Tax
7,835
(5,042)
2,793
Net Assets/
Total Equity
290,970
(8,352)
282,618
Reserves
36,294
(11,292)
25,002
Retained
Earnings
17,145
2,940
20,085
239,033
(17,154)
221,879
12,535
(5,042)
7,493
290,483
(12,112)
278,371
37,484
(12,112)
25,372
15,468
-
15,468
64 | Ridley Corporation Limited – Annual Report 2013
For personal use only The Group has decreased land and buildings by reversing the historical uplift recorded in the Asset Revaluation Reserve, thereby
ascribing the carrying value as at 1 July 2010 to be the deemed cost. As a result, the related Deferred Tax Liability was reversed.
The periodic revaluations to land and buildings have not been material since the transition to IFRS on 1 July 2005.
The change in accounting policy had an immaterial impact on the Condensed Statement of Profit or Loss and earnings per share
for the current and comparative periods.
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis except for the following items in the balance sheet:
• derivative financial instruments at fair value through profit or loss;
• 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 and estimated cost of remediation.
(ii) Defined benefit superannuation
The Group has obligations for defined benefit superannuation. The value of the obligations is based on independent actuarial valuations.
(iii) Salt fields valuations
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 and estimated cost of remediation.
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.
Ridley Corporation Limited – Annual Report 2013 | 65
For personal use only Notes to the Financial Statements continued
Note 1. Summary of significant accounting policies continued
Measuring goodwill
The Group measures goodwill as the fair value of the consideration transferred 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.
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 accounted for 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 statement of profit
or loss, 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.
Segment 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 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.
Change in operating segments
During the financial year, the Group has increased its operating segments from two to three, to include an additional segment
for property realisation. The Group continues to pursue value creation strategies for non-operating sites and management believes
that the disclosure of this segment would now be useful to users of the financial statements. Comparative amounts have been
adjusted accordingly.
As such, the Group now has three 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 Managing Director
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 or how future economic benefits will be realised. Discrete financial information
about each of these operating businesses is reported to the Managing Director and his management team on at least a monthly basis.
66 | Ridley Corporation Limited – Annual Report 2013
For personal use only 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.
Salt discontinued operations
Produces, refines and markets salt and has investments in equity accounted investments.
Salt retained operation
Produced and sold salt to Penrice under a long term Supply Agreement which was
terminated on 1 July 2013.
Property realisation
Realisation of opportunities in respect of surplus property assets.
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.
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 statement
of profit or loss.
(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 statement of profit
or loss 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, are recognised in other comprehensive income, and are presented within equity in the FCTR.
Investment properties
Investment property is property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary
course of business, use in the production or supply of goods or services, or for administrative purposes. Investment property is
measured at cost on initial recognition. Cost includes expenditure that is directly attributable to the acquisition of the investment
property. Expenditure capitalised to investment properties includes the cost of acquisition, capital and remediation additions.
Depreciation is calculated using the straight line method to allocate their cost or revalued amounts, net of their residual values,
over their estimated useful lives, for buildings over 40 years.
Any gain or loss on disposal of an investment property is recognised in profit and loss.
Property, plant and equipment
Land and buildings are stated at cost or deemed cost less accumulated depreciation and impairment.
Salt fields are measured at fair value, based on periodic, but at least triennial, valuations by external independent valuers.
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 statement of profit or loss during the financial period in which they are incurred.
Ridley Corporation Limited – Annual Report 2013 | 67
For personal use only Notes to the Financial Statements continued
Note 1. Summary of significant accounting policies continued
Increases in the carrying amounts arising on revaluation of 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 statement of profit or loss, the increase is first
recognised in the statement of profit or loss. 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 statement of profit or loss.
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 statement of
profit or loss. 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.
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 statement of profit or loss.
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.
68 | Ridley Corporation Limited – Annual Report 2013
For personal use only 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
(i) 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.
Ridley Corporation Limited – Annual Report 2013 | 69
For personal use only Notes to the Financial Statements continued
Note 1. Summary of significant accounting policies continued
(ii) 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.
(iii) Derivative financial instruments
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 statement of profit or loss.
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.
70 | Ridley Corporation Limited – Annual Report 2013
For personal use only 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 Incentive Plan and Special Retention 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.
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.
Ridley Corporation Limited – Annual Report 2013 | 71
For personal use only Notes to the Financial Statements continued
Note 1. Summary of significant accounting policies continued
(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 statement of profit or loss 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. Collectibility 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 statement of profit or loss.
The amount of the impairment loss is recognised in the statement of profit or loss. 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 statement of profit or loss.
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.
Payments made under operating leases (net of any incentives received from the lessor) are charged to the statement of profit or loss
on a straight line basis over the period of the lease.
72 | Ridley Corporation Limited – Annual Report 2013
For personal use only 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.
Provisions for close down and restoration costs include the costs of dismantling and demolition of infrastructure and the removal of
residual materials and remediation of disturbed areas. Provisions for close down and restoration costs do not include any additional
obligations which are expected to arise from future disturbance. The costs are estimated on the basis of a closure plan. The cost
estimates are reviewed annually during the life of the operation, based on the net present value of estimated future costs. Estimated
changes resulting from new disturbance, updated cost estimates, changes to the lives of operations and revisions to discount rates
are recorded as an adjustment against property, plant and equipment/investment property. These costs are then depreciated over
the lives of the assets to which they relate as appropriate.
The amortisation or ‘unwinding’ of the discount applied in establishing the net present value of provisions is charged to the
statement of profit or loss in each accounting period. The amortisation of the discount is shown in finance costs.
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.
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.
(i) Salt fields
An external, independent valuation company, having appropriate recognised professional qualifications, values the salt fields at
least every three years. 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.
Ridley Corporation Limited – Annual Report 2013 | 73
For personal use only Notes to the Financial Statements continued
Note 1. Summary of significant accounting policies continued
(ii) 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.
(iii) 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 2012 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 2012-1 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 2013 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 not 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 but it is not likely to have a material effect.
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
but it is not likely to have a material effect.
AASB 13 Fair value measurement and AASB 2012-8 Amendments to Australian Accounting Standards arising from AASB 13
The amendment introduces a framework for the application of the fair value measurement technique. The Group is currently
reviewing its methodologies in determining fair values and will apply the amended standard from 1 July 2013. The Group is
yet to assess its full impact but it is not likely to have a material effect.
Note 2. Revenue and other income
Revenue from continuing operations
Sale of goods
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
74 | Ridley Corporation Limited – Annual Report 2013
2013
$’000
2012
$’000
716,318
635,792
-
-
12
17
280
309
625
308
-
28
526
1,487
For personal use only
Note 3. Expenses
Profit from continuing operations before income tax is arrived at after charging the following items:
2013
$’000
2012
$’000
Depreciation and amortisation (i)
Buildings
Plant and equipment
Software
Other intangible
885
11,712
1,757
170
14,524
(i) The current year depreciation expense includes an additional $2,576,000 as a result of the annual review of the useful life of plant and equipment.
Finance costs
Interest expense
Amortisation of borrowing costs
Capitalisation of borrowing costs
Bad and doubtful debt expense – net
Employee benefits expense
Operating lease expense
Business restructuring
Acquisition related costs (a)
Impairment loss on Salt goodwill (b)
Impairment loss on Dry Creek salt field (c)
Write down of Dry Creek salt inventory (d)
Write down of Dry Creek property, plant and equipment (d)
7,349
462
-
7,811
330
61,136
2,799
3,234
5,017
14,741
10,393
3,869
37,254
741
7,383
1,940
99
10,163
9,476
216
(163)
9,529
372
54,977
2,688
375
-
-
-
-
375
(a) Acquisition related costs include $2,400,000 of stamp duty on the acquisition of the rendering business.
(b) An impairment loss of $5,017,000 in respect of the goodwill that arose from the 2005 acquisition of Dry Creek.
(c) Dry Creek was retained by Ridley after completion of the Cheetham Salt sale on 28 February 2013 and Ridley continued to service the Penrice Salt Supply Agreement
until the termination of the supply agreement by Penrice on 1 July 2013. Ridley will actively continue to prepare for the redevelopment of the Dry Creek site.
Following the announcement of the sale of the Cheetham Salt business, an assessment of the carrying value of the Dry Creek salt field was required to be undertaken,
based on its estimated fair value by external independent valuers. For the purposes of impairment testing, the salt field’s carrying value has previously included an
earnings attribution from a portfolio of customer contracts included in the 2005 Dry Creek acquisition. These contracts were serviced from Cheetham Salt sites other
than Dry Creek and such contracts were included in the sale transaction.
An impairment of the Dry Creek Salt Fields, reflecting the loss to Ridley of the value pertaining to these contracts, of $15,728,000 was recognised, of which $987,000
represents a reversal of an amount against the Group Asset Revaluation Reserve with the balance resulting in an impairment loss of $14,741,000, which has been
recognised in Business restructuring.
(d) The early termination of the Penrice Salt Supply Agreement rendered most of the plant and equipment at the Dry Creek site redundant. Management endeavoured
to redeploy surplus assets or realise as much value as possible from sales thereof, however $3,869,000 has been recognised to write down the plant and equipment
assets to their recoverable amount.
After exploring all salt export sales avenues open to Ridley not otherwise closed under the Cheetham Salt divestment agreement, the sale of 180,000 tonnes of salt
at Dry Creek to Cheetham Salt has been contractually confirmed from 1 July 2013 until 30 June 2017. Except for this saleable tonnage, the remaining inventory at
30 June 2013 has been written down to nil, thereby generating a non-cash write down of $10,393,000.
Ridley Corporation Limited – Annual Report 2013 | 75
For personal use only
Notes to the Financial Statements continued
Note 4. Assets held for sale and discontinued operations
(i) Non-current assets held for sale
Assets held for sale
2013
$’000
2012
$’000
670
4,017
At 30 June 2012, the Group had classified $4,017,000 of assets as held for sale relating to the
proposed sale of the Ridley AgriProducts site at Dandenong and the property realisation site at
Bowen. This is following management’s commitment to sell these sites.
At 30 June 2013, the Group has classified the Dandenong site as held for sale. The sale process for
this site commenced in the prior financial year but a sale has not yet been achieved. In the current
financial year, the site has ceased all manufacturing operations and has been decommissioned in
order to achieve a sale. A revised marketing campaign is expected to achieve a sale within the next
12 months. The Bowen site was withdrawn from sale due to a lack of interest in the site with a view
to launching a new sale plan in the future. The Bowen site has been reclassified to Investment
Properties (refer to note 9) and there is no impact on the result for the current or prior period as
a result of this reclassification.
(ii) Discontinued operation
On 29 November 2012, Ridley announced the signing of agreements for the sale of Cheetham Salt
Limited (Cheetham) for $150,000,000 payable fully in cash on completion. The sale was completed
on 28 February 2013 and is disclosed in this Financial Report as a discontinued operation.
(a) Statement of profit or loss for discontinued operation
The financial performance and cash flow information presented are for the period
1 July 2012 to 28 February 2013 (2013 column) and the year ended 30 June 2012:
Results of discontinued operation
Sales revenue
Cost of sales
Gross profit
Other income
Expenses
Selling and distribution
General and administrative
Share of net profits of equity accounted investments
Profit before income tax expense
Income tax expense
Profit after income tax expense
Loss on sale before income tax, transaction costs and transfers of reserves (refer (c) on page 77
Transaction related expenses
Transfer of foreign currency reserve
Income tax expense
Loss from sale of discontinued operation after income tax
66,908
(55,534)
11,374
12
(2,218)
(5,275)
4,562
8,455
(1,459)
6,996
(952)
(9,530)
(1,622)
-
(12,104)
98,903
(79,805)
19,098
187
(3,274)
(8,374)
6,773
14,410
(978)
13,432
-
(1,527)
-
-
(1,527)
Loss from discontinued operation after tax
(5,108)
11,905
76 | Ridley Corporation Limited – Annual Report 2013
For personal use only
(b) Effect of disposal on the financial position of the Group
The carrying amounts of assets and liabilities as at the 28 February 2013 date of sale were:
Assets
Cash
Receivables
Inventories
Property, plant and equipment
Investments accounted for using the equity method
Deferred tax asset
Intangible assets
Total assets
Liabilities
Payables
Tax liabilities
Provisions
Total liabilities
Carrying amount of net assets sold
(c) Loss on sale
Cash consideration received
Carrying amount of net assets sold
Loss on carrying amount of net assets sold
before transaction costs and transfers of reserves
(d) Cash flows from discontinued operation
Net cash inflow from ordinary activities
Net cash inflow/(outflow) from investing activities*
Net cash (outflow) from financing activities
Net cash inflow
* Includes cash consideration received of $150,000,000.
28 February 2013
$’000
5,121
15,486
20,012
64,678
46,486
9,300
1,294
162,377
8,867
193
2,365
11,425
150,952
150,000
(150,952)
(952)
2012
$’000
21,851
(6,299)
(723)
14,829
2013
$’000
14,209
144,053
(1,207)
157,055
Ridley Corporation Limited – Annual Report 2013 | 77
For personal use only Notes to the Financial Statements continued
Note 5. Income tax expense
(a) Income tax expense
Current tax
Deferred tax
Under/(over) provided in prior years
Aggregate income tax expense/(benefit)
Income tax expense/(benefit) is attributable to:
Profit/(loss) from continuing operations
Profit from discontinued operations
(b) Reconciliation of income tax expense and pre-tax accounting profit
Profit/(loss) from continuing operations before income tax expense
Profit/(loss) from discontinued operations 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
Disposal of subsidiary
Impairment
Difference in overseas tax rates
Other
Income tax expense/(benefit)
2013
$’000
6,237
(9,087)
(114)
(2,964)
(4,423)
1,459
(2,964)
(21,009)
(3,649)
(24,658)
(7,397)
(787)
60
240
336
(114)
(724)
2,507
2,555
-
360
(2,964)
2012
$’000
1,687
4,813
602
7,102
6,124
978
7,102
13,472
12,883
26,355
7,907
(2,039)
39
165
417
602
(250)
-
-
130
131
7,102
(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
10,987
113
78 | Ridley Corporation Limited – Annual Report 2013
For personal use only
Note 6. Dividends
Dividends paid during the year
Year ended 30 June 2013
Final dividend in respect of the prior financial year
Fully Franked
Dividend paid
30 September 2012
Per share
3.75 cents
Year ended 30 June 2012
Final dividend in respect of the prior financial year
Interim dividend in respect of current financial year
Unfranked
Fully Franked
30 September 2011
31 March 2012
3.75 cents
3.75 cents
Paid in cash
Non-cash dividends paid on employee in-substance options
Dividends not recognised at year end
There were no dividends declared in the current financial year.
In the prior financial year, in addition to the above dividends, since year end the Directors had approved
payment of a final dividend of 3.75 cents, fully franked per fully paid share payable on 30 September
2012. 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 7. Receivables
Current
Trade debtors
Less: Allowance for doubtful debts (a)
Prepayments
Insurance income receivable
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
Derecognised as part of sale of discontinued operation
At 30 June
2013
$’000
11,543
2012
$’000
11,543
11,543
23,086
2012
$’000
22,871
215
23,086
2013
$’000
11,427
116
11,543
-
11,543
2,750
6,956
83,125
(25)
83,100
81,103
(252)
80,851
1,018
7,734
-
91,852
3,029
-
379
84,259
252
117
(330)
(14)
25
381
255
(384)
-
252
Ridley Corporation Limited – Annual Report 2013 | 79
For personal use only Notes to the Financial Statements continued
Note 7. Receivables continued
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 statement
of profit or loss 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 2013, the nominal value of trade receivables impaired is $25,000 (2012: $216,000). 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 2013, trade receivables of $5,962,000 (2012: $5,237,000) 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:
Past due by 0-30 days
Past due by 30-60 days
Past due by 60-90 days
Past due by 90 days +
Note 8. 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
Raw materials and stores – at net realisable value
Work in progress – at cost
2013
$’000
4,866
691
265
140
5,962
44,054
180
-
16,178
60,412
360
-
360
2012
$’000
3,692
386
390
769
5,237
44,029
-
11,449
24,245
79,723
-
3,575
3,575
Write-downs of inventories of salt at Dry Creek to net realisable value recognised as an expense during the year ended 30 June
2013 amounted to $10,393,000 (2012: nil). The write-downs are included in Business restructuring in the consolidated statement
of profit or loss, refer to note 3.
80 | Ridley Corporation Limited – Annual Report 2013
For personal use only Note 9. Investment properties
Movement in investment properties
Carrying amount at cost at 1 July
Transfer from assets held for sale
Transfer from property, plant and equipment
Additions – provision for remediation for Dry Creek (note 14)
Carrying amount at cost at 30 June
Investment properties comprise owned sites that have ceased operating and are held for the purpose
of property realisation. The sites at Lara, Moolap and Dry Creek were reclassified to investment
properties from property, plant and equipment during the year as these sites are no longer used in
the ordinary course of business. The Bowen site was reclassified during the year from assets held
for sale to an investment property as the site was withdrawn from sale due to a lack of interest.
A fair value range for the sites at Bowen, Lara, Moolap and Dry Creek cannot be determined reliably
at the present time given that the respective locations do not have local established industrial or
residential infrastructure which would enable a reliable valuation benchmark to be determined.
Furthermore, the value of each site also varies significantly depending upon which stage of the
progressive regulatory approvals required for redevelopment has been attained at balance date.
Therefore, the value of these sites has been recorded at cost.
Amounts recognised in profit and loss for investment properties:
Direct operating expenses that did not generate rental income
Contractual obligations for site remediation
2013
$’000
2012
$’000
-
1,248
32,703
4,500
38,451
390
3,949
-
-
-
-
-
-
-
Note 10. Property, plant and equipment
Non-current
Land and buildings
At cost
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
2013
$’000
2012
$’000
2011
$’000
46,014
(3,046)
42,968
42,890*
(3,695)
39,195
45,700*
(2,731)
42,969
-
97,697
98,812
162,893
6,811
169,704
(94,593)
75,111
186,167
16,578
202,745
(117,758)
84,987
183,230
10,564
193,794
(115,586)
78,208
Total property, plant and equipment
118,079
221,879
219,989
* Land and buildings has been restated for the voluntary change in accounting policy for the valuation of land and buildings as detailed in note 1.
Capitalisation of borrowing costs
During the year ended 30 June 2013, capitalised borrowing costs related to the construction of property, plant and equipment
amounted to nil (2012: $163,000) with a capitalisation rate of nil (2012: 7%).
Ridley Corporation Limited – Annual Report 2013 | 81
For personal use only Notes to the Financial Statements continued
Note 10. Property, plant and equipment continued
Revaluations
The following revaluations were made in the year and recognised in the following accounts:
Reversal of asset revaluation reserve (a)
Salt fields
Deferred tax
Asset revaluation reserve
2013
$’000
2012
$’000
29,529
(11,099)
18,430
-
-
-
(a) Due to the sale of Cheetham Salt Limited, the Asset Revaluation Reserve attributable to salt fields was reversed in order to reflect the fair value attributable to the salt
fields, with the tax relating to the salt fields within the Asset Revaluation Reserve recorded as a reduction in the balance of the deferred tax liability.
At 1 July 2011
Cost or fair value*
Accumulated depreciation
Carrying amount at 1 July 2011
Additions
Acquisition of subsidiary
Disposals
Foreign currency exchange differences
Transfers to assets held for sale
Transfers from plant under construction
Depreciation
Carrying amount at 30 June 2012
Cost or fair value
Accumulated depreciation
Carrying amount at 1 July 2012
Additions
Acquisitions of businesses
Disposals
Disposal of subsidiary
Impairment
Revaluation
Transfer to Investment property
Foreign currency exchange differences
Transfers from plant under construction
Depreciation
Carrying amount at 30 June 2013
At 30 June 2013
Cost
Accumulated depreciation
Carrying amount at 30 June 2013
Land and
Buildings
$’000
Plant and
Equipment
$’000
45,700
(2,731)
42,969
1,474
-
(4,382)
(249)
(1,802)
2,185
(1,000)
39,195
42,890
(3,695)
39,195
-
15,009
-
(13,145)
(1,326)
-
(1,809)
(34)
6,163
(1,085)
42,968
193,794
(115,586)
78,208
20,947
368
(200)
55
(1,558)
(1,727)
(11,106)
84,987
202,745
(117,758)
84,987
22,260
22,447
(2,301)
(29,000)
(2,543)
-
-
(31)
(6,163)
(14,545)
75,111
Salt
Fields
$’000
98,812
-
98,812
-
-
-
-
(657)
(458)
-
97,697
97,697
-
97,697
-
-
-
(22,533)
(14,741)
(29,529)
(30,894)
-
-
-
-
Total
$’000
338,306
(118,317)
219,989
22,421
368
(4,582)
(194)
(4,017)
-
(12,106)
221,879
343,332
(121,453)
221,879
22,260
37,456
(2,301)
(64,678)
(18,610)
(29,529)
(32,703)
(65)
-
(15,630)
118,079
46,014
(3,046)
42,968
169,704
(94,593)
75,111
-
-
-
215,718
(97,639)
118,079
* Land and buildings has been restated for the voluntary change in accounting policy for the valuation of land and buildings as detailed in note 1.
82 | Ridley Corporation Limited – Annual Report 2013
For personal use only Note 11. Intangible assets
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
Year ended 30 June 2013
Carrying amount at 1 July 2012
Additions
Acquisition of businesses
Amortisation
Impairment
Disposal of subsidiary
Disposals
Closing balance at 30 June 2013
At 30 June 2013
Cost
Accumulated amortisation/impairment losses
Carrying amount at 30 June 2013
Software
$’000
Goodwill
$’000
Other
$’000
13,132
1,144
-
(2,199)
(249)
11,828
19,834
(8,006)
11,828
11,828
533
-
(1,972)
-
(1,294)
(647)
8,448
18,426
(9,978)
8,448
31,284
-
908
-
-
32,192
33,145
(953)
32,192
32,192
-
41,775
-
(5,017)
-
-
68,950
69,903
(953)
68,950
-
-
850
(99)
-
751
850
(99)
751
751
-
-
(170)
-
-
-
581
850
(269)
581
Total
$’000
44,416
1,144
1,758
(2,298)
(249)
44,771
53,829
(9,058)
44,771
44,771
533
41,775
(2,142)
(5,017)
(1,294)
(647)
77,979
89,179
(11,200)
77,979
The amortisation charge is included in general and administrative costs in the consolidated statement of profit or loss.
Impairments during the year
An impairment loss of $5,017,000 (2012: nil) in respect of the goodwill that arose from the 2005 acquisition of Dry Creek has been
recognised in Business restructuring in the consolidated statement of profit or loss.
Impairment testing for goodwill
The Group’s cash generating unit (CGU) level summary is presented below:
2013
2012
Salt
$’000
-
5,017
Animal Meals
$’000
56,616
16,322
Other
$’000
12,334
10,853
Total
$’000
68,950
32,192
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 the 2014 Board approved budget, projected for four years plus a terminal value.
(ii) Forecast growth rates are based on management’s expectations of future performances. The growth rates applied to cash
flows beyond one year were 3% (2012: 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. The post-tax discount rate applied to cash flows
was 9.2% (2012: 9.0%).
These assumptions have been used for the analysis in each CGU of goodwill within the business segment of continuing operations.
Ridley Corporation Limited – Annual Report 2013 | 83
For personal use only Notes to the Financial Statements continued
Note 11. Intangible assets continued
Impact of possible changes in key assumptions
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 outlook for the Ruminant CGU following the 2013 financial year baseline has significantly eroded
the impairment headroom. Recent internal reorganisation and the benefits from the new Pakenham mill are expected to improve
the outlook for this sector, however any significant deterioration in the discount rate or earnings profile for the Ruminant CGU will
raise impairment concerns in the future. The estimated recoverable amount of the Ruminant CGU exceeds its carrying amount
by approximately $7,214,000. The change required for the Ruminant CGU carrying amount to equal the recoverable amount
is a discount rate increase of 1.5% or a decrease in the growth rate of 2.1%, all other things being equal.
Note 12. Tax assets and liabilities
Current
Tax asset
Tax liability
Non-current
Deferred tax asset
Deferred tax liability*
* The deferred tax liability has been restated for the voluntary change in accounting policy for the valuation of land and buildings as detailed in note 1.
Movement in deferred tax asset/(liability)
Balance at 1 July
Credited/(charged) to the statement of profit or loss (note 5)
Credited to comprehensive income
Disposal of subsidiary
Balance at 30 June
2013
$’000
2012
$’000
412
1,588
-
1,035
3,281
-
-
7,493
(7,493)
9,087
10,987
(9,300)
3,281
(2,793)
(4,813)
113
-
(7,493)
The amount of unused tax losses for which no deferred tax asset is recognised in the balance sheet is nil (2012: $1,816,000). The
tax losses in the prior year related to the Group’s Japanese operations within the discontinued operation and were transferred as
part of the sale of discontinued operation on 28 February 2013.
Recognised deferred tax assets and liabilities
Consolidated
Intangibles
Doubtful debts
Property, plant and equipment
Employee entitlements
Retirement benefits
Provisions
Other
Tax assets/(liabilities)
Assets
Liabilities
Net
2013
$’000
-
7
6,866
4,055
33
30
1,916
12,907
2012
$’000
284
72
-
3,421
185
587
747
5,296
2013
$’000
(2,794)
-
(6,832)
-
-
-
-
(9,626)
2012
$’000
-
-
(12,789)
-
-
-
-
(12,789)
2013
$’000
(2,794)
7
34
4,055
33
30
1,916
3,281
2012
$’000
284
72
(12,789)
3,421
185
587
747
(7,493)
84 | Ridley Corporation Limited – Annual Report 2013
For personal use only Balance
1 July
2011
$’000
Recognised
in Profit
or Loss
$’000
Recognised
in Other
Comprehensive
Income
$’000
Balance
30 June
2012
$’000
Recognised
in Profit
or Loss
$’000
Recognised
in Other
Comprehensive
Income
$’000
Disposal of
Subsidiary
$’000
Balance
30 June
2013
$’000
Consolidated
Intangibles
Doubtful debts
Property, plant
and equipment
Employee
entitlements
Retirement
benefits
Provisions
Other
Tax asset/(liability)
284
161
-
(89)
-
-
284
72
(3,078)
(65)
-
-
-
-
(2,794)
7
(8,449)
(4,340)
-
(12,789)
11,206
11,099
(9,482)
34
4,149
(728)
-
3,421
634
-
-
4,055
91
402
569
(2,793)
(19)
185
178
(4,813)
113
-
-
113
185
587
747
(7,493)
(40)
(577)
1,007
9,087
(112)
-
-
10,987
-
20
162
(9,300)
33
30
1,916
3,281
Note 13. Payables
Current
Trade creditors and accruals
Capital return
Other creditors
Note 14. Provisions
Current
Employee entitlements
Provision for remediation
Contingent consideration
Non-current
Employee entitlements
Provision for remediation
Movement in provisions
Balance at 30 June 2012
Acquisition of businesses
Provision recognised for remediation of Dry Creek
Provision utilisation
Balance at 30 June 2013
2013
$’000
2012
$’000
121,754
23,086
7,734
152,574
9,889
2,213
600
12,702
1,181
1,736
2,917
95,266
-
-
95,266
10,005
-
-
10,005
1,396
-
1,396
Contingent
Consideration Remediation
-
-
4,500
(551)
3,949
-
600
-
-
600
Ridley Corporation Limited – Annual Report 2013 | 85
For personal use only Notes to the Financial Statements continued
Note 15. Share capital
Fully paid up capital: 307,817,071 ordinary shares with no par value (2012: 307,817,071)
Parent Entity
2013
$’000
214,445
2012
$’000
237,531
(a) Movements in ordinary share capital
Date
30 June 2012
24 June 2013
30 June 2013
Details
Balance at 30 June 2012
Capital return (c)
Balance at 30 June 2013
Number of Shares
307,817,071
-
307,817,071
$’000
237,531
(23,086)
214,445
(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) Capital return
Ridley Corporation Ltd shareholders approved on the 24 June 2013 for each registered holder of fully paid ordinary shares on
2 July 2013 to receive a capital return of 7.5 cents per share payable on 5 July 2013. This was recognised in current payables
at 30 June 2013 (refer note 13).
(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:
Gross debt
Less: cash
Net debt
Total equity
Gearing ratio
Note 16. Reserves and retained earnings
(a) Reserves
Revaluation reserve
Share based payments reserve
Foreign currency translation reserve
Movements:
Revaluation reserve
Balance at 1 July
Revaluation
Deferred tax on revaluation
Transfer to retained earnings on disposal of subsidiary
Balance at 30 June
86 | Ridley Corporation Limited – Annual Report 2013
2013
$’000
34,771
(16,936)
17,835
207,553
8.6%
2012
$’000
105,379
(7,228)
98,151
278,371
35.3%
2013
$’000
-
1,487
-
1,487
25,971
(29,529)
11,099
(7,541)
-
2012
$’000
25,971*
671
(1,270)
25,372
25,971*
-
-
-
25,971
2011
$’000
25,971*
(44)
(925)
25,002
25,971*
-
-
-
25,971
For personal use only Share based payments reserve
Balance at 1 July
Options and performance rights expense
Share based payment transactions
Retained earnings transfer
Balance at 30 June
Foreign currency translation reserve
Balance at 1 July
Currency translation differences arising during the year
Disposal of subsidiary
Balance at 30 June
(b) Retained earnings
Balance at 1 July
Actuarial profits/(losses) on defined benefit superannuation – net of tax
Net profit/(loss) for the year
Dividends paid
Share based payments reserve transfer
Disposal of subsidiary
Balance at 30 June
2013
$’000
671
2,691
(2,065)
190
1,487
(1,270)
(352)
1,622
-
15,468
260
(21,694)
(11,543)
(190)
9,320
(8,379)
2012
$’000
(44)
1,266
(1,071)
520
671
(925)
(345)
-
(1,270)
20,085
(264)
19,253
(23,086)
(520)
-
15,468
2011
$’000
(250)
928
(1,326)
604
(44)
(211)
(714)
-
(925)
14,629
(170)
29,316
(23,086)
(604)
-
20,085
* The revaluation reserve has been restated for the voluntary change in accounting policy for the valuation of land and buildings as detailed in note 1.
(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) Foreign currency translation reserve
Exchange differences arising on translation of the discontinued foreign controlled entity are taken to the foreign currency translation
reserve. The reserve was recognised in the statement of profit or loss as the foreign controlled entity was disposed of as part of the
sale of the Cheetham Salt group on 28 February 2013.
Note 17. Financial risk management
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.
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 the purchase and sale of
goods in foreign currencies.
Ridley Corporation Limited – Annual Report 2013 | 87
For personal use only Notes to the Financial Statements continued
Note 17. Financial risk management continued
Forward contracts and foreign currency bank balances are used to manage foreign exchange risk. Management is responsible for
managing exposures in each foreign currency by using external forward currency contracts and purchasing foreign currency that is
held in US dollars and Euro bank accounts. 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.
Foreign currency cash and forward exchange contracts
Forward foreign exchange contracts are 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 holds foreign currency bank accounts in US dollars and Euro.
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars, was as follows:
$’000 Australian dollars
Cash
Payables
Forecast purchases
Forward exchange contracts
Buy foreign currency
Sell foreign currency
Net exposure
2013
2012
USD
1,143
(565)
(578)
EUR
775
-
(775)
USD
-
(1,438)
-
-
-
-
-
-
-
1,438
-
-
JPY
-
(362)
-
-
362
-
CHF
-
(24)
-
24
-
-
EUR
656
(915)
-
259
-
-
At 30 June 2013, the net fair value of forward exchange contracts results in a liability of nil (2012: 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 not significant.
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. At balance date, bank
borrowings of the Group incur an average variable interest rate of 4.92% (2012: 5.58%).
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.
88 | Ridley Corporation Limited – Annual Report 2013
For personal use only Variable rate instruments
Cash
Bank loans – Australia
Bank loans – Indonesia
Interest
Rate
2013
$’000
Interest
Rate
2012
$’000
-
4.92%
-
16,936
35,000
-
-
5.58%
4.50%
7,228
104,500
1,212
(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 $243,000 (2012: $738,000) and the Group’s equity by $243,000 (2012: $738,000).
(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
2013
$’000
83,125
7,734
16,936
107,795
2012
$’000
81,103
379
7,228
88,710
Further credit risk disclosures on trade receivables are disclosed in note 7.
(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.
Ridley Corporation Limited – Annual Report 2013 | 89
For personal use only Notes to the Financial Statements continued
Note 17. Financial risk management continued
The following tables disclose the contractual maturities of financial liabilities, including estimated interest payments and excluding
the impact of netting agreements:
2013
Non-derivative financial liabilities
Trade and other payables
Bank loans
2012
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
152,574
34,771
187,345
152,574
1,744
154,318
-
36,624
36,624
-
1,744
1,744
-
1,744
1,744
152,574
41,856
194,430
95,266
105,379
200,645
95,266
47,245
142,511
-
200,645
2,076
144,587
-
6,533
6,533
-
6,533
-
71,533
71,533
-
6,533
6,533
95,266
131,844
227,110
-
71,533
-
6,533
2,076
229,186
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.
Note 18. Commitments for expenditure
During the year ending 30 June, the Group entered into contracts to purchase plant and equipment for:
Total group 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
The Group has leases for land, buildings and equipment under operating leases.
2013
$’000
2012
$’000
2,820
2,921
4,018
2,290
4,448
902
11,658
5,588
4,694
6,247
6,163
22,692
90 | Ridley Corporation Limited – Annual Report 2013
For personal use only
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
Bank guarantees – associates (a)
2013
$’000
450
-
2012
$’000
1,102
590
(a) A controlled entity within the discontinued operation guaranteed 50% of an associate’s bank debt to a maximum of $590,000. This was transferred as part of the sale of
the discontinued group on 28 February 2013.
Salt field damage subject to insurance
In January 2013, a flood event occurred in northern Queensland which resulted in the Bajool and Port Alma salt fields operated
by Cheetham Salt Limited sustaining considerable damage. On 28 February 2013, the date of the sale of Cheetham Salt Limited
to CK Life Sciences Int’l., (Holdings) Inc. (CKLS), the full extent of that damage was unknown and was still being assessed.
As part of the sale negotiations, a Queensland Flood Insurance Claim Agreement (QFIC Agreement) was entered into between
Ridley and CKLS, the material terms of which require the parties to cooperate with each other, act in good faith and do all things
necessary to enable Ridley to submit an insurance claim under Ridley’s Industrial Special Risks insurance policy for the damage
sustained, with the claim amount to be agreed to by both parties. Recoverable proceeds under that policy by Ridley will be passed
on to CKLS. The parties are also similarly required to ensure that the cost and expense of all parties is minimised. Under the QFIC
Agreement, Ridley is responsible for payment of the insurance policy excess (which has been fully provided as at 30 June 2013)
and is required to reimburse CKLS for any shortfall between the audited cost of the agreed remediation works and the insurance
recovery proceeds, capped at the value of the claim.
At the date of this report, the claim lodged by Ridley under its Industrial Special Risks insurance policy as agreed by the parties is
for $7,734,000. An insurance receivable of $7,734,000 has been included in current receivables (see note 7) and an amount owing
to CKLS of $7,734,000 has been included in current payables (see note 13). The insurance excess has been fully provided for. Due
to the nature of the damage sustained to the salt fields, the claim is still being assessed by the insurer and the outcome of that
assessment and any impact on the financial result will not be known for some time.
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
2013
$
2012
$
496,863
-
496,863
500,813
11,903
512,716
285,775
782,638
490,855
1,003,571
Ridley Corporation Limited – Annual Report 2013 | 91
For personal use only
Notes to the Financial Statements continued
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
Directors fees
– jointly controlled entities
Sales of products
– associates
– jointly controlled entities
Purchases of products
– jointly controlled entities
Purchases of products
– associates
Outstanding balances with related parties were as follows:
Current receivable
– associates
Current receivable
– jointly controlled entities
Current payable
– associates
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
Retirement benefits
Termination benefits
Other benefits
Share based payments
92 | Ridley Corporation Limited – Annual Report 2013
2013
$’000
2012
$’000
6,594
1,693
2,788
4,017
35
82
7,917
3,527
10,537
4,169
2,448
3,456
4,190
2,395
-
-
581
849
4
-
2013
$
2012
$
3,852,822
245,480
26,481
629,124
412,232
1,139,717
6,305,856
3,344,814
284,501
-
297,109
-
637,139
4,563,563
For personal use only
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 below:
Number of shares held in Ridley Corporation Limited at 30 June 2013
JM Spark
RJ Lee
TJ Hart
J Murray
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen
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
398,500
269,366
-
792,024
48,658
86,625
35,000
25,000
703,286
2,358,459
243,662
4,790
51,028
150,554
133,877
132,290
135,385
851,586
3,210,045
Acquired4/(Disposed)
During the Year
-
15,491
-
(200,000)3
-
-
-
-
-
(184,509)
41,837
24,597
24,597
99,597
97,166
(132,290)5
(135,385)2
20,119
(164,390)
Balance at the
End of the Year
398,500
284,857
-
592,024
48,658
86,625
35,000
25,000
703,286
2,173,950
285,499
29,387
75,625
250,151
231,043
-
-
871,705
3,045,655
1. Or commencement of employment if not employed throughout the financial year.
2. At the date of resignation from the Company.
3. J Murray sold 200,000 shares during the year. There were no other sales of Ridley securities by key management personnel during the financial year.
4. J Murray and all executives acquired shares through the exercise of performance rights and/or employee share schemes.
5. Ceased being an employee of the Group on 28 February 2013 as a result of the sale of the salt business.
Number of shares held in Ridley Corporation Limited at 30 June 2012
JM Spark
RJ Lee
J Murray
AL Vizard
PM Mann
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
316,000
269,366
559,024
48,658
76,625
-
-
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
82,500
-
233,000
-
10,000
35,000
25,000
385,500
222,154
1,654
1,654
54,154
52,500
54,154
52,500
438,770
824,270
Balance at the
End of the year
398,500
269,366
792,024
48,658
86,625
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
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.
Ridley Corporation Limited – Annual Report 2013 | 93
For personal use only Notes to the Financial Statements continued
Note 22. Key management personnel disclosures continued
Performance Rights granted and vested during the financial year ended 30 June 2013
Long Term Incentive Plan (LTIP)
Recipients of LTIP Rights
Directors
J Murray
Key management personnel
AM Boyd
PJ Weaver 2
AL Speed 3
CW Klem
AM Mooney
RN Lyons
S Butler
Total issued to Directors
and key management
personnel
Balance at
1 July 2012 Granted
Balance at
Vested Forfeited 30 June 20131
Value per
Date Share at Date
of Exercise
Exercised
1,243,000
-
-
-
1,243,000
-
-
400,000
475,000
475,000
225,000
300,000
300,000
225,000
-
-
- (109,727)
-
(365,273)
400,000
-
- (226,170)
-
-
-
-
-
-
-
-
(248,830)
-
-
-
-
-
225,000
300,000
300,000
225,000
-
11 July 2012
5 December 2012,
28 March 2013
-
-
-
-
-
$1.01
$1.14, $0.95
-
-
-
-
3,643,000
- (335,897) (614,103)
2,693,000
-
-
1. Performance rights are due to vest between December 2013 through to December 2014.
2. Resigned 1 July 2012.
3. Ceased being an employee of the Group on 28 February 2013 as a result of the sale of the salt business.
Ridley Corporation Special Retention Plan (SRP)
Recipients of SRP rights
Directors
J Murray
Key management personnel
AM Boyd
AL Speed1
CW Klem
AM Mooney
RN Lyons
S Butler
Total issued to Directors
and key management
personnel
Balance at
1 July 2012 Granted
Vested Forfeited
Balance at
30 June 2013
600,000
-
-
200,000
200,000
150,000
150,000
125,000
125,000
-
-
- (200,000)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
600,000
200,000
-
150,000
150,000
125,000
125,000
Date
Exercised
Value per
Share at Date
of Exercise
-
-
-
28 March 2013
-
-
-
-
-
$0.95
-
-
-
-
1,550,000
-
(200,000)
-
1,350,000
-
-
1. Ceased being an employee of the Group on 28 February 2013 as a result of the sale of the salt business.
94 | Ridley Corporation Limited – Annual Report 2013
For personal use only
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 Cheetham Salt divestment process. Under the Special Retention Plan,
selected executives and the Managing Director were offered a number of performance rights (Right). The Plan offer was 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 and Special Retention Plan
There were no performance rights granted during the reporting period.
Details of performance rights outstanding under the plans at balance date are as follows:
30 June 2013
Grant Date
Long Term Incentive Plan
05 December 2009
05 December 2010
05 December 2011
Expiry Date
05 December 2012
05 December 2013
05 December 2014
Special Retention Plan
05 May 2012
05 May 2014
Balance
at Start of
the Year
Granted
During
the Year
Cancelled
During
the Year
Vested
During
the Year
Balance
at End of
the Year
300,000
2,493,000
2,350,000
5,143,000
2,300,000
7,443,000
-
-
-
-
-
(19,739)
(373,554)
(507,622)
(900,915)
(280,261)
(276,446)
(92,378)
(649,085)
-
1,843,000
1,750,000
3,593,000
(50,000)
(950,915)
(400,000)
(1,049,085)
1,850,000
5,443,000
Ridley Corporation Limited – Annual Report 2013 | 95
For personal use only Notes to the Financial Statements continued
Note 23. Share based payments continued
(i) Ridley Corporation Long Term Incentive Plan and Special Retention Plan continued
30 June 2012
Grant Date
Long Term Incentive Plan
05 December 2008
14 April 2009
05 December 2009
05 December 2010
05 December 2011
Expiry Date
05 December 2011
14 April 2012
05 December 2012
05 December 2013
05 December 2014
Balance
at Start of
the Year
Granted
During
the Year
Cancelled
During
the Year
Vested
During
the Year
Balance
at End of
the Year
300,000
225,000
300,000
2,593,000
-
3,418,000
-
-
-
-
2,400,000
2,400,000
(90,000)
(4,500)
-
(67,940)
(50,000)
(212,440)
(210,000)
(220,500)
-
(32,060)
-
(462,560)
-
-
300,000
2,493,000
2,350,000
5,143,000
Special Retention Plan
05 May 2012
05 May 2014
-
2,300,000
-
-
2,300,000
3,418,000
4,700,000
(212,440)
(462,560)
7,443,000
(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
Employee Share Scheme option movements
30 June 2013
26 April 2013
3 years
$0.44
26%
5.3%
3.1%
Date Shares
Become
Unrestricted
Grant Date
29 January 2002 29 January 2005
28 January 2003 28 January 2006
13 Feburary 2004 13 February 2007
05 April 2005
10 April 2006
13 April 2007
11 April 2008
03 April 2009
30 April 2010
30 April 2011
30 April 2012
26 April 2013
05 April 2008
10 April 2009
13 April 2010
11 April 2011
03 April 2012
30 April 2013
30 April 2014
30 April 2015
26 April 2016
Number of Shares
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
$0.41
Balance
at Start 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
Granted
During
the Year
-
-
-
-
-
-
-
-
-
-
-
841,126
841,126
Exercised
During
the Year
(12,000)
(31,050)
(38,040)
(32,625)
(31,836)
(47,493)
(68,134)
(150,756)
(99,308)
(101,036)
(125,704)
(4,862)
(742,844)
Balance
at End of
the Year
49,000
91,800
122,045
121,365
144,020
182,936
236,676
428,620
350,020
354,380
406,884
836,264
3,324,010
Exercisable
at End of
the Year
49,000
91,800
122,045
121,365
144,020
182,936
236,676
428,620
350,020
-
-
-
1,726,482
Weighted average exercise price
$0.58
$0.41
$0.57
$0.58
$0.56
The options outstanding have a weighted average contractual life of three years (2012: three years).
96 | Ridley Corporation Limited – Annual Report 2013
For personal use only 30 June 2012
Date Shares
Become
Unrestricted
Grant Date
29 January 2002 29 January 2005
28 January 2003 28 January 2006
13 February 2004 13 February 2007
05 April 2005
10 April 2006
13 April 2007
11 April 2008
03 April 2009
30 April 2010
30 April 2011
30 April 2012
05 April 2008
10 April 2009
13 April 2010
11 April 2011
03 April 2012
30 April 2013
30 April 2014
30 April 2015
Number of Shares
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
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
Share based payment expense
Shares issued under Employee Share Scheme
Performance rights issued under Long Term Incentive Plan and Special Retention Plan
Total share based payment expense
2013
$’000
370
2,320
2,690
2012
$’000
368
898
1,266
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 statement
of profit or loss is $5,616,000 (2012: $5,910,000).
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.
Ridley Corporation Limited – Annual Report 2013 | 97
For personal use only Notes to the Financial Statements continued
Note 24. Retirement benefit obligations continued
The following notes (a) to (f) set out details in respect of the defined benefit section only:
(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
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
(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
Past service cost
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 statement of profit or loss
Current service cost
Past service cost
Interest cost
Expected return on plan assets
Total included in employee benefits expense/(benefit)
Actual return on plan assets
98 | Ridley Corporation Limited – Annual Report 2013
2013
$’000
1,337
(1,228)
109
2012
$’000
2,469
(1,853)
616
2013
%
6
58
19
11
6
2012
%
6
55
18
16
5
2013
$’000
2012
$’000
2,469
96
60
(284)
(1,070)
34
32
1,337
1,853
125
88
198
34
(1,070)
1,228
96
32
60
(125)
63
213
2,106
79
87
349
(199)
47
-
2,469
1,834
120
(28)
79
47
(199)
1,853
79
-
87
(120)
46
92
For personal use only 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
2013
$’000
2,101
(372)
1,729
2013
%
3.10
2.50
6.75
2012
$’000
1,724
377
2,101
2012
%
2.60
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 used in determining 30 June 2013 plan disclosures.
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 2013 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 2013 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 2014 are $82,000. Economic assumptions used by the actuary to make the funding recommendations were
a long term investment earning rate, 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
Deficit
Experience adjustments arising on plan liabilities
Experience adjustments arising on plan assets
2013
$’000
1,337
(1,228)
109
88
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
Note 25. Segment information
Geographical segments
The Group predominantly operates in Australasia. The Group had equity accounted investments located in New Zealand (note 33)
and an operation located in Indonesia, both of which were disposed of as part of the sale of the Cheetham Salt business.
Ridley Corporation Limited – Annual Report 2013 | 99
For personal use only Notes to the Financial Statements continued
Note 25. Segment information continued
2013
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)
2012 Restated1
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)
AgriProducts
$’000
706,330
-
706,330
309
706,639
(116)
(12,936)
-
-
28,075
337,161
2,194
339,355
127,546
15,984
AgriProducts
$’000
626,018
-
626,018
1,487
627,505
67
(8,485)
-
-
27,161
236,777
2,310
239,087
93,195
16,389
Property
Realisation
$’000
-
-
-
-
-
-
-
-
-
(1,943)
5,104
-
5,104
-
-
Property
Realisation
$’000
-
-
-
-
-
-
-
-
-
(701)
7,060
-
7,060
-
-
1. This segment note has been restated for the change from two to three reporting segments as well as for the voluntary change in accounting policy for the valuation
of land and buildings as detailed in note 1.
100 | Ridley Corporation Limited – Annual Report 2013
-
-
-
-
-
-
-
-
-
-
-
-
-
Salt
$’000
9,988
9,988
9,988
(1,076)
(30,588)
36,797
36,797
6,303
Salt
$’000
9,774
9,774
9,774
(882)
3,424
56,675
56,675
364
224
Unallocated
$’000
(512)
74
(7,811)
(16,553)
29,368
29,370
69,224
862
Unallocated
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
(796)
202
(9,529)
(16,412)
8,760
-
8,760
115,749
702
Total
$’000
716,318
-
716,318
309
716,627
(116)
(14,524)
74
(7,811)
(21,009)
408,430
2,194
410,626
203,073
16,846
Total
$’000
635,792
-
635,792
1,487
637,279
67
(10,163)
202
(9,529)
13,472
309,272
2,310
311,582
209,308
17,315
Salt (Discontinued
Operations)
Consolidated
$’000
66,908
1,585
68,493
12
68,505
4,562
(3,248)
(3,649)
-
-
-
-
-
-
-
-
5,947
$’000
98,903
3,104
102,007
187
102,194
6,773
(4,241)
12,883
137,768
50,211
187,979
11,882
6,251
Eliminations
$’000
(1,585)
(1,585)
(1,585)
Eliminations
$’000
(3,104)
(3,104)
(3,104)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$’000
783,226
-
783,226
321
783,547
4,446
(17,772)
74
(7,811)
(24,658)
408,430
2,194
410,626
203,073
22,793
Total
$’000
734,695
-
734,695
1,674
736,369
6,840
(14,404)
202
(9,529)
26,355
447,040
52,521
499,561
221,190
23,566
Salt (Discontinued
Operations)
Consolidated
For personal use only Note 25. Segment information continued
2013
AgriProducts
$’000
706,330
Property
Realisation
$’000
Share of profits of equity accounted investments
Depreciation and amortisation expense
Reportable segment profit before income tax
Investments accounted for using the equity method
Acquisitions of property, plant and equipment, intangibles and other
non-current segment assets (excluding the impact of business combinations)
Sales – external
Sales – internal
Total sales revenue
Other revenue
Total revenue
Interest income
Interest expense
Segment assets
Total segment assets
Segment liabilities
2012 Restated1
Sales – external
Sales – internal
Total sales revenue
Other revenue
Total revenue
Interest income
Interest expense
Segment assets
Total segment assets
Segment liabilities
Share of profits of equity accounted investments
Depreciation and amortisation expense
Reportable segment profit before income tax
Investments accounted for using the equity method
-
-
-
-
-
-
706,330
309
706,639
(116)
(12,936)
28,075
337,161
2,194
339,355
127,546
15,984
626,018
1,487
627,505
67
(8,485)
27,161
236,777
2,310
239,087
93,195
16,389
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,943)
5,104
5,104
(701)
7,060
7,060
AgriProducts
$’000
626,018
Property
Realisation
$’000
Acquisitions of property, plant and equipment, intangibles and other
non-current segment assets (excluding the impact of business combinations)
1. This segment note has been restated for the change from two to three reporting segments as well as for the voluntary change in accounting policy for the valuation
of land and buildings as detailed in note 1.
Salt
$’000
9,988
-
9,988
-
9,988
-
(1,076)
-
-
(30,588)
36,797
-
36,797
6,303
-
Salt
$’000
9,774
-
9,774
-
9,774
-
(882)
-
-
3,424
56,675
-
56,675
364
224
Unallocated
$’000
-
-
-
-
-
-
(512)
74
(7,811)
(16,553)
29,368
-
29,370
69,224
862
Unallocated
$’000
-
-
-
-
-
-
(796)
202
(9,529)
(16,412)
8,760
-
8,760
115,749
702
Total
$’000
716,318
-
716,318
309
716,627
(116)
(14,524)
74
(7,811)
(21,009)
408,430
2,194
410,626
203,073
16,846
Total
$’000
635,792
-
635,792
1,487
637,279
67
(10,163)
202
(9,529)
13,472
309,272
2,310
311,582
209,308
17,315
Salt (Discontinued
Operations)
$’000
66,908
1,585
68,493
12
68,505
Eliminations
$’000
-
(1,585)
(1,585)
-
(1,585)
Consolidated
Total
$’000
783,226
-
783,226
321
783,547
4,562
(3,248)
-
-
(3,649)
-
-
-
-
5,947
-
-
-
-
-
-
-
-
-
-
4,446
(17,772)
74
(7,811)
(24,658)
408,430
2,194
410,626
203,073
22,793
Salt (Discontinued
Operations)
$’000
98,903
3,104
102,007
187
102,194
Eliminations
$’000
-
(3,104)
(3,104)
-
(3,104)
Consolidated
Total
$’000
734,695
-
734,695
1,674
736,369
6,773
(4,241)
-
-
12,883
137,768
50,211
187,979
11,882
6,251
-
-
-
-
-
-
-
-
-
-
6,840
(14,404)
202
(9,529)
26,355
447,040
52,521
499,561
221,190
23,566
Ridley Corporation Limited – Annual Report 2013 | 101
For personal use only Notes to the Financial Statements continued
Note 26. Notes to statement of cash flows
Reconciliation of net cash inflow from operating activities to profit/(loss) after income tax
Profit/(loss) for the year
Adjustments for non cash items:
Depreciation and amortisation
(Profit)/loss on sale of discontinued operations and businesses
Impairment of inventory and property, plant and equipment
Impairment of salt fields and goodwill
Net (profit) 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 in inventories
Increase in trade creditors excluding capital return
Increase/(decrease) in provisions excluding remediation
Increase/(decrease) in income tax liability/receivable
Increase/(decrease) in deferred income tax
Net cash inflow from operating activities
2013
$’000
2012
$’000
(21,694)
19,253
17,773
5,773
14,262
19,758
-
3,841
2,691
462
227
(12)
725
(15,345)
4,816
35,714
1,237
334
(17,979)
52,583
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
Note 27. Non-cash financing and investing activities
There were no non-cash financing and investing activities during the years ended 30 June 2013 and 30 June 2012.
Note 28. Finance facilities
Borrowings
Current
Bank loans (a)
Non-current
Bank loans (a)
2013
$’000
2012
$’000
-
40,712
34,771
64,667
(a) These loans are subject to bank covenants based on financial ratios of the Group. As at 30 June 2013, the Group was in compliance with these covenants.
The bank loans are unsecured.
102 | Ridley Corporation Limited – Annual Report 2013
For personal use only Total loan facilities available to the Group
AUD
Australian dollars
Loan
Cash
Overdraft facility
United States dollars
2013
2012
Limits
$’000
Utilised
$’000
Limits
$’000
Utilised
$’000
126,000
-
10,000
-
136,000
35,000
(16,936)
-
-
18,064
169,000
-
10,000
4,551
183,551
104,500
(7,818)
590
1,212
98,484
Long term loan facilities
Finance facility
On 28 December 2010, a bank debt facility totalling $169,000,000 was established with two Australian banks. The facility included
a combination of term debt available to be drawn down in tranches, with a tenure of between two and four years. These unsecured
bank loans were floating interest rate debt facilities subject to negative pledge arrangements which required the Group to comply
with certain minimum financial requirements. The key covenant ratios under the facility are interest cover, debt cover, gearing and
consolidated net worth.
On 21 December 2012, an Amendment Deed was signed, increasing the facility to $206,000,000 and extending the two tranches
with maturity dates of 29 December 2012 to 29 December 2014. From 21 December 2012 until the disposal of Cheetham Salt
was completed on 28 February 2013, the four key banking covenants were eased in the facility agreement to accommodate the
incremental debt during this period. On 28 February 2013, the Group repaid and reduced the facility by $80,000,000 from the
proceeds of the Cheetham Salt divestment as required under the amended bank debt facility arrangement. The Group is in
compliance with the facility covenants.
United States Dollar facility
A controlled entity within the discontinued operation had a US$2,100,000 (2012: US$1,225,000 was utilised) term loan facility
which was discontinued as part of the sale of the discontinued operation on 28 February 2013.
Short term credit facilities
Australian dollar overdraft facility
The Group has a $10,000,000 (2012: $10,000,000) net overdraft facility, which is due for annual renewal on 31 December 2013.
At 30 June 2013, nil (2012: $590,000) was utilised on a consolidated basis due to offsetting within this consolidated Group overdraft
facility. At 30 June 2013, $9,240,000 (2012: $8,732,000) was utilised by the parent company of the Group.
United States dollar facility
A controlled entity within the discontinued operation had a US$2,000,000 (2012: US$2,000,000 utilised nil) revolving credit facility
and a US$500,000 (2012: US$500,000 utilised nil) revolving loan facility. These facilities were discontinued as part of the sale of
the discontinued operation on 28 February 2013.
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 $30,000,000 (2012:$20,000,000). The amount utilised classified within current
payables at 30 June 2013 was $22,069,996 (2012: $15,624,574).
Ridley Corporation Limited – Annual Report 2013 | 103
For personal use only
Notes to the Financial Statements continued
Note 29. Earnings per share
Basic earnings per share – continuing
Basic earnings per share
Diluted earnings per share – continuing
Diluted earnings per share
Earnings used in calculating earnings per share
Profit/(loss) after income tax – continuing operations
Profit/(loss) after income tax – discontinued operation
Total
Weighted average number of shares
Weighted average number of shares used
in calculating basic and diluted earnings per share
2013
Cents
(5.4)
(7.0)
(5.4)
(7.0)
2012
Cents
2.4
6.3
2.4
6.3
2013
Earnings Per Share
Diluted
Basic
$’000
$’000
2012
Earnings Per Share
Basic
$’000
Diluted
$’000
(16,586)
(5,108)
(21,694)
(16,586)
(5,108)
(21,694)
7,348
11,905
19,253
7,348
11,905
19,253
Basic
Diluted
Basic
Diluted
307,817,071 307,817,071 307,817,071 307,817,071
Options
There are 5,443,000 (2012: 7,443,000) 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.
Note 30. Investment in controlled entities
The ultimate parent entity within the Group is Ridley Corporation Limited.
Name of Entity
Country of Incorporation Class of Shares
Ownership Interest
2012
2013
Ridley AgriProducts Pty Ltd and its controlled entities
CSF Proteins Pty Ltd1
Farmstock Pty Limited2 and its controlled entity
Farmstock Milling Pty Ltd2
Ridley Liquids JV Pty Limited2
Barastoc Stockfeeds Pty Ltd and its controlled entity
Rumevite Pty Ltd 2
Cheetham Salt Limited and its controlled entities 3
CSL (No.3) Pty Limited3
Salt Australia Pty Ltd 3
Ocsalt Pty Ltd3
Queensland Salt Pty Ltd3
PT Cheetham Garam and its controlled entity3
PT Cheetham International Trading3
Sea Lake Salt Pty Ltd3
Diamond Salt Pty Limited
RCL Retirement Pty Limited
Ridley Land Corporation Pty Ltd and its controlled entities
Lara Land Development Corporation Pty Ltd
Moolap Land Development Corporation Pty Ltd
Bowen Land Development Corporation Pty Ltd
Ridley Dry Creek Pty Ltd 4
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Indonesia
Indonesia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
100%
100%
-
-
-
100%
-
-
-
-
-
-
-
-
-
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
1. Camilleri Stockfeeds Pty Ltd changed its company name to CSF Proteins Pty Ltd on 21 November 2012.
2. Non-trading company which was deregistered during the year.
3. Company sold as part of sale of Cheetham discontinued operation on 28 February 2013.
4. Cheetham (Dry Creek) Pty Ltd changed its company name to Ridley Dry Creek Pty Ltd on 21 December 2012.
104 | Ridley Corporation Limited – Annual Report 2013
For personal use only
Note 31. Parent entity
As at, and throughout, the financial year ending 30 June 2013, 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
2013
$’000
2,258
260
2,518
3,200
289,764
292,964
36,785
34,499
71,284
221,680
214,445
1,487
5,748
221,680
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
GST liabilities of other entities within the GST group
1,044
212
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, Ridley Dry Creek Pty Ltd and CSF Proteins Pty Ltd are parties to a Deed
of Cross Guarantee under which each company guarantees the debts of the others.
During the current financial year, Cheetham Salt Limited was sold and was removed as a party to the Deed of Cross Guarantee
on 28 February 2013.
The above companies represent a Closed Group for the purposes of the ASIC Class Order which governs the operation and
establishment of the Deed of Cross Guarantee, 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.
Ridley Corporation Limited – Annual Report 2013 | 105
For personal use only
Notes to the Financial Statements continued
Note 32. Deed of Cross Guarantee continued
(a) Summarised consolidated statement of profit or loss
Profit/(loss) before income tax
Income tax benefit /(expense)
Profit/(loss) after income tax
(b) Summary of movements in retained profits
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
Disposal of subsidiary
Transfers from entities outside Deed of Cross Guarantee group
Balance at 30 June
(c) Balance sheet
Current assets
Cash and cash equivalents
Receivables
Inventories
Assets held for sale
Tax receivable
Total current assets
Non-current assets
Receivables
Investments accounted for using the equity method
Investment properties
Property, plant and equipment
Intangible assets
Inventories
Deferred tax asset
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Payables
Provisions
Retirement benefit obligations
Total current liabilities
106 | Ridley Corporation Limited – Annual Report 2013
2013
$’000
(16,934)
3,407
(13,527)
24,023
260
(13,527)
(190)
(11,543)
(7,402)
-
(8,379)
16,936
91,852
60,412
670
412
170,282
-
2,194
34,032
118,079
77,979
360
3,260
-
235,904
2012*
$’000
20,789
(6,635)
14,154
26,206
(264)
14,154
(520)
(23,086)
-
7,533
24,023
4,841
75,609
81,986
4,017
1,588
168,041
823
52,521
-
200,316
44,771
3,575
-
26,682
328,688
406,186
496,729
125,048
35,788
109
160,945
86,971
10,005
-
96,976
For personal use only 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
* Restated for the voluntary change in accounting policy for the valuation of land and buildings as detailed in note 1.
Note 33. Investments accounted for using the equity method
2013
$’000
34,771
-
2,917
-
37,688
2012*
$’000
104,172
8,340
1,396
616
114,524
198,633
211,500
207,553
285,229
214,445
1,487
(8,379)
237,531
23,675
24,023
207,553
285,229
Principal
Activity
Country of
Incorporation
2013
%
2012
%
2013
$’000
2012
$’000
Ownership Interest
Carrying Amount
Name of Company
Jointly Controlled Entities
Western Salt Refinery Pty Ltd
Salt production
and distribution
Australia
Dominion Salt Limited and
Dominion Salt (N.I.) Limited
Salt production
and distribution
New Zealand
Associates
Salpak Pty Ltd
Cerebos-Skellerup Limited
Consolidated Manufacturing
Enterprise Pty Ltd and
Swanbrook Road Holding Trust
Investments accounted for
using the equity method
Salt marketing
Salt marketing
Australia
New Zealand
Dog food and
Aqua-feed production
Australia
1. Sold as part of the sale of the Cheetham Salt group on 28 February 2013.
-1
-1
-1
-1
25
50
50
56
49
25
-1
-1
-1
-1
1,564
32,148
13,988
2,511
2,194
2,310
2,194
52,521
Ridley Corporation Limited – Annual Report 2013 | 107
For personal use only Notes to the Financial Statements continued
Note 33. Investments accounted for using the equity method continued
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 Consolidated Manufacturing Enterprise Pty Ltd and Swanbrook Road Holding Trust is 30 June.
The balance date of Salpak Pty Ltd and Cerebos-Skellerup Limited was 31 December, and 30 June for Western Salt Refinery Pty
Ltd, Dominion Salt Limited and Dominion Salt (N.I.) Limited. The Group owned 56% of total shares of Salpak Pty Ltd however only
a 49% interest in total voting shares.
Carrying amount of investments accounted for using the equity method
Carrying amount at 1 July
Share of investments disposed
Share of operating losses after income tax
Share of operating profits after income tax – discontinued operations
Dividends received – discontinued operations
Carrying amount at 30 June
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
2013
$’000
52,521
(46,486)
(116)
4,562
(8,287)
2,194
1,489
2,718
4,207
945
-
945
3,262
49,471
8,263
2012
$’000
52,486
-
-
6,840
(6,805)
52,521
16,320
26,466
42,786
9,850
750
10,600
32,186
73,845
13,175
There are no material reserves or contingent liabilities of the associated companies.
Note 34. Acquisitions
Acquisitions for the year ended 30 June 2013
On 31 December 2012, Ridley acquired the rendering business assets of BPL Melbourne Pty Ltd (CSF Proteins Melbourne) and
the associated Merino Street and Lincoln Street, Laverton properties of BPL Nominees Pty Ltd, for a total purchase consideration
of $77,078,000.
CSF Proteins Melbourne is Victoria’s largest renderer of poultry and mammalian waste products. Following the March 2011
acquisition of New South Wales located CSF Proteins, this transaction marked Ridley’s entry into the Victorian animal meals
sector and is consistent with Ridley’s strategy to secure the supply chain for strategic feed ingredients.
108 | Ridley Corporation Limited – Annual Report 2013
For personal use only In the six months to 30 June 2013, CSF Proteins Melbourne contributed $38,981,000 of revenue and profit of $1,733,000 to the
consolidated results after allocation of overheads, interest and integration costs. If the acquisition had occurred on 1 July 2012,
management estimated that consolidated revenue would have been $77,962,000 and consolidated profit from the period would
have been $3,912,000. 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 2012.
Identifiable assets acquired and liabilities assumed, and attributable goodwill
The following fair values have been determined by the Ridley Board of Directors following an independent review of plant and
equipment undertaken by Steers Pty Ltd and of land and buildings by m3 Property Pty Ltd.
Inventory of finished goods has been 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. Leave benefit entitlements for all transferring employees have been assumed
by the Group and appropriate adjustment made to accommodate this and the fair value of inventory.
The goodwill is attributable mainly to the rendering and blending skills of the CSF Proteins Melbourne management and workforce
together with the synergies expected to be achieved from integrating the business with both the NSW animal meals business and
the Ridley AgriProducts stockfeed business.
The following summarises the consideration transferred and the recognised amount of assets and liabilities assumed at the
acquisition date:
Total consideration paid in cash
Fair value of net assets acquired:
Property, plant and equipment
Inventories
Prepayments
Employee entitlement provisions (tax effected)*
Total net identifiable assets
Goodwill
$’000
77,078
37,456
939
58
(1,354)
37,099
39,979
* The employee entitlement provisions have been adjusted since the interim Financial Report at 31 December 2012. Due to the finalisation of employee
provisions post acquisition, this has resulted in goodwill increasing by $481,000.
Acquisition transaction costs of $3,234,000 have been expensed in the period, and include stamp duty costs of $2,400,000.
Current year acquisition of business assets and liabilities
On 15 August 2012, CSF Proteins Pty Ltd (formerly Camilleri Stockfeeds Pty Ltd) acquired the assets of Bartlett Grain Pty Ltd for
$1,700,000, and this resulted in goodwill of $750,000. Bartlett Grain is an agricultural commodity trading business specialising in
stock feed ingredients. This business provides synergies with CSF Proteins Pty Ltd and Ridley Aqua-Feeds for the procurement
of raw materials. The Company agreed to pay the selling shareholders up to $350,000 of contingent consideration during the
year ending 30 June 2014 subject to the acquiree reaching earnings performance targets for the first 12 months. An amount
of $350,000 was provided for as contingent consideration, which represents its fair value at acquisition date.
On 10 May 2013, Ridley AgriProducts Pty Ltd acquired the animal nutrition business of Probiotec Limited for $1,600,000, and this
resulted in goodwill of $1,046,000. The animal nutrition business consists primarily of a range of powdered milk replacer products,
which are fed to infant calves and other infant animals such as lambs, kids, foals and piglets. The Company agreed to pay the
selling shareholders up to $250,000 of contingent consideration during the year ending 30 June 2014 subject to the acquiree
reaching earnings performance targets for the first 12 months. An amount of $250,000 was provided for as contingent
consideration, which represents its fair value at acquisition date.
Ridley Corporation Limited – Annual Report 2013 | 109
For personal use only
Notes to the Financial Statements continued
Note 34. Acquisitions continued
Acquisitions for the year ended 30 June 2013 continued
Current year transactions separate from the acquisitions
The Group incurred acquisition related costs of $3,234,000 (2012: $375,000) relating to external legal fees and due diligence
costs, including $2,400,000 of stamp duty on the acquisition of the rendering business. These legal fees and due diligence
costs were included as business restructuring in the Group’s consolidated statement of profit or loss.
Acquisitions for the year ended 30 June 2012
Prior 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.
Note 35. Events occurring after the balance sheet date
Subject to receipt of approval from the financiers of Penrice, effective from 1 July 2013, Ridley has a formal Deed of Termination
and release (Agreement) with Penrice Soda Holdings Limited (Penrice) with regard to compensation payable to Ridley by Penrice
in consideration for the early termination by Penrice of the long term take or pay contract to supply brine from the Ridley salt field
at Dry Creek, South Australia to Penrice’s soda ash plant at Osborne, South Australia. This follows Penrice’s announcement in March
2013 that it will cease production of soda ash at that plant, and as such no longer requires brine from Ridley from 1 July 2013.
Under the terms of the Agreement, for a period of 10 years, Ridley is expected to receive an annual benefit of at least $500,000
through a combination of commercial arrangements, plus the option to procure up to 4.5 million tonnes of zero cost landfill product
from the Penrice Angaston mine in South Australia which can be used by Ridley in the redevelopment of its Dry Creek site. In addition,
in order for Ridley shareholders to participate in any value upside following Penrice’s business reconstruction, Penrice has issued
Ridley an option, exercisable at 7 cents per share at any time over a five year period, for Ridley to be issued 16,122,621 ordinary
shares in Penrice, representing 15% of the 30 June 2013 issued capital in Penrice.
No other matters or circumstances have arisen since 30 June 2013 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.
110 | Ridley Corporation Limited – Annual Report 2013
For personal use only
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 58 to 110 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 2013 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 2013.
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.
JM Spark
Director
Melbourne
21 August 2013
TJ Hart
Director
Ridley Corporation Limited – Annual Report 2013 | 111
For personal use only
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 2013, and consolidated statement of profit and loss 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 2013 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.
112 | Ridley Corporation Limited – Annual Report 2013
For personal use only
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 47 to 56 of the Directors’ Report for the year ended 30 June 2013.
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 2013, complies with Section
300A of the Corporations Act 2001.
KPMG
BW Szentirmay
Partner
Melbourne
21 August 2013
Ridley Corporation Limited – Annual Report 2013 | 113
For personal use only Shareholder Information
As at 21 August 2013
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 830 holders of less than a marketable parcel of shares
Twenty Largest Fully Paid Shareholders
Citicorp Nominees Pty Limited
National Nominees Limited
JP Morgan Nominees Australia Limited
BNP Paribas Noms Pty Ltd
RBC Investor Services Australia Nominees Pty Limited
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