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4
High Performance
Animal Nutrition
Solutions
Annual Report
2014
Corporate Directory
Ridley Corporation Limited
ABN 33 006 708 765
Corporate office and registered office
Level 4, 565 Bourke Street
Melbourne Victoria 3000 Australia
Telephone 03 8624 6500
Facsimile 03 8624 6505
Email
Website www.ridley.com.au
secretary@ridley.com.au
ASX code RIC
Head office
Level 4, 565 Bourke Street
Melbourne Victoria 3000 Australia
Telephone 03 8624 6500
Facsimile 03 8624 6505
Ridley AgriProducts Pty Limited
ABN 94 006 544 145
Website www.agriproducts.com.au
CSF Proteins Pty Limited
ABN 77 000 499 918
Website www.csfproteins.com.au
Contents
About the Company
Five Year Summary
Chairman’s Address
Managing Director’s Review
Ridley Locations and Sectors
Financial Review
Property Development
Our People
Board of Directors
Financial Report
Shareholder Information
Glossary
Corporate Directory
1
2
4
9
15
16
23
26
32
34
106
108
109
ABN 33 006 708 765
Design: MDM Investor Connect
About the Company
Ridley Corporation proudly stands as an Australian based agribusiness
focused on being the country’s leading producer of premium quality,
high performance animal nutrition solutions.
2014 Features
Record operating result for Ridley’s agribusiness of $40.1 million
Positive recovery in Dairy sector and stabilisation of Aquafeed
Opportunistic land sales generating $4.5 million of proceeds
Moolap development partner selected and engaged
Strong Balance Sheet with capacity for growth
Ridley AgriProducts
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 brands including Barastoc, Rumevite, Cobber and Primo, and with a product range to accommodate starter feed
solutions, Ridley has developed a portfolio that provides a first-class life cycle solution.
1
Annual Report 2014Ridley Corporation Limited Five Year Summary
A’000 Unless Otherwise Stated
Operating results
Revenue
Other income
Earnings before interest, tax, depreciation and amortisation (EBITDA)
Earnings before interest and tax (EBIT)
Net interest expense/finance charge
Operating profit before tax
Tax expense
Net profit before significant items
Significant items – net of tax and MI
Net profit after tax and significant items
Loss from discontinued operation (net of tax)
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) before significant items
and discontinued operation (cents)
EPS growth (%)
EBIT growth (%)
Operating cash flow / EBITDA (times)
Operating cash flow per share (cents)
Share price /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 (no. of 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 (%)
2014
Actual
2013
Actual
2012
Actual
2011
Actual
2010
Actual
873,625
5,972
41,012
27,436
5,392
22,043
4,430
17,613
-
17,613
-
17,613
219,774
423,091
203,317
36,343
244,715
281,058
31,349
79.50
783,226
321
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
734,695
1,674
50,086
35,682
9,327
26,355
7,102
19,253
-
19,253
-
19,253
278,371
499,561
221,190
98,151
313,973
412,124
50,896
102.00
723,702
1,241
54,218
39,965
9,725
30,240
924
29,316
-
29,316
-
29,316
282,618
510,640
228,022
102,139
378,615
480,754
35,472
123.00
727,968
1,102
58,486
46,234
8,156
38,078
8,985
29,093
-
29,093
-
29,093
285,157
484,300
199,143
71,981
353,990
425,971
39,426
115.00
307,817
658
307,817
649
307,817
961
307,817
948
307,817
974
7.8%
-6.8%
6.9%
10.3%
10.4%
5.7
(7.0)
9.5
6.3
181.2% -212.7% -34.3%
1.1%
306.7% -137.2% -10.7% -13.6%
0.65
0.12
10.7
42.2
41.99
0.17
4.4
(20.5)
1.02
0.17
6.2
37.1
0.76
0.10
7.8
41.7
8.9x
13.3
3175%
6.0x
6.9
13.9
16.5%
51.9%
0.9
5.1
45.2
1.50
26%
50%
-17.4x
0.4
-97%
184.4x
198.6
(10.6)
8.6%
50.5%
14.2
(1.7)
42.1
-^
-^
-^
8.8x
16.3
-8%
6.3x
8.2
16.3
35.3%
55.7%
2.0
3.8
75.9
7.50
120%
100%
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%
22.9%
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
# 2012 and 2011 restated for change in accounting policy for land and buildings.
^ Capital return of 7.5 cents per share brought to account in FY13 and paid on 5 July 2013.
2
Annual Report 2014Ridley Corporation Limited EBIT from continuing
operations*
Dividends and distributions
per share #
Consolidated
net profit
s
n
o
i
l
l
i
M
$
60
50
40
30
20
10
0
3
2
.
6
4
7
9
.
9
3
8
6
.
5
3
0
1
0
2
1
1
0
2
2
1
0
2
0
3
.
7
2
4
1
0
2
4
2
.
6
1
3
1
0
2
s
t
n
e
C
8
7
6
5
4
3
2
1
0
0
5
.
7
0
5
.
7
0
5
.
7
5
2
.
7
0
5
.
1
4
1
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
s
n
o
i
l
l
i
M
$
30
25
20
15
10
5
0
0
1
.
9
2
0
3
.
9
2
5
2
.
9
1
1
6
.
7
1
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
* 2013 before Business restructuring.
# 2013 distribution to shareholders
by way of 7.50 cents capital return.
2014 final dividend yet to be determined.
9
6
.
1
2
-
Ridley AgriProducts
volume
Ridley AgriProducts
operating EBIT
s
e
n
n
o
T
n
o
i
l
l
i
M
2.0
1.5
1.0
0.5
0
9
8
.
1
7
5
.
1
9
5
.
1
5
6
.
1
3
6
.
1
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
s
n
o
i
l
l
i
M
$
50
40
30
20
10
0
0
1
.
0
4
7
9
.
8
2
9
8
.
4
2
6
1
.
7
2
7
0
.
8
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
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4
1
0
2
3
Annual Report 2014Ridley Corporation Limited
Chairman’s Address
This year has been one of consolidation following the major
acquisition, divestment and restructure of the previous
year. Our activities have been concentrated on improving
our existing business and establishing a path of long term
sustainable growth in all of our key agribusiness markets of
poultry, pig, dairy, and aquafeed. The new management team
has delivered a pleasing agribusiness result of $40.1 million
of EBIT, and we believe we have the capacity for sustainable
growth in all key sectors of our business.
Land
In February 2014 we announced
the sale of the former salt field site
at Bowen in Queensland. In addition
to a small over-recovery of the book
value of the assets in cash, we were
able to relieve ourselves of the ongoing
maintenance and other costs for
the site.
The 11 April 2014 announcement
of the appointment of a Voluntary
Administrator to the Penrice group
of companies effectively removed
the possibility of Ridley being able to
receive any compensation for the early
termination by Penrice of the take or
pay Supply Agreement with that entity.
Having identified alternative sources for
our sodium bicarbonate requirements
and closely managed the situation since
cessation of salt supply on 30 June
2013, we were able to restrict the
ultimate debt write off to a pre-tax
amount of $1 million and activate
new sources of sodium bicarbonate
to ensure continuity of raw material
supply to our mills.
John M Spark
Chair
Sectors
Our prior year rendering acquisition
at Laverton has performed reasonably
since joining Ridley on 1 January 2013
in the face of domestic meal price
softness caused by the closure of the
overseas poultry meal markets following
the outbreak of avian influenza at
Young in New South Wales as reported
in October 2013.
The fact that our two largest Thai
customers for Maroota-rendered poultry
meal were able to successfully lobby
to continue receiving our product was
testament to the reputation for reliability
and quality developed at Maroota over
a long period of time.
In 2014 our Dairy business recovered
stronger than expected from the sharp
lows in confidence experienced in
January and February 2013. Our
Aquafeed business also performed
above expectation with strong volume
in salmon and also recoveries in sales
of prawn, barramundi and kingfish
aquafeed. We are optimistic in each
of these two sectors for the year ahead
and believe that Dairy should see
another good year with high milk
prices relative to the cost of feed.
Developments in Aquafeed diets are
expected to maintain a commercially
attractive position against the local
competition and a superior value
proposition to imported products.
Our poultry mills are well located to take
advantage of increasing bird numbers
in all the key forecast growth regions
for the poultry industry, for which
the experts are continuing to forecast
modest but compounding growth into
the foreseeable future.
Our challenge will be to make sure that
we continue to provide the most
compelling customer value proposition
by having the actual and back-up
capacity necessary to deliver high quality
and reliable product on a timely basis.
Our engineering team will be tasked
with identifying capacity constraints at
each site operating at or near full
capacity and recommending the most
efficient capital solutions to address
them within a macro capital expenditure
framework for the business.
Capital return
Having been approved at the Ridley
shareholders’ meeting in late June 2013,
the return of 7.5 cents per share of
Ridley capital was effected in early July
2013. We were able to issue the final
ATO Class Ruling for the capital return
on 5 August 2013 which confirmed the
expected tax treatment as a reduction
of the cost base of Ridley shares.
Bank facilities
In December 2013 our banking
relationships were strengthened through
the rollover of the existing twin bank
facility for a further five-year term. The
new facility remains unsecured and
operates within appropriate banking
covenants which provide significant
head room for expansion activities.
4
Annual Report 2014Ridley Corporation Limited The fact that our two largest Thai
customers for Maroota-rendered
poultry meal were able to successfully
lobby to continue receiving our
product was testament to the
reputation for reliability and quality
developed at Maroota over a long
period of time.
Ridley Corporation Limited
5
Annual Report 2014
Chairman’s Address continued
In June 2014 we were delighted to
announce the appointment of Sanctuary
Living as our development partner for
the proposed project at Moolap, just
beyond Geelong in Victoria. This
appointment followed an extensive
selection process and a visit by the
Ridley Board to the community of
Sanctuary Lakes, 20 minutes’ drive from
the Melbourne Central Business District.
Sanctuary Lakes is a master planned
community developed from a former
salt field by Sanctuary Living and a
shining example of the vision and
capacity for project delivery that the
Ridley Board was looking for. We are
now working with our partner towards
securing the necessary approvals to
redevelop the site but are being cautious
with our timeframes given the modern-
day complexities associated with any
new development.
On 30 June 2014 we sold surplus Ridley
property located north of the former
Dry Creek salt field in South Australia
and executed an agreement to sell
the former feedmill site at Dalby in
Queensland, a transaction which was
completed on 11 August 2014. These
transactions represent a significant
move forward in our property realisation
strategy, which contributed in excess of
$4.5 million proceeds and $2 million
profit for the year. In addition, Ridley no
longer has any property holding costs
associated with any of these sites.
Benchmarking opportunities
In April/May of this year, the Ridley
Board met with a number of
representatives from US feedmillers,
grain traders, veterinarians, renderers
and feedlot dairy farmers during a
week-long visit to Omaha, Nebraska
which was arranged by AGR Partners.
Having joined the share register late last
year, AGR Partners and their nominated
representative to the Ridley Board,
Mr Ejnar Knudsen, have been very
supportive of the business and have
proactively introduced a number
of overseas third parties to the
Company who have provided valuable
benchmarking opportunities and ideas.
Outlook
At the November 2013 Annual General
Meeting I noted that we are currently
undertaking a review of our existing
mill assets as a basis for modernisation,
renewal, consolidation and expansion
and that we were looking to conclude
that exercise in the year. The recent
announcement on 7 August 2014
of the acquisition of a strategic parcel
of land on the north eastern outskirts
of Geelong in Victoria is the first
announcement emanating from
this work.
The land parcel at north eastern Geelong
comprises a total of 5.3 hectares on
two titles, with frontage and easy access
to the Princes Highway just outside
of Geelong. The land also contains
significant grain silo storage, which is in
good condition and can accommodate
approximately 21,000 tonnes of grain,
and other infrastructure which will be
of value in any foreseeable development
of the site. Our long term aspiration is
to build a monogastric (poultry and pig)
feedmill on the site, whilst continuing
to share raw material synergies on the
silo infrastructure arrangement with
Riordan. The decision to construct a
new feedmill will be subject to planning
approval, local and state government
support, and customer commitment
before it can be formally considered.
The land acquisition is important for
us because although we already have
established facilities west of Melbourne
with the rendering operation at
Laverton and dairy mill at Terang in
western Victoria, we do not yet have
a poultry or pig feed presence in that
area. The area around Geelong and
wider western Victoria is going to be
a key growth area for broiler (chicken
meat) farms. A new facility within this
growth region, which also benefits from
proximity to raw material grain supply,
would allow us to service our customers’
growth in this region much more
effectively and would also represent
a major new offering for pig and
chicken layer farmers in the region.
This is exactly the kind of opportunity
identified in the core business review
and we expect to announce more
initiatives during the coming year
once we have secured the additional
feedstock volumes and/or savings in
logistics required for a number of
potential projects to hurdle.
The partnership with Sanctuary Living
is expected to accelerate the Moolap
development process and we are
separately testing the market by seeking
expressions of interest for various
parcels of land at both Lara and Dry
Creek. Responses from these processes
which the Board considers to have the
capacity to deliver a favourable outcome
for Ridley shareholders, will be pursued,
otherwise we will continue to be
patient in our endeavour to secure
the development approvals that will
generate an uplift in land values.
Future
The outlook for Ridley as a dedicated
agribusiness remains positive, not only
with business improvement and organic
growth opportunities but also with our
perennial pursuit of ‘bolt-on’ or larger
scale acquisition opportunities which
meet our requirements in respect of
core competencies, synergies and hurdle
rates. Our stable share register, banking
relationships, Board continuity and
restructured management team
combine to provide us with a very
solid platform for growth.
I would particularly like to thank all
the staff and management for what
has been a progressive year in our
endeavour to grow all of the Ridley
businesses.
John M Spark
Chair
6
Annual Report 2014Ridley Corporation Limited Our challenge will be to make sure
that we continue to provide the most
compelling customer value proposition
by having the actual and back-up
capacity necessary to deliver high
quality and reliable product on
a timely basis.
Ridley Corporation Limited
7
Annual Report 2014
Improvements in operating
performance have been recorded
across all major sectors.
At Ridley we are all 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.
Ridley Corporation Limited
8
Annual Report 2014
Managing Director’s Review
In my first full year review as Managing Director of Ridley, I am
delighted to be able to report a record profit in the operating
business. The Ridley agribusiness EBIT of $40.1 million is the
highest on record and incorporates a full year of the Laverton
rendering business which was acquired on 31 December 2012.
Tim Hart
Managing Director and
Chief Executive Officer
Improvements in operating performance
have been recorded across all major
sectors, with the most notable being
in Dairy, where last year’s operating
result was severely impacted by a sharp
mid-year downturn in confidence.
Also pleasing is the stabilisation of
the Aquafeed sector following the
introduction of over-capacity in the
salmon industry with the 2012
commissioning of a new Tasmanian
feedmill by Ridley’s largest domestic
competitor. Poultry growth continues
in line with the long term trend in
white meat consumption.
Safety
Safety for all persons associated
with Ridley will always be my number
one focus, and at Ridley we are all
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.
Our goal is always to have zero injuries
in the workplace. Our lead indicators
are designed to generate a process
of continuous improvement whereby
hazards are identified and rectified prior
to them causing any harm or damage.
The replication of hazard management
measures from a particular site across all
Ridley sites provides an effective ratchet
mechanism and leverage through which
our safety systems and physical
safeguards can continue to improve.
Progress in respect of safety
improvements is measured through
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
anywhere within Ridley.
The Long Term Injury Frequency Rate,
or LTIFR, measured as the number of
injuries incurring lost time for every
million hours worked, was 3.29 in
FY14, a slight reduction from the 3.65
recorded in FY13 and a sustained
decrease from the 4.46 recorded in
the prior year. The Total Recordable
Frequency Rate, or TRFR, represents our
total injury rate, and at 8.24 for FY14
(FY13: 8.21), represents sustained
improvement from the 16.8 recorded
in FY12.
We are continuing our journey on safety
and to develop a culture where safety
considerations are paramount and
override all other behaviour.
Core business operating
performance for 2014
financial year (FY14)
The core business record performance
of $40.1 million of EBIT for FY14
includes a full year for the Laverton
rendering operation and the new dairy
mill at Pakenham, which were acquired
and commissioned respectively mid-way
through the prior year. Agribusiness
sales revenue for FY14 of $873.6 million
was up $167.3 million (23.7%) on last
year’s $706.3 million, and reflects
1.89 million tonnes of stockfeed sold,
260,000 tonnes (15.8%) up on last year.
During the year, most of the
achievements were focused on internal
growth, with the notable exception
being the execution of a long term
poultry supply contract in the first half
year which has generated additional
volumes from an existing customer
who was then able to close their
urban-located mill and offer the site for
redevelopment. The costs to acquire the
contract have been capitalised as an
intangible asset and are being amortised
over the six year initial contractual term.
The milk replacer business acquired late
last year was successfully integrated
during FY14 and made a positive
contribution to earnings disrupted by
the interruption to raw material supply
caused by the Fonterra product recall.
Many of Ridley’s major customers
participated in a customer feedback
survey and provided valuable feedback
on Ridley performance which is being
utilised to develop personalised
customer value propositions within
each Ridley business sector.
The breadth and diversity of the
major operating sectors for Ridley’s
agribusiness continue to provide some
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.
9
Annual Report 2014Ridley Corporation Limited Managing Director’s Review continued
The underlying determinants of the
operating result are explained in
the following sector by sector summary.
an automated and remote feedstock
order request, is being rolled out to key
customer sites over the coming years.
(i) Dairy, beef and sheep
The Dairy sector started the year at
a low point of a traditional three to
five year economic cycle. A number
of positive signals were received early
in the year which helped restore
confidence and accelerate the
anticipated positive recovery. Dairy
farmers benefited financially from
successive rises in milk price, including
certain retrospective payments back
to the start of the financial year, whilst
overseas demand for Australian dairy
products benefited from a softening of
raw material prices and from the retreat
of the Australian dollar from the highs
of recent years.
The above factors significantly improved
the milk price:feed cost ratio which has
a strong influence on the disposition of
farmers with regard to supplementary
feeding, and led to a sharp turnaround
of Ridley’s Dairy sector earnings from
the prior year. Another two years of
positive sentiment to support the
economic cycle is required to return
Ridley to the earnings peaks of
the last five years.
Aggregate Australian milk production
has stagnated at c.9 billion litres per
annum despite increased demand from
the region. Average annual production
per cow is approximately 5,500 litres,
well short of the realistic potential to
produce between 7,500 and 8,000
litres. This potential will be realised
by a combination of better pasture
management and more consistent
feeding, and will benefit not only the
farmers themselves, but also the milk
processors and all other participants
in the supply chain. Ridley is investing
in industry education to help drive this
increased production and associated
profitability so that returns from this
sector become higher and more
consistent over time.
New initiatives and technologies were
developed during the year to assist with
replenishment of feedstocks at customer
sites, sales and operational planning,
and with transport load management
and efficiency. Feedmeter technology,
which can manage the reorder process
through a silo reading which triggers
Sales of supplementary feed for the
beef and sheep component of the Dairy
sector is somewhat opportunistic for
Ridley and not a primary focus. That
said, in drought conditions supplementary
feeding is essential for the wellbeing of
the livestock, and unbudgeted sales
were made during the year in the
drought stricken regions of Queensland
and northern New South Wales which
provided an additional boost to the
bottom line result for the sector.
The new dairy mill at Pakenham
continues to operate efficiently in
tandem with the Maffra mill in Victoria’s
east, and provides a competitive service
offering to facilitate expansion of the
customer base throughout the
Gippsland dairy region.
(ii) Poultry and pig
After allowing for the new volumes
associated with the new supply
contract, poultry sales volumes were
above and margins slightly below the
prior year, acknowledging that first
half margins last year were positively
impacted from Ridley improving its
returns by taking pricing risk on long
raw material positions in sharply rising
raw material markets.
Ridley continues to work closely with
the major poultry producers in Australia
and to grow its business in line with
the compounding 2% to 3% increase
in domestic demand for white meat
products. Ridley’s poultry mills are well
positioned to support the targeted
increases in bird numbers in the
growth corridors of South Australia
and Queensland. Through an active
engagement in the long term strategic
planning of the major poultry suppliers,
Ridley can implement the capital
expenditure projects necessary
to increase production capacity
to accommodate our customers’
expansion plans.
Whilst a strategic review of the Pig
sector is currently being finalised,
the healthy state of the industry and
prospects for the Pig sector have already
been concluded as favourable. With
the plan still in development mode,
the rebuilding of this sector which
10
has languished since the prior year
vertical integration of its largest
customer has already been identified
as a priority for the coming year.
(iii) Aquafeed
The Aquafeed performance for
the year was encouraging, with
improvements in volume and margin
recorded despite higher manufacturing
costs associated with shorter runs and
a higher variety of products. Prior year
Tassal salmon volumes were largely
replaced by increased patronage from
the other Tasmanian salmon farmers
whilst new salmon customers were
secured in New Zealand following the
completion of successful diet trials.
Sales in the prawn, barramundi and
kingfish sectors all rose from last year
and have a positive outlook for the year
ahead. Export sales of kingfish to Japan
for sushimi have benefited from the
damage to the local industry caused by
the recent natural disasters in Japan,
and sales of Australian grown prawns
are attracting a premium for the strictly
controlled marine environment from
which they have been harvested.
(iv) Proteins
Both rendering operations continue
to provide a reliable contribution to the
operating result, with improved intake
levels recorded for the year at Laverton
and a record annual intake recorded
at Maroota in New South Wales. The
increased intake volumes partially offset
the weaker selling prices driven by the
overseas market restrictions caused by
the outbreak of avian influenza in
Australia.
When overseas markets close following
an outbreak, poultry meal which would
ordinarily be exported is introduced into
the domestic market, causing price
weakness and the potential for product
switching based on protein pricing
relativities. The financial impact of the
market closures was mitigated by the
strength of the relationships with two
pet food manufacturer customers in
Thailand who successfully lobbied their
government to continue to receive
product throughout the period of
market closure.
Annual Report 2014Ridley Corporation Limited The result from the Laverton site for
the year was impacted by a number
of plant breakdowns and higher than
budgeted repairs and maintenance.
The installation of a new drier and
gearboxes and implementation of a
comprehensive program of preventive
maintenance, are expected to improve
plant reliability and returns in the
coming year.
(v) Packaged Products
Packaged Products volumes and
margins have been maintained in a
market where competitors have fought
aggressively to maintain market share.
A program of price increases across the
product range in the second half year
improved margins whilst maintaining
volume, and demonstrated the brand
loyalty developed through the reliable
delivery of a quality product over
many years.
Initiatives in social media have been
introduced during the year to engage
the younger generation, such as the
Microsteed interactive horse rationing
program launched on the website and
for application through smart phones.
A new program for community
engagement, promotional offers and
distribution of flyers and catalogues
throughout the regional store networks
has been introduced during the year to
be more targeted towards specific areas
of interest and seasonal requirements.
(vi) Supplements
For the second successive year, the
Supplements business generated
positive earnings. The first half year
earnings were hampered by plant
failures which interrupted the stock
build and led to there being insufficient
inventory relative to demand during
the peak season. Management has
developed a proactive program of plant
maintenance and is actively working to
ensure that the infrastructure at the
Townsville plant in northern Queensland,
where operations are now centralised
following the prior year restructure, is
adequate to meet peak demands and
provide sustainable improvements in
returns from these assets.
Property realisation
Our internal property development
team was bolstered during the year
by the appointment of a dedicated
and highly knowledgeable Land
Management Consultant, and the
part-time appointment of a qualified
lawyer, who has been instrumental in
successfully working through the legal
issues associated with site closures and
the land sales which concluded on
30 June 2014.
It was pleasing to be able to achieve
a number of land sales which are
described in detail in the Property
section of this Annual Report, and
which generated aggregate cash
proceeds in the vicinity of $4.5 million
and profits on sale slightly in excess of
$2.0 million.
A number of initiatives have
commenced to test the market and
alternative uses for the South Australian
asset at Dry Creek and Victorian asset
at Lara. We will examine the responses
received from the respective expression
of interest processes during the
coming months.
As part of the expression of
interest process, each site has been
disaggregated in order to provide
greater flexibility in alternative uses
and to increase the likelihood of a
competitive process. Opportunities
which the Ridley Board believes can
deliver an appropriate value uplift for
Ridley shareholders will be actively
pursued in the coming year.
Work has continued throughout the
year on the closure of the Dry Creek
salt field, which by its very nature will
continue to make salt whilst seawater
flows through the various condensing
ponds. A significant amount of soil and
discharge testing has been undertaken
during the year as part of the process
to achieve sign off from the South
Australian Government on a formal
closure plan.
Site redevelopment activities have been
running concurrently with the closure
process, and the Dry Creek site and
adjacent Ridley landholdings to the
north continue to present a unique
opportunity to secure the growth
capacity for Adelaide for the next
50 years.
11
We were delighted during the year to
be able to secure a development partner
for the Moolap site of the calibre of
Sanctuary Living, whose track record for
transformation of Victorian land banks
into state of the art master planned
communities is second to none. We
have pooled our collective resources
and are working together to expedite
the development approvals.
Dry Creek compensation
After all the work conducted in the
prior year to realise value for Ridley
shareholders, it is disappointing that
the inability of Penrice to secure
financier approval and its subsequent
demise in FY14 removes the opportunity
to recover any part of the compensation
payable to Ridley in consideration for
the early termination by Penrice of its
long term take or pay contract.
Corporate governance
In accordance with the latest ASX
Corporate Governance Principles and
Recommendations, for the first time this
year, Ridley is publishing its Corporate
Governance Statement in the Investor
section of the Ridley website rather
than in this Annual Report.
External relations
During the year Ridley recruited
a resource to assist in advocating a
number of initiatives with governments
and with key industry associations,
with the aim of not only improving
sustainable returns for Ridley
shareholders but of also establishing
and supporting a robust Australian
AgriFood supply chain which is the
envy of Asia and its rapidly expanding
population.
During the year Ridley made a
submission to Minister Joyce for the
Agricultural Competitiveness White
Paper. Key areas addressed in the
submission reinforced the need for
integrated national infrastructure
pipelines from the farm gate, across
processing and manufacturing supply
chains, to the customer end user. Farmer
education and capability building were
also noted as being an important
catalyst to successfully implement the
changes required and to generate
more innovation.
Annual Report 2014Ridley Corporation Limited Managing Director’s Review continued
The benefits of fostering a vibrant
domestic AgriFood processing and
manufacturing supply chain through
accelerated capital depreciation,
more sophisticated innovation and
government investment support criteria
were included in the submission,
together with improved government
resourcing to address non-tariff barriers
to trade and enforce industry bio-
security standards.
Some key other areas of focus during
the year included:
• improving market access to key
agricultural export markets, including
Indonesia and China. This year Ridley
has invested in strengthening the
commercial, government and industry
relationships in Indonesia, which was
our largest export market for poultry
meal before the avian influenza
outbreak in October 2013. We are
continuing to assist key government
departments in lifting the embargo
as quickly as possible and minimising
the non-tariff barriers, while forging
strategic commercial relationships
that we can leverage once access
is reopened;
• raising the standards in the animal
feed industry and the supply chain,
including collaboration with farmers,
customers, suppliers and other key
supply chain influencers to raise the
collective bar;
• enhancing competitiveness of
Australian manufacturing, including
improving the price of domestic
energy supply, the effectiveness
of transport infrastructure and
telecommunications infrastructure
in rural and regional areas, and
cutting green and red tape, as well as
ensuring the application of consistent
and effective environmental standards
across all states; and
• supporting the development of a
strong ‘brand Australia’ to generate
sustainable demand and premiums
for high quality.
From a purely Ridley perspective, Ridley
has been working closely with local,
state and federal governments, as well
as other key stakeholders, to optimise
the potential returns for our mill
expansion and modernisation plans,
through which we will increase our
capacity, operating efficiency and
product offering, in areas with the
greatest opportunity and benefit
for our shareholders and for the
local communities.
Our people
I am encouraged by the honesty
of our employees and their ideas
for improvement as reflected in the
responses to the Employee Opinion
Survey conducted during the year.
The management team is developing
a series of initiatives to address common
themes and generally improve the level
of communication throughout the
geographically diverse business.
The completion of the scheduled
training program for the year is
encouraging, and staff throughout
the organisation have embraced the
opportunity to enhance their skill set,
improve their knowledge of safety
processes and procedures, and take
advantage of the dedicated desktop
training facility now existing at
every site.
The emerging leader and leadership
programs introduced two years ago,
together with the mentoring and
networking training, continue to be
successful and to provide a pathway for
succession planning and opportunities
for career progression within Ridley.
More details of each of these initiatives
are provided in the Our People section
of this 2014 Annual Report.
Our communities
During the second year of our three
year partnership commitment to the
Garvan Institute and Aussie Helpers,
the Ridley Board visited the world-class
Garvan facility in Sydney and was
encouraged by the progress being made
at the cutting edge of oncology research
and treatment. Ongoing support
to farmers in need in many of the
rural communities where Ridley has
operations continued to be provided
in the form of both monetary and
physical assistance.
Ridley also continues to provide support
to local community groups in the rural
areas where our manufacturing plants
are located.
12
Research and development
innovation
In order to maintain our reputation
for quality products with optimum
conversion of feed to output, we need
to leverage our support services and
convert the expertise into bottom
line results for our customers and
shareholders. We are always looking
for advancement of our scientifically
formulated diets to improve the
wellbeing and performance of our
customers’ livestock. This duty of care
extends to an appropriate segregation
of mill activities to minimise the risk of
contamination.
At Ridley, we have a technical support
team which manages a program of
Research and Development and adopts
a stage gate process and project ranking
system designed to appropriately
prioritise the scarce resources allocated
to innovation projects. The critical
technical aspects of a project are
challenged as early as possible within a
project to minimise the costs associated
with project failure.
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.
Outlook
The explosion in dried milk product
demand from Asia over the last decade
shows no sign of abatement. The
Horizon 2020 predictions reflect strong
growth in Asian demand for all dairy
products for the foreseeable future and
China’s increasing demand for imported
product, coupled with population
growth and increasing affluence.
Australia is well placed to participate in
this growth and has the ability to lift the
average milk yield per cow, which has
stagnated in recent years. Dairy farmers
relying upon pasture and silage have an
opportunity to elevate milk yields from
their existing footprint simply through
the adoption of systematic programs
of supplementary feeding, and this
represents a significant long term
growth avenue for Ridley. In the short
term, continuation of the favourable
milk price:feed cost ratio is expected
to support another good year in Dairy.
Annual Report 2014Ridley Corporation Limited We are always looking for
advancement of our scientifically
formulated diets to improve the
wellbeing and performance of our
customers’ livestock. This duty of care
extends to an appropriate segregation
of mill activities to minimise the
risk of contamination.
Ridley Corporation Limited
13
Annual Report 2014
Managing Director’s Review continued
The Supplements business will benefit
from an uninterrupted stockbuild
which commenced in June 2014 and
will continue through the first quarter
of the coming year.
It is expected that the higher FY14
costs of advancing the property
development approvals will continue
in FY15, with the potential for offset
by piecemeal sales of surplus properties
and with the Moolap development
approval costs being shared on a 50:50
basis with our development partner.
The closure of the Dry Creek operation
will take more than a single year
to conclude and a development
approval process will run in parallel.
The outcomes of the expression of
interest processes for the Lara and Dry
Creek site will be known by the end of
the first half of FY15 and any realistic
opportunities to deliver value to Ridley
shareholders will be contemplated and
actioned by the Ridley Board
accordingly.
In addition to organic growth
opportunities, we will continue to
actively pursue acquisition opportunities
consistent with our long term strategy
for Ridley to be Australia’s leading
producer of premium quality, high
performance animal nutrition solutions.
Tim Hart
Managing Director and
Chief Executive Officer
The successful construction and
operation of the new Pakenham mill
provides an excellent platform not only
to target new volumes in the Gippsland
dairy heartland and in Tasmania, but
also for the mill modernisation program
currently under review. Straightforward
replacement of an ageing mill with a
new facility does not meet the Ridley
hurdle rate required for a project to
proceed. A combination of incremental
volume, and proximity to markets and
raw materials to generate freight
savings, is required before a new mill
project will be approved. We are
continuing to look for and negotiate
opportunities to lift project returns
from the cost of capital to the internal
hurdle rate.
During the year, a new facility was
leased and some second-hand plant
was purchased at Cherry Lane, near
to the Laverton rendering site. This
facility affords the Victorian Rendering
operation the ability to store product
which to date would have had to be
sold within a short period of time
given the absence of onsite storage.
In addition, the new Cherry Lane
operation facilitates the blending
of rendered animal meals, whereby
product specification can be upgraded
to generate significant uplifts in selling
prices and margins.
With a comprehensive maintenance
program in place and given the
investment in plant made during the
year, an improvement in plant operating
efficiency is expected in FY15 for the
Laverton site. Absent any further
outbreaks of avian influenza in the
coming year, it is likely that the overseas
market restrictions for Australian poultry
meal will be lifted, and this should have
a positive effect on selling prices in
accordance with the rudimentary forces
of supply and demand.
Consolidation of the FY14 recovery
in Ridley Aquafeed is anticipated
for the coming year, and Packaged
Products’ margin management and
new marketing initiatives are expected
to deliver an improved result.
14
Annual Report 2014Ridley Corporation Limited Ridley Locations and Sectors
From field to food
Ridley is a proud partner of Australian agriculture,
driving productivity and performance in response to
the needs of an ever-growing population and the
welfare of our agricultural community.
Business Unit
Structure
Monogastric
Pellet, meals, concentrates and
premixes for poultry and pigs
Ruminant
Packaged
Products
Aquafeeds
Pellets, meals, concentrates and
premixes for dairy cattle, beef
cattle, lambs, ewes and rams
Bagged poultry, dairy, dog, horse
and lifestyle animal feed
Extruded and steam pelleted
products and advice for all major
fin-fish and prawns
Supplements
Block and loose lick ruminant
supplements
Rendering
Rendered poultry, red meat and
fish products for the pet food
and aquaculture sectors
1
1
1
8
5
2
1
1
7
4
5
6
7
6
2
5
2
3
4
Business Unit
Monogastric
Ruminant
Packaged
Aquafeeds
Supplements
Rendering
1 Toowoomba
1 Taree
1 Toowoomba
1 Narangba
1 Townsville
1 Maroota
2 Mooroopna
2 Tamworth
2 Tamworth
2 Laverton
s
t
e
s
s
A
y
e
l
d
R
i
3 Pakenham
3 Pakenham
3 Pakenham
4 Murray Bridge
4 Maffra
4 Murray Bridge
5 Bendigo
5 Gunbower
5 Inverell
6 St Arnaud
6 Terang
7 Wasleys
7 Noorat
8 Clifton
Ridley Corporation Limited
15
Annual Report 2014
Financial Review
Ridley has reported EBIT from continuing operations and
before non-recurring costs for the year of $28.9 million,
an increase of $5.0 million on the $23.9 million prior
year equivalent.
Alan Boyd
Chief Financial Officer and
Company Secretary
Operating result
A consolidated profit after tax of
$17.6 million has been recorded for
the 2014 financial year, a significant
turnaround from the prior year result
which was affected by a number
of impairments and the sale of
Cheetham Salt.
Within the consolidated result, the
Ridley agribusiness recorded an EBIT of
$40.1 million, $12.0 million up on the
prior year and including a full year of
the Laverton rendering operation.
The full year consolidated EBIT of
$28.9 million before non-recurring items
comprises the Ridley agribusiness result,
Corporate costs of $8.6 million, Non-Dry
Creek Property costs of $2.2 million,
and Dry Creek net operating costs of
$0.4 million.
Net finance costs for the year of
$5.4 million reflect a full year at the
lower level of gearing following the
prior year application of Cheetham Salt
sale proceeds to debt retirement, whilst
the tax expense for the current year
of $4.4 million has been positively
impacted by a prior year over-provision
of $1.0 million.
Sales revenue and gross profit
Agribusiness sales revenue for FY14 of
$873.6 million was up $167.3 million
(23.7%) on last year’s $706.3 million
(excludes $10.0 million of 2013 salt
sales), and reflects 1.89 million tonnes
of stockfeed sold. This is 260,000
tonnes (15.8%) up on last year
and includes a full year’s contribution
from the Laverton rendering site.
Consolidated gross profit from
continuing operations was
$65.9 million, $9.5 million above
last year’s $56.4 million equivalent.
Results Summary
Table 1
Profit/(loss) from continuing operations before income tax
Income tax (expense)/ benefit
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
2014
$’000
22,043
(4,430)
17,613
-
17,613
2013
$’000
(21,009)
4,423
(16,586)
(5,108)
(21,694)
16
Annual Report 2014Ridley Corporation Limited A consolidated profit after tax of
$17.6 million has been recorded for
the 2014 financial year, a significant
turnaround from the prior year result
which was affected by a number
of impairments and the sale of
Cheetham Salt.
Ridley Corporation Limited
17
Annual Report 2014
Financial Review continued
Profit and loss account
Table 2
Profit and loss account in $ million
Earnings from operations before finance income and expense and tax expense (EBIT):
2014
2013 Movement
Ridley AgriProducts
Corporate
Property – Dry Creek
– other
EBIT from operations before non-recurring costs and discontinued operation
Net finance costs
Income tax expense (2013: 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 Penrice debt #
Write off of Dry Creek goodwill
Impairment and write off of Dry Creek salt fields and assets
Transaction costs
Tax effect of non-recurring transactions
Reported net profit/(loss) from continuing operations
Discontinued operation
Reported net profit/(loss)
Earnings per share (cents):
(i) continuing
(ii) reported
40.1
(8.6)
(0.4)
(2.2)
28.9
(5.4)
(4.4)
19.1
(1.0)
-
-
(0.5)
-
17.6
-
17.6
28.1
(5.7)
3.4
(1.9)
23.9
(7.7)
(4.3)
11.9
-
(5.0)
(29.0)
(3.2)
8.7
(16.6)
(5.1)
(21.7)
5.7
5.7
(5.4)
(7.0)
12.0
(2.9)
(3.8)
(0.3)
5.0
2.3
(0.1)
7.2
(1.0)
5.0
29.0
2.7
(8.7)
34.2
5.1
39.3
11.1
12.7
The profit and loss summary with a prior period comparison provided in Table 2 above, has been sourced from the audited accounts but has not been subject
to separate review or audit. The Directors believe that the presentation of the unaudited non-IFRS profit and loss summary in Table 2 is useful for users as it reflects
the underlying profits of the business.
# $0.3 million tax benefit included as an offset of current year tax expense.
Corporate and Property costs
Corporate costs of $8.6 million have
increased by $2.9 million from the prior
year. The prior year comparative was
reduced by the allocation of $1.1 million
of share-based payments to the
discontinued operation.
Property costs of $2.2 million are
$0.3 million higher than the prior period
due to an increase in consulting and
advisory activity for the Moolap and Lara
sites, and for the Dalby and Dandenong
sites which are currently held for sale.
A net loss of $0.4 million has been
recorded in respect of the wind up
of the Dry Creek operation. This figure
includes the benefit of $2.5 million
of profits from sales of land. It is
anticipated that agreement can be
reached in the near future with the
South Australian authorities on the
closure plan for the former salt field,
the implementation of which will
facilitate the cessation of certain
maintenance activities which have
incurred significant costs in the period.
Net finance costs
The net finance costs of $5.4 million are
$2.3 million lower than the prior period
(2013: $7.7 million). The reduction
reflects a combination of continuing low
interest rates throughout the year and a
full year of lower debt levels following
the prior year retirement of debt from
the Cheetham Salt sale proceeds.
Income tax expense
The tax expense of $4.4 million
incorporates a positive $1.0 million
over provision in the prior year relating
to the finalisation of the tax calculations
associated with the Cheetham Salt
divestment on 28 February 2013.
Non-recurring costs and
discontinued operations
Other than a $0.5 million flow over of
transaction costs from the prior year and
the $1.0 million write off of debt owing
from Penrice following the appointment
by that entity of a Voluntary Administrator,
there have been no other discontinued
operations or significant, non-recurring
items during the 2014 financial year
that warrant separate mention for the
purposes of presenting the underlying
result for continuing operations.
Cash flow and working capital
The operating cash inflow for the year,
as shown in Table 3, after working
capital movements and maintenance
capital expenditure was $24.1 million,
a decrease of $30.2 million from the
$54.3 million recorded in the prior year.
Prior year cash flows included eight
months of Cheetham Salt’s operating
cash flows.
18
Annual Report 2014Ridley Corporation Limited
The reduction in Development capital
expenditure figure to $2.3 million from
$10.9 million reflects the completion
of the new Pakenham mill in FY13.
With Maintenance capital expenditure
of $11.4 million, the total outlay for
the year of $13.7 million closely
approximates the aggregate
depreciation and amortisation
figure of $13.6 million (note 3).
Payments for Intangible assets
of $5.2 million for the year include
$4.5 million related to the acquisition
of a long term poultry supply contract.
Net proceeds of $1.4 million from sales
of assets comprise sale of the Bowen
site and various parcels of land north
of the former Dry Creek salt operation.
A further $2.7 million of Dry Creek land
sales has been recognised as income
in FY14 with the cash received on
1 July 2014.
The total outlay on acquisitions for
the period of $1.4 million includes an
investment of $1.0 million in Bluewave
Management Inc., a company producing
high protein concentrates from fish
offal, as well as the payment of
contingent consideration in relation
to the 2013 acquisition of the Bartlett
Grain tuna meal business.
Cash flows for the year
Table 3
Cash flows for the year in $ million
EBIT from operations after transaction costs and before discontinued operation
and non-recurring costs
Net cash inflow from discontinued operation and non-recurring transaction costs
Depreciation and amortisation
EBITDA
Movement in working capital
Maintenance capital expenditure
Operating cash flow
Development capital expenditure
Payment for intangibles
Dividends paid
Capital return
Share-based payments
Net proceeds from sale of property assets
Investment in Bluewave and contingent consideration (2013: Laverton rendering
business and Bartlett Grain)
Net proceeds from sale of Cheetham Salt
Cash assets divested with Cheetham Salt
Net finance cost payments
Net tax refund/(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
The Company has paid $1.2 million
in tax instalments during the year and
received a refund of prior year tax paid
of $2.8 million for a net refund of
$1.6 million.
Dividends paid during the year comprise
the interim dividend of 1.5 cents per
share paid on 30 April 2014.
Year Ended
30 June 2014
30 June 2013
28.9
(1.5)
13.6
41.0
(5.5)
(11.4)
24.1
(2.3)
(5.2)
(4.6)
(23.1)
(3.3)
1.4
(1.4)
-
-
(4.8)
1.6
(0.9)
(18.5)
(17.8)
(36.3)
23.9
0.8
14.5
39.2
26.4
(11.3)
54.3
(10.9)
-
(11.4)
-
(2.1)
-
(80.7)
144.6
(5.1)
(8.0)
(0.3)
-
80.4
(98.2)
(17.8)
The cash flow summary with a prior period comparison provided in Table 3 above, has been sourced from the audited accounts but has not been subject to separate
review or audit. The Directors believe that the presentation of the unaudited non-IFRS cash flow summary in table 3 is useful for users as it reflects the underlying cash
flows of the business.
19
Annual Report 2014Ridley Corporation Limited Financial Review continued
Balance Sheet
The primary movement in the Balance
Sheet is the settlement of the capital
return, which was recorded last year
as a $23.1 million year end current
payable, was paid in July 2013 from
the borrowing facility, and is effectively
reflected at 30 June 2014 within
non-current borrowings.
The modest increases in receivables and
inventory reflect the higher level of sales
activity compared to the prior year.
Other movements include:
(i) the termination and settlement of
the Defined Benefit Superannuation
Scheme and associated liability,
previously disclosed under the
heading of ‘Retirement benefit
obligations’;
(ii) a net $2.5 million increase in
intangible assets comprising the
acquisition of the poultry supply
contract of $4.5 million, goodwill
arising on the $0.35 million
payment in 2014 of Bartlett Grain
contingent consideration from the
2013 acquisition, and software
additions, offset by the period
charge for amortisation;
(iii) the prior period Balance Sheet
recorded a net income tax refund
receivable whereas the closing tax
position at 30 June 2014 reflects a
net tax liability of $2.4 million; and
(iv) reclassification of the former Dalby
feedmill from property, plant and
equipment to asset held for sale.
The Dalby mill was closed during
FY14 with the majority of the
stockfeed volume transferred to
the neighbouring Ridley feedmill
at Toowoomba. An agreement to
sell the site was reached in early
June 2014 subject to the purchaser
receiving financier approval. The
sale concluded as scheduled on
11 August 2014.
Segments
The ongoing reportable segments
are as follows:
AgriProducts: Australia’s leading
supplier of premium quality, high
performance animal nutrition solutions.
Property: Realisation of opportunities
in respect of surplus property assets and
sales of residual property site assets.
The prior year Salt segment ceased
operations on 30 June 2013 with the
termination of salt supply to Penrice,
and therefore does not appear as a
segment in the 2014 financial year.
Risks
The following is a summary of some
of the continuing significant 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, (namely Poultry
and Pig, Dairy, Aquafeed, Beef and
Sheep, Packaged Products and
Rendering) some of which have a
positive or negative correlation with
each other, Ridley is not dependent
upon a single business sector and is
able to spread the sector and adverse
event risk across a diversified
portfolio.
• Influence of domestic 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 not being able to
control the availability of natural
pasture, Ridley believes there is a
compelling commercial justification
for supplementary feeding in each
of its sectors of operation, whether
that be measured in terms of Dairy
milk yield and herd wellbeing or
feed conversion ratios in Poultry
and Aquafeed.
20
• 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 with the
outbreaks of avian influenza in the
last two years which effectively closed
most of the export markets for poultry
meal products.
• Customer concentration and risk
of regional consolidation – Ridley
endeavours to enter into long term
sales and supply contracts with its
customers and suppliers respectively.
Such contracts provide the surety of
volumes required to plan appropriate
shift structures, procurement and
supply chain activities, and capital
expenditure programs and to actively
manage the risk of stranded assets
and backward integration into feed
production by significant customers.
• Property holdings – Ridley has a
dedicated property team whose role
it is to manage the maintenance
of non-operating sites, to secure
appropriate redevelopment approvals,
and to optimise the realisation of
shareholder value from surplus
property.
• Corporate risks – customary risks
such as: safety, recruitment and
retention of high-calibre employees,
inadequate innovation and new
product development such that
product or customer value proposition
becomes redundant, customer credit
risk, and inappropriate raw material
purchases. These risks are actively
managed through the Company’s risk
management framework which
includes review and monitoring
by the executive lead team.
Annual Report 2014Ridley Corporation Limited Earnings per share
The underlying earnings per share of
5.7 cents reflects the result on a stable
equity platform following the FY13
financial impact of sale of Cheetham
Salt and the non-recurring pre-tax write
downs, impairments and transaction
costs of $37.2 million.
Earnings per
share (cents)
Basic earnings
per share
2014
2013
5.7
(7.0)
Gearing
Gearing is reported as debt to equity in
accordance with the covenants of the
Group banking facility.
Gearing
Gross debt
Less: cash
Net debt
Total equity
Gearing ratio
2014
$’000
55,584
(19,241)
36,343
2013
$’000
34,771
(16,936)
17,835
219,774 207,553
8.6%
16.5%
Capital movements
and return
The capital return of 7.5 cents per
share as approved by Ridley shareholders
on 24 June 2013 and was paid on 5 July
2013. A tax ruling was received from
the ATO advising that for all shareholders,
no part of the capital return would 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
During FY14, a total of 3,822,834
(FY13: 2,244,183) shares were acquired
by the Company on-market for an
outlay of $3.3 million (FY13: $2.1 million)
in satisfaction of: (i) the issue of
2,889,054 (FY13: 1,403,057) shares
allocated to Ridley employees under
the Ridley Long Term Incentive Plan
and Special Retention Plan; and
(ii) 933,780 (FY13: 841,126) shares
allocated under the Ridley Employee
Share Scheme.
There were no movements in issued
capital during either financial year.
Dividend
The Board declared and paid an interim
dividend of 1.5 cents per share at the
end of April 2014, franked to 50%.
Ridley does not have a formal dividend
policy but its intention is 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.
In accordance with Company policy to
pay any dividends at the end of April
and October, the consolidated entity
will consider the payment of a 2014
final dividend at its September 2014
Board meeting and will announce its
2014 final dividend decision to the
market at the appropriate time.
Outlook
All of the economic forecasts for Asia
for the next 20 or more years point
to an ever-increasing requirement
for protein, including protein derived
directly or indirectly from livestock
products. As a land and resource rich
nation in close proximity to this Asian
food requirement, Australia is a critical
component of the supply chain.
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
21
Annual Report 2014Ridley Corporation Limited There are significant opportunities
for Ridley and the state of South
Australia when considering that for
the first time in nearly a century,
a 30 kilometre corridor of coastal
land with very close proximity to the
Adelaide Central Business District
(CBD) has become available for
other land uses.
Ridley Corporation Limited
22
Annual Report 2014
Property Development
2014 has been an exciting year for Ridley in respect of its
property realisation strategy, with some considerable progress
being made towards unlocking the value from the significant
surplus property portfolio across Australia.
Stephen Butler
Property Development Manager
Ridley has been active in the divestment
of those properties with more immediate
sale potential, and has been pleased
to announce the sale of several sites
including the former salt field site at
Bowen, and the Dalby feedmill in
Queensland. There have also been sales
of significant parcels of land in South
Australia north of the former Dry Creek
salt field and a small parcel of surplus
land – part of the former Dry Creek
salt field. In total, these sales have
generated more than $4.5 million in
cash for the business and an overall
profit slightly in excess of $2 million.
Ongoing site maintenance costs and
ultimate remediation obligations have
also been removed through the sale
of this surplus land.
As beneficial as the above sales are
from a cash and resourcing perspective,
the core focus for Ridley remains on
generating long term value from the
more complex sites such as Dry Creek,
Moolap and Lara. Ridley has been
implementing its strategy aimed at
adding value to these larger property
holdings through the pursuit of
commercial transactions and
development approvals that will
facilitate redevelopment for higher
end uses such as residential, commercial
or industrial.
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 therefore taken a longer
term view towards realisation of these
properties, whilst also pursuing a shorter
term strategy for incidental parcels
of surplus land within these sites which
exhibit more immediate sale potential.
We have seen significant advances
with these major sites over the course
of the financial year, which has given
us further confidence in creating
shareholder value over the medium
term.
Dry Creek
Closure of a salt field of the scale
and operating history of Dry Creek is
a complex, costly and time-consuming
process, and requires approval from
a large number of regulatory bodies
whose interests and objectives are
not always fully aligned. A significant
program of testing and monitoring of
the site was commenced during FY14
and will continue in FY15 towards the
establishment of a comprehensive
closure plan which is required before
the process for closure of the site can
be actioned.
The closure of the Dry Creek salt fields
near Adelaide in South Australia was
a significant occurrence for Ridley in
FY14. During the previous year, Ridley
concluded the sale of its Cheetham
Salt business and through this process
retained ownership of the Dry Creek
operating asset, mining leases and over
5,200 hectares of freehold land.
Shortly after the conclusion of the
Cheetham Salt sale, Penrice announced
that it would cease the production of
soda ash from its Osborne plant from
30 June 2013 and advised Ridley that
it would no longer require an ongoing
supply of salt from Dry Creek.
23
The Supply Agreement between
Ridley and Penrice was subsequently
terminated by Penrice, and shortly
thereafter, Penrice was placed into
administration which ultimately led
to the closure of its Osborne Plant in
June 2014.
Having determined that there was
no commercially feasible option for
continuing production of new salt
from the fields, Ridley was compelled
to permanently close the site and in
early FY14 commenced working on
a strategy to cease salt production
and develop a plan for permanent
closure, rehabilitation and divestment
of the fields.
The scale, location and make-up of
the Dry Creek site combine to create
a highly complex process for closure,
and one that is expected to take several
years to complete. In addition to the
challenges, there are also significant
opportunities for Ridley and the state
of South Australia when considering
that for the first time in nearly a century,
a 30 kilometre corridor of coastal land
with very close proximity to the Adelaide
Central Business District (CBD) has
become available for other land uses.
Given the scale and complexity of
the closure and the scale of the overall
opportunities, Ridley is working closely
with the South Australian Government
in the development of the closure
plan and Program for Environmental
Protection and Rehabilitation (PEPR)
as required under the Mining Act 1971,
as well as in identifying potential future
land uses for parts of the site.
Annual Report 2014Ridley Corporation Limited Property Development continued
Ridley has, in parallel to the closure
process, begun the process for
divestment of some of its considerable
landholdings, and was pleased to
recently announce the 30 June 2014
sale and settlement of surplus land
within and to the north of the former
salt fields. The sales were made possible
by the earlier surrender of mining leases
that existed over the land, and removed
considerable land and operational
holding costs from the business.
Further, Ridley is preparing to launch
an Expression of Interest (EoI) process
to seek proposals from various groups
that have shown initial interest in parts
of the site for alternative uses. With
approximately 2,300 hectares of Ridley
freehold land within the former salt field
site, there is strong potential for a range
of new land uses to develop within this
corridor. For the purposes of the EoI
process, the land has been segregated
into four individual sections and Ridley
will work closely with the South
Australian Government and interested
groups to establish the various
alternative uses and potential economic
values for the various parts of the site.
Ridley hopes that this process will
contribute to achieving both an
improved commercial outcome on the
closure of the site, as well as optimising
value for shareholders from any
consequential commercial transactions.
The potential redevelopment of
the southern end of the salt fields
at Dry Creek, being the former salt
crystallisation and harvest section,
for a master planned community
remains a significant opportunity
for Ridley. With the cessation of salt
production and concurrent with the
process for closure of the salt fields,
we are now well positioned to
recommence work on this project.
The site has close proximity to the
heart of Adelaide and has been included
within the South Australian State
Government’s 30-year plan for the
Greater Adelaide region as a future
urban development site. Ridley believes
that redevelopment of the site, which
has the potential to accommodate
up to 10,000 dwellings, will deliver
considerable uplift in the value of
the site if it proves feasible.
Between the 2008 and 2010 financial
years, Ridley investigated redevelopment
of the salt crystallisation part of the
Dry Creek salt field in partnership
with Delfin Lend Lease and the South
Australian Government. At that time,
however, Ridley determined not to
proceed into the next stage of the
investigations because of the
complexities and costs associated with
the relocation of the existing salt fields
further north up the coast in order
to maintain Ridley’s ability to meet its
ongoing obligations under the Penrice
Supply Agreement. The termination
of that agreement and cessation of
salt production at that site removes
any impediment from pursuing the
previously contemplated redevelopment
and preliminary feasibility work is now
underway.
Geelong Salt Fields Urban
Renewal Project
Ridley has been investigating
redevelopment opportunities for
the former Cheetham Salt salt field
site at Moolap, Victoria. Preliminary
investigations and feasibility analyses
for redevelopment of the site have been
completed, showed some positive
results, and subsequently led to Ridley
seeking determination from the
Victorian State Planning Minister on
the need for an Environmental Effects
Statement (EES) for the project. The
EES requirement was subsequently
confirmed.
Having successfully completed a number
of the tasks required to establish the
initial feasibility of the project, Ridley
conducted a confidential EoI to identify
a preferred development partner for the
project. A number of proposals were
received from proponents and after a
thorough evaluation process, in June
2014 Ridley appointed the Sanctuary
Living consortium as its preferred
partner to commence this exciting
project.
Throughout the extensive selection
process, Sanctuary Living demonstrated
its credentials as a leading Australian
developer of master planned
communities, showcased by the highly
successful, multi-award winning
Sanctuary Lakes Resort (a former salt
field) and Sandhurst Club projects in
Melbourne. Ridley is confident that
Sanctuary Living has a complementary
vision for the site, and the capability
and resources to achieve the required
24
development approvals and to progress
the project through to the construction
phase, and beyond.
Ridley and Sanctuary Living are now
working together to undertake some
final investigations and feasibility work,
and to finalise discussions with the
Victorian state government with regard
to the future of Crown Land forming
part of the site. We expect that we will
soon be in a position to commence the
development approvals process.
Positive discussions with all levels
of government remain ongoing, and the
government has shown a high level of
interest and support for the project.
Whilst experiencing rapid growth
in population, Geelong is currently
attracting new investment and
businesses to the area to replace the
employment previously provided by
the Ford motor vehicle plant and Alcoa
Point Henry aluminium smelter. Geelong
is actively looking to diversify its
economy, and Ridley believes that the
project has the potential to revitalise
Geelong and provide considerable
economic, social and environmental
opportunities for Geelong and the
broader region.
Ridley has developed a preliminary
Master Plan and project feasibility, an
extract from which has been included
in this report. The plan forms part of
a package of intellectual property now
being shared and reviewed with
development partner Sanctuary Living.
The prior year work undertaken by
Ridley indicates that development of
the site is commercially feasible and
Sanctuary Living has already committed
significant resources to the project,
which indicates that it has a similar
belief. 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 put aside for
conservation, recreation and public
use purposes.
An independent assessment of the
project by Ridley’s advisors Ernst &
Young, indicates that a significant up-lift
in land value should be achieved once
planning and environmental approvals
have been received for the project.
Annual Report 2014Ridley Corporation Limited During FY14, Ridley completed
demolition of all buildings at the site
to prepare the site for sale, and is
hopeful of achieving sale of the land
in FY15. In the meantime, Ridley has
entered into a short term lease of the
site, which not only allows Ridley to
generate a moderate income to cover
all holding costs, but also makes the site
more attractive to a potential purchaser
by providing an income while it secures
its requisite development approvals.
Dalby
Ridley was pleased to announce the
execution of a contract for the sale
of the former feedmill site at Dalby
in Queensland.
The feedmill at Dalby in Queensland
was closed during FY14 and the
majority of the stockfeed volume
transferred to the neighbouring Ridley
feedmill at Toowoomba, together with
the barley steam flake plant which
provides an important service offering to
the regional equine market. Agreement
to sell the site was reached in early June
2014 subject to the purchaser receiving
financier approval. Completion occurred
as scheduled on 11 August 2014.
Concept design for Nelson Cove marina.
Lara
Ridley’s 912 hectare property is located
within a future employment corridor
nominated by the Victorian State
Government, and as such, is set
to directly benefit from proposed
expansion within the area surrounding
the adjacent Avalon Airport, which is
expected to become Victoria’s second
international airport.
Preliminary planning investigations were
completed during the year for the Lara
site, and indicated that a large portion
of the land has redevelopment potential
for employment and airport-related
uses. Whilst future redevelopment of
the site is likely to be some years away,
Ridley considers that the site has the
potential to create significant value for
shareholders, and Ridley is currently
exploring commercial opportunities
for the site in the short term, including
potential sale(s) of part of the site.
To establish the extent and value of
short term opportunities for the Lara
site, Ridley is currently conducting an
EoI process over approximately 650
hectares of the site, and to date has
received some encouraging responses
from several parties. Ridley will assess
any offers made for the land, and will
pursue those it considers to offer an
appropriate value uplift for shareholders.
The southern end of the Lara site,
located towards Corio Bay, is being held
as an environmental offset site to
provide for any Crown Land or
environmental offsets that may be
required as part of redevelopment
of Ridley’s Moolap site. This land may
be an important strategic asset in
relation to achieving planning approval
at Moolap, and once rehabilitated,
could also result in the creation of
a significant environmental asset
for the Geelong region.
Bowen
Ridley was pleased to announce
in February 2014 the execution of a
Share Sale Agreement to divest the
former salt field site located at Bowen,
in Queensland’s Whitsunday region.
Completion of the sale was achieved
on 9 May 2014 for a total consideration
of $1.25 million.
Production activity at the former salt
field adjacent to the township of Bowen
ceased several years ago following a
number of failed harvests due to cyclone
activity and severe rain events. The
Bowen assets were consequently
removed from the prior year divestment
of Cheetham Salt, retained by Ridley,
and transferred into a special purpose
landholding entity wholly owned
by Ridley.
As well as generating cash proceeds,
the sale relieves Ridley from the
ongoing maintenance of the site, lease
arrangements with the Queensland
authorities, and the ultimate
rehabilitation of the site.
Dandenong
During the prior year, the feedmill site
at Dandenong, Victoria was closed
and the volumes transferred to the
neighbouring Pakenham site following
the commissioning of the new dairy
mill adjacent to the existing poultry mill.
Since closing the Dandenong site, Ridley
has been pursuing the sale of the
1.3 hectare site which was recently
rezoned from ‘Industrial’ to
‘Comprehensive Development Zone
(High Density Residential)’. The change
of zoning 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.
25
Annual Report 2014Ridley Corporation Limited Our People
In a restructure of the executive lead team, former Group
General Manager, Commercial Anne-Marie Mooney moved into
an operational role as General Manager Commercial Feed and
Maria Robbins was recruited as General Manager Safety, People
and Sustainability effective from 2 January 2014.
Maria Robbins
General Manager, Safety, People
and Sustainability
Safety
Safety is fundamental to how we work
and operate at Ridley. Beginning with
a strong commitment at Board level,
safety is embedded in all of our decision
making, both as a fundamental value
and set of behaviours, and as one of
the six platforms driving the Ridley
Strategic Plan.
All the work we do is underpinned
by a robust safety management system
which ensures that we comply with
all relevant safety and environmental
legislation in all jurisdictions. We strive
for safety excellence through good
operational and business practice and
process, and we extensively manage,
measure and report against plan.
At Ridley, we use both lag and lead
indicators to measure progress against
plan. The key lag measures we use to
assess safety performance are rolling
Lost Time Injury Frequency Rate (LTIFR),
which measures the number of lost time
injuries per million hours worked, and
rolling Total Recordable Frequency Rate
(TRFR), which 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.
For FY14, Ridley maintained the
downward annual trend of the last few
years in both LTIFR and TRFR measures
as outlined in the graph below.
Our lead indicators, designed to reduce
safety hazards and injuries through
preventative measures, are:
• completion of mandatory Safety
Training by all staff. For FY14, we
have achieved a measure of 93.75%;
3 year LTIFR and TRFR history and trend
20
15
10
5
0
1
1
0
2
l
u
J
2
1
0
2
n
a
J
2
1
0
2
l
u
J
3
1
0
2
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a
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3
1
0
2
l
u
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4
1
0
2
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a
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4
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0
2
n
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LTIFR
TRFR
Linear (LTIFR)
Linear (TRFR)
26
• completion of Good Manufacturing
Practice audits on a monthly basis
on each site. The FY14 measure
is 98.73%; and
• closure of Priority Actions identified
during audits or as a result of incident
in investigations. For FY14 we
achieved a 97.17% closure rate.
Investment in people, systems and
capital has been a core safety activity
through FY14. We have increased the
resources and upskilled the Ridley
national safety team, enabling the
team to work hands on with managers
and staff to increase safety capability,
embed systems on the ground, and
importantly, assist with investing in
capital improvements to engineer
out safety risks over time.
All staff at Ridley are assigned safety
key performance indicators (KPIs) and
delivery against those KPIs is measured
in the annual performance review
process.
Whilst the progressive reduction in injury
frequency rates is a positive result, the
business will continue to put further
focus on lead (positive) indicators during
FY15 as part of a process of continuous
improvement and to entrench a safety
culture throughout Ridley.
Annual Report 2014Ridley Corporation Limited
We strive for safety excellence
through good operational and
business practice and process, and
we extensively manage, measure
and report against plan.
Ridley Corporation Limited
27
27
Annual Report 2014
Annual Report 2014Ridley Corporation Limited
Our People continued
People
FY14 has been a busy year for all of our
people. The prior year sale of Cheetham
Salt on 28 February 2013 required a
structural realignment of Ridley’s senior
management team, in line with Ridley’s
new strategic direction. Business Units
are supported by the Operations,
Merchandising, Finance, Corporate
Development, Business Systems and
Safety, People, and Sustainability
services.
Ridley staff have adapted well and are
systematically working through systems
and process improvements to align
everyone within Ridley to the delivery
of the Strategic Plan.
Learning and development
Throughout FY14, we have been
building on our people capability across
Ridley. In addition to safety capabilities,
we have been developing systems and
processes that enable us to attract,
motivate and retain high quality people.
Our activities to pursue this goal can be
summarised as follows:
• a focus on recruitment processes to
select the right candidates for Ridley;
• the development of a Market Based
Position Classification System;
• implementation of a Learning and
Development program that focuses
on both Emerging Leaders and on
developing core capabilities identified
as necessary to deliver the Strategic
Plan;
• creation of Talent Management plans
to identify, motivate, develop and
retain high potential high performers;
• enhancement of our performance
management systems and skills for
year round performance delivery by
embedding a desire and drive for
excellence; and
• improvement and upgrade of staff
communications across Ridley.
Employee feedback
In March 2014, Ridley completed a
biennial Employee Opinion Survey (EOS).
Ridley staff showed their commitment
to their company with an 82% response
rate, which is very high for surveys of
this type. Much of the feedback we
The Sustainability Strategy in FY15 seeks
to collate, record and establish base-
lines across water, waste and energy
and wherever possible, replicate these
initiatives across Ridley.
The Sustainability Strategy will be
overseen by a group of Ridley staff
who are very passionate about long
term sustainability. Reporting on
Sustainability Measures is part
of the long term strategy.
Waste – Pakenham
Recycling Scheme
Practical examples of effective recycling
have been utilised during the year at the
Pakenham feedmill site, where a new,
fully sealed car park was constructed
with safety bars made from recycled
Ridley plastic waste, including damaged
and used PEP Packaged Products bags.
Exterior benches also made from
recycled Ridley plastic waste were
erected during the year in the exterior
staff recreation amenity.
Bench at Pakenham staff recreation amenity
made from Ridley’s plastic waste.
Wheel stops at new Pakenham car park
made from Ridley’s plastic waste.
received reflects the need to continue
to refine and upgrade the work we are
doing to get the best out of our staff.
Workplace diversity
This year the Workplace Gender Equality
Agency (WGEA) required an upgraded
reporting process and foreshadowed a
more detailed requirement for reporting
for FY15.
The WGEA Report requires companies
to report both on employment by
gender and on initiatives to encourage
gender diversity. For FY14, Ridley was
able to report:
• the employment of Women as Board
Members at 14%, Women as Senior
Executives at 30%, and Women as
Senior Managers at 16%; and
• that gender equality is actively
pursued in the following policy
initiatives:
– Recruitment,
– Remuneration,
– Parental Leave,
– Flexible Working Arrangements, and
– Gender-based discrimination and
harassment.
Sustainability
In FY14, Ridley launched its
Sustainability Strategy. Designed
over time to integrate all of the work
that we undertake in the business to
support environment, community and
sustainability, it will initially focus on
Water, Waste and Energy.
This year, Ridley achieved some excellent
outcomes with the following initiatives:
• Water: Anaerobic Water
Management System at Maroota.
• Waste: Recycling of multiple waste
streams across a number of sites
including St Arnaud, Pakenham,
Townsville and Tamworth.
• Energy: Recipient of a Clean
Technology Investment Grant to
upgrade and implement energy
efficient operational solutions such
as tank insulation, boiler upgrades,
and installation of LED lighting and
solar PV panels.
28
Annual Report 2014Ridley Corporation Limited
Energy: Clean Technology
Investment Grant
A four stage energy efficiency project
commenced during the year with
funding support received by way
of a Government Clean Technology
Investment Grant. The first stage of
the project involved replacement
of all halogen lights throughout the
Pakenham site with LED lights. A total
of 1,082 lights, including over 1,000
fluorescent strip lights, were replaced,
with energy savings estimated at
$37,000 per annum.
Stage 2 of the project involved the
purchase and installation of a twin
inverter, 400 panel solar energy system,
designed to produce 100kW of
electricity to supply into the grid.
The final stage of the project is the
purchase and installation of a steam
economiser for the main plant boiler,
which will improve overall boiler
efficiency and reduce gas consumption.
Stage 3 of the project involved lagging
of the onsite tallow tanks at Pakenham
to facilitate improved temperature
control of the tank contents, which
in turn preserves the consistency and
dietary formulation characteristics
of the stored product.
A monitor has been installed at the
Pakenham site reception for all staff
and visitors to view the real time
performance of the solar panelling.
The following photos provide an insight
into each stage of the project.
Stage 1: LED lit packing area
Stage 2: Solar panelling
Stage 3: Insulation of tallow tanks
Stage 4: Boiler upgrade
29
Annual Report 2014Ridley Corporation Limited The challenge now being addressed
within the Novacq™ project is the scale
up from pond trials to commercial
production and selection of an
appropriate location with climatic
conditions conducive to growth
optimisation. The ultimate returns for
the project are considered by Ridley
and its partner CSIRO to be significant,
however, the traditional pathway to
commercialise a project of this scale
suggests a three to five-year timeframe
before commencement of shareholder
returns.
Implementation of the NPPTD Strategy
will actively manage a portfolio of
future projects with strong commercial
prospects and ensure that the appropriate
resources are made available and
partnerships formed to expedite project
advancement through the gate stage
process and to securitise the investment
in intellectual property for the benefit
of Ridley shareholders.
Our People continued
Community
Ridley continues its relationships with
Aussie Helpers and the Garvan Institute.
Our support for the Garvan Institute
involves supporting an education
program called Healthy Families, Healthy
Communities. Through our established
network into many regional communities
we can help Garvan educate and build
awareness of important health messages.
These free local community forums give
privileged access to leading experts,
to learn about important health
messages and the latest research.
The Healthy Families, Healthy
Communities project gives our
employees an affiliation that 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 community.
Awareness and education are the keys
to improved health outcomes. We think
we can play a role in community health
education through these forums.
Ridley’s relationship with Aussie Helpers
is consistent with our strategy of
working closely with the communities
where our staff, suppliers and customers
live. During the course of FY14, Ridley:
• donated over 2,500 bags of animal
feed to Queensland farmers affected
by drought;
• donated surplus computer equipment
to farming families; and
• held a Christmas collection drive
in Bourke Street Head Office to
donate presents to struggling
farming families.
Innovation
Ridley has a long history of technical
and nutrition innovation and of having
a strong Research and Development
(R&D) capability. Market surveys reveal
that this capability is highly valued by
our customers and that this has
contributed greatly to the success
and reputation of our business.
During the year, Ridley launched
a New Product, Process and Technical
Development (NPPTD) Strategy which
seeks to leverage our technical,
nutritional, R&D and also our
commercial capability throughout the
Ridley business. NPPTD Projects will be
managed under a common stage gate
process with rigorous standards for
assessment applied to every stage.
A virtual team has been assembled
comprising personnel representing
all sectors of the Ridley business, and
convenes regularly to progress the
portfolio approach adopted for all
our NPPTD projects.
One of the most exciting projects
that provides an example of the value
of leveraging our expertise in this field
is the progress of our work with
Novacq™, a bio-active product that has
great potential in the development of
aquafeed applications. Whilst the
current focus is for prawn, the potential
for a broader fin fish application exists
at a later date. Ridley has been working
with CSIRO on this project for some
time and the results from pond trials
during the year are very encouraging,
with significant increases in prawn
growth rates and general prawn health
being observed under formal trial
protocols. Ridley holds an exclusive
licence for the product in the territories
of Australia, Philippines, Indonesia and
Malaysia.
30
Annual Report 2014Ridley Corporation Limited Ridley has a long history of technical
and nutrition innovation and of having
a strong Research and Development
(R&D) capability. Market surveys reveal
that this capability is highly valued
by our customers and that this has
contributed greatly to the success
and reputation of our business.
Ridley Corporation Limited
31
Annual Report 2014
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.
Tim Hart
BSc, MM(T), MMkting,
MEd (Melb), PGDIPSI (Oxon),
GAICD, FAIM
Chief Executive Officer
and Managing Director
Mr Hart commenced
employment with Ridley on
2 April 2013 as CEO Designate
and was appointed a Director
on 24 June 2013. Mr Hart was
formally appointed as Chief
Executive Officer and Managing
Director on 1 July 2013. Mr Hart
was previously CEO of Sugar
Australia and Sugar New
Zealand, being joint ventures
between Wilmar/CSR and
Mackay Sugar Limited.
Prior to that, Mr Hart 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.
Professor
Andrew L Vizard
BVSc (Hons) MPVM FAICD
Patria M Mann
BEc CA FAICD
Independent
Non-Executive Director
A director since 2001, Andrew
is a Principal Fellow and former
Director of the Mackinnon
Project at the University of
Melbourne. Andrew is an
experienced Company Director
and has served on the boards
of numerous companies,
statutory bodies and scientific
organisations. 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
None.
Independent
Non-Executive Director
Appointed in March 2008,
Patria is currently a
Non-Executive Director
of Amalgamated Holdings
Limited, Allianz Australia Limited,
First State Superannuation
Trustee Corporation and
Perpetual Superannuation
Limited. Formerly a partner
at KPMG and an experienced
Director, Patria brings strong
audit, investigation, risk
management and governance
experience to the Board. Patria
is a member of the Institute
of Chartered Accountants and
a Fellow of the Institute of
Company Directors.
Other current listed
company directorships
Amalgamated Holdings Limited
from 2013.
Former listed company
directorships in the last
three years
None.
32
Annual Report 2014Ridley Corporation Limited Professor
Robert J van Barneveld
B.Agr.Sc. (Hon), PhD, R.An.
Nutr., FAICD
Dr Gary H Weiss
LLB (Hons) LLM (NZ)
JSD (Cornell, NY)
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 Fresh Foods Pty Ltd and
Roseworthy Piggery Pty Ltd. He
is also Chair of Sunpork Pty Ltd
and Deputy Chair of Autism CRC
Ltd. 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.
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 and private 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.Thorney Opportunities
Limited from 2013. The Straits
Trading Company Limited
from 2014
Former listed company
directorships in the last
three years
None.
Ejnar Knudsen
CFA
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.
33
Annual Report 2014Ridley Corporation Limited Financial Report
Directors’ Report
Remuneration Report – Audited
Lead Auditor’s Independence Declaration
Consolidated Statement of Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Declaration
35
43
53
54
55
56
58
59
103
104
Ridley Corporation Limited
34
Annual Report 2014
Directors’ Report
For the year ended 30 June 2014
The Directors of Ridley Corporation Limited (Ridley or 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 2014.
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
TJ Hart
J Murray (resigned 1 July 2013)
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen
2. Principal activities
The principal continuing activities of the Group during the year were the production of premium quality, high performance
animal nutrition solutions.
3. Results
Table 1
Profit/(loss) from continuing operations before income tax
Income tax (expense)/ benefit
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
4. Review of operations
2014
$’000
22,043
(4,430)
17,613
-
17,613
2013
$’000
(21,009)
4,423
(16,586)
(5,108)
(21,694)
Operating result
A consolidated profit after tax of $17.6 million has been recorded for the 2014 financial year, a significant turnaround from
the prior year result which was affected by a number of impairments and the sale of Cheetham Salt.
• Within the consolidated result, the Ridley agribusiness recorded an EBIT of $40.1 million, $12.0 million up on the prior year
and including a full year of the Laverton rendering operation.
• The full year consolidated EBIT of $28.9 million before non-recurring items comprises the Ridley agribusiness result, Corporate
costs of $8.6 million, Non-Dry Creek Property costs of $2.2 million, and Dry Creek net operating costs of $0.4 million.
• Net finance costs for the year of $5.4 million reflect a full year at the lower level of gearing following the prior year application
of Cheetham Salt sale proceeds to debt retirement, whilst the tax expense for the current year of $4.4 million has been
positively impacted by a prior year over-provision of $1.0 million.
Sales revenue and gross profit
Agribusiness sales revenue for FY14 of $873.6 million was up $167.3 million (23.7%) on last year’s $706.3 million (excludes
$10.0 million of 2013 salt sales), and reflects 1.89 million tonnes of stockfeed sold. This is 260,000 tonnes (15.8%) up on last
year and includes a full year’s contribution from the Laverton rendering site. Consolidated gross profit from continuing operations
was $65.9 million, $9.5 million above last year’s $56.4 million equivalent.
35
Annual Report 2014Ridley Corporation Limited Directors’ Report continued
For the year ended 30 June 2014
4. Review of operations continued
Profit and loss account
Table 2 in $ million
Earnings from operations before finance income and expense
and tax expense (EBIT):
Ridley AgriProducts
Corporate
Property – Dry Creek
– other
EBIT from operations before non-recurring costs and discontinued operation
Net finance costs
Income tax expense (2013: 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 Penrice debt
Write off of Dry Creek goodwill
Impairment and write off of Dry Creek salt fields and assets
Transaction costs
Tax effect of non-recurring transactions
Reported net profit/(loss) from continuing operations
Discontinued operation
Reported net profit/(loss)
Earnings per share (cents):
(i) continuing
(ii) reported
2014
2013 Movement
40.1
(8.6)
(0.4)
(2.2)
28.9
(5.4)
(4.4)
19.1
(1.0)
-
-
(0.5)
-
17.6
-
17.6
5.7
5.7
28.1
(5.7)
3.4
(1.9)
23.9
(7.7)
(4.3)
11.9
-
(5.0)
(29.0)
(3.2)
8.7
(16.6)
(5.1)
(21.7)
(5.4)
(7.0)
12.0
(2.9)
(3.8)
(0.3)
5.0
2.3
(0.1)
7.2
(1.0)
5.0
29.0
2.7
(8.7)
34.2
5.1
39.3
11.1
12.7
The profit and loss summary with a prior period comparison provided in Table 2 above, has been sourced from the audited
accounts but has not been subject to separate review or audit. The Directors believe that the presentation of the unaudited
non‑IFRS profit and loss summary in Table 2 is useful for users as it reflects the underlying profits of the business.
Corporate and property costs
Corporate costs of $8.6 million have increased by $2.9 million from the prior year. The prior year comparative was reduced
by the allocation of $1.1 million of share-based payments to the discontinued operation.
Property costs of $2.2 million are $0.3 million higher than the prior period due to an increase in consulting and advisory activity
for the Moolap and Lara sites, and for the Dalby and Dandenong sites which are currently held for sale.
A net loss of $0.4 million has been recorded in respect of the wind up of the Dry Creek operation. This figure includes the benefit
of $2.5 million of profits from sales of land. It is anticipated that agreement can be reached in the near future with the South
Australian authorities on the closure plan for the former salt field, the implementation of which will facilitate the cessation of
certain maintenance activities which have incurred significant costs in the period.
Net finance costs
The net finance costs of $5.4 million are $2.3 million lower than the prior period. The reduction reflects a combination
of continuing low interest rates throughout the year and a full year of lower debt levels following the prior year retirement
of debt from the Cheetham Salt sale proceeds.
Income tax expense
The tax expense of $4.4 million incorporates a positive $1 million over provision in the prior year relating to the finalisation of the
tax calculations associated with the Cheetham Salt divestment on 28 February 2013.
Non-recurring costs and discontinued operations
Other than a $0.5 million flow over of transaction costs from the prior year and the $1 million write off of debt owing from
Penrice following the appointment by that entity of a voluntary administrator, there have been no other discontinued operations
or significant, non-recurring items during the 2014 financial year that warrant separate mention for the purposes of presenting
the underlying result for continuing operations.
36
Annual Report 2014Ridley Corporation Limited
Cash flow and working capital
The operating cash inflow for the year as shown in Table 3 after working capital movements and maintenance capital expenditure
was $24.1 million, a decrease of $30.2 million from the $54.3 million recorded in the prior year. Prior year cash flows included
eight months of Cheetham Salt’s operating cash flows.
The reduction in Development capital expenditure figure to $2.3 million from $10.9 million reflects the completion of the new
Pakenham mill in FY13. With Maintenance capital expenditure of $11.4 million, the total outlay for the year of $13.7 million
closely approximates the aggregate depreciation and amortisation figure of $13.6 million.
Payments for intangible assets of $5.2 million for the year include $4.5 million related to the acquisition of a long term poultry
supply contract.
Net proceeds of $1.4 million from sales of assets comprise sale of the Bowen site and various parcels of land north of the former
Dry Creek salt operation. A further $2.7 million of Dry Creek land sales has been recognised as income in FY14 with the cash
received on 1 July 2014.
The total outlay on acquisitions for the period of $1.4 million comprises an investment of $1.0 million in Bluewave
Management Inc., a company producing high protein concentrates from fish offal, as well as the payment of contingent
consideration of $0.4 million in relation to the 2013 acquisition of the Bartlett Grain tuna meal business.
The Company has paid $1.2 million in tax instalments during the year and received a refund of prior year tax paid of $2.8 million
for a net refund of $1.6 million.
Dividends paid during the year comprise the interim dividend of 1.5 cents per share paid on 30 April 2014.
Cash flows for the year
Table 3 in $ million
EBIT from operations after transaction costs and before Discontinued Operation
and non-recurring costs
Net cash inflow from discontinued operation and non-recurring transaction costs
Depreciation and amortisation
EBITDA
Movement in working capital
Maintenance capital expenditure
Operating cash flow
Development capital expenditure
Payment for intangibles
Dividends paid
Capital return
Share-based payments
Net proceeds from sale of property assets
Investment in Bluewave and contingent consideration (2013: Laverton rendering business
and Bartlett Grain)
Net proceeds from sale of Cheetham Salt
Cash assets divested with Cheetham Salt
Net finance cost payments
Net tax refund/(payments)
Movement in other balance sheet items
Cash flow for the period
Opening net debt balance at 1 July
Closing net debt balance at 30 June
Year Ended
30 June 2014
30 June 2013
28.9
(1.5)
13.6
41.0
(5.5)
(11.4)
24.1
(2.3)
(5.2)
(4.6)
(23.1)
(3.3)
1.4
(1.4)
-
-
(4.8)
1.6
(0.9)
(18.5)
(17.8)
(36.3)
23.9
0.8
14.5
39.2
26.4
(11.3)
54.3
(10.9)
-
(11.4)
-
(2.1)
-
(80.7)
144.6
(5.1)
(8.0)
(0.3)
-
80.4
(98.2)
(17.8)
The cash flow summary with a prior period comparison provided in Table 3 above, has been sourced from the audited accounts
but has not been subject to separate review or audit. The Directors believe that the presentation of the unaudited non‑IFRS cash
flow summary in Table 3 is useful for users as it reflects the underlying cash flows of the business.
37
Annual Report 2014Ridley Corporation Limited
Directors’ Report continued
For the year ended 30 June 2014
4. Review of operations continued
Balance Sheet
The primary movement in the Balance Sheet is the settlement of the capital return, which was recorded last year as
a $23.1 million year end current payable, was paid in July 2013 from the borrowing facility, and is effectively reflected
at 30 June 2014 within non-current borrowings.
The modest increases in receivables and inventory reflect the higher level of sales activity compared to the prior year.
Other movements include:
(i) the termination and settlement of the Defined Benefit Superannuation Scheme and associated liability, previously disclosed
under the heading of ‘Retirement benefit obligations’;
(ii) a net $2.5 million increase in intangible assets comprising the acquisition of the poultry supply contract of $4.5 million,
goodwill arising on the $0.4 million payment in 2014 of Bartlett Grain contingent consideration from the 2013 acquisition,
and software additions, offset by the period charge for amortisation;
(iii) the prior period balance sheet recorded a net income tax refund receivable whereas the closing tax position at 30 June 2014
reflects a net tax liability of $2.4 million; and
(iv) reclassification of the former Dalby feedmill from Property, plant and equipment to Asset held for sale. The Dalby mill
was closed during FY14 with the majority of the stockfeed volume transferred to the neighbouring Ridley feed mill at
Toowoomba. An agreement to sell the site was reached in early June 2014 subject to the purchaser receiving financier
approval. The purchaser has since received such approval to satisfy the condition precedent to completion which occurred
as scheduled on 11 August 2014.
Segments
The ongoing reportable segments are as follows:
AgriProducts
Australia’s leading supplier of premium quality, high performance animal nutrition solutions.
Property
Realisation of opportunities in respect of surplus property assets and sales of residual property site assets.
The prior year Salt segment ceased operations on 30 June 2013 with the termination of salt supply to Penrice, and therefore
does not appear as a segment in the 2014 financial year.
Risks
The following is a summary of some of the continuing significant 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, (namely Poultry and Pig, Dairy,
Aquafeed, Beef and Sheep, Packaged Products and Rendering,) some of which have a positive or negative correlation with
each other, Ridley is not dependent upon a single business sector and is able to spread the sector and adverse event risk across
a diversified portfolio.
• Influence of domestic 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 not being able to control the availability
of natural pasture, Ridley believes there is a compelling commercial justification for supplementary feeding in each of its
sectors of operation, whether that be measured in terms of Dairy milk yield and herd wellbeing or feed conversion ratios in
poultry and aquafeed.
• 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 with the outbreaks of avian influenza
in the last two years which effectively closed most of the export markets for poultry meal products.
• Customer concentration and risk of regional consolidation – Ridley endeavours to enter into long term sales and supply
contracts with its customers and suppliers respectively. Such contracts provide the surety of volumes required to plan
appropriate shift structures, procurement and supply chain activities, and capital expenditure programs and to actively manage
the risk of stranded assets and backward integration into feed production by significant customers.
• Property holdings – Ridley has a dedicated property team whose role it is to manage the maintenance of non-operating sites,
to secure appropriate redevelopment approvals, and to optimise the realisation of shareholder value from surplus property.
38
Annual Report 2014Ridley Corporation Limited • Corporate risks – customary risks such as safety, recruitment and retention of high calibre employees, inadequate innovation
and new product development such that product or customer value proposition becomes redundant, customer credit risk,
and inappropriate raw material purchases. These risks are actively managed through the company’s risk management
framework which includes review and monitoring by the executive lead team.
Earnings per share
The underlying earnings per share of 5.7 cents reflects the result on a stable equity platform following the FY13 financial impact
of sale of Cheetham Salt and the non-recurring pre-tax write downs, impairments and transaction costs of $37.2 million.
Earnings per share (cents)
Basic earnings per share
Gearing
Gearing is reported as debt to equity in accordance with the covenants of the Group banking facility.
Gearing
Gross debt
Less: cash
Net debt
Total equity
Gearing ratio
2014
5.7
2013
(7.0)
2014
$’000
55,584
(19,241)
36,343
219,774
16.5%
2013
$’000
34,771
(16,936)
17,835
207,553
8.6%
Capital movements and return
The capital return of 7.5 cents per share as approved by Ridley shareholders on 24 June 2013 and was paid on 5 July 2013. A tax
ruling was received from the ATO advising that for all shareholders, no part of the capital return would 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
During FY14, a total of 3,822,834 (FY13: 2,244,183) shares were acquired by the Company on market for an outlay of
$3.3 million (FY13: $2.1 million) in satisfaction of (i) the issue of 2,889,054 (FY13: 1,403,057) shares allocated to Ridley
employees under the Ridley Long Term Incentive Plan and Special Retention Plan, and (ii) 933,780 (FY13: 841,126) shares
allocated under the Ridley Employee Share Scheme.
There were no movements in issued capital during either financial year.
Dividend
The Board declared and paid an interim dividend of 1.5 cents per share at the end of April 2014, franked to 50%. Ridley does not
have a formal dividend policy but its intention is 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.
In accordance with company policy to pay any dividends at the end of April and October, the consolidated entity will consider
the payment of a 2014 final dividend at its September 2014 Board meeting and will announce its 2014 final dividend decision
to the market at the appropriate time.
Outlook
All of the economic forecasts for Asia for the next 20 or more years point to an ever-increasing requirement for protein, including
protein derived directly or indirectly from livestock products. As a land and resource rich nation in close proximity to this Asian
food requirement, Australia is a critical component of the supply chain.
During the 2014 year Ridley increased its annual supply of nutrition to Australian livestock producers to 1.89 million tonnes,
and plays an important part in all of the nation’s sectors for the supply of animal-derived protein.
The growth in poultry has been compounding for over a decade at the rate of 2–3% from an already high base of consumption,
and the outlook is for more of the same.
The outlook for Australian dairy products is also positive, with China recently acknowledging its inability to become self-sufficient
and to it being a net importer of dairy products for the foreseeable future.
39
Annual Report 2014Ridley Corporation Limited Directors’ Report continued
For the year ended 30 June 2014
4. Review of operations continued
The aquafeed industry continues to grow on a worldwide scale and Ridley is well placed to service this growth through its fin fish
and prawn product range and with innovative protein sources to reduce reliance on fish meal derived from dwindling wild-caught
fish stocks.
Product from the rendering process is an integral part of the protein supply chain.
Ridley is intending to organically grow its business in each of the above markets. To achieve this, Ridley is working closely with
its customers to:
(i) ensure that it has long term feed-milling capacity close to the current and intended location of their livestock; and
(ii) make sure it has innovative research and development programs to find alternative raw material feed inputs and continually
improve its feed conversion ratios.
The long term outlook for the Ridley agribusiness is for steady and sustainable growth. The business continues to focus effort
on providing a more robust and stable business in the future.
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.
It is expected that the higher levels of costs now being incurred to advance the property development approvals will continue for
the next two to three years as the sites earmarked for development progress through their value-adding stage gates. These costs
may be offset by further piecemeal sales of surplus assets. An expression of interest process is being run for the Lara and Dry
Creek sites to ascertain the market interest for certain parcels of land and identify any opportunities to negotiate a favourable
sale transaction which will deliver significant value for Ridley shareholders.
5. Significant changes in the state of affairs
There were no significant changes in the state of affairs of the Group during the year ended 30 June 2014.
6. Dividends and distributions to shareholders
Dividends paid to members during the financial year were as follows:
Interim dividend in respect of the current financial year paid on 30 April 2014 of 1.5 cents, 50% franked
2014
$’000
4,617
7. 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 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 the National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER).
The Federal Government’s 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 submit an annual report.
The Energy Efficiency Opportunities Act 2006 (EEO) included a mandatory requirement for the Group to assess its energy usage
and energy saving opportunities, and to publicly report thereon. The EEO was repealed during the year. Whilst the EEO Program
played an important role in encouraging continuous improvement of general energy management practices, the Group will
continue to seek opportunities to improve energy efficiency.
8. Directors’ and executives’ remuneration
Refer to the Remuneration Report.
40
Annual Report 2014Ridley Corporation Limited 9. Share options and performance rights
Unissued ordinary shares of Ridley Corporation Limited and controlled entities under options and performance rights at the date
of this report are as follows:
Ridley Corporation Long Term Incentive Plan (performance rights)
Ridley Employee Share Scheme (Options)*
* The share grant and supporting loan together in substance comprise a share option.
Number Expiry Date
Various
Various
4,007,524
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 Company
will issue shares when the options and performance rights are exercised. Further details are provided in note 25 in the Notes to
the Financial Statements and in 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.
10. Information on Directors
Particulars of shares and options in the Company held by Directors, together with a profile of the Directors, are set out in the
Board of Directors section in the Annual Report and in the Remuneration Report.
11. Post-balance date events
No matters or circumstances have arisen since 30 June 2014 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.
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 as a committee member, are as follows:
Directors
JM Spark
TJ Hart
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen
Board
Audit and Risk
Committee
Remuneration
Committee
Ridley Innovation
and Operational
Committee
H
12
12
12
12
12
12
12
A
12
12
11
12
12
12
11
H
4
-
4
4
-
4
-
A
4
-
4
4
-
3
-
H
5
-
5
-
-
5
-
A
5
-
4
-
-
4
-
H
21
4
4
-
4
-
21
A
21
4
4
-
4
-
21
H: Number of meetings held during period of office.
A: Number of meetings attended.
1. Appointed/resigned to the Ridley Innovation and Operational Committee on 10 February 2014.
Mr J Murray resigned on 1 July 2013 and therefore did not attend any meetings during the year.
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 Governance Institute of Australia and a member of the Institute of Chartered Accountants
in Australia.
41
Annual Report 2014Ridley Corporation Limited Directors’ Report continued
For the year ended 30 June 2014
14. 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 Company’s Directors, the secretary of the Company, and the Directors of all
the subsidiaries.
The Deed requires the Company to maintain insurance to cover the Directors in relation to liabilities incurred while acting
as a Director of the Company or a subsidiary and costs involved in defending proceedings.
During the year the Company paid a premium in respect of such insurance covering the Directors and secretaries of the Company
and its controlled entities, and the general managers of the Group.
15. Non-audit services
The Company may decide to employ the auditor (KPMG) on assignments in addition to the statutory audit function where the
auditor’s expertise and experience with the Company and/or the Group are important and valuable.
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 of such expertise on separately negotiated fee arrangements 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; and
• None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics
for Professional Accountants, 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 53.
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
Other services
Total
$
218,020
5,000
223,020
16. 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 20 August 2014 in accordance with a resolution of the Directors.
JM Spark
Director
TJ Hart
Director
42
Annual Report 2014Ridley Corporation Limited 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 2014. This report forms part of the Directors’ Report for the year ended 30 June 2014.
Remuneration Committee
The Remuneration Committee, (throughout the Remuneration Report referred to as the Committee) consisting of three
independent Non-Executive Directors, advises the Ridley Board of Directors (Board) on remuneration policies and practices
generally and makes specific resolutions in its own right and recommendations to the Board on remuneration packages and
other terms of employment for the Managing Director, other senior executives and Non-Executive Directors. The Committee
is not responsible for evaluating the Board’s performance, reviewing Board size and composition and setting the criteria for
membership and candidates to fill vacancies; these responsibilities are managed by 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.
The number of meetings held during the year is shown as item 12 of the Directors’ Report.
Services from remuneration consultants
The Committee engaged the Godfrey Remuneration Group (GRG) on 23 August 2013 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, to provide advice outlining retention strategies for key senior managers in the event of a change in control
event for the Group, and to provide recommendations in relation thereto.
GRG was paid $62,304 for the remuneration reports and recommendations in respect of reviewing and benchmarking 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, and which govern 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 have related. The Board instructed GRG to provide recommendations directly and only to
the Board and the Committee and to direct all correspondence through the Chairman.
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 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:
(i) offer a base Total Employment Package (TEP) that can attract talented people;
(ii) provide short term performance incentives to encourage personal performance;
(iii) provide long term incentives to align the interests of executives more closely with those of Ridley shareholders; and
(iv) reward sustained superior performance, foster loyalty and staff retention.
The overall level of executive reward takes into account the performance of the Group primarily for the current year.
43
Annual Report 2014Ridley Corporation Limited Remuneration Report – Audited continued
Remuneration of Directors and executives continued
Consequences of performance on shareholder wealth
In considering the Group’s performance and benefits for creation of shareholder wealth, the Committee has regard for the
following indices in respect of the current financial year and the previous four financial years.
2014
2013
2012
2011
2010
Profit/(loss) attributable to members
of Ridley Corporation Ltd
Earnings before interest and tax
Cash flow from operating activities
Return on shareholders’ funds before
significant items
TSR#
$’000
$’000
$’000
%
%
17,613
27,436
31,349
7.8
8.0
Short Term Incentive to KMP
$’000
1,142
(21,694)
(13,272)
52,583
(6.8)
(19.1)
862
19,253
35,682
50,896
6.9
(11.0)
158
29,316
39,965
35,472
10.3
13.5
497
29,093
46,234
39,426
10.4
56.7
920
# Total Shareholder Returns (TSR) is calculated as the change in share price for the year plus dividends announced for the year, divided by the opening share price.
2014 final dividend to be declared and paid in October 2014.
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, and Chair of the Audit and Risk Committee and Ridley Innovation
and Operational Committee, receive fees in addition to the base Director fees. The total amount paid to Non-Executive Directors
in FY14 was $620,000.
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 2014.
Executives
The executive pay and reward framework comprises the three components of base pay and benefits, short term incentives,
and long term incentives.
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 for non-executive staff 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 (the Fund), 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 terminated a legacy
Defined Benefit Plan during the financial year through the provision of compensation and transfer of the five residual members
to a Defined Contribution Plan.
Short term incentives
Executives and employees in senior positions are eligible for short term incentive (STI) payments based on two equal 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 be achieved prior to any payment of an STI. KPIs are initially
set by the Board for the Managing Director based on the adopted business strategy, and then these are cascaded down to the
KMPs, CEO Direct Reports and then throughout the business, recognising the relative contributions required of each role within
the organisation.
44
Annual Report 2014Ridley Corporation Limited The Group financial performance component of the STI is assessed against budgeted earnings before interest and tax, profit
after tax, cash flow and return on funds employed. The measures of personal performance include targets on safety, training,
operational excellence, customer focus, sustainability and community, and people values and development.
Following the end of the 2014 financial year, financial results and each individual’s performance against KPIs have been reviewed
to determine STI payments for each executive. For the current year, the financial performance hurdles have been met.
For the 2013 financial year, the Group financial performance component hurdle for the year was not met and the Board
exercised its discretion to award a proportion of the personal performance component only, capped to 50% of the aggregate
at-risk STI entitlement. Exceptions were made last year 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.
(Refer details on page 50).
STI incentives range from 100% of the TEP for the CEO down to 10% of TEP for the least senior participants in the plan.
The KPIs are designed to incentivise successful and sustainable financial outcomes, instil a culture where safety is paramount,
and encourage excellence, innovation, and behaviour in compliance with the Ridley Code of Conduct,
Long term incentives
In the year ended 30 June 2014, executives’ and employees’ long term incentives were provided by way of participation in the
company-wide Ridley Employee Share Scheme. There was also an annual issue of performance rights to senior executives and
officers under the Ridley Long Term Incentive Plan with an effective date of 1 July 2013 and standard terms and conditions as
stated below.
The long term incentive programs align the interests of executives more closely with those of Ridley shareholders in rewarding
sustained superior performance, whilst also fostering loyalty and staff retention. Directors and senior executives are not permitted
to enter into any transaction that is designed or intended to hedge any 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 through the delivery of long term, sustainable business objectives that
are directly linked to generation of 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 continued employment (with an exclusion for cessation of employment for a Qualifying Reason such as
death, disability or redundancy) and 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. Performance is measured over the three-year period from the date of
grant. Fifty per cent 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 test period by an independent third party
which submits a report detailing the extent of any vesting in accordance with the above rules. 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.
TSR is the Company’s preferred performance measure as it provides a comprehensive measure of company performance against
a comparator peer group from the perspective of value delivered to shareholders through a combination of share price growth,
dividends and capital returns.
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 again 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 being
to purchase the shares on-market.
During the year ended 30 June 2014, 2,525,000 (2013: nil) Rights were issued under the LTIP, of which 1,300,000 (2013: nil)
were granted as remuneration to KMP and the balance issued to other, non-KMP senior executives within the organisation.
45
Annual Report 2014Ridley Corporation Limited Remuneration Report – Audited continued
Current long term incentive plans continued
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 2014 as the hypothetical end date.
TSR calculations use a 30-day average period rather than a single day start date for the commencement of each vesting period.
Start Date
5 December 11
1 July 13
TSR
Ridley
-11.9%
4.2%
Median TSR
Comparison
-23.6%
5.4%
Percentile
55.2
48.5
Number of
Rights on Issue
1,532,524
2,475,000
Hypothetically
Vested at
30 Jun 14
900,358
-
Hypothetically
Vested at
30 Jun 14
58.8%
-
Graph: Comparison of growth of Ridley Corporation Ltd share price to the ASX Small Ords and ASX 200 Accumulation
Index for FY14
$2.00
$1.50
$1.00
$0.50
Ridley TSR
Ridley Share Price
ASX 200 Accumulation Index (based to Ridley)
Small Ords Accumulation Index (based to Ridley)
104%
64%
48%
5%
2
1
l
u
J
1
2
1
l
u
J
2
2
2
1
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2
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2
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S
2
2
1
p
e
S
3
2
2
1
t
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O
4
1
2
1
v
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4
2
1
v
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N
5
2
2
1
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e
D
6
1
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6
3
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7
2
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F
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1
3
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M
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1
3
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3
3
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A
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2
3
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p
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1
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3
1
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2
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1
3
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8
3
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2
4
1
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9
1
4
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4
1
r
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2
4
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2
4
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6
Ridley Employee Share (Scheme)
Under the Scheme, shares are offered to all permanent Australian employees with a minimum of 12 months’ service prior to the
offer date, 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.
933,780 (2013: 841,126) shares were acquired and allocated to participating employees under the Scheme during the year.
The total value of the shares issued which were purchased on-market was $791,000 (2013: $713,000).
Ridley Corporation Special Retention Plan (SRP)
The SRP was a special circumstance plan 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 were no Disposal Restrictions and the
cessation of employment condition was superseded, such that the SRP Rights under this offer vested 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, as defined. Each SRP Right provided the entitlement to acquire
one Ridley share at nil cost at the end of the service period.
46
Annual Report 2014Ridley Corporation Limited
The SRP concluded on 5 May 2014. Of the total of 2,300,000 Rights issued in FY12 under the Special Retention Plan:
(i) 75,000 were cancelled upon early employee departure;
(ii) 400,000 vested to Cheetham Salt employees upon completion of its divestment from the Group on 28 February 2013;
(iii) 925,000 vested on 1 July 2013 following the exercise of Board discretion to vest 50% of the SRP Rights to those employees
still employed within the Group at the 5 May 2013 first year anniversary of issue; and
(iv) 900,000 vested on 5 May 2014 to Group employees retained at the two-year anniversary of issue.
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
Total
Number of Shares
Market Value
2014
933,780
1,064,054
1,825,000
3,822,834
2013
841,126
1,003,057
400,000
2,244,183
2014
$’000
791
926
1,548
3,265
2013
$’000
713
955
384
2,052
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) throughout the current financial year unless otherwise stated.
Name
Directors
JM Spark
TJ Hart
J Murray(a)
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen
Executives
AM Boyd
M Robbins
CW Klem
AI Lochland
AM Mooney
RN Lyons(b)
S Butler
J Murray(a)
Position
Status
Chairman
Managing Director and CEO – Ridley
Managing Director and CEO – Ridley
Director
Director
Director
Director
Director
Resigned 1 July 2013
Chief Financial Officer and Company Secretary
General Manager Safety, People and Sustainability
General Manager Rendering
General Manager Packaged, Aqua-Feed and Supplements
General Manager Commercial Feed
General Manager Corporate Development
General Manager Ridley Land Corporation Pty Ltd
Non-executive Director and Chairman of Ridley Land Corporation Pty Ltd
Appointed 6 January 2014
Appointed 19 August 2013
KMP to 5 August 2013
Appointed 1 July 2013
(a) J Murray resigned from the Ridley Corporation Ltd Board on 1 July 2013 and was appointed as a Director of Ridley Land Corporation Pty Ltd on 1 July 2013.
(b) RN Lyons ceased to be key management personnel on 5 August 2013 but remains an employee of the Group.
47
Annual Report 2014Ridley Corporation Limited
Remuneration Report – Audited continued
Directors and key management personnel continued
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 2013 and 2014 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.
2014
Short Term Benefits
Post-
Employment
Benefits
Name
Directors
JM Spark – Chairman
TJ Hart – Managing Director
AL Vizard3
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen3
Total Directors
Executives
AM Boyd
M Robbins4
CW Klem
AI Lochland5
AM Mooney
S Butler
J Murray
RN Lyons6
Total Executives
Total
Directors’
Fees and
Cash Salary
$
Other
Benefits
$
STI
$
Super-
annuation
$
159,091
650,000
95,000
86,364
77,273
77,273
85,000
1,230,001
-
546,000
-
-
-
-
-
546,000
-
-
-
-
-
-
-
-
176,080
392,114
37,230
155,321
65,042
258,353
53,454
231,156
85,507
312,586
110,000
252,500
-
135,329
68,686
275,827
595,999
2,013,186
3,243,187 1,141,999
-
-
10,000
-
-
-
-
-
10,000
10,000
15,909
50,000
-
8,636
7,727
7,727
-
89,999
25,000
12,500
25,835
23,115
24,600
25,250
14,671
25,000
175,971
265,970
1. Percentage remuneration consisting of performance rights/options.
2. Percentage remuneration performance related.
3. Director fee paid to a Company or Family Trust.
4. Remuneration reflects period from appointment on 6 January 2014.
5. Remuneration reflects period from appointment on 19 August 2013.
6. Ceased being a KMP on 5 August 2013, remuneration reflects whole financial year.
Share-based
Payments
Performance
Rights/
Options
$
Total
$
%1 %2
-
175,000
84,000 1,330,000
95,000
95,000
85,000
85,000
85,000
84,000 1,950,000
-
-
-
-
-
-
-
6% 47%
-
-
-
-
-
-
-
-
-
-
186,082
-
130,360
17,500
129,222
97,110
474,476
114,610
779,276 24% 46%
205,051
0% 18%
489,590 27% 42%
325,225
5% 22%
551,915 23% 39%
484,860 20% 43%
624,476 76% 76%
484,123 24% 38%
1,149,360 3,944,516
5,894,516
1,233,360
The salary package may be allocated at the executive’s discretion to cash, superannuation (subject to legislative limits), motor
vehicle and certain other benefits.
48
Annual Report 2014Ridley Corporation Limited 2013
Short Term Benefits
Post-
Employment
Benefits
Share-Based
Payments
Other
Name
Directors
JM Spark – Chairman
RJ Lee 5
TJ Hart –
Managing Director3
J Murray –
Managing Director7, 8, 10
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen9
Total Directors
Executives
AM Boyd7
PJ Weaver4
AL Speed6 7
CW Klem7
AM Mooney
RN Lyons
S Butler
Total Executives
Total
Directors’
Fees and
Cash Salary
$
159,091
106,422
STI
$
-
-
Other
Benefits
$
Super-
annuation
$
Retirement/
Termination
$
Performance
Rights/
Options
$
Total
$ %1 %2
-
-
15,909
9,578
-
26,481
160,705 125,000
70,000
12,500
-
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
378,970 112,734 81,988
-
-
- 67,120
41,895 55,860
-
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
-
-
-
175,000
142,481
-
-
-
-
368,205
- 34%
388,743 2,321,872 17% 37%
-
95,000
-
95,000
-
85,000
-
85,000
-
-
388,743 3,367,558
-
-
-
-
-
-
-
-
-
-
127,737
-
294,861
84,153
88,500
80,570
75,153
-
-
726,429 18% 33%
-
611,169 48% 59%
457,140 18% 28%
390,721 23% 30%
412,549 20% 29%
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 consists 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 eleven months accrued at 30 June 2013 and paid to Mr Murray in July 2013.
9. Appointed 24 June 2013.
10. Resigned 1 July 2013.
49
Annual Report 2014Ridley Corporation Limited Remuneration Report – Audited continued
Details of remuneration
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 increasing by 3% to $721,000
on 1 July 2014.
• 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.
• Full scheme participation from 1 July 2013 up to 100% of total base remuneration-based on the achievement of certain
agreed KPIs as approved by the Board. The 50% of Ridley financial performance measures include a mix of performance
against budgeted earnings before interest and tax, profit after tax, cash flow and return on funds employed. The measures
of personal performance include targets on safety, training, operational excellence, customer focus, sustainability and
community, and people values and development.
• 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. Shareholder approval was received on 26 November 2013 for the
600,000 performance rights issued to Mr Hart in the financial year with a three-year performance test period commencing on
1 July 2013.
• 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 benefits 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 Managing Director 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, Ridley Corporation Limited:
• During the prior year, separation arrangements were agreed between Ridley and Mr Murray for Mr Murray to cease being
employed as CEO and Managing Director of Ridley and to be employed in a new role by Ridley from 1 July 2013. Mr Murray’s
non-executive role as Chair of the Ridley property holding entity, Ridley Land Corporation Pty Ltd, currently includes oversight
of the Group’s surplus land realisation developments in Victoria, South Australia and Queensland, for which Mr Murray
received remuneration of $150,000 per annum for the year ended 30 June 2014.
• Mr Murray participated in the Ridley STI for the 2013 financial year and his awarded entitlement was brought to account at
30 June 2013 ($480,423) and reflected in the remuneration table for that year, together with the benefit paid to Mr Murray
for the successful completion of the Cheetham Salt divestment ($137,264). Mr Murray’s 2013 performance targets included
safety, strategy, completion of the Cheetham Salt sale and rendering business acquisition, securing appropriate shareholder
value under the Penrice early termination compensation arrangements, and transition to his successor as Ridley CEO.
Whilst Mr Murray did not participate in either the Ridley LTIP or Ridley STI Scheme in the 2014 financial year, prior period
performance and retention rights awarded to him under the Ridley LTIP and SRP were preserved given his continued
employment within the Group.
• 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, reflected in the 2013 remuneration table, and paid out in July 2013.
Payments to Mr Murray under the separation arrangements did not exceed the threshold above which shareholder approval is
required under the Corporations Act 2001.
Other senior executives have individual contracts of employment but with no fixed term of employment.
50
Annual Report 2014Ridley Corporation Limited Notice periods
The notice period for terminating employment of KMP ranges from three months to six months for executives and 12 months for
the Managing Director.
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 in the following table.
STI components of base salary and percentages awarded and forfeited for KMP are shown in the following table.
STI Payment
Name
TJ Hart
AM Boyd
M Robbins
CW Klem
AI Lochland
AM Mooney
S Butler
J Murray
STI Percentage
Range of TEP %
STI Payment
in $
2014
2013
Paid %
Forfeited %
Paid %
Forfeited %
0–100
0–50
0–15#
0–30
0–23#
0–30
(i)
0
546,000
176,080
37,230
65,042
53,454
85,507
110,000
-
78
41
11
23
17
25
(i)
0
22
9
4
7
6
5
(i)
0
71
27
-
15
-
14
13
70
29
23
-
15
-
16
17
30
# Full year STI up to 30% reduced pro rata for FY14 period of service.
(i) Mr Butler has individual targets based on the achievement of property management and realisation objectives.
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)
Balance at
1 July 2013 Granted1
Vested2
Vested3
Forfeited
Balance at
30 June 20144
Date
Exercised5
Recipients of LTIP Rights
Directors
TJ Hart
Key management personnel
AM Boyd
M Robbins
CW Klem
AI Lochland
AM Mooney
S Butler
J Murray
RN Lyons
Total issued to Directors
and key management
personnel
-
600,000
-
-
-
600,000
-
400,000
-
225,000
-
225,000
225,000
1,243,000
225,000
200,000
-
125,000
125,000
125,000
-
-
125,000
(39,406)
-
(22,165)
-
(22,165)
(22,165)
(122,454)
(22,165)
(111,784)
-
(55,892)
-
(55,892)
(55,892)
(359,386)
(55,892)
(68,513)
-
(34,257)
-
(34,257)
(34,257)
(220,269)
(34,257)
380,297
-
237,686
125,000
237,686
112,686
540,891
237,686
5 Dec 2013
-
5 Dec 2013
-
5 Dec 2013
5 Dec 2013
5 Dec 2013
5 Dec 2013
2,543,000 1,300,000 (250,520) (694,738)
(425,810)
2,471,932
-
1. The fair value per option at grant date was $0.42 per share.
2. Proportional vesting following the return of capital in July 2013.
3. Vested at the end of the performance period on 5 December 2013.
4. Performance rights are due to vest between December 2014 through to July 2016.
5. The value at the 5 December 2013 date of exercise was $0.86 per share.
51
Annual Report 2014Ridley Corporation Limited Remuneration Report – Audited continued
Equity instrument disclosures relating to Directors and executives continued
Ridley Corporation Special Retention Plan (SRP)
Recipients of SRP Rights
Directors
TJ Hart
Key management personnel
AM Boyd
M Robbins
CW Klem
AI Lochland
AM Mooney
S Butler
J Murray
RN Lyons
Total issued to Directors and
key management personnel
Balance at
1 July 2013
Vested1
Balance at
30 June 2014
Date
Exercised1
Value Per
Share at Date
of Exercise
-
-
200,000
-
150,000
-
150,000
125,000
600,000
125,000
(200,000)
-
(150,000)
-
(150,000)
(125,000)
(600,000)
(125,000)
1,350,000
(1,350,000)
-
5 May 2014
-
5 May 2014
-
5 May 2014
5 May 2014
5 May 2014
5 May 2014
-
-
-
-
-
-
-
-
-
-
-
$0.85
-
$0.85
-
$0.85
$0.85
$0.85
$0.85
1. First 50% vested and exercised on 1 July 2013 at a value of $0.83 per share and the remaining 50% on 5 May 2014 at $0.85 per share.
Shareholdings
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 in the
table below.
Number of shares held in Ridley Corporation Limited
Name
JM Spark
TJ Hart
AL Vizard
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen
Total Directors
AM Boyd
M Robbins
CW Klem
AI Lochland
AM Mooney
S Butler
J Murray
RN Lyons
Total Executives
Total Key Management Personnel
Balance at
1 July 2013
398,500
-
48,658
86,625
35,000
25,000
703,286
1,297,069
285,499
-
75,625
-
231,043
29,387
592,024
250,151
1,463,729
2,760,798
Received
During the Year1
-
-
-
-
-
-
-
-
314,154
-
208,262
-
205,892
205,428
781,839
52,848
1,768,423
1,768,423
Acquired/(Disposed)
During the Year
100,000
25,000
-
10,000
23,900
-
-
158,900
(36,190)
-
-
-
-
(22,166)
-
(302,999)2
(361,355)
(202,455)
Balance at
30 June 2014
498,500
25,000
48,658
96,625
58,900
25,000
703,286
1,455,969
563,463
-
283,887
-
436,935
212,649
1,373,863
-
2,870,797
4,326,766
1. Received either from the vesting of performance rights, SRP rights, or through the Ridley Employee Share Scheme.
2. At the date of ceasing to be a Key Management Personnel on 5 August 2013.
52
Annual Report 2014Ridley Corporation Limited 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 2014, 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
20 August 2014
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.
53
Annual Report 2014Ridley Corporation Limited Consolidated Statement of Comprehensive Income
For the year ended 30 June 2014
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
Note
2
2
3
3
2014
$’000
873,625
(807,744)
65,881
230
5,972
(10,432)
(33,543)
(5,622)
(466)
2013
$’000
716,318
(659,900)
56,418
74
309
(9,320)
(23,309)
(7,811)
(37,254)
Share of net profits/(losses) from equity accounted investments
30
23
(116)
Profit/(loss) from continuing operations before income tax expense
22,043
(21,009)
Income tax (expense)/benefit
12
(4,430)
4,423
Profit/(loss) from continuing operations after income tax expense
17,613
(16,586)
Profit/(loss) from discontinued operation (net of tax)
6
-
(5,108)
Net profit/(loss) after tax attributable to members of Ridley Corporation Limited
17,613
(21,694)
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
Items that will be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
123
-
-
-
-
123
372
(112)
(29,529)
11,099
(352)
(18,522)
Total comprehensive income for the year
17,736
(40,216)
Total comprehensive income for the year attributable to:
Ridley Corporation Limited
Earnings per share
Basic earnings per share – continuing
Basic earnings per share
Diluted earnings per share – continuing
Diluted earnings per share
17,736
(40,216)
Note
4
4
4
4
2014
5.7c
5.7c
5.7c
5.7c
2013
(5.4c)
(7.0c)
(5.4c)
(7.0c)
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
54
Annual Report 2014Ridley Corporation Limited
Consolidated Balance Sheet
As at 30 June 2014
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
Available-for-sale financial asset
Investment properties
Property, plant and equipment
Intangible assets
Inventories
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Payables
Tax liabilities
Provisions
Retirement benefit obligations
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
Note
2014
$’000
2013
$’000
7
8
6
13
30
31
9
10
11
8
13
14
13
15
26
16
15
17
18
18
19,241
96,371
64,539
1,370
-
181,521
2,217
1,084
37,177
118,602
80,491
120
1,879
241,570
423,091
129,417
4,233
13,134
-
146,784
55,584
949
56,533
203,317
219,774
214,445
375
4,954
219,774
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
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
55
Annual Report 2014Ridley Corporation Limited Consolidated Statement of Changes in Equity
For the year ended 30 June 2014
Balance at 1 July 2013
Profit for the period
Other comprehensive income
Actuarial gain/(loss) on defined benefit superannuation and pension
plans, net of tax
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
Share
Capital
$’000
214,445
-
Share-based
Payment
Reserve
$’000
1,487
-
Retained
Earnings
$’000
(8,379)
17,613
Total
$’000
207,553
17,613
-
-
-
-
-
-
-
-
123
123
123
123
(4,617)
(4,617)
(1,112)
214
(898)
(1,112)
(4,403)
(5,515)
Balance at 30 June 2014
214,445
375
4,954
219,774
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
56
Annual Report 2014Ridley Corporation Limited Consolidated Statement of Changes in Equity
For the year ended 30 June 2013
Balance at 1 July 2012
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
Share
Capital
$’000
237,531
-
Revaluation
Reserve
$’000
25,971
-
Share-based
Payment
Reserve
$’000
671
-
Foreign
Currency
Translation
Reserve
$’000
(1,270)
-
Retained
Earnings
$’000
15,468
(21,694)
Total
$’000
278,371
(21,694)
-
-
-
-
-
(29,529)
11,099
-
-
(18,430)
-
(23,086)
-
(23,086)
-
-
-
-
-
-
-
-
-
-
-
816
816
-
-
-
(352)
(352)
-
-
(29,529)
11,099
260
-
260
(352)
260
(18,522)
-
-
-
-
(11,543)
-
(11,543)
(23,086)
(190)
626
(11,733)
(34,003)
Disposal of subsidiary
-
(7,541)
-
1,622
9,320
3,401
Balance at 30 June 2013
214,445
-
1,487
-
(8,379)
207,553
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
57
Annual Report 2014Ridley Corporation Limited Consolidated Statement of Cash Flows
For the year ended 30 June 2014
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 tax net refund/(payment)
Note
2014
$’000
2013
$’000
945,171
(913,416)
-
230
2,804
(5,045)
1,605
857,904
(805,575)
8,287
74
321
(8,095)
(333)
Net cash inflow from operating activities
5
31,349
52,583
Cash flows from investing activities
Acquisition of business operations
Acquisition of available-for-sale financial asset
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
Draw down/(repayment) of borrowings
Dividends paid
Capital return
Net cash (outflow) from financing activities
Net increase in cash held
Cash at the beginning of the financial year
Cash at the end of the financial year
32
31
(350)
(1,084)
(13,717)
(5,205)
-
1,421
(80,740)
-
(22,260)
(533)
144,640
-
(18,935)
41,107
(3,264)
20,813
(4,572)
(23,086)
(2,056)
(70,499)
(11,427)
-
(10,109)
(83,982)
2,305
9,708
16,936
7,228
19,241
16,936
There were no non-cash financing and investing activities during the years ended 30 June 2014 and 2013.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
58
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements
Note 1 – Segment information
Geographical segments
The Group predominantly operates in Australasia.
2014
Sales – external
Total sales revenue
Other revenue
Total revenue
AgriProducts
$’000
873,625
873,625
664
874,289
Property
$’000
-
-
3,439
3,439
Unallocated
$’000
-
-
1,869
1,869
Consolidated
Total
$’000
873,625
873,625
5,972
879,597
Share of profits of equity accounted investments (note 30)
Depreciation and amortisation expense (note 3)
Write off of Penrice debt
Interest income
Interest expense (note 3)
23
(13,297)
-
-
-
-
(21)
-
-
-
-
(258)
(971)
230
(5,622)
23
(13,576)
(971)
230
(5,622)
Reportable segment profit/(loss) before income tax
40,086
(2,633)
(15,410)
22,043
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)
352,362
2,217
354,579
133,049
41,101
-
41,101
3,814
27,411
-
27,411
66,454
420,874
2,217
423,091
203,317
18,193
-
729
18,922
59
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 1 – Segment information continued
AgriProducts
$’000
706,330
-
706,330
309
706,639
Property
$’000
-
-
-
-
-
Salt
$’000
9,988
-
9,988
-
9,988
Unallocated
$’000
-
-
-
-
-
Total
$’000
716,318
-
716,318
309
716,627
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
2013
Sales – external
Sales – internal
Total sales revenue
Other revenue
Total revenue
Share of profits/(losses)
of equity accounted
investments
Depreciation and
amortisation expense
Interest income
Interest expense
Reportable segment
profit/(loss) 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)
(116)
(12,936)
-
-
-
-
-
-
-
-
(116)
4,562
(1,076)
-
-
(512)
74
(7,811)
(14,524)
74
(7,811)
(3,248)
-
-
28,075
(1,943)
(30,588)
(16,553)
(21,009)
(3,649)
337,161
5,104
36,797
29,368
408,430
2,194
339,355
127,546
-
5,104
-
-
36,797
6,303
-
29,370
69,224
2,194
410,626
203,073
-
-
-
-
15,984
-
-
862
16,846
5,947
-
-
-
-
-
-
-
-
-
-
4,446
(17,772)
74
(7,811)
(24,658)
408,430
2,194
410,626
203,073
22,793
2014
$’000
2013
$’000
873,625
716,318
361
1,456
764
2,675
-
19
697
5,972
-
-
-
-
12
17
280
309
Note 2 – Revenue and other income
Revenue from continuing operations
Sale of goods
Other income from continuing operations
Insurance proceeds
Business services
Profit from sales of residual property site assets
Profit on sale of land
Foreign exchange gains – net
Rent received
Other
60
Annual Report 2014Ridley Corporation Limited Note 3 – Expenses
Profit from continuing operations before income tax is arrived at after charging the following items:
Depreciation and amortisation(i)
Buildings
Plant and equipment
Software
Intangible assets
2014
$’000
2013
$’000
981
9,939
1,736
920
13,576
885
11,712
1,757
170
14,524
(i) The depreciation and amortisation charge is included within general and administrative expenses in the Consolidated Statement of Comprehensive Income.
The 2013 depreciation expense included $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
Bad and doubtful debt expense – net of recoveries
Write off of Penrice debt
Employee benefits expense
Operating lease expense
Business restructuring
Acquisition related costs
Impairment loss on Salt goodwill
Impairment loss on Dry Creek salt field
Write down of Dry Creek salt inventory
Write down of Dry Creek property, plant and equipment
2014
$’000
5,296
326
5,622
211
971
2013
$’000
7,349
462
7,811
330
-
68,611
3,484
61,136
2,799
Notes
2014
$’000
2013
$’000
(a)
(b)
(c)
(c)
(c)
466
-
-
-
-
466
3,234
5,017
14,741
10,393
3,869
37,254
(a) 2013 acquisition related costs included $2,400,000 of stamp duty on the acquisition of the Laverton rendering business.
(b) 2013 impairment loss of $5,017,000 in respect of the goodwill that arose from the 2005 acquisition of Dry Creek.
(c) 2013 impairments in relation to the Dry Creek site, which was retained by Ridley to facilitate completion of the Cheetham Salt sale on 28 February 2013. Ridley
continued to service the Penrice Supply Agreement until the termination of the supply agreement by Penrice on 1 July 2013. Ridley actively continues to prepare
for the redevelopment of the Dry Creek site.
61
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 4 – Earnings per share
Basic earnings per share – continuing
Basic earnings per share
Diluted earnings per share – continuing
Diluted earnings per share
2014
Cents
5.7
5.7
5.7
5.7
2013
Cents
(5.4)
(7.0)
(5.4)
(7.0)
Earnings used in calculating earnings per share
Profit/(loss) after income tax – continuing operations
(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
2014
Earnings Per Share
Basic
$’000
Diluted
$’000
2013
Earnings Per Share
Basic
$’000
Diluted
$’000
17,613
-
17,613
17,613
-
17,613
(16,586)
(5,108)
(21,694)
(16,586)
(5,108)
(21,694)
Basic
Diluted
Basic
Diluted
307,817,071
307,817,071
307,817,071
307,817,071
Options
There are 4,007,524 (2013: 5,443,000) performance rights outstanding which have been excluded from the determination
of diluted earnings per share calculation as the Group purchase shares on-market to satisfy vesting performance rights.
Details relating to the performance rights are set out in note 25.
62
Annual Report 2014Ridley Corporation Limited Note 5 – Notes to statement of cash flows
Reconciliation of net cash inflow from operating activities to profit after income tax
Profit/(loss) for the year
Adjustments for non-cash items:
Depreciation and amortisation
Loss on sale of discontinued operations and businesses
Impairment of inventory and property, plant and equipment
Impairment of salt fields and goodwill
Net loss on sale of non-current assets
Dividends received in excess of equity profits
Non-cash share-based payments
Non-cash finance expenses
Bad debts expense
Foreign exchange (gains)/losses
Other non-cash movements
Change in operating assets and liabilities, net of effects from purchase
and sale of controlled entities and businesses:
Decrease/(increase) in receivables
Decrease/(increase) in inventories
Increase/(decrease) in trade creditors excluding capital return
Increase/(decrease) in provisions
Increase/(decrease) in income tax liability/receivable
Increase/(decrease) in deferred income tax
Net cash inflow from operating activities
2014
$’000
17,613
2013
$’000
(21,694)
13,576
-
132
-
473
-
1,851
326
1,305
347
(118)
(1,796)
(3,887)
(71)
(1,536)
4,536
(1,402)
31,349
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
63
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 6 – Assets held for sale and discontinued operations
Assets held for sale
2014
$’000
1,370
2013
$’000
670
At 30 June 2014, the Group has classified $1,370,000 of assets as being held for sale which relate to the proposed sale of
the Ridley AgriProducts sites at Dalby and Dandenong. This disclosure follows management’s commitment to sell these sites.
The feedmill at Dalby in Queensland was closed during the current financial year and the majority of the stockfeed volume
transferred to the neighbouring Ridley feedmill at Toowoomba. Agreement to sell the site was reached in early June 2014 subject
to the purchaser receiving financier approval. The purchaser has since received such approval to satisfy the condition precedent
to completion which occurred on 11 August 2014.
At 30 June 2013, the Group had classified the former feedmill site at Dandenong as held for sale. The sale process for this site
commenced in 2013 but a sale has not yet been achieved. In the 2014 financial year, the site has been de-commissioned and
a contract to lease the site executed as a means of not only generating some income to cover its maintenance costs but also of
making the site more attractive to a purchaser who would have an income stream from the asset while the purchaser secures
its development approvals. A revised marketing campaign is expected to achieve a sale within the next 12 months.
(i) Discontinued operation in the prior financial year
In the prior financial year, the Cheetham Salt business was sold and is disclosed in this Financial Report as a prior year
discontinued operation.
(a) Statement of comprehensive income for discontinued operation
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) below)
Transaction related expenses
Transfer of foreign currency reserve
Income tax expense
Loss from sale of discontinued operation after income tax
Loss from discontinued operation after tax
2013
$’000
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)
(5,108)
64
Annual Report 2014Ridley Corporation Limited
(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 completion of the sale were:
Assets
Cash
Receivables
Inventories
Property, plant and equipment
Investment in equity accounted associates
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 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)
14,209
144,053
(1,207)
157,055
65
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 7 – Receivables
Current
Trade debtors
Less: Allowance for doubtful debts (a)
Prepayments
Insurance income receivable
Sale of land receivable
(a) Movements in the allowance for doubtful debts are as follows:
Balance brought forward at 1 July
Provision for impairment recognised during the year
Receivables written off during the year
Penrice debt written off during the year
Derecognised as part of sale of discontinued operation
Balance carried forward at 30 June
2014
$’000
89,018
(51)
88,967
2,002
2,679
2,723
2013
$’000
83,125
(25)
83,100
1,018
7,734
-
96,371
91,852
25
1,208
(211)
(971)
-
51
252
117
(330)
-
(14)
25
The allowance for doubtful debts is established when there is objective evidence that the Group will not be able to collect
all amounts owing in accordance with 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 Comprehensive Income 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 2014, the nominal value of trade receivables impaired is $121,000 (2013: $25,000). There is considered to be
adequate provision against the balance of 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 2014, trade receivables of $7,996,000 (2013: $5,962,000) were past due but not impaired. These receivables
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 greater than 90 days
2014
$’000
6,227
591
422
756
7,996
2013
$’000
4,866
691
265
140
5,962
66
Annual Report 2014Ridley Corporation Limited Note 8 – Inventories
Current
Raw materials and stores – at cost
Finished goods – at cost
– at net realisable value
Non-Current
Raw materials and stores – at net realisable value
2014
$’000
40,975
210
23,354
64,539
2013
$’000
38,464
180
21,768
60,412
120
360
Write downs of inventories to net realisable value recognised as an expense during the year ended 30 June 2014 were nil
(2013: $10,393,000). The prior year write downs were included in the business restructuring figure in the Consolidated
Statement of Comprehensive Income and in note 3.
Note 9 – Investment properties
Movement in investment properties
Carrying amount at cost at 1 July
Disposal of investment property
Depreciation expense
Transfer from assets held for sale
Transfer from property, plant and equipment
Additions – provision for remediation for Dry Creek (note 15)
Carrying amount at cost at 30 June
2014
$’000
38,451
(1,253)
(21)
-
-
-
37,177
2013
$’000
-
-
-
1,248
32,703
4,500
38,451
Investment properties comprise sites at Lara, Moolap and Dry Creek that have ceased operating and are held for the purpose
of property realisation. The former salt field site at Bowen was sold on 13 May 2014.
A fair value range for the sites at 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 that has been attained at balance date. Consequently, 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 (note 15)
2014
$’000
5,723
2,123
2013
$’000
390
3,949
67
Annual Report 2014Ridley Corporation Limited
Notes to the Financial Statements continued
Note 10 – Property, plant and equipment
2013
Cost or fair value at 1 July 2012
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
2014
Cost at 1 July 2013
Accumulated depreciation
Carrying amount at 1 July 2013
Additions
Impairment
Disposals
Transfers to assets held for sale
Transfers from plant under construction
Depreciation
Carrying amount at 30 June 2014
At 30 June 2014
Cost
Accumulated depreciation
Carrying amount at 30 June 2014
Land and
Buildings
$’000
Plant and
Equipment
$’000
42,890
(3,695)
39,195
-
15,009
-
(13,145)
(1,326)
-
(1,809)
(34)
6,163
(1,085)
42,968
46,014
(3,046)
42,968
541
(132)
-
(700)
551
(981)
42,247
202,745
(117,758)
84,987
22,260
22,447
(2,301)
(29,000)
(2,543)
-
-
(31)
(6,163)
(14,545)
75,111
169,704
(94,593)
75,111
13,176
-
(1,442)
-
(551)
(9,939)
76,355
Salt
Fields
$’000
97,697
-
97,697
-
-
-
(22,533)
(14,741)
(29,529)
(30,894)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
$’000
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
215,718
(97,639)
118,079
13,717
(132)
(1,442)
(700)
-
(10,920)
118,602
Land and
Buildings
$’000
Plant and
Equipment
$’000
Salt
Fields
$’000
Total
$’000
46,274
(4,027)
42,247
180,887
(104,532)
76,355
-
-
-
227,161
(108,559)
118,602
Revaluations
There were no revaluations in 2014. The following revaluations were made in 2013 and recognised in the following accounts:
Reversal of Asset Revaluation Reserve
Salt fields
Deferred tax
Asset Revaluation Reserve
2014
$’000
2013
$’000
-
-
-
29,529
(11,099)
18,430
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.
68
Annual Report 2014Ridley Corporation Limited Note 11 – Intangible assets
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
2014
Carrying amount at 1 July 2013
Additions
Amortisation charge
Disposals
Closing balance at 30 June 2014
Software
$’000
Goodwill
$’000
Contracts
$’000
Licence
$’000
11,828
533
-
(1,972)
-
(1,294)
(647)
8,448
18,426
(9,978)
8,448
8,448
252
(1,736)
(37)
6,927
32,192
-
41,775
-
(5,017)
-
-
68,950
69,903
(953)
68,950
68,950
-
-
-
68,950
751
-
-
(170)
-
-
-
581
850
(269)
581
581
4,500
(920)
-
4,161
Total
$’000
44,771
533
41,775
(2,142)
(5,017)
(1,294)
(647)
77,979
89,179
(11,200)
77,979
77,979
5,205
(2,656)
(37)
80,491
94,347
(13,856)
80,491
-
-
-
-
-
-
-
-
-
-
-
-
453
-
-
453
453
-
453
At 30 June 2014
Cost
Accumulated amortisation/impairment losses
Carrying amount at 30 June 2014
18,641
(11,714)
6,927
69,903
(953)
68,950
5,350
(1,189)
4,161
The amortisation charge is included within general and administrative expenses in the Consolidated Statement
of Comprehensive Income.
Impairments during the year
There were no impairments of intangible assets during the year. In the prior year, an impairment loss of $5,017,000 in respect
of the goodwill that arose from the 2005 acquisition of Dry Creek was recognised within business restructuring expenses in
the Consolidated Statement of Comprehensive Income.
Impairment testing for goodwill
$56.6 million of goodwill has been recognised in the Rendering CGU whilst the balance has been accumulated from a
combination of other CGUs over many years. The Group’s cash-generating unit (CGU) level summary is presented below:
2014
2013
Rendering
$’000
56,616
56,616
Other
$’000
12,334
12,334
Total
$’000
68,950
68,950
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. These assumptions have been
used for the analysis of goodwill in each CGU.
69
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 11 – Intangible assets continued
(i) Cash flow forecasts are based on the 2015 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 rate represents a steady
indexation rate which does not exceed the Group’s expectations of the long-term average growth rate for the business in
which each CGU operates. The growth rates applied to cash flows beyond one year were 3% (2013: 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 10.2% (2013: 9.2%).
A sensitivity analysis was undertaken to examine the effect of a change in a variable on each CGU. For all CGUs a reasonable
possible change in these inputs would not cause the recoverable amount to be below the carrying amount.
Note 12 – Income tax expense
(a) Income tax expense
Current tax
Deferred tax
(Over) provided in prior years
Aggregate income tax expense/(benefit)
Income tax expense/(benefit) is attributable to:
Profit/(loss) from continuing operations
Profit from discontinuing operations
(b) Reconciliation of income tax expense and pre-tax accounting profit
Profit/(loss) from continuing operations before income tax expense
(Loss) from discontinued operations before income tax expense
Profit/(loss) before income tax
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
(Over) provision in prior year
Research and development allowance
Disposal of subsidiary
Impairment
Other
Income tax expense/(benefit)
2014
$’000
4,060
1,402
(1,032)
4,430
4,430
-
4,430
22,043
-
22,043
6,613
-
16
362
133
(1,032)
(920)
-
-
(742)
4,430
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)
(c) Income tax recognised directly in equity
Aggregate current and deferred tax arising in the period and not recognised in net comprehensive
income but directly debited or (credited) to equity
-
10,987
70
Annual Report 2014Ridley Corporation Limited Note 13 – Tax assets and liabilities
Current
Tax asset
Tax liability
Non-current
Deferred tax asset
Movement in deferred tax asset/(liability):
Opening balance at 1 July
Credited/(charged) to the Statement of Comprehensive Income (note 12)
Credited/(charged) to comprehensive income
Disposal of subsidiary
Closing balance at 30 June
Recognised deferred tax assets and liabilities
2014
$’000
-
4,233
2013
$’000
412
-
1,879
3,281
3,281
(1,402)
-
-
1,879
(7,493)
9,087
10,987
(9,300)
3,281
Consolidated
Intangibles
Doubtful debts
Property, plant and equipment
Employee entitlements
Provisions
Other
Tax assets/(liabilities)
Assets
Liabilities
Net
2014
$’000
-
15
4,880
4,515
730
1,716
11,856
2013
$’000
-
7
6,866
4,088
30
1,916
12,907
2014
$’000
(1,998)
-
(7,979)
-
-
-
(9,977)
2013
$’000
(2,794)
-
(6,832)
-
-
-
(9,626)
2014
$’000
(1,998)
15
(3,099)
4,515
730
1,716
1,879
2013
$’000
(2,794)
7
34
4,088
30
1,916
3,281
Movement in net deferred tax assets and liabilities
Balance
1 July 2012
$’000
Recognised
in Profit
or Loss
$’000
Recognised
in Other
Comprehensive
Income
$’000
Disposal of
Subsidiary
Balance
30 June
2013
$’000
Recognised
in Profit
or Loss
$’000
Balance
30 June
2014
$’000
Consolidated
Intangibles
Doubtful debts
Property, plant
and equipment
Employee
entitlements
Provisions
Other
Tax asset/(liability)
284
72
(3,078)
(65)
-
-
-
-
(2,794)
7
796
8
(1,998)
15
(12,789)
11,206
11,099
(9,482)
34
(3,133)
(3,099)
3,606
587
747
(7,493)
594
(577)
1,007
9,087
(112)
-
-
10,987
-
20
162
(9,300)
4,088
30
1,916
3,281
427
700
(200)
(1,402)
4,515
730
1,716
1,879
71
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 14 – Payables
Current
Trade creditors and accruals
Capital return
Other creditors
Note 15 – Provisions
Current
Employee entitlements
Provision for remediation(a)
Contingent consideration
Non-current
Employee entitlements
Provision for remediation
2014
$’000
2013
$’000
125,921
-
3,496
129,417
121,754
23,086
7,734
152,574
2014
$’000
11,011
2,123
-
13,134
949
-
949
2013
$’000
9,889
2,213
600
12,702
1,181
1,736
2,917
(a) Provision is made for remediation of site closure, restoration and environmental costs when the obligation is known and can be reliably measured. The ultimate
cost of remediation is uncertain and management uses its judgement and experience to provide for these costs at balance date. Cost estimates can vary in
response to many factors. The expected timing of expenditure included in cost estimates can also change, for example as additional or better information becomes
available as to the extent of any site remediation required. As a result, there could be significant adjustments to the provision for remediation which would affect
future financial results. Refer to note 34 accounting policies for the detailed policy on provision for remediation.
Movement in provisions
Opening balance at 1 July 2013
Payment of contingent consideration
Reversal of contingent consideration credited to statement of comprehensive income
Provision utilisation
Closing balance at 30 June 2014
Contingent
Consideration Remediation
3,949
-
-
(1,826)
2,123
600
(350)
(250)
-
-
72
Annual Report 2014Ridley Corporation Limited Note 16 – Finance facilities
Borrowings – non-current
Bank loans
2014
$’000
2013
$’000
55,584
34,771
The bank loans are subject to bank covenants based on financial ratios of the Group. As at 30 June 2014, and throughout all
relevant times during the financial year ended 30 June 2014, the Group was in compliance with these covenants. The bank loans
are unsecured.
Total loan facilities available to the Group in Australian dollars
Loan facility
Overdraft facility
Cash
(a) Long Term Loan facility
(a)
(b)
2014
2013
Limits
$’000
Utilised
$’000
Limits
$’000
100,000
56,000
126,000
-
-
-
10,000
(19,241)
-
(16,936)
100,000
36,759
136,000
18,064
Utilised
$’000
35,000
-
On 24 December 2013, a Second Amendment Deed to the original 28 December 2010 dual bank facility was executed for a
facility limit of $100 million and with a maturity date extended from 29 December 2014 to 31 January 2019. The borrowing
facility comprises unsecured bank loans with floating interest rates subject to negative pledge arrangements which require the
Group to comply with certain minimum financial requirements. The key covenant ratios under the facility remain interest cover,
debt cover, gearing and consolidated net worth. The Group is in compliance with all facility covenants.
(b) Overdraft facility
The Group formerly had a $10,000,000 (2013: $10,000,000) net overdraft facility which was cancelled on 5 February 2014.
Although $9,240,000 of this facility was utilised by the parent company of the Group at 30 June 2013, at the same date there
was no draw down against this facility from a consolidated perspective given the offsetting of subsidiary cash balances within
the consolidated Group.
Trade payable facility
The Group has a trade payable facility which 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 within an overall facility limit of $50,000,000 (2013: $30,000,000).
The amount utilised and recorded within current payables at 30 June 2014 was $20,443,402 (2013: $22,069,996).
Offsetting of financial instruments
The Group does not set off financial assets with financial liabilities in the financial statements. Under the terms of the loan facility
agreement if the Group does not pay an amount when due and payable, the Bank may apply any credit balance in any currency
in any account of the Group’s with the bank in or towards satisfaction of that amount.
As at 30 June 2014, the value of legally enforceable cash balances which upon default or bankruptcy would be applied to the
loan facility is $17,809,000 (2013: $15,863,000).
73
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 17 – Share capital
Fully paid up capital: 307,817,071 ordinary shares with no par value (2013: 307,817,071)
(a) Movements in ordinary share capital
Date
1 July 2012
24 June 2013
30 June 2013
30 June 2014
Details
Balance
Capital return(c)
Balance
Balance
Parent Entity
2014
$’000
214,445
2013
$’000
214,445
Number of Shares
307,817,071
-
307,817,071
307,817,071
$’000
237,531
(23,086)
214,445
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 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 liability was recognised in Current Payables
at 30 June 2013 (refer note 14).
(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
2014
$’000
55,584
(19,241)
36,343
219,774
16.5%
2013
$’000
34,771
(16,936)
17,835
207,553
8.6%
74
Annual Report 2014Ridley Corporation Limited Note 18 – Reserves and retained earnings
(a) Reserves
Share-based payments reserve
Opening balance at 1 July
Options and performance rights expense
Share-based payment transactions
Retained earnings transfer
Closing balance at 30 June
Revaluation Reserve
Opening balance at 1 July
Revaluation
Deferred tax on revaluation
Transfer to retained earnings on disposal of subsidiary
Closing balance at 30 June
Foreign currency translation reserve
Opening balance at 1 July
Currency translation differences arising during the year
Disposal of subsidiary
Closing balance at 30 June
(b) Retained earnings
Opening balance at 1 July
Actuarial profits on defined benefit superannuation – net of tax
Net profit/(loss) for the year
Dividends paid
Share-based payments reserve transfer
Disposal of subsidiary
Closing balance at 30 June
(c) Nature and purpose of reserves
(i) Share-based payments reserve
2014
$’000
1,487
1,851
(2,749)
(214)
375
-
-
-
-
-
-
-
-
-
(8,379)
123
17,613
(4,617)
214
-
4,954
2013
$’000
671
2,691
(2,065)
190
1,487
25,971
(29,529)
11,099
(7,541)
-
(1,270)
(352)
1,622
-
15,468
260
(21,694)
(11,543)
(190)
9,320
(8,379)
The Share-based payments reserve is used to recognise the fair value of performance rights and options issued to employees
in relation to equity settled share-based payments.
(ii) Revaluation Reserve
The Revaluation Reserve is used to record increments and decrements on the revaluation of certain non-current assets.
(iii) Foreign currency translation reserve
In 2013 exchange differences arising on translation of the discontinued foreign controlled entity were taken to the foreign
currency translation reserve. The reserve was recognised in the Statement of Comprehensive Income as the foreign controlled
entity was disposed of as part of the sale of the Cheetham Salt group on 28 February 2013.
75
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 19 – Dividends
Dividends paid during the year
Year ended 30 June 2014
Interim dividend in respect of the current financial year
50% franked
Dividend paid
30 April 2014
Per share
1.5 cents
Year ended 30 June 2013
Final dividend in respect of the prior financial year
Dividend paid
Fully franked 30 September 2012
Per share
3.75 cents
Paid in cash
Non-cash dividends paid on employee in-substance options
2014
$’000
4,572
45
4,617
2014
$’000
4,617
2013
$’000
11,543
2013
$’000
11,427
216
11,543
Dividends not recognised at year end
In accordance with Company policy to pay any dividends at the end of April and October, the
consolidated entity will consider the payment of a 2014 final dividend at its September 2014 Board
meeting and will announce its 2014 final dividend decision to the market at the appropriate time.
-
-
Dividend franking account
Amount of franking credits available at 30 June to shareholders of Ridley Corporation Limited for
subsequent financial years
156
2,750
Note 20 – 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. Management evaluates and hedges
financial risks where appropriate. The Board approves 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
(i) 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.
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 dollar, New Zealand dollar 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.
76
Annual Report 2014Ridley Corporation Limited Foreign currency cash and forward exchange contracts
The Group holds foreign currency bank accounts in US dollars, New Zealand dollars and Euros which are translated into
Australian dollar using spot rates. These foreign currency bank accounts and at times 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’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
Net Balance Sheet exposure
Forecast purchases
Forward exchange contracts
Net exposure
USD
7,310
(494)
6,816
(6,816)
-
-
2014
NZD
669
-
669
(669)
-
-
EUR
399
-
399
(399)
-
-
2013
USD
1,143
(565)
578
(578)
-
-
EUR
775
-
775
(775)
-
-
At 30 June 2014, the net fair value of forward exchange contracts resulting in a liability of nil (2013: nil) has been recognised
by the Group for the fair value of forward foreign exchange contracts.
Foreign currency sensitivity
A change of a 10% strengthening or weakening in the closing exchange rate of the foreign currency bank balances at
the reporting date for the financial year would have increased or decreased the Group’s reported comprehensive income and the
Group’s equity by $762,000 (2013: $174,000). A sensitivity of 10% has been selected as this is considered reasonable taking into
account the current level of exchange rates and the volatility observed both on a historical basis and on market expectations for
future movements. The Directors cannot nor do not seek to predict movements in exchange rates.
(i) Cash flow and fair value interest rate risk
As the Group has no significant interest bearing assets, the Group’s income and operating cash inflows 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 were incurring an average variable interest rate of 4.87% (2013: 4.92%).
Interest rate risk exposures
The Group’s exposure to interest rate risk and the effective weighted average interest rate for each class of financial assets
and financial liabilities is set out below.
Exposures arise predominantly from assets and liabilities bearing variable interest rates as the Group intends to hold fixed rate
assets and liabilities to maturity.
Variable rate instruments
Cash
Bank loans – Australia
Interest
Rate
2014
$’000
-
4.87%
19,241
56,000
Interest
Rate
-
4.92%
2013
$’000
16,936
35,000
77
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 20 – Financial risk management continued
Interest rate sensitivity
A change of 10 basis points in interest rates at the reporting date annualised for the financial year would have increased or
decreased the Group’s reported comprehensive income by $389,000 (2013: $243,000) and the Group’s equity by $389,000
(2013: $243,000).
(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 the risk arises principally from the Group’s receivable 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 financial institutions with a high credit rating. 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
2014
$’000
88,967
2,679
19,241
110,887
2013
$’000
83,125
7,734
16,936
107,795
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, and by 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 16.
78
Annual Report 2014Ridley Corporation Limited The following tables disclose the contractual maturities of financial liabilities, including estimated interest payments:
2014
Non-derivative financial liabilities
Trade and other payables
Bank loans
2013
Non-derivative financial liabilities
Trade and other payables
Bank loans
Carrying
Amount
$’000
Less than
1 year
$’000
129,417
55,584
185,001
129,417
2,575
131,992
1 to 2
years
$’000
-
2,575
2,575
2 to 3
years
$’000
-
2,575
2,575
Total
Contractual
Cash Flows
$’000
3 to 4
years
$’000
-
58,159
58,159
129,417
65,884
195,301
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
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 21 – Commitments for expenditure
During the year ending 30 June, the Group entered into contracts which are not yet settled
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.
2014
$’000
2013
$’000
4,549
2,820
3,564
2,854
3,946
1,477
11,841
4,018
2,290
4,448
902
11,658
79
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 22 – 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
2014
$’000
567
2013
$’000
450
Salt field damage subject to Insurance
In the prior year, a Queensland Flood Insurance Claim Agreement was entered into between Ridley and CK Life Sciences Int’l.,
(Holdings) Inc. (CKLS), the purchaser of Cheetham Salt, whereby Ridley indemnified CKLS for the estimated cost of up to
$7,734,000 to repair damage to its Queensland salt fields caused by severe flooding. A claim for the full amount of the
remediation costs incurred by Cheetham Salt, less the excess of $250,000 under the policy as borne by Ridley, is being
progressed by Ridley under its Industrial Special Risks insurance policy. At balance date, an insurance receivable of $2,679,000
has been included in current receivables (see note 7) and the corresponding amount owing to CKLS has been included in current
payables (see note 14). During the current year, progress insurance payments have been received by Ridley and reimbursement
payments made by Ridley to CKLS through Cheetham Salt. The remediation works and claim were still in progress at year end
and are expected to be concluded in the first half of the coming year.
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 23 – Auditors’ remuneration
(a) Audit and review of financial reports
Auditors of the Company KPMG Australia
(b) Other services
Auditors of the Company KPMG Australia – in relation to other assurance,
taxation and due diligence services
Total remuneration of auditors
2014
$
2013
$
383,308
496,863
223,020
606,328
285,775
782,638
80
Annual Report 2014Ridley Corporation Limited Note 24 – Related party disclosures
Investments
Information relating to investments accounted for using the equity method is set out in note 30.
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 26.
2014
$’000
2013
$’000
-
-
-
1,940
-
6,594
1,693
35
7,917
3,527
-
2,448
12,022
4,190
299
581
2014
$
4,385,186
265,970
-
-
10,000
1,233,360
5,894,516
2013
$
3,852,822
245,480
26,481
629,124
412,232
1,139,717
6,305,856
Transactions with related parties
Transactions with related parties were as follows:
Dividend revenue
– associates
– joint arrangements
Directors’ fees
– joint arrangements
Sales of products
– associates
– joint arrangements
Purchases of products
– joint arrangements
Purchases of products
– associates
Outstanding balances with related parties were as follows:
Current payable
– associates
Outstanding balances are unsecured and repayable in cash.
Key management personnel compensation
Short term employee benefits
Post-employment benefits
Retirement benefits
Termination benefits
Other benefits
Share-based payments
Total KMP compensation
81
Annual Report 2014Ridley Corporation Limited
Notes to the Financial Statements continued
Note 25 – Share-based payments
Share-based payment arrangements
Ridley Corporation Long Term Incentive Plan
The purpose of the Ridley Corporation Long Term Incentive Plan (LTIP) is to provide long term rewards that are linked to shareholder
returns. Under the LTIP, selected executives and the Managing Director may be offered a number of performance rights (Right).
Each Right provides the entitlement to acquire one Ridley share at nil cost 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 (SRP Right). The once only offer
was made in accordance with the rules of the LTIP except that there were no disposal restrictions and the cessation of
employment clause was superseded, such that the SRP Rights under this offer vested in full on the earlier occurrence of:
(i) completion of two years of service from the 5 May 2012 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 provided the entitlement to acquire one Ridley share at the end of the service period. The SRP concluded on 5 May
2014 with the vesting of the final 900,000 SRP Rights for remaining Ridley Group employees. Of the total of 2,300,000 SRP
Rights issued in May 2012, 75,000 were cancelled on early employee departure and the remaining 2,225,000 SRP Rights vested.
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%, 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 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) Current year issues under the Ridley Corporation Long Term Incentive Plan
The model inputs for the performance rights granted during the reporting period under the LTIP included:
Grant date
Expiry date
Share price at grant date
Fair value at grant date
Expected price volatility of the Company’s shares
Expected dividend yield
Risk-free interest rate
1 July 2013
1 July 2016
$0.83
$0.42
26%
4.8%
2.9%
82
Annual Report 2014Ridley Corporation Limited The expected share price volatility is based on the historic volatility (based on the remaining life of the performance rights),
adjusted for any expected changes to future volatility due to publicly available information.
Details of performance rights outstanding under the plans at balance date are as follows:
2014
Grant Date
Long‑Term Incentive Plan
5 December 2010
5 December 2011
1 July 2013
Expiry Date
5 December 2013
5 December 2014
1 July 2016
Special Retention Plan
5 May 2012
5 May 2014
2013
Grant Date
Expiry Date
Long‑Term Incentive Plan
5 December 2009
5 December 2010
5 December 2011
5 December 2012
5 December 2013
5 December 2014
Special Retention Plan
5 May 2012
5 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
1,843,000
1,750,000
-
3,593,000
-
-
2,525,000
2,525,000
(635,443)
(32,017)
(50,000)
(717,460)
(1,207,557)
(185,459)
-
(1,393,016)
-
1,532,524
2,475,000
4,007,524
1,850,000
5,443,000
-
2,525,000
(25,000)
(742,460)
(1,825,000)
(3,218,016)
-
4,007,524
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
(ii) Ridley Employee Share Scheme
The fair value at grant date of the options issued during the year through the Employee Share Scheme was measured based on
the binomial model. The model inputs for valuation of 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
23 May 2014
3 years
$0.48
26%
5.3%
3.8%
83
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 25 – Share-based payments continued
Employee Share Scheme Option movements
2014 Number of shares
Grant Date
29 January 2002
28 January 2003
13 February 2004
5 April 2005
10 April 2006
13 April 2007
11 April 2008
3 April 2009
30 April 2010
30 April 2011
30 April 2012
26 April 2013
23 May 2014
Date Shares
Become
Unrestricted
29 January 2005
28 January 2006
13 February 2007
5 April 2008
10 April 2009
13 April 2010
11 April 2011
3 April 2012
30 April 2013
30 April 2014
30 April 2015
26 April 2016
23 May 2017
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
$0.48
Balance at
Start 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
Granted
During
the Year
-
-
-
-
-
-
-
-
-
-
-
-
933,780
933,780
Exercised
During
the Year
(6,000)
(10,800)
(122,045)
(11,745)
(10,612)
(15,831)
(19,723)
(44,340)
(43,956)
(33,176)
(29,772)
(38,896)
(2,370)
(389,266)
Balance at
End of
the Year
43,000
81,000
-
109,620
133,408
167,105
216,953
384,280
306,064
321,204
377,112
797,368
931,410
3,868,524
Exercisable
at End of
the Year
43,000
81,000
-
109,620
133,408
167,105
216,953
384,280
306,064
321,204
-
-
-
1,762,634
Weighted average exercise price
$0.58
$0.48
$0.58
$0.53
$0.58
The options outstanding have a weighted average contractual life of three years (2013: three years).
2013 Number of shares
Grant Date
29 January 2002
28 January 2003
13 February 2004
5 April 2005
10 April 2006
13 April 2007
11 April 2008
3 April 2009
30 April 2010
30 April 2011
30 April 2012
26 April 2013
Date Shares
Become
Unrestricted
29 January 2005
28 January 2006
13 February 2007
5 April 2008
10 April 2009
13 April 2010
11 April 2011
3 April 2012
30 April 2013
30 April 2014
30 April 2015
26 April 2016
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
Share-based payment expense
Shares issued under the Employee Share Scheme
Performance rights issued under long term incentive and special retention plans
Total share-based payment expense
2014
$’000
448
1,403
1,851
2013
$’000
370
2,320
2,690
84
Annual Report 2014Ridley Corporation Limited Note 26 – Retirement benefit obligations
Superannuation
The Group sponsors the Ridley Superannuation Plan – Australia which is administered by Mercer. The fund provides available
benefits on a 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 plan.
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 Comprehensive Income for the year is $4,589,000 (2013: $5,616,000).
Defined Benefit Plan
The Defined Benefit Plan was closed during the year. A Voluntary Transfer Offer from defined benefit to accumulation was made
by the Company to all remaining fund participants. With effect from 30 September 2013, all remaining Defined Benefit Plan
members accepted the offer and were transferred to the Ridley Superannuation Plan – Australia.
The following notes (a) to (e) set out details in respect of the Defined Benefit Plan 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
(b) Categories of Defined Benefit Plan assets
The major categories of plan assets are as follows:
Cash
Equity instruments
Debt instruments
Property
Other
2014
$’000
-
-
-
2013
$’000
1,337
(1,228)
109
2014
-
-
-
-
-
2013
6%
58%
19%
11%
6%
85
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 26 – Retirement benefit obligations continued
(c) Reconciliations
Reconciliation of the present value of the Defined Benefit Plan obligations
Opening balance at 1 July
Current service cost
Interest cost
Actuarial (gains)/losses
Benefits, expenses and insurance premiums paid
Contributions by plan participants
Past service cost
Closing balance at 30 June
Reconciliation of the fair value of plan assets
Opening balance at 1 July
Actual/expected return on plan assets
Actuarial gains/(losses)
Employer contributions
Contributions by plan participants
Benefits, expenses and insurance premiums paid
Closing balance at 30 June
Expense recognised in Statement of Comprehensive Income
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
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
(e) 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
2014
$’000
-
-
-
-
-
86
2014
$’000
1,337
15
11
(4)
(1,385)
7
19
-
1,228
130
-
20
7
(1,385)
-
15
47
-
-
62
-
2013
$’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
1,729
(123)
1,606
2,101
(372)
1,729
2014
3.50%
2.50%
-
2011
$’000
2,106
(1,834)
272
35
166
2013
3.10%
2.50%
6.75%
2010
$’000
2,979
(2,888)
91
87
(8)
Annual Report 2014Ridley Corporation Limited Note 27 – Investment in controlled entities
The ultimate parent entity within the Group is Ridley Corporation Limited.
Name of Entity
Ridley AgriProducts Pty Ltd and its controlled entity
CSF Proteins Pty Ltd
Barastoc Stockfeeds Pty Ltd
Diamond Salt Pty Limited1
RCL Retirement Pty Limited
Ridley Land Corporation Pty Ltd and its controlled entities
Lara Land Development Corporation Pty Ltd
Ridley Dry Creek Pty Ltd
Moolap Land Development Corporation Pty Ltd
Bowen Land Development Corporation Pty Ltd2
1. Non-trading company which is in the process of being de-registered.
2. Company was sold on 9 May 2014.
Country of
Incorporation
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Class of
Shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ownership Interest
2014
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
2013
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Note 28 – Parent Entity
As at and throughout the financial year ending 30 June 2014, 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
2014
$’000
25,724
123
25,847
6,064
302,596
308,660
10,870
55,734
66,604
242,056
214,445
375
27,236
242,056
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
GST liabilities of other entities within the GST group
515
1,044
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 the debts of certain
of its subsidiaries which are party to the deed.
Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed, are disclosed in note 29.
87
Annual Report 2014Ridley Corporation Limited
Notes to the Financial Statements continued
Note 29 – 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.
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 but not wholly owned by Ridley Corporation Limited, they also represent the Extended Closed Group.
(a) Summarised Consolidated Statement of Comprehensive Income
2014
$’000
22,043
(4,430)
17,613
(8,379)
123
17,613
214
(4,617)
-
4,954
2013
$’000
(16,934)
3,407
(13,527)
24,023
260
(13,527)
(190)
(11,543)
(7,402)
(8,379)
2014
$’000
2013
$’000
19,241
96,371
64,539
1,370
-
181,521
2,217
1,084
34,012
118,602
80,491
120
1,879
238,405
419,926
16,936
91,852
60,412
670
412
170,282
2,194
-
34,032
118,079
77,979
360
3,260
235,904
406,186
Profit/(loss) before income tax
Income tax benefit/(expense)
Profit/(loss) after income tax
(b) Summary of movements in retained profits
Opening balance at 1 July
Actuarial gains on defined superannuation benefit – net of tax
Profit for the year
Share-based payment reserve transfer
Dividends paid
Disposal of subsidiary
Closing 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
Investments accounted for using the equity method
Available-for-sale financial asset
Investment properties
Property, plant and equipment
Intangible assets
Inventories
Deferred tax asset
Total non-current assets
Total assets
88
Annual Report 2014Ridley Corporation Limited Current liabilities
Payables
Tax liabilities
Provisions
Retirement benefit obligations
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
2014
$’000
2013
$’000
126,252
4,233
13,134
-
143,619
125,048
-
35,788
109
160,945
55,584
949
56,533
34,771
2,917
37,688
200,152
219,774
198,633
207,553
214,445
375
4,954
219,774
214,445
1,487
(8,379)
207,553
Note 30 – Investments accounted for using the equity method
Name of Company
Associates
Consolidated Manufacturing
Enterprise Pty Ltd and
Swanbrook Road Holding Trust
Joint venture entities
Ridley Bluewave Pty Ltd1
Nelson Landholdings Pty Ltd as
Trustee for Nelson Landholdings Trust2
Investments accounted for using
the equity method
Principal
Activity
Country of
Incorporation
Ownership Interest
2013
%
2014
%
Carrying Amount
2013
2014
$’000
$’000
Feed production Australia
25
25
2,217
2,194
Animal protein
production
Property
realisation
Australia
Australia
50
50
-
-
-
-
-
-
2,217
2,194
1. Ridley Bluewave Pty Ltd was incorporated on 1 June 2014 and did not conduct any activity during the financial year.
2. The Company and Unit trust were established on 28 May 2014 as the corporate structure through which any ultimate development of the Moolap site would be
managed. There are a number of restrictions for this entity to protect the interests of each party, (being Ridley and development partner Sanctuary Living) which
cause the entity to be reported as a joint venture rather than controlled entity. Despite this classification for reporting purposes, Ridley retains full control of the
value and use of the land at Moolap until such time as Ridley resolves to commit the land to the project.
89
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 30 – Investments accounted for using the equity method continued
Investments in associates and joint venture 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 common balance date of the associate and
joint venture entities is 30 June.
Carrying amount of investments accounted for using the equity method
Opening carrying amount at 1 July
Share of investments disposed
Share of operating profits/(losses) after income tax
Share of operating profits after income tax – discontinued operations
Dividends received – discontinued operations
Closing carrying amount at 30 June
2014
$’000
2,194
-
23
-
-
2,217
2013
$’000
52,521
(46,486)
(116)
4,562
(8,287)
2,194
Summarised financial information of equity accounted investees, not adjusted for the percentage ownership held by the Group,
is provided following.
Current assets
Non-current assets
Total assets
Current liabilities
Total liabilities
Net assets
Revenue
Net profit after tax
There are no material reserves or contingent liabilities of the associated companies.
Note 31 – Available-for-sale financial asset
Non-current
Unlisted equity security
1,762
3,006
4,768
1,416
1,416
3,352
1,489
2,718
4,207
945
945
3,262
11,367
68
49,471
8,263
2014
$’000
1,084
2013
$’000
-
The unlisted equity security is not traded in active markets. This asset is shares in Bluewave Management Inc., initially recorded
at a fair value of USD $1 million. This holding represents a 5% investment in Bluewave Management Inc., an entity incorporated
in Panama with several overseas high protein concentrate plants and access to technology rights which Ridley has acquired for
Australasia and selected territories in the Pacific Islands. There is no Ridley Board representation or other influence on Bluewave
Management Inc.
90
Annual Report 2014Ridley Corporation Limited Note 32 – Acquisitions
Acquisitions for the year ended 30 June 2014
There were no acquisitions for the year ended 30 June 2014.
Acquisitions for the year ended 30 June 2013
Contingent consideration for 2013 acquisitions of business assets and liabilities
On 15 August 2012, CSF Proteins 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 stockfeed 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 at 30 June 2013 and was paid on 16 August 2013 upon attainment of the performance targets.
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 at 30 June 2013. Earnings performance targets were not met and the contingent consideration was
not paid and the provision reversed.
2013 acquisition of Laverton rendering business
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, excluding acquisition costs.
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.
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.
2013 identifiable assets acquired and liabilities assumed, and attributable goodwill
The following CSF Proteins Melbourne fair values were 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 was fair valued at selling prices less the costs of disposal and an estimate of the reasonable profit
margin for the selling effort of the acquirer. Leave benefit entitlements for all transferring employees were assumed by the Group
and an 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.
91
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 32 – Acquisitions continued
2013 identifiable assets acquired and liabilities assumed, and attributable goodwill continued
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 of businesses acquired:
Property, plant and equipment
Inventories
Prepayments
Employee entitlement provisions (tax effected)
Total net identifiable assets
Goodwill
2013
$’000
77,078
37,456
939
58
(1,354)
37,099
39,979
With regard to the prior year acquisitions, the Group incurred acquisition-related costs of $3,234,000 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 expenses in the Group’s Consolidated Statement of
Comprehensive Income.
Note 33 – Events occurring after the balance sheet date
No other matters or circumstances have arisen since 30 June 2014 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.
Note 34 – 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 2014 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 is primarily involved in the manufacture of animal nutrition solutions.
The Financial Report was authorised for issue by the Directors on 20 August 2014.
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. 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).
92
Annual Report 2014Ridley Corporation Limited
Application of new and revised accounting standards and interpretations
The Group has adopted all of the new and revised standards and interpretations issued by the AASB that are relevant to its
operations and effective for the current year. New and revised standards and amendments thereof, and interpretations effective
for the current year that are relevant to the Group, include:
• AASB 10 ‘Consolidated Financial Statements’.
• AASB 2011-7 ‘Amendments to Australian Accounting Standards arising from the consolidation and Joint Arrangements
standards’.
• AASB 11 ‘Joint Arrangements’.
• AASB 12 ‘Disclosure of Interests in Other Entities’.
• AASB 13 ‘Fair Value Measurement’ and AASB 2011-8 ‘Amendments to Australian
• Accounting Standards arising from AASB 13’.
• AASB 119 ‘Employee Benefits’ (2011) and AASB 2011-10 ‘Amendments to Australian Accounting Standards arising from
AASB 119 (2011)’.
The Group has early adopted AASB 2013-3 ‘Amendments to AASB 136 Recoverable Amount Disclosures for Non-Financial Assets’.
The application of the new and revised standards has had no material impact on the disclosures or on the amounts recognised
in the current or prior period, and are not likely to affect future periods.
The following standards, amendments and interpretations, are effective for annual periods beginning after 1 July 2014 and have
been identified as those which may impact the Group 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 2017 but is available for early adoption.
The Group is yet to assess its full impact but considers it is not likely to have a material effect.
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 comprehensive income; 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.
93
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 34 – Summary of Significant Accounting Policies continued
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, or
CGUs). The recoverable amounts of CGUs 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) Investment properties
The Group measures investment properties at cost. A fair value range cannot be determined reliably 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. The valuation of investment properties
requires judgement to be applied in selecting appropriate valuation techniques and setting valuation assumptions. The Group
engages independent valuers to provide an indicative value for its material investment properties in the context of assessing
for impairment.
(iii) Provision for remediation
Provision is made for remediation of site closure, restoration and environmental costs when the obligation is known and can
be reliably measured, based on the net present value of estimated future costs with an appropriate probability weighting of the
different remediation, closure or other activities required to satisfy the closure obligations. The ultimate cost of remediation is
uncertain and management uses its judgment and experience to provide for these costs at balance date. Cost estimates can
vary in response to many factors including changes to the relevant legal or local/national government ownership requirements,
review of remediation and relinquishment options, timing of the expenditures and the effects of inflation.
The expected timing of expenditure included in cost estimates can also change, for example as additional or better information
becomes available as to the extent of any site remediation required. Cash flows extending beyond the next 12 months must be
discounted if this has a material effect. The selection of appropriate sources on which to base the calculation of the risk-free
discount rate used for such obligations also requires judgement.
As a result of all of the above factors, there could be significant adjustments to the provision for remediation which would affect
future financial results. Increases and decreases in site holding obligations are charged directly to the Consolidated Statement of
Comprehensive Income. Increases and decreases in remediation obligations are capitalised to investment property. The
corresponding accounting entry for an increase in closure provision would be an increase in the carrying value of the relevant
investment property, which might potentially impact any future impairment considerations.
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.
Goodwill on a business combination is measured by the Group 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 at 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.
94
Annual Report 2014Ridley Corporation Limited Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The
financial statements of subsidiaries are included in the consolidated financial statements from the date on which control
commences until the date on which control ceases.
Intercompany transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated.
Accounting policies of subsidiaries are changed where necessary to ensure consistency with the policies adopted by the Group.
Interests in equity-accounted investees
Associates are those entities where the Group has significant influence, but not control or joint control, over the financial and
operating policies. A joint venture is an arrangement in which the Group has joint control. 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 Consolidated
Statement of Comprehensive Income, 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 and used by 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. The financial results of each operating segment are regularly reviewed
by the Group’s Managing Director in order 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.
The Group has two reportable segments, as described below, which are the Group’s strategic business units. 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.
The following summary describes the operations in each of the Group’s reportable segments:
AgriProducts
Australia’s leading supplier of premium quality, high performance animal nutrition solutions.
Property
Realisation of opportunities in respect of surplus property assets and sales of residual property site assets.
In the prior year, the Group had a third reportable segment which comprised both a continuing and discontinuing operation:
Salt – discontinued operation
Salt (previously a continuing operation
but since discontinued)
Produces, refines and markets salt, and has investments in associated companies.
This business, operating through the Cheetham Salt Limited group of entities,
was sold on 28 February 2013.
Comprised the Dry Creek salt operation which produced and sold salt exclusively
to Penrice under a long term Supply Agreement which was terminated by Penrice
on 1 July 2013. The salt operation ceased at that date and a site closure program
commenced which involves disposal of surplus assets and rehabilitation of the
site. The Dry Creek site is now included within the Property segment from 1 July
2013.
The basis of inter-segmental transfers is market pricing. Results are calculated on before consideration of net borrowing costs
and tax expense basis. Segment assets exclude deferred tax balances and cash, which have been included as unallocated assets.
95
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 34 – Summary of significant accounting policies continued
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 Consolidated
Statement of Comprehensive Income.
(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 prevailing 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
Consolidated Statement of Comprehensive Income as part of the comprehensive income 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, for capital appreciation, or for both, but not for sale in the
ordinary course of business, for 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. Any gain or loss on disposal of an investment property is recognised in profit and loss.
Depreciation is calculated using the straight-line method to allocate cost or revalued amounts, net of their residual values,
over the estimated useful lives of the assets, and for buildings over a 40-year period.
Property, plant and equipment
Land and buildings are stated at cost, or deemed cost, less accumulated depreciation and impairment.
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 Consolidated Statement of Comprehensive Income during the financial period
in which they are incurred.
Land (and in prior years 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 and are included in the
Consolidated Statement of Comprehensive Income.
Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be
received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised
in comprehensive income over the period necessary to match them with the costs that they are intended to compensate.
The value of government grants relating to the purchase of property, plant and equipment is deducted from the carrying
amount of the asset. The grant is recognised in comprehensive income over the life of the depreciable asset as a reduced
depreciation expense.
96
Annual Report 2014Ridley Corporation Limited 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 of an asset (or disposal group) less costs to sell, 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 Group 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 Consolidated Statement of Comprehensive Income.
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 comprehensive income.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of
investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences
and it is probable that the differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and
when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity
has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability
simultaneously. Deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.
Tax consolidation
Ridley Corporation Limited and its wholly owned Australian controlled entities are part of a tax consolidated group. The entities
in the tax consolidated group are part a tax sharing agreement which limits the joint and several liability of the wholly owned
entities in the case of a default by the head entity, Ridley Corporation Limited. The agreement provides for the allocation of
income tax liabilities between the entities should Ridley Corporation Limited default on its payment obligations. At balance
date the possibility of default is considered to be remote.
Under the tax sharing agreement, 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 for 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.
97
Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 34 – Summary of Significant Accounting Policies continued
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 comprehensive income) 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.
(a) 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.
(b) Available‑for‑sale financial asset
Available-for-sale financial asset comprises an investment in an unlisted equity security. This type of asset is a non derivative that
is either designated in this category or not classified in any of the other categories. The asset is classified as a non-current asset
unless the investment matures or management intends to dispose of the investment within 12 months of the end of the
reporting period. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable
payments and management intends to hold them for the medium to long term.
Investments in equity instruments is recognised initially at fair value. After initial recognition, the investment in equity instrument
does not have a quoted market price in an active market whose fair value cannot be reliably measured. As the probability of
various estimates cannot be reasonably assessed, the Group is precluded from measuring the instrument at fair value.
(c) 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.
(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 comprehensive income) 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 Consolidated Statement of
Comprehensive Income.
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.
98
Annual Report 2014Ridley Corporation Limited 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. Goodwill 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 impairment 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) Contracts and licence
The contracts and licence intangible assets represents acquired contractual legal rights which have finite useful lives and which
are amortised over periods of between five and 20 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 the carrying amount may no longer 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 have previously suffered impairment are reviewed for possible reversal of the impairment
at each reporting date.
Employee benefits
(i) Defined benefit superannuation funds
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan.
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.
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 Consolidated Statement of Other Comprehensive Income.
Past service costs are recognised immediately in comprehensive income, 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 comprehensive income 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.
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Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 34 – Summary of significant accounting policies continued
(iii) Share-based payments
Share-based compensation benefits are provided to employees via incentive plans described in note 25.
Ridley Corporation Long Term Incentive 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, term of the option, vesting and performance criteria, impact of dilution, non-tradeable nature of the performance
rights, share price at grant date and expected price volatility of the underlying share, 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 timing of estimated future cash outflows.
(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 Consolidated Statement of Comprehensive Income 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.
100
Annual Report 2014Ridley Corporation Limited Revenue recognition
Revenue from the sale of goods in the course of ordinary business is measured at the fair value of the consideration received
or receivable, net of returns, trade allowances and duties and taxes paid. Sales revenue is recognised when the significant risks
and rewards of ownership have been transferred to the customer.
The Group recognises revenue when pervasive evidence exists, usually in the form of an executed sales agreement, that the
significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the
associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with
the goods, and the amount of revenue can be measured reliably. If it is probable that discounts will be granted and the amount
can be measured reliably, then the discount is recognised as a reduction of revenue as the sales are recognised.
Interest income is recognised using the effective interest rate method. Dividend income is recognised as revenue when the right
to receive payment is established.
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less allowance for doubtful
debts. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written
off. An impairment allowance for doubtful debts is established when there is objective evidence that the Group will not be able
to collect all amounts due according to the original terms of the receivables and where suitable insurance arrangements or
collateral do not cover any uncollected amounts.
The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the effective interest rate, and is recognised in the Consolidated Statement of
Comprehensive Income.
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
Consolidated Statement of Comprehensive Income.
Leased assets
A distinction is made between finance leases, which effectively transfer from the lessor to the lessee substantially all the risks and
benefits of 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 Consolidated Statement of Comprehensive Income on a straight-line basis over the period of the lease.
Provisions
A provision is recognised if, as a result of a past event, the Group has a present legal or constructive obligation that can be
estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are
determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability.
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 all 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
Consolidated Statement of Comprehensive Income 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.
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Annual Report 2014Ridley Corporation Limited Notes to the Financial Statements continued
Note 34 – Summary of significant accounting policies continued
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) Derivative financial instruments
The fair values of forward exchange contracts are 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.
(ii) 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.
102
Annual Report 2014Ridley Corporation Limited 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 54 to 102 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 2014 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 29 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 2014.
4. The financial statements also comply with International Financial Reporting Standards as disclosed in note 34.
This declaration is made in accordance with a resolution of the directors
JM Spark
Director
TJ Hart
Director
Melbourne
20 August 2014
103
Annual Report 2014Ridley Corporation Limited
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 2014, 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 34 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 34, 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 2014 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 34.
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.
104
Annual Report 2014Ridley Corporation Limited
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 43 to 52 of the Directors’ Report for the year ended 30 June 2014.
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 2014, complies with Section
300A of the Corporations Act 2001.
KPMG
BW Szentirmay
Partner
Melbourne
20 August 2014
Liability limited by a scheme approved under
Professional Standards Legislation.
105
Annual Report 2014Ridley Corporation Limited Shareholder Information
As at 20 August 2014
Holdings of securities – ordinary shares
Each fully paid
Number of
Holders
Number of
Securities
% Held by 20
Largest Holders
7,346
307,817,071
70.47
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 761 holders of less than a marketable parcel of shares.
20 Largest Fully Paid Shareholders
Citicorp Nominees Pty Limited
National Nominees Limited
JP Morgan Nominees Australia Limited
RBC Investor Services Australia Nominees Pty Limited
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