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Wide Open AgricultureANNUAL
REPORT
2016
HIGH
PERFORMANCE
ANIMAL
NUTRITION
SOLUTIONS
Ridley Corporation Limited Annual Report 2016 | A
CONTENTS
1 About the Company
1 2016 Features
2 Five Year Summary
5 Ridley Locations and Sectors
6 Chairman’s Address
8 Managing Director’s Review
18 Financial Review
22 Property Development
26 Our People and Sustainability
32 Board of Directors
34 Financial Report
94 Shareholder Information
96 Glossary
97 Corporate Directory
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
mostly in pellet form, the exception being a mash offering in certain
markets, 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 that 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 lifecycle solution.
ABN 33 006 708 765
ABOUT THE
COMPANY
2016
FEATURES
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.
• Third successive record
core business result, up
from $50.4 million EBIT
to $53.7 million.
• Dry Creek sold for
$35 million, with no
further costs to incur.
• NovacqTM production
site secured at Yamba,
NSW, lined, infrastructure
installed and production
commenced.
• Investment in Thailand
feedmill to produce
shrimp diets, with
NovacqTM inclusion
for Thai market.
• Former feedmill site
at Dandenong sold for
$2.2 million after tax
profit.
• Strong progress with
construction of new
feedmill at Lara.
• Successful execution
of Disaster Recovery
Plan following Pinery,
SA, bushfire damage
to Wasleys feedmill.
Ridley Corporation Limited Annual Report 2016 | 1
FIVE YEAR SUMMARY
A$’000 unless otherwise stated
Operating results
Revenue
Other income
Earnings before interest, tax, depreciation and amortisation
(EBITDA) and discontinued operations (Disc Ops)
Earnings before interest and tax (EBIT) and Disc Ops
Net interest expense/finance charge
Operating profit before tax and Disc Ops
Tax expense before Disc Ops
Net profit before Disc Ops
Profit/(loss) from discontinued operation(s) (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 (%)*
Earnings per share (EPS) (cents)*
Total Shareholder Returns (%)
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] (times)*
EBITDA per share (cents)*
EBITDA growth (%)*
EBITDAx (market cap/EBITDA) (times)*
Enterprise value/EBITDA (times)*
P/E ratio (times)*
Net debt/shareholders’ equity (%)
Equity/total assets (%)
Net debt/EBITDA (times)*
EBIT/net interest (times)*
Net tangible asset backing per share (cents)
Dividends per share (cents)
Dividend payout ratio (%)
Percentage franked (%)
2016
Actual
2015
Actual
2014
Actual
2013
Actual
2012
Actual
912,561
12,121
909,850
4,649
873,625
5,972
783,226
321
734,695
1,674
60,723
45,734
5,419
40,315
13,112
27,203
403#
27,606
247,884
484,850
236,966
40,967
430,944
471,911
17,612
140.00
307,817
676
11.4%
8.8
14.8%
28.5%
11.3%
0.29
5.72
24.5
67.7
9.4
19.7
19%
7.1
7.8
15.8
16.5%
51.1%
0.67
8.44
55.7
4.00
44%
100%
51,061
41,108#
5,059
36,049#
10,306#
25,743#
(4,572)#
21,171#
229,834
476,553
246,719
32,702
384,771
417,473
47,059
125.00
307,817
685
9.4%
6.9
61.6%
20.2%
31.7%
0.92
15.30
8.2
52.8
10.6
16.6
25%
7.5
8.2
18.1
14.2%
48.2%
0.64
7.14
49.3
3.50
51%
100%
41,012
27,436
5,392
22,043
4,430
17,613
-
17,613
219,774
423,091
203,317
36,343
244,715
281,058
31,349
79.50
307,817
658
7.8%
5.7
8.0%
181.2%
306.7%
0.76
10.20
7.8
41.7
8.9
13.3
3,175%
6.0
6.9
13.9
16.5%
51.9%
0.90
5.10
45.2
3.50
61%
50%
1,252
(13,272)
7,737
(21,009)
(4,423)
(16,586)
(5,108)
(21,694)
207,553
410,626
203,073
17,835
230,863
248,698
52,583
75.00
307,817
649
-6.8%
(7.0)
-19.1%
-212.7%
-137.2%
41.99
17.10
4.4
(20.5)
-17.4
0.4
-97%
184.4
198.6
(10.6)
8.6%
50.5%
14.24
(1.72)
42.1
7.50^
-^
-^
50,086
35,682
9,327
26,355
7,102
19,253
-
19,253
278,371
499,561
221,190
98,151
313,973
412,124
50,896
102.00
307,817
961
6.9%
6.3
-11.0%
-34.3%
-10.7%
1.02
16.50
6.2
37.1
8.8
16.3
-8%
6.3
8.2
16.3
35.3%
55.7%
1.96
3.83
75.9
7.50
120%
100%
* Before discontinued operation.
^ Capital return of 7.5 cents per share brought to account in FY13 and paid on 5 July 2013.
# FY16 Dry Creek operations prior to sale and FY15 comparative reflected as discontinued operation.
2 | Ridley Corporation Limited Annual Report 2016
EBIT from continuing
operations*
Consolidated
net profit
Dividends and distributions
per share #
0
5
.
7
0
5
.
7
s
t
n
e
C
8
7
6
5
4
3
2
1
0
0
0
.
0 4
5
.
3
0
5
.
3
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
# 2013 distribution to shareholders
by way of 7.50 cents capital return.
s
n
o
i
l
l
i
M
$
50
40
30
20
10
0
8
6
.
5
3
2
1
0
2
4
2
.
6
1
3
1
0
2
3
7
.
5
1 4
1
.
1
4
4
4
.
7
2
0
6
.
7
7 2
1
.
1
2
5
2
.
9
1
1
6
.
7
1
9
6
.
1
2
-
s
n
o
i
l
l
i
M
$
30
20
10
0
-10
-20
-30
4
1
0
2
5
1
0
2
6
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
* 2013 before business restructuring.
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
0
9
.
1
3
9
.
1
5
6
.
1
3
6
.
1
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
s
n
o
i
l
l
i
M
$
60
50
40
30
20
10
0
0
7
.
3
5
0
4
.
0
5
0
1
.
0
4
6
1
.
7
2
7
0
.
8
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
Ridley Corporation Limited Annual Report 2016 | 3
4 | Ridley Corporation Limited Annual Report 2016
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 agriculture community.
RIDLEY LOCATIONS AND SECTORS
Thailand
3
Business Unit
Structure
Monogastric
Pellet, meals, concentrates and
premixes for poultry and pigs
Ruminant
Packaged
Products
Aquafeeds
Pellets, meals, blends, concentrates
and premixes for dairy cattle, beef
cattle and sheep
Bagged poultry, dairy, dog, horse
and lifestyle animal feed
Extruded and steam pelleted
products for all major fin-fish and
prawns, and novel feed ingredients
7
4
Supplements
Block and loose lick supplements
Rendering
Rendered poultry, red meat and
fish products for the pet food, stock
feed and aquaculture sectors
1
Australia
5
6
5
2
9
6
2
3
4
1
2
1
8
5
7
2
1
Monogastric
Ruminant
Packaged
Aquafeeds
Supplements
Rendering
1 Toowoomba
1 Toowoomba
1 Toowoomba
1 Narangba
1 Townsville
1 Maroota
Business Unit
2 Mooroopna
2 Tamworth
2 Tamworth
3 Pakenham
3 Pakenham
3 Pakenham
4 Murray Bridge
4 Maffra
4 Murray Bridge
5 Bendigo
5 Gunbower
5 Inverell –
2 Yamba – Novacq
production site
3 Chanthaburi –
49% interest
2 Laverton
6 St Arnaud
6 Terang
7 Wasleys
7 Taree
8 Clifton
9 Lara – under
construction
25% interest
4
–
5
Inverell
25% interest
s
t
e
s
s
A
y
e
l
d
R
i
Ridley Corporation Limited Annual Report 2016 | 5
CHAIRMAN’S ADDRESS
IN MY FIRST YEAR AS CHAIR, RIDLEY HAS ACHIEVED
A NUMBER OF SIGNIFICANT MILESTONES, INCLUDING
A THIRD SUCCESSIVE RECORD RESULT FOR OUR
CORE BUSINESS.
Dr Gary H Weiss
Chair
During the year, the Group’s banking
facilities were rolled over, extended
and improved to take advantage of the
favourable lending environment and secure
the funding to accommodate a number
of significant capital projects currently
under review.
While we believe there is still the capacity
for further growth within the existing asset
base, we are keen to reach agreement on
supply and logistics arrangements which
will generate the commercial returns
required to secure approval from the
Ridley Board to proceed with a number
of new feedmill projects.
Construction of the new feedmill to service
the pig and poultry industries in the greater
Geelong region commenced during the year
and is proceeding as planned towards a
commissioning date early in the third
quarter of the 2017 financial year (FY17).
During the year we have made major
strides in the operational R&D program
for Novacq™, having secured a long term
lease on a site at Yamba, NSW capable
of meeting the Novacq™ production
requirements for the domestic prawn
industry. We have also, for a modest
outlay of AUD$1.1 million, acquired a
49% interest in a state-of-the-art feedmill
in Chanthaburi, one of the larger regions
in Thailand for growing prawns, or shrimp
as they are knownin Asia.
Having also secured the exclusive
Novacq™ production and selling rights
for Thailand from CSIRO during the year,
we are working to secure the licence to
import Novacq™ produced at Yamba into
Thailand and include this novel ingredient
in a new range of diets to be manufactured
by our Chanthaburi feedmill and trialled
in local ponds.
If Novacq™ performs well in the
Chanthaburi trials, and assuming we
continue to take positive steps down the
commercialisation path at Yamba, then
our medium term strategy for Thailand
is to secure and construct the facilities
to produce Novacq™ locally in the
Chanthaburi region.
If we can establish the efficacy of this novel
ingredient in local pond trials using feed
produced at the Chanthaburi feedmill, we
intend to launch a new range of Novacq™
inclusive Ridley prawn diets in the Thai
market. The outcomes of our operational
R&D work being conducted at Yamba and
the Thailand trials will strongly influence
our long term strategy with regard to the
other territories covered under our
exclusive licence agreement with CSIRO.
In respect of our remaining surplus
property assets at Lara and Moolap, Ridley
and our development partner Sanctuary
Living submitted our latest concept plan
to the Victorian State Government to assist
with its strategic land use assessment of
the Corio Bay peninsula area. The draft
report of the review was published as a
Discussion Paper in June 2016, outlining
seven different concepts for the region,
none of which featured the Ridley/
Sanctuary Living concept plan.
Ridley has made available to the Victorian
State Government the body of geotechnical
and environmental data compiled over a
number of years at Moolap which not only
supports the Ridley/Sanctuary Living
concept plan, but also highlights the low
lying nature of the land at Moolap, much
of which remains under water and which
is need of a cost-effective solution. Once
the final outcome of the Government’s
review is published, we will reassess and
amend our strategy and concept plan for
what we perceive to be in the best interests
of our shareholders.
A full year AgriProducts result of
$53.7 million is an increase of $3.3 million
on the prior year and 91% ahead of the
2013 full year result. This is a significant
achievement for the business and
achieved only through the collective and
concerted efforts of all Ridley employees,
through the loyalty and success of its
customers and the quality of its suppliers.
The Managing Director’s review will cover
the operating performance and outlook,
so I will reflect on some of the other
highlights of another successful year.
A major milestone for the year was the sale
of Ridley Dry Creek Pty Ltd, being the entity
holding the entire former salt field at Dry
Creek in South Australia. Since June 2013,
when the sole customer for the site Penrice
appointed an administrator and terminated
its salt requirements, the annualised spend
just to maintain this extensive site has been
in excess of $3 million. Since impairing
the site in the 2013 year down to an
estimated discounted realisable value
of $33.5 million, Ridley has been
progressively and concurrently working
through one process to close the site and
another to position the site for sale.
During the 2016 financial year (FY16),
the sale of Dry Creek was executed and
completed for a gross consideration of
$35 million, generating $19 million of
cash proceeds in the year, with a further
$16 million receivable in three tranches
up to 31 December 2017 and secured by
appropriate documents of securitisation.
The site of the former feedmill at
Dandenong was also sold during
the year for $3 million cash proceeds
and a net profit of $2.2 million.
6 | Ridley Corporation Limited Annual Report 2016
$3.3m
INCREASE IN ONE YEAR
The full year AgriProducts result
of $53.7 million in 2016 is 91%
ahead of the 2013 result.
Board
On 31 March 2016, Professor Andrew
Vizard resigned from the Board after over
15 years of service to Ridley. On behalf of
the Board, management, employees and
shareholders, I sincerely thank Andrew for
his contribution in getting us to the positive
and exciting stage of our evolution that we
find ourselves in at the present time.
Having been alerted to Andrew’s future
intentions, an extensive search was
conducted to find a suitable replacement,
and on 29 April 2016, we were delighted
to announce the appointment of David
Lord to the Ridley Board. David has had
a distinguished career in Australian
agriculture, most recently as President
and Chief Operating Officer of Saputo Dairy
Division (Australia) and as CEO and
Managing Director of Warrnambool Cheese
& Butter Factory Company Limited from
2010 to 2014. David has a strong track
record in delivery of financial performance
improvement and implementation of
restructuring programs and we welcome
him to the Ridley Board.
“During the 2016 financial year (FY16),
the sale of Dry Creek was executed and
completed for a gross consideration of
$35 million, generating $19 million of
cash proceeds in the year, with a further
$16 million receivable in three tranches
up to 31 December 2017 and secured by
appropriate documents of securitisation.”
Outlook
The Managing Director’s review provides
more details on the outlook for Ridley. For
my part, I wish only to add that all of us at
Ridley are excited about the prospects for
Novacq™ in terms of being a potential
game changer for the prawn industry and
potentially in other applications – albeit that
we are still in the operational R&D phase
of the initial project. With the low-cost entry
into the world’s second largest prawn
market through our investment and
relationships in Thailand, we believe we
have an opportunity to create significant
value and a new and low-risk offshore
earnings stream for our shareholders
into the future.
Dr Gary H Weiss
Chair
Ridley Corporation Limited Annual Report 2016 | 7
MANAGING DIRECTOR’S REVIEW
I AM DELIGHTED TO BE ABLE TO REPORT A THIRD
SUCCESSIVE YEAR OF RECORD EARNINGS. THE RIDLEY
AGRIBUSINESS EARNINGS BEFORE INTEREST AND TAX
(EBIT) OF $53.7 MILLION IS THE HIGHEST ON RECORD,
BEATING LAST YEAR’S RESULT OF $50.4 MILLION BY
$3.3 MILLION, OR 6%.
Tim Hart
Managing Director and Chief Executive Officer
“Despite the dairy
sector being
challenged by a fourth
quarter reduction
in prices paid by the
major milk processors,
we have generated
a third strong year
of earnings after
the lows experienced
in 2013.”
This result has been achieved from
continued performance improvements
across the business, and in a year where
salmon feed volumes were significantly
disrupted mid-year due to unseasonally
warm water temperatures around the
Tasmanian coast and where animal
protein meal prices were dragged lower
by falls in vegetable protein meal prices
prior to a recovery late in the year.
Despite the dairy sector being challenged
by a fourth quarter reduction in prices paid
by the major milk processors, we have
generated a third strong year of earnings
after the lows experienced in 2013. The
Monogastric business continues to provide
the cornerstone volume of the business
required to absorb the Group overhead.
The margin and brand management
strategy has again delivered earnings
growth and more than offset volume
decline in packaged products. The
supplements lick block business enjoyed
a positive year, bolstered by a strong
dry season in the first half year and
improvements in plant reliability
throughout the year.
Safety
Our number one focus at Ridley is the
safety of all persons associated with
Ridley, whether employees, contractors,
suppliers, customers, service providers
or simply visitors to Ridley sites. From
the Board to the factory floor, we are
committed to continually improve our
safety performance and strive to make
sure that all tasks performed in the
operation of our business are conducted
in a safe and respectful manner.
circumstances which could lead to an
accident or injury, referred to as near-
misses, and we endeavour to implement
actions to remove the hazards not only at
that site, but also at all other Ridley sites
capable of generating a similar scenario.
Near-miss reporting is one of our lead
indicators and a barometer for the
continuous cultural improvement that we
are seeking as we continue our journey
towards our zero injury target.
The Long Term Injury Frequency Rate, or
LTIFR, measured as the number of injuries
incurring lost time for every million hours
worked, was 2.20 for FY16, a further
reduction from the 2.26 recorded for FY15,
and the 3.29 and 3.65 recorded in the two
prior years. The Total Recordable Frequency
Rate, or TRFR, represents our total injury
rate, and at 9.52 for FY16, represents an
increase from the 6.79 recorded for FY15
but is consistent with the longer term
downward trend.
We are committed to making further
progress on our journey on safety and
in developing a culture where safety
considerations are paramount and
override all other behaviour.
Core business operating
performance for the 2016
financial year
The core business record performance
of $53.7 million of EBIT for FY16 comprises
a strong across the board performance
in all sectors, with Ridley’s smallest
operation, Supplements, providing the
strongest percentage improvement on
last year’s performance.
Zero injuries in the workplace is our
long term goal. To achieve this, we need
to embed a culture where hazards are
identified and rectified prior to them
causing any harm or damage. We encourage
reporting of all hazards and dangerous
With revenue not being a meaningful
indicator of performance due to the
pass-through nature of many of the
raw material ingredients, our internal
focus is on margin and volume. With
FY16 volume relatively
8 | Ridley Corporation Limited Annual Report 2016
2.20
LOST TIME INJURY
FREQUENCY RATE
Down from 2.26 in FY15
and 3.29 in FY14.
Ridley Corporation Limited Annual Report 2016 | 9
MANAGING DIRECTOR’S REVIEW CONTINUED
flat at 1.93 million tonnes of stockfeed and
rendered product sold, compared to the
prior year’s 1.90 million tonnes, the
operating improvements were achieved
through all facets of margin management.
The underlying determinants of the
operating result are explained within
the following summary by sector.
(i) Dairy, beef and sheep
The Dairy sector had another positive
year, with improved margins recorded
on stable annualised volume. Milk price
downgrade announcements in the fourth
quarter affected and continue to influence
farmer sentiment and herd management
strategies, with a number of farms drying
off their herds earlier than planned. The
focus for our Ruminant team is to support
our customer base and drive the value
proposition by manufacturing feeding
solutions to optimise the farmers’
margin over their feed cost.
During the year, the lack of pasture in
many dairy regions necessitated the
purchase of large quantities of forage.
After dry conditions in most of the Victorian
dairy regions through the autumn, recent
winter rainfall has generated a good base
for pasture which, subject to the adoption
of a controlled grazing program, should
significantly reduce the dairy farmers’
outlay on forage in the year ahead. From
a farmer’s cash flow perspective, this
should partly compensate for the reduction
in milk price received.
The new storage and blending facility
at the Terang Ruminant mill in western
Victoria had a successful first full year
of operation, and provides a range of both
partial and total mixed ration products
designed to improve herd performance
through the supply of specialist heifer
feeds and dry/milking cow feeds. The
tailoring of the ration to the specific
demands of the dairy farm is a critical
part of the value proposition.
Following the success of last year’s
inaugural Farmer Forum for farmers in
the western districts of Victoria, the forum
was successfully extended to the Gippsland
region. The Farmer Forum has now become
an annual event in both regions where
industry participants can exchange ideas
and be updated on the latest technologies
and advances in nutrition, equipment,
pasture and herd management. A Farmer
Forum for northern Victoria is targeted
for the coming year.
10 | Ridley Corporation Limited Annual Report 2016
NEW LARA FEED MILL
New grain and meal silos.
Capping for the mill tower.
Product development activity during the
year included a number of feed additive
studies conducted in northern and western
Victoria to examine influences on energy
supply and nitrogen utilisation, and
performance studies to evaluate
opportunities to supply maintenance cubes
for live export cattle. The roll-out of the
Ridley inventory management system
(IMS), which provides a real-time feedstock
inventory position to the farmer and the
Ridley feed mill to assist with automatic
reordering, working capital management
and mill production planning, continued
throughout the year.
Sales of supplementary feed for beef and
sheep is generally driven by the availability
of forage, and FY16 can be regarded as a
typical year, with no extremes in regional
weather patterns to significantly influence
demand one way or the other.
(ii) Poultry and Pig
The compounding 2% to 3% increase in
domestic demand for poultry products
shows no signs of abatement, with the
health benefits of a lean, white meat and
low-cost protein source combining with
population growth for a positive outlook.
Ridley’s broiler volumes were slightly up
for the year and our Ridley-formulated
diets continue to achieve continuous
improvement in conversion to meat
mass, as reflected in record low feed
conversion rates.
We remain optimistic but patient on
converting a number of new feedmill
prospects into the same kind of project
that is being managed at Lara, just north
east of Geelong. Construction for this
new poultry and pig feedmill to service
the Geelong and neighbouring livestock
production regions is on target for a
mid-year commissioning in FY17. With
customer scorecards containing key
Ridley performance data, we are looking
to stay close and accountable to our
customers, and to understand their
strategies with regard to bird number
expansions and locations, both of which
have a direct influence on our capital
expenditure programs.
Pig sector volume increased as the prior
year investment in technical experts and
resources in this sector started to deliver
the anticipated returns. The Pig industry
is flourishing after a period where pork
products were considered to be relatively
unhealthy compared to other sources of
animal protein, and there is significant
industry investment in progress to increase
sow numbers. With the technical support
in place, we continue to aggressively
market ourselves in this space and have
a positive outlook for this sector.
The poultry layer sector (as opposed to
broilers which are reared for their meat)
has continued its resurgence, and eggs
remain in strong demand with supply
struggling to keep up. A lot of work is
going into the customer value proposition
for layers to provide the most cost-effective
and flexible lifecycle nutrition solutions.
(iii) Aqua-Feed
The overall Aqua-Feed performance for
the year remained strong, although it was
adversely affected by the higher than usual
warm water currents experienced last
summer in the salmon growing areas
of southern Tasmania. Salmon appetites
are abruptly curtailed whenever there is a
sudden rise (or fall) in water temperature
as occurred when the Eastern Australian
Current extended beyond its traditional
waters in January 2016. Although there is
a slight catch-up in salmon appetites when
water temperatures and appetites return
to normal, salmon feed production was
suspended for several weeks and sales
volumes for the year were below the highs
recorded last year.
The prawn, barramundi and kingfish
components of the business performed
well, despite some brood stock issues
being experienced in a number of prawn
farms which delayed the start of the
domestic prawn season.
The industry outlook is for continuing
growth in domestic salmon consumption
and investment in biomass by the domestic
salmon producers, which will deliver
further growth in industry stockfeed
requirements in the years ahead. To be
the leading feed provider in a sector
which is a major
“The industry outlook is for continuing
growth in domestic salmon consumption
and investment in biomass by the domestic
salmon producers, which will deliver
further growth in industry stockfeed
requirements in the years ahead.”
part of the Aqua-Feed business, Ridley
is continually looking to improve the
performance of its diets for Tasmanian
and New Zealand salmon, and is currently
evaluating the most appropriate investment
of capital to consistently produce the
high-energy diets increasingly demanded
by the industry. The outlook for the prawn
industry is positive, and is covered in more
detail in the Novacq™ section of my report.
(iv) Proteins
Last year, Ridley’s Rendering operations
enjoyed increases in the volume of raw
material to render at each of our sites,
which more than offset a decline in traded
volumes of poultry meal at Maroota. This
year has seen the reverse, namely a
reduction in raw material intake for
processing, which mirrored the fall in
slaughter rates as herds rebuild following
a period of dry conditions and high
livestock prices which combined to
encourage farmers to realise their
investment in livestock. The reduction in
intake volumes was offset by an increase
in traded volumes required to satisfy
longstanding customer requirements.
During the year a number of profit
improvement projects were completed,
including improved waste processing via
a three-phase decanter, the installation
of three new boilers at Laverton and plant
improvements geared to improving product
consistency and allowing the manufacture
of more customised products. Further
initiatives to improve product positioning
will be implemented in the coming year.
Offsetting the above operating
improvements has been the large soy
crops and stock levels in the United States
and South America, which have led to a
fall in world prices for vegetable protein
meal. This in turn dragged down the price
for animal protein meals given the ability
to substitute one for the other in a number
of applications, including many petfood
diets. Recoveries in the world soybean
price late in FY16 and shortages in meat
and bone meal are starting to flow through
to higher meat meal prices in FY17.
The facility at Cherry Lane, near to the
Laverton Rendering site, has been fully
operational throughout the year in
delivering custom products and product
consistency, and a lease has been secured
on the adjacent storage facility to add
capacity to this facility. The segregation
of meals by protein and ash content
facilitates a more precise and higher
product specification and associated
pricing premium.
(v) Packaged Products
The focus on margin management has
continued for the Packaged Products
business unit, with a third successive year
of earnings growth achieved. Focus has
been maintained on the store presence and
animal welfare benefits for our champion
products and on a comprehensive review
of product packaging and the promotion
strategy. Our challenge now is to maintain
the margin improvement of the last three
years whilst recovering some of the
volume sacrificed over this period as
we have realigned and repositioned our
product range.
(vi) Supplements
A significant uplift in Supplements
earnings was achieved through a
combination of plant performance
improvements at Townsville and a return
to a more traditional dry season in
northern Australia. Consequently, the
plant was able to service the increased
demand for the dry season and molasses
blocks required to maintain herd health
in the absence of pasture prior to the
Ridley Corporation Limited Annual Report 2016 | 11
MANAGING DIRECTOR’S REVIEW
CONTINUED
onset of the rainy season in the second
half year. Sales of Rumevite Magnesium
Capsules, which boost the levels of
magnesium in the bloodstream and
thereby reduce the likelihood of fatalities
through grass tetany, continue to grow
and add to the bottom line return for this
business unit.
Investment in Thailand feedmill
On 29 January 2016, Ridley announced the
execution of formal agreements to acquire
a joint venture interest in Pen Ngern Feed
Mill Co (PNFM), an entity domiciled in
Thailand which owns and operates a
dedicated aqua-feed manufacturing
facility, for an investment of A$1.3 million.
PNFM was established by Mr Prayoon
Hongrath, a Thai national. For the last
30 years, Mr Hongrath has (separately)
owned and successfully run a major
224-hectare prawn farm, adjacent to
PNFM’s feedmill, trading as ‘Sureerath
Prawns’ and constituting one of Thailand’s
largest prawn farms. The feedmill is
located in Thailand’s prime prawn-growing
Chanthaburi region and is relatively
new, having been constructed in 2012
and commenced manufacture of feed
in early 2013.
The PNFM feedmill’s primary purpose was
to make feed for the adjacent and related
Sureerath Prawn Farm (SPF), with a view
to simultaneously building a market for
third party feed sales. The mill has an
existing capacity of 30,000 tonnes per
annum with infrastructure in place to
expand to 55,000 tonnes per annum for
a relatively low capital outlay.
Thailand is traditionally the world’s second
largest producer of prawns (also called
shrimp globally), with an estimated prawn
feed market capacity of 800,000 tonnes
per annum, noting that this is currently
depressed due to the impact of Early
Mortality Syndrome, a serious disease
which caused a significant loss of Thailand
prawn biomass in recent years. For
comparative purposes, the Thailand prawn
feed market is approximately 100 times
larger than the Australian market.
Ridley’s joint venture partnership in
PNFM is Ridley’s first significant offshore
venture in aquaculture, and the feedmill
represents a highly attractive proposition
in its own right. Although Ridley’s investment
of $1.3 million is for a 49% equity stake,
governance and management of the
business will be effectively on a 50:50 basis
between Ridley and the Hongrath family
by way of the operating agreement. The
investment is effectively secured by the
value of the feedmilling assets, and can
thus be considered as a low-risk, low-cost
entry into Thailand, especially when
compared with Australian construction
and operating costs/standards.
In addition to the feedmill operation,
Ridley’s joint venture partnership also
represents a critical step in Ridley’s wider
strategy to develop and commercialise
Novacq™ as a novel feed ingredient. Ridley’s
involvement with PNFM and SPF will
provide it with an unrivalled opportunity to
learn about the Thai prawn feed industry
and market, and also to test customer
acceptance and performance of Novacq™
in a real commercial environment.
Located in the heart of a major prawn
producing region, the region neighbouring
the feedmill is an ideal location for the
production of Novacq™, and we are
looking to secure an appropriate long
term facility accordingly.
Commercialisation of Novacq™
Strong progress in the operational R&D
phase of the project has been made during
the year towards the commercialisation
of Ridley’s investment in Novacq™.
Novacq™ is a prawn feed additive which
has the capability of transforming the
prawn feed industry through the
substantial acceleration of growth rates,
improvement in feed conversion rates,
and enhancement of animal wellbeing
and survival rates through an increased
resistance to viral and bacterial attacks.
On 22 January 2016, Ridley announced
the leasing by Ridley of 7.5 hectares
comprising seven fallow prawn production
ponds adjacent to the Tru-Blu Prawn
farm in Yamba, NSW for a period of up
to 10 years for the domestic production
of the prawn feed ingredient Novacq™,
with a right of first refusal for Ridley
to acquire the leased area.
Traditional prawn production ponds
and infrastructure are well suited to be
reconfigured by Ridley to produce and
harvest the Novacq™ raw material in the
large quantities required to effectively
service the anticipated domestic demand
for this novel and ground-breaking
feed ingredient.
12 | Ridley Corporation Limited Annual Report 2016
“Ridley’s joint venture partnership
in PNFM is Ridley’s first significant
offshore venture in aquaculture,
and the feedmill represents a
highly attractive proposition
in its own right.”
Ridley Corporation Limited Annual Report 2016 | 13
MANAGING DIRECTOR’S REVIEW CONTINUED
Prawn ponds at Yamba, NSW have been excavated, fully lined,
irrigated, fenced and filled from the nearby Clarence river.
Typical Novacq™ production pond tailored to provide
optimum growing conditions.
Water flow is circulated via customised sets of
equipment, providing water flow and aeration.
New silos erected and bunding provided for raw
material storage.
Stage 1 production at Yamba will supply
the Ridley Aqua-Feed plant at Narangba,
near Brisbane, with sufficient quantities
of Novacq™ to commence servicing
domestic prawn demand and to undertake
overseas trials with appropriate inclusion
rates in prawn feed diets. Stage 2 for the
project will be to replicate the Stage 1
reconfiguration for the remaining four
ponds to increase and optimise the
production capacity of the Yamba site.
Having already made excellent progress
at Yamba in demonstrating the ability to
produce and harvest Novacq™ as a
value-adding offering to domestic prawn
farmers, we are now looking to take this
expertise offshore to Thailand, the exclusive
Novacq™ licence for which territory was
executed during the year with CSIRO.
Upon receipt of the relevant importation
licence, Yamba-produced Novacq™ will be
shipped to Thailand for inclusion in diets for
trials to be conducted in conjunction with
our Thai partner and feedmill co-owner.
The pictures and captions above highlight
the Novacq™ activities being conducted
at Yamba.
The pictures and captions on the
following page are from the feedmill
in Chanthaburi, Thailand.
Property realisation
With the divestment of Dry Creek during
the financial year, we have banked
$19 million of cash and from 31 March
2016, terminated all costs associated
with the maintenance of the Dry Creek
site. These costs have been upwards of
$3 million per annum since the site’s
closure of operations as a salt field.
The cost of our 50% share of the joint
venture to progress the Nelson Cove
development through the approvals
process was reduced and the site reverted
to a holding pattern pending the release
of the Victorian State Government’s report
on its strategic review of the Corio Bay
peninsula. We believe that a scaled down
version of our Nelson Cove development
project as submitted to the Government
is congruous with the ‘Tourism in Moolap’
scenario outlined in the Government’s
‘Moolap coastal strategic framework plan
Discussion Paper July 2016’ except that
the surrounding area remains subject
to sea level rise and inundation.
14 | Ridley Corporation Limited Annual Report 2016
We believe that our current concept plan
provides the most comprehensive and only
privately funded solution for the region and
we will continue to substantiate our position
supported by the data compiled over several
years of planning and preparation.
In the event our concept plan gains no
traction with the State Government, we
will be compelled to back the selection
of the ‘Tourism in Moolap’ scenario for the
peninsula and will work with the relevant
Government bodies to ascertain the actions
required to secure the appropriate
development approvals for our freehold
land. At an appropriate time, we will
endeavour to re-engage with the
Government on the market-led proposal
to facilitate the land swap required to
establish the dedicated migratory bird
sanctuary at Lara which is a key feature
of the full version of the Nelson Cove
concept plan.
During the year it was pleasing to complete
the sale agreement for the Dandenong site
which generated gross cash proceeds of
$3 million and a post-tax profit in the year
of $2.2 million.
“Upon receipt of the relevant
importation licence, Yamba-
produced Novacq™ will
be shipped to Thailand for
inclusion in diets for trials to
be conducted in conjunction
with our Thai partner and
feedmill co-owner.”
Pen Ngern feedmill in Chanthaburi Thailand.
View of local prawn farms extending to the ocean
with the Pen Ngern feedmill visible in the distance
(top left quadrant identifiable by the feedmill tower).
Staff accommodation block and boiler house on the
right-hand side and feedmill on the left-hand side.
Administration and training block.
On-site warehouse.
Having made such strong progress with
regard to the realisation of surplus land,
and with the Nelson Cove project suitably
partnered, a decision was made to release
the internal Ridley Property Development
group by the start of FY17. I wish to
formally acknowledge the efforts and
successes of our Property Development
Manager Stephen Butler and Land
Management Consultant Nick Withers
in achieving the property realisation
outcomes for Ridley shareholders.
External relations
Ridley continues to actively support the
Australian Food and Grocery Council
(AFGC) Agribusiness Forum, and I am
delighted to have been re-elected as Chair
of the AFGC for another two years. The
AFGC has provided valuable support on key
industry and Government relations issues
throughout the year. Ridley also continues
to collaborate with the National Farmers’
Federation (NFF) and important sector
specific associations such as the
Australian Renderers Association (ARA)
and the Stockfeed Manufacturers Council
of Australia (SFMCA) among others, to
advocate key policy issues in support
of Ridley, our customers, suppliers
and communities.
In support of our Aqua-Feed customers,
Ridley submitted a response to the
Productivity Commission enquiry on
Ridley Corporation Limited Annual Report 2016 | 15
MANAGING DIRECTOR’S REVIEW CONTINUED
Unfortunately regional communities are
hit pretty hard by chronic health issues.
I think everyone knows someone who has
been touched by a disease such as cancer
or diabetes, or who cares for an elderly
family or community member. For Ridley,
it is important that the community has a
better understanding of the disease,
treatments and progress in medical
research. This is why we support
organisations such as Aussie Helpers, the
Garvan Institute, and the Healthy Families,
Healthy Communities Education and
Awareness Program jointly developed
between Ridley and Garvan.
We are investing in, and working hard to
improve, the production and harvesting
processes and techniques at our new
Novacq™ production facility at Yamba.
Novacq™ is already being produced at the
site for inclusion in domestic diets and we
expect that soon we will be able to import
Yamba-produced Novacq™ into Thailand
for inclusion in local diets produced at the
Chanthaburi feedmill. Local production
of Novacq™ at Chanthaburi to service the
local prawn feed market is a primary
objective for the year ahead, and we are
actively looking to secure the appropriate
local production capability.
More details of each of these initiatives,
and of our community influence and
sustainability programs, are provided
in the Our People section of this 2016
Annual Report.
Outlook
For FY16 we have recorded a core business
result of $53.7 million, up 91% from the
$28.1 million recorded for FY13. This uplift
has been the result of a concerted effort
across the entire business, with every
sector, support service and business
enabler making a positive contribution
to this improvement. We have navigated
some headwinds in FY16 in the Aqua-Feed
and Rendering sectors, however one
of the strengths of our business is its
diversification of risk and lack of reliance
on any single sector or customer.
Our Poultry sector delivers a strong base
earnings platform year after year, and will
start to benefit from the commissioning of
the new poultry and pig feedmill at Lara,
Geelong in mid-FY17. Broiler and layer
poultry volume has topped one million
tonnes in each of the last three years and
we are looking to secure additional volumes
in the coming year over and above the 2–3%
industry growth rate.
In addition to Novacq™ and organic growth,
we continue to develop plans and financial
modelling analyses, and to identify
potential sites, for the modernisation of
our feedmills in a number of key regions.
The rollover and extension of our banking
facilities during the year, coupled with the
experience within our internal Operations
group, provide the capacity to undertake
multiple mill construction projects.
In addition to continuing our discussions
to secure the requisite commitments for a
number of potential new feedmill projects,
we will continue to actively pursue any
acquisition opportunities that may arise
which are 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
Marine fisheries and aquaculture. Ridley
has also responded to the Senate Select
Committee report on the Murray Darling
Basin Plan in support of our customers
affected by the impacts of that plan.
Support for the removal of non-tariff
barriers to trade was a key focus in FY16
as we continue to seek to maximise our
overseas trade opportunities, particularly
for our Rendering and Aqua-Feed
businesses. We expect to continue this
support in FY17. Other areas of industry
and Government engagement in FY16
included support for favourable
commercial application of the Free Trade
Agreements with South Korea, Japan and
China, as well as ongoing negotiations for
the Trans Pacific Partnership (TPP) and
the Regional Comprehensive Economic
Partnership (RCEP), among others.
Our people and communities
We have continued our people focus on
ensuring we have the right people with
the right skill sets to execute our strategic
plans and deliver a sustainable and
compelling customer value proposition.
At the senior executive level, I have
restructured the lead team during the
year by appointing Michael Murphy to
an expanded role encompassing Safety,
People and Technical Development, and
by backfilling the Strategy and Business
Development role with Anton Feely,
previously a senior executive within
KPMG’s Transaction Services division.
Our prior year investments in technical
appointments for the Aqua-Feed and Pig
business sectors are starting to deliver
the desired outcomes, with an increased
on-site presence and expertise
acknowledged by existing and target
customers alike.
A comprehensive training program and
remuneration policies more closely aligned
to the market are attracting personnel of
the highest calibre and capable of delivering
compelling customer value propositions
for their respective business units.
16 | Ridley Corporation Limited Annual Report 2016
“We have navigated some headwinds in FY16
in the Aqua-Feed and Rendering sectors,
however one of the strengths of our business
is its diversification of risk and lack of reliance
on any single sector or customer.
Ridley Corporation Limited Annual Report 2016 | 17
FINANCIAL REVIEW
RIDLEY CORPORATION LIMITED HAS REPORTED
PROFIT FROM CONTINUING OPERATIONS BEFORE
INCOME TAX FOR THE YEAR OF $40.3 MILLION, AN
INCREASE OF $4.3 MILLION ON THE $36.0 MILLION
PRIOR YEAR EQUIVALENT.
Alan Boyd
Chief Financial Officer and Company Secretary
Operating result
A consolidated profit after tax of
$27.6 million has been recorded for
the 2016 financial year, an increase of
$6.4 million (30%) on the prior year’s
$21.2 million. Within the consolidated
result, Ridley AgriProducts recorded an
EBIT of $53.7 million, a third successive
record and $3.3 million (6%) up on the
prior year’s record of $50.4 million.
The full year consolidated EBIT of
$42.1 million after property costs but
before non-recurring items (Table 2),
comprises the Ridley AgriProducts result
of $53.7 million, less corporate costs of
$9.6 million and property costs other
than Dry Creek of $2.0 million.
The divestment of Dry Creek has been
reflected as a discontinued operation for
the year (note 10), comprising a pre-tax
operating loss prior to divestment of
($4.0 million) offset by a pre-tax profit on
disposal of $6.6 million. After allowing for
tax payable on the disposal of ($4.9 million)
after utilisation of all brought forward
capital losses and a tax benefit on operating
losses of $2.7 million, a net after tax
profit on the discontinued operation of
$0.4 million has been recorded for the year.
The prior year Dry Creek operating result
and asset impairment has been reclassified
as a discontinued operation for consistency.
The sale of the former feedmill site at
Dandenong generated a non-recurring
pre-tax profit during the year of
$2.2 million, the capital gain on which
was absorbed through the utilisation of
brought forward tax losses.
$1.4 million of non-recurring, taxable
sundry income has been generated
through the insurance claim proceeds
received to replace on a ‘new for old’
basis the feedmill assets damaged
by the Pinery, South Australia bushfire
at Ridley’s Wasleys feedmill. The
reinstatement of all damaged facilities
at the Wasleys site is expected to be
completed in the first half of the 2017
financial year and further proceeds
progressively received as the rebuild
progresses.
Net finance costs for the year of
$5.4 million reflect interest on bank
debt and the trade payables facility
and the amortisation of establishment
and other fees.
The tax expense for the current year of
$12.6 million excludes $2.2 million of tax
payable on the Dry Creek discontinued
operation and excludes $0.5 million of
tax relating to other non-recurring items.
Results
Table 1 in $’000
Profit from continuing operations before income tax
Income tax expense
Profit from continuing operations after tax
Profit/(loss) from discontinued operation after tax
Net profit attributable to members of Ridley Corporation Limited
2016
40,315
(13,112)
27,203
403
27,606
2015
36,049
(10,306)
25,743
(4,572)
21,171
18 | Ridley Corporation Limited Annual Report 2016
$2.2m
PRE-TAX PROFIT
(NON-RECURRING)
From sale of former feedmill
site at Dandenong.
“Ridley AgriProducts
recorded an EBIT of
$53.7 million, a third
successive record
and $3.3 million
(6%) up on the
prior year’s record
of $50.4 million.”
Profit and loss
Table 2 in $ million
Earnings from operations before finance income and expense and tax expense (EBIT):
Ridley AgriProducts
Corporate
Property – other than Dry Creek
EBIT from operations before non-recurring costs
Net finance costs
Income tax expense – continuing
Net profit from continuing operations after tax before non-recurring items
Discontinued operation – Dry Creek after tax
Other non-recurring items before tax
Tax on other non-recurring items
Reported net profit
Earnings per share (cents):
(i) continuing
(ii) reported
2016
2015
Movement
53.7
(9.6)
(2.0)
42.1
(5.4)
(12.6)
24.1
0.4
3.6
(0.5)
27.6
8.8
9.0
50.4
(8.9)
(2.7)
38.8
(5.0)
(9.7)
24.1
(4.6)#
2.3
(0.6)
21.2
8.4
6.9
3.3
(0.7)
0.7
3.3
(0.4)
(2.9)
-
5.0
1.3
0.1
6.4
1.9
2.1
# Prior year reclassified from Property – Dry Creek to discontinued operation for consistency with 2016.
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.
Ridley Corporation Limited Annual Report 2016 | 19
FINANCIAL REVIEW CONTINUED
Sales revenue and gross profit
Agribusiness sales revenue for FY16 of
$912.6 million was up $5.0 million (0.5%)
on last year’s $907.6 million, and reflects
1.94 million (2015: 1.90 million) tonnes of
stockfeed and rendered product sold.
Consolidated gross profit from continuing
operations was $80.2 million, $2.6 million
(3.4%) above last year’s $77.6m equivalent.
Corporate and property costs
Corporate costs of $9.6m are largely
consistent with the prior year’s
$8.9 million, increasing by $0.7 million
(7.9%) and accommodating a restructure
of the executive lead team.
The property costs other than Dry Creek
of $2.0 million are $0.7 million lower than
the prior period due to the project delays
associated with the Victorian State
Government’s termination of the market
led proposal process and the conduct of its
review of the Corio Bay peninsula.
Balance Sheet
There have been the following material
movements in the Balance Sheet over
the last 12 months:
(i) The $33.5 million prior period Dry
Creek current asset held for sale
has been sold during the year, with
$19 million of proceeds received and
a further $16 million yet to be received
after the balance date, of which
$10 million ($9.8 million net present
value) is due within 12 months and
the final $6 million ($5.5 million
net present value) by no later than
31 December 2017.
(ii) A $6.5 million decrease in cash and
cash equivalents reflects the timing
of cash receipts versus application to
tranches of borrowing, which increased
by $1.7 million.
(iii) Increases in current receivables of
$11.3 million reflect a net $0.7 million
increase in trade debtors and
prepayments, $0.8 million insurance
income receivable, and $9.8 million
Dry Creek present value of deferred
consideration receivable.
(iv) An increase in inventory ($6.0 million)
and decrease in Payables ($12.8
million) which reflect the interaction
between inventory holding levels
required to keep the mills operating at
capacity and timing of cash payments
compared to the prior year.
(v) A $20.7 million increase in property,
plant and equipment, which reflects
$12.2 million of construction work in
progress for the new Lara feedmill
at north east Geelong (announced
in August 2015), and a number of
operational initiatives at the rendering
site at Laverton.
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 $19.3 million, a decrease
of $25.9 million from the prior year of
which $19.6 million represents a
temporary increase in working capital.
Cash flow
Table 3 in $ million
Cash flows for the year
EBIT from operations after transaction costs and before discontinued operation and non-recurring costs
Net cash flow from discontinued operation and non-recurring items
Depreciation and amortisation
EBITDA
(Increase)/decrease in working capital
Maintenance capital expenditure
Operating cash flow
Development capital expenditure
Payment for intangibles
Dividends paid
Share-based payments
Proceeds from sale of discontinued operation (Dry Creek)
Proceeds from sale of property assets
Payment for investment in Thailand joint venture
Net finance cost payments
Net tax payments
Other items
Cash flow for the period
Opening net debt balance at 1 July
Closing net debt balance at 30 June
Year ended
30 June 2016
42.1
(3.6)
15.0
53.5
(19.3)
(14.9)
19.3
(19.3)
(0.7)
(10.6)
(1.0)
19.0
3.0
(1.3)
(5.4)
(13.9)
2.6
(8.3)
(32.7)
(41.0)
30 June 2015
38.8
(2.7)
14.9
51.0
7.0
(12.8)
45.2
(20.6)
(0.4)
(10.6)
(2.0)
-
3.5
-
(4.9)
(6.6)
-
3.6
(36.3)
(32.7)
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.
20 | Ridley Corporation Limited Annual Report 2016
The Company has invested $19.3 million
in development projects during the year,
the largest of which is noted above in
the Balance Sheet analysis. Maintenance
capital expenditure of $14.9 million
remains below the $15.0 million aggregate
charge for depreciation and amortisation.
$19 million of the $35 million proceeds
from the sale of Dry Creek were received
during the year and a further $3.0 million
of proceeds were received from the sale of
the former feedmill site at Dandenong for
a post-tax profit of $2.2 million.
The investment in the Thailand joint venture
was acquired for an outlay of $1.3 million
and payments for intangible assets
of $0.7 million reflect Novacq™
development costs.
Dividends paid comprise the final dividend
of 2.0 cents per share in respect of the
prior financial year paid on 30 October
2015 and the interim dividend of 1.5 cents
per share which was paid on 29 April 2016.
Tax instalment payments of $14.0 million
were made during the year compared to
$6.6 million in the prior year.
Earnings per share
The continuing earnings per share of
8.8 cents reflects the result on a stable
equity platform. The earnings per share
of 9.0 cents reflects the impact of the
discontinued operation from the sale
of Dry Creek in FY16.
Basic earnings per share
– continuing
Basic earnings per share
2016
2015
8.8c
9.0c
8.4c
6.9c
Risks
The following is a summary of the key
continuing significant operational risks
facing the business and the way in which
Ridley manages these risks.
• Cyclical fluctuations impacting the
demand for animal nutrition products
– by operating in several business
sectors within the domestic economy,
(namely Poultry and Pig, Dairy, Aqua,
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 the domestic grain harvest
• Corporate – risks such as safety,
– 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 milk yield and
herd wellbeing or feed conversion
ratios in poultry and aqua-feed.
• Impact on domestic and export
markets in the event of disease
outbreak – Ridley has a strategy of
mill segregation in place to effectively
manage its own risk of product
contamination across the various
species sectors. Ridley also has a
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 third party market risk, such
as what happened with the outbreaks
of Avian Influenza three years ago 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. This provides surety of
volumes required to plan appropriate
shift structures, procurement and supply
chain activities, and capital expenditure
programs, and actively manages the
risk of stranded assets and backward
integration into feed production by
significant customers.
• Surplus property holdings – following
the realisation of the majority of its
surplus land assets, Ridley has released
its dedicated property team. Ridley has
retained in-house legal resources
supported when needed by external
experts to manage the maintenance
of existing and potential new operating
sites. Ridley will work with the State
Government and alongside its
development partner to secure
appropriate redevelopment approvals
to optimise the realisation of
shareholder value from the remaining
surplus property.
recruitment and retention of high-calibre
employees, inadequate innovation and
new product development, customer
credit risk, interest rate, foreign
exchange and inappropriate raw
material purchases are actively
managed through the Company’s
risk management framework which
includes review and monitoring by
the executive lead team.
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
2016
$’000
69,435
(28,468)
40,967
247,884
16.5%
2015
$’000
67,693
(34,991)
32,702
229,834
14.2%
Dividend
Ridley paid a 2015 final dividend
of 2.0 cents per share, fully franked on
30 October 2015 and a 2016 interim
dividend of 1.5 cents per share, fully
franked on 29 April 2016. 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.
After the Balance Sheet date, a 2016
final dividend of 2.5 cents per share, fully
franked and payable on 31 October 2016
was declared by the Board of Directors.
The financial effect of this dividend has
not been brought to account in the
consolidated financial statements for
the year ended 30 June 2016 and will
be recognised in subsequent financial
reports.
Alan Boyd
Chief Financial Officer and
Company Secretary
Ridley Corporation Limited Annual Report 2016 | 21
PROPERTY DEVELOPMENT
RIDLEY HAS HAD A SUCCESSFUL YEAR IN
REALISING SHAREHOLDER VALUE FROM
ITS SURPLUS LANDHOLDINGS.
Stephan Butler
Property Development Manager
Dry Creek
The closure and divestment of the former
Dry Creek salt fields near Adelaide in South
Australia has been a considerable journey
since Penrice closed its Osborne Plant and
ceased taking salt from Dry Creek in June
2013. From the time of Penrice’s restructure
announcement, Ridley has been exploring
and developing a range of commercial
options for the site. After an extensive
investigation, Ridley concluded that there
was no commercially feasible option for
continuing any salt production from the
salt fields, and that the only practical
solution was to permanently close the
site and position it for sale.
The immediate challenge in site closure
was to ensure that Ridley could meet the
stringent and complex compliance and
environmental standards associated with
closing and maintaining the site, whilst
concurrently exploring ways to achieve
the best possible commercial outcomes
to maximise shareholder value.
Ridley worked closely with the South
Australian Government with regard to
the site closure process, and in doing
so was able to achieve regulatory and
environmental compliance and ensure
that the sensitive environment within and
surrounding the salt fields was protected.
A Plan for Environment Protection and
Rehabilitation (PEPR) was developed in
compliance with the myriad of regulatory
requirements and ultimately finalised
with the South Australian Government.
Having established the appropriate
environmental and compliance frameworks,
Ridley began working on a divestment
strategy for the site.
Ridley seized an early opportunity to divest
some low-value land around Dublin and
Lower Light that had originally been held
for potential salt production expansion
north of the salt fields. A sale was effected
through three separate transactions,
grossing $2.2 million of both proceeds
and profit in 2014 given the negligible cost
base attributed to this land.
Following the abovementioned sales, Ridley
held a multi-phased Expression of Interest
(EOI) process to seek out offers or proposals
for the remainder of the Dry Creek site, with
the view that divestment of the site would
be preferential to undertaking a costly and
high-risk closure process. The first phase
of the EOI process generated more than
20 proposals for a range of land uses and
proposals, and generated a level of
confidence that a commercial outcome
could be achieved through further
development of the proposals in a second
phase ‘Calls for Commercial Proposals’
(CCP) process. The CCP process focused
on developing a shortlist of proposals
into a binding commercial agreement.
The CCP strategy proved to be effective, and
in November 2015, Ridley announced the
sale of 100% of the shares in Ridley Dry
Creek Pty Ltd for a cash consideration
of $35 million, $19 million of which was
received by completion with the $16 million
balance receivable in tranches up to 31
December 2017. The balance outstanding
is secured by a first ranking security over
the shares in Ridley Dry Creek Pty Ltd.
The purchaser of Dry Creek is an entity
associated with Adelaide Resource
Recovery (ARR), a leading South Australian
recycling company with its primary
business based on a 120-hectare site at
Wingfield adjacent to the Dry Creek salt
fields. The ARR offer to acquire all of the
Company shares, as opposed to some or
all of the assets of the business, was a
compelling commercial proposal from a
value and timing perspective, and delivered
positive Ridley shareholder outcomes for
Property
Ridley has had a successful year in
realising shareholder value from its
surplus landholdings. The implementation
of this long term strategy began several
years ago with the appointment of a
dedicated internal property realisation
team and the establishment of an
appropriate corporate structure to hold,
manage and elicit the most beneficial
outcomes for the significant land bank
that comprised the former salt field assets
at Dry Creek in South Australia, Moolap
and Lara in Victoria, and Bowen in
Queensland, and a number of former
sites and feedmills across the eastern
states.
By the conclusion of the 2016 financial
year, Ridley has successfully divested
the majority of surplus assets through
the execution of sales transactions for the
Corio, Bowen, Dandenong, Cohuna, Dalby
and Dry Creek sites. The cash value of
these transactions in aggregate totals
approximately $45 million, of which
$16 million is receivable from the Dry Creek
divestment in tranches up to 31 December
2017. In addition to generating cash
proceeds, the divestments have also
removed significant costs and liabilities
from the business which were necessarily
incurred in managing, maintaining, and
in certain circumstances rehabilitating,
the sites.
For the properties remaining as at
30 June 2016, Ridley has a suite of corporate
agreements with developer Sanctuary
Living to generate shareholder value
from the former salt field site at Moolap,
now referred to under its development
project name of Nelson Cove. Ridley is
also confident that as time passes, its
strategic landholdings at Lara in Victoria
will increase in value and generate a
significant value uplift for Ridley
shareholders.
22 | Ridley Corporation Limited Annual Report 2016
$45m
APPROXIMATE CASH VALUE
OF SALES TRANSACTIONS
Aggregate totals including
$16 million receivable from
the Dry Creek divestment.
both the freehold land and the land leased
from State Government bodies. The sale
resulted in all costs associated with the
management, closure and holding of the
site ceasing from 31 March 2016, being
the original intended date for completion.
These costs have been running in excess
of $3 million per annum since the 30 June
2013 cessation of salt sales to Penrice.
In comparison to other proposals that were
received as part of the CCP process, the
ARR offer delivered superior value for Ridley
shareholders, not only in terms of sales
proceeds but also in early termination of
the considerable legacy costs associated
with the closure of the salt field and future
management of any legacy liabilities.
Coupled with the earlier divestments at
Dublin and Lower Light, Ridley is realising
in excess of $37 million cash for the asset,
and has eliminated all long term liabilities
associated with closure, rehabilitation,
holding and other management costs
pertaining to the site.
Nelson Cove
Ridley has been developing plans for
the former Moolap Salt Works for several
years, and is ready to proceed with
planning approvals for the proposed
Nelson Cove project, which comprises
the redevelopment into a master-planned
mixed-use community of nearly 500
hectares of land currently owned or
leased by Ridley at Moolap, near Geelong
in Victoria.
During the last 12 months there has been
a changing political landscape in Geelong
and more broadly in Victoria, and with the
change has come a deferral of the project
timelines. Despite this delay, Ridley
continues to positively plan and promote
the vision for this major project with
the belief that it presents a unique and
remarkable opportunity, not only for the
immediate Moolap vicinity, but also for
the area of Greater Geelong.
The Victorian State Government
(Government) announced the process
to develop a ‘Moolap Coastal Strategic
Framework Plan’ (the Plan) in August
2015, which will consider opportunities
for Ridley’s landholdings alongside Alcoa’s
aluminium smelter plant at Point Henry.
As part of the process to develop the Plan,
the Government has been consulting with
the broader community, and will be
preparing a strategic land use framework
plan for ultimate inclusion in the Geelong
Planning Scheme to be published some
time in 2017.
The process to formulate the Plan is
now well underway, and the Government
released a Discussion Paper in June 2016,
outlining seven possible scenarios for the
region, none of which comprised or
incorporated the Ridley master plan.
Ridley and its development partner,
Sanctuary Living, were active in the
consultation process, preparing and lodging
a submission outlining the collaborative
proposal for the site, together with
accompanying plans for the construction
of the Lara International Bird Sanctuary
(Sanctuary) at Ridley’s former salt field site
at Lara.
No reference is made in the Discussion
Paper to either the Ridley/Sanctuary Living
submission or to the availability of the
Sanctuary. Also there is no mention made
of the significant issues facing the region
with regard to existing inundation and
stormwater, and to future sea level rise.
Absent a comprehensive solution for the
entire region, such as that provided by
the Ridley/Sanctuary Living master plan,
there is a material funding requirement
associated with all of the scenarios
featured in the Discussion Paper.
There is a ‘Tourism in Moolap’ scenario
outlined in the Discussion Paper which
contemplates the development of Ridley’s
“For the properties remaining as at
30 June 2016, Ridley has a suite of corporate
agreements with developer Sanctuary
Living to generate shareholder value from
the former salt field site at Moolap, now
referred to under its development project
name of Nelson Cove.”
Ridley Corporation Limited Annual Report 2016 | 23
“With the surplus land bank portfolio now divested, partnered
or packaged ready for sale, the internal Ridley property
development team has completed its mandate and was
disbanded at the end of the 2016 financial year.”
24 | Ridley Corporation Limited Annual Report 2016
700m
PROPERTY DEVELOPMENT CONTINUED
freehold land for residential purposes.
This scenario could accommodate a
much smaller Ridley/Sanctuary Living
development minus the myriad of
community facilities, but would still require
impose a significant taxpayer or ratepayer
burden to address the low-lying former
salt field land currently under water.
Further consultation is proposed to be
undertaken by the Government prior to
the development and release of its Plan
later in the year. To assist the Government
in understanding the complexity and scale
of the sea level rise and inundation issues
facing the local community on the
peninsula, Ridley has made available all
of its research data for the region which
it has privately funded over several years
in pursuit of development approvals.
Provided that appropriate development
approvals are achieved for the Nelson Cove
development, the Sanctuary at Lara will
be gifted to the community by Ridley at nil
cost as part of a land offset strategy to
acquire the Crown land currently leased
by Ridley. The Sanctuary is perceived by
Ridley and Sanctuary Living as critical to
any meaningful development of the Corio
Bay peninsula by virtue of it providing a
nearby and improved location to sustain
the migratory bird populations which are
a feature of the region.
Ridley and Sanctuary Living have completed
the required investigations and revisions of
the preferred master plan and the financial
feasibility for the Nelson Cove project.
Ridley expects that upon publication of the
Plan by the end of the calendar year, there
will be a clear direction for the site and for
the Nelson Cove project, and that Ridley and
Sanctuary Living will be well positioned to
move forward at that time.
Lara
Ridley’s 912-hectare property at Lara is
located directly adjacent to the Avalon
Airport and within a future employment
corridor nominated by the Victorian State
Government, and as such Ridley believes
there is significant shareholder value
inherent in the site.
There are a number of strategic initiatives
that are evolving in the area around the
Lara site, including the expansion of the
Avalon Airport to accommodate
international flights following the Federal
Government’s announcement that it had
amended the airport’s lease from domestic-
only to international status. The lease
amendment means that Avalon Airport
will become Victoria’s second international
airport and its expansion will create
significant opportunities for the
establishment of airport-related industrial
use and support businesses.
In addition to the lease amendment referred
to above, the Linfox Group and China’s HNA
Group have signed a Memorandum of
Understanding (MOU) to collaborate on a
number of key joint initiatives, including
establishing commercial flights and
airfreight services between Avalon Airport
and China. Other infrastructure
developments currently being investigated,
such as the development of the $250 million
rail link to Avalon Airport, will further
strengthen strategic opportunities for the
region and the Lara site.
Ridley has conducted an EOI process over
approximately 650 hectares of the Lara
site to explore potential short term value
opportunities, and received several offers
to acquire the site. Since that time there
has been continued interest in the
property, and although the commercial
offers have to date fallen short of Ridley’s
value expectations, we are encouraged
by the continued interest. With minimal
holding costs for the site, Ridley is prepared
to remain patient in order to deliver
maximum shareholder value.
The southern 250 hectares of Ridley’s
freehold land is located towards Corio
Bay and is being held for the proposed
Lara International Bird Sanctuary, an
environmental offset site proposed for
migratory and other shore birds, and
associated with the proposed development
of Nelson Cove. This land is considered
an important strategic asset in relation
to achieving planning approval for the
Nelson Cove project, and once established,
is expected to create a significant
environmental asset and legacy for
the Geelong region.
Dandenong
Ridley announced in April 2015 that it
had achieved an unconditional sale of its
former feedmill site in Dandenong, Victoria
for gross proceeds of $3 million, with
completion due on 30 November 2015. We
were pleased to announce the completion
of this transaction as scheduled.
The closure of the Dandenong site saw
all site operational activities relocated
to its then newly constructed facility in
Pakenham. The 1.3-hectare site was
re-zoned from ‘Industrial’ to a
‘Comprehensive Development Zone
(High Density Residential)’ as part of the
local Government’s broader strategic plan
to regenerate Dandenong’s commercial
hub and transform the city centre into a
thriving activities district.
Ridley completed demolition of all buildings
at the site in preparation for sale, and
had written down the asset in 2013 to a
residual carrying value of c.$670,000. After
incurring agents’ fees and minimal legal
costs, an accounting profit in excess of
$2.2 million was achieved and recorded
in the 2016 financial year.
Future activity
With the surplus land bank portfolio now
divested, partnered or packaged ready
for sale, the internal Ridley property
development team has completed its
mandate and was disbanded at the end
of the 2016 financial year. Value realisation
activities at Nelson Cove will henceforth
be managed in conjunction with
development partner Sanctuary Living,
whilst any sale opportunities for the
Lara site will be managed through a real
estate agent and in-house legal affairs
resources augmented as required by
external consultancy support.
Ridley Corporation Limited Annual Report 2016 | 25
OUR PEOPLE AND SUSTAINABILITY
THREE YEARS AGO, RIDLEY DEVELOPED A NEW
SUITE OF SIX STRATEGIC PLATFORMS AS A BASE
UPON WHICH TO RUN THE BUSINESS AND PROVIDE
DIRECTION FOR OUR GROWTH.
Michael Murphy
General Manager Safety People and Sustainability
Four-year rolling LTIFR and TRFR history and trend
20
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Rolling LTIFR
Rolling TRFR
Linear (Rolling LTIFR)
Linear (Rolling TRFR)
From a lead indicator perspective, our
performance also remains strong:
• Completion of safety training by all staff
– for FY16, we have achieved a completion
measure of 94.8%.
• Completion of good manufacturing
practice audits on a monthly basis on
each site – for FY16, we have achieved
a completion measure of 100%.
• Closure of priority actions identified
during audits or as a result of incident
in investigations – for FY16, we have
achieved a closure measure of 98%.
These headline lead indicators are
supplemented by reporting of hazards/
near misses, regular occupational health
and safety/workplace health and safety
committee meetings at all sites, internal
and external audits, plus a program of
site safety walks conducted by Ridley
management.
Of course our safety performance can
only continue to improve if our people
embrace safety as part of our workplace
culture. To this end, all of our employees
have a dedicated safety metric as part of
their personal Key Performance Indicators
(KPI). Additionally, we have also introduced
safety as an agenda item in the daily
‘stand up’ meetings which occur at our
operational sites, and this has been a
very positive initiative in keeping safety
uppermost in our thinking and as part
of our everyday conversations on site.
Finally, FY16 has also seen us establish
a health and wellbeing program across
the business. This program provides our
employees with a range of information
on how to improve their general physical
and mental health, and the program has
been well received to date.
Safety
Ridley’s position as Australia’s leading
provider of high performance animal
nutrition solutions is only made possible
by a commitment to provide a safe
environment for our employees,
contractors and visitors. This commitment
is manifested in a comprehensive and
robust safety management system,
together with safety being embedded
as a priority in the everyday culture
of conducting our business.
Three years ago, Ridley developed a new
suite of six Strategic Platforms as a base
upon which to run the business and
provide direction for our growth. Safety
was articulated as the first of these
platforms, and since that time has been
made the subject of much greater focus
in all our day-to-day operations. It is
therefore very pleasing to see the efforts
put in to this cultural journey reflected in
our key safety statistics.
At Ridley we use both lag and lead
indicators to measure our safety
performance.
The key lag measures are Lost Time Injury
Frequency Rate (LTIFR), which measures
the number of lost time injuries per million
hours worked, and 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.
In FY16, the final LTIFR for the year end
was reported as a record low of 2.20, with
the TRFR at 9.52. These results continue
the positive linear trend for both metrics,
as illustrated in the adjacent graph.
26 | Ridley Corporation Limited Annual Report 2016
100%
COMPLETION MEASURE
Monthly good manufacturing
practice audits.
“Of course our safety performance
can only continue to improve if our
people embrace safety as part of our
workplace culture. To this end, all
of our employees have a dedicated
safety metric as part of their personal
key performance indicators.”
Ridley Corporation Limited Annual Report 2016 | 27
OUR PEOPLE AND SUSTAINABILITY CONTINUED
People
Similar to safety, people stands as one
of the business’ six Strategic Platforms, in
recognition of the fact that recruitment and
retention of quality people, and a continuing
investment in their development, is
fundamental to our success as a business.
In terms of recruitment, we have continued
with our policy to target both specialists
from inside our various agribusiness
sub-sectors together with external
high-calibre individuals from non-
traditional agricultural backgrounds, who
nonetheless have valuable skills in other
fields such as marketing, finance or IT
to help drive our business forward. From
a personal development perspective,
we continue to offer our employees a
combination of tailored internal training
content together with relevant external
training programs where appropriate.
We also actively encourage internal
mobility, whether it be through promotion
of internal staff for key roles or job-swap
opportunities.
In the context of the above, it was
particularly pleasing to see three Ridley
employees recognised by peak industry
body the Stock Feed Manufacturers’ Council
of Australia (SFMCA) during the year. The
SFMCA announced five individual winners
of its 2016 Development Award, three of
which came from Ridley. This recognition
was a tremendous reflection of both the
skills and passion of the individuals
concerned, and of Ridley’s commitment
to pursue excellence and innovation in
stockfeed manufacturing.
FY16 also saw Ridley reaffirm its
commitment to diversity. With respect to
gender, in its 2015–16 Public Report to the
Workplace Gender Equality Agency, Ridley
reported proportions of the following key
employment categories as being held by
female employees:
• Board members – 17%
• Senior executives – 30%
• Senior managers – 30%
Ridley also supports employment equality
for indigenous Australians, which is a formal
key business objective of its associate
company Consolidated Manufacturing
Enterprise Pty Ltd, in which Ridley holds
“Of course our Safety performance can only
continue to improve if our people embrace
Safety as part of our workplace culture. To this
end, all of our employees have a dedicated
Safety metric as part of their personal Key
Performance Indicators.”
a 25% minority interest with the majority
75% interest held by Indigenous Business
Australia. The commitment is reflected
in the high number of indigenous workers
employed by that company.
Sustainability
In addition to generating returns for its
shareholders, Ridley also understands
the importance of its responsibilities from
a social and environmental perspective.
In this context, and as a processor of
nearly two million tonnes of materials
per annum, Ridley has devised a simple
framework of ‘water, waste and energy’
as a focus for its efforts to achieve more
sustainable practices and outcomes.
From a water perspective, Ridley’s water
bioremediation system at its rendering
plant at Maroota, NSW, is an industry-
leading recycling solution comprising two
covered anaerobic ponds which allow the
site to recycle all its water and function
on a 100% self-sufficient basis in terms
of water supply.
With respect to energy, an SFMCA study
of energy consumption and CO2 emissions
per tonne of feed manufactured across
35 Australian feedmills saw Ridley record a
significant improvement between 2013 and
2015. This reduction in energy usage was
achieved through combined investments
in our boilers, tallow tanks, lighting and
a new solar photovoltaic system.
Finally, it was pleasing to see the efforts
of the business in the sustainability space
recognised at the end of the year with Ridley
receiving a 2016 Australian Packaging
Covenant High Performer Award.
Innovation
Ridley’s ability to continually innovate in
both its nutritional products/services and
its means of delivering those solutions
to market is critical in defending and
growing our position as Australia’s leading
provider of high performance animal
nutrition solutions.
From an R&D perspective, FY16 has been
a significant year in achieving some key
milestones around our flagship Novacq™
program. The journey with Novacq™ has
been one of many years hard work from
key individuals across our business, in
conjunction with Novacq™ licensor CSIRO.
It was gratifying to finally secure our own
commercial scale production facility for
this ground-breaking prawn feed additive
in Yamba, NSW, together with a 49% share
in a prawn feed mill in Chanthaburi,
Thailand, to be used as a platform to
launch the product into the large and
lucrative Thai prawn market.
Our R&D portfolio also saw another
new product come to market, with a new
supplements block for sows launched
to considerable interest. The sow block
builds on the success of our well-
established beef cattle block business,
albeit with a novel benefit of improving
the behaviour, and consequently the
performance from a meat production
perspective, of group-housed sows.
Outside of R&D, it was exciting to launch
our new Total Mixed Ration-style dairy
feed product out of our new blending shed
in Terang, western Victoria. Our new pig
and poultry feedmill near Geelong is also
under construction and utilises the very
latest in feedmilling technology.
28 | Ridley Corporation Limited Annual Report 2016
“During the year, Ridley donated
cash and many tonnes of animal
feed directly to Aussie Helpers in
order to assist struggling farmers.”
Ridley Corporation Limited Annual Report 2016 | 29
OUR PEOPLE AND SUSTAINABILITY CONTINUED
A LEGACY THAT WILL
CHANGE THE HEALTH OF
FUTURE GENERATIONS
The inaugural Ridley Ken Davies Award has been awarded
to Dr Yvonne Selecki and Dr Mohammad Al Moni of the
Garvan Institute of Medical Research.
The generous $50,000 Ridley Ken Davies Award will
assist a research project that uses data obtained through
Garvan’s Dubbo Osteoporosis Epidemiological Study. The
chosen project is a web-based data portal that allows the
Dubbo study to extend its use and impact.
Honouring Ken Davies
Mr Ken Davies, a Ridley employee of six years, sadly
passed away in 2015 having lived with and been treated
for cancer for a number of years.
You can also support the Ridley Ken Davies Award by
donating at www.giving.garvan.org.au/healthinitiative.
The Ridley Ken Davies Memorial Award
Ken Davies was a valued and respected colleague
who passed away on 15 September 2015. Ken was
held in the highest esteem by our customers and
all Ridley employees who knew him.
Ridley established the Ridley Ken Davies Memorial
Award to honour Ken and to make a positive difference
to support medical research and contribution to
change the direction of medicine that will have major
impacts on human health.
The Ridley Ken Davies Memorial Award is an annual
award presented to a Garvan Institute researcher
with a $50,000 prize as part of the Healthy Families,
Healthy Communities program. Ridley has also established a Workplace Giving
program to establish ongoing support for the Ridley Ken Davies Memorial Award.
The inaugural Ridley Ken Davies Memorial Award has been awarded to Dr Yvonne
Selecki and Dr Mohammed Ali Moni of Garvan’s Bone Biology Division. The award
will assist researchers to use the extensive research data from Garvan’s Dubbo
Osteoporosis Epidemiology Study (DOES), and the $50,000 of funding will allow
Drs Selecki and Moni to develop a web-based data portal for DOES, extending the
utility and impact of the data.
Dr Yvonne Selecki (Garvan), Dr Mohammad Ali Moni (Garvan),
Megan Gourlay (Ridley), Helen Davies (Ken Davies’ wife) and
Melissa Pang (Ken Davies’ daughter) at the presentation
of the inaugural Ridley Ken Davies Memorial Award.
Community
Ridley is proud to support employees,
suppliers, customers, and the communities
where we operate, and for the last four
years has been an active supporter of the
Garvan Institute and Aussie Helpers.
Garvan Institute – promoting
‘healthy families, healthy
communities’
In 2012, the Garvan Institute (Garvan)
and Ridley joined forces to raise awareness
about health and wellbeing in regional
and rural Australia through the
establishment of the Healthy Families,
Healthy Communities program, which
is designed to:
• advocate the importance of medical
research to rural and regional Australia;
• share important health messages with
rural and regional Australia; and
• convey messages supporting healthy
living and risk mitigation.
In FY16, the Healthy Families, Healthy
Communities program was showcased
at the Australian Renderers Association
Industry Conference, the Australian Grains
Industry Conference and the Australasian
Milling Conference. The Healthy Families,
Healthy Communities program also
contributes content for a regular health
awareness column in the QantasLink
Spirit Magazine.
As Australia’s largest regional airline,
this magazine provides 5.2 million Qantas
passengers per annum with access to
information on various health awareness
topics.
30 | Ridley Corporation Limited Annual Report 2016
Aussie Helpers
Aussie Helpers supports farmers who
are going through really tough times.
The majority of these people would
not ask for help or expect it. Originally
started by a husband and wife team,
Aussie Helpers has expanded over the
years and is unique in its aim to not
only encourage financial support for
struggling farmers, but also in respect
of donations of time.
Aussie Helpers is a direct link to the
rural communities where Ridley operates.
Aussie Helpers visits to farming families
are not meant to solve any major problems,
however at times just knowing that
someone cares about them and their
difficult situation in the bush offers
a little hope of better days ahead.
Aussie Helpers has helped thousands
of farmers who have been affected by
fire, flood, drought, and rising costs of
In July 2015, the Garvan Research
Foundation launched the Medical
Research and Rural Health – Garvan
Report 2015 at the Australian Grains
Industry Conference in Melbourne. The first
of its kind, the report brought together
evidence-based data to better understand
the health issues facing rural and regional
populations across Australia, how to
identify those who might be affected and in
need of assistance, and to explain why the
challenges exist and what is the outlook
and way forward to rectify some of these
major health issues.
Ridley is also proud when employees
support a range of charitable activities.
By way of example, Ridley employees
Robin Campbell and Vaughan Chenoweth,
supported in part through Ridley’s site
donation program, actively championed
and participated in the 2015 Tour de Cure.
The Tour de Cure is a bike ride for charity
which promotes the keys messages
around health and wellbeing, as well as
raising precious funds to fund research
against cancer. In late 2015, the tour route
was from Adelaide to Melbourne, via
the Great Ocean Road.
Ridley are proudly helping the Heart of our Country
www.aussiehelpers.org.au
living. We have been actively helping
Aussie Helpers since becoming a sponsor
and believe that this organisation is best
placed to assist farmers.
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 year, Ridley donated cash
and many tonnes of animal feed directly
to Aussie Helpers in order to assist
struggling farmers. Ridley also donates
surplus computer equipment to farming
families and holds an annual Christmas
collection drive at our Bourke Street Head
Office and at some of our sites to donate
gifts to less fortunate farming families.
Bike maintenance for Robin Campbell en route to Melbourne.
Tour de Cure support vehicle.
Ridley Corporation Limited Annual Report 2016 | 31
BOARD OF DIRECTORS
Dr Gary Weiss
LLB (Hons) LLM (NZ) JSD (Cornell, NY)
Tim Hart
BSc, MM(T), MMkting, MEd (Melb),
PGDIPSI (Oxon), FAICD, FAIM
Patria Mann
BEc CA FAICD
Chief Executive Officer and
Managing Director
Mr Hart commenced employment with
Ridley on 2 April 2013 as CEO Designate,
was appointed a Director on 24 June 2013,
and was formally appointed as Chief
Executive Officer and Managing Director
on 1 July 2013. Tim was previously CEO of
Sugar Australia and Sugar New Zealand,
being joint ventures between Wilmar/CSR
and Mackay Sugar Limited. Prior to that,
he held management positions with SCA
Hygiene Australasia, Carter Holt Harvey,
ACI Plastics Packaging, Amcor Limited
and Pasminco Limited.
Other current listed company
directorships
Isignthis Limited.
Former listed company directorships
in the last three years
None.
Independent Non-Executive
Director
Appointed in March 2008, Mrs Mann is
currently a Non-Executive Director of Event
Hospitality & Entertainment Limited, Allianz
Australia Limited, Bellamy’s Australia
Limited 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
Event Hospitality & Entertainment
Limited from October 2013.
Bellamy’s Australia Limited from
10 March 2016.
Former listed company directorships
in the last three years
None.
Independent Non-Executive
Director and appointed Chair
on 1 July 2015
Appointed in June 2010, Dr Weiss is an
Executive Director of Ariadne Australia Ltd
and a former executive director with the
Guinness Peat Group. Gary has LLB (Hons)
and LLM (Dist) degrees from Victoria
University of Wellington, New Zealand and
a JSD from Cornell University, New York.
He has extensive experience in international
capital markets and is a Director of a
number of public and private companies.
Gary was appointed Chair on 1 July 2015.
Other current listed company
directorships
Ariadne Australia Limited from 1989.
Premier Investments Limited from 1994.
Tag Pacific Limited from 1988.
Pro-Pac Packaging Limited from 2012.
Thorney Opportunities Limited from 2013.
The Straits Trading Company Limited
from 2014.
Estia Health Ltd from 24 February 2016.
Former listed company directorships
in the last three years
Clearview Wealth Limited from October
2012 until May 2016.
Mercantile Investment Company Limited
from 2012 until February 2015. Dr Weiss
resigned as a Non-Executive Director
and acts as an Alternate Director for
Mr Daniel Weiss.
32 | Ridley Corporation Limited Annual Report 2016
Professor Robert van Barneveld
B.Agr.Sc. (Hon), PhD, R.An.Nutr., FAICD
Ejnar Knudsen
CFA
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 the University
of Queensland. Appointed in June 2010,
Rob brings to the Board a wealth of
experience in the agricultural sector, and
is the Group CEO and Managing Director
of the Sunpork Group, which includes
farms, abattoirs, value adding and food
businesses. He also serves on the boards
of Pork CRC Ltd and Roseworthy Piggery
Pty Ltd, is Deputy Chair of Autism CRC Ltd
and Chairman of Social Skills Training Pty
Ltd. Rob 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.
Mr Knudsen represents the
interests of 19.73% shareholder
AGR Agricultural Investments
LLC (formerly known as Insitor
Holdings, LLC) and AGR
Partners, LLC.
Appointed on 24 June 2013, Mr Knudsen
is the CEO of AGR Partners, LLC, an
associated entity of Ridley’s largest
shareholder, AGR Agricultural Investments
LLC (formerly known as Insitor Holdings,
LLC). 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 start-up Californian grain and feedmilling
company that grew to over $1 billion in
sales. He spent 10 years as Vice President
for Rabobank in New York managing 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
and Craton Capital.
Other current listed company
directorships
None.
Former listed company directorships
in the last three years
None.
David Lord
MBA (Executive) MEBS, Grad. Dip. Bus
(Management) (Monash) MAICD
Independent Non-Executive
Director
Appointed in April 2016, Mr Lord has
enjoyed a senior management career
primarily in consumer products and
agribusiness, most recently as President
and Chief Operating Officer of Saputo
Dairy Division (Australia) and as CEO
and Managing Director of Warrnambool
Cheese and Butter Factory Company
Limited (WCB) from 2010 to 2015. Between
the years 2002 and 2009, David was CEO
and Managing Director of Parmalat
Australia, a national dairy food
manufacturing company known for its
Pauls, Ice Break, Vaalia and Smarter White
brands. David has extensive experience in
supply chain and in the domestic markets
for consumer and industrial food products,
and the marketing of Australian dairy
products in the international commodity
marketplace.
Other current listed company
directorships
None.
Former listed company directorships
in the last three years
Managing Director of Warrnambool Cheese
and Butter Factory Company Holdings
Limited until May 2014.
Ridley Corporation Limited Annual Report 2016 | 33
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
Index of Notes
Notes to the Financial Statements
Directors’ Declaration
Independent Auditor’s Report
35
43
52
53
54
55
56
57
58
91
92
34 | Ridley Corporation Limited Annual Report 2016
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2016
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 2016.
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:
GH Weiss
TJ Hart
PM Mann
RJ van Barneveld
E Knudsen
DJ Lord (appointed 29 April 2016)
JM Spark (resigned on 1 July 2015)
AL Vizard (resigned on 31 March 2016)
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 in $’000
Profit from continuing operations before income tax
Income tax expense
Profit from continuing operations after tax
Profit/(loss) from discontinued operation after tax
Net profit attributable to members of Ridley Corporation Limited
4. Review of operations
2016
40,315
(13,112)
27,203
403
27,606
2015
36,049
(10,306)
25,743
(4,572)
21,171
Operating result
The full year consolidated EBIT of $42.1 million after property costs but before non-recurring items, comprises the Ridley AgriProducts
result of $53.7 million, less corporate costs of $9.6 million and property costs other than Dry Creek of $2.0m.
The divestment of Dry Creek has been reflected as a discontinued operation for the year (note 10 to the accounts), comprising a pre-tax
operating loss prior to divestment of ($4.0 million) offset by a pre-tax profit on disposal of $6.6 million. After allowing for tax payable on
the disposal of ($4.9 million) after utilisation of all brought forward capital losses and a tax benefit on operating losses of $2.7 million, a
net after tax profit on the discontinued operation of $0.4 million has been recorded for the year. The prior year Dry Creek operating result
and asset impairment has been reclassified as a discontinued operation for consistency.
As reflected in Table 2 below, Ridley has reported EBIT from continuing operations and before non-recurring costs for the year of
$42.1 million, an increase of $3.3 million on the $38.8 million prior year equivalent.
The sale of the former feedmill site at Dandenong generated a non-recurring pre-tax profit during the year of $2.2 million, the capital
gain on which was absorbed through the utilisation of brought forward tax losses.
$1.4 million of non-recurring, taxable sundry income has been generated through the insurance claim proceeds received to replace on
a ‘new for old’ basis the feedmill assets damaged by the Pinery, South Australia bushfire at Ridley’s Wasleys feedmill. The reinstatement
of all damaged facilities at the Wasleys site is expected to be completed in the first half of the 2017 financial year and further proceeds
will be periodically received as the rebuild progresses.
Net finance costs for the year of $5.4 million reflect interest on bank debt and the trade payables facility and the amortisation of
establishment and other fees.
The tax expense for the current year of $12.6 million excludes $2.2 million of tax payable on the Dry Creek Discontinued Operation and
excludes $0.5 million of tax relating to other non-recurring items.
Ridley Corporation Limited Annual Report 2016 | 35
DIRECTORS’ REPORT CONTINUED
FOR THE YEAR ENDED 30 JUNE 2016
4. Review of operations continued
Profit and loss
Table 2 in $ million
Earnings from operations before finance income and expense and tax expense (EBIT):
2016
2015
Movement
Ridley AgriProducts
Corporate
Property – other than Dry Creek
EBIT from operations before non-recurring costs
Net finance costs
Income tax expense – continuing
Net profit from continuing operations after tax before non-recurring items
Discontinued operation – Dry Creek after tax
Other non-recurring items before tax
Tax on other non-recurring items
Reported net profit
Earnings per share (cents):
(i) continuing
(ii) reported
53.7
(9.6)
(2.0)
42.1
(5.4)
(12.6)
24.1
0.4
3.6
(0.5)
27.6
8.8
9.0
50.4
(8.9)
(2.7)
38.8
(5.0)
(9.7)
24.1
(4.6)#
2.3
(0.6)
21.2
8.4
6.9
3.3
(0.7)
0.7
3.3
(0.4)
(2.9)
-
5.0
1.3
0.1
6.4
1.9
2.1
# Prior year reclassified from Property – Dry Creek to discontinued operation for consistency with 2016.
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.
Sales revenue and gross profit
Ridley AgriProducts sales revenue for FY16 of $912.6 million was up $5.0 million (0.5%) on last year’s $907.6 million, and reflects
1.94 million (2015: 1.90 million) tonnes of stockfeed and rendered product sold. Consolidated gross profit from continuing operations
was $80.2 million, $2.6 million (3.4%) above last year’s $77.6 million equivalent.
Corporate and property costs
Corporate costs of $9.6 million are largely consistent with the prior year’s $8.9 million, increasing by $0.7 million (7.9%) to accommodate
a restructure of the executive lead team.
The property costs other than Dry Creek of $2.0 million are $0.7 million lower than the prior period due to the project delays associated
with the Victorian State Government’s termination of the market led proposal process and the conduct of its strategic land use
assessment review of the Corio Bay peninsula.
Balance Sheet
There have been the following material movements in the Balance Sheet over the last 12 months:
(i) The $33.5 million prior period Dry Creek current asset held for sale has been sold during the year, with $19 million of proceeds
received and a further $16 million yet to be received after the balance date, of which $10 million ($9.8 million net present value)
is due within 12 months and the final $6 million ($5.5 million net present value) by no later than 31 December 2017.
(ii) A $6.5 million decrease in cash and cash equivalents reflects the timing of cash receipts versus application to tranches of borrowing,
which increased by $1.7 million.
(iii) Increases in current receivables of $11.3 million reflect a net $0.7 million increase in trade debtors and prepayments, $0.8 million
insurance income receivable, and $9.8 million Dry Creek present value of deferred consideration receivable.
(iv) An increase in inventory ($6.0 million) and decrease in payables ($12.8 million) which reflect the interaction between inventory
holding levels required to keep the mills operating at capacity and timing of cash payments compared to the prior year.
(v) A $20.7 million increase in property, plant and equipment, which reflects $12.2 million of construction work in progress for the
new Lara feedmill at north east Geelong (announced in August 2015), and a number of operational initiatives at the rendering
site at Laverton.
36 | Ridley Corporation Limited Annual Report 2016
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
$19.3 million, a decrease of $25.9 million from the prior year of which $19.6 million represents a temporary increase in working capital.
The Company has invested $19.3 million in development projects during the year, the largest of which is noted above in the Balance
Sheet analysis. Maintenance capital expenditure of $14.9 million remains below the $15.0m aggregate charge for depreciation and
amortisation.
$19 million of the $35 million proceeds from the sale of Dry Creek were received during the year and a further $3.0 million of proceeds
were received from the sale of the former feedmill site at Dandenong for a post-tax profit of $2.2 million.
The investment in the Thailand joint venture was acquired for an outlay of $1.3 million and payments for intangible assets of $0.7 million
reflect NovacqTM development costs.
Dividends paid comprise the final dividend of 2.0 cents per share in respect of the prior financial year paid on 30 October 2015 and the
interim dividend of 1.5 cents per share which was paid on 29 April 2016.
Tax instalment payments of $14.0 million were made during the year compared to $6.6 million in the prior year.
Table 3 in $ million
Cash flows for the year
EBIT from operations after transaction costs and before discontinued operation and non-recurring costs
Net cash flow from discontinued operation and non-recurring items
Depreciation and amortisation
EBITDA
(Increase)/decrease in working capital
Maintenance capital expenditure
Operating cash flow
Development capital expenditure
Payment for intangibles
Dividends paid
Share-based payments
Proceeds from sale of discontinued operation (Dry Creek)
Proceeds from sale of property assets
Payment for investment in Thailand joint venture
Net finance cost payments
Net tax payments
Other items
Cash flow for the period
Opening net debt balance at 1 July
Closing net debt balance at 30 June
Year Ended
30 June 2016
42.1
(3.6)
15.0
53.5
(19.3)
(14.9)
19.3
(19.3)
(0.7)
(10.6)
(1.0)
19.0
3.0
(1.3)
(5.4)
(13.9)
2.6
(8.3)
(32.7)
(41.0)
30 June 2015
38.8
(2.7)
14.9
51.0
7.0
(12.8)
45.2
(20.6)
(0.4)
(10.6)
(2.0)
-
3.5
-
(4.9)
(6.6)
-
3.6
(36.3)
(32.7)
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.
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 residual sites are now the former salt fields at Moolap and Lara.
Ridley Corporation Limited Annual Report 2016 | 37
DIRECTORS’ REPORT CONTINUED
FOR THE YEAR ENDED 30 JUNE 2016
4. Review of operations continued
Risks
The following is a summary of the key continuing significant operational risks facing the business and the way in which Ridley manages
these risks.
• Cyclical fluctuations impacting the demand for animal nutrition products – by operating in several business sectors within the
domestic economy, (namely Poultry and Pig, Dairy, Aqua, 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 the domestic grain 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 milk yield and herd wellbeing or feed conversion ratios in poultry and aqua-feed.
• Impact on domestic and export markets in the event of disease outbreak – Ridley has a strategy of mill segregation in place to
effectively manage its own risk of product contamination across the various species sectors. Ridley also has a 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 third party market risk, such as what happened with the outbreaks of Avian Influenza three years ago 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. This provides surety of volumes required to plan appropriate shift structures, procurement and
supply chain activities, and capital expenditure programs, and actively manages the risk of stranded assets and backward integration
into feed production by significant customers.
• Surplus property holdings – following the realisation of the majority of its surplus land assets, Ridley has released its dedicated
property team. Ridley has retained in-house legal resources supported when needed by external experts to manage the maintenance
of existing and potential new operating sites. Ridley will work with the State Government and alongside its development partner to
secure appropriate redevelopment approvals to optimise the realisation of shareholder value from the remaining surplus property.
• Corporate – risks such as safety, recruitment and retention of high-calibre employees, inadequate innovation and new product
development, customer credit risk, interest rate, foreign exchange and inappropriate raw material purchases are actively managed
through the Company’s risk management framework which includes review and monitoring by the executive lead team.
Earnings per share
The continuing earnings per share of 8.8 cents reflects the result on a stable equity platform. The earnings per share of 9.0 cents reflects
the impact of the discontinued operation from the sale of Dry Creek in FY16.
Basic earnings per share – continuing
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
38 | Ridley Corporation Limited Annual Report 2016
2016
8.8c
9.0c
2015
8.4c
6.9c
2016
$’000
69,435
(28,468)
40,967
247,884
16.5%
2015
$’000
67,693
(34,991)
32,702
229,834
14.2%
Capital movements
During FY16, a total of 735,552 (FY15: 1,870,969) shares were acquired by the Company on-market for an outlay of $1.0 million
(FY15: $2.0 million) in satisfaction of:
(i) the issue of 59,649 (FY15: 1,100,713) shares allocated to Ridley employees under the Ridley Long Term Incentive Plan; and
(ii) 675,903 (FY15: 770,256) shares allocated under the Ridley Employee Share Scheme.
There were no new issues of capital during either financial year.
Dividend
Ridley paid a 2015 final dividend of 2.0 cents per share, fully franked on 30 October 2015 and a 2016 interim dividend of 1.5 cents
per share, fully franked on 29 April 2016. 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.
After the Balance Sheet date, a 2016 final dividend of 2.5 cents per share, fully franked and payable on 31 October 2016 was declared by
the Board of Directors. The financial effect of this dividend has not been brought to account in the consolidated financial statements for
the year ended 30 June 2016 and will be recognised in subsequent financial reports.
Outlook
A 90% uplift in AgriProducts EBIT from $28.1 million to $53.7 million has been achieved over the last three years, essentially from our
existing asset base without the benefit of any external acquisitions. In FY16, we have delivered another record result in a year when we
have experienced some headwinds in two of our flagship business units, Rendering and Aqua-Feed. In the long term, we retain our view
that there is further growth that can be extracted from the current portfolio of assets in the coming years.
To augment the expected organic growth, we are continuing to develop the concepts and plans for the modernisation of our feedmills
in a number of key regions. The replacement of an older mill with a newer, more energy and staffing efficient feedmill is capable of
returning the cost of capital. What is needed to generate a return which meets Ridley’s internal hurdle rates is a combination of
incremental volume and freight/logistics savings or arbitrages. In order to de-risk the capital outlay associated with any major new
project, these profit-enhancing factors need to be underwritten by way of customer contractual commitments. We are continuing
our discussions to secure the requisite commitments for a number of potential new feedmill projects and hope to be able to make
a positive announcement in the coming year.
Our operational R&D activities to advance the NovacqTM project are gathering momentum and we have an exciting year ahead at Yamba
and in Thailand as we continually improve our domestic production and harvesting processes and trial the efficacy of NovacqTM in diets
manufactured at the new Thailand facility. Securing a site for local production of NovacqTM in Thailand would reflect another positive
development for the project.
We will also be looking to provide some guidance on the process and timing for the Nelson Cove development once we have clarification
from the Victorian State Government on the outcome of its review of the Corio Bay peninsula.
In addition to organic growth through a program of mill modernisation, Ridley continues to target acquisition opportunities consistent
with its long term strategy to be Australia’s leading producer of premium quality, high performance animal nutrition solutions.
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 2016.
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 29 April 2016 of 1.5 cents, 100% franked
Final dividend in respect of the prior financial year paid on 30 October 2015 of 2.0 cents, 100% franked
2016
$’000
4,618
6,156
10,774
Ridley Corporation Limited Annual Report 2016 | 39
DIRECTORS’ REPORT CONTINUED
FOR THE YEAR ENDED 30 JUNE 2016
7. Environmental regulation
The Group’s manufacturing activities are subject to environmental regulation. 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 reporting requirements
The Group is subject to the reporting requirements of the National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER), which
governs the reporting and dissemination of information about greenhouse gas emissions, greenhouse gas projects and energy use
and production. Ridley has submitted its an annual report in compliance with its reporting requirements.
8. Directors’ and executives’ remuneration
Refer to the Remuneration Report.
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
7,650,000
4,551,514
Various
Various
No holder has any right under the above plan and scheme 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
Refer to the Litigation section of note 29 Contingent liabilities in respect of a post balance date event comprising the initiation
of proceedings by Ridley to recover an outstanding debt.
No other matters or circumstances have arisen since 30 June 2016 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.
40 | Ridley Corporation Limited Annual Report 2016
12. 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 Australia and
New Zealand.
13. 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.
14. 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
Board
Audit and Risk
Committee
Remuneration
Committee
Ridley Innovation and
Operational Committee
JM Spark#
GH Weiss#
TJ Hart
AL Vizard1
PM Mann
RJ van Barneveld2
E Knudsen
DJ Lord 3
H
-
12
12
8
12
12
12
2
A
-
12
12
8
11
12
11
2
H
-
4
-
-
4
4
-
-
A
-
4
-
-
4
4
-
-
H
-
4
-
3
-
-
-
1
A
-
4
-
3
-
-
-
1
H
-
-
4
3
-
4
4
-
A
-
-
4
3
-
4
4
-
H Number of meetings held during period of office.
A Number of meetings attended.
# Mr Spark resigned as Chair, from the Ridley Board, and from the Audit and Risk Committee on 1 July 2015. Dr Weiss was appointed as Chair on 1 July 2015.
1. Professor Vizard resigned from the Ridley Board on 31 March 2016.
2. Professor van Barneveld was appointed to the Audit and Risk Committee on 1 July 2015.
3. Mr Lord was appointed to the Ridley Board on 29 April 2016. Mr Lord was appointed as Chair of the Remuneration Committee on 20 June 2016.
Ridley Corporation Limited Annual Report 2016 | 41
DIRECTORS’ REPORT CONTINUED
FOR THE YEAR ENDED 30 JUNE 2016
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 52.
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
Transaction advisory and other services
Total
$
48,878
60,644
109,522
16. Rounding of amounts to nearest thousand dollars
The Company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 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 legislative instrument, unless otherwise indicated.
Signed in Melbourne on 29 August 2016 in accordance with a resolution of the Directors.
GH Weiss
Director
TJ Hart
Director
42 | Ridley Corporation Limited Annual Report 2016
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 2016. This report forms part of the
Directors’ Report for the year ended 30 June 2016.
Remuneration Committee
The Remuneration Committee, (throughout the Remuneration Report referred to as the Committee) consisting of at least two independent
Non-Executive Directors, advises the Ridley Board of Directors (Board) on remuneration policies and practices generally and makes
specific 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 14 of the Directors’ Report.
Services from remuneration consultants
In the prior year, the Committee engaged both the Godfrey Remuneration Group (GRG) and Hay Group (Hay) for a period of one year
as remuneration consultants to the Board. GRG and Hay were 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.
The engagement of both GRG and Hay by the Committee was based on a documented set of protocols to be followed by GRG, Hay, members
of the Committee and KMP, and which govern the way in which the remuneration recommendations would be developed by GRG and
Hay and provided to the Board and the Committee. The Board adopted these recommendations last year and have continued to apply
the existing policies and practices throughout the 2016 financial year.
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 thoroughly benchmarked against a Comparator Group of Companies comprised of ASX, globally listed and
private companies of similar function and size to Ridley.
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.
Ridley Corporation Limited Annual Report 2016 | 43
REMUNERATION REPORT – AUDITED
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.
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 and discontinued operations
Dividends paid
TSR#
Short Term Incentive to KMP
2016
2015
2014
2013
2012
$’000
$’000
$’000
%
$’000
%
$’000
27,606
45,734
17,612
11.4
10,774
15.0
1,322
21,171
36,141
47,059
9.4
10,774
62.0
1,559
17,613
27,435
31,349
7.8
4,617
8.0
1,142
(21,694)
(13,272)
52,583
(6.8)
11,543
(19.1)
862
19,253
35,682
50,896
6.9
23,086
(11.0)
158
# Total Shareholder Returns (TSR) is calculated as the change in share price for the year plus dividends paid for the year, divided by the opening share price.
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 $10,000 of incremental fees in addition to the base Director fees. The total amount paid to Non-Executive Directors in FY16 was
$600,955 (FY15: $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’s was the sole remaining
entitlement of $35,000, and this was paid out in full upon his retirement on 31 March 2016.
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 base 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 the base package 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. In the prior year, the Group terminated a legacy defined
benefit plan 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 components, being
the financial performance of the Group (60%) and the overall performance of the individual (40%) as measured against personal key
performance indicators (KPIs) (FY15: financial to personal split 50%:50%).
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 | Ridley Corporation Limited Annual Report 2016
The Group financial performance component of the STI for FY16 was assessed against budgeted Earnings Before Interest, Tax, Depreciation
and Amortisation (EBITDA) and against Net Profit After Tax (NPAT). 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 2016 financial year, the financial results and each individual’s performance against KPIs have been reviewed
to determine STI payments for each executive. For FY16, the financial performance hurdles were assessed as being 80% achieved by
the Committee, and its recommendations were adopted by the Board. The STI is payable in cash and in September, after the release
of the full year financial results.
STI incentives range from 100% of the base package for the CEO down to 10% of the base package 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 2016, 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 2015 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 company-wide loyalty and staff retention through the Ridley Employee Share Scheme. Company
policy prohibits employees from entering 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 the 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 effective date of grant. 50%
of the Rights vest if Ridley ranks at the 51st percentile, and 100% vest if Ridley ranks at the 75th percentile or above. There is straight
line proportionate vesting of the balance from 51% 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 that participant, 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 2016, 2,800,000 (2015: 2,700,000) Rights were issued under the LTIP, of which 1,350,000 (2015: 1,225,000)
were granted as remuneration to KMP and the balance issued to other, non-KMP senior executives within the organisation.
Ridley Corporation Limited Annual Report 2016 | 45
REMUNERATION REPORT – AUDITED 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 2016 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
1 July 2013
1 July 2014
1 July 2015
TSR
Ridley
95.6%
79.9%
19.4%
Median TSR
Comparison
(18.5%)
(10.5%)
4.5%
Percentile
85.0
84.5
66.0
Number of
Rights on Issue
2,400,000
2,575,000
2,675,000
Hypothetically
Vested at
30 June 2016
Hypothetically
Vested at
30 June 2016
2,275,000
2,450,000
2,132,813
100%*
100%
81.3%
* All 2,275,000 Rights vested and 2,275,000 shares awarded on 1 July 2016.
Graph: Comparison of growth of Ridley Corporation Limited share price to the ASX Small Ords and ASX 200
Accumulation Index for FY14–FY16
Ridley Share Price
ASX 200 Accumulation Index (based to Ridley)
Small Ords Accumulation Index (based to Ridley)
$1.80
$1.60
$1.40
$1.20
$1.00
$0.80
$0.60
$0.40
Up ~82%
Up ~14%
Up ~10%
3
1
l
u
J
1
3
3
1
t
c
O
1
3
4
1
n
a
J
1
3
4
1
r
p
A
0
3
4
1
l
u
J
1
3
4
1
t
c
O
1
3
5
1
n
a
J
1
3
5
1
r
p
A
0
3
5
1
l
u
J
0
3
5
1
t
c
O
1
3
6
1
n
a
J
0
3
6
1
r
p
A
0
3
6
1
l
u
J
0
3
Ridley Employee Share Scheme (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. 675,903 (2015: 770,256) shares
were acquired on-market and allocated to participating employees under the Scheme during the year. The total value of the shares
purchased on-market was $962,000 (2015: $909,000).
46 | Ridley Corporation Limited Annual Report 2016
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*
Total
Number of Shares
2016
675,903
59,649
735,552
2015
770,256
1,100,713
1,870,969
Market value
2015
$’000
909
1,061
1,970
2016
$’000
962
88
1,050
* Shares awarded under the Long Term Incentive Plan are issued on a pro-rata basis in respect of employees whose departure from the Ridley Group is for a qualifying
reason as defined In the plan rules.
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
GH Weiss (a)
JM Spark (a)
TJ Hart
AL Vizard
PM Mann
RJ van Barneveld
E Knudsen
DJ Lord
Executives
AM Boyd
M Murphy
M Robbins
CW Klem
AI Lochland
AM Mooney
S Butler
J Murray
Position
Status
Chair
Chair
Managing Director and CEO
Director
Director
Director
Director
Director
Chief Financial Officer and Company Secretary
General Manager Safety, People and Technical Development
General Manager Safety, People and Sustainability
General Manager Rendering
General Manager Packaged, Aqua-Feed and Supplements
General Manager Commercial Feed
General Manager Ridley Land Corporation Pty Ltd
Non-Executive Director and Chairman of Ridley Land Corporation Pty Ltd
Appointed Chair on 1 July 2015
Resigned on 1 July 2015
Resigned on 31 March 2016
Appointed on 29 April 2016
Appointed 11 January 2016
Resigned 4 December 2015
Made redundant on 1 July 2016
Resigned on 31 December 2015
(a) JM Spark resigned as Chair and from the Ridley Board on 1 July 2015. GH Weiss was appointed as Chair on 1 July 2015.
Details of remuneration
Details of the remuneration of each Director of Ridley Corporation Limited and each of the KMP of the Group during the financial year are
set out below. In accordance with the requirements of Section 300A of the Corporations Act 2001 and Regulation 2M.3.03, the remuneration
disclosures for the 2015 and 2016 financial years only include remuneration relating to the portion of the relevant periods that each
individual was considered a KMP.
Ridley Corporation Limited Annual Report 2016 | 47
REMUNERATION REPORT – AUDITED CONTINUED
Details of remuneration continued
All values are in A$ unless otherwise stated.
2016
Name
Directors
GH Weiss – Chair 3
JM Spark – Chair
TJ Hart – Managing Director
AL Vizard 4, 5
PM Mann
RJ van Barneveld 4
E Knudsen 4
DJ Lord 6
Total Directors
Executives
AM Boyd
M Murphy 7
M Robbins 8
CW Klem
AI Lochland
AM Mooney
S Butler 9
J Murray 10
Total executives
Total
Short Term
Benefits
Directors’
Fees and
Cash Salary
$
159,091
-
692,630
95,000
86,364
96,979
85,000
13,473
1,228,537
418,572
234,073
132,439
301,732
301,732
329,018
196,988
36,364
1,950,918
3,179,455
Post-
employment
Benefits
STI
$
Other
Benefits
$
Super-
annuation
$
Share-based
Payments
Performance
Rights/
Options
$
-
-
594,104
-
-
-
-
-
594,104
184,552
76,800
-
75,782
80,834
92,900
216,686
-
727,554
1,321,658
-
-
-
35,178
-
-
-
-
35,178
-
-
186,354
-
-
-
-
153,774
340,128
375,306
15,909
-
50,000
-
8,636
4,156
-
1,347
80,048
25,000
23,567
18,866
30,173
30,173
29,990
19,699
3,636
181,104
261,152
-
-
323,257
-
-
-
-
-
323,257
108,590
28,090
24,167
67,083
68,340
67,083
1,257
-
364,610
687,867
Total
$
175,000
-
1,659,991
130,178
95,000
101,135
85,000
14,820
2,261,124
736,714
362,530
361,826
474,770
481,079
518,991
434,630
193,774
3,564,314
5,825,438
%1
%2
-
-
19%
-
-
-
-
-
15%
8%
7%
14%
14%
13%
-
-
-
-
55%
-
-
-
-
-
40%
29%
7%
30%
31%
31%
50%
-
1. Percentage remuneration consisting of performance rights/options.
2. Percentage remuneration performance related.
3. Appointed Chair 1 July 2015.
4. Director fee paid to a Company or Family Trust. Remuneration for RJ van Barneveld includes back pay for Chairing the Ridley Innovation and Operational
Committee.
5. Resigned on 31 March 2016. Other Benefits reflect the payment of the 2003 retirement allowance scheme.
6. Appointed on 29 April 2016.
7. Appointed to a General Manager, KMP role on 11 January 2016.
8. Resigned on 4 December 2015. Other Benefits reflect benefits paid on departure.
9. Made redundant on 1 July 2016.
10. Resigned on 31 December 2015. Other Benefits reflect payment of preserved leave entitlements.
48 | Ridley Corporation Limited Annual Report 2016
2015
Name
Directors
JM Spark – Chair
TJ Hart – Managing Director
AL Vizard 3
PM Mann
RJ van Barneveld
GH Weiss
E Knudsen 3
Total Directors
Executives
AM Boyd
M Robbins
CW Klem
AI Lochland
AM Mooney
S Butler
J Murray
Total executives
Total
Short Term
Benefits
Directors’
Fees and
Cash Salary
$
159,091
671,000
95,000
86,364
77,273
77,273
85,000
1,251,001
405,652
320,100
266,738
270,268
323,952
258,825
104,545
1,950,080
3,201,081
Post-
employment
Benefits
STI
$
Super-
annuation
$
Share-based
Payments
Performance
Rights/
Options
$
-
721,000
-
-
-
-
-
721,000
218,508
105,060
96,000
96,000
105,960
216,686
-
838,214
1,559,214
15,909
50,000
-
8,636
7,727
7,727
-
89,999
25,000
25,000
26,674
27,026
24,600
25,882
10,455
164,637
254,636
-
201,177
-
-
-
-
-
201,177
67,844
25,344
42,844
42,844
41,667
1,177
-
221,720
422,897
1. Percentage remuneration consisting of performance rights/options.
2. Percentage remuneration performance related.
3. Director fee paid to a Company or Family Trust.
Total
$
175,000
1,643,177
95,000
95,000
85,000
85,000
85,000
2,263,177
717,004
475,504
432,256
436,138
496,179
502,570
115,000
3,174,651
5,437,828
%1
%2
-
12%
-
-
-
-
-
9%
5%
10%
10%
8%
0%
0%
-
56%
-
-
-
-
-
40%
27%
32%
32%
30%
43%
0%
The salary package may be allocated at the executive’s discretion to cash, superannuation (subject to legislative limits), motor vehicle
and certain other benefits.
Contracts of employment
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, eligibility to participate in the Ridley Corporation LTIP. Other major provisions of the
agreements relating to remuneration are set out below:
TJ Hart, CEO and Managing Director
• Base remuneration, inclusive of superannuation and any elected benefits, of $742,630 for the 2016 financial year, increasing by 3%
to $764,909 on 1 July 2016.
• Full scheme participation up to 100% of total base package based on the achievement of certain agreed KPIs as approved by the Board.
The 60% of Ridley financial performance measures for FY16 included a mix of performance against budgeted Earnings Before Interest,
Tax, Depreciation and Amortisation (EBITDA) and Net Profit After Tax, excluding property. 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 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 20 November 2015 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 2015.
• 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.
Other senior executives have individual contracts of employment but with no fixed term of employment.
Ridley Corporation Limited Annual Report 2016 | 49
REMUNERATION REPORT – AUDITED CONTINUED
Details of remuneration continued
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.
Name
TJ Hart
AM Boyd
M Murphy
M Robbins
CW Klem
AI Lochland
AM Mooney
S Butler
J Murray
STI percentage
Range of TEP %
STI payment
in $
0–100
0–50
0–30
0–30
0–30
0–30
0–30
(i)
0%
594,104
184,552
76,800
22,675
75,782
80,834
92,900
216,686
n/a
Paid %
80%
82%
80%
50%
76%
81%
85%
100%
n/a
2016
Forfeited %
20%
18%
20%
50%
24%
19%
15%
-
n/a
2015
Paid %
Forfeited %
100%
100%
100%
100%
100%
100%
100%
100%
n/a
-
-
-
-
-
-
-
-
n/a
(i) Mr Butler had individual STI 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)
Recipients of LTIP rights
Directors
TJ Hart
Key management personnel
AM Boyd
M Murphy
M Robbins
CW Klem
AI Lochland
AM Mooney
S Butler
J Murray
Total issued to Directors and
key management personnel
Balance at
1 July 2015
Granted1
Vested2
Forfeited
Balance at
30 June 20163
Date
Exercised4
1,200,000
600,000
-
-
1,800,000
-
400,000
100,000
125,000
250,000
250,000
250,000
-
-
200,000
50,000
125,000
125,000
125,000
125,000
-
-
-
-
(59,649)
-
-
-
-
-
-
-
(190,351)
-
-
-
-
-
600,000
150,000
-
375,000
375,000
375,000
-
-
-
-
4 Dec 2015
-
-
-
-
-
2,575,000
1,350,000
(59,649)
(190,351)
3,675,000
-
1. The fair value per option at the grant date of 1 July 2015 was $0.61 per share.
2. Vested upon termination of employment on 4 December 2015.
3. Performance rights are due to vest between July 2016 through to July 2018.
4. The value at the 4 December 2015 date of exercise was $1.62 per share.
50 | Ridley Corporation Limited Annual Report 2016
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
KMP 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
Balance at
1 July 2015
Received During
the Year1
Holding at date
of termination
Acquired/(Disposed)
during the year
Balance at
30 June 2016
JM Spark
GH Weiss
TJ Hart
AL Vizard
PM Mann
RJ van Barneveld
E Knudsen
DJ Lord
Total Directors
AM Boyd
M Murphy
M Robbins
CW Klem
AI Lochland
AM Mooney
S Butler
J Murray
Total executives
Total key management personnel
498,500
50,000
26,783
48,658
96,625
58,900
703,286
-
1,482,752
698,666
6,584
1,783
369,058
1,783
395,323
172,820
1,774,122
3,420,139
4,902,891
-
-
1,479
-
-
-
-
-
1,479
1,479
1,479
59,649
-
1,479
-
1,479
-
65,565
67,044
(498,500)
-
-
(48,658)
-
-
-
-
(547,158)
-
-
(61,432)
-
-
-
(174,299)
(1,774,122)
(2,009,853)
(2,557,011)
1. Received from the vesting of performance rights and/or through the Ridley Employee Share Scheme.
-
100,000
-
-
-
-
-
18,200
118,200
-
-
-
(39,729)
-
(24,999)
-
-
(64,728)
53,472
-
150,000
28,262
-
96,625
58,900
703,286
18,200
1,055,273
700,145
8,063
-
329,329
3,262
370,324
-
-
1,411,123
2,466,396
Ridley Corporation Limited Annual Report 2016 | 51
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 2016 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
29 August 2016
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.
52 | Ridley Corporation Limited Annual Report 2016
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2016
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
Share of net profits from equity accounted investments
Profit from continuing operations before income tax expense
Note
4
4
5(e)
5(b)
5(d)
14
2016
$’000
912,561
(832,329)
80,232
183
12,121
(13,400)
(33,235)
(5,602)
-
2015
$’000
Restated*
907,599
(830,002)
77,597
272
3,825
(12,252)
(25,688)
(5,331)
(2,480)
16
106
40,315
36,049
Income tax expense
6
(13,112)
(10,306)
Profit from continuing operations after income tax expense
27,203
25,743
Profit/(loss) from discontinued operation (net of tax)
10
403
(4,572)
Net profit after tax attributable to members of Ridley Corporation Limited
27,606
21,171
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
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
-
-
27,606
21,171
27,606
21,171
Note
1
1
1
1
2016
8.8c
9.0c
8.8c
9.0c
2015
8.4c
6.9c
8.4c
6.9c
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
* The 2015 Consolidated Statement of Comprehensive Income has been restated for the effect of Dry Creek being classified as a
discontinued operation (refer note 10).
Ridley Corporation Limited Annual Report 2016 | 53
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2016
Current assets
Cash and cash equivalents
Receivables
Inventories
Assets held for sale
Total current assets
Non-current assets
Receivables
Investment properties
Property, plant and equipment
Intangible assets
Investments accounted for using the equity method
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Payables
Provisions
Tax liability
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
Note
2016
$’000
2015
$’000
7
8
9
10
8
11
12
13
14
15
16
17
15
18
17
19
20
20
28,468
112,352
87,683
-
228,503
5,537
3,140
160,209
76,355
3,663
7,443
256,347
484,850
145,916
12,909
8,260
167,085
69,435
446
69,881
236,966
34,991
101,037
81,703
34,133
251,864
-
3,153
139,543
78,194
2,323
1,476
224,689
476,553
158,725
12,766
7,148
178,639
67,693
387
68,080
246,719
247,884
229,834
214,445
2,170
31,269
247,884
214,445
853
14,536
229,834
54 | Ridley Corporation Limited Annual Report 2016
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2016
Balance at 30 June 2016
214,445
2,170
31,269
247,884
Balance at 1 July 2015
Profit for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners recorded directly in equity
Dividends paid
Share-based payment transactions
Total transactions with owners recorded directly in equity
Balance at 1 July 2014
Profit for the year
Other comprehensive income
Total 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-based
Payment
Reserve
$’000
853
Share Capital
$’000
214,445
Retained
Earnings
$’000
14,536
27,606
-
27,606
Total
$’000
229,834
27,606
-
27,606
-
1,317
(10,774)
(99)
(10,774)
1,218
1,317
(10,873)
(9,556)
Share-based
Payment
Reserve
$’000
375
Share Capital
$’000
214,445
Retained
Earnings
$’000
4,954
21,171
-
21,171
Total
$’000
219,774
21,171
-
21,171
-
478
(10,774)
(815)
(10,774)
(337)
478
(11,589)
(11,111)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Balance at 30 June 2015
214,445
853
14,536
229,834
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
Ridley Corporation Limited Annual Report 2016 | 55
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2016
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Other income received
Interest and other costs of finance paid
Income tax payment
Net cash inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Proceeds from sale of discontinued operation
Proceeds from sale of non-current assets
Acquisition of investment in joint venture entity
Net cash (outflow) from investing activities
Cash flows from financing activities
Share-based payment transactions
Draw-down of borrowings
Dividends paid
Net cash (outflow) from financing activities
Net (decrease)/increase in cash held
Cash at the beginning of the financial year
Note
2016
$’000
2015
$’000
1,007,469
(979,510)
183
8,926
(5,484)
(13,972)
17,612
(34,170)
(698)
19,000
3,000
(1,324)
(14,192)
(1,050)
1,742
(10,635)
(9,943)
7
10
14
2
962,930
(907,459)
272
3,118
(5,209)
(6,593)
47,059
(33,827)
(446)
-
3,472
-
(30,801)
(1,970)
12,109
(10,647)
(508)
(6,523)
15,750
34,991
19,241
Cash at the end of the financial year
7
28,468
34,991
There were no non-cash financing and investing activities during the current or prior years.
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
56 | Ridley Corporation Limited Annual Report 2016
INDEX OF NOTES
TO AND FORMING PART OF THE FINANCIAL REPORT
1. Earnings per share
2. Dividends
3. Operating segments
4. Revenue and other income
5. Expenses
6.
Income tax expense
7. Cash and cash equivalents
8. Receivables
9.
Inventories
10. Assets held for sale and discontinued operations
11. Investment properties
12. Property, plant and equipment
13. Intangible assets
14. Investments accounted for using the equity method
15. Tax assets and liabilities
16. Payables
17. Provisions
18. Borrowings
19. Share capital
20. Reserves and retained earnings
21. Investment in controlled entities
22. Parent entity
23. Deed of Cross Guarantee
24. Related party disclosures
25. Share-based payments
26. Retirement benefit obligations
27. Financial risk management
28. Commitments for expenditure
29. Contingent liabilities
30. Auditor’s remuneration
31. Events occurring after the balance sheet date
32. Corporate information and accounting policy summary
Ridley Corporation Limited Annual Report 2016 | 57
NOTES TO THE FINANCIAL STATEMENTS
Note 1 – Earnings per share
Basic earnings per share – continuing
Basic earnings per share
Diluted earnings per share – continuing
Diluted earnings per share
Earnings used in calculating earnings per share:
Profit after income tax – continuing operations
Profit after income tax – discontinued operation
Total
2016
Cents
8.8
9.0
8.8
9.0
2015
Cents
8.4
6.9
8.4
6.9
2016
Earnings Per Share
Diluted
Basic
$’000
$’000
2015
Earnings Per Share
Diluted
Basic
$’000
$’000
27,203
403
27,606
27,203
403
27,606
25,743
(4,572)
21,171
25,743
(4,572)
21,171
Weighted average number of shares
Weighted average number of shares used in calculating
basic and diluted earnings per share
Basic
Diluted
Basic
Diluted
307,817,071
307,817,071
307,817,071
307,817,071
Options
There are 7,650,000 (2015: 5,100,000) performance rights outstanding which have been excluded from the determination of diluted
earnings per share calculation as the Group purchases shares on-market to satisfy vesting performance rights. Details relating to the
performance rights are set out in note 25.
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 on issue 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.
58 | Ridley Corporation Limited Annual Report 2016
Note 2 – Dividends
Dividends paid during the year
Franking
Payment Date
Per Share (cents)
Interim dividend in respect of the current financial year Fully franked
Final dividend in respect of the prior financial year
Fully franked
29 April 2016
(2015: 30 April 2015)
30 October 2015
(2015: 31 October 2014)
1.5
(2015: 1.5)
2.0
(2015: 2.0)
Paid in cash
Non-cash dividends paid on employee
in-substance options
Since the end of the financial year, the Directors declared the following dividend:
2016 final dividend of 2.5 cents per share, fully franked,
payable on 31 October 2016
2016
$’000
2015
$’000
4,618
4,618
6,156
10,774
6,156
10,774
10,635
10,647
139
10,774
127
10,774
7,695
6,156
Dividend franking account
Amount of franking credits available at 30 June to shareholders of Ridley Corporation Limited
for subsequent financial years
11,487
2,132
Note 3 – Operating segments
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 until such time as all
surplus property assets have been realised, whereupon the property segment will cease to exist. The operating segments identified
by management are consistent with the manner in which products are sold or how future economic benefits will be realised.
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.
The basis of inter-segmental transfers is market pricing. Results are calculated before consideration of net borrowing costs and tax
expense. Segment assets exclude deferred tax balances and cash, which have been included as unallocated assets.
Ridley Corporation Limited Annual Report 2016 | 59
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 3 – Operating segments continued
Geographical segments
The Group predominantly operates in Australasia.
2016 financial year
$’000
Total sales revenue – external (note 4)
Other revenue (note 4)
Total revenue
AgriProducts Property Unallocated
Total
Property
(Discontinued
Operations)
Consolidated
Total
912,561
8,415
920,976
-
2,638
2,638
-
1,068
1,068
912,561
12,121
924,682
-
381
381
912,561
12,502
925,063
Share of profits of equity accounted investments
(note 14)
Depreciation and amortisation expense (note 5)
Impairment of property, plant and equipment (note 5)
Interest income
Finance costs (note 5)
16
(14,611)
(1,053)
-
-
-
(13)
-
-
-
-
(364)
-
183
(5,602)
16
(14,988)
(1,053)
183
(5,602)
-
-
-
-
-
16
(14,988)
(1,053)
183
(5,602)
Reportable segment profit/(loss) before income tax
55,168
(2,060)
(12,793)
40,315
2,597
42,912
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)
425,867
3,663
429,530
156,181
3,140
-
3,140
-
52,180
-
52,180
80,785
481,187
3,663
484,850
236,966
34,868
-
-
34,868
-
-
-
-
-
481,187
3,663
484,850
236,966
34,868
2015 financial year
$’000
Total sales revenue – external (note 4)
Other revenue (note 4)
Total revenue
AgriProducts Property Unallocated
Total
907,599
970
908,569
-
-
-
-
2,855
2,855
907,599
3,825
911,424
Share of profits of equity accounted investments
(note 14)
Depreciation and amortisation expense (note 5)
Impairment of available for sale financial asset –
Bluewave
Impairment of asset held for sale – Dry Creek
Interest income
Finance costs (note 5)
106
(14,406)
-
(14)
-
(500)
106
(14,920)
(1,084)
-
-
-
-
-
-
-
-
-
272
(5,331)
(1,084)
-
272
(5,331)
Property
(Discontinued
Operations)
Consolidated
Total
-
824
824
-
-
-
(1,396)
-
-
907,599
4,649
912,248
106
(14,920)
(1,084)
(1,396)
272
(5,331)
Reportable segment profit/(loss) before income tax
50,371
(2,536)
(11,786)
36,049
(4,967)
31,082
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)
399,036
2,323
401,359
168,653
3,153
-
3,153
-
38,237
-
38,237
77,681
440,426
2,323
442,749
246,334
33,804
-
33,804
385
474,230
2,323
476,553
246,719
34,273
-
-
34,273
-
34,273
60 | Ridley Corporation Limited Annual Report 2016
Note 4 – Revenue and other income
Revenue from continuing operations
Sale of goods
Other income from continuing operations
Foreign exchange gains – net
Business services
Rent received
Insurance proceeds – note 5(e)
Profit on sale of land
Other
2016
$’000
2015
$’000
912,561
907,599
121
917
567
7,832
2,242
442
12,121
1,531
911
724
-
-
659
3,825
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.
Note 5 – Expenses
Profit from continuing operations before income tax is arrived at after charging the following items:
(a) Depreciation and amortisation(i)
Buildings
Plant and equipment
Software
Intangible assets
2016
$’000
2015
$’000
1,314
11,078
1,846
750
14,988
1,097
10,823
1,839
1,161
14,920
(i) The depreciation and amortisation charge is included within General and Administrative expenses in the Consolidated Statement of Comprehensive Income.
(b) Finance costs
Interest expense
Amortisation of borrowing costs
Capitalisation of borrowing costs
5,405
317
(120)
5,602
5,212
119
-
5,331
Finance costs include interest and amortisation of ancillary costs incurred in connection with the arrangement of borrowings. 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.
Ridley Corporation Limited Annual Report 2016 | 61
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 5 – Expenses continued
(c) Other expenses
Employee benefits expense
Operating lease expense#
Bad and doubtful debt expense – net of recoveries
2016
$’000
78,633
3,583
371
2015
$’000
75,743
3,343
7
# 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.
(d) Business restructuring
Impairment of available for sale financial asset – Bluewave
Impairment of asset held for sale – Dry Creek
(e) General and administrative expenses include, in respect of the Wasleys feedmill:
Incremental operating costs, clean up and removal of debris
Impairment loss on property, plant and equipment
Inventory write-offs and write-downs
-
-
-
4,466
1,053
910
6,429
1,084
1,396
2,480
-
-
-
-
On 25 November 2015, the Pinery bushfire in South Australia caused significant damage to Ridley’s feedmill at Wasleys, giving rise to
an impairment of damaged assets. The assets, plus the lost profits and Additional Increased Costs of Working (AICW) to accommodate
customer commitments, subject to a deductible of $250,000, are covered by insurance, the claim for which was in progress at year end
and will continue during the first half of the 2017 financial year.
Based on ongoing estimates of the damaged assets, lost profits and AICW to 30 June 2016, total insurance revenue of $7,832,000 has
been brought to account, of which $7,000,000 has been received in progress payments from the insurer up to 30 June 2016, and $832,000
remains an outstanding receivable at balance date. (Refer Other income – insurance claim proceeds in note 4.)
There is a net Consolidated Statement of Comprehensive Income gain (before income tax) of $1,403,000 between insurance claim proceeds
received and receivable and incremental general and administrative costs incurred. The income tax on the insurance proceeds received
has been brought to account within the income tax expense for the 2016 financial year.
62 | Ridley Corporation Limited Annual Report 2016
Note 6 – Income tax expense
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 by unused tax losses.
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 party to 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 tax payment obligations. At balance date the possibility of default
is considered to be remote.
(a) Income tax expense
Current tax
Deferred tax
Under provided in prior year
Aggregate income tax expense
Income tax expense is attributable to:
Profit from continuing operations
Profit/(loss) from discontinued operation
(b) Reconciliation of income tax expense and pre-tax accounting profit
Profit from continuing operations before income tax expense
Profit/(loss) from discontinued operation before income tax expense
2016
$’000
2015
$’000
14,633
221
453
15,307
13,112
2,195
15,307
40,315
2,597
42,912
9,246
403
262
9,911
10,306
(395)
9,911
36,049
(4,967)
31,082
Income tax using the Group’s tax rate of 30%
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
12,874
9,325
Share-based payments
Non-deductible expenses
Under provision in prior year
Research and development allowance
Disposal of discontinued operation
Disposal of land
Impairment of Bluewave and Dry Creek
Other
Income tax expense
(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
36
343
453
(238)
2,476
(381)
-
(256)
15,307
23
390
262
(850)
-
-
744
17
9,911
-
-
Ridley Corporation Limited Annual Report 2016 | 63
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 7 – Cash and cash equivalents
Cash and cash equivalents comprise cash balances in Australian dollars and foreign currencies.
Cash at bank
Reconciliation of net cash inflow from operating activities to profit after income tax
2016
$’000
28,468
2015
$’000
34,991
Net profit after tax for the year
27,606
21,171
Adjustments for non-cash items:
Depreciation and amortisation (note 5(a))
Net profit from discontinued operation (note 10)
Net profit on sale of land
Non-cash insurance proceeds receivable (note 5(e))
Impairment of Bluewave and Dry Creek
Share of profit from equity accounted investment
Non-cash share-based payments
Non-cash finance expenses
Bad debts expense
Foreign exchange gains
Other non-cash movements
Change in operating assets and liabilities, net of effects from purchase and sale
of controlled entities and businesses:
Decrease/(increase) in receivables
Decrease/(increase) in inventories
Increase/(decrease) in trade creditors
Increase/(decrease) in provisions
Increase/(decrease) in net income tax liability
Increase/(decrease) in deferred income tax
Net cash inflow from operating activities
Note 8 – Receivables
Current
Trade debtors
Less: Allowance for doubtful debts
Prepayments
Insurance income receivable
Dry Creek deferred consideration receivable
Non-current
Dry Creek deferred consideration receivable
64 | Ridley Corporation Limited Annual Report 2016
14,988
(4,469)
(2,242)
(832)
-
(16)
2,049
317
339
(121)
(546)
(1,765)
(5,980)
(12,809)
202
1,112
(221)
17,612
100,904
(1,000)
99,904
1,819
832
9,797
112,352
14,920
-
-
-
2,480
(106)
1,430
119
(12)
(1,531)
(592)
(4,666)
(17,044)
29,308
(930)
2,915
(403)
47,059
99,245
(32)
99,213
1,824
-
-
101,037
5,537
-
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.
The allowance for doubtful debts is established when there is objective evidence that the Group may not be able to collect all amounts
owing in accordance with the original terms of the receivable and where suitable insurance arrangements or collateral do not cover any
uncollected amounts. In determining the recoverability of the receivables, the Group considers any material changes in the credit quality
of the receivable on an ongoing basis. The allowance for doubtful debts and the receivables written off are included in ‘general and
administrative’ expense in the Consolidated Statement of Comprehensive Income.
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. 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.
Doubtful debts
Movement in the allowance for doubtful debts
Balance brought forward at 1 July
Provision for impairment movement during the year
Receivables written off during the year
Balance carried forward at 30 June
2016
$’000
32
1,339
(371)
1,000
2015
$’000
51
(12)
(7)
32
As at 30 June 2016, trade receivables against which a provision for doubtful debts has been raised totals $5,563,000 (2015: $482,000).
This is considered to be adequate provision against the balance of any overdue receivables to the extent they are not covered by collateral
and/or credit insurance. Based on historic default rates and having regard to the ageing analysis referred to immediately below, the
Group believes that, apart from those trade receivables which have been 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
At 30 June 2016, the age profile of trade receivables that were past due amounted to $11,157,000 (2015: $3,950,000) as shown in the
following table. As at the date of this report, the value of an overdue receivable relating to one major customer totals $13,626,000 and
Ridley has initiated proceedings to recover this debt in accordance with the Group’s credit policy.
The ageing analysis of trade receivables is shown as follows:
Past due by 1–30 days
Past due by 31–60 days
Past due by 61–90 days
Past due by greater than 90 days
Note 9 – Inventories
Current
Raw materials and stores – at cost
Raw materials and stores – at net realisable value
Finished goods – at cost
2016
$’000
9,068
1,729
178
182
11,157
2016
$’000
48,573
-
39,110
87,683
2015
$’000
3,223
392
68
267
3,950
2015
$’000
42,660
1,170
37,873
81,703
There have been no write-downs of inventories to net realisable value (2015: $0.3 million) recognised as an expense during the year.
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.
Ridley Corporation Limited Annual Report 2016 | 65
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 10 – Assets held for sale and discontinued operations
Assets 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. Assets (including those that are
part of a disposal group) are not depreciated or amortised while they are classified as held for sale.
Assets held for sale
2016
$’000
-
2015
$’000
34,133
At 30 June 2015
The Group classified $33,463,000 of assets as being held for sale which related to the Dry Creek site and $670,000 of assets which related
to the sale of the Ridley AgriProducts site at Dandenong. In April 2015, a contract for the sale of Dandenong was executed for $3.0 million
and the sale completed on 30 November 2015.
Discontinued operations
On 6 November 2015, the Group announced the signing of a Share Sale Agreement (SSA) to divest 100% of the share capital of Ridley Dry
Creek Pty Ltd for gross proceeds of $35 million, the net present value of which at completion was $34.3 million.
$19 million of proceeds relating to the SSA were received during the 2016 financial year, with the balance of $16 million receivable in
three tranches up to 31 December 2017. Completion occurred on 2 June 2016 in accordance with the side letter executed on 8 April 2016
which deferred completion from the originally scheduled 31 March 2016 date.
(a) Statement of profit or loss for discontinued operation
The financial performance and cash flow information presented are for the period 1 July 2015 to 2 June 2016 (2016 column) and the
comparative full year ended 30 June 2015 (2015 column):
Results of discontinued operation
Other income
Expenses – general and administrative
Loss before income tax
Income tax benefit:
Current tax
Deferred tax
Loss after income tax
Profit on sale before income tax and transaction expenses – note 10(b)
Transaction related expenses
Capital gain on disposal
Utilisation of brought forward tax losses
Net income tax payable on disposal of discontinued operation
Profit on sale of discontinued operation after income tax
2016
$’000
381
(4,351)
(3,970)
1,293
1,399
2,692
(1,278)
7,067
(499)
6,568
(8,601)
3,714
(4,887)
1,681
2015
$’000
824
(5,791)
(4,967)
395
-
395
(4,572)
-
-
-
-
-
-
-
Profit/(loss) from discontinued operation after income tax
403
(4,572)
66 | Ridley Corporation Limited Annual Report 2016
(b) Effect of disposal on the financial position of the Group
The carrying amounts of assets and liabilities as at the date of sale completion (2 June 2016) were:
Assets
Assets held for sale: property, plant and equipment
Deferred tax
Total assets
Liabilities
Deferred tax
Carrying amount of net assets sold
Cash consideration received
Deferred consideration receivable
Discount on deferred consideration
Total consideration
Profit on carrying amount of net assets sold before transaction costs
(c) Cash flows from discontinued operation
Net cash (outflow) from ordinary activities
Net cash inflow from investing activities*
Net cash inflow/(outflow)
* Comprises cash consideration received of $19 million.
2016
$’000
33,456
857
34,313
(7,045)
27,268
19,000
16,000
(665)
34,335
7,067
2015
$’000
(3,241)
-
(3,241)
2016
$’000
(4,018)
19,000
14,982
Note 11 – 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 and impairments of an investment property are recognised in the Consolidated Statement of
Comprehensive Income.
Depreciation is calculated using the straight line method to allocate deemed cost, net of residual values, over the estimated useful lives
of the assets, and for buildings over a 40-year period.
Movement in investment properties
Carrying amount at cost at 1 July
Additions – provision for remediation of Dry Creek site
Impairment of Dry Creek assets
Transfer of Dry Creek to assets held for sale
Depreciation expense
Carrying amount at cost at 30 June
2016
$’000
3,153
-
-
-
(13)
3,140
2015
$’000
37,177
849
(1,396)
(33,463)
(14)
3,153
Investment properties comprise former salt field sites at Lara and Moolap that have ceased operating and are held for the purpose
of property realisation. The Dry Creek site was transferred to assets held for sale in FY15 and sold on 2 June 2016.
Ridley Corporation Limited Annual Report 2016 | 67
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 11 – Investment properties continued
A fair value range for the sites at Lara and Moolap cannot be determined reliably at the present time given that the respective locations
do not have local established industrial or residential infrastructure which would enable a reliable valuation benchmark to be determined.
Furthermore, the value of each site also varies significantly depending upon which stage of the progressive regulatory approvals required
for redevelopment has been attained at balance date. Consequently, the value of these sites has been recorded at cost less impairment
and depreciation.
2016
$’000
2015
$’000
965
6,980
Land and
Buildings
$’000
Plant and
Equipment
$’000
57,815
(4,988)
52,827
257
(5)
-
2,694
(1,314)
54,459
202,071
(115,355)
86,716
33,913
(1,048)
(59)
(2,694)
(11,078)
105,750
Total
$’000
259,886
(120,343)
139,543
34,170
(1,053)
(59)
-
(12,392)
160,209
60,509
(6,050)
54,459
222,903
(117,153)
105,750
283,412
(123,203)
160,209
46,274
(4,027)
42,247
7,950
(144)
-
3,871
(1,097)
52,827
180,887
(104,532)
76,355
25,877
(326)
(496)
(3,871)
(10,823)
86,716
227,161
(108,559)
118,602
33,827
(470)
(496)
-
(11,920)
139,543
57,815
(4,988)
52,827
202,071
(115,355)
86,716
259,886
(120,343)
139,543
Amounts recognised in profit and loss for investment properties:
Direct operating expenses that did not generate rental income
Note 12 – Property, plant and equipment
2016
Cost at 1 July 2015
Accumulated depreciation
Carrying amount at 1 July 2015
Additions
Impairment
Transfers to intangible assets
Transfers from plant under construction
Depreciation
Carrying amount at 30 June 2016
At 30 June 2016
Cost
Accumulated depreciation
Carrying amount at 30 June 2016
2015
Cost at 1 July 2014
Accumulated depreciation
Carrying amount at 1 July 2014
Additions
Disposals
Transfers to intangible assets
Transfers from plant under construction
Depreciation
Carrying amount at 30 June 2015
At 30 June 2015
Cost
Accumulated depreciation
Carrying amount at 30 June 2015
68 | Ridley Corporation Limited Annual Report 2016
Property, plant and equipment
Land and buildings, plant and equipment are stated at cost, or deemed cost, less accumulated depreciation and impairment. 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 is 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 amounts 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.
A Victorian Government Grant of $800,000 has been awarded by, and $191,000 received in the current year from, the Geelong Region
Innovation & Investment Fund (GRIIF) as a contribution to plant and equipment purchased for Ridley’s new feedmill at Lara, Geelong,
Victoria. The balance of the grant will be received in the 2017 financial year upon satisfaction of the final project milestone and
commissioning of the new feedmill which will service poultry and pig customers in the region.
Note 13 – Intangible assets
2016
Carrying amount at 1 July 2015
Transfer from property, plant and equipment/additions
Amortisation charge
Carrying amount at 30 June 2016
At 30 June 2016
Cost
Accumulated amortisation/impairment losses
Carrying amount at 30 June 2016
Software
$’000
Goodwill
$’000
Contracts
$’000
Licence
$’000
5,345
59
(1,846)
3,558
14,062
(10,504)
3,558
68,950
-
-
68,950
69,903
(953)
68,950
3,000
-
(750)
2,250
4,500
(2,250)
2,250
899
698
-
1,597
1,597
-
1,597
Total
$’000
78,194
757
(2,596)
76,355
90,062
(13,707)
76,355
The amortisation charge is included within general and administrative expenses in the Consolidated Statement of Comprehensive Income.
Ridley Corporation Limited Annual Report 2016 | 69
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 13 – Intangible assets continued
2015
Carrying amount at 1 July 2014
Transfer from property, plant and equipment/additions
Amortisation charge
Disposals
Carrying amount at 30 June 2015
At 30 June 2015
Cost
Accumulated amortisation/impairment losses
Carrying amount at 30 June 2015
Intangible assets
Software
$’000
Goodwill
$’000
Contracts
$’000
Licence
$’000
6,927
496
(1,839)
(239)
5,345
68,950
-
-
-
68,950
18,898
(13,553)
5,345
69,903
(953)
68,950
4,161
-
(1,161)
-
3,000
5,350
(2,350)
3,000
453
446
-
-
899
899
-
899
Total
$’000
80,491
942
(3,000)
(239)
78,194
95,050
(16,856)
78,194
(i) 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.
(ii) 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.
(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, according to 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.
Research and development expenditure
Research and development expenses of $5,875,000 have been incurred in the current year (2015: $5,500,000), which are included in
general and administration costs in the Consolidated Statement of Comprehensive Income.
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, 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 either intangibles or property, plant and equipment.
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.
70 | Ridley Corporation Limited Annual Report 2016
Impairments during the year
There were no impairments of intangible assets during the year.
Impairment testing for goodwill
$56.6 million of goodwill has been recognised in the Rendering Cash Generating Unit (CGU), whilst the balance has been accumulated
from a combination of other CGUs over many years as summarised below:
Rendering
AgriProducts
Total
2016
$’000
56,616
12,334
68,950
2015
$’000
56,616
12,334
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.
(i)
Cash flow forecasts are based on the Board approved FY17 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 2% (2015: 2%). A growth rate of 2% is applied
to the terminal value.
(iii) Discount rates used are the weighted average cost of capital for the Group. The post-tax discount rate applied to cash flows was
9.2% (2015: 10.2%).
A sensitivity analysis was undertaken to examine the effect of a change in each key variable on each CGU. For all CGUs, a reasonably
possible change in these inputs would not cause the recoverable amount to be materially below the carrying amount.
Note 14 – Investments accounted for using the equity method
Name of Company
Associate:
Consolidated Manufacturing
Enterprise Pty Ltd and
Swanbrook Road Holding Trust
Joint venture entities:
Ridley Bluewave Pty Ltd 1
Nelson Landholdings Pty Ltd
as Trustee for Nelson
Landholdings Trust2
Pen Ngern Feed Mill Co.3
Investments accounted for
using the equity method
Principal Activity
Country of
Incorporation
Ownership Interest
2015
2016
%
%
Carrying Amount
2015
$’000
2016
$’000
Feed production
Australia
Animal protein production Australia
Property realisation
Aqua-feed production
Australia
Thailand
25
50
50
49
25
2,339
2,323
50
50
-
-
-
1,324
3,663
-
-
-
2,323
1. Ridley Bluewave Pty Ltd is an incorporated joint venture established to produce animal proteins but has not traded to date.
2. The Company and unit trust are the corporate structure through which any ultimate development of the Moolap site will 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.
3. On 28 January 2016, the Group acquired a 49% interest in Pen Ngern Feed Mill Co. Ltd. (PNFM) for an investment of $1.3 million. PNFM is an entity domiciled
in Thailand which owns and operates a dedicated aqua-feed manufacturing facility. The 49%, rather than an equal or controlling equity stake, is a reflection of
Thai law, which can impose certain restrictions on Thai businesses whose shares owned by non-Thai nationals exceed 49%. The pertinent contracts have been
structured however, such that governance and management of the business will be effectively on a 50:50 basis between Ridley and the other party.
Ridley Corporation Limited Annual Report 2016 | 71
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 14 – 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 operating profits after income tax
Acquisition of Pen Ngern Feed Mill Co. Ltd
Closing carrying amount at 30 June
2016
$’000
2,323
16
1,324
3,663
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
Non-current liabilities
Total liabilities
Net assets
Revenue
Net profit after tax
2016
$’000
3,985
8,387
12,372
4,051
4,733
8,784
3,588
12,505
64
2015
$’000
2,217
106
-
2,323
2015
$’000
3,960
3,155
7,115
2,665
212
2,877
4,238
15,594
475
There are no material reserves or contingent liabilities of the equity accounted investees.
Note 15 – Tax assets and liabilities
Current
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 6)
Disposal of subsidiary
Closing balance at 30 June
2016
$’000
2015
$’000
8,260
7,148
7,443
1,476
1,476
(221)
6,188
7,443
1,879
(403)
-
1,476
72 | Ridley Corporation Limited Annual Report 2016
Recognised deferred tax assets and liabilities
Consolidated
Intangibles
Doubtful debts
Property, plant and equipment
Employee entitlements
Provisions
Other
Tax assets/(liabilities)
Assets
Liabilities
Net
2016
$’000
-
-
3,748
5,057
81
293
9,179
2015
$’000
-
10
3,355
5,152
291
1,024
9,832
2016
$’000
(1,627)
-
(109)
-
-
-
(1,736)
2015
$’000
(1,917)
-
(6,439)
-
-
-
(8,356)
2016
$’000
(1,627)
-
3,639
5,057
81
293
7,443
2015
$’000
(1,917)
10
(3,084)
5,152
291
1,024
1,476
Movement in net deferred tax assets and liabilities
Consolidated
Intangibles
Doubtful debts
Property, plant and equipment
Employee entitlements
Provisions
Other
Tax asset/(liability)
Balance
1 July 2014
$’000
Recognised
in Profit
or Loss
$’000
Balance
30 June 2015
$’000
Recognised
in Profit
or Loss
$’000
Disposal of
Subsidiary
$’000
Balance
30 June 2016
$’000
(1,998)
15
(3,099)
4,515
730
1,716
1,879
81
(5)
15
637
(439)
(692)
(403)
(1,917)
10
(3,084)
5,152
291
1,024
1,476
290
(10)
535
(95)
(210)
(731)
(221)
-
-
6,188
-
-
-
6,188
(1,627)
-
3,639
5,057
81
293
7,443
Income tax
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.
Ridley Corporation Limited Annual Report 2016 | 73
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 16 – Payables
Current
Trade creditors and accruals
2016
$’000
2015
$’000
145,916
158,725
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 purchase of various raw materials from approved suppliers. 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 (2015:$50,000,000). The
amount utilised and recorded within trade creditors at 30 June 2016 was $36,004,244 (2015: $41,900,457).
Note 17 – Provisions
Current
Employee entitlements
Non-current
Employee entitlements
2016
$’000
2015
$’000
12,909
12,766
446
387
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.
Provision for employee entitlements
Current liabilities for wages and salaries, including non-monetary benefits, short term incentive payments, annual leave, accumulating
sick leave and long service 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. Employee benefit on-costs, including payroll tax, are recognised and included in both employee benefit
liabilities and costs.
The non-current liability for long service leave expected to be settled more than 12 months from the reporting date is 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.
Note 18 – Borrowings
Non-current
Bank loans
2016
$’000
2015
$’000
69,435
67,693
The bank loans are subject to bank covenants based on financial ratios of the Group. As at 30 June 2016, and throughout all relevant
times during the financial year ended 30 June 2016, the Group was in compliance with these covenants. The bank loans are unsecured.
74 | Ridley Corporation Limited Annual Report 2016
Total loan facilities available to the Group in Australian dollars
Long term loan facility (a)
Cash
2016
2015
Limits
$’000
160,000
-
160,000
Utilised
$’000
70,000
(28,468)
41,532
Limits
$’000
100,000
-
100,000
Utilised
$’000
68,000
(34,991)
33,009
(a) Long term loan facility
On 18 April 2016, a Third Amendment Deed to the original 28 December 2010 dual bank facility was executed. The amended facility is a
combination of floating core debt funding of $80 million (reduced from $100 million) plus an additional $80 million of five year, fixed term
project funding with a maturity date extended from 31 January 2019 to 18 April 2021. 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.
Offsetting of financial instruments
The Group does not set off financial assets with financial liabilities in the consolidated 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 that the Group has with the bank, in or towards satisfaction of that amount.
As at 30 June 2016, the value of legally enforceable cash balances which upon default or bankruptcy would be applied to the loan facility
is $28,468,000 (2015: $34,991,000).
Note 19 – Share capital
Fully paid up capital:
Parent Entity
2016
$’000
2015
$’000
307,817,071 ordinary shares with no par value (2015: 307,817,071)
214,445
214,445
There were no movements in issued capital or number of shares on issue in either of the financial years.
Ordinary shares
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. 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 shareholders’ meeting in
person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
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
2016
$’000
69,435
(28,468)
40,967
247,884
16.5%
2015
$’000
67,693
(34,991)
32,702
229,834
14.2%
Ridley Corporation Limited Annual Report 2016 | 75
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 20 – Reserves and retained earnings
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
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.
Retained earnings
Opening balance at 1 July
Net profit for the year
Dividends paid
Share-based payments reserve transfer
Closing balance at 30 June
Note 21 – 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
RCL Retirement Pty Limited
Country of
Incorporation
Australia
Australia
Australia
Australia
Ridley Land Corporation Pty Ltd and its controlled entities Australia
Australia
Australia
Australia
Lara Land Development Corporation Pty Ltd
Ridley Dry Creek Pty Ltd1
Moolap Land Development Corporation Pty Ltd
Class of Shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
2016
$’000
2015
$’000
853
2,049
(831)
99
2,170
375
1,430
(1,767)
815
853
14,536
27,606
(10,774)
(99)
31,269
4,954
21,171
(10,774)
(815)
14,536
Ownership Interest
2015
2016
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
100%
100%
100%
100%
100%
1. Sold on 2 June 2016.
76 | Ridley Corporation Limited Annual Report 2016
Note 22 – Parent entity
As at 30 June 2016 and throughout the financial year ending on that date, the parent entity 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
2016
$’000
11,147
-
11,147
15,938
310,398
326,336
11,892
69,530
81,422
244,914
214,445
2,170
28,299
244,914
2015
$’000
33,534
-
33,534
3,347
298,695
302,042
11,284
67,693
78,977
223,065
214,445
853
7,767
223,065
GST liabilities of other entities within the GST group
758
347
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 23.
Note 23 – Deed of Cross Guarantee
Ridley Corporation Limited, Ridley AgriProducts Pty Ltd and CSF Proteins Pty Ltd are parties to a Deed of Cross Guarantee under which
each company guarantees the debts of the other entities.
During the current financial year, Ridley Dry Creek Pty Ltd was sold and removed as a party to the Deed of Cross Guarantee on 2 June 2016.
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. 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
Profit before income tax
Income tax expense
Profit/(loss) from discontinued operation (net of tax)
Profit after income tax
2016
$’000
40,315
(13,112)
403
27,606
2015
$’000
36,049
(10,306)
(4,572)
21,171
Ridley Corporation Limited Annual Report 2016 | 77
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 23 – Deed of Cross Guarantee continued
(b) Summary of movements in retained profits
Opening balance at 1 July
Profit for the year
Dividends paid
Share-based payment reserve transfer
Closing balance at 30 June
(c) Balance Sheet
Current assets
Cash and cash equivalents
Receivables
Inventories
Assets held for sale
Total current assets
Non-current assets
Investments accounted for using the equity method
Receivables
Property, plant and equipment
Intangible assets
Deferred tax asset
Total non-current assets
Total assets
Current liabilities
Payables
Tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Reserves
Retained earnings
Total equity
78 | Ridley Corporation Limited Annual Report 2016
2016
$’000
14,536
27,606
(10,774)
(99)
31,269
28,468
112,352
87,683
-
228,503
3,663
5,537
160,209
76,355
7,443
253,207
481,710
142,776
8,260
12,909
163,945
69,435
446
69,881
233,826
247,884
214,445
2,170
31,269
247,884
2015
$’000
4,954
21,171
(10,774)
(815)
14,536
34,991
101,037
81,703
34,133
251,864
2,323
-
139,543
78,194
1,476
221,536
473,400
155,572
7,148
12,766
175,486
67,693
387
68,080
243,566
229,834
214,445
853
14,536
229,834
Note 24 – Related party disclosures
Investments
Information relating to investments accounted for using the equity method is set out in note 14.
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.
Transactions and balances with related parties
Transactions with related parties were as follows:
Sales of products – associate
Purchases of products – associate
Outstanding balances with related parties were as follows:
Current payable – associate
Outstanding balances are unsecured and repayable in cash.
Key management personnel compensation
Short term employee benefits
Post-employment benefits
Other benefits
Share-based payments
Total key management personnel compensation
Note 25 – Share-based payments
Share-based payment expense
Shares issued under the employee share scheme
Performance rights issued under long term incentive plan
Total share-based payment expense
Share-based payment arrangements
2016
$’000
4,407
12,994
2015
$’000
6,326
15,594
375
706
2016
$
4,501,113
261,152
375,306
687,867
5,825,438
2015
$
4,760,295
254,636
-
422,897
5,437,828
2016
$’000
575
1,474
2,049
2015
$’000
508
922
1,430
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.
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 by an independent third party expert at grant date and recognised over the three-year vesting period during which
the employees become unconditionally entitled to the performance rights.
The fair value at grant date is 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 Corporation Limited Annual Report 2016 | 79
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 25 – Share-based payments continued
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 2015
30 June 2018
$1.27
$0.61
24%
3.2%
2.0%
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:
2016
Grant Date
Long Term Incentive Plan
1 July 2013
1 July 2014
1 July 2015
2015
Expiry Date
1 July 2016
1 July 2017
1 July 2018
Grant Date
Long Term Incentive Plan
Expiry Date
5 December 2011
1 July 2013
1 July 2014
5 December 2014
1 July 2016
1 July 2017
Balance
at Start of
the Year
Granted
During
the Year
Cancelled
During
the Year
Vested
During
the Year
Balance at
End of
the Year
2,400,000
2,700,000
-
5,100,000
-
-
2,800,000
2,800,000
-
(65,351)
(125,000)
(190,351)
-
(59,649)
-
(59,649)
2,400,000
2,575,000
2,675,000
7,650,000
Balance
at Start of
the Year
Granted
During
the Year
Cancelled
During
the Year
Vested
During
the Year
Balance at
End of
the Year
1,532,524
2,475,000
-
4,007,524
-
-
2,700,000
2,700,000
(431,811)
(75,000)
-
(506,811)
(1,100,713)
-
-
(1,100,713)
-
2,400,000
2,700,000
5,100,000
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 as at the date of offer and at a discount
of up to 50%. The maximum discount per employee is limited to $1,000 annually in accordance with relevant Australian taxation legislation.
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.
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. Dividends on the shares are allocated against the balance of any loan outstanding.
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.
The fair value at grant date of the options issued during the year through the employee share scheme was measured based on the
binomial option pricing model using the following inputs:
Grant date
Restricted life
Fair value at grant date
Expected price volatility of the Company’s shares
Expected dividend yield
Risk free interest rate
80 | Ridley Corporation Limited Annual Report 2016
20 May 2016
3 years
$0.85
25%
3.3%
2.3%
Ridley Employee Share Scheme movements
2016 Number of shares
Grant Date
29 January 2002
28 January 2003
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
31 May 2015
20 May 2016
Date Shares Become
Unrestricted
29 January 2005
28 January 2006
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
31 May 2018
20 May 2019
Weighted
Average
Exercise Price
$0.82
$0.74
$0.77
$0.66
$0.57
$0.56
$0.34
$0.61
$0.66
$0.61
$0.41
$0.48
$0.66
$0.85
Balance
at Start of
the Year
37,000
68,850
97,875
122,796
147,756
200,816
345,852
280,016
295,568
352,302
773,058
912,450
770,256
-
4,404,595
Granted
During
the Year
-
-
-
-
-
-
-
-
-
-
-
-
-
675,903
675,903
Exercised
During
the Year
(2,000)
(5,400)
(9,135)
(9,096)
(15,831)
(25,102)
(47,296)
(52,096)
(52,780)
(67,814)
(89,947)
(82,950)
(69,537)
-
(528,984)
Balance
at End of
the Year
Exercisable
at End of
the Year
35,000
63,450
88,740
113,700
131,925
175,714
298,556
227,920
242,788
284,488
683,111
829,500
700,719
675,903
4,551,514
35,000
63,450
88,740
113,700
131,925
175,714
298,556
227,920
242,788
284,488
683,111
-
-
-
2,345,392
Weighted average exercise price
$0.54
$0.85
$0.55
$0.59
$0.53
The ‘Exercisable at end of the year’ column in the above and following tables reflects the fact that the options outstanding have a
weighted average contractual life of three years (2015: three years).
2015 Number of shares
Grant Date
29 January 2002
28 January 2003
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
31 May 2015
Date Shares Become
Unrestricted
29 January 2005
28 January 2006
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
31 May 2018
Weighted
Average
Exercise Price
$0.82
$0.74
$0.77
$0.66
$0.57
$0.56
$0.34
$0.61
$0.66
$0.61
$0.41
$0.48
$0.66
Balance at
Start 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
Granted
During
the Year
-
-
-
-
-
-
-
-
-
-
-
-
770,256
770,256
Exercised
During
the Year
Balance at
End of
the Year
Exercisable
at End of
the Year
(6,000)
(12,150)
(11,745)
(10,612)
(19,349)
(16,137)
(38,428)
(26,048)
(25,636)
(24,810)
(24,310)
(18,960)
-
(234,185)
37,000
68,850
97,875
122,796
147,756
200,816
345,852
280,016
295,568
352,302
773,058
912,450
770,256
4,404,595
37,000
68,850
97,875
122,796
147,756
200,816
345,852
280,016
295,568
352,302
-
-
-
1,948,831
Weighted average exercise price
$0.52
$0.66
$0.56
$0.54
$0.58
Ridley Corporation Limited Annual Report 2016 | 81
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
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.
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.
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.
Benefits are based on an accumulation of defined contributions. The amount of contribution expense recognised in the Consolidated
Statement of Comprehensive Income for the year is $5,180,000 (2015: $4,935,000).
Note 27 – 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 may use 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) 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 does not hedge account on forward foreign currency contracts.
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 AUD using spot
rates. These foreign currency bank accounts, and at times forward foreign exchange contracts, are entered into for 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. At 30 June 2016, the net fair value of forward exchange contracts resulting in a liability of nil (2015: nil) has
been recognised by the Group for the fair value of forward foreign exchange contracts.
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
USD
12,338
-
12,338
2016
NZD
945
-
945
EUR
4,512
(953)
3,559
USD
12,885
(68)
12,817
2015
NZD
1,823
-
1,823
EUR
9,599
-
9,599
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
$1,618,000 (2015: $2,201,000). 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 and do not seek to predict movements in exchange rates.
82 | Ridley Corporation Limited Annual Report 2016
(b) 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
that 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 4.0% (2015: 4.2%).
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
Interest
rate
2016
$’000
Interest
rate
-
4.0%
28,468
70,000
-
4.2%
2015
$’000
34,991
68,000
Interest rate sensitivity
A change of 100 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 and equity by $486,000 (2015: $474,000).
(c) 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 receivables from customers.
Refer to note 8 and note 29 in respect of actions initiated by Ridley since balance date to recover overdue debts. The Group has no other
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
2016
$’000
99,904
15,920
28,468
144,292
2015
$’000
99,213
-
34,991
134,204
Further credit risk disclosures on trade receivables are disclosed in note 8.
(d) 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 notes 16 and 18.
Ridley Corporation Limited Annual Report 2016 | 83
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 27 – Financial risk management continued
The following tables disclose the contractual maturities of financial liabilities, including estimated interest payments:
2016
Non-derivative financial liabilities
Trade and other payables
Bank loans
2015
Non-derivative financial liabilities
Trade and other payables
Bank loans
Carrying
Amount
$’000
Less than
1 Year
$’000
145,916
69,435
215,351
145,916
5,382
151,298
158,725
67,693
226,418
158,725
5,334
164,059
1 to 2
Years
$’000
-
5,382
5,382
-
5,334
5,334
2 to 3
Years
$’000
-
5,382
5,382
3 to 4
Years
$’000
-
5,382
5,382
Total
Contractual
Cash Flows
$’000
4 to 5
Years
$’000
-
74,817
74,817
145,916
96,345
242,261
-
5,334
5,334
-
73,027
73,027
-
-
-
158,725
89,029
247,754
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different
amounts.
(e) Financial instruments
(i) Non-derivative financial assets
The Group initially recognises loans, 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 when 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.
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.
(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, borrowings, 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.
(f) Fair values
Fair values versus carrying amounts
The carrying amount of financial assets and liabilities approximates their fair value.
84 | Ridley Corporation Limited Annual Report 2016
Note 28 – 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
2016
$’000
2015
$’000
14,512
10,639
4,431
3,407
5,214
657
13,709
3,341
3,051
3,203
704
10,299
The Group has leases for land, buildings and equipment under operating leases.
Note 29 – Contingent liabilities
Guarantees
The Group is, in the normal course of business, required to provide certain 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
2016
$’000
954
2015
$’000
559
Sale of Dry Creek
Prior to the disposal of Ridley Dry Creek Pty Ltd, the Government of South Australia verbally indicated an intent to establish a liability
fund in connection with the surrender of the mining leases held by Ridley Dry Creek Pty at the site (with the intent that such liability fund
will be used to remediate the site, as necessary, as a condition to the surrender of the relevant mining leases). No actual requirements,
details, or negotiations in respect of such a fund have been either communicated or held during the past year. Under the share sale
agreement to dispose of Ridley Dry Creek Pty Ltd, Ridley Corporation Limited retains responsibility for making such financial contribution
to any such fund as may be attributable to the period for which Ridley Dry Creek owned or operated the site.
Litigation
On Monday 8 August 2016, Ridley initiated proceedings to recover an outstanding debt from an individual customer of $17,579,000,
of which $5,255,000 was overdue at balance date and $13,626,000 overdue as at the date of this report. A provision for doubtful
debts of $1.0 million has been raised and included in the determination of the 2016 consolidated Ridley result, and supply to the
customer ceased in July 2016.
At the time of preparing this financial report, some companies included in the Group are parties to pending certain legal proceedings,
the outcome of which is not known. The entities are defending, or prosecuting, these proceedings as they are entitled to do. 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.
Ridley Corporation Limited Annual Report 2016 | 85
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 30 – Auditor’s 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
2016
$
2015
$
342,058
357,229
109,522
331,410
451,580
688,639
Note 31 – Events occurring after the balance sheet date
Refer to the Litigation section of note 29 Contingent Liabilities in respect of a post balance date event comprising the initiation
of proceedings initiated by Ridley to recover an outstanding debt.
No other matters or circumstances have arisen since 30 June 2016 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 32 – Corporate information and accounting policy summary
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 2016
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 high performance animal nutrition solutions.
The financial report was authorised for issue by the Directors on 29 August 2016.
The principal accounting policies adopted in the preparation of the financial report are set out in either the relevant note to the accounts
or 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.
86 | Ridley Corporation Limited Annual Report 2016
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).
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 2015-3 Withdrawal of AASB 1031 Materiality
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 2016 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 includes revised guidance on the classification and measurement of financial instruments, including a new expected credit
loss model for calculating impairment on financial assets and the new general hedge accounting requirements. The standard is not
applicable until 1 January 2018 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.
• AASB 15 Revenue from contracts with customers
The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer – so
the notion of control replaces the existing notion of risks and rewards. The standard is not applicable until 1 January 2018. The Group
is yet to assess its full impact but it is not likely to have a material effect.
• AASB 16 Leases
AASB 16 will replace the current accounting standard on leases AASB 117. AASB 16 introduces a single lessee accounting model and
requires the lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset
is of low value. The standard is not applicable until 1 January 2019. The Group is yet to assess its full impact but as the Group has
operating leases it is likely to increase both assets and liabilities in the balance sheet and impact the classification and timing of
expenses in the income statement.
Ridley Corporation Limited Annual Report 2016 | 87
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 32 – Corporate information and accounting policy summary continued
Basis of preparation continued
Basis of measurement
The consolidated financial statements have been prepared on the historical cost basis (unless otherwise stated) 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.
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). Refer
to note 13 for further details on impairment testing.
88 | Ridley Corporation Limited Annual Report 2016
(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. Where reliable estimates of fair value are obtainable, they are
factored into the annual assessment of the property’s carrying value. The valuation of investment properties requires judgement to be
applied in selecting appropriate valuation techniques and setting valuation assumptions. The Group periodically engages independent
valuers to provide an indicative value for its material investment properties in the context of assessing for impairment. Refer to note 11
for further details on investment properties.
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.
Basis of consolidation – business combinations
The Group accounts for business combinations using the acquisition method when control is transferred to the Group. The consideration
transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is
tested annually for impairment. Any gain on bargain purchase is recognised in profit or loss immediately. Transaction costs are expensed
as incurred, except if related to the issue of debt or equity securities. The consideration transferred does not include amounts related to
the settlement of pre-existing relationships. Such amounts are generally recognised in profit or loss. Any contingent consideration is
measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial
instrument is classified as equity, then it is not remeasured and settlement is accounted for within equity. Otherwise, subsequent
changes in the fair value of the contingent consideration are recognised in profit or loss.
Ridley Corporation Limited Annual Report 2016 | 89
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Note 32 – Corporate information and accounting policy summary continued
Basis of preparation continued
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, whereby the Group has rights to the net amounts of the
arrangement, rather than rights to its assets and obligations for liabilities. 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.
Foreign currency
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.
90 | Ridley Corporation Limited Annual Report 2016
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 53 to 90 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 2016 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 23 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 2016.
4. The financial statements also comply with International Financial Reporting Standards as disclosed in note 32.
This declaration is made in accordance with a resolution of the Directors.
GH Weiss
Director
Melbourne
29 August 2016
TJ Hart
Director
Ridley Corporation Limited Annual Report 2016 | 91
INDEPENDENT AUDITOR’S REPORT
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 2016, 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 32 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 32, 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 2016 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 32.
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.
92 | Ridley Corporation Limited Annual Report 2016
Report on the remuneration report
We have audited the Remuneration Report included in pages 43 to 51 of the directors’ report for the year ended 30 June 2016. 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 2016, complies with Section 300A of the
Corporations Act 2001.
KPMG
BW Szentirmay
Partner
Melbourne
29 August 2016
Ridley Corporation Limited Annual Report 2016 | 93
SHAREHOLDER INFORMATION
AS AT 25 AUGUST 2016
Holdings of securities – ordinary shares
Each fully paid
Number Held
Distribution of holdings – ordinary shares
1 to 1,000*
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and Over
* There are 572 holders of less than a marketable parcel of shares.
20 Largest Fully Paid Shareholders
Citicorp Nominees Pty Limited
J P Morgan Nominees Australia Limited
HSBC Custody Nominees (Australia) Limited
National Nominees Limited
BNP Paribas Noms Pty Ltd
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