More annual reports from Ridley Corporation Ltd:
2023 ReportPeers and competitors of Ridley Corporation Ltd:
Farm PrideEnhanced capability
for growth
Annual Report
2019
R
i
d
l
e
y
C
o
r
p
o
r
a
t
i
o
n
L
i
m
i
t
e
d
A
n
n
u
a
l
R
e
p
o
r
t
2
0
1
9
Contents
01
About the
Company
06
Chairman’s
Report
32
Board of
Directors
100
Glossary
01
2019
Features
10
Interim CEO’s
Review
34
Financial
Report
101
Corporate
Directory
02
Five Year
Summary
19
Financial
Review
05
Ridley Locations
and Sectors
24
Safety, People,
Innovation and
Community
94
98
Independent
Auditor’s Report
Shareholder
Information
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 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 exceptions 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 by-products, which are
subjected to a process called rendering.
With major brands including Barastoc,
Rumevite, Cobber and Primo, and with
a product range to accommodate starter
feed solutions, Ridley has developed
a portfolio that provides a first class
lifecycle solution.
ABN 33 006 708 765
INTRODUCTION
LOCATIONS
& SECTORS
CHAIRMAN &
CEO’S MESSAGES
FINANCIAL
REVIEW
SAFETY, PEOPLE,
INNOVATION &
COMMUNITY
BOARD OF
DIRECTORS
FINANCIAL
REPORT
CORPORATE
DIRECTORY
About the Company
Ridley Corporation proudly stands as an Australian-based
agribusiness focused on being the country’s leading
producer of premium quality, high-performance
animal nutrition solutions.
2019 Features
• First year of Novacq™ commercial
• Poultry result impacted by
operations at Yamba.
• Full utilisation of Thailand
Novacq™ production capacity,
awaiting installation of
dewatering and drying approvals.
• Record result for Ruminant
and third highest for
Packaged Products.
• Strong performances for
Laverton Rendering and positive
response at Maroota Rendering
from prior year loss of major
poultry raw material supplier.
volume reduction due to industry
shortening of bird life cycle, feed
conversion improvements and
October 2018 expiry of Ingham’s
supply agreement.
• Pig result impacted by industry-
wide reduction in sow numbers.
• Positive result for Supplements
from a return to a ‘normal’
dry season, and from Aquafeed
as it transitions to a twin
extrusion plant structure.
• New extrusion plant in Tasmania
opened on 24 July 2019, and
construction of new 350kt
capacity feedmill in Bendigo,
central Victoria well advanced
by year end.
• $6.2 million net pre-tax profit for
Property segment from property
sales at Lara.
• Corporate and finance costs
normalised at prior year levels,
with reduction in effective tax
rate reflective of tax shelter
on property capital gains.
01
Ridley Corporation Limited Annual Report 2019 Five Year Summary
A$’000 unless otherwise stated
Operating results
Revenue
Other income
EBITDA
Depreciation and amortisation (DA)
Earnings Before Interest and Tax (EBIT) ¹
Net interest expense/finance charge
Operating profit before tax ¹
Tax expense
Net profit before significant items
Loss from discontinued operation (net of tax)
Other comprehensive income
Profit/loss attributable to members
Financial position
Ridley shareholders’ funds
Intangible assets
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 (%) ¹
Earnings per share (EPS) (cents) ¹
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) ¹
EBITDA per share (cents) ¹
EBITDA growth (%) ¹
EBITDAx (market cap/EBITDA) (times) ¹
Enterprise value/EBITDA (times) ¹
P/E ratio (times) ¹
Net debt/shareholders’ equity (%)
Equity/total assets (%)
Net debt/EBITDA (times) ¹
EBIT/net interest (times) ¹
Net tangible asset backing per share (cents)
Dividends per share (cents)
Dividend payout ratio (%)
Percentage franked (%)
1. Before discontinued operations.
02
2019
Actual
2018
Actual
2017
Actual
2016
Actual
2015
Actual
1,002,583
7,300
54,315
18,903
35,412
5,073
30,339
6,774
23,565
-
(403)
23,162
277,499
85,670
573,754
296,255
101,443
366,875
468,318
36,824
119.00
308,298
697
8.5
7.6
(10.4)
33.3
34.3
0.7
11.9
10.0
50.8
10.4
17.6
24.5
6.8
8.6
15.7
36.6
48.4
1.9
7.0
62.2
4.25
56.5
100.0
917,660
6,248
43,629
17,262
26,367
4,648
21,719
4,310
17,409
-
520
17,929
263,107
82,485
510,319
247,212
52,781
423,248
476,029
50,900
137.50
307,817
710
6.7
5.7
2.3
(32.6)
(32.8)
1.2
16.5
8.3
37.1
16.1
14.2
(19.9)
9.7
10.9
24.1
20.1
51.6
1.2
5.7
58.7
4.25
73.0
100.0
852,923
8,581
54,484
15,220
39,264
4,977
34,287
8,472
25,815
-
-
25,815
259,823
79,284
490,603
230,780
51,544
426,327
477,871
29,655
138.50
307,817
697
10.2
8.4
1.8
(6.6)
(14.1)
0.5
9.6
14.4
56.3
10.9
17.7
(72.1)
7.8
8.8
16.5
19.8
53.0
0.9
7.9
58.7
4.0
48.0
100.0
912,561
12,121
60,723
14,989
45,734
5,419
40,315
13,112
27,203
403 ¹
-
27,606
247,884
76,355
484,850
236,966
40,967
430,944
471,911
17,612
140.00
307,817
676
11.4
8.8
15.2
28.5
11.3
0.3
5.7
24.5
67.7
9.4
19.7
18.9
7.1
7.8
15.8
16.5
51.1
0.7
8.4
55.7
4.0
44.0
100.0
909,850
4,649
51,061
14,920
41,108 ¹
5,059 ¹
36,049 ¹
10,306 ¹
25,743 ¹
(4,572)
-
21,171 ¹
229,834
78,194
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
0.9
15.3
8.2
52.8
10.6
16.6
(70.8)
7.5
8.2
18.1
14.2
48.2
0.6
7.1
49.3
3.5
51.0
100.0
Ridley Corporation Limited Annual Report 2019 INTRODUCTION
EBIT from continuing
operations 1
Consolidated
net profit
Dividends per share
3
7
.
5
4
1
1
.
1
4
6
2
.
9
3
.
1
4
5
3
.
7
3
6
2
50
40
s
n
o
i
l
l
i
M
$
30
20
10
0
s
n
o
i
l
l
i
M
$
30
25
20
15
10
5
0
0
6
.
7
2
.
1
8
5
2
7
1
.
1
2
6
1
.
3
2
3
9
.
7
1
s
t
n
e
C
5
4
3
2
1
0
5
2
.
4
5
2
4
.
0
0
4
.
0
0
0 4
5
3
.
.
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
1. Inclusive of non-recurring items.
Operating
volume
Operating
EBIT
0
9
.
1
3
9
.
1
3
9
.
1
5
0
.
2
9
8
.
1
s
e
n
n
o
T
n
o
i
l
l
i
M
2.5
2.0
1.5
1.0
0.5
0
0
7
.
3
5
0
4
0
5
.
0
8
5
4
.
0
3
3
4
.
.
1
5
0
4
s
n
o
i
l
l
i
M
$
60
50
40
30
20
10
0
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
03
Ridley Corporation Limited Annual Report 2019LOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
04
Ridley Corporation Limited Annual Report 2019 LOCATIONS
& SECTORS
Ridley Locations and Sectors
1
Australia
1
1
8
1
7
2
1
7
4
5
6
5
2
9
6
2
3
4
3
Thailand
2
Business Unit
Structure
Monogastric
Pellets, meals, concentrates and pre-mixes
for poultry and pigs
Ruminant
Pellets, meals, blends, concentrates and
pre-mixes for dairy cattle, beef cattle and sheep
Packaged
Products
Bagged poultry, dairy, dog, horse and lifestyle
animal feed
Extrusion
Plants
Extruded and steam pelleted products for
all major fin fish and prawns, and specialist
pet foods
Supplements
Block and loose lick supplements
Rendering
Ingredients
Rendered poultry, red meat and fish products
for the pet food, stock feed and aquaculture
sectors
Unique and sustainable value adding raw
material ingredients for stock feed and
animal wellbeing
s
t
e
s
s
A
y
e
d
R
i
l
Ingredients
Monogastric
Ruminant
Packaged
Extrusion Plants
Supplements
Rendering
1 Yamba*
1 Toowoomba
1 Toowoomba
1 Toowoomba
1 Narangba
1 Townsville
1 Maroota
2 Chanthaburi #
2 Mooroopna
2 Tamworth
2 Tamworth
2 Chanthaburi
2 Laverton
100% Owned Business Units
* Novacq™
production site.
# 100% interest
in Novacq™
production site.
3 Pakenham
3 Pakenham
3 Pakenham
3 Westbury
4 Murray Bridge
4 Maffra
4 Murray Bridge
5 Bendigo*
5 Gunbower
6 St Arnaud
6 Terang
7 Wasleys
7 Taree
8 Clifton
9 Lara
* Existing old mill
and new mill under
construction.
05
INTRODUCTIONRidley Corporation Limited Annual Report 2019CHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
Chairman’s Report
“One of the highlights of the year was the
start of commercial feed production at our new
extrusion plant at Westbury in northern Tasmania.”
Dr Gary H Weiss AM
Chair
$40.5m
Operating EBIT
Hazeldene’s Chickens, our key customer
in the region. The new feedmill will be
the largest feedmill in the Ridley portfolio
at nearly twice the size of the Lara mill
commissioned in January 2017. The latest
technological advancements are being
incorporated into the mill design, with a
strong focus on efficiency and low running
costs and with sufficient on-site bulk
storage and warehousing facilities to
accommodate the anticipated long-term
growth in livestock production for the
region. The total budgeted capital outlay
will be between $45–$50 million, of which
over $21 million had been incurred at
balance date. Following the transition
of feed production and staff relocation
to the new Wellsford feedmill, the existing
Bendigo feedmill will be closed and the site
remediated as appropriate in preparation
for sale.
Ridley’s Dairy, Beef and Sheep, Laverton
Rendering, Packaged Products,
Supplements and Aquafeed sectors all
recorded positive year on year earnings
improvements in the 2019 financial year
(FY19), while market share was preserved
in a pig industry in cyclical downturn for
much of the year. As previously forecast,
Poultry volumes were lower following the
expiry of the Ingham’s supply agreement
in October 2018, and Maroota Rendering
poultry raw material intake volumes were
down following the prior year closure of
the Red Lea business. Against a backdrop
of high raw material prices throughout the
year, Ridley operations (excluding property
earnings and corporate costs) generated
Earnings Before Interest and Tax (EBIT)
for the year of $40.5 million.
The Interim Chief Executive Officer’s (CEO)
Review sets out the details of the key
performance drivers for the year, so I will
comment on some of the other features
of another busy year.
Feedmill portfolio
One of the highlights of the year was the
start of commercial feed production at
our new extrusion plant at Westbury in
northern Tasmania. The facility at Westbury
is a demonstrable commitment by Ridley
to the Tasmanian salmon industry with
a significant capital outlay. The plant
commissioning process and transitioning
of salmon feed production from our
06
Narangba plant in Brisbane started in
the fourth quarter of FY19 and culminated
with the official opening by the Premier
of Tasmania on 24 July 2019. We are proud
of this new facility and the team of
professionals we have at the plant to
produce the highest quality salmon and
other fin fish feed available in the market.
Another highlight for FY19 was the
ceremonial turning of the soil for our new
feedmill at Wellsford in central Victoria.
In September 2017, we announced our
intention to build a new feedmill in the
Bendigo region and started the process
to identify and secure the most
appropriate site. Having done so and
undertaken an extensive development
approval process, we were pleased to
finally commence construction at our
site in Wellsford, just outside Bendigo in
Central Victoria in FY19. As you will see
from the progress photo included in the
Interim CEO’s review, there has been a
great deal of activity on site during the
second half of the year as we work towards
a targeted commissioning for this new
plant in the fourth quarter of FY20. The
final look of this 350,000 tonne annual
capacity state-of-the-art plant is shown
in the following image.
The new feedmill at Wellsford will produce
high-performance, high-quality feed for the
Poultry and Pig sectors, and is underpinned
by a 10-year supply agreement with
Ridley Corporation Limited Annual Report 2019 CHAIRMAN &
CEO’S MESSAGES
Raw material samples
Aquafeed produced
at Westbury
Design image for the Wellsford feedmill,
Bendigo, Victoria
07
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSFINANCIAL REVIEWSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY recognition of the team’s effort in striving
to be a value-adding business partner
to our customer base. The Packaged
Products team is confident that the new
customer engagement model will continue
to resonate with our partners, and provide
a platform for ongoing growth and
business development.
Another acknowledgement I would like
to make for the Packaged Products team
is in respect of Ridley’s engagement with
the Equine sector, where the Ridley team
has been dedicated to making the Horse
of the Year Show such a success. Ridley
has sponsored this event for 50 years
and was awarded with the status of Event
of the Year in the 2019 Equestrian Victoria
Awards. Our entry into the horse racing
feed market is also another exciting
development in FY19 for our Equine
business within Packaged Products.
While Ridley’s performance overall reflects
a team effort, there are two members of
our team who deserve particular mention.
Andrew Westlake, Ridley’s representative
on the Australian Renderers Association,
was instrumental in the Association’s
adoption of industry-wide minimum
specifications for raw material supply
mentioned above, which will elevate the
standards for raw material supply for all
industry participants and consequently
improve the quality of the rendered
product outputs.
Chairman’s Report continued
Rendering
Last year I made reference to the initiatives
at Laverton Rendering to improve the
quality of the raw material supply, and
consequently the quality of the rendered
product, through the segregation of raw
material inputs. Further progress has been
made this year, not only in respect of the
supply of raw material to Ridley, but also for
supply throughout the rendering industry
following the adoption by the Australian
Renderers Association of a minimum set
of raw material supply standards.
The new business development initiatives
at Maroota to generate new earnings
streams to cover the loss of Red Lea raw
material supply have had mixed success
during the year, however all projects are
continuing into FY20. The rendering of
whole birds is now being successfully
undertaken at Maroota and a market
has been established for the rendered
products. The volumes of available
birds and seasonality of the supply
place an effective earnings ceiling
on this revenue stream.
While markets have also been established
at premium prices for the rendered meals
and oils generated from the processing
of whole mackerel, the ability to secure
long-term, uninterrupted fishing
agreements has to date proven to be
problematic. Nevertheless, we continue
to pursue this business opportunity, which
has the potential to enable Ridley to be
self-sufficient in its fish meal and fish oil
requirements from a wholly sustainable
source, with the sustainability of the
fishery evidenced by the Marine Stewards
Council certification issued to Ridley in
mid-August 2019.
Novacq™
We have had a productive year of
continuous improvement for Novacq™, both
at our commercial operation at Yamba and
at our applied research and development
(R&D) site at Chanthaburi in Thailand.
Dewatering and drying equipment has been
installed, tested and commissioned during
the year at Yamba, and the same equipment
has been delivered to Chanthaburi. We are
working through the approval process
required to install and operate this plant
within the Chanthaburi feedmill, and this
has taken longer than anticipated due to
the local political landscape in this mainly
rural region in the south east of Thailand.
Commercial sales of Novacq™-inclusive
prawn feed have been made from Yamba
and also Chanthaburi, noting that prawn
farmers are very cautious with regard
to change given the delicate balance
between success and failure and noting
the history and financial impacts of disease.
The project to explore options to
accelerate the growth of Novacq™ as
announced in May 2018 continued for
much of FY19, and while not resulting in
any investment or divestment transaction,
provided an opportunity for Ridley to
demonstrate the merits of the product
and educate a large number of interested
parties, many of whom expressed their
desire to be kept informed of new
developments and to stay in contact.
Property
The property sales in the last two years
have generated, and will continue to
generate through the deferred consideration
structures, an inflow of funds to assist with
the financing of the major capital program
centreing on the new plants at Westbury
and Wellsford.
Achievements in the year
In June 2018, agreement was reached
with Tassal for Ridley to participate in
salmon feed trials, which provide Ridley the
opportunity to showcase our feed quality
and nutrition expertise. The production of
feed for these trials, which at balance date
was approximately halfway through a full
term which expires in the second quarter
of FY21, has recently been seamlessly
switched from Narangba to Westbury.
The trial sampling results to date have
been very encouraging, and we look
forward to continuing our performance
in the coming year. Over the full course
of the trials, we will have provided and
sold approximately 3,300 tonnes of the
full range of Ridley salmon feed from the
hatchery through to the grow out stage.
It was pleasing in February 2019 for Ridley’s
Packaged Products team to be recognised
by one of its largest customers, Ruralco/
CRT, as their Supplier of the Year – Animal
Nutrition. This award was based on a
comprehensive service assessment
comprising sales support, product quality,
customer service, innovation, marketing
and supply chain, and was great
08
Ridley Corporation Limited Annual Report 2019 CHAIRMAN &
CEO’S MESSAGES
Dr Richard Smullen, Ridley’s prawn
and aquafeed nutrition expert, recently
received an award from the Australian
Prawn Farmers’ Association to recognise
his ‘service and contribution to the
Australian prawn farming industry’.
This is a wide-reaching and industry
acknowledgment of the work Richard
has put into leading prawn aquaculture
nutrition and R&D over many years.
People
On behalf of the Board, I would like
to take this opportunity to thank all our
shareholders, suppliers and customers for
their continuing support throughout the
year. I would also like to acknowledge and
thank all members of our Ridley team for
their dedication and hard work over the
last 12 months, and look forward to their
continuing contribution to the long-term
success of Ridley.
I would also like to thank fellow Director
Mr David Lord for not only agreeing to
become Ridley’s Interim CEO while we
recruited and transitioned to a new
CEO, but also for the leadership and
commitment he provided during
that period.
Finally, the Ridley team welcomes our
newly appointed CEO and Managing
Director Mr Quinton Hildebrand. Quinton
has extensive experience and background
in the agriculture industry, and will focus
Ridley on its domestic growth plans,
leverage the investment in our state-of-
the-art facilities and accelerate the
commercialisation of our Novacq™
franchise internationally.
Dr Gary H Weiss AM
Chair
09
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSFINANCIAL REVIEWSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Interim CEO’s Review
“In FY19, positive year on year earnings improvements
have been recorded in Dairy, Beef and Sheep, Laverton
Rendering, Supplements, Packaged Products
and Aquafeed.”
David Lord
Interim Chief Executive Officer
Rendering site. This, together with
the increase in energy pricing, meant
that we needed at least $5m of growth
throughout the business just to maintain
earnings at the prior year level.
In FY19, positive year on year earnings
improvements have been recorded
in Dairy, Beef and Sheep, Laverton
Rendering, Supplements, Packaged
Products and Aquafeed. Volume
reductions in Poultry and Pig sectors
and the known reduction in poultry raw
material supply to Maroota Rendering
have adversely impacted the result,
together with the loss on the first year
of Novacq™ operations at Yamba. Each
of these sectors will be covered in more
detail later in this review.
Beyond Ridley operations, corporate
costs have been contained to be consistent
with prior years except for c.$2.0m in
respect of the termination costs associated
with the departure of the CEO and
Managing Director as announced on
28 June 2019, plus the legal costs incurred
and expensed in respect of defending
the ongoing Baiada legal claim.
The 2019 financial year was an eventful
one in many respects, not least of which
was the senior management restructure
at the end of the financial year, which
saw the departure of the Chief Executive
Officer and Managing Director (CEO) on
27 June 2019 after six years in the role.
I was appointed as Interim CEO from
28 June 2019 and charged with the
responsibility of managing the business
and the executive search process to
identify and secure a successor capable
of leading the Company into a new era
of growth as we approach a new decade.
Following the departure of the CEO and
Managing Director in late June 2019, the
Company embarked on a search program
to identify and secure a new CEO. The
Board leveraged its extensive network
of industry and professional relationships
to identify potential candidates and then
conducted an independent evaluation
process of a shortlist of both external
and internal candidates. As announced
through the ASX Announcements Platform
on 19 August 2019, the Board has appointed
Mr Quinton Hildebrand as its new Chief
Executive Officer and Managing Director
effective from 26 August 2019. The Board
regards Mr Hildebrand as the ideal person
to refocus Ridley on its domestic growth
plans, leverage the investment in its
state-of-the-art facilities, and accelerate
the commercialisation of its Novacq™
franchise internationally.
10
Having managed the transition to new
leadership, I stepped down from the role of
Interim CEO and have resumed my former
duties as a Ridley Non-Executive Director
and Chair of the Ridley Remuneration and
Nominations Committee. Notwithstanding
the timing of this transition, I am presenting
the full year result and giving the ‘Managing
Director’s’ address within this report.
Having spent most of the year as a
Non-Executive Director, my brief period
as Interim CEO has provided me with
valuable insights into the complexities of
the operations and a deeper understanding
of the business. I have gained a great deal
of confidence in the commitment and
abilities of the Ridley management team
and in the significant capital investment
program in place to construct and
operate two new plants in Tasmania
and central Victoria.
The Ridley Operations Earnings Before
Interest and Tax (EBIT) result for the 2019
financial year (FY19) is $40.5 million (m),
and there are no non-recurring items to
report for the year.
We started the 2019 financial year knowing
that the Ingham’s poultry feed supply
agreement was to expire in October
2018 and that there was no prospect of a
resumption, due to insolvency, of Red Lea
poultry raw material supply to the Maroota
Ridley Corporation Limited Annual Report 2019 CHAIRMAN &
CEO’S MESSAGES
New extrusion plant at
Westbury, Tasmania
11
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSFINANCIAL REVIEWSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Interim CEO’s Review continued
important attribute in the selection and
appointment of our new CEO. Safety is
one of our five core values and one of
our six strategic platforms.
The journey to an injury-free environment
is a long and continuous one, and there will
always be scope for further improvement.
Nonetheless, our change of leadership
coinciding with our annual reporting
commitments does provide an opportunity
to step back and reflect on the progress
of our journey to date, and to refocus on
the direction and priorities ahead.
From the perspective of our core KPIs
of Lost Time Injury Frequency Rate (LTIFR)
and Total Recordable Frequency Rate
(TRFR), we are pleased to report a record
low TRFR of 5.6, which was largely driven
by a record low number of Medically
Treated Injuries (MTIs) of just three
during the year, down from greater
than 10 in prior years.
The safety results for FY19 are the
culmination of a dedicated strategy
which is overseen by the Health & Safety
team and then adopted throughout the
organisation, noting that ownership for
safety must originate and be held at the
individual sites, with fellow operatives and
colleagues all looking out for each other.
Data is also critical in identifying the most
common causes of hazards and injuries,
and in recent years we have allocated
resources and expended great effort in
capturing and analysing data to identify
and rectify root causes of injury. By way of
example, in FY19, we adopted a Safe Hands
program in response to the observation
that many of our MTIs were the result of
cuts to fingers, hands and wrists.
Consequently, we invested in a new, wider
range of latest technology, cut-resistant
gloves throughout the business, together
with an education program for our
operators, and changes to the relevant
Standard Operating Procedures. The Safe
Hands program feedback from staff has
been very positive, with workers not only
reporting a more comfortable fit from the
new gloves, but also witnessing a real
reduction in actual injuries.
A critical lead indicator for safety
performance is the reporting of hazards,
and FY19 was yet another record number
of hazard identification logs. At Ridley, we
recognise the strong correlation between
elevated hazard reporting activity and
decrease in injuries. In this context, we
were delighted to see a total of 4,643 logs
in FY19, compared with 2,954 in FY18, an
increase of 57%. Particularly pleasing is the
embracing of Ridley safety standards at
our operations in Thailand, where the
introduction of workplace safety has
been well received.
Core business operating
performance for the 2019
financial year
The following is a sector-by-sector
summary of operating performance
for the year.
(i) Dairy, Beef and Sheep
Total sales volumes for Dairy, Beef and
Sheep, referred to as the Ruminant sector,
were marginally up on the prior year,
boosted by the beef and sheep feeding
in drought-affected regions. A combination
of these favourable feeding conditions, a
strategy to support and retain customers
in the main milk producing regions, good
commodity management, and strong cost
control within the feedmills has generated
a strong full year result for this sector.
(ii) Poultry and Pig
Poultry volumes were down on the prior
year due to a combination of the expiry of
the Ingham’s supply agreement in October
2018, record feed conversion ratios being
enjoyed by customers on Ridley feed and
Ridley diets, and an industry-wide
shortening of the bird lifecycle, which
results in a drop in finisher feed sales
volumes. Notwithstanding these
conditions, all ongoing major poultry
broiler customers enjoyed growth in bird
numbers while poultry layer sales volumes
fell slightly in line with an industry
reduction in bird placements. The year
on year impact of the expiry of the
Ingham’s supply agreement was 169,000
tonnes. Mill efficiencies and effective
commodity management supported
margins during the year.
Pig volumes were down 25,000 tonnes
on the prior year, which is reflective of a
combination of high raw material prices
and low sow numbers. The contraction
in sow numbers is an outworking of the
industry readjustment to the fall in meat
prices driven by the over-supply conditions
that prevailed in the prior year.
The $6.2m net profit recorded for the
Property segment reflects the sale of
Lots A and C at Lara in July 2018 for total
proceeds of $9.5m, and brings the total
proceeds of surplus land holding sales at
Lara in the last two years to $14.5m. If the
land purchase option for Lot D is exercised
in the coming year for sale proceeds of
$1.5m, then we will have completely exited
the Lara site, leaving Moolap as the single
surplus landholding to be divested. The
third party option holder is continuing
its due diligence on Lot D to secure the
development approvals and funding
necessary to facilitate the exercise of the
option prior to its expiry on 2 July 2020.
To complete the high level summary of
profit and loss items, net finance costs for
the year of $5.0m reflect interest on higher
levels of bank debt than last year incurred
to finance the construction of the new
extrusion plant at Westbury in Tasmania,
and the 350,000 tonne capacity feedmill
at Wellsford, Bendigo. This incremental
interest cost has been partially offset by
interest revenue of $0.8m recorded on the
unwinding of the discount on the deferred
consideration payable in respect of current
and prior year Lara land sales.
The $6.8m income tax expense and
22.3% effective tax rate for FY19 includes
the application of $4.5m of capital losses
against the July 2018 Lara Lot A and C
property sales, a $0.2m overprovision in
the prior year, and the tax benefit from
the sustained levels of research and
development (R&D) activity across
the business.
There are no non-recurring items reported
in FY19 and there have been no negative
impacts on the FY19 operating result
associated with the disposal of the Huon
legacy inventory which was written down
to a nil carrying value last year.
The last item in the profit or loss, being an
other comprehensive income reversal of
$0.4m, is an entry to adjust the carrying
value of the investment in a UK-listed
specialist ingredients business to the last
traded value prior to balance date.
This investment had been written
up by $0.5m in the prior year.
Safety
The Ridley Board is committed to ensuring
that the safety and wellbeing of our people
remains our number one priority at all
times when conducting business at Ridley,
and the sharing of these values was an
12
Ridley Corporation Limited Annual Report 2019 CHAIRMAN &
CEO’S MESSAGES
Biofilter at Westbury
(iii) Aquafeed
While Aquafeed sales volumes were
nearly 6,000 tonnes above the prior
year, increases in energy, labour and mill
cleaning costs, and a change in overall
product mix have trimmed some of
the upside to generate a full year result
c.$1.0m ahead of last year, exclusive
of last year’s write off of Huon inventory
legacy. Two new senior appointments
were made during the year to the Sales
and Nutrition team, which now has a full
complement and an enviable expertise
in Southern Hemisphere salmon nutrition.
Recruitment for the new extrusion plant
in Tasmania was also undertaken and
the new team put in place prior to the
first commercial production runs in late
June 2019.
(iv) Rendering
Laverton Rendering raw material intake
volumes were up 55,000 tonnes on the
prior year, however the price paid to
secure these tonnes was increased in
accordance with the supply and demand
conditions within a highly competitive
market. The segregation of raw material
streams and a concerted effort to improve
the quality of raw materials being delivered
through the removal of paunch, water and
foreign objects have delivered positive
returns for the year. Partially offsetting
these gains is a combination of energy
costs, product mix and lower poultry meal
sales prices, however the overall result is a
significant improvement on the prior year.
13
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSFINANCIAL REVIEWSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Interim CEO’s Review continued
Ridley’s Dr Matt Briggs with local Ridley employees
at the mangrove planting day
The results from the prior year site
restructure and the raw material intake
levels at Maroota Rendering have been
pleasing following the prior year cessation
of poultry raw material supply from Red Lea.
A number of business development
initiatives have supported raw material
receival volumes, and supplemented
by an increase in product trading activity,
have produced a result ahead of internal
expectations and budget.
(v) Packaged Products
The high raw material prices impacted
the margins for Packaged Products,
particularly in the first half year until a pass
through price adjustment was processed
to address the imbalance. The generation
of annualised sales volumes only
2,000 tonnes below the prior year was a
considerable achievement in the context
of the high feed prices and discretionary
nature of spending on companion animals.
FY19 has been an exciting year in Equine,
marking the 50th anniversary of Ridley’s
sponsorship of the Barastoc Horse of
the Year Show, with Ridley’s launch into
horse racing with a new concentrated
high-performance feed, and the new
partnership with British Horse Feeds to
exclusively distribute Speedi-Beet and
Fibre-Beet in Australia and New Zealand.
(vi) Supplements
Supplements enjoyed a normal dry season
across northern Australia in FY19, which
generated a strong first half year of sales
and a full year result 5,900 tonnes ahead
of the prior year. The full year result is
pleasing given the impact on sales and
the damage to Ridley’s operations and
inventory arising from the February 2019
Townsville floods and the first half year
shortage of key raw materials in northern
Queensland, which compromised
production capacity.
(vii) Thailand feedmill
The Thai prawn market continues to be
beset with the problem of eradicating the
diseases that continue to affect prawn
production activity, farmer confidence
and the availability of working capital
to facilitate any large-scale restocking
programs. Witnessing these experiences
through the fortunes of our feedmill
14
Ridley Corporation Limited Annual Report 2019 CHAIRMAN &
CEO’S MESSAGES
partner, we have refocused our attention
on securing sustainable fin fish supply
arrangements both in Thailand and
overseas and on exports of prawn feed.
(viii) Novacq™
In the first 12 months of operation since
transitioning from an applied R&D project
to full commercial status, the Novacq™
domestic operations recorded an
operating loss. Commercial sales of prawn
feed with a 5% Novacq™ inclusion rate
commenced with a number of domestic
prawn farmers on a conservative proportion
of their available ponds. The dewatering
and drying equipment was installed and
commissioned at Yamba, together with
a power upgrade, which will facilitate a
higher level of oxygenation and fertilisation
to improve production output.
CSIRO Alliance
At balance date we were two and a quarter
years into the five-year CSIRO Alliance,
and both organisations are working well
together to endeavour to understand
how and why Novacq™ works, and how
we can produce it more effectively and
cost-efficiently, and with greater bioactivity.
The development of an assay to test and
provide a real-time measure (as opposed
to measurement of live animals over
periods of time in tank trials) of the level
of bioactivity of the Novacq™ produced
is of vital importance as we need to ensure
there is a consistent level of bioactive
ingredient in the feed being supplied to
generate a predictable and reliable result
for the prawn farmer. Although there are
several other work packages being
conducted concurrently by other teams
within CSIRO, this remains the prioritised
package of work being undertaken.
The output from this work package is
considered to be a critical component
of the work ahead to identify the most
likely applications for Novacq™ beyond
the known monodon and vannamei
species of prawn.
Property
With the successful sales of surplus
land at Lara in recent years and the lack
of positive engagement by the State
Government of Victoria towards a
commercial development of the Ridley-
owned and Crown-leased land at Moolap,
the outlook for FY20 in respect of Property
is primarily a minimal cost holding pattern
while providing all possible support for the
land-based aquaculture project envisaged
for Lot D at Lara. The 12 month option
agreement for the sale of Lot D to a
land-based aquaculture company has
been extended for a further year, such
that it now expires on 2 July 2020.
As a consequence of the above, the
Property segment will no longer be
separately reported from 1 July 2019
and the associated costs and revenues
will be absorbed within the corporate
reporting cost centre.
Our people and communities
There have been no changes to the
executive lead team in FY19 following
the appointment of Jody Scaife as
General Manager Commercial Feeds in
late June 2018. The executive lead team
is able to provide a solid platform of Ridley
knowledge and industry experience to
the incoming CEO and thereby maintain
the momentum on all the new business
development and quality initiatives
currently in progress.
FY19 was a busy year for Ridley in working
with its local communities, many of which
were dealing with the hardship and stress
associated with severe drought conditions.
Our work with Aussie Helpers continues to
provide valuable support for farmers in
need, whether in the form of animal feed,
cash or donation of second hand office
equipment. Supplementary feed support
has been particularly welcome in areas
where the farmers have been unable
to grow or acquire supplies of hay.
We have now provided seven consecutive
years of support for Aussie Helpers, where
the focus is on providing assistance to
rural Australia, and for the Garvan Institute.
The Garvan Institute’s Healthy Families,
Healthy Communities program supported
by Ridley continues to advocate the
importance of medical research to rural
and regional Australia, sharing important
health information with rural and regional
Australia and conveying messages
supporting healthy living and risk
mitigation.
The Ridley Ken Davies Award, which honours
a former colleague, continues as an annual
award presented to a Garvan Institute
researcher with a $75,000 prize as part of
the Healthy Families, Healthy Communities
program. Ridley has a Workplace Giving
program to assist with ongoing support
for the Ridley Ken Davies Award.
The third annual Cobber Challenge was
launched in August 2018, and the fourth
Cobber Challenge was run from 12 August
2019. The Cobber Challenge is designed to
showcase the unsung heroes of Australian
farms, our working dogs and their owners.
The challenge is a three-week competition
during which the competing dogs wear
GPS collars that provide live data on their
movements, with points accrued for
speed, duration and distance. The dog that
has the most points at the close of the
campaign is declared the winner of the
coveted Cobber Challenge trophy. The
Cobber Challenge provides an opportunity
to show the important role that nutrition
plays in enabling working dogs to perform
day in and day out.
2019 marked the 50th anniversary of
Ridley’s sponsorship of the Horse of the
Year Show. The show was held in February
at Werribee Equestrian Centre west of
Melbourne, and attracted well over 1,000
entries from competitors in Equestrian
Victoria events as well as breed societies
and the Horse Riding Club Association
of Victoria. Following the success of the
show, at the 2019 Equestrian Victoria
Awards, the 50th Barastoc Horse of
the Year won the Event of the Year.
Our engagement with local communities
where we operate also extended to
Thailand and a mangrove planting day
near the joint venture feedmill. We are
also working with local oyster farmers to
provide disease analysis and water quality
testing, data and insights to assist them
in addressing the incidence of oyster
mortalities in their overcrowded estuaries.
Outlook
The overall outlook for the coming year
for the business is positive, with another
strong year expected for the Ruminant
business driven by high milk prices, which
will help support positive dairy farmer
sentiment. The high Beef and Sheep
volumes of FY19 driven by drought
conditions are not expected to be
repeated in FY20, but a positive
performance is nevertheless expected
against historical sales volumes.
Poultry volumes are expected to improve
in FY20 as the industry reverts to its
traditional bird lifecycle, the shortening
of which by several days in the second
half of FY19 led to a reduction in bird size
and overall feed volumes.
15
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSFINANCIAL REVIEWSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Managing Director’s Review continued
August 2019 progress at the
Wellsford site, Bendigo, Victoria
Construction of the new state-of-the-art
Monogastric feedmill to service key
customer Hazeldene’s Chickens and other
poultry and pig farmers in central Victoria
was in progress at balance date, and is
expected to be commissioned in the
fourth quarter of FY20. The existing
160,000 tonne capacity feedmill in East
Bendigo will be retired once the new
feedmill at Wellsford is commissioned
and fully operational. The new facility
will be similar in design and construction
to the last Ridley feedmill constructed
at Lara, Geelong. With an annual
production capacity in excess of 350kt,
the Wellsford feedmill will be significantly
the largest in the Ridley network.
The outlook for the Pig sector in FY20 is
for Australian pig meat production to grow
in line with population growth. Much of this
increase will occur in the later part of the
year as supply increases to meet demand
following a reduction in pig production in
preceding years. On a global scale, the
past 12 months have seen African Swine
Fever substantially reduce the population
of pigs in China, neighbouring Asian
countries and various European Union
countries, generating pressure on global
pig meat supply and pricing.
From a Ridley pig feed perspective,
breeder inventories are expected to
increase during FY20 with feed production
volumes expected to increase from the
later part of FY20 and beyond.
production for other fin fish is currently
being transitioned to Westbury from the
Narangba plant in Brisbane, which will now
concentrate on prawn feed and extruded
pet food.
The outlook for Rendering is positive, with
the benefits of last year’s improvements in
plant efficiency and segregation of higher
value raw material intake to be enjoyed for
a full year despite an expected pull back
in raw material input volumes following
a reduction in red meat slaughter rates.
Continuing improvement to the Overall
Equipment Effectiveness (OEE) of both
Rendering plants and initiatives to reduce
energy consumption are also expected
to contribute positively in FY20.
For Aquafeed, the long-term outlook for
the domestic salmon industry continues
to be positive, with sustainable fishery
solutions being developed for Tasmania
and New Zealand, continuing growth in
domestic salmon consumption, and
further investment in technology,
automation and biomass by the Tasmanian
salmon producers. Ridley has committed
to playing an important role in supplying
locally produced feed to the salmon
industry and officially opened its new
feedmill at Westbury in northern Tasmania
on 24 July 2019. In addition to salmon,
The two salmon feed trials being
conducted as part of Tassal’s research
and development program as announced
last year are proceeding well. Production
for all ensuing stages of the trial has now
been switched to the new extrusion plant
at Westbury and provides incremental trial
volume sales.
The prospect of volume growth in
barramundi and yellow tail king fish
is positive, but potentially eclipsed by
the current expansion of the domestic
prawn industry, led by Tassal following
its September 2018 acquisition of prawn
producer the Fortune Group. Effective
management of working capital and
a seamless transfer of feed volumes
will be critical in the coming year as
the Aquafeed business unit transitions
from a single location to a tandem site
production model at Westbury and
Narangba. The return of Ridley’s extruded
dog feed production to Narangba from
an outsourced supply agreement is an
important component of this strategy.
16
Ridley Corporation Limited Annual Report 2019 CHAIRMAN &
CEO’S MESSAGES
We are expecting and managing
towards another year of growth and
consolidation in both Packaged Products
and Supplements, through a new range
and product mix, improved store coverage
and presence, a focus on raising the profile
of our Petfood and Equine products, and
on the assumption that we experience a
traditional 12 month dry and wet season
weather pattern in northern Australia,
which is conducive to the consumption
of supplementary feeding blocks.
Novacq™ operations at Yamba went live
from a commercial perspective on 1 July
2018 and the year proved to be another
year of consolidation, with the FY19 trialist
prawn farmers continuing to purchase the
Novacq™-inclusive feed and confirm that
the positive results observed in the prior
year are sustainable given the continued
use of the Novacq™ product.
The Novacq™ operations at Chanthaburi,
Thailand, will remain in development mode
for another year, with an expected go-live
date of 1 July 2020. By this time, it is
expected that all development approvals
to install and operate the dewatering and
drying equipment within the Chanthaburi
feedmill will have been secured and the
dewatering and drying process finely
tuned through another year of domestic
experience at Yamba.
The strategic alliance with CSIRO is two
and a quarter years into a five-year term as
at 30 June 2019, and the primary focus of
the alliance for the coming year in FY20
will continue to be the development of an
assay to test the bioactivity on a simple,
accurate, timely and cost-effective basis.
This information is considered to be a
critical component of the work ahead
to identify the most likely applications for
Novacq™ beyond the known monodon
and vannamei species of prawn.
Ridley’s $95m-plus commitment to a new
state-of-the-art feedmill in central Victoria
and to a new extrusion plant in Tasmania
supports our focus on growing with our
customers and capitalising on opportunities
to expand our presence in key livestock
animal production regions. In order to
manage the cash flows associated with
this significant spike in investment funding
requirement, in May 2019 a new five-year
banking facility was executed with existing
financiers ANZ and Westpac. Under the
new agreement, the total loan capacity
was increased by $40m to $200m,
with the bank overdraft facility of $10m
and the trade payables facility of $50m
both retained.
The 12-month option agreement for the
sale of the sole remaining Lara land, Lot D,
to a land-based aquaculture company has
been extended for a further year, such that
it now expires on 2 July 2020.
There has been no meaningful progress
with regard to the proposed Moolap
development during FY19, and any
other avenues for generating shareholder
returns from this site will be considered.
With an outlook of minimal activity at
Moolap and given the significant reduction
in the portfolio of surplus land holdings
following the FY18 and FY19 sales of
property at Lara, the Property reporting
segment is being folded into Corporate
from 1 July 2019.
David Lord
Interim CEO
17
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSFINANCIAL REVIEWSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Bulka bag storage
18
Ridley Corporation Limited Annual Report 2019 FINANCIAL
REVIEW
Financial Review
“Sales revenue for FY19 of $1,002.6m was up $84.9m (9.2%)
on last year’s $917.7m, and reflects 1.89m (2018: 2.05m)
tonnes of stockfeed and rendered product sold.”
Alan Boyd
Chief Financial Officer
and Company Secretary
Results
For statutory reporting purposes, the Consolidated Profit and Loss (Table 1) reports profit from continuing operations after income tax
for the year of $23.56 million (m) and a pre-tax profit from continuing operations of $30.34m.
Table 1
Profit from continuing operations before income tax
Income tax expense
Profit from continuing operations after income tax
Other comprehensive income, net of income tax
Total comprehensive income for the year
2019
$’000
30,339
(6,774)
23,565
(403)
23,162
2018
$’000
21,719
(4,310)
17,409
520
17,929
Sales revenue for FY19 of $1,002.6m was up $84.9m (9.2%) on last year’s $917.7m, and reflects 1.89m (2018: 2.05m) tonnes of stockfeed
and rendered product sold. The increase in sales revenue is largely a reflection of the pass through of high raw material grain prices
experienced throughout the financial year despite a reduction in overall sales volumes.
Table 2 – Profit and loss account in $ million
Earnings from operations before net interest, tax expense, depreciation
and amortisation (EBITDA) before non-recurring items:
Depreciation and amortisation (DA)
Ridley operations
Corporate costs
Property net profit
EBIT before non-recurring costs
Net Finance costs
Income tax expense
Net profit from continuing operations after tax before non-recurring items
Other non-recurring items before tax
Tax on other non-recurring items
Reported net profit
Other comprehensive income, net of tax
Total comprehensive income for the year
2019
54.3
(18.9)
40.5
(11.3)
6.2
35.4
(5.0)
(6.8)
23.6
-
-
23.6
(0.4)
23.2
2018
Movement
55.3
(17.3)
43.3
(9.5)
4.2
38.0
(4.6)
(7.8)
25.6
(11.6)
3.4
17.4
0.5
17.9
(1.0)
(1.6)
(2.8)
(1.8)
2.0
(2.6)
(0.4)
1.0
(2.0)
11.6
(3.4)
6.2
(0.9)
5.3
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.
19
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Financial Review continued
Results continued
The reported Ridley operations EBIT of
$40.5m (Table 2) is $2.8m below last year’s
$43.3m before non-recurring items, largely
as a result of lower poultry tonnes arising
from a combination of the drop in finisher
feed attributable to shorter bird life
throughout the industry, improved feed
conversion ratios for customers on Ridley
diets, and the non-renewal of the Ingham’s
supply agreement, which expired in
October 2018.
The absence of the former Red Lea poultry
raw material supply at Maroota and the
first year of commercialisation of Novacq™
at Yamba have also impacted the FY19
operating result. Positive year on year
earnings improvements have been
recorded in Dairy, Beef and Sheep,
Laverton Rendering, Supplements and
Packaged Products, while high energy
costs continue to challenge the business.
Corporate costs have been contained
to be consistent with prior years after
allowing for c.$2.0m for the combined
termination costs associated with the
departure of the CEO and Managing
Director as announced on 28 June 2019
and for legal costs incurred and
expensed in respect of defending
the Baiada legal claim.
Net finance costs for the year of
$5.0m reflect interest on higher levels
of bank debt than last year incurred
to finance the construction of the new
extrusion plant at Westbury in Tasmania
and 350,000 tonne capacity feedmill
at Wellsford, Bendigo. This incremental
cost has been partially offset by interest
revenue of $0.8m recorded on the
unwinding of the discount on the deferred
consideration payable in respect of current
and prior year Lara land sales.
The $6.8m income tax expense and
22.3% effective tax rate for FY19 include
the application of $4.5m of capital losses
against the July 2018 Lots A and C property
sales, a $0.2m overprovision in the prior
year, and the tax benefit from the sustained
levels of research and development (R&D)
activity across the business.
There are no non-recurring items reported
in FY19 and there have been no negative
impacts on the FY19 operating result
associated with the disposal of the Huon
legacy inventory, which was written down
to a nil carrying value last year.
20
A post-tax mark to market other
comprehensive income reversal of
$0.4m has been recorded in respect
of the investment in a UK-listed specialist
ingredients business, which was written
up by $0.5m in the prior year.
The $6.2m net profit recorded for the
Property segment in Table 2 above reflects
the sale of Lots A and C at Lara in July 2018
for total proceeds of $9.5m. The 12 month
option agreement for a land-based
aquaculture business to acquire the
only remaining Ridley land at Lara (Lot D
in Table 3) was extended for a further
12 months to 2 July 2020. Lot B was
sold in June 2018.
Balance sheet
There have been the following movements
in the balance sheet over the last 12 months:
(i) A $48.6m increase in net debt for
the year from $52.8m to $101.4m.
(ii) A $1.1m increase in current trade
receivables from $96.2m to $97.3m,
which reflects the pass through of
the high raw material grain prices
while debtor days remained
consistently in the low 30-days range.
Other receivables has increased
due to a $2.0m increase in deferred
consideration relating to the July 2018
Lara Lots A and C property sales.
(iii) A $7.1m increase in inventory from
$76.7m to $83.8m reflects high
raw material prices for year end
grain positions.
Table 3 – Lara land
(iv) A $0.9m decrease in current assets
held for sale to $0.2m following
the July 2018 Lara Lots A and C
property sales.
(v) A $3.1m increase in non-current
receivables from $8.6m to $11.7m
comprising a $2.5m increase in
respect of the Lara Lots A and C
property sales deferred consideration
receivable of $5.1m as at 30 June 2019,
and an increase of $0.7m in the
unsecured loan to the Thailand
feedmill joint venture to $6.0m
at balance date.
(vi) A $56.7m increase in non-current
property, plant and equipment to
$259.3m, which reflects $33.8m
of construction costs for the new
extrusion plant at Westbury and a
further $21.2m incurred in respect of
the new feedmill under construction
at Wellsford, Bendigo. There have also
been several other profit improvement
and capital maintenance projects
conducted during the year, notably
the next stages of Novacq™
production at Chanthaburi.
(vii) A $0.5m reduction in non-current
investments accounted for using the
equity method to $0.7m, which
comprises the carrying value of the
49% ownership interest in the Pen
Ngern Feed Mill in Thailand and
reflects Ridley’s share of its operating
loss for the financial year.
(viii) A $0.6m decrease in non-current
available-for-sale financial assets from
$2.3m to $1.7m, which reflects the mark
to market adjustment for the 1.2%
equity interest investment in a UK-listed
specialist ingredients business.
Ridley Corporation Limited Annual Report 2019 FINANCIAL
REVIEW
Dividend
The Board paid a 2018 final cash dividend
of 2.75 cents per share, fully franked,
on 31 October 2018 and a 2019 interim
dividend of 1.5 cents per share, fully
franked, on Friday 10 May 2019. A fully
underwritten Dividend Reinvestment Plan
(DRP) was introduced for the 2019 interim
dividend under which 896,926 fully paid
ordinary shares were issued to existing
shareholders plus 2,542,224 fully paid
ordinary shares to institutional and
sophisticated investors at an issue
price of $1.33 per share.
After the balance sheet date, a 2019 final
dividend of 2.75 cents per share, fully
franked and payable wholly in cash on
31 October 2019 was declared by the
Directors. The financial effect of this
dividend has not been brought to account
in the consolidated financial statements
for the year ended 30 June 2019 and will
be recognised in subsequent financial
reports. The DRP will be suspended for
the purposes of this 2019 final dividend
as the Directors believe that the issue of
share capital at the current Ridley share
price trading range is dilutive and not in
the best interests of Ridley shareholders.
Cash flow and working capital
The operating cash inflow for the year
(Table 4) after working capital movements
and maintenance capital expenditure was
$33.7m, a reduction of $10.2m on last
year’s $43.9m.
Working capital increased by $7.3m over
last year largely due to the impact of
higher raw material input prices.
EBITDA before non-recurring items of
$54.3m has remained relatively consistent
with the $55.3m in FY18 before non-
recurring items and represents a year
on year improvement of $10.6m after
non-recurring items.
Payments for intangible assets of $5.5m
comprise the capitalisation of Novacq™
development costs, contractual legal
rights acquired, plus software.
Maintenance capital expenditure of
$13.3m was below the $16.6m aggregate
charge for depreciation and amortisation
on property, plant and equipment. Ridley
has invested a further $55.0m in the two
new plants at Westbury, Tasmania, and
Wellsford, central Victoria.
Dividends paid for the year of $11.7m
comprise the 2018 final dividend of
2.75 cents per share paid fully in cash
on 31 October 2018, plus the interim FY19
dividend of 1.5 cents per share paid on
10 May 2019, of which $1.35m was settled
through the take up of DRP entitlements by
existing shareholders. The $3.3m balance
of the FY19 interim dividend was settled
in cash, but effectively fully reimbursed
through the issue of 3,439,150 new shares
under the fully underwritten DRP, less
the underwriting and transaction
costs incurred.
Proceeds from the disposal of fixed assets
of $5.0m comprise the Lots A, B and C
properties sold during the current and
prior year at Lara, with further gross
consideration of $3.85m receivable by
30 June 2020, $3.85m by 30 June 2021,
and $1.3m by 30 June 2022.
Net tax payments of $1.7m were made
during the year and a further $2.0m
is payable in respect of the outstanding
income tax liability for the 2019
financial year.
Table 4 – Statement of cash flows in $ million
Cash flows for the year ended
EBIT from operations before non-recurring costs
Depreciation and amortisation
EBITDA before non-recurring items
EBITDA from non-recurring items
EBITDA after non-recurring items
Add back non-cash write off of Huon inventory legacy
(Increase)/decrease in working capital
Maintenance capital expenditure
Operating cash flow after working capital and maintenance
Development capital expenditure
Payment for intangibles
Dividends paid
Issue of share capital under Dividend Reinvestment Plan
Share-based payments
Proceeds from sale of property assets and associate
Payment for other investment
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
30 June 2019
30 June 2018
35.4
18.9
54.3
-
54.3
-
(7.3)
(13.3)
33.7
(60.0)
(5.5)
(11.7)
3.1
(2.4)
5.0
-
(5.7)
(1.7)
(3.4)
(48.6)
(52.8)
(101.4)
38.0
17.3
55.3
(11.6)
43.7
8.4
6.9
(15.1)
43.9
(21.1)
(4.3)
(12.9)
-
(4.2)
7.2
(1.8)
(4.6)
(5.9)
2.5
(1.2)
(51.6)
(52.8)
The cash flow summary with a prior period comparison provided in Table 4 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 4 is useful for users as it
reflects the underlying cash flows of the business.
21
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Financial Review continued
Earnings per share
Basic earnings per share – continuing
Basic earnings per share
Diluted earnings per share – continuing
Diluted earnings per share
Gearing and financing facility
2019
7.6c
7.6c
7.6c
7.6c
2018
5.7c
5.7c
5.6c
5.6c
Ridley’s consolidated banking facility was refinanced on 27 May 2019 for a further five
years. As part of the refinancing, the total borrowing facility was increased from $160m
to $210m, the trade payables facility of $50m was retained, and certain banking covenant
requirements were relaxed to accommodate the funding requirements for the new plants
at Westbury and Wellsford and the expansion of Novacq™ production capacity in Thailand.
Gearing is reported as net debt to equity in accordance with the covenants of the banking
facility and excludes the draw down against the trade payables facility.
Gearing
Gross debt
Less: cash
Net debt
Total equity
Gearing ratio
2019
$’000
118,926
(17,483)
101,443
277,499
36.6%
2018
$’000
76,222
(23,441)
52,781
263,107
20.1%
Capital movements
During FY19, a total of 2,092,935 (FY18: 3,116,507) shares were acquired by the Company
on market for an outlay of $2.8m (FY18: $4.2m) in satisfaction of:
(i)
the issue of 1,384,802 (FY18: 2,430,232) shares allocated to Ridley employees under
the Ridley Long Term Incentive Plan, with a further 24,123 share entitlements satisfied
by payment in cash; and
(ii) 708,133 (FY18: 686,725) shares allocated under the Ridley Employee Share Scheme.
A fully underwritten Dividend Reinvestment Plan (DRP) was introduced for the 2019
interim dividend under which 896,926 fully paid ordinary shares were issued to existing
shareholders plus 2,542,224 fully paid ordinary shares to institutional and sophisticated
investors at an issue price of $1.33 per share.
22
Ridley Corporation Limited Annual Report 2019 FINANCIAL
REVIEW
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 (CODM).
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 CODM 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 reported to the CODM
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 in recent years reported
two 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
Property
of premium quality,
high-performance animal
nutrition solutions.
Realisation of opportunities
in respect of surplus
property assets and sales of
residual property site assets.
Following the recent property sales at Lara
in FY18 and FY19, the residual sites are now
only the former saltfield at Moolap and a
single residual lot, Lot D at Lara, for which
the option to purchase has been extended
for a further year to 2 July 2020. In light
of the lack of commercial activity at
Moolap, low cost base and low property
holding costs, from 1 July 2019 the
reporting of a Property segment will
cease and its activities will be reported
through Corporate.
Following the substantial exit of the
Group’s surplus land portfolio, and with
the imminent appointment of a new
Chief Executive Officer (the Group’s Chief
Operating Decision Maker), the Group
is currently reviewing the business
operations identified as reportable
segments. Any changes will be reflected
in the interim Financial Report for the
period ending 31 December 2019.
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, Aquafeed,
Beef and Sheep, Packaged Products
and Rendering) some of which have
a positive or negative correlation with
each other, Ridley is not dependent
upon a single business sector and is
able to spread the sector and adverse
event risk across a diversified portfolio.
• Influence of the domestic grain
harvest – through properly managed
procurement practices and many of
our customers retaining responsibility for
the supply of raw materials for the feed
Ridley manufactures on their behalf, 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, Pig and Aquafeed.
• Impact on domestic and export
markets in the event of disease
outbreak – Ridley has a strategy of
mill segregation in place to effectively
manage its own risk of product
contamination across the various
species sectors. Ridley also has 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 the 2016
outbreak of White Spot disease (White
Spot Syndrome Virus or WSSV) in the
Logan River region of Queensland,
which devastated a number of affected
farms in the region.
• 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 a degree of
confidence in order to plan appropriate
shift structures, procurement and supply
chain activities in the short term and
capital expenditure programs in the long
term, while actively managing the risk
of stranded assets and backward
integration into feed production by
significant customers. The ongoing
commercial viability of key customers
and suppliers is generally beyond the
control of Ridley, as evidenced by the
FY18 appointment of an administrator to
the Red Lea poultry producer, which was
a major supplier of poultry raw material
to Rendering Maroota. The potential for
disputes to arise with customers over
animal performance linked to feed is
a significant risk.
• Corporate – risks such as safety,
recruitment and retention of high calibre
employees, inadequate innovation and
new product development, customer
credit risk, climate risk, interest rate,
foreign exchange and inappropriate
raw material purchases are all managed
through the Company’s risk management
framework, which includes review and
monitoring by the executive lead team
and testing by the internal audit function
and external audit.
Alan Boyd
Chief Financial Officer
and Company Secretary
23
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESSAFETY, PEOPLE, INNOVATION & COMMUNITYBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Safety, People, Innovation and Community
“In FY19, we were delighted to expand the breadth
of our employee diversity with the addition of two
new production teams in Tasmania (Westbury)
and Thailand (Chanthaburi).”
Michael Murphy
General Manager Safety,
People and Technical
Development
Safety
LTIFR and TRFR history and trend
FY19 has been another significant year
of progress for Health & Safety at Ridley,
which aligns with our number one value
and priority of ensuring the safety and
wellbeing of our people and visitors
on site at all times.
From the perspective of our core KPIs of
Lost Time Injury Frequency Rate (LTIFR)
and Total Recordable Frequency Rate
(TRFR), we are pleased to report a record
low TRFR of 5.6, which was largely driven
by a record low number of Medically
Treated Injuries (MTIs) of just three
during the year, down from greater
than 10 in prior years.
This record low number of MTIs represents
the results of a dedicated strategy which
we commenced last year in the Health
& Safety team, working closely with
colleagues across all of our operating
sites. At Ridley, we recognise the value
of our data, and our strategy began with
an observation that many of our MTIs
were the result of cuts to fingers, hands
and wrists.
With the benefit of this data, we undertook
a comprehensive risk assessment program
across the business focused on risks to
hands. From this program we quickly
identified that in many instances, the
gloves being worn by our operators were
not best suited to the task being
24
14
12
10
8
6
4
2
0
4
1
l
u
J
4
1
t
c
O
5
1
n
a
J
5
1
r
p
A
5
1
l
u
J
5
1
t
c
O
6
1
n
a
J
6
1
r
p
A
6
1
l
u
J
6
1
t
c
O
7
1
n
a
J
7
1
r
p
A
7
1
l
u
J
7
1
t
c
O
8
1
n
a
J
8
1
r
p
A
8
1
l
u
J
8
1
t
c
O
9
1
n
a
J
9
1
r
p
A
LTIFR
TRFR
Linear (LTIFR)
Linear (TRFR)
LTIFR = Lost Time Injuries expressed as a ratio of hours worked
TRFR = aggregate of Lost Time Injuries + Medically Treated Injuries expressed
as a ratio of hours worked
undertaken. Consequently, we launched
a dedicated ‘Safe Hands’ program across
Ridley, which saw us roll out a new, wider
range of latest technology, cut-resistant
gloves, together with an education program
for our operators, and changes to the
relevant Standard Operating Procedures.
The feedback from the Safe Hands
program has been excellent, with workers
reporting a more comfortable fit from
the new gloves, plus of course the all
important reduction in actual injuries.
In addition to physical education programs
of this nature, we also recognise that good
Health & Safety practice starts with a
positive attitude to your own safety and
that of your colleagues. In this context,
we continued with our behavioural
program called ‘My Personal Big 5’,
which invites staff to write down the
five reasons why they come to work.
These reasons are then captured and
displayed in a dedicated template to serve
as an ongoing visual reminder of the
importance of remaining safe and vigilant
whilst going about our business.
Ridley Corporation Limited Annual Report 2019
SAFETY, PEOPLE,
INNOVATION &
COMMUNITY
The final major safety related achievement
in FY19 was yet another record number
of Hazard Identification logs. At Ridley, we
recognise the strong correlation between
elevated hazard reporting activity and
decrease in injuries and, in this context,
we were delighted to see a total of 4,643
logs in FY19, compared with 2,954 in FY18,
an increase of 57%.
The reporting and rectification of hazards
that have the potential to cause injury is
a positive and proactive behaviour in a
program of continuous improvement to
lower the risk and incidence of personal
injury at the Ridley workplaces, not only
in Australia, but also at our operations
in Thailand, where the introduction of
workplace safety has been well received.
A graphical representation of safety
performance in recent years is provided
on the previous page.
People
Like Safety, ‘People’ are one of our
six official strategic platforms, and thus
represent a fundamental asset and focus
for the ongoing health and success of
our business.
At Ridley, we have always enjoyed the
benefit of a truly diverse workforce, both
in a geographical sense across the full
length of the eastern Australian seaboard,
plus in the sense of skills and experience,
which naturally includes expertise in
animal nutrition and welfare, but also
encompasses specialised skills in
manufacturing, technology, supply
chain, corporate services and sales.
In FY19, we were delighted to expand the
breadth of this diversity with the addition
of two new teams in Tasmania (Westbury)
and Thailand (Chanthaburi).
Whilst the new extrusion plant at Westbury
was officially opened on 24 July 2019, the
new team comprising 18 new hires or
relocations were all recruited and trained
in FY19 prior to the official opening. In
particular, the new team really appreciated
the welcome and instruction from their
colleagues over a two-week period at
our existing extrusion plant in Narangba,
Brisbane, which was a great example of
collaboration across our business. The two
sites will operate in tandem in accordance
with the twin production site strategy
adopted in 2017, execution of which
commenced in FY17 with the start of
construction of the new plant at Westbury
and the disposal of the 25% interest in the
extrusion plant at Inverell.
Ceremonial opening of the day
The actual planting
Ridley’s Dr Matt Briggs with officials
Ridley clean-up station
25
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
Safety, People, Innovation and Community continued
Diversity
At Ridley, in addition to the important
commercial and operational role that
we play in the Australian food and supply
chain, we also take great pride in the fact
that we are a truly diverse organisation,
providing employment to 700 people from
a wide range of backgrounds, beliefs and
personal experiences.
Our Diversity Policy and commitment to
non-discrimination on grounds of gender,
age, ethnicity, sexuality, cultural beliefs or
other personal circumstances is an active
and core part of how we recruit our
people. A copy of our Diversity Policy
is provided below.
Diversity at Ridley
To achieve the objective of creating
a culture that is flexible, inclusive and
supportive, each manager employed
at Ridley is expected to take responsibility
for the following, where:
1.
2.
3.
4.
all employees are treated fairly and
with respect and dignity;
the ability to contribute and access
career development opportunities
is based solely on merit;
individual differences are embraced
in the workplace;
the workplace is free from
discriminatory behaviours and
practices;
5. equitable frameworks and policies,
practices and processes limit the
potential for bias;
6. equal employment opportunities exist
based on capability and performance;
7.
8.
there is awareness of the different
needs and circumstances
of employees;
there is provision for flexible working
practices and policies to support
employees; and
9. where a diverse range of talented
people can be attracted and retained.
To achieve a diverse and inclusive working
environment, Ridley will provide equal
opportunity in respect of employment and
employment conditions, and specifically
with regard to the following:
1. Recruitment, selection
and promotion
Equal opportunity forms an integral part
of the Recruitment and Selection Policy,
and at Ridley we recognise the value
of recruiting and promoting employees
with different backgrounds, knowledge
and experiences. This principle also
applies to the selection of contractors.
All recruitment and selection
documentation, procedures and practices
will be non-discriminatory, and Ridley
undertakes to recruit employees and
Directors impartially and from a diverse
field of suitably qualified candidates.
The recruitment process will focus on
predetermined criteria designed to ensure
that the most appropriate candidate is
selected for each position, recognising
the importance of the inherent value that
diverse perspectives, experiences and
approaches can bring to the business
as a whole.
Documentation, including job descriptions,
job advertisements, application forms
and contracts, will include no direct or
indirect discrimination.
Company procedures, including interviews,
reference checking and testing, will be
undertaken in such a way so as to ensure
the absence of discriminatory practices.
2. Talent and succession planning
Employees throughout Ridley are
encouraged to continually develop and
progress their skills and capability through
involvement in formal training programs
and other work experience opportunities
that may become available within the
organisation.
Ridley will undertake a review of
high-potential and high-performance
employees on an annual basis. This review
will be based on the performance of the
individual and identifying their potential
for further career development.
A formal performance review will also be
undertaken at least annually between each
employee and their manager to review
past performance, identify further training
and development needs and set new
performance targets for the year.
In Thailand, our Novacq™ journey also
took a significant step forward with the
recruitment of a new team of 10 Thai
nationals to start the production of
Novacq™ in Thailand. This team is the
first Ridley team ever to be established
outside Australia, and therefore represents
a genuine milestone for the whole Ridley
business, not just Novacq™.
In addition to learning how to grow
Novacq™, the Thai team has also done
a great job in reaching out to the local
community to ensure that they are fully
informed about who Ridley is, what we
are doing in their region, and how we
can benefit their local community. This
communication and consultation exercise
has seen our local staff participate in
a number of local community and
environment initiatives, which have
all been well received. One of these
community engagements was our
participation in a local mangrove planting
day, during which our staff provided
assistance in the actual planting of
new mangrove plants and in providing
a relief station to assist with the clean-up
exercise at the end of the day.
The photos on the previous page show
the scale of activity of the day and its
ceremonial importance for everyone
concerned, with officials from Bangkok
joining the local dignitaries.
Outside of our new teams, it was very
pleasing to see Ridley’s commitment to
excellence in animal nutrition recognised
with external awards for two of our
long-serving staff. Dr Richard Smullen
was recently honoured with a Lifetime
Achievement Award by the Australian
Prawn Farmers’ Association, recognising
Richard’s innovative and outstanding
contribution to prawn nutrition in
Australia over the last 15 years.
Ridley’s Dr Louise Edwards’ pioneering
work in antimicrobial resistance in the
sphere of animal feed was also recognised
with her nomination to the Writing and
Implementation Group for the Department
of Agriculture and Water Resources’
Animal Sector National Antimicrobial
Resistance Plan.
Our commitment to diversity is reflected
in the inclusion in this Annual Report of
a dedicated diversity report, which is
provided below.
26
Ridley Corporation Limited Annual Report 2019 The outcome of these reviews will be used
to develop/refine the Ridley Learning and
Development Strategy, ensuring that all
training is aligned to diversity and equal
opportunity principles.
In considering individual needs, Ridley
appreciates that it may be appropriate
to develop or implement more targeted
practices relating to skills development
in order to promote a diverse workplace
at all levels of the organisation.
3. Career development
Ridley actively encourages employees
to develop their careers through
opportunities that build capability
and by providing relevant experience
to individual employees.
At Ridley, all available opportunities for
internal promotion will be advertised
to all employees to enable individuals
to apply for roles to develop their career
paths. Employees are assessed for
suitability for the role based on their
capability and performance within
the organisation.
4. Flexibility
Ridley will actively work with individual
employees to provide flexible work
arrangements, particularly employees
with parenting, disability, family and
carer commitments.
These arrangements will be assessed
based on business requirements to ensure
that job or business performance is not
compromised as a result of the flexible
work practice.
The flexible work practices that Ridley
may implement include working from
home, reduced hours from full time
to part time for women returning to
the workforce from maternity leave,
and in unforeseen circumstances where
an employee is required to care for
a dependant on a temporary basis.
SAFETY, PEOPLE,
INNOVATION &
COMMUNITY
5. Gender diversity
Technical development
Gender equality is a key element for
ensuring that Ridley creates a flexible,
inclusive and supportive environment.
Through the implementation of this
policy, Ridley embraces diversity when
determining the composition and
further development of employees,
senior management and the Board.
6. Employee consultation
Ridley will conduct an employee opinion
survey every two years to gain employee
feedback on a range of cultural factors.
All employees will be invited to participate
on an anonymous basis.
In addition, as a key tool in measuring
and understanding the breadth and
diversity of its employees’ backgrounds
and experiences, Ridley conducts an
Employee Opinion Survey every two years
to generate feedback and improvement
opportunities from its employees.
Finally, as part of its annual reporting
requirements, Ridley is dedicated to
publishing the following data by way
of providing transparency on its
commitment to being a diverse and
inclusive organisation.
Technical development consists of our
activities in research and development
(R&D), innovations in our product portfolio
and operations, plus the maintenance
and improvement of our Information
Technology (IT) environment.
With respect to R&D, the success of our
Novacq™ technology has given impetus
to a suite of other exciting initiatives in the
dietary and ingredients fields. These are
all at an earlier stage in their development,
and consist of a range of new technologies
in novel ingredients, probiotics, warm
temperature salmon diets, nano-
encapsulation, removal of medications
from feed and farm sanitation.
In seeking to exploit these opportunities,
the multidisciplinary R&D team at Ridley
continues to collaborate with the best
minds in their field and associated best in
class facilities across a number of leading
universities, together with maintaining an
active relationship with CSIRO.
Finally, FY19 was also notable in seeing
Ridley open its first R&D facility, being
a dedicated poultry trial shed on the
Mornington Peninsula in Victoria.
2019
2018
Number of
employees
Proportion
of category
Number of
employees
Proportion
of category
Female representation
Board member
Management
reports to CEO
All staff
1
2
146
20.0%
24.4%
20.9%
1
2
147
20.0%
20.0%
20.6%
Regional vs metro
Regional
Metropolitan
Age
<30
30–39
40–49
50–59
60+
Working
arrangements
Part time
Number of
employees
Proportion
of total
workforce
Number of
employees
Proportion
of total
workforce
373
325
65
154
200
183
96
53.4%
46.6%
9.3%
22.1%
28.7%
26.2%
13.8%
381
332
77
151
201
184
100
53.4%
46.6%
10.8%
21.2%
28.2%
25.8%
14.0%
32
4.6%
32
4.5%
27
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Safety, People, Innovation and Community continued
From an IT perspective, like any other
modern business, Ridley is progressing
on a strategy to migrate more of its
applications and IT environment to
the cloud, which delivers benefits in
both flexibility and availability. In this
context, FY19 saw some good progress,
particularly with our new, bespoke Incident
Management system referred to as
‘FeedTrack’, which is hosted in the cloud
and offers additional advantages such as
being able to record and upload incidents
on mobile devices. The widespread access
and user friendliness of FeedTrack has
been a key contributing factor in our
record number of safety hazards logged
in FY19 as reported above.
Notwithstanding the benefits of cloud
computing, we also recognise the
importance of developing software
and applications suited to the unique
requirements of our business. In this
context, FY19 also saw us develop in-house
two ground-breaking applications, one
being a dedicated ‘Dairy App’ for use by
our Dairy sales team on customer farms
to ensure that our feed product offering
is uniquely suited to the needs of the
customer’s herd. The second initiative
is a bespoke scheduling application in
our feedmills, which will maximise the
efficiency with which we order/store raw
materials and convert them into feed.
Community
(i) Charitable activity
Ridley is proud to support employees,
suppliers, customers and the communities
where we operate. We are entering our
seventh consecutive year of support for
the Garvan Institute and Aussie Helpers,
where the focus is on providing assistance
to rural Australia.
The Healthy Families, Healthy Communities
program supported by Ridley continues to
advocate the importance of medical
research to rural and regional Australia,
sharing important health messages with
rural and regional Australia and conveying
messages supporting healthy living and
risk mitigation.
The Ridley Ken Davies Award, which
honours a former colleague, continues as
an annual award presented to a Garvan
Institute researcher with a $75,000 prize
as part of the Healthy Families, Healthy
Communities program. Ridley has a
Workplace Giving program to assist
with ongoing support for the Ridley
Ken Davies Award.
28
With much of Australia formally declared as
100% in drought, the work of organisations
like Aussie Helpers has never been more
important in helping to support our
nation’s farming families. Ridley has
been supporting Aussie Helpers not
only encouraging financial support for
struggling farmers, but also in respect
of donations of food, stock feed, time
and most importantly emotional support.
Aussie Helpers has helped thousands
of farmers who have been affected by fire,
flood, drought and rising costs of living.
Each year Ridley donates cash and many
tonnes of animal feed directly to Aussie
Helpers. Ridley also works with Aussie
Helpers to donate old laptops and office
supplies that are of great value to farmers,
particularly those in remote regional areas.
For anyone wishing to support Aussie
Helpers to help the heart of our country,
it can be contacted via telephone on
1300 665 232 or through its website
at www.aussiehelpers.org.au.
(ii) Equine
One of the most exciting outcomes in FY19
has been the resurgence in the growth of
our Equine business. A refreshed strategy
has supported strong development in our
existing sectors, the launch into racing
with a new concentrated performance
feed, as well as establishing a partnership
with British Horse Feeds to exclusively
distribute Speedi-Beet and Fibre-Beet
across Australia and New Zealand.
(a) Digital transformation project
A ‘new and improved’ Barastoc Horse
website, with an updated interface, striking
imagery and easy to use tools to help
users find the right product, has been
launched in FY19. Built on a platform that
will allow us to personalise our marketing
communications with our Equine
consumers in the future, it brings new
functionality as well as incorporating some
of the wonderful tools already developed.
(b) Barastoc 50th Horse of the Year
The 50th Barastoc Horse of the Year
Show was held from 8–10 February at
the Werribee Equestrian Centre west
of Melbourne. The show attracted well
over 1,000 entries from competitors
in Equestrian Victoria events, as well
as breed societies and the Horse Riding
Club Association of Victoria.
An afternoon tea was held on the Saturday
afternoon of the event to celebrate past
and present champions, and importantly
to acknowledge the efforts of committee
members, some of whom were in
attendance who had worked on the very
first show held in 1970. The Equine portfolio
is growing in both retail and on farm, with
further growth anticipated to come from
the newly targeted racing industry. Events
such as Horse of the Year are an integral
part of the Equine marketing mix, as they
provide the opportunity to communicate
directly with the consumer market and
bolster loyalty from the equine community.
Ridley Corporation Limited Annual Report 2019
SAFETY, PEOPLE,
INNOVATION &
COMMUNITY
The program is airing on the main Seven
Network channel and will feature Ridley’s
horse nutritionist expert David Nash
consulting on nutrition and assisting
in the training of some of the horses.
(e) Speedi-Beet and Fibre-Beet
During the year, Ridley established a
partnership with British Horse Feeds to
distribute Speedi-Beet and Fibre-Beet
across Australia and New Zealand. British
Horse Feeds is the equine feed division
of I’Anson Brothers Ltd., which is a fifth
generation family owned business that
has been operating in North Yorkshire,
England, since 1900. The products are
ideal fibre sources for horses and ponies,
and those that are prone to Laminitis and
EGUS (Equine Gastric Ulcer Syndrome).
All of the Equine initiatives have combined
to deliver greater than 16% year on year
volume growth with lots of momentum
moving into FY20.
(iii) Packaged Products
(a) Supplier of the Year
In February, 2019 Ridley’s Packaged
Products team was recognised by one
of its largest customers, Ruralco/CRT,
as their Supplier of the Year – Animal
Nutrition. This award was based on sales
support, product quality, customer service,
innovation, marketing and supply chain,
and was great recognition of the team’s
effort in striving to be a value-adding
business partner to our customer base.
The team is confident that the new
customer engagement model will continue
to resonate with our partners, and provide
a platform for ongoing growth and
business development discussions.
Following the success of the show, at the
2019 Equestrian Victoria Awards, the 50th
Barastoc Horse of the Year won the Event
of the Year.
Details can be found at
www.barastochorse.com.au.
(c) New horse feed
A new equine feed called Barastoc Low
Cal Cruiser was launched in FY19 through
an exclusive arrangement with customer
AIRR. Manufactured at Ridley’s Pakenham
Ruminant feedmill, Barastoc Low Cal
Cruiser provides a low calorie, nutritionally
balanced feed for horses and ponies
resting or in light work. Containing
Barastoc Superfibres™, it is made from
all natural ingredients such as beet pulp or
soybean hulls that have been shown to be
more digestible than hay, possess superior
fermentation characteristics, and are an
excellent source of digestible energy.
The low starch formula is suitable for
horses and ponies that cannot tolerate
high grain diets, and it is pelleted to ensure
that horses or ponies receive the right
balance of nutrients in every mouthful.
(d) JUMPOFF
In FY19, Barastoc sponsored a new
reality TV show about ex-racehorses
called JUMPOFF. The show followed five
well known horse racing trainers who
worked in tandem with some of the
country’s best show jumping riders to
retrain former racehorses into show
jumping champions. The five teams
‘jumped off’ for a $100,000 prize pool in
the finale, Australia’s richest show jumping
purse, in front of a live audience at Boneo
Park Equestrian Centre on the Mornington
Peninsula in southern Victoria. Throughout
the series, Barastoc was the proud sponsor
of Olympic show jumper Russell Johnstone.
(b) Golden Yolk
In FY19, the addition of Poultry Star, a
globally proven probiotic that supports
healthy gut flora and overall wellbeing
for laying hens, into Barastoc Golden Yolk
demonstrated Ridley’s category leadership
with new innovative products.
AUSTRALIA’S FAVOURITE
EVERYDAY LAYER PELLET
just got better again
NEW AND
IMPROVED
DESIGNED
SPECIFICALLY
FOR POULTRY
PROVEN TO BUILD
AND MAINTAIN A
HEALTHY GUT FLORA
Now with PoultryStar® a blend of probiotics and prebiotics that
protect your laying hens from harmful bacteria in their environment.
Because a healthy and happy laying hen is a productive one.
we put the chicken before the egg
The changes will continue to position
Barastoc Golden Yolk as the best everyday
layer pellet in the market and will be
supported by ongoing campaigns
over the coming year.
29
RID20898INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Safety, People, Innovation and Community continued
We are exceptionally pleased with how
the campaign raises awareness and
positions Cobber as the brand of choice
for Australian farmers and their working
dogs. Details can be found on the website
www.cobberchallenge.com.au.
(c) Cobber Challenge
The third annual Cobber Challenge was
launched in August 2018, and the fourth
Cobber Challenge was run from 12 August
2019. The Cobber Challenge is designed to
showcase the unsung heroes of Australian
farms, our working dogs and their owners.
The Cobber Challenge is run as a three-
week competition during which the
competing dogs wear GPS collars that
provide live data on their movements, with
points accrued for speed, duration and
distance. The dog that has the most points
at the close of the campaign is declared
the winner of the coveted Cobber
Challenge trophy. The Challenge provides
an opportunity to show the important role
that nutrition plays in enabling working
dogs to perform day in and day out.
Sustainability
In addition to generating returns for its
shareholders, Ridley also understands
the importance of its responsibilities from
a social and environmental perspective.
We remain committed to initiatives such as
the Australian Packaging Covenant (APC),
which is a sustainable packaging initiative
aiming to change business culture to
design more sustainable packaging,
increase recycling rates and reduce
packaging litter.
Ridley’s employee-led Sustainability
Working Group (SWG), which was
voluntarily established to increase and
maintain awareness of the importance
of the environment and sustainability
throughout the Ridley Group, continues
to promote awareness of environmental
responsibility into daily business activities.
Comprising an employee group across a
range of roles, departments and locations,
the SWG recognises that significant steps
forward in sustainability often start with
small changes across multiple sites and
locations, and while the tangible changes
may appear to be somewhat small in the
context of Ridley’s two million tonnes of
production, they are helping to improve
awareness and ultimately change
behaviour and culture.
2019 Cobber Challenge
2018 Cobber Challenge winner Boof
from Victoria
30
BARRACK FOR YOUR STATE CHALLENGER!VISIT COBBERCHALLENGE.COM.AU@COBBER.CHALLENGE@COBBERDOG• Showcasing Our Aussie Farm Heroes •WE’RE ON YOUR TEAMAUGUST 12 – SEPTEMBER 1DOGS TRACKED VIA GPS COLLARSLIVE DATA DAILY OVER 3 WEEKSSPEED, DURATION & DISTANCE POINTSMOST POINTS WINS!RID21134RID21134_Cobber_Challenge_2019_Promo_Poster_A4_FA.indd 15/7/19 2:45 pmWORKING DOGTHE FUEL OF CHAMPIONSPERFECTLY BALANCED TO MAXIMISE THE PERFORMANCE OF YOUR WORKING DOG TEAM22% PROTEIN + 15% FATRID21134Maximum stamina and mental alertness.Better digestion and nutrient absorption.Protection against oxidative damage.Clean and strong teeth.RID21134_Cobber_Challenge_2019_Fuel_Poster_A4_FA.indd 15/7/19 3:11 pmFor more information on our products, call: 1300 666 657 • visit: www.cobberdogs.com.au • email: enquiries@ridley.com.auWE’RE ON YOUR TEAMfacebook.com/cobberdogRID20921There’s no question your working dogs go the extra mile for you. In an average day, they can run further and work harder than an elite athlete, managing hundreds of livestock over all kinds of terrain, whatever the weather. It’s important to make sure your dogs are getting everything they need in their diet to stay in peak condition. Gut health is a significant part of looking after your working dogs properly. Maintaining the right balance of beneficial bacteria, prebiotics and antioxidants will help to ensure healthy digestive function, so they’re getting the most out of their food and performing at their best. Importantly, good gut health is also critical to supporting your dogs’ immune system, energy levels, recovery, appearance and overall wellbeing. That’s why we’re improving our Cobber Working Dog feed with Diamond V Original XPC. This unique gut health supplement has been formulated in line with over 70 years of research by Diamond V, world leaders in all-natural fermentation products for pets and livestock. It includes unique metabolites (proteins, peptides, antioxidants, polyphenols, organic acids and nucleotides) together with beta-glucans and mannans, specifically designed to support canine health and performance.GET MORE OUT OF YOUR DOG FEED – AND YOUR DOGS.Together with Cobber Working Dog’s proven balance of protein, fats, complex carbohydrates and essential nutrients, our new formulation offers your dogs all the benefits of good gut health:Better absorption of nutrientsPrebiotics in Diamond V Original XPC promote a healthy digestive tract with a balance of beneficial bacteria.More energy and faster recovery The supplement has been scientifically proven to support fat and protein digestibility, increasing energy and helping your dogs get back to work quicker. Stronger immune functionDiamond V Original XPC’s unique metabolites balance gut bacteria to support the immune system and optimise gut morphology.Reduced inflammationBy reducing levels of pro-inflammatory markers and protecting against oxidative damage, Diamond V Original XPC reduces inflammation within the body.The new Cobber Working Dog with Diamond V Original XPC has a rounder, chunkier kibble shape and the same delicious taste – your dogs will clean the bowl every time. It’s also been specially formulated to offer optimal benefits at regular feeding levels, so you can just keep feeding your dogs as you normally would. RID20921_Cobber_WorkingDog_Advertorial_A4_FA.indd 115/5/19 11:25 amRidley Corporation Limited Annual Report 2019 SAFETY, PEOPLE,
INNOVATION &
COMMUNITY
31
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Board of Directors
Dr Gary H Weiss AM
LLB (Hons) LLM (NZ) JSD (Cornell, NY)
David Lord
MBA (Executive) MBS, Grad. Dip. Bus
(Management) (Monash) MAICD
Patria M Mann
BEc FAICD
Independent Non-Executive Director
Independent Non-Executive Director
Appointed in March 2008, Mrs Mann is
currently a Non-Executive Director of Event
Hospitality & Entertainment Limited and
Allianz Australia Limited. Formerly a partner
at KPMG and an experienced director,
Patria brings strong audit, investigation,
risk management and governance
experience to the Board. Patria qualified
as a Chartered Accountant and is a Fellow
of the Institute of Company Directors.
Other current listed company
directorships
Event Hospitality & Entertainment Limited
from October 2013.
Bega Cheese Limited from 10 September
2019.
Former listed company directorships
in the last three years
Bellamy’s Australia Limited from
10 March 2016 to 18 May 2017.
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 & 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.
From 28 June 2019 to 26 August 2019,
David was appointed to the executive
position of Interim CEO for the Ridley
consolidated group while it conducted
its CEO search.
Other current listed company
directorships
None.
Former listed company directorships
in the last three years
None.
Independent Non-Executive
Director and Chair
Appointed in June 2010, Dr Weiss is an
Executive Director of Ariadne Australia Ltd
and a former executive director with
Guinness Peat Group plc (now Coats plc).
Gary has LL.B (Hons) and LLM (Dist.)
degrees from Victoria University of
Wellington, New Zealand, and a JSD from
Cornell University, New York. Gary has
extensive experience in international
capital markets and is a Director of a
number of public and private companies.
Gary was appointed Ridley Chair on
1 July 2015. In June 2019, Gary was
appointed as a Member of the
Order of Australia.
Other current listed company
directorships
Ariadne Australia Limited from 1989.
Thorney Opportunities Limited from 2013.
The Straits Trading Company Limited
from 2014.
Estia Health Ltd from 24 February 2016.
Ardent Leisure Limited from
3 September 2017.
Former listed company directorships
in the last three years
Tag Pacific Limited from 1988 until
31 August 2017.
Pro-Pac Packaging Limited from 2012
until November 2017.
Premier Investments Limited from 1994
until July 2018.
32
Ridley Corporation Limited Annual Report 2019 BOARD OF
DIRECTORS
Professor Robert J van Barneveld
B.Agr.Sc. (Hon), PhD, R.An.Nutr., FAICD
Ejnar Knudsen
CFA
Independent Non-Executive Director
Appointed in June 2010, 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. 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. Rob also
serves on the Board of the Australasian
Pork Research Institute Ltd and is
Chairman of Autism CRC 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 and AGR Partners, LLC.
Appointed in June 2013, Mr Knudsen is the
CEO of AGR Partners, LLC, an associated
entity of Ridley’s largest shareholder, AGR
Agricultural Investments 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
California grain and feed milling company
that grew to over $1 billion in sales. Ejnar
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.
33
INTRODUCTIONRidley Corporation Limited Annual Report 2019LOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWSAFETY, PEOPLE, INNOVATION & COMMUNITYFINANCIAL REPORTCORPORATE DIRECTORY
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
45
54
55
56
57
58
59
60
93
94
Ridley Corporation Limited
34
Annual Report 2019
Directors’ Report
For the Year Ended 30 June 2019
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 (FY) ended
30 June 2019.
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:
G H Weiss
D J Lord
E Knudsen
R J van Barneveld
P M Mann
Mr T J Hart was Chief Executive Officer and Managing Director from 1 July 2013 to 27 June 2019.
Mr D J Lord was appointed Interim CEO from 28 June 2019 to 26 August 2019.
Following the departure of the CEO and Managing Director in late June 2019, the Company embarked on a search program to identify
and secure a new CEO. The Board leveraged its extensive network of industry and professional relationships to identify any potential
candidates and then conducted an independent evaluation process of a shortlist of both external and internal candidates. As announced
through the ASX Announcements Platform on 19 August 2019, the Board has appointed Mr Quinton Hildebrand as its new Chief
Executive Officer and Managing Director effective from 26 August 2019. The Board regards Mr Hildebrand as the ideal person to refocus
Ridley on its domestic growth plans, leverage the investment in its state of the art facilities, and accelerate the commercialisation
of its NovacqTM franchise internationally. Having managed the transition to new leadership with the appreciation of the Board and
management, Mr David Lord steps down from his role as Interim CEO and resumes his former duties as a Ridley non-executive director
and Chair of the Ridley Remuneration and Nominations Committee.
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
For statutory reporting purposes, the Consolidated Profit and Loss (Table 1) reports profit from continuing operations after income tax
for the year of $23.56 million (m) and a pre-tax profit from continuing operations of $30.34m.
Table 1
Profit from continuing operations before income tax
Income tax expense
Profit from continuing operations after income tax
Other comprehensive income, net of income tax
Total comprehensive income for the year
2019
$’000
30,339
(6,774)
23,565
(403)
23,162
2018
$’000
21,719
(4,310)
17,409
520
17,929
Sales revenue for FY19 of $1,002.6m was up $84.9m (9.2%) on last year’s $917.7m, and reflects 1.89m (2018: 2.05m) tonnes of stock feed
and rendered product sold. The increase in sales revenue is largely a reflection of the pass through of high raw material grain prices
experienced throughout the financial year despite a reduction in overall sales volumes.
35
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
Directors’ Report continued
For the Year Ended 30 June 2019
4. Review of operations
Operating result
Table 2 – Profit and loss account in $ million
Earnings from operations before net interest, tax expense, depreciation
and amortisation (EBITDA) before non-recurring items:
Depreciation and amortisation (DA)
Ridley operations
Corporate costs
Property net profit
EBIT before non-recurring costs
Net finance costs
Income tax expense – continuing
Net profit from continuing operations after tax before non-recurring items
Other non-recurring items before tax
Tax on other non-recurring items
Reported net profit
Other comprehensive income, net of tax
Total comprehensive income for the year
2019
2018
Movement
54.3
(18.9)
40.5
(11.3)
6.2
35.4
(5.0)
(6.8)
23.6
-
-
23.6
(0.4)
23.2
55.3
(17.3)
43.3
(9.5)
4.2
38.0
(4.6)
(7.8)
25.6
(11.6)
3.4
17.4
0.5
17.9
(1.0)
(1.6)
(2.8)
(1.8)
2.0
(2.6)
(0.4)
1.0
(2.0)
11.6
(3.4)
6.2
(0.9)
5.3
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.
The reported Ridley operations EBIT of $40.5m (Table 2) is $2.8m below last year’s $43.3m before non-recurring items, largely as a result
of lower poultry tonnes arising from a combination of the drop in finisher feed attributable to shorter bird life throughout the industry,
improved feed conversion ratios for customers on Ridley diets, and the non-renewal of the Ingham’s supply agreement, which expired
in October 2018.
The absence of the former Red Lea poultry raw material supply at Maroota and the first year of commercialisation of Novacq™ at Yamba
have also impacted the FY19 operating result. Positive year on year earnings improvements have been recorded in Dairy, Beef and Sheep,
Laverton Rendering, Supplements and Packaged Products, while high energy costs continue to challenge the business.
Corporate costs have been contained to be consistent with prior years after allowing for c.$2.0m for the combined termination costs
associated with the departure of the CEO and Managing Director as announced on 28 June 2019 and for legal costs incurred and
expensed in respect of defending the Baiada legal claim.
Net finance costs for the year of $5.0m reflect interest on higher levels of bank debt than last year incurred to finance the construction of
the new extrusion plant at Westbury in Tasmania, and 350,000 tonne capacity feedmill at Wellsford, Bendigo. This incremental cost has
been partially offset by interest revenue of $0.8m recorded on the unwinding of the discount on the deferred consideration payable in
respect of current and prior year Lara land sales.
The $6.8m income tax expense and 22.3% effective tax rate for FY19 include the application of $4.5m of capital losses against the July
2018 Lara Lots A and C property sales, a $0.2m overprovision in the prior year, and the tax benefit from the sustained levels of research
and development (R&D) activity across the business.
There are no non-recurring items reported in FY19 and there have been no negative impacts on the FY19 operating result associated with
the disposal of the Huon legacy inventory, which was written down to a nil carrying value last year.
A post-tax mark to market other comprehensive income reversal of $0.4m has been recorded in respect of the investment in a UK-listed
specialist ingredients business, which was written up by $0.5m in the prior year.
The $6.2m net profit recorded for the Property segment in Table 2 above reflects the sale of Lots A and C at Lara in July 2018 for total
proceeds of $9.5m. The 12-month option agreement for a land-based aquaculture business to acquire the only remaining Ridley
land at Lara (Lot D in Table 3) was extended for a further 12 months to 2 July 2020. Lot B was sold in June 2018.
36
Ridley Corporation Limited Annual Report 2019 Table 3 – Lara land
Balance Sheet
There have been the following movements in the Balance Sheet over the last 12 months:
(i) A $48.6m increase in net debt for the year from $52.8m to $101.4m.
(ii) A $1.1m increase in current trade receivables from $96.2m to $97.3m, which reflects the pass through of the high raw material grain
prices while debtor days remained consistently in the low 30 days range. Other receivables has increased due to a $2.0m increase
in deferred consideration relating to the July 2018 Lara Lot A and C property sales.
(iii) A $7.1m increase in inventory from $76.7m to $83.8m reflects high raw material prices for year end grain positions.
(iv) A $0.9m decrease in current assets held for sale to $0.2m following the July 2018 Lara Lots A and C property sales.
(v) A $3.1m increase in non-current receivables from $8.6m to $11.7m comprising a $2.5m increase in respect of the Lara Lots A and C
property sales deferred consideration receivable to $5.1m as at 30 June 2019, and an increase of $0.7m in the unsecured loan to
the Thailand feedmill joint venture to $6.0m at balance date.
(vi) A $56.7m increase in non-current property, plant and equipment to $259.3m, which reflects $33.8m of construction costs for the
new extrusion plant at Westbury and a further $21.2m incurred in respect of the new feedmill under construction at Wellsford,
Bendigo. There have also been several other profit improvement and capital maintenance projects conducted during the year,
notably the next stages of Novacq™ production at Chanthaburi.
(vii) A $0.5m reduction in non-current investments accounted for using the equity method to $0.7m, which comprises the carrying value of
the 49% ownership interest in the Pen Ngern Feed Mill in Thailand and reflects Ridley’s share of its operating loss for the financial year.
(viii) A $0.6m decrease in non-current available-for-sale financial assets from $2.3m to $1.7m, which reflects the mark to market
adjustment for the 1.2% equity interest investment in a UK-listed specialist ingredients business.
Dividend
The Board paid a 2018 final cash dividend of 2.75 cents per share, fully franked, on 31 October 2018 and a 2019 interim dividend
of 1.5 cents per share, fully franked, on Friday 10 May 2019. A fully underwritten Dividend Reinvestment Plan (DRP) was introduced
for the 2019 interim dividend under which 896,926 fully paid ordinary shares were issued to existing shareholders plus 2,542,224 fully
paid ordinary shares to institutional and sophisticated investors at an issue price of $1.33 per share.
After the Balance Sheet date, a 2019 final dividend of 2.75 cents per share, fully franked and payable wholly in cash on 31 October 2019
was declared by the Directors. The financial effect of this dividend has not been brought to account in the consolidated financial
statements for the year ended 30 June 2019 and will be recognised in subsequent financial reports. The DRP will be suspended for
the purposes of this 2019 final dividend as the Directors believe that the issue of share capital at the current Ridley share price trading
range is dilutive and not in the best interests of Ridley shareholders.
Cash flow and working capital
The operating cash inflow for the year (Table 4) after working capital movements and maintenance capital expenditure was $33.7m,
a reduction of $10.2m on last year’s $43.9m. Working capital increased by $7.3m over last year largely due to the impact of higher raw
material input prices.
EBITDA before non-recurring items of $54.3m has remained relatively consistent with the $55.3m in FY18 before non-recurring items
and represents a year on year improvement of $10.6m after non-recurring items.
Maintenance capital expenditure of $13.3m was below the $16.6m aggregate charge for depreciation and amortisation on Property,
plant and equipment. Ridley has invested a further $55.0m in the two new plants at Westbury, Tasmania and Wellsford, Central Victoria.
37
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Directors’ Report continued
For the Year Ended 30 June 2019
4. Review of operations continued
Payments for intangible assets of $5.5m comprise the capitalisation of Novacq™ development costs, contractual legal rights acquired,
plus software.
Dividends paid for the year of $11.7m comprise the 2018 final dividend of 2.75 cents per share paid fully in cash on 31 October 2018, plus
the interim FY19 dividend of 1.5 cents per share paid on 10 May 2019, of which $1.35m was settled through the take up of DRP entitlements
by existing shareholders. The $3.3m balance of the FY19 interim dividend was settled in cash, but effectively fully reimbursed through
the issue of 3,439,150 new shares under the fully underwritten DRP, less the underwriting and transaction costs incurred.
Proceeds from the disposal of fixed assets of $5.0m comprise the Lots A, B and C properties sold during the current and prior year
at Lara, with further gross consideration of $3.85m receivable by 30 June 2020, $3.85m by 30 June 2021, and $1.3m by 30 June 2022.
Net tax payments of $1.7m were made during the year and a further $2.0m is payable in respect of the outstanding income tax liability
for the 2019 financial year.
Table 4 – Statement of cash flows in $ million
Cash flows for the year ended
EBIT from operations before non-recurring costs
Depreciation and amortisation
EBITDA before non-recurring items
EBITDA from non-recurring items
EBITDA after non-recurring items
Add back non-cash write off of Huon inventory legacy
(Increase)/decrease in working capital
Maintenance capital expenditure
Operating cash flow after working capital and maintenance
Development capital expenditure
Payment for intangibles
Dividends paid
Issue of share capital under Dividend Reinvestment Plan
Share-based payments
Proceeds from sale of property assets and associate
Payment for other investment
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
30 June 2019
35.4
18.9
54.3
-
54.3
-
(7.3)
(13.3)
33.7
(60.0)
(5.5)
(11.7)
3.1
(2.4)
5.0
-
(5.7)
(1.7)
(3.4)
(48.6)
(52.8)
(101.4)
30 June 2018
38.0
17.3
55.3
(11.6)
43.7
8.4
6.9
(15.1)
43.9
(21.1)
(4.3)
(12.9)
-
(4.2)
7.2
(1.8)
(4.6)
(5.9)
2.5
(1.2)
(51.6)
(52.8)
The cash flow summary with a prior period comparison provided in Table 4 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 4 is useful for users as it reflects the underlying cash flows of the business.
Earnings per share
Basic earnings per share – continuing
Basic earnings per share
Diluted earnings per share – continuing
Diluted earnings per share
38
2019
7.6c
7.6c
7.6c
7.6c
2018
5.7c
5.7c
5.6c
5.6c
Ridley Corporation Limited Annual Report 2019 Gearing and financing facility
Ridley’s consolidated banking facility was refinanced on 27 May 2019 for a further five years. As part of the refinancing, the total
borrowing facility was increased from $160m to $210m, the trade payables facility of $50m was retained, and certain banking covenant
requirements were relaxed to accommodate the funding requirements for the new plants at Westbury and Wellsford and the expansion
of Novacq™ production capacity in Thailand.
Gearing is reported as net debt to equity in accordance with the covenants of the banking facility and excludes the draw down against
the trade payables facility.
Gearing
Gross debt
Less: cash
Net debt
Total equity
Gearing ratio
Capital movements
2019
$’000
118,926
(17,483)
101,443
277,499
36.6%
2018
$’000
76,222
(23,441)
52,781
263,107
20.1%
During FY19, a total of 2,092,935 (FY18: 3,116,507) shares were acquired by the Company on market for an outlay of $2.8m (FY18: $4.2m)
in satisfaction of:
(i)
the issue of 1,384,802 (FY18: 2,430,232) shares allocated to Ridley employees under the Ridley Long Term Incentive Plan, with a further
24,123 share entitlement satisfied by payment in cash; and
(ii) 708,133 (FY18: 686,725) shares allocated under the Ridley Employee Share Scheme.
A fully underwritten Dividend Reinvestment Plan (DRP) was introduced for the 2019 interim dividend under which 896,926 fully paid
ordinary shares were issued to existing shareholders plus 2,542,224 fully paid ordinary shares to institutional and sophisticated investors
at an issue price of $1.33 per share.
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 (CODM). 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 CODM
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 reported to the CODM 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 in recent years reported two 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.
Following the recent property sales at Lara in FY18 and FY19, the residual sites are now only the former saltfield at
Moolap and a single residual lot, Lot D at Lara, for which the option to purchase has been extended for a further year
to 2 July 2020. In light of the lack of commercial activity at Moolap, low cost base and low property holding costs,
from 1 July 2019 the reporting of a Property segment will cease and its activities will be reported within Corporate.
Following the substantial divestment of the Group’s surplus land portfolio, and with the 26 August 2019 appointment of a new Chief
Executive Officer (the Group’s Chief Operating Decision Maker), the Group is currently reviewing the business operations identified
as reportable segments. Any changes will be reflected in the interim Financial Report for the period ending 31 December 2019.
39
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
Directors’ Report continued
For the Year Ended 30 June 2019
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, Aquafeed, Beef and Sheep, Packaged Products and Rendering) some of which
have a positive or negative correlation with each other, Ridley is not dependent upon a single business sector and is able to spread
the sector and adverse event risk across a diversified portfolio.
• Influence of the domestic grain harvest – through properly managed procurement practices and many of our customers retaining
responsibility for the supply of raw materials for the feed Ridley manufactures on their behalf, 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, Pig and Aquafeed.
• Impact on domestic and export markets in the event of disease outbreak – Ridley has a strategy of mill segregation in place to
effectively manage its own risk of product contamination across the various species sectors. Ridley also has 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 the 2016 outbreak of White Spot disease (White Spot Syndrome Virus or WSSV) in the Logan River
region of Queensland, which devastated a number of affected farms in the region.
• 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 a degree of confidence in order to plan appropriate shift structures, procurement
and supply chain activities in the short term and capital expenditure programs in the long term, while actively managing the risk
of stranded assets and backward integration into feed production by significant customers. The ongoing commercial viability of key
customers and suppliers is generally beyond the control of Ridley, as evidenced by the FY18 appointment of an administrator to the
Red Lea poultry producer, which was a major supplier of poultry raw material to Rendering Maroota. The potential for disputes to arise
with customers over animal performance linked to feed is a significant risk.
• Corporate – risks such as safety, recruitment and retention of high-calibre employees, inadequate innovation and new product
development, customer credit risk, climate risk interest rate, foreign exchange and inappropriate raw material purchases are all
managed through the Company’s risk management framework, which includes review and monitoring by the executive lead team
and testing by the internal audit function and external audit.
Outlook
The overall outlook for the coming year for the business is positive, with another strong year expected for the Ruminant business driven
by high milk prices, which will help support positive dairy farmer sentiment. The high Beef and Sheep volumes of FY19 driven by drought
conditions are not expected to be repeated in FY20, but a positive performance is nevertheless expected against historical sales volumes.
Poultry volumes are expected to improve in FY20 as the industry reverts to its traditional bird lifecycle, the shortening of which by several
days in the second half of FY19 led to a reduction in bird size and overall feed volumes. Margin pressure is expected in FY20 against a
backdrop of softening raw material prices.
Construction of the new state-of-the-art Monogastric feedmill to service key customer Hazeldene’s Chickens and other poultry and
pig farmers in central Victoria was in progress at balance date, and is expected to be commissioned in the fourth quarter of FY20.
The existing 160,000 tonne capacity feedmill in East Bendigo will be retired once the new feedmill at Wellsford is commissioned and fully
operational. The new facility will be similar in design and construction to the last Ridley feedmill constructed at Lara, Geelong, however
with an annual production capacity in excess of 350kt, the Wellsford feedmill will be significantly the largest in the Ridley network.
The outlook for the Pig sector in FY20 is for Australian pig meat production to grow in line with population growth. Much of this increase
will occur in the later part of the year as supply increases to meet demand following a reduction in pig production in preceding years.
On a global scale, the past 12 months have seen African Swine Fever substantially reduce the population of pigs in China, neighbouring
Asian countries and various European Union countries, generating pressure on global pig meat supply and pricing.
From a Ridley pig feed perspective, breeder inventories are expected to increase during FY20, with feed production volumes expected
to increase from the later part of FY20 and beyond.
The outlook for Rendering is positive, with the benefits of last year’s improvements in plant efficiency and segregation of higher value raw
material intake to be enjoyed for a full year despite an expected pull back in raw material input volumes following a reduction in red meat
slaughter rates. Continuing improvement to the Overall Equipment Effectiveness (OEE) of both Rendering plants and initiatives to reduce
energy consumption are also expected to contribute positively in FY20.
40
Ridley Corporation Limited Annual Report 2019 For Aquafeeds, the long term outlook for the domestic salmon industry continues to be positive, with sustainable fishery solutions being
developed for Tasmania and New Zealand, continuing growth in domestic salmon consumption, and further investment in technology,
automation and biomass by the Tasmanian salmon producers. Ridley has committed to playing an important role in supplying locally
produced feed to the salmon industry and officially opened its new feedmill at Westbury in northern Tasmania on 24 July 2019. In addition
to salmon, production for other fin fish is currently being transitioned to Westbury from the Narangba plant in Brisbane, which will now
concentrate on prawn feed and extruded pet food.
The two salmon feed trials being conducted as part of Tassal’s research and development program as announced last year are
proceeding well, with Ridley’s performance at each stage of the trial thus far outperforming the competitor’s equivalent diets using
product manufactured at the Narangba site in Brisbane. Production for all ensuing stages of the trial has now been switched to the
new extrusion plant at Westbury and provides incremental trial volume sales.
The prospect of volume growth in barramundi and yellow tail king fish is positive, but potentially eclipsed by the potential expansion
of the domestic prawn industry, led by Tassal following its September 2018 acquisition of leading prawn producer the Fortune Group.
Effective management of working capital and a seamless transfer of feed volumes will be critical in the coming year as the Aquafeed
business unit transitions from a single location to a tandem site production model at Westbury and Narangba. The return of Ridley’s
extruded dog feed production to Narangba from an outsourced supply agreement is an important component of this strategy.
We are expecting and managing towards another year of growth and consolidation in both Packaged Products and Supplements,
through a new range and product mix, improved store coverage and presence, a focus on raising the profile of our Petfood and Equine
products, and on the assumption that we experience a traditional 12-month dry and wet season weather pattern in northern Australia,
which is conducive to the consumption of supplementary feeding blocks.
Novacq™ operations at Yamba went live from a commercial perspective on 1 July 2018 and the year proved to be another year of
consolidation, with the FY18 trialist prawn farmers continuing to purchase the Novacq™-inclusive feed and confirm that the positive
results observed in the prior year are sustainable given the continued use of the Novacq™ product.
The Novacq™ operations at Chanthaburi will remain in development mode for another year, with an expected go-live date of 1 July 2020.
By this time, it is expected that all development approvals to install and operate the dewatering and drying equipment within the
Chanthaburi feedmill will have been secured and the dewatering and drying process finely tuned through another year of domestic
experience at Yamba.
The strategic alliance with CSIRO is two and a quarter years into a five-year term as at 30 June 2019, and the primary focus of the alliance
for the coming year in FY20 will continue to be the development of an assay to test the bioactivity on a simple, accurate, timely and cost
effective basis. This information is considered to be a critical component of the work ahead to identify the most likely applications for
Novacq™ beyond the known monodon and vannamei species of prawn.
Ridley’s $95m-plus commitment to a new state-of-the-art feedmill in central Victoria and to a new extrusion plant in Tasmania supports
our focus on growing with our customers and capitalising on opportunities to expand our presence in key livestock animal production
regions. In order to manage the cash flows associated with this significant spike in investment funding requirement, in May 2019 a new
five-year banking facility was executed with existing financiers ANZ and Westpac. Under the new agreement, the total loan capacity was
increased by $40m to $200m, with the bank overdraft facility of $10m and the trade payables facility of $50m both retained. Covenants
otherwise stretched by the capital outlay have been relaxed in the new agreement, with plans to return to more traditional levels in years
four and five of the facility term.
The 12 month option agreement for the sale of the sole remaining Lara land, Lot D, to a land-based aquaculture company has been
extended for a further year such that it now expires on 2 July 2020.
There has been no meaningful progress with regard to the proposed Moolap development during FY19, and any other avenues for
generating shareholder returns from this site will be considered.
With an outlook of minimal activity at Moolap and given the significant reduction in the portfolio of surplus land holdings following
the FY18 and FY19 sales of property at Lara, the Property reporting segment is being reported within Corporate from 1 July 2019.
41
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Directors’ Report continued
For the Year Ended 30 June 2019
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 2019.
6. Dividends and distributions to shareholders
Dividends paid to members during the financial year were as follows:
Interim dividend
In respect of the 2019 financial year paid on 10 May 2019 of 1.5 cents, 100% franked
A fully underwritten Dividend Reinvestment Plan (DRP) was introduced for the payment of the interim dividend,
which resulted in the issue of 896,926 fully paid ordinary shares to existing shareholders, plus 2,542,224 fully paid
ordinary shares issued to institutional and sophisticated investors pursuant to a placement under the DRP.
Final dividend
In respect of the 2018 financial year paid on 31 October 2018 of 2.75 cents, 100% franked
2019
$’000
4,618
8,465
13,083
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. 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 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 and Special Retention Incentive Plan (Performance Rights)
Ridley Employee Share Scheme (Options)*
* The share grant and supporting loan together in substance comprise a share option.
Number
5,100,000
4,222,934
Expiry date
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.
42
Ridley Corporation Limited Annual Report 2019 10. Information on Directors
Particulars of shares and performance rights 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
Other than the appointment of the new Chief Executive Officer and Managing Director on 26 August 2019, no matters or circumstances
have arisen since 30 June 2019 that have significantly affected, or may significantly affect:
(i)
the Group’s operations in future financial years, or
(ii)
the results of those operations in future financial years, or
(iii) the Group’s state of affairs in future financial years.
12. 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 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
G H Weiss
T J Hart
P M Mann
R J van Barneveld
E Knudsen
D J Lord
Board
H
11
11
11
11
11
11
A
11
10
11
11
11
11
Audit and Risk
Committee
H
5
-
5
5
-
-
A
5
-
5
5
-
-
Remuneration
and Nominations
Committee
H
3
-
3
-
-
3
A
3
-
3
-
-
3
Ridley Innovation
and Operational
Committee
H
-
4
-
4
4
-
A
-
3
-
4
4
-
H: Number of meetings held during period of office.
A: Number of meetings attended.
In addition to the formal attendance above, all Directors are invited to attend all committee meetings.
43
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Directors’ Report continued
For the Year Ended 30 June 2019
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 provided during FY19 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 54
and forms part of this report.
During the year the following fees were paid or payable for non-audit services provided by the auditor of the parent entity and its
related practices:
Tax services
Transaction advisory and other services
Total
$
19,383
7,000
26,383
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 2018/191 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 23 August 2019 in accordance with a resolution of the Directors.
Dr G H Weiss AM
Director
D J Lord
Director
44
Ridley Corporation Limited Annual Report 2019
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 2019. This report forms part
of the Directors’ Report for the year ended 30 June 2019.
Remuneration and Nominations Committee
From 20 August 2018, the Remuneration Committee became the Remuneration and Nominations Committee and Mrs Patria Mann
became the third independent Non-Executive Director of that committee. The Remuneration and Nominations 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. Following the August 2018 restructure, the Committee is now responsible for evaluating the
Board’s performance, reviewing Board size and composition, setting the criteria for membership, and identifying and evaluating
candidates to fill vacancies on behalf of 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
The Committee has previously engaged both the Godfrey Remuneration Group (GRG) and Hay Group (Hay) 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 Board adopted these recommendations in prior years and have
continued to apply the existing policies and practices throughout the 2019 financial year.
During the 2018 financial year, Morrow Sodali was engaged by the Board to conduct a review of Ridley’s executive remuneration and
diversity disclosure policies in the context of current Australian corporate governance best practice, and specifically to conduct:
• external benchmarking of Ridley’s short-term incentive and long-term incentive policies and mechanisms;
• a review of the relative total shareholder return concept as the most meaningful measure of shareholder performance; and
• a recommendation in relation to diversity policy disclosure.
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 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.
45
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Remuneration Report – Audited continued
Consequences of performance on shareholder wealth
In considering the Group’s performance and benefits for creation of shareholder wealth, the Committee has regard for the following
indices in respect of the last five financial years.
Profit/(loss) attributable to members
of Ridley Corporation Ltd
Earnings Before Interest, Tax, Depreciation
and Amortisation
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
2019
2018
2017
2016
$’000
23,565
17,409
25,815
27,606
$’000
$’000
$’000
%
$’000
%
$’000
54,315
35,412
36,824
8.6
13,083
(10.4)
-
43,629
26,368
50,900
6.7
13,083
2.3
-
54,484
39,264
29,655
10.2
12,313
1.8
-
61,125
45,734
17,612
11.4
10,774
15.0
1,322
2015
21,171
51,456
36,141
47,059
9.4
10,774
62.0
1,559
# Total Shareholder Returns (TSR) is calculated as the change in share price for the year plus dividends paid per share 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 receives incremental fees, and the Chair of the Audit and Risk Committee, Ridley Innovation
and Operational Committee and Remuneration and Nominations Committee each receive $10,000 of incremental fees in addition to
the base Director fees. The total amount paid to Non-Executive Directors in FY19 was $545,475 (FY18: $535,000).
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.
Short-term incentives
Executives and employees in senior positions are eligible for short-term incentive (STI) payments based on three components, being
the financial performance of the Group (60%), the safety performance of the Group (10%), and the overall performance of the individual
(30%) as measured against personal key performance indicators (KPIs).
Each year, appropriate KPIs are set to align the STI plan with the priorities of the Group through a process that includes setting stretch
target and minimum performance levels required to be achieved prior to any payment of an STI. The STI policy stipulates that no STI is
payable for financial performance below 70% of budgeted EBIT. KPIs for the Managing Director are initially considered and recommended
by the Committee and then approved by the Board based on the adopted business strategy. These approved KPIs are then cascaded
down to the KMPs, CEO Direct Reports and throughout the business, recognising the relative contributions required of each role within
the organisation to achieve the stated objectives.
The Group financial performance component of the STI is 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.
46
Ridley Corporation Limited Annual Report 2019 Following the end of the 2019 financial year, the financial results and each individual’s performance against KPIs have been reviewed
to determine STI payments for each executive. Given the shortfall in consolidated financial performance to budget for the reasons as
outlined In the Review of Operations Section 4 of the Directors’ Report, the Board resolved that no STI be awarded in respect of FY19.
When awarded, the STI is ordinarily payable through the payroll function in September, after the release of the full year financial results.
STI incentives by role 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 2019, 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 grant date of 1 July 2018 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 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 50th percentile, and 100% vest if Ridley ranks at the 75th percentile or above. There is straight line proportionate vesting
of the balance from 50% to 100% between the 51st percentile and 75th percentiles. 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 has historically been the Company’s preferred performance measure as it provides a comprehensive measure of a company’s
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 2019, 2,700,000 (2018: 2,700,000) Rights were issued under the LTIP, of which 1,300,000
(2018: 1,300,000) were granted as remuneration to KMP and the balance issued to other non-KMP senior executives within
the organisation.
47
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Remuneration Report – Audited continued
Current long-term incentive plans continued
Summary of Ridley TSR performance
The following table provides a summary of Ridley TSR performance for each tranche of the LTIP Rights on issue at year end measured
against the median percentage rankings of the comparator group and using 30 June 2019 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 2016
1 July 2017
1 July 2018
TSR
Ridley
(3.9%)
(10.0%)
(11.0%)
Median TSR
comparison
15.4%
15.1%
(2.2%)
Percentile
42.5
32.0
41.7
Number of
rights on issue
2,500,000
2,450,000
2,650,000
Hypothetically
vested at
30 Jun 2019
nil *
-
-
%
Hypothetically
vested at
30 Jun 2019
nil%
-
-
* The Rights on issue with an effective grant date of 1 July 2016 and performance period ending 30 June 2019 all lapsed on 1 July 2019. There have been
no issues of Rights subsequent to balance date, however the Board expects to make a 2020 financial year offer of Rights in the first half year.
Ridley share price performance for the last three years
$2.00
Ridley TSR
Ridley Share Price
ASX 200 Accumulation Index (based to Ridley)
Small Ords Accumulation Index (based to Ridley)
$1.90
$1.80
$1.70
$1.60
$1.50
$1.40
$1.30
$1.20
$1.10
$1.00
43%
34%
(6%)
(15%)
6
1
n
u
J
0
3
6
1
p
e
S
0
3
6
1
c
e
D
1
3
7
1
r
a
M
1
3
7
1
n
u
J
0
3
7
1
p
e
S
0
3
7
1
c
e
D
1
3
8
1
r
a
M
1
3
8
1
n
u
J
0
3
8
1
p
e
S
0
3
8
1
c
e
D
1
3
9
1
r
a
M
1
3
9
1
n
u
J
0
3
Ridley Corporation Special Retention Plan
The Ridley Corporation Special Retention Plan (SRP) was developed specifically to retain and motivate key executives. Under the SRP,
selected executives and the Managing Director may be offered a number of performance rights (SRP Rights). The Plan offer is made
in accordance with the rules of the Ridley Long Term Incentive Plan except that there are no disposal restrictions and the cessation
of employment has been superseded, such that the SRP Rights under this offer vest in full on the earlier occurrence of either completion
of two years of service from the date of grant; ceasing to be an employee of Ridley because of a sale of a subsidiary entity; and
occurrence of a change of control event. Each SRP Right provides the entitlement to acquire one Ridley share at the end of the service
period. During the year ended 30 June 2019, nil (2018: nil) SRP Rights were issued.
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
sole discretion of the Board. The purpose of the Scheme is to align employee and shareholder interests. 708,133 (2018: 686,275) 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 $858,349 (2018: $945,000).
48
Ridley Corporation Limited Annual Report 2019
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
Market value $’000
2019
708,133
1,384,802
2,092,935
2018
686,275
2,430,232
3,116,507
2019
858
1,942
2,800
2018
945
3,382
4,327
* In addition to the shares purchased on market, 24,123 of the LTI employee share entitlement was satisfied in cash in lieu of shares.
Directors and Key Management Personnel
The following persons were the Directors and executives with the greatest authority for the strategic direction and management of the
Group (Key Management Personnel or KMP) throughout the 2019 financial year unless otherwise stated.
Name
Directors
G H Weiss
T J Hart
P M Mann
R J van Barneveld
E Knudsen
D J Lord
Executives
A M Boyd
M Murphy
C W Klem
A I Lochland
J C Scaife
Position and status
Chair
Managing Director and CEO to 27 June 2019
Director
Director
Director
Director – Interim CEO from 28 June 2019 to 26 August 2019
Chief Financial Officer and Company Secretary
General Manager Safety, People and Technical Development
General Manager Rendering
General Manager Packaged Products, Aquafeed & Supplements
General Manager Commercial Feeds
49
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Remuneration Report – Audited continued
Details of remuneration
Details of the remuneration of each Director of Ridley Corporation Limited and each of the KMP of the Group during the financial year
are set out below. In accordance with the requirements of Section 300A of the Corporations Act 2001 and Regulation 2M.3.03, the
remuneration disclosures for the 2018 and 2019 financial years only include remuneration relating to the portion of the relevant periods
that each individual was considered a KMP.
All values are in A$ unless otherwise stated. The salary package may be allocated at the executive’s discretion to cash, superannuation
(subject to legislative limits), motor vehicle and certain other benefits.
2019
Short-term benefits
Post-
employ-
ment
benefits
Name
Directors
G H Weiss – Chair
T J Hart – Managing Director3
P M Mann
R J van Barneveld4
E Knudsen4
D J Lord
Total Directors
Executives
A M Boyd
M Murphy
C W Klem
A I Lochland
J C Scaife
Total executives
Total
Directors’
fees and
cash salary
$
161,477
793,396
87,659
95,000
85,000
83,114
1,305,646
482,078
319,581
337,681
337,681
357,964
1,834,985
3,140,631
Share-
based
payments
Perfor-
mance
rights/
options
$
Total
$
%1
%2
Super-
annuation
$
STI
$
Other
benefits5
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,148
20,290
8,766
-
-
8,311
53,515
22,625
25,000
25,000
25,000
25,481
123,106
176,621
-
1,000
-
-
-
-
1,000
1,000
1,000
1,000
1,000
-
4,000
5,000
-
433,558
-
-
-
-
433,558
177,625
1,248,244
96,425
95,000
85,000
91,425
1,793,719
144,000
649,703
91,557
437,138
91,557
455,238
91,557
455,238
31,667
415,112
2,412,428
450,338
883,896 4,206,148
-
35%
-
-
-
-
22%
21%
20%
20%
8%
-
35%
-
-
-
-
22%
21%
20%
20%
8%
1. Percentage remuneration consisting of performance rights/options.
2. Percentage remuneration that is performance related.
3. Mr Hart’s employment terminated on 27 June 2019.
4. Director fee paid to a company.
5. Comprises first $1,000 of value upon vesting of performance rights, with the balance satisfied through the allocation of Ridley shares.
50
Ridley Corporation Limited Annual Report 2019
2018
Name
Directors
G H Weiss – Chair
T J Hart – Managing Director
P M Mann
R J van Barneveld3
E Knudsen3
D J Lord
Total Directors
Executives
A M Boyd
M Murphy
C W Klem
A I Lochland
A M Mooney4
J C Scaife5
Total executives
Total
Short-term
benefits
Directors’
fees and
cash salary
$
159,091
767,807
86,364
95,000
85,000
77,273
1,270,535
445,586
312,236
327,118
327,118
249,239
-
1,661,297
2,931,832
Post-
employ-
ment
benefits
Super-
annuation
$
STI
$
Other
benefits
$
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
15,909
20,049
8,636
-
-
7,727
52,321
25,000
22,308
25,000
25,000
18,241
-
115,549
167,870
-
-
-
-
-
-
-
-
-
-
111,439
-
111,439
111,439
Share-
based
payments
Perform-
ance
rights/
options
$
-
403,193
-
-
-
-
Total
$
175,000
1,191,049
95,000
95,000
85,000
85,000
403,193
1,726,049
134,000
63,326
85,776
85,776
-
-
604,586
397,870
437,894
437,894
378,919
-
368,878
772,071
2,257,163
3,983,212
1. Percentage remuneration consisting of performance rights/options.
2. Percentage remuneration performance related.
3. Director fee paid to a company.
4. Resigned on 16 March 2018. Other benefits comprises solely the pay out of accrued leave entitlements.
5. Appointed on 25 June 2018.
Contracts of employment
%1
-
34%
-
-
-
-
22%
16%
20%
20%
0%
-
%2
-
34%
-
-
-
-
22%
16%
20%
20%
0%
-
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, STI and Ridley Employee Share
Scheme. Other major provisions of the agreements relating to remuneration are set out below:
T J Hart, CEO and Managing Director to 27 June 2019
• Annualised base remuneration, inclusive of superannuation and any elected benefits, of $804,952 from 1 July 2018 to 31 December
2018, and $822,420 from 1 January 2019 to 27 June 2019 in order to align the annual remuneration review for the CEO with all other
salaried employees and which equates to an annualised 3% increase over the effective 18-month period of alignment. Mr Hart was
subsequently remunerated at the same level for the first month of his notice period to 27 July 2019 and then paid his accrued leave
entitlements plus $753,885 being the remaining 11 months of his contracted notice period at his average annual remuneration
of the last three years of his employment at Ridley.
• Full STI 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 FY19 included a mix of performance against budgeted EBITDA and Net
Profit After Tax, excluding property, exceptional energy costs, merger and acquisition impacts and any extraordinary item(s). The 10%
of Ridley safety performance included measures of LTIFR, TRFR, training, hazard reduction, implementation and usage of the new
safety management system, and the conduct of safety walks. The measures of personal performance included targets on customer
value proposition, certain commercial performance targets for new volume and margins, the applied research and development
program, and the capital projects at Tasmania and central Victoria.
• 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 30 November 2018 for the 600,000 performance rights issued
to Mr Hart in FY19 with a three year performance test period.
51
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Remuneration Report – Audited continued
Details of remuneration continued
• 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.
From 28 June 2019, Mr David Lord ceased being a Non-Executive Director and commenced his role as Interim CEO. Mr Lord was
remunerated as Interim CEO at an annual salary of $822,420 and based on the submission of a timesheet for the days and half days
worked. Mr Lord was not entitled to STI or LTI under this interim arrangement, which continued until the 26 August 2019 appointment
of permanent Managing Director and CEO Mr Quinton Hildebrand, at which time Mr Lord resumed all of his former activities and salary
as a Non-Executive Director.
Other senior executives have individual contracts of employment, but with no fixed term of employment.
Notice periods
The notice period for terminating employment of KMP ranges from between three and six months for executives to 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 service and performance
criteria were not achieved, are set out in the following table, together with the maximum amount of $1,511,311 (2018: $1,458,814) payable
to KMP had all STI performance targets been achieved.
Name
T J Hart
A M Boyd
M Murphy
C W Klem
A I Lochland
J C Scaife
STI
percentage
range of TEP
STI
maximum
potential
award
2019 STI
payment in
$
2019
2018
Paid
%
Forfeited
%
Paid
%
Forfeited
%
0%–100%
$822,420
0%–50%
$245,933
0%–30%
$104,902
0%–30%
$110,412
0%–30%
0%–30%
$110,412
$117,232
-
-
-
-
-
-
-
-
-
-
-
-
100
100
100
100
100
100
-
-
-
-
-
-
100
100
100
100
100
-
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 KMP of the Group are set out below. When exercisable, each Right is convertible into one ordinary share of Ridley
Corporation Limited, which can be satisfied either through the issue of new Ridley shares or, as has been the practice to date, through
the acquisition of Ridley shares purchased on-market by an independent broker. Non-Executive Directors do not participate in the LTIP
and are therefore ineligible to receive Rights.
52
Ridley Corporation Limited Annual Report 2019 Long Term Incentive Plan (LTIP)
The ‘Balance at 30 June 2019’ holdings of rights in the following table represent the maximum number of Ridley shares that the members
of the KMP would receive if Ridley were to have performed at the 75th percentile or above at the end of each three-year performance
testing period.
Recipients of LTIP rights
Directors
T J Hart4
Key Management Personnel
A M Boyd
M Murphy
C W Klem
A I Lochland
J C Scaife
Balance at
1 July 2018
Granted1
Vested2
Forfeited
Balance at
30 June
20193
1,800,000
600,000
(348,600)
(251,400)
1,800,0004
600,000
300,000
375,000
375,000
-
200,000
125,000
125,000
125,000
125,000
(116,200)
(29,050)
(72,625)
(72,625)
-
(83,800)
(20,950)
(52,375)
(52,375)
-
600,000
375,000
375,000
375,000
125,000
Total issued to Directors and Key Management Personnel
3,450,000 1,300,000
(639,100)
(460,900) 3,650,000
1. The fair value per option at the grant date was $0.76 per share. Shareholder approval was received on 27 November 2018 for the 600,000 performance
rights granted to Mr Hart on 27 November 2018.
2. Vested at the end of the performance period on 1 July 2018. The first $1,000 of value is provided by way of taxable income and the balance satisfied
through the allocation of Company shares purchased on-market.
3. Performance rights are due to vest between July 2019 through to July 2021.
4. Balance as at 27 June 2019 date of termination.
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
G H Weiss
T J Hart#
P M Mann
R J van Barneveld
E Knudsen
D J Lord
Total Directors
A M Boyd
M Murphy
C W Klem
A I Lochland
J C Scaife
Total executives
Total Key Management Personnel
# Balance as at 27 June 2019 date of termination.
Balance at
1 July 2018
270,000
1,270,116
96,625
83,053
703,286
73,200
2,496,280
1,150,000
110,157
581,423
255,356
-
2,096,936
4,593,216
Received
during
the year
-
349,512
-
-
-
-
349,512
Acquired/
(disposed)
during the year
-
-
864
-
-
-
864
Balance at
30 June 2019
270,000
1,619,628#
97,489
83,053
703,286
73,200
2,846,656
115,469
30,693
73,557
73,537
-
293,256
642,768
-
-
-
-
-
-
864
1,265,469
140,850
654,980
328,893
-
2,390,192
5,236,848
53
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Lead Auditor’s Independence Declaration
54
Ridley Corporation Limited Annual Report 2019 Consolidated Statement of Comprehensive Income
For the Year Ended 30 June 2019
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
Share of net (losses)/profits from equity accounted investments
Note
4
4
5(d)
5(b)
14
2019
$’000
1,002,583
(930,033)
72,550
481
7,300
(14,049)
(29,908)
(5,554)
2018
$’000
917,660
(848,914)
68,746
465
6,248
(13,246)
(35,193)
(5,113)
(481)
(188)
Profit from continuing operations before income tax expense
30,339
21,719
Income tax expense
6
(6,774)
(4,310)
Profit from continuing operations after income tax expense
23,565
17,409
Net profit after tax attributable to members of Ridley Corporation Limited
23,565
17,409
Other comprehensive income
Items that are or may be reclassified to profit or loss
Available-for-sale financial assets – net change in fair value
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
20
1
1
1
1
(403)
(403)
520
520
23,162
17,929
23,162
17,929
7.6c
7.6c
7.6c
7.6c
5.7c
5.7c
5.6c
5.6c
The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
55
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
Consolidated Balance Sheet
As at 30 June 2019
Current assets
Cash and cash equivalents
Receivables
Inventories
Tax asset
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
Available-for-sale financial assets
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
Note
7
8
9
15
10
8
11
12
13
14
27(e)
15
16
17
15
18
17
19
20
20
2019
$’000
17,483
108,212
83,829
-
182
209,706
11,673
1,265
259,323
85,670
655
1,725
3,737
364,048
573,754
158,759
16,006
2,046
176,811
118,926
518
119,444
296,255
2018
$’000
23,441
104,005
76,666
3,019
1,133
208,264
8,644
1,275
202,596
82,485
1,136
2,300
3,619
302,055
510,319
155,897
14,592
-
170,489
76,222
501
76,723
247,212
277,499
263,107
218,941
3,718
54,840
277,499
214,445
3,760
44,902
263,107
The above Consolidated Balance Sheet should be read in conjunction with the accompanying notes.
56
Ridley Corporation Limited Annual Report 2019 Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2019
Share capital
$’000
214,445
Share-based
payment
reserve
$’000
3,240
Fair value
reserve
$’000
520
2019
Balance at 1 July 2018
Recognition of expected credit losses
under IFRS 9
Related tax
Impact at 1 July 2018
Revised opening balance at 1 July 2018
Profit for the year
Other comprehensive income:
Available-for-sale financial assets – net change
in fair value, net of tax
Total comprehensive income for the year
Transactions with owners recorded
directly in equity:
Dividends paid
Shares issued under the
Dividend Reinvestment Plan
Share-based payment transactions
Total transactions with owners recorded
directly in equity
-
-
-
214,445
-
-
-
-
4,496
-
4,496
-
-
-
3,240
-
-
-
-
-
361
361
Retained
earnings
$’000
44,902
(239)
72
(167)
44,735
23,565
Total
$’000
263,107
(239)
72
(167)
262,940
23,565
-
-
-
520
-
(403)
-
(403)
(403)
23,565
23,162
-
-
-
-
(13,083)
(13,083)
-
4,496
(377)
(16)
(13,460)
(8,603)
Balance at 30 June 2019
218,941
3,601
117
54,840
277,499
2018
Balance at 1 July 2017
Profit for the year
Other comprehensive income:
Available-for-sale financial assets – net change
in fair value, net of tax
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 capital
$’000
214,445
-
Share-based
payment
reserve
$’000
2,895
-
Fair value
reserve
$’000
-
-
Retained
earnings
$’000
42,483
17,409
Total
$’000
259,823
17,409
-
-
-
-
-
-
-
-
345
345
520
520
-
17,409
520
17,929
-
-
-
(13,083)
(13,083)
(1,907)
(1,562)
(14,990)
(14,645)
Balance at 30 June 2018
214,445
3,240
520
44,902
263,107
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
57
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Consolidated Statement of Cash Flows
For the Year Ended 30 June 2019
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 from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intangibles
Payments for financial investments
Proceeds from sale of discontinued operation
Proceeds from sale of non-current assets
Net cash used in investing activities
Cash flows from financing activities
Issue of share capital
Purchase of shares for share-based payments
Proceeds/(repayment) of borrowings
Dividends paid
Loans to related parties
Net cash from/(used in) financing activities
Net movement in cash held
Cash at the beginning of the financial year
Note
2019
$’000
2018
$’000
1,104,549
(1,060,736)
481
410
(6,225)
(1,655)
36,824
(73,336)
(5,479)
-
-
5,000
(73,815)
3,140
(2,370)
42,704
(11,727)
(714)
31,033
7
2
1,031,925
(972,277)
465
1,820
(5,087)
(5,946)
50,900
(36,131)
(4,292)
(1,256)
6,000
1,170
(34,509)
-
(4,182)
8,143
(12,918)
(528)
(9,485)
(5,958)
6,906
23,441
16,535
Cash at the end of the financial year
7
17,483
23,441
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
58
Ridley Corporation Limited Annual Report 2019 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
Inventories
9.
10. Assets held for sale
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
59
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements
30 June 2019
Note 1 – Earnings per share
Basic / diluted earnings per share – continuing
Basic / diluted earnings per share
2019
Cents
7.6 / 7.6
7.6 / 7.6
2018
Basic
$’000
2018
Cents
5.7 / 5.6
5.7 / 5.6
Diluted
$’000
2019
Basic
$’000
Diluted
$’000
Earnings used in calculating earnings per share:
Profit after income tax
23,565
23,565
17,409
17,409
Weighted average number of shares used in calculating basic earnings per share:
2019
308,297,610
2018
307,817,071
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. On 10 May 2019,
3,439,150 shares were issued under the Dividend Reinvestment Plan, which was introduced for the payment of the FY19 interim dividend.
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. Based on the vesting conditions
and exercise price, as at 30 June 2019 there are no dilutive potential ordinary shares outstanding.
The Group has historically purchased shares on-market to satisfy vesting performance rights. Details relating to the performance rights
are set out in Note 25. There are nil (2018: 1,408,925) performance rights outstanding that have been included in the determination of
diluted earnings per share, however if the Group purchases shares on-market to satisfy any vesting performance rights, there would
be no dilution.
Weighted average number of shares used in calculating diluted earnings per share
2019
308,297,610
2018
310,685,570
Note 2 – Dividends
Dividends paid during the year
Interim dividend in respect
of the current financial year
Final dividend in respect
of the prior financial year
Franking
Fully franked
Fully franked
Payment date
10 May 2019
(2018: 30 April 2018)
31 October 2018
(2018: 31 October 2017)
Per share
(cents)
1.5
(2018: 1.5)
2.75
(2018: 2.75)
Paid in cash
Paid through the issue of shares#
Non-cash dividends paid on employee in-substance options
2019
$’000
4,618
8,465
13,083
11,727
1,193
163
13,083
2018
$’000
4,618
8,465
13,083
12,918
-
165
13,083
# A fully underwritten Dividend Reinvestment Plan (DRP) was introduced for the payment of the interim dividend on 10 May 2019, which resulted in the
issue of 896,926 fully paid ordinary shares to existing shareholders plus 2,542,224 fully paid ordinary shares issued to institutional and sophisticated
investors pursuant to a placement under the DRP.
60
Ridley Corporation Limited Annual Report 2019 Since the end of the financial year, the Directors have declared the following dividend:
2019 final dividend of 2.75 cents per share, fully franked, payable wholly in cash on 31 October 2019.
The DRP will be suspended for the purposes of this 2019 final dividend as the directors believe that
the issue of share capital at the current Ridley share price trading range is dilutive and not in the best
interests of Ridley shareholders.
Dividend franking account
Amount of franking credits available at 30 June to shareholders of Ridley Corporation Limited
for subsequent financial years
2019
$’000
2018
$’000
8,465
8,465
17,321
21,273
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 in recent years reported two 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. Following
the recent property sales at Lara in FY18 and FY19, the residual sites are now only the former saltfield at Moolap and
a single residual lot, Lot D at Lara, for which the option to purchase has been extended for a further year to 2 July 2020.
In light of the lack of commercial activity at Moolap, low cost base and low property holding costs, from 1 July 2019
the reporting of a Property segment will cease and its activities will be reported within Corporate.
Following the substantial divestment of the Group’s surplus land portfolio, and with the 26 August 2019 appointment of a new
Chief Executive Officer (the Group’s Chief Operating Decision Maker), the Group is currently reviewing the business operations identified
as reportable segments. Any changes will be reflected in the interim Financial Report for the period ending 31 December 2019.
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.
61
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 3 – Operating segments continued
Geographical segments
The Group predominantly operates in Australasia.
2019 financial year
$’000
Total sales revenue – external (Note 4)
Other revenue (Note 4)
Total revenue
AgriProducts
1,002,583
285
1,002,868
Property
-
6,861
6,861
Unallocated
-
154
154
Consolidated
total
1,002,583
7,300
1,009,883
Share of (losses) of equity accounted investments (Note 14)
Depreciation and amortisation expense (Note 5)
Interest income
Finance costs (Note 5)
(481)
(18,898)
27
(1,567)
-
(5)
-
-
-
-
454
(3,987)
(481)
(18,903)
481
(5,554)
Reportable segment profit/(loss) before income tax
38,978
6,161
(14,800)
30,339
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)
541,583
655
542,238
170,204
10,360
-
10,360
1,052
21,156
-
21,156
124,999
573,099
655
573,754
296,255
75,142
-
-
75,142
2018 financial year
$’000
Total sales revenue – external (Note 4)
Other revenue (Note 4)
Total revenue
AgriProducts
917,660
1,045
918,705
Property
-
4,713
4,713
Unallocated
-
490
490
Consolidated
total
917,660
6,248
923,908
Share of (losses) of equity accounted investments (Note 14)
Depreciation and amortisation expense (Note 5)
Aquafeed inventory legacy expenses (Note 5)
Interest income
Net finance costs (Note 5)
(188)
(17,112)
(11,658)
-
-
-
(11)
-
-
-
-
(139)
-
465
(5,113)
(188)
(17,262)
(11,658)
465
(5,113)
Reportable segment profit/(loss) before income tax
31,682
4,166
(14,129)
21,719
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)
464,309
1,136
465,445
168,834
2,408
-
2,408
-
42,466
-
42,466
78,378
509,183
1,136
510,319
247,212
40,423
-
-
40,423
62
Ridley Corporation Limited Annual Report 2019 Note 4 – Revenue and other income
Revenue from continuing operations
Sale of goods
Other income from continuing operations
Business services
Rent received
Profit on sale of land
Foreign exchange gains – net
Other
Revenue recognition
2019
$’000
2018
$’000
1,002,583
917,660
-
124
6,809
81
286
7,300
68
197
4,696
302
985
6,248
For the sale of feed, the Group generally has one performance obligation. Therefore revenue is currently recognised when the feed is
either collected from the Ridley premises or delivered to the customers’ premises, which are taken to be the points in time at which the
customer accepts the feed and the performance obligation has been met when the control transfers. Revenue is recognised at these
points, depending on agreed terms, provided that the revenue and costs can be measured reliably, the recovery of the consideration
is probable and there is no continuing management involvement with the goods.
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
2019
$’000
1,704
14,905
1,325
969
18,903
2018
$’000
1,665
13,712
1,134
751
17,262
(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
Unwind of discount on deferred consideration
2019
$’000
6,225
144
(815)
5,554
2018
$’000
5,136
144
(167)
5,113
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 that 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.
(c) Other expenses
Employee benefits expense
Operating lease expense#
Bad and doubtful debt expense – net of recoveries
Research and development
2019
$’000
85,471
4,313
163
24,480
2018
$’000
80,528
4,116
505
19,200
# 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.
63
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
Notes to the Financial Statements continued
30 June 2019
Note 5 – Expenses continued
For FY19 and FY18, 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. The new accounting
standard AASB 16 Leases comes into operation from 1 July 2019.
(d) General and administrative expenses include:
Aquafeed inventory write down before income tax
2019
$’000
-
2018
$’000
11,658
Having written down Huon legacy inventory as at 30 June 2018 to a nil value, there has been no adverse profit and loss impact in FY19
associated with the disposal of this inventory.
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
(Over)/under provided in prior year
Aggregate income tax expense
Income tax expense is attributable to:
Profit from continuing operations
(b) Reconciliation of income tax expense and pre-tax accounting profit
Profit from continuing operations before income tax expense
Income tax using the Group’s tax rate of 30%
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
Non-deductible expenses
Overprovision in prior year
Research and Development allowance
Disposal of Lara surplus land holdings
Recognition of capital loss on contract intangible
Other
Income tax expense
2019
$’000
6,833
157
(216)
6,774
2018
$’000
3,681
1,215
(586)
4,310
6,774
4,310
30,339
9,102
7
262
(216)
(1,700)
672
(1,363)
10
6,774
21,719
6,516
28
78
(586)
(1,940)
220
-
(6)
4,310
(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
244
223
64
Ridley Corporation Limited Annual Report 2019
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
Net profit after tax for the year
Adjustments for non-cash items:
Depreciation and amortisation (Note 5(a))
Net profit on sale of non-current assets (Note 4)
Share of loss from equity accounted investment (Note 14)
Non-cash share-based payments expense (Note 25)
Non-cash finance movements
Bad debts provision
Foreign exchange movements
Other non-cash movements
Change in operating assets and liabilities:
Decrease/(increase) in prepayments
Decrease/(increase) in receivables
Decrease/(increase) in inventories
Decrease/(increase) in deferred income tax asset
Increase/(decrease) in trade creditors
Increase/(decrease) in provisions
Increase/(decrease) in net income tax liability
Net cash from operating activities
Note 8 – Receivables
Current
Trade debtors
Less: Allowance for doubtful debts (a)
Prepayments and other receivables
Lara land sale deferred consideration receivable
Non-current
Prepayments
Other receivable – joint venture entity (b)
Lara land sale deferred consideration receivable
2018
$’000
23,441
2018
$’000
17,409
17,262
(4,696)
188
2,308
(283)
505
(302)
3,340
-
3,904
7,051
(1,438)
7,319
972
(2,639)
50,900
2018
$’000
96,150
-
96,150
5,976
1,879
104,005
713
5,275
2,656
8,644
2019
$’000
17,483
2019
$’000
23,565
18,903
(6,809)
481
2,354
(815)
-
(81)
(555)
(913)
(1,383)
(7,163)
2,901
2,862
1,431
2,046
36,824
2019
$’000
97,533
(239)
97,294
7,068
3,850
108,212
534
5,989
5,150
11,673
65
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
Notes to the Financial Statements continued
30 June 2019
Note 8 – Receivables continued
Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less the provision for doubtful debts.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off.
The adoption of AASB 9 has changed the Group’s accounting for impairment losses for trade and other receivables by replacing AASB 139’s
incurred loss approach with a forward-looking credit loss (ECL) approach. AASB 9 requires the Group to record an allowance for ECLs
for all loans and other debt financial assets, including Trade and other receivables.
For Trade and other receivables, the Group has applied the standard’s simplified approach and has calculated ECLs based on lifetime
expected credit losses. The Group has established a provision matrix that is based on the Group’s historical credit loss experience,
adjusted for forward-looking factors specific to the debtors and the economic environment. A provision has been recognised,
determined with reference to forward-looking ECL.
(a) Movement in the allowance for doubtful debts:
Balance brought forward at 1 July
Adjustment to opening balance to recognise general provision
Revised opening balance as at 1 July
Provision for impairment during the year
Provision raised during the year
Receivables written off during the year
Balance carried forward at 30 June
2019
$’000
-
239
239
-
163
(163)
239
2018
$’000
1,000
-
-
505
-
(1,505)
-
As at 30 June 2019, a provision for doubtful debts of $239,077 is maintained against trade receivables (2018: $nil). 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 2019, the age profile of trade receivables that were past due amounted to $10,061,000 (2018: $8,752,000) as shown in the
following table.
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
2019
$’000
7,651
1,140
655
615
10,061
2018
$’000
7,334
858
319
241
8,752
(b) Other receivable – joint venture entity
The parent entity has provided an unsecured loan to the Pen Ngern Feed Mill Co., Ltd. joint venture entity to provide working capital
for the operation. The amount utilised at 30 June 2019 was $5,989,000 (2018: $5,275,000). The loan was extended for a two year term
commencing on 1 May 2018 and is capped at 140 million Baht, or approximately AUD $6.7m at an exchange rate of 21 Thai Baht:AUD$1.
Interest on the loan is charged at 5% and capitalised for the first 12 months of the loan.
66
Ridley Corporation Limited Annual Report 2019
Note 9 – Inventories
Current
Raw materials and stores – at cost
– at cost
Finished goods
– at net realisable value
2019
$’000
42,695
39,486
1,648
83,829
2018
$’000
35,952
36,286
4,428
76,666
Write-downs of inventories to net realisable value of $0.5m (2018: $0.6m) has been recognised as an expense during the year.
Having written down Huon legacy inventory as at 30 June 2018 to a nil value, there has been no adverse profit and loss impact in FY19
associated with the disposal of this inventory.
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.
Note 10 – Assets held for sale
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
2019
$’000
182
2018
$’000
1,133
At 30 June 2018, the Group reclassified $1,133,000 of assets as being held for sale, which related to the remaining parcels of surplus land
at Lara referred to as Lots A, C and D. Lots A and C were sold on 24 July 2018 for total consideration of $8.0m and $1.5m respectively,
while Lot D is the sole residual land holding retained as a current asset for sale.
The terms of the two separate sale agreements for Lots A and C include the combined payment of $1.15m at the 24 July 2018 date
of sale, with the balance to be received in four instalments with amounts and dates comprising:
(i) $2.35m by no later than 30 June 2019, which was duly received;
(ii) $2.35m by no later than 30 June 2020;
(iii) $2.30m by no later than 30 June 2021; and
(iv) $1.35m by no later than 30 June 2022.
In respect of the residual surplus land holding at Lara, Lot D, a 12 month option agreement was executed on 2 July 2018 for a land-based
aquaculture company to purchase the entire holding of 97.8 hectares. Under the terms of the option, the purchaser had 12 months in
which to conduct its due diligence and determine whether or not it wishes to exercise its option to complete the contract of sale for total
consideration of $1.5m. In order to enable the purchaser to secure all development approvals and funding, this option has been extended
by one year to 2 July 2020.
67
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
Notes to the Financial Statements continued
30 June 2019
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
Sale in part of Lara site
Transfer of Lara site to assets held for sale (Note 10)
Additions
Depreciation and other expenses
Carrying amount at cost at 30 June
2019
$’000
2018
$’000
1,275
-
-
-
(10)
1,265
3,181
(762)
(1,133)
-
(11)
1,275
In the prior year, investment properties comprised former saltfield sites at Lara and Moolap that have ceased operating and are held for
the purpose of property realisation. In FY18 and FY19, the Lara site has been sold in part and the remaining Lara land holding of Lot D
is classified as a current asset held for sale (Note 10).
A fair value range for the site at Moolap cannot be determined reliably at the present time given that the location does not have local
established industrial or residential infrastructure, which would enable a reliable valuation benchmark to be determined. Furthermore,
the value of the site may also vary significantly depending upon which stage of the progressive regulatory approvals required for
redevelopment has been attained at balance date. Consequently, the value of this site has been recorded at cost less impairment
and depreciation.
Amounts recognised in profit and loss for investment properties:
Direct operating expenses that did not generate rental income
Note 12 – Property, plant and equipment
$’000
2019
Cost at 1 July 2018
Accumulated depreciation
Carrying amount at 1 July 2018
Additions
Disposals
Transfers from plant under construction to intangible assets
Depreciation
Carrying amount at 30 June 2019
At 30 June 2019
Cost
Accumulated depreciation
Carrying amount at 30 June 2019
# Includes capital work in progress balance of $86.3m (2018: $38.5m).
68
2019
$’000
702
2018
$’000
547
Land and
buildings
Plant and
equipment
66,812
(9,174)
57,638
363
-
-
(1,704)
56,297
285,535
(140,577)
144,958
74,779
(7)
(1,799)
(14,905)
203,026#
Total
352,347
(149,751)
202,596
75,142
(7)
(1,799)
(16,609)
259,323
67,175
(10,878)
56,297
357,324
(154,298)
203,026#
424,499
(165,176)
259,323
Ridley Corporation Limited Annual Report 2019 $’000
2018
Cost at 1 July 2017
Accumulated depreciation
Carrying amount at 1 July 2017
Additions
Disposals
Transfers from plant under construction to intangible assets
Transfers from plant under construction
Depreciation
Carrying amount at 30 June 2018
At 30 June 2018
Cost
Accumulated depreciation
Carrying amount at 30 June 2018
Property, plant and equipment
Land and
buildings
Plant and
equipment
64,345
(7,519)
56,826
1,632
(12)
-
857
(1,665)
57,638
66,812
(9,174)
57,638
254,181
(128,213)
125,968
34,499
(146)
(794)
(857)
(13,712)
144,958
285,535
(140,577)
144,958
Total
318,526
(135,732)
182,794
36,131
(158)
(794)
-
(15,377)
202,596
352,347
(149,751)
202,596
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 Tasmanian Government grant of $2.0m was awarded by Tasmania Development and Resources in 2017. No amount has been received
in FY19 (nil in FY18 and $1.0m in FY17) as a contribution to plant and equipment purchased for Ridley’s new extrusion plant at Westbury,
Tasmania. $0.5m has been received subsequent to balance date and the $0.5m balance of the grant will be received no later than the
2022 financial year upon satisfaction of the final project milestone.
A Victorian Government grant of $800,000 was awarded by the Geelong Region Innovation & Investment Fund. The balance of the grant
of $80,000 was received in FY18 upon satisfaction of the final project milestone and commissioning of the new feedmill, which services
poultry and pig customers in the region at Ridley’s new feedmill at Lara, Geelong, Victoria.
69
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 13 – Intangible assets
$’000
2019
Carrying amount at 1 July 2018
Transfer from property, plant
and equipment/additions
Amortisation charge
Carrying amount at 30 June 2019
At 30 June 2019
Cost
Accumulated amortisation/impairment losses
Carrying amount at 30 June 2019
Software
Goodwill
Contracts
Assets under
development
Total
3,305
68,950
748
9,482
82,485
1,799
(1,325)
3,779
17,806
(14,027)
3,779
-
-
68,950
69,903
(953)
68,950
685
(836)
597
5,185
(4,588)
597
2,995
(133)
12,344
12,477
(133)
12,344
5,479
(2,294)
85,670
105,371
(19,701)
85,670
The amortisation charge is included within general and administrative expenses in the Consolidated Statement of Comprehensive Income.
$’000
2018
Carrying amount at 1 July 2017
Transfer from property, plant
and equipment/additions
Amortisation charge
Carrying amount at 30 June 2018
At 30 June 2018
Cost
Accumulated amortisation/impairment losses
Carrying amount at 30 June 2018
Intangible assets
Software
Goodwill
Contracts
Assets under
development
3,645
68,950
1,499
794
(1,134)
3,305
16,007
(12,702)
3,305
-
-
68,950
69,903
(953)
68,950
-
(751)
748
4,500
(3,752)
748
5,190
4,292
-
9,482
9,482
-
9,482
Total
79,284
5,086
(1,885)
82,485
99,892
(17,407)
82,485
(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 (CGUs) for the purpose of impairment testing.
$56.6m (2018: $56.6m) of goodwill has been recognised in the Rendering cash generating unit, whilst the balance has been accumulated
from a combination of other CGUs over many years as summarised below:
Rendering
AgriProducts
Total goodwill
70
2019
$’000
56,616
12,334
68,950
2018
$’000
56,616
12,334
68,950
Ridley Corporation Limited Annual Report 2019 (iii) Contracts
The contracts intangible asset brought forward represented acquired contractual legal rights which had a finite useful life and which
were amortised over a period of six years, which concluded in FY19, according to the period of the contractual legal rights. A new
contracts intangible asset was acquired for $0.7m during FY19 with similar features and a two year effective useful life. Amortisation
methods, useful lives and residual values are and were reviewed at each financial year end and adjusted if appropriate.
(iv) Assets under development
Assets under development include the applied R&D activities being conducted at Yamba in New South Wales and Chanthaburi in
Thailand in respect of the novel feed ingredient Novacq™ project. Items of plant and equipment purchased as part of the project are
being separately capitalised as capital work in progress. The Yamba site became operational from 1 July 2018, while the Chanthaburi
site is scheduled to become operational from 1 July 2020.
Research and development expenditure
Research and development (R&D) expenditure of $24,480,278 have been incurred in the current year (2018: $19,200,000), which has
been included as eligible R&D in the R&D tax incentive schedule.
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.
Impairments during the year
There were no impairments of intangible assets during the year.
Impairment testing
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. These assumptions have been used for the analysis
in each CGU.
(i) Cash flow forecasts are based on the Board-approved FY20 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% (2018: 2%). A growth rate of 2% is applied
to the terminal value (2018: 2%).
(iii) Discount rates used are the weighted average cost of capital for the Group. The post-tax discount rate applied to cash flows was
8.0% (2018: 8.1%).
A sensitivity analysis was undertaken to examine the effect of a change in each key variable on each CGU. For all CGUs, excluding
Supplements, a reasonably possible change in these inputs would not cause the recoverable amount to be below the carrying amount.
Impact of possible changes in key assumptions
All CGUs in the Group have been tested for impairment and have met their required hurdle rates to support the current carrying values.
Return to a more traditional dry season weather pattern combined with improvements in manufacturing efficiencies and waste and
water management are expected to improve the outlook for the Supplements sector, however any deterioration in the discount rate
or earnings profile for the Supplements CGU may result in an impairment in the future.
71
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 14 – Investments accounted for using the equity method
Name of company
Joint venture entities:
Ridley Bluewave Pty Ltd 1
Nelson Landholdings Pty Ltd as Trustee
for Nelson Landholdings Trust2
Pen Ngern Feed Mill Co., Ltd.3
Investments accounted for using the equity method
1. Ridley Bluewave Pty Ltd was deregistered on 15 February 2018.
Principal
activity
Country of
incorporation
2019
%
2018
%
2019
$’000
2018
$’000
Ownership
interest
Carrying
amount
Animal protein production
Australia
Property realisation
Aquafeed production
Australia
Thailand
-
50
49
-
50
49
-
-
-
655
655
-
1,136
1,136
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 $1.3m. PNFM is an entity domiciled
in Thailand, which owns and operates a dedicated Aquafeed manufacturing facility at Chanthaburi. Movements in the carrying amount reflect Ridley’s
equity accounted share of the operating result for PNFM.
The 49% ownership interest in PNFM, rather than an equal or controlling equity stake, is a reflection of Thai law, which can, without the
granting of an exemption by the Thailand Board of Investment, impose certain restrictions on Thai businesses whose shares owned
by non-Thai nationals exceed 49%. The pertinent contracts have been structured such that governance and management of the
business will be effectively on a 50:50 basis between Ridley and the other party.
Investments in joint venture entities are accounted for in the consolidated financial statements using the equity method of accounting.
The balance date of the Nelson Landholdings Pty Ltd joint venture entity is 30 June, whereas the balance date for PNFM is 31 December.
Carrying amount of investments accounted for using the equity method
Opening carrying amount at 1 July
Share of operating (losses)/profits after income tax
Closing carrying amount at 30 June
Summarised financial information of 100% of the equity accounted investees (i.e. not adjusted for
the percentage ownership held by the Ridley Group, is provided following.
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net (liabilities)/assets
Revenue
Net loss after tax
There are no material reserves or contingent liabilities of the equity accounted investees.
2019
$’000
1,136
(481)
655
479
5,658
6,137
32
7,529
7,561
(1,424)
634
(979)
2018
$’000
1,324
(188)
1,136
259
5,088
5,347
29
5,670
5,699
(352)
290
(376)
72
Ridley Corporation Limited Annual Report 2019 Note 15 – Tax assets and liabilities
Current
Tax asset
Tax liability
Non-current
Deferred tax asset
Movement in deferred tax asset:
Opening balance at 1 July
Credited/(charged) to the statement of comprehensive income
Closing balance at 30 June
Recognised deferred tax assets and liabilities
2019
$’000
-
2,046
2018
$’000
3,019
-
3,737
3,619
3,619
118
3,737
5,057
(1,438)
3,619
$’000
Consolidated
Intangibles
Doubtful debts
Property, plant and equipment
Employee entitlements
Provisions
Other
Tax assets/(liabilities)
Assets
Liabilities
Net
2019
2018
2019
2018
2019
2018
-
72
2,623
4,660
-
227
7,582
-
-
2,866
4,544
-
162
7,572
(3,241)
-
(624)
-
-
20
(3,845)
(3,052)
-
(678)
-
-
(223)
(3,953)
(3,241)
72
1,999
4,660
-
247
3,737
(3,052)
-
2,188
4,544
-
(61)
3,619
Movement in net deferred tax assets and liabilities
$’000
Consolidated
Intangibles
Doubtful debts
Property, plant and equipment
Employee entitlements
Provisions
Other
Tax asset/(liability)
Balance
1 July 2017
Recognised in
profit or loss
Balance
30 June 2018
Recognised in
profit or loss
Balance
30 June 2019
(2,293)
-
2,394
4,262
-
694
5,057
(759)
-
(206)
282
-
(755)
(1,438)
(3,052)
-
2,188
4,544
-
(61)
3,619
(189)
72#
(189)
116
-
308
118
(3,241)
72
1,999
4,660
-
247
3,737
# Recognised directly against opening retained earnings rather than through the profit and loss.
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.
73
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 15 – Tax assets and liabilities continued
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.
Note 16 – Payables
Current
Trade creditors and accruals
Trade payable facility
2019
$’000
2018
$’000
158,759
155,897
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 (2018: $50,000,000).
The amount utilised and recorded within trade creditors at 30 June 2019 was $38,534,164 (2018: $42,462,143).
Note 17 – Provisions
Current
Employee entitlements
Non-current
Employee entitlements
Provisions
2019
$’000
2018
$’000
16,006
14,592
518
501
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.
74
Ridley Corporation Limited Annual Report 2019 Note 18 – Borrowings
Non-current
Bank loans
2019
$’000
2018
$’000
118,926
76,222
The bank loans are subject to bank covenants based on financial ratios of the Group. As at 30 June 2019, and throughout all relevant
times during the financial year ended 30 June 2019, the Group was in compliance with these covenants. The bank loans are unsecured.
Total loan facilities available to the Group in Australian dollars
$’000
Long-term loan facility
Cash
Long term loan facility
2019
Limits
200,000
-
200,000
Utilised
119,500
(17,483)
102,017
2018
Limits
160,000
-
160,000
Utilised
76,500
(23,441)
53,059
In FY19, the long term loan facility with ANZ and Westpac was refinanced for a new five year term and extended from $160m to $200m in
order to accommodate the funding requirements for the construction of the new extrusion plant at Westbury in Tasmania and feedmill at
Wellsford, Bendigo in central Victoria. The Group’s dual bank long term loan facility is now a combination of floating core debt funding of
$100m plus an additional $100m of fixed term project funding with a maturity date of 27 May 2024. 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 2019, the value of legally enforceable cash balances which upon default or bankruptcy would be applied to the loan facility
is $17,483,000 (2018: $23,441,000).
Note 19 – Share capital
Fully paid up capital:
311,256,221 ordinary shares with no par value (2018: 307,817,071)
Parent entity
2019
$’000
2018
$’000
218,941
214,445
A fully underwritten Dividend Reinvestment Plan (DRP) was introduced for the payment of the 2019 interim dividend on 10 May 2019
which resulted in the issue of 896,926 fully paid ordinary shares to existing shareholders plus 2,542,224 fully paid ordinary shares
issued to institutional and sophisticated investors pursuant to a placement under the DRP. The shares were issued at $1.33 per share
and the costs of the DRP were $69,420. Issued share capital consequently increased through the issue of these 3,439,150 shares from
307,817,071 shares to 311,256,221 shares.
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.
75
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 19 – Share capital continued
The Group reviews and, where appropriate, adjusts the capital structure to take advantage of favourable costs of capital or high returns
on assets. The Group may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue new shares
or sell assets to reduce debt. The Group monitors capital through the gearing ratio (net debt/total equity). The gearing ratios as at
30 June are as follows:
Gross debt
Less: cash
Net debt
Total equity
Gearing ratio
Note 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
2019
$’000
118,926
(17,483)
101,443
277,499
36.6%
2019
$’000
3,240
2,354
(2,370)
377
3,601
2018
$’000
76,222
(23,441)
52,781
263,107
20.1%
2018
$’000
2,895
2,308
(3,870)
1,907
3,240
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.
Fair value reserve
Opening balance at 1 July
Available-for-sale financial assets – net change in fair value, net of tax
Closing balance at 30 June
2019
$’000
520
(403)
117
2018
$’000
-
520
520
The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the assets are
derecognised or impaired.
2019
$’000
44,902
(239)
72
(167)
44,735
23,565
(13,083)
(377)
54,840
2018
$’000
42,483
-
-
-
42,483
17,409
(13,083)
(1,907)
44,902
Retained earnings
Opening balance at 1 July
Recognition of expected credit losses under IFRS 9
Related tax
Impact at 1 July
Revised opening balance at 1 July
Net profit for the year
Dividends paid
Share-based payments reserve transfer
Closing balance at 30 June
76
Ridley Corporation Limited Annual Report 2019 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
Ridley Corporation (Thailand) Co., Ltd
Ridley Corporation Ecuador S.A.
Ridley Corporation (India) Private Limited
RCL Retirement Pty Limited
Ridley Land Corporation Pty Ltd and its controlled entities
Lara Land Development Corporation Pty Ltd
Moolap Land Development Corporation Pty Ltd
Country of
incorporation
Australia
Australia
Australia
Thailand
Ecuador
India
Australia
Australia
Australia
Australia
Class
of shares
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ownership interest
2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Note 22 – Parent entity
As at 30 June 2019 and throughout the financial year ending on that date, the parent company of the Group was Ridley
Corporation Limited.
Result of the parent entity
(Loss)/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
2019
$’000
(11,363)
(403)
(11,766)
1,392
363,702
365,094
6,072
118,926
124,998
240,096
218,941
3,718
17,437
240,096
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.
77
2018
100%
100%
100%
100%
-
-
100%
100%
100%
100%
2018
$’000
14,275
520
14,795
5,916
333,155
339,071
2,008
76,366
78,374
260,697
214,445
3,240
43,012
260,697
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
Notes to the Financial Statements continued
30 June 2019
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.
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 after income tax
Other comprehensive income
Available-for-sale financial assets – net change in fair value
Total comprehensive income for the year
(b) Summary of movements in retained profits
Opening balance at 1 July
Recognition of expected credit losses under IFRS 9 – after tax
Comprehensive income for the year
Dividends paid
Share-based payment reserve transfer
Closing balance at 30 June
2019
$’000
24,178
(6,774)
17,404
(403)
17,001
2019
$’000
41,256
(167)
17,001
(13,083)
(377)
44,630
2018
$’000
17,553
(4,310)
13,243
520
13,763
2018
$’000
42,483
-
13,763
(13,083)
(1,907)
41,256
78
Ridley Corporation Limited Annual Report 2019 (c) Balance sheet
Current assets
Cash and cash equivalents
Receivables
Inventories
Tax asset
Total current assets
Non-current assets
Receivables
Property, plant and equipment
Intangible assets
Investments accounted for using the equity method
Deferred tax asset
Available for sale financial 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
2019
$’000
2018
$’000
13,799
104,184
83,829
-
201,812
10,151
259,045
85,215
655
3,737
1,725
360,528
562,340
157,672
16,006
2,046
175,724
118,926
518
119,444
295,168
267,172
218,941
3,601
44,630
267,172
23,441
104,005
76,666
3,019
207,131
4,478
202,596
82,485
1,136
3,619
2,300
296,614
503,745
153,489
14,592
-
168,081
76,222
501
76,723
244,804
258,941
214,445
3,240
41,256
258,941
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.
79
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 24 – Related party disclosures continued
Transactions with related parties
Transactions with related parties were as follows:
– associate
Sales of products
Purchases of products/services – associate
– joint venture entity
Outstanding balances with related parties were as follows:
Current receivable – joint venture entity (Note 8(b))
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
2019
$’000
2018
$’000
-
-
-
-
-
-
5,989
5,275
2019
$
2018
$
3,140,631
2,931,832
176,621
5,000
883,896
167,870
111,439
772,071
4,206,148
3,983,212
2019
$’000
455
1,899
2,354
2018
$’000
579
1,729
2,308
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 Special Retention Plan
The Ridley Corporation Special Retention Plan was developed specifically to retain and motivate key executives. Under the Special
Retention Plan, selected executives and the Managing Director may be offered a number of performance rights (SRP Rights). The Plan
offer is made in accordance with the rules of the Ridley Long Term Incentive Plan except that there are no disposal restrictions and
the cessation of employment has been superseded, such that the SRP Rights under this offer vest in full on the earlier occurrence of
(i) completion of two years of service from the date of grant; (ii) ceasing to be an employee of Ridley because of a sale of a subsidiary
entity; and (iii) occurrence of a change of control event. Each SRP Right provides the entitlement to acquire one Ridley share at the
end of the service period.
80
Ridley Corporation Limited Annual Report 2019
(i) Current year issues under the Ridley Corporation Long Term Incentive Plan
The model inputs for the performance rights granted during the reporting period under the LTIP included:
Grant date
Expiry date
Share price at grant date
Fair value at grant date
Expected price volatility of the Company’s shares
Expected dividend yield
Risk-free interest rate
1 July 2018
30 June 2021
$1.375
$0.76
22%
4.5cps
2.07%
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:
Grant date
Expiry date
2019
Long Term Incentive Plan
1 July 2015
1 July 2018
1 July 2016
1 July 2017
1 July 2018
1 July 2019
1 July 2020
1 July 2021
Balance at
1 July 2018
Granted during
the year
Cancelled
during the year
Vested during
the year
Balance at
30 June 2019
2,425,000
2,600,000
2,550,000
-
7,575,000
-
-
-
2,700,000
2,700,000
(1,016,075)
(1,408,925)
(100,000)
(100,000)
(50,000)
-
-
-
-
2,500,0001
2,450,000
2,650,000
(1,266,075)
(1,408,925)
7,600,000
Special Retention Plan
1 January 2017
1 January 2020
150,000
-
-
-
150,000
1. The performance targets for this tranche of performance rights were not met and consequently all of these performance rights were forfeited on 1 July 2019.
7,725,000
2,700,000
(1,266,075)
(1,408,925)
7,750,000
Expiry date
Grant date
2018
Long Term Incentive Plan
1 July 2014
1 July 2015
1 July 2016
1 July 2017
1 July 2017
1 July 2018
1 July 2019
1 July 2020
Balance at
1 July 2017
Granted during
the year
Cancelled
during the year
Vested during
the year
Balance at
30 June 2018
2,450,000
2,675,000
2,800,000
-
7,925,000
-
-
-
2,700,000
2,700,000
-
(250,000)
(200,000)
(150,000)
(600,000)
(2,450,000)
-
-
-
(2,450,000)
-
2,425,000
2,600,000
2,550,000
7,575,000
Special Retention Plan
1 January 2017
1 January 2020
150,000
-
-
-
150,000
8,075,000
2,700,000
(600,000)
(2,450,000)
7,725,000
81
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 25 – Share-based payments continued
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 are 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 Ridley Employee Share Scheme was measured based
on the binomial option pricing model using the following inputs:
Grant date
Restricted life
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
Ridley Employee Share Scheme movements
2019 Number of shares
21 June 2019
3 years
$1.185
$0.642
22.5%
0.41-0.42cps
1.28%
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
19 May 2017
31 May 2018
21 June 2019
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
19 May 2020
31 May 2021
21 June 2022
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
$0.84
$0.84
$0.64
Balance
at start of
the year
22,000
41,850
62,640
84,896
94,986
129,096
230,568
179,080
170,404
210,058
483,769
604,350
575,909
578,289
590,010
686,275
-
4,744,180
Granted
during
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
708,133
708,133
Exercised
during
the year
(22,000)
(41,850)
(15,660)
(84,896)
(94,986)
(17,930)
(230,568)
(37,444)
(37,700)
(41,350)
(80,223)
(127,980)
(139,074)
(106,488)
(73,405)
(77,825)
-
(1,229,379)
Balance
at end of
the year
-
-
46,980
-
-
111,166
-
141,636
132,704
168,708
403,546
476,370
436,835
471,801
516,605
608,450
708,133
4,222,934
Exercisable
at end of
the year
-
-
46,980
-
-
111,166
-
141,636
132,704
168,708
403,546
476,370
436,835
471,801
-
-
-
2,389,746
Weighted average exercise price
$0.66
$0.64
$0.60
$0.68
$0.61
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 (2018: three years).
82
Ridley Corporation Limited Annual Report 2019 2018 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
19 May 2017
31 May 2018
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
19 May 2020
31 May 2021
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
$0.84
$0.84
Balance
at start of
the year
30,000
56,700
78,300
98,540
117,853
150,612
266,040
196,988
203,580
246,446
573,716
727,590
636,531
619,701
623,250
-
4,625,847
Granted
during
the year
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
686,275
686,275
Exercised
during
the year
(8,000)
(14,850)
(15,660)
(13,644)
(22,867)
(21,516)
(35,472)
(17,908)
(33,176)
(36,388)
(89,947)
(123,240)
(60,622)
(41,412)
(33,240)
-
(567,942)
Balance
at end of
the year
22,000
41,850
62,640
84,896
94,986
129,096
230,568
179,080
170,404
210,058
483,769
604,350
575,909
578,289
590,010
686,275
4,744,180
Exercisable
at end of
the year
22,000
41,850
62,640
84,896
94,986
129,096
230,568
179,080
170,404
210,058
483,769
604,350
575,909
-
-
-
2,889,606
Weighted average exercise price
$0.63
$0.84
$0.58
$0.66
$0.55
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 $5,687,335 (2018: $5,555,000).
Note 27 – Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk including currency, interest rate, commodity, credit and liquidity
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 manage 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.
83
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 27 – Financial risk management continued
(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, Thai Baht 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
The Group holds foreign currency bank accounts in US dollars, New Zealand dollars, Thai Baht 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.
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
Assets
Payables
USD
NZD
93
1,053
-
-
-
-
2019
EUR
111
-
-
THB
3,681
5,989
-
GBP
-
1,725
-
USD
3,315
-
-
NZD
1,176
-
-
2018
EUR
2,982
THB
2,121
GBP
-
-
-
5,275
2,300
(3,533)
-
Net balance sheet exposure
93
1,053
111
9,670
1,725
3,315
1,176
2,982
3,863
2,300
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 decreased by $1,156,690 (2018: $1,068,000) or increased by $1,413,732 (2018: $1,305,000) the Group’s
reported comprehensive income and the Group’s equity. A sensitivity of 10% has been selected as this is considered reasonable taking
into account the current level of exchange rates and 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.
(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 3.8% (2018: 4.0%).
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
2019
2018
Interest rate
$’000
Interest rate
$’000
-
3.8%
17,483
119,500
-
4.0%
23,441
76,500
Interest rate sensitivity
A 100 basis point change 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 $832,000 (2018: $534,000).
84
Ridley Corporation Limited Annual Report 2019 (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. Wherever possible, the Group mitigates credit risk
through securing of 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
2019
$’000
97,294
16,989
17,483
131,766
2018
$’000
96,150
13,410
23,441
133,001
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 Note 18.
The following tables disclose the contractual maturities of financial liabilities, including estimated interest payments:
$’000
2019
Non-derivative financial liabilities
Trade and other payables
Bank loans
2018
Non-derivative financial liabilities
Trade and other payables
Bank loans
Carrying
amount
Less than
1 year
1 to 2
years
2 to 3
years
3 to 4
years
Total
contractual
cash flows
4 to 5
years
158,759
118,926
277,685
158,759
4,555
163,314
-
4,555
4,555
155,897
76,222
232,119
155,897
5,715
161,612
-
5,715
5,715
-
4,555
4,555
-
81,937
81,937
-
4,555
4,555
-
123,481
123,481
158,759
141,701
300,460
-
5,715
5,715
-
5,715
5,715
155,897
104,796
260,693
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.
(e) Other financial assets
Fair value through other comprehensive income
Equity securities – available for sale
The fair value is a Level 1 valuation (see Note 27(g)).
2019
$’000
2018
$’000
1,725
2,300
85
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 27 – Financial risk management continued
(f) Financial instruments
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.
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.
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.
(g) Fair values
Fair values versus carrying amounts
The carrying amount of financial assets and liabilities approximates their fair value.
For financial assets and liabilities carried at fair value, the Group uses the following to categorise the method used:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly (as prices) or indirectly (derived from prices). Valuation inputs include forward curves, discount
curves and underlying spot and futures prices.
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
Note 28 – Commitments for expenditure
Expenditure contracted for but not recognised as liabilities:
Capital plant and equipment (a)
CSIRO Novacq™ Research Alliance (b)
Total Group commitments for non-cancellable operating leases:
Due within one year
Due within one to two years
Due within two to five years
Due after five years
The Group has leases for land, buildings and equipment under operating leases.
86
2019
$’000
41,815
2,750
44,565
5,244
4,272
5,282
943
15,741
2018
$’000
51,493
3,750
55,243
4,855
3,470
3,475
1,202
13,002
Ridley Corporation Limited Annual Report 2019 (a) Capital plant and equipment
Capital plant and equipment includes a new extrusion plant and a new feedmill in development as announced on the following
respective dates.
• On 7 September 2018, the Group announced its intention to build a new state-of-the-art, fit-for-purpose feedmill in the Greater
Bendigo region of Victoria. The plant will have an annual production capacity in excess of 350,000 tonnes and will cost between
$45m–$50m, of which $21.1m was incurred in FY19 and reflected at balance date within capital work in progress and for which $22.4m
was contractually committed but not recognised as a liability at balance date.
• The new state-of-the-art, fit-for-purpose extrusion plant at Westbury, northern Tasmania, was officially commissioned on 24 July 2019
and has a 50,000 tonne annual production capacity on a five day shift structure. As at the date of this report, the final costs are still
being finalised and the total project cost is expected to be in the vicinity of $47m–$48m.
(b) CSIRO Novacq™ Research Alliance
On 24 March 2017, a five-year strategic alliance was executed with CSIRO to collaborate in order to maximise the development of new
Novacq™ applications beyond the former application for prawn and crustacean species. Ridley’s annual cash commitment to the alliance
is $1m, and Ridley has the option to extend the relationship for a further five years. The quarterly payments are being capitalised into the
Novacq™ Project reflected in the Balance Sheet as a non-current intangible asset.
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
Litigation
2019
$’000
967
2018
$’000
954
On 20 August 2018, Ridley advised the market of proceedings having been commenced against it by a customer, Baiada, in respect of
stockfeed manufactured by Ridley for Baiada at its Wasleys feedmill in South Australia ‘between about 2014 until about October 2017’.
Baiada, through its operating entities Baiada Poultry Pty Limited and BPL Adelaide Pty Limited, is, and has been for many years,
a significant customer of Ridley, and one which Ridley is continuing to supply.
In the context of the legal proceedings, Baiada is yet to quantify its alleged loss, but has said that it consists of increased milling fees
(and associated costs) and lost profits as a result of the reduced growth of its broiler chickens. Ridley believes the claim is not of merit,
and as such it is being vigorously defended. Ridley’s insurers have been notified of the claim and are being advised of the status of the
court proceedings. If required, Ridley believes insurance cover exists in respect of the claim. Legal costs are being expensed in the profit
and loss as incurred and no provision has been raised to date for any insurance deductible.
At the time of preparing this Financial Report, some companies included in the Group are parties to pending legal proceedings. The
outcome of these proceedings is not known and 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.
87
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 30 – Auditor’s remuneration
(a) Audit and review of Financial Reports
Auditor 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 auditor
2019
$
2018
$
369,196
349,513
26,383
96,377
395,579
445,890
Note 31 – Events occurring after the balance sheet date
Other than the 26 August 2019 appointment of the new Chief Executive Officer and Managing Director, no matters or circumstances
have arisen since 30 June 2019 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 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 2019
comprise Ridley Corporation Limited, the ‘parent entity’, its subsidiaries and the Group’s interest in equity accounted investments.
Ridley Corporation Limited and its subsidiaries together are referred to in this Financial Report as ‘the Group’. The Group is a
‘for-profit’ entity and is primarily involved in the manufacture of animal nutrition solutions.
The Financial Report was authorised for issue by the Directors on 23 August 2019.
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. With the exception of the adoption of AASB 9 Financial Instruments and AASB 15 Revenue from Contracts with Customers as
of 1 July 2018, these policies have been consistently applied to all the years presented. Certain comparative amounts have been reclassified
to conform with the current year’s presentation.
Basis of preparation
Statement of compliance
The consolidated financial statements comply with International Financial Reporting Standards (IFRSs) and interpretations adopted
by the International Accounting Standards Board (IASB).
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.
Application of new and revised accounting standards and interpretations
The Group has initially applied AASB 15 and AASB 9 from 1 July 2018. A number of other new standards are also effective from 1 July 2018,
but they do not have a material effect on the Group’s financial statements. Due to the transition methods chosen by the Group in applying
these standards, comparative information throughout these financial statements has not been restated to reflect the requirements of
the new standards.
AASB 15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing
revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes.
AASB 15 was effective for annual periods beginning on or after 1 January 2018, and consequently adopted by the Group from 1 July 2018
using the modified retrospective approach.
88
Ridley Corporation Limited Annual Report 2019 The Group is using the practical expedients for completed contracts, meaning that completed contracts that began and ended in the
same comparative reporting period, as well as the contracts that are completed contracts at the beginning of the earliest period
presented, are not restated. This practical expedient also excludes the consideration for significant financing components of the
transaction price. Under AASB 15, revenue is recognised when a customer obtains control of the goods, where ‘control of an asset
refers to the ability to direct the use of and obtain substantially all of the remaining benefits from the asset’.
For the sale of feed, the Group generally has one performance obligation. Therefore revenue is currently recognised when the feed is
either collected from the Ridley premises or delivered to the customers’ premises, which are taken to be the points in time at which
the customer accepts the feed and the performance obligation has been met and the related risks and rewards of ownership transfer.
Revenue is recognised at these points, depending on agreed terms, provided that the revenue and costs can be measured reliably,
the recovery of the consideration is probable and there is no continuing management involvement with the goods.
The Group provides retrospective volume rebates to some of its customers once the quantity of products purchased reaches a specified
volume. Under AASB 15, if a discount applies retrospectively to all purchases once a volume threshold is achieved, then the discount
represents variable consideration. In this case, an entity estimates the volumes to be purchased and the resulting discount in determining
the transaction price and updates this throughout the term of the contract. Prior to the adoption of AASB 15, the Group estimated volume
rebates using historical data and inputs from customers and provided for rebates. For contracts where discounts apply retrospectively
to all purchases under the contract once a threshold is achieved, the financial impact is not material.
The Group provides variable fee pricing structures whereby discounts for future purchases are provided after a volume threshold has
been met, i.e. prospectively. Under AASB 15, management must determine whether the arrangement conveys a material right to the
customer. If a material right exists, then this is viewed as a separate performance obligation to which an entity allocates a portion of
the transaction price. However, if a material right does not exist, then there are no accounting implications for transactions completed
before the volume threshold is met. On the basis that the volume discounts are not incremental to any one customer, along with the
fact that they are not material, management has assessed there to be no material right arising from these arrangements.
AASB 9 Financial Instruments
AASB 9 Financial Instruments sets out requirements for recognising and measuring financial assets, financial liabilities and some
contracts to buy or sell non-financial items. This standard replaces AASB 139 Financial Instruments: Recognition and Measurement.
AASB 9 introduces changes in the classification and measurement of financial assets and financial liabilities, including a new expected
credit loss model for impairment. The standard also introduces new requirements for hedge accounting that align hedge accounting
more closely with risk management.
(i) Classification and measurement
Under AASB 139, the Group applied the classification of its available-for-sale financial assets at fair value through other comprehensive
income and all other reported financial instruments at amortised cost. Under AASB 9, the Group has determined that there is no change
to classification and measurement of financial instruments. Set out below is a table showing the accounting treatment under AASB 139
as compared to AASB 9:
Asset/liability
Cash and cash equivalents
Trade debtors
Lara land receivable
Other receivables – joint venture entity
Available-for-sale financial assets
Payables
Borrowings
Previous accounting treatment
(AASB 139)
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Fair value through other
comprehensive income
Amortised cost
Amortised cost
New accounting treatment
(AASB 9)
Amortised cost
Amortised cost
Amortised cost
Amortised cost
Fair value through other
comprehensive income
Amortised cost
Amortised cost
(ii) Impairment
The impact of this standard was to recognise an impairment allowance of $239,077 as at 1 July 2018, with this balance maintained
at 30 June 2019 as detailed in Note 8 to these accounts.
Standards issued but not yet effective
A number of new standards are effective for annual periods beginning 1 July 2019 and while earlier application is permitted, the Group
has not early adopted the new or amended standards in preparing these consolidated financial statements. Of those standards that are
not yet effective, AASB 16 is expected to have a material impact on the Group’s financial statements in the period of initial application.
The following standards are applicable to the Group’s financial statements in the period of initial application.
89
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 32 – Corporate information and accounting policy summary continued
AASB 16 Leases (applies from years commencing 1 January 2019)
The new lease accounting standard AASB 16 is effective for the financial year beginning 1 July 2019. It requires all leases to be recognised
on the balance sheet with a right-of-use asset capitalised and depreciated over the estimated lease term together with a corresponding
liability that will reduce over the same period with an appropriate interest charge recognised. AASB 117 Leases only requires leases
categorised as finance leases to be recognised on the balance sheet. Management has completed the initial impact assessment
and will concentrate ongoing efforts to implement the standard as business as usual.
At 30 June 2019, the Group held operating leases with a future obligation of $15.741m on a non-discounted basis as disclosed in Note 28.
The impact of AASB 16 will be as follows.
(i) Lease liability
A lease liability of $13.106m will be recognised, being the present value of the future payments, using the Group’s incremental borrowing
rate of 3.8% applicable to the location and term of each lease. No finance leases were recognised under IAS 17. The most significant lease
liabilities relate to property of $7.521m and equipment of $3.940m.
Where leases are held in non-Australian dollar currencies, the spot exchange rates on 1 July 2019 have been used to value them.
Lease liabilities will be revalued to spot exchange rates at each future balance sheet date.
(ii) Right of use asset
A right-of-use asset of $13.810m will be recognised. The right-of-use asset has been measured at an amount equal to the lease liability
on transition plus amounts prepaid for the Thailand Pond Lease. This will result in a reduction in prepayments of $0.704m.
Where leases are held in non-Australian dollar currencies, the spot exchange rates on 1 July 2019 have been used to value them.
Lease liabilities will be revalued to spot exchange rates at each future balance sheet date.
(iii) Transition
The Group is applying the modified retrospective transition method under which comparative information will not be restated and has
elected to use the following practical expedients permitted by the standard:
• on initial application, AASB 16 will be only been applied to contracts that were previously classified as leases;
• lease contracts for low-value assets will continue to be expensed to the income statement on a straight-line basis over the lease term;
• in measuring lease liabilities, apply a single discount rate to a portfolio of leases with similar characteristics (such as leases with
a similar remaining lease term for a similar class of underlying asset in a similar economic environment); and
• the lease term has been determined with the use of hindsight where the contract contains options to extend the lease.
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:
• available-for-sale financial assets; 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 ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2018/191 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.
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:
90
Ridley Corporation Limited Annual Report 2019 (i) Estimated recoverable amount 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 12 for further details on impairment testing.
(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. Refer to Note 10 for further details on investment properties.
(iii) Provision for ECL on receivables
The Group calculates the doubtful debts provision under the expected credit loss (ECL) model. The Group has established a provision
matrix that is based on the Group’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and
the economic environment. Measurement of ECL allowance for trade receivables is disclosed in Note 8.
(iv) Determining timing of satisfaction of performance obligations
The Group generally has one performance obligation. Therefore revenue from the sale of feed is to be recognised at a point in time.
Refer to Note 4 for further details on revenue recognition.
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) 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.
(ii) 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.
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.
91
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY Notes to the Financial Statements continued
30 June 2019
Note 32 – Corporate information and accounting policy summary 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.
92
Ridley Corporation Limited Annual Report 2019 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 55 to 92 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 2019 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 2019.
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
Dr G H Weiss AM
Director
D J Lord
Director
Melbourne
23 August 2019
93
SAFETY, PEOPLE, INNOVATION & COMMUNITYRidley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORY
Independent Auditor’s Report
94
Ridley Corporation Limited Annual Report 2019 95
Ridley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORYSAFETY, PEOPLE, INNOVATION & COMMUNITY Independent Auditor’s Report continued
96
Ridley Corporation Limited Annual Report 2019 97
Ridley Corporation Limited Annual Report 2019INTRODUCTIONLOCATIONS & SECTORSCHAIRMAN & CEO’S MESSAGESFINANCIAL REVIEWBOARD OF DIRECTORSFINANCIAL REPORTCORPORATE DIRECTORYSAFETY, PEOPLE, INNOVATION & COMMUNITY Shareholder Information
Holdings of securities – Ordinary Shares
Each fully paid
Distribution of holdings – ordinary shares
Number held
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
>100,000
Total
Number of
holders
Number of
securities
% Held by 20 largest
shareholders
6,335
311,256,221
76.97%
Number of ordinary
shareholders
1,139
2,262
1,195
1,637
102
Number of ordinary
shares held
480,258
6,791,565
9,029,368
40,602,154
254,352,876
6,335
311,256,221
There are 641 holders of unmarketable parcels (comprising shareholdings less than 491 shares at $1.02 per share) of Ordinary Shares.
Number of
ordinary shares
89,191,067
58,900,213
48,695,837
16,093,963
8,984,908
6,200,791
1,554,868
1,550,000
1,500,000
998,800
865,469
770,694
703,286
670,477
654,979
500,000
485,888
431,310
426,377
400,000
239,578,927
71,677,294
Holding
60,727,615
42,569,445
27,696,981
15,954,589
% of fully paid
ordinary shares
28.66
18.92
15.64
5.17
2.89
1.99
0.50
0.50
0.48
0.32
0.28
0.25
0.23
0.22
0.21
0.16
0.16
0.14
0.14
0.13
76.99
23.01
% Holding
19.73
13.83
9.00
5.18
20 largest fully paid shareholders
Citicorp Nominees Pty Limited
HSBC Custody Nominees (Australia) Limited
JP Morgan Nominees Australia Pty Limited
BNP Paribas Nominees Pty Ltd
Continue reading text version or see original annual report in PDF format above