2 0 1 6 A N N U A L R E P O R T
2016 “In our pursuit of best practice in the
agricultural production of fine foods,
TasFoods aims to redefine industry standards
across animal husbandry, environmental
responsibility and employee development.”
Jane Bennett, CEO.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
CORPORATE DIRECTORY
Board of Directors
Rob Woolley
(Chairman and Non-Executive Director)
Hugh Robertson
(Non-Executive Director until 10 February 2017)
Roger McBain
(Non-Executive Director)
Antony Robinson
(Non-Executive Director)
Jane Bennett
(Managing Director and CEO)
Company Secretary
Janelle O’Reilly
Registered Office
52-54 Tamar Street
Launceston Tasmania 7250 AUSTRALIA
Telephone: +61 3 6331 6983
Facsimile: +61 3 6256 9251
Principal Place of Business
52-54 Tamar Street
Launceston Tasmania 7250 AUSTRALIA
Telephone: +61 3 6331 6983
Facsimile: +61 3 6256 9251
Web: www.tasfoods.com.au
Postal Address
PO Box 425
LAUNCESTON, TASMANIA 7250 AUSTRALIA
Share Registry
Advanced Share Registry Services
Unit 2, 150 Stirling Highway
NEDLANDS WESTERN AUSTRALIA 6009
AUSTRALIA
Telephone: +61 8 9389 8033
Facsimile: +61 8 9389 7871
Auditor
PricewaterhouseCoopers
2 Riverside Quay
Southbank Boulevard
Southbank, VICTORIA 3006 AUSTRALIA
Solicitors
Groom Kennedy Lawyers and Advisors
Level 1, 4 7 Sandy Bay Road
Hobart, TASMANIA 7000 AUSTRALIA
Bankers
Australia and New Zealand Banking Group Limited
Bendigo and Adelaide Bank Limited
Stock Exchange Listing
TasFoods Limited shares are listed on the
Australian Securities Exchange, code TFL.
INDEX
Chairman’s Report
Managing Director/CEO Report
Brand Development
Review of Operations
Board of Directors
Executive Team
Directors’ Report
Financial Statements
5
7
10
12
28
29
30
• Consolidated Statement of Profit and
Loss and Other Comprehensive Income
42
• Consolidated Statement of Financial Position 43
• Consolidated Statement of Changes in Equity 44
• Consolidated Statement of Cash Flows
• Notes to Financial Statements
• Directors’ Declaration
• Independent Auditor’s Report
Shareholder Information
45
46
80
81
88
3
During the year, we conducted
a $25 million capital raising
that provided funding for the
two major acquisitions
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 CHAIRMAN’S REPORT
TasFoods made two significant acquisitions in
2016, being the Nichols Poultry business and
Shima Wasabi, both located on the north west
coast of Tasmania where the temperate climate
provides an ideal growing environment for these
products. Combined with our dairy business in
northern Tasmania, these assets provide TasFoods
with a range of product opportunities that enable
us to target high-end food consumers in Australia
who are willing to pay a premium for quality, taste,
provenance and production standards.
The Board’s focus for the year was to ensure we
built a management team that could develop and
implement systems and processes within each of
the businesses to allow for both the introduction
of new product lines and the on-going growth of
each business. I am pleased to report that during
2016 we secured management expertise in all key
areas of the businesses, invested in new systems,
processes and operating infrastructure, and
positioned the Company to grow the businesses
and expand our customer base.
TasFoods’ Revenue for the 2016 financial year was
$16.139 million compared to $2.476 million in 2015.
The increase was due primarily to revenue from the
newly acquired businesses. The Company made a
net loss of $2.577 million, reflecting our investment
in the development of the systems, processes and
expertise required to provide future growth. Our
capital expenditure of $12.876 million reflects the
cost of acquiring the Nichols Poultry and Shima
Wasabi businesses, the movement of the dairy
processing operations to a renovated facility, and
increasing the milk processing capacity.
During the year, we conducted a $25 million
capital raising that provided funding for the two
major acquisitions. While we are well-placed
for further acquisitions if opportunities arise to
acquire food businesses that meet our criteria, our
focus for 2017 is on development of the chicken,
dairy and wasabi businesses, within which we
believe there is significant potential for profitable
and sustainable growth.
I would like to thank my fellow directors and
the management team for their hard work and
commitment to building a company that creates
value by matching consumer demand for premium
food products with the attributes of regional
provenance.
Rob Woolley
Chairman
5
Premium food brands that
leverage the attributes of the
provenance of Tasmania
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 MANAGING DIRECTOR
/CEO REPORT
We established
TasFoods with an aim
to build a portfolio
of premium food
brands that leverage
the attributes of
the provenance
of Tasmania. The
business commenced
in 2015 with the
purchase of Meander Valley Dairy, a producer
of premium luxurious high-fat dairy creams and
butters.
2016 has been a year of significant investment
for TasFoods in both the tangible and intangible
assets of the business. We have continued to build
a range of premium iconic Tasmanian businesses
whilst developing the overarching brand identity
that will serve to unify our offerings to the
consumer.
In June 2016 we finalised the acquisition of several
businesses that enhance our objective of building
a premium Tasmanian branded food business.
The largest acquisition was Nichols Poultry which
is a chicken brand that is well-known and loved
by Tasmanians and is synonymous with quality
product. The Nichols Poultry acquisition included
91 hectares of land on which are located a number
of chicken growing sheds, a feed mill, processing
plant and a wind turbine. Inclusion of all these
assets of the business ensures we are able to
manage all aspects of the chicken production
process and develop protocols that ensure
each element of the value chain is meeting the
expectations of our target customers.
Nichols Poultry is the second largest chicken
processor in Tasmania producing chickens for the
Tasmanian market. The business has a number
of attributes that position it to supply products
for a premium market, including using air-chill
technology during processing instead of tumbling
the chicken meat in chlorinated water.
We have undertaken a variety of consumer
research in H2 2016 to help us understand
consumer expectations for chicken. This has
shown us that premium chicken consumers are
concerned about animal welfare and the life of the
chicken. For these consumers, free-range chicken
is perceived to meet a higher standard of animal
welfare than any barn-raised system. We have
taken this information and worked with our chicken
experts Rob and Tristan Nichols to develop a plan
to meet the expectations of consumers who wish to
purchase chicken meat produced from a growing
system that meets the highest standards of animal
welfare. Under Rob and Tristan’s guidance we have
commenced trial growing of a premium ethical
free-range chicken using a system similar to that of
premium free-range chicken in the United Kingdom
but not currently utilised by commercial operators
in Australia. We look forward to launching this
product commercially in H1 2017.
We have trialled a number of different shed
designs and found the most suitable to be a
simple construction that we build ourselves. These
small mobile sheds house colonies of 700 – 1200
chickens. The small flock and shed size combined
with ample natural light encourages ranging for
all birds from the shed. A number of sheds are
co-located in each field to form a village of same-
aged chickens for ease of management. At the
conclusion of a production batch the sheds are
connected to tractors and pulled up the field to a
fresh location for the next chicken batch to range
on fresh pasture. There are no power or heating
costs for the sheds, however there is a larger
7
product. Through this product we are moving away
from the competitive environment of improving
feed conversion efficiency to reduce costs and
we are creating a new category for chicken
in the Australian market that meets consumer
expectations for the life and welfare of a free-
range chicken, for which they have paid a premium.
The second acquisition finalised in June 2016 was
Shima Wasabi, a brand known for innovation and
premium quality in the specialised niche industry
of wasabi production. Shima Wasabi is the largest
producer of fresh wasabi stem in Australia selling
to premium restaurants across the country.
Harvesting of the wasabi crop at Shima Wasabi
commenced in July 2016. Fresh wasabi stems,
small leaves and flowers are sold directly to high-
end restaurants across Australia. Harvested parts
of the plant unsuitable for fresh sales are freeze-
dried into a powder that is sold as a premium
100% wasabi powder for industrial and retail sale.
As the volume of harvested material suitable for
powder production grows in H1 2017 the volume
of powder produced will enable the launch of new
retail packaging suited to consumer use.
Construction of a new larger and more automated
greenhouse on the existing Shima Wasabi site
commenced in late 2016. This new greenhouse will
be finished and planted in H1 2017 with harvesting
to commence in H1 2018.
June 2016 also saw the company purchase a herd
of 500 milking goats to provide the business with
a consistent supply of high quality goat milk from
which to develop a range of goat milk and cheese
products. A new dairy goat brand Robur Farm was
launched in November 2016 to which a range of
products will be added in H1 2017. Fresh goat milk
under the Robur Farm brand was launched into
Woolworths Tasmania stores in December 2016.
To support the growth in dairy production, the
existing Meander Valley Dairy processing operation
was moved in October 2016 from a small rented
facility to a refurbished processing site that is three
times larger with separate rooms for each type
of product manufacturing. The new factory was
delivered on time and on budget. It will allow for
significant growth in dairy production and a range
of new products to be produced. Application for an
export licence commenced in H1 2017.
labour cost involved in the bird management and
feeding.
We have observed a number of differences in
the chickens produced in this new ethical free-
range system. When ranging, the chickens eat
the pasture and this produces a healthy yellowing
around the hocks and vibrant red combs,
particularly on the males. Close inspection of our
birds also shows an absence of hock burn and soft,
healthy foot pads, both important indicators of
healthy living conditions.
Many of the advantages we have for introducing
this ethical free-range chicken production system
stem from the location of Nichols Poultry at
Sassafras on the northwest Coast of Tasmania.
The temperate climate minimises the risk of
extremes of hot or cold weather, allowing for
the natural ventilation of the sheds and the
pop holes and doors to be open continuously,
providing permanent access to outside for birds.
The absence of foxes in Tasmania reduces the risk
of predation. The remote location of Tasmania
in the Southern Ocean and the absence of
other commercial chicken flocks in the region
significantly reduce the exposure of ranging birds
to disease from other chicken flocks or migratory
birds.
The outcome of our production trials show that
a chicken that has been treated with respect
and has had a happy life produces the very best
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TasFoods is building a branded food business which
competes based on the attritributes of provenance
that appeal to our target consumers. To understand
the expectations of target consumers we engaged
in extensive consumer research in H2 2016 that
is influencing the revised branding across the
business, revised packaging sizing for a number
of existing products and a range of new products
that will all be launched in H1 2017. The research
will also influence the target channels to market to
ensure that we are selling the products in the places
where our target consumers choose to shop and
eat.
H2 of 2016 saw a strong focus on developing
the management systems and capabilities of the
business to deliver on the strategy. Shared services
teams that operate across the business have been
developed for financial management, sales and
marketing, food safety and quality assurance and
work health and safety. Each of the operational
units of the business is led by technically skilled
managers and the business is focused on building
leadership capability throughout each operating
unit.
The brands purchased in 2015 and 2016 by
TasFoods are already premium offerings in
Tasmania and to a lesser extent major cities of
other Australian States. In order to present them
effectively both to discerning consumers and to
the retail trade we have created an aggregating
brand – The Tasmanian Food Co – as a vehicle to
market. The name was chosen to highlight that our
focus is on Tasmanian produce, and to both tap
into, and help build and strengthen Tasmanian’s
reputation for being a clean, green and healthy
place with great food from passionate producers.
Across the world food provenance is on the
agenda. Increasingly, people care where food
comes from and how it has been produced. The
aim of the Tasmanian Food Co branding strategy
is to become synonymous with the aggregation
or ‘curation’ of the best Tasmanian artisan brands
under a single endorser brand.
The immediate advantage of this ‘house of brands’
approach is that each brand can tell its own
unique story and build its consumer equity. At the
same time The Tasmania Food Co provides an
easy-to-find ‘one stop’ via the web landing page
and social media activities to present to consumers
the story of the best that Tasmania has to offer,
becoming a trusted brand in its own right over
time. Under this strategy, brands with greater
awareness, like Nichols, can tell a fuller story, while
those with less can develop awareness as part of
The Tasmanian Food Co.
We expect that over time brands with the
Tasmanian Food Co endorsement will represent
best practice in both environmental standards,
farming and animal husbandry so that they deliver
the best eating experience possible. The activities
outlined above ensure we are actively delivering
on these values.
Our efforts in 2016 have been aimed at setting the
individual brands up for growth. In line with the
new branding approach, December saw the launch
TasFoods is building a branded
food business which competes
based on the attritributes of
provenance that appeal to
our target consumers.
of our initial landing page for The Tasmanian Food
Co where consumers can find us. In the coming
months this will be transformed into a full website
where people with a passion for food can learn
more about us and our philosophy.
As we look to 2017 with our initial key structural
plans now in place, we are poised to execute our
commitment to provenance and the highest quality
and, above all, provide consumers with the genuine
delight of artisan produce that is unmistakably
Tasmanian.
This commitment is summed up in our brand
promise. The Tasmanian Food Co: Pride of Plate.
Jane Bennett
Managing Director/CEO
9
BRAND DEVELOPMENT
TasFoods has purchased three businesses with
existing brand identities and varying levels of
brand recognition:
• The Nichols brand has a very high level of brand
awareness in Tasmania but is virtually unknown
elsewhere.
• Meander Valley Dairy has strong brand recognition
from the distinctive cow on the packaging, and has a
high level of awareness in the channels to market as
a premium dairy brand.
• Shima Wasabi has strong brand recognition amongst
premium foodies and chefs of high-end restaurants.
Since purchasing Nichols and Shima Wasabi we have
had a strong focus on developing a brand structure
that enables TasFoods to leverage the existing brand
recognition, while building a platform for shared
values. The new designs maintain the prominence of
the existing brands while introducing the Tasmanian
Food Co. as an endorser brand across the range.
The Tasmanian Food Co. is the endorser brand
through which our artisan brands are promoted to a
wider audience. The Tasmanian Food Co. endorses
those brands within the TasFoods business that meet
the brand promise and values that it represents.
The sub-brands within the Tasmanian Food Co.
will each have their own set of unique attributes
that meet the needs of their target market. This
enables the Tasmanian Food Co. to tell the story
of the provenance of the products. It also helps us
develop new and exciting product categories such as
Ethical Free-Range Chicken, that meet the evolving
expectations of consumers.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 Consumer research conducted during 2016
showed that the Meander Valley Dairy
cow icon met consumer expectations of a
premium artisan brand;
“The logo/cow sits firmly in artisan territory;
conveys a sense of small dairy, with a love
of tradition, yet contemporary, committed to
delivering an experience you will love.”
The Meander Valley cow was then used
as a style guide to develop contemporary
branding for the full range of products
endorsed by the Tasmanian Food Co. brand.
The Nichols brand has been broken into
three separate branding propositions:
• Nichols Poultry represents the original cuts
and whole birds raised under the RSPCA
standard.
• Nichols Kitchen represents the value-added
and ready-to-cook products that provide
convenience to consumers.
• Nichols Ethical Free-Range represents
chicken from the new free-range production
system, which has been established to
create a new premium free-range category
for chicken meat in Australia.
The new branding will be released to the
market in early 2017. It will be supported by
a strong marketing campaign at retail level
and through social media.
11
REVIEW OF
OPERATIONS
Dairy Division
Meander Valley Dairy was the original dairy brand
purchased by Tasfoods in September 2015. It
produces a range of luxurious premium creams and
butters that exemplify the TasFoods strategy of
building a stable of premium branded foods.
The rented premises used for dairy manufacturing
when the business was purchased were not
adequate to accommodate the growth plan for the
dairy operations. Suitable alternative premises were
identified in early 2016 and renovated to comply
with all regulatory requirements for dairy processing.
New processing equipment was purchased to allow
for significant growth in processing volume and
speed. The new dairy processing facilities were
completed on time and on budget in October 2016.
An application for export accreditation for the dairy
processing facility has been submitted to Australian
Quarantine Inspection Service (AQIS) with an audit
of the facilities and Quality Assurance and Food
Safety processes due to take place in February 2017.
Consumer research conducted in 2016 helped us
determine how to best resize the existing product
range and identify new product opportunities for the
Meander Valley Dairy range. The resized products
under our new branding will be released in early
2017, along with a range of new products that
complement existing products and take advantage
of the expanded production capability.
A herd of 500 dairy goats was purchased in June
2016 and relocated to converted buildings on the
Nichols Poultry farm. The objective in purchasing
the goatherd was to secure a supply of goat milk
and to develop animal husbandry practices that
will meet the brand promise of ethical treatment of
animals. We intend to apply these animal husbandry
practices to future contract goat farmers in a similar
way to the Nichols Poultry business, in which we
A range of luxurious
premium milk, creams
and butters
2016 ANNUAL REPORT
2016 ANNUAL REPORT
20162016 have developed animal husbandry practices for the
Ethical Free-Range chickens prior to rolling them
out to contract growers.
Robur Farm is the new brand name for the goat
milk products, with a range of milk and cheese
products being developed. Robur Farm Goat
Milk was released into the Tasmanian market in
December 2016 and is sold in independent retail
and Woolworth stores. A range of cheese products
will be released early in 2017.
“An understanding of
good nutrition is key to
sustainable goat farming.
Our connection with the
Netherlands will ensure
we have access to the
best advice. We want to
prioritise animal health and
comfort. We provide year-
round, constant quality and
quantity, luscious, clover-
based grass supply for
our goats, free from urea
additives.”
Leon Lolkema
Goat Farm Manager
13
REVIEW OF
OPERATIONS
Continued
Nichols Poultry
Nichols Poultry was established in the early 1980’s
when founder Rob Nichols and his family emigrated
from Leicestershire in England to Sassafras in
Tasmania. The business has grown to become one
of the most trusted and respected meat brands
in Tasmania. Consumer research conducted by
TasFoods in 2016 demonstrated that Tasmanian
consumers know the product and trust Nichols to
be a source of high quality chicken.
“I feel good buying their chickens and you can taste
the difference”
“It’s the ethics and good provenance that is the
Nichols difference”
The most significant attribute that distinguishes
the Nichols chicken products and can be tasted by
the consumer is that during processing, the meat
is air-chilled rather than spin-chilled in chlorinated
water to cool. The spin-chilling process results
in the absorption of chlorinated water that may
cause bleaching of the meat and bones, and it adds
water that emerges during the cooking process
and influences the flavour of the meat. Air-chilled
chicken is drier meat and is brighter in colour.
The consumer research also indicated that there
was value in modernising the brand to reflect the
values of the company.
“Looks straight out of the 60’s. Does not support
the more innovative and contemporary feel to the
brand story.”
In response, the Nichols range has become part of
The Tasmanian Food Co stable of brands, which
now comprises three categories of product from
the Nichols Poultry business:
• Nichols Poultry represents the original cuts and
whole birds raised under the RSPCA standard.
It’s the ethics and good
provenance that is the
Nichols difference
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 • Nichols Kitchen represents the value-added and
ready-to-cook products.
• Nichols Ethical Free-Range represents chicken
from the new free-range production system,
which has been established to create a new
premium free-range category for chicken meat in
Australia.
Nichols Ethical Free-Range Chicken
Robert Nichols has always had a passion for
poultry. From free-range eggs in the UK to free-
range turkeys in Tasmania, Rob’s interest in the
welfare of the animals he works with has been
a common thread. When looking for a standard
to apply across Nichols Poultry, Rob chose the
RSPCA standard for barn-raised poultry as this
was focused on the welfare of the animal. Rob
realised, however, that consumers want the birds
to have access to range outdoors.
Rob had concerns that the free-range standard
in Australia for meat chickens was not very high
when it came to the welfare of the birds. It was
these concerns that led Rob to believe there was
more that could be done to create a defensible
standard of free-range chicken that meets
consumer expectations. Through Tasfoods, Rob
was able to see a means to achieve his vision for
ethically produced free-range chicken. Tasfoods
shares Rob’s passion for animal welfare and
sustainable farming, and plans to build and grow
the Nichols range of products.
Nichols Ethical Free-Range Chicken is a new
standard for raising chicken that will ensure
that chickens are raised in small colonies with
comfortable housing and access to outdoors at
all times, once they are old enough to go outside.
15
REVIEW OF
OPERATIONS
Continued
At TasFoods, we believe that consumers should be
able to know how their food is raised and where it
comes from.
Nichols location in northwest Tasmania provides a
competitive advantage for growing ethical free-
range chicken in small flocks, and with the ability
to range at all times, because Tasmania is free of
predatory foxes. As well, northwest Tasmania has
a temperate climate that does not expose the birds
to extremes of temperature. The State’s isolation
reduces the exposure of free-range chickens
to disease risk from migratory birds or other
commercial chicken flocks.
Chicken meat has become one of the cheapest
sources of protein to Australian consumers. As
consumption continues to grow, the average price
per kilogram of chicken meat drops. UK Professor
of food marketing, Dr. David Hughes describes the
food market as moving to the poles. To succeed,
a food brand needs to either compete on price
or offer a provenance or story that is valued by
high-end consumers. TasFoods sees an opportunity
for premium market growth for chicken, similar to
what has occurred in the premium milk market,
with transparency around its high animal welfare
standards and sustainable sourcing practices.
Consumer research conducted by TasFoods in 2016
in Sydney and Hobart about their expectations of
premium chicken:
“The spotlight is on the ethics; respectful treatment
of the bird. This is what premium buyers are seeking
reassurance of when they buy premium….”
Consumers believe good provenance can be
tangibly assessed by the look and feel of the bird
and in the eating experience.
PHOTO
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 Unhappy chicken
• Overly plump breast and little legs (fast tracked vs
naturally raised).
• “Watery”/full of water. Can feel it in the touch, can
see it in the packet. And it broils vs fries/grills.
• Looks pale and anaemic.
Happy chicken
• Well proportioned, breast plump and legs
proportioned. Legs and wings have meat.
• Less watery/slimy. Firm to touch, less water when
cooking.
• Has colour, should be yellow, as chickens are
naturally.
“There are chickens...and then there is the
assurance of a Nichols chicken.”
Net result: Premium buyers can taste the
difference. A moist, juicy, flavorsome, tender eat.
True for both whole chickens and chicken pieces…
To enhance the connection to Tasmanian
provenance for the Ethical Free-Range Chicken,
Nichols Poultry signed a grain supply agreement
for 2017 with Tasmanian Agricultural Producers
(TAP Agrico) to source 100% of the cereals
processed in the company’s feed mill from
Tasmanian grain growers.
Nichols Ethical Free-Range Chicken will be
launched in March 2017 with an open weekend
at the farm to invite the public to view how the
chickens are raised. The rearing system utilises
small mobile sheds that are easy to replicate as
the volume of Ethical Free-Range Chicken sales
grow.
“There are chickens...and
then there is the assurance
of a Nichols chicken.”
The spotlight is on the
ethics; respectful treatment
of the bird. This is what
premium buyers are
seeking, reassurance of
when they buy premium….
17
REVIEW OF
OPERATIONS
Continued
Wasabi Facts
• Most powdered wasabi sold across the world is
made from horseradish, not wasabi.
• The chemical in wasabi that provides its initial
pungency is the volatile allyl isothiocyanate,
which is released by the grating of the plant stem.
Release of the chemical is a natural defence
mechanism, which also occurs when the plant is
damaged.
• Research has shown that the isothiocyanate
compounds produced by the plant inhibit microbe
growth, perhaps with implications for preserving
food against spoilage and suppressing oral
bacterial growth.
• Because the burning sensations of wasabi are not
oil-based, they are short-lived compared to the
effects of chili peppers, and are washed away with
more food or liquid. The sensation is felt primarily
in the nasal passage and can be quite painful
depending on the amount consumed.
• Inhaling or sniffing wasabi vapor has an effect like
smelling salts, a property exploited by researchers
attempting to create a smoke alarm for the deaf.
The 2011 Ig Nobel Prize in Chemistry was awarded
to the researchers for determining the ideal
density of airborne wasabi to wake people in the
event of an emergency.
Shima Wasabi
Shima Wasabi is the largest commercial wasabi
farm in Australia. Located in Tasmania’s
temperate northwest, Shima Wasabi utilizes a
unique hydroponic growing system that enables a
controlled growing environment.
TasFoods purchased Shima Wasabi in 2016 and
began harvesting from the existing greenhouse in
July. Almost all parts of the plant are sold, with the
stems being harvested and cleaned before packing
to send direct to restaurants around Australia for
grating and mixing to make fresh wasabi paste.
Other parts of the plant are sorted into a range
of uses for both fresh and dried product, with less
than 10% of harvested material going to waste.
TasFoods is expanding the existing crop and
building a new greenhouse that will enable a
doubling of production. Since purchasing the
business, our focus has been on expanding the
customer base for fresh wasabi products and
building a stock of powdered wasabi that will be
released in new consumer-friendly retail packaging
in 2017. Shima Wasabi Powder is one of the few
100% wasabi powders available and commands a
premium price for both industrial and retail sales.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 Shima Wasabi founder
and Manager, Stephen
Welsh, has developed
a unique hydroponic
growing system that
enables a controlled
growing environment
for the plants.
19
REVIEW OF
OPERATIONS Continued
People and Management
The purchase of Nichols Poultry and Shima Wasabi
in June created the opportunity to structure the
Company to form centralised Shared Service teams
supporting the operational production units. Where
existing service teams were operating in newly
acquired businesses they have been integrated into
the centralised team. Each Shared Service team
has a suitably qualified leader appointed. The four
Shared Service teams are:
• Financial Management and Human Resources;
• Sales, Marketing, Brand Management and Route
to Market;
• Quality Assurance and Food Safety; and
• Work Health and Safety.
The operational teams are site specific and
represent all operational activities relating to a
specific product type or process. They are:
• Shima Wasabi, located at Port Sorell.
• Poultry Agricultural Operations, which includes
feed mill, contract growers, hatchery and breeder-
farm relationships, located at Sassafras.
• Poultry Processing Operations, which includes
all processing and dispatch operations and
maintenance team, located at Sassafras.
• Goat Farming Operations, located at Sassafras.
• Dairy Processing Operations, located at
Launceston.
Nicholas Kerkham,
Work Health and
Safety Manager
Nic moved to Tasmania
from South Australia
in December 2016 and
immediately started
working for TasFoods.
Nic came to TasFoods
with 10 years of
experience leading
teams in work health and safety, including six
years managing health, safety and environmental
performance across a number of operational sites
in South Australia, Victoria and Queensland.
Nic has extensive experience developing integrated
management systems for the oil and gas industry
and logistics companies. This experience has
enabled him to rapidly establish a work, health and
safety framework aligned to the company strategy.
“It is very exciting to be developing a
safety management framework that
focuses on proactive safety initiatives,
and engaging with all levels of the
business to establish key safety
objectives and targets that contribute
to the overall success of TasFoods”
Nicholas Kerkham
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 Diversity & inclusion
TasFoods has established a strong culture for
valuing diversity and inclusion in the workplace
and recognises the value that diversity plays in
contributing to performance. The Company fosters
inclusion regardless of age, gender, race, ethnicity
or sexual orientation.
The mix of employees in the Company workforce
has diversified with the inclusion of Nichols Poultry
and Shima Wasabi in 2016.
• Women make up 20% of the Board.
• Women represent 60% of the executive team.
• The senior management team includes 30%
women and 22% from non-English speaking
backgrounds.
• Female employees represent 36% of the
Company’s workforce.
• Employees from non-English speaking
backgrounds represent 5% of the Company’s
workforce.
“To be artistic in the crafting of
artisan dairy products you have
to first understand the science
that underpins them”
Tommy Madsen
Tommy Madsen,
Dairy Production
Manager
Tommy grew up in
Denmark with a
passionate desire
to enter the dairy
industry and craft
artisan cheese and
butter. He studied
Dairy Technology for
four years with the highly acclaimed Kold College,
while being apprenticed to Arla Foods. After
graduating, Tommy took part in a Danish Dairy
Board sponsored graduate exchange program to
Australia to work for a dairy company in Tasmania.
Tommy enjoyed the work and lifestyle Tasmania
offered so took out a residency visa to work
permanently in Australia. He completed five
years in Tasmania producing cheese, butter, ice
cream and bottled milk before moving to Sydney
to manage production in a fast-paced yoghurt
manufacturing company.
When TasFoods purchased Meander Valley Dairy,
Tommy was lured back to Tasmania to take up
the role of leading the dairy manufacturing team.
Tommy is busy developing a range of new cheese
and butter products to be released in the first half
of 2017.
Tommy became an Australian citizen in November
2016 and purchased his first home in Tasmania in
January 2017.
21
REVIEW OF
OPERATIONS Continued
Quality Assurance
At TasFoods we aim to produce premium quality
foods. Having systems and processes that support
our production teams to produce food to meet the
specifications of customers is the foundation for
the success of our business. To achieve this our
Quality Assurance team works across the business
developing, reviewing and challenging the Food
Safety and Quality Assurance Management System.
The addition of two new food production
businesses to the company in 2016 saw the
primary focus of the Quality Assurance team being
the development of a Food Safety and Quality
Assurance Management System that provides
consistency of systems and processes across the
business.
Our Food Safety and Quality Assurance
Management Systems are subject to regular
audits by independent certification bodies with
an emphasis on compliance to standards and
regulations.
• Our dairy and chicken processing operations are
both certified to globally recognised standards of
Safe Quality Food (SQF).
• Our wasabi operation has a Hazard Analysis and
Critical Control Point (HACCP) program that is
audited by AUS-QUAL Pty Ltd.
• Our dairy farming and processing operations
are licenced and audited by the Tasmanian Dairy
Industry Authority.
• Our chicken farming and processing operations
are licenced and audited by the RSPCA.
The Company uses external National Association
of Testing Authorities (NATA) certified food
laboratories to provide all microbial, chemical and
nutritional analysis of products.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
Leigh Austin,
Quality Assurance
Manager
Leigh joined TasFoods
in December 2015.
Leigh brings 30
years of experience
in food safety to the
business. Leigh has
spent much of his
career working for
multinational companies in the dairy industry as
a dairy technologist, quality assurance manager
and troubleshooter in a newly built, large cheese
processing facility. Leigh is a certified auditor who
spent 10 years working for the Tasmanian Dairy
Industry Authority as a farm and factory auditor. He
also has experience providing hygiene services to
companies in a range of food industry sectors.
Leigh heads up the Quality Assurance team
for TasFoods. His experience in developing and
implementing food safety and quality assurance
management systems for a range of food
companies combined with his farm and factory
system audit experience enable him to provide
leadership across the organisation for producing
safe food.
“We are building a culture across
our food production systems that
places food safety and the customer
specifications at the centre of every
decision in the production process”.
Leigh Austin
2016 23
REVIEW OF
OPERATIONS Continued
FINANCIAL SUMMARY
Investing in a sustainable foundation for growth
Financial Results
TasFoods’ focus for the year ended 31 December 2016
was one of expansion and investing in a sustainable
foundation for growth. During the year, the Company
expanded its operations through the acquisition of two
premium food businesses, Nichols Poultry Pty Ltd and
Shima Wasabi Pty Ltd, at a value of $9.36 million and
$2.77 million respectively. The consideration included
the issue of 9.2 million ordinary shares valued at $2.3
million. Furthermore, the Company acquired a goat herd
comprised of 500 goats to secure supply of goat milk
to produce a premium goat milk dairy range of products
under the Robur Farm Dairy brand.
To fund these acquisitions and provide working capital
and funding for future investment opportunities that meet
TasFoods value proposition, the Company completed a
share issue, raising $25.39 million before costs.
The Group reported total revenue from continuing
operations of $15.98 million (2015: $1.02 million). While
revenue growth can be primarily attributed to the
acquisition of Nichols Poultry Pty Ltd ($13.85 million)
and Shima Wasabi Pty Ltd ($150,000) in June 2016,
all operational business units achieved growth in sales
volumes during the reporting period as compared to the
prior year equivalent period.
The statutory net loss before income tax of $2.61 million
included several significant non-recurrent expenditure
items that affected the financial performance of the
Group for the 2016 financial year. These included:
• non-capitalised expenditure associated with acquisition
and integration of Nichols Poultry Pty Ltd, Shima
Wasabi Pty Ltd and a 500-head goat herd, and the
identification of other potential acquisitions;
• completion of an integrated branding and marketing
strategy, with final concepts for the branding and
packaging of each business and product line to be
released in early 2017;
• development of ethical free-range chicken and goat
dairy standards, which included the identification of
best practice in animal husbandry to ensure that our
products meet consumer standards for both quality
and the ethical treatment of animals; and
• legal fees attributable to the settlement of The Van
Diemen’s Land (VDL) Company litigation.
A reconciliation of the statutory net loss before tax to
the underlying operating loss before income tax after
taking into consideration the above noted factors is
shown below:
Statutory loss from continuing
operations before income tax*
Expenditure associated with the acquisition
of Nichols, Shima and goat herd
Investment expenses
Marketing and brand development
Costs of establishing ethical free range
and goat dairy standards
VDL settlement legal fees
Underlying operating loss from continuing
operations before income tax*
$’000
(2,611)
218
110
497
340
74
(1,372)
Note:
* Underlying operating loss from continuing operations before income tax is a
non-IFRS measure as contemplated in ASIC Regulatory Guide 230 Disclosing
non-IFRS financial information (RG230). Operating net profit before tax is used
by management and the directors as the primary measure of assessing the
financial performance of the Group and individual segments.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 25
REVIEW OF
OPERATIONS Continued
margins and ensure the sustainability of the Group. This
will be achieved by:
• changes to the process flow within our production
facilities to harness labour efficiencies; and
• leveraging increased buying power with key suppliers
arising from the larger scale of our business operations.
RISK
TasFoods is committed to successfully delivering its
strategic objectives including delivering high quality,
safe food products to its customers. This requires the
management of all types of uncertainties and risks.
TasFoods has approved and implemented a Risk
Management Policy and Framework for the Group.
The Policy provides high level direction, establishes
key principles and allocates responsibilities to ensure
TasFoods has an effective and efficient system and
process that will facilitate identification, assessment,
evaluation and treatment of risks in order to achieve
strategic and performance objectives with optimal
allocation of resources.
A copy of the Risk Management Policy is on the
Company’s website at
http://www.tasfoods.com.au/corporate-governance/
During 2016 TasFoods held risk identification and
assessment workshops across the Group at a strategic
and operational level. Each business unit considered
how their risks were being managed and what steps
should be taken to further mitigate the risks. The
risk registers created are being actively used by the
businesses and were used to inform and report to the
Audit and Risk Committee. The workshops revealed
risks that fall within four broad categories. The nature of
the risks and their management is discussed below.
Outlook
Independent data for the retail market has reported
growth of greater than 10% in premium food categories,
including double cream, crème fraiche and speciality
cheese, which have reported growth ranging from
12.9% to 15.9% in the previous year. Furthermore, the
consumption of chicken is forecast to continue to rise
over the medium term, with stronger growth in premium
categories such as free-range and organic.
In recognition of this data and customer research
undertaken by the Company, TasFoods has developed
a strategy for growth in revenue through optimising
our distribution, responding to consumer feedback and
trends with new product development and maximising
our offer to existing customers. Strategies to achieve
this will include:
• improving our distribution with the expansion of our
offer to targeted retailers and food service outlets
nationally for dairy products and the inclusion of a
poultry offering to retailers in south eastern states. The
complementary cool chain requirements of poultry
and dairy products enable the same route to market
to be used. We also plan to expand our offer to direct
customers online and through emerging channels;
• releasing new products and changes to existing
products from Q1 2017. These will meet growing
consumer demand for convenience and product utility.
We will also take advantage of our production flexibility
to customise products for growth channels; and
• Development of an overarching brand called the
Tasmanian Food Co that provides a common
endorsement of the values of the company across the
individual brands. New branding and packaging will be
rolled out across the company in Q1 2017.
While targeting sales growth, TasFoods will continue
to focus on generating efficiencies within its production
environment, which will result in improving gross profit
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 Safety Risk
Supply Risk
Ensuring our products are safe for customers and our
staff are safe at work.
Food safety and workplace health and safety are risks
that must be actively managed by TasFoods all day,
every day. We have strong quality and safety assurance
processes that are overseen by skilled staff. Our safety
processes and procedures are under review and safety
culture training has been provided to the majority of our
employees.
Disease Risk
Minimising the risk of disease impacting our animals,
plants and inputs.
Careful site management, biosecurity measures and
good husbandry and agricultural management are
used to manage Tasfoods’ risk of exposure to disease.
Suppliers undergo an approval process to ensure inputs
comply with product specifications. These are internally
audited and monitored for compliance.
Ensuring our input supply is secure, stable and reliable
TasFoods is reliant on a number of key suppliers for
inputs such as hatchlings, cream and wheat grain.
We have strong relationships and contracts with our
suppliers to ensure that quality, quantity and price are
stable. Where appropriate we have also diversified
supply channels to reduce risk levels.
Market risk
Delivering on our customer promises and growing our
customer base
TasFoods has a number of large key customers
and the loss of one or more of them would have a
detrimental impact on the Group. TasFoods mitigates
this risk by investing in our relationships, ensuring we
deliver product in accordance with our customer’s
specifications, growing our customer base and entering
into contracts for supply. TasFoods has also developed a
point of difference in our products, reducing the risk of
substitution.
27
BOARD OF DIRECTORS
ROB WOOLLEY
Non-Executive Chairman
Rob is the chairman of ASX-listed
Bellamy’s Australia Limited, a branded
organic baby food company.
He is a former chairman of Tandou
Ltd and a former board member of
Forestry Tasmania and a current
board member of the not-for-profit
Tasmanian Leaders Inc.
Rob was previously managing director
of Webster Limited following over 20
years as a partner of Deloitte.
TONY ROBINSON
Non-Executive Director
Tony has held a number
of senior management
positions in a variety of
service industries, including
stockbroking, financial
services, telecommunications
and transport.
HUGH ROBERTSON
Non-Executive Director
Hugh has worked in the stockbroking
industry for 30 years with a variety
of firms including Bell Potter, Investor
First and more lately Wilson HTM.
Among his areas of interest is a
concentration on small cap industrial
stocks and he currently sits on the
board of AMA Group Ltd.
Mr Robertson resigned from the
Board in February 2017
ROGER McBAIN
Non-Executive Director
Roger was a partner for 6 years
with Deloitte and prior to this was
a partner in a privately owned
accounting firm for 25 years.
Roger holds a Bachelor of Business
degree and is a member of the
Institute of Chartered Accountants,
the Australian Reconstruction,
Insolvency & Turnaround Association
and is a member of the Taxation
Institute of Australia.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
JANE BENNETT
Executive Director & CEO
Jane has 20 years experience as a senior
executive in vertically integrated dairy
operations in Tasmania and UK. Jane is a
director of Food Innovation Australia Ltd.
She has previously served on the boards
of Australian Broadcasting Corporation,
CSIRO and the Brand Tasmania Council.
Jane was named 2010 Tasmanian Telstra
Business Woman of the Year and 1997
Australian ABC Radio Rural Woman of
the Year.
JANELLE O’REILLY
Company Secretary
& General Counsel
Janelle is an experienced
corporate lawyer and chartered
company secretary having
worked for ASX listed entities
Crane Group Limited and
Ruralco Holdings Limited
and as General Manager
Governance with Aurora
Energy.
EXECUTIVE TEAM
JANE BENNETT
Managing Director/CEO
With over 20 years experience in agricultural production management, Jane brings a depth of
experience and leadership to the TasFoods Executive Management Team. As the visionary for
TasFoods’ commitment to agricultural sustainability and redefining industry standards to meet
consumer expectations, Jane is driven to protect and expand Tasmanian employment opportunities
and attract new investment to the State.
Jane was formerly founder and Managing Director of Ashgrove Cheese, one of Australia’s leading
premium dairy brands.
TOM WOOLLEY
Chief Operating Officer
Tom Woolley is an experienced investment manager with over 11 years of private equity and
investment banking experience. Tom worked at Credit Suisse for 3 years followed by 8 years
as a Director at Ironbridge Capital, an Australian private equity company focussed on growth
investments.
For the past two years, Tom has implemented capital investment and resource development within
TasFoods’ fast moving consumer goods operations.
DONNA WILSON
Chief Financial Officer
Donna is a qualified finance executive with over 16 years of experience working within public
practice at KPMG, an ASX listed company and statutory government authorities.
Since December 2014 Donna worked at the executive level as the Director of Finance within a
complex healthcare organisation.
Donna holds a Masters of Business Administration and a Bachelor of Commerce and is a member
of the Institute of Chartered Accountants Australia and New Zealand.
DAVID BENNETT
Chief Sales & Marketing Officer
David has extensive experience in national sales distribution and marketing fast moving consumer
goods, specialising in premium dairy products. David holds a Bachelor of Laws and Bachelor of
Commerce.
29
TASFOODS LIMITED
DIRECTORS’ REPORT
The Directors of TasFoods Limited (the “Company”) submit herewith the Financial Report on the Company and its controlled entities (the
“Group”) for the financial year ended 31 December 2016.
In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:
Directors
Details of the Directors of the Company in office at any time during or since the end of the financial year and at the date of this report are:
Rob Woolley
Chairman and Non-Executive Director. BEc, FCA.
Rob was appointed to the Board as a Director and Chair on 3 September 2015. Rob is a member of the
Audit and Risk Committee and a member of the Nomination and Remuneration Committee.
Experience and qualifications
Rob was appointed to the Board to enhance the Board’s skills in the areas of branded food products and
strategic business development.
Rob is the Chair of ASX-listed Bellamy’s Australia Limited, a branded organic baby food company. He is
the former chair of Tandou Limited and a former board member of Forestry Tasmania and the not-for-
profit Tasmanian Leaders Inc. Rob was previously managing director of Webster Limited following over 20
years as a partner at Deloitte.
Other Directorships in listed
entities:
Former Directorships in listed
entities in last 3 years:
Bellamy’s Australia Limited (since 2007)
Tandou Limited (until July 2015)
Interests in shares and options
4,223,000 Ordinary Shares
4,750,000 share options exercisable at $0.21 before 3 September 2019
4,750,000 share options exercisable at $0.42 before 3 September 2019
Jane Bennett
Chief Executive Officer (‘CEO’) and Managing Director.
Jane was promoted to the position of CEO and Director on 17 February 2016, having previously been the
Company’s Head of Strategic Development and General Manager of Dairy.
Experience and qualifications
Jane was appointed to build TasFoods into a successful branded food business based on the unique
attributes of Tasmania and its produce.
Jane has extensive experience in the premium branded food industry in Tasmania, including as the former
Managing Director of Ashgrove Cheese, one of Australia’s leading premium dairy brands. Jane also
chaired the Tasmanian Food Industry Council for 8 years and was a board member of the Brand Tasmania
Council for 10 years. Jane has spent 4 years working as a non-executive director in a diverse portfolio of
companies including the CSIRO, Australian Broadcasting Corporation and Tasmanian Ports Corporation.
Other Directorships in listed
entities:
Former Directorships in listed
entities in last 3 years:
Nil
Nil
Interests in shares and options
1,999,000 Ordinary Shares
1,250,000 share options exercisable at $0.21 before 3 September 2019
1,250,000 share options exercisable at $0.42 before 3 September 2019
Hugh Robertson
Non-Executive Director.
Hugh Joined the Board as a Director on 21 February 2014. Hugh was appointed as Chairman on 30
June 2015 and stood down when Rob Woolley was appointed. Hugh is a member of the Audit and Risk
Committee and the Nomination and Remuneration Committee.
Hugh resigned from the position of Non-Executive Director on 10 February 2017.
Hugh has over 25 years’ experience in the financial services industry, commencing his stockbroking career
in 1983. During that time, he has been involved in a number of successful stockbroking and equity capital
markets businesses including Falkiners Stockbroking and Bell Potter Securities.
Primary Opinion Limited (since October 2015), AMA Limited (since June 2015)
Hub24 Limited (from April 2011 – October 2016).
Experience and qualifications:
Other Directorships in listed
entities:
Former Directorships in listed
entities in last 3 years:
Interests in shares and options
1,014,000 Ordinary Shares
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
DIRECTORS’ REPORT
Continued
Roger McBain
Executive Director Finance until 30 June 2016, Non-Executive Director thereafter. BBus, ACA.
Roger was appointed to the Board as an Executive Director on 3 September 2015 and transitioned to
a Non-Executive Director role on 1 July 2016. Roger is the Chair of the Nomination and Remuneration
Committee and a member of the Audit and Risk Committee.
Experience and qualifications:
Roger is a chartered accountant and brings broad commercial and financial skills to the board. Roger is a
former partner of Deloitte, based in Launceston.
Other Directorships in listed
entities:
Former Directorships in listed
entities in last 3 years:
Nil
Nil
Interests in Shares and options
2,199,000 Ordinary Shares
1,250,000 share options exercisable at $0.21 before 3 September 2019
1,250,000 share options exercisable at $0.42 before 3 September 2019
Antony Robinson
Non-Executive Director. BCom, ASA, MBA.
Experience and qualifications:
Antony joined the Board on 29 May 2014 and was appointed as Managing Director on 6 June 2014. On
1 September 2015 Antony’s role as Managing Director ceased, and he was appointed as a Non-Executive
Director. Antony is the Chair of the Audit and Risk Committee and a member of the Nomination and
Remuneration Committee.
Antony has extensive experience in senior roles in the financial services, insurance and telecommunications
sectors. He is currently a director of Bendigo & Adelaide Bank Limited and was previously managing
director of Centrepoint Alliance Limited. Prior to that he held a number of senior executive roles including
executive director and CEO of IOOF Holdings Ltd, managing director and CEO of OAMPS Limited.
Other Directorships in listed
entities:
Bendigo & Adelaide Bank Limited (since April 2006), Pacific Current Group Limited (since August 2015),
Primary Opinion Limited (since October 2015), PSC Insurance Group Ltd (since July 2015)
Former Directorships in listed
entities in last 3 years:
Centrepoint Alliance Limited - Resigned April 2014
Interests in shares and options
800,000 Ordinary Shares
1,500,000 options exercisable at $0.21 before 3 September 2019.
Company Secretaries
Janelle O’Reilly
Company Secretary & General Counsel BEcLLB, GAICD, FGIA
Experience and qualifications:
Janelle became Joint Company Secretary on 9 September 2016 and sole Company Secretary on 7
October 2016. Janelle was previously Company Secretary & General Counsel for ASX listed companies
Crane Group Limited and Ruralco Holdings Limited. She is an expert in commercial law and corporate
governance and was the General Manager of Governance for State owned Aurora Energy Pty Ltd
where she was responsible for legal services, company secretariat, risk, compliance and information
management. She is a Director of Tasmanian not for profit Colony 47.
Mark Licciardo
Joint Company Secretary until 7 October 2016
Experience and qualifications:
Mark Licciardo (B Bus(Acc), GradDip CSP, FGIA, GAICD) is the founder and Managing Director of
Mertons Corporate Services. A former company secretary of Top 50 ASX listed companies Transurban
Group and Australian Foundation Investment Company Limited, his expertise includes working with
boards of directors in the areas of corporate governance, administration and company secretarial. Mark is
also the former Chairman of the Governance Institute of Australia (GIA) Victoria division and Melbourne
Fringe Festival and a current non-executive director of a number of public and private companies.
Matthew Rowe
Joint Company Secretary until 30 June 2016
Experience and qualifications:
Matthew Rowe is a Corporate Governance Advisor at Mertons Corporate Services, is an Associate of
the Governance Institute of Australia (formerly Chartered Secretaries Australia) and has a Masters
in Corporate Governance. Matthew has extensive experience of providing corporate governance,
administration and company secretarial services to boards of directors of Australian, UK and European
listed companies.
31
TASFOODS LIMITED
DIRECTORS’ REPORT
Meeting of Directors
The following table sets out the number of meetings of the Company’s Directors during the year ended 31 December 2016 and the number of
meetings attended by each Director.
During the financial year 10 board meetings were held in addition to the Company’s Annual General Meeting held on 23 May 2016.
DIRECTOR
R Woolley
J Bennett*
H Robertson
R McBain
A Robinson
BOARD
MEETING
AUDIT AND RISK
COMMITTEE
NOMINATION AND
REMUNERATION
COMMITTEE
Held
Attended
Held
Attended
Held
Attended
10
10
10
10
10
9
10
9
10
10
3
3
3
3
3
1
3
2
3
3
3
3
3
3
3
2
3
2
3
3
*Ms Bennett is not a member of the Audit and Risk Committee or the Nomination and Remuneration Committee, but attends the meetings.
Principal Activities
During the year the principal activities of the Group were the processing, manufacture and sale of premium Tasmanian made produce. Until
June 2016 the Group was focused on production of premium cream, butter and dairy products. Upon the acquisition of Nichols Poultry and
Shima Wasabi in June 2016, the scope of the principal activities expanded into other premium food categories.
Other than the expansion into other premium food categories, there have been no significant changes in the nature of the principal activities of
the Group during the financial year.
Operating Results and Financial Position
A comprehensive review of operations is set out in the front section of this Annual Report under Review of Operations.
Significant Change in State of Affairs
Discontinued operations
Following the strategic review carried out during 2015, the Company discontinued all loyalty, rewards and payment solutions operations.
During the 2016 financial year, the Company deregistered all interests in Hong Kong, Singapore and Malaysia and, in the case on Oncard Pte
Ltd in Singapore, liquidated the company’s assets. All interests in Chinese entities were disposed of during the 2015 financial year.
Acquisition of Nichols Poultry Pty Ltd
The Company completed the acquisition of the share capital and associated land and buildings and wind turbine of Nichols Poultry Pty Ltd
(“Nichols Poultry”) on 15 June 2016, a business based in Tasmania. The consideration paid to the owners of Nichols Poultry amounted to $9.359
million and included the issue of 8,000,000 new fully paid ordinary shares issued at a nominal value of $0.25 (25 cents) per share to the
vendor (R & J N Family Trust). The balance of the consideration ($7.359 million) was paid in cash.
The Nichols Poultry brand is well known for quality. It is the second largest poultry processor in Tasmania, producing chickens for the Tasmanian
market where it holds a market share of approximately 25%. Nichols Poultry has a number of attributes that positions it to supply products for
a premium market.
Acquisition of Shima Wasabi Pty Ltd
The Company also completed the acquisition of the share capital of Shima Wasabi Pty Ltd (“Shima Wasabi”) on 15 June 2016, a business based
in Tasmania. The consideration paid to the owners of Shima Wasabi amounted to $2.768 million and included the issue of 1,200,000 new fully
paid ordinary shares issued at a nominal value of $0.25 (25 cents) per share to the vendors (Stephen Welsh and Karen Welsh). The balance of
the consideration ($2.468 million) was paid in cash.
Shima Wasabi operates a business producing and distributing both fresh and powdered wasabi and is the largest producer of fresh wasabi in
the Southern hemisphere.
Acquisition of Goat Herd
In June 2016, the Company acquired a goat herd and assets comprised of 500 milking goats, and related plant and equipment from Cosy
Goats in Tasmania.
This acquisition was made to provide milk for a new range of products, the first of which, being fresh goat milk under the Robur Farm Dairy
brand, was made available to the market in December 2016.
Capital Raising
On 19 February 2016 the Company issued 22,232,000 ordinary shares at $0.25 (25 cents) per share to investors associated with the Company,
who took up the shortfall in the Company’s share purchase plan offer (due to eligible shareholders not applying for their full entitlement of
shares under the offer) under a placement of new and fully paid ordinary shares in the Company.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
DIRECTORS’ REPORT Continued
On 8 March 2016 the Company issued a further 1,200,000 ordinary shares at $0.25 (25 cents) per share to sophisticated investors to enable
further acquisitions and other growth opportunities.
A prospectus was issued in May 2016, detailing a public offer of the Company’s shares. The offer was concluded in June 2016 and, as a result,
101,577,000 ordinary shares were issued by the Company at $0.25 (25 cents) per share, raising $25,394,250 before costs. The cash raised
was utilised in the settlement of the acquisition of Nichols Poultry and provides the Company with working capital as it continues its strategy of
acquiring and developing (including capital infrastructure expenditure) premium branded food products and businesses.
There were no other significant changes in the state of affairs of the Group during the financial year.
After Balance Date Events
No matters or circumstances have arisen since 31 December 2016, which have significantly affected the Group’s operations, results or state of
affairs, or may do so in future years.
Remuneration Report
Introduction
The Directors of TasFoods Limited present the Remuneration Report for the Company and its controlled entities for the financial year ended 31
December 2016, prepared in accordance with the requirements of the Corporations Act 2001 and its regulations.
This report outlines the remuneration arrangements in place for the Key Management Personnel (KMP) of the Group, which comprises all
Directors (executive and non-executive) and those other members of the TasFoods Executive who have authority and responsibility for planning,
directing and controlling the activities of the Group.
After OnCard International Limited acquired the assets of the Meander Valley Dairy in 2015 the Company changed its name to TasFoods
Limited and altered the nature of its business. Accordingly, in 2016 the Company’s main activity related to acquiring and developing Tasmanian
premium branded food businesses (including, Nichols Poultry and Shima Wasabi) and, therefore, the details of KMP remuneration for 2016
relate to those activities and the current remuneration structure and proposed changes for 2017.
Key Management Personnel
The term Key Management Personnel refers to those persons having the authority and responsibility for planning, directing and controlling the
activities of the Consolidated entity, directly or indirectly, and includes any director of the Group (whether executive or otherwise).
The KMP of TasFoods for the year ended 31 December 2016 were:
Non-executive Directors
Rob Woolley
Hugh Robertson1
Antony Robinson2
Roger McBain3
KMP - Executive Director
Jane Bennett4
KMP Executives
Tom Woolley
Donna Wilson5
Role
Chairman
Non-executive Director
Non-executive Director
Non-executive Director
Appointment
03-September-2015
21-February-2014
29-May-2014
03-September-2015
Managing Director and CEO
03-September-2015
Chief Operating Officer
Chief Financial Officer
03-September-2015
27-June-2016
1. Hugh Robertson remained a Non-Executive Director after OnCard International acquired the assets of the Meander Valley Dairy in 2015 and the Company changed its name to TasFoods
Limited and altered the nature of its business. Hugh resigned from the position of Non-Executive Director on 10 February 2017.
2. Antony Robinson remained a Non-Executive Director after OnCard International acquired the assets of the Meander Valley Dairy in 2015 and the Company changed its name to TasFoods
Limited and altered the nature of its business.
3. Roger McBain was an Executive Director as he also held the role of Finance Director. Effective 1 July 2016 Mr Roger McBain transitioned to a role as Non-Executive Director.
4. Jane Bennett was appointed to the role of Head of Dairy Strategy on 3 September 2015 and then to the role of CEO and Managing Director on 17 February 2016.
5. Donna Wilson was appointed to the role of Chief Financial Officer effective 27 June 2016.
Role of the Nomination and Remuneration Committee
The Committee shall have responsibility for proposing candidates for consideration by the Board to fill casual vacancies or additions to the
Board and for devising criteria for Board membership and for reviewing membership of the Board, including:
• Assessment of necessary and desirable competencies of Board members;
• Review of Board succession plans to maintain an appropriate balance of skills, experience and expertise;
• As requested by the Board, evaluation of the Board’s performance and, as appropriate, developing and implementing a plan for identifying,
assessing and enhancing Director competencies; and
• Recommendations for the appointment or replacement of Directors.
33
TASFOODS LIMITED
DIRECTORS’ REPORT
Additional responsibilities of the Committee include reviewing and reporting to the Board on:
• Remuneration arrangements for the directors and senior executives of the Company (including, without limitation, incentive, equity and other
benefit plans and service contracts) to ensure remuneration suitably motivates executives to pursue the success of the Company through the
identification and profitable integration of growth opportunities;
• The review of the Audited Remuneration Report to be included in the annual report;
• Remuneration policies and practices for the Company generally;
• Superannuation arrangements;
• Board remuneration; and
• Such other matters as the Board may refer to the Committee from time to time.
The Nomination and Remuneration Committee periodically engages independent external consultants to advise and assess the remuneration of
the Chairman, Non-executive Directors, CEO and those executives reporting to the CEO.
Kurt Elder, an independent remuneration consultant, was engaged by the Nomination and Remuneration Committee in the year ended 31
December 2016 to benchmark the remuneration of the Non-Executive Directors, CEO and those executives reporting to her against market
data. The engagement was in accordance with the TasFoods’ governance processes. The fees incurred were $3,750.
Remuneration Structure
The performance of the Company depends upon the quality of its executives. To prosper, the Company must attract, motivate and retain highly
skilled executives. To that end, the Company embodies the following principles in its remuneration framework:
• Provide competitive rewards to attract high calibre executives;
• Focus on creating sustained shareholder value;
• Place a portion of executive remuneration at risk by linking reward with the strategic goals and performance of the Company;
• Differentiate individual rewards commensurate with contribution to overall results and according to individual accountability, performance and
potential; and
• Ensure total remuneration is competitive by market standards.
In the case of non-executive directors, their remuneration does not contain performance-based or ‘at risk’ components. Non-executive directors
are paid fees and are encouraged to hold shares in TasFoods.
Executives’ total remuneration package may be comprised of the following elements:
• Total Fixed Remuneration (base salary + superannuation)
• At-Risk Remuneration:
o Short-Term Incentive (“STI”)
o Long-Term Incentive (“LTI”)
Fixed Remuneration
The remuneration for executives includes a fixed component comprised of base salary and employer superannuation contributions. To ensure
that fixed remuneration for TasFoods’ executives remains competitive, it is reviewed regularly by the Remuneration and Nomination Committee
with reference to similar roles in ASX-listed companies that have comparable market capitalisation, revenues, and financial metrics relevant to
the executive’s role, skills and experience.
On Jane Bennett’s appointment to Managing Director and CEO on 17 February 2016 Jane’s salary was increased from $200,000 (plus
superannuation) to $240,000 (plus superannuation). The Nomination and Remuneration Committee and the Board of Directors are satisfied
that the remuneration is an appropriate reward in relation to the increased responsibilities and accountabilities and Jane’s ongoing contribution
to the Company’s development and financial performance.
In recognition of the amount of car travel undertaken by the COO, Tom Woolley, the Nomination and Remuneration Committee and the Board
of Directors approved a car allowance of $10,000 per annum effective 8 August 2016.
KMP - Executive Director
Jane Bennett
KMP Executives
Tom Woolley
Donna Wilson
Base Salary
Allowances
Superannuation
Total Fixed
Remuneration
$240,000
-
$22,800
$262,800
$200,000
$160,000
$10,000
-
$19,000
$15,200
$229,000
$175,200
Details of KMP executives’ total fixed remuneration paid for the year ended 31 December 2016 (and 31 December 2015) can be found in the
‘Remuneration Tables’ below.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
DIRECTORS’ REPORT Continued
Variable Remuneration
The Board recognises that each executive needs a meaningful portion of their remuneration to be at-risk and be linked to TasFoods annual
business objectives and actual performance.
Variable remuneration is linked to performance by:
• Setting clear expectations on target and stretch performance objectives required for STI payments in order to ensure quality results; and
• Assessment of long-term performance through multiple measures to provide a complete picture of TasFoods performance and the increase in
shareholder value.
Short-Term Incentive (STI)
The Board recognises that a short-term incentive plan should put a meaningful proportion of an executive’s remuneration at risk, to be delivered
based on the achievement of performance measures linked to the Group’s annual business objectives together with the executive’s individual
performance over that period.
During 2016 the Board has undertaken work to establish an STI structure and the quantum for its executives. It is expected that this will be in
place for 2017 and details of the STI structure and quantum will be disclosed in the 2017 remuneration report. It is intended that the STI will
include a mixture of business and individual measures that will be set based on the Company’s annual objectives. The STI measures will aim to
increase financial performance, market share, and shareholder returns.
No STI payments will be made to KMP executives in respect of the year ended 31 December 2016.
Long-Term Incentive (LTI)
The Board recognises that an LTI plan rewards executives in a manner that aligns this element of remuneration with the creation of shareholder
value. As such, LTI grants are only made to executives who are able to influence the generation of shareholder value and thus have a direct
impact on the Company’s performance against relevant long-term performance hurdles.
During 2016 the Board has undertaken work to establish an LTI structure and the quantum for its executives. It is expected that this will be in
place for 2017 and details of the LTI structure and quantum will be disclosed in the 2017 remuneration report.
No LTI grants will be made to KMP executives in respect of the year ended 31 December 2016.
Relationship between remuneration policy and company performance
As stated above, no STI payments were made to executives in 2016. Nonetheless, TasFoods has set out information about the Group’s earnings
and movements in shareholders’ value for the current financial year (the first year that TasFoods undertook its major activities relating to dairy,
poultry, and wasabi).
Financial Year Ended 30 December
Revenue ($000)
Net (loss)/profit before tax
Net (loss)/profit after tax
Share price at start of year
Share price at end of year
Share price growth
Dividends
Basic (loss)/earnings per share
Diluted (loss)/eamings per share
Average STI payout as a % at-target for eligible KMP executives
2016
$15,980
$(2,611)
$(2,577)
$0.41
$0.18
-56.10%
$0.00
$(2.33)
$(2.33)
0.00%
35
TASFOODS LIMITED
DIRECTORS’ REPORT
Key Management Personnel – Service Agreements
The remuneration and other terms of employment for the executives are covered in formal employment contracts that have no fixed terms.
TasFoods may terminate an executive immediately for cause, in which case the executive is not entitled to any payment other than the value of
total fixed remuneration (and accrued entitlements) up to the termination date.
Name
Notice Period
by TasFoods
Notice Period by
Executive
Termination / Redundancy Payment
KMP - Executive Director
Jane Bennett
6 months
6 months
KMP Executives
Tom Woolley
6 months
6 months
Donna Wilson
6 months
6 months
The Company has discretion to make a payment in lieu of all or part of
the notice period.
If the CEO’s employment is terminated in circumstances where there
has been a fundamental change to her role, or if she is made redundant
then she is entitled to a severance payment equivalent to 12 months’
salary.
The Company has discretion to make a payment in lieu of all or part of
the notice period.
If the COO’s employment is terminated in circumstances where there
has been a fundamental change to his role, or if he is made redundant
then he is entitled to a severance payment equivalent to 12 months’
salary.
The Company has discretion to make a payment in lieu of all or part of
the notice period.
If the CFO’s employment is terminated in circumstances where there
has been a fundamental change to her role, or if she is made redundant
then she is entitled to a severance payment equivalent to 12 months’
salary.
Non-executive directors’ remuneration structure
TasFoods’ remuneration policy for non-executive directors aims to ensure that TasFoods can attract and retain suitably qualified and
experienced directors having regard to:
• the level of fees paid to non-executive directors of other comparable Australian listed companies;
• the growing size and complexity of TasFoods operations;
• the responsibilities and work requirements of Board members; and
• the skills and diversity of Board members.
Under the ASX Listing Rules, the total amount paid to all non-executive directors in any financial year must not exceed the amount fixed in a
general meeting of the Company. This amount is currently $400,000 as determined by Shareholders at an Annual General Meeting held on
23 November 2009.
At 1 January 2016 the non-executive director fees (inclusive of superannuation) were:
NED
Rob Woolley (Chair)
Hugh Robertson
Antony Robinson
Base Fee
$50,000
$30,000
$45,000
Committee Chair Fee
-
-
$5,000
Total
$50,000
$30,000
$50,000
Within the aggregate amount of $400,000, non-executive directors’ fees are reviewed periodically and determined by the Nomination and
Remuneration Committee and the Board with reference to other ASX-listed companies that have comparable market capitalisation.
A review of NED fees was undertaken in 2016, based on the benchmark data of a market capitalisation comparator group.
As a result of this review the NED fees, effective 1 July, (inclusive of superannuation) were:
NED
Rob Woolley (Chair)
Hugh Robertson
Antony Robinson
Roger McBain1
Base Fee
Committee Chair Fee
$100,000
$45,000
$45,000
$45,000
-
-
$5,000
$5,000
Total
$100,000
$45,000
$50,000
$50,000
1. Effective 1 July 2016, the date he transitioned to non-executive director.
Directors may also be reimbursed for travel and other expenses incurred in attending to TasFoods’ affairs.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
DIRECTORS’ REPORT Continued
A non-executive director may be paid such additional or special remuneration as the Board decides is appropriate where a director performs
extra work or services. Roger McBain provides TasFoods with consultancy services in relation to acquisitions and special projects work on
merger and acquisition related activities. These services are in addition to his directors’ duties and require substantial involvement outside non-
executive board and committee meetings. Where these services are provided to TasFoods, Roger McBain is paid a daily rate of $1,500. This
rate has been approved by the Board.
Subsequent to his appointment as a non-executive director Roger McBain provided services relating to the due diligence for proposed
acquisitions. Roger McBain was paid $4,500 for these services. The amount is included in Table A below.
There are no retirement benefit schemes for directors other than statutory superannuation contributions, and non-executive directors’
remuneration must not include a commission on, or a percentage of, the profits or income of TasFoods.
Restrictions on LTIP shares prior to vesting
The Company prohibits executives from entering into arrangements to protect the value of unvested Long Term Incentive awards. This includes
entering into contracts to hedge their exposure to performance rights over shares granted as part of their remuneration package. Adherence
to this policy is monitored informally on an annual basis where such awards exist by the Nomination and Remuneration Committee requesting
confirmation from each of the executives that no such activity has occurred.
The Company treats compliance with this policy as a serious issue and takes appropriate measures to ensure policy adherence.
Remuneration Tables – Directors and KMP Executives
Details of the nature and amount of each element of the remuneration and shareholdings of the KMP of the consolidated entity are set out in
the following tables.
Table A: Remuneration for KMP for the year ended 31 December 2016
Short Term
Employee
Benefits
Salary/Fees
Year
Post-employment
Benefits
Superannuation
STI Payment4
Non-
monetary
benefits
Movement
in Employee
Entitlements
Share Based
Payments
Total
Performance
Related %
Shares5
Options6
Long term
employment
benefits
Non-executive Directors
$
$
$
$
$
$
$
$
Robert Woolley
2016
75,000
Hugh Robertson1
2016
34,060
2015
15,873
Antony Robinson2
2016
45,662
2015
48,810
-
-
-
-
-
2015
153,106
850,000
Roger McBain3
2016
119,023
2015
24,167
KMP - Executive Director
Jane Bennett
2016
228,127
2015
66,667
KMP Executives
Tom Woolley
2016
203,397
2015
66,667
Donna Wilson
2016
83,364
2015
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
794
3,440
2,440
4,338
9,390
11,881
1,410
1,583
10,067
21,633
3,949
6,333
11,577
19,323
3,103
6,566
6,333
7,920
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
104,500
-
-
-
%
$
75,000
121,167
37,500
51,250
50,000
30,000
1,042,496
-
130,904
27,500
54,660
-
259,827
27,500
104,449
-
234,297
27,500
103,603
-
-
97,850
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1. The remuneration disclosed for Hugh Robertson in 2015 includes remuneration that relates to his role of Chairman of OnCard International Limited and his duties as a non-executive director
of TasFoods (effective 3 September 2015).
2. The remuneration disclosed for Antony Robinson in 2015 includes remuneration that relates to his role of Managing Director of OnCard International Limited and his duties as a non-
executive director of TasFoods (effective 3 September 2015).
3. Up until 30 June 2016 Mr Roger McBain was paid a base salary of $200,000 (plus superannuation) in his role of Executive Director Finance. From 1 July 2016 Roger McBain received
board fees as set out in this report. The amount for 2016 also includes $4,500 which relates to consultancy services provided to TasFoods also set out in this report.
4. No STI payments were made to KMP in 2016.
5. No new shares were issued to Directors or Executives as part of their remuneration during the year ended 31 December 2016.
6. No options were issued to Directors or Executives as part of their remuneration during the year ended 31 December 2016.
37
TASFOODS LIMITED
DIRECTORS’ REPORT
Share based payments
Table B: Details of share-based payments granted as remuneration to KMP during 2016 are set out below:
Year
Grant Date
Number Granted
Non-executive Directors
Rob Woolley
Hugh Robertson
Antony Robinson
Roger McBain
KMP - Executive Director
Jane Bennett
KMP Executives
Tom Woolley
Donna Wilson
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
Value of
Options
Granted
$
-
No.
-
19-Nov-15
9,500,000
104,500
-
-
-
-
-
-
19-Nov-15
1,500,000
30,000
19-Nov-15
2,500,000
27,500
-
-
19-Nov-15
2,500,000
27,500
-
-
19-Nov-15
2,500,000
27,500
-
-
-
-
-
-
Number
Vested
Percentage of
Grant Forfeited
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
No.
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
Options over shares in TasFoods Limited
Table C: Shows the movements during 2016 in the options over shares in the Company held, directly, indirectly or beneficially, by each KMP,
including their related parties.
Non-executive Directors
Rob Woolley
Hugh Robertson
Antony Robinson
Roger McBain
KMP - Executive Director
Jane Bennett
KMP Executives
Tom Woolley
Donna Wilson
Year
Options held at
Start of Year
Granted as
remuneration
Vested and
exercisable
Forfeited
Options held
at End of Year
Exercised
during the
reporting
period
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
No.
9,500,000
-
-
-
1,500,000
-
9,500,000
-
-
-
-
1,500,000
2,500,000
-
-
2,500,000
2,500,000
-
-
2,500,000
2,500,000
-
-
-
-
2,500,000
-
-
No.
No.
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9,500,000
9,500,000
-
-
1,500,000
1,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
2,500,000
-
-
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
DIRECTORS’ REPORT Continued
Fully paid ordinary shares of TasFoods Australia Limited
Table D: Shows the movement during 2016 in the shares of TasFoods
Non-executive Directors
Rob Woolley
Hugh Robertson
Antony Robinson
Roger McBain
KMP - Executive Director
Jane Bennett
KMP Executives
Tom Woolley
Donna Wilson
Year
Shares held at
Start of Year
Issued as
Remuneration
Share Buyback
Net other
changes
Shares held at
End of Year
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
2016
2015
No.
223,000
-
174,000
150,000
400,000
-
199,000
-
199,000
-
199,000
-
-
-
No.
No.
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,000,000
4,223,000
223,000
223,000
840,000
1,014,000
24,000
400,000
174,000
800,000
400,000
400,000
2,000,000
2,199,000
199,000
199,000
1,800,000
1,999,000
199,000
199,000
1,400,000
1,599,000
199,000
199,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Indemnity and Insurance of Officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director or executive,
for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Company paid
a premium in respect of a contract to insure the directors and officers of the Company against a liability to the extent permitted by the
Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.
Indemnity and Insurance of Auditor
The Company has not, during or since the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity
against a liability incurred by the auditor. During the financial year, the Company has not paid a premium in respect of a contract to insure
the auditor of the Company or any related entity.
Environmental Regulations
The Company is subject to usual Federal and State environmental regulations. TasFoods manufacturing sites are licenced with Council and
State authorities. The licences stipulate performance standards for all emissions (noise, air, odour, waste water etc), from the sites as well as the
frequency and method of assessment of emissions. The Company’s activities are in full compliance with all prescribed environmental regulations.
Shares under Option or Issued on Exercise of Options
The Company has 18,500,000 options on issue at 31 December 2016. These options were issued in 2015 year under the Company’s
Employee Share Option Plan (‘ESOP’). All options are exercisable on or before 3 September 2019. 10,000,000 are exercisable at $0.21 (21
cents) per share, and the remaining 8,500,000 are exercisable at $0.42 (42 cents) per share. The options do not entitle the holder to participate
in any share issue or interest issue by virtue of holding the option. The options do not carry voting rights or any dividend entitlement.
Proceedings on Behalf of the Company
No person has applied for leave of the Court under Section 327 of the Corporations Act 2001 to bring proceedings on behalf of the
Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company
for all or any part of those proceedings. The Company was not a party to any proceedings during the year.
Non-Audit Services
The Group may decide to engage its auditor on assignments additional to their statutory audit duties where the auditor’s expertise and
experience with the Group are important. Where auditors are engaged to perform non-audit services, the Directors are satisfied that the
provision of these non-audit services by the auditor (or by another person or firm on the auditor’s behalf) is compatible with the general
standard of independence for auditors imposed by the Corporations Act 2001.
39
TASFOODS LIMITED
DIRECTORS’ REPORT
Details of amounts paid or payable to the Group’s auditor, PricewaterhouseCoopers (2015: BDO East Coast Partnership) for audit and non-
audit services provided during the year are set out below.
Auditors of the parent entity:
Auditing the financial report
Non-audit services (a)
PKF offices (b)
Auditing the financial report – subsidiary companies
Non-audit services - subsidiary companies
2016
$
108,850
-
108,850
-
-
108,850
2015
$
63,000
38,865
101,865
14,813
-
116,678
(a) Non-audit services performed in the 2015 financial year by BDO East Coast Partnership relate principally to tax compliance advice.
(b) Audit services provide by PKF (HK) in relation to subsidiary company audits located in Hong Kong, Singapore and audit services provided
by PKF Daxin to subsidiary company audits located in China.
The Directors are of the opinion that the services as disclosed above do not compromise the external auditor’s independence for the
following reasons:
• All non-audit services have been reviewed and approved by the Audit and Risk Committee to ensure that they do not impact the
integrity 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 issued by the Accounting Profession and Ethical Standards Board, including reviewing or auditing the
auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or
jointly sharing economic risks and rewards.
Auditor’s Independence Declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included at page 41 of the
Annual Report.
Auditor
PricewaterhouseCoopers continues in accordance with section 327 of the Corporations Act 2001. There are no officers of the Company
who are former audit partners of PricewaterhouseCoopers.
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors support the principles of good
corporate governance. The Group continued to follow best practice recommendations as set out by the ASX Corporate Governance
Council. Where the Group has not followed best practice for any recommendation, explanation is given in the Corporate Governance
Statement which is available on the Company’s website at http://www.tasfoods.com.au/corporate-governance/
Rounding of Amounts
The amounts contained in this report and in the financial report have been rounded to the nearest $1,000 (where rounding is applicable)
under the option available to the company under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191. The
company is an entity to which the Class Order applies. Amounts in the directors’ report have been rounded off in accordance with the Class
Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.
Signed in accordance with a resolution of the Directors made pursuant to s.298 (2) of the Corporations Act 2001.
On behalf of the Directors
Rob Woolley
Chairman
24 February 2017
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
41
Auditor’s Independence DeclarationAs lead auditor for the audit of TasFoods Limited for the year ended 31 December 2016, I declare that to the best of my knowledge and belief, there have been:(a)no contraventions of the auditor independence requirements of the Corporations Act 2001in relation to the audit; and(b)no contraventions of any applicable code of professional conduct in relation to the audit.This declaration is in respectof TasFoods Limited and the entities it controlled during the period.Alison TaitMelbournePartnerPricewaterhouseCoopers24 February 2017PricewaterhouseCoopers, ABN 52 780 433 7572 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.auLiability limited by a scheme approved under Professional Standards Legislation. TASFOODS LIMITED
CONSOLIDATED STATEMENT OF PROFIT AND
LOSS AND OTHER COMPREHENSIVE INCOME
AS AT 31 DECEMBER 2016
Revenue from continuing operations
Other income
Fair value adjustment of biological assets
Raw materials used
Employment and contractor expense
Occupancy costs
Depreciation and amortisation
Legal and professional fees
Marketing and advertising expense
Research and development expense
Investment expenses
Travel and accommodation
Other expenses
Loss before income tax
Income tax expense
Net Loss after tax for the year from continuing operations
Net Profit/(Loss) after tax for the year from discontinued operations
Net Loss for the year
Other Comprehensive income
Items that may be reclassified to profit or loss in future periods:
Exchange differences on translation of discontinued operations
Items that have been reclassified to profit or loss in the current period:
Exchange differences on translation of discontinued operations
Other comprehensive income/(loss) net of tax
Total comprehensive loss
Net Profit for the period is attributable to:
Non-controlling interest
Owners of TasFoods Limited
Total comprehensive income for the year is attributable to:
Non-controlling interest
Owners of TasFoods Limited
Attributable to continuing operations
Attributable to discontinued operations
Basic loss per share (cents per share)
Diluted loss per share (cents per share)
Basic loss per share from continuing operations (cents per share)
Diluted loss per share from continuing operations (cents per share)
The above statement should be read in conjunction with the accompanying notes.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
Note
6
6
8
9
2016
$000
15,980
159
1,183
(9,475)
(6,849)
(620)
(307)
(601)
(606)
(119)
(110)
(249)
(997)
(2,611)
(371)
(2,982)
405
(2,577)
-
(367)
(367)
2015
$000
1,019
1,457
-
(510)
(2,000)
(104)
(16)
(1,280)
-
-
(400)
(51)
(211)
(2,096)
-
(2,096)
(2,107)
(4,203)
(8)
-
(8)
(2,944)
(4,211)
-
(2,577)
(2,577)
-
(2,944)
(2,944)
2
(4,205)
(4,203)
2
(4,213)
(4,211)
(2,982)
(2,096)
38
(2,944)
(2.33)
(2.33)
(2.70)
(2.70)
(2,115)
(4,211)
(4.39)
(4.39)
(2.19)
(2.19)
2016 TASFOODS LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2016
Current Assets
Cash and cash equivalents
Trade and other receivables
Current tax receivable
Biological assets
Inventory
Prepayments
Total Current Assets
Non-Current Assets
Property, plant and equipment
Intangible assets
Biological assets
Deferred tax assets
Total Non-Current Assets
Total Assets
Current Liabilities
Trade and other payables
Borrowings
Provisions
Total current liabilities
Non-Current Liabilities
Borrowings
Provisions
Total Non-Current Liabilities
Total Liabilities
Net Assets
Equity
Contributed equity
Reserves
Accumulated losses
Total Equity
Note
20
10
8
11
12
13
14
11
8
15
16
17
16
17
18
19
2016
$000
11,862
2,222
42
1,814
1,222
305
17,467
12,793
8,989
255
168
22,205
39,672
3,117
690
373
4,180
321
98
419
4,599
35,073
39,086
217
(4,230)
35,073
2015
$000
2,799
1,718
-
-
30
71
4,618
230
1,879
-
-
2,109
6,727
990
-
187
1,177
-
-
-
1,177
5,550
6,618
584
(1,652)
5,550
The above statement should be read in conjunction with the accompanying notes.
43
TASFOODS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2016
At 1 January 2015
Profit / (Loss) for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Disposal of non-controlling interest
Dividends paid
Issue of shares
Purchase of shares under the share buy-back scheme
Share based payments
As at 31 December 2015
At 1 January 2016
Loss for the year
Other comprehensive income
Total comprehensive income for the year
Transactions with owners in their capacity as owners:
Acquisition transactions
Issue of shares
Share issue costs (net of tax)
Contributed
Equity
Reserves
(Accumulated
losses)/
Retained
Earnings
Non-
Controlling
Interest
Total
$000
38,516
$000
375
$000
18,265
$000
203
$000
57,359
(4,205)
-
(4,205)
2
-
2
-
(205)
-
-
-
-
-
1,918
(33,816)
-
6,618
6,618
-
-
-
-
2,300
31,252
(1,084)
-
(8)
(8)
-
-
-
-
217
584
584
-
(367)
(367)
-
-
-
-
(15,712)
-
-
-
(1,652)
(1,652)
(2,577)
-
(2,577)
-
-
-
-
(4,203)
(8)
(4,211)
(205)
(15,712)
1,918
(33,816)
217
5,550
5,550
(2,577)
(367)
(2,945)
2,300
31,252
(1,084)
35,073
-
-
-
-
-
-
-
-
-
-
-
-
-
As at 31 December 2016
39,086
217
(4,230)
The above statement should be read in conjunction with the accompanying notes.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2016
Note
2016
$000
2015
$000
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
Income taxes received in overseas jurisdictions
Settlement proceeds regarding The Van Diemen’s Land (VDL) Company acquisition litigation
Legal fees associated with the VDL litigation and settlement
Expenditure incurred in the pursuit of acquisitions and investment opportunities
Net cash outflow from operating activities
20
Cash flows from investing activities
Payments for property, plant & equipment
Proceeds from disposal of financial assets
Acquisition of goat herd
Net cash used in business combination
Settlement of litigation claim
Net cash foregone from disposal of subsidiaries
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares
Cost of issuing shares
Payments made to buy back shares
Dividends paid to equity holders
Proceeds from borrowings
Repayment of borrowings
Net cash inflow from financing activities
Net increase/(decrease) in cash held
Cash and cash equivalents at the beginning of the year
Effects of exchange changes on the balances held in foreign currencies
Cash and cash equivalents at the end of the year
16,122
(19,532)
33
(32)
-
1,250
(576)
(231)
(2,966)
(3,693)
-
(204)
(9,827)
-
(4)
(13,728)
31,252
(1,549)
-
-
163
(4,617)
25,249
659
(5,691)
709
-
3
-
-
-
(4,320)
(20)
2,751
-
(1,800)
(250)
(944)
(263)
1,842
(224)
(33,816)
(15,712)
-
-
(47,910)
8,555
(52,493)
2,799
-
11,354
55,331
(39)
2,799
20
The above statement should be read in conjunction with the accompanying notes.
45
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
1. General Information
The consolidated financial statements and notes represent those of TasFoods Limited and its Controlled Entities. TasFoods Limited is a
company incorporated in Australia, and whose shares are publicly traded on the Australian Securities Exchange (ASX).
The financial statements were authorised for issue on 24 February 2017 by the Directors of the Company.
All press releases and other information are available on our website www.tasfoods.com.au.
2. Significant changes in the current reporting period
During the year the Company completed the acquisition of the Nichols Poultry and Shima Wasabi business units to complement the existing
operations and advance the Company’s growth strategy.
The consideration paid to the owners of Nichols Poultry amounted to $9.359 million and included the issue of 8,000,000 new fully paid
ordinary shares issued at a nominal value of $0.25 (25 cents) per share to the sellers (R & J N Family Trust). The balance of the consideration
($7.359 million) was paid in cash.
The consideration paid to the owners of Shima Wasabi amounted to $2.768 million and included the issue of 1,200,000 new fully paid
ordinary shares issued at a nominal value of $0.25 (25 cents) per share to the sellers (Stephen Welsh and Karen Welsh). The balance of the
consideration ($2.468 million) was paid in cash.
The Company also completed a public offer of its shares which raised $25.394 million before costs, with a further $5.858 million raised through
other share issues.
There is a detailed discussion of the Group’s financial performance and position included in the Review of Operations on pages 12 to 27 at the
start of this Annual Report.
There have been no changes in accounting policies since the previous financial report at 31 December 2015.
3. Segment information
The operating segments are based on the units identified in the operating reports reviewed by the Board and executive management and that
are used to make strategic decisions, in conjunction with the quantitative thresholds established by AASB 8 Operating Segments. As such,
there are three identifiable and reportable segments each of which is outlined below.
- The Dairy segment incorporates the Meander Valley Dairy business, the assets of which were acquired in September 2015, and goat
farming operations which were acquired in June 2016.
- The Poultry segment incorporates the net assets and business operations of Nichols Poultry Pty Ltd, which was acquired in June 2016.
- The Corporate and Other segment, which comprises:
• Corporate costs that are not directly attributable to operational business units, including the recently established Shared Service
teams, which provide administrative support to the operational production units in the areas of financial management, human
resources, sales, marketing, brand management, route to market, quality assurance and food safety and work health and safety;
• The net assets and business operations of Shima Wasabi Pty Ltd, which was acquired in June 2016; and
• The MarketSmart loyalty system, which provided services to a significant customer that in turn, managed customer loyalty
programmes. The customer terminated services in June 2015. Management resolved in 2016 to close and deregister MarketSmart.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Management measures the performance of the segments identified at the ‘net profit before tax’ level.
Consolidated - 2016
Revenue
Total segment revenue
Other income
Segment profit/(loss)
Profit after tax from discontinued operation
Loss before income tax expense
Income tax expense
Loss after income tax expense
Assets
Segment assets
Unallocated assets continuing operations:
Deferred Tax Asset
Unallocated assets – discontinued operations:
Total assets
Total assets include:
Dairy
Poultry
Corporate
and Other
Total
$’000
$’000
$’000
$’000
1,981
16
13,849
126
150
17
(816)
134
(1,929)
15,980
159
16,139
(2,611)
405
(2,206)
(371)
(2,577)
5,538
18,037
15,929
39,504
168
-
39,672
Goodwill on acquisition of non-current assets
1,879
4,709
2,218
8,806
Liabilities
Segment liabilities
Unallocated liabilities – discontinued operations:
Total liabilities
384
3,738
477
4,599
-
4,599
47
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Consolidated - 2015
Revenue
Total segment revenue
Other income
Total revenue
Segment profit/(loss)
Loss after tax from discontinued operation
Loss before income tax expense
Income tax benefit
Loss after income tax expense
Assets
Segment assets
Unallocated assets – discontinued operations:
Cash and cash equivalents
Other current assets
Total assets
Total assets include:
Meander Valley
Dairy
$’000
Corporate and
Other
$’000
Total
$’000
790
-
229
1,457
47
(2,143)
3,033
3,645
1,019
1,457
2,476
(2,096)
(2,107)
(4,203)
-
(4,203)
6,678
44
5
6,727
1,879
977
200
1,177
Goodwill on acquisition of non-current assets
1,879
-
Liabilities
Segment liabilities
Unallocated liabilities – discontinued operations:
Other payables
Total liabilities
172
805
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
SHAREHOLDER RETURNS
4. Earnings per share
Basic loss per share
Diluted loss per share
Basic loss per share from continuing operations
Diluted loss per share from continuing operations
Basic (loss)/earnings per share from discontinued operations
Diluted (loss)/earnings per share from discontinued operations
Net (loss)/profit from continuing operations attributable to the Owners of TasFoods Limited used in
calculation of basic and diluted earnings per share for.
All operations
Continuing operations
Discontinued operations
Basic
2016
CENTS
(2.33)
(2.33)
(2.70)
(2.70)
0.37
0.37
2015
CENTS
(4.39)
(4.39)
(2.19)
(2.19)
(2.20)
(2.20)
$’000
$’000
(2,577)
(2,982)
405
(4,203)
(2,096)
(2,107)
2016
Number
2015
Number
Weighted average number of ordinary shares outstanding during the period used in the calculation of basic
earnings per share
110,521,565
95,864,090
Diluted
Weighted average number of ordinary shares and convertible redeemable cumulative preference shares
outstanding and performance rights during the period used in the calculation of basic earnings per share
110,521,565
95,864,090
Information Concerning the Classification of Securities
(a) Ordinary shares held in escrow:
8,000,000 ordinary shares were issued in part satisfaction of the consideration for the Nichols Poultry Pty Ltd acquisition (held in the
name of Nichols Investments Pty Ltd as trustee for the R & J N Nichols Family Trust) were held in voluntary escrow from 15 June 2016 until
15 December 2016. There were no ordinary shares held in escrow at 31 December 2016 (31 December 2015: nil)
(b) Potential ordinary shares:
There were no options (other than those referred to in Note 32) or other forms of potential shares on issue at 31 December 2016 (31
December 2015: Nil).
Recognition and measurement
Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity
(other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus
element.
49
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:
• Costs of servicing equity (other than dividends) and preference share dividends;
• The after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and
• Other non-discretionary changes in revenues or expenses during the year that would result from the dilution of potential ordinary shares;
divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.
5. Dividends to shareholders
On 16 February 2015, the Company declared an unfranked dividend of 9 cents per share, a total of $15,711,560. This dividend had a record
date of 23 February 2015 and a payment date of 20 March 2015. The amount per security of this dividend that related to foreign sourced
income was 9 cents per share.
No dividends have been paid or declared during the year ended 31 December 2016.
PROFIT & LOSS INFORMATION
6. Revenue
Revenue from Continuing Operations
Sales Revenue
Other income
Interest received
Settlement of legal matter
Sundry income
Total other income
Recognition and measurement
Sales revenue
2016
$000
2015
$000
15,980
15,980
33
-
126
159
1,019
1,019
707
750
-
1,457
Revenue from the sale of goods is measured at the fair value of the consideration received after taking into account any trade discounts and
volume rebates allowed.
The Group recognises revenue when the amount of revenue can be reliably measured and it is probable that future economic benefits will flow
to the Group.
Revenue from the sale of goods is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and
the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered
passed to the buyer at the time of dispatch of the goods to the customer.
Revenue from the provision of services to customers is recognised upon delivery of the service to the customer.
All revenue is stated net of the amount of goods and services tax (GST), where applicable.
Interest revenue
Interest revenue is recognised using the effective interest method.
Dividend revenue
Dividend revenue is recognised when the Group’s right to receive the payment is established.
Settlement of legal matter
During the previous year the Company entered into an agreement to acquire the assets of The Van Diemen’s Land Company (“VDL”). As part of
the agreement the Company paid a non-refundable deposit of $500,000. Subsequent to signing the agreement the Company received notice
that the owners of VDL intended to terminate the agreement as it did not consider it possible that all conditions precedent would be satisfied.
The Company subsequently came to an agreement with the owners of VDL under which the Company received compensation of $1,250,000 in
full and final settlement of the matter, consisting of $500,000 refund of deposit and $750,000 costs reimbursement.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
7. Expenses
Profit before income tax expense includes the following specific expenses:
Note
2016
$000
2015
$000
Employee benefits expense:
Salaries and wages
Temporary employees
Share based payments
Superannuation expense (defined contribution)
Cash bonus
Termination payments
Total employment benefits
Consultant fees
Other employment expenses
Total employment and contractor expense
The expense above is split as follows: -
Continuing operations
Discontinued operations
Rental expense relating to operating leases
Investment expense
4,625
1,410
-
384
-
-
6,419
64
479
6,962
6,849
113
6,962
147
110
1,395
-
217
50
850
1
2,513
294
78
2,885
2,000
885
2,885
348
400
Investment expense arises from costs relating to the identification of, and pursuit of investment and acquisition opportunities. This includes
non-refundable contractual payments to secure rights to exclusive periods of negotiation with third parties and associated costs.
51
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
8.
Income tax
(a) Income tax recognised in profit or loss:
Tax expense/(benefit) comprises:
Current tax (benefit)/expense
Deferred tax movements
Income tax (benefit)/expense is attributable to:
Continuing operations
Discontinued operations
Deferred income tax (benefit)/expenses included in income tax expense comprises:
Increase in deferred tax assets
Increase in deferred tax liabilities
Note
2016
$000
2015
$000
(54)
425
371
371
-
371
873
(502)
371
(10)
-
(10)
-
(10)
(10)
-
-
-
Reconciliation of income tax expense to prima facie tax on accounting profit:
Loss before income tax expense
(2,206)
(4,211)
Tax benefit at Australian tax rate of 30% (2015: 30%)
Tax effect of amounts which are not deductible in calculating taxable income
Tax effect of amounts which are not taxable in calculating taxable income – discontinued operations
Capital Gain
Research and development tax offset
Difference in overseas tax rates
Deferred taxes not recognised
Previously unrecognised temporary differences now recognised as deferred tax balances
(662)
7
(122)
17
(54)
(814)
-
1,185
-
(1,264)
778
-
-
-
(486)
12
464
-
Income Tax (Benefit)/Expense for the Period
371
(10)
(b) Income tax benefit recognised directly in equity during the period:
Deferred tax arising from share is sue costs
(465)
(465)
-
-
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(c) Deferred tax balances:
Taxable and deductible temporary differences arise from the following:
Gross deferred tax assets:
Provisions
Trade and other payables
Share issue expense
Trade and other receivables
Property, plant and equipment
Intangibles
Gross deferred tax liabilities:
Biological assets
Inventory
Property, plant and equipment
Other
Net deferred tax asset/(liability)
(d) Tax Losses
Opening Balance
$’000
Acquired as
part of Business
Combination $000
Charged to
Income $’000
Charged to
Equity $’000
Closing
Balance $’000
-
-
-
-
-
-
-
-
-
-
-
-
-
100
28
-
-
-
-
128
-
-
-
-
-
128
41
12
(39)
7
2
54
77
(313)
(156)
(8)
(25)
(502)
(425)
-
-
465
-
-
-
465
-
-
-
-
-
465
141
40
426
7
2
54
670
(313)
(156)
(8)
(25)
(502)
168
Unused tax losses for which no deferred tax asset has been recognised:
Capital losses
Revenue losses
Potential tax benefit at 30%
Unused tax losses
Losses incurred post 1 January 2015
2016
$000
1,597
15,295
16,892
5,068
2015
$000
-
10,004
10,004
3,001
As at 31 December 2016 the Group has unused tax losses of $6.483 million for which no deferred tax asset has been recognised. The
Company has adopted a conservative approach to the recognition of deferred tax assets with respect to tax losses available to the Group,
and has determined not to recognise these losses until such time there is greater evidence supporting taxable profit of the Group.
Losses incurred prior to 31 December 2014
In addition, the Company has unused tax losses ($8.812 million revenue losses and $1.597 million capital losses) which were incurred under
the loyalty, rewards and payment solutions operations of OnCard International Limited. The Company has conservatively decided not to
recognise a deferred tax asset in relation to these tax losses on the basis that the Australian tax losses are subject to further review by the
Group to determine if they satisfy the necessary legislative requirements under income tax legislation for the carry forward and recoupment
of tax losses. The Company is currently undertaking a review of the accessibility of the unrecognised tax losses under the “Continuity of
Ownership” Test. The review is not yet complete and the Company is not currently in a position to state that the losses are accessible in full.
53
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Recognition and measurement
Current income tax expense or revenue is the tax payable on the current year’s taxable income based on the applicable income tax rate
adjusted by changes in deferred tax assets and liabilities.
A balance sheet approach is adopted, under which deferred tax assets and liabilities are recognised for temporary differences between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. No deferred tax asset or liability is recognised if it arose in
a transaction, other than a business combination, that at the time of the transaction did not affect either accounting or taxable profit or loss.
Deferred tax assets are recognised for temporary differences and unused tax losses only when it is probable that future taxable amounts will be
available to utilise those temporary differences and losses. Current and deferred tax balances attributable to amounts recognised directly in
equity are also recognised directly in equity.
Tax Consolidation
The Company and its wholly-owned Australian controlled entities have formed an income tax consolidated group effective 1 July 2016 under
tax consolidation legislation. Each entity in the Group recognises its own deferred tax assets and liabilities arising from temporary differences.
Such taxes are measured using the ‘stand-alone taxpayer’ approach. Current tax liabilities or assets and deferred tax assets arising from
unused tax losses and tax credits in the controlled entities are immediately transferred to the head entity which is the Parent entity. No tax
sharing or funding arrangements are presently in place.
9. Discontinued operations
(a) Description
On 20 January 2015, the Company announced that the Board, having received and considered the results of the strategic review, had decided
to close the Chinese business operations on the basis that the Directors believed: -
- The businesses were likely to require material ongoing investment to make them profitable, and
- The potential returns were uncertain, may not have materialised for some time, and were unlikely to be material.
On 1 June 2015, the Company entered into contracts to sell the following entities and as such reported in the financial statements for the Year
ended 31 December 2015: -
- OnCard Consulting Services Shanghai Ltd;
- Yin Chang Information Technology Shanghai Co., Ltd;
- Shanghai Yifutong Network Technology Co., Ltd;
- Beijing All Payments Company Ltd;
Furthermore, during the current year the Company ceased all remaining operations in Asia, and de-registered or liquidated the following
entities: -
- OnCard Limited;
- OnCard China (HK) Limited;
- OnCard Rewards Limited
- Consolidated Payment Services Ltd;
- Payment Services China Limited;
- Payment Services China Number 2 Limited;
- OnCard Pte Ltd.
Accordingly, the results of these entities have been disclosed within discontinued operations.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(b) Financial Performance and cash flow information
Revenue
Expenses
Loss before income tax
Income tax expense
Net Loss after tax for the year from discontinued operations
Gain/(Loss) on disposal of discontinued operations after income tax (refer c below)
Net Profit/(Loss) for the year
Basic (loss)/earnings per share (cents per share)
Diluted (loss)/earnings per share (cents per share)
4
4
Net cash inflow (outflow) from ordinary activities
Net cash inflow (outflow) from investing activities (i)
Net cash inflow (outflow) from financing activities (i)
(i) Net cash outflow from investing activities includes cash paid to the purchaser and the cash
foregone on the disposal of these operations.
(c) Details of the sale of the discontinued operations
Disposal proceeds and tax withheld
Disposal costs and payments to purchaser (ii)
Cash
Trade receivables
Other current assets
Other payables
Outside equity interest
Note
2016
$’000
-
2015
$’000
201
-
(1,549)
(1,348)
10
(1,338)
(769)
(2,107)
(2.20)
(2.20)
(1,542)
(943)
-
-
(445)
(445)
499
1
137
(108)
(205)
(144)
(144)
-
(144)
549
405
0.37
0.37
-
(9)
-
-
374
374
4
-
-
(179)
-
Carrying amount of net assets disposed
Gain (Loss) on disposal of discontinued operations
(175)
324
549
(769)
(ii). Amounts include loans written off, written back and the reversal of foreign exchange translation reserve back through profit or loss.
55
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Recognition and measurement
The Group classifies non-current assets (or disposal groups) as held for sale if their carrying amount will be recovered principally through a
sale transaction rather than through continuing use, and a sale is considered highly probably. They are measured at the lower of their carrying
amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and
investment property, which are carried at fair value and contractual rights under insurance contracts.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to fair value less costs to sell. A gain
is recognised for any subsequent increases in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative
impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal
group) is recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale.
Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.
Non-current assets held for sale, and the assets of a disposal group classified as held for sale, are presented separately from the other assets
in the balance sheet. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the balance
sheet.
A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale, and that represents a separate
major line of business or geographical area of operations, is a part of a single co-ordinated plan to dispose of such a line of business or area of
operations, or is a subsidiary acquired exclusively with the view to resale. The results of discontinued operations are presented separately in the
statement of profit and loss.
CURRENT ASSETS
10. Trade and other receivables
Trade receivables
Provision for impairment
Other receivables
Provision for impairment
Movements in the provision for impairment were as follows:
Carrying value at the beginning of the year
Provision for impairment recognised/(derecognised)
Receivables written off as uncollectable
Provision for impairment at year end
Trade receivables past due but not impaired
Under one month
One to three months
Over three months
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
$000
1,911
(25)
336
2,222
2015
$000
434
-
1,284
1,718
-
25
-
25
248
43
62
353
-
-
-
-
-
-
-
-
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Recognition and measurement
Trade receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables
expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified
as non-current assets.
Trade receivables are initially recognised at fair value and subsequently recognised less any provision for impairment.
Collectability of trade and other receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by
reducing the carrying amount directly. A provision for impairment of trade receivables is used when there is objective evidence that the Group
will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payment are considered indicators
that the trade receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the
present value of the estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables
are not discounted if the effect of discounting is immaterial.
The amount of the impairment loss is recognised in the consolidated income statements within other expenses. When a trade receivable for
which an impairment allowance has been recognised becomes uncollectable in a subsequent period, it is written off against the provision
account. Subsequent recoveries of amounts previously written off are credited against other expenses.
Fair values of trade and other receivables
Due to the short-term nature of the current receivables, their carrying amount approximated to fair value.
Credit risk
The Group has no significant concentration of credit risk with respect to any single counterparty or group of counterparties other than those
receivables specifically provided for within the provision for impairment. The main source of credit risk to the Group is considered to relate to
the class of assets described as ‘trade and other receivables’.
The above table details the Group’s trade and other receivables exposed to credit risk (prior to collateral and other credit enhancements) with
ageing analysis and impairment provided thereon. Amounts are considered as ‘past due’ when the debt has not been settled within the terms
and conditions agreed between the Group and the customer or counterparty to the transaction. Receivables that are past due are assessed for
impairment by ascertaining the solvency of the debtors and are provided for where there are specific circumstances that the debt may not be
fully repaid to the Group.
The balances of receivables that remain within initial trading terms are considered to be of low credit risk.
11. Biological assets
Balance as at 1 January 2016
Increases:
- As part of a business combination
- Due to purchases and production
Decreases due to sales/processing/mortality (i)
Movement in fair value as a result of physical and/or price changes (ii)
Balance as at 31 December 2016
Current
Non-current
Poultry
$’000
-
652
661
(652)
289
950
950
-
950
Goats
$’000
Wasabi
Plants $’000
-
-
204
(1)
53
256
1
255
256
-
102
-
(80)
841
863
863
-
863
Total
$’000
-
754
865
(733)
1,183
2,069
1,814
255
2,069
(i) includes biological assets reclassified as inventory at the point of harvest and/or processing.
(ii) includes physical changes as a result of biological transformation such as growth, degeneration and procreation.
57
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Recognition and Measurement
Biological assets of the Group include poultry, goats and wasabi plants and are measured at fair value less costs to sell in accordance with
AASB 141 Agriculture. Where fair value cannot be reliably measured or little or no biological transformation has taken place biological assets
are measured at cost less impairment losses.
Market prices are derived from observable market prices and achieved sales prices and are reduced for costs associated with bringing the
finished product to market including incremental selling costs and harvesting and production costs to process the biological asset into a
saleable form.
The change in estimated fair value is charged to the income statement on a separate line item as fair value adjustment of biological assets.
This line item includes movements in fair value as a result of both physical and price changes.
Biological assets are reclassified as inventory at the point of harvesting or processing.
As at 31 December 2016, the Group held 371,594 live poultry (2015: nil), 640 goats (2015: nil) and 4,217 wasabi plants (2015: nil).
Poultry
For live poultry with an estimated dressed weight of below 1kg (which is consistent with independent poultry performance guidelines for meat
chicken) the carrying amount is a reasonable approximation of fair value. Live poultry with an estimated dressed weight of greater than 1kg are
measured at fair value less costs to sell and the measurement is categorised into Level 2 in the fair value hierarchy.
The valuation is completed at the whole dressed bird stage for each batch of live poultry as there is no effective market for live poultry
produced by the Group. The valuation methodology takes into consideration estimated growth rates, feed intake and carcass yield per
independent performance guidelines.
Based on market prices and weights utilised at 31 December, with all other variables held constant, the Group’s net profit/(loss) for the period
would have been impacted by $36,343 by a pricing or dressed weight increase/decrease of 5%.
Goats
Goats are measured at fair value less costs to sell, based on market prices of similar age, breed and genetic merit. As these prices are
observable, they are deemed to be Level 2 in the fair value hierarchy.
The value of goats, comprised of mature does, weaned doelings and breeding bucks, is determined by independent valuation with reference
to prices received from sales of milking goat stock similar to the Group’s herd with direct references made to recent sales evidence in relevant
dairy goat markets. Prices of the Group’s goats are reflective of current market conditions.
Wasabi Plants
Wasabi plants which are greater than twelve months of age are considered mature and ready for harvest, as such plants which are greater
than twelve months of age are disclosed as a current asset. As at 31 December 2016 the Group’s wasabi plants were an average of 17 months
of age and suitable for harvest, as such wasabi plants are valued at fair value less estimated point of sale costs. The valuation methodology is
deemed to be Level 3 in the fair value hierarchy as it contains unobservable inputs due to the rare nature of the crop.
The fair value of the wasabi plants is determined using the estimated yield per plant in kilograms which has been determined through collection
of historical growth rate and harvest data for mature wasabi plants within the crop. Notable variations and fluctuations in the fair value of
wasabi plants may occur as a result of factors including; plant variety, the timing of cultivation, plant maturity, timing of harvest, seasonal
growth patterns and weather conditions.
Based on market prices and estimated yields utilised within the valuation methodology at 31 December 2016, with all other variables held
constant, the Group’s net profit/(loss) for the period would have been impacted by $43,148 by a yield increase/decrease of 5%.
Fair Value Measurement
Recurring fair value measurements
- Goats
- Wasabi Plants
Total biological assets recognised at fair value
Level 1
$’000
Level 2
$’000
Level 3
$’000
-
-
-
-
950
256
-
1,206
-
-
863
863
Total
$’000
950
256
863
2,069
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Fair value measurements using significant unobservable inputs
The following table summarises the quantitative information about the significant unobservable inputs used in Level 3 fair value measurements:
Description
31 December 2016
Wasabi Plant biological assets at fair value
Unobservable inputs
Average yield per wasabi plant used in fair value measurement: 0.37 kilograms
Relationship of unobservable inputs to fair value
An increase in yield would result in a direct increase in the fair value.
12. Inventory
Finished goods
Raw materials and packaging
Other
Recognition and measurement
2016
$000
394
309
519
1,222
2015
$000
30
-
-
30
Inventories are measured at the lower of cost and net realisable value and are assigned on a weighted average cost basis. Net realisable value
is the estimated selling price in the ordinary course of business, less estimated costs of completion and costs to sell.
Inventories are accounted for in the following manner:
• Finished goods: cost includes direct materials, direct labour and an appropriate proportion of manufacturing variable and fixed overheads
based on normal operating capacity, but excluding any borrowing costs.
• Biological assets reclassified as inventory: the initial cost assigned to agricultural produce is the fair value less costs to sell at the point of
harvesting or processing in accordance with AASB 141.
• Raw materials and packaging: purchase cost.
NON-CURRENT ASSETS
13. Property, plant and equipment
Land and Buildings – at cost
Less accumulated depreciation
Plant and equipment – at cost
Less accumulated depreciation
Office equipment – at cost
Less accumulated depreciation
Motor vehicles – at cost
Less accumulated depreciation
Capital Work in Progress
At cost
Total Assets
Reconciliations
2016
$000
6,747
(60)
6,687
4,950
(268)
4,682
201
(161)
40
142
(11)
131
1,253
1,253
12,793
2015
$000
-
-
-
267
(39)
228
158
(156)
2
-
-
-
-
-
230
59
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Reconciliations of the carrying amounts of each class of property, plant and equipment at the beginning and end of the financial year are set
out below:
Carrying value
As at 1 January 2015
Additions
Additions as part of a business combination
Disposals
Depreciation expense
Balance 31 December 2015
Additions
Additions as part of a business combination
Disposals
Depreciation expense
Land &
Buildings
$’000
Plant &
Equipment
$’000
Office
Equipment
$’000
Motor
Vehicles
$’000
Capital
work in
progress
$’000
-
-
-
-
-
-
821
5,926
-
(60)
-
18
221
-
(11)
228
2,160
2,524
-
(230)
52
2
-
(37)
(15)
2
43
-
-
(5)
-
-
-
-
-
-
94
55
(6)
(12)
-
-
-
-
-
-
569
684
-
-
Total
$’000
52
20
221
(37)
(26)
230
3,687
9,189
(6)
(307)
Balance 31 December 2016
6,687
4,682
40
131
1,253
12,793
Recognition and measurement
Property, plant and equipment is stated at historical cost less depreciation. Historical cost includes expenditure that is directly attributable to
the acquisition of the items. 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 that the cost of the item can be
measured reliably.
Repairs and maintenance expenditure is charged to the profit and loss during the period in which the expenditure is incurred.
The average depreciation rates for each class of fixed assets are:
Class of fixed asset
Buildings
Leasehold improvements
Plant and equipment
Office equipment
Motor vehicles
Average Depreciation Rates
2-5%
10-12%
8-20%
40-50%
15-20%
The assets’ residual values and useful lives are reviewed and adjusted if appropriate at the end of each reporting period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated
recoverable amount.
Assets are derecognised when sold or replaced with gains and losses on disposals determined by comparing proceeds with the carrying
amount. These gains or losses are recognised in the consolidated income statement when the item is derecognised.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
14. Intangible Assets
Goodwill
Patents and trademarks
Water rights
Gross Carrying Value
At cost
Accumulated impairment
Total net carrying amounts
Reconciliations
Carrying amount at beginning
Business combinations during the year
Impairment during the period
Carrying amount at end
2016
$000
2015
$000
8,806
8
175
8,989
9,590
(601)
8,989
1,879
7,110
-
8,989
1,879
-
-
1,879
2,480
(601)
1,879
-
1,879
-
1,879
Goodwill related to the acquisition of the Meander Valley Dairy business in 2015, along with the acquisition of the wholly-owned controlled
entities Nichols Poultry Pty Ltd and Shima Wasabi Pty Ltd acquired in the 2016 year. Refer to note 25 for further details regarding the
acquisitions.
Recognition and measurement
Intangible assets are initially recognised and recorded at cost where it is probable that future economic benefits attributable to the asset will
flow to the Group and the cost can be measured reliably. Subsequently, intangible assets are carried at cost less any accumulated amortisation
and impairment losses.
Goodwill
Goodwill is not amortised but is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might
be impaired. Goodwill is carried at cost less accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the
Group’s cash generating units, or groups of cash generating units, that are expected to benefit from the synergies of the combination,
irrespective of whether other assets or liabilities of the Group are assigned to those units or group of units. Each unit or group of units to which
the goodwill is so allocated represents the lowest level within the Group at which the goodwill is monitored for internal management purposes.
Impairment is determined by assessing the recoverable amount of the cash generating unit (group of cash generating units) to which the
goodwill relates. When the recoverable amount of the cash generating unit (group of cash generating units) is less than the carrying amount,
an impairment loss is recognised.
When goodwill forms part of a cash generating unit (group of cash generating units) and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on
disposal of the operation. Goodwill disposed of in this manner is measured based on the relative values of the operation disposed of and the
portion of the cash generating unit retained.
Impairment losses recognised for goodwill are not subsequently reversed.
61
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Before recognition of impairment losses, the carrying amount of the goodwill (other than goodwill relating to discontinued operations) was
allocated to CGUs as follows:
Meander Valley Dairy
Nichols Poultry
Shima Wasabi
MarketSmart
2016
$’000
1,879
4,709
2,218
-
8,806
2015
$’000
1,879
-
-
601
2,480
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Recoverable amount of goodwill
Meander Valley Dairy
The recoverable amounts of the Meander Valley Dairy CGU has been determined based on a value-in-use calculation which uses cash flow
projections based on financial budgets and forecasts approved by management covering a five year period, before any fair value adjustments
for biological assets.
Key assumptions used in the value-in-use calculations for the Meander Valley Dairy CGU include:
Revenue Growth
Production costs
Revenue growth over the five-year period is based upon budgeted revenue growth associated with the Groups
growth strategy with the expansion of the business unit via increases in production volumes, new product
offerings and expansion into new markets.
Revenue growth is forecast to be 78% in the 2017 financial year and 23% per year on average in the subsequent
four years of the forecast period.
The forecast revenue growth of 78% in the 2017 financial year is supported by revenue growth already achieved
in the CGU arising from acquisitions and initiatives taken in 2016, which resulted in a revenue increase of 47% in
the 2016 financial year.
Forecast production costs are anticipated to increase over the five-year period in line with revenue growth, and
are projected to be on average 62% of revenue over the five-year period (2015: 65%). Conservative savings
and efficiencies to be generated as a result of achieving economies of scale in production have been recognised
within the forecast cash flows.
Indirect costs
Indirect costs are anticipated to increase by 7.5% per annum.
Long-term growth rate
The long-term growth rate is the weighted average growth rate used to extrapolate cash flows beyond
the budget period. A long-term growth rate of 2.5% has been used in the value-in-use calculation, which is
consistent with the Reserve Bank of Australia rates.
Pre-tax discount rates
Discount rates represent the current market assessment of the risks relating to the relevant CGU.
In performing the value-in-use calculations for the CGU, the Group has applied post-tax discount rates to
discount the forecast future attributable post-tax cash flows. The equivalent pre-tax discount rate is 10.8%
(2015: 10.3%).
Based on the above assumptions the recoverable amount of the CGU is estimated to be $11.3 million, which exceeds the CGU’s carrying amount
by $6.2 million. The recoverable amount of the CGU would equal its carrying amount if the key assumptions were to change as follows:
Pre-tax discount rate
Increase from 10.8% to 17.2%.
Annual revenue growth rate Reduction in average from 34% (over the five-year period) to 27%.
Production costs
Increase from 62% of revenue to 70%.
Nichols Poultry and Shima Wasabi
On 15 June 2016, TasFoods Limited acquired 100% controlling interest in Nichols Poultry Pty Ltd and Shima Wasabi Pty Ltd.
At 31 December 2016, the recoverable amount of the goodwill and assets of both Nichols Poultry and Shima Wasabi have been determined
based on fair value less costs of disposal, with reference to the purchase price of the acquired interests. There are no indicators to suggest that
the fair value of Nichols Poultry or Shima Wasabi has significantly changed since acquisition.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
MarketSmart
Management has resolved to close and deregister the MarketSmart CGU, and as such no value-in-use calculations have been prepared for the
CGU. Accordingly, the goodwill that was impaired at 31 December 2015 remains fully impaired at 31 December 2016.
Impairment of assets
Assets with an indefinite useful life are not amortised but are tested annually for impairment. Assets subject to annual depreciation or
amortisation are reviewed for impairment whenever events or circumstances arise that indicate that the carrying amount of the asset may be
impaired.
An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount. The recoverable amount of an asset
is defined as the higher of its fair value less costs to sell and value-in-use.
LIABILITIES
15. Trade and other payables
Trade and other payables
Recognition and measurement
2016
$’000
3,117
3,117
2015
$’000
990
990
Trade and other payables represent liabilities for goods and services received by the Group which remain unpaid at the end of the reporting
period. The balance is recognised as a current liability with amounts paid in accordance with supplier trading terms.
Fair value of trade and other payables
Due to the short term nature of trade and other payables, the carrying value is reflective of fair value.
16. Borrowings
Current
Bank Overdraft
Secured finance lease liabilities
Non-Current
Secured finance lease liabilities
Total borrowings
2016
$’000
2015
$’000
508
182
690
321
1,011
-
-
-
-
-
-
63
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Finance Lease Commitments
Commitments in relation to finance leases are payable as follows:
Within one year
Later than one year but not later than five years
Later than five years
Future finance charges
Recognised as a liability
The present value of finance lease liabilities is as follows:
Within one year
Later than one year but not later than five years
Later than five years
Minimum lease payments
Financing Arrangements
Equipment Financing Liabilities
Bank Bill Facility
Bank Overdraft
Recognition and measurement
2016
$’000
2015
$’000
213
338
-
551
(48)
503
192
311
-
503
-
-
-
-
-
-
-
-
-
-
2016
$’000
2015
$’000
Undrawn
Balance
Limit
Undrawn
Balance
-
2,000
492
2,492
-
-
-
-
-
-
-
-
Limit
503
2,000
1,000
3,503
Borrowings, including finance lease liabilities, are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is
recognised in the consolidated income statement over the period of the borrowings using the effective interest method.
Borrowings are removed from the balance sheet of the Group when the terms and obligations specified in the contract are discharged,
cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another
party, and the consideration paid is recognised in the consolidated income statement as other income or finance costs.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12
months after the reporting period.
Borrowing costs, including transaction fees, are recognised in the consolidated income statement in the period in which they are incurred.
Secured liabilities and assets pledged as security
Finance lease liabilities relate to specific operating equipment within Nichols Poultry arranged with the Australia and New Zealand Banking
Group Limited (ANZ) and Commonwealth Bank of Australia Limited (CBA). These facilities are secured over the assets financed under each
facility. The finance leases are held over a remaining period of less than 1 year to 5 years and have a weighted average effective interest rate of
5.85%.
The Group also has access to an undrawn bank bill facility with the ANZ. This bill facility, along with the bank overdraft facility, is secured by
mortgage over the property and water rights owned by Nichols Poultry Pty Ltd and a general security agreement over property of Nichols
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Poultry Pty Ltd not otherwise secured.
Financial covenants
Upon acquisition of Nichols Poultry Pty Ltd, the Group also acquired the financial covenants associated with the Nichols Poultry overdraft and
business development loan facility. Under the terms of the facilities, Nichols Poultry is required to comply with the following financial covenant:
• Interest Cover Ratio (calculated using EBITDA) for each financial half year will not, as at the Compliance date, be less than 1.50:1.
The Group has complied with the financial covenants throughout the reporting period.
17. Provisions
Current
Employee benefits
Restructure provision
Other provisions
Non-current
Employee benefits
2016
$’000
2015
$’000
368
-
5
373
98
98
15
172
-
187
-
-
Recognition and measurement
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the
Group will be required to settle the obligation, and a reliable estimate can be made of the quantum of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date,
taking into consideration the risks and uncertainties surrounding the obligation. If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the liability.
Employee benefits
Provision is made for employee benefits arising at the end of the reporting period. Employee benefit obligations are presented as current liabilities in
the consolidated balance sheet if the Group does not have an unconditional right to defer settlement for at least 12 months after the reporting period,
regardless of when the actual settlement is expected to occur.
Employee benefits that are expected to be settled within one year from the reporting date have been measured at amounts expected to be paid when
the liability is settled. Employee benefits payable later than one year have been measured at present value of the estimated future cash outflows to be
made for those benefits. In determining the liability, consideration is given to employee wage increments and the probability that the employee may
satisfy any vesting requirements. Those cash flows are discounted using market yields on Australian corporate bond rates with terms to maturity that
match the expected timing of cash flows attributable to those employees.
Provision has been made in the financial statements for benefits accruing to employees up to the reporting date such as annual leave, long service
leave and bonuses (where applicable). No provision is made for non-vesting sick leave as the anticipated patterns of future sick leave indicates that
accumulated non-vesting sick leave will not be paid. Annual leave provisions are measured at nominal values using the remuneration rates expected to
apply at the time of settlement. Long service leave provisions are measured as the present value of expected future payments to be made in respect
of services provided to employees up to reporting date. Expected future payments are discounted using market yields at reporting date on Australian
corporate bonds with terms to maturity that match the estimated future cash flows.
On-costs, such as superannuation and payroll tax are included in the determination of employee benefits provisions.
The net change in the obligation for employee benefits provisions are recognised in the consolidated income statement as a part of employee benefits
expense.
Restructure provision
The Company commenced winding up the Buffet Club Singapore operations prior to 31 December 2015 following a board decision that the
benefits of further investment into the operations were outweighed by the potential downside following regulatory changes to outbound call
65
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
centre sales operations. All entities were dissolved and deregistered or liquidated during the 2015 and 2016 financial years.
EQUITY
18. Contributed Equity
NUMBER OF SHARES
SHARE CAPITAL
Ordinary shares – fully paid (no par value)
164,107,181
29,898,181
2016
2015
2016
$000
39,086
39,086
2015
$000
6,618
6,618
Total Share Capital
Movements in ordinary share capital:
DATE
1/1/15
Balance at end of period
Issued in current year
Acquisition shares
Share buy-back
Share issue costs
31/12/15
Balance at end of year
19/2/2016
Issue of shares
8/3/2016
Issue of shares
15/6/2016
Public offer
15/6/2016
Acquisition of Nichols Poultry (i)
15/6/2016
Acquisition of Shima Wasabi (ii)
Issue costs - net of tax
DETAILS
ORDINARY SHARES
PRICE
174,572,890
7,368,000
1,666,667
(153,709,376)
-
29,898,181
22,232,000
1,200,000
101,577,000
8,000,000
1,200,000
164,107,181
0.25
0.18
-
0.25
0.25
0.25
0.25
0.25
$000
38,516
1,842
300
(33,816)
(224)
6,618
5,558
300
25,394
2,000
300
(1,084)
39,086
(i) 8,000,000 ordinary shares were issued at $0.25 (25 cents) per share as part of the consideration for the acquisition of Nichols Poultry Pty Ltd.
(ii) 1,200,000 ordinary shares were issued at $0.25 (25 cents) per share as part of the consideration for the acquisition of Shima Wasabi Pty Ltd.
Terms and Conditions of Issued Capital
Ordinary Shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of
shares held. On a show of hands each holder of ordinary shares present at a meeting in person or by proxy is entitled to one vote, and upon a
poll each share is entitled to one vote.
Options
Share options do not entitle the holder to participate in dividends and the proceeds on winding up of the Company. The holder is not entitled to
vote at General Meetings. There were 18,500,000 options on issue during the financial year and as at 31 December 2016 (2015: 18,500,000).
Recognition and measurement
Ordinary shares are classified as equity, with ordinary share capital being recognised at the fair value of the consideration received by the
Company.
Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.
Ordinary share capital bears no special terms or conditions affecting income or capital entitlements of the shareholders.
Where the Company purchases the Company’s equity instruments, for example as the result of a share buy-back or a share based payment
plan, the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from the equity attributable
to the owners of TasFoods Limited as ordinary share capital until the shares are cancelled or reissued. Where such ordinary shares are
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
subsequently reissued, any consideration received, net of any directly attributable incremental transactions costs and the related income tax
effects, is included in the equity attributable to the owners of TasFoods Limited.
19. Reserves
Foreign currency translation reserve
Employee share options reserve
Nature and Purpose of Reserves
Share based payment reserve
2016
$’000
-
217
217
2015
$’000
367
217
584
This reserve is used to record the exchange differences arising on translation of foreign operations where the foreign operations functional
currency is different from the Group’s presentation currency.
Employee share option reserve
The reserve is used to record the value of equity instruments issued to employees and directors as part of their remuneration, and other parties
as part of compensation for their services. Details of the Employee share option payments are contained in note 32.
Movements in Reserve
Balance at 1 January 2015
Movement during the period
Balance at the beginning of period
Movement during the period
Balance at end of period
OTHER NOTES
20. Additional Cash Flow Information
Cash and cash equivalents
Recognition and measurement
ESOP
Foreign
currency
Total
-
217
217
-
217
375
(8)
367
(367)
-
375
209
584
(367)
217
2016
$’000
11,862
2015
$’000
2,799
Cash and cash equivalents include cash on hand and at banks and short-term deposits with an original maturity of three months or less held at
call with financial institutions.
(a) Reconciliation of cash and cash equivalents to the statement of cash flows:
For the purposes of the statement of cash flows, cash and cash equivalents includes cash on hand and in banks and short-term deposits at call,
net of outstanding bank overdrafts. Cash and cash equivalents as at the end of the financial year as shown in the statement of cash flows is
reconciled to the related items in the statement of financial position as follows:
Cash and cash equivalents
Bank overdraft
2016
$’000
11,862
(508)
11,354
2015
$’000
2,799
-
2,799
67
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(b) Reconciliation of operating profit after income to net cash flows from operating activities:
Operating (loss)/profit after income tax:
Depreciation and amortisation
Impairment expense
Losses on fair value through profit or loss financial assets
Loss on disposal of property, plant and equipment
Disposal of foreign operations
Share based payments
Change in net operating assets and liabilities:
(Increase)/decrease in trade receivables
(Increase)/decrease in biological assets
(Increase)/decrease in inventories
Decrease in other assets
Movement in deferred taxes
Increase/(decrease) in trade and other payables
(Decrease) in tax liability
(Decrease)/Increase in operating provisions
Net cash (outflow) from operating activities
(c) Non-cash activities
There were no non-cash financing activities.
2016
$’000
(1,005)
2015
$’000
(4,203)
314
-
-
6
(549)
-
1,269
(1,207)
(364)
(136)
(1,133)
(116)
(54)
9
26
37
3
-
769
217
(1,458)
-
-
150
-
244
(6)
(99)
(2,966)
(4,320)
The Company funded part of the acquisitions of the Nichols Poultry and Shima Wasabi business units by the issue of shares. Details are
contained in Note 25. There were no other non-cash investment activities.
21. Financial risk management
The Group’s principal financial instruments comprise receivables, payables, cash and short term deposits.
The Group manages its exposure to key financial risks, including interest rate and currency risk in accordance with the Group’s financial risk
management policy. The objective of the policy is to support the delivery of the Group’s financial targets whilst protecting future financial
security.
The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, price risk, credit risk and liquidity risk.
The Group uses different methods to measure and manage different types of risk to which it is exposed. These include monitoring levels of
exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rate, foreign exchange and commodity
prices. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk, liquidity risk is monitored through
the development of future rolling cash flow forecasts.
The Board reviews and agrees policies for managing each of these risks as summarised in the following.
Primary responsibility for identification and control of financial risks rests with the Chief Financial Officer under the authority of the Board. The
Board reviews and agrees policies for managing each of the risks identified below, including any hedging cover of foreign currency, interest rate
risk, credit allowances, and future cash flow forecast projections.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
The carrying amounts and net fair values of the Group’s financial assets and liabilities at balance date are:
Financial Assets
Cash and cash equivalents
Trade and other receivables
Non-Traded Financial Assets
Financial Liabilities
Trade and other payables
Borrowings
Non-Traded Financial Liabilities
Recognition and measurement
Classification
CARRYING AMOUNT
NET FAIR VALUE
2016
$000
2015
$000
11,862
2,222
14,084
3,117
1,011
4,128
2,799
1,718
4,517
990
-
990
2016
$000
11,862
2,222
14,084
3,117
1,011
4,128
2015
$000
2,799
1,718
4,517
990
-
990
The Group classifies its financial instruments in the following categories: financial assets at fair value through profit or loss, loans and
receivables, held-to-maturity investments, and available-for-sale financial assets. The classification depends on the purpose for which the
investments were acquired. Management determines the classification of its financial instruments at the time of initial recognition.
Financial Assets at Fair Value through Profit or Loss
Upon initial recognition a financial asset or financial liability is designated as at fair value through profit or loss when:
(a) An entire contract containing one or more embedded derivatives is designated as a financial asset or financial liability at fair value through
profit and loss.
(b) Doing so results in more relevant information, because either:
(i) It eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets or
liabilities or recognising gains or losses on them on different bases.
(ii) A group of financial assets, financial liabilities or both is managed and its performance is evaluated on a fair value basis, in accordance
with a documented risk management or investment strategy, and information about the group is provided internally on that basis to key
management personnel.
Investments in equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably
measured are not designated as at fair value though profit or loss.
Present investment strategy is to keep assets in a highly liquid state and almost all of the investment assets are held in cash.
A gain or loss arising from a change in the fair value of a financial asset or financial liability classified as at fair value through profit or loss is
recognised in the statement of profit or loss and other comprehensive income.
Non-listed investments, for which fair value cannot be reliably measured, are carried at cost and tested for impairment.
Loans and Receivables
Loan and receivables are measured at fair value at inception and subsequently at amortised cost using the effective interest rate method.
Financial Liabilities
Financial liabilities include trade payables, other creditors and loans from third parties including inter-company balances and loans from or
other amounts due to Director-related entities.
Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principle payments and amortisation.
69
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Risk Exposures and Responses
Interest Rate Risk
The Group’s exposure to market interest rate related primarily to the Group’s cash deposits. At balance date, the Group had the following mix
of financial assets exposed to Australian and overseas variable interest rate risks that are not designated as cash flow hedges:
Financial Assets
Cash and cash equivalents
Net exposure
2016
$’000
11,862
11,862
2015
$’000
2,799
2,799
The Group regularly analyses its interest rate opportunity and exposure. Within this analysis consideration is given to existing positions and
alternative arrangements for its deposits.
The following sensitivity analysis is based on the interest rate opportunity/risk relating to cash deposits at balance date.
At 31 December, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post-tax profit and equity
would have been affected as follows:
Judgements of reasonably possible movements:
+0.5% (50 basis points)
-0.5 % (50 basis points)
2016
$’000
2015
$’000
57
(57)
14
(14)
The movement in profits are due to higher/lower interest received. As the Group does not have any derivative instruments the movements in
equity are those of profit only. A movement of + and – 0.5% is selected because this historically is within a range of rate movements.
Foreign Currency Risk
As a result of operations in China, Hong Kong and Singapore, the Group’s statement of financial position has previously been affected
significantly by movements in the RMB/AUD, HKD/AUD and SGD/AUD exchange rates. As the Group has discontinued all foreign operations, it
is no longer subject to significant foreign exchange risks.
Liquidity Risk
Liquidity Risk is the risk that the Group, although balance sheet solvent, cannot meet or generate sufficient cash resources to meet its payment
obligations in full as they fall due, or can only do so at materially disadvantageous terms.
Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has built an appropriate liquidity risk management
framework for the management of the Group’s short, medium and long-term funding and liquidity management requirements. The Group
manages liquidity risk by maintaining adequate reserves and by continuously monitoring forecast and actual cash flows and matching the
maturity profiles of financial assets and liabilities.
The Group has total liabilities of $4,599 (2015: $1,177) of which $3,672 (2015: $1,177) is recorded as current liabilities and total current assets of
$17,467 (2015: $4,618) of which $11,862 (2015: $2,799) consists of cash or cash equivalents providing the Board with comfort that the Group is
solvent and can meet its payment obligations in full as they fall due.
All current liabilities fall due within normal trade terms, which are generally 30 days.
Credit Risk
Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and trade and other receivables. The
Group’s exposure to credit risk arises from potential default of the counter party, with maximum exposure equal to the carrying amount of these
instruments. Exposure at balance date is addressed in each applicable note.
The Group does not hold any credit derivatives to offset its credit exposure.
The Group trades only with recognised, creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to
securitize its trade and other receivables.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment
of their independent credit rating, financial position, past experience and industry reputation. The risks are regularly monitored. An analysis of
the ageing of receivables is included in note 10.
In addition, receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Fair Value
The method for estimating fair value is outlined in the relevant notes to the financial statements. All financial assets held at fair value are
valued based on the principles outlined in AASB 7 in relation to Level 1 of the hierarchy of fair values, being quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can access at the measurement date.
22. Capital Management
When managing capital, management’s objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to
shareholders and benefits for other stakeholders. Management also aims to maintain a capital structure that ensures the lowest cost of capital
available to the entity.
Management are constantly adjusting the capital structure to take advantage of favourable costs of capital or high returns on assets. As the
market is constantly changing, management may change the amount of dividends to be paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.
During 2015, management elected to pay a dividend of $0.09 (9 cents) per share, and repaid equity to shareholders out of proceeds from
the sale of its joint venture interest. As a result, the Company now has a more flexible and manageable capital base, and can use this base to
identify and pursue suitable acquisition and investment opportunities.
Borrowings
Trade and other payables
Total debt
Less cash and cash equivalents
Net debt/(cash)
Total equity
Total capital
2016
$’000
1,011
3,117
4,128
(11,862)
(7,734)
35,073
39,086
2015
$’000
-
990
990
(2,799)
(1,809)
5,550
6,618
Gearing Ratio (Total debt / Total equity)
11.8%
17.8%
The Group is not subject to any externally imposed capital requirements.
71
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
GROUP MANAGEMENT
23. Parent entity supplementary information
Information relating to TasFoods Limited:
Financial position
Current assets
Non – current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Contributed equity
Reserves
Accumulated Losses
Total equity
Financial performance
Total revenue
Loss for the period
Comprehensive income for the period
The Company has not entered into any guarantees in respect to its controlled entities or associates.
Capital Commitments
There are no commitments for the acquisition of plant and equipment contracted for at the reporting date.
2016
$’000
2015
$’000
12,924
18,380
31,304
720
59
779
4,473
1,045
5,518
976
-
976
30,525
4,542
39,086
217
(8,779)
6,618
217
(2,293)
30,524
4,542
2,012
(2,157)
(2,157)
918
(3,270)
(3,270)
Finance Leases
There are no commitments in relation to finance leases.
Contingent Liabilities
The parent entity is not subject to any liabilities that are considered contingent upon events known at balance date.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
24. Subsidiaries
COUNTRY OF
INCORPORATION
PRINCIPAL ACTIVITY
Van Diemen’s Land Dairy Pty Ltd
Nichols Poultry Pty Ltd
Shima Wasabi Pty Ltd
MarketSmart International Pty Limited
OnCard Ltd
OnCard (China) HK Ltd
OneRewards Ltd
Consolidated Payment Services Limited
Payment Services China Limited
OnCard Pte Ltd
Australia
Australia
Australia
Australia
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Singapore
Dairy
Poultry
Wasabi
Loyalty Solutions
Loyalty Solutions
Investment
Rewards
Investment
Investment
Loyalty Solutions
EQUITY HOLDING
2016
%
100
100
100
100
-
-
-
-
-
-
2015
%
100
-
-
100
100
100
100
100
100
100
PARENT ENTITY
INVESTMENT
2016
$000
2015
$000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
A. OnCard Pte Ltd was a wholly owned subsidiary of OnCard Limited (HK).
B. Payment Services China Limited was wholly owned by Consolidated Payment Services Limited.
C.
Van Diemen’s Land Dairy Pty Ltd (formerly TasFoods (VDL) Pty Ltd) is a company incorporated by the parent for the operation of dairy
businesses. At 31 December 2016 this company is not operational.
25. Business combinations
Current Year
On 15 June 2016 the Company announced that it had completed the acquisition of Nichols Poultry Pty Ltd and associated assets (“Nichols
Poultry”) and Shima Wasabi Pty Ltd (“Shima Wasabi”).
Nichols Poultry Pty Ltd
The acquisition was completed for cash consideration of $7.359 million and upon the issue of 8,000,000 ordinary shares in TasFoods Limited,
valued at $2.0 million to the vendor of Nichols Poultry Pty Ltd. Details of the acquisition were as follows: -
Consideration
Cash consideration
Issue of 8,000,000 ordinary shares
$’000
7,359
2,000
9,359
73
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Acquisition-related costs amounting to $135,744 have been excluded from the consideration transferred and have been recognised as an
expense in profit or loss in the current year within Legal and professional fees.
The net identifiable assets acquired are considered to be preliminary. In accordance with the Groups accounting policy, the Company is
finalising the allocation of the purchase price to the acquired assets. In particular, fair values assigned to property plant and equipment and
intangible assets and contingent liabilities are still being assessed and subject to finalisation. In accordance with accounting standards, the
acquisition accounting will be finalised within twelve months of the acquisition date.
Assets acquired
Property plant and equipment
Intangible assets
Trade and other receivables
Other current assets
Deferred tax asset
Trade and other payables
Borrowings
Provisions
Net assets acquired
Goodwill
Purchase consideration
Preliminary Fair
Value
$’000
8,747
183
1,798
1,478
129
(4,675)
(2,564)
(446)
4,650
4,709
9,359
Goodwill arose in the acquisition because the cost of the combination included a control premium. In addition, the consideration paid for the
combination effectively included amounts in relation to the benefit of revenue growth, future market development and the assembled workforce
of Nichols Poultry Pty Ltd. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for
identifiable intangible assets.
None of the goodwill arising on this acquisition is expected to be deductible for tax purposes.
Shima Wasabi Pty Ltd
The acquisition was completed for cash consideration of $2.468 million and upon the issue of 1,200,000 ordinary shares to the vendors of
Shima Wasabi Pty Ltd. Details of the acquisition were as follows:
Consideration
Cash consideration
Issue of 1,200,000 ordinary shares
$’000
2,468
300
2,768
Acquisition-related costs amounting to $19,172 have been excluded from the consideration transferred and have been recognised as an expense
in profit or loss in the current year within Legal and professional fees.
The net identifiable assets acquired are considered to be preliminary. In accordance with the Groups accounting policy, the Company is
finalising the allocation of the purchase price to the acquired assets. In particular, fair values assigned to property plant and equipment and
intangible assets and contingent liabilities are still being assessed and subject to finalisation. In accordance with accounting standards, the
acquisition accounting will be finalised within twelve months of the acquisition date.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Assets acquired
Property plant and equipment
Trade and other receivables
Other current assets
Trade and other payables
Net tangible assets acquired
Goodwill
Purchase consideration
Preliminary Fair
Value
$’000
442
13
108
(13)
550
2,218
2,768
Goodwill arose in the acquisition because the cost of the combination included a control premium. In addition, the consideration paid for the
combination effectively included amounts in relation to the benefit of revenue growth, future market development and the assembled workforce
of Shima Wasabi Pty Ltd. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for
identifiable intangible assets.
None of the goodwill arising on this acquisition is expected to be deductible for tax purposes.
Finalisation of Prior Year Acquisition
Meander Valley Dairy
On 4 September 2015 the Company announced that it had acquired the business operations of the Meander Valley Dairy food products
business based in Tasmania. The acquisition was completed for cash consideration of $1.80 million and upon the issue of 1,666,667 ordinary
shares in TasFoods Limited, valued at $300,000 to the vendor of Meander Valley Dairy.
In the financial statements for the year ended 31 December 2015, the net asset valuation and allocation of the purchase price to acquired
assets and fair values assigned to intangible assets were preliminary.
In accordance with the Group’s accounting policy, the acquisition of Meander Valley Dairy was finalised during the current year and the
preliminary balances confirmed.
The final fair values of the assets arising from the Meander Valley Dairy acquisition are as follows:
Assets acquired
Property plant and equipment
Net assets acquired
Goodwill
Purchase consideration
Final Fair Value
$’000
221
221
1,879
2,100
Goodwill arose in the acquisition because the cost of the combination included a control premium. In addition, the consideration paid for the
combination effectively included amounts in relation to the benefit of revenue growth, future market development and the assembled workforce
of Meander Valley Dairy. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for
identifiable intangible assets.
None of the goodwill arising on this acquisition is expected to be deductible for tax purposes.
Recognition and Measurement
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured
at fair value, which is calculated as the sum of the acquisition-date fair values of assets transferred by the Group, liabilities incurred by the
Group to the former owners of the acquire, and the equity instruments issued by the Group in exchange for control of the acquiree.
Acquisition-related costs are expensed as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value
Goodwill is measured as the excess of the sum of the consideration transferred and the fair value of the acquirer’s previously held equity
interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If,
75
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
after reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the sum of the
consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest
in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the
Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted during the
measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that
existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.
UNRECOGNISED ITEMS
26. Contingent liabilities and assets
There are no matters which the Group consider would result in a contingent liability as at the date of this report.
27. Commitments for expenditure
Capital Commitments – Capital Expenditure Projects
Non-cancellable capital expenditure contracted for but not in the financial statements:
Payable:
- Not longer than one year
- Longer than one year and not longer than five years
- Longer than five years
Other Commitments – Operating Expenditure
Operating expenditure contracted but not included in the financial statements:
Payable:
- Not longer than one year
- Longer than one year and not longer than five years
- Longer than five years
2016
$’000
2015
$’000
427
-
-
427
-
-
-
-
2016
$’000
2015
$’000
3,421
-
-
3,421
-
-
-
-
Operating expenditure commitments are reflective of contracts entered into with suppliers of Nichols Poultry Pty Ltd to secure grain supply
during the 2017 financial year, with contracted volumes at levels to meet forecast feed demand.
28. Operating lease arrangements
Operating Leases
Non-cancellable operating leases contracted for but not capitalised in the financial statements:
Payable:
- Not longer than one year
- Longer than one year and not longer than five years
- Longer than five years
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
$’000
2015
$’000
133
158
-
291
-
-
-
-
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
29. Events occurring after reporting date
The Board are not aware of any matter or circumstance not otherwise dealt with in these financial statements that has significantly or may
significantly affect the operation of the Group, the results of those operations, or the state of affairs of the Group in subsequent financial years.
OTHER INFORMATON
30. Related party transactions
(a) Key Management Personnel Compensation
The aggregate compensation of the key management personnel of the entity is set out below:
Short term employment benefits
Post-employment benefits
Share based payments
Termination payment
2016
$’000
816
69
-
-
885
2015
$’000
1,423
29
217
-
1,669
Refer to the Remuneration Report in the Director’s Report for detailed compensation disclosures on key management personnel.
31. Auditor’s remuneration
Remuneration for audit and review of the financial reports of the parent entity or any entity in the Group:
Auditors of the parent entity:
Auditing the financial report
Non-audit services (i)
PKF offices (ii)
Auditing the financial report – subsidiary companies
Non-audit services - subsidiary companies
2016
$
2015
$
108,850
-
108,850
-
-
108,850
63,000
38,865
101,865
14,813
-
116,678
(i) Non-audit services performed in the 2015 financial year by BDO East Coast Partnership relate principally to tax compliance advice.
(ii)
Audit services provide by PKF (HK) in relation to subsidiary company audits located in Hong Kong, Singapore and audit services
provided by PKF Daxin to subsidiary company audits located in China.
32. Share based payments
TasFoods Limited had established an employee share ownership plan (“ESOP”). The Scheme was designed to provide a long-term incentive for
employees and Directors of TasFoods Limited. It allows entitled officers of the Group to participate in TasFoods Limited’s future growth and
provides them with an incentive to increase profitability and returns to shareholders. Full-time employees, part-time employees, directors and
contractors of TasFoods Limited and controlled entities are eligible to participate in the ESOP.
The entitlement of eligible participants under the ESOP is at the absolute discretion of the Directors. The exercise price of each option offered
pursuant to the Scheme is also at the discretion of the Directors.
The options hold no voting or dividend rights, and are not transferable.
77
TASFOODS LIMITED
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
Set out below are summaries of options granted under the plan:
2015
Grant date
Expiry date
Exercise
price
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
4/9/2015
4/9/2015
3/9/2019
3/9/2019
$0.21
$0.42
Weighted average exercise price
-
-
-
-
10,000,000 -
8,500,000
18,500,000
$0.31
-
-
-
-
-
-
-
Balance at
the end of
the year
10,000,000
8,500,000
18,500,000
$0.31
Details of share options held by employees, former employees, consultants and former Directors outstanding as at end of year:
Grant date
Exercisable date
Expiry date
Share price at grant date Exercise price
Fair value at grant date
4/9/2015
4/9/2015
3/9/2019
3/9/2019
3/9/2019
3/9/2019
$0.15
$0.15
$0.042
$0.02
$0.002
$0.020
There are no EPS hurdles attached to the options granted.
33. Summary of significant accounting policies
(a) Basis of preparation
These financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting
Standards, Australian Accounting Interpretations and the Corporations Act 2001, as appropriate for profit oriented entities.
The financial statements cover the Company and its controlled entities as a group for the financial year ended 31 December 2016. The
Company is a company limited by shares, incorporated and domiciled in Australia.
Separate financial statements for the Company as an individual entity are no longer presented as a consequence of a change to the
Corporations Act 2001, however limited financial information for the Company as an individual entity is included in Note 23.
The following is a summary of material accounting policies adopted by the Group in the preparation and presentation of the financial
statements not elsewhere disclosed. The accounting policies have been consistently applied, unless otherwise stated.
(b) Compliance with IFRS
The financial statements comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB).
(c) Historical Cost Convention
The financial statements have been prepared under the historical cost convention. All amounts are presented in Australian dollars unless
otherwise noted.
(d) Principles of Consolidation
The consolidated financial statements are those of the Group, comprising the parent entity and its controlled entities as defined in Accounting
Standard AASB 10 ‘Consolidated Financial Statements’. Control is achieved when the Company:
- has power over the investee;
- is exposed, or has rights, to variable returns from its involvement with the investee; and
- has the ability to use its power to affect its returns.
The Company reassess whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the
three elements of control listed above.
Details of the controlled entities are contained in Note 24.
Financial statements for controlled entities are prepared for the same reporting period as the parent entity. Controlled entities are fully
consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is
transferred out of the Group. Adjustments are made to bring into line any dissimilar accounting policies, which may exist.
All inter-company balances and transactions, including any unrealised profits or losses have been eliminated on consolidation.
Non-controlling interests in the equity and results of the entities that are controlled are shown separately in the consolidated financial
statements.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
TASFOODS LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2016
(e) Critical Accounting Estimates, Judgements and Errors
The preparation of the financial statements of the Group requires the use of accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in applying the Group’s accounting policies.
Areas within the financial report which contain a higher degree of judgement or complexity, and items which are more likely to be materially
adjusted due to estimates and assumptions turning out to be incorrect. Detailed information about each of these estimates and judgements are
included in the notes to the financial statements together with the basis of calculation.
The areas involving significant estimates or judgements are:
• Estimated fair value of biological assets
• Estimated value in use calculations for the assessment of the recoverable amount of goodwill
• Estimation of fair values of assets and liabilities as part of a business combination
Estimates and judgements are continually evaluated. They are based on historical experience, information, and other factors, including
expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
(f) Leases
Operating lease payments are charged to the statement of profit or loss and other comprehensive income in the periods in which they are
incurred, as this represents the pattern of the benefits derived from the leased assets.
(g) Comparatives
Where necessary, comparative information has been reclassified and repositioned for consistency with current year disclosures.
(h) New, Revised or Amending Accounting Standards and Interpretations Adopted
The Group has applied the following standards and amendments for the first time for its annual reporting period commencing 1 January 2016:
• AASB 2014-4 ‘Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation’
• AASB 2015-1 ‘Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012-2014 Cycle’
• AASB 2015-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101’.
(i) New, Revised or Amending Accounting Standards and Interpretations Adopted
Certain new accounting standards, amendments to accounting standards and interpretations have been published that are not yet mandatory
for 31 December 2016 reporting periods and have not been early adopted by the Group. The major accounting standards that have not been
early adopted for the year ended 31 December 2016, but will be applicable to the Group in future reporting years, are detailed below. Apart
from these standards, the Group has considered other accounting standards that will be applicable in future years, however they have been
considered insignificant to the Group.
• AASB 9 replaces AASB 139 and addresses the classification, measurement and derecognition of financial assets and financial liabilities. It
also addresses the new hedge accounting requirements, including changes to hedge effectiveness testing, treatment of hedging costs and risk
components that can be hedged. AASB 9 introduces a new expected-loss impairment model that requires entities to account for expected
credit losses at the time or recognising the asset. The Group does not expect the adoption of the new Standard to have a material impact
on its classification and measurement of the financial assets and liabilities, its hedging arrangements or its results on adoption of the new
impairment model. The Group has decided not to early adopt AASB 9.
• 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’. IFRS
15 is effective for annual reporting periods beginning on or after 1 January 2018, with early adoption permitted. The Group has decided not to
early adopt AASB 15 as a detailed assessment of the impact, additional disclosures and reporting requirements is still in progress
• AASB 16 ‘Leases’ introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a
term of more than 12 months, unless the underlying asset is of low value. This standard becomes mandatory for the Group’s 31 December 2019
financial statements. The Group has decided not to early adopt AASB 16, this is in line with the requirement to adopt AASB 15 at the same
time. Once adopted, the structure of cash flows and the presentation of the balance sheet and income statement will change, with no material
impact on overall cash flows and net profits.
(j) Rounding Amounts
The company is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance
with that Class Order, amounts in the financial statements have been rounded off to the nearest thousand dollars, or in certain cases, to the
nearest dollar.
79
TASFOODS LIMITED
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 31 DECEMBER 2016
1.
In the opinion of the Directors of TasFoods Limited (the “Company”):
(a) The financial report and the Remuneration Report included in the Directors’ Report, designated as audited, of the Group are in
accordance with the Corporations Act 2001, including:
i. Giving a true and fair view of the Group’s financial position as at 31 December 2016 and of its performance for the year ended on
that date; and
ii. Complying with the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements;
(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.
The financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting
Standards Board, as described in Note 1 to the financial statements; and
3.
This declaration has been made after receiving the declarations required by section 295A of the Corporations Act 2001 from the Chief
Executive Officer and the Chief Financial Officer for the financial year ended 31 December 2016.
Signed in accordance with a resolution of the Directors made pursuant to section 295(5) of the Corporations Act 2001. This declaration is
made in accordance with a resolution of the Directors.
Rob Woolley
Chairman
24 February 2017
Launceston
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016
Independent auditor’s report
To the shareholders of TasFoods Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of TasFoods Limited (the Company) and its controlled entities
(together the Group) is in accordance with the Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 31 December 2016 and of its
financial performance for the year then ended
(b)
complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The financial report comprises:
•
•
•
•
•
•
the consolidated statement of financial position as at 31 December 2016;
the consolidated statement of profit and loss and other comprehensive income for the year then
ended;
the consolidated statement of changes in equity for the year then ended;
the consolidated statement of cash flows for the year then ended;
the notes to the consolidated financial statements, which include a summary of significant
accounting policies; and
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant
to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001
T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
81
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the operational and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
The Group has three main operating business units being Nichols Poultry, Meander Valley Dairy and
Shima Wasabi with sites across Tasmania. We have focused our audit procedures at the corporate head
office in Launceston where the majority of accounting records are kept.
Materiality
Audit scope
Key audit matters
Our audit focused on where
the directors made subjective
judgements; for example,
significant accounting
estimates involving
assumptions and inherently
uncertain future events.
• We performed a full scope
audit on the most significant
operations of the Group, being
Nichols Poultry and Meander
Valley Dairy. We performed
specific audit procedures over
Shima Wasabi and the
corporate head office.
•
•
Amongst other relevant topics,
we communicated the
following key audit matters to
the Audit and Risk Committee:
-
-
-
Accounting for acquisition
of Nichols Poultry and
Shima Wasabi.
Carrying value of goodwill.
Accounting for biological
assets.
These are further described in
the Key audit matters section
of our report.
•
•
For the purpose of our audit we
used overall Group materiality
of $300,000 calculated by
reference to revenue as a
benchmark.
• We applied this threshold,
together with qualitative
considerations, to determine the
scope of our audit and the
nature, timing and extent of our
audit procedures and to
evaluate the effect of
misstatements on the financial
report as a whole.
• We chose revenue as the
materiality benchmark because,
in our view, it is the benchmark
against which the Group is most
commonly measured during its
acquisition phase.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context.
Key audit matter
How our audit addressed the key audit matter
Accounting for acquisition of Nichols Poultry
and Shima Wasabi
Refer to note 25 in the financial report
In June 2016, the Group acquired two businesses:
We performed a number of audit procedures on the
purchase consideration for each acquired business
including the following:
•
•
Nichols Poultry, which raises and processes
chickens, for $9.4m consideration; and
Shima Wasabi, which grows, harvests and
processes wasabi, for $2.8m consideration.
At 31 December 2016, the acquisition accounting for
both businesses is provisional and, in line with the
Australian Accounting Standards, the Group has up to
12 months, from date of acquisition to finalise the
accounting for these acquisitions.
Under Australian Accounting Standards the Group is
required to identify all assets and liabilities of the newly
acquired entities and estimate fair value of each item.
Any excess consideration that is not attributed to an
asset or liability is to be recognised as goodwill.
The value of the provisional goodwill recognised by the
Group at 31 December 2016 is $4.7m for Nichols
Poultry and $2.2m for Shima Wasabi however other
potential intangible assets will be considered by the
Group as part of the finalisation of acquisition
accounting during the next financial year ended
31 December 2017.
We focused on the accounting for the acquisition of the
businesses due to:
•
•
the magnitude of the business acquisition
transactions;
significant judgement involved in identifying
the assets and liabilities acquired and
determining their fair value.
•
•
•
Agreed the purchase price to the sale and
purchase agreement and agreed the cash
payment required under the sale and purchase
agreement to banking and accounting records.
Tested the calculation of shares allocated and
recognised as consideration and agreed the
share price used in the calculation to the ASX
quoted share price at the date of acquisition.
Read the sale and purchase agreement to
understand the key terms and conditions
regarding the purchase price and considered
whether the purchase price has been
appropriately reflected in the accounting for
the acquisitions.
We performed a number of audit procedures on the
recognition of the provisional fair value allocation to
assets and liabilities acquired (and resultant goodwill),
including the following:
•
•
•
•
Physically inspected a sample of material
assets on the date of acquisition for each
business.
Agreed the recognised fair value of property,
plant and equipment for each business to
third party valuation reports, where available,
and assessed the appropriateness of the
valuation methodology used by the valuation
expert.
Compared the recognised fair value of
biological assets (chickens and wasabi plants)
to the supporting fair value calculations
prepared by management and assessed the
assumptions in those calculations.
Tested the mathematical accuracy of the
calculation of the resultant goodwill.
83
Key audit matter
How our audit addressed the key audit matter
Carrying value of goodwill
Refer to note 14 in the financial report
The Group recognised $8.8m of goodwill as at 31
December 2016 and under Australian Accounting
Standards is required to assess the carrying value of
goodwill for impairment annually.
The Group identified three cash generating units
(CGUs), being Meander Valley Dairy, Nichols Poultry
and Shima Wasabi. The goodwill is allocated across
these CGUs.
The Group performed an impairment assessment for
each of the three CGUs as described below.
Nichols Poultry and Shima Wasabi
The Group considered whether there had been any
changes in the fair value of the businesses since the
date of acquisition to identify any impairment.
Meander Valley Dairy
Meander Valley Dairy was acquired in September 2015.
At 31 December 2016 the Group had performed an
impairment assessment by calculating the value in use
of the net assets (including intangibles). This
calculation is based on estimated future cash flows,
discounted to a net present value. This calculation
includes the following key assumptions:
•
•
•
Revenue growth over the coming 5 years.
Discount rate of 10.8%.
A terminal growth rate of 2.5% from 2021
onwards.
We focused on the carrying value of goodwill in each of
the three CGUs given the size of the goodwill balance
and the significant judgement involved in determining
fair value and in estimating future cash flows in the
value in use model used by the Group when assessing
impairment of the Meander Valley Dairy.
Nichols Poultry and Shima Wasabi
To test the fair value of goodwill for Nichols Poultry
and Shima Wasabi we performed a number of
procedures including the following:
•
•
•
•
Considered whether there were any changes in
the businesses since the date of acquisitions
which would result in impairment based on our
knowledge of the businesses and discussions
with management.
Considered the Group’s pre-acquisition
assumptions for the performance of each
business and compared these to current
reported results for the period ending 31
December 2016.
Considered whether there was any
deterioration in the market which would
impact on the fair value since acquisition.
Discussed with directors their views on the fair
value.
Meander Valley Dairy
To test the value in use valuation model used for
Meander Valley Dairy goodwill we performed a number
of procedures including the following:
•
•
•
•
•
Tested the mathematical accuracy of the
underlying calculations in the model and
compared the future cash flow forecasts in the
model to the latest Board approved budget.
Assessed the 5 year cash flow forecasts in the
model by developing an understanding of the
underlying drivers for growth and
profitability, in the context of the Group’s
future plans.
Compared the discount rate used in the model
to economic forecasts and industry trends.
Performed a sensitivity analysis by reducing
the cash flow growth rate and terminal growth
rate used in the model, and increasing the
discount rate within a reasonably foreseeable
range.
Considered the disclosure in note 14 of the
financial statements in light of the
requirements of Australian Accounting
Standards, including after taking into account
the impact which reasonably foreseeable
changes in the model assumptions may have
on the fair value of goodwill.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
Key audit matter
How our audit addressed the key audit matter
Accounting for biological assets
Refer to note 11 in the financial report
The Group held biological assets of $2.1m at
31 December 2016. The biological assets include live
poultry, wasabi plants and goats.
Australian Accounting Standards require biological
assets to be measured at fair value less cost to sell or, in
the absence of a fair value, at cost less impairment.
The Group has valued each of the biological assets. We
focused on the valuation of poultry and wasabi plants
on the basis that these involve judgement and estimates
using key assumptions.
Poultry
At 31 December 2016 the carrying value of poultry was
$950,000. The quantity, age and related weight of the
chickens are key elements of the valuation
methodology. The Group considered the cost of the
chicks, feed costs, grower costs and the conversion rate
for the chicken meat (using industry standards), to
determine the fair value less cost to sell.
Wasabi plants
The carrying value of wasabi plants at 31 December
2016 was $863,000. This was determined based on the
current market price of wasabi powder net of the costs
of harvesting, preparing and selling the product. The
valuation takes into account an estimated yield per
plant in kilograms which has been determined based on
historical growth rates and harvest data for mature
wasabi plants.
We performed a number of audit procedures in relation
to the Group’s valuation for both poultry and wasabi
plants, including the following:
•
•
•
Considered the appropriateness of the
valuation methodology against the relevant
Australian Accounting Standard.
Tested the mathematical accuracy of
the calculations.
On a sample basis, compared the fair value
recognised as at 31 December 2016 to the
actual selling price once biological assets were
reclassified into inventory.
We performed a number of procedures in relation to
the Group’s valuation of poultry biological assets,
including the following:
•
•
•
Compared the reasonableness of the number
and age of chickens recognised as at 31
December 2016 based on a sample of purchase
information for chicks for the December
period and physical observation of chickens as
at 31 December 2016.
Compared the conversion rate for chicken
meat used in the Group’s calculation as at
31 December 2016 to the industry valuation
methodology standards for such biological
assets.
Agreed the cost of feed and grower costs in the
Group’s calculation as at 31 December 2016 to
a sample of supplier invoices.
We performed a number of procedures in relation to
the Group’s valuation of the wasabi biological assets,
including the following;
•
•
•
Considered the reasonableness of the number
of plants on hand based on physical
observation at 31 December 2016.
Assessed the reasonableness of the yield per
plant based on the harvest data prepared by
the Group over the preceding 6 month period.
Considered the reasonableness of the costs of
harvest and selling costs based on the costs
incurred over the preceding 6 month period.
85
Other information
The directors are responsible for the other information. The other information comprises the
Director’s Report and the Corporate Directory included in the Group’s annual report for the year
ended 31 December 2016 but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
identified above and, in doing so, consider whether the other information is materially inconsistent
with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_files/ar1.pdf. This description forms part of our auditor's report.
2016 ANNUAL REPORT
2016 ANNUAL REPORT
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 33 to 39 of the directors’ report for the
year ended 31 December 2016.
In our opinion, the remuneration report of TasFoods Limited for the year ended 31 December 2016
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Alison Tait
Partner
Melbourne
24 February 2017
87
TASFOODS LIMITED
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 15 February 2017.
A. Distribution of Equity Securitie
Analysis of numbers of equity security holders by size of holding:
Spread of Holdings
Number of Holders
Number of Units
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
> 100,000
Total
273
520
298
682
142
1,915
102,607
1,591,914
2,527,784
24,452,859
135,432,017
164,107,181
The number of shareholders with less than a marketable parcel is 598.
% of Total
Issued Capital
0.06%
0.97%
1.54%
14.90%
82.53%
100.00%
B. Equity Security Holders
Twenty largest quoted equity security holders.
The names of the twenty largest holders of quoted equity securities are listed below (some are grouped where
the holdings are deemed to be controlled by the same entity):
Name
Bollinger Investments Limited
National Nominees Limited and
National Nominees Limited
HSBC Custody Nominees (Australia) Limited and HSBC
Custody Nominees (Australia) Limited – A/C 2
Nichols Investments Pty Ltd
Helbern Investments Pty Ltd
JB Were (NZ) Nominees Limited
<45230 a/c>
*Mrkat pty ltd
Mrkat Pty Ltd
and VEF Pty Ltd
Krisami Investments Pty Ltd
*Mr Andrew Woolley & Mr Stephen Richard Kreft
*Mr Andrew Woolley
Ordinary Shares
Number Held
20,684,000
20,000,244
11,564,037
8,000,000
6,000,000
5,858,732
4,209,000
% of Issued Shares
12.604
12.187
7.047
4.875
3.656
3.570
2.56
3,000,000
2,799,257
1.828
1.706
2016 ANNUAL REPORT
2016 ANNUAL REPORT
2016 TASFOODS LIMITED
SHAREHOLDER INFORMATION
Name
Ordinary Shares
Number Held
2,199,000
% of Issued Shares
1.219
1.339
2,000,000
Vermilion 21 Pty Ltd
and Cerulean 37 Pty Ltd
Quality Life Pty Ltd
Elsie Cameron Foundation
Elphinstone Holdings Pty Ltd
Chardon Lodge Pty Ltd
Jane Bennett
Picton Cove Pty Ltd
Buduva Pty Ltd
JB Were (NZ) Nominees Limited
<50645 A/C>
Elsie Cameron Foundation Pty Ltd
Bob Wilson
Mr Darius Isaac
As at 15 February 2017, the 20 largest shareholders held ordinary shares representing 62.31 % of the issued
share capital.
2,000,000
2,000,000
1,999,000
1,900,000
1,800,000
1.219
1.219
1.218
1.138
1.097
1,600,000
1,600,000
1,402,500
1,648,700
0.855
1.005
0.975
0.975
Substantial Shareholders
Substantial holders in the Company are set out below:
Name
Bollinger Investments Limited
National Nominees Limited
National Nominees Limited
HSBC Custody Nominees (Australia) Limited and HSBC
Custody Nominees (Australia) Limited – A/C 2
Number of Shares
Held
20,684,000
20,000,244
11,564,037
%
12.6
12.187
7.047
C. Voting Rights
The voting rights attached to ordinary shares are set out below:
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a
poll each share shall have one vote.
D. Use of Cash
Cash and assets readily convertible to cash held by the Company for the reporting period were used in a way
consistent with its business strategy and objectives.
89
2016 ANNUAL REPORT
2016 ANNUAL REPORT
91