2 0 1 7 A N N U A L R E P O R T
2017 Work put into developing business
operations during the year and an
investment of resources has laid the
foundation for future profitability.
Jane Bennett
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
CORPORATE DIRECTORY
Board of Directors
Shane Noble
(Executive Chair)
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
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, 47 Sandy Bay Road
Hobart, TASMANIA 7000 AUSTRALIA
Piper Alderman (formerly Norton Gledhill)
Level 23, 459 Collins Street
Melbourne, VICTORIA 3000 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
Chair’s Report
Managing Director/CEO Report
Operating & Financial Review
Board of Directors
Executive Team
Directors’ Report
Financial Statements
5
7
10
20
21
22
• Consolidated Statement of Profit and
Loss and Other Comprehensive Income
38
• Consolidated Statement of Financial Position 39
• Consolidated Statement of Changes in Equity 40
• Consolidated Statement of Cash Flows
• Notes to Financial Statements
• Directors’ Declaration
• Independent Auditor’s Report
Shareholder Information
41
42
80
81
88
3
TasFoods’ revenue for the 2017
financial year was $31.112 million
compared to $16.139 million in
2016, representing a 93 per cent
growth in revenue year on year.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 CHAIR’S REPORT
I feel privileged to have recently been appointed
as Executive Chairman of TasFoods Limited and
I’m excited by the opportunity to participate in the
creation of a truly unique premium Tasmanian food
business. 2017 was an important foundation year for
Tasfoods as we integrated the operation of our dairy,
chicken, wasabi and goat businesses into a common
corporate structure with a comprehensive suite of
systems and processes.
Towards the end of 2017, TasFoods also made the
strategic acquisition of Pyengana Dairy and has
successfully integrated the business into its dairy
operations, unlocking synergies and adding a further
premium Tasmanian brand to our stable of food
products.
The other key focus for the business during 2017 has
been the rebranding of our product range under The
Tasmanian Food Co. brand umbrella. This utilises
a range of common design and branding elements
to reinforce the essence of premium Tasmanian
foods whilst maintaining the unique identity of the
individual brands within the portfolio.
Although 2017 was a year of significant activity and
growth within the business, our financial performance
was disappointing. The Company’s bottom line
performance resulted in a net loss after income tax of
$6.81 million, which included an impairment charge of
$2.1 million against the goodwill of Shima Wasabi. The
trading net loss before tax from continuing operations
was $4.52 million for 2017 compared to a trading net
loss from continuing operations of $2.61 million in 2016.
TasFoods’ revenue for the 2017 financial year was
$31.112 million compared to $16.139 million in 2016,
representing a 93 per cent growth in revenue year
on year. This high growth percentage is impacted
by the fact that only 6 months of trading results for
Nichols Poultry and Shima Wasabi are included in the
2016 revenue number. The pleasing result is that the
Company’s second half 2017 revenue grew by 13%
compared to the second half 2016 on a like for like
basis.
During 2017 the company invested $3.005 million in
capital expenditure. This investment reflects the plant
and equipment included in the Pyengana acquisition,
the construction of a second wasabi greenhouse
and investment in equipment to improve operational
efficiencies at Nichols Poultry and Meander Valley
Dairy. All of the 2017 investments will contribute to
improved financial performance in the coming years.
To help us achieve our strategic goals, late last year
TasFoods conducted a capital raising through an
initial share placement raising $2.99 million (before
costs). A further $4 million was raised in the first
quarter of 2018 from a Share Purchase Plan (SPP)
and a second tranche of the placement, as well as
the sale of shortfall shares resulting from an under
subscription in the SPP.
I would like to extend a thank you to TasFoods’ founding
chairman, Rob Woolley, for establishing a vision for a
premium Tasmanian food company and for acquiring
the initial portfolio of food businesses. Thanks also to
Tony Robinson for taking on the interim chairman’s role
for much of 2017 and to Hugh Robertson who was a
founding director. To my fellow existing directors and
the broader Tasfoods team, I thank you for your hard
work and commitment during the year.
Whilst 2017 was a year of significant activity and
progress, there is still much to do and I look forward
to working closely with the Tasfoods team to deliver
a much improved financial result in 2018.
Shane Noble
Executive Chair
5
The vision of The Tasmanian Food
Co. brand is to be the most trusted
source of ethically produced
premium food products in Australia.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 MANAGING DIRECTOR
/CEO REPORT
2017 was the first
full year of operation
for TasFoods since
the purchase of the
largest business unit
of the group, Nichols
Poultry, in June 2016.
Significant change
was implemented
across the business
portfolio during 2017 to put a structure in place
to support the operational teams and position the
company brands for future growth.
The group’s 2017 sales revenue grew 92% from 2016
revenue of $15.98 million to $30.74 million.
TasFoods Total Sales Revenue
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
H1
H2
2016
2017
Total
Tasfoods purchased Nichols Poultry and Shima
Wasabi on 15 June 2016, meaning that the 2016
results reflect slightly more than six months’ of
trading for these entities. Comparative sales revenue
for the second half of 2017 compared to the second
half 2016 for the business units of Nichols Poultry,
Meander Valley Dairy and Shima Wasabi (excluding
sales revenue of Pyengana Dairy, which was
purchased in October 2017) show a 13% growth from
$13.98 million to $15.82 million.
The Company’s bottom line performance resulted
!
in a net loss after income tax of $6.81 million, which
included an impairment charge of $2.1 million against
the goodwill of Shima Wasabi. The trading result was
a net loss before tax from continuing operations of
$4.52 million for 2017 compared to a trading net loss
from continuing operations of $2.61 million in 2016.
The extent of the trading loss reflected the
challenging environment in which we operate, with
the outcomes for both the poultry and dairy divisions
delivering below expected results. Poultry results
were impacted by below target live weights and bird
numbers that impacted revenue and gross margins.
Work undertaken in 2017 to improve chicken live
weights and investment planned in 2018 in new
growing shed infrastructure will result in greater
consistency in live weight and increased bird
numbers available for processing.
The dairy division result was impacted by commodity
pricing for cream which impacted revenue and gross
margins. Work undertaken in 2017 to respond to a
43% increase in cream pricing has begun to improve
revenue and gross margins while an increase in
productivity and throughput of milk from March
2018 in the Meander Valley Dairy processing facility
will improve the scale of the site and leverage its
operational costs.
Work put into developing business operations during
the year and an investment of resources has laid the
foundation for future profitability.
In October 2017 TasFoods Ltd purchased the assets
of Pyengana Dairy for $1.62 million. Pyengana
Dairy produces a range of fresh milk and award-
winning Cloth Matured Cheddar cheese using
traditional methods handed down from farmhouse
cheese makers in the Pyengana valley in North East
Tasmania since 1885. The Pyengana products are
high-quality artisan foods with a strong regional
7
heritage that fit well in the TasFoods strategy to
build a portfolio of premium Tasmanian food brands
that leverage unique provenance attributes. This
acquisition will provide increased scale and efficiency
for the existing dairy operations of the business.
Expansion of the bottled milk range and cheese
production under the Pyengana brand is scheduled
for 2018, with an extended range of milk products
accepted for sale through Woolworth’s Tasmanian
stores from April 2018.
A major outcome in 2017 for the group was the
rebranding of Nichols Poultry, Meander Valley Dairy
and Shima Wasabi under the unifying endorser brand
The Tasmanian Food Co. A new brand for the goat
dairy business, Robur Farm, was also launched under
The Tasmanian Food Co. endorser brand.
The rebranding exercise required significant
investment in new labels and packaging along with
point of sale and marketing material to support the
brands. A total of 37 products were rebranded under
The Tasmanian Food Co. endorser brand structure,
with a further 70 new products created across the
group and released in 2017. A number of marketing
strategies were utilised to launch these rebranded
and new products into the Tasmanian market and,
for relevant products, into markets across Australia.
A new website was created for The Tasmanian Food
Co., under which each business brand retains an
identity. Various social media streams were also
established under The Tasmanian Food Co. umbrella.
A key focus for 2017 was to establish the cultural
values of the business and embed them in the
operational teams to ensure the actions of our
workforce reflect the values of the business and the
brands we are developing. The aim of The Tasmanian
Food Co. brand is to be the most trusted source
of ethically produced premium food products in
Australia. To achieve this, we need to maintain the
highest standards of animal welfare and animal
husbandry across the business. Food production
needs to meet premium quality standards and
interactions with stakeholders must reinforce the
brand values.
To underpin the brand values, we have established
animal welfare standards for the Nichols Ethical
Free Range Chicken rearing system. These were
independently audited and certified in August 2017
by an external party, PROOF (Pasture Reared on
Open Fields). Animal welfare standards were also
developed for the dairy goat herd, including the
management of horned animals (the business does
not permit dehorning of goats) and standards for
rearing male dairy kids for meat.
The entire workforce engaged in a training program
called Success Circle with the first stage of the
program concluding in March 2017. Success Circle
aims to build a business culture focused on workplace
safety, food safety and customer service. The initial
training program is being followed up by ongoing
Success Circle conversations and tool box talks
within the business along with the establishment of
champions who are tasked with establishing a culture
of continuous improvement.
In consultation with all management teams, we
developed a set of values and beliefs to help drive
cultural change throughout the group. These are
used to guide behaviours and set acceptable
standards for operations and engagement with
stakeholders. To embed the new systems and
processes that underpin the values and beliefs within
the business all existing and new employees have
undergone an induction training process.
The company-wide investment in developing a values
base for the business and driving cultural change
in operations has made a significant contribution
to an 86% reduction in the lost time injury (LTIFR)1
frequency rate from 34 to 4.5.
2017 has been a foundation year of growth
and development for TasFoods and the brands
now marketed under the Tasmanian Food Co.
endorsement. The business will continue to drive
revenue growth by opening new sales channels for
the existing product range across Australia and
through the development of new product offerings
for existing and new customers.
Growth through acquisition will continue to be
a strategic focus for the business in 2018 to
build business scale and strengthen bottom line
performance.
Jane Bennett
Managing Director and CEO
2017 ANNUAL REPORT
2017 ANNUAL REPORT
1 A Lost Time Injury is a work-related injury that causes a person to be unable
to work in any capacity for a work shift. The Lost Time Injury Frequency Rate
is the number of Lost Time Injuries incurred per million work hours.
2017
9
OPERATING &
FINANCIAL REVIEW
brands in the second half of 2017.
A whole-of-enterprise planning system was
implemented for Nichols Poultry in 2017 to improve
management of supply and demand for chicken,
taking the business from a production-driven
operation to a sales and customer demand-driven
business.
An unanticipated drop in live weight during the winter
period impacted on both sales revenue and gross
margins for a 3 month period. In response to this
drop in live weight the agricultural division of Nichols
Poultry implemented a number of activities designed
to improve feed conversion ratios (FCR), and this
has resulted in an increase in bird live weights being
processed in the last quarter of the year.
Throughout the year a series of upgrades to
processes and systems used in the chicken processing
facility were completed to ensure compliance with
customer requirements and to improve product
quality. A range of equipment was installed in late
2017 to automate processes in the cutting and boning
operations. Labour savings from this upgrade will
be realised in 2018. The business is considering a
number of capital investments which would increase
production capacity and improve processing efficiency
within the Nichols Poultry business.
Nichols Poultry sales revenue grew from $13.85 million
in 2016 to $27.98 million in 2018. The business was
purchased in June 2016 and as such sales revenue
for 2016 represents six months of ownership. Sales
revenue for the second half of the 2017 year grew
by 14% compared to the second half of 2016 as a
result of the roll-out of new products across the range
and an expanded customer base. Rebranding of the
Nichols Poultry business under the Tasmanian Food Co.
endorser brand was achieved in early 2017 with two
new sub-brands created. Nichols Kitchen is a brand for
ready to eat convenience foods and Nichols Ethical
Free Range Chicken is the premium chicken brand. 40
new products were launched under the Nichols Poultry,
Ethical Free Range Chicken and Nichols Kitchen sub-
It’s the ethics and good
provenance that is the
Nichols difference
2017 ANNUAL REPORT
2017 ANNUAL REPORT
20162017 “I choose Nichols Ethical Free
Range chicken because they
share the same beliefs as we
do at Pure South in regards to
sustainability and the ethical
treatment of animals raised
for food. I think the extra care
taken and methods of rearing
their chickens results in
superior flavour, texture and
overall quality.”
David Hall (Executive Chef Pure South)
11
OPERATING &
FINANCIAL REVIEW
Continued
Dairy Division
The dairy division includes the milk and cream
processing operations at Kings Meadows near
Launceston, goat farming operations located at
the Nichols Poultry farm at Sassafras, and the
operations of Pyengana Dairy, which was purchased
in October 2017. The total sales revenue for the
dairy operations in 2017 was $2.48 million, up 25%
from $1.98 million in 2016. The division recorded
a segment net loss of $1.52 million driven by
commodity pricing and one-off costs associated
with the commissioning of a waste water treatment
system at the Kings Meadows site.
The performance of the Dairy Division operations
was impacted in 2017 by a reduction in gross
margins for cream products sold under the Meander
Valley Dairy brand and private label contracts
that resulted from a 43% increase in commodity
cream pricing over a six month period. The business
responded quickly to the raw material price increase
by reconfiguring product sizing for retail markets,
however the new ranging did cause some short
term loss of distribution due to the transition. The
commodity price increase for cream also resulted
in the business exiting some private label contracts
owing to a loss of margins.
Resizing the products helped to reduce the on-shelf
price-point and secured new customers for cream
and goat products. This resulted in a 43% growth
in sales revenue from these products for the second
half of the year compared to the first half of 2017.
Revised branding for Meander Valley Dairy and a
new goat dairy brand, Robur Farm, were launched
under the endorser brand of The Tasmanian Food
Co. in 2017. A total of 26 products were rebranded
and 26 new products were launched during the
second half of the year under the Robur Farm or
Meander Valley Dairy brands.
A range of luxurious
premium milk, creams
and butters
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 “I absolutely love using
Meander Valley Dairy
Double Cream in my
cooking. Silky and thick it is
such an easy and luxurious
finish to a dessert. It’s our
preferred cream to use
on Food Lab”
Ben Milbourne (Food Lab, SBS)
13
OPERATING &
FINANCIAL REVIEW
Continued
The high quality of products manufactured in the
Meander Valley Dairy facility were recognised at
the Royal Hobart Fine Food Awards 2017 where
Meander Valley Dairy Double Cream was named
Supreme Champion Food Product of the Show and
Champion Dairy Product, with Robur Farm Goat
Fetta named Champion Goat or Sheep product.
Investment in preparing the Kings Meadows site for
export accreditation in 2017 led to TasFoods gaining
an export licence for the dairy products made in the
facility.
TasFoods invested in the goat farming operation
in 2017 to increase animal welfare and improve
biosecurity. A new kid rearing facility was developed
PHOTO
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 increased space for expansion of the cheese making
operation.
Consolidation of Pyengana Dairy’s milk bottling
operations with the existing Kings Meadows dairy
processing activities will provide improved utilisation
of equipment and labour efficiencies to the Kings
Meadows site, which will continue to improve the
bottom-line performance of the dairy division.
to enable rearing of all male as well as female kids.
Facilities were developed for the rearing of young
bucks to enable male kids to be grown out for meat.
The first sale of meat goats occurred in early 2018.
A new goat milking parlour for Robur Farm was
installed in 2017 to reduce labour and improve milk
quality.
Pyengana Dairy was purchased in October 2017.
Sales for the Pyengana operations for the year
were in line with expectations. The three months
of ownership in 2017 resulted in an increase in
cheese stock levels to enable growth in cheese
sales anticipated for late 2018, after the cheese
has matured for 12 months. Work has commenced
on rebranding the Pyengana Dairy range and
developing a suite of new fresh milk products to be
released in 2018.
The milk bottling operations of Pyengana will
be moved to the Kings Meadows dairy facility in
early 2018 to improve supply chain logistics and
achieve better operational efficiencies on the
Kings Meadows site. Removal of the milk bottling
equipment from the Pyengana site will provide
15
OPERATING &
FINANCIAL REVIEW
Continued
Shima Wasabi
Shima Wasabi’s operations are located at Port Sorell
on Tasmania’s North West Coast. Sales revenue from
wasabi products was $0.261 million in 2017 which
was a 74% growth on 2016 sales of $0.15 million.
The market for fresh wasabi stems was expanded
to include fresh produce wholesalers in Sydney and
Melbourne, improving access to fresh wasabi stems
for restaurants and other food service customers.
As a result of our annual intangible asset impairment
testing required by Australian Accounting Standards
the Tasfoods Board has adopted a prudent
approach and written off $2.1 million in regard to
the carrying value of goodwill held within the Shima
wasabi business unit. The Board and Management
remain confident in the long-term prospects and
future opportunities that exist within the Australian
market for Wasabi and our focus over the next 12
months will be very much on market development
and continuing to develop selling opportunities for
both the fresh product and freeze dried wasabi
powder.
New packaging was developed for fresh stems
in late 2017 to provide an extended shelf life
and increased convenience for customers. New
packaging was also developed for a retail powdered
wasabi product to provide a more convenient
package for consumer usage.
The business has engaged a consultant food
technologist to assist in the development of a range
of value-added wasabi products that will be trialled in
2018. These products will focus on utilising components
of the plant that are currently not fully utilised.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
The business has engaged the CSIRO to undertake
a nutritional compositional analysis of various
components of the wasabi plant in a fresh and
dried form. The key components measured were
fibre and bioactives such as phenolics and allyl
isothiocyanates. A literature review is being
undertaken to assess the value of nutrition and
health claims that can be attributed to the wasabi
components. The final report is due in early 2018.
A second wasabi greenhouse was completed and
planted-out during 2017. This greenhouse is larger
than the original greenhouse and has capacity for a
total of 6,000 plants (current numbers 5,922). Fresh
wasabi stems from this greenhouse will be ready to
harvest in 2018.
The investment in the new greenhouse included
increased automation to control atmosphere and
environment within the greenhouse and doubled the
infrastructure used for fertilisation and irrigation.
2017 “I love using Shima Wasabi
in my sushi. As Australia’s
exclusive commercial
wasabi producer I am
so glad it is grown here
in Tasmania where I can
combine it with fresh fish
and other Tasmanian
ingredients. It has the
fragrance, sweetness
and pepperiness you can
only get from real wasabi.
Customers are always
fascinated to see the actual
plant and I believe this is
an important part of the
Masaaki’s Sushi culinary
experience.”
Masaaki Koyama,
Masaaki’s Sushi, Tasmania.
17
OPERATING &
FINANCIAL REVIEW
Continued
OUTLOOK
RISK
The Group will continue to progress its strategy
of growth through organic means in addition
to acquisitive growth. Organic growth will be
generated from leveraging work undertaken in 2017
to enter new markets and channels, including the
launch of new products and expanding off-island
markets for our dairy, wasabi and Ethical Free
Range chicken products. Acquisitive growth will
continue to be a strategic focus to build business
scale and strengthen bottom line performance.
TasFoods will be focused on improving productivity
from our existing asset base and investments in new
infrastructure and equipment. Improved yield, feed
conversion ratios, sales mix and cost reductions
continue to be a priority. Emphasis will also be
placed on harnessing production efficiencies from
automation of processing lines commissioned in late
2017.
The medium and long term fundamentals of
TasFoods’ industry and business are strong, with
continued increasing demand expected for premium
food, specifically in the free range chicken and high-
fat dairy segments. TasFoods strategy will continue
to be one of growth with a focus on maintaining
premium provenance of its brands, minimising risk,
investing in productive assets and effective cost
management.
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 a formalised Risk Management
Policy and Framework which operates across
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
the identification, assessment, evaluation and
treatment of risks in order to achieve strategic and
performance objectives.
A copy of the Risk Management Policy can be
located on the Company’s website at http://
www.tasfoods.com.au/corporate-governance/
During 2017 the Group complied with its Risk
Management Policy and Framework, ensuring all
risks were regularly reviewed and risk registers were
updated for new risks and changes to existing risk
profiles. Risks identified remain relatively stable,
with no expectation of increases or decreases in
the foreseeable future unless specifically noted in
the following. The material business risks faced by
TasFoods which may have an effect on the financial
performance of the Group are:
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 The new wasabi greenhouse was installed August 2017 with improved environmental controls.
Supply Risk
Biosecurity Risk
Ensuring our input supply is secure, stable and
reliable.
Minimising the risk of disease and infection
impacting our animals, plants and inputs.
TasFoods is reliant on a number of key suppliers
for inputs such as hatchlings, milk, cream and feed.
We have strong relationships and contracts, where
possible, with our suppliers to ensure that quality,
quantity and price are stable. Where appropriate
and able, TasFoods is diversifying supply channels to
reduce risk levels and dependence on key suppliers.
Although supply risk impacted the dairy segment’s
financial performance in 2017, actions taken in
response are anticipated to reduce this risk in future
periods.
Careful site management, biosecurity measures
and good husbandry and agricultural management
are used to manage TasFoods’ risk of exposure to
disease, infection and contamination. Significant
disease outbreaks may result in mass mortality
of livestock or loss of plants, having a significant
impact on saleable goods. Suppliers undergo
an approval process to ensure inputs comply
with product specifications. These are internally
and, where appropriate, externally audited and
monitored for compliance.
Market Risk
Safety 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 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. In addition,
TasFoods responds to changing customer
compliance requirements via upgrading facilities
and processes. TasFoods has also developed a
point of difference in our products which reduces the
risk of substitution.
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 managed by TasFoods at all
times. We have built strong quality and safety
assurance systems which are externally audited
against relevant standards, are overseen by highly
skilled staff and within a culture committed to food
and people safety. In addition, TasFoods holds
relevant insurances to further mitigate food safety
and workplace health and safety risks.
19
BOARD OF DIRECTORS
SHANE NOBLE
Executive Chair
Shane has over 20 years
experience operating at either
the CEO or Executive Chair level
in a diverse range of businesses
across the consumer foods and
agribusiness sectors.
In his most recent role Shane was
Executive Chairman and CEO of
Green Foods Holding for 8 years.
ANTONY 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.
Tony is a very experienced Director
across diverse industries including
consumer foods and financial
services.
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.
2017 ANNUAL REPORT
2017 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 is an experienced executive who for the past 3 years has worked in key operational and
business development roles within TasFoods’ fast moving consumer goods operations.
Tom has extensive investment management, acquisition and business development experience.
He worked at Credit Suisse for 3 years followed by 8 years as a Director at Ironbridge Capital,
an Australian private equity company focused on growth investments. Tom holds a Bachelor
of Science and Bachelor of Commerce (Honours) and recently graduated from the Tasmanian
Leaders Program.
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.
Prior to joining TasFoods 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.
21
TASFOODS LIMITED
DIRECTORS’ REPORT
The Directors of TasFoods Limited (the Company) present the financial report on the Company and its controlled entities (the Group) for the
year ended 31 December 2017.
In order to comply with the provisions of the Corporations Act 2001, the Directors report as follows:
Directors
Shane Noble
Executive Chair
Experience and qualifications
Shane joined the Board on 30 November 2017 and became Chair of the Board on 1 February
2018. Shane is a member of both the Audit and Risk Committee and the Nomination and
Remuneration Committee.
Shane has extensive experience in the consumer foods and agribusiness industries. Most recently,
Shane was the Executive Chair and Chief Executive Officer of Green’s Foods Holdings which
he successfully transformed through an integrated plan of profit improvement initiatives and
strategic acquisitions.
Other Directorships in listed entities:
Former Directorships in listed entities in
the last 3 years:
Nil
Nil
Interest in shares and options:
3,000,000 Ordinary Shares
Jane Bennett
Chief Executive Officer (CEO) and Managing Director
5,000,000 Share Options exercisable at $0.20 before 30 November 2021
Experience and qualifications
Jane was promoted to the position of CEO and Director on 18 February 2016, having previously
been the Company’s Head of Strategic Development and General Manager of Dairy.
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
the last 3 years:
Nil
Nil
Interest in shares and options:
2,175,472 Ordinary Shares
Roger McBain
Non-Executive Director BBus, ACA
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
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 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
the last 3 years:
Nil
Nil
Interest 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
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
DIRECTORS’ REPORT
Continued
Antony Robinson
Former Chair and Non-Executive Director BCom, ASA, MBA.
Experience and qualifications
Other Directorships in listed entities:
Antony joined the Board on 29 May 2014 and became a Non-Executive Director in September
2015 and Chair of the Board on 3 March 2017. Antony resigned from the role of Chair of the
Board on 1 February 2018.
Antony was the Chair of the Audit and Risk Committee until he became Chair of the Board
and is a member of both the Audit and Risk Committee and 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.
Bendigo & Adelaide Bank Limited (since April 2006), Pacific Current Group Limited (since August
2015), Longtable Group Limited (previously known as Primary Opinion Limited, since October
2015).
Former Directorships in listed entities in
the last 3 years:
Centrepoint Alliance Limited (until April 2014)
Interest in shares and options:
800,000 Ordinary Shares
Rob Woolley
Former Chair and Non-Executive Director. BEc, FCA.
Rob resigned from the Board on 3 March 2017.
1,500,000 Share Options exercisable at $0.21 before 3 September 2019
Experience and qualifications:
Rob was appointed to the Board as a Director and Chair of the Board on 3 September 2015.
Rob was a member of the Audit and Risk Committee and a member of the Nomination and
Remuneration Committee.
Rob is the former Chair of Bellamy’s Australia Limited, 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:
Nil
Former Directorships in listed entities in
the last 3 years:
Tandou Limited (until July 2015) and Bellamy’s Australia Limited (until 28 February 2017)
Interest in shares and options:
4,223,000 Ordinary Shares (as at 3 March 2017)
Hugh Robertson
Former Non-Executive Director
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
Experience and qualifications:
Hugh resigned from the Board on 10 February 2017.
Hugh Joined the Board as a Director on 21 February 2014. Hugh was a member of the Audit and
Risk Committee and the Nomination and Remuneration Committee.
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.
Other Directorships in listed entities:
Longtable Group Limited (previously Primary Opinion Limited, since October 2015), AMA Limited
(since June 2015)
Former Directorships in listed
entities in the last 3 years:
Hub24 Limited (from April 2011 – October 2016).
Interest in shares and options:
1,014,000 Ordinary Shares (as at 10 February 2017)
Company Secretary
Janelle O’Reilly
Experience and qualifications
Company Secretary and General Counsel BEcLLB, GAICD, FGIA
Janelle joined TasFoods on 9 September 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.
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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 2017 and the number of
meetings attended by each Director.
During the financial year. Board Meetings were held in addition to the Company’s Annual General Meeting held on 22 May 2017. #
DIRECTOR
S Noble
J Bennett *
R McBain
A Robinson
R Woolley
H Robertson
BOARD
MEETING
AUDIT AND RISK
COMMITTEE
NOMINATION AND
REMUNERATION
COMMITTEE
Attended
Held
during time
on Board
Held during
time on
Board
Attended
Held during
time on
Board
Attended
2
16
16
16
2
-
2
16
15
14
2
-
1
5
5
5
2
-
1
5
5
4
1
-
-
3
3
3
-
-
-
3
3
3
-
-
# Only Ms Bennett, Mr McBain and Mr Robinson were Directors for the full financial year
* Ms Bennett is not a member of the Audit and Risk Committee or the Nomination and Remuneration Committee but attends the meetings as an
invitee.
Principal Activities
The principal activities of the Group are the processing, manufacture and sale of premium Tasmanian-made produce.
Operating Results and Financial Position
A comprehensive review of operations is set out in the front section of this Annual Report under Operating and Financial Review.
Significant Change in State of Affairs
Acquisition of Pyengana Dairy
In October 2017, TasFoods Limited acquired the assets of Pyengana Dairy via its new subsidiary Tasmanian Food Co Dairy Pty Ltd for cash
consideration of $1.623 million.
Pyengana Dairy is a leading Australian producer of traditional cloth-matured cow cheddar cheese. It also produces fresh bottled milk under the
Real Milk brand, which is supplied to major retail chains, independent retail outlets and cafes across Tasmania.
Capital Raising
On 21 December 2017 the Company announced it would undertake a capital raising for approximately $7 million via a Placement to
sophisticated and professional investors and a Share Purchase Plan (SPP). The Placement was to raise up to $5 million and the SPP $2 million,
with shareholder approval being required for the last $2 million (second tranche) of the Placement.
On 29 December 2017 the Company issued 16,616,076 ordinary shares at $0.18 per share to sophisticated and professional investors raising
$2.99 million (before costs). Following this all shareholders were invited to participate in the SPP for up to $15,000 at $0.17 per share.
The funds raised (after costs) are intended to be used for the continuing development of the Company’s business, in particular to expand
production capacity, and for general working capital purposes.
There were no other significant changes in the state of affairs of the Group during the financial year.
After Balance Date Events
The SPP noted above, resulted in 7,794,180 shares valued at $1.325 million being issued to shareholders on 2 February 2018.
At a General Meeting of the Company on 15 February 2018 Shareholders approved the remainder of the Placement (second tranche) to
sophisticated and professional investors and also approved such persons taking up the shortfall in the Company’s SPP 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. The General Meeting also refreshed the Company’s ability to raise up to 15% of its capital without shareholder approval by
approving the previous placement with sophisticated and professional investors and the issue to the Executive Chair, Shane Noble.
Other than the matter noted above, there are no matters or circumstances have arisen since 31 December 2017, which have significantly
affected the Group’s operations, results or state of affairs, or may do so in future years.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
DIRECTORS’ REPORT Continued
Remuneration Report (Audited)
Message from the Chair of the Nomination and Remuneration Committee
Shareholders,
The Board of TasFoods presents the Remuneration Report for the financial year ended 31 December 2017.
This year there have been changes to the composition of the Board due to the resignation of the following Directors:
• Rob Woolley – Chair; and
• Hugh Robertson – Non-executive Director.
On 30 November 2017, Shane Noble was appointed to the Board as a Non-Executive Director and subsequently appointed to the position of
Executive Chair on 1 February 2018. Shane brings to the Company extensive experience in the consumer foods and agribusiness industries,
with his role including finding suitable acquisition opportunities for the Company.
As advised to shareholders in the 2016 remuneration report, the Board was committed to reviewing TasFoods remuneration strategy and
framework. This review was undertaken, and the following changes were implemented for 2017:
• the introduction of a short-term incentive plan; and
• the introduction of a long-term incentive plan.
The Board believes that the remuneration strategy and framework ensure it:
• attracts, motivates and retains top talent executives;
• aligns reward with the creation of sustainable value for shareholders including through long-term equity-based incentives and
performance metrics linked to total shareholder value;
• aligns rewards with strategic objectives and the Board’s high-performance expectations;
• drives behaviours that align with the interests of our shareholders;
• implements a robust and transparent remuneration decision making process and performance review system; and
• targets stretch for critical talent and rewards exceptional performance.
On behalf of the Board, we recommend the Report to you and we look forward to welcoming you to the 2017 Annual General Meeting.
Roger McBain
Chair - Nomination and Remuneration Committee
The Directors of TasFoods Limited present the Remuneration Report for the Company and its controlled entities for the financial year ended 31
December 2017, 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.
In 2017 the Company’s main activity related to developing Tasmanian premium branded food businesses (including, Nichols Poultry, Meander
Valley Dairy and Shima Wasabi) and acquiring Pyengana Dairy, therefore, the details of KMP remuneration for 2017 relate to those activities
and the current remuneration structure.
This report has been prepared in accordance with section 300A of the Corporations Act 2001.
The Report has been set out as follows:
1. Key management personnel
2. Role of the Nomination and Remuneration Committee
3. Engagement of remuneration consultants
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TASFOODS LIMITED
DIRECTORS’ REPORT
4. Remuneration strategy and framework
4.1. Review of remuneration strategy and framework
4.2. Executive remuneration schedule
4.3. Remuneration mix and linking pay to performance
4.4. 2017 fixed remuneration
4.5. 2017 short-term incentive arrangements
4.6. 2017 long-term incentive arrangements
4.7. KMPs 2017 short-term incentive arrangement results
4.8. Summary of 2017 short-term incentive payments to KMP
4.9. Company financial performance
5. Executive contracts
6. Non-executive directors’ and Executive Chair’s remuneration structure
6.1. Current fee levels and fee pool
7. Restrictions on long-term incentive plan shares prior to vesting
8. Remuneration tables – Directors and KMP executives
1. 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 2017 were:
Current Executive and Non-executive Directors
Shane Noble1
Roger McBain
Antony Robinson2
Current KMP Executives
Jane Bennett
Tom Woolley
Donna Wilson
Former Non- Executive Directors
Rob Woolley3
Hugh Robertson4
Role
Executive Chair
Appointment Date
30 November 2017
Non-executive Director
3 September 2015
Non-executive Director
29 May 2014
Role
Appointment Date
Chief Executive Officer
3 September 2015
Chief Operating Officer
3 September 2015
Chief Financial Officer
27 June 2016
Role
Chairman
End Date
3 March 2017
Non-executive Director
10 February 2017
1. Shane Noble was appointed initially as a Non-Executive Director on 30 November 2017 and became Executive Chair as of 1 February 2018.
2. Antony Robinson was appointed as the Chair of the Board on 3 March 2017 and subsequently resigned from this position on 31 January 2018 at which time he transitioned to a Non-
Executive Director role.
3. Rob Woolley resigned from the Board and position of Chair on 3 March 2017.
4. Hugh Robertson resigned from the position of Non-Executive Director on 10 February 2017.
2. Role of the Nomination and Remuneration Committee
The Committee has the 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.
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;
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
DIRECTORS’ REPORT Continued
• 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.
3. Engagement of remuneration consultants
The Nomination and Remuneration Committee periodically engages independent external consultants to advise and assess the remuneration
of the Chair, Directors, CEO and those executives reporting to the CEO.
In selecting the remuneration consultant, the Nomination and Remuneration Committee considered potential conflicts of interest and required
the consultant’s independence from management as part of their terms of engagement.
During 2017, Kurt Elder, an independent remuneration consultant and Godfreys Remuneration, were engaged by the Nomination and
Remuneration Committee to advise on Short Term Incentives and Long-Term Incentives. The engagement was in accordance with the
TasFoods’ governance processes. The fees incurred were $56,000.
4. Remuneration strategy and framework
The remuneration strategy sets the direction for the remuneration framework and drives the design and application of remuneration policies
for executives of TasFoods (including KMP).
TasFoods remuneration strategy and framework aims to attract and retain the best available people to run and manage TasFoods and align
their interests with our shareholders. The Board is committed to having a remuneration strategy and framework that rewards, motivates, and
retains executives, to achieve our business objectives and deliver shareholder returns.
TasFoods seeks to create alignment between the interests of its executives and shareholders in the case of executives, by providing a fixed
remuneration component together with specific short-term and long-term incentives based on key performance areas affecting TasFoods
financial results.
In the case of Non-executive directors and Executive Chair, their remuneration does not contain performance-based or ‘at risk’ components.
Non-executive directors and the Executive Chair are paid fees and are encouraged to hold shares in TasFoods.
4.1. Review of remuneration strategy and framework
As advised to shareholders in the 2016 remuneration report, the Board was committed to reviewing TasFoods remuneration strategy and
framework. This review was undertaken, and the following changes were implemented for 2017:
1. The introduction of a short-term incentive plan (STI); and
2. The introduction of a long-term incentive plan (LTI).
4.2. Executive 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.
Executives’ total remuneration package may be comprised of the following elements:
• Total Fixed Remuneration (base salary + superannuation)
• At-Risk Remuneration:
- Short-Term Incentive (STI)
- Long-Term Incentive (LTI)
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TASFOODS LIMITED
DIRECTORS’ REPORT
Performance Condition
Remuneration Strategy/ Performance Link
Total Fixed
Remuneration (TFR)
- salary
- statutory
superannuation
Short Term Incentive
(STI)
Executive remuneration levels are market-aligned by
comparison to similar roles in ASX-listed companies
that have comparable market capitalisation, revenues,
and financial metrics relevant to the executive’s role,
executive’s knowledge, skills and experience, and
individual performance.
Performance is measured against:
• Financial Group performance (i.e., sales revenue, and
- Annual incentive
gross profit margin); and
opportunity delivered
in cash
• Non-Financial KPIs (i.e., WH&S (LTIFR) and national
brand awareness).
The STI plan applies more broadly beyond the KMP and
KPI’s vary depending on the executive’s level and role.
Non-Financial KPIs also vary and depend on the
executive’s individual role and responsibilities.
Details of the specific measures and results for 2017
can be found in Section 4.7
Long Term Incentive
(LTI)
LTI awards for the 2017 grants were provided under the
LTIP approved by shareholders at the 2016 AGM.
- An award of options
with performance
assessed over 3 years
A three-year performance period provides a reasonable
period to align reward with shareholder return and
also acts as a vehicle to help retain the KMP, align the
business planning cycle, and provide sufficient time for
the longer-term performance to be achieved.
Due to the importance that the Board places on an
improvement in share price a single measure based on
share price growth was chosen for the 2017 grant.
Fixed remuneration is set to, motivate and retain
executives to ensure they can deliver on TasFoods
business strategy and contribute to the TasFoods ongoing
financial performance.
The STI plan is designed to encourage and reward high
performance and for this reason it places a significant
proportion of the executives’ remuneration at-risk against
targets linked to the Company’s annual performance
objectives and therefore supports the alignment
between the interests of the executive, TasFoods and our
shareholders.
A combination of financial and non-financial KPIs are
used because the Board believes that there should be a
balance between short term financial measures and more
strategic non-financial measures which in the medium to
longer term will support the growth of TasFoods.
The Board believes the STI plan provides the right
measures and appropriately challenging targets for
participants.
The purpose of the LTI is to focus the executives’ efforts
on the achievement of sustainable long-term shareholder
value creation and the long term financial success of
TasFoods.
The provision of LTIP awards via performance rights for
ordinary shares in TasFoods encourages long-term share
exposure for the executives and, therefore, aligns the
long-term interests of executives and shareholders.
4.3. Remuneration mix and linking pay to performance
The Board recognises that each executive needs a significant portion of their remuneration to be at-risk and be linked to TasFoods annual
business objectives and actual performance.
Remuneration is linked to performance by:
• Requiring a proportion of the executives’ remuneration to vary with the short-term and long-term performance of TasFoods;
• Setting clear expectations on target and stretch performance objectives required for STI payments 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.
In addition, STI and LTI outcomes are not driven by a purely formulaic approach. The Nomination and Remuneration Committee holds
discretion to determine that awards are not to be provided or vested in circumstances where it would be inappropriate or would provide
unintended outcomes.
The relative weighting of fixed and variable components for target performance is set according to the scope of the executive’s role. For the
KMP the ‘at risk’ components are as follows:
Current KMP Executives
Jane Bennett
Tom Woolley
Donna Wilson
TFR
$262,800
$219,000
$186,150
Short Term
Incentive
(At-Target)1
Short Term
Incentive
(Stretch)2
Long Term
Incentive
(Target
Opportunity)3
Long Term
Incentive
(Maximum
Opportunity)
30%
30%
25%
45%
45%
37.5%
40%
30%
25%
80%
60%
50%
1.
2.
3.
The short-term incentive is the total payment at-target as a % of TFR
KMP executives’ STIs have a stretch component that is designed to encourage above at-target performance as a % of TFR.
The long-term incentive refers to the value, of any grant as a % of TFR.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
DIRECTORS’ REPORT Continued
TFR
STI
LTI
4.4. 2017 fixed remuneration
TasFoods uses a total fixed remuneration (base salary + superannuation) for the purposes of calculating STI and/or LTI amounts.
Changes to fixed remuneration of current KMP executives
The TFR of the CFO was reviewed in light of the increased responsibilities and accountabilities and the challenges the role faced as TasFoods
continued to acquire businesses and integrate businesses previously acquired. The increase was 6.25%.
In approving this increase the Nomination and Remuneration Committee and the Board were satisfied that the increase was necessary to
ensure that the Company’s remuneration levels were aligned with the market and the accountabilities and responsibilities of the roles.
Details of KMP executives’ total fixed remuneration for the year ended 31 December 2017 (and 31 December 2016) can be found in the
‘Remuneration Tables’ section of this report.
4.5. 2017 short-term incentive arrangements
The TasFoods Short Term Incentive Plan (STIP) rewards the CEO and those executives reporting to her (including the KMP executives) for
performance against a pre-determined scorecard of measures linked to TasFoods short-term business performance (12 months) and individual
performance. The specific performance measures may vary from year to year depending on the business’s objectives but are chosen on the
basis that they will increase financial performance, market share and shareholder returns.
The relative weighting of fixed and variable components for target performance is set according to the scope of the executive’s role.
The key performance indicators and other targets against which performance can be measured for determining the proportion of ‘at-risk’
remuneration, are generally as follows:
• Financial – actual results compared to budgeted results for items including EBITDA, Sales Revenue, and Gross Profit Margin.
• Business growth – NPAT, earnings per share, price earnings ratio, new order value, acquisitions and new customers.
• Business management – cash generation, capital management, number of days sales outstanding in debtors, inventory turnover, cost/
revenue ratios, and staff utilisation.
• Strategy – development, approval, implementation, and achievement.
• People – Workplace Health and Safety (LTIFR).
Performance for each measure is assessed on a range from Target to Stretch. Stretch is set by the Board for each measure at a level that
ensures maximum STI is payable only where performance has truly and substantially exceeded expectations.
Details of the STI performance measures and targets for 2017 are set out in Section 4.7.
4.6. 2017 long-term incentive arrangements
Executive remuneration is determined by the Board, having consideration to relevant market practices and the circumstances of the Company
on an annual basis. It is the view of the Board that it is in the interests of Shareholders for selected Executives (the Participants) to receive
part of their total remuneration package (TRP) in the form of at-risk equity that will vest based on performance against indicators that are
linked to Shareholder benefit (refer to details in respect of the Vesting Conditions following) during a defined Measurement Period. This is also
considered best practice with regards to evident market practices. It should therefore be considered appropriate to provide some equity-based
remuneration to Executives of the Company instead of cash only.
The TasFoods Limited Rights Plan (TFLRP) was designed to form a significant component of at-risk remuneration and to create alignment
between Shareholder value creation and the remuneration of selected Executives. Grants under the TFLRP will facilitate the Company
providing appropriate, competitive and performance-linked remuneration to its Executives. The Board seeks to ensure that grants to Executives
are made at a level that will appropriately position their TRPs in the market, in accordance with the Company’s remuneration policies.
The key elements of the LTI plan are:
Participants: the CEO, 2 executive KMP, and provision for additional participants but noting that the terms of their grants may be varied as
considered appropriate by the Board.
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TASFOODS LIMITED
DIRECTORS’ REPORT
Instrument: The TFLRP uses Rights which are an entitlement to the value of a Share which may be settled either in the form of cash or a Share/
Restricted Share (a Share which is subject to disposal restrictions). Generally, it is expected that vested Rights will be satisfied in Restricted
Shares.
Maximum number of Performance Rights: The maximum number of Performance Rights is calculated by multiplying the total fixed
remuneration (TFR) of the Participant at the beginning of the financial year by the maximum LTI % and then dividing that figure by a 10-
day volume weighted average share price (VWAP) related to the time of calculation. The VWAP used to calculate the maximum number of
performance rights for 2017 was $0.15 cents based on the share price over a 10-day period, being 5 days prior to the Company’s 2016 end of
year announcement date (24 February 2017), and the subsequent 5 days.
Measurement Period: The Measurement Period will be the three financial years from 1 January 2017 to 31 December 2019.
Vesting Conditions: In order for Performance Rights to vest, the Participant must remain employed by the Company during the Measurement
Period (except in the case of a “Good Leaver”) and the performance conditions must be satisfied. The performance condition in relation to this
proposed grant of Performance Rights is Share Price growth, with the vesting percentages (of the grant/stretch/maximum level of LTI) to be
determined by the following scale:
Performance Level
TFL Share Price
% of the Grant/Stretch/Maximum Vesting
>Stretch
Stretch
Between Target and Stretch
Target
>$0.40
$0.40
>$0.33, < $0.40
$0.33
100%
100%
Pro-rata
50%
The targets for share price growth are based on a starting share price of $0.25 (being the share price at which investors acquired their shares
at the 2016 capital raising) which is a Compound Annual Growth Rate (CAGR) of 10% to achieve ‘target’ share price and a CAGR of 17% to
achieve ‘stretch’ share price; noting the share price at 1st January 2017 was $0.18 which is a CAGR of 23% to achieve ‘target’ share price and a
CAGR of 31% to achieve ‘stretch’ share price.
Share Price will be determined by a ten trading day VWAP ending on the date that is the end of the Measurement Period (see above). Details
of the performance rights allocated to KMP can be found in Table D of Section 8 below.
Retesting: Retesting is not permitted under the proposed terms of the 2017 Invitations.
Exercise Price: No amount will be payable by the Participant to exercise a Performance Right that has vested.
Cessation of Employment: Unless the Board determines otherwise, if a TFLRP Participant ceases employment and is classified as a “Bad
Leaver” (dismissal for cause, termination for poor performance or otherwise as determined by the Board), all unvested Performance Rights
held by the Participant will lapse. Unless the Board determines otherwise, if a Participant ceases employment for any other reason, including
by reason of death, disability, redundancy or retirement (“Good Leaver”), Performance Rights that were granted to the Participant during the
financial year in which the termination occurred will be forfeited in the same proportion as the remainder of the financial year bears to the full
year. All remaining Performance Rights for which Vesting Conditions have not been satisfied as at the date of cessation of employment will then
remain “on foot”, subject to the original Vesting Conditions. In the circumstances of any termination, any Restricted Shares that flow from the
exercising of the Rights would cease to be subject to disposal restrictions unless otherwise specified in the Invitation.
4.7. KMPs 2017 short-term incentive arrangement results
The measures and targets for the 2017 STI were set by the Board in early 2017 and were based on the priorities for 2017.
The financial measures and targets were the same for the CEO and her direct reports.
Key Performance Indicators
Financial
Sales Revenue ($m)
Gross Profit Margin
Non-financial
WH&S (LTIFR)
National brand Awareness
Total
Weighting
(At-Target %)
Achievement
(As a % of FY17 Target)
50%
20%
20%
10%
100%
0%
0%
150%
0%
150%
Paid out
0%
0%
30%
0%
30%
The key performance indicators for 2017 were set with stretch targets for the first full year of operations as a portfolio of premium food brands.
The financial outcomes did not achieve the threshold level set for the financial KPI’s therefore no payment was triggered.
Of the non-financial KPI’s the WHS target was exceeded beyond the maximum whilst the National Brand Awareness target did not achieve the
threshold level. The Board approved the payment to Executives of the short-term incentives based on these outcomes.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
DIRECTORS’ REPORT Continued
4.8. Summary of 2017 short-term incentive payments to KMP
Details of KMP executives’ STI payments for the year ended 31 December 2017, the proportion to be received for at-target and stretch
performance, achieved STI, and the amounts forfeited are shown in the table below.
FY17 STI Payment
Current KMP Executives
Jane Bennett
Tom Woolley
Donna Wilson
STI $
At-Target
$
77,885
65,700
46,538
STI $
Stretch
$
116,827
98,550
69,806
STI $
Achieved
% At-Target
STI Achieved
% Stretch
STI Achieved
% Stretch
STI Forfeited
$
23,652
19,710
13,961
%
30%
30%
30%
%
20%
20%
20%
%
80%
80%
80%
4.9. Company financial performance
The following table shows the relationship between KMP executives’ at-risk remuneration and TasFoods overall financial performance:
Financial Year Ended 31 December 2017
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)/earnings per share
Average STI payout as a % at-target for eligible KMP executives
5. Executive Contracts
2017
$31,112
($6,639)
($6,808)
$0.18
$0.19
5.56%
$0.00
($0.0414)
($0.0414)
20%
2016
$16,139
($2,611)
($2,577)
$0.41
$0.18
-56.10%
$0.00
($0.0233)
($0.0233)
0%
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
KMP - Executive Director
Notice
Period by
TasFoods
Notice
Period by
Executive
Jane Bennett
6 months
6 months
Termination / Redundancy Payment
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.
KMP Executives
Tom Woolley
6 months
6 months
The Company has discretion to make a payment in lieu of all or part of the notice
period.
Donna Wilson
6 months
6 months
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.
31
TASFOODS LIMITED
DIRECTORS’ REPORT
6. Non-executive directors’ and Executive Chair’s remuneration structure
TasFoods remuneration policy for the Executive Chair and 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 the Executive Chair and 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.
6.1. Current fee levels and pool
TasFoods’ remuneration policy for the Executive Chair and 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.
Within the aggregate amount of $400,000, non-executive directors’ and the Executive Chair’s 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 fees was undertaken in 2016, based on the benchmark data of a market capitalisation comparator group. They were further
reviewed by the Board when Rob Woolley resigned and later when Shane Noble joined the Board.
As a result of this review the fees, effective 1 January 2018 (inclusive of superannuation) were:
NED
Shane Noble (Executive Chair)1
Antony Robinson2
Roger McBain
Base Fee
$250,000
$75,000
$45,000
Committee Chair Fee
Total
$0
$0
$0
$250,000
$75,000
$45,000
1.
Shane Noble as Executive Chair has a more significant role in the business than that of Non-Executive Chair and in particular spends approximately 2 days a week working with the CEO
and Executive Team. Accordingly, the fee reflects the extra work that is provided by Shane Noble to TasFoods.
2.
Antony Robinson was Chair of the Board for the period 3 March 2017 until 31 January 2018. On his transition to Non-Executive Director (1 February 2018) his fee was reduced from
$75,000 to $45,000.
Directors may also be reimbursed for travel and other expenses incurred in attending to TasFoods affairs.
A non-executive director or the Executive Chair may be paid such additional or special remuneration as the Board decides is appropriate where
a director performs extra work or services. No fees were paid during 2017 as additional or special remuneration.
There are no retirement benefit schemes for directors other than statutory superannuation contributions, and executive chair and non-executive
directors’ remuneration must not include a commission on, or a percentage of, the profits or income of TasFoods.
7. Restrictions on LTIP shares prior to vesting
The Company prohibits executives from entering into arrangements to protect the value of unvested Long-Term Incentive awards. This includes
entering into contracts to hedge their exposure to performance rights over shares granted as part of their remuneration package. Adherence
to this policy is monitored informally on an annual basis where such awards exist by the Nomination and Remuneration Committee requesting
confirmation from each of the executives that no such activity has occurred.
The Company treats compliance with this policy as a serious issue and takes appropriate measures to ensure policy adherence.
8. Remuneration tables – Directors and KMP executives
Details of the nature and amount of each element of the remuneration and shareholdings of the KMP of the consolidated entity are set out in
the following tables.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
DIRECTORS’ REPORT
Table A: Remuneration for KMP for the year ended 31 December 2017
%
d
e
t
a
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R
l
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n
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t
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$
$
$
$
$
$
$
$
$
e
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%
0
%
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0
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0
%
7
%
0
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7
%
0
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6
%
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0
9
4
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7
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6
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9
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6
6
8
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9
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3
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)
1
(
33
TASFOODS LIMITED
DIRECTORS’ REPORT
Table B: Shareholdings at 31 December 2017
Current Non-executive Directors
and Executive Chair
Shane Noble
Roger McBain
Antony Robinson
Current KMP Executives
Jane Bennett
Tom Woolley
Donna Wilson
Former Non-executive Directors
Robert Woolley
Hugh Robertson
Shares
held at
Year
Start of Year
Issued as
Remuneration
Share Buyback Net other changes
End of Year
Shares
held at
No.
No.
No.
No.
No.
2017
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
-
2,199,000
199,000
800,000
400,000
1,999,000
199,000
1,599,000
199,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
No.
No.
No.
4,223,000
223,000
1,014,000
174,000
-
-
-
-
-
-
-
-
3,000,000
3,000,000
-
2,199,000
2,000,000
2,199,000
-
800,000
400,000
800,000
-
1,999,000
1,800,000
1,999,000
(1,000,000)
599,000
1,400,000
1,599,000
-
-
No.
-
-
-
No.
N/A
4,000,000
4,223,000
-
N/A
840,000
1,014,000
Table C: Movements during 2017 in performance rights or options over shares in the Company held, directly, indirectly or beneficially, by each
KMP, including their related parties.
Non-executive Directors
and Executive Chair
Shane Noble
Roger McBain
Antony Robinson
Current KMP Executives
Jane Bennett
Tom Woolley
Donna Wilson
Performance
Rights or
Options held at
Start of Year
Granted as
remuneration
Vested and
exercisable
Exercised
during the
reporting
period
Forfeited
Performance
Rights or
Options held
at End of Year
No.
No.
No.
No.
No.
No.
-
5,000,000
2,500,000
2,500,000
1,500,000
1,500,000
-
-
-
-
2,500,000
1,384,619
2,500,000
-
2,500,000
878,464
2,500,000
-
-
-
584,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,000,000
2,500,000
2,500,000
1,500,000
1,500,000
3,884,619
2,500,000
3,378,464
2,500,000
584,000
-
Year
2017
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
DIRECTORS’ REPORT
Year
Options held at
Start of Year
Granted as
remuneration
Vested and
exercisable
Former Non-executive Directors
No.
No.
Robert Woolley
Hugh Robertson
2017
2016
2017
2016
9,500,000
9,500,000
-
-
No.
-
-
-
-
-
-
-
-
Table D: Share-based payments granted as remuneration to KMP during 2017
Exercised
during the
reporting
period
No.
-
-
-
-
Forfeited
Options held
at End of Year
No.
-
-
-
-
No.
9,500,000
9,500,000
-
-
Current Non-executive Directors and Executive Chair
Year
Grant Date
Value of
Performance
Rights or
Options
Granted
$
Number
Vested
No.
Number
Granted
No.
Shane Noble
2017
30-Nov-17
5,000,000
325,000
Current KMP Executives
Jane Bennett
Tom Woolley
Donna Wilson
2017
2016
2017
2016
2017
2016
17-Jul-17
1,384,619
94,154
-
-
17-Jul-17
878,464
59,736
-
-
17-Jul-17
584,000
39,712
-
-
-
-
-
-
-
-
-
Percentage
of Grant
Forfeited
No.
0%
0%
0%
0%
0%
0%
0%
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 Options and Performance Rights
During the financial year the Company issued 5,000,000 share options and 2,847,083 performance rights to Directors and Key Management
Personnel. Further details regarding the share options and performance rights granted are contained within the Remuneration Report and in
note 32.
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.
35
TASFOODS LIMITED
DIRECTORS’ REPORT
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.
Details of amounts paid or payable to the Group’s auditor for audit and non-audit services provided during the year are set out below.
Auditors of the parent entity:
Auditing the financial report
Auditing the financial report - subsidiary companies
Non-audit services
2017
$
2016
$
120,750
32,000
-
108,850
-
-
152,750
108,850
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 37 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 thousand (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 section 298(2) of the Corporations Act 2001.
On behalf of the Directors
Shane Noble
Executive Chair
27 February 2018
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
AUDITOR’S INDEPENDENCE DECLARATION
37
Liability limited by a scheme approved under Professional Standards Legislation. Liability limited by a scheme approved under Professional Standards Legislation. TASFOODS LIMITED
CONSOLIDATED STATEMENT OF PROFIT AND
LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2017
Note
6
6
8
9
4
4
4
4
2017
$000
30,743
369
668
(2,116)
(16,753)
(12,075)
(1,323)
(967)
(853)
(76)
(130)
(633)
(629)
(604)
(110)
(40)
(2,109)
(6,639)
(169)
(6,808)
-
(6,808)
-
-
(6,808)
-
(6,808)
(6,808)
2016
$000
15,980
159
1,183
-
(8,440)
(6,849)
(1,173)
(620)
(307)
(58)
(249)
(601)
(606)
(317)
(119)
(110)
(484)
(2,611)
(371)
(2,982)
405
(2,577)
(367)
(367)
(2,944)
-
(2,577)
(2,577)
-
(6,808)
(6,808)
-
(2,944)
(2,944)
(4.14)
(4.14)
(4.14)
(4.14)
(2.33)
(2.33)
(2.70)
(2.70)
Revenue from operations
Other income
Fair value adjustment of biological assets
Impairment of goodwill
Raw materials used
Employment and contractor expense
Freight
Occupancy costs
Depreciation and amortisation
Finance costs
Travel and accommodation
Legal and professional fees
Marketing and event expenses
Repairs and maintenance
Research and development
Investment expenses
Other expenses
Loss before income tax
Income tax expense
Net Loss after tax for the year from continuing operations
Net profit after tax for the year from discontinued operations
Net Loss after tax for the year
Other comprehensive income
Items that may be reclassified to profit or loss in the future:
Exchange differences on translation of discontinued operations
Other comprehensive loss net of tax
Total comprehensive income
Net profit for the period 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
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.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE YEAR ENDED 31 DECEMBER 2017
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
Deferred tax liabilities
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
8
18
19
2017
$000
9,663
2,799
-
1,932
2,013
350
16,757
14,944
8,673
328
-
23,946
40,702
4,775
1,255
524
6,554
1,379
144
979
2,502
9,056
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
31,646
35,073
42,505
260
(11,119)
31,646
39,086
217
(4,230)
35,073
The above statement should be read in conjunction with the accompanying notes.
39
TASFOODS LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2017
At 1 January 2016
Loss for the year
Other comprehensive loss
Total comprehensive loss for the year
Acquisition transactions
Issue of shares
Share issue costs
As at 31 December 2016
At 1 January 2017
Loss for the year
Other comprehensive income
Total comprehensive loss for the year
Adjustments as a result of finalisation of accounting for business
combinations
Issue of shares
Share issue costs
Share-based payment expense
As at 31 December 2017
Contributed
Equity
$000
6,618
-
-
-
2,300
31,252
(1,084)
39,086
Reserves
$000
584
-
(367)
(367)
-
-
-
Accumulated
losses
$000
(1,653)
(2,577)
-
(2,577)
-
-
-
Total
$000
5,549
(2,577)
(367)
(2,944)
2,300
31,252
(1,084)
217
(4,230)
35,073
39,086
217
-
-
-
-
3,501
(82)
-
42,505
-
-
-
-
-
-
43
260
(4,230)
(6,808)
35,073
(6,808)
-
-
(6,808)
(6,808)
(81)
-
-
-
(81)
3,501
(82)
43
(11,119)
31,646
The above statement should be read in conjunction with the accompanying notes.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2017
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest received
Interest paid
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
Income taxes received
Other
Net cash used in operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for intellectual property
Acquisition of wasabi plants
Acquisition of goat herd
Net cash used in business combination
Net cash forgone from disposal of subsidiaries
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Cost of issuing shares
Proceeds from borrowings
Repayment of borrowings
Net cash provided by financing activities
Net (decrease)/increase in cash held
Cash and cash equivalents at the beginning of the year
Effects of exchange changes on the balances held in foreign countries
Cash and cash equivalents at the end of the year
Note
2017
$000
20
30,488
(33,776)
83
(107)
-
-
(40)
205
130
(3,017)
(2,812)
(33)
-
-
(1,623)
-
(4,467)
3,501
(105)
2,843
(882)
5,357
2016
$000
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
(2,127)
8,555
11,354
-
9,227
2,799
-
11,354
20
The above statement should be read in conjunction with the accompanying notes.
41
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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 27 February 2018 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 Pyengana Dairy to complement existing dairy operations and advance the
Company’s growth strategy.
The consideration paid to the owners of Pyengana Dairy amounted to $1.623 million and was paid in cash.
In December 2017, TasFoods announced a placement of ordinary shares to institutional and sophisticated investors at $0.18 per share. The first
tranche of the share placement was successfully completed on 29 December 2017, with 16,616,076 shares issued raising $2.99 million (before costs).
At this time, TasFoods also announced a Share Purchase Plan (SPP) for retail investors at $0.17 per share to raise up to $2.0 million (before costs).
The SPP and second tranche of the share placement had not been completed as at 31 December 2017.
There is a detailed discussion of the Group’s financial performance and position included in the Operating and Financial Review on pages 10 to
19 at the start of this Annual Report.
There have been no changes in accounting policies since the previous financial report at 31 December 2016.
3. Segment Information
The operating segments are based upon the units identified in the operating reports reviewed by the Board and executive management, and
that are used to make strategic decision, in conjunction with the quantitative thresholds established by AASB 9 Operating Segments. As such,
there are three identifiable and reportable segments each of which are outlined below:
• The Dairy segment incorporates the Meander Valley Dairy and Pyengana Dairy businesses, the assets of which were acquired in
September 2015 and October 2017, respectively. In addition, the Dairy segment includes goat farming operations (associated with the
Robur Farm goat dairy product range) 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 comprise:
- Corporate costs that are not directly attributable to operational business units, including 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 were 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. The Board resolved in late 2016 to close and deregister MarketSmart International Pty Limited.
Management measures the performance of the segments identified at the ‘net profit before tax’ level.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Management measures the performance of the segments identified at the ‘net profit before tax’ level.
Consolidated - 2017
Revenue
Total segment sales 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 from continuing operations:
Deferred tax asset/(liability)
Total Assets
Total assets include:
Dairy
$’000
Poultry
$’000
Corporate
and Other
$’000
Total
$’000
2,484
71
2,555
27,978
278
28,256
281
20
301
(1,521)
727
(5,845)
30,743
369
31,112
(6,639)
-
(6,639)
(169)
(6,808)
7,625
19,386
13,691
40,702
-
40,702
Goodwill on acquisition of non-current assets
2,397
2,264
-
4,661
Liabilities
Segment liabilities
Deferred tax liability/(asset)
Total liabilities
2,085
5,063
929
8,077
979
9,056
43
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Consolidated - 2016
Revenue
Total segment sales 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 from continuing operations:
Deferred tax asset
Total Assets
Total assets include:
Dairy
$’000
Poultry
$’000
Corporate
and Other
$’000
Total
$’000
1,981
16
1,997
13,849
126
13,975
150
17
167
(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
Total liabilities
384
3,738
477
4,599
4,599
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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
2017
CENTS
2016
CENTS
(4.14)
(4.14)
(4.14)
(4.14)
-
-
(2.33)
(2.33)
(2.70)
(2.70)
0.37
0.37
$'000
$'000
(6,808)
(6,808)
-
(2,577)
(2,982)
405
2017
Number
2016
Number
Weighted average number of ordinary shares outstanding during the period used in the calculation of
basic earnings per share
164,453,023
110,521,565
Diluted
Weighted average number of ordinary shares an convertible redeemable preference shares outstanding
and performance rights during the period used in the calculation of basic earnings per share
164,453,023
110,521,565
Information Concerning the Classification of Securities
(a) Ordinary shares held in escrow:
No ordinary shares were held in escrow at 31 December 2017 (31 December 2016: 8,000,000 ordinary shares were held in escrow at 31
December 2016 which were issued in part satisfaction of the consideration for the Nichols Poultry Pty Ltd acquisition).
(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 2017 (31
December 2016: Nil).
45
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Information Concerning the Classification of Securities
(a) Ordinary shares held in escrow:
No ordinary shares were held in escrow at 31 December 2017 (31 December 2016: 8,000,000 ordinary shares were held in escrow at 31
December 2016 which were issued in part satisfaction of the consideration for the Nichols Poultry Pty Ltd acquisition).
(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 2017 (31
December 2016: 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.
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
No dividends have been paid or declared during the year ended 31 December 2017 (31 December 2016: Nil).
PROFIT AND LOSS INFORMATION
6. Revenue
Revenue from continuing operations
Sales revenue
Other income
Interest received
Sundry income
Recognition and measurement
Sales revenue
2017
$’000
2016
$’000
30,743
15,980
83
286
369
33
126
159
Revenue from the sale of goods is measured at the fair value of the consideration received after accounting for 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.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
7. Expenses
Profit before income tax expense includes the following specific expenses:
Employee benefits expense:
Salaries and wages
Temporary employees
Share based payments
Superannuation expense (defined contribution)
Total employee benefits
Consultant fees
Other employment expenses
Total employment and contractor expense
The expense above is split as follows:
Continuing operations
Discontinued operations
2017
$’000
2016
$’000
8,264
2,308
43
709
11,324
-
751
12,075
12,075
-
12,075
4,625
1,410
-
384
6,419
64
479
6,962
6,849
113
6,962
Rental expenses related to operating leases
Investment expense
151
40
147
110
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.
47
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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)/expense included in income tax expense comprises:
Decrease in deferred tax assets
Increase/(decrease) in deferred tax liabilities
2017
$’000
2016
$’000
(142)
311
169
169
-
169
69
242
311
(54)
425
371
371
-
371
873
(502)
371
Reconciliation of income tax expense to proforma facie tax on accounting profit:
Loss before income tax expense
(6,639)
(2,206)
Tax benefit at Australian tax rate of 30% (2016: 30%)
Tax effect of amounts which are not deductible in calculating taxable income
Tax effect of amount which are not taxable in calculating taxable income - discontinued operations
Capital gain
Research and development tax offset
Deferred taxes not recognised
Tax effect on impairment of goodwill in Shima Wasabi
(1,992)
71
-
-
(164)
(2,085)
1,609
645
(662)
7
(122)
17
(54)
(814)
1,185
-
Income tax expense for the period
169
371
(b) Income tax benefit recognised directly in equity during the period
Deferred tax arising from share issue costs
(32)
(32)
(465)
(465)
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(c) Deferred tax balances:
Taxable and deductible temporary differences arise from the following:
Opening Balance
$’000
Acquired as
part of Business
Combination
$000
Charged to
Income
$’000
Charged to
Equity
$’000
Closing
Balance
$’000
Gross deferred tax assets:
Provisions
Trade and other payables
Share issue expenses
Trade and other receivables
Property, plant and equipment
Intangibles
Gross deferred tax liabilities:
Biological assets
Inventory
Property, plant and equipment
Intangibles
Other
Net deferred tax asset/(liability)
(d) Tax Losses
141
40
426
7
2
54
670
(313)
(156)
(8)
-
(25)
(502)
168
2
-
-
-
-
-
2
-
-
-
(873)
-
(873)
(871)
70
7
(111)
(1)
7
(41)
(69)
(209)
(57)
8
-
16
(242)
(311)
Unused tax losses for which no deferred tax asset has been recognised:
Capital losses
Revenue losses
Potential tax benefit at 30%
Unused tax losses
-
-
32
-
-
-
32
-
-
-
-
-
213
47
347
6
9
13
635
(522)
(213)
-
(873)
(9)
-
32
(1,617)
(982)
2017
$000
-
20,307
20,307
6,092
2016
$000
1,597
15,295
16,892
5,068
As at 31 December 2017 the Group had $20.307 million of carry forward tax losses for which no deferred tax asset has been recognised. The
losses relate to both Group’s current operations and also losses incurred by the loyalty, rewards and payments business previously operated
by the Group. The Group has adopted a conservative position and determined not to recognise any deferred tax asset in respect of the carry
forward tax losses until such time as there is greater evidence supporting future taxable profits of the Group. Prior to recognising the carry
forward tax losses the Group will assess the application of the continuity of ownership and continuity of business tests.
49
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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 2010 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
In 2016 the Board resolved to close and deregister MarketSmart International Pty Limited, a subsidiary which operated loyalty solutions
activities as part of the historical OnCard International Ltd operations. On 9 January 2018, the Company applied to ASIC for deregistration of
MarketSmart International Pty Limited.
There is no revenue or expenditure during the 2017 year which is required to be reported as being from discontinued operations as
MarketSmart ceased trading in 2015.
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.
During 2016 the Company ceased all 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 operations have been disclosed within discontinued operations in 2016.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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
Note
2017
$000
-
-
-
-
-
-
-
-
-
-
2016
$000
-
(144)
(144)
-
(144)
549
405
0.37
0.37
(9)
2016
$000
374
4
(179)
(175)
549
Basic (loss)/earnings per share (cents per share)
Diluted (loss)/earnings per share (cents per share)
4
4
Net cash inflow (outflow) from investing activities (i)
(i) net cash outflow from investing activities includes cash paid to the purchaser and the cash forgone
on the disposal of these operations
c) Details of the sale of the discontinued operations
Disposal costs and payments to the purchaser (ii)
(ii) Amounts include loans written off, written back and the reversal of foreign exchange translation
reserves back through profit or loss.
Cash
Other payables
Gain/(Loss) on disposal of discontinued operations
Recognition and measurement
Note
2017
$000
-
-
-
-
-
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.
51
TASFOODS LIMITED
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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
2017
$'000
2016
$'000
2,711
(20)
108
2,799
1,911
(25)
336
2,222
25
(7)
2
20
421
23
40
484
-
25
-
25
248
43
62
353
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.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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 a 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
Balance as at 1 January 2017
Increases:
- 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 2017
Current
Non-current
Poultry
$’000
-
652
661
(652)
289
950
950
-
950
Goats
$’000
-
-
204
(1)
53
256
1
255
256
Wasabi
Plants
$’000
-
102
-
(80)
841
863
863
-
863
Total
$’000
-
754
865
(733)
1,183
2,069
1,814
255
2,069
950
256
863
2,069
695
(950)
262
957
957
-
957
1
(69)
142
330
20
310
330
19
(173)
264
973
955
18
973
715
(1,192)
668
2,260
1,932
328
2,260
(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.
53
TASFOODS LIMITED
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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 2017, the Group held 368,734 live poultry (2016: 371,594), 946 goats (2016: 640) and 4,395 mature wasabi plants (2016:
4,217) and 5,922 immature wasabi plants (2016: nil) that are less than 12 months of age and not suitable for harvest.
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 2017, with all other variables held constant, the Group’s net profit/(loss) for the
period would have been impacted by $31,896 (2016: $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. At 31 December 2017 the Group’s wasabi plants were an average of 29 months of
age (31 December 2016: 17 months) and at various stages of growth post-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 2017, with all other variables held
constant, the Group’s net profit/(loss) for the period would have been impacted by $48,257 (31 December 2016: $43,148) by a yield increase/
decrease of 5%.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Fair Value Measurement
Recurring fair value measurements
- Poultry
- Goats
- Wasabi Plants
Total biological assets recognised at fair value
Recurring fair value measurements
- Poultry
- Goats
- Wasabi Plants
Total biological assets recognised at fair value
2016
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
950
256
-
1,206
2017
-
-
863
863
950
256
863
2,069
Level 1
$’000
Level 2
$’000
Level 3
$’000
Total
$’000
-
-
-
-
957
330
-
1,287
-
-
973
973
957
330
973
2,260
Fair value measurements using significant unobservable inputs
The following table summarises the quantitatively information about the significant unobservable inputs used in Level 3 fair value
measurements:
Description
Wasabi plant biological assets at fair value:
Unobservable inputs
Average yield per wasabi plant used in fair value measurement: 0.42 kilograms
(31 December 2016: 0.37 kilograms)
Relationship to 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
2017
$’000
1,099
284
630
2,013
2016
$’000
394
309
519
1,222
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.
55
2017
$000
8,132
(254)
7,879
7,538
(889)
6,650
173
(96)
77
197
(35)
162
2016
$000
6,747
(60)
6,687
4,950
(268)
4,682
201
(161)
40
142
(11)
131
177
1,253
14,944
12,793
TASFOODS LIMITED
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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 Property, Plant and Equipment
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Reconciliations
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:
Land &
Buildings
$’000
Plant &
Equipment
$’000
Office
Equipment
$’000
Motor
Vehicles
$’000
Carrying value
As at 1 January 2016
Additions
Additions as a part of a business combination
Disposals
Depreciation expense
Balance as at 31 December 2016
As at 1 January 2017
Additions
Additions as a part of a business combination
Adjustments as a result of finalisation of accounting for
business combinations
Capitalisation to asset categories
Depreciation expense
-
821
5,926
-
(60)
6,687
6,687
1,378
-
-
-
(185)
228
2,160
2,524
-
(230)
4,682
4,682
2,355
727
(495)
-
(619)
Balance as at 31 December 2017
7,879
6,650
2
43
-
-
(5)
40
40
63
-
-
-
(26)
77
-
94
55
(6)
(12)
131
131
54
-
-
-
(23)
162
Capital
work in
progress
$’000
-
569
684
-
-
Total
$’000
230
3,687
9,189
(6)
(307)
1,253
12,793
1,253
177
-
38
(1,291)
-
12,793
4,026
727
(457)
(1,291)
(853)
177
14,945
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.
57
TASFOODS LIMITED
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
14. Intangible Assets
Goodwill
Brands and trademarks
Other
Gross carrying value
At cost
Accumulated impairment
Total net carrying amounts
Reconciliations
Carrying amount at beginning
Transfers from other asset classes as a result of finalisation of accounting for business combinations
Additions
Business combinations during the year
Impairment during the period
Carrying amount at end
2017
$’000
5,534
2,945
194
8,673
11,390
(2,717)
8,673
8,989
1,228
54
518
(2,116)
8,673
2016
$’000
8,806
8
175
8,989
9,590
(601)
8,989
1,879
-
-
7,110
-
8,989
Goodwill relates to the acquisition of the assets of Meander Valley Dairy and Pyengana Dairy businesses in 2015 and 2017 respectively.
Goodwill is also attributable to the acquisition of the wholly-owned controlled entities Nichols Poultry Pty Ltd and Shima Wasabi Pty Ltd
acquired in the 2016 year.
The goodwill of Shima Wasabi was written down to nil during 2017 as part of the annual impairment testing process. Refer to the recoverable
amount of goodwill commentary below for further information regarding the impairment.
Brands and trademarks are predominantly associated with the Nichols Poultry brand acquired in 2016.
Other intangible assets include water rights and intellectual property.
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 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.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Before recognition of impairment losses, the carrying amount of the goodwill (other than goodwill relating to discontinued operations) is as
follows:
Meander Valley Dairy
Nichols Poultry
Shima Wasabi
Pyengana Dairy
2017
$’000
1,879
3,137
2,116
518
7,650
2016
$’000
1,879
4,709
2,218
-
8,806
The movement in goodwill in 2017 is associated with the finalisation of the acquisition accounting for Nichols Poultry and Shima Wasabi, in
addition to the provisional acquisition accounting for Pyengana Dairy.
Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.
Recoverable amount of goodwill
In accordance with the Company’s accounting policy, impairment testing has been undertaken at 31 December 2017 for all groups of cash
generating units (CGUs) with indefinite life intangibles or where there is an indication of impairment.
The Company has three CGUs for which impairment testing has been completed, which are as follows:
Dairy CGU - Meander Valley Dairy and Pyengana Dairy
The recoverable amount of the 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 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.
Average revenue growth over the five-year forecast period is anticipated to be 15.8% per annum, with the baseline
on which growth has been determined including the full-year effect of Pyengana dairy sales revenue.
Forecast production costs are anticipated to increase over the five-year period in line with revenue growth and
are projected to be on average 70% of revenue over the five-year period (2016: 62%). 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 10% 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% (2016: 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% (2016: 10.8%).
Based on the above assumptions the recoverable amount of the CGU is estimated to be $8 million, which exceeds the CGU’s carrying amount
by $1.33 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 12.1%.
Annual revenue growth rate
Reduction in average from 15.8% (over the five-year period) to 14.6%.
Production costs
Increase from 70% of revenue to 71.3%.
59
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Poultry CGU - Nichols Poultry
The recoverable amount of the Poultry 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 Poultry CGU include:
Revenue Growth
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.
Average revenue growth over the five-year forecast period is anticipated to be 12.9% per annum.
Production costs
Forecast production costs are anticipated to increase over the five-year period in line with revenue growth and
are projected to be on average 71% of revenue over the five-year period. Conservative savings and efficiencies to
be generated as a result of automation of production have been recognised within the forecast cash flows.
Indirect costs
Indirect costs are anticipated to increase by 15% 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%.
Wasabi CGU - Shima Wasabi Pty Ltd
The recoverable amount of the Wasabi 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.
Although Shima Wasabi reported growth in sales revenue in 2017, future sales growth to support the carrying value of goodwill is not certain
given the early stages of product, market and customer development. While the Company remains confident in the long-term growth potential
of Shima Wasabi a prudent approach to revenue growth has been adopted in the value-in-use calculations. This has resulted in an impairment
charge equal to the carrying value of goodwill of $2.116 million being recognised in the financial report.
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
2017
$’000
4,775
4,775
2016
$’000
3,117
3,117
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.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
16. Borrowings
Current
Bank Overdraft
Secured Finance Lease Liabilities
Non-Current
Secured Finance Lease Liabilities
Total borrowings
Finance Lease Commitments
Commitments in relation to finance leases are payable as follows:
2017
$’000
2016
$’000
436
818
1,255
508
182
690
1,379
321
2,633
1,011
At 31 December 2017
Non-derivatives
Trade payables
Bank Overdraft
Finance lease liabilities
At 31 December 2016
Non-derivatives
Trade payables
Bank Overdraft
Finance lease liabilities
Financing Arrangements
Equipment Finance Liabilities
Bank Bill Facility
Bank Overdraft
Recognition and measurement
Less than 12
months
$’000
Between 1
and 5 years
$’000
Over 5 years
$’000
Total
contracted cash
flows
$’000
Carrying
amount
$’000
4,775
436
818
6,030
3,117
508
213
3,838
-
-
1,379
1,379
-
-
338
338
-
-
-
-
-
-
-
-
4,775
436
2,197
7,409
3,117
508
551
4,176
4,775
436
2,197
7,409
3,117
508
551
4,176
2017
$’000
2016
$’000
Limit
2,197
2,000
1,000
5,197
Undrawn
Balance
-
Limit
503
Undrawn
Balance
-
2,000
2,000
2,000
564
2,564
1,000
3,503
492
2,492
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
61
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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 arranged with the Australia and New Zealand Banking Group Limited (ANZ),
Commonwealth Bank of Australia Limited (CBA) and Maia Financial (formerly Alleasing Pty Ltd). 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 an average effective interest rate of 5.26%.
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 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
Other provisions
Non-current
Employee benefits
2017
$’000
2016
$’000
524
-
524
144
144
368
5
373
98
98
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
A 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.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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.
EQUITY
18. Contributed Equity
NUMBER OF SHARES
SHARE CAPITAL
Ordinary shares - fully paid (no par value)
183,723,257
164,107,181
2017
2016
Total share capital
Movements in ordinary share capital:
2017
$000
42,505
42,505
2016
$000
39,086
39,086
DETAILS
ORDINARY SHARES
PRICE
$000
164,107,181
3,000,000
16,616,076
-
183,723,257
0.17
0.18
-
39,086
510
2,991
(82)
42,505
DATE
1/1/17
Balance at beginning of period
30/11/17
Issue of shares
29/12/17
Issue of shares
Issue costs - net of tax
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.
Share Options and Performance Rights
Share options and performance rights 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 23,500,000 share options on issue and 3,212,083 performance rights during the financial year and as at 31 December 2017 (2016:
18,500,000 share options, nil performance rights).
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
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.
63
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
19. Reserves
Employee share option reserve
Nature and Purpose of Reserves
Employee share option reserve
2017
$’000
260
260
2016
$’000
217
217
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.
Balance at start of year
Movement during the year
Balance at end of year
OTHER NOTES
20. Additional Cash Flow Information
Cash and cash equivalents
Recognition and measurement
2017
$’000
217
43
260
2016
$’000
217
-
217
2017
$’000
9,663
2016
$’000
11,862
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
2017
$’000
9,663
(436)
9,227
2016
$’000
11,862
(508)
11,354
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(b) Reconciliation of operating profit after income tax to net cash flows from operating activities:
Net loss after income tax
Depreciation and amortisation
Impairment expense
Movement in fair value of biological assets
Loss on disposal of property, plant and equipment
Disposal on foreign operations
Share based payments
Other
Change in operating assets and liabilities:
(Increase)/decrease in trade receivables
(Increase)/decrease in biological assets
(Increase)/decrease in inventories
(Increase)/decrease in prepayments
(Increase)/decrease in deferred taxes
Increase/(decrease) in trade and other payables
(Increase)/decrease in current tax receivable
Increase/(decrease) in provisions
Net cash inflow/(outflow) from operating activities
(c) Non-cash activities
There were no non-cash financing activities.
21. Financial Risk Management
2017
$’000
(6,808)
2016
$’000
(1,005)
853
2,116
(668)
-
-
43
38
(507)
(293)
(791)
(45)
1,147
1,658
42
197
(3,017)
314
-
6
(549)
-
-
1,269
(1,207)
(364)
(136)
(1,133)
(116)
(54)
9
(2,966)
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.
65
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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
2017
$000
9,663
2,799
2016
$000
11,862
2,222
2017
$000
9,663
2,799
2016
$000
11,862
2,222
12,462
14,084
12,462
14,084
4,775
2,633
7,409
3,117
1,011
4,128
4,775
2,633
7,409
3,117
1,011
4,128
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.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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 sheet 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
2017
$’000
9,663
9,663
2016
$’000
11,862
11,862
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 2017, 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:
Judgement of reasonably possible movements
+0.5% (50 basis points)
-0.5% (50 basis points)
2017
$’000
2016
$’000
48
(48)
57
(57)
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 $9.056 million (2016: $4.599 million) of which $6.554 million (2016: $4.180 million) is recorded as current
liabilities and Total Current Assets of $16.756 million (2016: $17.467 million) of which $9.663 million (2016: $11.862 million) 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.
67
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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.
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, the Board may change the amount of dividends to be paid to shareholders, return capital to shareholders, issue
new shares or sell assets to reduce debt.
Borrowings
Trade and other payables
Total debt
Less cash and cash equivalents
Net debt/(cash)
Total equity
Total capital
Gearing ratio (total debt / total equity)
The Group is not subject to any externally imposed capital requirements.
2017
$’000
2,633
4,775
7,409
(9,663)
(2,254)
2016
$’000
1,011
3,117
4,128
(11,862)
(7,734)
31,646
42,505
35,073
39,086
23.4%
11.8%
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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 loss for the period
Deed of Cross Guarantee
2017
$’000
24,141
11,186
35,327
1,914
846
2,760
2016
$’000
12,924
18,380
31,304
720
59
779
32,567
30,525
42,470
39,086
260
(10,164)
32,567
217
(8,778)
30,525
1,982
(3,856)
(3,856)
2,012
(2,157)
(2,157)
The wholly-owned subsidiaries disclosed in note 24 are parties to a deed of cross guarantee under which each company guarantees the debts
of the others. By entering into the deed, the wholly-owned entities have been relieved from any requirement to prepare a financial report and
directors’ report that might otherwise apply under Instrument 2016/785 issued by the Australian Securities and Investments Commission.
The closed group financial information for 2017 is identical to the financial information included in the consolidated financial statements. The
wholly-owned subsidiaries became a party to the deed of cross guarantee dated 23 October 2017.
The companies disclosed in note 24 represent a ‘closed group’ for the purposes of the Instrument, and as there are no other parties to the deed
of cross guarantee that are controlled by TasFoods Limited, they also represent the ‘extended closed group’.
Capital Commitments
Non-cancellable capital expenditure contracted for but not in the financial statements relating to TasFoods Limited’s dairy operations are as
follows:
Payable:
- Not longer than one year
- Longer than one year and not longer than five years
- Longer than five years
2017
$’000
2016
$’000
39
-
-
39
-
-
-
-
69
TASFOODS LIMITED
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Finance Leases
During 2017 TasFoods Limited entered into a finance lease for the upgrade of its dairy factory located at Kings Meadows. The balance of the
finance lease at 31 December 2017 is as follows:
Current
Secured Finance Lease Liabilities
Non-Current
Secured Finance Lease Liabilities
Total Finance Lease Liabilities
Contingent Liabilities
2017
$’000
2016
$’000
572
845
1,418
-
-
-
TasFoods Limited is not subject to any liabilities that are considered contingent upon events known at balance sheet date.
24. Subsidiaries
Van Diemen’s Land Dairy Pty Ltd
Nichols Poultry Pty Ltd
Shima Wasabi Pty Ltd
Tasmanian Food Co Dairy Pty Ltd
MarketSmart International Pty Ltd
25. Business Combinations
Current Year
Pyengana Dairy
COUNTRY OF
INCORPORATION
PRINCIPAL ACTIVITY
Australia
Australia
Australia
Australia
Australia
Dairy
Poultry
Wasabi
Dairy
Loyalty Solutions
EQUITY HOLDING
2017
%
100%
100%
100%
100%
100%
2016
%
100%
100%
100%
0%
100%
On 6 October 2017 the Company acquired via its new subsidiary Tasmanian Food Co Dairy Pty Ltd, the business operations of the Pyengana
Dairy food products business based in Tasmania. The acquisition was completed for cash consideration of $1.623 million.
Details of the acquisition were as follows:
Consideration
Cash Consideration
$’000
1,623
Acquisition related costs amounting to $40,434 have been excluded from the consideration transferred and have been recognised as an
expense in the 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 Group’s 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.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Plant and equipment
Trade and other receivables
Other current assets
Trade and other payables
Provisions
Net identifiable assets acquired
Add: Goodwill
Consideration paid
Finalisation of Prior Year Acquisitions
Preliminary
Fair Value
$’000
727
111
401
(127)
(7)
1,105
518
1,623
On 15 June 2016, the Company acquired 100% of the issued share capital of Nichols Poultry Pty Ltd (‘Nichols Poultry’) and its associated
assets, and 100% of the issued share capital of Shima Wasabi Pty Ltd (‘Shima Wasabi’).
In the financial statements for the year ended 31 December 2016, 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 accounting for
the acquisition of Nichols Poultry and Shima Wasabi was finalised during the current period and the preliminary balances have been updated
accordingly. The final fair values of the assets arising from the acquisitions are as follows:
Nichols Poultry
The acquisition of Nichols Poultry was completed for consideration of $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 Nichols Family Trust). The balance of
consideration ($7.359 million) was paid in cash.
The reallocation of the purchase price is outlined in the table below. A reallocation of the fair value was completed to recognise an intangible
asset and related deferred tax liability associated with the brand of Nichols Poultry, resulting in a corresponding net decrease in the value
of goodwill. In addition, a movement in property, plant and equipment was recorded to reflect the market value of the assets at the date of
acquisition.
Property, plant and equipment
Intangible assets
Trade and other receivables
Other current assets
Deferred tax asset
Trade and other payables
Borrowings
Provisions
Deferred tax liability
Net identifiable assets acquired
Add: Goodwill
Consideration paid
Preliminary
Fair Value as
presented at
31 December
2016
$’000
Final Fair Value
$’000
8,290
3,085
1,798
1,478
129
(4,675)
(2,564)
(446)
(873)
6,222
3,137
9,359
8,747
183
1,798
1,478
129
(4,675)
(2,564)
(446)
-
4,650
4,709
9,359
71
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Shima Wasabi
The acquisition of Shima Wasabi was completed for consideration of $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 vendor (Stephen Welsh and Karen Welsh). The balance of consideration
($2.468 million) was paid in cash.
The reallocation of the purchase price is outlined in the table below. A reallocation of the fair value was completed to recognise an increase in
the valuation of the wasabi biological asset (included in other current assets) and a corresponding reduction in the value of goodwill.
Plant and equipment
Trade and other receivables
Other current assets
Trade and other payables
Net identifiable assets acquired
Add: Goodwill
Consideration paid
Recognition and Measurement
Preliminary
Fair Value as
presented at
31 December
2016
$’000
442
13
108
(13)
550
2,218
2,768
Final Fair Value
$’000
442
18
205
(13)
652
2,116
2,768
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,
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.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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
2017
$’000
2016
$’000
39
-
-
39
427
-
-
427
2017
$’000
2016
$’000
708
3,421
-
-
-
-
708
3,421
Operating expenditure commitments are reflective of contracts entered into with suppliers of Nichols Poultry Pty Ltd to secure grain supply
during the following 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 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
29. Events Occurring After Reporting Date
2017
$’000
2016
$’000
204
378
-
582
133
158
-
291
On 21 December 2017 the Company announced it would undertake a capital raising for approximately $7 million via a Placement to
sophisticated and professional investors and a Share Purchase Plan (SPP).
On 29 December 2017 the Company issued 16,616,076 ordinary shares at $0.18 per share to sophisticated and professional investors.
Following this all shareholders were invited to participate in the SPP for up to $15,000 at $0.17 per share.
The SPP noted above, resulted in 7,794,180 shares valued at $1.325 million being issued to shareholders on 2 February 2018.
At a General Meeting of the Company on 15 February 2018 Shareholders approved the remainder of the Placement (second tranche) to
sophisticated and professional investors and also approved such persons taking up the shortfall in the Company’s SPP 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. The General Meeting also refreshed the Company’s ability to raise up to 15% of its capital without shareholder approval by
73
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
approving the previous placement with sophisticated and professional investors and the share and option issue to the Executive Chair, Shane
Noble.
Other than those matters noted above the Board is 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 INFORMATION
30. Related Party Transactions
Key Management Personnel Compensation
The aggregate compensation of the key management personnel of the entity is set out below:
Short term benefits
Post-employment benefits
Share based payments
Termination payments
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
Auditing the financial report - subsidiary companies
Non-audit services
2017
$’000
2016
$’000
806
71
39
-
916
816
69
-
-
885
2017
$
2016
$
120,750
108,850
32,000
-
-
-
152,750
108,850
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
32. Share Based Payments
Performance Rights
a. Share based payment arrangements
TasFoods Limited offers the Chief Executive Officer and senior management the opportunity to participate in the Long-Term Incentive Plan
(LTIP), which involves performance rights to receive shares in TasFoods Limited. The LTIP is designed to:
• Assist in the motivation, retention and reward of employees, including the Chief Executive Officer and members of senior management;
and
• Align the interests of employees participating in the LTIP more closely with the interests of shareholders by providing an opportunity for
those employees to receive an equity interest in the TasFoods Limited Group through the granting of performance rights.
Under the LTIP, performance rights were issued to the Chief Executive Officer and managers of senior management as the LTI component of
their remuneration. Performance rights granted under the LTIP have a share price growth performance vesting condition. Vesting percentages
(of the grant/stretch/maximum level of LTI) to be determined by the following scale:
Performance Level
TFL Share Price
>Stretch
Stretch
Between Target and Stretch
Target
>$0.40
$0.40
>$0.33, <$0.40
$0.33
% of the Grant/Stretch /
Maximum Vesting
100%
100%
Pro-rata
50%
The targets for share price growth are based on a starting share price of $0.25 (being the share price at which investors acquired their shares
at the 2016 capital raising) which is a Compound Annual Growth Rate (CAGR) of 10% to achieve ‘target’ share price and a CAGR of 17% to
achieve ‘stretch’ share price; noting the share price at 1st January 2017 was $0.18 which is a CAGR of 23% to achieve ‘target’ share price and a
CAGR of 31% to achieve ‘stretch’ share price.
Share Price will be determined by a ten trading day volume weighted average share price ending on the date that is the end of the
Measurement Period.
b. Performance rights granted
Below is a summary of performance rights granted under the LTIP.
Grant Date
From
To
Balance at
start of Year
Granted
During Year
Forfeited
Vested
Balance at
End of Year
Fair Value
per Right
17/7/17
1/1/17
31/12/19
-
3,212,083
-
-
3,212,083
$0.068
2017 Performance Period
The performance rights hold no voting or dividend rights and are not transferable.
c. Fair value of performance rights granted
For the performance rights granted during the 2017 financial year, the fair value was measured at the grant date of 17 July 2017 for those
rights issued to the Chief Executive Officer and senior management.
The fair value of the performance rights granted under the LTIP was calculated by an independent expert using a Monte-Carlo simulation and
is based on the achievement of the target rate performance of 50%.
The expense recognised in relation to the performance rights applicable to the Chief Executive Officer and senior management for the year
ended 31 December 2017 is $36,404 (31 December 2016: nil).
75
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
Share Options
a. Share based payment arrangements
On 30 November 2017 TasFoods Limited issued 5,000,000 share options to Shane Noble upon his appointment as a Director of the
Company. The options granted were for nil cash consideration and will entitle the option holder to acquire one ordinary share in the Company
at an exercise price of $0.20 until 30 November 2021.
In addition, during 2015 TasFoods Limited established an employee share ownership plan (ESOP) to provide a long-term incentive for
employees and Directors of TasFoods Limited. It allowed entitled officers of the Group to participate in TasFoods Limited’s future growth and
provided an incentive to increase profitability and returns to shareholders. The ESOP was replaced with the LTIP noted above in 2017.
b. Share options granted
Share options outstanding at 31 December 2017 are as follows:
Grant Date
Expiry Date
Exercise Price
4/9/15
4/9/15
3/9/19
3/9/19
30/11/17
30/11/21
$0.21
$0.42
$0.20
Weighted average exercise price
Granted
Exercised
Balance at the
start of the year
10,000,000
8,500,000
-
-
-
5,000,000
18,500,000
5,000,000
-
-
-
-
Expired/
forfeited/
other
-
-
-
-
Balance at the
end of the year
10,000,000
8,500,000
5,000,000
23,500,000
$0.28
The options hold no voting or dividend rights and are not transferable.
c. Fair value of share options granted
For share options granted during the 2017 financial year, the fair value was measured at the grant date of 30 November 2017.
The fair value of the share options granted was calculated by an independent expert using the Binomial method.
The expense recognised in relation to share options for the year ended 31 December 2017 is $6,901 (31 December 2016: nil).
d. Share Options at 31 December 2017
Details of share options held by Directors, 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
4/9/15
4/9/15
30/11/17
3/9/19
3/9/19
30/11/21
3/9/19
3/9/19
30/11/21
$0.150
$0.150
$0.165
$0.042
$0.020
$0.200
$0.002
$0.020
$0.065
There are no performance hurdles attached to the options granted.
Recognition and Measurement
The Group provides benefits to the Directors, the Chief Executive Officer and certain senior management in the form of share-based payment,
whereby services are rendered in exchange for rights over shares (performance rights) or options.
The fair value of the performance rights and options is recognised as an employee benefits expense, with a corresponding increase in equity.
The total amount to be expensed is determined by reference to the fair value of the performance rights or options granted.
The total expense is recognised over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on
the date on which the relevant employees become fully entitled to the award (the vesting date).
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017 TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
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 2017. 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.
(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
• Impairment of goodwill
• Estimation of fair values of assets and liabilities as part of a business combination
• Recognition of deferred tax assets for carried forward tax losses
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.
77
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
(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 2017:
• AASB 2016-1 ‘Amendments to Australian Accounting Standards – Recognition of Deferred Tax Assets for Unrealised Losses’
• AASB 2016-2 ‘Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 107’
• AASB 2017-2 ‘Amendments to Australian Accounting Standards – Further Annual Improvements 2014-2016 Cycle’.
(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 2017 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 2017 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.
The Group has not applied the following new and revised AASBs that have been issued but are not yet effective for the year ended 31
December 2017:
• AASB 9 Financial Instruments
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.
Based on an analysis of the Group’s financial assets and financial liabilities as at 31 December 2017 on the basis of the facts and
circumstances that exist at that date, the directors of the Company have assessed the impact of AASB 9 to the Group’s consolidated
financial statements as follows:
Classification and measurement
All financial assets and financial liabilities will continue to be measured on the same basis as is currently adopted under AASB 139.
Impairment
Financial assets measured at amortised cost will be subject to the impairment provisions of AASB 9. The Group expects to apply the
simplified approach to recognise lifetime expected credit losses for its trade and other receivables as required or permitted by AASB 9.
There will be no impact on the group’s accounting for financial liabilities, as the new requirements only affect the accounting for financial
liabilities that are designated at fair value through profit or loss and the group does not have any such liabilities. The derecognition rules
have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed.
The directors do not anticipate that the application of the AASB 9 hedge accounting requirements will have a material impact on the
Group’s consolidated financial statements.
• AASB15 Revenue from Contracts with Customers
AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing
revenue recognition guidance, including AASB 18 ‘Revenue’, AASB 11 ‘Construction Contracts’, and IFRIC 13 ‘Customer Loyalty Programmes’.
AASB 15 is currently effective for annual reporting periods beginning on or after 1 January 2018.
The Group recognises revenue from the following major sources:
Sale of dairy, poultry and wasabi goods measured at the fair value of consideration received net of any trade discounts and volume rebates
allowed.
The directors of the Company have assessed that the sale of the dairy, poultry and wasabi goods represents a single performance
obligation and accordingly, revenue will be recognised in respect of the sale of these goods at the point in time when control over
the corresponding goods and services is transferred to the customer. This is similar to the current identification of separate revenue
components under AASB 18. The timing of revenue recognition of this performance obligation under AASB 15 (i.e. at a point in time for sale
of goods when the goods are delivered to the customer) is also expected to be consistent with current practice.
2017 ANNUAL REPORT
2017 ANNUAL REPORT
2017
TASFOODS LIMITED
NOTES TO AND FORMING PART OF THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2017
The directors intend to use the modified retrospective method of transition to AASB 15.
Apart from providing more extensive disclosures on the Group’s revenue transactions, the directors anticipate that as of 1 January 2018, the
application of AASB 15 will have an immaterial impact on the group’s financial statements.
• AASB16 Leases
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.
As at 31 December 2017, the Group has non-cancellable operating lease commitments of $0.6 million. AASB 17 does not require the
recognition of any right-of-use asset or liability for future payments for these leases; instead, certain information is disclosed as operating
lease commitments in note 28. A preliminary assessment indicates that these arrangements will meet the definition of a lease under AASB
16, and hence the Group will recognise a right-of-use asset and a corresponding liability in respect of all these leases unless they qualify for
low value or short-term leases upon the application of AASB 16. The new requirement to recognise a right-of-use asset and a related lease
liability has been assessed by the directors and is not anticipated to have a significant impact on the amounts recognised in the Group’s
consolidated financial statements. 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.
In contrast, for finance leases where the Group is a lessee, as the Group has already recognised an asset and a related finance lease
liability for the lease arrangement and therefore the directors of the Company do not anticipate that the application of AASB 16 will have a
significant impact on the amounts recognised in the Group’s consolidated financial statements.
(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 2017
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 2017 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 the notes 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 2017.
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.
Shane Noble
Executive Chair
27 February 2018
Launceston
2017 ANNUAL REPORT
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2016
•
•
•
•
•
•
Liability limited by a scheme approved under Professional Standards Legislation.
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•
•
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TASFOODS LIMITED
SHAREHOLDER INFORMATION
The shareholder information set out below was applicable as at 16 February 2018.
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
% of Total Issued Capital
Range
1 - 1,000
1,001 - 5,000
5,001 - 10,000
10,001 - 100,000
> 100,000
Total
Holders
259
(14.49%)
465
(26.01%)
254
(14.21%)
634
(35.46%)
176
(9.84%)
1,788
(100.00%)
Units
91,070
(0.05%)
1,426,495
(0.74%)
2,112,238
(1.10%)
24,364,836
(12.72%)
163,522,798
(85.38%)
191,517,437
(100.00%)
The number of shareholders with less than a marketable parcel is 487.
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):
Rank
1
2
3
4
5
6
7
8
9
10
Name
JAN CAMERON
ELSIE CAMERON FOUNDATION PTY LTD
JBWERE (NZ) NOMINEES LIMITED <50645 A/C>
ELSIE CAMERON FOUNDATION
JBWERE (NZ) NOMINEES LIMITED <45230 A/C>
JB WERE (NZ) NOMINEES LIMITED <56871 A/C>
TASPLAN SUPERANNUATION
(VIA NATIONAL NOMINEES)
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
Includes Ellerston Capital Limited and its associates shares
CVC LIMITED
NICHOLS INVESTMENTS PTY LTD
HELBERN INVESTMENTS PTY LTD
V E F PTY LTD
MRKAT PTY LTD
BUDUVA PTY LTD
SHANE ALEXANDER NOBLE
MR ANDREW WOOLLEY + MR STEPHEN RICHARD KREFT
MR ANDREW WOOLLEY
Units
31,791,432
25,538,692
16,429,060
11,467,274
8,000,000
6,000,000
4,385,472
3,000,000
3,000,000
2,511,668
2017 ANNUAL REPORT
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2017 TASFOODS LIMITED
SHAREHOLDER INFORMATION
Rank
11
12
13
14
15
16
17
18
19
20
Name
VERMILION 21 PTY LTD
CERULEAN 37 PTY LTD
VERMILION 21 PTY LTD
VERMILION 21 PTY LTD
JANE FRANCES BENNETT
CHARDON LODGE PTY LTD
MS JANE FRANCES BENNETT
QUALITY LIFE PTY LTD
ELPHINSTONE HOLDINGS PTY LTD
PICTON COVE PTY LTD
CUSTODIAL SERVICES LIMITED
BOB WILSON
MR DARIUS ISAAC
MR STEPHEN PATRICK WELSH + MRS KAREN MAREE WELSH
MR JASON PLEHN
Totals: Top 20 holders of TFL ORDINARY FULLY PAID
Total Remaining Holders Balance
Total Holders Balance
Units
2,199,000
2,175,472
2,000,000
2,000,000
1,900,000
1,844,088
1,600,000
1,585,736
1,200,000
1,074,154
129,702,048
61,815,389
191,517,437
As at 16 February 2018, the 20 largest shareholders held ordinary shares representing 67.72% of the issued share capital.
Substantial Shareholders
Substantial holders in the Company are set out below:
Name
Jan Cameron
Tasplan Superannuation Fund
Ellerston Capital and its associates (Per substantial shareholder notice)
CVC Limited
C. Voting Rights
Number of Shares Held
31,791,432
25,538,692
13,099,728
11,467,274
%
16.6%
13.33%
7.13%
5.99%
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.
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