17 November 2021
The Manager
Companies Announcement Office
Australian Securities Exchange
20 Bridge Street
Sydney NSW 2000
Dear Sir/Madam,
United Malt Group Limited 2021 (FY21) Annual Report
United Malt today announced its results for the full year ended 30 September 2021
(FY21). Attached is the Appendix 4E and 2021 Annual Report including:
• Directors’ report
• Remuneration report
• FY21 Financial report
This announcement is authorised for market release by the United Malt Board of
Directors.
Yours sincerely,
United Malt Group Limited
Lisa Jones
Company Secretary
|+ 61 2 8073 3160 | CITIGROUP CENTRE, L18, SUITE C, 2 PARK ST, SYDNEY NSW 2000 . | ABN 61 140 174 189 |
APPENDIX 4E- Preliminary Final Report
Under ASX Listing Rule 4.3A
Current Reporting Period
Prior Corresponding Period
1 October 2020 to 30 September 2021
1 October 2019 to 30 September 20201
RESULTS FOR ANNOUNCEMENT TO THE MARKET
To be read in conjunction with the FY21 Financial Report.
Key information
Revenue from ordinary activities
Net profit after tax attributable to members for United Malt Group
Limited
Net profit after tax before significant items
Earnings before depreciation, amortisation, interest, tax, and significant
items
Basic earnings per share (cents per share)
Record
Date
14 December
2020
3 June 2021
Payment
Date
30 December
2020
18 June 2021
2 December
2021
17 December
2021
Details relating to dividends
FY20 Final dividend per
share
FY21 Interim dividend per
share
FY21 Final dividend per
share
Total FY21 dividend
Net tangible assets per share
Net tangible assets per share
Additional information
% change
(4%)
(70%)
(41%)
(21%)
(73%)
Cents per
share
3.9
2.0
3.5
5.5
$M (AUD)
1,235.0
13.8
34.0
123.3
4.6
to
to
to
to
to
$M (AUD)
Franked %
11.7
6.0
10.52
16.5
0%
0%
0%
0%
30 September 2020
$2.56
30 September 2021
$2.69
Additional Appendix 4E disclosure requirements and further information including commentary on significant features
of the operating performance, trends in performance and other factors affecting the results for the current period is
contained in the FY21 Annual Report and accompanying Investor Presentation.
This report is based on the consolidated financial statements and notes which have been audited by
PricewaterhouseCoopers.
Further information regarding the company and its business activities can be obtained by visiting the Company’s
website at www.unitedmalt.com
1 United Malt Group Demerged from Graincorp and listed on the ASX on 23 March 2020
2 Represents the anticipated dividend based on shares on issue at the time of this report. This value will change if there are any shares issued between the date of this
report and the ex-dividend report.
|+ 61 2 8073 3160 | CITIGROUP CENTRE, L18, SUITE C, 2 PARK ST, SYDNEY NSW 2000 |
|ABN 61 140 174 189|
Annual
Report
2021
Contents
02 Letter from the Chairman
04 Managing Director & CEO’s Review
07
08
09 Value Creation
10 Where We Operate
Investment Proposition
United Malt Overview
12 Our Strategy
14
Strategic Delivery
16 Sustainability Highlights
22 Board of Directors
24 Executive Leadership Team
22 Directors’ Report
24 Operating and Financial Review
37 Remuneration Report
58
Financial Report
98 Shareholder Information
102 Corporate Directory
Our Purpose
Creating ingredients
that bring people together
Our Company purpose sits at the centre of everything we do to create value for our
stakeholders. It provides the foundation of our business strategy.
Our Values
Safety
The safety of our people is paramount. It is part of our way of life and
requires the commitment of everyone throughout the organisation.
Quality
We provide outstanding ingredients and superior service that,
together, deliver premium value to our customers.
Safety extends to the health and wellbeing of ourselves and everyone
around us and to the environment in which we operate. It is part of
everything that we do as well as the way that we do it.
It is our way of coming together as a community.
At every step in the process and in all our roles, we come together
as a team to make sure that we always provide the best.
Passion
We are proud of our industry, our business and our people.
We are proud to be part of a wider community and are positive
stewards in the way we work.
We bring a spirit of innovation and continuous improvement
to everything that we do.
Integrity
We believe that nothing is more important than our reputation,
and behaving with the highest levels of integrity is fundamental
to who we are.
UNITED MALT ANNUAL REPORT 2021
01
UNITED MALT ANNUAL REPORT 2021
Chairman’s
Letter
As near-term market conditions stabilise, we remain well placed
to leverage improving malt demand trends.
Graham Bradley AM
Chairman and Non-Executive Director
Fellow Shareholders,
United Malt faced significant challenges over the past year
caused by COVID-19-related extended lockdowns in most of our
key markets leading to reduced on-premise beer consumption,
and also by disruption to our supply chain and our ability to ship
product to customers.
The Board and I are very pleased, however, with the way our
management team and employees across the world have adapted
to changing customer and supply chain dynamics and demonstrated
agility, ingenuity and strong customer focus.
Financial Result
While our full-year financial result for FY21 was adversely affected
by these evolving COVID-related disruptions across our markets,
relaxed lockdown restrictions in North America and the UK spanning
the northern hemisphere summer resulted in improved operating
performance in the second half of the financial year. This improvement
was reflected in an 18 per cent increase in full-year Earnings Before
Interest, Tax, Depreciation and Amortisation (EBITDA) in our Warehouse
and Distribution business (27 per cent on a constant currency basis).
Pleasingly, this momentum appears to be continuing into FY22.
The arrival of the COVID Delta variant in Australia and Asia, however,
resulted in curfews and extended lockdowns in those markets in the
second half which softened sales, as did ocean freight disruption and
significant increases in shipping rates.
Group EBITDA was $123.3 million, down 21 per cent on the prior
year. FY21 EBITDA included one-off costs related to the Grantham
site closure, our transformation programme and also the new IFRIC
accounting pronouncement which required costs incurred for our new
Enterprise Resource Planning and Transport Management systems
being expensed when incurred rather than capitalised. Underlying
EBITDA, excluding these one-off items, was $137.2 million, down
11 per cent on the prior year.
Regrettably, as reported in our September 2021 market update, the
Company incurred two Significant Items which reduced our reported
result for FY21. These were provisions for possible write-downs on
debts owed by a longstanding Asian customer and for grain stored at
a UK warehouse that went into administration. These significant items
totalled $21.1 million and are detailed in the Managing Director and
CEO’s Review and also in the Operating and Financial Review.
With the inclusion of these significant items, our Statutory Net Profit
After Tax (NPAT) was $13.8 million compared to $45.6 million for
FY20. Underlying Net Profit After Tax was $34.0 million compared
to $57.4 million for FY20.
2
Governance
Again this past year our Board and management were focused on
implementing policies and procedures appropriate for a standalone
listed entity following our demerger from GrainCorp.
Recognising the importance of ensuring that United Malt’s risk
management policies are fit for purpose in the current operating
environment, we undertook a comprehensive review of our risk
management framework and risk appetite. This culminated in the
Board approving a revised risk appetite statement and the identification
of initiatives which will be implemented to enhance the Company’s
management of operational, financial, strategic, environmental and
social risks.
Outlook
While we now see welcome improvements in sales outlook in our
major markets, and ’green shoots’ in some Asian countries, COVID-19
continues to create unexpected challenges across our markets. We
are encouraged, however, by the increasing vaccination rates globally
and government commitments to removing lockdowns. United Malt has
demonstrated its ability to adapt to these challenges to provide quality
products and services to our strong and diversified customer base.
As market conditions improve, we believe we are well-placed to take
full advantage of rebounding malt demand. We continue to focus on
optimising our core business by upgrading our capabilities and footprint
to target growth in the craft beer and distilling markets.
In the meantime, we continue to implement our transformation strategy
to deliver approximately $30 million in net benefits in EBITDA by FY24.
Conclusion
I would like to thank my fellow Directors for their ongoing dedication
in navigating the Company through another year of progress despite
limited opportunities to meet in person or visit our facilities.
On behalf of the Board I want to acknowledge our executive team and
employees across the world for their dedication and hard work in what
has been a difficult year. I also extend thanks to our shareholders for
their continued support. I look forward to providing a further update
on the Company’s progress at the Annual General Meeting in
February 2022.
Yours sincerely,
Graham Bradley AM
Chairman and Non-Executive Director
Dividend
United Malt’s dividend policy is to distribute approximately 60 per cent
of Underlying NPAT. Consistent with this policy, and notwithstanding
the challenges experienced during the year, the Board resolved to
pay a final dividend of 3.5 cents per share (unfranked), bringing the
full year dividend to 5.5 cents per share. The dividend payout in FY21
totalled 48 per cent of Underlying NPAT, increasing from 40 per cent
in FY20.
Subject to trading conditions, we aim to provide shareholders with
a steady increase in dividends as profits grow.
Other FY21 Achievements
In response to the pandemic, we maintained our focus on the health
and well being of our employees, and the safe operations of our sites
for employees, customers and visitors. We not only implemented
initiatives to keep our people safe and support them during the
pandemic, but we also made good progress in the development of our
longer-term safety strategy.
Pleasingly, COVID-related constraints did not slow our internal
improvement initiatives. During the year, we announced a
transformation programme to renew our organisational and
technology platforms to create a simplified, more efficient and
effective organisation. The aim of this programme is to keep the
customer at the centre of everything we do, and to reshape the
business to drive growth, enhance customer experience and increase
efficiency by improving our systems and processes, and streamlining
our organisation structure. Despite being launched against the
backdrop of significant disruption caused by the pandemic, the Board
is pleased with the progress that has been achieved to date.
The Board is confident that these measures will position the business
to capitalise on the expected improvements in market conditions
as our core markets enter the recovery phase, return to growth, and
generate enhanced shareholder returns over the medium term.
Sustainability
United Malt is committed to safe, efficient and sustainable operations
while ensuring the management of our business is consistent with our
values and the expectations of our stakeholders and the communities
in which we operate.
During FY21 we established specialist working groups across
our business to develop our sustainability strategy, focused on a
number of priorities that we have identified as being fundamental
to our business and important to our stakeholders. Enhancing our
management of food security standards was one key focus for FY21.
Recognising the risks and opportunities that climate change
presents for all businesses, including ours, we have also commenced
work towards aligning our climate change reporting with the
recommendations of the Task Force on Climate-related Financial
Disclosures.
During FY21, the Company commenced a detailed assessment
of the potential physical and transitional climate-related risks and
opportunities facing the business. We also enhanced our supplier
on-boarding and due diligence, our compliance training and our review
of modern slavery risks in our supply chain before lodging our first
modern slavery statement in March 2021.
Our Sustainability Report which is available on our website details
the specific initiatives we have undertaken over the past year and the
targets we have set for the year ahead.
3
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021 Managing Director
and CEO’s Review
We continued to implement our strategy to optimise and strengthen
our business, and we have emerged from FY21 in a stronger and more
competitive position.
Mark Palmquist
Managing Director and CEO
Introduction
United Malt has spent its first 18 months as a listed company
managing through the continued impact of COVID-19. While FY21 was
a challenging year, our team at United Malt continued to respond and
adapt to the ongoing disruptions to our operations and supply chain
across our business resulting from the global pandemic. I would like
to acknowledge the efforts of all of our employees for their ongoing
commitment.
At the same time, we continued to implement our strategy to optimise
and strengthen our business. We have emerged from FY21 in a
stronger and more competitive position to leverage the improving
customer and market trends across our core geographies as we
enter FY22.
Safety
The safety of our people remains paramount. During FY21 we made
good progress in the development of our longer-term safety strategy,
‘Safe for Life’, which is focused on improving safety at our sites and our
safety management systems.
During FY21 we reduced both the total number of injuries and also
the frequency rate of injuries across our workplace. The number of
recordable injuries reduced from 16 in FY20 to 14 in FY21, while the
Recordable Injury Frequency Rate for FY21 was 1.42, down from 1.45
in the prior year. However, the Lost Time Injury Frequency Rate (LTIFR)
increased from 3.63 in the prior year to 4.04 for FY21. Whilst the
LTIFR increase is disappointing, we remain committed to improving our
performance.
FY21 Financial Results
While our financial results in FY21 continued to be impacted by
COVID-19, we did see an improvement in performance in our North
American and UK markets in the second half of the year where high
vaccination rates and northern hemisphere summer weather supported
improved malt demand.
Export sales volumes to Asia were, however, negatively affected by
stringent COVID-19 restrictions in that region, including strict stay at
home orders and curfews, as well as significant disruption to container
freight availability, shipping delays and increased freight costs; and
the extended COVID-19 lockdowns in Australia affected on-premise
demand. Although important strategic markets for us, these markets
make up less than 20 per cent of total sales revenue.
Total revenue in FY21 declined by 4 per cent compared to FY20 and
was in line with the prior year revenue on a constant currency basis.
EBITDA was $123.3 million, down 21 per cent on the prior year.
EBITDA in FY21 includes $3.1 million in costs associated with the
Grantham site closure, transformation costs of $4.3 million and
also the negative impact of $9.1 million related to the ~10 per cent
appreciation in the Australian dollar compared to the US dollar for the
prior year affecting the translation of earnings into Australian dollars.
On a constant currency basis, EBITDA declined by 16 per cent.
The EBITDA result also includes the impact of the new IFRIC
accounting pronouncement which required expensing costs
associated with the Enterprise Resource Planning and Transport
Management Systems which would previously have been capitalised.
This accounting change decreased FY21 EBITDA by $6.5 million.
As announced on 1 September 2021, the statutory earnings in FY21
were impacted by two Significant Items. One related to a UK grain
storage contractor who has entered administration and the other
related to a bad debt provision from one Asian customer. A provision
for stock loss of $4.7 million and a provision for a bad debt of $16.4
million were booked in the year. United Malt is actively pursuing all
legal and commercial avenues on both of these Items.
Segment Results
In the Processing segment, revenue declined by 5 per cent to $938
million reflecting volume declines compared to the prior year as a
result of the reduction in on-premise consumption.
Segment EBITDA declined by 29 per cent to $89.5 million, reflecting
lower volume, a change in customer mix, additional costs associated
with enhanced COVID-19 hygiene and social distancing measures and
related one-off costs.
Earnings were also affected by global freight delays and higher freight
costs which delayed sales and shipments to customers.
Revenue in the Warehouse & Distribution segment was $330 million
compared to $329 million in FY20.
Segment EBITDA increased by 18 per cent to $40.8 million as
demand for malt increased in the second half in the North American
craft beer market, with a corresponding improvement in sales mix and
greater demand for specialty malts. The Warehouse & Distribution
segment also benefited from our optimisation programme which is
driving lower costs and enhancing our operational efficiencies.
Company-wide Underlying Net Profit After Tax was $34.0 million
compared to $57.4 million for FY20.
Net debt at 30 September 2021 was $312.4 million compared
to $344.1 million at 31 March 2021. Our gearing ratio (net debt/
Underlying EBITDA) was 2.1 times which is towards the lower end
of our target range of 2.0-2.5 times and also reflects the seasonal
impact of lower working capital at year end compared to the first half.
We remain in a strong financial position to manage in the current
environment and to continue our investment in strategic growth
initiatives.
New Leadership Appointments
During the year, we strengthened our Executive Leadership Team with
the appointments in July 2021 of a Chief Operating Officer and Vice
President of Human Resources.
Tiago Darocha joins United Malt as COO, a role that brings together
leadership of our Canadian and US processing operations. This
role reflects the implementation of our business transformation
programme to create a simplified, more efficient and effective
organisation. Our aim is for our worldwide network of 12 malting
Results Snapshot
$123.3m
EBITDA
$1,235bn
Revenue
$34.0m
Underlying NPAT
$312.4m
Net Debt
2.1 times
Gearing Ratio
5.5cents
Dividend
production facilities to operate as one network. Tiago has over 20 years’
industry experience in process optimisation for large scale brewing and
malting operations having worked for Anheuser-Busch InBev in a variety
of senior positions.
As VP HR, Erika Morgan is responsible for the Group’s Human Resource
strategy and operations. Her priorities are to ensure her teams develop
and lead programmes that equip, engage and empower the highest
levels of team performance and business success. Erika’s priorities
include building a Group-wide workforce with the capability to create
value and operate as an integrated business, reflecting the continued
implementation of our business transformation. Prior to joining United
Malt, Erika held various HR leadership positions with global and multi-
national companies, including Nike, in the consumer goods, services
and food and beverage industries.
Strengthened risk management, governance
and oversight
The Chairman has referred to our comprehensive review of our risk
management framework. In FY21, management reviewed a number
of key corporate governance policies and practices which underpin
our risk management programme, to ensure that accountability for
compliance is clearly articulated and that management is operating
within the risk appetite set by the Board. This review has led to
4
5
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021 Managing Director and CEO’s Review
(Continued)
We have also commenced the development of our new Enterprise
Resource Planning (ERP) and implementation of a Transport
Management System to enhance our data analysis and process
improvement. Total expense on these systems is expected to be
~$20 million over three years with $6.5 million incurred in FY21.
Looking Forward
We remain well positioned to continue navigating and adapting to the
near- term challenges facing our business. We enter FY22 with optimism
based on the opening up across key geographies, higher vaccine roll-
outs, governments’ desire to limit future lockdowns and the continuing
recovery in beer consumption. We are confident in the implementation
of our strategy to set the business up for a return to growth by investing
in our capability, delivering on our strategic initiatives and capitalising on
the improving market trends.
Crop conditions in Canada have deteriorated due to the drought which
has impacted the size and quality of the barley crop and has elevated
global barley prices. We are proactively sourcing barley from Denmark
and Australia to supplement our locally-sourced supply. The imported
barley will support our requirements to meet our customers’ demands
in both quality and supply. We expect to receive our first cargo early in
calendar 2022.
As vaccination rates increase and lockdown restrictions ease, we
expect to capitalise on increased on-premise consumption with a
corresponding improvement in product mix and demand for speciality
malts.
Over the medium term, we are well positioned to return to growth
supported by our strong market positions, strategically located malting
assets and our market leading distribution platform which services
customers’ ingredient requirements.
Our growth will be further enhanced by the strategic initiatives we are
implementing to equip our business by enhancing our capabilities
to operate more sustainably and to create a more streamlined and
efficient operating model to generate higher returns for shareholders.
Mark Palmquist
Managing Director and CEO
clarification of roles and responsibilities for governance and risk within
the Group based on organisational and individual capability as we
continue our journey to become a more integrated business. I look
forward to continuing this work in FY22 to strengthen our governance
and risk culture to ensure that risk issues are properly identified,
evaluated, managed and integrated into our strategy.
Further details about the important work undertaken during the year
in relation to evaluating our ESG risks are included in the Sustainability
Report.
Progressing Strategic Priorities
I am pleased to report continued progress on our strategic initiatives
during the year.
In the UK, we remain focused on servicing the Scottish whisky market
which requires malt to meet the long-term requirements of distillers
to produce aged whisky. The expansion at the Arbroath facility is now
complete and has delivered an additional 22,000 tonnes of production
capacity and is performing to our expectations.
Meanwhile, the new facility in Inverness will provide an additional
57,000 tonnes of capacity to service the distilling market. The site
is expected to be operational by July/August 2022, slightly behind
schedule due to ongoing social distancing requirements on-site.
The revised overall cost to complete the Scottish project is ~A$127
million. The higher cost estimate is driven by construction delays, higher
material and supply chain costs and a tight labour market resulting from
the COVID-19 environment, and also by some adverse foreign exchange
movements. Notwithstanding increased project costs, the 79,000
tonne capacity expansion is underpinned by expanded contracts with
major customers and based on the current forward orders secured,
project return rates will be preserved.
The Grantham facility in England was closed in March 2021, with
customers’ orders now being supplied from our Witham facility and from
the additional volume coming online at the Arbroath facility.
In Australia, we continue to progress the $27 million project to replace
the existing kiln at our Welshpool facility with a new and indirect heating
source kiln. This renewal provides operating efficiencies and safer
technology. We expect to achieve a 10 per cent reduction in gas and
electricity usage. It also provides an opportunity to expand the facility’s
capacity with further capital investment.
The project is scheduled for commissioning by February 2022, slightly
behind schedule due to COVID-19 related travel restrictions to Western
Australia.
Our new 9,100sqm craft Warehouse & Distribution centre in Derrimut,
Victoria is now operational and provides an expanded range of
ingredients and a ‘one-stop-shop’ experience for customers.
We have expanded our partnership with our Mexican distribution
partner to further grow our penetration into the region. Our partner
opened its third warehouse in October 2021.
During the year we announced our transformation programme which
is focused on renewing our organisation and technology platforms
to create a simplified, more efficient and effective organisation. This
project is expected to deliver ~$30 million of net benefits in EBITDA by
FY24. One-off costs of $4.3 million were incurred in FY21 as part of the
project.
Investment
Proposition
Focused, pure play malting business
leveraging strong growth fundamentals.
Attractive market dynamics in established areas of strength
Strong market position and malting assets that are strategically located
Leading craft brewing distribution platform
Integrated supply chain with strong barley sourcing capabilities
High quality customer base diversified by product, end market and geography
Transformation program established with ~$30 million in net benefits delivered by 2024
Growth strategy focused on high value end markets where growth is expected to continue
Exposure to high
growth craft beer and
Scotch whisky market
Full service
25 warehouses & distribution facilities
for craft brewers, distillers and food
producers, providing malt, hops, yeast,
adjuncts and related products.
4th
largest commercial
maltster globally
UMG has ~900 employees.
12
processing facilities
across Canada, the US, Australia
and the UK
6
7
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021 United Malt
Overview
Value
Creation
United Malt is the fourth largest commercial maltster globally,
producing ingredients for the brewing, distilling and food markets.
United Malt’s business model, strategic positioning and expertise in leveraging
key inputs into our business creates value for our customers, shareholders, employees,
supply chain and community.
United Malt’s operational headquarters are in Vancouver, Washington,
US and the Company is listed on the Australian Securities Exchange
(ASX: UMG). United Malt predominantly services the brewing, distilling
and food markets with processing facilities and warehouses in Canada,
the US, Australia, the UK and New Zealand. Our products are sold in
these markets as well as export markets across Asia, South America,
Europe and Africa.
We are one of the leading malt suppliers to the craft brewing sector,
supported by a distribution network comprising 25 warehouses (both
Company-operated and through third party logistics providers) and
international craft distribution partnerships throughout North America,
South America, Europe, Asia and Australia.
Our strategy is focused on keeping our customers at the centre of
everything we do, whilst targeting those high value markets where the
long-term outlook for growth remains supportive.
Our customer base is diversified by product, end-market and geography,
and comprises a range of high quality customers including global
brewers, craft brewers, distillers and food companies.
We sell into domestic and export markets. Export markets (particularly
Asia) are an important source of demand for malt produced in Australia.
We have a long history of established brands in each of our markets
and operate United Malt with a shared purpose and values.
Revenue by customer geography
Revenue by customer group
North America
Europe
Australasia
Asia
Other
1%
11%
8%
19%
Micro Brewers
Major Domestic Brewers
Major Export Brewers
Distillers
Other
2%
15%
61%
25%
35%
23%
Selection of the highest
quality barley
We maintain a diverse range of
grower relationships, over multiple
growing regions. We contract
directly with growers for production
acres and planting of specific
varieties to meet the needs of
our customers.
Quality & providence
preservation
We have capabilities to store
our barley in the right conditions
to maintain quality prior to
processing.
We segregate our barley to
preserve its unique identity
and key quality attributes to
meet our customers’ requirements.
We strive to be our
customers’ preferred
partner in quality, service
and innovation
Processing Conversion
to Malt
Our processing facilities are in
close proximity to barley crops,
reducing transportation and
handling requirements along
with reducing greenhouse gas
emissions.
In our 12 processing facilities we
convert the barley into malt via a
process of steeping, germination,
kilning and roasting. Through
these processes we create our
range of base and speciality malts
for applications in the brewing,
distilling and food markets.
Distribution
Distribution is a further step in
our value creation, as we connect
our customers to our malts in
the format that meets their
requirements.
Our Processing division distributes
our malt products in a bulk format
via rail car, road and containers
to major food and beverage
producers.
Our Warehouse & Distribution
division provides our malts in a
smaller format to meet the needs
of craft producers. We complement
our malt ingredient offering with the
provision of the full range of other
brewing and distilling ingredients.
We provide our customers with
products including hops, yeast,
adjuncts, flavours and packaging
materials – providing the one stop
shop for craft producers.
Our long history of established brands
In each or our operating geographies we have local brands that represent United Malt.
Each of these brands has a long and rich history within the malting industry and represents who we are today as a Company.
1823
1902
1912
1934
1995
1995
2013
8
UNITED MALT ANNUAL REPORT 2021
9
UNITED MALT ANNUAL REPORT 2021 Pantone 466 C
C:20%, M:31%, Y:56% K:7%
R:202, G:169, B:118
#CAA976
3
Pantone 7738 C
C:74%, M:10%, Y:95% K:0%
R:70, G:160, B:64
#46A040
Pantone Black C
C:65%, M:61%, Y:62% K:74%
R:46, G:41, B:37
#2E2925
Pantone 185 C
C:0%, M:100%, Y:81% K:0%
R:235, G:0, B:40
#EB0028
Facilities
Warehouse & Distribution
Our Warehouse & Distribution segment generates revenue from the sales
and distribution of bagged malt, hops, yeast, adjunctions and related
products. The Company owned distribution network is supported by
international craft distribution partners focused on regions exhibiting
growth in craft. United Malt’s competitive advantage is its ability to deliver
all ingredients to the brewer on a just-in-time basis.
13
Facilities
8
Facilities
1
Facility
Where We
Operate
Malting assets that are strategically located in close proximity to barley growing regions
and customer demand.
Key
Key barley growing regions
Processing facility
Storage facility
Warehouse & Distribution facility
BeerMex - partner Warehouse
& Distribution facility
Processing
United Malt has approximately 1.25Mtpa of capacity across
12 processing plants in Canada, United States of America (US),
Australia and the United Kingdom (UK).
Our malting assets are strategically located across major barley
growing regions providing access to high quality barley and in
close proximity to critical transport infrastructure proving better
access to customers. The Processing division services over
600 customers including major brewers, national craft brewers,
distillers and food companies with high visibility of earnings
underpinned by long-term contracts.
~750kt
Production capacity
~250kt
Production capacity
~250kt
Production capacity
10
11
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021 Our
Strategy
Our three strategic pillars is focused on keeping our customers at the centre of everything
we do, whilst targeting those high value markets where the long-term outlook for growth
remains supportive.
Drive penetration
in the distilling
market
Proactively assess
acquisitive growth
opportunities
Expand craft
distribution
business into new
geographies
Integrate sustainable
actions into
everyday operations,
embracing our
commitment to
Zero Harm
Renew our
organisational
and technological
platforms to create
a simplified, more
efficient and effective
organisation
Invest in our
assets to create
best in class
operations and
grow malting
capacity
Develop
innovative
products and
solutions for
customers
Optimise the core
Drive penetration in the distilling market
Capture growth from increasing demand for whisky in emerging markets and higher value
single malt whiskies.
Expand craft distribution business into new geographies
Expand into the growing craft beer market in Latin America and Asia by leveraging extensive
craft distribution experience.
Supported by other bolt-on acquisitions, start-up opportunities and new distribution
partnerships.
Transform for tomorrow
Renew our organisational and technological platforms to create a
simplified, more efficient and effective organisation
Redesign our organisation to simplify our operations to create an organisational design
reflecting a standalone malting company.
Embrace process changes to improve capabilities by implementing simplified and standard
processes, skills and systems.
Strengthen operational management by harnessing our network of production facilities
and Warehouse & Distribution centres as one global network to deliver better outcomes for
customers.
Integrate sustainable actions into everyday operations, embracing our
commitment to Zero Harm
Develop priorities and actions to address climate change and resource scarcity.
Create new value
Proactively assess acquisitive growth opportunities
Take a disciplined approach to evaluating acquisitive growth opportunities to extend our
geographic reach, product offering or customer base creating value.
Invest in our assets to create best in class operations and grow
malting capacity
Continue to optimise our asset footprint including upgrading capacity to create best in
class operations, enhancing customer experience.
Targeted expansion of malting capacity.
Develop innovative products and solutions for customers
Leverage our rich pedigree and expertise in the brewing, distilling and food ingredients
markets to create new and innovative product solutions for our customers.
12
13
TransformfortomorrowOptimisethecoreCreatenewvalueUNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021 Strategic
Delivery
We continue to optimise our asset footprint including upgrading capacity
to create best in class operation enhancing customer experience.
Scottish Expansion
Growth capital
Targeted completion by mid 2022
79,000 tonne capacity increase over two facilities
In late 2018 the expansion of the Inverness and Arbroath sites in Scotland
was announced in response to long term customer demand for distilling
malt. This expansion will allow us to support the local distilling industry
and farmer base with malt products that are sown, grown and malted in
Scotland.
Global demand for aged whisky continues to grow, United Malt is well
positioned to support the Scottish distilling industry in supplying Scottish
malt. The capacity expansion is underpinned by long term customer
agreements.
The first stage of the project was completed in March 2021, with 22,000
tonnes of additional capacity commissioned in Arbroath.
The expansion at United Malt’s Inverness site in underway, with the
addition of a new malting tower of 57,000 tonnes per annum with expected
completion in July/August 2022.
In addition to increasing production capacity, sustainability has been at the
forefront of this project.
The plant control system has been designed to incorporate energy
monitoring technology and process control that allows both consistent
production quality and data-led analysis of energy consumption. The kilning
equipment uses the best available technology to limit gas and electricity
consumption. In addition, the installation of an anerobic digestion module
that treats effluent from both malting facilities at the site will significantly
reduce the strength of effluent flows by 80% and reduce suspended solids
by 50%.
Perth Kiln
Stay in business capital
Targeted completion early 2022
United Malt’s Australian-based business is replacing the existing kiln
at its Welshpool facility with a new and indirect heating source kiln.
This renewal provides operating efficiencies and safer technology.
The project replaced the site’s ageing direct fired, double floor kiln
with an indirect fired single deck kiln, which will remove reliability and
inefficiency issues and reduce maintenance costs and plant emissions.
The Welshpool facility is strategically located in close proximity to
Western Australia’s high-quality barley growing region and is also
well situated to meet demand both domestically and through exports
to Asia.
Mexico Warehouses
In FY20 United Malt announced its intention to expand its presence
in Mexico.
Mexico is an emerging craft market, with demographics to support craft
proliferation. Demand for reliable and readily available craft brewing
ingredients is increasing.
United Malt has expanded its distribution partnership to further grow United
Malt’s brand presence and one-stop-shop service offering into the Mexican
craft market.
With our local partner Beermex, we provide the growing craft market in
Mexico a wider product offering, enhanced customer experience and more
efficient logistics.
Three warehouses are now operational in Mexico. Merida, Guadalajara and
Tijuana. Guadalajara will serve as the primary supply hub for Tijuana and
other satellite distribution points as we expand our presence in the Northern
and Central areas of Mexico.
Mexico has not been immune to the impact of COVID-19. However over
1,200 craft brewers are operational, and we expect our market share to
continue to grow.
Melbourne Warehouse
In June 2021 United Malt opened a new distribution facility in the greater
Melbourne area, which is its first Company operated distribution centre
in Australia. The 9,100 square metre distribution centre, leverages the
experience of the Company run distribution centre network across North
America, providing an expanding range of ingredients and a ‘one-stop-shop’
experience for customers.
The new distribution centre allows United Malt to work more closely with its
customers as their key partner in providing the finest brewing and distilling
ingredients, which create the foundations of excellent beer and whisky.
The site has capability for both cold and ambient storage on one site,
offering customers all key beverage ingredients: malt, hops, yeast and an
expanded range of adjuncts.
The new facility is the result of numerous years of planning and has
significantly strengthened United Malt’s distribution network and supports
our strategy of being easy to do business with. This enables us to serve the
needs of our customers, through faster dispatch and an expanded range of
ingredients.
14
15
Pantone 466 C
C:20%, M:31%, Y:56% K:7%
R:202, G:169, B:118
#CAA976
Pantone Black C
C:65%, M:61%, Y:62% K:74%
R:46, G:41, B:37
#2E2925
Transformation
Transforming our business and renewing our
organisational and technology platforms to
create a simplified, more efficient and effective
organisation.
Pantone 185 C
C:0%, M:100%, Y:81% K:0%
R:235, G:0, B:40
#EB0028
Pantone 7738 C
C:74%, M:10%, Y:95% K:0%
R:70, G:160, B:64
#46A040
During FY21 we commenced a program of work to transform our business
and renew our organisational and technology platform to create a simplified,
more efficient and effective organisation.
The specific areas of focus and initiatives that form part of the
transformation include:
- Organisational redesign – transitioning to a simplified operation to create
an organisational design reflecting a standalone malting company
- Process changes – Improving capabilities by implementing simplified and
standard processes, skills and systems, enabling United Malt to become
more data informed
- Operational management – harnessing our network of malting production
facilities and warehouse & distribution centres as one global network to
deliver better outcomes for our customers
The transformation program is being delivered over the coming periods and
is targeted to deliver ~$30 million in annualised net benefits by FY24.
During the year significant progress was made on our focus areas including:
• The uniting of the US and Canadian processing operations under a single
leadership structure
• The commencement of the implementation of the new Enterprise
Resource Planning software and Transportation Management Solution
supporting improved logistics solutions for our customers
• Enhancing the Warehouse & Distribution operations including SKU,
freight and pricing optimisation.
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021 Sustainability
Highlights
We continue to focus on embedding sustainability within our day to day operations,
emphasising safe, efficient and sustainable operations while ensuring the management
of our business is consistent with our values and the expectations of our stakeholders
and the communities in which we operate.
Environment
United Malt remains committed to minimising the impact of our
operations on the environment. Our value chain impacts the
environment through both sourcing and process of raw materials,
packaging and distribution. We recognise the impact of our operations,
including energy consumption, water consumption, wastewater
management, waste generation and emissions and the impact this
can have on the environment.
At our operations, we continue to assess, monitor and reduce our
impact on the environment with focus on energy consumption and
Scope 1 and 2 greenhouse gas emissions. We continue to monitor
and evaluate energy efficiency improvements across our assets, and
implement options to reduce the water and energy required in our
malting processes.
Sustainable Agriculture: We work to ensure that our agricultural
partners’ supply chain and businesses embed sustainable agricultural
practices that protect the environment and maintain and improve
soil fertility to ensure longevity of supply, and improve the social
and economic conditions of farmers, their employees and local
communities.
In Australia, 30% of the malting barley utilised is procured from
grain suppliers that are International Sustainability and Carbon
Certification (ISCC).
Governance
United Malt is committed to a high standard of corporate governance
and to fostering a culture of ethical behaviour and compliance, and to
promoting the Company’s values of safety, integrity, passion and quality.
Modern Slavery
United Malt acknowledges the risk that modern slavery practices may
exist within the value chains in which we do business, and that we hold
a moral responsibility to take actions which contribute to mitigating
such risks and remediating harm.
We conducted modern slavery training for 275 key personnel in
management positions, as well as staff involved in procurement
practices and supplier selection and onboarding.
Communities
One of our Company values is Passion. This passion extends to our
people, our customers and our communities. Our community approach
is dedicated to making a positive social impact and community
engagement. We continue to act responsibly within the communities
where we operate to encourage and gain their ongoing support.
Sponsor report prepared for
30%
Australian grain suppliers
that have International
Sustainability & Carbon
Certification
We continued to support the local
communities where we operate through
corporate donations, sponsorships,
fundraising and volunteering activities.
Collectively, United Malt donated
approximately $100,000 in FY21.
Our People
Our priorities in FY21 remained on initiatives to promote health and
safety across all our work sites, including mental health and our ongoing
response to COVID-19, policies to promote diversity and inclusion
throughout our workforce and continued investment in our employees’
learning and development to equip them with the knowledge and skills
to perform their roles.
Diversity & Inclusion
In FY21, the level of female participation across the Company was 27%
compared to 26% in FY20, while the level of female participation at the
Senior Leader level was 46% compared to 35% for the prior year.
Female participation at the Senior Leader
level was 46%
Safety
2%
Recordable injury frequency rate
Female representation in United Malt (up from 26% in FY20)
1%
2021
2020
1.42
1.45
2021
2020
27%
26%
~11.5K
Safety leader
observations
16
17
Indspire recognises that First Nations, Inuit and Métis students
encounter additional barriers to completing and funding their education.
They have established the Building Brighter Futures program which
provides scholarships, bursaries and awards to Indigenous students
every year. United Malt via its Canadian operations, Canada Malting
is continuing to support Indspire’s scholarship program for students
from Indigenous communities by sponsoring the ‘Canada Malting
Indigenous Student Award’. In 2021 this award helped support two
students from the provinces of Alberta or Ontario who are studying in the
post-secondary academic programs in Sciences and Business. Canada
Malting has been a proud supporter of this program since 2018.
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Board
of Directors
Mr Graham Bradley AM
Mr Mark Palmquist
Ms Barbara Gibson
Mr Terry Williamson
Ms Jane McAloon
Mr Gary W. Mize
Mr Simon Tregoning
Independent Chairman and
Non-Executive Director
Managing Director &
Chief Executive Officer
BA, LLB (Hons. Sydney University),
LLM (Harvard)
Bec, GAICD
Independent Non-Executive
Director
B.Sc MAACB FTSE MAICD
Independent Non-Executive
Director
MBA, BEc, FCANZ, FGIA, FAICD
Appointed to the Board
on 13 January 2020.
Appointed to the Board
on 13 January 2020.
Appointed to the Board
on 13 January 2020.
Appointed to the Board
on 23 March 2020.
Skills and experience
Mr Palmquist has over 30 years
experience in food processing
and agricultural sectors and
has held a number of senior
leadership roles prior to
commencing his role at United
Malt. Mr Palmquist is focused on
building a sustainable business
aligned to meeting the needs
of our customers in each of our
markets, whilst ensuring strong
governance, risk management
and continued innovation.
Prior to his role at United
Malt, Mr Palmquist was the
Managing Director and CEO of
GrainCorp Limited from 2014
until 2020, which demerged
its malt business that is now
United Malt. Prior to this, he
was Executive Vice President
and Chief Operating Officer,
Ag Business, for CHS Inc., a
leading global agribusiness,
diversified in energy, grains,
and food. He has held a variety
of global leadership roles for a
broad range of CHS agricultural
inputs and marketing areas,
retail businesses, and grain
based food and food ingredients
operations.
Mr Palmquist is currently a
director of Telesense, Inc
(September 2020) and is a
former director of GrainCorp
Limited (from October 2014
until March 2020).
Skills and experience
Ms Gibson has over 30 years
of business experience at
senior executive and board
levels across the chemicals,
health care, agriculture and
manufacturing sectors.
Ms Gibson is an experienced
executive having spent 20 years
with Orica Limited. Prior to this,
she held positions in medical
diagnostics, pharmaceuticals
and fine chemicals.
Ms Gibson is currently a fellow
of the Australian Academy of
Technology and Engineering. In
2003, Ms Gibson was awarded
a Centenary of Federation Medal
for services to Australian society
in medical technology. She is
a Member of the Australian
Institute of Company Directors.
She is a former director of
GrainCorp Limited (March 2011
until March 2020), and Chair of
Warakirri Asset Management Pty
Ltd (July 2006 until December
2018).
Board Committee memberships:
Chair of the Environment, Health
and Safety Committee
Member of the Audit and Risk
Committee
Skills and experience
Mr Bradley has over 30 years of
business, executive leadership
and governance experience at
senior executive and board levels
across banking and financial
services, manufacturing,
infrastructure, resources,
agribusiness and corporate
strategy consulting.
Mr Bradley has previously held
the position of Managing Director
of Perpetual and senior roles at
Blake Dawson and McKinsey
& Company.
Mr Bradley is currently Chairman
of Energy Australia Holdings
(since June 2012), Virgin
Australia International Holdings
(since March 2012), Shine
Justice Limited (since May 2020),
Volt Corporation Ltd and Volt
Bank Limited (Since June 2021).
Mr Bradley is also a Director
of Hongkong and Shanghai
Banking Corporation (since
November 2012), the Chairman
of Infrastructure NSW (since July
2013), a member of the Advisory
Council of the Australian School
of Business at UNSW and was
made a member of The Order
of Australia in 2009.
He is a former Chairman of
GrainCorp (March 2017 until
March 2020). Mr Bradley was
the President of the Business
Council of Australia and
the Deputy President of the
Takeovers Panel, among other
notable roles.
Board Committee memberships:
Member of the Nominations and
Remuneration Committee.
18
Skills and experience
Mr Williamson has an extensive
background in financial reporting
and risk management with prior
roles as senior audit partner
of Price Waterhouse, Chief
Financial Officer Bankers Trust
Australia, Member of the Global
Controls Group Bankers Trust
New York Group, Chair of Audit
and Risk Committee Stockland
Property Group, Avant Insurance
and Member of the Audit
Committee of the Reserve Bank
of Australia and financial advisor
to a number of not-for-profit
organisations.
Mr Williamson is a Fellow of
The Australian Institute of
Company Directors, Fellow
Chartered Accountants in
Australia and New Zealand,
Fellow CPA Australia, Fellow
Governance Institute of Australia
and Member Australian
Computer Society.
Mr Williamson is currently
a Director of Apollo Care
Operations Pty Ltd and Apollo
Care Pty Ltd (since August 2020),
Member of the Building Estates
Committee of the University of
Sydney, and Finance Advisor to
the Society of the Divine Word.
Mr Williamson was previously
a Director of Stockland Capital
Partners and Stockland Direct
Retail Trust No. 1 (April 2018 to
September 2021).
Mr Williamson has had no other
public company directorships in
the last three years.
Board Committee memberships:
Chair of the Audit and Risk
Committee.
Member of the Environment,
Health and Safety Committee
Independent Non-Executive
Director
Independent Non-Executive
Director
Independent Non-Executive
Director
BCom, FAICD
Appointed to the Board
on 13 January 2020.
Resigned on 18 February 2021
Skills and experience
Mr Tregoning has over 30 years
of experience at senior executive
and board level across the
fast moving consumer goods,
agriculture and energy sectors.
He was previously Vice President
of Kimberly-Clark Corporation
and has extensive overseas
senior executive experience
and is an experienced Company
Director.
Mr Tregoning is a former director
of GrainCorp (December 2008
until March 2020) and Capilano
Honey (July 2006 until November
2018).
BEc (Hons), LLB, GDip CorpGov, FAICD
Appointed to the Board
on 13 January 2020.
BA (Marketing and Finance) Michigan
State University and Advance
Executive Program, Northwestern
University
Skills and experience
Ms McAloon has over 30 years
of business, government and
regulatory experience at senior
executive and board levels
across the natural resources,
energy and infrastructure
sectors. In particular, she
has experience in navigating
complex ESG issues across
multiple jurisdictions.
Ms McAloon was an executive
at BHP Billiton and AGL. Prior
to this, she held positions in
government in energy, rail
and natural resources.
Ms McAloon is currently a Non-
Executive Director of Energy
Australia (since December
2012), Home Consortium (since
October 2019), Allianz Australia
(since July 2020) and Newcrest
Mining (since July 2021). Jane
is also a board member of the
Allens Advisory Board (since
September 2019).
She is a former director of Viva
Energy (June 2018 to August
2021), Healthscope Limited
(February 2016 to June 2019),
Cogstate Limited (January 2017
to November 2019), Civil Aviation
Safety Authority (December
2017 to December 2019), Port
of Melbourne (February 2018 to
February 2020) and GrainCorp
(December 2019 to March
2020). Ms McAloon was also
previously Chair of Defence
Reserves Support Council and
a Member of the Referendum
Council on Constitutional
Recognition for Aboriginal and
Torres Strait Islander Peoples.
Board Committee memberships:
Chair of the Nominations and
Remuneration Committee
Member of the Audit and Risk
Committee
Appointed to the Board
on 23 October 2020.
Skills and experience
Mr Mize has over 36 years
of experience managing
commodity-based trading and
processing businesses at the
senior executive and board
levels.
He was previously the Global
Chief Operating Officer of Noble
Group Hong Kong, President of
Conagra Foods Grain Processing
Group, CEO Conagra Malt and
President Cargill Worldwide Juice
Group. Mr Mize has lived in Hong
Kong, Sao Paulo and Geneva.
Mr Mize is currently Lead
Director of Darling Ingredients
(a company listed on NYSE)
(appointed in Feb 2021), an
Independent Director of Gevo Inc
(a company listed on NASDAQ)
(since September 2011) and
Ceres Global (a company listed
on TSX) (since September 2013).
Board Committee memberships:
Member of the Environment,
Health and Safety Committee
Member of the Nominations and
Remuneration Committee
19
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Executive
Leadership Team
Mr Mark Palmquist
Managing Director &
Chief Executive Officer
Bec, GAICD
For Bio, see page 18.
Ms Amy Spanik
Chief Financial Officer
Mr Tiago Darocha
Chief Operating Officer
Qualifications
Bachelor of Arts in Education
from the University of Portland
and Post Baccalaureate
Certificate in Accounting from
Washington State University.
Licensed CPA.
Appointed in March 2020.
Priorities
Amy is responsible for the
Group’s finance, treasury, tax,
investor relations, environmental,
health & safety, and risk
functions. Her priorities are
ensuring her team provides
accurate, independent and
objective analysis to drive
decision making, performance
and value creation for all the
Group’s stakeholders.
Experience
Prior to the demerger of United
Malt, Amy held the position
of Chief Financial Officer of
GrainCorp Malt since 2015.
Previously, Amy was Global
Financial Controller and
Assistant Controller at
GrainCorp Malt.
Amy started her career with Ernst
& Young where she had nine
years’ experience.
Qualifications
Bachelor of Science,
Mechanical Engineering, M.S.
Industrial and Organizational
Psychology, Masters in Business
Administration (MBA).
Appointed in July 2021.
Priorities
Tiago has comprehensive
management responsibility
for all elements of the United
Malt Group commercial
and production activities
including all malt production
and barley procurement. His
focus is centered on delivering
operational excellence to ensure
customer satisfaction with the
highest quality products and
service, the supporting the
execution of the Company’s
transformation agenda and the
development of the Company’s
long-term strategy that will drive
continued performance and
growth.
Experience
Tiago spent 21 years at
Anheuser-Busch InBev, where
he started as an intern and
held positions of increasing
responsibilities including
Sr. Brewmaster, Sr. General
Manager, Sr. Operations
Director and Vice-President of
Operations. Tiago’s last role
prior to transitioning to United
Malt was Global Vice-President
of Brewing & Quality, with
worldwide responsibility for
brewing operations and end-to-
end quality. Tiago is native of
Brazil and has lived in São Paulo
and Mexico City.
Mr Bryan Bechard
President, Warehouse
& Distribution
Qualifications
Bachelor of Applied Science from
the Madden School of Business
at LeMoyne College.
Appointed in March 2020.
Priorities
Bryan is responsible for the
Warehouse & Distribution
operations of United Malt
serving the needs of its craft
brewing, distilling and food
customers. Providing market
leading services, and outcomes
for the Group’s customers in
the craft segment, is a primary
focus. His priorities are to ensure
the Group’s warehouse and
distribution business continually
provides the one-stop-shop of
ingredient solutions of branded
and innovative products through
its network of distribution
facilities and a portfolio of
services geared to the needs
of its customers.
Experience
Bryan joined GrainCorp in 2009
and was appointed President
of the Global Craft business in
February 2019.
As one of the co-founders of
the North Country Malt Supply
business in 1995, which formed
the basis of today’s North
American Country Malt Group,
Bryan has been involved in
ingredient distribution to the
craft brewing industry for over
25 years. He previously held
the role of President, Country
Malt Group beginning in
October 2014.
Ms Nina Palludan
Chief Information Officer
Qualifications
Bachelor of Science, Information
Systems from the California
State University, Long Beach.
Appointed in March 2020.
Priorities
Nina is responsible for the
Group’s Information technology
function. Her priorities are driving
agility through technology, data
and process optimisation.
Experience
Prior to the demerger of United
Malt, Nina held the position
of CIO of GrainCorp Malt since
October 2019. Previously, Nina
was the CIO at Hanna Andersson.
Nina has over 30 years’
experience as a technology
and operational leader. Using
technology as the catalyst
for change, Nina has been
responsible for leading global
transformations across the
manufacturing, logistics, retail
and hospitality industries.
Ms Erika Morgan
Vice President,
Human Resources
Mr Donald McBain
Chief Strategy and
Transformation Officer
Qualifications
Bachelor of Arts in Marketing
and Communications from the
Glasgow Caledonian University.
Appointed in March 2020.
Priorities
Donald is responsible for
overseeing the formulation and
implementation of Group-wide
strategies including mergers
and acquisitions and major
Group-wide programs. He also
has responsibility for leading
UMG’s transformation program
which encompasses commercial
analytics and program
management.
Experience
Prior to the demerger of United
Malt, Donald was a member of
GrainCorp’s Corporate Strategy
team and held the position of
GM Customer Experience since
2015. Previous to that, Donald
held several senior marketing
and strategy positions in the UK,
Europe and Australasia. These
included Lion (Brewing and
Beverage company),
General Motors (UK & Europe)
and the Suncorp Financial
Services Group.
Qualifications
Bachelor of Arts in International
Business & Marketing
SHRM – Senior Certified
HR Professional.
Appointed July 2021.
Priorities
Erika is responsible for the
Group’s Human Resource
strategy and operations globally.
Her priorities are to ensure
her teams lead and develop
programs that engage, equip
and empower the highest
levels of team performance
and business success. Erika’s
priorities include building and
developing a workforce Group-
wide with the capability and
capacity to help create value and
operate as a more integrated
Group.
Experience
Prior to United Malt, Erika has
held various leadership positions
within HR for global and multi-
national companies in the
consumer goods, services and
food & beverage industries. She
has extensive experience in the
assessment and implementation
of Global HR Service Delivery
Models to support scale and
growth sustainably.
Erika started her career with Nike
Inc. where she led HR teams and
implemented enterprise-wide
transformation initiatives across
North and Latin America, Europe
and Asia Pacific.
20
21
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021 Directors’
Directors’
Report
Report
Directors
The Directors in office at the date of this report are:
Name
Position held
Period as Director during FY21
Graham Bradley AM
Chairman and Independent Non-Executive
Director
1 October 2021 – 30 September 2021
Mark Palmquist
Managing Director and Chief Executive Officer
1 October 2021 – 30 September 2021
Barbara Gibson
Independent Non-Executive Director
1 October 2021 – 30 September 2021
Gary W. Mize
Jane McAloon
Terry Williamson
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-executive Director
Appointed 23 October 2020
1 October 2021 – 30 September 2021
1 October 2021 – 30 September 2021
Details of current Directors, including their experience, qualifications, special responsibilities, and term of office are included on pages 18 to 19
of the Annual Report.
During the Financial Year, the following Director retired:
Directors’ Report
(cid:24)(cid:144)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:16)(cid:131)(cid:142)(cid:150)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:15)(cid:139)(cid:143)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:3)
(cid:3)
(cid:3)
Board and Board Committee Composition
The Composition of the Board and Board Committees at the date of this report are:
Name
Membership
Barbara Gibson (Chair)
Environment, Health and Safety Committee
Gary W. Mize*
Audit and Risk Committee
Terry Williamson
Terry Williamson (Chair)
Barbara Gibson
Jane McAloon
Jane McAloon (Chair)
Nominations and Remuneration Committee
Graham Bradley
Gary W. Mize*
Notes:
Mr Simon Tregoning was a member of the Environment, Health and Safety and Nominations and Remuneration Committees until his retirement
on 18 February 2021.
*Mr Gary W. Mize was appointed to the Environment, Health and Safety and Nominations and Remuneration Committees on 17 February 2021.
Name
Position held
Period as Director during FY21
Simon Tregoning
Independent Non-Executive Director
Retired 18 February 2021
Board and Board Committee Meetings
Company Secretary
Ms Lisa Jones
Qualifications: LLB, University of Sydney
The number of United Malt Board meetings (including meetings of committees of Directors) and the number of meetings attended by
each of the Directors of the Company to 30 September 2021 are set out below:
Name
Board
Environment,
Health and Safety
Committee
Audit
and
Risk Committee
Nominations
& Remuneration
Committee
Held
Attended
Held
Attended
Held
Attended
Held
Attended
Lisa was appointed Company Secretary of United Malt at the time of its listing on ASX in March 2020 and is based in Sydney.
Graham Bradley AM
Lisa is an experienced corporate lawyer and corporate governance professional with more than 20 years’ experience in commercial law
and corporate affairs, working with both public and private companies in Australia and in Europe.
She has held executive positions with private and public listed companies in Australia and in Italy and prior to that was a senior
associate in the corporate and commercial practice in Allens.
Mark Palmquist
Barbara Gibson
Gary W. Mize (1)
Jane McAloon
Simon Tregoning (2)
Terry Williamson
Notes:
10
10
10
10
10
10
10
10
10
10
10
10
4
10
4
4
4
4
4
2
2
4
5
5
5
5
5
5
5
5
5
5
5
3
5
2
1. Gary W. Mize was appointed to the Board on 23 October 2020.
2. Simon Tregoning retired on 18 February 2021.
All Directors are sent Board committee agendas and papers and may attend any meeting. The Chairman of the Board and the CEO
attend Board Committee meetings by invitation as a matter of course. The above table excludes the attendance of Directors at Board
Committee meetings of which they are not a member.
From time to time, additional Board sub-committees are established, for example, to consider material transactions or material issues
which may arise, and meetings of those sub-committees are held throughout the year. These sub-committee meetings are not included
in the above table.
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UNITED MALT
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Operating & Financial
Operating
Review
& Financial Review
About United Malt
Overview
United Malt is the fourth largest commercial maltster globally, producing ingredients for the brewing, distilling and food
markets. United Malt has approximately 1.25Mtpa of capacity across 12 processing plants in Canada, the US, Australia and
the UK. United Malt also operates an international warehouse and distribution business, which provides a full service offering
for craft brewers and distillers, including malt, hops, yeast, adjuncts and related products.
We are one of the leading malt suppliers to the craft brewing sector, supported by a distribution network comprising 25
warehouses (both Company-operated and through third party logistics providers) and international craft distribution partnerships
throughout North America, South America, Europe, Asia and Australia.
United Malt generates earnings along the malt supply chain, from barley procurement and handling, malt processing, and sale
and distribution of value-added malt and related products. United Malt benefits from having high quality, low operating cost
processing assets that are strategically located in premium barley growing regions, allowing it to source high quality barley and
access a diverse range of customers.
Our customer base is diversified by product, end-market and geography, and comprises a range of high quality customers
including global brewers, craft brewers, distillers and food companies.
We sell into both domestic and export markets. Export markets (particularly Asia) are an important source of demand for malt
produced in Australia.
United Malt has two operating segments: Processing and Warehouse & Distribution.
Our Business Model
United Malt’s business model, strategic positioning and expertise in leveraging key inputs into our business create value for our
customers, shareholders and employees.
Our Processing assets are strategically located in premium quality barley growing regions and in close proximity to a diverse
range of customers, including global brewers, craft brewers, distillers, and food companies. We benefit from having high
quality and low operating cost processing assets.
Our Warehouse & Distribution segment has established itself as one of the leading malt and ingredient suppliers to the craft
brewing sector and has a strong market position in our key markets.
United Malt has a highly capable team of ~900 employees across our operating geographies; this, combined with the long and
rich history of our operating brands, delivers a business model to capitalise on growth trends to deliver shareholder returns
over the medium to longer term.
Our Strategy
Our strategy is focused on keeping our customers at the centre of everything we do, whilst targeting those high value markets
where the long-term outlook for growth remains supportive.
Our strategic priorities are centred on three areas, whilst remaining agile in times of uncertainty:
• Optimise the core
•
•
Transform for tomorrow
Create new value
Operating & Financial Review
United Malt Group Limited Operating & Financial Review
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Focus Area
Strategic Priorities
Strategic Actions
Drive penetration in the distilling
market
Capture growth from increasing demand for whisky in emerging
markets and higher value single malt whiskies
Optimise the core
Expand craft distribution
business into new geographies
Renew our organisational and
technological platforms to create
a simplified, more efficient and
effective organisation
Transform for tomorrow
Expand into the growing craft beer market in South America and Asia
by leveraging extensive craft distribution experience
Supported by other bolt-on acquisitions, start-up opportunities and
new distribution partnerships
Redesign our organisation to simplify our operations to create an
organisational design reflecting a standalone malting company.
Embrace process changes to improve capabilities by implementing
simplified and standard processes, skills and systems.
Strengthen operational management by harnessing our network of
production facilities and Warehouse & Distribution centres as one
global network to deliver better outcomes for customers
Integrate sustainable actions into
everyday operations, embracing
our commitment to Zero Harm.
Develop priorities and action to address climate change and resource
scarcity
Proactively assess acquisitive
growth opportunities.
Take a disciplined approach to evaluating acquisitive growth
opportunities to extend our geographic reach, product offering and or
customer base creating value
Create new value
Invest in our assets to create
best in class operations and grow
malting capacity
Continue to optimise our asset footprint including upgrading capacity
to create best in class operation, enhancing customer experience
Targeted expansion of malting capacity
Develop innovative products and
solutions for customers
Leverage our rich pedigree and expertise in the brewing, distilling and
food ingredients markets to create new and innovative product
solutions for our customers
Group Financial Summary
Key Results ($M)
Revenue
EBITDA
EBIT
Net finance costs
Significant Items
Tax expense
Net Profit After Tax
Add back Significant Items
Tax recovery on Significant Items
Underlying Net Profit After Tax
Shareholder Returns
Basic earnings per ordinary share
Return on equity
Return on capital employed (ROCE)
Dividend per ordinary share
2021
1,235.0
2020
1,289.1
123.3
62.7
(9.8)
(21.1)
(18.0)
13.8
21.1
(0.9)
34.0
4.6
1.3%
4.8%
5.5
cents
%
%
cents
156.1
92.0
(14.6)
(11.8)
(20.0)
45.6
11.8
-
57.4
16.8
4.4%
7.5%
3.9
Change %
(4.2)%
(21.0)%
(31.8)%
32.9%
(78.8)%
10.0%
(69.7)%
(78.8)%
nm
(40.8)%
(72.6)%
(3.1)pts
(2.7)pts
41.0%
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Operating & Financial Review
Operating & Financial Review
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Segment results
Segment Results
($M)
Processing
Warehousing & Distribution
Corporate and eliminations
2021
Revenue
2021
EBITDA
2020
Revenue
2020
EBITDA
% Change
Revenue
EBITDA
938.1
330.1
(33.2)
89.5
40.8
(7.0)
989.4
328.9
(29.2)
126.0
(5.2)%
(29.0)%
34.6
(4.5)
0.4%
18.1%
(13.7)%
(54.7)%
Total
1,235.0
123.3
1,289.1
156.1
(4.2)%
(21.0)%
Reconciliation of EBITDA to Statutory NPAT and Underlying NPAT
Reconciliation of EBITDA to Statutory NPAT
EBITDA
Net Interest
Depreciation and Amortisation
Significant items
Profit Before Tax
Income tax Expense
Net Profit After Tax
Add back Significant Items
Tax recovery on Significant Items
Underlying Net Profit After Tax
Financial Analysis and Commentary
2021
123.3
(9.8)
(60.6)
(21.1)
31.8
(18.0)
13.8
21.1
(0.9)
34.0
2020
156.1
(14.6)
(64.1)
(11.8)
65.6
(20.0)
45.6
11.8
-
57.4
% Change
(21.0)%
32.9%
5.5%
(78.8)%
(51.5)%
10.0%
(69.7)%
(78.8)%
nm
(40.8)%
United Malt’s operating environment experienced significant challenges during the year ending 30 September 2021, due to
COVID-19-related extended lockdowns in most of our key markets leading to reduced malt demand with the restrictions
impacting on-premise beer consumption and also disrupting our supply chain and ability to ship product to customers.
Relaxed lockdown restrictions in North America and the UK, as a result of the northern hemisphere summer and higher
vaccination rates, resulted in an improved operating performance in the second half of the year.
The onset of the COVID-19 Delta variant in Australia and Asia, however, resulted in curfews and extended lockdowns in those
markets in the second half of the year which depressed volumes, as did ocean freight disruption and significant cost increases
in shipping rates.
Group Financial Results
Revenue was down 4 per cent to $1.2 billion for the full year, and in line with prior year revenue on a constant currency basis.
EBITDA was $123.3 million; down 21 per cent on the prior year. EBITDA in FY21 includes $3.1 million in costs associated with
the Grantham site closure and transformation costs of $4.3 million and also the negative impact of $9.1 million related to the ~10
per cent appreciation in the Australian dollar compared to the US dollar for the prior year affecting the translation of earnings
into Australian dollars.
EBITDA also includes the impact of the adoption of the new IFRIC accounting pronouncement which resulted in costs
associated with the Enterprise Resource Planning (ERP) and Transport Management Systems, which were previously
capitalised, being expensed. The result of this accounting change decreased FY21 EBITDA by $6.5 million.
In addition, the Group results reflected an increase in corporate costs, associated with being a separately listed entity for its first
full year of standalone operations.
Significant Items impacting reported FY21 result
As announced on 1 September 2021, the statutory earnings in FY21 were impacted by two significant one-off items. One
related to a UK grain storage contractor who entered administration, and the other related to a bad debt provision from one
Asian customer. A provision for stock loss of $4.7 million and a provision for a bad debt of $16.4 million have been booked in
the year. United Malt is actively pursuing all legal and commercial avenues on both of these items.
The Company delivered an Underlying Net Profit After Tax of $34.0 million compared to $57.4 million for FY20.
Statutory Net Profit After Tax for the period was $13.8 million. Earnings per share were 4.6 cents compared to 16.8 cents in the
prior year, reflecting lower net profit.
Segment Financial Results
In the Processing segment, revenue fell by 5 per cent to $938 million reflecting volume declines compared to the prior
year. Segment EBITDA declined by 29 per cent to $89.5 million as a result of the impact of COVID-19 in key
markets.
EBITDA margin was impacted by sales mix and lower volumes as a result of rolling COVID-19 trading conditions in our key
markets, including higher costs associated with hygiene and social distancing measures put in place to keep our workforce safe.
In addition, there were some higher costs associated with operating at reduced utilisation and continued delays with freight
containers and higher freight costs attributable to COVID-19.
Revenue in the Warehouse & Distribution segment was in line with prior year at $330 million. Segment EBITDA increased by
18 per cent to $40.8 million, with improving volume and mix, particularly in the second half, driving margins as craft breweries
re-opened.
The EBITDA margin benefited from the realisation of the optimisation programme and freight initiatives driving lower costs,
whilst still managing the elevated container freight costs for imported products.
Financial Position and Balance Sheet
United Malt remains in a strong financial position to manage in the current environment and to continue our investment in
strategic growth initiatives.
Net debt at 30 September 2021 was $312.4 million compared to $344.1 million at 31 March 2021. The gearing
ratio (net debt / Underlying EBITDA) was 2.11 times, which is within the Company’s target ratio of 2.0 to 2.5 times, reflecting
the seasonal impact of working capital.
The Company maintains comfortable headroom within its banking covenants and has no significant near-term refinancing
commitments. The maturity date of the term debt facilities was extended to November 2024, with the terms of the debt
remaining materially unchanged. Customary annual refinancing of inventory and working capital facilities was completed in
November 2021.
Dividend
The Board has resolved to pay a final dividend of 3.5 cents per share (unfranked), bringing the full year dividend to 5.5 cents per
share. Dividends for FY21 totalled 48% of Underlying NPAT.
Operating Cash Flow
Operating cash flow remained positive during FY21. Working capital in the second half was lower, reflecting the typical
seasonal unwinding with higher inventory and prices offsetting higher payables due to timing of harvest at year end.
Interest paid was lower in FY21, reflecting the full year post demerger capital structure.
Tax paid was higher due to timing of payments.
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1 Based on a 12 month rolling EBITDA excluding the impact of AASB16, Significant Items and net debt excluding finance lease commitment. The impact of AASB16 on the 12
month rolling EBITDA is $14.9m.
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Operating & Financial Review
Operating & Financial Review
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(cid:3)
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Future Business Prospects
United Malt continues to implement its strategy for growth.
In the UK, we remain focused on servicing the Scottish whisky market, which requires malt to meet the long-term requirements
of distillers to produce aged whisky. The expansion at the Arbroath facility is now complete and has delivered an additional
22,000 tonnes of production capacity and is performing to our expectations.
Meanwhile, the new facility in Inverness will provide an additional 57,000 tonnes of capacity to service the distilling market with
a significant proportion of the new capacity already underpinned by expanded contracts with major customers. The site is
expected to be operational by July/August 2022, slightly behind schedule due to ongoing social distancing requirements on-site.
The revised overall cost to complete the Scottish project is ~A$127 million. The higher cost estimate is driven by construction
delays, higher material and supply chain costs and a tight labour supply resulting from the COVID-19 environment, and also by
some adverse foreign exchange movements. Notwithstanding the increased projects costs, the 79,000 tonne capacity
expansion is underpinned by long-term customer agreements and based on the current forward orders secured, project return
rates will be preserved.
In Australia, we continue to progress the $27 million project to replace the existing kiln at our Welshpool facility in Perth with a
new and indirect heating source kiln. This renewal provides operating efficiencies and safer technology. We expect to achieve a
10 per cent reduction in gas and electricity usage. It also provides an opportunity to expand the facility capacity with further
capital investment. The project is scheduled for commissioning in February 2022, slightly behind schedule due to the COVID-19
related travel restrictions to Western Australia.
In our Warehouse & Distribution segment, we have opened a new 9,100sqm craft warehouse and distribution centre in
Derrimut, Victoria. It provides an expanded range of ingredients and a ‘one-stop-shop’ experience for customers. We have also
expanded our partnership with our Mexican distribution partner, Beermex, to further grow our penetration into the region. Our
partner opened its third warehouse in October 2021.
During the year we announced our transformation programme, which is focused on renewing our organisation and technology
platforms to create a simplified, more efficient and effective organisation. This project is expected to deliver ~$30 million of net
benefits in EBITDA by FY24. One-off costs of $4.3 million were incurred in FY21 as part of the programme.
We have also commenced the development of our new ERP and implementation of a Transport Management System to
enhance our data analysis and process improvement. Total expense on these systems is expected to be ~$20 million over
three years, with $6.5 million incurred in FY21.
As part of the Transformation programme, we have commenced the redesign of our organisational structure, including the
appointment of a new Chief Operating Officer, allowing the amalgamation of our US and Canadian processing operations.
We remain well positioned to continue navigating and adapting to the current short term challenges facing our business. We are
also implementing our strategy to set the business up for a return to growth by investing in our capability, delivering on our strategic
initiatives and capitalising on the improving market trends.
Crop conditions in North America have deteriorated due to the drought which has impacted the size and quality of the barley crop
and has elevated global barley prices. We are proactively sourcing barley from Denmark and Australia to supplement our locally-
sourced supply. The imported barley will support our requirements to meet our customers’ demand in both quality and supply. We
expect to receive our first cargo early in calendar 2022.
As vaccination rates increase and lockdown restrictions ease, we expect to capitalise on increased on-premise consumption with
a corresponding improvement in sales mix with increased demand for speciality malts.
Over the medium term, we remain well positioned to return to growth supported by our strong market positions, strategically
located malting assets and our market leading distribution platform which services customers’ ingredient requirements.
Our growth will be further enhanced by the strategic initiatives we are implementing to equip our business by enhancing our
capabilities to operate more sustainably and to create a more streamlined and efficient operating model to generate higher returns
for shareholders.
Rounding of amounts
The Directors’ Report is presented in Australian dollars, with all amounts rounded to the nearest one hundred thousand dollars
(unless specifically stated otherwise) under the option available to the Company under ASIC Corporations (Rounding in
Financial/Director’s Report) instrument 206/191. The is an entity to which this legislative instrument applies.
(cid:24)(cid:144)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:16)(cid:131)(cid:142)(cid:150)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:15)(cid:139)(cid:143)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)
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Risks
(cid:3)
There are various risks associated with owning shares in United Malt. Some of these risks are specific to United Malt and its
business, while others are risks of a more general nature that apply to any investment in publicly traded shares. The list of risks
set out below is not exhaustive and does not consider the personal circumstances of shareholders. The list of risks set out
below is also not arranged in any hierarchical manner. Shareholders should seek professional advice if they are in any doubt
about the risk associated with holding shares in United Malt.
The Board and the Audit and Risk Committee are ultimately responsible for Risk Management. The Board approved Risk
Appetite Statement and Risk Management Framework are used by the Executive Leadership Team (ELT) and managers to
identify and manage risks to the business. The business maintains Operational and Strategic Risk Registers that are reviewed
and approved by the Audit and Risk Committee.
Risks affecting United Malt’s business
Risk Risk overview
Actions
(cid:3)
The COVID-19 pandemic will continue
to adversely impact the global economy
and our customers, suppliers, and
employees. It has the potential to
temporarily close a production facility if
a worker became infected.
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Also, the impact on global and regional
economic conditions could disrupt the
supply chain, operations, industries or
production capabilities of our
customers.
Moreover, the pandemic can reduce
consumption of our customers’ product
through closing of pubs, restaurants
and large public sporting or music
events. All of these could reduce
demand for our products.
United Malt has a strong balance sheet and has strengthened its
position to respond to the ongoing pandemic.
(cid:3)
Our people are a key asset, and their safety has been of paramount
concern to us during the pandemic.
We have taken consistent and measurable steps to keep them safe in
order to keep our production facilities open. This includes pre-shift
screening, contract tracing, cohort working, partnerships with expert
vendors and pre-negotiated testing agreements.
We have also formed a standing committee of the ELT who meet
regularly to monitor the pandemic and calibrate our response.
We closely monitor customer offtake of products and conditions in their
markets to identify potential changes in demand for our goods.
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We are intrinsically linked to the barley
crops grown around the globe. Climate
Change can imperil the global barley
supply which we depend on for our core
functions of processing and distributing
malted products.
Our reporting is guided by the Task Force on Climate-related Financial
Disclosures (TCFD) recommendations and climate risk is emerging as a
consideration in our customer and supplier contracts as well as in our
future capital expenditure projects. We are also tracking proposed
policy, legal and technological changes that are on the horizon during
the transitional phase of a coordinated global response to climate
change.
Climate Change could lead to higher
costs, lower margins and potentially
increased costs associated with our
business functions.
We continue to review and, where possible, reduce our consumption of
water and fossil fuels. This includes finding alternative sources to heat
our plants or power our kilns, including cogeneration capabilities or
investigating geothermal heating opportunities. Future capital
expenditures managed by the Project Management Office do actively
review opportunities for reduced consumption.
Water is an essential component of the
malting process. Access to high quality
water may be impacted by Climate
Change, long-term drought or wide-
spread contamination of local aquifers.
We understand the critical importance of water to us all. United Malt is
focused on consumption reduction strategies, recycle, reclamation and
effluent management regimes; all to reduce our consumption of water
and creation of wastewater. Each of our processing facilities closely
monitors and reports their consumption of water.
This could lead to adverse financial
impacts in the form of higher costs or
reduction in product quality.
We are committed to evaluating and rating the impact of our future
capital expenditure projects’ changes to water consumption and effluent
treatment. Furthermore, all capital expenditure projects are evaluated
for their access to water supplies.
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Operating & Financial Review
Operating & Financial Review
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Risks affecting United Malt’s business
Risk Risk overview
Actions
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(cid:3)
There is a risk to United Malt that a loss
of key customers or suppliers could
result in an adverse impact on our
financial performance through either a
reduction in revenue or an increase in
costs associated with running the
business.
(cid:3)
We enjoy strong partnerships with key customers and suppliers in our
production and distribution businesses. Many of these relationships are
codified in the form of long-term agreements. They provide us with the
stability in the form of forward orders that allow us to control costs and
deliver savings to our customers, while also providing our suppliers with
certainty.
We face variations throughout the year
in the draw on our working capital,
relating to harvest purchasing
requirements, customer purchasing
behaviour, payment terms and
commodity prices.
Historically, United Malt’s working
capital levels have peaked around 31
March and unwind in the second half to
30 September.
We rely on our supply chain to store
and transport barley to our production
sites and finished products to our
customer. There is a risk that disruption
to the supply of raw materials to our
processing plants, and/or finished
goods through our network, could
adversely impact our financial results or
increase the costs associated with
running the business.
Our senior leaders regularly engage with their counterparts to find
innovative ways to improve our commercial relationships.
Our Malt Innovation Centre (MIC) is driving product development,
improving processes and quality; all with the goal of maintaining key
customers.
A recent marketing and branding refresh, combined with customer
segmentation work, has also been a key focus during the current fiscal
year.
We closely monitor and manage our receivables and the timing of
receipt of payment throughout the year.
We are also mindful of, and constantly review, our inventory levels
during harvest in each of the jurisdictions in which we operate, the
requirements of our processing facilities and the timeliness of accounts
payables to ensure that we meet our obligations.
Our warehouse and distribution business has implemented a
Transportation Management System (TMS) in North America and will
roll it out in the processing segment and other jurisdictions. The TMS
will ensure timely and safe delivery tracking of our products to our
customers. The TMS will allow us to be nimbler and more responsive to
potential disruptions to our supply chain, while giving our customers
greater visibility into their shipments.
All warehouses and production facilities are subject to audit procedures
relating to Food Safety and Quality Management (FSQM) standards.
Food safety risks have been identified and are covered by Statements
of Procedure (SOP) or contract. Also, where possible, we are shifting
towards using company managed facilities, instead of 3PLs, to give us
greater control of this risk.
Inventory and stock controls that United Malt has in place include
procedures such as inventory reconciliation against third-party logistics,
stocktakes/cycle counts, site visits, due diligence conducted for new
facilities and audit procedures. When United Malt purchases stock that
is held at a third-party location, we secure certificate of ownership or
title of the goods. We also purchase appropriate insurances against
physical damage to our stock in transit, stored at our sites or stored at
third party sites.
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Risks affecting United Malt’s business
Risk Risk overview
Actions
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Like most businesses, we require
significant capital to operate and fund
capital expenditures.
If United Malt is unable to generate
sufficient cash flows or raise sufficient
external financing, then we may be
forced to limit our operations and
growth plans.
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United Malt strives to ensure strict cash management and has built-up
cash reserves, and, when appropriate, will continue to build up those
reserves. We look to pay down debt when doing so is prudent. Our
Group Strategy and Group Finance teams actively seek to optimise
portfolio management. Meetings are held to review, prioritise and select
capital projects based on an assessment of business needs and
financial benefits.
Barley growing and procurement are
subject to a variety of agricultural
factors beyond our control, such as
disease, pests, rainfall, and extreme
weather conditions. To the extent that
any of these factors impact the quality
and quantity of barley available to
United Malt for malting, its operations
could be adversely affected.
United Malt seeks to mitigate this risk by maintaining a diversified
network of growers, leveraging its strong supplier relationships,
importing barley in each jurisdiction in which it operates, if necessary,
all in an effort to respond to local variations of agricultural yields.
We enter forward contracts with multiple growers, co-operatives and
grain companies in all geographies where we currently source barley,
and we seek to renew these well in advance of expiry. We continually
review options to diversify our procurement footprint. We also malt other
cereal grains, which further mitigates this risk.
There is a risk that a lack of proper
oversight or controls, delays to or
increased costs of construction
projects, or changes to government or
regulatory approval regimes could
result in future projects failing to
achieve their intended benefits.
United Malt has a track record of managing large capital expenditure
projects. This includes expansions and upgrades to production facilities,
as well as the continued deployment of our distribution businesses. We
created a Project Management Office (PMO) to oversee large capital
expenditure projects. This office works with local stakeholders, including
specifically assigned construction and installation managers, to oversee
the day-to-day progress of our expansion and improvement builds.
For our larger projects, we form steering committees, which include ELT
members and technical experts, and they meet on a regular basis
before, during and after the build. The cadence of meetings is designed
to ensure that our strategic objectives are met, and the estimated
returns are achieved. The post-completion meetings are important to
extract key learnings that can be implemented in future projects.
We utilise internal and external auditing support, as well as, engage
with technical experts including engineers, consultants and other third
parties as part of the PMO process.
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Operating & Financial Review
Operating & Financial Review
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Risks affecting United Malt’s business
Risk Risk overview
Actions
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Risks affecting United Malt’s business
Risk Risk overview
Actions
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United Malt is working towards operating with a low overall cyber-risk
range. United Malt has committed to address cyber-risk by employing
industry cybersecurity best practices and in seeking ISO 27001:2013
certification for its Information Security programmes.
United Malt deploys many methods to protect its systems, including but
not limited to, security infrastructures such as firewalls, virus scanning,
data back-up systems, network performance monitoring, improved and
geographically dispersed redundancies, an Information Security
Management System, Access Control Standards, Global Disaster
Recovery and Business Continuity Plans.
Last year, United Malt completed an internal audit focusing on
Information Technology General Controls (ITGC), the learnings from the
ITGC audit were incorporated into this year’s IT business plan in
aligning with ISO 27001.
United Malt is partnering with private vendors and government partners
for support in this space. Some of those partnership include
penetration, resilience, and response plan testing. United Malt also
provides training to employees and Board members on internet and
email best practices to reduce the risk to United Malt of email-based
threats.
United Malt has augmented its senior leadership structure to include a
new Transformation Office led by a Chief Strategy and Transformation
Officer, as well as a more robust Communications Team led by a
Director of Communications.
The Transformation Office and Communications Department are
responsible for continuously updating employees on the course United
Malt has set. These updates include memoranda, videos or question
and answer sessions with senior leadership including the CEO, CFO or
Chief Strategy Officer.
The Transformation Office is also responsible for continuous
improvement and implementation of Board approved initiatives such as
the recently implemented Transportation Management System (TMS)
discussed in the Transportation and Supply Chain Risks.
United Malt invests in market intelligence to better understand its
customers, suppliers, and competitors. United Malt leverages insights
from its Warehouse and Distribution network as well as experimentation
at our own MIC to stay abreast of end-consumer preferences that our
customers are trying to meet.
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United is exposed to Cyber Security
risks posed to it by malicious third
parties, and by unintended outcomes
from actions taken by employees or
delivered by existing programmes.
Each of these risks has the potential to
disrupt our systems, production or
distribution capabilities which would
damage United Malt’s reputation,
impact customers, suppliers, and
financial performance.
United Malt has and is implementing a
strategy for sustainable growth that
provides value to customers, suppliers
and shareholders. There is a risk that if
this Strategy is static and not iterative
or is not thoughtfully communicated at
all levels of the company, that United
Malt could fail to successfully
implement this strategy which would
damage United Malt’s reputation, and
impact customers, suppliers and
financial performance.
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United Malt faces the risk that
integration of Customers, Suppliers or
Competitors could disadvantage the
competitiveness of United Malt relative
to its peers. Moreover, innovations in
beverage production technologies could
lead to substitution of malted products
for other carbohydrates in beverages.
Each of these risks could result in an
adverse impact on our business and
financial performance.
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Over the past two years, United Malt worked with internal auditors and
external parties to undertake a review of the Food Safety Quality
Management (FSQM) processes and procedures of our production and
distribution businesses. We have implemented the findings of that
review to include quality assurance accreditation and ISO9001
compliance, improved plant and warehouse housekeeping and hygiene
procedures.
We are also investing in increased staff training and assessments. The
goals of the review were to deliver more consistent higher quality
products to our customers and to strengthen our resilience while
reducing potential business and financial performance impacts.
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United Malt operates an international
network of malting and warehouse
facilities and is subject to food and
stock handling risks.
These include spoilage, contamination,
misappropriation, damage to food and
stock through insurable and non-
insurable risks, incorrect grading,
product tampering, product recall,
changes to government, industry or
destination standards regarding product
specification, product liability claims or
perceived obsolescence of stock.
Any of these occurrences could result
in an adverse impact on our business
and financial performance.
We take large holding positions of
commodities at various times of the
year. In addition to these, United Malt
also hedges energy and utilities prices,
interest rates and foreign exchange
rates. There is a risk that our hedging
management strategies might not
successfully minimise exposure to
these risks. Moreover, there is the risk
that an inadequate segregation of
duties or improper oversight of these
positions could lead to an adverse
impact on United Malt’s business and
financial performance.
United Malt has a robust Position & Trading Risk Management Policy
(PTRMP) that is overseen by the company CFO and the Audit and Risk
Committee. We continually monitor the positions and associated risks of
each geography through daily tracking and weekly meetings of senior
leadership.
United Malt utilises a Credit Policy to manage exposure from customers
in each jurisdiction it operates in. This policy is also overseen by the
Company CFO and the Audit and Risk Committee.
We also utilise enterprise risk management software programmes to
track and hedge these risks. In addition, we have implemented a clear
Segregation of Duties protocol between the front, middle and back
offices that clearly delineates the authority levels of all decision makers
as sanctioned by the Audit and Risk Committee.
There is a chance that a major system
outage to one of the business’ core
software or system platforms could
increase United Malt’s costs and could
lead to regulatory or government
intervention in the form of costs,
investigations, penalties or liabilities.
United Malt deploys many methods to maintain the functionality of its
systems, including but not limited to, data back-up systems, network
performance monitoring, improved and geographically dispersed
redundancies, an Information Security Management System, Access
Control Standards, Global Disaster Recovery. United Malt catalogues
and manages physical and software end of life systems and has a plan
to phase them out.
We rely on IT systems that, if they fail,
could lead to a loss of confidential data,
deterioration in reputation and impacts
on suppliers or customers.
All of these outcomes would have an
adverse impact on our business and
financial performance.
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Operating & Financial Review
Operating & Financial Review
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Risks affecting United Malt’s business
Risk Risk overview
Actions
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Changes in taxation laws (or their
interpretation) where we have
operations could materially affect our
financial performance.
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United Malt works closely with our advisors in all geographies to
thoughtfully consider and confirm that we adhere to tax regulations and
potential liabilities associated with doing business in each of the
countries in which we operate.
In addition, governments may review
and impose additional or higher excise
or other taxes on beer or whisky, which
may have an adverse effect on
consumer buying patterns and may
adversely impact United Malt’s financial
results.
Our legal counsel provides guidance on compliance and governance
matters and consults with us on ramifications of any potential changes
in the jurisdictions where we operate.
Where appropriate, our obligations and consent registers are
maintained and reviewed. Moreover, clearly defined compliance
oversight responsibilities are assigned to specific job roles. Lastly, our
internal audit programme reviews compliance matters as required.
United Malt supplies food and beverage
companies, specialising in the
production of malted products for
brewing and distilling customers. There
is a risk that we may not optimally align
with consumers, or that beer
consumption could fall or that our
products could be used less often in
customers’ end products.
These risks could lead to a reduction in
market demand which could have an
adverse impact on United Malt’s
business and financial performance.
People capability or capacity could
impact the effective execution of United
Malt’s strategic plans and future
operation of the business.
United Malt is actively involved in industry forums and trade groups that
shape and influence consumer trends. In addition, market research and
competitor intelligence are incorporated into the Strategic Planning
Process at all levels of the company.
The use of the Net Promotor Score tracking methodology gives us early
warning systems to see where we could better align with market or
consumer trends. Our employees gather and act on customer feedback
at all times. This includes formal research (utilising NPS and other
research methods), as well as, providing training to members of staff in
managing customer relationships.
United Malt significantly strengthened its ELT with the appointment in
July 2021 of a Vice President of Human Resources. A priority for United
Malt is to ensure we develop programmes that engage, equip and
empower the highest levels of team performance and business
success. United Malt is keenly focused on building a culture of
development and continuous improvement.
United Malt has enhanced how employees set and achieve their annual
goals and is aligning those goals to overall Group level targets,
furthering integration in the business. United Malt continues to
investigate systems and processes that improve data gathering and
reporting on employee productivity, satisfaction and growth.
United Malt and its related entities enter
into foreign currency transactions,
typically in the purchase of raw
materials or in the sale of malt.
United Malt leverages a multi-desk foreign exchange processing
platform to facilitate entering and sourcing of foreign exchange trades to
improve operating efficiency and reduced foreign exchange exposure in
purchases or sales.
Additionally, a significant proportion of
United Malt’s income is denominated in
foreign currency. Therefore, our
reported net income in Australian
dollars will fluctuate inversely to the
Australian dollar’s relationship with the
other foreign currencies in which we do
business.
These actions and procedures are reviewed by the Audit and Risk
Committee and monitored by internal audit for efficacy and compliance.
Translation risk of the earnings of the overseas subsidiaries is mitigated
by the fact that the assets and liabilities of those businesses, including
external debt, are held in local currencies. Any change in exchange
rates will not impact a business unit’s ability to repay its debts or
suppliers in its local currency.
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Risks affecting United Malt’s business
Risk Risk overview
Actions
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Some of our largest expenditures are
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United Malt reviews utilities pricing in each geography. We have local
expert energy brokers work with us to manage the volatility of these
costs. At times, United Malt hedges these costs in an effort to further
mitigate this risk. As part of a longer-term strategy, a management
working group has been formed which is developing a wholistic energy
management plan and is reviewing alternative and renewable sources
of energy.
General Risks
In addition to the risks specific to United Malt noted above, we also monitor the below risks which are generally associated with
any investment in publicly traded shares. These risks are reviewed by the Audit and Risk Committee, as well as, the CEO and
the Executive Leadership Team. The Group Risk and Insurance Manager also provides guidance on the below matters as part
of the annual reporting regime.
Economic Risks
General economic conditions, fluctuations in interest and inflation rates, commodity prices, currency exchange rates, energy
costs, changes in government, changes in fiscal, monetary and regulatory policies, the development of new technologies and
other changes to the general market conditions may have an adverse effect on United Malt, its future business activities and the
value of United Malt shares.
Market Conditions Risks
Share market conditions may affect the value of shares regardless of United Malt’s financial or operating performance. Share
market conditions can be unpredictable and are affected by many factors including changes in investor sentiment towards
market sectors (in particular food and beverage supply) and the domestic and international outlooks.
Significant Events Risks
Significant events may occur in Australia or internationally that could impact the market for United Malt’s products and its
operations, the share price and the overall economy generally. These events include war, terrorism, civil disturbance, political
actions and natural events such as earthquakes, floods and pandemic risks.
Global, Regional and Country Specific Sovereign Risks
As an international maltster, United Malt is vulnerable to geopolitical tensions that may impact global trading patterns and
flows. There is a risk that United Malt’s financial performance may be impacted when those tensions affect markets or
commodities that United Malt purchases.
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Remuneration
Report
Operating & Financial Review
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Subsequent Events
Other than the term debt refinancing, as described in the financial report note 2.1(b), no matters or circumstances have arisen
since 30 September 2021 which have significantly affected or may significantly affect: a) The Group's operations in future
financial years; b) The results of those operations in future financial years; or c) The Group’s state of affairs in future financial
years.
Additional Disclosures
Indemnification and Insurance of officers
Under the Company’s constitution, the Company may indemnify, to the extent permitted by law, each director and company
secretary of United Malt or its related bodies corporate as the directors determine, for all losses and liabilities incurred by the
person as an officer to the extent that such losses and liabilities are not covered by insurance.
The Company has entered Deeds of Access, Indemnity and Insurance with its directors, company secretary and certain
executives.
The Company has paid a premium in respect of a contract insuring current and former directors, company secretaries and
executives of the Company and its subsidiaries against liability that they may incur as an officer of the Company, including
liability for costs and expenses incurred by them in defending civil or criminal proceedings involving them as such officers,
with certain exceptions. It is a condition of the insurance contract that no details of the premiums payable or the nature of the
liabilities insured are disclosed.
Indemnification of auditors
To the extent permitted by law, the Company has agreed to reimburse its auditor, PricewaterhouseCoopers (PwC) for any
liability (including reasonable legal costs) PwC incurs in connection with any claim by a third party arising from the
Company’s breach of its audit agreement. No payment has been made to reimburse PwC during, or since, the end of the
financial year.
No proceedings
No application has been made under section 237 of the Corporations Act 2001 (Cth) in respect of United Malt, and there are
no proceedings that a person has brought or intervened in on behalf of United Malt under that section.
Audit services
Audit services during the year have been provided by PricewaterhouseCoopers (PwC), led by partner Brett Entwistle.
Details of the amounts paid to PwC for audit services are set out in note 4.5 of the financial report.
Non-audit services
The Company may decide to engage the external auditor on assignments additional to its statutory audit duties where the
auditor’s expertise and experience with the Company are important. Details of the amounts paid to the external auditor
PwC for non-audit services provided during the year are set out in note 4.5 to the financial report.
In accordance with advice received from the Audit & Risk Committee (ARC), the Board is satisfied that the provision of non-
audit services by PwC during the year is compatible with the auditor independence requirements of the Corporations Act 2001
(Cth) The Board is satisfied that the provision of non-audit services by the auditor did not compromise the auditor
independence requirements of the Corporations Act 2001 (Cth) for the following reasons:
•
•
All non-audit services have been reviewed by the ARC to ensure that they do not impact the integrity and objectivity of the
auditor;
None of the services undermine the general principles relating to auditor independence as set out in the APES 110 Code
of Ethics for Professional Accountants.
A copy of the external auditor’s independence declaration as required by s307C of the Corporations Act 2001 (Cth) is set out
on page 56 and forms part of this report.
Corporate Governance Statement
During the year ended 30 September 2021, the Company’s corporate governance framework was consistent with the 4th
edition of the ASX Corporate Governance Council. United Malt’s corporate governance statement can be viewed at
www.unitedmalt.com//corporate-governance.
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UNITED MALT ANNUAL REPORT 2021
UNITED MALT ANNUAL REPORT 2021
2021 Remuneration
Remuneration
Report
Report
Introduction
This Report covers the remuneration of Non-Executive Directors, the Managing Director and Chief Executive Officer (MD&CEO) and
senior executives who are considered Key Management Personnel (KMP), who have authority for and are accountable for planning,
directing and controlling the activities of United Malt consistent with the Australian Accounting Standards Board 124 (Related Party
Disclosures (‘AASB 124’) definition).
This report outlines the remuneration outcomes and structures in place for the financial year ended 30 September 2021 and
refinements planned for FY22. This is the first full-year Report since United Malt’s listing on 23 March 2020.
FY21 Overview
a) FY21 Year in Review
Whilst FY21 has been a challenging year, it has also been one of consolidation for the Company in its first full financial year since listing
as a standalone entity. United Malt has continued to respond and adapt to both the evolving needs of our customers and the ongoing
impacts of COVID-19 across our business. Key areas to note have been:
•
•
•
•
Steady progress in the development of our longer-term safety strategy ‘Safe for Life’ which is focused on the ongoing
improvement of safety management systems, aimed at reducing both the total number of injuries and the frequency rate of
injuries across our workplaces.
Significant milestones achieved to increase production capacity in Arbroath and Inverness in the UK, to expand our distribution
partnership in Mexico and to establish a new distribution centre in Victoria, Australia.
Strengthened capabilities across the Company including:
o Progressing implementation of our new Enterprise Resource Planning and Transport Management Systems to enhance our
data analysis, process improvement, customer service and decision making;
o Commencing work towards aligning our climate change reporting with the Task Force on Climate-related Financial Disclosures
(TCFD); and
o Designing and implementing the transformation programme aimed at achieving an annualised target of $30 million in net benefits
by FY24 creating a simplified and more efficient and effective global organisation.
Strengthened the Executive Leadership team with appointments to the key positions of Chief Operating Officer and Vice President,
Human Resources.
b) United Malt Financial Performance
Our financial result for FY21 reflected the different impacts and timing of COVID-19 and various countries’ response to the pandemic
across our markets. Performance in the North America and the UK improved in the second half of the year, but extended lockdowns have
impacted both performance and logistical challenges in Australia and Asia generally. This has resulted in the following:
•
Processing EBITDA declined by 29 per cent to $89.5 million, reflecting lower volumes, changes in customer mix and additional
costs associated with COVID-19.
• Warehouse & Distribution EBITDA increased by 18% per cent to $40.8 million due to increased demand for malt, with a
corresponding improvement in sales mix.
As advised in September 2021, two significant one-off items impacted the Company’s statutory results for FY21. These included a
$4.7 million provision related to one of United Malt’s longstanding grain storage contractors which entered administration and a
separate bad debt provision related to one Asian customer of $16.4 million.
As a result of these one-off significant items, Reported Statutory Net Profit After Tax (NPAT) was $13.8 million, compared to
$45.6 million for 2020. Reported EBITDA for FY21 was $123.3 million (EBIT $62.7 million).
The Board resolved to pay a final dividend of 3.5 cents per share, bringing the full year dividend to 5.5 cents per share.
•
•
•
c) FY21 Remuneration outcomes
The following were the key remuneration outcomes and decisions for 2021. They continue to demonstrate the strong alignment
between the Company’s performance and executive remuneration outcomes, where the decrease in the Company’s financial
performance relative to FY20 resulted in a reduction in performance-related payments to Executive KMPs. Key points are:
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The moderate FY21 short-term incentive payments reflect the decreased financial result relative to 2020. The average Executive
KMP STI payment was 35% of target (23% of maximum), with the MD&CEO receiving a payment of 33% of target (22% of
maximum). Of this payment, 50% will be delivered as deferred equity which vests half in one year and half after two years.
The One-off award granted to the MD&CEO in FY20 will lapse with no vesting because United Malt’s absolute total shareholder
return (aTSR) and Return on Capital Employed (RoCE) performance did not reach the required thresholds for vesting.
There were no salary increases to any Executive KMP in FY21.
There were no changes to Non-Executive Director base or committee fees.
Importantly, this year also reflects the first full-year reporting of remuneration outcomes in the Remuneration Report. However, the
FY21 outcomes are not directly comparable to FY20. In the prior year remuneration outcomes reflected part-year remuneration for the
MD&CEO and were impacted by a voluntary five-month salary base pay reduction to the MD&CEO and a similar fee reduction for our
Non-Executive Directors to reflect the initial impact of COVID-19 on the business.
d) Remuneration in 2022
The overall remuneration structure in FY22 will not change significantly in comparison to FY21. The key issues to note are set out
below (with further detail in Section 8 of this Report).
•
•
•
•
No Executive KMP will receive a base salary increase or other change in overall remuneration other than the President,
Warehouse & Distribution. Following a benchmarking review, his salary will increase by approximately 15% and his STI
opportunity will increase from 50% to 60%. This also aligns the package more closely with other Executive KMP.
There will be no changes to Non-Executive Director base fees, committee fees or the aggregate fee pool in FY22.
The FY22 STI programme will change slightly to allow greater focus on individual KPIs for Executive KMP. This will reweight the
Corporate Scorecard to either 50% or 60% of Executive KMP’s target opportunity, with the remaining STI tied to objectives
aligned with the Executive’s direct responsibilities.
The FY22 LTIP will remain broadly consistent with the awards made in FY21. ROCE remains the primary hurdle, with 50% of the
award. Absolute TSR and strategic measures make up the remaining hurdles, each with a 25% weighting. In FY22 the focus of
the strategic measures will be on the Company’s transformation strategy, major project delivery efficiency and the identification
and execution of sustainable and profitable growth opportunities.
1. Key Management Personnel (KMP)
KMP are listed in the table below. The Managing Director and Chief Executive Officer (MD&CEO) and other Executives considered
KMP are collectively referred to as ‘Executive KMP’ in this report.
Non-Executive Directors
Role
Graham Bradley AM
Chairman and Non-Executive Director
Barbara Gibson
Jane McAloon
Gary W. Mize
Terry Williamson
Former Non-Executive Directors
Non-Executive Director
Non-Executive Director
Non-Executive Director
Non-Executive Director
Simon Tregoning
Non-Executive Director (retired from the Board on 18 February 2021)
Executive KMP
Mark Palmquist
Amy Spanik
Bryan Bechard
Tiago Darocha
Former Executive KMP
Darren Smith#
Role
Managing Director and Chief Executive Officer
Chief Financial Officer
President, Warehouse & Distribution
Chief Operating Officer (appointed 12 July 2021)
President, Processing (ceased employment on 25 March 2021)
# Darren Smith gave notice of resignation post FY20 balance date and ceased to be a KMP on 1 October 2020. He had a six-month notice
period.
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2. FY21 Executive Remuneration Outcomes
FY21 Base Salary
Remuneration for the Executive KMP was set prior to demerger of United Malt from GrainCorp Limited in FY20 after a comprehensive
review of relevant benchmarks, both in Australia and in the United States where all the Executive KMP are based. This review looked at
both Australian companies of a similar market capitalisation, but also similarly sized roles and companies in the United States. While
Australian market practice is a key consideration in assessing base salaries, the Nominations and Remuneration Committee must also
ensure that Executive KMP salaries are competitive in the markets in which they operate.
There were no increases to any Executive KMP salaries in FY21.
FY21 Short Term Incentive
The United Malt Corporate Scorecard outcomes were measured across the full FY21. The FY21 Scorecard was designed to reflect the
standalone United Malt business and to align with United Malt targets, allowing STI participants to be measured against performance
for the full year. Performance against the FY21 metrics is set out below in Table 1.
In determining the FY21 STIP outcomes, the Board reviewed the key metrics that drive the performance of the Company in key areas.
Financial metrics are critical, hence the 50% weighting given to the Company’s EBIT performance. Customers and Environment, Health
and Safety initiatives are central to the Company’s operations so performance in these areas is tracked throughout the year and makes
a material contribution to STIP outcomes.
Each Executive KMP has their own individual metrics approved by the Board which align to their respective areas of responsibility. For
the MD&CEO key individual objectives include the management and performance of key internal projects delivering the transformation
of the business and key growth initiatives, together with key initiatives regarding the management of the Company’s assets, as well as
executive talent development and succession planning.
FY21 Executive KMP STI Performance
Executive KMP*
Financial measures
weighting (%) and
performance
Environment, Health &
Safety weighting (%)
and performance
Customer
weighting (%)
and performance
Individual
weighting (%)
and performance
Name
Position Title
EBIT
RIFR, EH&S
Engagements and
Critical Risk Reviews
NPS and
Customer
performance and
insight
Agreed objectives
tailored to the
Executive KMP’s role.
Mark Palmquist
MD&CEO
(50%)
(15%)
(15%)
Amy Spanik
Chief Financial Officer
Bryan Bechard
President, Warehouse &
Distribution
Tiago Darocha
Chief Operating Officer
(50%)
(15%)
(50%)
(50%)
(15%)
(15%)
(15%)
(15%)
(15%)
(20%)
(20%)
(20%)
(20%)
Minimum performance
threshold not achieved
Threshold performance
achieved
Target performance
achieved
Stretch performance
achieved
* Mr Smith, a former Executive KMP, was ineligible for a FY21 STI payment.
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In determining the final scorecard results, the Board believes the right outcome for Executive KMP and shareholders was to award a
modest, well below target STI that reflected the Company’s lower financial results which were adversely affected by significant items.
The outcomes for the Executive KMP have been assessed at between 33-37% of target STI.
There are a number of reasons for this outcome:
•
•
•
•
•
The global COVID-19 pandemic continued to disrupt our business, including the disruptions in supply chains and ongoing
negative impact on malt demand as on-premise consumption was affected by the various lockdown restrictions across our core
markets. As outlined in the Annual Report, our employees and executives have worked hard and effectively to meet these
challenges and adapt to the changing market conditions. The overall result, while disappointing, did reflect good performances
across elements of the business. This effort, teamwork and financial outcomes are also taken into account in the Board’s final
assessment of performance, particularly in the individual component on the scorecard.
The EBIT target was not achieved, which was very disappointing. This was due in part to the impact of the significant items
outlined in the financial results. However, the Board is satisfied with executive contributions to a variety of initiatives commenced
in FY21 which will underpin our financial performance in future years. Examples include major projects to increase malt
production, greater capacity to service our customers in the warehouse and distribution area, and our transformation programme
to create a simplified business with standardised processes, skills and systems.
Environment, Health and Safety performance during FY21 was steady with a pleasing reduction in both the total number of
injuries and also in the frequency rate of injuries across our workplaces. The frequency rate of lost time injuries increased,
primarily as a result of reduced hours due to site consolidation and closures during the year. There was also significant work done
to adjust to new COVID-19 requirements. Overall the Board assessed performance between threshold and target.
Customers continued to be the focus of our operations across the year and this has been a strength of United Malt. However,
COVID related transport and delivery issues were a factor contributing to a decline in our Net Promoter Score (NPS) relative to
2020. The Board and Executive KMP are focused on improving the end-to-end customer experience with key initiatives launched
to enable us to understand our customer needs and work with them to deliver the outstanding service they deserve. Overall, the
customer objectives were scored at threshold.
The Board also undertakes a detailed assessment of the individual performance of each Executive KMP. For the MD&CEO and
Chief Financial Officer the impact of significant items on the financial result of the Company was taken into account.
After reviewing the performance of United Malt and our Executive KMP individually, the Board believes the outcome was appropriate
and balanced and these results fairly reflect both Company and individual Executive KMP performance in a challenging year.
FY21 Executive KMP STI outcomes
The table below sets out the actual STI outcome for each Executive KMP as a percentage of both their target and maximum STI
percentage.
Executive KMP
Mark Palmquist
Amy Spanik
Bryan Bechard
Tiago Darochai
2021
Target / maximum
2020
Target / maximum
33% / 22%
33% / 22%
37% / 24%
37% / 24%
42% / 28%
46% / 31%
46% / 31%
n/a
i Mr Darocha’s FY21 STI award was pro-rated based on his start date in July 2021.
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3. Executive KMP statutory remuneration outcomes for FY21
The table below sets out the total remuneration for Executive KMP in FY21 and FY20, calculated in accordance with statutory
accounting requirements.
FY21 and FY20 statutory remuneration outcomes for Executive KMP
Amount
A$i
Short-Term Benefits
Post-Employment
Benefits
Share-based
Payments
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The proportion of each Executive’s KMP’s remuneration for FY21 that was fixed, and the portion that was subject to a performance
measure, is set out below. The percentages are based on the FY21 statutory remuneration disclosures above (including the STI
deferral and LTI awards values which are determined in accordance with accounting standards) and do not correspond to the target
remuneration percentages set out below.
Mix of fixed and variable remuneration based on FY21 statutory remuneration outcomes for Executive KMP
Executive KMP
Mark Palmquist
Amy Spanik
Bryan Bechard
Tiago Darochai
Fixed
54%
72%
77%
92%
Variable (including short-term and
long-term incentive payments)
46%
28%
23%
8%
Current Executive KMP
Mark
Palmquistii
Amy
Spanik
Bryan
Bechardvii
Tiago
Darochavii
2021
$1,178,674
$191,535
$16,779
$9,114
2020
$550,766
–
$10,660
$12,267
2021
$432,602
$42,179
$24,273
$11,221
2020
$437,787
–
$31,193
$13,134
2021
$393,628
$31,641
$24,752
$7,602
2020
$396,067
$10,729
$31,193
$8,812
2021
$185,116
$14,394
$3,919
$2,050
–
–
–
–
–
–
–
Former Executive KMP
$292,567
$538,853
$2,227,523
$144,453
$347,807
$1,065,953
$69,003
$71,113
$650,391
i In FY21 Mr Darocha received no LTI awards and an STI award pro-rated to his start date in July 2021.
4. Executive Remuneration Policy
Our remuneration policy aims to engage and retain executive talent, while motivating them to deliver business strategy and key
performance targets that create value for shareholders. It seeks to provide remuneration that is structured in a manner that also
encourages behaviours consistent with United Malt’s corporate values.
$34,840
$37,884
$554,838
The Board affirmed its commitment to the following principles underlying the Company’s Remuneration Policy:
$40,408
$56,999
$555,030
$18,617
$20,861
$486,279
$2,015
–
$207,494
•
•
•
Fixed remuneration is determined at a level to attract and retain top talent with a market competitive offering. It is determined
regarding the complexity, responsibility, competence and levels that are competitive with remuneration levels for employees in
comparable roles in the relevant market.
Variable remuneration plans link outcomes to achievement of business and individual goals, as well as to behaviours which are
consistent with United Malt’s values.
United Malt aims to position Executive KMP at the median of the relevant market for fixed remuneration with a range up to the
75th percentile of total remuneration for outstanding performance.
Darren
Smithix
2020
$605,380
–
$21,151
$12,301
–
$51,278
$88,771
$778,881
Explanatory notes to the Statutory Remuneration outcomes table:
i.
Amounts have been converted using the average exchange rate for the period the remuneration is reported. In FY21 the exchange rate
used was USD = AUD1.3319.
ii. Mr Palmquist’s annual base salary remained unchanged at US$885,500 (A$1,178,674). For FY20 the MD&CEO is reported from his
commencement as MD&CEO of United Malt on 23 March 2020, a period of just over six months (noting that for five months from May
2020 to September 2020 he elected to take a 20% reduction in base salary due to the impact of COVID on United Malt’s business). Prior
to March 2020 he was not a KMP of the Malt business of GrainCorp Limited.
iii.
iv.
v.
vi.
vii.
Non-monetary benefits include the gross value of health insurance and vehicles (if applicable). All Executive KMP are based in the United
States and have no superannuation or long service leave entitlements.
The FY20 LTI Awards amounts for Amy Spanik and Darren Smith include an award relating to FY18 STI deferred equity.
The value of the STI deferral and the LTI awards represents the accounting value rather than the cash value to participants. In 2021, all
Executive KMP STI awards were paid 50% in cash and 50% in STI deferral awards. In FY20 all STI awards were made as 100% STI
deferral awards. Please also note the FY21 figures include the amortised accounting value of awards made in FY20.
For FY20 remuneration the Executive KMP, excluding Mr. Palmquist, have been reported for the full FY20 in accordance with AASB 124.
The FY20 Cash STI payment for Bryan Bechard is related to a FY18 STI deferred cash payment.
viii. Mr Darocha commenced employment on 12 July 2021 and his FY21 remuneration is shown from that date. The amount shown includes
assistance paid to Mr Darocha for his relocation. Mr Darocha’s FY21 STI payment is also pro-rated based on the portion of the year he
was employed.
ix.
No FY21 remuneration is shown for Mr Smith as he resigned from United Malt effective 1 October 2020 and ceased to be a KMP.
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Remuneration framework
Remuneration for Executive KMP comprises fixed and variable (‘at risk’) elements. A significant proportion of the total remuneration for
Executive KMP is ‘at-risk’ to create alignment with United Malt’s strategic objectives and Shareholder interests.
5. Variable Remuneration
The United Malt STI Plan rewards achievement against annual business goals. It forms a part of our attraction strategy and provides for
both recognition and retention. The terms of the STI plan are outlined below.
Short-term Incentive
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The executive remuneration framework elements and their links to performance are outlined below.
Term
Details
Base Salary
Variable Remuneration (At-Risk)
Elements
Salary (and benefits as relevant
to local conditions).
Short Term Incentive (STI)
Long Term Incentive (LTI)
Delivery Method
Cash
Cash and Equity
(Deferred Rights)
Equity
(Performance Rights)
Intent
Attract and retain talent by providing
competitive package, recognising
job size, complexity and capability.
Link to Performance
Suitable and appropriate reward
commensurate with
the role.
Performance Measures
Position requirements and
accountabilities that align to
achieving business strategy.
Reward for short-term
business and personal goals
with equity deferral, alignment
with sustainable shareholder
return performance.
A balanced scorecard of key
business measures and
individual measures aligned to
core accountabilities.
Financial (EBIT), Environment,
Health & Safety, Customer,
and Individual measures.
•
•
Set in relation to relevant
external market considering
experience and performance.
Target median of the market
for base salary with range up
to 75th percentile of base plus
variable for outstanding
performance.
•
•
50% paid in cash.
50% deferred over 12 and
24 months into equity.
• Measured against
scorecard (financial,
customer, safety and
individual measures).
How it works
Remuneration mix
Alignment with long-term
business goals and shareholder
value creation.
Key measures set with three-year
targets to focus on cost efficiency
and sustainable improvement.
•
•
•
•
•
ROCE
aTSR
Strategic measures
Delivered as Rights.
Vest after three years
subject to performance
conditions of 50% ROCE,
25% aTSR and 25%
strategic measures.
The tables show the breakdown of total remuneration at target achievement by our three remuneration elements in accordance with our
policy. The split of cash and equity is considered important for building alignment with shareholder value creation. The balance of the
pay mix, and the cash and equity mix, will continue to be reviewed over time.
Executive KMP remuneration mix at target
Eligibility
All Executive KMP are eligible to participate in the STI. The United Malt Board determines the employees who
are eligible to participate in the STI from time to time.
Opportunity
The opportunity is set as a percentage of base salary. Maximum opportunity is 1.5 times target (150%).
The CEO has a target opportunity of 100% and a maximum opportunity of 150%.
The opportunity for the remaining Executive KMP ranges from a target of 50% up to 60% and a maximum
opportunity from 75% to 90%.
The proportion of the STI award that vests is delivered:
• 50% as cash; and
• 50% deferred into rights to acquire United Malt shares.
Deferred rights do not carry any voting or dividend rights, but dividend equivalent payments (which may be
delivered in cash or additional shares) may be made on vesting of the rights.
The deferred rights will vest in two tranches – 50% of the deferred awards vest after 12 months and 50% after
24 months.
Performance was tested over one financial year, 1 October 2020 to 30 September 2021.
Form of award
Deferred STI
award and
deferral period
Performance
period
The United Malt STI scorecard measures four key financial and non-financial elements and each element is
weighted the same for the CEO and the other KMP.
Performance
measures
Financials (EBIT) 50% weighting
Environment, Health & Safety (RIRF, EH&S Engagements and Critical Risk Reviews) 15% weighting
Customers (NPS and Customer Feedback, Customer performance and insight) 15% weighting
Individual performance (including people leadership, project completion) 20% weighting
Malus
The United Malt Board in its discretion may determine that some, or all, of an employee’s deferred STI should
be forfeited for gross misconduct, material misstatement or fraud.
Cessation of
employment
Change of
Control
Unless the United Malt Board determines otherwise, STI awards will:
a. Remain on foot to be paid, or be awarded in full, at their normal payment or grant date for cessation of
employment due to any other reason (including redundancy, disability, death or retirement), or
b. Lapse where the participant ceases employment due to resignation or termination for cause.
All deferred STI awards will vest upon a change of control unless the United Malt Board determines otherwise.
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Remuneration Report
Remuneration Report
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(cid:3)
(cid:3)
6. Variable Remuneration – Long-term Incentive
The LTI Plan awards are granted under the United Malt Employee Incentive Plan Rules and are intended to reward superior long-term
performance and encourage retention and alignment with United Malt shareholders.
The terms of the Long-term Incentive Plan are outlined below.
Term
Details
Eligibility
The United Malt Board determines the employees who are eligible to participate. Currently, the LTI is open
only to Executive KMP.
Instrument
Opportunity
Performance
period
Performance
conditions
Performance rights, each being a right to acquire a United Malt share for nil consideration, upon specified
performance measures being satisfied over the relevant performance period. Performance rights will not
carry voting or dividend rights.
The Board retains discretion to settle Vested Rights in cash by making a cash payment equal to the Cash
Equivalent Value in lieu of an allocation of Shares.
The number of Performance Rights granted to each participant is determined by dividing the dollar value of a
participant’s LTI opportunity by the Volume Weighted Average Price (VWAP) of shares over a defined period.
For the FY21 LTI the VWAP was the 20 trading days immediately following the date on which the Company’s
full-year results were released for the financial year ended 30 September 2020.
For FY21 the LTI opportunity is as follows:
• CEO - 100% of base salary.
• All other Executive KMP - 40% of base salary.
The FY21 LTI performance period commenced on 1 October 2020 and ends on 30 September 2023.
Vesting of Performance Rights under the FY21 LTI plan will be subject to the participant’s continued
employment with United Malt and satisfaction of specified performance conditions.
The performance conditions applicable to the FY21 award under the LTI plan are as follows:
a. Return on Capital Employed (ROCE) - 50% of the FY21 LTI grant
Defined as EBIT divided by capital employed. Earnings before interest and taxes (EBIT) divided by
capital employed (being the sum of United Malt’s total borrowings net of cash assets and average
shareholders’ equity). An average of the three financial year ROCE outcomes will be calculated to
determine the ROCE over the three-year vesting period and then measured against the applicable
ROCE targets.
b. Absolute total shareholder return (aTSR) - 25% of the FY21 LTI grant
Defined as the compound annual growth rate (CAGR) of United Malt’s TSR over the performance
period measured against the applicable aTSR targets.
c. Strategic execution - 25% of the FY21 LTI grant
Realisation of the pre-determined agreed metrics that will demonstrate the achievement of United Malt’s
Strategic Plan. There are a variety of quantified metrics predominately designed to increase revenue or
manage costs in the following key areas.
• Profitability and customer performance – realign and enhance our marketing and decision-making
capabilities with a focus on customer efficiencies and increased profitability.
• Operating Model – reposition our operating model to reflect the needs of United Malt as a stand-
alone, listed Company involved in Malt and beverage ingredient products.
• Growth – establishing and executing strategic growth opportunities.
The precise strategic measures are commercially sensitive and the Company’s performance against these
measures will be outlined following the completion of the three-year performance period in the FY23
Remuneration Report.
(cid:24)(cid:144)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:16)(cid:131)(cid:142)(cid:150)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:15)(cid:139)(cid:143)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:3)
(cid:3)
(cid:3)
Term
Details
a. The proportion of rights that may vest based on ROCE performance is determined by the Board, based on the
following vesting schedule.
ROCE
Percentage of ROCE rights to vest
Below threshold ROCE target – 6%
Equals threshold ROCE target – 6%
Nil
25%
Between threshold and maximum ROCE target
Straight line between 25% and 100%
At or above maximum ROCE target – 10%
100%
b. The proportion of rights that may vest based on aTSR performance is determined by the Board based on the
following vesting schedule.
Absolute TSR
Percentage of TSR rights to vest
FY21 Vesting
schedules
Below threshold aTSR CAGR target – 6%
Equals threshold aTSR CAGR target – 6%
Nil
25%
Within target range of 6 to 10% TSR CAGR
Straight line between 25% and 100%
At or above maximum aTSR CAGR target – 10%
100%
c. The proportion of rights that may vest based on the execution of Strategic measures is determined by the
Board based on the following vesting schedule.
Strategic measures
Percentage of Strategic rights to vest
Majority of strategic measures not achieved
Nil
Majority of strategic measures partially
achieved
Majority of strategic measures fully
achieved
25% to 100%
100%
In determining whether the strategic measures are achieved the Board will primarily examine the
performance against the defined financial targets associated with the applicable measures, but also take into
consideration qualitative factors such as execution against agreed timeframes.
Vesting
Based on performance relative to the performance conditions, the relevant number of performance rights will
vest, and each participant will receive a United Malt share in respect of each vested performance right
(unless the United Malt Board, in its sole discretion, determines to settle vested performance rights by making
a cash equivalent payment in lieu of the allocation of United Malt shares).
Disposal
restrictions
In accordance with the Minimum Shareholding Policy (MSP), a participant must seek approval to sell or
transfer any Shares allocated on Vesting of the Rights. Approval will be granted if the participant meets or
exceeds the minimum holding level set under the MSP (and would continue to satisfy the holding
requirements immediately after the disposal).
However, a participant may seek approval to dispose of Shares at any time if compliance with the MSR will
cause severe financial hardship (including meeting a tax obligation in connection with participation in the
Plan) or could prevent a participant from complying with an order from a court of law.
Malus
The United Malt Board in its discretion may vary downwards the number of an employee’s shares due to
vest, if the Board determines that the performance of the Group, any member of the Group, any business,
area or team, and the conduct, capability, or performance of the Participant, justifies the variation.
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Remuneration Report
Remuneration Report
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(cid:3)
(cid:3)
(cid:24)(cid:144)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:16)(cid:131)(cid:142)(cid:150)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:15)(cid:139)(cid:143)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:3)
(cid:3)
(cid:3)
Term
Details
FY20 Long Term Incentive
Cessation of
employment
Unless the United Malt Board determines a different treatment, where a participant ceases employment with
United Malt:
a.
b.
as a result of resignation or termination for cause, all unvested performance rights will lapse; or
for any other reason (including redundancy, disability, death or retirement), a pro-rata number of the
participant’s unvested performance rights (based on the proportion of the performance period that has
elapsed at the time of cessation) will remain on foot and will be eligible to vest on the original vesting
date. To the extent the relevant performance hurdles are satisfied the shares will then vest.
Change of
Control
In the event of a change of control all unvested performance rights will vest unless the United Malt Board
determines otherwise.
7. Legacy Equity awards
As a stand-alone Company from 24 March 2020, there are no United Malt prior year LTI awards able to vest in FY21.
One-off Award
As there were no LTI awards due to vest until post FY22, to encourage retention of Executive KMP and to support alignment with
United Malt shareholders during the period following the demerger, a One-off Award was granted to the CEO and the President,
Processing in September 2020. The Chief Financial Officer and the President, Warehouse & Distribution had not been eligible for LTI
prior to the offering of the United Malt FY20 LTI, and as such they were not offered participation in the One-off Award.
The performance period for this award commenced on the date United Malt shares commenced trading on the ASX (24 March 2020)
and ended on 30 September 2021.
There were two performance hurdles, ROCE and absolute TSR, each applying to 50% of the One-off award.
The proportion of rights that may vest based on ROCE performance was determined by the Board, based on the following vesting
schedule:
ROCE
Percentage of ROCE rights to vest
Below threshold ROCE target – 8.6%
Equals threshold ROCE target – 8.6%
Nil
25%
The first United Malt LTI (the FY20 LTI) was offered to Executive KMP in September 2020. Due to the timing of the grant and demerger,
it has a slightly shortened performance period (2.5 years) commencing on the date United Malt shares commenced trading on the ASX
(24 March 2020) and ending on 30 September 2022.
There were two performance hurdles, ROCE and absolute TSR, each applying to 50% of the FY20 LTI award. The performance
conditions and vesting schedule are the same as the One-off Award described above. All other terms and conditions are as per the
FY21 LTI.
8. Remuneration in FY22
Base salary
There will be no changes to the base salary for the MD&CEO. There are no proposed changes to any Executive KMP base salaries for
FY22, other than an increase in base salary for the President, Warehouse & Distribution. Following a benchmarking review, his salary
will increase by approximately 15% to align the remuneration for this role more closely to other Executive KMP.
Short-term incentive
There will be no change to STI quantum for any Executive KMP in FY22, other than the President, Warehouse & Distribution whose
target opportunity increases from 50% to 60%, in line with the other Executive KMP (aside from the MD&CEO).
The Board reviewed the structure of the STIP to ensure an appropriate balance between corporate and individual outcomes. This has
resulted in a small number of changes proposed in FY22 to better align the STI programme with executive accountabilities. The
Corporate Scorecard will be maintained, with EBIT remaining as the largest measure along with safety, environment and other non-
financial measures, but the weighting of the Corporate Scorecard reduces from 80% to 60% (MD&CEO and Chief Financial Officer) or
50% (Chief Operating Officer and President, Warehouse & Distribution). The increased emphasis on Environmental, Social and
Governance objectives in the Corporate Scorecard includes a new Waste Management and Landfill reduction objective and also
revised safety objectives.
There will be increased weighting for individual executive performance objectives. Individual objectives will be assessed according to
Individual Scorecards with each Executive KMP being assessed on those objectives for which they have direct responsibility and
accountability. This will include customer advocacy and satisfaction, capital project execution, executing process improvement
initiatives and the development and delivery of strategic growth opportunities. Both Corporate and Individual Scorecard metrics will be
outlined in the FY22 Remuneration Report.
Between threshold and maximum ROCE target
Straight line between 25% and 100%
At or above maximum ROCE target – 11.4%
100%
Long-term incentive
The proportion of rights that may vest based on aTSR performance was determined by the Board based on the following vesting
schedule:
Absolute TSR
Percentage of TSR rights to vest
Below threshold aTSR CAGR target – 6.0%
Equals threshold aTSR CAGR target – 6.0%
Nil
25%
Within target range of 6% to 10% TSR CAGR
Straight line between 25% and 100%
At or above maximum aTSR CAGR target – 9.0%
100%
As described in our overview section at the beginning of the report, the Board and management team believe that there are critical
strategic projects that must continue to be delivered over the next three years. The Board has determined that to continue to drive the
Company’s transformation strategy and ensure appropriate returns to shareholders the existing structure of LTI measures will remain.
ROCE is a measure of profitability and the efficient use of capital efficiency. Both are critical to our business. Absolute TSR is a
measure of shareholder value. The strategic measure aligns with the key transformative objectives of the business to create a simplified
and efficient organisation over the next three years, and also assesses delivery of major capital projects and management’s success in
identifying and executing growth opportunities. An overview of the weightings and definitions for our FY22 LTI measures is set out
below.
Measure
Weighting
Definition
Earnings before interest and taxes (EBIT) divided by capital employed (being the sum of
United Malt’s total borrowings net of cash assets and average shareholders’ equity). An
average of the three financial year ROCE outcomes will be calculated to determine the
ROCE over the three-year vesting period.
The FY21 LTI threshold and stretch metrics will be retained for the FY22 LTI awards. The
targets are set bearing in mind the Group’s three-year ROCE targets, with threshold not
less than the Company’s post-tax weighted average cost of capital. As in 2021, only 25% of
the award vests on achieving threshold, vesting on a straight-line basis up to the stretch
hurdle.
The compound annual growth rate of United Malt’s TSR over the performance period.
All other terms and conditions, including the definition of the performance conditions, are as per the FY21 LTI.
ROCE
50%
One-off award vesting outcomes
ROCE
United Malt’s ROCE performance over the period of 24 March 2020 to 30 September 2021 was 5.8% versus a threshold of 8.6% and
so no portion of this award will vest.
Absolute TSR
United Malt’s aTSR performance over the period of 24 March 2020 to 30 September 2021 was 0.77% versus a threshold of 8.6% and
so no portion of this award will vest.
aTSR
25%
The FY21 LTI threshold and stretch metrics will be retained for the FY22 awards. As in
FY21, only 25% of the award vests on achieving threshold, vesting on a straight-line basis
up to the stretch hurdle.
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UNITED MALT
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Remuneration Report
Remuneration Report
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(cid:3)
(cid:3)
FY21 and FY20 Non-Executive Director fees (statutory remuneration outcomes)
The following table sets out the audited Non-Executive Director fees in FY21 and FY20 calculated in accordance with statutory
accounting requirements and which reflect the actual remuneration received during the year. Non-Executive Directors are not eligible to
receive any cash-based or equity-based incentives.
Financial
Year
(cid:3)
Board and
Committee Feesi
Superannuation
Other Benefits
Total Fees
Current Non-Executive Directors
Graham Bradley AM
Barbara Gibson
Jane McAloon
Gary W. Mizeii
Terry Williamson
Former Non-Executive Directors
Simon Tregoningiii
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
$310,149
$137,736
$140,023
$62,184
$153,500
$29,851
$13,085
$13,477
$5,907
–
$62,184
$5,907
$133,508
–
–
–
$140,023
$13,477
$62,184
$5,907
$54,414
$57,930
$5,169
$5,503
–
–
–
–
–
–
–
–
–
–
–
–
$340,000
$150,821
$153,500
$68,091
$153,500
$68,091
$133,508
-
$153,500
$68,091
$59,583
$63,433
i.
ii.
iii.
FY20 Fees and superannuation are for the period commencing on 23 March 2020. While most Non-Executive Directors were appointed to
the United Malt Board on 13 January 2020 (Terry Williamson was appointed from 23 March 2020), no payment was received by any Non-
Executive Director from United Malt for the period between appointment and formalisation of the demerger in March 2020.
Mr Mize was appointed 23 October 2020. His fees are paid in USD. The USD:AUD exchange rate used for these fees is 1:1.3319.
Mr Tregoning resigned 18 February 2021. The fees paid are until that date.
(cid:24)(cid:144)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:16)(cid:131)(cid:142)(cid:150)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:15)(cid:139)(cid:143)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:3)
(cid:3)
(cid:3)
Measure
Weighting
Definition
In assessing performance against pre-set Strategic measures, the Board will evaluate how
well management has delivered against key projects and goals over the three-year
performance period from 1 October 2021 to 30 September 2024. A major focus will be
Transformation strategy and the drive to create a more streamlined and efficient
organisation and improve capabilities by implementing simplified and standardised
processes, skills and systems.
In addition, Executive KMP will also be assessed regarding the on-time and on-budget
delivery of major capital projects and management’s success in identifying and executing
growth opportunities, including greenfield business developments in new geographies.
Strategic Measures
25%
The key criteria to be used by the Board is as follows:
• Achieving annualised EBITDA benefits (savings or revenues).
• Achieving the agreed benefits within the timeframes and financial goals
• Demonstrating teamwork to achieve good customer and stakeholder management.
• Adapting to any material changes in circumstances impacting the timeframes and
estimated benefits.
Performance against these measures including detail regarding the annualised benefits
achieved, the status of the capital projects delivered and the progress on the identification
and execution of organic growth opportunities will be disclosed in the FY24 Remuneration
Report.
Non-Executive Director fees
No changes are proposed to any Non-Executive Director fees in FY22.
9. Non-Executive Director fees
Full-year Non-Executive Director fees are set out below. They reflect the approach agreed as a result of the review undertaken in
preparation for the demerger. The fees were positioned at market median for base fees, committee chair and membership fees, and
aligned with positioning against companies of a similar size.
Fees are paid from the $1,500,000 aggregate annual fee pool. This pool value was set to allow for growth and changes within the
structure of the United Malt Board over time. This fee pool was approved as part of the Scheme approved by shareholders in November
2019 and remained unchanged at the 2020 AGM. Total Director fees paid during FY21 was $993,591. These fees represented 66% of
the fee pool.
In view of the continuing business environment, no changes to Board fees will be made for FY22.
FY21 Non-Executive Director fees
Function
Board
Board Committees:
• Audit and Risk
• Nominations and Remuneration
•
Environment, Health & Safety
Role
Chairman
Non-Executive Director
Chair
Committee Member
Fees A$ (including
superannuation)
$340,000
$120,000
$22,000
$11,500
Superannuation contributions are made in accordance with Australian superannuation legislation at a rate of 9.5%, and 10% from 1 July
2021. Superannuation is included in the fees presented above.
Committee fees are not paid to the Chairman of the Board.
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Remuneration Report
Remuneration Report
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(cid:3)
(cid:3)
10. Remuneration Governance
The Board has ultimate responsibility for the Company’s remuneration policies and takes that responsibility very seriously. Strong
governance and oversight processes have been established for remuneration, assisted by the Nominations and Remuneration
Committee which comprises three Non-Executive Directors. The Committee assists the Board to satisfy itself that the Company:
•
•
•
has coherent remuneration and people management policies and practices which are aligned with the Company’s purpose, values,
strategic objectives and risk appetite and which enable the Company to attract, motivate and retain capable and talented Directors,
executives and employees;
fairly and responsibly remunerates Directors, executives and employees having regard to the performance of the Company and
best market practices; and
delivers on its overall people strategy, with regard to the Company’s succession planning, talent management, diversity,
performance management and employee relations policies.
The Nominations and Remuneration Committee operates under a Charter which was established at the commencement of the
Company and will be reviewed every two years. The Charter is available on the Company’s website.
Minimum Shareholding Policy
A Minimum Shareholding Policy was approved in July 2020 in recognition of the importance of aligning the interests of United Malt’s
Non-Executive Directors and Executives with the long-term interests of the Company’s shareholders. Non-Executive Directors must
have a minimum shareholding equal to one times base fees within five years, Executive KMP must hold one times base salary, and the
CEO must hold two times base salary also within five years from commencement of the policy or appointment. Compliance is reviewed
by the Nominations and Remuneration Committee following the end of each financial year. Executives are required to retain all shares
acquired from participation in the United Malt employee incentive plan (other than shares sold to cover tax obligations) until such time
as they meet the minimum shareholding. They are not expected to buy shares on market to reach the minimum shareholding. A full
copy of the Policy is available on the Company website.
Remuneration Advisers
The Board and the Nominations and Remuneration Committee may seek advice from external advisers as required.
In FY21 no remuneration recommendations relating to KMP remuneration were obtained.
Employment Terms
(cid:24)(cid:144)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:16)(cid:131)(cid:142)(cid:150)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:15)(cid:139)(cid:143)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:3)
(cid:3)
(cid:3)
11. Shareholdings and other mandatory disclosures
Movement of Rights held during the FY21 reporting period
Details of the issue of Performance Rights in the Company are shown in the table below.
Role
Current KMP
Balance as at
1 October 2020
Granted
during the
year
Exercised
during the year
Forfeited or
lapsed during
the year
Balance as at
the 30
September
2021
Vested and
exercisable as
at 30
September
2021
Mark Palmquist
576,610
379,715
–
Amy Spanik
Bryan Bechard
Tiago Darocha
Former Executive KMP
48,221
36,358
–
66,268
45,931
–
(2,861)
–
–
–
–
–
–
Darren Smith
119,186
39,579
(4,740)
(154,025)
956,325
111,628
82,289
–
–
–
–
–
–
–
Number of rights granted, vested and forfeited under the deferred STI and LTI awards
Details of the number of rights granted to Executive KMP, as well as the number of rights that vested or were forfeited during the year
are provided below.
Equity granted
Vested in 2021
Plan
Number of
rights
Grant date
Fair value at
grant
Financial year in
which rights may
vest i
Vested
in the
year
(%)
Forfeited
in the
year (%)
Number
of
ordinary
shares
The Executive KMP are employed under employment contracts which are open-ended.
Current Executive KMP
The Non-Executive Directors have a letter of appointment which outlines their duties and their remuneration. Non-Executive Directors
are not eligible to receive variable pay, bonuses or termination payments.
Executive KMP key employment terms
A summary of the key employment terms for the Executive KMP is shown in the table below.
Executive KMP
MD&CEO
Other Executive KMP
Notice period
Company
Notice period
KMP
Termination entitlements
6 months
3 months
6 months
Redundancy – 6 months
6 months
Redundancy – 6 months
Darren Smith – President Processing
Mr Smith resigned from United Malt post the FY20 balance date and ceased to be a KMP of the Company from 1 October. He has a
six-month notice period and ceased employment on 25 March 2021. On ceasing employment all Mr Smith’s unvested LTI awards
lapsed, as did his FY20 Deferred STI awards. He did not receive a FY21 LTI offer and no STI was payable to him in FY21.
Tiago Darocha – Chief Operating Officer
Mr Darocha was appointed on 12 July 2021 as Chief Operating Officer. Mr Darocha’s contract included relocation assistance to assist
with his move to Vancouver, Washington. Mr Darocha is entitled to a pro-rated FY21 payment and will be entitled to participate in the
FY22 STI and LTI programmes.
Mark
Palmquist
Amy
Spanik
Bryan
Bechard
FY21 LTI
268,218
11 Mar 2021
$ 869,697
2024
FY20 Deferred STI
111,497
22 Dec 2020
$ 451,563
2022, 2023
FY20 LTI
296,067
1 Sept 2020
$ 789,019
One-off Award ii
280,543
1 Sept 2020
$ 758,869
FY21 LTI
39,377
11 Mar 2021
$ 127,680
2023
2022
2024
FY20 Deferred STI
26,891
22 Dec 2020
$ 108,909
2022, 2023
FY20 LTI
45,360
1 Sept 2020
$ 120,884
FY21 LTI
31,562
11 Mar 2021
$ 102,340
2023
2024
FY20 Deferred STI
14,369
22 Dec 2020
$ 58,194
2022, 2023
FY20 LTI
36,358
1 Sept 2020
$ 96,894
2023
Former Executive KMP
FY20 Deferred STI
39,579
22 Dec 2020
$ 160,295
2022, 2023
Darren
Smith
FY20 LTI
57,223
1 Sept 2020
$ 152,499
One-off Award
57,223
1 Sept 2020
$154,788
2023
2022
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(100)
(100)
(100)
–
–
–
–
–
–
–
–
–
–
–
–
–
i.
ii.
This column reflects the financial year in which the award will vest, rather than the final year of the vesting period.
Mark Palmquist’s One-off Award will lapse in November 2021, as the performance hurdles for the Award have not been met.
52
UNITED MALT
(cid:3)(cid:4)(cid:17)(cid:17)(cid:24)(cid:4)(cid:15)(cid:3)(cid:21)(cid:8)(cid:19)(cid:18)(cid:21)(cid:23)(cid:3)(cid:884)(cid:882)(cid:884)(cid:883)(cid:3)
53
UNITED MALT
(cid:3)(cid:4)(cid:17)(cid:17)(cid:24)(cid:4)(cid:15)(cid:3)(cid:21)(cid:8)(cid:19)(cid:18)(cid:21)(cid:23)(cid:3)(cid:884)(cid:882)(cid:884)(cid:883)(cid:3)
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Remuneration Report
Remuneration Report
(cid:24)(cid:144)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:16)(cid:131)(cid:142)(cid:150)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:15)(cid:139)(cid:143)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:3)
(cid:3)
(cid:3)
Shares held by KMP
The table below details the number of Company shares, in which KMP have a relevant interest, as at the date of this report.
(cid:3)
Link between United Malt financial performance and executive remuneration
(cid:24)(cid:144)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:16)(cid:131)(cid:142)(cid:150)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:15)(cid:139)(cid:143)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:3)
(cid:3)
Summary of performance over 2021 and 2020 and link to remuneration
2021
2020
FY21
Role
Executive KMP
Balance
as at
30 September 2020
Vested
Purchased
Sold
Balance
as at
30 September 2021
EBIT
EBITDA
$62.7M
$92.0M
$123.3M
$156.1M
5.5 cents
3.9 cents
$4.10
$4.38
$4.12
$4.08
4.6 cents
16.8 cents
35%
0%
45%
n/a
Dividends (cents per share)
Share pricei
Share price (3-month average)ii
EPS
Average Executive KMP STI payout (relative to target)
LTI vesting outcomes
I.
II.
The share price quoted is the closing price on the last day of trading in the financial year.
This is the three-month average closing price to and including the last day of trading in the financial year.
Transactions and Loans to KMP
No transactions or loans involving Directors or Executive KMP, or their related parties, were made.
Signed on behalf of the Board in accordance with a resolution of Directors.
Graham Bradley AM
Chairman
17 November 2021
(cid:3)
Mark Palmquist
427,473
Amy Spanik
Bryan Bechard
Tiago Darocha
Non-Executive Directors
Graham Bradley AM
Barbara Gibson
Jane McAloon
Gary W. Mizei
Terry Williamson
8,183
2,898
–
81,395
29,895
12,076
–
34,586
Former Non-Executive Directors
Simon Tregoningii
72,895
–
2,861
–
–
–
–
–
–
–
–
10,000
–
–
–
20,000
5,000
10,734
17,696
15,000
–
–
697
–
–
–
–
–
–
–
–
437,473
10,347
2,898
–
101,395
34,895
22,810
17,696
49,586
72,895
FY20
Role
Executive KMP
Balance
as at
23 March 2020
Vested
Purchased
Sold
Balance
as at
30 September 2020
Mark Palmquist
302,473
Amy Spanik
Bryan Bechard
8,183
2,898
Former Executive KMP
Darren Smithiii
23,066
Non-Executive Directors
Graham Bradley AM
Barbara Gibson
Jane McAloon
Simon Tregoning
Terry Williamson
58,500
22,000
6,038
40,000
5,000
–
–
–
–
–
–
–
–
–
125,000
–
–
–
22,895
7,895
6,038
32,895
29,586
–
–
–
–
–
–
–
–
–
427,473
8,183
2,898
23,066
81,395
29,895
12,076
72,895
34,586
i. Mr Mize was appointed to the Board effective 23 October 2020.
ii. Mr Tregoning retired from the Board as a Non-Executive Director on 18 February 2021. His FY21 balance shareholding is shown as at
this date.
iii. Mr Smith ceased to be a KMP as at 1 October 2020. His shareholding balance on this date is as set out in the table above.
54
UNITED MALT
(cid:3)(cid:4)(cid:17)(cid:17)(cid:24)(cid:4)(cid:15)(cid:3)(cid:21)(cid:8)(cid:19)(cid:18)(cid:21)(cid:23)(cid:3)(cid:884)(cid:882)(cid:884)(cid:883)(cid:3)
55
UNITED MALT
(cid:3)(cid:4)(cid:17)(cid:17)(cid:24)(cid:4)(cid:15)(cid:3)(cid:21)(cid:8)(cid:19)(cid:18)(cid:21)(cid:23)(cid:3)(cid:884)(cid:882)(cid:884)(cid:883)(cid:3)
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Financial Report
Auditor’s Independence Declaration
As lead auditor for the audit of United Malt Group Limited for the year ended 30 September 2021, I
declare that to the best of my knowledge and belief, there have been:
(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of United Malt Group Limited and the entities it controlled during the
period.
Brett Entwistle
Partner
PricewaterhouseCoopers
Sydney
17 November 2021
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
56
57
UNITED MALT ANNUAL REPORT 2021
UNITED MALT ANNUAL REPORT 2021
Financial
Report
Financial Report
United Malt Group Limited
Consolidated Statement of Financial Position
As at 30 September 2021
Consolidated Statement of Profit or Loss and Other
Comprehensive Income
For the year ended 30 September 2021
Revenue
Other income / (loss)
Raw materials and consumables used
Employee benefits expense
Finance costs
Depreciation and amortisation
Occupancy costs
Repairs and maintenance
Other expenses
Profit before income tax
Income tax expense
Profit for the year attributable to equity holders of parent entity
Other comprehensive income
Items that will not be reclassified to profit and loss:
Remeasurement of retirement benefit obligations
Income tax relating to these items
Items that may be reclassified to profit and loss:
Changes in fair value of cash flow hedges
Income tax relating to these items
Exchange differences on translation of foreign operations
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the equity holders
of the parent entity
Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Note
1.2
1.3
1.3
3.2,3.3,3.4
1.3
1.4
3.6
1.4
1.4
2021
$ M
2020
$ M
1,235.0
1,289.1
6.0
(925.1)
(116.4)
(10.5)
(60.6)
(3.0)
(18.0)
(75.6)
31.8
(18.0)
13.8
18.4
(5.1)
7.6
(2.1)
19.7
38.5
52.3
4.5
(956.0)
(122.3)
(15.8)
(64.1)
(4.5)
(17.8)
(47.5)
65.6
(20.0)
45.6
(0.2)
(0.2)
5.6
(1.3)
(26.6)
(22.7)
22.9
Note
2021
2020
1.5
1.5
4.6
4.6
16.8
16.8
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes.
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Current tax assets
Assets held for sale
Total current assets
Non-current assets
Trade and other receivables
Derivative financial instruments
Deferred tax assets
Property, plant and equipment
Intangible assets
Right of use assets
Retirement benefit asset
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Derivative financial instruments
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Income received in advance
Borrowings
Lease liabilities
Derivative financial instruments
Deferred tax liabilities
Provisions
Retirement benefit obligations
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained earnings
Total equity
Note
2.1
3.1
3.1
2.5
3.2
2.5
1.4
3.2
3.3
3.4
3.6
3.1
2.1
3.4
2.5
3.5
2.1
3.4
2.5
1.4
3.5
3.6
2.2
2021
$ M
286.8
206.0
344.0
8.7
4.3
2.5
2020
$ M
262.1
245.4
318.5
4.4
5.2
-
852.3
835.6
1.4
2.4
24.7
679.6
337.9
77.4
16.8
0.2
2.4
21.7
620.8
337.6
66.4
2.1
1,140.2
1,992.5
1,051.2
1,886.8
179.4
168.2
12.2
4.5
0.2
12.1
376.6
18.5
349.5
69.3
3.2
103.0
3.0
3.6
550.1
926.7
178.4
107.3
12.4
4.9
0.7
12.9
316.6
19.1
348.1
56.0
5.2
93.3
4.0
13.2
538.9
855.5
1,065.8
1,031.3
166.9
492.0
406.9
166.9
452.6
411.8
1,065.8
1,031.3
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
2
58
UNITED MALT
59
ANNUAL REPORT 2021
Report Title
3
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Financial Report
United Malt Group Limited
Financial Report
United Malt Group Limited
Consolidated Statement of Changes in Equity
For the year ended 30 September 2021
Consolidated Statement of Cash Flows
For the year ended 30 September 2021
Hedging
reserve
$ M
Pension
reserve
$ M
Share
option
reserve
$ M
Common
Control
reserve
$ M
Trans-
lation
reserve
$ M
Total
reserves
$ M
Cont-
ributed
equity
$ M
Retained
earnings
$ M
Total
equity
$ M
14.5
67.2
47.5
At 30 September 2020
(3.3)
(26.1)
0.8
441.5
39.7
452.6
166.9
411.8 1,031.3
-
-
-
-
166.9
0.8
427.0
-
-
-
-
-
166.9
0.8
427.0
-
427.0
At 30 September 2019
Profit for the year
Other comprehensive income:
Exchange differences on translation of
foreign operations
Changes in fair value of cash flow hedges
Remeasurements of retirement benefit
obligations (note 3.6)
Tax effect of above items
Total other comprehensive income
Total comprehensive income for the year
Transactions with owners:
Shares issued
Share-based payments (note 1.3)
Demerger-related loan extinguishment
(7.8)
(26.4)
-
-
0.2
5.6
0.7
-
-
(0.2)
(1.3)
(0.2)
4.5
4.5
0.3
0.3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.8
Opening balance adjustment 1
Profit for the year
Other comprehensive income:
Exchange differences on translation of
foreign operations
-
-
-
-
0.1
(0.6)
Changes in fair value of cash flow hedges
7.6
-
Remeasurements of retirement benefit
obligations (note 3.6)
Tax effect of above items
Total other comprehensive income
Total comprehensive income for the year
-
18.4
(2.1)
(5.1)
5.6
5.6
12.7
12.7
-
-
-
-
-
-
-
-
-
-
(27.5)
(26.6)
-
-
-
5.6
(0.2)
(1.5)
(27.5)
(22.7)
(27.5)
(22.7)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.5
19.7
19.7
-
-
-
-
-
-
0.5
0.5
19.7
19.7
7.6
18.4
(7.2)
38.5
38.5
1.0
(0.1)
-
366.2
413.7
45.6
45.6
-
-
-
-
-
(26.6)
5.6
(0.2)
(1.5)
(22.7)
45.6
22.9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1.0)
(1.0)
13.8
13.8
-
-
-
-
-
13.8
19.7
7.6
18.4
(7.2)
38.5
52.3
-
-
1.0
(0.1)
(17.7)
(17.7)
Transactions with owners:
Share-based payments (note 1.3)
Employee shares purchased
Dividends paid (note 2.3)
At 30 September 2021
-
-
-
-
-
-
1.0
(0.1)
-
-
-
-
-
-
-
2.3
(13.4)
1.7
442.0
59.4
492.0
166.9
406.9 1,065.8
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Proceeds / (repayment) of inventory funding loans
Interest received
Interest paid
Lease payments (interest component)
Income taxes paid
Net inflow from operating activities
Cash flows from investing activities
Payments for property, plant and equipment
Payments for computer software
Net outflow from investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Proceeds from capital raise
Lease payments (principal component)
Dividends paid
Shares purchased for employee share plan
Net (outflow) / inflow from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
Note
2021
$ M
2020
$ M
1,326.9
1,351.1
(1,202.6)
(1,191.1)
124.3
58.9
0.6
(8.8)
(2.7)
(18.5)
153.8
(102.1)
(1.2)
(103.3)
-
-
-
(11.3)
(17.7)
(0.1)
(29.1)
21.4
262.1
3.3
286.8
160.0
(32.9)
1.4
(10.0)
(3.3)
(13.5)
101.7
(58.1)
(1.4)
(59.5)
220.1
(322.8)
166.9
(18.8)
-
-
45.4
87.6
181.4
(6.9)
262.1
2.1
2.3
2.1
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
1 Opening balance adjustment relates to software as a service costs that were previously capitalised that would have been expensed in the prior period under the IFRIC
pronouncement. Refer to Overview section C) for more information on newly amended accounting standards adopted.
60
61
Report Title
4
Report Title
5
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the
Consolidated
Financial Statements
For the year ended 30 September 2021
Overview
The financial report includes consolidated financial statements for United Malt Group Limited (‘United Malt’ or the ‘Company’) and its
controlled entities (collectively the ‘Group’). United Malt Group Limited is a for-profit company incorporated and domiciled in Australia,
limited by shares which are publicly traded on the Australian Securities Exchange. The financial report of United Malt Limited for the
period ended 30 September 2021 was authorised for issue in accordance with a resolution of the Directors on 17 November 2021.
a) Basis of preparation
This general purpose financial report has been prepared in accordance with Australia Accounting Standards issued by the Australian
Accounting Standards Board (AASB) and the Corporation Act 2001. The report also complies with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board.
United Malt successfully demerged from GrainCorp Limited on 23 March 2020 to form a stand-alone entity listed on the Australian
Securities Exchange.
The consolidated financial statements have been prepared on a historical cost basis, except for derivative financial instruments
measured at fair value and the defined benefit plan assets and liabilities, which are recognised as the net total of the plan assets, plus
unrecognised past service costs less the present value of the defined benefit obligation.
The report is presented in Australian dollars, with all amounts rounded to the nearest one hundred thousand dollars (unless specifically
stated otherwise) under the option available to the Company under ASIC Corporations (Rounding in Financial/Director’s Report)
Instrument 2016/191. The Company is an entity to which this legislative instrument applies. Comparative information has been
reclassified where necessary to conform to changes in the current year.
b)
Impact of the COVID-19 pandemic
During the reporting period, the COVID-19 pandemic has impacted people and businesses across the globe. United Malt has
considered the impact of COVID-19 on the disclosures included in this financial report. The financial performance of the Group was
impacted throughout FY21 by the COVID-19 pandemic. Governments imposed containment restrictions adversely affecting on-premise
alcohol consumption, particularly for small craft beer brands. While off-premise consumption increased, this was not sufficient to
mitigate the decline in on-premise consumption. Despite this, United Malt remains in a strong financial position to manage in the
current environment and to continue with investment in strategic growth initiatives.
c) New and amended standards adopted
The Group has adopted all mandatory amended Accounting Standards issued that are relevant and effective for the current reporting
period but does not early adopt any Australian Accounting Standards and Interpretations that have been issued or amended but are not
yet effective.
Interest rate benchmark reform
The banking sector and global banking regulators have been working together to develop a replacement of benchmark interest rates
which will replace Interbank Offered Rates (IBORs). One example is the London Interbank Offered Rate (LIBOR), which will cease to
be a valid benchmark rate from 31 December 2021. The cessation of the USD LIBOR is expected to be on 30 June 2023.
AASB 2020-8 Amendments to Australian Accounting Standards – Interest Rate Benchmark Reform – Phase 2 was issued by the AASB
in September 2020. The amendments apply only to those changes to financial instruments and hedging relationships that are a direct
consequence of the IBOR reform and then cash flows are amended on an economically equivalent basis. The key amendments include
a practical expedient for changes in contractual cash flows required by the reform, a hedge accounting transition clause to assist in
maintaining a hedge accounting designation when changes are made to hedging instruments as a result of the reform, and additional
required disclosures. The amendments will apply to the Group from 1 October 2021.
The Group completed a renewal of its inventory funding, working capital, and term debt facilities on 12 November 2021. As part of the
renewal, all of the reference rates for the UK debt tranches were amended from LIBOR to Sterling Overnight Index Average (SONIA).
Interest rate swaps related to the debt will be transitioned to reference the new rate. The Group is currently assessing the impact of the
transition, noting that the refinancing has not resulted in a material change in terms or cash flows related to the debt. The impact
related to the reference rate change is not expected to be material as the Group expects to utilise the transitional provisions permitted
by AASB 2020-8.
Notes to the Consolidated Financial Statements
United Malt Group Limited
c) New and amended standards adopted (continued)
IFRIC agenda decision Configuration or Customisation Costs in a Cloud Computing Arrangement
Previously the Group capitalised the costs incurred in configuring or customising supplier application software in a cloud computing
arrangement (including software as a service) as an intangible asset on the basis that the group would benefit from the costs to
implement the cloud-based software over the life of the asset. Following the IFRS Interpretations Committee agenda decision on
Configuration or Customisation Costs in a Cloud Computer Arrangement in March 2021, the Group has reconsidered the accounting
treatment and adopted the treatment set out in the IFRS Interpretations Committee decision, which is to recognise those costs as
intangible assets only if these activities create an intangible asset that is separate from the software and the entity controls the asset
and it meets the recognition criteria. Costs that do not meet the criteria of capitalisation are expensed as incurred, unless they are paid
to the supplier of the cloud-based software to significantly customise the product for the Group, in which case they are recorded as a
prepayment for services and amortised over the expected term of the cloud computing arrangement.
Costs expensed related to software as a service in the current period were $6.5 million. Any previously capitalised amounts relating to
prior periods have been adjusted in opening retained earnings in the Statement of Changes in Equity as the amount is not material.
d) Key judgements and estimates
In applying the Group’s accounting policies, management has made a number of judgements and applied estimates of future events.
Judgements and estimations which are material to the financial report relate to the following areas:
Taxation
Financial instruments and risk management
Intangible assets
Right of use assets and lease liabilities
Retirement benefit obligations
e) Foreign currency
Note
1.4
2.5
3.3
3.4
3.6
These consolidated financial statements are presented in Australian dollars, which is the functional currency of the United Malt Group
Limited and its Australia subsidiaries. Each entity in the Group determines its own functional currency, reflecting the currency of the
primary economic environment in which it operates.
Foreign currency transactions are translated into the functional currency using the exchange rates at the transaction date. Foreign
exchange gains and losses resulting from the settlement of such transactions, and from the translation of monetary assets and liabilities
denominated in foreign currencies at reporting date exchange rates, are recognised in profit or loss.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the
initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rate when the
fair value was determined.
The assets and liabilities of foreign subsidiaries are translated into Australian dollars by applying the rate ruling at balance sheet date
and revenue and expense items are translated at the average rate calculated for the period. Transactions in equity are translated by
applying the rate on the date of the transaction with no subsequent revaluation. Foreign exchange differences resulting from translation
are initially recognised in the foreign currency translation reserve and subsequently transferred to profit or loss on disposal of the
foreign operation.
6
62
UNITED MALT
63
ANNUAL REPORT 2021
Report Title
7
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
1. Group Performance
This section provides information on the performance of the Group, including segment results, line items in the consolidated income
statement, earnings per share, and income tax.
1.1 Operating segments
a) Description of segments
The Group is organised into two segments based on operational activity. These segments are consistent with internal reports that are
reviewed and used by the Group’s chief operating decision maker, the MD&CEO, in assessing performance and determining the
allocation of resources.
The operating segments are as follows:
•
Processing: generates earnings from the production and sale of bulk malt to major brewers, craft brewers, distillers and food
companies.
• Warehouse & Distribution: generates revenue for the distribution and sale of bagged malt, hops, yeast, adjuncts, and related
products to craft brewers, distillers and food companies.
Corporate includes costs associated with the corporate office function for the group. Segment performance is based on a measure of
EBITDA.
b) Performance of segments
2021
Reportable segment revenue
External revenue
Intersegment revenue
Total reportable segment revenue
EBITDA
Net interest
Depreciation and amortisation
Significant items 2
Profit / (loss) before income tax
Other segment information
Capital expenditure
Reportable segment assets
Reportable segment liabilities
Processing
$ M
Warehouse &
Distribution
$ M
Reportable
segments
$ M
Corporate &
Eliminations
$ M
Total
$ M
904.9
33.2
938.1
89.5
(0.5)
(50.0)
(21.1)
17.9
99.7
1,412.1
(309.8)
330.1
-
330.1
40.8
(1.9)
(10.5)
-
28.4
3.6
279.7
(87.9)
1,235.0
33.2
1,268.2
130.3
(2.4)
(60.5)
(21.1)
46.3
103.3
1,691.8
(397.7)
-
1,235.0
(33.2)
(33.2)
(7.0)
(7.4)
(0.1)
-
(14.5)
-
300.7
(529.0)
-
1,235.0
123.3
(9.8)
(60.6)
(21.1)
31.8
103.3
1,992.5
(926.7)
1.1 Operating segments (continued)
2020
Reportable segment revenue
External revenue
Intersegment revenue
Total reportable segment revenue
EBITDA
Net interest
Depreciation and amortisation
Significant items 3
Profit / (loss) before income tax
Other segment information
Capital expenditure
Reportable segment assets
Reportable segment liabilities
c) Geographical information
North America
Europe
Australasia
Asia
Other
1.2 Revenue
Total revenue from external customers
Revenue from sale of finished goods
Service and other revenue
Revenue from contracts with customers
Revenue recognised at point in time
Revenue recognised over time
Total revenue from external customers
-
1,289.1
156.1
(14.6)
(64.1)
(11.8)
65.6
59.5
1,886.8
(855.5)
4
2020
$ M
719.7
144.9
160.4
-
-
Processing
$ M
Warehouse &
Distribution
$ M
Reportable
segments
$ M
Corporate &
Eliminations
$ M
Total
$ M
-
1,289.1
960.2
29.2
989.4
126.0
(0.7)
(53.5)
-
71.8
54.2
1,336.0
(287.3)
328.9
-
328.9
34.6
(1.9)
(10.6)
-
22.1
5.3
272.4
(99.5)
1,289.1
29.2
1,318.3
160.6
(2.6)
(64.1)
-
93.9
59.5
1,608.4
(386.8)
(29.2)
(29.2)
(4.5)
(12.0)
-
(11.8)
(28.3)
-
278.4
(468.7)
Revenue by customer location
Non-current assets
2021
$ M
755.5
234.9
94.4
141.7
8.5
2020
$ M
792.3
214.0
91.1
175.2
16.5
2021
$ M
718.2
192.7
185.4
-
-
1,235.0
1,289.1
1,096.3
1,025.0
2021
Total
$M
2020
Total
$M
1,217.0
1,273.2
18.0
1,235.0
1,235.0
-
15.9
1,289.1
1,286.4
2.7
1,235.0
1,289.1
Revenue from the sale of goods and services is recognised when the control of the goods has transferred to the customer. Sales in the
Processing segment consist of bulk malt, and control is transferred to the customer in line with shipping terms. Sales in the
Warehousing & Distribution segment consist of bagged malt, hops, yeast, and other brewing-related products, and control is transferred
to the customer at point of sale. Service revenue is recorded over the time that the service is performed. Revenue is recorded at the
value of consideration receivable net of discounts and goods and services tax (GST).
2 The Group defines significant items as those items not in the ordinary course of business, non-recurring and material in nature and amount. The amounts are included in other
expense in the consolidated income statement and in 2021 relate to costs incurred to the provision for bad debt of one customer ($16.4m) and the provision related to the
inventory held at a grain contactor in administration in the UK ($4.7m).
3 The Group defines significant items as those items not in the ordinary course of business, non-recurring and material in nature and amount. The amounts are included in other
expense in the consolidated income statement and in 2020 relate to costs incurred to execute the demerger from GrainCorp Limited.
4 Excludes derivative financial instruments, retirement benefit assets and deferred tax assets.
64
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Report Title
8
Report Title
9
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
1.3 Other income and expenses
a) Other income
Interest income
Net gain/(loss) on foreign currency derivatives
Sundry income
Total other income
2021
$ M
0.7
2.2
3.1
6.0
2020
$ M
1.2
(2.5)
5.8
4.5
Interest income is recognised as it accrues using the effective interest method. Gain/loss on foreign currency derivatives are
recognised through the P&L as the derivatives are revalued to fair value. The derivatives are mainly purchased to hedge future sales
and purchases in foreign currency. Sundry income is comprised of items not in the course of normal operations, such as proceeds
from asset sales, government grants, and sublease income.
b) Other expenses
Employee benefits expense
Defined contribution superannuation and defined benefit superannuation expenses
Share-based payment expense
Other employee benefits
Total employee benefits expense
Other expenses
Bad debt expense 5
Consulting 6
Insurance
Software implementation costs 7
Communication
Grain supplier provision5
Legal expenses6
Impairment 8
Marketing costs
Travel
Financing arrangements restructuring6
Other
Total other expenses
2021
$ M
7.4
1.0
108.0
116.4
16.8
12.5
11.9
6.5
5.7
4.7
2.3
2.0
1.0
0.8
-
11.4
75.6
2020
$ M
8.8
0.8
112.7
122.3
1.7
7.8
5.8
-
6.7
-
2.1
-
1.7
3.3
5.3
13.1
47.5
1.3 Other income and expenses (continued)
Employee benefits expense includes salaries and wages, superannuation contributions, share-based payments and other
entitlements. The Group’s accounting policy for retirement benefit obligation plans is set out in note 3.6.
Share-based payment expense is determined by the grant date. The fair value of equity-settled share-based payments is recognised
as an expense proportionally over the vesting period, with a corresponding increase in equity. The fair value of instruments with market-
based performance conditions (aTSR) is calculated at the date of grant using the Monte Carlo simulation model, which is a commonly
used valuation technique. The probability of achieving market-based performance conditions is incorporated into the determination of
the fair value per instrument. The fair value of instruments with non-market-based performance conditions (ROCE and Strategic) and
service conditions is calculated using the Black-Scholes option pricing model. The amount recognised as an expense over the vesting
period is adjusted to reflect the actual number of instruments that vest. The expense associated with the instruments with market-based
performance conditions is recognised in full if the awards do not vest due to market condition not being met.
Share based payment expense has two components, the long-term incentive plan (LTIP) and the deferred equity plan (DEP).
LTIP
Under the Group’s LTIP, senior executives have the opportunity to be rewarded with fully paid ordinary shares, provided the LTIP
minimum pre-determined hurdles for aTSR and ROCE covering a three-year period, as set by the Board of Directors, are met. In 2021,
a Strategic hurdle was also introduced. These shares are generally purchased on market once the LTIP vests.
The fair value of performance rights is determined as described above using the following inputs:
Grant date
Fair value at grant date (aTSR)
Fair value at grant date (ROCE)
Fair value at grant date (Strategic)
Estimated vesting date
Share price at grant date
Volatility
Risk free interest rate
Dividend yield
1 September 2020
One-off award
1 September 2020
LTIP
11 March 2021
LTIP
$1.66
$3.75
N/A
$1.72
$3.61
N/A
$1.72
$3.75
$3.75
Nov 2021
Nov 2022
Nov 2023
$3.85
42%
0.23%
2.23%
$3.85
42%
0.25%
2.96%
$4.00
36%
0.08%
2.39%
Set out in the table below is a summary of the number of rights granted under the LTIP. The exercise price on outstanding options is
zero.
Grant date
Expiry date
Balance at
start of year
Granted
during year
Exercised during
the year
Forfeited during
year
Balance at end
of year
Exercisable at
end of year
1 Sep 2020
1 Sep 2020
11 Mar 2021
Nov 2021
Nov 2022
Nov 2023
337,766
435,008
-
-
-
339,157
772,774
339.157
-
-
-
-
(57,223)
(57,223)
-
(114,446)
280,543
377,785
339,157
997,485
-
-
-
-
DEP
All senior executives are required to have a portion of their short-term incentives deferred and awarded in the form of rights, subject to
service conditions. The deferred component is awarded over two years as rights i.e. 50% deferred component vesting at the end of
year one and 50% of deferred component vesting at the end of year 2. For the short-term incentive earned in 2021, the DEP grants will
be issued in 2022.
For the short-term incentive earned in FY20 by senior executives, 204,003 rights were granted on 22 December 2020. The first tranche
(50%) of these rights will be exercisable in November 2021. The remaining tranche will be exercisable in November 2022. The fair
value used for determining the share-based payment expense is $4.05. 39,579 of the rights lapsed in the year.
In addition, there are 37,197 rights which have been issued as compensation for the FY18 DEP under GrainCorp on 1 September
2020, which were expensed in 2020 and vested during the period. The fair value used for determining the share-based payment
expense was $3.85.
5 Some expense items in these categories in 2021 are included in note 1.1 as Significant Items.
6 Some expense items in these categories in 2020 are included in note 1.1 as Significant Items, as they are included in transaction costs related to the demerger from GrainCorp
Limited.
7 Software implementation costs relates to software as a service costs that were expensed in the current period under the IFRIC pronouncement. Refer to Overview section C)
for more information on newly amended accounting standards adopted.
8 Impairment is largely related to the impairment of fixed assets at the Grantham site as a result of the closure of the operations, as announced to the ASX on 8 February 2021.
66
67
Report Title
10
Report Title
11
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
1.4 Taxation
a)
Income tax expense
Income tax expense recognised in the consolidated income statement
Current tax
Deferred tax
Under / (over) provision in prior years
Reconciliation to effective tax rate
(Loss) / profit subject to tax
Income tax expense calculated at 30% (2020: 30%)
Tax effect of amounts which are not deductible / (taxable) in calculating taxable income
Non-deductible / non-assessable items
Tax losses for which no deferred tax asset has been recognised
Change in substantially enacted tax rates
Adjustment for tax base reset
Under provision in prior years
Difference in overseas tax rates
Income tax expense
Effective tax rate 9
Tax (credit) / expense relating to items of other comprehensive income
Change in fair value of cash flow hedges
Remeasurement of retirement benefit obligations
Unused tax losses for which no deferred tax asset has been recognised (not tax effected)
b) Deferred tax assets and liabilities
Deferred tax assets
The balance comprises temporary differences attributable to:
Tax losses
Retirement benefit obligation
Provisions and accruals
Inventories
Lease liabilities
Other
Set-off deferred tax liabilities pursuant to set-off provision
Net deferred tax assets
Movements:
Opening balance at 1 October
Recognised in the income statement
Recognised in other comprehensive income
Closing balance at 30 September
2021
$ M
17.1
(1.1)
2.0
18.0
31.8
9.5
1.4
5.5
4.2
-
2.0
(4.6)
18.0
2020
$ M
20.2
(0.5)
0.3
20.0
65.6
19.7
4.7
-
-
0.4
0.3
(5.1)
20.0
56.6%
30.5%
2.1
5.1
7.2
18.2
2021
$ M
6.4
-
3.5
0.8
15.7
10.1
(11.8)
24.7
21.7
3.3
(0.3)
24.7
1.3
0.2
1.5
-
2020
$ M
6.0
3.0
3.7
2.0
16.7
2.1
(11.8)
21.7
4.5
18.4
(1.2)
21.7
9 Effective tax rate is calculated as the income tax expense divided by profit subject to tax. The effective tax rate is impacted in the current period by the unused tax losses for
which no deferred tax asset has been recognised and the change in substantially enacted corporate tax rate in the UK from 19% to 25% effective April 2023.
1.4 Taxation (continued)
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Property, plant and equipment
Right of use assets
Intangible assets
Retirement benefit obligation
Set-off deferred tax liabilities pursuant to set-off provision
Net deferred tax liabilities
Movements:
Opening balance 1 October
Recognised in the income statement
Recognised in other comprehensive income
Exchange differences
Closing balance at 30 September
c) Accounting policy
2021
$ M
98.4
14.5
1.3
0.6
(11.8)
103.0
93.3
2.2
6.9
0.6
103.0
2020
$ M
88.1
15.7
1.3
-
(11.8)
93.3
78.7
17.9
0.3
(3.6)
93.3
Income tax expense is calculated at the applicable income tax rate for each jurisdiction and recognised in profit for the year, unless it
relates to other comprehensive income or transactions recognised directly in equity.
The tax expense comprises both current and deferred tax. Current tax represents the tax expense paid or payable for the current year,
using tax rates which are enacted or substantially enacted at the reporting date. Deferred tax is recognised using the balance sheet
liability method, providing for temporary differences between the carrying amount of the assets and liabilities for financial reporting
purposes and the amounts for taxation purposes. Temporary differences generally occur when there is a timing difference in recognition
between income and expenses as recognised by tax authorities and accounted for in different periods. The amount of deferred tax
provided is based on the expected manner of realisation of the carrying amount of the assets and liabilities, using tax rates enacted or
substantially enacted at the reporting date.
Deferred tax assets, including those arising from tax losses, are recognised to the extent it is probable that sufficient taxable profits will
be available to utilise the related tax assets in the foreseeable future. Deferred tax assets are reduced to the extent that it is no longer
probable that the related tax benefit will be utilised.
As the Group is subject to income taxes in Australia and jurisdictions where it has foreign operations, management consider the
estimation of the worldwide tax provision and recognition of deferred tax balances in the consolidated statement of financial position to
be an area of judgement. Changes in circumstances will alter expectations, which may impact the amount of provision for income
taxes and deferred tax balances recognised.
Tax consolidation
For the period up to 23 March 2020, United Malt’s Australian entities were part of the GrainCorp group’s taxation arrangements. Upon
demerger, United Malt’s Australian entities exited the GrainCorp Australian income tax consolidated group. The entities exited clear
from any further income tax liability and any future tax obligations that may arise in respect of the period when they were members of
the GrainCorp group. On 24 March 2020, the Company formed a new income tax group for its 100% Australian resident subsidiaries,
with United Malt Group Limited being the head entity. The new tax consolidated group uses the group allocation approach whereby the
current and deferred tax assets for the group are allocated among each entity within the group.
1.5 Earnings per share
Basic earnings per share (cents)
Diluted earnings per share (cents)
Weighted average number of ordinary shares – basic
Add: adjustment for calculation of diluted earnings per share (performance rights)
Weighted average number of ordinary shares – diluted
2021
4.6
4.6
2020
16.8
16.8
299,179,135
270,507,607
1,052,111
64,354
300,231,246
270,571,961
Basic earnings per share (EPS) is calculated by dividing profit for the year attributable to ordinary shareholders by the weighted
average number of ordinary shares outstanding during the financial year. The weighted average number of ordinary shares for the year
ended 30 September 2020 has been restated to reflect the change in the Company’s capital structure as a result of the demerger from
GrainCorp, as if the change had occurred at the start of the comparative period.
Diluted EPS is calculated on the same basis except that it includes the impact of any potential commitments the Group has to issue
shares in the future. For the year ended 30 September 2021, these relate to the performance rights granted.
Report Title
12
Report Title
13
68
69
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
2 Capital and Financial Risk Management
The Group maintains an optimal capital structure so that it can continue to provide returns for shareholders and benefits for other
stakeholders. The Group’s capital consists of net debt and equity. Net debt is calculated as total borrowings and lease liabilities, net of
cash assets.
The capital structure of the Group is continuously monitored and can be changed by adjusting the amount of dividends paid to
shareholders, returning capital to shareholders or issuing new shares.
2.1 Net debt (continued)
b) Borrowings (continued)
Loans under term and working capital funding facilities are secured by a negative pledge, and these facilities provide the related entities
in the Group, that are party to the pledge, the flexibility in funding their respective liquidity requirements as needed. The facilities impose
certain financial covenants on the Group. All covenant ratios have been complied with during the financial year.
2.1 Net debt
Total borrowings (note 2.1(b))
Cash and cash equivalents (note 2.1(c))
Net debt
Lease liabilities (note 3.4)
Net debt including lease liabilities
a) Net debt reconciliation
193.3
68.4
261.7
Total
$M
855.2
(242.0)
(427.0)
88.6
(13.1)
261.7
26.2
24.7
(0.2)
312.4
Cash and cash
equivalents
$M
Inventory
funding
facilities
$M
Borrowing
facilities
$ M
Lease
liabilities
$ M
Loans with
GrainCorp Ltd
$M
Net debt as at 1 October 2019
Cash flows
Extinguishment as a result of demerger
Additions for AASB 16
Foreign exchange movements
Net debt as at 30 September 2020
Cash flows
Net lease additions
Foreign exchange movements
(181.4)
(87.6)
-
-
6.9
(262.1)
(21.4)
-
(3.3)
142.8
(32.9)
-
-
(2.6)
107.3
58.9
-
2.0
Net debt as at 30 September 2021
(286.8)
168.2
260.0
104.1
-
-
(16.0)
348.1
-
-
1.4
349.5
-
(18.8)
-
88.6
(1.4)
68.4
(11.3)
24.7
(0.3)
81.5
633.8
(206.8)
(427.0)
-
-
-
-
-
-
-
b) Borrowings
Current
Working capital facilities
Commodity inventory funding facilities
Total current borrowings
Non-current
Term debt facilities
Total non-current borrowings
Facility limits
Drawn amounts
2021
$M
160.0
227.6
387.6
349.5
349.5
2020
$M
160.0
210.3
370.3
348.1
348.1
2021
$ M
-
168.2
168.2
349.5
349.5
2020
$ M
-
107.3
107.3
348.1
348.1
2021
$ M
517.7
2020
$ M
455.4
c) Cash and cash equivalents
Cash and cash equivalents on hand at 30 September 2021 was 286.8 million (2020: 262.1 million). Cash and cash equivalents
include cash on hand, deposits held at call with banks, and short-term investments with maturities three months or less.
Reconciliation of profit after income tax to net cash flow from operating activities
(286.8)
(262.1)
Note
230.9
81.5
312.4
Profit for the year
Net profit on sale of non-current assets
Non-cash employee benefits expense – share-based payments
Depreciation and amortisation
Impairment
Derivative mark-to-market
Changes in operating assets and liabilities:
Decrease / (increase) in inventories
Decrease / (increase) in deferred tax
(Increase) in derivatives
Decrease / (increase) in receivables
(Decrease) / increase in trade payables
Increase / (decrease) in other liabilities
Increase in provision for income tax
(Decrease) in defined benefit pension plan liability
Increase in provisions
Net cash inflow from operating activities
2.2 Contributed equity
Consolidated and Company
At 1 October 2019
Shares issued as a result of the demerger from GrainCorp Ltd
New shares issued from capital raising
Balance at 30 September 2020
Balance at 30 September 2021
Ordinary shares
2021
$ M
13.8
-
1.0
60.6
2.0
0.1
77.5
39.1
7.1
(0.9)
40.6
(0.1)
12.8
0.4
(24.2)
1.5
153.8
Ordinary shares
Number
100
254,283,932
44,895,103
299,179,135
299,179,135
2020
$ M
45.6
0.1
0.8
64.1
-
2.0
112.6
(13.8)
(0.1)
(5.1)
(24.7)
17.1
(8.1)
7.5
(3.3)
19.6
101.7
$ M
-
-
166.9
166.9
166.9
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised
cost using the effective interest method.
On 12 November 2021, the maturity date of the term debt facilities was extended from November 2022 to November 2024. The term
facility is an evergreen facility which provides an option to extend maturity dates on the anniversary of the facility. The terms of the debt
remain materially unchanged from the previous terms, except for the change in reference rate for the UK based debt from LIBOR to
SONIA.
The commodity inventory funding facilities are secured by the related inventory. The carrying amounts of inventory pledged as security
at the reporting date is $168.2 million (2020: $109.9 million).
Ordinary shares issued are classified as equity and are fully paid, have no par value, carry one vote per share and the right to
dividends.
Capital raising
On 14 May 2020, the Group announced a capital raising comprising of both an Institutional Placement (IP) and a Share Purchase Plan
(SPP). The IP completed on 15 May 2020 for a value of $140 million, and the SPP completed on 23 June 2020 for a value of $30.6
million. The costs ($3.7 million) associated with the capital raising are presented net of the funds raised in contributed equity.
70
71
Report Title
14
Report Title
15
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
2.3 Dividends
2.5 Financial instruments and risk management
The Company considers current earnings and future cash flow requirements in determining the amount of dividends to be paid.
Dividends are recognised in the Statement of Financial Position in the period in which they are declared by the Board.
Dividends paid and declared
Dividends paid
Prior year final dividend paid at 3.9 cents, 0% franked (2020: nil)
Current year interim dividend paid at 2.0 cents, 0% franked (2020: nil)
Total dividends paid
Dividends declared
2021
$ M
11.7
6.0
17.7
2020
$ M
-
-
-
Current year final dividend declared at 3.5 cents, 0% franked (2020: 3.9 cents, 0% franked)
10.5
11.7
The Group’s Treasury function is responsible for managing the liquidity requirements of the Group and mitigating any financial risks
relating to the Group’s operations through continuous monitoring and evaluation. The Treasury function is governed by the Board
approved Treasury Policy. The Policy requires periodic reporting of financial risks to the Board, and its application is subject to
oversight from the Chief Financial Officer and the Chair of the Audit and Risk Committee. Financial risks include:
• Market risk (refer to note 2.5(b))
•
•
Liquidity risk (refer to note 2.5.(c))
Credit risk (refer to note 2.5(d))
a) Classification of financial instruments
United Malt classifies its financial instruments into categories in accordance with AASB 9 Financial instruments depending on the
purpose for which the financial instruments were acquired, which is determined at initial recognition based on the business model. The
following table presents the Group’s financial assets and liabilities measured and recognised at fair value.
As the current year final dividend was declared after the reporting date, there is no liability recorded at 30 September 2021. No prior
dividends were paid in 2020 as the Group was part of the GrainCorp group at that time prior to the demerger.
$M
Franking credits available
Immediately after the Demerger from GrainCorp, the Group’s franking account balance was nil. There have been no additions to the
franking account balance during the period, therefore the dividend declared above is unfranked.
The Group intends to frank future dividends to the extent practicable, although it is anticipated that there will be limited capacity for
franking credits with a substantial proportion of the Group’s earnings being derived outside Australia and which therefore may not be
subject to Australian income tax.
2.4 Commitments and guarantees
Financial commitments
Capital expenditure commitments
Total capital expenditure contracted for at the reporting date but not provided for in payables:
- Not later than one year
Total capital expenditure commitments
2021
$ M
2020
$ M
44.6
44.6
35.9
35.9
The capital expenditure commitments are associated with both stay-in-business and growth projects related to the Company’s malt
processing and distribution facilities.
Financial guarantees
Financial guarantees are provided by Group entities as follows:
The Group enters into guarantees as part of the normal course of business. At 30 September 2021, these guarantees amounted to $7.3
million (2020: $5.1 million). The Directors do not believe any claims will arise in respect of these guarantees.
United Malt Limited and the wholly owned entities listed in note 4.1 are parties to a deed of cross guarantee as described in note 4.2.
The nature of the deed of cross guarantee is such that each company which is party to the deed guarantees, to each creditor, payment
in full of any debt in accordance with the deed of cross guarantee. No deficiency of net assets existed for the Group as at 30
September 2021.
No liability was recognised by the Group in relation to these guarantees as the fair value of the guarantees is immaterial.
Derivative assets
Derivative financial instruments – fair value through profit and loss
Commodity futures and options
Foreign currency derivatives
Derivative financial instruments – cash flow hedge
Foreign currency derivatives
Total derivative assets
Derivative liabilities
Derivative financial instruments – fair value through profit and loss
Commodity futures and options
Foreign currency derivatives
Derivative financial instruments – cash flow hedge
Foreign currency derivatives
Interest rate swap contracts
Total derivative liabilities
30 September 2021
30 September 2020
Current
Non-current
Current
Non-current
0.5
3.6
4.6
8.7
-
3.6
0.9
-
4.5
-
0.9
1.5
2.4
-
1.1
1.1
1.0
3.2
-
2.9
1.5
4.4
0.1
2.8
2.0
-
4.9
-
0.6
1.8
2.4
-
0.6
2.5
2.1
5.2
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered. Subsequently, at
each reporting date, the gain or loss on remeasurement to fair value is recognised immediately in the consolidated income statement,
unless they qualify for hedge accounting as outlined in AASB 9 Financial Instruments.
The Group enters into certain cash flow hedges to hedge exposure to variability in cash flows that are attributable to the risk
associated with the cashflows of recognised assets or liabilities and highly probably forecast transactions caused by interest rate and
foreign currency movements. The Group’s cash flow hedges include:
•
•
Interest rate swap contracts
Forward foreign exchange contracts
When a derivative financial instrument is designated as a cash flow hedge, the effective part of any gain or loss on the derivative
financial instrument is recognised in other comprehensive income and accumulated in the cashflow hedge reserve within equity. The
gain or loss relating to the ineffective portion is recognised immediately in consolidated income statement, within other income/loss.
Amounts accumulated in equity are reclassified to the consolidated income statement in the periods when the hedged item affects profit
or loss.
The Group’s derivative instruments are measured at fair value at the end of each reporting period. Derivative instruments are grouped
into Levels 1 to 3 based on the degree to which fair value measurement inputs are observable. The fair value of derivative instruments
has been determined as follows:
•
•
Level 1 financial instruments held by the Group are instruments which are traded on an active market. The fair value of these
financial instruments is the quoted market settlement price on the reporting date.
Level 2 financial instruments held by the Group are financial instruments that are not traded on an active market. The fair value is
determined using valuation techniques which maximise observable market data and rely as little as possible on entity-specific
estimates.
Report Title
16
Report Title
17
72
73
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
2.5 Financial instruments and risk management (continued)
2.5 Financial instruments and risk management (continued)
•
Level 3 financial instruments do not have quoted market prices available. If one or more of the significant inputs is not based on
observable market data, the instrument is level 3. The fair value of financial assets and liabilities that are not traded in an active
market is determined using valuation techniques. Management considers the valuation of these financial instruments to be an area
of judgement.
All derivative financial instruments are considered Level 2 financial instruments.
b) Market risk
The Group’s activities expose it to the financial risks of changes in (i) commodity prices, (ii) foreign currency and (iii) interest rates.
Commodity price risk
The Group enters into forward physical purchase and sales contracts, along with commodity derivative contracts, to manage the
underlying price risks in the purchase of barley for malt production and the subsequent sale of malt. These contracts are entered into,
and continue to be held, for the purpose of delivery of raw materials and subsequent sale of processed malt and are therefore classified
as non-derivative and not fair valued.
Foreign currency risk
The Group has exposure to movement in exchange rates through:
•
•
•
Purchase of barley and other goods from suppliers in foreign currency;
Sale of malt in foreign currency; and
Translation of net investments in foreign subsidiaries denominated in foreign currencies.
To manage exposure to this risk, the Group enters into forward exchange contracts, foreign currency options and swap contracts, with
the contracted time to mature when the relevant underlying contracts expire.
Expressed in Australian Dollars, the following table indicates exposure and sensitivity to movements in exchange rates on the profit or
loss and equity of the Group, based on the foreign currency exposure of each entity against its functional currency at 30 September.
The tables are based upon the Group’s financial asset and liability profile at 30 September, which fluctuates over the course of normal
operations.
2021
Movement in exchange rate
US Dollar
Canadian Dollar
UK Pound Sterling
New Zealand Dollar
Euro
Yen
Total
2020
Movement in exchange rate
US Dollar
Canadian Dollar
UK Pound Sterling
New Zealand Dollar
Euro
Yen
Total
Exposure at
reporting date
$M
Impact on profit / (loss) after tax
$ M
Impacts on other
components of equity
$ M
65.1
221.3
72.3
2.8
13.1
(34.9)
339.7
+10%
(8.8)
12.4
0.8
0.2
0.9
(2.4)
3.1
-10%
8.8
(12.4)
(0.8)
(0.2)
(0.9)
2.4
(3.1)
Exposure at
reporting date
$M
Impact on profit / (loss) after tax
$ M
(38.8)
278.9
73.2
3.1
9.8
(28.3)
297.9
+10%
(16.2)
16.6
1.0
0.2
0.7
(2.0)
0.3
-10%
16.2
(16.6)
(1.0)
(0.2)
(0.7)
2.0
(0.3)
+10%
13.3
3.1
4.2
-
-
-
20.6
-10%
(13.3)
(3.1)
(4.2)
-
-
-
(20.6)
Impacts on other
components of equity
$ M
+10%
-10%
13.5
2.9
4.1
-
-
-
20.5
(13.5)
(2.9)
(4.1)
-
-
-
(20.5)
Interest rate risk
The Group has exposure to interest rate risk as it borrows funds at both fixed and floating interest rates. The risk is managed by
maintaining between 40% and 75% of long-term borrowings at fixed rates through the use of interest rate swap contracts.
Under interest rate swap contracts, the Group is entitled to receive interest at variable rates and is obliged to pay interest at fixed rates.
The contracts require settlement of net interest receivable or payable at each reset period. The settlement dates coincide with the dates
on which interest is payable on the underlying debt.
At 30 September 2021, after taking into account the effect of interest rate swap contracts, approximately 74% ($258.2 million) of the
Group's long-term borrowings are at a fixed rate of interest (2020: 74%, $257.2million).
The Group continuously monitors its interest rate exposure with consideration given to cash flows impacting on rollovers and
repayments of debt, alternative hedging instruments and the mix of fixed and variable interest rates.
At balance date, the Group had the following mix of financial liabilities with interest at variable rates:
Current instruments
Commodity inventory facilities
Non-current instruments
Term debt facilities
Interest rate swaps (notional principal amount)
Net exposure to cash flow interest rate risk
Interest rate sensitivity analysis
2021
2020
Weighted
average
interest rate %
Balance
$ M
Weighted
average
interest rate %
Balance
$ M
0.95%
(168.2)
0.97%
(107.3)
1.53%
0.15%
1.16%
(349.5)
258.2
(259.5)
1.63%
0.25%
1.27%
(348.1)
257.2
(198.2)
At balance date, if interest rates had moved as illustrated in the table below, with all other variables held constant, profit and equity
would have been affected as follows:
+ 100 basis points
– 100 basis points
2021
2020
Profit / (loss)
Increase /
(decrease) in
equity
Profit / (loss)
Increase /
(decrease) in
equity
$ M
(2.6)
2.6
$ M
2.6
(2.6)
$ M
(2.3)
2.3
$ M
2.6
(2.6)
Report Title
18
Report Title
19
74
75
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
2.5 Financial instruments and risk management (continued)
2.5 Financial instruments and risk management (continued)
c) Liquidity risk
d) Credit risk
The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank
loans, finance leases and committed available credit facilities. The Group manages liquidity risk by regularly monitoring actual and
forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available with a variety of counterparties. At
balance date, the Group had approximately $219.4 million of unused credit facilities available for immediate use.
The tables below show the contractual maturities of financial liabilities, including estimated interest payments. The amounts disclosed in
the table are the contractual undiscounted cash flows.
Carrying
Value
$M
Total
$M
Less than 1
year
$ M
Between
1 and 2 years
$ M
Between 2
and 5 years
$ M
Over 5
years
$ M
Trade and other payables
(177.5)
(177.5)
(177.2)
(81.5)
(98.8)
(11.7)
(517.7)
(521.7)
(168.2)
(353.5)
(0.3)
(9.0)
-
-
(26.9)
(51.2)
30 September 2021
Non-derivatives:
Borrowings 10
Lease liabilities 11
Derivatives:
Interest rate swap contracts
Foreign currency derivatives
(Outflow)
Inflow
30 September 2020
Non-derivatives
Borrowings10
Trade and other payables
Lease liabilities11
Derivatives
Interest rate swap contracts
Foreign currency derivatives
(Outflow)
Inflow
Commodity futures and options
(Outflow)
Inflow
(1.0)
(1.0)
-
(1.0)
-
(6.7)
(270.4)
(199.7)
(56.0)
(14.7)
263.7
195.2
54.7
13.8
-
-
-
Carrying
Value
$M
Total
$M
Less than 1
year
$ M
Between
1 and 2 years
$ M
Between 2
and 5 years
$ M
Over 5
years
$ M
(455.4)
(176.4)
(68.4)
(466.3)
(176.4)
(81.4)
(112.5)
(176.4)
(13.0)
-
-
(353.8)
-
-
-
(8.7)
(26.2)
(33.5)
(2.1)
(2.1)
-
-
(2.1)
(7.9)
(362.8)
(242.5)
354.9
237.6
(85.9)
83.5
(34.4)
33.8
(0.1)
(14.1)
14.0
(14.1)
14.0
-
-
-
-
-
-
-
-
-
Credit risk is the risk of loss that would be recognised if a counterparty were to default on its contractual obligations. The Group has a
Board approved Credit Policy which provides guidelines for the management and diversification of the credit risk to the Group. The
Group is exposed to credit risk from its operating activities and financing activities. The Group’s maximum exposure for credit risk is the
carrying amount of all trade and other receivables, derivative asset balances, and cash assets as set out in the consolidated statement
of financial position.
Trade receivables
The credit risk on trade and other receivables which has been recognised on the consolidated statement of financial position is the
carrying amount of trade debtors, net of allowances for impairment and further disclosed in note 3.1. The Group minimises credit risk
associated with trade and other receivables by performing a credit assessment for all customers who wish to trade on credit terms.
Credit limits are determined for each individual customer based on their credit assessment and as per the Credit Policy. The Group
does not have any significant credit risk exposure to a single customer or group of customers.
The Group applies the simplified approach to provision for expected credit losses prescribed by AASB 9, which permits the use of the
lifetime expected loss provision for all trade receivables. Under this method, determination of the loss allowance provision and expected
loss rate incorporates past experience, forward-looking information, and market data. In FY21 the Group considered the impact of the
COVID pandemic on the forward-looking information and market data when applying these rates.
The aging of the trade receivables at the reporting date was:
2021
2020
Current
More than 30 days past due
More than 60 days past due
More than 90 days past due
Total
The movement in the allowance for doubtful debts was:
Balance at 1 October
Provisions made during the year
Loss recognised during the year
Provisions reversed during the year
Exchange differences
Balance at 30 September
Financial instruments and cash deposits
Gross
$ M
180.2
2.4
1.3
21.8
205.7
Loss
allowance
$M
-
-
(0.3)
(17.5)
(17.8)
Gross
$ M
201.9
8.6
6.5
9.9
226.9
2021
$M
(1.4)
(17.1)
0.4
0.4
(0.1)
(17.8)
Loss
allowance
$M
(0.7)
(0.1)
(0.2)
(0.4)
(1.4)
2020
$M
(2.0)
(1.9)
2.4
-
0.1
(1.4)
To minimise the credit exposure to financial institutions that are counterparties to derivative contracts and cash, the Group has a panel
of authorised counterparties who are principally large banks and recognised financial intermediaries with acceptable credit ratings
determined by a ratings agency. The Group’s net exposure and credit assessment of its counterparties are continuously monitored to
ensure any risk is minimised.
The Group may also be subject to credit risk for transactions that are not included in the consolidated statement of financial position,
such as when a guarantee is provided for another party.
10 The Group’s bank borrowings facilities are set out in note 2.1b. Cash outflows associated with bank borrowings are inclusive of principal and interest.
11 Cash outflows associated with leases are inclusive of principal and interest.
76
77
Report Title
20
Report Title
21
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
3 Operating Assets and Liabilities
3.2 Property, plant and equipment
This section shows the assets used to generate the Group’s operating performance and liabilities incurred as a result. Liabilities relating
to the Group’s financing activities are addressed in Section 2 Capital and Financial Risk Management.
Land
$ M
Buildings and
structures
$ M
Leasehold
improvements
$ M
Plant and
equipment
$ M
Capital works in
progress
$ M
Total
$ M
3.1 Working capital
Trade receivables
Inventories
Trade and other payables
a) Trade and other receivables
Trade receivables
Allowance for doubtful receivables
Prepayments
Other receivables
Total current trade and other receivables
2021
$ M
206.0
344.0
(179.4)
370.6
2021
$ M
205.7
(17.8)
187.9
16.9
1.2
206.0
2020
$ M
245.4
318.5
(178.4)
385.5
2020
$ M
226.9
(1.4)
225.5
15.7
4.2
245.4
Trade and other receivables are recognised at the face value of amounts due less an allowance for doubtful receivables. Doubtful
receivables are determined using an expected credit loss model whereby trade and other receivables that share the same or similar
credit risk characteristics and debt ageing are grouped and then assessed for collectability as a whole. Refer to note 2.5 for details of
the Group’s credit exposures.
b)
Inventories
Raw materials
Work in progress
Finished goods
Total inventories
2021
$ M
200.9
11.1
132.0
344.0
2020
$ M
185.1
9.9
123.5
318.5
Inventories are valued at lower of cost and net realisable value, unless stated otherwise. Cost includes direct labour, other direct costs,
and production overheads, where applicable. Net realisable value is the estimated selling price less cost of completion and variable
selling expenses. Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 September
2021 amounted to $3.6 million (2020: $6.6 million), which is included in raw materials and consumables used in the consolidated
income statement.
c) Trade and other payables
Current
Trade payables
Accrued expenses
Income received in advance
Total current trade and other payables
2021
$ M
109.4
67.8
2.2
179.4
2020
$ M
90.0
86.4
2.0
178.4
Trade and other payables are carried at the amount payable. Accrued expenses are amounts payable in relation to goods received or
services rendered which have not been billed at the reporting date.
At 30 September 2019
Cost
Accumulated depreciation
Net book value
Movement
Transfer between asset categories
Additions
33.9
-
33.9
-
1.5
Transfer from leased assets (note 3.4)
11.0
Disposals
Depreciation
Exchange differences
Net book value
At 30 September 2020
Cost
Accumulated depreciation
Net book value
Movement
Transfer between asset categories
Assets transferred to held for sale
Additions
Disposals
Depreciation
Impairment
Exchange differences
Net book value
At 30 September 2021
Cost
Accumulated depreciation
Net book value
-
-
(1.1)
45.3
45.3
-
45.3
-
(2.5)
-
-
-
-
1.1
43.9
43.9
-
43.9
207.0
(40.3)
166.7
6.5
1.9
-
-
(7.9)
(7.3)
159.9
206.2
(46.3)
159.9
21.0
(7.4)
13.6
2.8
-
-
-
(0.9)
(0.3)
15.2
23.2
(8.0)
15.2
618.8
(255.3)
363.5
22.3
1.8
-
(0.2)
(37.1)
(11.5)
338.8
622.1
(283.3)
338.8
32.1
912.8
-
(303.0)
32.1
609.8
(31.6)
63.7
-
-
-
(2.6)
61.6
-
68.9
11.0
(0.2)
(45.9)
(22.8)
620.8
61.6
958.4
-
(337.6)
61.6
620.8
3.6
0.5
22.2
(26.3)
-
(0.2)
(7.4)
-
0.2
156.1
210.5
(54.4)
156.1
-
-
(1.0)
-
-
14.7
23.7
(9.0)
14.7
0.1
(0.1)
(35.9)
(1.9)
2.2
325.4
648.3
(322.9)
325.4
-
(2.5)
102.4
(0.3)
(44.3)
(1.9)
5.4
679.6
102.3
-
-
-
1.9
139.5
139.5
1,065.9
-
(386.3)
139.5
679.6
Property, plant and equipment are measured at cost less accumulated depreciation and impairment losses. Subsequent costs are
capitalised when it is probable that future economic benefits associated with the expenditure will flow to the Group.
Property, plant and equipment assets, other than land, are depreciated on a straight-line basis over the useful lives of the assets.
Useful lives are reviewed on an annual basis and have been assessed as follows:
•
•
•
Buildings and structures:
30-50 years
Leasehold improvements:
Term of lease
Plant and equipment:
5-20 years
Tests for impairment on items of property, plant and equipment are conducted in accordance with the policy for impairment of non-
financial assets. Property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For
the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.
In 2021, the Group announced the closure of one of its sites in the UK. This site is classified as an asset held for sale on the
statement of financial position. The asset is valued at the lower of cost or fair value less cost to sell at $2.5 million (2020: nil).
Report Title
22
Report Title
23
78
79
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021 Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
3.3 Intangible assets
At 30 September 2019
Cost
Accumulated amortisation
Net book value
Movement
Transfer between asset categories
Additions
Amortisation charge
Exchange differences
Net book value
At 30 September 2020
Cost
Accumulated amortisation
Net book value
Movement
Transfer between asset categories
Additions
Amortisation charge
SaaS adjustment 12
Exchange differences
Net book value
At 30 September 2021
Cost
Accumulated amortisation
Net book value
Computer
software
$ M
Trade name
$ M
Customer
relationship
$ M
Goodwill
$ M
Capital works
in progress
$M
27.4
(18.0)
9.4
0.1
-
(3.9)
(0.2)
5.4
26.6
(21.2)
5.4
7.4
-
(4.0)
(0.1)
0.1
8.8
34.5
(25.7)
8.8
1.5
(0.6)
0.9
-
-
(0.1)
-
0.8
1.5
(0.7)
0.8
-
-
(0.1)
-
0.7
1.5
(0.8)
0.7
122.2
(120.5)
1.7
-
-
(1.7)
-
-
118.7
(118.7)
-
-
-
-
-
-
120.2
(120.2)
-
336.2
-
336.2
-
-
-
(11.9)
324.3
324.3
-
324.3
-
-
-
4.1
328.4
328.4
-
328.4
5.5
-
5.5
(0.1)
2.1
-
(0.4)
7.1
7.1
-
7.1
(7.4)
1.4
-
(0.9)
(0.2)
-
-
-
-
Total
$ M
492.8
(139.1)
353.7
-
2.1
(5.7)
(12.5)
337.6
478.2
(140.6)
337.6
-
1.4
(4.1)
(1.0)
4.0
337.9
484.6
(146.7)
337.9
Intangible assets include definite life and indefinite life intangibles. The accounting treatment for each of the asset categories is:
•
•
•
Computer software is costs capitalised in developing products or systems and costs incurred in acquiring software and licenses
that will contribute to future period financial benefits. Amortisation is calculated on a straight-line basis over an estimated useful
life of 3 to 7 years. Capitalised costs exclude software as a service (SaaS) arrangements, where the fee for use of the application
software is expensed over the life of the service contract. Customisation costs related to SaaS are expensed as incurred, unless
they are paid to the supplier of the cloud-based software to significant customise the product for the Group, in which case they are
recorded as a prepayment for services and amortised over the expected term of the service contract.
Trade names are acquired as part of a business combination and recognised separately from goodwill. Trade names are carried
at fair value at the date of acquisition less accumulated amortisation, which is calculated on a straight-line basis over an estimated
useful life of 3 to 9 years.
Customer relationships are acquired as part of a business combination and recognised separately from goodwill. They are
carried at the fair value at the acquisition date less accumulated amortisation. Amortisation is calculated on a straight-line basis
over an estimated useful life of 5 to ten years.
• Goodwill is measured on acquisition as part of a business combination as the difference between the consideration paid and the
fair value of the net assets acquired. Goodwill is tested for impairment as described in note 3.3 a).
12 SaaS adjustment relates to software as a service costs that were previously capitalised that would have been expensed in the prior period under the IFRIC pronouncement.
Refer to Overview section C) for more information on newly amended accounting standards adopted.
3.3 Intangible assets (continued)
a)
Impairment test for goodwill
For purposes of impairment testing, goodwill acquired through business combination is allocated to cash-generating units (CGUs):
Processing
Warehousing & Distribution
Total goodwill
2021
$ M
228.3
100.1
328.4
2020
$ M
224.9
99.4
324.3
Goodwill and intangible assets with indefinite lives are tested for impairment annually or more frequently if circumstances indicate that
an asset may be impaired. In assessing impairment, the recoverable amount of assets is estimated to determine the extent of the
impairment loss. The recoverable amount for goodwill is assessed at the Group of CGUs level and is based on value in use (VIU)
calculations. Management uses judgement in determining the recoverable amount of assets including expected future cash flows, long
term growth rates and discount rates.
In assessing VIU, estimated future cash flows are based on the Group’s most recent Board approved business plan covering a period
of five years. Projected cash flows are based on past performance and management’s future expectations, taking into account the
Group’s production capacity, long-term customer agreements, and market information in key geographies. Cash flows beyond the five-
year period are extrapolated using an estimated growth rate of 2.01% (2020: 2.04%) for the Processing CGU and 2.04% (2020:2.02%)
for the Warehousing & Distribution CGU. The growth rate does not exceed the long-term average growth rate for the business in which
the CGUs operate.
In performing the VIU calculations for each CGU, the Group has applied pre-tax discount rates to the discount the forecasted future
cashflows; 8.96% (2020: 8.83%) for the Processing CGU and 9.10% (2020:8.72%) for the Warehousing & Distribution CGU. These
discount rates reflect the current market assessment of the time value of money and risks specific to the relative segment and its
country of operation, as well as an additional Asset Risk Premium to ensure conservatism in the outputs of the testing. Any reasonably
possible change to the above key assumptions would not cause the carrying value of a CGU to exceed its recoverable amount.
3.4 Leases
a) Right of use assets
Opening balance arising from the adoption of AASB 16
8.0
50.0
11.0
69.0
Property leases
$M
Equipment
leases
$M
Motor vehicle
leases
$M
Total
$M
Movement
Additions to right of use asset
Transfers to property, plant, and equipment (note 3.2)
Depreciation expense
Exchange rate differences
Net book value
At 30 September 2020
Cost
Accumulated depreciation
Net book value
Movement
Additions to right of use asset
Disposals
Depreciation expense
Exchange rate differences
Net book value
At 30 September 2021
Cost
Accumulated depreciation
Net book value
11.0
(11.0)
(1.1)
(0.2)
6.7
7.7
(1.0)
6.7
7.6
-
(0.9)
0.1
13.5
15.4
(1.9)
13.5
9.9
-
(6.7)
(2.5)
50.7
57.1
(6.4)
50.7
18.5
(2.4)
(6.8)
(0.6)
59.4
71.3
(11.9)
59.4
3.2
-
(4.7)
(0.5)
9.0
13.5
(4.5)
9.0
-
-
24.1
(11.0)
(12.5)
(3.2)
66.4
78.3
(11.9)
66.4
26.1
(2.4)
(4.5)
(12.2)
-
4.5
13.8
(9.3)
4.5
(0.5)
77.4
100.5
(23.1)
77.4
25
Report Title
24
Report Title
80
81
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
3.6 Retirement benefit obligations
The Group operates pension plans for some employees in US, Canada, UK and Australia. The plans are closed to new members. The
plan is funded through contributions to the defined benefit plan as determined by annual actuarial valuations. A defined benefit plan is a
pension plan that defines the amount of pension benefit an employee will receive on retirement, usually dependent on one or more
factors such as age, years of service and compensation.
a) Retirement benefit liability recognised in the consolidated statement of financial position
3.4 Leases (continued)
b) Lease liabilities
Opening balance arising from the adoption of AASB 16
Interest expense
Additions
Repayments
Exchange rate differences
Lease liabilities at 30 September 2020
Interest expense
Additions
Repayments
Disposals
Exchange rate differences
Lease liabilities at 30 September 2021
Current
Non-current
$M
Total
69.0
3.3
19.6
(22.1)
(1.4)
68.4
2.7
27.1
(14.0)
(2.4)
(0.3)
81.5
12.2
69.3
The Group enters into non-cancellable leases as a lessee on properties, motor vehicles, railcars, and other plant and equipment.
There are leases in all of the Group’s operating geographies.
For a qualifying lease, there is a right of use asset and a lease liability recorded based on the present value of the future lease
payments, excluding variable payments. Fixed lease payments are discounted using the Group’s incremental borrowing rate, which is
the rate of interest that a lessee would have to pay to borrow over a similar term, with a similar security, the funds necessary to
purchases an asset of similar value to the right of use asset in a similar economic environment. The incremental borrowing rate has
been used when the rate implicit in the lease is not readily determinable. The weighted average incremental borrowing rate applied to
the lease liabilities at 30 September 2021 is 3.6% (2020: 3.6%).
Right of use assets are depreciated over the shorter of the asset’s useful life or the lease term on a straight-line basis. Payments
associated with low value assets or short-term leases with a term of 12 months or less are recognised on a straight-line basis as an
expense.
3.5 Provisions
At 1 October 2020
Additional provisions
Amounts used
Unused amounts reversed
Exchange differences
At 30 September 2021
Current
Non-current
Provisions are:
Employee benefits
$ M
12.5
7.9
(9.0)
(0.1)
-
11.3
9.6
1.7
Other
$M
4.4
2.3
(1.6)
(1.5)
0.2
3.8
2.5
1.3
Total
$M
16.9
10.2
(10.6)
(1.6)
0.2
15.1
12.1
3.0
•
Recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that cash will be
required to settle the obligation, and the amount can be reliably estimated.
• Measured at the present value of the estimated cash outflow required to settle the obligation. For non-current provisions, the
nominal amount is discounted, and the financing impact is recognised in the Consolidated Income Statement.
Present value of the defined benefit obligations
Fair value of defined benefit plans assets
Net defined benefit asset / (obligation)
Recognised in the consolidated statement of financial position as:
Retirement benefit asset
Retirement benefit obligation
Net defined benefit asset / (obligation)
b) Categories of plan assets
The major categories of plan assets are as follows:
Cash
Equity instruments
Debt instruments
Other assets
Total
c) Reconciliations
Reconciliation of the present value of the defined benefit obligations:
At 1 October
Current service cost
Interest cost
Scheme participants contributions
Remeasurements
Benefits paid
Past service cost
Exchange differences
At 30 September
Reconciliation of fair value of plan assets:
At 1 October
Interest income
Remeasurements
Contributions by Group companies
Scheme participants contributions
Actual plan administration expense
Benefits paid
Exchange differences
At 30 September
Report Title
26
Report Title
82
83
2021
$ M
(182.6)
195.8
13.2
16.8
(3.6)
13.2
2021
%
3%
28%
65%
4%
2020
$ M
(201.6)
190.5
(11.1)
2.1
(13.2)
(11.1)
2020
%
2%
38%
59%
1%
100%
100%
2021
$ M
2020
$ M
201.6
211.4
1.3
4.0
0.1
(14.9)
(16.8)
0.4
6.9
182.6
1.5
4.4
0.1
4.4
(16.1)
1.1
(5.2)
201.6
190.5
197.0
3.8
3.5
8.3
0.1
(0.4)
(16.8)
6.8
195.8
4.1
4.2
6.5
0.1
(0.4)
(16.1)
(4.9)
190.5
27
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
3.6 Retirement benefit obligations (continued)
3.6 Retirement benefit obligations (continued)
d) Amounts recognised in the consolidated income statement
h) Employer contributions
2021
$ M
2020
$ M
Based on the recommendations of the plans’ actuaries, total employer contributions expected to be paid by the Group for the year
ended 30 September 2022 are $6.0 million (2021: $6.6 million).
i) Accounting treatment
The asset or liability recognised in the consolidated statement of financial position in respect of defined plan benefits is the present
value of the defined benefit obligation at the balance sheet date minus the fair value of plan assets. The present value of the pension
liability is determined by discounting the estimated future cash flows using interest rates of high quality corporate or government bonds
that:
•
•
Are denominated in the currency in which the benefits will be paid; and
Have terms to maturity approximating the terms of the related pension liability.
The defined benefit obligation is calculated at least annually by independent actuaries using the projected unit credit method, which in
simple terms, proportions the benefit based on years of service provided. Management considers the valuation of defined benefit plans
to be an area of judgement as a number of key assumptions must be adopted to determine the fair value.
Actuarial gains and losses arise when there is a difference between previous estimates and actual experience or a change to
assumptions in relation to demographic and financial trends. Gains and losses are recognised directly in other comprehensive income
as remeasurements in the period in which they occur.
The Group determines the net interest expense (income) on the net defined benefit liability for the period by applying the discount rate
at the beginning of the period to the net defined benefit liability, considering any changes during the period because of contributions and
benefit payments. Net interest expense (income), service cost and other expenses related to defined benefit plans are recognised in the
consolidated income statement.
The amounts recognised in the income statement are as follows:
Current service cost
Net interest expense
Past service cost
Total expense included in employee benefits expense
e) Amounts recognised in other comprehensive income
Remeasurements of retirement benefit obligations
Cumulative remeasurements recognised
f) Principal actuarial assumptions
2021
Principal actuarial assumptions used (expressed as weighted averages):
Discount rate
Future salary increases
2020
Principal actuarial assumptions used (expressed as weighted averages):
Discount rate
Future salary increases
g) Sensitivity analysis
1.3
0.2
0.4
1.9
2021
$ M
18.4
(12.9)
1.5
0.3
1.1
2.9
2020
$ M
(0.2)
(31.3)
North
America
UK
Australia
3.17%
2.50%
2.00%
3.30%
1.50%
3.00%
North
America
UK
Australia
2.61%
2.00%
1.70%
2.80%
1.90%
3.00%
Changes in the following principal actuarial assumptions would have the following effect on the defined benefit pension obligation:
Discount rate:
0.25% increase
0.25% decrease
Inflation:
0.25% increase
0.25% decrease
2021
$ M
Increase/(decrease)
2020
$ M
Increase/(decrease)
(6.6)
6.8
2.3
(2.3)
(7.6)
8.0
3.1
(3.1)
The sensitivity information has been derived for all plans using projected cash flows valued using the relevant assumptions and
membership profiles as at 30 September 2021. Extrapolation of these results beyond the sensitivity figures shown may not be
appropriate.
Report Title
28
Report Title
29
84
85
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
4 Group Structure & Other
4.2 Deed of cross guarantee
The Company and the subsidiaries, as disclosed in note 4.1, have entered a Deed of Cross Guarantee on 9 April 2020 under which
each of the companies guarantees the debts of the other and are relieved from the requirement to prepare financial statements under
ASIC Class Order No. 2016/785. These are collectively known as the Closed Group.
A Statement of Comprehensive Income and Retained Earnings, and a Statement of Financial Position, comprising the Company and
controlled entities which are party to the Deed, after eliminating all transactions between the parties to the Deed, are set out below.
Statement of Comprehensive Income and Retained Earnings (Closed Group)
Revenue
Other income
Raw materials and consumables used
Employee benefits expense
Depreciation and amortisation
Finance costs
Repairs and maintenance
Other expenses
Profit before income tax
Income tax benefit
Profit/(loss) for the year
Other comprehensive income:
Changes in the fair value of cash flow hedges
Remeasurements of retirement benefit obligations
Income tax (expense) / benefit relating to components of other comprehensive income
Other comprehensive income for the year, net of tax
Total comprehensive income/(expense) for the year
Summary of movements in consolidated retained earnings
Retained losses at the beginning of the financial year
Income for the year
Dividends paid
Retained losses at the end of the financial year
2021
$ M
183.2
2.1
(153.8)
(17.1)
(11.3)
(2.4)
(3.8)
(31.5)
(34.6)
1.9
(32.7)
1.8
0.1
(0.4)
1.5
(31.2)
(20.9)
(32.7)
(17.7)
(71.3)
2020
$ M
204.8
142.1
(167.1)
(17.5)
(12.8)
(3.7)
(4.5)
(9.0)
132.3
2.7
135.0
2.2
(0.1)
(1.1)
1.0
136.0
(155.9)
135.0
-
(20.9)
This section provides information on how the Group structure affects the financial position and performance of the Group. The
disclosures detail the types of entities and transactions included in the consolidation and those which are excluded.
4.1 Subsidiaries
The Company, which is the ultimate parent of the Group, is incorporated in Australia. Subsidiaries are consolidated from the date of
acquisition, being the date the Company obtains control, and continue to be consolidated until the date control ceases. Control exists
where the Company has power to govern the financial and operating policies of the entity in order to obtain benefits from its activities.
Below are the subsidiaries within the Group.
Controlled entities are fully consolidated from the date control is obtained until the date that control ceases. All subsidiaries incorporated
in Australia, along with the United Malt Group Limited, form part of the Closed Group (note 4.2). All entities were wholly owned at 30
September 2021 unless otherwise stated.
Country of
incorporation
% controlled
2021
% controlled
2020
Subsidiaries controlled at 30 September
Name of entity
Australia Malt Finco Pty Limited
Australia Malt Holdco Pty Limited
Barrett Burston Malting Co. Pty. Limited
Barrett Burston Malting Company WA Pty Limited
Malt Real Property Pty Limited
Security Superannuation Fund Pty Limited
United Malt Australia Pty Limited
Canada Malting Co. Limited
Schill Malz GmbH Co. KG13
Schill Malz Verwaltungs-GmbH13
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Canada
Germany
Germany
Barrett Burston Malting Co (NZ) Limited
New Zealand
Bairds Malt Limited
Bairds Malt (Pension Trustees) Limited
Brewers Select Limited
Malt UK Holdco Limited
Maltco 3 Limited
Mark Lawrence (Grain) Limited
Moray Firth Maltings Limited
Norton Organic Grain Limited
Scotgrain Agriculture Limited
Ulgrave Limited
United Malt (Canada) Holdings UK Limited
United Malt UK Limited
Great Western Malting Co
Malt US Holdco Inc
Metropolitan Insurance Group14
United Malt Holdings USA
United Malt USA
13 This entity has been liquidated during the year.
14 This entity was incorporated on 11 August 2021.
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
USA
USA
USA
USA
USA
100
100
100
100
100
100
100
100
-
-
100
100
99
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
Report Title
30
Report Title
31
86
87
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
Notes to the Consolidated Financial Statements
United Malt Group Limited
United Malt Group Limited
4.2 Deed of cross guarantee (continued)
4.3 Parent entity financial information
Set out below is the consolidated statement of financial position of the Closed Group as at 30 September.
Summary financial information for the Company is set out below:
Non-current assets
Total assets
Non-current liabilities
Total liabilities
Shareholders’ equity
Contributed equity
Reserves
Retained earnings in 2020 and subsequent periods
Retained losses in prior periods
Total shareholders’ equity
(Loss)/Profit for the year
Total comprehensive (loss) / income
2021
$ M
513.0
513.0
-
-
166.9
393.0
110.0
2020
$ M
547.1
547.1
-
-
166.9
393.0
144.1
(156.9)
(156.9)
513.0
(16.4)
(16.4)
547.1
144.1
144.1
The parent entity is party to the Deed of Cross Guarantee and is subject to the terms of the deed as described in note 4.2. At 30
September 2021, the parent entity did not provide any other guarantees (2020: nil), contingent liabilities (2020: nil) or capital
commitments (2020: nil).
Consolidated Statement of Financial Position (Closed Group)
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Derivative financial instruments
Current tax assets
Total current assets
Non-current assets
Trade and other receivables
Investment in subsidiaries
Property, plant and equipment
Intangible assets
Lease assets
Derivative financial instruments
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Derivative financial instruments
Lease liabilities
Current tax liabilities
Provisions
Total current liabilities
Non-current liabilities
Borrowings
Lease liabilities
Derivative financial instruments
Provisions
Deferred tax liabilities
Retirement benefit obligations
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Retained losses
Total equity
2021
$ M
34.5
37.5
46.9
3.4
0.1
122.4
338.6
309.1
148.6
23.9
12.9
0.2
833.3
955.7
23.5
39.2
1.1
1.1
-
3.0
67.9
349.5
11.9
1.4
1.7
0.2
-
364.7
432.6
523.1
166.9
427.5
(71.3)
523.1
2020
$ M
116.7
53.5
58.8
2.2
0.4
231.6
337.8
238.6
134.8
24.0
1.4
0.8
737.4
969.0
35.0
-
1.5
0.5
0.5
4.2
41.7
348.1
0.9
2.3
2.7
2.8
0.1
356.9
398.6
570.4
166.9
424.4
(20.9)
570.4
Report Title
32
Report Title
33
88
89
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Notes to the Consolidated Financial Statements
United Malt Group Limited
4.4 Related party transactions
a) Transactions with GrainCorp Limited and its controlled entities (GrainCorp Group)
The ultimate parent entity of the Group is United Malt Group Limited, which is domiciled and incorporated in Australia. Prior to the
demerger from GrainCorp and subsequent listing as a standalone entity on the ASX, the ultimate parent entity of the Group was
GrainCorp Limited. Transactions with entities as part of the GrainCorp Group have been identified as related party transactions up until
the date of demerger on 23 March 2020.
Prior to Demerger, the Group had a number of intercompany loan agreements where interest was payable to the benefit of the
GrainCorp Group. These loans have been extinguished prior to the Demerger on 23 March 2020. The impact of the loans
extinguished is recognised in a separate reserve within equity.
Transactions with GrainCorp Group entities:
Sale of goods
Purchase of raw materials and services
Interest expense
Other charges
Loan extinguishment
b) KMP compensation
Consolidated
2021
$’000
-
-
-
-
-
2020
$’000
2
16,087
440
3,031
427,065
Disclosures relating to KMP are provided in the Remuneration Report. There were no other transactions with KMP during the period.
Short-term employee benefits
Post-employment benefits
Share-based payments
Total KMP compensation
4.5 Remuneration of auditor
PricewaterhouseCoopers Australia
Audit and review of financial reports
Total remuneration of PricewaterhouseCoopers Australia
Overseas PricewaterhouseCoopers firms
Audit and review of financial reports
Total audit and review of financial reports
Overseas PricewaterhouseCoopers firms
Other non-audit services (company secretarial services)
Total auditors’ remuneration
4.6 Events subsequent to reporting date
2021
$’000
3,471
92
1,071
4,634
2021
$’000
450
450
797
1,247
19
1,266
2020
$’000
2,477
83
745
3,305
2020
$’000
420
420
1,697
2,117
19
2,136
Other than the term debt refinancing as described in note 2.1 b), no significant events subsequent to the balance date have occurred.
Directors’
Declaration
In the Directors’ opinion:
a)
The financial statements and notes set out on pages 57 to 90 are in accordance with the Corporations Act 2001, including:
i.
Complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements; and
ii. Giving a true and fair view of the consolidated entity’s financial position as at 30 September 2021 and of its performance for
the financial year ended on that date; and
b)
c)
There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable; and
At the date of this declaration, there are reasonable grounds to believe that the members of the Closed Group identified in note
4.2 will be able to meet any obligation or liabilities to which they are, or may become, subject to by virtue of a deed of cross
guarantee described in note 4.2.
The Basis of Preparation note as disclosed on page 62 confirms that the financial statements also comply with International Financial
Reporting Standards as issued by the International Accounting Standards Board.
The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of
the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Graham Bradley AM
Chairman
Sydney
17 November 2021
Report Title
34
ANNUAL REPORT 2021
90
35
91
UNITED MALT
UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Independent auditor’s report
To the members of United Malt Group Limited
Report on the audit of the financial report
Our opinion
In our opinion:
The accompanying financial report of United Malt Group Limited (the Company) and its controlled
entities (together the Group) is in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the Group's financial position as at 30 September 2021 and of its
financial performance for the year then ended
(b) complying with Australian Accounting Standards and the Corporations Regulations 2001.
What we have audited
The Group financial report comprises:
●
●
●
●
●
●
the consolidated statement of financial position as at 30 September 2021
the consolidated statement of changes in equity for the year then ended
the consolidated statement of cash flows for the year then ended
the consolidated statement of profit or loss and other comprehensive income for the year then
ended
the notes to the consolidated financial statements, which include significant accounting policies
and other explanatory information
the directors’ declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the financial
report section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical
Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence
Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also
fulfilled our other ethical responsibilities in accordance with the Code.
PricewaterhouseCoopers, ABN 52 780 433 757
One International Towers Sydney, Watermans Quay, Barangaroo, GPO BOX 2650, SYDNEY NSW 2001
T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au
Level 11, 1PSQ, 169 Macquarie Street, Parramatta NSW 2150, PO Box 1155 Parramatta NSW 2124
T: +61 2 9659 2476, F: +61 2 8266 9999, www.pwc.com.au
Liability limited by a scheme approved under Professional Standards Legislation.
Our audit approach
An audit is designed to provide reasonable assurance about whether the financial report is free from
material misstatement. Misstatements may arise due to fraud or error. They are considered material if
individually or in aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of the financial report.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an
opinion on the financial report as a whole, taking into account the geographic and management
structure of the Group, its accounting processes and controls and the industry in which it operates.
Materiality
● For the purpose of our audit we used overall Group materiality of $2.6 million, which represents
approximately 5% of the Group’s adjusted profit before tax.
● We applied this threshold, together with qualitative considerations, to determine the scope of our audit
and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on
the financial report as a whole.
● We chose Group profit before tax because, in our view, it is the benchmark against which the performance
of the Group is most commonly measured. We adjusted for the inventory provision in relation to the
storage contractor in administration and the bad debt provision related to the impact of COVID-19
impairment as they are unusual or infrequently occurring items impacting profit and loss.
● We utilised a 5% threshold based on our professional judgement, noting it is within the range of commonly
acceptable thresholds.
Audit Scope
● Our audit focused on where the Group made subjective judgements; for example, significant accounting
estimates involving assumptions and inherently uncertain future events.
● Local component auditors in the United States and the United Kingdom assisted in the audit work
performed, acting under instruction from the group audit team.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report for the current period. The key audit matters were addressed in the
context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do
not provide a separate opinion on these matters. Further, any commentary on the outcomes of a
particular audit procedure is made in that context. We communicated the key audit matters to the
Audit and Risk Committee.
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Key audit matter
Goodwill impairment assessments
(Refer to note 3.3 in the financial report)
The Group holds indefinite lived intangible assets
totalling $328.4m as at 30 September 2021, across its
Processing, and Warehousing & Distribution Groups
of cash generating units (Group of CGUs).
Under Australian Accounting Standards, the Group is
required to assess goodwill for impairment at least
annually.
The Group performed the annual impairment
assessments on the carrying value of the Processing,
and Warehousing & Distribution Groups of CGUs at
30 September 2021. This was performed by
calculating the value in use for each Group of CGUs
using discounted cash flow models (the models). The
models estimated cash flows for each Group of CGUs
for 5 years, with a terminal growth rate applied to the
5th year. These cash flows were then discounted to
net present value using the Group’s discount rates,
taking into account the specific countries in which the
Group of CGUs operates.
This was a key audit matter due to the financial size of
the goodwill balance and the significant judgements
required by the Group including:
● Estimated future cash flows
● Discount rates
● Long term growth rates
How our audit addressed the key audit
matter
We performed the following procedures, amongst
others, in respect of the Processing and Warehousing
& Distribution Groups of CGUs:
● Assessed whether the Group of CGUs were
consistent with our understanding of the
Group’s operations and internal Group
reporting.
● Considered whether the methodology
applied in the models was consistent with
the basis required by Australian Accounting
Standards.
● Tested the mathematical accuracy of the
calculations in the models used to assess
impairment.
● Assessed whether the forecast cash flows in
the impairment assessments were
appropriate by performing the following
procedures, amongst others:
○ Compared the 2022 forecasted cash
flows used in the models with the
forecast formally approved by the
Board.
○ Evaluated the historical accuracy of the
Group’s forecasts by comparing the
forecasts used in prior year models to
the actual performance.
○ Assessed the forecast growth
assumptions used in the models by
reference to our understanding of the
key drivers for future growth, with
reference to third party information
including economic and industry
forecasts, and historical results.
○ With the assistance of PwC valuation
experts, assessed whether the discount
rates used in the models were
appropriate by comparing them to
market data, comparable companies
and industry research.
○ Evaluated the appropriateness of the
long term growth rates in the models
by comparison to the long term growth
rates of the countries that the Group
operates in.
● Evaluated the reasonableness of the
disclosures made in note 3.3, including key
assumptions, in light of the requirements of
Australian Accounting Standards.
Key audit matter
Taxation
(Refer to note 1.4)
Income taxes and deferred tax balances were a key
audit matter because the Group operates across
multiple jurisdictions with different tax laws,
regulations and authorities.
How our audit addressed the key audit
matter
Together with tax experts in Australia and the United
States, we performed the following procedures,
amongst others:
•
•
For the Group tax consolidation agreed key
inputs to supporting documentation including
underlying entity tax calculations. Tested the
mathematical accuracy of the consolidation
model.
For those individual entities identified with
significant income tax expense or recorded tax
payable, agreed the key inputs in the tax
calculations to the relevant general ledger
balance and assessed adjustments between
accounting and taxable profits with reference
to temporary and permanent differences
included in the calculation of the income tax
expense and accounting and tax bases
included in the calculation of deferred tax
assets and liabilities.
• Evaluated the analysis conducted by the
Group for significant judgements made in
respect of the ultimate amounts expected to be
paid to tax authorities. This included
comparing prior year tax provisions to actual
tax filings in the current year.
• Assessed the reasonableness of the Group’s
disclosure in the financial report in light of
Australian Accounting Standard
requirements.
Other information
The directors are responsible for the other information. The other information comprises the
information included in the annual report for the year ended 30 September 2021, but does not include
the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of
this auditor’s report, we conclude that there is a material misstatement of this other information, we
are required to report that fact. We have nothing to report in this regard.
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Responsibilities of the directors for the financial report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of the financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website at:
https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This description forms part of
our auditor's report.
Report on the remuneration report
Our opinion on the remuneration report
We have audited the remuneration report included in pages 37 to 55 of the directors’ report for the
year ended 30 September 2021.
In our opinion, the remuneration report of United Malt Group Limited for the year ended 30
September 2021 complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the remuneration report, based on our audit conducted in accordance with
Australian Auditing Standards.
PricewaterhouseCoopers
Brett Entwistle
Partner
Sydney
17 November 2021
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Shareholder Information
(cid:24)(cid:144)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:16)(cid:131)(cid:142)(cid:150)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:15)(cid:139)(cid:143)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:3)
(cid:3)
Holding distribution as at 2 November 2021
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Securities
241,677,162
26,117,140
12,262,646
15,865,453
3,256,734
%
80.78
8.73
4.10
5.30
1.09
No. of Holders
54
1,220
1,693
6,438
8,015
%
0.31
7.00
9.72
36.96
46.01
299,179,135
100.00
14,142
100.00
There were 1,442 shareholders holding less than a marketable parcel of shares.
Voting rights
On a show of hands, every member present in person or by proxy shall have one vote, and upon each poll, each share shall have one
vote.
Unquoted Equity Securities
The Company has a total of 1,161,909 unquoted rights issued pursuant to the Company’s Long Term Incentive Offers, One-off Award
offer and Deferred STI Awards as further described the Remuneration Report. There were a total of five holders of the unquoted rights.
Corporate Governance Statement
United Malt has reviewed its corporate governance practices against the Corporate Governance Principles and Recommendations
(4thedition) published by the ASX Corporate Governance Council.
The 2021 corporate governance statement was approved by the Board on 16 November 2021 and reflects the corporate governance
practices in place for year ending 30 September 2021. United Malt’s 2021 corporate governance statement and key governance
documents such as charters, policies and United Malt’s Appendix 4G Key to Disclosures under the Corporate Governance Principles
and Recommendations can be viewed at www.unitedmalt.com/corporate-goverance.
Shareholder
Information
Listing Information
United Malt is listed and our issued shares are quoted on the Australian Securities Exchange (ASX) under the code: UMG.
Unless otherwise stated all information set out below is current as at 3 November 2021.
The Company has on issue 299,179,135 ordinary fully paid shares and a total of 17,420 shareholders.
Substantial shareholders
The following organisations have a substantial shareholding in United Malt Group Limited based on substantial holding notices lodged
on or before 3 November 2021.
Name
GrainCorp Limited
Ethical Partners
Notice date
Shares held
Issued capital %
29 June 2020
5 May 2020
25,428,404
17,141,967
8.50
6.74
Twenty largest ordinary fully paid shareholder as at 2 November 2021
Rank
Name
Shares held
Issued capital %
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
NATIONAL NOMINEES LIMITED
GRAINCORP LIMITED
CS THIRD NOMINEES PTY LIMITED
CITICORP NOMINEES PTY LIMITED
BNP PARIBAS NOMS PTY LTD
BNP PARIBAS NOMINEES PTY LTD
FIRST SAMUEL LTD ACN 086243567
JARJUMS HOLDINGS PTY LIMITED
MRS INGRID KAISER
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED-A/C 2
BRISPOT NOMINEES PTY LTD
BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD
BNP PARIBAS NOMINEES PTY LTD
MARK PALMQUIST
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
BNP PARIBAS NOMINEES PTY LTD
VERBENA BEE PTY LTD
58,409,412
49,027,840
45,468,365
29,187,549
25,428,404
8,632,408
4,799,487
4,408,306
2,810,205
1,728,520
1,700,000
1,133,976
905,411
863,780
789,792
541,596
437,473
382,431
275,000
266,848
19.52
16.39
15.20
9.76
8.50
2.89
1.60
1.47
0.94
0.58
0.57
0.38
0.30
0.29
0.26
0.18
0.15
0.13
0.09
0.09
Total for top 20 shareholders
237,196,803
79.28
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UNITED MALT
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UNITED MALT ANNUAL REPORT 2021UNITED MALT ANNUAL REPORT 2021
Glossary
(cid:24)(cid:144)(cid:139)(cid:150)(cid:135)(cid:134)(cid:3)(cid:16)(cid:131)(cid:142)(cid:150)(cid:3)(cid:10)(cid:148)(cid:145)(cid:151)(cid:146)(cid:3)(cid:15)(cid:139)(cid:143)(cid:139)(cid:150)(cid:135)(cid:134)
(cid:3)
Glossary
Glossary
Glossary
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(cid:3)
Description
Million Tonnes
Interest expense net of interest income
Net Profit After Tax
Net Promoter Score
Nominations and Remuneration Committee
Term
Mt
Net finance costs
NPAT
NPS
NRC
Non-Executive Directors Directors of the Board who are not Executives
PMO
PTY
PTRMP
PWC
RIFR
Project Management Office
Proprietary
Position & Trading Risk Management Policy
PricewaterhouseCoopers
Recordable Injury Frequency Rate. is calculated as the number of injuries per
200,000 hours worked,
Return on capital employed
Significant items as those items not in the ordinary course of business, non-recurring
and material in nature and amount
United Nations Sustainable Development Goals
Share Purchase Plan
Short-term incentive
Task Force on Climate-Related Disclosures
United Malt Group Limited
Transportation Management System
United Kingdom
United Malt Group Limited
Net profit after tax excluding Significant Items
United Malt Group Limited
United States of America
United States Dollar
Vice President, Human Resources
Volume Weighted Average Price
Second Half of financial year ending 30 September
First Half of financial year ending 31 March
ROCE
Significant Items
SDG
SPP
STI
TCFD
the Company
TMS
UK
UMG
Underlying NPAT
United Malt
US
USD
VP HR
VWAP
2H
1H
Term
AASB
ABN
ACN
AGM
AM
ARC
ASX
ASIC
aTSR
AUD
Board
Capex
CFO
COO
Constant currency
COVID-19
Cth
DEP
D&O
EBIT
EBITDA
EH&S
EIP
ELT
EPS
ERP
ESG
Executive KMP
FSQM
FY20
FY21
GRI
Group
HY
IFRS
IP
ITGC
KMP
Ltd
LTI
LTIFR
LTIP
MD & CEO
Mtpa
Description
Australian Accounting Standards Board
Australian Business Number
Australian Company Number
Annual General Meeting
Member of the Order of Australia
Audit and Risk Committee
Australian Securities Exchange
Australian Securities and Investments Commission
Absolute total shareholder return
Australian Dollar
The Board of Directors of United Malt Group Limited, details of which are on pages 18
to 19
Capital Expenditure
Chief Financial Officer
Chief Operating Officer
Prior period results translated into Australian dollars at the actual monthly exchange
rates applicable in the current period, so as to show relative performance between the
two periods
An acute respiratory illness in humans caused by a coronavirus, capable of producing
severe symptoms and in some cases death, especially in older people and those with
underlying health conditions. It became pandemic in 2020.
Commonwealth
Deferred equity plan
Directors & Officers
Earnings before interest, tax, and excluding significant items
A non-IFRS measure representing earnings before net interest, tax, depreciation and
amortisation, and excluding significant items
Environment, Health & Safety
Employee Incentive Plan
Executive Leadership Team
Earnings per share
Enterprise Resource Planning System
Environmental, Social & Governance
CEO and other executives considered KMP
Food safety quality management
2020 financial year
2021 financial year
Global Reporting Initiative
United Malt Group Limited
Half-year
International Financial Reporting Standards
Institutional Placement
Information Technology General Controls
Key Management Personnel
Limited
Long-term incentive
Lost Time Injury Frequency Rate
Long-term incentive plan
Managing Director & Chief Executive Officer
Million Tonnes Per Annum
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Corporate
Corporate
Directory
Directory
This page has been left blank intentionally.
Board of Directors
Graham J Bradley AM
(Chairman)
Mark L Palmquist
(Managing Director & CEO)
Barbara J Gibson
(Non-Executive Director)
Terry Williamson
(Non-Executive Director)
Jane McAloon
(Non-Executive Director)
Gary W Mize
(Non-Executive Director)
Company Secretary
Lisa Jones
Registered Office
Citigroup Centre
Level 18
Suite C, 2 Park Street
Sydney NSW 2000
Tel: + 61 2 8073 3160
Company website
www.unitedmalt.com
Share Registry
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
Tel: +61 1300 554 474
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