0 | WELLARD ANNUAL REPORT 2024
WELLARD LIMITED
ACN 607 708 190
ANNUAL REPORT 2024
1 | WELLARD ANNUAL REPORT 2024
CONTENTS
EXECUTIVE CHAIRMAN’S REPORT ..................................................................................... 2
RESULTS FOR ANNOUNCEMENT TO THE MARKET ......................................................... 8
OPERATIONS REPORT ....................................................................................................... 10
DIRECTORS’ REPORT ......................................................................................................... 15
FINANCIAL REVIEW ............................................................................................................. 19
REMUNERATION REPORT ................................................................................................. 32
AUDITOR’S INDEPENDENCE DECLARATION ................................................................... 42
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ..................................... 44
CONSOLIDATED STATEMENT OF FINANCIAL POSITION ............................................... 45
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ............................................... 46
CONSOLIDATED STATEMENT OF CASH FLOWS ............................................................ 47
CONSOLIDATED ENTITY DISCLOSURE STATEMENT AS AT 30 JUNE 2024 ................. 50
INDEPENDENT AUDITOR’S REPORT ................................................................................ 77
ASX ADDITIONAL INFORMATION ....................................................................................... 82
CORPORATE DIRECTORY .................................................................................................. 85
2 | WELLARD ANNUAL REPORT 2024
EXECUTIVE CHAIRMAN’S REPORT
WELLARD
LIMITED
WELLARD LIMITED ANNUAL REPORT
2024
WELLAR
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LIMITED
ANNUAL
REPORT
2024
EXECUTIVE
CHAIRMAN’S
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EXECUTIVE CHAIRMAN’S REPORT
3 | WELLARD ANNUAL REPORT 2024
MESSAGE FROM THE EXECUTIVE CHAIRMAN
Wellard almost returned to profitability in FY2024, recording a loss of US$0.8 million which
although disappointing was significantly better than the US$15.5 million loss recorded in
FY2023.
Better ship utilisation was the key to the improved financial performance, however live
export trading conditions for all exporters, ship operators and importers were highly
variable.
Our four core trading markets all experienced some high-demand periods, but they were
interspersed with low and complete non-activity. Fortunately, the low or non-activity
periods weren’t synchronised, and when the particular individual markets recovered, we
had positioned the right-sized ship to capitalise on more favourable market conditions.
We have further acted on the hand dealt by the markets during FY2024 and our views on
the outlook by:
Relocating the large-sized M/V Ocean Drover away from the Australian market to the reactivated South America
to Türkiye trade at the end of FY2023. And then subsequently the mid-sized M/V Ocean Swagman was also
relocated there.
Completing the redelivery of the M/V Ocean Swagman to its owner in February 2024 at the expiration of the time
charter.
Further reducing our overheads, including substantial staff reductions with Wellard’s Australian office reduced to
Board members only in late FY2024.
Selling the M/V Ocean Ute with settlement in September 2024, and making a capital return of 2 cents a share
from some of the sale proceeds subject to shareholder approval at the upcoming AGM on 22 November 2024.
Continuing the productive engagement with the liquidators of Ruchira Ships Limited (In Liquidation) (“Ruchira”),
the registered owner of the M/V Ocean Drover, to seek a commercial resolution that will result in the return to
Wellard of full, unencumbered legal title to the vessel.
The Company recorded zero lost time injuries and zero medically treated injuries for FY2024, extending the nil-nil
result achieved in FY2023 and FY2022, which the Company will seek to replicate in FY2025.
At a macro level, there were 744,298 cattle exported by sea from Wellard’s principal market of Australia in FY2024, a
21.7% increase to the 611,324 cattle shipped in FY2023 and a similar number the previous year. While the percentage
increase was large, the FY2023 and FY2022 total shipments were 10-year lows1.
The lack of adequate supply of Australian feeder cattle to Australia’s largest live cattle export destination in Indonesia
that has existed in previous years has been alleviated with Australian live export feeder steer A$ prices back to around
10-year averages, or lower, during FY2024, which has directly led to an increase in volumes, however not to previous
levels.
In the half-year ended 31 December 2023 (“H1FY2024”), the fear of an outbreak of foot and mouth disease (FMD) or
lumpy skin disease (LSD) in Australia kept shipment sizes small (Wellard, as an operator of mid to large-size carriers,
was effectively out of this market as a result) as it would be financially devastating for importers if they held large
numbers on-hand and which, if found to be subject to those diseases, would be euthanized. Durning that period,
significant numbers of export-consigned cattle from Australia were rejected by Indonesian regulators due to skin
blemishes.
After overcoming the LSD issue, market participants were then hit with a two-month delay in the issuing of import
permits for Australian cattle at the start of the half-year ended 30 June 2024 H2FY2024. The trade effectively ground
to a halt during this time. Shipments recommenced with good volumes seen from the end of February 2024 when the
permits were issued by the Indonesian Authorities.
As per our previous reports, the sustained very high Australian cattle prices, which were exacerbated when producers
directed feeders to southern restocker markets in FY2022-23, have led to closures of some Indonesian feedlots, which
could not continue to sustain the trading losses. Indian buffalo meat is consistently priced below imported Australian
cattle and, along with frozen Brazilian beef, has established a large market position such that despite supply being
available, the demand for Australian product is materially below previous year’s levels.
1 Total cattle exported from Australia: https://www.agriculture.gov.au/sites/default/files/documents/all-livestock-exports-2019-2024.xlsx
John Klepec
Executive Chairman
EXECUTIVE CHAIRMAN’S REPORT
4 | WELLARD ANNUAL REPORT 2024
The export market to Vietnam for Australian slaughter cattle regained some vitality at the start of FY2024, and the M/V
Ocean Ute completed multiple shipments. Then, an increase in Australian cattle prices eroded the cost
competitiveness of Australian cattle in the Vietnam market and immediately impacted volumes, leading to no activity
for the M/V Ocean Ute for two months from January 2024. Pricing then reverted down with a commensurate pickup in
volumes and shipments for Wellard for the last 3 months of FY2024.
Given the sporadic nature of these base Australian markets, the M/V Ocean Drover and M/V Ocean Swagman were
relocated and operating in the Atlantic Ocean for most of H1FY2024, while the Company’s smallest vessel, the M/V
Ocean Ute, remained to service the Australian live export markets.
The dairy breeder market to China, which was a major source of demand in the years prior to FY2024, was sporadic
with demand materially lower than the past. Following a period of inactivity when the New Zealand market closed in
April 2023, there was a restart with several shipments completed over the course of FY2024, with Wellard completing
one shipment with the M/V Ocean Drover and one with the M/V Ocean Swagman. These were completed when the
ships were relocated back to Australia, following a period of inactivity in the South American export market at the back
end of calendar year 2023 (“CY2023”).
Strong demand continues from Türkiye. After the utilisation of most quotas by the end of Q3 CY2023 caused a
slowdown in shipping charter activity, additional quotas were again issued in early 2024, and charter demand
immediately rebounded. This, along with increased demand from Iraq, saw significant exports from Brazil and Uruguay
following several subdued years. Wellard completed 7 voyages to Türkiye in FY2024.
We are commencing FY2025 with an excellent charter book, with the M/V Ocean Drover, our remaining and largest
ship contracted for the entire financial year, a forward commitment position we have not been in for some years. This
is largely due to the increased trading activity from South America to Türkiye, where the Drover was located for a large
part of FY2024.
However, in an inflationary world, charter rates, whilst moving up, remain under downward pressure due to excess
cheap livestock shipping capacity, particularly in the South America to Türkiye market, where minimum animal welfare
and ship safety standards are lacking. Wellard is therefore competing against vessels that are long overdue for
retirement from service.
Wellard ended the financial year with US$8.8 million in cash and cash equivalents. Loans and borrowings amounted
to just US$0.3 million (FY2023: US$2.6 million), resulting in a negative net debt (i.e. cash surplus) position of US$8.5
million. This will be bolstered with the M/V Ocean Ute sale proceeds, the majority of which will then be progressively
returned to shareholders.
Voyage success rates reflect the ratio of cattle delivered versus loaded and remain an important KPI for Wellard and
the customers who charter our vessels. Through a combination of a dedicated focus on animal welfare, voyage
planning and vessel management, the effort and attention of our officers and crew, the quality of our vessels, and the
hard work of our suppliers, Wellard recorded another year with a 99.82% success rate, this year from the 162,551
cattle that boarded our vessels.
Voyage success rates such as these are integral to the continued demand for Wellard vessels from live export
companies and are a major reason we have secured voyages in the very competitive South American live export
market.
Outlook
Once the M/V Ocean Ute completes the remaining contracted charters and is delivered to her new owners in
September 2024, Wellard will become a one-ship company with the M/V Ocean Drover. The dynamics of ship size
and underlying market demand means that the M/V Ocean Drover is competitive in only two of the four markets where
Wellard has operated – the South American export market to Türkiye and other Middle Eastern countries and breeders
from Australia (and New Zealand once that market re-opens for exports) to China.
Looking forward, the market demand for breeder cattle into China is best described as patchy, with lower volumes
expected in FY2025, which has been reflected in the sustained material price correction that has taken place for
Australian dairy breeders. The process of reopening of the New Zealand market has commenced, however timing is
uncertain and the demand issue that will drive this market in FY2025 and beyond is unresolved. Similarly, it is uncertain
what impact the recent Indonesian government announcement of an investment scheme to boost domestic dairy
production will have on the market.
EXECUTIVE CHAIRMAN’S REPORT
5 | WELLARD ANNUAL REPORT 2024
The M/V Ocean Drover is contracted on multiple charters to service the Brazil/Uruguay to Türkiye market for the rest
of FY2025. Food security is driving demand for cattle in this region, and despite a surplus of livestock ships, the charter
demand for the M/V Ocean Drover remains high given its proven record on animal welfare and ship safety, and we
see no change for calendar 2025.
Wellard’s ships have not been affected by the current geopolitical instability in the Middle East, with both the M/V
Ocean Drover and M/V Ocean Swagman transiting through the Suez Canal during FY2024 without incident. However,
we do not have any charters that require that passage nor will we be accepting new charters that do so.
The outlook for the Australia to Indonesia feeder market for FY2025 is one of fully adjusting to the structural change
that has occurred and how the stock clearance avenue that Indonesia has traditionally provided will work when there
is a surplus of supply through the cycle. Most analysts are predicting that the entry of the US cattle herd into a rebuild
cycle will cause Australian cattle prices to rise, however the impact that Brazil, with the largest herd in the world by
some margin, can have on markets cannot be ignored.
The Australian slaughter cattle to Vietnam market will remain opportunistic with several alternative avenues available
for abattoirs. Activity is directly correlated to the landed price of Australian Cattle. Our expectation is similar volumes
and fluctuations that occurred in FY2024 will continue into FY2025.
Finally, whilst Wellard has long-term operational control and possession of the M/V Ocean Drover via its bareboat
charter (“BBC”), which lasts until 30 June 2032, the Company continues to engage productively with KPMG
(Singapore) as the liquidators of Ruchira Ships Limited (In Liquidation) (“Ruchira”), the registered owner of the vessel,
to seek a commercial resolution that will result in the return to Wellard of full, unencumbered legal title to the Drover.
There are no further charter hire payments to be made to Ruchira/KPMG under the BBC.
Australian Livestock Exports
Middle Eastern importers of Australian live sheep view the supply of live sheep as crucial food security for their people
and cannot accept any uncertainty regarding the supply, especially over the long term. Uncertainty regarding sheep
supply from Australia started well before the current Federal Government enacted the ban on live sheep exports from
1 May 2028. The uncertainty started with parliamentary motions and opposition to the sheep trade by Labor and
Greens members, which led to questions being raised by importers whether there is going to be a supply issue at
some point in the future.
Importers started to look elsewhere for alternative live sheep supplies, and only for processed products as a last resort.
Australia was once exporting more than 6 million head of sheep a year and we are now only around 10% of that level.
Wellard was involved with Middle East importers with extensive and expanding operations who wanted to invest in
Australian facilities that could reignite the sheep trade with several million sheep a year. In return, they very reasonably
wanted a commitment that the trade would not be closed for 10 years. There was no support from any political party
to provide this. So, when supply is a food security issue, they were forced to move on to alternatives elsewhere.
As we have noted previously, the current Labor Government has long held a position against the live export of sheep
trade which has progressively undermined the live export trade. The position in regards live export of cattle has varied
from a ban imposed in 2011 to currently stating support for the trade. It is Wellard’s opinion that the legislated sheep
ban is only the first act with the same noises that have led to the demise of the live sheep trade now being made about
the cattle trade from Australia.
The beliefs, which are not based on science or economics, of those that support the ending of live sheep export can
similarly be applied to cattle. So, despite the current Labor Government’s stated policy of support for the live cattle
industry, there only needs to be one catalyst which could see the live export of cattle from Australia banned. This could
come in the form of a future Australian Labor Party coalition, involving either the Greens or Teal Independents, who
have both voted previously (except for one Teal Independent) to also ban the live export of cattle in Parliament, with
the banning of live cattle exports one of the concessions required for their agreement to a coalition.
Wellard has not seen any good evidence that the proposed Australian ban will encourage or force our existing live-
sheep customers to instead import boxed, processed sheep meat. Instead, we have seen international customers
turning to alternative suppliers of live sheep from countries with lower animal welfare and shipping standards that
Australia. For example, when sheep from Somalia provided importers with the certainty they required, traders seized
on the opportunity created by the undermining of the trade from Australia by lack of Government support and replaced
the Australian sheep with Somali livestock.
EXECUTIVE CHAIRMAN’S REPORT
6 | WELLARD ANNUAL REPORT 2024
In CY2023, Somalia exported 2.8 million sheep, an increase of 780,000 sheep on the 2.1m exported in CY20222.
Australia exported ~600,000 sheep in the same period.
Seeing farmers having to cope with thousands of unsellable sheep on their farms is not due to the trade being
commercially unviable, as the current Government would have the public believe. Instead it is directly attributable to
those Members of Parliament that have been part of a comprehensive campaign of undermining the trade over many
years. The recently enacted ban is only the latest act.
Just how much of the announced compensation for those impacted by the closing of the live sheep trade will ultimately
flow to those affected, and what chunk is carved off for the Department to administer the program, remains to be seen.
If history is any guide, very little will ultimately flow to farmers. The cattle industry is still waiting 13 years later for the
Brett class action proceeds to be agreed and disbursed, whilst costs continue to grow.
Wellard encourages all industry participants to actively stand-up and protect the Australian live cattle trade from the
same outcome as the sheep trade.
Regulation
Continuing its excellent record of safe delivery of livestock for our customers, Wellard had no reportable mortality
incidents in FY2024.
Although live exports of sheep and cattle combined have remained low in recent years, there has not been a
commensurate reduction in either the number of Australian departmental staff monitoring the trades or the costs
attributable to that monitoring function. With cost recovery, this is unacceptable, particularly when the Federal
Department of Agriculture is not incentivised to reduce costs. In fact, the opposite is true. There have been a lot of
discussions over several years regarding the issue without any tangible outcome.
The ongoing cost of excessive and unnecessary Australian Government oversight cannot be absorbed by the live
export trade participants as the competing products, as noted above with Indian buffalo exports to Indonesia having
no such imposts, threaten to make the commercial proposition for Australian exports non-competitive, particularly in
light of already thin margins.
Reforming shipping standards
Given its importance, it is pertinent to restate that animal welfare remains of crucial importance to Wellard so that every
animal in our care is managed to the highest standards. Through our larger-than-average purpose-built vessel, our
expert crew, and our rigorous emphasis on high standards of care, we will continue to provide superior conditions for
the transport of livestock to destination markets.
Wellard has long campaigned for higher regulatory shipping standards to minimise the chances of adverse events
from occurring in the industry, and therefore improving the long-term sustainability of the live export trade in countries
that produce livestock which are surplus to their domestic consumption requirements.
Worldwide, the last new livestock ship entered service seven years ago and no new vessels are under construction,
and to the best of our knowledge, none are planned.
Unless standards are improved and enforced there will be no financial rationale to replace old, outdated ships with
new, state-of-the-art vessels, and those who place our valuable livestock and the long-term sustainability of the
livestock export industry at risk will continue to ply the trade. The current Australian Government has shown no interest
in improving Australian livestock shipping standards.
Wellard’s very real fear is that history will be repeated, and thousands of cattle, crew, and the future of the live cattle
trade will suffer from an entirely preventable situation because successive governments, including the current
Australian Government, have relied on a false sense of security and failed to listen to experienced industry experts
who want a sustainable trade.
Conclusion
Two of the four markets in which Wellard operates have swung from coping with supply-side issues, in the form of
high Australian cattle prices, to a demand-side issue. This is difficult to resolve quickly and has led to uncertainty about
the mid to longer term outlook as supply side is cyclical and will be difficult to navigate if the two coincide.
2 https://slmof.org/wp-content/uploads/2024/03/Annual-Trade-Statistics-Bulletin-2023-FF.pdf
EXECUTIVE CHAIRMAN’S REPORT
7 | WELLARD ANNUAL REPORT 2024
We have focussed on maximising the returns on the Company’s assets to our shareholders whose investment value
has suffered over several years. This has seen the major change being a reduction in the fleet of ships to only the M/V
Ocean Drover going forward. The M/V Ocean Swagman was redelivered to its owner following 152 voyages as a ship
that was operated, designed and built by Wellard. Subsequently, having accepted a sale offer greater than what we
could reasonably expect to earn by continuing to operate the ship, the M/V Ocean Ute will be delivered in September
to its new owner following 113 voyages.
We will seek shareholder approval at the AGM on 22 November 2024 for an initial capital return of A$ 2 cents a
share following the settlement of the M/V Ocean Ute.
After several years working hard, facing a very strong headwind, it is certainly welcome to have a tailwind as we
enter FY2025. Importantly, we finished FY2024 with US$8.5 million net cash on hand before any proceeds from the
M/V Ocean Ute sale.
We also thank our loyal business partners for their continued support.
John Klepec
Executive Chairman
29 August 2024
We have continued to engage productively with the liquidators of the registered owner of the M/V Ocean Drover, to
seek a commercial resolution that will result in the return to Wellard of full, unencumbered legal title to the Drover.
8 | WELLARD ANNUAL REPORT 2024
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Provided below are the results for the announcement to the market in accordance with Australian Securities
Exchange (ASX) Listing Rule 4.3A and Appendix 4E for the consolidated entity Wellard Limited ABN 53 607 708 190
(Wellard or Company) and its controlled entities (Wellard Group or Group or Consolidated Group), for the year
ended 30 June 2024 (FY2024) compared with the year ended 30 June 2023 (FY2023).
The financial statements are presented in United States dollars (unless otherwise stated).
FINANCIAL RESULTS AND KEY FINANCIAL ITEMS FROM CONTINUING OPERATIONS:
FOR THE YEARS ENDED 30 JUNE (US$ thousand)
2024
2023
Movement
Revenue
34,943
38,655
(9.6%)
Cost of Sales
(30,539)
(38,930)
(21.6%)
Gross profit/(loss)
4,404
(275)
1701.5%
Other income1
3,577
-
100.0%
General and Administrative expenses
(3,872)
(3,850)
0.6%
Other losses from chartering activities
-
(306)
(100.0%)
EBITDA2
4,109
(4,431)
192.7%
Other gains from other activities
147
112
31.3%
Restructuring costs
(469)
-
100.0%
Depreciation and amortisation expenses
(4,427)
(10,578)
(58.1%)
EBIT
(640)
(14,897)
(95.7%)
Net finance costs
(172)
(222)
(22.5%)
Income tax expense
(3)
(368)
(99.2%)
Loss from continuing operations after tax
(815)
(15,487)
(94.7%)
Profitability analysis
Gross profit margin
%
12.6
(0.7)
(1900.0%)
Operating Profit margin
%
11.8
(11.5)
(202.6%)
Net Profit margin
%
(2.3)
(40.1)
(94.3%)
Interest coverage3
Times
23.9
(20.0)
(219.5%)
Balance Sheet analysis
Working capital
$’000
18,029
3,195
464.3%
Current ratio
Times
4.6
1.4
228.6%
Net tangible assets
$’000
36,486
37,017
(1.4%)
Net tangible assets per security
Cps
6.9
7.0
(1.4%)
Loans and borrowings
$’000
271
2,588
(89.5%)
Negative net debt4
$’000
(8,511)
(4,832)
76.1%
Debt to capital ratio5
%
0.7%
6.4%
(89.1%)
Ship loan to asset book value ratio
%
0%
0%
-
1 Other income refers to the receipt of insurance claims following the M/V Ocean Swagman’s starboard engine repair in the prior financial year.
2 EBITDA equals profit/(loss) from continuing operations before income tax, less depreciation and amortisation expenses, less net finance costs, less
other gains arising from other activities and less impairment expenses.
3 Interest coverage equals EBITDA divided by net finance costs.
4 Net debt equals loans and borrowings less cash and cash equivalents. A negative net debt indicates that the cash and cash equivalents exceed the
entire debt balance.
5 Debt to capital ratio equals loans and borrowings divided by total equity plus loans and borrowings.
9 | WELLARD ANNUAL REPORT 2024
Commentary on the consolidated results and outlook are set out in the Operating and Financial Review section of the
Directors' Report.
DIVIDENDS
The Company does not intend to pay any dividends in respect to the year ending 30 June 2024 (2023: Nil).
AUDIT STATUS
The Consolidated Financial Statements upon which this Appendix 4E is based have been audited.
WELLARD
The nature of operations and principal activities of the Group is that it is an agribusiness that connects primary
producers of cattle, sheep, and other livestock to international customers through a global supply chain. The Group is
a supplier of seaborne transportation for livestock globally.
LIVESTOCK LOGISTICS SERVICES:
Wellard’s predominant activity in FY2024 was as a livestock logistics services business. When pursuing this business
activity, Wellard charters its ships to third parties, earning freight income by carrying livestock on their behalf. To
support its operations, the Group owns one medium and one large livestock transport vessel. As announced to the
ASX on 1 July 2024, Wellard executed a binding agreement to sell its oldest livestock vessel, the M/V Ocean Ute, for
US$12.0 million to Bassem Dabbah Shipping Inc., a Marshall Islands-registered company, with delivery expected in
September 2024.
OPERATIONS REPORT
PICTURE
OPERATIONS
REPORT
OPERATIONS REPORT
11 | WELLARD ANNUAL REPORT 2024
OPERATIONS REPORT
The year in summary
Employee safety remains a core focus. The Company recorded zero lost time injuries and zero medically treated injuries
for FY2024, extending the nil-nil result achieved in FY2023, which the Company will seek to replicate in FY2025.
During FY2024, Wellard loaded 21 cattle voyages to the following destinations:
Table 1: Wellard Voyage Analysis
Loaded
Discharged
FY2024
FY2023
Australia
Vietnam
7
3
South America
Türkiye
7
1
Australia
Indonesia
5
6
Australia
China
2
6
New Zealand
China
-
6
Total
21
22
Figure 2: Charter revenue by origins
Figure 3: Charter revenue by destinations
The Wellard fleet again achieved excellent voyage success rates for the livestock it delivered.
Of the 162,551 head of cattle loaded globally during the period, our vessels recorded a success rate of 99.82%. There
were no reportable livestock mortality incidents aboard Wellard vessels in the reporting period, as has been the case
since 2017.
No sheep were loaded in FY2024, as was the case in both FY2022 and FY2023.
Persistently low demand in key markets, regulatory uncertainties and competition from alternative protein sources have
led to a difficult trading environment in FY2024. The live cattle export sector in Australia remained under pressure for
most of the financial year with only March to June providing respite and volume to the market. Despite favourable
Australian export cattle prices, suppressed demand in key markets of Indonesia and China, affected charter rates and
fleet utilization. While the Vietnamese market showed some positive movement, it has not been sufficient to
counterbalance the difficulties experienced in other regions fully. Similarly, the South America-Türkiye cattle trade has
faced obstacles, with delays in import permits and changing regulatory requirements disrupting trade flows with a
positive start and finish to FY2024 punctuated with a poor middle period.
M/V Ocean Swagman Time Charter
Following the conclusion of Wellard's long-term bareboat charter in June 2023 and the subsequent eight-month time
charter agreement, and as announced in the Interim Financial Result in February 2024, the M/V Ocean Swagman –
was redelivered to her owner Heytesbury Singapore Pte Ltd ("Heytesbury") on 24 February 2024 and ceased to be
part of the Wellard fleet.
Whilst being an excellent vessel, under the Time Charter arrangement the M/V Ocean Swagman had not been working
commercially during the current financial year, having had only one charter since November 2023, with Wellard unable
to secure sufficient charters at a rate to enable a positive financial contribution from the vessel.
48%
54%
1%
Australia
South America
New Zealand
FY2024
71%
7%
22%
FY2023
18%
11%
18%
53%
China
Indonesia
Vietnam
Turkiye
FY2024
77%
9%
6%
8%
FY2023
OPERATIONS REPORT
12 | WELLARD ANNUAL REPORT 2024
M/V Ocean Ute Sold
As announced to the ASX on 1 July 2024, Wellard executed a binding agreement to sell its oldest livestock vessel, the
MV Ocean Ute, for US$12.0 million to Bassem Dabbah Shipping Inc., a Marshall Islands-registered company, with
delivery expected in September 2024.
The Wellard fleet as at 30 June 2024
Ocean
Drover
Ocean
Ute
Main Particulars:
Bareboat Chartered
to 30 June 2032
Owned
Year built
2002
1994
Year converted
N.A.
2011
Length overall
176.7 m
139.9 m
Summer draft
8.7 m
7.2 m
Speed
18.0 Knots
13.5 Knots
Cargo Area for Cattle:
Pens
1,417
437
Cargo surface area (net)
23,329 m2
6,978 m2
Number of animals
20,000 approx.
6,500 approx.
Cargo Area for Sheep:
Pens
786
416
Cargo surface area (net)
23,578 m2
7,025 m2
Number of animals
75,000 approx.
22,000 approx.
Fresh-water production:
Fresh water tank capacity
3,190 m3
1,120 m3
Fresh
water
production
m3/day
800 m3/day
300 m3/day
Fodder storage:
Silo Fodder at 100% full
capacity
5,181 m3
1,234 m3
Silo Fodder at 80% full
capacity
4,145 m3
987 m3
Sundeck:
Sundeck
surface
area
available
1,126 m2
200 m2
Sundeck maximum load
1 Ton/m2
1 Ton/m2
Market Trends
Wellard’s voyage origination and disembarkation ports reflect a broader trend in the market, with many vessels
departing the Australia to Southeast Asia route and Australia/New Zealand3 to China route in favour of the longer haul
South America to Middle East route.
Trading conditions improved late in the financial year due largely to a resurgent Türkiye import market and the issuing
of Indonesian import permits in February 2024.
This FY2024 operations report reveals the following key trends, some of which already described in FY2023, being:
Trend One: Downward shift in the number of live exports by sea of feeders and slaughter cattle from Australia
to Southeast Asia since FY2020, with FY2024 total cattle exports at only 57% of FY2020 levels.
Trend Two: The market for breeder cattle trade to China is almost at a standstill, when previously, half of the
AMSA-accredited shipping capacity was engaged on this route from both Australia and New Zealand.
3 On 30 April 2023, the previous New Zealand government enacted a live export ban on cattle, closing this trade. New Zealand’s new government has pledged to re-open this
trade, however there is no set timeframe announced.
OPERATIONS REPORT
13 | WELLARD ANNUAL REPORT 2024
Trend three: There has been a significant shift to South America, with a considerable portion of the AMSA fleet
deployed there.
An additional trend to emerge during FY2024 is the decrease in the AMSA-approved fleet, with several ships failing to
meet requirements, creating opportunities for the Wellard Ships in H2FY2024.
Australian live export slaughter and feeder cattle to Indonesia and Vietnam in FY2024
In FY2023, 463,099 feeder and slaughter cattle were exported from Australia by sea, which increased to 633,9924
during FY2024. This increase was due to the severe correction in pricing following a long period of historically high
prices for live export feeder and slaughter cattle and reduced availability of stock in FY2023.
The volumes to our largest market in Indonesia increased from 335,852 cattle in FY2023 to 424,837 in FY2024. The
FY2024 exports to Indonesia were still impacted by the ongoing outbreaks of lumpy skin disease ("LSD") and foot and
mouth disease ("FMD") in Indonesia, with importers reluctant to commit to large orders of cattle, followed by a delay in
issuing CY2024 permits for two months. The M/V Ocean Ute, which had been idle for 2 months, benefited when the
permits were issued in February 2024 and, following 2 months of inactivity, has been fully employed since.
The correction in Australian cattle prices throughout H2FY2023 and H1FY2024 (noting live feeder cattle prices initially
resisted the fall in the Eastern Young Cattle Indicator) initially did little to stimulate Indonesian demand to levels that
would be expected at the pricing that has prevailed, reinforcing the fact that this live export market has completed a
structural shift with imports of frozen Brazilian beef and especially Indian buffalo meat (“IBM”) now entrenched.
Price will be the primary basis of any demand stimulation for Australian beef into Indonesia as the sustained high prices
and lack of supply by Australian producers, who looked elsewhere for those willing to pay over the last two years, has
resulted in shutdowns and removed Indonesian feedlot capacity for the cattle that would historically go into this market.
Indonesian feedlots that remained operational are reportedly at capacity currently, and for any increases in volumes to
occur in FY2025 additional feedlot capacity needs to be created.
IBM is priced at a level below the Australian price and fluctuates seemingly without a floor relative to the landed
Australian price.
In FY2023, just 60,941 slaughter or feeder cattle were exported from Australia to Vietnam by sea. In FY2024 that figure
more than doubled to 126,665 cattle. This provided opportunities for increased shipping activities, which the M/V Ocean
Ute benefited from. However, this market remains best described as opportunistic with a very strong correlation to the
landed price of cattle. Sustained low prices could see a return to previous high export levels of slaughter-weight cattle
to Vietnam.
Australian Dairy and beef breeder cattle to China
The heightened activity prior to the closure of the New Zealand market to exports of breeding cattle created a backlog
in late FY2023, and effectively caused the trade to grind to a halt for six months once that market closed.
At an industry level, 147,227 breeding cattle departed Australia in FY2023 by sea, with a decrease to 110,306 cattle
departed in FY20245.
As a result of almost non-existent demand for Australian dairy cattle to China shipments in H2FY2023, and sporadic
demand for Australia to Indonesia/Vietnam voyages, Wellard made the decision in mid CY2023 to relocate the M/V
Ocean Drover and M/V Ocean Swagman to the South America to Türkiye trade.
Combined, the vessels completed five voyages on that route during H1FY2024. These were concentrated in the earlier
part of H1, as the 500,000 head Türkiye quota was filled later in the reporting period.
Consequently, and as noted at Wellard’s 2023 Annual General Meeting, both vessels spent time under-utilised in Q2
and Q3 of FY2024, particularly the M/V Ocean Swagman, which doesn’t offer exporters the same economies of scale
that the M/V Ocean Drover provides.
Both vessels embarked on a ballast return to Australia in late December 2023, though the M/V Ocean Drover returned
to South America after completing a profitable voyage from Australia to China early in H2FY2024.
4 https://www.agriculture.gov.au/sites/default/files/documents/all-livestock-exports-2019-2024.xlsx
5 https://www.agriculture.gov.au/biosecurity-trade/export/controlled-goods/live-animals/live-animal-export-statistics/livestock-exports-by-market
OPERATIONS REPORT
14 | WELLARD ANNUAL REPORT 2024
The M/V Ocean Drover is suited and is competitive on breeder Shipments to China, whereas the smaller ships are
better suited to Vietnam or Indonesian voyages. The M/V Ocean Drover would only return to service the Australian
market if there was a sustained lift in breeder exports from Australia or New Zealand, once the New Zealand market is
reopened following a change in Government.
South America to the Mediterranean and Middle East (Türkiye, Egypt and Iraq)
The demand from Türkiye, Egypt and Iraq for beef cattle, and therefore the demand for larger vessels to transport them
from cattle-producing countries such as those in South America, at the end of FY2023 continued into the start of
FY2024, then paused at the end of the calendar year. Since then there has been a sustained increase that sees the
M/V Ocean Drover chartered into CY2025.
With substantial quotas for imported cattle for Türkiye and a combined voyage time of about 50 days (loaded and
ballast), importers/exporters have contracted a significant fleet of mid and large-sized vessels to complete the task.
Charter rates have improved, but not to the extent that Wellard is seeking.
Türkiye government authorities do not publish total annual import quota figures and do not provide ongoing data on
remaining capacity.
Whether Türkiye will continue to import such large numbers of cattle into CY2025 is less certain, and Wellard will be
monitoring developments in Türkiye closely to assess likely demand in the transition period.
Australian sheep exports to the Middle East
Similar to FY2021, FY2022 and FY2023, Wellard did not conduct any voyages of Australian sheep to either the Middle
East or any other destination in FY2024.
Due to the continuing low level of exports to the Middle East and the vertical integration of competing vessel owners,
Wellard does not expect that this will change in FY2025.
A total of 502,8406 sheep were exported by sea from Australia to the Middle East in FY2024, a decrease on the 620,588
sheep shipped in FY2023 and on the 464,664 sheep shipped in FY2022.
Shipping fuel prices
Fuel (or “bunker”) prices remain Wellard’s single largest operational cost. The Very Low Sulphur Fuel Oil (VLSFO) price
is a key determinant of the charter rates Wellard quotes and charges its customers.
In FY2024, Wellard recorded a year-on-year 21.3% decrease in the average price per metric tonne (mt) consumed.
After peaking beyond US$1,000/tonne in May 2023 in most of the international supply markets, falling bunker prices
throughout FY2024 provided some respite for Wellard and the Company’s customers. Nonetheless, fuel prices remain
above their historical average, mostly trading in the US$600/mt-$700/mt range (ex Singapore).
There is a difference in VLSFO prices at different ports throughout Wellard’s operating destinations, and we cannot
always access the cheapest bunker fuel when it is needed. As a regional hub, Singapore bunker prices are often lower
than those paid by Wellard and other operators at the regional ports Wellard’s ships transit, however the price trend is
illustrative.
Bunker prices at most ports Wellard takes on fuel oscillated about +/- 10% throughout FY2024.
6 https://www.agriculture.gov.au/export/controlled-goods/live-animals/live-animal-export-statistics/livestock-exports-by-market
DIRECTORS’ REPORT
PICTURE
DIRECTORS’
REPORT
DIRECTORS’ REPORT
16 | WELLARD ANNUAL REPORT 2024
The Directors present their report together with the financial report of Wellard Limited (ABN 53 607 708 190) (Wellard or the
Company) and the entities controlled during the financial year ended 30 June 2024 (FY2024) and the independent auditor’s
report thereon.
DIRECTORS
John Klepec has over thirty years commercial management experience across a range of
industry groups including construction, resources, media, health care, logistics, transport,
shipping, livestock trading, construction materials, building products and agriculture.
He has considerable public company experience, including, most recently being appointed
as Chairman of Fleetwood Limited since March 2021.
Mr Klepec was previously the Chief Development Officer for Hancock Prospecting from
2010 to 2016, and prior to that held senior management positions with major Australian
publicly listed companies BHP Billiton Limited, Mayne Group Limited and with the private
BGC Group. He is also a previous Non-Executive Director of Ten Network Holdings Limited.
From his prior successful executive and Board roles Mr Klepec brings extensive financial
expertise, corporate development, operational leadership and strategic thinking to any
commercial position.
Mr Klepec is a Non-Independent Director.
John Stevenson has extensive experience as an executive in publicly listed organisations
as well as large family and private equity businesses in Australia and Asia.
John’s expertise in the agribusiness and livestock sectors includes having previously been
the Chief Executive Officer of Namoi Cotton Limited (ASX: NAM) until 30 June 2023, and
the Chief Financial Officer of Wellard Limited (ASX: WLD) and Consolidated Pastoral
Company. As well as being a Non-Executive Director of Wellard, John is a Director of the
Royal Flying Doctor Service of Australia (Queensland Section) and Director of RFDS (QLD)
Services Limited.
John is a Fellow of the Chartered Accountants of Australia and New Zealand, a Fellow of
the Governance Institute of Australia, and a graduate of the Australian Institute of Company
Directors.
Mr Stevenson is an Independent Director.
Philip Clausius is the Founder & Managing Partner of Singapore based Transport Capital
Pte. Ltd., an investment management and advisory firm focused on the global marine
transport, aviation and offshore industries. Prior to this, he was Co-Founder and CEO of
the FSL Group, a Singapore-based provider of leasing services to the international shipping
industry where he oversaw the acquisition and financing of approximately US$1 billion in
maritime assets as well as the IPO of FSL Trust in March 2007, which raised about US$330
million in equity proceeds in a globally marketed offering.
As well as being a Non-Executive Director of Wellard, Philip is the Chairman of the
Singapore War Risks Mutual and a Director of the Bengal Tiger Line. He served as Director
and CEO of Nasdaq OMX Copenhagen listed Nordic Shipholding until 1 January 2023 and
was a Director of the Standard Club and Standard Asia until 20 February 2023.
Philip graduated from the European Business School, Germany in 1992 with the “Diplom-
Betriebswirt” (Business Administration) degree and completed the Advanced Management
Programme by INSEAD in July 2023.
Mr Clausius is an Independent Director.
John Klepec
Executive Chairman
B.Comm
John Stevenson
Non-Executive Director
FCA, GAICD, FGIA,
BBus.
Philip Clausius
Non-Executive Director
BA (Hons) Business
Administration
DIRECTORS’ REPORT
17 | WELLARD ANNUAL REPORT 2024
Kanda Lu possesses considerable expertise in commerce and financial institutions. His
recent position was Vice President for Morgan Stanley China GCM. Kanda Lu currently runs
his own boutique asset management firm in Hangzhou China.
In addition to his Executive Director role, Kanda is responsible for the development and
growth of Wellard’s entry into the Chinese market and other business initiatives.
Mr Lu is a Non-Independent Director.
COMPANY SECRETARY
Michael Silbert
Company Secretary
B.Juris, B. LLB, B.A. (Hons)
Michael Silbert was appointed as Company Secretary since 17 October 2016. Michael has extensive experience in equity
capital markets, mergers and acquisitions, banking and finance and general commercial matters. Michael has strong legal
and company secretarial experience, having been general counsel and company secretary for a significant Western Australian
and ASX-listed engineering and mining services business, an iron ore miner, and a listed winery business.
Kanda Lu
Executive Director
Business Development
Manager China
B. Comm., M.
International Relations
with M. Commercial Law,
Macquarie University
DIRECTORS’ REPORT
18 | WELLARD ANNUAL REPORT 2024
PRINCIPAL ACTIVITIES
The nature of operations and principal activities of the Group is that it is an agribusiness that connects primary producers
of cattle, sheep, and other livestock to international customers through a global supply chain. The Group is a supplier of
seaborne transportation for livestock globally.
LIVESTOCK LOGISTICS SERVICES:
Wellard’s predominant activity in FY2024 was as a livestock logistics services business. When pursuing this business
activity, Wellard charters its ships to third parties, earning freight income by carrying livestock on their behalf. To support
its operations, the Group owns one medium and one large livestock transport vessel. As announced to the ASX on 1 July
2024, Wellard executed a binding agreement to sell its oldest livestock vessel, the M/V Ocean Ute, for US$12.0 million to
Bassem Dabbah Shipping Inc., a Marshall Islands-registered company, with delivery expected in September 2024.
OPERATIONS AND FINANCIAL REVIEW:
Full details of Wellard’s operations can be found in the Operations Report commencing on page 10. Both Operations
Report commencing on page 10 and Financial Review commencing on page 19, form a part of this Directors’ Report.
PICTURE
FINANCIAL REVIEW
FINANCIAL REVIEW
FINANCIAL REVIEW
20 | WELLARD ANNUAL REPORT 2024
FINANCIAL REVIEW
A summary of the financial results and key financial items are set out below. All amounts in this Financial Review are
presented in US$ unless stated otherwise.
FINANCIAL RESULTS AND KEY FINANCIAL ITEMS FROM CONTINUING OPERATIONS:
FOR THE YEARS ENDED 30 JUNE (US$ thousand)
2024
2023
Movement
Revenue
34,943
38,655
(9.6%)
Cost of Sales
(30,539)
(38,930)
(21.6%)
Gross profit/(loss)
4,404
(275)
1701.5%
Other income1
3,577
-
100.0%
General and Administrative expenses
(3,872)
(3,850)
0.6%
Other losses from chartering activities
-
(306)
(100.0%)
EBITDA2
4,109
(4,431)
192.7%
Other gains from other activities
147
112
31.3%
Restructuring costs
(469)
-
100.0%
Depreciation and amortisation expenses
(4,427)
(10,578)
(58.1%)
EBIT
(640)
(14,897)
(95.7%)
Net finance costs
(172)
(222)
(22.5%)
Income tax expense
(3)
(368)
(99.2%)
Loss from continuing operations after tax
(815)
(15,487)
(94.7%)
Profitability analysis
Gross profit margin
%
12.6
(0.7)
(1900.0%)
Operating Profit margin
%
11.8
(11.5)
(202.6%)
Net Profit margin
%
(2.3)
(40.1)
(94.3%)
Interest coverage3
Times
23.9
(20.0)
(219.5%)
Balance Sheet analysis
Working capital
$’000
18,029
3,195
464.3%
Current ratio
Times
4.6
1.4
228.6%
Net tangible assets
$’000
36,486
37,017
(1.4%)
Net tangible assets per security
Cps
6.9
7.0
(1.4%)
Loans and borrowings
$’000
271
2,588
(89.5%)
Negative net debt4
$’000
(8,511)
(4,832)
76.1%
Debt to capital ratio5
%
0.7%
6.4%
(89.1%)
Ship loan to asset book value ratio
%
0%
0%
-
1 Other income refers to the receipt of insurance claims following the M/V Ocean Swagman’s starboard engine repair in the prior financial year.
2 EBITDA equals profit/(loss) from continuing operations before income tax, less depreciation and amortisation expenses, less net finance costs, less
other gains arising from other activities and less impairment expenses.
3 Interest coverage equals EBITDA divided by net finance costs.
4 Net debt equals loans and borrowings less cash and cash equivalents. A negative net debt indicates that the cash and cash equivalents exceed the
entire debt balance.
5 Debt to capital ratio equals loans and borrowings divided by total equity plus loans and borrowings.
FINANCIAL REVIEW
21 | WELLARD ANNUAL REPORT 2024
OVERVIEW
For the financial year ended 30 June 2024 ("FY2024"), Wellard is reporting a net loss after tax of US$0.8 million
compared to a net loss of US$15.5 million in the financial year ended 30 June 2023 (“FY2023”) amidst continuously
challenging market conditions that remain volatile and continue to affect the livestock export industry.
The result includes a non-cash depreciation and amortisation expense of US$4.4 million (FY2023: US$10.6 million)
and the receipt of US$3.6 million in insurance proceeds – comprised in Other Income – associated with the engine
breakdown on the M/V Ocean Swagman in February 2023, the costs of which were already recognised in Wellard's
FY2023 financial statements.
Moreover, as announced to the ASX on 1 July 2024, Wellard executed a binding agreement to sell its oldest livestock
vessel, the MV Ocean Ute, for US$12.0 million to Bassem Dabbah Shipping Inc., a Marshall Islands-registered
company, with delivery expected in September 2024. In FY2024, the M/V Ocean Ute is presented separately in the
statement of financial position under Assets Held for Sale, and a reversal of impairment loss of US$276,000 has been
recognized under AASB 5 Non-current Assets Held for Sale and Discontinued Operations recognising the asset fair
value, minus costs to sell.
REVENUE AND OPERATING PERFORMANCE
Revenue declined 9.6% to US$34.9 million (FY2023: US$38.7 million), with income from chartering activities
accounting for 99.9% of the Group’s revenue and the shipping capacity fully absorbed by external chartering activities
as in the previous year. This decrease was caused by lower fleet activity due to a slowdown in the South America-
Türkiye cattle trade during Q2, which caused the M/V Ocean Drover and M/V Ocean Swagman to sit idle for some
time, as well as an overall chartering reduction following the redelivery of the M/V Ocean Swagman to her owner
Heytesbury Singapore Pte Ltd in February 2024.
As the chartering activity represents the entirety of the Group's operating revenue in FY2024, as it did the previous
year, no segment reporting is provided in this section of the Annual Report.
Variable costs: In FY2024, the total cost of bunkers decreased by 21.8% to US$15.1 million, down from US$19.3
million in FY2023, resulting in a 43.3% incidence on revenue, compared to 49.9% in FY2023. The primary reason for
this reduction was a 4.4% year-over-year decrease in Very Low Sulphur Fuel Oil (VLSFO) consumption and a 21.3%
decrease in the average price per metric tonne (mt) of the fuel consumed. The reduction in consumption was mainly
due to the unemployment periods of M/V Ocean Drover and M/V Ocean Swagman, along with the early redelivery of
M/V Ocean Swagman in February 2024. Conversely, Marine Diesel Oil (MDO) consumption increased by 27.2% due
to the fleet's extended time in port and the increased activity of M/V Ocean Ute, even though the price of the consumed
MDO per mt recorded a 16.0% decrease.
Nonetheless, during FY2024, bunker prices remained high by historical standards despite recording a year-on-year
reduction on a global scale. The price of VLSFO ex Singapore, one of the most price-competitive ports in the world for
marine fuel, averaged US$635/mt during FY2024, which is only 6% lower than the average price of US$676/mt
recorded in FY2023. However, it is important to note that Wellard purchases fuel in different ports along its trading
routes. These include low-cost ports like Singapore and more expensive ports such as those in Indonesia, where fuel
prices remained above US$700/mt for most of the year, and Australia, where fuel prices stayed above US$850, with
peaks above US$1,000 per metric tonne.
On the other hand, port costs experienced an 8.6% surge, reaching US$2.5 million in the current financial year
(FY2023: US$2.3 million) despite declining charter activity levels.
Vessels' operating expenses (OPEX) – mainly consisting of crew wages, insurance, repair and maintenance costs,
and other operating expenses – decreased by US$7.6 million, or 44.7%, to US$9.4 million (FY2023: US$17.0 million)
as the OPEX of M/V Ocean Swagman was shifted back to the vessel's owner following the change of charter typology
from bareboat to time charter. Additionally, in FY2023, OPEX was burdened by an extra US$3.4 million incurred for
repairs and ancillary expenses resulting from the engine breakdown on the M/V Ocean Swagman in February 2023.
On the other hand, in FY2024, the cost of sales included the M/V Ocean Swagman's time charter costs of US$3.5
million, which contrasts with FY2023, when the vessel was engaged on a bareboat charter basis. During that time,
bareboat-related costs were recorded as depreciation and amortisation expenses, specifically as depreciation of right-
of-use assets, totalling US$2.8 million.
FINANCIAL REVIEW
22 | WELLARD ANNUAL REPORT 2024
Gross profit increased to US$4.4 million, compared to a negative US$0.3 million in FY2023, primarily due to a
substantial 21.6% decrease in the cost of sales to US$30.5 million (US$38.9 million in FY2023), which more than
offset the 9.6% decrease in revenue.
Figure 1: Track record
Revenue Cost of Sales
Gross Profit
General and administrative expenses, which increased by a modest 0.6% to US$3.9 million, are consistent with the
previous year's results (FY2023: US$3.8 million), underscoring the Group's ongoing commitment to minimising the
cost of our structure. These expenses primarily relate to personnel and office costs, consultancies, travel, and other
miscellaneous costs.
EBITDA from continuing operations, which is defined as earnings from continuing operations before the impact of
income tax, depreciation and amortisation expenses, finance costs, and other gains or losses from other activities and
impairment expenses, reported a significant 193% increase to US$4.1 million (FY2023: negative US$4.4 million)
primarily driven by the positive gross profit results and by the receipt of US$3.6 million in insurance proceeds
associated with the engine breakdown on the M/V Ocean Swagman in February 2023, recorded under other income.
This significant EBITDA increase has led to an operating profit margin of 11.8%, substantially improving from the
negative 11.5% margin in FY2023.
Figure 2: Track record
General and Administrative Expenses EBITDA
Operating Profit Margin
EARNINGS PERFORMANCE
Depreciation and amortisation expenses saw a significant decrease of 58.1%, amounting to US$4.4 million
(FY2023: US$10.6 million). This reduction is primarily attributable to the change in the charter contract of the M/V
Ocean Swagman from a bareboat to a time charter that, during FY2024, was recognised under the cost of sales.
Moreover, FY2023 depreciation included the derecognition of US$1.9 million costs for the M/V Ocean Swagman's
intermediate mandatory survey, previously capitalised under AASB 16 and fully expensed in the income statement in
FY2023, due to the short-term nature of the vessel’s time charter renewal in June 2023.
Net finance costs in the current financial year remained in line with FY2023 results of US$0.2 million and included
the interest expense of right-of-use assets amounting to US$0.02 million (FY2023: US$0.1 million) for the application
of AASB16 ‘Leases’ from 1 July 2019.
Loss from continuing operations after tax reported this financial year marks a significant improvement compared to
the previous year. Despite ongoing industry challenges, Wellard reports a much-contained loss from continuing
operations after tax of US$0.8 million in FY2024 (FY2023: loss of US$15.5 million). This positive shift is a testament to
our strategic adjustments and operational resilience in the face of persistent difficulties within the global economic and
industry landscape. As already mentioned, this improvement in financial performance includes the receipt of US$3.6
million in insurance proceeds related to the engine breakdown on the M/V Ocean Swagman in February 2023 which
significantly contributed to offsetting the operational losses.
FINANCIAL REVIEW
23 | WELLARD ANNUAL REPORT 2024
Figure 3: Track record
Depreciation
Net Finance Costs
(Loss)/profit from Continuing Operations
ASSETS AND LIABILITIES
Non-current assets are mainly related to the net book value (“NBV”) of Wellard’s vessels – including right-of-use
leased assets – and related drydock costs capitalised. The Group assesses the carrying value of its ships by obtaining
independent market valuations from two primary brokers, considering any market offers, and forecasting earnings over
the vessels’ lifetime. As announced on 1st July 2024, as a result of Management’s continued assessment of its fleet
composition and in light of the challenging market conditions, Wellard identified an opportunity to sell its oldest vessel,
the M/V Ocean Ute, for US$12.0 million (approx. A$18.1 million). In FY2024, a reversal of impairment loss of
US$276,000 was recognized in accordance with AASB 5 Non-current Assets Held for Sale and Discontinued
Operations to recognize the asset at its fair value, minus costs to sell.
Capital expenditure was US$5 thousand paid for office equipment (FY2023: US$3.2 million for the drydock costs of
the M/V Ocean Swagman and M/V Ocean Ute).
Negative Net Debt increased by US$3.7 million or 76.1% as a result of a US$2.3 million decrease in loans and
borrowings and an increase of US$1.4 million in cash and cash equivalent to US$8.8 million as of 30 June 2024 (30
June 2023: US$7.4 million). As a result, the Company has a "negative net debt" – hence, cash available for the
Company – of US$8.5 million (30 June 2023: US$4.8 million) and US$18.0 million working capital as of 30 June 2024
(30 June 2023: US$3.2 million) which includes US$11.7 million in assets held for sale.
The continued focus on capital efficiency further reduced Group debt levels as a proportion of funding. As of 30 June
2024, total debt represented 0.7% of the Group’s funding (30 June 2023: 6.4%), while the Group has successfully
repaid all ship debt, reflecting the Group's commitment to sound financial management.
The Group maintains a US$4.0 million trade facility with a financial institution in Singapore to fund ship operating costs
and foreign-exchange transactions, which as of 30 June 2024, was completely unutilised. Wellard also retains a
US$19.1 million facility with the same institution to be used for commodity swaps to hedge against bunker price swings
which was not utilised as of 30 June 2024.
Debt Position
US$
2024
2023
Movement
Utlisation of bunker facility
$‘000
0
2,439
(2,439)
Other lease liabilities
$‘000
271
149
122
Total Loans and borrowings
$’000
271
2,588
(2,317)
Cash and cash equivalents
$‘000
8,782
7,420
1.362
Negative Net Debt
$‘000
(8,511)
(4,832)
(3,679)
Figure 4: Track record
Working Capital
Loans and Borrowings
Ship Loan to Asset Book Value
FINANCIAL REVIEW
24 | WELLARD ANNUAL REPORT 2024
CASH FLOWS
Cash flow from operating activities generated net cash of US$4.2 million in FY2024, which included US$3.6 million
of insurance claims received for the engine breakdown on the M/V Ocean Swagman in FY2023. In contrast, the US$1.5
million cash flow generated in FY2023 was impacted by a US$3.4 million cash outflow related to the repairs and
ancillary costs of the breakdown.
Cash flow used for investing activities was limited to US$5,000 for office equipment in FY2024. In comparison, the
US$3.7 million used in FY2023 included US$2.4 million and US$1.3 million paid during the year for the dry docking
costs of M/V Ocean Ute and M/V Ocean Swagman, respectively.
Cash flow from financing activities resulted in a net cash use of US$2.9 million (FY2023: US$5.5 million), primarily
due to borrowing and lease repayment.
During the current financial year, there was a US$1.4 million increase in cash held (net of the effect of exchange rate
changes), up from a decrease in cash held of US$7.7 million reported in FY2023. On 30 June 2024, the Group’s cash
and cash equivalents stood at US$8.8 million (30 June 2023: US$7.4 million).
Condensed Consolidated Statement of Cash Flows
2024
US$‘000
2023
US$’000
Net cash inflow from operating activities
4,218
1,535
Net cash outflow from investing activities
(5)
(3,711)
Net cash outflow from financing activities
(2,855)
(5,538)
Net increase/(decrease) in cash held
1,358
(7,714)
Cash at the beginning of the financial year
7,420
15,279
Effects of exchange rate changes
4
(145)
Cash at the end of the financial year
8,782
7,420
Free Cash Flow Statement
2024
US$‘000
2023
US$’000
Net cash inflow from operating activities
4,218
1,535
Income tax paid
(369)
(5)
Net interest paid
(194)
(229)
Free cash flow
3,655
1,301
180.9%
Cash conversion ratio (FCF/Revenue)
10.5%
3.4%
208.8%
Free cash flow (“FCF”) for the year – defined as cash flow from operating activities less income taxes paid and net
interest payments – increased by 180.9% to US$3.7 million (FY2023: US$1.3 million).
Figure 5: Free cash flow to sales (cash conversion) ratio
The cash conversion
ratio
increased
to
10.5% in the current
financial
year,
showing
that
the
Group
generated
more cash from its
sales.
$58.8m
$43.4m
$45.0m
$38.7m
$34.9m
15.9%
22.1%
36.3%
3.4%
10.5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
FY20
FY21
FY22
FY23
FY24
Free cash flow to sales
Revenue (US$ millions)
Cash Conversion Ratio
Revenue
Free cash flow to sales
FINANCIAL REVIEW
25 | WELLARD ANNUAL REPORT 2024
Alternative Performance Measures (APM)
Certain analyses included in this annual report are
based on measures not defined in the applicable
reporting framework but regularly used by Wellard for
management
purposes
like
communicating
performance and decision-making. Wellard believes that
complementing IFRS measures with APM may enhance
financial communication and add value to users by
explaining the Company’s performance from the
management’s perspective and, in some cases, provide
comparability with peers. APM should not be considered
in isolation from, or as a substitute for, financial
information presented in compliance with Australian
Accounting Standards.
EBITDA and Operating profit margin
EBITDA is defined as profit/(loss) from continuing
operations before the impact of income taxes,
depreciation and amortisation expenses, net finance
costs, other gains/(losses) arising from other activities
and impairment expenses. Operating profit margin is
defined as EBITDA divided by total revenue. Wellard
believes that EBITDA and Operating profit margin are
important measures that focus on the business’
profitability from its core operations before the impact of
capital structure, leverage, and non-cash items.
EBIT
EBIT is defined as profit/(loss) from continuing
operations before the impact of income taxes and
finance costs. EBIT is considered an important measure
for analysing a company’s performance without the
costs of capital structure and taxes.
Free cash flow (FCF) and cash conversion ratio
Free cash flow is defined as cash flow from operating
activities, less income taxes paid and net interest
payments. It does not represent residual cash flows
entirely available for discretionary purposes. The
repayment of principal amounts borrowed is not
deducted from FCF. Cash conversion ratio is defined as
FCF divided by total revenue. Wellard believes that FCF
and cash conversion ratio are useful to investors
because they represent cash flows that could be used
for capital expenditures, distribution of dividends,
repayment of debt, or to fund strategic initiatives.
Interest Coverage
Interest coverage is defined as EBITDA divided by net
finance costs and provides a measure of the Group’s
capability to service its debt through its operating
profitability.
Net Debt
Net debt is defined as loans and borrowings (including
liabilities directly associated with assets held for sale)
less cash and cash equivalents. Wellard believes Net
debt is a relevant measure to determine the level of
leverage given the Company’s liquid assets.
Group Presentation Currency
The financial information included in the Group’s Annual
Report is presented in the United States Dollar (“US$”),
the presentational currency of the Group, unless
otherwise specified.
Material Business Risks
The Wellard Board defines risk management as the
identification, assessment and management of risks that
have the potential to materially impact on Wellard’s
people, environment, operations, assets, reputation,
and financial results, and therefore on Wellard’s
shareholders.
Given the international nature of Wellard’s operations, a
wide range of risk factors have the potential to impact
the Company. While Wellard attempts to mitigate and
manage risks where it is efficient and practicable to do
so, there is no guarantee these efforts will be successful.
Outlined below is an overview of the material risks facing
Wellard.
The material business risks flow from the Company’s
current circumstances, the nature of its business
activities as an international shipper of live animals, and
general risks that apply to international companies
involved in maritime transportation, cross-border trade,
and the ownership of shares in listed companies.
These risks are not set out in any particular order and do
not comprise every risk that Wellard could encounter
when conducting its business. As such, they do not
purport to be a list of every risk that may be associated
with an investment in Wellard shares now or in the
future. Also, the occurrence or consequences of some
of the risks are partially or completely outside the control
of Wellard, its Directors and Management. Rather, they
are the most significant risks that, in the opinion of the
Board, should be considered and monitored by both
existing shareholders and potential shareholders in the
Company.
Each of the risks referred to could, in isolation or in
combination, if they eventuate, have a material adverse
impact on Wellard’s business, results of operations,
financial condition, financial performance, prospects and
share price. The risks described here are based on an
assessment of a combination of the probability of the risk
occurring and the impact/consequence of the risk if it did
occur. The assessment was based on the knowledge of
the Directors at the time of approving this document, but
there is no guarantee or assurance the importance of
these risks will not change or other risks will not emerge.
An investment in the Wellard Group may be considered
highly speculative and carries no guarantee with respect
to the payment of dividends or returns of or on capital.
An investment in the Company is not risk-free, and the
Directors strongly recommend that potential investors
consult their professional advisers and consider the risks
described herein when making decisions relating to an
investment in Wellard shares.
FINANCIAL REVIEW
26 | WELLARD ANNUAL REPORT 2024
Supply, Demand & Market Risks
Wellard operates in often volatile spot markets, which
can involve rapid market demand changes and declines,
leading to lower demand for specialised livestock
vessels. There is a risk of alternative protein markets
developing and of key markets deciding to become more
self-sufficient.
Wellard monitors supply and demand markets to
understand, measure and manage freight market risk.
The Company can redeploy ships to alternative markets.
Wellard maintains its fleet at high standards to retain
AMSA licensing and gain a competitive advantage on
voyage outcomes.
Vessel Breakdown or Damage Risk
The operation of ocean-going vessels carries inherent
risks. Wellard’s vessels and their cargoes could be at
risk of being damaged or lost because of events such as
marine disasters, bad weather, mechanical failures,
grounding, fire, collisions, human error, war, terrorism,
piracy, force majeure and other circumstances or
events. If Wellard’s vessels suffer damage, they may
need to be repaired. The costs and timing of repairs may
be substantial, partially due to their scale and need for
specialised repair infrastructure. Wellard may have to
pay repair costs if the Group’s insurance and contractual
indemnification provisions are unavailable or insufficient
to cover such liability. The loss of revenues while these
vessels are being repaired and the actual cost of these
repairs may adversely affect Wellard’s business and
financial condition and performance.
The Company seeks to mitigate this risk by taking out
relevant insurance policies with first-class insurers and
adopting a Planned Maintenance System (PMS) through
the engagement of our fleet technical manager, Welltech
Marine Pte. Ltd. (Welltech), to ensure safe and reliable
vessel operations, and asset protection.
Failure to adequately maintain the Wellard fleet of
vessels
If Wellard fails to adequately maintain its fleet of vessels,
this may result in mechanical problems or failure to
comply with safety regulations and Port State Control or
loss of its Class Certificate, causing animal welfare
issues, disruptions to business operations, higher
operating costs or deterioration in Wellard’s ability to
provide transport to a standard which complies with
relevant regulations to enable the movement of livestock
commodities. These circumstances may materially and
adversely affect Wellard’s reputation, profitability and
growth. To mitigate the impact of this risk, Wellard has
entrusted the technical management of its fleet to a
primary technical manager, Welltech, and through the
adoption of a rigorous PMS. Welltech is operated by the
Singapore-based
professional
technical
ship
management company Ishima Pte. Ltd.
Bunker Price Risk
Fuel is a material operating cost, and the Group is
exposed to bunker price fluctuations through its shipping
operations. The price and supply of fuel are
unpredictable and fluctuate based on events outside
Wellard’s control, including geopolitical developments,
supply and demand for oil and gas, actions by
organisations such as OPEC and other oil and gas
producers, war and unrest in oil-producing countries and
regions, regional production and consumption patterns
and environmental concerns. There is a risk that there
could be significant increases in fuel price that could
significantly increase Wellard’s cost of operations,
including third-party freight costs. As a general principle,
bunker adjustment factors in customer contract prices
are the main mechanism to manage bunker price risk in
the Group. In addition, Wellard may hedge its bunker
price risk by implementing financial and physical hedges
for the cost of fuel directly related to its ships’ operations.
However, Wellard may occasionally absorb the cost of
increased bunkers into its operating margins.
Customer and Commodity Price Risk
In general, the Company operates in a spot market, and
its material customers have no long-term contract, so
there is a risk that the Company’s level of sales with
customers could decrease. The loss (wholly or partially)
of a material customer could negatively impact the
Company’s financial performance if the Company were
not able to replace such a customer.
The Company seeks to mitigate the impact of this risk by
building and maintaining strong customer relationships
by delivering superior customer value and satisfaction
and by having a range of customers in numerous
countries.
Wellard is indirectly exposed to the risks of livestock
traders, who are its customers. This includes livestock
commodity pricing in international markets, which
continue to be volatile. Should customers not be able to
secure livestock at a price that allows for profitable
international sales, Wellard bears the risk of lower
charter rates or of no or fewer charter bookings.
Social, Political and Regulatory Risk
Animal welfare activism and public reports regarding the
poor treatment of animals and high-stress/mortality
events continue to place increased focus on the live
export industry in which Wellard operates. The high level
of public sensitivity to animal welfare issues means
public pressure could lead to further export restrictions
and changes to applicable laws and regulations.
Changes to the regulatory system may require the
Company to incur material costs or could become the
basis for new or increased liabilities that could adversely
affect the Company’s financial performance. In addition,
negative perceptions of the live export trade could
impact the attitude of banks, insurers and investors.
Animal rights activists have increasingly engaged in
aggressive lobbying and litigation to attempt to prevent
or impede livestock export, including taking action
against Australian Federal and State regulators. In
Australia, the Federal Government has legislated to
close the live sheep export trade effective from 1 May
2028. At present, the Australian Federal Government
has assured the live cattle industry that it is not under
similar threat. Wellard minimises these risks in Australia
by remining compliant with all regulations required to
FINANCIAL REVIEW
27 | WELLARD ANNUAL REPORT 2024
export livestock, including the Australian regulations
prohibiting sheep exports to the Gulf states during the
northern summer; however, animal rights activism
continues in areas where the Company is active. Where
such activism is successful in delaying, disrupting and
complicating
the
government’s
approvals
and/or
regulatory processes, the resulting uncertainty to the
likelihood of successful trading may mean it no longer
remains commercial for the Company to continue to
trade in some markets. In April 2023, New Zealand
closed its livestock export market entirely, and Wellard’s
ships were redeployed to other markets.
At an operational level, if the Company was to fail to
meet certain requirements with respect to animal welfare
or shipping performance standards, its vessels may be
subject to a range of regulatory responses which remove
or compromise its ability to operate efficiently.
The Company seeks to mitigate this risk by continuing
to maintain a specialised fleet of high-quality purpose-
built livestock transport vessels, by building and
maintaining strong customer relationships with a range
of customers in numerous countries, and by ensuring
that it is always in compliance with all laws and
regulations, as well as engaging actively to understand
community expectations around livestock export.
Exchange Rate Risk
The Company’s financial reports are prepared in United
States Dollars, and the majority of its transactions are
denominated in United States Dollars. The Group
remains exposed to currency risk in respect of
transactions denominated in currencies other than
United States Dollars.
The Company monitors its exposure to currency risk on
a regular basis and seeks to mitigate this risk by putting
in place, where it deems necessary, appropriate hedging
arrangements. In addition, loans are stipulated by the
operating companies in the same currency as the
revenues, where possible, in order to attenuate
exchange rate oscillations.
Vessel Financier Risk
The M/V Ocean Drover is operated by the Company
under a long-term bareboat charter agreement (“BBC”),
which runs until 30 June 2032 and allows Wellard full
access to offer the M/V Ocean Drover to customers for
the transport of livestock. The BBC is part of a standard
hire-purchase style financing arrangement with Ruchira
Ships Limited (In Liquidation) (“Ruchira”), and includes
a Memorandum of Agreement (“MoA”) in which Ruchira
was legally obliged to redeliver the vessel to Wellard on
1 September 2023.
Ruchira has included the M/V Ocean Drover in a
package of secured assets under its own arrangements
with its lending bank, United Overseas Bank Limited
(“UOB”). UOB has placed two registered mortgages on
the M/V Ocean Drover, which must be discharged or
compromised or lifted by court order before the Vessel
can be delivered to Wellard by Ruchira in accordance
with its legal obligations under the MoA.
In February 2024, UOB appointed KPMG Services
(Singapore) as liquidators to Ruchira.
There is a risk that Wellard will not be able to
satisfactorily complete commercial negotiations with
KPMG, as Ruchira’s liquidators, in a manner which will
allow UOB to clear the mortgages on the M/V Ocean
Drover. In such circumstances, the redelivery of full legal
title to the M/V Ocean Drover to Wellard will be delayed
or potentially prevented. Wellard does not have full
visibility of the debt position between Ruchira and its
bank. It is possible that KPMG may challenge the
continuation of Wellard’s BBC and/or MoA.
Wellard has mitigated this position so far by (i) putting
the long-term BBC in place, and preserving Wellard’s
legal right to operate the vessel until 2032 at effectively
no additional cost; and (ii) entering into commercial
negotiations with KPMG with the aim of discharging the
Drover mortgages and redelivering legal title of the
vessel to Wellard.
The consequences of not receiving full legal title to the
vessel include that the Company cannot refinance or
offer the vessel for sale.
Trade, Cattle Diseases and Biosecurity Risk
Wellard’s operations rely on the ability to transport cattle
from one country to another. Each destination country
has specific sanitary and phytosanitary protocols under
which trade in animals is conducted on either a global or
country-by-country basis.
Disease outbreaks in a supply country can cause a
customer country to impose quarantine-based trade
barriers on that country, either restricting or preventing
trade in livestock between the two countries in totality or
until various mitigation or prevention measures are
agreed.
Trade disputes can occur between trading nations,
which prevent or restrict the trade of goods, including
livestock, between two countries. Countries may open
and close their borders to livestock imports or place
restrictions on the volume of imports through the
imposition of quotas for various domestic reasons. This
can impact the level of shipping activity to that
destination.
Australian livestock exports have always benefited from
the nation’s high biosecurity standards. However, there
is an increasing risk posed by the spread of Lumpy Skin
Disease (LSD) and Foot and Mouth Disease (FMD)
throughout Australia’s northern neighbours. LSD and
FMD have been detected in cattle in Indonesia, and
recently, in July 2023, there were been reports that
Australian cattle imported into Indonesia have tested
positive for LSD. Australia’s Chief Veterinary Officer
issued a statement that LSD has never been detected in
Australia, and that the country remains free of the
disease.
In response to the detection of LSD in Australian cattle
after importation to Indonesia, there has been a rigorous
local testing regime commenced, and Australia’s well
planned biosecurity response has been activated.
The risk if such diseases are detected or become
endemic in Australia is that the market will be
constrained or, at worst, closed for a period of time, and
that the country’s export protocols with importing nations
FINANCIAL REVIEW
28 | WELLARD ANNUAL REPORT 2024
which depend on Australia being disease free will be
invalidated and need to be re-negotiated.
Wellard’s principal mitigation for these trade and disease
risks is to deploy its vessels into other supply and
demand markets. Although the Company may focus its
activity on a particular trading route at a particular time,
it has a policy of continuously assessing alternative
routes. At the time of writing, Wellard’s major markets
are in South America and Turkiye, not due to biosecurity
issues but economic drivers. However, the closure of
any market due to disease would mean that Wellard has
fewer opportunities to turn to alternative markets.
Credit Risk
The Company’s operations generally involve charter
shipments for third parties to transport livestock over
long
distances.
The
inherent
nature
of
these
arrangements involves a low number of contracts with a
high dollar value. There is a risk, therefore, that if a
counterparty to such a contract defaults on its
contractual obligations, a material financial loss to the
Company may result.
To minimise the credit risk, financial vetting is
undertaken for all major customers, and adequate
security is required for commercial counterparties whose
rating is below the minimum acceptable standard.
Various terms of payment, including pre-payments and
payments by way of letters of credit, are utilised,
depending on the credit assessment and trading history
of various Wellard customers.
Climate Change Risk
The Group is exposed to various risks which arise under
the general heading of climate change risk.
At present, governments, regulators, and industry are
increasingly focusing on laws and regulations based on
climate
change
and
greenhouse
gas
emission
reductions, which will impact both the shipping and
livestock industries.
The International Maritime Organization (IMO) is
seeking to reduce CO2 emissions per transport work, as
an average across international shipping, by at least
40% by 2030, compared to 2008.
Measures the IMO has raised to achieve this goal
include:
a technical element, namely a goal-based marine
fuel standard regulating the phased reduction of the
marine fuel's greenhouse gases (GHG) intensity;
and
an economic element based on a maritime GHG
emissions pricing mechanism.
As a way of mitigating the impact of planned changes to
regulations which penalise greenhouse gas emissions in
shipping, Wellard commenced a feasibility study for a
fleet renewal project centred on designing new livestock
vessels which utilise sustainable materials and inputs,
such as lowest-possible greenhouse gas emission fuels,
to enhance operability, meet developing international
shipping regulations, and provide best-in-class animal
welfare standards. At the time of writing, that major
project is paused, pending changes to vessel
affordability; however, the Company continues to
monitor all essential elements, such as international
alternative fuel availability and the evolution in the
design of greener marine propulsion systems. Wellard
recognises that there are high community expectations
regarding greenhouse gas emissions in the livestock
and shipping industries and that a social license to
operate will be maintained when all stakeholders are
satisfied that industry participants are working to meet
the appropriate, evidence-based standards required to
manage and minimise such emissions. Wellard’s ships
utilise lower sulphur-content bunker fuels, and on-board
systems are being assessed for replacement by cleaner
solutions as these are developed.
Climate change also presents risks to various
participants in the Wellard supply chain, which may
impact supply, demand and the continued ability to
operate.
Guidance and Outlook
Wellard may provide forecasts and predictions about its
business outlook or future performance (“Guidance”) on
the
basis
of
various
assumptions
which
may
subsequently prove to be incorrect. Guidance is not a
guarantee of future performance, and is subject to
known and unknown risks, many of which are beyond
the control of Wellard.
Wellard’s actual results may differ materially from its
Guidance and the assumptions on which any Guidance
is based.
Key Personnel Risk
Wellard’s growth and profitability may be limited by the
loss of key management and operating personnel, the
inability to recruit and retain skilled and experienced
employees, or the increase in compensation costs.
Current economic conditions reflect an increased
demand for quality people resources, creating a
tightening labour market and upward pressures to
secure skilled leaders, professionals and personnel.
Wellard’s downsizing in FY24, in both its Australian and
Singapore offices, may result in increased pressures on
remaining staff. Wellard is working with staff to retain
their skills and services.
Price Inflation
Wellard procures goods and services that are critical to
business operations from a range of suppliers. Cost
increases, or price inflation, can occur in respect of
goods and services over a certain time period for a range
of reasons, including strong demand and supply
shortages, the cost of inputs to the production process
increasing
(including
labour-related
wages
and
salaries), and supply related logistics disruption. The
rate of these price increases can be material, and if
Wellard does not recover price inflation from its clients,
there is a risk of negative impact on Wellard’s financial
performance.
FINANCIAL REVIEW
29 | WELLARD ANNUAL REPORT 2024
Cyber Security Risk
Cyber attacks, information misuse and the release of
sensitive information pose ongoing and real risks to
Wellard’s on-shore and vessel systems. Cyber breaches
have the potential to cause disruptions to operations,
and there is a risk of liability for misuse or unauthorised
disclosure of sensitive information. To address these
risks, Wellard has implemented resilient information
technology systems equipped with suitable detection
and protective measures. Additionally, the Company has
obtained insurance coverage to safeguard against
potential cyber incidents. The implementation of ongoing
training and frequent evaluation of management and
staff serves to enhance the Company's ability to
withstand potential cyber security breaches, thereby
fortifying the business’ overall security stance.
Geopolitical Risks and Impact on Trade Routes
The ongoing conflict between Israel and Hamas has
significantly increased tensions across the Middle East,
raising the possibility of a larger regional conflict. The
Houthis' continued attacks on several commercial
vessels in Yemen, allegedly in support of Hamas, has
disrupted trade through the Suez Canal. The number of
vessels transiting the Bab-el-Mandeb Strait has
decreased significantly due to the escalation of attacks
since the start of CY2024, with shipowners choosing the
longer route around the Cape of Good Hope. Because
the Bab-el-Mandeb Strait is also a critical passage for
livestock vessels, continued disruption or closure of this
trade route could result in higher freight rates, reduced
business opportunities, and decreased profitability.
Wellard is closely monitoring the situation, focussing on
the safety of its crew, animals, and asset
DIRECTORS’ MEETINGS
The following table sets out the number of Directors’ meetings (including meetings of Board committees) held
during the year ended 30 June 2024 and the number of meetings attended by each Director:
Board
Nomination and
Remuneration
committee
Audit and Risk
Committee
Conflicts of
Interest
Committee
Directors
held
present
held
present
held
present
held
present
John Klepec
10
10
3
3
3
3
-
-
Philip Clausius
10
10
3
3
3
3
-
-
Kanda Lu
10
10
-
-
-
-
-
-
John Stevenson
10
10
3
3
3
3
-
-
In addition to the above meetings, a number of matters were dealt with by way of a circular resolution during the
year.
DIRECTORS’ INTEREST IN SECURITIES OF THE GROUP
The interests of each Director in the shares and options of the Wellard Group as notified by the Directors to the
ASX in accordance with Section 205G(1) of the 2001 (Cth) Corporations Act as at the date of this report are as
follows:
Directors
Ordinary shares held
Notes:
1.
These shares are held by Rezone Pty Ltd as Trustee
for the Kakulas-Klepec Superannuation Fund. Mr
Klepec has a voting power of greater than 20% in this
company and is a beneficiary of this superannuation
fund.
2024
2023
John Klepec1
437,500
437,500
Philip Clausius
-
-
Kanda Lu
-
-
John Stevenson
-
-
FINANCIAL REVIEW
30 | WELLARD ANNUAL REPORT 2024
INDEMNITIES AND INSURANCE
Rule 18.1 of the Wellard Constitution requires Wellard to indemnify each Director and Officer on a full indemnity
basis and to the extent permitted by law against liability incurred by them in their capacity as an officer of any
member company of the Wellard Group. The Directors, Company Secretary and Officers of the Company have the
benefit of this indemnity (as do any individuals who may have formerly held one of those positions).
As permitted by Wellard’s Constitution, the Company has entered into deeds of indemnity, access and insurance
with each Director, Company Secretary and Officer. Wellard has also insured against amounts that the Company
may be liable to pay to Directors, Company Secretaries and certain employees or that Wellard otherwise agrees
to pay by way of indemnity. Wellard’s insurance policy also insures Directors, Company Secretaries and relevant
employees against certain liabilities (including legal costs) they may incur in carrying out their duties. The Directors
of the Company are satisfied the terms of these insurances and agreements are standard for their type.
No indemnity payment has been made under any of the documents referred to above during the financial year.
DIVIDENDS
The Company does not intend to pay any dividends in respect to the year ending 30 June 2024 (2023: Nil).
EQUITY ISSUES DURING THE YEAR
At 30 June 2024, the Company had authorised share capital totalling 531,250,312 ordinary shares issued and
paid.
EVENTS OCCURRING AFTER THE END OF THE REPORTING PERIOD
Other than matters after 30 June 2024 disclosed in the Operations Report, no other significant events have
occurred after the end of the reporting period. Reference is made to the Company’s website and to the ASX’s
announcements platform for any and all material disclosures which are required under ASX’s Listing rules.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Company is committed to the protection of the environment and good environmental practices and
performance. To deliver on this commitment, the Company seeks to comply with all applicable environmental laws
and regulations.
The Company’s subsidiary, Wellard Ships Pte. Ltd. (“Wellard Ships”), operates two vessels internationally that
conform to MARPOL (International Convention for the Prevention of Pollution from Ships, 1973 as modified by the
Protocol of 1978) and ISM (International Safety Management) Code requirements for pollution prevention and
maritime environmental protection. Wellard Ships’ management system complies with ISO 9001 – Quality
Management System –, ISO 14001 – Environmental Management System –, and ISO 45001 – Health and Safety
Management System standards established by the International Organisation for Standardization, as certified by
the international classification society RINA S.p.A. (Registro Italiano Navale).
Wellard Ships contracts with Welltech Marine Pte. Ltd. (“Welltech”), a company previously owned by Wellard Ships
and now owned by Ishima Pte. Ltd., which is responsible for the technical management of Wellard’s owned and
bareboat chartered vessels pursuant to a ship management agreement entered in April 2020. Welltech complies
with ISO 9001:2015 – Quality Management System – and ISO 14001:2015 – Environmental Management System
– standards established by the International Organisation for Standardization, as certified by the international
classification society RINA S.p.A. (Registro Italiano Navale).
ENVIRONMENTAL PROSECUTIONS
The Company has not been involved with any material environmental prosecutions this year. During FY24,
Wellard Rural Exports Pty Ltd successfully defended a claim relating to a small oil spill from the M/V Ocean
Drover in a port in Brazil, alleged to have occurred in 2021. The spill involved a very small quantity oof bunker
fuel, and was classified in the lowest category of environmental impact. The claim was defeated on the basis that
it had been brought against the wrong entity. It is not anticipated that any adverse consequences will result from
this matter.
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31 | WELLARD ANNUAL REPORT 2024
ROUNDING
Wellard is an entity of the kind specified in the ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. In accordance with that legislative instrument, amounts in the Financial Report and the
Directors’ Report have been rounded to the nearest thousand dollars unless specifically stated otherwise.
All amounts are in United States dollars only unless specifically stated otherwise.
NON-AUDIT SERVICES
The Auditor’s independence declaration has been included on page 42.
Details of the non-audit services undertaken by, and amounts paid to, the Auditor are detailed in Note 24 to the
financial statements.
The Directors have formed the view that the provision of non-audit services during the financial year ended 30 June
2024 is compatible with and does not compromise the general standard of auditor independence for the following
reasons:
(a)
the non-audit services provided do not involve reviewing or auditing the Auditor’s own work or acting in a
management or decision-making capacity for the Company; and
(b)
all non-audit services were subject to the corporate governance procedures and policies adopted by the
Company and have been reviewed by the Audit and Risk Committee to ensure they do not affect the integrity
and objectivity of the Auditor.
In accordance with Section 307C of the Corporations Act, the Auditors of the Company have provided a signed
Auditor’s Independence Declaration to the Directors in relation to the year ended 30 June 2024. This Auditor’s
Independence Declaration has been attached to the Independent Auditor’s Report to the members of the Company.
CORPORATE GOVERNANCE STATEMENT
The Company will disclose its Corporate Governance Statement on the Company’s website at www.wellard.com.au
with lodge it with ASX.
DIRECTORS’ DECLARATION
In accordance with Section 298(2) of the Corporations Act, the Directors have provided a signed Directors’
Declaration in relation to the year ended 30 June 2024. This Directors’ Declaration is included on page 41 of this
Annual Report.
On behalf of the Directors
Mr John Klepec
Executive Chairman
Mr Paolo Triglia
Group Chief Financial Officer
Dated: 29 August 2024
PICTURE
REMUNERATION REPORT
REMUNERATION
REPORT
REMUNERATION REPORT
33 | WELLARD ANNUAL REPORT 2024
The following sections form the Remuneration Report for the Wellard Group for the financial year ended 30 June 2024.
The information provided in the Remuneration Report has been audited as required by the Corporations Act 2001 (Cth)
(Act) and forms part of the Directors’ Report.
1.
Remuneration report overview
2.
Remuneration governance
3.
Remuneration of executive key management personnel
4.
Remuneration of non-executive directors
5.
Key management personnel shareholding
6.
Transactions with key management personnel
1.
REMUNERATION REPORT OVERVIEW
This Remuneration Report has been prepared in accordance with section 300A of the Act.
The disclosure in this Remuneration Report relates to the remuneration of the Wellard Group’s key management
personnel (KMP), being those people who have the authority and responsibility for planning, directing and controlling
Wellard’s activities, either directly or indirectly.
This report focuses on the remuneration arrangements of the Wellard Group, including its remuneration policy and
framework. The table below sets out details of those persons who were KMP of the Wellard Group during the financial
year ended 30 June 2024.
Key Management Personnel covered in this report
Name
Position(s) held
KMP term
FY2024
NON-EXECUTIVE DIRECTORS
Philip Clausius
Non-Executive Director (19 November 2015 – present)
Full year
John Stevenson
Non-Executive Director (23 November 2019 – present)
Full year
EXECUTIVE DIRECTORS
John Klepec
Non-Executive Director (15 November 2016 – 26 April 2018)
Non-Executive Chairman (27 April 2018 – 3 August 2018)
Executive Chairman (3 August 2018 – present)
Full year
Kanda Lu
Business Development Manager China (24 November 2015 – present)
Executive Director (12 May 2017 – present)
Full year
OTHER KMP
Paolo Triglia
Managing Director – Wellard Ships Pte Ltd (18 November 2015 – present)
Chief Financial Officer (22 November 2019 – present)
Full year
Michael Silbert 1
General Counsel and Company Secretary (18 October 2016 – 31 May
2024)
Part year
1.
Mr Silbert’s combined roles as General Counsel and Company Secretary were ceased effective 31 May 2024 however, he remains a consultant to
the Company and continues to hold the position of Company Secretary.
Response To 2023 Remuneration Report Outcomes
At the Company’s 2023 Annual General Meeting, Wellard received a ‘first strike’ against its Remuneration Report.
In response to this outcome, Board members have had discussions with various shareholders regarding their views
and have taken those views into consideration. The Board understands the need for and is keen to ensure there is an
alignment between the Company’s performance and remuneration paid by the Company to the senior management
group.
With that in mind, in the 2024 Financial Year the Company has adopted the following approach with regards to [the
management structure of the organisation and its remuneration having regard to the Company’s performance:
a)
There has been a substantial restructure and costs-cutting in the Group business, and aside from the 2
Australian-based Directors there are no longer any staff in Australia;
b)
there has been no increase in the fees paid by the Company to Non-Executive Directors;
c)
there has been no increase in the fixed annual remuneration for remaining senior management in Singapore;
d)
total employees head-count across the Company has been reduced by 35.7 % since FY2023.
REMUNERATION REPORT
34 | WELLARD ANNUAL REPORT 2024
2.
REMUNERATION GOVERNANCE
(a) Nomination and Remuneration Committee
The Board is responsible for ensuring the remuneration arrangements for the Wellard Group are aligned with its business
strategy and shareholders’ interests.
The Nomination and Remuneration Committee (NR Committee) is delegated responsibility to advise the Board on
composition (ensuring the Board has an appropriate balance of skills, knowledge, experience, independence and
diversity), succession planning, and an appropriate level and composition of remuneration for Directors and senior
executives.
The NR Committee was formed on 19 November 2015 and comprises the following Directors:
Philip Clausius – Committee Chair (independent from management);
John Stevenson – Committee Member (independent from management); and
John Klepec – Committee Member (not independent from management)
The Board considers it preferable that the NR Committee is independent from management when making decisions
affecting the remuneration of KMP and other senior employees.
The Board continues to assess its own structure and that of its various sub-committees.
Decisions relating to the remuneration of KMP and senior employees will be made only by NR Committee members and
Board members who are not conflicted in the circumstance.
The NR Committee meets throughout the year as required and when necessary, is briefed by management but makes
all decisions free of management’s influence. The NR Committee may, from time to time, seek independent advice from
remuneration consultants and, in so doing, will directly engage with the relevant consultant without management
involvement. The NR Committee has not taken independent advice from remuneration consultants in the financial year
ended 30 June 2024.
Further information regarding the objectives and role of the NR Committee is contained in its Charter, which is available
on the Corporate Governance Policy section of the Company’s website at www.wellard.com.au.
(b) Independent Remuneration Consultants
In FY2024, the Board did not engage an independent consulting firm to provide independent advice regarding
remuneration or incentive structures.
There were no long-term (LTIP) plans or programmes in place for the financial year ended 30 June 2024. The NR
Committee retains the ability, at its discretion, to make ad-hoc STI awards to individuals outside of any Company-wide
plan. Details of the short-term incentive programme (STIP) for FY2024 are included in 3(c) below.
In FY2024, no remuneration recommendations, as defined by the Corporations Act, were provided by any independent
remuneration consultant.
3. REMUNERATION OF KMP
(a) Remuneration policy
The Board and the NR Committee recognise that remuneration has an important role to play in supporting the
implementation and achievement of Wellard’s strategy.
The Board is committed to driving alignment between the remuneration arrangements of its KMP with the expectations
of Wellard’s shareholders, its employees and the Company’s sustainability.
Wellard’s executive remuneration policy aims to reward KMP fairly and responsibly in accordance with the Australian
and Singaporean markets and to ensure that Wellard:
(i)
provides competitive rewards that attract, retain, and motivate KMP of the highest calibre;
(ii) sets demanding levels of performance that are linked to KMP’s remuneration;
(iii) structures remuneration at a level that reflects the KMP’s duties and accountabilities and is competitive;
(iv) benchmarks remuneration against appropriate comparator groups;
(v) aligns KMP incentive rewards with the creation of value for shareholders; and
(vi) complies with applicable legal requirements and appropriate standards of governance.
REMUNERATION REPORT
35 | WELLARD ANNUAL REPORT 2024
(b) Remuneration framework
Wellard’s remuneration comprises the following elements:
(c) Elements of remuneration
Fixed annual remuneration
Each KMP receives a fixed salary or consultancy fees. The quantum of salary or consultancy reflects the individual’s
responsibilities, location, skills, experience and performance and is aligned with salaries for comparable roles in global
companies of similar complexity, size, geographic footprint, listing jurisdictions, reach and industry.
Short-term incentives
In FY2024, KMP Mr Triglia and Mr Silbert were eligible to earn bonuses under a Short-Term Incentive (STI) programme.
STI’s were available upon attainment of an escalating series of Key Performance Indicators (KPI’s) based on the Group
achieving nominated EBITDA hurdles, which would allow them to earn an STI of between 20% and 50% of their base
salary. Based on the STI programme, no bonuses were earned in FY2024.
The Board also retains the ability, at its discretion, to make ad-hoc STI awards to individuals outside of any company-
wide plan. No ad-hoc awards were earned in FY2024.
Long-term incentives
No options in Wellard’s LTIP were granted to KMPs in FY2024.
Statutory performance indicators
Wellard aims to align its executive remuneration to strategic and business objectives and the creation of shareholder wealth. The
table below shows measures of the Group’s financial performance over the last five years as required by the Corporations Act
2001. However, these are not necessarily consistent with measures used in determining the variable amounts of remuneration to
be awarded to the KMPs. As a consequence, there may not always be a direct correlation between the statutory key performance
measures and the variable remuneration awarded.
2024
2023
2022
2021
2020
(Loss)/profit for the year attributable to owners of
Wellard Limited (A$’000)
(1,243)
(22,998)
13,688
2,493
245
Basic (loss)/earnings per share (A$ cents)
(0.23)
(4.33)
2.58
0.5
0.1
Dividend payments (A$’000)
-
-
-
-
-
Dividend payout ratio (%)
-
-
-
-
-
(Decrease)/increase in share price (%)
(59.5)
(46.2)
+21.9
+77.8
+50.0
Element
Purpose
Potential Value
Changes for
FY2024
Fixed annual
remuneration
Provide competitive market salary, including
superannuation and non-monetary benefits.
Reviewed annually
No changes
Short term
incentives
Cash reward for current year performance.
Up to 50% of total fixed
remuneration is determined
by EBITDA hurdles.
No changes
Long term
incentives
Maintain a balance between the interests of
shareholders and the reward of executives.
Determined by share price
No changes
REMUNERATION REPORT
36 | WELLARD ANNUAL REPORT 2024
(d) Key terms of KMP agreements
Remuneration (in the currency of each KMP’s contract) and other terms of employment for each of the KMP are
contained in contracts of employment or consultancy agreements as summarised in the table set out below.
1. This is inclusive of superannuation payments where applicable.
Name
KMP term
Short / Long term
incentives
Notice period
termination
Notice period
resignation
Year
Total fixed
remuneration1
Currency
John Klepec
3 Aug 18 -
At the Board’s
Discretion
2 weeks
2 weeks
2024
400,000
AUD
present
2023
400,000
AUD
Kanda Lu
12 May 17 -
At the Board’s
Discretion
4 weeks
4 weeks
2024
105,223
AUD
present
2023
105,525
AUD
Paolo Triglia
18 Nov 15 - STI Program and at
the Board’s
Discretion
3 months
3 months
2024
364,008
SGD
present
2023
364,008
SGD
Michael Silbert
18 Oct 16 -
STI Program and at
the Board’s
Discretion
6 months
3 months
2024
378,415
AUD
31 May 24
2023
400,573
AUD
REMUNERATION REPORT
37 | WELLARD ANNUAL REPORT 2024
(e)
Executive KMP remuneration table
The table below sets out the remuneration received by Wellard KMP for FY2024 during the portion of the year for which KMP were employed by the Wellard Group. The table includes the statutory
disclosures required under the Act and in accordance with the Accounting Standards. See previous table for details of each KMP’s remuneration in the original currencies of their contracts of employment
or consultancy agreements.
Key management personnel remuneration table for FY2024 is presented in United States Dollars:
Short-term benefits
Long-term benefits
Termination
benefits
US$
Post-employment
benefits
Superannuation
US$
Total remuneration
US$
%
Remuneration
“at risk”
Name
Year
Base salary
US$
STI1
US$
Other2
US$
Accrued
annual leave3
US$
Long service
leave4
US$
EXECUTIVE DIRECTORS
John Klepec
2024
255,830
-
-
-
-
-
6,499
262,329
-
2023
262,961
-
-
-
-
-
6,399
269,360
-
Kanda Lu
2024
62,564
-
-
-
-
-
6,444
69,008
-
2023
64,308
-
-
259
168
-
6,753
71,488
-
OTHER KMP
Paolo Triglia5
2024
270,213
-
96,750
11,870
-
-
-
378,833
-
2023
266,981
-
92,841
11,871
-
-
-
371,693
-
Michael Silbert6
2024
230,172
-
-
20,017
30,292
166,881
18,001
465,363
-
2023
252,714
-
-
8,450
4,084
-
17,032
282,280
-
Total in US$
2024
818,779
-
96,750
31,887
30,292
166,881
30,944
1,175,533
-
2023
846,964
-
92,841
20,580
4,252
-
30,184
994,821
-
1.
This includes cash bonuses provided to KMP.
2.
This includes short-term benefits such as leave passage and accommodation.
3.
This includes statutory leave for Executive Directors and other KMP.
4.
Represents the net accrual movement for Long Service Leave (LSL) over the twelve-month period, which will only be paid if the KMP meets legislative service conditions. LSL has been separately categorised and is measured on an accrual
basis and reflects the movement in the accrual over the twelve-month period.
5.
Mr Triglia is employed as an expatriate, and pursuant to his employment contract, he is not paid superannuation and receives additional benefits for accommodation, school fees and travel expenditure.
6.
Mr Silbert’s combined roles as General Counsel and Company Secretary were ceased effective 31 May 2024 however, he remains a consultant to the Company and continues to hold the position of Company Secretary.
REMUNERATION REPORT
38 | WELLARD ANNUAL REPORT 2024
4. REMUNERATION OF NON-EXECUTIVE DIRECTORS
(a) Remuneration policy and arrangements
The Board considers the following policy objectives when determining its remuneration profile for Non-Executive
Directors:
(i)
offering market competitive remuneration to attract and retain high-quality directors with the appropriate
expertise and skillset to complement the Wellard Group business;
(ii) safeguarding the independence of Non-Executive Directors by limiting performance-related remuneration of
Non-Executive Directors; and
(iii) ensuring the Company is not paying excessive remuneration.
No element of the Non-Executive Directors’ remuneration is linked to the performance of the Company. However, to
create alignment with shareholders, Non-Executive Directors are encouraged to hold equity securities in the Company.
All Directors are subject to the Company’s Security Trading Policy.
(b) Aggregate fees
Under the Constitution, the Non-Executive Directors will be remunerated for their services by:
(i)
an amount or value of remuneration each year as Wellard in a general meeting determines; or
(ii) an aggregate amount or value of remuneration not exceeding the maximum amount or value as Wellard in a
general meeting determines, to be divided among the Non-Executive Directors in such proportion and manner
as they agree, or if they do not agree, equally.
Wellard has currently fixed the maximum aggregate fee pool for Non-Executive Directors at A$800,000 per annum,
which has been approved by Shareholders.
(c) Remuneration review
The Board will periodically review the level of fees paid to Non-Executive Directors, including seeking external advice
where appropriate.
A review of the remuneration of Non-Executive Directors was undertaken as part of the NR Committee’s review of
senior remuneration and the Company’s operating budget for FY2024. No change was made to Non-Executive Director
fees, or fees paid to members of any Board Committee.
(d) Non-executive director fees and benefits
Set out below is a description of each component of total remuneration for Directors and how each component impacts
remuneration in Australian dollars:
2024
Fees /
Benefits
Description
Fees
A$
Superannuation
A$
Included in
shareholder
approved cap?
BOARD FEES
Wellard board
Members
183,749
14,713
Yes
COMMITTEE FEES
Audit and risk compliance committee
Chairman
23,415
1,201
Yes
Members
9,009
991
Yes
Nomination and remuneration committee
Chairman
22,325
2,477
Yes
REMUNERATION REPORT
39 | WELLARD ANNUAL REPORT 2024
OTHER FEES / BENEFITS
Short-term incentives
Non-Executive Directors are eligible to participate in short-term incentive arrangements.
Long-term incentives
Non-Executive Directors are eligible to participate in long-term incentive arrangements.
Other group fees
Non-Executive Directors are not paid additional fees for participation on the board of any of the
Wellard Group’s subsidiary companies.
Termination payments
Termination benefits are not payable to Non-Executive Directors.
Other benefits
Non-Executive Directors are entitled to reimbursement for business-related expenses, including
travel expenses, and also receive the benefit of coverage under the Wellard Group’s directors and
officer’s insurance policy.
(d) Non-executive director remuneration
The fees paid or payable to the Non-Executive Directors in relation to the 2023 financial year are set out below in
Australian dollars.
Name
Year
Short-term benefits
Superannuation1
A$
Total
A$
Board and committee fees
A$
NON-EXECUTIVE DIRECTORS
Philip Clausius
2024
121,622
13,378
135,000
2023
122,172
12,828
135,000
John Stevenson
2024
118,898
6,102
125,000
2023
125,000
-
125,000
Total
2024
240,520
19,480
260,000
2023
247,172
12,828
260,000
1. Superannuation contributions are made on behalf of Non-Executive Directors in accordance with the Wellard Group’s statutory superannuation
obligations. Also included are any Director’s fees that have been sacrificed into superannuation.
5.
KMP EQUITY HOLDING
The table below sets out the number of shares held directly, indirectly or beneficially by current directors and KMP,
including their related parties and shows the effect that departing directors and KMP have had on the aggregate
balance of all Shares held directly, indirectly or beneficially by directors and KMP when compared to the previous
financial year.
Name
Balance at
1 July 2023
Change to aggregate
KMP balance
Balance at
30 June 2024
NON-EXECUTIVE DIRECTORS
Philip Clausius
-
-
-
John Stevenson
-
-
-
EXECUTIVE DIRECTORS
John Klepec
437,500
-
437,500
Kanda Lu
-
-
-
OTHER KMP
Paolo Triglia
1,126,800
-
1,126,800
Michael Silbert
-
-
-
Total
1,564,300
-
1,564,300
REMUNERATION REPORT
40 | WELLARD ANNUAL REPORT 2024
(a) Prohibition on hedging shares and equity instruments
KMP are not allowed to protect the value of any unvested or restricted equity awards allocated to them. KMP are also
not permitted to use unvested or restricted equity awards as collateral in any financial transaction, including hedging
and margin loan arrangements.
Any securities that have vested and are no longer subject to restrictions or performance conditions may be subject to
hedging arrangements or used as collateral provided that the consent, notification and other restrictions on dealings
set out in the Wellard Security Trading Policy are complied with in advance of the KMP entering into the arrangement.
6. TRANSACTIONS WITH KMP
(a) Transactions with other related parties
Nil
(b) Purchases from entities controlled by key management personnel
Transport Capital Pte Ltd, a transportation-focused investment management and advisory firm, of which Mr Philip
Clausius is the founder and Managing Partner, provided technical shipping consultancy services to the Group with
effect from 1 July 2020 for a period of 15 months, ended on 30 September 2021. Ad-hoc technical advisory services
were provided post 30 September 2021. The technical service fee rendered during the year was US$Nil (2023:
US$1,777).
(c) Outstanding balance from services rendered.
As at 30 June 2024, there was no outstanding due to Transport Capital Pte Ltd (30 June 2023: US$Nil).
(d) Loans to/from related parties
Nil
DIRECTORS’ DECLARATION
DIRECTORS’ DECLARATION
41 | WELLARD ANNUAL REPORT 2024
In accordance with a resolution of the Directors of Wellard Limited, we declare that:
a)
the attached financial statements, notes and the additional disclosures included in the Directors’ Report
designated as audited of the Group are in accordance with the Corporations Act, including:
i.
giving a true and fair view of the financial position and performance of the Group as at 30 June 2024
and of its performance for the year ended on that date;
ii.
the information detailed in the consolidated entity disclosure statement is true and correct; and
iii.
complying with Accounting Standards and the Corporations Act 2001; and
b)
the financial statements and notes also comply with International Financial Reporting Standards as disclosed
in Note 1; and
c)
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become
due and payable; and
d)
this declaration has been made after receiving the declarations required to be made to the Directors in
accordance with Section 295A of the Corporations Act for the financial year ended 30 June 2024.
Signed in accordance with a resolution of the Directors.
Mr John Klepec
Executive Chairman
29 August 2024
42 |
Moore Australia Audit (WA) – ABN 16 874 357 907.
An independent member of Moore Global Network Limited - members in principal cities throughout the world.
Liability limited by a scheme approved under Professional Standards Legislation.
Moore Australia Audit (WA)
Level 15, Exchange Tower,
2 The Esplanade, Perth, WA 6000
PO Box 5785, St Georges Terrace, WA 6831
T +61 8 9225 5355
F +61 8 9225 6181
www.moore-australia.com.au
AUDITOR’S INDEPENDENCE DECLARATION
UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
TO THE DIRECTORS OF WELLARD LIMITED
I declare that, to the best of my knowledge and belief, during the year ended 30 June 2024, there have
been:
a)
no contraventions of the auditor independence requirements as set out in 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.
NEIL PACE
MOORE AUSTRALIA AUDIT (WA)
PARTNER
CHARTERED ACCOUNTANTS
Signed at Perth this 29th day of August 2024.
picture
FINANCIAL
STATEMENTS
44 | WELLARD ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED 30 JUNE
NOTE
2024
US$’000
2023
US$’000
CONTINUING OPERATIONS
Revenue
4(A)
34,943
38,655
Cost of sales
6(A)
(30,539)
(38,930)
Gross profit/(loss)
4,404
(275)
Other income
5
3,577
-
Other losses
6(B)
(322)
(194)
Net finance costs
6(C)
(172)
(222)
Depreciation and amortisation expenses
(4,427)
(10,578)
General and administrative expenses
6(D)
(3,872)
(3,850)
Loss from continuing operations before income tax
(812)
(15,119)
Income tax expense
8
(3)
(368)
Loss for the period after tax
(815)
(15,487)
OTHER COMPREHENSIVE INCOME/(LOSS)
Items that may be reclassified to profit or loss
Gain/(loss) from foreign currency translation
21
(178)
Other comprehensive income/(loss) for the period, net of tax
21
(178)
Total comprehensive losses for the period
(794)
(15,665)
US$ Cents
US$ Cents
Loss per share from continuing operations attributable to
ordinary equity holders of the Company
Basic loss per share
9
(0.15)
(2.92)
Diluted loss per share
9
(0.15)
(2.92)
The accompanying notes form an integral part of this consolidated statement of comprehensive income.
45 | WELLARD ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE
NOTE
2024
US$’000
2023
US$’000
CURRENT ASSETS
Cash and cash equivalents
10
8,782
7,420
Trade and other receivables
13
199
974
Inventories
12
1,481
1,210
Contract assets
4(B)
626
639
Other assets
14
210
705
Asset held for sale
15
11,780
-
Total current assets
23,078
10,948
NON-CURRENT ASSETS
Property, plant and equipment
18
18,512
33,830
Intangible assets
19
577
840
Other assets
14
21
64
Total non-current assets
19,110
34,734
Total assets
42,188
45,682
CURRENT LIABILITIES
Trade and other payables
16
2,844
3,713
Loans and borrowings
11
195
2,545
Provisions
20
10
55
Contract liabilities
4(B)
2,000
1,440
Total current liabilities
5,049
7,753
NON-CURRENT LIABILITIES
Loans and borrowings
11
76
43
Provisions
20
-
29
Total non-current liabilities
76
72
Total liabilities
5,125
7,825
Net assets
37,063
37,857
EQUITY
Issued capital
21
412,259
412,259
Reserves
28
(277,105)
(277,126)
Accumulated losses
29
(98,091)
(97,276)
Total equity
37,063
37,857
The accompanying notes form an integral part of this consolidated statement of financial position.
46 | WELLARD ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARS ENDED 30 JUNE
NOTE
ISSUED
CAPITAL
US$’000
ACCUMULATED
LOSSES
US$’000
RESERVES
TOTAL
US$’000
SHARE-BASED
PAYMENTS
US$’000
OTHER
RESERVES
US$’000
COMMON
CONTROL
US$’000
2024
Opening balance
412,259
(97,276)
12,963
5,679
(295,768)
37,857
Comprehensive loss for the period:
Loss for the period
29
-
(815)
-
-
-
(815)
Other comprehensive income
28
-
-
-
21
-
21
Total comprehensive loss for the period
-
(815)
-
21
-
(794)
Closing balance
412,259
(98,091)
12,963
5,700
(295,768)
37,063
2023
Opening balance
412,259
(81,789)
12,963
5,857
(295,768)
53,522
Comprehensive loss for the period:
Loss for the period
29
-
(15,487)
-
-
-
(15,487)
Other comprehensive loss
28
-
-
-
(178)
-
(178)
Total comprehensive loss for the period
-
(15,487)
-
(178)
-
(15,665)
Closing balance
412,259
(97,276)
12,963
5,679
(295,768)
37,857
The accompanying notes form an integral part of this consolidated statement of changes in equity.
47 | WELLARD ANNUAL REPORT 2024
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED 30 JUNE
NOTE
2024
US$’000
2023
US$’000
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers
39,764
39,708
Payments to suppliers and employees
(35,179)
(38,200)
Interest received
2
32
Income tax paid
(369)
(5)
Net cash inflow from operating activities
4,218
1,535
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment
(5)
(3,711)
Net cash outflow from investing activities
(5)
(3,711)
CASH FLOWS FROM FINANCING ACTIVITIES
Net repayments of borrowings
(2,439)
(2,397)
Principal payment of lease liabilities
(222)
(2,912)
Interest paid
(194)
(229)
Net cash outflow from financing activities
(2,855)
(5,538)
Net increase/(decrease) in cash held
1,358
(7,714)
Cash at the beginning of the financial year
7,420
15,279
Effects of exchange rate changes on cash and cash
equivalents
4
(145)
Cash at the end of the financial year
10
8,782
7,420
The accompanying notes form an integral part of this consolidated statement of cash flows.
48 | WELLARD ANNUAL REPORT 2024
RECONCILIATION OF CONSOLIDATED STATEMENT OF CASH FLOWS
Reconciliation of losses after tax to net cash flows from operating activities.
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
Loss after tax
(815)
(15,487)
Adjustment for:
Depreciation and amortisation
4,427
10,578
Income tax expense
3
368
Interest income
(2)
(32)
Allowance for impairment loss
-
306
Interest expense and borrowing costs
174
254
Reversal on impairment loss on disposal of vessel
(276)
-
Net loss on disposal of property, plant and equipment
-
1
Write down of inventory
31
-
Unrealised foreign exchange losses
11
24
Change in assets and liabilities, net of the effects of purchase and
of subsidiaries
Change in trade and other receivables and other assets
1,326
25
Change in inventories
(302)
2,421
Change in trade and other payables and provisions
(552)
1,810
Change in deferred revenue
560
1,240
4,585
1,508
Interest received
2
32
Income tax paid
(369)
(5)
Net cash flows from operating activities
4,218
1,535
The accompanying notes form an integral part of this consolidated statement of cash flows.
49 | WELLARD ANNUAL REPORT 2024
Reconciliation of liabilities arising from financing activities:
Non-cash changes
FOR THE YEAR ENDED 30 JUNE 2024
Opening
balance
US$’000
Principal and
interest
payments
US$’000
Addition
during the
year
US$’000
Interest
expense
US$’000
Effect of
movement in
exchange
US$’000
Non-cash
movement
US$’000
Closing
balance
US$’000
Loan and borrowings (Note 11)
Borrowings
-
-
-
-
-
-
-
Lease liabilities
149
(241)
343
19
1
-
271
Other loans
2,439
(13,471)
10,877
155
-
-
-
Total borrowings
2,588
(13,712)
11,220
174
1
-
271
Less: Cash and cash equivalents
(8,782)
Negative Net debt
(8,511)
Non-cash changes
FOR THE YEAR ENDED 30 JUNE 2023
Opening
balance
US$’000
Principal and
interest
payments
US$’000
Addition
during the
year
US$’000
Interest
expense
US$’000
Effect of
movement in
exchange
US$’000
Non-cash
movement
US$’000
Closing
balance
US$’000
Loan and borrowings (Note 11)
Borrowings
2,845
(2,852)
-
5
-
2
-
Lease liabilities
2,929
(3,037)
137
125
(5)
-
149
Other loans
1,964
(16,579)
16,930
124
-
-
2,439
Total borrowings
7,738
(22,468)
17,067
254
(5)
2
2,588
Less: Cash and cash equivalents
(7,420)
Negative Net debt
(4,832)
The accompanying notes form an integral part of this consolidated statement of cash flows.
50 | WELLARD ANNUAL REPORT 2024
CONSOLIDATED ENTITY DISCLOSURE STATEMENT AS AT 30 JUNE 2024
CONSOLIDATED ENTITY DISCLOSURE
STATEMENT AS AT 30 JUNE
ENTITY
TYPE
COUNTRY OF
INCORPORATION
% OF SHARE
CAPITAL HELD
AUSTRALIAN
TAX
RESIDENCY
STATUS
FOREIGN
COUNTRIES
TAX
RESIDENCY
PARENT ENTITY
Wellard Limited
Body
Corporate
Australia
N/A
Australian
N/A
SUBSIDIARIES OF WELLARD LIMITED
Wellard Rural Exports Pty Ltd
Body
Corporate
Australia
100
Australian
N/A
Wellard NZ Ltd
Body
Corporate
New Zealand
100
Foreign
New Zealand
Wellard Singapore Pte Ltd
Body
Corporate
Singapore
100
Foreign
Singapore
Wellard Ships Pte Ltd
Body
Corporate
Singapore
100
Foreign
Singapore
Ocean Drover Pte Ltd
Body
Corporate
Singapore
100
Foreign
Singapore
Niuyang Express Pte Ltd
Body
Corporate
Singapore
100
Foreign
Singapore
Wellard do Brasil Agronegocios Ltda
Body
Corporate
Brazil
100
Foreign
Brazil
Wellard Uruguay S.A.
Body
Corporate
Uruguay
100
Foreign
Uruguay
Best Hayvancilik Sanayi Ticaret AŞ
Body
Corporate
Turkiye
100
Foreign
Turkey
The requirement to prepare consolidated entity disclosure statement was introduced into the Corporations Act (2001) in March 2024. It is applicable for the first time for years
beginning on or after 1 July 2023 (June 2024 year-ends).
NOTES TO THE FINANCIAL STATEMENTS
51 | WELLARD ANNUAL REPORT 2024
1. CORPORATE
INFORMATION
AND BASIS OF
PREPARATION
A. CORPORATE INFORMATION
This consolidated financial report
relates to the Group, comprising
Wellard Limited (Company or
Wellard) and the entities that it
controlled (Group) during the year
ended 30 June 2024, that were
authorised for issue in accordance
with a resolution of the Directors
on 29 August 2024.
The Company is a company
limited by shares incorporated in
Australia whose shares are
publicly traded on the Australian
Securities Exchange (ASX:WLD).
The nature of operations and
principal activity of the Group are
an agribusiness that connects
primary producers of cattle, sheep
and other livestock to international
customers through a global supply
chain. The Group is a supplier of
seaborne transportation for
livestock globally.
The registered office address is
Manning Buildings,
Suite 20, Level 1,
135 High Street, Fremantle,
Western Australia 6160.
Comparative financial information
has been reclassified and/or
renamed for better comparability
purposes.
B. BASIS OF PREPARATION
The financial report is a general-
purpose financial report, which has
been prepared in accordance with
Australian Accounting Standards
and Interpretations issued by the
Australian Accounting Standard
Board and the Corporations Act
2001.
The financial report has been
prepared on a historical cost basis,
except for the following:
a)
Share-based payments –
measured at fair value; and
The financial report is presented in
the United States dollar (US$). All
values are rounded to the nearest
thousand dollars ($’000) unless
otherwise stated, under the option
available to the Company under
Australian Securities and
Investment Commission (ASIC)
Instrument 2016/191. The
Company is an entity to which the
instrument applies.
For the purposes of preparing the
consolidated financial statements,
the Company is a for-profit entity.
C. COMPLIANCE WITH IFRS
This financial report complies with
Australian Accounting Standards
and International Financial
Reporting Standards (IFRS) as
issued by the International
Accounting Standards Board
(IASB).
The Group has adopted the new or
amended IFRS and Interpretations
of IFRS that are mandatory for
application for the financial year.
The adoption of these new or
amended IFRS and Interpretations
of IFRS did not have any impact
on the amounts recognised in prior
periods and are not expected to
significantly affect the current or
future periods.
2. MATERIAL
ACCOUNTING
POLICIES AND
ESTIMATES
The material accounting policies
adopted in the preparation of the
financial statements have been
consistently applied to all the
periods presented unless
otherwise stated. In addition to
these accounting policies, the
following policies and critical
accounting estimates were
applied:
A. REVENUE FROM
CONTRACTS WITH
CUSTOMERS
AASB 15 Revenue from Contracts
with Customers states that an
entity shall recognise revenue (or
as) the entity satisfies a
performance obligation by
transferring a promised good or
service (i.e. an asset) to a
customer. An asset is transferred
when (or as) the customer obtains
control of the asset.
If revenue is not recognised over
time, it is recognised at a point in
time. To determine the point in
time at which a customer obtains
control of a promised asset and
the entity satisfies a performance
obligation, the following
requirements are considered:
a) The entity has a present right
to payment for an asset;
b) The customer has legal title
to the asset;
c) The entity has transferred
physical possession of the
asset; however, physical
possession may not coincide
with control of the asset;
d) The customer has significant
risks and rewards of
ownership of the asset; and
e) The customer has accepted
the asset.
Vessel chartering
Freight revenue for external
shipments meets the criteria of a
performance obligation satisfied
over time.
Voyage charter revenue is
recognised on a percentage of
completion basis which is
determined on a time proportion
method of each individual voyage.
Any demurrage and dispatch are
recognised when considered
probable.
Contract liabilities
The timing of revenue recognition
and cash collections results in
invoiced accounts receivable and
customer advances and deposits
(contract liabilities) on the
consolidated statement of financial
position.
Generally, amounts are invoiced,
and deposits are received in
advance of providing the good or
service.
Deposits received are recognised
on a per-shipment basis; these
deposits are recorded as a liability
on the balance sheet and
liquidated on discharge when the
revenue is recognised.
Deposits received at the time of
booking a vessel for charter are
recorded as a liability on the
balance sheet and liquidated on a
percentage complete basis when
the revenue is recognised.
B. BORROWING COSTS
Borrowing costs can include
interest, amortisation of discounts
or premiums relating to
borrowings, ancillary costs
incurred regarding the
arrangement of borrowings and
foreign exchange losses net of
hedged amounts on borrowings.
NOTES TO THE FINANCIAL STATEMENTS
52 | WELLARD ANNUAL REPORT 2024
Borrowing costs are expensed as
incurred, except for borrowing
costs incurred as part of the cost of
the construction of a qualifying
asset, which are capitalised until
the asset is ready for its intended
use or sale.
Loan establishment costs have
been capitalised to deferred
borrowing costs and are amortised
over the life of the loan facility.
Borrowing costs relating to loans
extinguished during the period
have been expensed.
C. INTEREST REVENUE
Interest revenue is recognised as
interest accrued using the effective
interest method. This is a method
of calculating the amortised cost of
a financial asset and allocating the
interest income over the relevant
period using the effective interest
rate, which is the rate that exactly
discounts estimated future cash
receipts through the expected life
of the financial asset to the net
carrying amount of the financial
asset.
D. INCOME TAX EXPENSE
Income tax expense comprises
current and deferred tax. Current
income tax expense or benefit is
the tax on the current period’s
taxable income/loss based on the
applicable income tax rate
adjusted by changes in deferred
tax assets and liabilities. It is
calculated based on tax laws that
have been enacted or are
substantially enacted by the end of
the reporting period.
Current tax payable is the
expected tax payable on the
taxable income for the year, using
tax rates enacted or substantially
enacted at the reporting date and
any adjustment to tax payable in
respect of previous years. Income
tax benefits are based on the
assumption that no adverse
change will occur in the income tax
legislation and the anticipation that
the Group will derive sufficient
future assessable income to
enable the benefit to be realised
and comply with the conditions of
deductibility imposed by the law.
E. DEFERRED TAX ASSETS
AND LIABILITIES
Deferred tax assets and liabilities
are recognised for temporary
differences at the applicable tax
rates when the assets are
expected to be recovered, or
liabilities are settled based on the
tax rates (and tax laws) that have
been enacted or substantially
enacted by the end of the reporting
period. The measurement of
deferred tax liabilities and assets
reflects the tax consequences that
would follow from the manner in
which the Group expects, at the
end of the reporting period, to
recover or settle the carrying
amount of its assets and liabilities.
No deferred tax asset or liability is
recognised in relation to temporary
differences if they arose in a
transaction, other than a business
combination, that at the time of the
transaction did not affect either
accounting profit or taxable profit
or loss.
Deferred tax assets are recognised
for deductible temporary
differences and unused tax losses
only if it is probable that future
taxable amounts will be available
to utilise those temporary
differences and losses.
Deferred tax assets and liabilities
are offset when there is a legally
enforceable right to set off current
tax assets against current tax
liabilities and when they relate to
the income taxes levied by the
same taxation authority and the
Group intends to settle its current
tax assets and liabilities on a net
basis.
Current and deferred tax balances
attributable to amounts recognised
directly in equity are also
recognised directly in equity.
F. TAX CONSOLIDATION
Wellard Limited and its Australian
subsidiaries formed a tax
consolidated Group with effect
from 11 December 2015.
The parent entity and subsidiaries
in the tax-consolidated Group have
entered into a tax funding
agreement such that each entity in
the tax-consolidated Group
recognises the assets, liabilities,
revenues and expenses in relation
to its own transactions, events and
balances only. This means that:
the parent entity recognises
all current and deferred tax
amounts relating to its own
transactions, events and
balances only;
the subsidiaries recognise
current or deferred tax
amounts arising in respect of
their own transactions,
events and balances; and
current tax liabilities and
deferred tax assets arising in
respect of tax losses, are
transferred from the
subsidiary to the parent entity
as intercompany payables or
receivables.
Adjustments may be made for
transactions and events occurring
within the tax-consolidated Group
that do not give rise to a tax
consequence for the Group or that
have a different tax consequence
at the head entity level of the
Group. The tax-consolidated
Group will enter into a tax-sharing
agreement to limit the liability of
subsidiaries in the tax-consolidated
Group arising under the joint and
several liability requirements of the
tax consolidation system in the
event of default by the parent
entity to meet its payment
obligations.
G. EARNINGS PER SHARE
Basic earnings per share is
calculated by dividing:
the profit / (loss) attributable
to the owners of the
Company, excluding any
costs of servicing equity other
than ordinary shares,
by
the weighted average
number of ordinary shares
outstanding during the
financial year, adjusted for
bonus elements in ordinary
shares issued during the year
and excluding treasury
shares.
Diluted earnings per share
Diluted earnings per share adjusts
the figures used in the
determination of basic earnings
per share to take into account the
after-income tax effect of interest
and other financial costs
associated with dilutive potential
ordinary shares.
Potential ordinary shares are only
considered dilutive if the loss per
share decreases on conversion to
ordinary shares.
H. LOANS AND BORROWINGS
All loans and borrowings are
initially recognised at the fair value
of the consideration received, less
directly attributable transaction
NOTES TO THE FINANCIAL STATEMENTS
53 | WELLARD ANNUAL REPORT 2024
costs. After initial recognition,
interest-bearing loans and
borrowings are subsequently
measured at amortised cost using
the effective interest method.
Borrowings are classified as
current liabilities unless the Group
has an unconditional right to defer
settlement of the liability for at
least 12 months after the reporting
date.
I. CASH
Cash comprises cash on hand and
demand deposits. Cash
equivalents comprise short-term
and highly liquid cash deposits that
are readily convertible to known
amounts of cash and which are
subject to an insignificant risk of
change in value. For the purposes
of the statement of cash flows,
cash includes cash on hand,
demand deposits and cash
equivalents.
Cash at bank earns interest at
floating rates based on daily bank
deposit rates. Short-term deposits
are made for carrying periods of
between one day and three
months, depending on the
immediate cash requirements of
the Group, and earn interest at the
respective short-term deposit
rates. For cash subject to
restriction, assessment is made on
the economic substance of the
restriction and whether it meets the
definition of cash and cash
equivalents.
J. ISSUED CAPITAL
Ordinary shares are classified as
equity. Incremental costs directly
attributable to the issue of ordinary
shares are recognised as a
deduction from equity, net of any
tax effects.
K. INVENTORIES
Bunker fuel used for the operation
of the vessels and with a high
turnover rate is not written-down to
the net realisable value when the
market price falls below cost if the
overall shipping activity is
expected to be profitable.
All other inventories are measured
at the lower of cost or net
realisable value.
Costs incurred in bringing each
product to its present location and
condition are accounted for as
follows:
fuel: purchase cost on a first
in, first out basis;
raw materials and
consumables: purchase cost
on a first in, first out basis;
and
finished goods and work in
progress: cost of direct
material and labour and an
appropriate portion of
variable and fixed overheads.
Overheads are applied on the
basis of normal operating
capacity. Costs are assigned
on the basis of weighted
average costs.
Net realisable value is the
estimated selling price in the
ordinary course of business, less
estimated costs of production and
the estimated costs necessary to
complete the sale.
L. DERIVATIVE FINANCIAL
ASSETS AND LIABILITIES
The Group classifies its financial
assets into the following
categories: financial assets at fair
value through profit or loss, loans
and receivables and available-for-
sale financial assets. The
classification depends on the
purpose for which the instruments
were acquired. Management
determines the classification of the
financial instruments at initial
recognition.
Derivative financial instruments
Derivatives are initially recognised
at fair value on the date a
derivative contract is entered into
and are subsequently remeasured
to their fair value at the end of
each reporting period. The Group
does not apply hedge accounting
for its derivative financial
instrument.
Foreign exchange contracts
The Group enters into foreign
exchange contracts to manage its
exposure against foreign currency
risk in line with the entity’s risk
management strategy.
M. TRADE AND OTHER
RECEIVABLES
The Group applied the simplified
approach permitted by AASB 9
Financial Instruments, which
requires expected lifetime losses
to be recognised from the initial
recognition of the receivables.
Credit loss allowance is based on
12-month expected credit loss if
there is no significant increase in
credit risk since the initial
recognition of the receivables. If
there is a significant increase in
credit risk since initial recognition,
lifetime expected credit loss will be
calculated and recognised.
N. TRADE AND OTHER
PAYABLES
These amounts represent liabilities
for goods and services provided to
the Group prior to the end of the
financial year that are unpaid.
The amounts are unsecured and
are usually paid within 14 days of
recognition. Trade and other
payables are presented as current
liabilities unless payment is not
due within 12 months after the end
of the reporting period.
They are recognised initially at
their fair value and subsequently
measured at amortised cost using
the effective interest method.
Due to the short-term nature of
trade and other payables, their
carrying amount approximates fair
value.
O. DEFERRED REVENUE
These amounts represent
payments collected but not earned
at the end of the reporting period.
These payments are recognised in
line with AASB15 Revenue
Recognition.
P. PROPERTY, PLANT AND
EQUIPMENT
Each class of property, plant and
equipment are initially recorded at
cost. Subsequent to recognition,
property, plant and equipment are
measured at cost less
accumulated depreciation and any
accumulated impairment losses.
The cost of property, plant and
equipment includes its purchase
price and any costs directly
attributable to bringing the asset to
the location and condition
necessary for it to be capable of
operating in the manner intended
by the management.
Dismantlement, removal or
restoration costs are included as
part of the cost of property, plant
and equipment if the obligation for
dismantlement, removal or
restoration is incurred as a
consequence of acquiring or using
the property, plant and equipment.
Vessels
Vessels are measured on a cost
basis. Depreciation rate: 3.33% -
NOTES TO THE FINANCIAL STATEMENTS
54 | WELLARD ANNUAL REPORT 2024
5%, on a straight-line basis after
deducting the expected scrap
value of the vessel.
The vessels are subjected to major
overhauls at regular intervals. Dry-
docking expenditures incurred in
the major overhauls are capitalised
as additional component costs to
the vessels and amortised on a
straight-line basis over the period
up to the next dry-docking, which
is generally 2.5 to 3 years.
Deferred expenses are
derecognised upon the next dry-
docking or when no future
economic benefits are expected
from the dry-docking costs
previously recognised.
Plant and Equipment (excluding
Vessels)
Plant and equipment are
measured on a cost basis.
Depreciation rate: 4% - 32%, on a
straight-line basis.
Improvements
Improvements are measured on a
cost basis. Depreciation rate: 10%
- 50%, on a straight-line basis.
Right-of-use assets
Right-of-use assets are measured
as disclosed in Note 2V.
Depreciation rate: 17% - 51%, on a
straight-line basis.
Depreciation
The depreciable amount of all fixed
assets is depreciated over their
estimated useful lives commencing
from the time the asset is held
ready for use.
Q. NON-CURRENT ASSETS
HELD FOR SALE
Non-current assets and disposal
groups are classified as held for
sale and generally measured at
the lower of carrying amount and
fair value less costs to sell, where
the carrying amount will be
recovered principally through sale
as opposed to continue use. No
depreciation or amortisation is
charged against assets classified
as held for sale.
Classification as “held for sale”
occurs when:
-
Management has
committed to a plan for
immediate sale;
-
The sale is expected to
occur within one year
from the date of
classification; and
-
Active marketing of the
asset has commenced.
Such assets are classified as
current assets.
R. INTANGIBLE ASSETS
Software
Software is measured initially at
the cost of acquisition and
amortised over the useful life of the
software. Expenditure on software
development activities is
capitalised only when it is
expected that future benefits will
exceed the deferred costs, and
these benefits can be reliably
measured. Capitalised
development expenditure is stated
at cost less accumulated
amortisation. Amortisation is
calculated using the straight-line
method to allocate the cost of the
intangible asset over its estimated
useful life (not exceeding ten
years) commencing when the
intangible asset is available for
use. Other development
expenditure is recognised as an
expense when incurred.
Recoverability of non-financial
assets other than goodwill
All assets are assessed for
impairment at each period end by
evaluating whether indicators of
impairment exist in relation to the
continued use of the asset by the
Group. Impairment triggers include
declining product or manufacturing
performance, technology changes,
adverse changes in the economic
or political environment or future
product expectations. If an
indicator of impairment exists, the
recoverable amount of the asset is
determined.
S. PROVISIONS
Provisions are recognised if, as a
result of a past event, the Group
has a present legal or constructive
obligation that can be estimated
reliably, and it is probable that an
outflow of economic benefits will
be required to settle the obligation.
Provisions are determined by
discounting the expected future
cash flows at a pre-tax rate that
reflects current market
assessments of the time value of
money and the risks specific to the
liability. When discounting is used,
the increase in the provision due to
the passage of time is recognised
as a finance cost.
Short-term employee benefit
obligations
Liabilities arising in respect of
wages and salaries, annual leave,
long service leave and any other
employee benefits expected to be
settled within 12 months of the end
of the period are measured at their
nominal amounts based on
remuneration rates which are
expected to be paid when the
liability is settled. The expected
cost of short-term employee
benefits in the form of
compensated absences, such as
annual leave, is recognised in the
provision for employee benefits. All
other short-term employee benefit
obligations are presented as
payables.
Long-term employee benefit
obligations
Liabilities arising in respect of long
service leave and annual leave,
which are not expected to be
settled within 12 months of the end
of the period, are measured at the
present value of the estimated
future cash outflow to be made in
respect of services provided by
employees up to the end of the
period. Employee benefit
obligations are presented as
current liabilities in the statement
of financial position if the entity
does not have an unconditional
right to defer settlement for at least
12 months after the end of the
period, regardless of when the
actual settlement is expected to
occur.
Termination benefits
Termination benefits are payable
when the employment of an
employee or group of employees is
terminated before the normal
retirement date or when the Group
provides termination benefits as a
result of an offer made and
accepted in order to encourage
voluntary redundancy. The Group
recognises a provision for
termination benefits when the
entity can no longer withdraw the
offer of those benefits, or if earlier,
when the termination benefits are
included in a formal restructuring
plan that has been announced to
those affected by it.
NOTES TO THE FINANCIAL STATEMENTS
55 | WELLARD ANNUAL REPORT 2024
T. CONSOLIDATION
Transactions eliminated on
consolidation
Intercompany balances and
transactions, and any unrealised
income and expenses arising from
intercompany transactions, are
eliminated in preparing the
consolidated financial statements.
Foreign currency translation and
balances
Functional and presentation
currency
The financial statements of each
entity within the Group are
measured using the currency of
the primary economic environment
in which that entity operates
(functional currency). The
consolidated financial statements
are presented in United States
Dollars. The Company’s functional
currency is the Australian Dollar.
Transactions and balances
Transactions in foreign currencies
of entities within the Group are
translated into functional currency
at the rate of exchange ruling at
the date of the transaction.
Foreign currency monetary items
that are outstanding at the
reporting date (other than
monetary items arising under
foreign currency contracts where
the exchange rate for that
monetary item is fixed in the
contract) are translated using the
spot rate at the end of the period.
Except for certain foreign currency
transactions, all resulting
exchange differences arising on
settlement or restatement are
recognised as revenues and
expenses for the period.
Entities that have a functional
currency different from the
presentation currency are
translated as follows:
assets and liabilities are
translated at period-end
exchange rates prevailing at
that reporting date;
income and expenses are
translated at actual exchange
rates or average exchange
rates for the period, where
appropriate; and
all resulting exchange
differences are recognised as a
separate component of equity.
Goodwill and fair value
adjustments arising on the
acquisition of a foreign operation
are treated as assets and liabilities
of the foreign operation and
translated at the closing rate.
U. INVESTMENTS IN
SUBSIDIARIES
Investments in subsidiaries are
initially recognised at cost (fair
value of consideration paid plus
directly attributable costs). Costs
incurred in investigating and
evaluating acquisitions up to the
formal commitment are expensed
as incurred. Where the carrying
value of an investment exceeds
the recoverable amount, an
impairment charge is recognised in
profit or loss, which can
subsequently be reversed in
certain conditions.
V. SHARE-BASED PAYMENTS
The fair value of shares granted is
recognised as an employee
benefits expense with a
corresponding increase in equity.
The total amount to be expensed
is determined by reference to the
fair value of the shares granted,
which includes any market
performance conditions and the
impact of any non-vesting
conditions but excludes the impact
of any service and non-market
performance vesting conditions.
The total expense is recognised
over the vesting period, which is
the period over which all of the
specified vesting conditions are to
be satisfied.
W. LEASES
The Group assesses at contract
inception whether a contract is, or
contains, a lease. That is, if the
contract conveys the right to
control the use of an identified
asset for a period of time in
exchange for consideration.
a) As lessee
The Group applies a single
recognition and measurement
approach for all leases, except for
short-term leases and leases of
low-value assets. The Group
recognises lease liabilities
representing the obligations to
make lease payments and right-of-
use assets representing the right
to use the underlying assets.
Right-of-use assets
The Group recognises right-of-use
assets at the commencement date
of the lease (i.e. the date the
underlying asset is available for
use). Right-of-use assets are
measured at cost, less any
accumulated depreciation and
impairment losses, and adjusted
for any remeasurement of lease
liabilities. The cost of right-of-use
assets includes the amount of
lease liabilities recognised, initial
direct costs incurred, and lease
payments made at or before the
commencement date, less any
lease incentives received. Right-of-
use assets are depreciated on a
straight-line basis over the shorter
of the lease term and the
estimated useful lives of the
assets.
If the ownership of the leased
asset transfers to the Group at the
end of the lease term or the cost
reflects the exercise of a purchase
option, depreciation is calculated
using the estimated useful life of
the asset. The right-of-use assets
are also subject to impairment, as
disclosed in Note 2X.
The Group’s right-of-use assets
are presented within property,
plant and equipment in Note 16.
Lease liabilities
At the commencement date of the
lease, the Group recognises lease
liabilities measured at the present
value of lease payments to be
made over the lease term. The
lease payments include fixed
payments less any lease
incentives receivable, variable
lease payments that depend on an
index or a rate, and the amount
expected to be paid under residual
values guarantees. The lease
payments also include the exercise
price of a purchase option
reasonably certain to be exercised
by the Group. Variable lease
payments that do not depend on
an index or a rate are recognised
as expenses in the period.
In calculating the present value of
lease payments, the Group uses
the implicit rate in the lease if the
rate can be readily determined. If
the rate cannot be readily
determined, the Group shall use its
incremental borrowing rate. After
the commencement date, the
amount of lease liabilities is
increased to reflect the accretion of
interest and reduced for the lease
payments made. In addition, the
carrying amount of lease liabilities
is remeasured if there is a
modification, a change in the lease
term, a change in the lease
NOTES TO THE FINANCIAL STATEMENTS
56 | WELLARD ANNUAL REPORT 2024
payments or a change in the
assessment of an option to
purchase the underlying assets.
The Group’s lease liabilities are
included in Note 11.
Short-term leases and leases of
low-value assets
The Group applies the short-term
lease recognition exemption to its
short-term leases of leasehold
residential property, which have a
lease term of 12 months or less
and do not contain a purchase
option.
It also applies the lease of low-
value assets recognition
exemption to the lease of office
equipment that is considered to be
low value.
Lease payments on short-term
leases and leases of low-value
assets are recognised as
expenses on a straight-line basis
over the lease term.
X. GOODS AND SERVICES TAX
Revenues, expenses, assets and
liabilities are recognised net of the
amount of GST, except where the
amount of GST incurred is not
recoverable from the ATO. In
these circumstances, the GST is
recognised as part of the cost of
acquisition of the asset or as part
of an item of the expense.
Receivables and payables in the
statement of financial position are
shown inclusive of GST.
Y. IMPAIRMENT
Financial assets measured at
amortised cost
The Group considers evidence of
impairment for financial assets
measured at amortised cost (loans
and receivables) at both a specific
asset and collective level. All
individually significant assets are
assessed for specific impairment.
Those found not to be specifically
impaired are then collectively
assessed for any impairment that
has been incurred but not yet
identified. Assets that are not
individually significant are
collectively assessed for
impairment by grouping together
assets with similar risk
characteristics.
In assessing collective impairment,
the Group uses historical trends of
the probability of default, the timing
of recoveries and the amount of
loss incurred, adjusted for
management’s judgement as to
whether current economic and
credit conditions are such that the
actual losses are likely to be
greater or lesser than suggested
by historical trends.
An impairment loss in respect of a
financial asset measured at
amortised cost is calculated as the
difference between its carrying
amount and the present value of
the estimated future cash flows
discounted at the asset’s original
effective interest rate. Losses are
recognised in profit or loss and
reflected in an allowance account
against loans and receivables.
Interest on the impaired asset
continues to be recognised. When
an event occurs after the
impairment was recognised,
causing the amount of the
impairment loss to decrease, the
decrease in impairment loss is
reversed through profit or loss.
Useful life and residual value of
livestock-carrying vessels
Management reviews the
appropriateness of the useful life
and residual value of vessels at
each balance date. Certain
estimates regarding the useful life
and residual value of vessels are
made by management based on
past experience, and these are in
line with the industry. Changes in
the expected level of usage, scrap
value of steel and market factors
could impact the economic useful
life and residual value of the
vessels. When there is a material
change in the useful life and
residual value of vessels, such a
change will impact both the
depreciation charges in the period
in which the changes arise and
future depreciation charges.
An impairment loss in respect of
goodwill is not reversed. For other
assets, an impairment loss is
reversed only to the extent that the
asset’s carrying amount does not
exceed the carrying amount that
would have been determined, net
of depreciation or amortisation, if
no impairment loss had been
recognised.
Investment in subsidiaries
All assets are assessed for
impairment at each period end by
evaluating whether indicators of
impairment exist in relation to the
continued use of the asset by the
Group. Impairment indicators
include market capitalisation,
declining product or processing
performance, technology changes,
adverse changes in the economic
or political environment or future
product expectations.
3. CRITICAL
ACCOUNTING
ESTIMATES AND
JUDGEMENTS
The preparation of financial
statements requires the use of
accounting estimates, which, by
definition, will seldom equal the
actual results. Management also
needs to exercise judgement in
applying the Group’s accounting
policies.
Estimates and underlying
assumptions are reviewed on an
ongoing basis. Revisions to
accounting estimates are
recognised in the period in which
the estimates are revised and in
any future periods affected.
A. DEFERRED TAX ASSET
Management assesses the extent
to which it is probable that future
taxable profits will be available
against which the deferred tax
assets can be utilised.
In the previous financial year,
management assessed that there
is sufficient uncertainty in the
recovery of the deferred tax asset
and has therefore decided to
derecognise all current deferred
tax assets and liabilities from
temporary assets and carry
forward losses.
Deferred tax assets of US$55.6
million (FY2023: US$55.1 million)
relating to the tax and capital
losses of the Australian tax
consolidated group and US$2.0
million (FY2023: US$2.0 million)
relating to Singapore have not
been recognised.
B.
IMPAIRMENT
Impairment of non-financial assets
In order to assess the fair value
less cost of sale for the vessel fleet
CGU, management requested and
received two independent market
valuations for its vessels with
purchase obligation.
For the vessel which the Group
leases from third party with no
purchase obligation, management
NOTES TO THE FINANCIAL STATEMENTS
57 | WELLARD ANNUAL REPORT 2024
has compared the carrying amount
of the asset with its recoverable
amount. The recoverable amount
is determined based on its value-
in-use (VIU) calculations, taking
into account the individual facts
and circumstances of the
investment, economic and
industry-related factors and
management plans for the
investment.
The VIU is determined using cash
flow projections based on the
financial budget prepared by
management covering the
remaining useful lives of the
vessel. In making these estimates,
management has relied on its past
performance and its current
expectations of market
development. Cash flow in the VIU
calculation was discounted at an
average rate of 13.4% per annum.
If the estimated EBITDA co-
efficient index used in the VIU
calculation had been 0.50% lower
than the management’s estimates,
the recoverable amounts of the
asset would decrease by US$0.2
million. If the estimated discount
rate applied to the discounted cash
flows had been 1% higher than
management’s estimates, the
recoverable amounts of the asset
would decrease by US$1.6 million.
The Group has not recognised
impairment charges on its vessels
during the year.
Investments in subsidiaries
We have estimated the
recoverable amount based on the
value-in-use of the subsidiaries.
No impairment (2023: Nil) has
been recognised in respect of the
recoverable amount of investment
in subsidiaries. Impairment of
investments in subsidiaries has
been eliminated on consolidation
in the Group accounts. The
impairment of investment in
subsidiaries is considered a critical
accounting estimate for the parent
entity only and not for the Group.
C.
USEFUL LIFE OF
PURPOSE-BUILT
LIVESTOCK VESSEL
Management reviews the
appropriateness of the useful live
and residual value of vessels at
each balance sheet date. Certain
estimates regarding the useful life
and residual value of vessels are
made by the management based
on past experience, and these are
in line with the industry. Changes
in the expected level of usage,
scrap value of steel and market
factors could impact the economic
useful life and residual value of the
vessels.
In FY2023 the estimated useful
lives of the livestock vessels were
revised from 25 years to 30 years
for purpose-built vessels to better
reflect the economic period during
which the vessel is capable of
operating, considering the
historical operating experience and
currently available livestock
vessels in the market. The change
in accounting estimate has been
applied prospectively. The effect of
these changes has decreased the
depreciation charge of one vessel
by approximately US$ 1.5 million
effective from FY2023.
NOTES TO THE FINANCIAL STATEMENTS
58 | WELLARD ANNUAL REPORT 2024
4. REVENUE FROM CONTRACTS WITH CUSTOMERS
A) DISAGGREGATION OF REVENUE FROM CONTRACTS WITH CUSTOMERS
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
REVENUES
Chartering
34,918
38,619
Other revenue
25
36
34,943
38,655
Charter revenue is derived over time and includes revenue generated from the sale of space on the Group’s vessels
for the carriage of cargo owned by third parties.
B) ASSETS AND LIABILITIES RELATED TO CONTRACTS WITH CUSTOMERS
The Group has recognised the following assets and liabilities related to contracts with customers:
AS AT 30 JUNE
2024
US$’000
2023
US$’000
CHARTERING
Contract assets
626
639
Contract liabilities
2,000
1,440
Chartering contract assets refer to bunker and agency costs incurred for the contracted voyages and are yet to load
at the end of the reporting period. Chartering contract liabilities refer to deposits received from chartering of vessels.
5. OTHER INCOME
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
Insurance claims received
3,577
-
3,577
-
The insurance claim received is associated with the engine breakdown on the M/V Ocean Swagman in February 2023.
6. EXPENSES
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
A)
COST OF SALES
Chartering
30,539
38,930
30,539
38,930
NOTES TO THE FINANCIAL STATEMENTS
59 | WELLARD ANNUAL REPORT 2024
6. EXPENSES (continued)
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
B)
OTHER LOSSES
Losses arising from chartering activities
Allowance for impairment loss
-
306
-
306
(Gains)/losses arising from other activities
Net foreign exchange losses/(gains)
98
(113)
Reversal of impairment loss
(276)
-
Net loss on disposal of property, plant and equipment
-
1
Write down of inventory
31
-
Restructuring and integration costs
469
-
322
(112)
322
194
C)
NET FINANCE COSTS
Interest income
(2)
(32)
Interest expense
174
254
172
222
D)
GENERAL AND ADMINISTRATIVE EXPENSES
Labour expenses
6(E)
2,415
2,470
Consulting costs
643
544
General and administrative costs
525
478
Travel expenses
190
223
Occupancy costs
82
77
Motor vehicle expenses
17
58
3,872
3,850
E)
LABOUR EXPENSES
Wages and salaries
2,083
2,012
Employee entitlements
198
328
Superannuation
134
130
2,415
2,470
7. SEGMENT INFORMATION
Segment information is presented based on the information reviewed by senior management for performance
measurement and resource allocation.
Description of segments and principal activities
a) Chartering: This segment is engaged in the business of livestock transportation required to deliver livestock
globally. In the table below, this segment is further reported as charter revenue, being revenue generated from
the sale of space on the Group’s vessels for the carriage of cargo owned by third parties.
b) Other: This segment mainly consists of corporate services. Corporate services consist of a centralised support
function that provides specialised services across several disciplines to the rest of the Group, including human
resources, finance and payroll, information technology and communication, legal services and the board of
directors.
NOTES TO THE FINANCIAL STATEMENTS
60 | WELLARD ANNUAL REPORT 2024
7. SEGMENT INFORMATION (continued)
These classifications are in accordance with AASB 8 guidelines.
Management primarily uses a measure of statutory net (loss)/profit before income tax to assess the performance of
the operating segments. However, management also receives financial information about segment revenue,
EBITDA, interest expense, assets and liabilities on a monthly basis.
Chartering
US$’000
Other
US$’000
Total
US$’000
FOR THE YEAR ENDED 30 JUNE 2024
Revenue
34,918
25
34,943
Depreciation and amortisation expenses
(4,136)
(291)
(4,427)
Net finance costs
(171)
(1)
(172)
Loss from continuing operations before income
tax
1,758
(2,570)
(812)
Total segment assets
40,895
1,293
42,188
Total segment liabilities
4,867
258
5,125
FOR THE YEAR ENDED 30 JUNE 2023
Revenue
38,619
36
38,655
Depreciation and amortisation expenses
(10,235)
(343)
(10,578)
Net finance costs
(222)
-
(222)
Loss from continuing operations before income
tax
(12,826)
(2,293)
(15,119)
Total segment assets
41,893
3,789
45,682
Total segment liabilities
7,410
415
7,825
Revenue of approximately US$31.6 million were derived from six external customers of the chartering segment,
which individually account for greater than 8.0% of total revenue (FY2023: revenue of approximately US$34.2 million
from four external customers, which individually account for greater than 10.0% of total revenue).
Geographical information
Wellard operates in several geographical locations around the world, spanning multiple continents for sale of space
on the Group’s vessels.
External revenue based on the origin country of sale are as follows:
FOR THE YEARS ENDED 30 JUNE
Australia
US$’000
Singapore
US$’000
Brazil
US$’000
Total
US$’000
2024
13
34,930
-
34,943
2023
5
38,630
20
38,655
The non-current assets of the Group are located across the following countries:
AS AT 30 JUNE
Australia
US$’000
Singapore
US$’000
Total
US$’000
2024
629
18,481
19,110
2023
916
33,818
34,734
NOTES TO THE FINANCIAL STATEMENTS
61 | WELLARD ANNUAL REPORT 2024
8. TAXATION
INCOME TAX EXPENSE
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
INCOME TAX EXPENSE
Income tax expense comprises:
Current tax
4
11
Under provision for income tax in prior years
(1)
357
Income tax expense reported during the year
3
368
Income tax expense is attributable to:
Continuing operations
3
368
3
368
NUMERICAL RECONCILIATION OF INCOME TAX EXPENSE TO PRIMA FACE TAX PAYABLE
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
Loss from continuing operations before income tax
(812)
(15,119)
Tax at the Australian tax rate of 30% (2023: 30%)
(244)
(4,536)
Add/(deduct) the effect of other assessable items
Attributable foreign income
291
363
Exempt foreign shipping activities
(938)
895
Current year losses and temporary differences not recognised
417
321
Income not subject to tax
(50)
(43)
Statutory stepped income exemption
(5)
(11)
Expenses not deductible for tax purposes
760
1,347
(Over)/under provision for income tax in prior years
(1)
357
Total other assessable items
230
(1,307)
Add/(less) the effect of other non-assessable items
Effect of different tax rates in other countries
(227)
1,675
Total other non-assessable items
(227)
1,675
Income tax expense reported during the year
3
368
At the reporting date, the Group has unused tax losses of US$46.5 million (FY2023: US$46.2 million) and capital
losses of US$11.1 million (FY2023: US$10.9 million) available for offset against future profits. No deferred tax asset
has been recognised as it is not probable that future taxable profits will be available against which the Group can use
the benefits therefrom. The tax losses do not expire under current tax legislation but are subject to the satisfaction of
loss utilisation rules.
NOTES TO THE FINANCIAL STATEMENTS
62 | WELLARD ANNUAL REPORT 2024
9. LOSS PER SHARE
10. CASH AND CASH EQUIVALENTS
AS AT 30 JUNE
2024
US$’000
2023
US$’000
Cash at bank and in hand
8,782
7,420
8,782
7,420
Cash at bank earns interest at floating rates based on daily bank deposit rates.
11. LOANS AND BORROWINGS
AS AT 30 JUNE
2024
US$’000
2023
US$’000
CURRENT
Un-secured
Lease liabilities (i)
195
106
Other loans (ii)
-
2,439
Total Current Loans and Borrowings
195
2,545
NON-CURRENT
Un-secured
Lease liabilities (i)
76
43
Total Non-current Loans and Borrowings
76
43
Total Loans and Borrowings
271
2,588
For bank loans and borrowings, the fair values are not materially different from their carrying amounts since the interest
payable on the loans and borrowings are close to the current market rates.
FOR THE YEARS ENDED 30 JUNE
2024
2023
BASIC LOSS PER SHARE
From continuing operations attributable to the ordinary
equity holders of the Company
US$
cents
(0.15)
(2.92)
DILUTED LOSS PER SHARE
From continuing operations attributable to the ordinary
equity holders of the Company
US$
cents
(0.15)
(2.92)
WEIGHTED AVERAGE ORDINARY SHARES
Weighted average number of ordinary shares used as the
denominator
number
531,250,312
531,250,312
NOTES TO THE FINANCIAL STATEMENTS
63 | WELLARD ANNUAL REPORT 2024
11. LOANS AND BORROWINGS (continued)
(i) Lease liabilities
Un-secured
In 2023, the Group renegotiated and modified an existing lease contract for office building by extending the lease term
at revised lease payments. As this extension is not part of the terms and conditions of the original lease contract, it is
accounted for as a lease modification with an addition to the right-of-use assets.
In 2024, the Group renegotiated the short term lease for accommodation for a further 24 months with effect from 1
February 2024. As this extension is more than 12 months, it was recognised as right-of-use asset in this financial year.
(ii) Other loans
Other loans represent a bunker facility from United Overseas Bank Limited, Singapore.
AS AT 30 JUNE
Currency
Financial year of
maturity
2024
US$’000
2023
US$’000
LOANS AND BORROWINGS
Un-secured
Lease liabilities
SGD
2026
228
88
Lease liabilities
A$
2026
43
61
Other loans
US$
2024
-
2,439
271
2,588
The maturity profile of principal repayments is set out in Note 17(C).
12. INVENTORIES
AS AT 30 JUNE
2024
US$’000
2023
US$’000
Raw materials
1,481
1,210
1,481
1,210
Inventories are reported at the lower of cost and net realisable value. During the year, inventory was written down by
a value of US$31,120 (FY2023: Nil).
13. TRADE AND OTHER RECEIVABLES
AS AT 30 JUNE
2024
US$’000
2023
US$’000
CURRENT
Trade receivables
352
979
Allowance for impairment loss
(306)
(306)
Other receivables
153
301
199
974
Trade and other receivables are non-interest bearing and are on various terms depending on the market. Charter
customers are generally required to pay a deposit on signing of the booking note, and the balance payable before
delivery of the vessel or provision of the Bill of Lading. An allowance for doubtful debts is made when there is objective
evidence that a trade receivable is impaired in excess of expected credit losses.
NOTES TO THE FINANCIAL STATEMENTS
64 | WELLARD ANNUAL REPORT 2024
13.
TRADE AND OTHER RECEIVABLES (continued)
Due to the short-term nature of trade and other receivables, their carrying amount approximates fair value less
expected credit losses.
The ageing analysis of these trade receivables is as follows:
AS AT 30 JUNE
2024
US$’000
2023
US$’000
0 to 3 months
210
619
3 to 6 months
94
5
Over 6 months
48
355
352
979
Information on the Group’s credit risk is disclosed in Note 17(B).
14.
OTHER ASSETS
AS AT 30 JUNE
2024
US$’000
2023
US$’000
CURRENT
Prepayments
210
705
210
705
NON-CURRENT
Deposits
21
64
21
64
15.
ASSETS HELD FOR SALE
AS AT 30 JUNE
2024
US$’000
2023
US$’000
ASSET HELD FOR SALE
Plant and equipment – Vessel
11,780
-
11,780
-
Vessel held for sale
The sale of the vessel. MV Ocean Ute was announced to the ASX on 1 July 2024, Wellard signed a binding contract
to sell the MV Ocean Ute, for US$12.0 million. In accordance with AASB 5 Non-current Assets Held for Sale and
Discontinued Operations a reversal of impairment loss of US$276 thousand was recognised in the 2024 financial year
to write down the asset to its fair value less costs to sell.
The vessel will be purchased by Marshall Islands registered company, Bassem Dabbah Shipping Inc.
The sale of the vessel is expected to complete in September 2024.
NOTES TO THE FINANCIAL STATEMENTS
65 | WELLARD ANNUAL REPORT 2024
16.
TRADE AND OTHER PAYABLES
AS AT 30 JUNE
2024
US$’000
2023
US$’000
CURRENT
Trade payables
2,013
2,756
Sundry payables and accrued expenses
831
957
2,844
3,713
Trade and other payables are non-interest bearing.
17.
FINANCIAL RISK MANAGEMENT
Like all companies, Wellard is subject to a range of risks associated with its activity which could, in isolation or in
combination, if they eventuate, have a material adverse impact on Wellard’s business, results of operations, financial
condition, financial performance, prospects and share price. To carry out its business and achieve its objectives,
Wellard needs to take risks but tries to do so by identifying, assessing, responding and monitoring them to ensure the
Group's long-term success.
Wellard’s financial risk management objective is to minimise the potential adverse effects on financial performance
arising from changes in financial risk. Financial risks are managed centrally by Wellard’s finance team under the
direction of the Directors and the Board’s Audit, Risk and Compliance Committee. The finance team regularly monitors
Wellard’s exposure to any of these financial risks and where practicable, takes steps to mitigate or manage certain
risks. While mitigation steps are taken, these steps will not remove the risk but are aimed at reducing its impact in the
short and long term.
This section provides qualitative and quantitative disclosure on the effects that those risks may have on the Group.
A) MARKET RISK
i)
Chartering
Wellard is exposed to fluctuations in market freight rates in respect of vessels trading on the spot market. Particularly,
when chartering out vessels, the freight rates may be too low to ensure an adequate return or to cover costs. The
following risk management strategies are applied: (i) the vessels trade on a worldwide basis to reduce the effect of
different regional market conditions. (ii) Wellard pursues long-standing relationships of trust with its customers and
tries to adapt its chartering policy to their requirements in order to support reciprocal and continuous value creation.
ii)
Commodity price risk
Fuel
Wellard is exposed to commodity price volatility for the fuel required to operate its fleet of vessels. Wellard
management monitors the market and, when appropriate, can manage this risk with commodity swaps and physical
hedge to partially hedge its exposure to fuel price volatility.
iii) Foreign exchange risk
Wellard’s exposure to currency risk is minimal as most of the sales and purchases transactions are denominated in
United States Dollars (“US$”). The Group monitors its exposure to currency risk on a regular basis and may enter into
short-term forward exchange contracts to manage the exposure.
iv) Interest rate risk
Interest rate risk is the risk that the fair value of future cash flows of a financial asset or financial liability will change as
a result of changes in market interest rates. Wellard’s exposure to market interest rate risk relates primarily to its loans
and borrowings.
Changes to interest rates will affect borrowings which bear interest at a floating rate. Any increase in interest rates will
affect Wellard’s cost of servicing these borrowings which may adversely affect its financial position.
NOTES TO THE FINANCIAL STATEMENTS
66 | WELLARD ANNUAL REPORT 2024
17.
FINANCIAL RISK MANAGEMENT (continued)
A) MARKET RISK (continued)
iv) Interest rate risk
Wellard’s net interest rate exposure does not have a significant effect on the result; therefore, Wellard does not enter
into interest rate swaps on debt instruments subject to floating interest rates. Lease liabilities carry interest at their
fixed rates.
Sensitivity:
The exposure of Wellard’s borrowings to variable interest rate changes at the end of the reporting period are as follows:
AS AT 30 JUNE
2024
US$’000
2023
US$’000
Loans and borrowings
-
2,439
-
2,439
Based on Wellard’s variable borrowings a change of 10 basis points (0.1%) in interest rates, with all other variables
held constant, would increase/(decrease) profit before taxation and equity as follows:
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
+0.1%
-
2
-0.1%
-
(2)
B) CREDIT RISK
Credit risk refers to the risk that a counterparty will default on its contractual obligations, resulting in financial loss to
Wellard. Wellard is exposed to some counterparty credit risk arising from its operating activities, primarily from trade
receivables. The ageing of these receivables is as follows:
AS AT 30 JUNE
2024
US$’000
2023
US$’000
0 to 3 months
210
619
3 to 6 months
94
5
Over 6 months
48
355
352
979
The risk of non-payment by customers is an inherent risk of Wellard’s business, due to sales typically involving
individual high-value shipments. Wellard seeks to mitigate the impact of this risk by building long-term relationships
with its customers, obtaining partial payment before loading, requiring letters of credit to partially secure payment in a
number of jurisdictions and through a systematic credit assessment of counterparties and regular monitoring of their
creditworthiness.
Each analysis results in an internal rating, which is subsequently used for determining the allowed scope of the
commitment. The internal ratings are based both on a financial and a non-financial assessment of the counterparty’s
profile. In addition, trade receivable balances are monitored on a fortnightly basis by management.
Owing to the nature of long-term client relationships which relies on a shared commitment to continuing trade and
future growth there has historically been a low number of debtor impairment provisions and bad debts expressed as a
percentage of revenue. The timing of customer payments for shipments and the requirement to pay a deposit mitigates
the risk of large debtor impairments.
NOTES TO THE FINANCIAL STATEMENTS
67 | WELLARD ANNUAL REPORT 2024
17.
FINANCIAL RISK MANAGEMENT (continued)
B) CREDIT RISK (continued)
Set out below is a summary of the concentration of receivables by currency:
AS AT 30 JUNE
2024
US$’000
2023
US$’000
United States dollar
352
927
Australian dollar
-
52
352
979
Movements in the provision for impairment of trade receivables that are assessed for impairment collectively are as
follows:
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
Opening balance
306
-
Allowance for impairment recognised during the year
-
306
Closing balance
306
306
Impaired trade receivables
The impairment of the Group’s financial assets that are subject to credit losses where the expected credit loss model
has been applied is not material.
To measure the expected credit losses, the Company has applied the simplified approach to measure the lifetime
expected credit losses for trade receivables using a provision matrix, estimated based on the Group’s historical credit
loss experience, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. The
Group has identified the Gross Domestic Product (“GDP”) of the countries in which it operates to be the most relevant
factors.
Receivables are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in
a repayment plan with the Group. Where receivables have been written off, the Group continues to engage in
enforcement activity to attempt to recover the receivables due. Where recoveries are made, these are recognised in
the consolidated statement of comprehensive income.
Amounts recognised in profit or loss
During the year, the following losses were recognised in profit or loss in relation to impaired receivables:
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
IMPAIRMENT LOSSES
Individually impaired trade receivables
-
306
-
306
NOTES TO THE FINANCIAL STATEMENTS
68 | WELLARD ANNUAL REPORT 2024
17.
FINANCIAL RISK MANAGEMENT (continued)
C) LIQUIDITY RISK
Liquidity risk arises from Wellard’s financial liabilities and the subsequent ability to repay the financial liabilities as and
when they fall due.
In particular, Wellard’s chartering activity is exposed to liquidity risk due to its exposure to the spot market. Freight
rates earned might not be sufficient to cover its operating costs, required investments and financial commitments,
leading to a reduction in cash balances.
As part of its financial planning process, Wellard manages the liquidity risk through an appropriate financial planning
and liquidity risk management which are regularly reviewed and updated. Prudent liquidity risk management implies
maintaining sufficient availability of funding through an adequate amount of cash and committed credit facilities to
meet Wellard’s financial obligations.
Wellard manages its liquidity risk by monitoring and forecasting the total cash inflows and outflows expected on a
fortnightly basis. The forecast includes projections of cash outflows from overhead and supplier payments, interest
obligations, the repayment of debt facilities and capital expenditure when they fall due.
Maturities of financial liabilities
The following tables detail for the years 2024 and 2023, respectively, Wellard’s prospective cashflows for its financing
liabilities based on contractual repayment terms. The tables have been drawn up on the basis of undiscounted cash
flows on the earliest date in which Wellard can be required to pay.
FOR THE YEAR ENDED
30 JUNE 2024
<6
MONTHS
US$’000
6-12
MONTHS
US$’000
1-2
YEARS
US$’000
2-5
YEARS
US$’000
TOTAL
US$’000
CARRYING
AMOUNT
US$’000
Non-interest bearing
2,844
-
-
-
2,844
2,844
Fixed rate
149
61
78
-
288
271
Variable rate
-
-
-
-
-
-
2,993
61
78
-
3,132
3,115
FOR THE YEAR ENDED
30 JUNE 2023
<6
months
US$’000
6-12
months
US$’000
1-2
years
US$’000
2-5
years
US$’000
TOTAL
US$’000
Carrying
amount
US$’000
Non-interest bearing
3,713
-
-
-
3,713
3,713
Fixed rate
99
12
22
23
156
149
Variable rate
2,468
-
-
-
2,468
2,439
6,280
12
22
23
6,337
6,301
Working capital facility
Wellard’s working capital facilities include bunker trade finance facility with United Overseas Bank Limited (UOB) with
a limit of US$4.0 million and credit card facility of S$0.2 million.
NOTES TO THE FINANCIAL STATEMENTS
69 | WELLARD ANNUAL REPORT 2024
17.
FINANCIAL RISK MANAGEMENT (continued)
D) CAPITAL MANAGEMENT
Wellard’s objectives in managing capital are to:
safeguard Wellard’s ability to continue as a going concern, so to provide returns for shareholders and benefits
for other stakeholders;
ensuring a satisfactory return is made on any new capital invested; and
maintain an optimal capital structure to reduce the cost of capital.
Capital is defined as the combination of shareholders’ equity, reserves and net debt. The Board is responsible for
monitoring and approving the capital management framework within which management operates.
Wellard manages its capital through various means, including:
raising or returning capital;
raising or repaying debt for working capital requirements, capital expenditure and acquisitions; and
adjusting the amount of ordinary dividends paid to shareholders
18. PROPERTY, PLANT AND EQUIPMENT
AS AT 30 JUNE 2024
IMPROVEMENTS
US$’000
PLANT AND
EQUIPMENT
US$’000
RIGHT-OF-
USE ASSETS
US$’000
TOTAL
US$’000
Opening net book amount
23
33,649
158
33,830
Additions
-
3
344
347
Foreign exchange revaluation
-
-
(1)
(1)
Depreciation expense
(23)
(3,899)
(238)
(4,160)
Reversal of impairment loss
-
276
-
276
Transfer to asset held for sale
-
(11,780)
-
(11,780)
Closing balance
-
18,249
263
18,512
Cost
536
75,678
1,492
77,706
Accumulated depreciation and
impairments
(536)
(57,429)
(1,229)
(59,194)
Closing balance
-
18,249
263
18,512
AS AT 30 JUNE 2023
IMPROVEMENTS
US$’000
PLANT AND
EQUIPMENT
US$’000
RIGHT-OF-
USE ASSETS
US$’000
TOTAL
US$’000
Opening net book amount
81
37,886
2,780
40,747
Additions
2
3,247
137
3,386
Disposals
-
(1)
-
(1)
Foreign exchange revaluation
(1)
(1)
(1)
(3)
Depreciation expense
(59)
(7,482)
(2,758)
(10,299)
Closing balance
23
33,649
158
33,830
Cost
536
107,285
1,160
108,981
Accumulated depreciation and
impairments
(513)
(73,636)
(1,002)
(75,151)
Closing balance
23
33,649
158
33,830
NOTES TO THE FINANCIAL STATEMENTS
70 | WELLARD ANNUAL REPORT 2024
18.
PROPERTY, PLANT AND EQUIPMENT (continued)
A) The M/V Ocean Drover is operated by the Company under a long-term bareboat charter agreement (BBC), which
runs until 30 June 2032 and allows Wellard full access to offer the M/V Ocean Drover to customers for the transport
of livestock. The BBC is part of a standard hire-purchase style financing arrangement with Ruchira Ships Limited
(Ruchira), and includes a Memorandum of Agreement (MoA) in which Ruchira was legally obliged to redeliver the
vessel to Wellard on 1 September 2023.
Ruchira included the M/V Ocean Drover in a package of secured assets under its own arrangements with its
lending bank, United Overseas Bank Limited (UOB). UOB has placed two registered mortgages on the M/V Ocean
Drover, which must be discharged or compromised or lifted by court order before the Vessel can be delivered to
Wellard by Ruchira in accordance with its legal obligations under the MoA.
Wellard has mitigated this position by putting a long-term BBC in place, which lasts until 30 June 2032, preserving
Wellard’s legal right to operate the vessel until 2032 at no additional cost. There are no further charter hire
payments to be made to Ruchira/KPMG under the BBC.
In February 2024, UOB appointed KPMG Services (Singapore) as liquidators to Ruchira, with Wellard continuing
to assert its legal rights to receive the unencumbered redelivery of the vessel's title and actively negotiating with
KPMG to resolve the matter.
At the time this report is issued, Wellard continues to engage productively with KPMG (Singapore) as the
liquidators of Ruchira Ships Limited (In Liquidation) (“Ruchira”), the registered owner of the vessel, to seek a
commercial resolution that will result in the return to Wellard of full, unencumbered legal title to the Drover.
However, there is a risk that Wellard will not be able to satisfactorily complete commercial negotiations with KPMG
in a manner which will allow UOB to clear the mortgages on the M/V Ocean Drover. In such circumstances, the
redelivery of full legal title to the M/V Ocean Drover to Wellard will be delayed or potentially prevented. Wellard
does not have full visibility of the debt position between Ruchira and its bank. It is possible that KPMG may
challenge the continuation of Wellard’s BBC and/or MoA.
The consequences of not receiving full legal title to the vessel include that the Company cannot refinance or offer
the vessel for sale.
B) Leased assets – The Group as a lessee
(i)
Nature of the Group’s leasing activities
Property
The Group leases office space for the purpose of back office operations and apartment for employee’s
accommodation.
Equipment and vessel
The Group leases office equipment for back office operation and vessel to render chartering services.
(ii)
Carrying amounts
The balance sheet shows the following amounts relating to leases:
2024
US$’000
2023
US$’000
Assets classified within Right-of-Use Assets
Property
263
154
Equipment
-
4
263
158
Lease liabilities
Current
195
106
Non-current
76
43
271
149
NOTES TO THE FINANCIAL STATEMENTS
71 | WELLARD ANNUAL REPORT 2024
18.
PROPERTY, PLANT AND EQUIPMENT (continued)
(iii)
Depreciation during the year
The consolidated statement of comprehensive income shows the following amounts relating to leases:
Depreciation charge of right-of-use assets
2024
US$’000
2023
US$’000
Property
235
208
Equipment
3
5
Vessels
-
2,543
Motor Vehicle
-
2
238
2,758
(iv)
Interest expense on lease liabilities during the financial year 2024 was US$18,651 (2023: US$125,365)
(v)
Lease expense not capitalised in lease liabilities – short-term leases was US$48,305 (2023:US$86,615).
(vi)
Total cash outflow for all the leases during the financial year 2024 was US$241,301 (2023: US$3,037,480).
(vii)
Additions of Right-of-use assets during the financial year 2024 was US$343,867 (2023: US$136,914).
19. INTANGIBLE ASSETS
AS AT 30 JUNE 2024
SOFTWARE
US$’000
TOTAL
US$’000
Opening net book amount
840
840
Foreign exchange revaluation
4
4
Amortisation expense
(267)
(267)
Closing balance
577
577
Cost
2,704
2,704
Accumulated amortisation
(2,127)
(2,127)
Closing balance
577
577
AS AT 30 JUNE 2023
SOFTWARE
US$’000
TOTAL
US$’000
Opening net book amount
1,158
1,158
Foreign exchange revaluation
(39)
(39)
Amortisation expense
(279)
(279)
Closing balance
840
840
Cost
2,677
2,677
Accumulated amortisation
(1,837)
(1,837)
Closing balance
840
840
Software consists of amounts spent on the implementation and maintenance of an enterprise resource planning
system in use since May 2016. Software is amortised over ten years.
NOTES TO THE FINANCIAL STATEMENTS
72 | WELLARD ANNUAL REPORT 2024
20. PROVISIONS
AS AT 30 JUNE
2024
US$’000
2023
US$’000
CURRENT
Employee entitlements
10
55
10
55
NON-CURRENT
Employee entitlements
-
29
-
29
A provision has been recognised for employee entitlements related to annual and long service leave. In calculating
the present value of future cash flows in respect of long service leave, the probability of long service leave being taken
is based on historical data. This is discounted using market yields at the reporting date on corporate bonds with terms
to maturity and currency that match, as closely as possible, the estimated future cash outflows.
The current provision for employee benefits includes accrued annual leave and long service leave. For long service
leave it covers all unconditional entitlements where employees have completed the required period of service and also
those where employees are entitled to pro-rata payments in certain circumstances. A provision of US$9,585 (2023:
US$54,863) is presented as current, since the Group does not have an unconditional right to defer settlement for any
of these obligations.
21. ISSUED CAPITAL
The Company’s share capital comprises fully paid-up 531,250,312 (2023: 531,250,312) ordinary shares with no par
value, amounting to a total US$412,258,944 (2023: US$412,258,944). Fully paid ordinary shares carry one vote per
share and carry a right to dividends as and when declared by the Company.
No shares were issued during the financial year 2024.
22. COMMITMENTS
There was no significant capital commitment contracted and not recognised as liabilities at the end of the reporting
period.
23. SIGNIFICANT ITEMS
There are no other significant items to be disclosed for the financial year ended 30 June 2024.
24. AUDITOR’S REMUNERATION
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
Fees in respect of the audit of the consolidated and parent
company financial statements
114
110
Other audit fees, principally in respect of audits of accounts of
subsidiaries in Singapore
18
18
Other assurance services
4
4
Total auditor’s remuneration
136
132
NOTES TO THE FINANCIAL STATEMENTS
73 | WELLARD ANNUAL REPORT 2024
25. CONTROLLED ENTITIES
(a)
Subsidiaries
Subsidiaries are entities controlled by Wellard Limited. Wellard Limited controls an entity when it is exposed to, or has
rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power to direct the activities of the entity.
The financial statements of subsidiaries are included in the consolidated financial report from the date that control
commences until the date that control ceases.
Interests held in controlled entities is set out below:
COUNTRY OF
INCORPORATION
2024
%
2023
%
PARENT ENTITY
Wellard Limited
Australia
SUBSIDIARIES OF WELLARD LIMITED
Wellard Rural Exports Pty Ltd
Australia
100
100
Wellard NZ Ltd1
New Zealand
100
100
Wellard Singapore Pte Ltd
Singapore
100
100
Wellard Ships Pte Ltd
Singapore
100
100
Ocean Drover Pte Ltd
Singapore
100
100
Niuyang Express Pte Ltd
Singapore
100
100
Wellard do Brasil Agronegocios Ltda
Brazil
100
100
Wellard Uruguay S.A.
Uruguay
100
100
Best Hayvancilik Sanayi Ticaret AŞ
Turkiye
100
100
Notes:
1. Wellard NZ Ltd was deregistered on 15 July 2024.
26. RELATED PARTY TRANSACTIONS
All transactions with related parties are recorded on an arms-length basis at commercial terms and conditions.
(a)
Subsidiaries
Interests in subsidiaries are set out in Note 25(a).
(b)
Key management personnel compensation
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
Short-term benefits
877
940
Long-term benefits
62
25
Post-employment benefits
31
30
Termination benefits
167
-
1,137
995
Detailed remuneration disclosures are available in the Remuneration Report on page 37.
NOTES TO THE FINANCIAL STATEMENTS
74 | WELLARD ANNUAL REPORT 2024
26.
RELATED PARTY TRANSACTIONS (continued)
(c)
Transactions with other related parties
FOR THE YEARS ENDED 30 JUNE
2024
US$’000
2023
US$’000
ENTITIES CONTROLLED BY KEY MANAGEMENT PERSONNEL
Technical shipping consultancy service rendered
-
2
(d)
Outstanding balance from services rendered from related parties
As at 30 June 2024, there was no outstanding balance from services rendered from related parties (2023: Nil).
27. PARENT ENTITY
(a)
Summary financial information
The individual financial statements for the parent entity (Wellard Limited) show the following aggregate amounts in
Australian Dollars:
AS AT 30 JUNE
2024
A$’000
2023
A$’000
NET ASSETS
Current assets
1,498
4,150
Total assets
9,754
12,849
Current liabilities
(640)
(310)
Total liabilities
(674)
(419)
Net assets
9,080
12,430
FOR THE YEARS ENDED 30 JUNE
2024
A$’000
2023
A$’000
EQUITY
Issued capital
581,656
581,656
Share issue costs capitalised
(9,525)
(9,525)
Share-based payment reserve
18,014
18,014
Accumulated losses
(581,065)
(577,715)
Total equity
9,080
12,430
Loss for the period
3,350
3,569
Total comprehensive loss
3,350
3,569
(b)
Guarantees provided by the parent entity
At 30 June 2024, the parent entity had provided guarantees to support the banking facilities in Singapore and
borrowings set out in Note 11.
(c)
Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2024 (30 June 2023: Nil).
NOTES TO THE FINANCIAL STATEMENTS
75 | WELLARD ANNUAL REPORT 2024
27. PARENT ENTITY (continued)
(d)
Contractual commitments for the acquisition of property, plant and equipment
None.
(e)
Determining the parent entity’s financial information
The financial information of the parent entity has been prepared on the same basis as the consolidated financial
statements. The current subsidiaries information can be found in Note 25.
28. RESERVES
AS AT 30 JUNE
COMMON
CONTROL
US$’000
SHARE
BASED
PAYMENTS
US$’000
FOREIGN
CURRENCY
TRANSLATION
US$’000
TOTAL
US$’000
2024
Opening balance
(295,768)
12,963
5,679
(277,126)
Current year
movements
-
-
21
21
Closing balance
(295,768)
12,963
5,700
(277,105)
2023
Opening balance
(295,768)
12,963
5,857
(276,948)
Current year
movements
-
-
(178)
(178)
Closing balance
(295,768)
12,963
5,679
(277,126)
Common control reserve
The acquisition of all subsidiaries as part of the Group Restructure Event gives rise to the common control reserve.
Common control reserve is the difference between the purchase consideration and the carrying value of the net assets
acquired is recorded directly in equity in a separate reserve.
Foreign currency reserve
Exchange differences arising on translation of the foreign-controlled entity are recognised in other comprehensive
income and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss
when the net investment is disposed.
Share-based payments
Share-based payments represent the cumulative value of employee services received for the issue of share options.
When the option is exercised, the amount from the share-based payments reserve is transferred to share capital.
When the share options expire, the amount from the share-based payment reserve is transferred to retained earnings.
29. ACCUMULATED LOSSES
AS AT 30 JUNE
2024
US$’000
2023
US$’000
Opening balance
(97,276)
(81,789)
Net loss for the year
(815)
(15,487)
Closing balance
(98,091)
(97,276)
NOTES TO THE FINANCIAL STATEMENTS
76 | WELLARD ANNUAL REPORT 2024
30. SUBSEQUENT EVENTS
Other than matters after 30 June 2024 disclosed in Note 18(A), there are no other significant events that have occurred
after balance sheet date.
31. CONTINGENT ASSETS/LIABILITIES
(a)
SHAREHOLDER CLASS ACTION
As advised to ASX on 18 December 2023, following pre-trial mediation, Wellard Limited executed a Deed of
Settlement fully and finally resolving the Shareholder class action against the Company, originally announced 10
March 2020. The total settlement amount was agreed at A$23 million, payment of which will has now been fully
met from available insurance proceeds in FY2024. The settlement was reached without any admission of liability
on the part of the Company. Federal Court approval was duly received and all payments have been made.
No contingent liability was previously raised in respect of this matter.
(b)
CLAIM AGAINST THE AUSTRALIAN FEDERAL GOVERNMENT RE 2011 INDONESIAN CATTLE BAN
Wellard remains active in preparing a legal claim relating to losses incurred due to the 2011 ban on Australian
livestock exports to the Republic of Indonesia. On 2 June 2020, the Federal Court of Australia found in favour of
the lead applicant, Brett Cattle Company Pty Limited in representative proceedings (also known as a ‘class
action’) before the Federal Court brought against the former Minister for Agriculture, Forestry and Fisheries
Senator Joe Ludwig and the Commonwealth of Australia as the Respondents. Wellard’s claim for damages is
being made following this successful litigation brought by the Brett Cattle Company.
Progress on this matter remains slow for Wellard and all other Class members. The Federal Court has ordered
the parties to proceed concurrently by way of both mediation and Court process to resolve various foundational
issues that remain in dispute. The concurrent processes are being undertaken in an attempt to assist the parties
reach a global settlement sum and to prevent unnecessary delay.
The parties continue to work towards a resolution. Wellard cannot reliably anticipate the outcome of its legal claim
at the date of this report. It remains too early to make any estimate of the amount which may be recovered by
Wellard. No contingency has been raised in these accounts in respect of this class action.
77 |
Moore Australia Audit (WA) – ABN 16 874 357 907.
An independent member of Moore Global Network Limited - members in principal cities throughout the world.
Liability limited by a scheme approved under Professional Standards Legislation.
Moore Australia Audit (WA)
Level 15, Exchange Tower,
2 The Esplanade, Perth, WA 6000
PO Box 5785, St Georges Terrace, WA 6831
T +61 8 9225 5355
F +61 8 9225 6181
www.moore-australia.com.au
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WELLARD LIMITED
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Wellard Limited (the Company) and its subsidiaries (the Group),
which comprises the consolidated statement of financial position as at 30 June 2024, the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of changes in
equity and the consolidated statement of cash flows for the year then ended, and notes to the financial
statements, including a summary of material accounting policies, the consolidated entity disclosure
statement and the directors’ declaration.
In our opinion the accompanying financial report of the Group is in accordance with the Corporations
Act 2001, including:
giving a true and fair view of the Group’s financial position as at 30 June 2024 and of its
financial performance for the year then ended; and
complying with Australian Accounting Standards and the Corporations Regulations 2001.
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 Company 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.
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 of the current year. These 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.
78 |
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WELLARD LIMITED (CONTINUED)
Key Audit Matters (continued)
Recognition of Revenue
Refer to Note 2.A and Note 4 “Revenue from Contracts with Customers”
The Group’s revenue is largely derived from the
charter of vessels, including revenue generated
from the sale of space on the Group’s vessels for
the carriage of cargo owned by third parties.
Revenue is recognised over a period of time,
determined using the time proportion method of
each voyage, and is based on contracts which
determine the services to be provided and rates
to be charged.
The accurate recording of revenue is highly
dependent upon the following key factors;
• Knowledge of the individual characteristics
and status of contracts;
• Management’s invoicing process including;
̶ accurate measurement of services and
provided each month
̶ invoices prepared in compliance with
contract
terms
such
as
services
performed, cargo delivered and rates
charged; and
• Compliance with contractual terms and an
assessment of when the Group believes it is
has complied with its performance obligations
and thus is entitled to recognize the revenue.
We focused on this matter as a key audit matter
due to the significance of revenue to the Group
combined with the need to comply with a variety
of contractual conditions and to accurately
measure the percentage of completion of each
voyage, leading to judgmental and estimation risk
associated with revenue recognition.
Our procedures included, amongst others:
• We evaluated management’s processes
regarding
occurrence,
valuation
and
recording of the Group’s contract revenues.
We tested internal controls in relation to
preparation and authorisation of monthly
revenue invoices for compliance with the
Group’s accounting policies in relation to
revenue;
• We selected a sample of sales invoices raised
during the year and performed the following
procedures:
̶ agreed to contractual terms and rates
̶ agreed to general ledger accounts and
subsequent receipts from the customer
̶ for variations or claims we checked they
were in accordance with contract terms
and evaluated for risk of non-recovery;
• We evaluated contract performance and the
timing of revenue recognition during and
subsequent to year end in order to test timing
of revenue recognition and the accuracy of
year end cut offs; and
• Ensured
appropriate
disclosure
in
the
financial statements of revenue policies and
significant estimates and judgement applied.
Ownership and Carrying value of Vessels
Refer to Note 2.Y Impairment, Note 15 Asset Held for Sale and Note 18 Property, Plant and
Equipment
At 30 June 2024, the Group had $30.3 million
of property, plant and equipment and assets
held for sale, as disclosed in Notes 18 and 15
respectively.
The asset held for sale, M/V Ocean Ute, is
under a binding memorandum of agreement
Our procedures included, amongst others:
• Verifying ownership of the two vessels and related
Bare Boat Charter and repurchase arrangements.
• Evaluating the Group’s assessment of whether
there were any indicators of asset impairment, by
comparing market capitalisation to the net the
asset value of the Group as at 30 June 2024,
79 |
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WELLARD LIMITED (CONTINUED)
Key Audit Matters (continued)
Ownership and Carrying value of Vessels
Refer to Note 2.Y Impairment, Note 15 Asset Held for Sale and Note 18 Property, Plant and
Equipment
signed by the Group for the sale of the vessel,
with delivery expected to be completed in
September 2024.
The other vessel, M/V Ocean Drover, is
subject to a bareboat charter financing
arrangement until June 2032, which allows
the Group full access to offer it to customers
for the transport of livestock. The bareboat
charter
includes
a
Memorandum
of
Agreement (MoA) in which the third party was
legally obliged to redeliver the vessel to the
Group by 1 September 2023. However, the
vessel has been included in a package of
assets given as security by the third party
under an arrangement with the third party’s
financiers. The third party has been unable to
discharge the two registered mortgages over
the vessel and has therefore been unable to
meet its obligations under the MoA to
redeliver legal title to the vessel to the Group.
During the current year liquidators were
appointed to the third party and, as a result,
the redelivery of the legal title of the vessel to
the Group has been prevented. The Group
has mitigated this risk by putting the long-term
bareboat charter in place, preserving the legal
right to operate the vessel until 2032, and is
now negotiating with the liquidator of the third
party in order to agree an outcome that will
result in the redelivery of legal title to the
vessel to the Group.
The Group considered whether there were
any indicators of impairment for individual
assets having regard to the performance of
those assets as well as any adverse industry
economic conditions.
Accounting standards require the carrying
value of assets tested for impairment to be
compared to their recoverable amount. The
Group estimated recoverable amounts for
vessels by reference to external valuations
performed by external parties
consideration of the utilisation, performance and
results derived from operating the vessel fleet and
consideration
of
any
adverse
economic
conditions.
• In relation to external valuations obtained from
third parties we:
̶ evaluated the competence, experience and
objectivity of the expert used;
̶ evaluated the scope and appropriateness of
the valuations obtained; and
̶ assessed whether the valuations obtained
were consistent with other audit evidence
obtained, including management’s value-in-
use calculations.
• In relation to the accounting for the sale of M/V
Ocean Ute, we have obtained and evaluated the
binding contract relating to the sale of the vessel
and
have
ensured
the
vessel
has
been
appropriately classified in the accounts.
• In relation to value-in-use calculations we
assessed
the
significant
estimates
and
assumptions used in the cash flow models
including discount rates and residual values used,
based on our knowledge of the business and the
industry.
• Regarding the bareboat charter arrangement for
the M/V Ocean Drover, we have:
̶ Held multiple discussions with the directors
regarding the current situation and the assets’
accounting treatment;
̶ Obtained legal correspondence and advice
regarding Wellard’s position up until audit
sign off; and
̶ assessed the appropriateness of the relevant
disclosures included in the financial report.
• Assessing the appropriateness of the relevant
disclosures included in Notes 2.Y, 15 & 18 to the
financial report.
80 |
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WELLARD LIMITED (CONTINUED)
Key Audit Matters (continued)
Ownership and Carrying value of Vessels
Refer to Note 2.Y Impairment, Note 15 Asset Held for Sale and Note 18 Property, Plant and
Equipment
as well as through value-in-use models using
discounted cashflow projections.
This was a key audit matter because of the
significance of the asset class to the Group
and the significant judgement involved in
considering
impairment
indicators
and
estimating the recoverable amounts of these
assets,
including
determining
the
key
assumptions supporting the expected future
cash flows from these assets.
Other Information
The directors are responsible for the other information. The other information comprises the information
included in the Group’s annual report for the year ended 30 June 2024 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, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of:
a.
the financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view in accordance with Australian Accounting Standards and the Corporations Act
2001 and;
b.
the consolidated entity disclosure statement that is true and correct in accordance with the
Corporation Act 2001, and
for such internal control as the directors determine is necessary to enable the preparation of:
i.
the financial report (other than the consolidated entity disclosure statement) that gives a true
and fair view and is free from material misstatement, whether due to fraud or error; and
ii.
the consolidated entity disclosure statement that is true and correct and is free of 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 has no realistic alternative but to do so.
81 |
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF WELLARD LIMITED (CONTINUED)
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 this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing
and Assurance Standards Board website at: http://www.auasb.gov.au/Home.aspx. This description
forms part of our auditor’s report.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report as included in the directors’ report for the year ended
30 June 2024.
In our opinion, the Remuneration Report of Wellard Limited, for the year ended 30 June 2024 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.
NEIL PACE
MOORE AUSTRALIA AUDIT (WA)
PARTNER
CHARTERED ACCOUNTANTS
Signed at Perth this 29th day of August 2024.
ASX ADDITIONAL INFORMATION
PICTURE
ASX
ADDITIONAL
INFORMATION
ASX ADDITIONAL INFORMATION
83 | WELLARD ANNUAL REPORT 2024
Additional information required by the Australian Securities Exchange Limited and not shown elsewhere in this report
is as follows. The information is accurate as at 22 August 2024.
SUBSTANTIAL SHAREHOLDERS
No.
Registered Shareholder
Number of shares
held
% of all shares
1.
Hongkong Fulida International Trading Company Limited
130,094,894
24.49
2.
Bell Potter Nominees Ltd
83,950,729
15.80
3.
BNP Paribas Noms Pty Ltd
50,935,700
9.59
4.
One Managed Invt Funds Ltd
38,967,981
7.34
SHARES ON ISSUE
The total number of shares on issue is 531,250,312 and these shares are held by a total of 790 registered
shareholders.
DISTRIBUTION OF SHAREHOLDING
The distribution of all shareholders is set out below.
Range
Total holders
Shares
% of all
shareholders
1 - 1000
50
6,412
6.33
1001 - 5000
37
118,783
4.68
5001 – 10,000
42
336,575
5.32
10,001 – 100,000
472
17,453,632
59.75
100,001 and over
189
513,334,910
23.92
Total
790
531,250,312
100
UNMARKETABLE PARCEL
The minimum parcel size at 22 August 2024 is per unit is 12,500 shares.
There are 168 shareholders that hold unmarketable parcels.
An “unmarketable parcel” is a parcel of shares that is worth less than A$500.
ASX ADDITIONAL INFORMATION
84 | WELLARD ANNUAL REPORT 2024
TOP 20 SHAREHOLDERS
The top twenty registered shareholders of the Company are set out below.
No.
Shareholder
Number of
shares held
% of all shares
1.
Hongkong Fulida International Trading Company Limited
130,094,894
24.49
2.
Bell Potter Nominees Ltd
83,950,729
15.80
3.
BNP Paribas Noms Pty Ltd
50,935,700
9.59
4.
One Managed Invt Funds Ltd
38,967,981
7.34
5.
Innovation Bloom Limited
36,881,588
6.94
6.
Vine Street Investments Pty Ltd
31,626,009
5.95
7.
One Fund Services Ltd
18,320,453
3.45
8.
Mr David Allan Dixon & Ms Catherine Louise Ramm
7,460,588
1.40
9.
Mr Zixiao Zhao
7,280,000
1.37
10.
Citicorp Nominees Pty Limited
6,255,042
1.18
11.
Mr Steven Boyd Taylor
5,937,097
1.12
12.
Hamsar Holdings Pty Ltd
4,417,100
0.83
13.
BNP Paribas Nominees Pty Ltd
3,577,767
0.67
14.
Brazil Farming Pty Ltd
3,500,000
0.66
15.
Dynamic Supplies Investments Pty Ltd
3,000,000
0.56
15.
Ms Xia Zhao
3,000,000
0.56
16.
Mr Ross Maxwell Hargreaves
2,250,000
0.42
17.
Mr Orlando Berardino Di Iulio & Ms Catharina Maria Koopman
2,185,489
0.41
18.
Mr Lei Wang
2,085,992
0.39
19.
Jastal Family Investments Pty Ltd
2,000,000
0.38
20.
Mr Feng Shi
1,835,723
0.35
Total
445,562,152
83.87
Balance of Register
85,688,160
16.13
Grand Total
531,250,312
100
OPTIONS
The Company has no options on issue.
VOTING RIGHTS
All ordinary shares (whether fully paid or not) carry one vote per share without restriction. There are no voting rights
attaching to any convertible note. There is no other class of security in the Group.
CORPORATE DIRECTORY
85 | WELLARD ANNUAL REPORT 2024
CORPORATE DIRECTORY
DIRECTORS
John Klepec
Executive Chairman
John Stevenson
Non-Executive Director
Kanda Lu
Executive Director
Philip Clausius
Non-Executive Director
COMPANY SECRETARY
Michael Silbert
AUDITORS
Moore Australia Audit (WA)
Level 15, Exchange Tower,
2 The Esplanade
Perth WA 6000
Phone:
+61 8 9225 5355
Facsimile:
+61 8 9225 6181
Website:
www.moore-australia.com.au
REGISTERED OFFICE AND PRINCIPAL PLACE OF BUSINESS
Manning Buildings
Suite 20, Level 1
135 High Street
Fremantle WA 6160
Phone:
+61 8 9432 2800
Facsimile:
+61 8 9432 2880
Website:
www.wellard.com.au
SHARE REGISTRY
Link Market Services
Level 12, QVI Building
250 St Georges Terrace
Perth WA 6000
Phone: +61 1300 554 474 (toll free within Australia)
General Shareholder Enquiries: +61 1300 554 474
Website:
www.linkmarketservices.com.au
SECURITIES EXCHANGE LISTING
Shares in Wellard Limited are listed on the Australian Securities Exchange (ASX: WLD).