Costa Group Holdings Limited
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Costa Group Holdings Limited Annual Report 2016 Costa Group Holdings Limited | Annual Report | Annual Holdings Limited Group Costa 2016 Investing in Growth Contents 02 Chairman’s Report 05 Managing Director’s Review 06 Company Profile 10 Harvest Calendar 12 Sustainability Report 19 Directors’ Report 44 Auditor’s Independence Declaration 45 Consolidated Statement of Profit and Loss and Other Comprehensive Income 46 Consolidated Statement of Financial Position 47 Consolidated Statement of Changes in Equity 48 Consolidated Statement of Cash Flows 49 Notes to the Consolidated Financial Report 91 Directors’ Declaration 92 Independent Auditor’s Report 94 Shareholder Information 96 Corporate Directory Corporate Governance Statement Costa Group’s 2016 Corporate Governance Statement is located at http://investors.costagroup.com.au/investor-centre/?page=corporate-governance Costa Group Holdings Limited ABN 68 151 363 129 Costa Group Holdings Limited | Annual Report 2016 | 01 Chairman’s Report The Company has continued to deliver on its growth projects, with the completion of a further 76 hectares in new berry plantings across our Australian farms, the commencement of production at our new 10-hectare tomato glasshouse in northern New South Wales, the further expansion of our African Blue operations in Morocco and the development of our berry farms in China. Overview and that we engage in responsible Dividends environmental stewardship. To this end The 2016 financial year has seen Costa The Board declared a fully franked final the Company continues to be committed Group exceed our prospectus forecast with dividend of 6.0 cents per share, resulting to investing in farming operations that a pro forma (NPAT) of $49.3 million net in a fully franked dividend total of 9.0 cents are innovative and promote sustainable profit after tax. Continued growth in our per share in respect of FY2016. horticultural practices. During the year we berry, citrus and mushroom categories targeted investment in technology to enable and increasing revenue in the second the recycling and reuse of water. As a result, half of the year from our international Our People our main mushroom farm located at Mernda operations offset the under performance I would like to acknowledge the valuable in Victoria is now capturing and reusing waste of our tomato category. contribution of my Board colleagues, the water resulting in up to a 40% reduction in management team and all of our people water use. Our new 10-hectare glasshouse Our diversified portfolio of high yield quality throughout the organisation for their facility at Guyra in northern New South Wales produce sets us apart from other agricultural commitment to ensuring the Company has also been designed for full water self- businesses and provides us with the capacity delivered not only its prospectus forecasts, sufficiency. to absorb and evenly spread risk, without but also continued to establish a strong impacting our overall performance and results. foundation for growth and sustainable At the community level we continue Our FY2016 performance is also evidence of value creation. to support and work with a variety of our successfully transition from a private to organisations. A particular focus over the a public company, while delivering positive past year has been on developing educational returns to shareholders. Outlook opportunities for young people in regional FY2017 will see continued execution of and rural areas to study and pursue a career in The Company has continued to deliver on our announced domestic and international agriculture. Our citrus category is collaborating its growth projects, with the completion growth initiatives, while our strong balance with local training organisations, TAFE and of a further 76 hectares in new berry sheet supports continued organic growth high schools in the South Australian Riverland plantings across our Australian farms, the and a disciplined M&A program. to host field days, which provide on-site and commencement of production at our new practical demonstrations of how our business 10-hectare tomato glasshouse in northern With projected NPAT (pre-SGARA) growth operates and the job opportunities that are New South Wales, the further expansion of at approximately 10% for FY2017, seasonality available. The Company also commenced our African Blue operations in Morocco and and increased contribution from our funding one undergraduate and one the development of our berry farms in China. international operations will see the postgraduate scholarship per year over the Company’s performance more heavily next four years for local students from the In recognition of the strong potential for weighted towards the second half. north-west of Tasmania to study Agricultural continued berry category growth, during Science at the University of Tasmania. the year the Board also approved a further FY2017 dividends will be balanced against berry growth program involving an estimated the Company’s need to fund growth $80 million worth of capital projects to be Results objectives, but indicatively will be in the undertaken in Australia over four years from range of 50-70% of NPAT (pre-SGARA). FY2017. This investment in expanding our Pro forma full year revenue of $809 million production capability leverages our superior saw an 11.8% increase on our full year plant genetics, agronomic skills, established FY2015 result. cold chain infrastructure and scale of operations. We are the only grower which Pro forma EBITDA before SGARA was up can supply fresh blueberries and raspberries 27.6% on full year FY2015 to $91.1 million, while pro forma NPAT was $49.3 million to the Australian market year round. Neil Chatfield and statutory NPAT $25.3 million. For the Chairman With our farming footprint continuing to grow, first time ever, the Company’s annual we recognise the importance of ensuring our transacted sales exceeded $1 billion. existing and new operations are sustainable 02 | Costa Group Holdings Limited | Annual Report 2016 Costa Group Holdings Limited | Annual Report 2016 | 03 The first blueberry and raspberry farm has been established in Yunnan province, with the initial raspberry harvest completed in February and the first blueberry harvest expected from December this year. 04 | Costa Group Holdings Limited | Annual Report 2016 Managing Director’s Review Once again our people have ably met all challenges through their dedicated performance and commitment to the Company’s ongoing success. Delivering Growth From With respect to our international segment, we The Company also continued to pursue a Strong Business Model now have 208 hectares of blueberries planted strategic opportunities through acquisitions across five farms in Morocco under our African that deliver immediate value to our earnings. This year has seen Costa Group complete Blue business. To this end, Costa acquired the Pike Creek our first full financial year as a publicly citrus orchard located in the South Australian listed company, and it has been a period The Company also signed a joint venture Riverland, adding up to 120 hectares of quality in which the Company has demonstrated agreement with Driscoll’s, which formalised citrus plantings to our existing citrus farms. on more than one occasion the resilience an agreement for berry farming operations of our business model. in China to service the expanding Asian Our Australia-wide production footprint and appetite for high-quality berries. Costa will the size and scale of our operations mean Strong and consistent performances from have 70% ownership of the joint venture, that we rely on a dedicated and highly skilled our core categories of mushrooms, citrus and with Driscoll’s having the remaining 30%. workforce. Once again our people have ably berries highlighted the benefits of having a met all challenges through their dedicated diversified portfolio structure enabling our The first blueberry and raspberry farm has performance and commitment to the capacity to absorb any individual category been established in Yunnan province with the Company’s ongoing success. We will continue volatility in both our on-farm production and initial raspberry harvest completed in February to put our people first through our core markets. The way in which we were able to and the first blueberry harvest expected from Company values of passion, respect, sincerity, deal with the impact of several hailstorms December this year. A second farming location determination and accountability. on our New South Wales berry farms and has been selected, with land preparation and the downturn in the tomato market has planting currently under way. We look forward to 2017 and beyond as been testament to this. we continue to build the business both This investment is a long-term proposition domestically and internationally and Over the year we also made significant requiring effort and patience to establish deliver on our growth plans. progress in delivering on our growth program. our footprint in China and the wider Asian The second year of our first Australian berry marketplace. However, it is clearly also one growth program saw a further 76 hectares in with very large potential. new plantings. Our new 10-hectare tomato glasshouse, which produces cocktail and The new, second Australian berry growth snacking varieties, was commissioned in plan approved by the Board in FY2016 will Harry Debney October 2015 and has exceeded expectations be undertaken over a four-year period. This Managing Director and CEO on production