ANNUAL REPORT 2017 CONSOLIDATED PASTORAL COMPANY PTY LTD CONTENTS PAGE ABOUT 3 OUR BUSINESS 5 OUR LOCATIONS 7 OUR CORE VALUES 9 OUR APPROACH EXECUTIVE SUMMARY 13 BUSINESS SNAPSHOT 14 MACRO SNAPSHOT 17 CHAIRMAN’S REPORT 19 CEO’S REPORT 21 BOARD OF DIRECTORS IN PROFILE 25 OUR PEOPLE 26 NAREE BRYCE 26 TIM HIGGS 27 SALLY FLETCHER 27 WILLIAM BULO 28 DAVE YOUNG 29 OUR FOOTPRINT 29 INDONESIA FEEDLOTS, SUMATRA 31 MANBULLOO, NT 33 ALLAWAH, QLD 35 NEWCASTLE WATERS GROUP, NT 37 BUNDA, NT CORPORATE AND SOCIAL RESPONSIBILITY 41 COMMUNITY 41 REAL JOBS PROGRAM 43 RECOGNITION 45 LEARNING AND DEVELOPMENT 45 TALENT ENGAGEMENT 47 INDONESIAN EXCHANGE PROGRAM 49 WORKPLACE HEALTH AND SAFETY 51 OUR ENVIRONMENT 53 NATIVE TITLE 53 ANTI-CORRUPTION 55 ANIMAL WELFARE “Our Team is Proud to Connect the FINANCIAL STATEMENTS 59 CORPORATE GOVERNANCE STATEMENT Best Australian Beef to the World” 63 DIRECTORS’ REPORT 65 LEAD AUDITORS DECLARATION 67 FINANCIAL STATEMENTS HEALTH & SAFETY | LEADERSHIP | TRUST | COMMUNITY | VALUE CREATION 71 NOTES TO THE FINANCIAL STATEMENTS 97 DIRECTORS’ DECLARATION CPC is an Australian managed company that is majority owned by an investment fund managed by Terra Firma, which is 99 INDEPENDENT AUDIT REPORT a leading European private equity firm. 101 CONTACT INFORMATION 1 Section 1 - About Section 1 - About 2
ABOUT
Bunda Station by Shannon Chatfield 3 Section 1 - About Section 1 - About 4
OUR BUSINESS
Australia’s largest privately-owned Globally Majority Respected beef and cattle producer significant owner of and historic . agribusiness international brand 16 5.5 million 345 with a joint venture properties hectares of land team members strong PT Juang presence Jaya Abdi in all Alam (JJAA) major beef markets Yarding up at Newry Station 5 Section 1 - About Section 1 - About 6
OUR LOCATIONS Medan QLD LOCATIONS Indonesian Feedlot ALLAWAH COMELY Operations 3,069 ha 1,200 head* 23,159 ha 10,000 head* Lampung
ISIS DOWNS MIMONG Manbulloo 246,057 ha 26,800 head* 79,970 ha 9,600 head* Carlton Hill Auvergne Argyle Downs Newry Wrotham Park Dungowan NOCKATUNGA WROTHAM PARK Kirkimbie Bunda Ucharonidge 852,306 ha 21,400 head* 596,880 ha 47,600 head* Newcastle Waters NT Mimong QLD NT / WA LOCATIONS ARGYLE DOWNS AUVERGNE 72,022 ha 7,900 head* 414,200 ha 30,800 head* Isis Downs Allawah
Comely BUNDA CARLTON HILL 178,800 ha 16,100 head* 475,709 ha 49,100 head* WA Nockatunga Brisbane DUNGOWAN KIRKIMBIE SA 445,400 ha 17,600 head* 230,400 ha 15,700 head*
MANBULLOO NEWCASTLE WATERS NSW 379,130 ha 18,900 head* 1,033,101 ha 65,700 head*
NEWRY UCHARONIDGE 246,700 ha 20,500 head* 245,500 ha 15,700 head* VIC
INDONESIAN LOCATIONS LAMPUNG MEDAN ~180 ha 19,800 head* ~20 ha 7,200 head* TAS head* = Carrying Capacity 7 Section 1 - About Section 1 - About 8
OUR CORE VALUES
Health & Leadership Trust Community Value Safety At CPC, we At CPC, we have At CPC, we value Creation show leadership the utmost family, diversity At CPC, the welfare At CPC, we are at every level confidence in and recognition of our people, always on the because we are the goodwill customers, lookout for all proud to take and reliability of animals and land innovative ways ownership and our colleagues, is paramount to enhance the responsibility for customers and productivity of our what we do industry partners. land, the quality We are honest and of our cattle, the transparent in our talents of our exchange with people and the others experience of our customers Roadtrain leaving Bunda Station 9 Section 1 - About Section 1 - About 10
OUR APPROACH
CPC is the leading producer of high quality cattle
Vertically #1 Australian Creating Secure Land Operational Global Cattle Implementing Integrated Supplier of Value Tenure with and Portfolio Producer and Technology Operation Live Cattle Through Geographic Optimisation Marketer to Improve Continual and Climatic Productivity. Genetic Diversity Improvement
Manbulloo Station by Jeremy Scott 11 Section 2 - Executive Summary Section 2 - Executive Summary 12
EXECUTIVE SUMMARY
Lake woods Holdings Board of Directors 13 Section 2 - Executive Summary Section 2 - Executive Summary 14
BUSINESS SNAPSHOT MACRO SNAPSHOT LONG TERM CAPITAL RETURNS FROM AUSTRALIA’S GRAZING LAND VALUES EBITDA of ARE SUPERIOR TO EQUITY MARKET RETURNS (1996-2016)
Returns from Australian Returns from Selected Equity Indices $49.7m, up 31.5 per cent. Grazing Land 9.2% (FY16 $37.8m).
Profit after tax of 5.7% $37.1m, up 82.9 per cent.
(FY16 $20.3m). 1.2%
NT & QLD grazing land values S&P/ASX 200 REIT S&P500 Total assets at year-end Source: MLA, Department of Agriculture and Water Resources $880.5m, up 12 per cent. POPULATION GROWTH INCREASES PRESSURE ON ARABLE LAND
(FY16 $785.9m). 12 000 000 0.60 • The world’s population is 10 000 000 0.50 projected to reach 9.6 billion by 2050 World class • In contrast, arable land per person 8 000 000 0.40 is expected to fall. This is reflected in increasing land prices in most genetics Strong regions 6 000 000 0.30 • Australia has ample arable program Focused Team Returns land and is well placed to take advantage of the limited supply 4 000 000 0.20 World Population (‘000)
Arable land (ha) per person and rising demand • Australia has land that can be 2 000 000 0.10 developed • Basic supply vs demand imbalance means likely higher prices and 0 - returns for investors over the next
1950 1954 1958 1962 1966 1970 1974 1978 1982 1986 1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030 2034 2038 2042 2046 2050 decade
World population Arable Land (ha) per person
Source: World Bank, IMF 15 Section 2 - Executive Summary Section 2 - Executive Summary 16
MACRO SNAPSHOT AUSTRALIA HAS A COMPARATIVE ADVANTAGE OF LAND AND WATER TO OTHER TOTAL AUSTRALIAN CATTLE HERD IS DECLINING AS BEEF CONSUMPTION RISES
MAJOR CATTLE AND BEEF PRODUCERS 1,120,000 70,000 30,000 2.50
1,100,000 60,000 25,000 2.00 1,080,000 50,000 20,000 1,060,000 1.50 40,000
15,000 tonne 1,040,000 1000 head head 1000 1.00 1000 30,000 10,000 1,020,000 Arable land (ha) per person 20,000
Freshwater per capita (cubic meters) 0.50 1,000,000 5,000
10,000 980,000 - - Australia United States Brazil China India 960,000 0 Arable land (hectares per person) Renewable internal freshwater resources per capita (cubic meters)
Total Australian Cattle Herd (1000 head) Beef Consumption (1000 tonne) Australia is the only major cattle producer with ample arable land and renewable freshwater Source: World Bank (2014) Source: USDA Foreign Agricultural Service and UN Food & Agriculture Organisation
GLOBAL BEEF CONSUMPTION RISES WITH INCREASE IN GDP TOTAL CONSUMPTION MAINTAINED DESPITE PRICE INCREASE
35 Australian Consumption 1 200 25.00 30
1 000 25 20.00
800 Forecast 20 15.00
600
15 10.00 dollar kg per '000 tonnes tonnes CWT '000 400
10 5.00 Beef Beef Consumption per Capita (KG) 200
5 0 0.00 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
0 Consumption Retail Price $- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 GDP per Capita (USD) 2016 MLA: “Beef value share has remained steady as retail prices have increased to record highs – while consumers are eating less, the same amount of money is allocated to beef each shop” Source: OECD Statistics and IMF Data Source: ABARES, MLA 17 Section 2 - Executive Summary Section 2 - Executive Summary 18
CHAIRMAN’S REPORT It is a pleasure to share my thoughts regimes. At CPC, we will continue to about CPC’s achievements in FY17. build on the historical values we hold In the coming year, we will navigate to ensure we retain a strong inner the United States of America’s But before doing so, indulge me as directed personality. A personality decision to withdraw from the Trans I approach nearly 10 years on the that welcomes challenges and Pacific Partnership and continue to Board. Reflecting on the challenges innovation. A company that passes push for live cattle exporting into in these times to maintain the on the values to its successors and China. cultures of these type of enterprises enjoys tough challenges and hard that are charged with producing work. CPC is strong because of its team large volumes of safe food that is and I would like to highlight the nutritionally and flavour intense, it A company that plays it long and has efforts of our head office team, who is difficult to think of an activity that more interest in sustainability than have played a critical role in the past is more fundamentally important to quick profits. Principles that not year designing programs that have humanity. only maximise but are critical to the boosted the company’s bottom line prospects of survival in the long run. and allowed the team to make more Historically, there was little doubt informed decisions. of the industry’s ability to protect its In the past financial year, one of social licence to operate. That belief the most rewarding aspects of my It’s also heartening that so many CPC was founded of the highest levels of role as Chairman has been the team members play an active role trust and respect that the community implementation of world leading in peak industry bodies and provide held for the industry – a result of practices at 16 stations that help leadership to the sector on a range of the heroic efforts of its leaders and produce >30 million tonnes of political and social issues, including employees. premium, disease-free cattle per our female workforce who are forging annum. new career paths in an industry once We can never take for granted that we dominated by males. will always have that social licence to CPC and its team play a pivotal role operate. Witness the recent decline in in the global beef pipeline, and As the owner of 5.5 million hectares reputation of the banking sector and with consumption in developing of land, including some of the most the clerically driven religious orders countries predicted to rise sharply in scenic and fragile landscapes in the and other similar institutions. the coming decade, CPC is perfectly world, we are extremely conscious positioned to continue to build of our custodial responsibility to Armed with new technologies, its scale and prominence as one preserve it and will continue to instant global communications and of Australia’s leading cattle agri- implement cutting edge initiatives deep funding from ideologically businesses. that are both environmentally driven donors, there is a fertile sustainable and animal welfare audience constantly searching for Size matters, and as Australia’s focussed. ways to challenge the sustainability largest privately-owned beef cattle of the social licence of industries and producer it’s important we continue On behalf on the Board, I would like organisations. to be a leading voice in the sector to thank all CPC team members for regarding issues at home and abroad. their hard work and commitment Our response can only be to maintain over the past year and for their within our operations, the highest CPC will continue to lead to contribution to the year ahead. ethical standards. Standards that discussion and face challenges are fully respectful of our customers, head on. In the past year, we’ve our employees, the cattle, the closely monitored the Indonesian environment and the indigenous Government’s ongoing concern groups whose connection to the about rising beef prices and the country has been affected. possibility of a cap and witnessed significant shifts in the South East These ethical standards need to be Asian market with the introduction of higher than simply compliance to Indian buffalo-meat. Mark Bahen economic, political and regulatory Chairman
Chairman, Mark Bahen 19 Section 2 - Executive Summary Section 2 - Executive Summary 20
CEO’S REPORT The past financial year saw CPC’s properties and a self-sustaining herd, and survivability to meet our current performance continue to improve CPC is well positioned to benefit from and future market demands. even in the face of a range of this strong global demand for beef. challenges, showing the quality and As custodians of 5.5 million hectares commitment of the CPC team and As the majority owner of JJAA which of land, waterways and rivers, CPC our land and cattle assets. owns and operates two feedlots in will continue to champion long term, Indonesia, CPC also has valuable, sustainable land use. The company’s solid earnings direct access to the South-East performance for FY17 reflected Asia, Australia’s largest cattle export FY17 we continued to execute sustained strong cattle values market. on our strategy to invest in and compared to historical values and a develop our significant reserves of range of productivity improvements The tactical work we have completed undeveloped land. This development across the business, culminating in over the past three years in work combined with appreciating a 82.9 per cent rise in net profit after partnership with Terra Firma has land values contributed to the tax to $37.1m, up from $20.3m in strengthened and streamlined the strengthening of our balance FY16. business and improved productivity, sheet. There remains significant specifically the investment in our opportunities for CPC to continue to Total assets were up 12 per cent properties, our cattle and our team, develop our reserves of land for beef year on year to $880.5m, reflecting including our in-house training and cropping. the quality of our properties, the facility built this year at Manbulloo decision to divest five stations and Station. The strength of CPC is its team. lease one back (Carlton Hill Station), Irrespective of location or position improvements in water and fencing We will continue to invest in the workforce is responsible for the infrastructure, and the company’s technology and initiatives that success of the company, and that’s conservative methodology to asset fortify CPC’s position as a globally why we will continue to make people valuation throughout the year. significant agribusiness with access and training a key priority, so all to all major beef markets. team members continue to develop, As part of our strategy, we will rise through the business and fulfill continue to see positive outcomes We continue to focus on reducing the their potential. through the transformation of CPC age profile of our herd, increasing from a traditional cattle producer to turnoff weights and numbers, I look forward to embracing the a more innovated and commercially investing in improved cattle challenges of the coming financial focused, integrated premium management whilst operating our year. It an exciting time to lead CPC, quality beef and cattle supplier stations with sustainable stocking particularly when you believe as which understands its markets and levels. passionately as I do in our future, our customers’ needs both domestically people and our potential. and abroad. These tactics will reduce mortality rates, increase brandings, increase The welfare of our people, cattle turnoff, lower mustering costs customers, animals and land is and create better market-making paramount and remains a key focus opportunities while continually of the company and all employees improving animal welfare standards. from station to head office. We will also continue to invest in our Despite herd numbers in Australia world class genetics program that Troy Setter remaining at historic lows, the will deliver long term value creation CEO and Executive Director demand for beef in traditional and a competitive advantage over markets in the USA, Japan and our peers and increase profitability Korea remains strong while new and right through our value chain. By developing markets including China targeting the best external and and Indonesia continue to grow. internal genetics available, CPC will produce cattle with increased With geographically diverse fertility, growth, yield, meat quality CPC CEO, Troy Setter 21 Section 2 - Executive Summary Section 2 - Executive Summary 22
BOARD OF DIRECTORS
MARK BAHEN TROY SETTER JIM HUNTER MARGAUX BEAUCHAMP ANDREW MILLER RUHUL AMIN Chairman CEO and Executive Director CFO and Executive Director Non-Executive Director Non-Executive Director Non-Executive Director
Mark joined the Board in November Troy is one of the top cattlemen Jim joined CPC in July 2015, bringing Margaux is an experienced corporate Andrew joined Terra Firma in Ruhul joined the Board in August 2008 and was subsequently and agribusiness leaders in the over 20 years of financial leadership finance executive having spent September 2016 to focus on the 2015 after being with Terra Firma appointed as Chairman in August country and well-renowned for his and governance experience across 20 years plus advising the private operational improvement of the since 2011. 2012. achievements across the industry. a range of industries. KPMG trained, sector and government on the firm’s portfolio businesses. He has Jim built a career in industries sale, purchase and financing of served as Chairman of Terra Firma Ruhul has worked on a number of Mark is a former partner of Clayton Prior to being appointed Chief including energy, animal genetics, businesses; strategy; feasibility; Porfolio Company AWAS. Terra Firma’s portfolio businesses Utz, one of Australia’s leading Executive Officer at CPC in July 2014, information technology and media, due diligence; Independent Expert including Odeon & UCI Cinemas, Four commercial law firms, where he Troy held key leadership positions at and several successful trade sale/IPO Reports and valuations. Andrew has extensive experience of Seasons Health Care and Wyevale. practiced corporate and commercial a variety of agribusinesses including transactions. successful digital transformation in Most recently, Ruhul was seconded law and headed up the agribusiness Australian Agricultural Company, Specific agribusiness experience consumer facing industries, most into Odeon & UCI Cinemas where practice. He has provided advice Torrens Investments, North Jim has applied his rich financial includes advising on a number of recently working with the Founders’ he led a strategic review of the to some of Australia’s leading Australian Cattle Company, Killara experience to CPC’s operations major transactions. Forum supporting multinational business. Prior to this Ruhul led a agribusiness companies. He is a Feedlot and Twynam Group. and brought renewed focus and business on digital transformation. successful bolt-on acquisition to Four Director of St John of God Health improved professionalism to CPC’s Margaux is an Executive Director Seasons. Before joining Terra Firma, Care, a leading Australian private Throughout his career Troy has internal and external financial with BDO Corporate Finance. Before As Chief Executive of the Guardian Ruhul worked for Credit Suisse and hospital and health care operator. been responsible for all aspects management, infrastructure and joining BDO she worked with a Media Group from 2010 to 2015, UBS. Ruhul graduated with a BSC in of the supply chain; from cereal processes. specialist agribusiness advisory firm, Andrew reshaped the Guardian’s Mathematics from Imperial College Mark has retained a personal and fibre cropping, grain and grass Schroders Investment Bank and a portfolio of businesses to support London. involvement in agriculture all his fed cattle operations, domestic Jim is a Chartered Accountant and private equity fund. its transformation into one of the working life and currently farms in and international logistics, Chartered Secretary. world’s leading digital organisations. the Margaret River region. trading and shipping through to Margaux has a life long association From 2002 to 2014 he carried out genetic improvement, beef and with the agricultural industry from a similar transformation as Chief cattle marketing, broad strategy having been raised on a cattle station Financial Officer and Non-Executive development, investment and in Far Western Queensland. She Director of Trader Media Group. finance. maintains a private investment in the Andrew has previously held senior beef industry. finance roles at Pepsico Europe, Troy is a director of ALEC, Tocal Procter and Gamble, Bass and a start- Advisory Council and a Former up company. Chairman of the Australian Beef Industry Foundation and the Andrew is a member of the Institute Northern Beef Roads Project. of Chartered Accountants of Scotland qualifying in 1991, training with Price Waterhouse after completing his law degree at Edinburgh University. He is on the Advisory Board for Sarah Brown’s Theirworld Charity, and a Governor at the Benjamin Franklin House Museum. 23 Section 3 - In Profile Section 3 - In Profile 24
IN PROFILE
Smoko Time 25 Section 3 - In Profile Section 3 - In Profile 26
4 44
OURSENIOR MANAGER PEOPLES CPC TEAM BREAKDOWN
2222 3% 2%
FeFemale Male Female6% Male Supporting Station and Feedlot Teams 9% 33% Feedlot Yard Team
Station Hands NAREE BRYCE TIM HIGGS 4 CPC1616 TEAM Administration and Finance Payroll Manager and Accounts Administrator Bore Runner, Carlton Hill GM and Senior Managers Naree Bryce remembers when the entire CPC support Ivanhoe Station bore runner Tim Higgs loves the isolation 21%108108 team was just four people based on a rural property of the Kimberley. Feedlot FarmingSENIOR Team MANAGERS outside of Byron Bay. SENIOR MANAGERS Responsible for ‘life’ on the station, the 51-year-old has EMPLOYEES 149149 EMPLOYEES 149 Head Stockpersons Back then, CPC’s headquarters neighboured her parent’s spent the past four years with CPC ensuring cattle have property and made for a very convenient 60 second water, maintaining water troughs and turkey nests, commute to work. repairing polly lines and helping the station’s ringers. 26% 22
7272 The granddaughter of a beef farmer, Naree vividly recalls A labour-intensive job, it takes Tim all day to drive from being surrounded by cattle from a young age but never one side of the property to the other. Female Male Female Male anticipated a career in agribusiness or beef until fate JJJJAAAA FemaleFemale JJJJAAAA MaleMale intervened. A mechanical fitter and boilermaker by trade, Tim purchased a $300 Valiant after his apprenticeship and CPCCPC FeFemale CPCCPC MaleMale Unsure of her next career move and fresh from a stint in travelled around Australia, falling in love with the outback MALE AND FEMALE EMPLOYMENT BREAKDOWN London, Naree applied for a finance role she discovered in the process. reading her local newspaper, The Northern Star. Fast forward twelve years and Naree is CPC’s second Despite stints at an oil rig in the Timor Sea off the coast of longest serving head office team member. Western Australia and a career working at gold and nickel 16 11 4 refineries, outback Australia was under his fingernails, Since 2005, Naree’s office roles have been many and so in 2013, Tim and his partner Gillian, jumped at the varied, including periods in accounts payable, payroll, opportunity to join CPC and live and work at Ivanhoe 108 108 office management and bookkeeping. Station.
A loyal team member and colleague, Naree has witnessed Despite long working days and a list of seemingly never- LWH DIRECTORS SENIOR MANAGERS EMPLOYEES 149 first-hand the transformation of CPC from a company with ending tasks, Tim is contemplating more study and a small head office based in Northern New South Wales getting his fixed-wing pilot’s licence. to Australia’s largest privately-owned beef and cattle 55 22 producer. A passionate fisherman, Tim loves to wet a line and catch 72 Barramundi, when he’s not working despite the presence It’s been the constant evolution of CPC that has kept it of a 3.5 metre crocodile named Ivan, who regularly suns Female Male Female Male Female Male JJAA Female JJAA Male interesting and challenging for Naree, who anticipates himself on a nearby riverbank. JJAA Female JJAA Male spending at least another decade with the company. CPC Female CPC Male Tim considers life at Ivanhoe Station a once-in-a-lifetime Away from the office, Naree is focused on achieving her opportunity, and can’t think of any other place in the fitness goals and looks forward to spending her long world he’d rather be. service leave on a holiday to Canada and Alaska.
1 16 1
108 LWH DIRECTORS EMPLOYEES 149
5
72
Female Male JJAA Female JJAA Male
CPC Female CPC Male
1
LWH DIRECTORS
5
Female Male 27 Section 3 - In Profile Section 3 - In Profile 28
SALLY FLETCHER WILLIAM BULO DAVE YOUNG BROOKE BARKLA Head Stockperson, Newcastle Waters General Manager, JJAA Station Manager, Newry Quality Control Advisor, JJAA
Sally Fletcher can’t remember a time she wasn’t William Bulo started his career in JJAA as a Financial Dave Young is something of a high-flyer. Brooke Barkla has spent her entire professional career surrounded by horses and cattle. Analyst and experienced many positions in operational with CPC, but left the comfort of Brisbane for the divisions in the past decade, until recently promoted to The 27-year-old has been in charge of Newry Station, nine challenge of Indonesia because there ‘wasn’t enough Born and raised on an isolated cattle station near General Manager. hours’ drive south-west of Darwin, for the past year, but livestock working behind a desk’. Charleville, Sally spent 13 years at School of the Air as farming and cattle are nothing new to the third-generation a student before continuing the family’s tradition of In charge of CPC’s Indonesian operation, William splits his farmer. The 26-year-old is blazing a trail in an industry farming. time between the Lampung and Medan feedlots to ensure traditionally dominated by men, and has been JJAA’s both facilities operate efficiently and deliver high quality Born and raised on a cattle station in outback Queensland, Quality Control Advisor for the past year, working One of four children, the entire Fletcher family works on beef to consumers. there was a brief period where his parents pushed a career between the two feedlots at Lampung and Medan. the land, including her younger brother Dillion who is outside of beef and agribusiness, but cattle was in Dave’s based at Newry Station. A committed and trustworthy leader and colleague, blood. A jack-of-all-trades, Brooke plays a critical role in day-to- William has played a major role in the evolution of JJAA day operations at Indonesia, including sales, profitability, With CPC since 2012, Sally is the Head Stockperson at and its transformation into a sophisticated, disciplined In charge of 11 people, 17,000 cattle and 2,500 square the management of 165 team members and the Newcastle Waters Station in the Barkly region of the business. kilometres of scenic, gorge country, Dave somehow finds movement of more than 27,000 cattle. Northern Territory and can’t believe she’s getting paid to time for his second passion, aviation. work with horses and cattle on a daily basis. Born in Java, William has come a long way since growing Growing up on a cattle station, Brooke left the family up on his parent’s onion farm. A fixed-wing pilot for the past four years, Dave is also property and joined CPC as a teenage Jillaroo at One of a handful of female Head Stockpersons in studying for his helicopter licence. Newcastle Waters before heading to university to attain a Australia, Sally has earnt the respect of her colleagues In addition to managing more than 165 team members, degree in International Business and Management. because of her industry knowledge, hard work and William oversees all aspects of the JJAA operation Away from Newry Station and study, Dave and his farm- commitment to the animals in her care. including HR, IT and farming. family spend their time together fishing (while avoiding Following graduation, Brooke returned to CPC, working at the odd crocodile) or at local rodeos and shows. the company’s Brisbane headquarters, before jumping at A passionate sports fan, particularly tennis and cricket, When William is not enjoying the ocean at any number of an opportunity to challenge herself and further her career Sally likes Rodger Federer and Adam Gilchrist, but unlike Indonesia’s world class dive sites, he’s spending time with With CPC since 2008, Dave recently married his long- in Indonesia. the storied Australian gloveman, is more of a batting his first love, his wife and their two children, or playing an term partner, Ellie, and have established a wonderful life allrounder and is already practising for next year’s CPC active role in his local church community. together in the Northern Territory. She initially struggled with the language and the culture, Easter cricket match. but quickly discovered her place within the operation and A keen scuba diver, William swaps cattle for fish at every Blessed with great rainfall and a ‘cracker’ of a wet season, the vital role she is playing within the company, due in Away from the responsibilities of being a Head opportunity. Dave is already planning for next year by implementing part to her supportive colleagues who have now become Stockperson, Sally spends time with her animals, new technology and devising strategies to boost the lifelong friends. including her lead dog, Ruby, a black and tan kelpie and profitability of Newry Station into the future. her horse, Explorer, with whom she has won multiple It’s family and childhood friends who Brooke misses most, campdrafting titles throughout Queensland including but she’s extremely happy being based in Indonesia, a the Novice section at the Burke and Wills Campdraft and country she’ll continue to call home for the foreseeable Challenge event. future.
Eventually Sally would love to own and manage her own 0000property but, in the meantime, is committed to CPC 0000000and and being the best stockperson she can be. 29 Section 3 - In Profile Section 3 - In Profile 30
OUR FOOTPRINT INDONESIA FEEDLOTS, SUMATRA
JJAA’s Lampung and Medan feedlots • Program of giving food to the and its loyal team play a critical elderly and the surrounding role in the profitability and long- community term future of CPC by providing • Providing free Paramectin RV international diversification and Anti Parasitic Drugs to local cattle direct access to the large, high value breeders Indonesian market. • Construction of various At full capacity, the two world class infrastructures in Kotadalam and facilities accommodate 27,000 cattle Sukabanjar villages at one time, under the watchful eye • Development of Livestock of 165 permanent and contract team Breeders’ Breeding Centre members and approximately 300 casual Sumatran team members. • Development of local farmers through various training and With a population of 257 million, intensive mentoring Indonesia is the fastest growing economy in the region and a CPC has invested in and supplied gateway to South East Asia, but it’s cattle for more than 15 years to the surrounding villages and their a joint venture, PT Juang Jaya residents that matter most to CPC. Abdi Alam (JJAA), which owns and operates two feedlots in Indonesia. For more than two decades, CPC In December 2015, CPC increased has played a major role supporting its investment in JJAA from 50 per the community by providing clean cent to 80 per cent, reflecting both water facilities, building roads and commitment to CPC’s strategy of bridges, offering scholarships to local getting closer to its end customers, students and providing financial and CPC’s confidence in the future of assistance to surrounding villages. the Indonesian market as part of its portfolio. CPC is also committed to education in the region. At the Juang Jaya P4SP training centre, local beef farmers are taught a range of best practice initiatives and techniques, including cattle behaviour, ranch systems and waste management so they can maximise their income.
A snapshot of CPC’s investment in the local Indonesian community includes:
• Construction of Abu Bakar Mosque • Children’s learning program at Abu Bakar Mosque • Scholarship program for local children
JJAA Feedlot, Lampung 31 Section 3 - In Profile Section 3 - In Profile 32
MANBULLOO, NT
Manbulloo is a breeding property Cameron will travel to South Africa and a holding depot for slaughter and South America to learn as part cattle and younger stock destined to of the scholarship to investigate be exported from Darwin. international grazing strategies and implement his findings at Manbulloo. A mix of black soil, red sandy soil and forest country, Manbulloo boasts A training centre was constructed 60km frontage to the Katherine River at Manbulloo Station to provide and 150km frontage to the King a class room style facility and River. With a 974mm annual average accommodation for training rainfall, the property is capable of events conducted by CPC. The carrying almost 20,000 head of cattle. initial induction training at the commencement of each season is Manbulloo is also a research held at Manbulloo, along with the site, courtesy of Station Manager mid-year sessions which include the Cameron Kruckow, who was Junior Managers Conference and recently awarded the 2017 Nuffield Station Review meetings. Scholarship, supported by the Australian Agricultural Company and the ANZ Bank.
The objective of the scholarships is to increase practical farming knowledge and management skills and techniques, and give Australian citizens the opportunity to study farming practices in New Zealand, Europe, Asia and the Americas.
Scholarship winners, like Cameron, are also expected to actively share the knowledge they have gained with their colleagues and contemporaries and inspire industry change.
At Manbulloo, the scholarship will allow Cameron to investigate different grazing strategies, including cell, rotational and time control and how to improve soil and pasture quality to produce more beef.
Cameron’s research will be particularly pertinent to better employ vast areas of underutilised land. In addition to weight gain, other potential benefits include environmental and animal welfare improvements, as well as better planning and cost control.
Manbulloo Station Cattle Yards 33 Section 3 - In Profile Section 3 - In Profile 34
ALLAWAH, QLD
Allawah underpins CPC’s ongoing commitment to constantly improve the genetics of its stud and commercial herds.
The 3,069-hectare bloodwood forest and brigalow block is located 145km south of Rockhampton in North Queensland.
Its 1,100 stud females produce bulls and females for use in the company’s single sire, stud and commercial breeding programs.
Predominantly based on Australian bloodlines, imported genetics have been infused using embryo transfer and artificial insemination to keep Allawah at the forefront of the stud industry.
Performance evaluation is also identified through commercial progeny testing of elite sire lines.
Multigenerational investment into its cutting-edge genetics program allows CPC to:
• Increase the fertility of the CPC herd with more calves that reach puberty at a younger age. • Increase the productivity of the CPC trading herd with faster young growth to customer specifications. • Improve carcass yield and quality for greater customer value and CPC returns. • Utilise hybrid vigour to increase fertility, growth, yield and survivability. • Produce cattle that are in demand by today’s and tomorrow’s customers. • Combine the best internal and external genetics available to give CPC a competitive advantage over its peers. Allawah Station 35 Section 3 - In Profile Section 3 - In Profile 36
NEWCASTLE WATERS GROUP, NT
Newcastle Waters is a The versatile technology can also 1,033,101-hectare breeding property provide farmers with early warning in the west Barkly region of the signs. Fewer animals crossing the Northern Territory. platform may indicate missing cattle or deaths, while a spike in cattle Its open plains, flood country and crossing numbers may indicate a timbered sand hills can carry 65,700 broken fence that needs fixing. head of cattle including 20,000 commercial Brahman breeders. Newcastle Waters also hosts the annual Spellbore competition as a The property is home to Newcastle means of collaborative engagement. Waters Brahman and Brangus Stud, All CPC stations participate in the which comprises 4,000 stud females competition, including head office who annually produce 1,000 quality, team members. acclimatised herd bulls for CPC’s northern properties. The competition features a Colt Challenge, with competitors riding Newcastle Waters is also one of horses they have trained while Australia’s first company-scale working at CPC and Station Teams beef properties to invest in walk- events. over weighing systems as part of a broader move to precision livestock The Station Teams title is awarded management. to the team that aggregates the most points from a range of tests during In remote, extensive locations, like the three day event including the Newcastle Waters, 12 hours south of Poddy Pursuit, Iron man and Iron Darwin, walk-over weighing systems woman, horse stick events and a set up on watering points direct Stockman’s Challenge. cattle over a series of scales before drinking, enabling their weights to be remotely and accurately recorded.
The system is also useful for separating calves of a certain weight from their mothers, or drafting steers reaching a desired weight. The walk- over weighing technology is also being used in combination with a satellite imaging system at Newcastle Waters that provides detailed information on pasture quality verified by animal performance.
In addition to saving thousands of man hours, the technology is also minimising weight losses and providing CPC team members with accurate herd assessments, including weight data.
Hay baling on the Barkly 37 Section 3 - In Profile Section 3 - In Profile 38
BUNDA, NT
In early 2015, CPC expanded its • New grazing and holding operations at Kirkimbie Station by paddocks. purchasing Bunda, an adjoining • Replacement of turkey nests with property located in the Western tanks. Victoria River District of the Northern Territory. • Pipe connection between Maud and One Tree. The aggregation of the two • New watering points. properties provided the opportunity to increase productivity, reduce CPC will also spend a further $1.1 overheads and increase labour million on improvements on new efficiencies. It also added valuable water connections, watering points, fattening country to CPC’s northern tanks and holding paddocks at portfolio, allowing the company to Yellow Waterhole, Underwood, Pear further optimise its herd flow. Tree, Splitting Bauhinia, Bunda Creek Laneway and the Bullock and Maud Bunda has its own stud complex and paddocks in the coming financial a high-quality Brahman stud herd. year. Just under 178,800-hectares in size, the property can carry more than The decision to aggregate and invest 15,000 cattle. in the two properties is already paying dividends. The land is fenced to allow effective rotational grazing and is well- Earnings performance has improved watered by 22 bores in addition to year on year since 2015, with the dams and natural water sources from majority of key EBITDA (Earnings the Sturt Creek, Bunda Creek and before interest, tax, depreciation Maud Creek systems. and amortisation) components improving, including: The aggregation of Bunda and Kirkimbie created efficiencies in • Sales volumes increased to 2,503 cattle operations for CPC including: hd in FY17 (up from 1,368 hd in FY16). • The ratio of fattening to breeding country in CPC’s northern • Sales prices increased to $836/ portfolio. hd in FY17 (up from $760/hd in FY16). • Eased pressure on the fattening country of Newcastle Waters, • Opex continues to be effectively Carlton Hill and Argyle Downs managed with efficiencies resulting in reduced freight and a captured in FY17. more optimised herd flow. • Number of brandings increased • The stud complex at Bunda and to 7,812 in FY17 (up from 5,389 in breeding herd of Kirkimbie has FY16). allowed bulls to be produced • Herd value on hand was internally. supported by increased cattle prices in FY17 as well as a strong Since purchasing Bunda, more increase in kilograms produced than $400,000 has been spent on to 1.74 million in FY17 (up from capital improvements and water 0.7 million in FY16). infrastructure, including: Bunda Station by Shannon Chatfield 39 Section 4 - Corporate and Social Responsibility Section 4 - Corporate and Social Responsibility 40
CORPORATE AND SOCIAL RESPONSIBILITY
Taking a break at Newry Station 41 Section 4 - Corporate and Social Responsibility Section 4 - Corporate and Social Responsibility 42
COMMUNITY CPC is a proud to partner with RAYELLA BAND the community to offer a range of services, programs and sponsorships SPONSORSHIP that help promote a sense of CPC has been a proud supporter community spirit, champion outback and sponsor of an aboriginal family living and support the growth of band called Rayella from the Marlinja regional and rural businesses. Community at Newcastle Waters. Rayella has toured nationally and CPC is honoured to sponsor lead singer Elenor Dixon has become the Isolated Children’s Parents’ an empowering role model for Association Annual Conference and indigenous girls and women. a variety of sporting and agricultural events including Kununurra Bushmen’s Rodeo WA, Show and Races at Isisford Qld, Walsh Office Races Qld and Daly Waters Rodeo NT. INDIGENOUS LAND USE AGREEMENTS
CPC has numerous Indigenous Land use agreements including Twin Hills Aboriginal Corporation with up to 10,000 cattle running on the property. As part of the agreement the Corporation manages the cattle and the land. REAL JOBS PROGRAM For the past seven years, the In the past year, Real Jobs Program Northern Territory Cattlemen’s participants were based at Auvergne Association has worked with CPC and and Newcastle Waters Stations. Indigenous people as part of the Real Jobs Program.
The Program is a progressive and innovative employment initiative that engages, trains and supports young Indigenous people within the cattle industry.
Since 2010, 30 Indigenous CPC team members through the Real Jobs Program have been taught the required skills and discovered the passion required for a career in the cattle industry. Rayella – Raymond and Eleanor Dixon 43 Section 4 - Corporate and Social Responsibility Section 4 - Corporate and Social Responsibility 44
RECOGNITION CPC is more than a business, it’s a Team members who have worked for The Awards celebrate the success supportive family that celebrates the CPC for longer than a decade were of Northern Territory businesses achievements of its employees. also recognised for their long service that excel in international exports and loyalty. and local business success through At the 2017 CPC Annual Conference their untiring efforts, planning and six team members and four stations CPC was also awarded the innovative approach. were recognised for their hard work Agribusiness Award and the and dedication to the company and Australian Exporter of the Year Award presented with a variety of awards at The Chief Minister’s Export and for safety, people and team culture, Industry Awards. operational improvement, business success and a people’s choice award for excellence.
Australian Export Awards
CPC Annual Conference Team Activity CPC Annual Awards (February 2017) 45 Section 4 - Corporate and Social Responsibility Section 4 - Corporate and Social Responsibility 46
LEARNING AND DEVELOPMENT CPC continues to encourage Head Stockpersons and Leading the upskilling of its workforce Hands. These events provide through internal and external the opportunity for our team of training, education and personal managers and up and coming development so every team member managers to further develop their has the opportunity to reach their full skills. The 2017 conferences included potential. sessions on industry innovation, WHS, leadership, property In FY17, 84 per cent of entry level productivity, financial skills and team members received training, genetics programs. an increase of three per cent on FY16. Areas of training include WHS, animal welfare and stock handling, horsemanship, first aid, vehicle maintenance, motorbike skills and general station maintenance.
Throughout the year CPC conducted group conferences and review sessions for senior management,
TALENT ENGAGEMENT Creating a high performing workforce As part of its commitment to requires a strategic approach to a collaborative engagement, CPC team member’s life cycle based on offers a range of additional activities role competencies and proactive to all team members including the behaviours. Spellbore Campdraft and the Colt Challenge at Newcastle Waters. The use of Individual Performance and Development Plans, allows team members to focus on their learning and development needs and provides management with the opportunity to identify high performing staff.
NTWA Operations Review Team Building Activity 47 Section 4 - Corporate and Social Responsibility Section 4 - Corporate and Social Responsibility 48
INDONESIAN EXCHANGE PROGRAM CPC is involved in two programs which provide a valuable two-way learning experience for Indonesian university students and key members of the CPC and JJAA team.
The NTCA Indonesia Australian Pastoral Program has been operating with CPC for several years and this year saw six Indonesian university students based in pairs at Newcastle Waters, Auvergne and Manbulloo for six weeks as part of the ten-week exchange program.
In addition to developing the skills of Indonesia’s future agribusiness leaders, the Program galvanised CPC’s long-term relationship with its northern neighbours.
The second program is a CPC initiative, designed to strengthen management skills and facilitate knowledge sharing gaps between JJAA and CPC to achieve higher efficiency and productivity.
In FY17, two JJAA team members visited Newcastle Waters, Manbulloo and Carlton Hill as part of their one- month exchange, while a Carlton Hill team member spent 10 days working for JJAA, including passage on the cattle ship. Several CPC Brisbane and Qld based team members also spent time at JJAA Indonesia.
FY18 will see two JJAA and two CPC team members participate in the exchange program.
NTCA Indonesian Australian Pastoral Program participants at JJAA feedlot, Lampung 49 Section 4 - Corporate and Social Responsibility Section 4 - Corporate and Social Responsibility 50
WORKPLACE HEALTH AND SAFETY Workplace, health and safety (WHS) continues to be a key priority for CPC and its team, irrespective of role or location.
Recognising the need for continuous improvement, CPC reviewed its Safety Plan and identified areas of improvement, including additional training and development, improved communication processes and updating Near Miss and Hazard reporting procedures.
As part of continuous improvement, CPC identified the need for WHS metric data and implemented a Safety Climate survey to identify key trends, both positive and negative across the business.
CPC also rolled out the Injury Prevention and Management Program in partnership with Queensland Worksafe. This program will analyse all the safety components of CPC and recommend ways to strengthen the company’s WHS systems and procedures.
Into the future, CPC will continue to focus proactively on WHS communication, audit compliancy at all stations, including electrical testing and tagging, and a dedicated WHS Software platform - MyOSH.
Station self-audits at cattle yards will also continue to be a priority to help boost workforce awareness and ensure best practice procedures are followed.
Anna Maguire, Newcastle Waters 51 Section 4 - Corporate and Social Responsibility Section 4 - Corporate and Social Responsibility 52
OUR ENVIRONMENT CPC strives to meet or exceed A second environmental project is industry best practice guidelines in also showing favourable results for environmental management and CPC. undertakes regular compliance reviews with state and federal The Herd Management Project environmental regulations as part of is reducing methane emissions its commitment to the environment. produced from pasture-fed cattle. By altering feed and herd In FY17, CPC continued to reduce management practices, CPC is emissions through Savanna burning producing a more productive herd projects at Manbulloo, Carlton who emit less methane. Hill, Auvergne, Newry, Bunda and Kirkimbie, Dungowan, part of Still at the feasibility testing stage, Newcastle Waters and Wrotham Park. the Herd Management will evaluate three years of historical livestock Carbon reduction is an opportunity data (including opening and closing for CPC to further enhance its heads, sale and transfer numbers environmental stewardship of land and weights) at every CPC property assets and potentially generate to determine how the herds have income through the trading of any performed in the past. This data will carbon credits generated. This also form the baseline for the project income will assist the financial in which all future data will be management of the project and compared to in order to determine assist further asset development. whether or not we improved the efficiency of our herds, thus reducing CPC expects to abate approximately our methane emissions. 715,000 tonnes of greenhouse gases over the 10-year period of the project.
The CPC Savanna Burning Project focuses fire management on shifting the seasonality of burning events from late dry season to early dry season and reducing the area required to be burnt.
The shift in time results in fires burning at lower intensities due to lower fuel loads. This in turn results in a reduction in the area burnt and in the amount of fuel consumed. Consequently, there is a reduction in greenhouse gas emissions released from fires.
CPC will craft a comprehensive report when the Savanna Burning season ends on 31 July and detail the areas burnt and when, fossil fuel usage, permits and fire control activities. The report will allow CPC to make an initial carbon credit claim in early 2018. Cattle tracks, Newcastle Waters Station 53 Section 4 - Corporate and Social Responsibility Section 4 - Corporate and Social Responsibility 54
NATIVE TITLE CPC is proud of our engagement Pleasingly, Native Title can also co- with and commitment to Indigenous exist with non-indigenous property Australians and places Aboriginal rights, as is the case at CPC’s stations welfare at the heart of its social Newcastle Waters, Auvergne, responsibility agenda. Newry, Ucharonidge, Dungowan, Nockatunga and Comely. The centrepiece of this commitment is Native Title, a property right which CPC is proud to work alongside the recognises that some Indigenous traditional owners of the land and Australians have a traditional right hopes to galvanise already strong and interest in the land. relationships with present and emerging Indigenous leaders. Native Title also guarantees traditional laws and customs are passed down to future generations of Indigenous Australians.
ANTI-CORRUPTION CPC is committed to conducting its business in an ethical, honest and transparent manner.
Bribery and corruption are not consistent with the company’s values and present significant risks to its business. Therefore, CPC is committed to the prevention, deterrence and detection of bribery and corruption.
Under CPC’s Anti-Bribery Policy, it is prohibited to offer, give, solicit or accept a bribe, whether cash or other inducement to or from any person or company.
Waterhole at Newry Station 55 Section 4 - Corporate and Social Responsibility Section 4 - Corporate and Social Responsibility 56
ANIMAL WELFARE Animal welfare is of paramount CPC applies the principles of low importance to CPC. The company stress stock handling and regularly does everything within its power to provides instruction and training to maintain the highest standards of team members in these methods. animal welfare and regularly inspects CPC cattle have access to sufficient and monitors all of its facilities. food, supplements and water and every effort is taken to protect its CPC supports and voluntarily animals from disease and predators. engages in all steps designed to eliminate the inhuman and cruel CPC engages expert veterinarians treatment of animals, and plays and management to ensure all an active role in Cattlecare, the endeavours are used to keep its Livestock Production Assurance cattle free from stress, disease and Program, the Export Supply Chain illness. Assurance System and the Australian Standards for the Export of Livestock CPC at all times at least meets the to ensure the highest possible minimum requirements of the Codes standards are met. of Practice and Regulations for the Management and Transport of CPC continues to train and refresh Animals for both land and sea. the skills of its team in the areas of low stress stock handling techniques CPC believes there is an ethical and animal behaviour recognition for imperative of care extending the sole purpose of producing calm, beyond the change in legal title quiet, stress free cattle. of its animals. CPC works closely with the Australian and Indonesian All practices and management Governments, its customers and decisions utilised to operate a joint venture partners in Indonesia CPC property are in line with the to ensure acceptable standards of fulfilment of the five freedoms of animal welfare are in place. animal welfare set out by the OIE, the global governing body for animal CPC reserves the right to inspect welfare. its customers facilities where CPC cattle are transported, managed and CPC continues to seek out and slaughtered and withhold supply if, implement new technology to assist in the company’s absolute discretion, with favourable animal welfare it is not satisfied with the standards outcomes, and is currently playing under which CPC animals are cared an active role in the research and for. development of pain relief products for cattle. CPC supports all steps designed to eliminate the inhumane and cruel CPC ANIMAL WELFARE treatment of animals. DUTY OF CARE STATEMENT
CPC strives to continually improve and promote the standards of animal welfare whilst animals are on its properties and when they are in the care and ownership of others up to the point of slaughter. Hot Shoeing by Dave Young 57 Section 5 - Financial Statements Section 5 - Financial Statements 58
FINANCIAL STATEMENTS
Buffel pasture, Allawah Station 59 Section 5 - Financial Statements Section 5 - Financial Statements 60
CORPORATE GOVERNANCE Where urgent decisions are required them. In addition, the Committee as the auditors’ remuneration and on matters specifically reserved for reviews the effectiveness of the performance; any major issues which the Board in between meetings, group’s internal controls and risk arise during the course of the audit STATEMENT there is a process in place to facilitate management systems and also and their resolution; key accounting discussion and decision-making. ensures that there is proportionate and audit judgements; the level of The directors also have access to the and independent investigation of errors identified during the audit; Lake Woods Holdings Pty Ltd’s Board and risk management in directing at 31 March 2017. Through these advice and services of the Company any matter bought to their attention. and the recommendations made to believes that effective corporate and controlling the business. mechanisms, the company aims Secretary and external advisers, as The Committee is required to assist management by the auditors and governance is a fundamental to apply the highest standards of appropriate. the Board to fulfil its responsibilities management’s response. aspect of a well-run company and is To provide a better understanding corporate governance. related to external financial reporting committed to achieving the highest we describe the key governance and associated announcements. standards of corporate structures and internal controls BOARD COMMITTEES NOMINATIONS AND During the year the Committee governance, corporate responsibility operating within the company as The Board has established three REMUNERATION committees, each with clearly reviewed either as a Committee or as COMMITTEE defined terms of reference, part of the Board: As at 31 March 2017, the Nomination BOARD AND COMMITTEE COMPOSITION (as at 31 March 2017) procedures, responsibilities and • the annual financial statements, and Remuneration Committee Nomination and Consolidated powers. Lake Woods Finance including the requirements for was chaired by Andrew Miller and Director’s Name Audit Committee Remuneration Pastoral Company Holdings Pty Ltd Committee financial reporting; comprised three non-executive Committee Pty Ltd FINANCE COMMITTEE directors. The Committee meets at As at 31 March 2017 the Finance • changes proposed to the least twice a year and at such other Mark Bahen C Committee was chaired by Ruhul Company’s accounting policies times as the Board requires. Amin. This Committee is responsible and practices; for making recommendations to the Alex Williams • significant accounting issues; The Committee’s specific duties and Board on funding strategy, capital and responsibilities are as follows: structure and management of Margaux financial risks as well as the policies • the audit plan and processes. Beauchamp C • to establish criteria to be used in and control procedures, approval selecting Directors and ensure of investments and divestments, The Committee is also Andrew Miller the remuneration packages are C raising of external financing and the responsible for the development, designed to attract, motivate and granting of securities, guarantees implementation and monitoring of retain staff of the highest calibre; Ruhul Amin and indemnities as set out within the company’s policy on external C • to approve the remuneration the delegated authorities. In certain audit. The Committee has oversight of the executive directors specific circumstances the Board responsibility for monitoring Troy Setter and management, to provide C has delegated authorities to the independence, objectivity and independent and objective Committee to make decisions in compliance with ethical and assessment of any benefits Jim Hunter these areas. regulatory requirements. The granted to directors and Committee recommends the management, and appointment and reappointment The Board meets regularly during The Board has adopted a Corporate AUDIT COMMITTEE LAKE WOODS HOLDINGS of the company’s external auditors • to ensure that the pension the year. During the twelve Governance Charter and a formal As at 31 March 2017, the Audit BOARD CONSTITUTION and annually reviews a formal letter arrangements throughout the months to 31 March 2017, five schedule of delegated authorities Committee was chaired by Margaux provided by the external auditors Group are appropriate, well AND PROCEDURES scheduled meetings were held, to facilitate decision making. Key Beauchamp. There were three confirming their independence and supervised and conform to There were two executive directors all in Australia. All members of the policy and strategic decisions members of the Audit Committee; all objectivity within the context of applicable law. and five non-executive directors Board receive detailed financial and are made by the full board. Such non-executive directors. The Chief applicable regulatory requirements on the Board as at 31 March 2017, operational information and regular matters include, but are not limited Executive Officer, Chief Financial and professional standards. with Mark Bahen as Chairman. The presentations from executives on the to, the final approval of the annual Officer and external auditors are The Committee will also review the Chairman is responsible for the business performance, in addition accounts and budget, major normally invited to attend the Audit design of incentive and performance The Committee also reviews the effective running of the Board and for to items for decision and minutes of acquisitions and disposals, any new Committee meeting. The Committee related pay plans for approval by the terms of responsibility and scope communications with all directors. Board committees in advance of each or changes to existing policies and meets at least twice annually at Board and will review the company’s of the audit (including schedules of He ensures that the Board receives board meeting, whether they are any changes to the group’s financing appropriate times in the reporting remuneration policies as a whole unadjusted errors and representation sufficient information on financial able to attend or not. This enables arrangements and financial policies. and audit cycle. and remuneration trends across the letters) as set out in the external trading and corporate issues prior to the directors to make informed Regular updates on legal and risk group. auditors’ engagement letter; the the board meetings. The executive decisions on corporate and business management, health and safety, and The Committee oversees the overall work plan for the forthcoming directors are responsible for issues under consideration. other key company policies are given relationship with the external year, together with the cost reporting to the Board on operations to the Board. auditors. It reviews their audit plan and the development of strategic and discusses audit findings with effectiveness of the audit as well plans for consideration by the Board as a whole. 61 Section 5 - Financial Statements Section 5 - Financial Statements 62
CPC OPERATING BOARD • a loan to subsidiary PT. Seasonal risks Key person risk A meeting of the Consolidated Juang Jaya Abdi Alam of Whilst CPC’s geographic spread CPC’s key management positions Pastoral Company Pty Ltd Board is IDR15,000,000,000 funded by PT of properties provides a natural require considerable knowledge held quarterly as a minimum. During Bank UOB Indonesia. This loan hedge against seasonal variations, and expertise. The loss of people the twelve months to 31 March 2017, was drawn to IDR12,012,898,137 extreme occurrences (e.g. flood, in key positions would impact the six scheduled meetings were held. as at 31 March 2017, and expires droughts, fires) will have an impact operation of the group. As at 31 March 2017, the Board was in December 2017. on operations. chaired by Troy Setter and comprises • a loan to subsidiary PT. At CPC, we see risk management two executive directors. Juang Jaya Abdi Alam of Competition risk as an important part of business IDR97,000,000,000 funded by PT CPC operates in a competitive operations. We are constantly The Operating Board oversees the Bank CIMB Niaga Tbk. This loan global protein market with varied reviewing and analysing potential day to day management of the was drawn to IDR69,665,783,161 competitors from other beef risks to minimise disruption to our group’s on property operations and as at 31 March 2017, and expires producers and other protein sources operations should any arise. reports to the Lake Woods Holdings in October 2017. (e.g. pork, chicken). Pty Ltd Board in accordance with the Cash on hand at 31 March 2017 was Corporate Governance Charter and Risk of market fluctuation $20.4m including $15.0m deposited Board Delegated Authorities. Any material decrease in global as security under the Consolidated beef prices will impact the sales and Pastoral Company Pty Ltd loan profitability of the company. CASH POSITION AND facility. FINANCE FACILITIES Risk of change in government Proceeds from station divestments RISK MANAGEMENT AND were used to fund productivity policy Any change in Australian, Indonesian improvement capital expenditure INTERNAL CONTROLS The company’s aim is to manage or Chinese government policies with projects, and stock purchases to risk and to control its business and regard to the sale and transport rebuild CPC’s herd, with the balance financial activities cost-effectively of cattle can affect the sales and used to reduce the drawn balance of and in a manner that enables it profitability of the company. debt finance facilities by $91.5m from to explore profitable business 31 March 2016 to 31 March 2017. opportunities in a disciplined way. Risk on currency movements Borrowings comprise three facilities CPC’s major markets are overseas The Board has overall responsibility as follows: (particularly Indonesia) and any for the systems of internal controls, material movements in the Australian which are designed to manage risk dollar will impact profits. • a bilateral loan to Consolidated of failure to achieve the objectives Pastoral Company Pty Ltd of of the business where such risk $315.0m that is jointly funded Disease risk cannot be eliminated. The Board has by Rabobank ($211.3m) and ANZ The Australian cattle industry is considered the systems of internal ($103.7m). As at 31 March 2017, relatively disease free and has an control for the accounting year under the drawn balance of this facility exceptional reputation worldwide for review and is satisfied that they are was $211.0m, leaving $104.0m provision of high quality beef. As we appropriate. undrawn. Interest rates payable have seen recently in other countries are hedged by a swap agreement with foot and mouth disease, if these that covered approximately KEY BUSINESS RISKS standards are compromised the 80% of the drawn balance at 31 The company and its subsidiaries in reputational risk to Australian beef March 2017. As at 31 March 2017, carrying out their principal business producers would be significant. the outstanding loan to security activities are affected by business value ratio was 24% compared to risks arising from their trading Workplace injury 37% at 31 March 2016. This loan environment and from an uncertain The nature of CPC’s business means facility matures in December global economic environment. The employees are working with animals 2018. key business risks are highlighted and machinery in remote locations. below: CPC employs a WHS Manager who develops and monitors group safety policies and formal operating procedures. A workplace injury could have an impact on business operations. 63 Section 5 - Financial Statements Section 5 - Financial Statements 64
DIRECTORS’ REPORT FOR THE YEAR ENDED 31 MARCH 2017 9. ROUNDING OFF The directors present their report comprising Lake Woods Holdings March 2017 and the auditor’s report The Company is of a kind referred together with the consolidated Pty Limited (“the Company”) and its thereon. to in ASIC Corporations (Rounding financial report of the Group, subsidiaries, for the year ended 31 in Financial/Directors’ Report) 2016/191 dated 24 March 2016 and in accordance with that instrument, 1. DIRECTORS amounts in the financial report and The directors of the Company at any time during or since the end of the financial year are: directors’ report have been rounded off to the nearest thousand dollars, DIRECTORS DATE DIRECTORS DATE unless otherwise stated. Mark Bahen Andrew Miller (Appointed on 31/10/16) Troy Setter Christopher Evans (Resigned on 31/08/16) 10. LEAD AUDITOR’S Jim Hunter Mike Kinski (Resigned on 31/10/16) INDEPENDENCE DECLARATION Ruhul Amin Alex Williams (Appointed on 08/07/16 The Lead auditor’s independence declaration is set out on page 65 and Margaux Beauchamp Resigned on 31/03/17) forms part of the directors’ report for the financial year ended 31 March 2. PRINCIPAL ACTIVITIES 4. DIVIDENDS 7. ENVIRONMENTAL 2017. The principal activity of the Group There were no dividends paid REGULATION during the course of the financial or declared by the Company to The Group’s operations are subject This report is made with a resolution year was ownership and operation of members during the year ended 31 to various environmental regulations of the directors: pastoral properties producing beef March 2017 (2016: Nil). under both Commonwealth and cattle. State legislation. The Board believes 5. EVENTS SUBSEQUENT that the Group has adequate systems There were no significant changes TO REPORTING DATE in place for the management of its in the nature of the activities of the environmental requirements and is Group during the year. There has not arisen in the interval between the end of the financial year not aware of any breaches of those and the date of this report any item, environmental requirements as they 3. OPERATING AND apply to the Group. transaction or event of a material Margaux Beauchamp FINANCIAL REVIEW and unusual nature likely, in the Non-Executive Director The profit for the Group after income opinion of the directors of the Group, 8. INDEMNIFICATION tax amounted to $37,066,000 for the to affect significantly the operations AND INSURANCE OF year ended 31 March 2017 (31 March of the Group, the results of those 2016: Profit of $20,264,000). operations, or the state of affairs of OFFICERS the Group, in future financial years. During the financial period a related The profit from continuing company paid a premium in respect of a contract insuring the directors operations before finance 6. LIKELY costs, income tax, depreciation, of the Company, and all executive amortisation, revaluation and DEVELOPMENTS officers of the Group and of any impairment amounted to profit of The Group will continue to pursue related body corporate against its policy of increasing profitability a liability incurred as a director, Mark Bahen $49,685,000 for the year ended 31 Non-Executive Director March 2017 (31 March 2016: Profit of and market share in the beef industry secretary, executive officer to the $37,795,000). during the next financial year. extent permitted by the Corporations Act 2001. The contract of insurance Brisbane Dated this 12th day of June 2017 The Group’s livestock assets Further information about likely prohibits disclosure of the nature of increased in value to $325,474,000 as developments in the operations of the liability and the amount of the at 31 March 2017 versus $299,155,000 the Group and the expected results of premium. as at 31 March 2016. Livestock assets those operations in future financial together with property, plant and years has not been included in this equipment comprise 92.1% of the report because disclosure of the Group’s total assets as at year end. information would be likely to result in unreasonable prejudice to the Group. 65 Section 5 - Financial Statements Section 5 - Financial Statements 66
LEAD AUDITORS DECLARATION FOR THE YEAR ENDED 31 MARCH 2017
Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001
To the Directors of Lake Woods Holdings Pty Limited
I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 31 March 2017 there have been:
(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
(ii) no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG Stephen Board Partner
Brisbane 12 June 2017
KPMG, an Australian partnership and a member firm of the Liability limited by a scheme approved under KPMG network of independent member firms affiliated with Professional Standards Legislation. KPMG International Cooperative (“KPMG International”), a Swiss entity. 67 Section 5 - Financial Statements Section 5 - Financial Statements 68
FINANCIAL STATEMENTS STATEMENT OF FINANCIAL POSITION STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME As at 31 March 2017 For the year ended 31 March 2017 Consolidated Consolidated 31 Mar 2017 31 Mar 2016 31 Mar 2017 31 Mar 2016 Assets Note $’000 $’000 Note $’000 $’000 Cash and cash equivalents 6 5,381 1,276 Revenue 21 153,305 163,098 Trade and other receivables 7 2,526 11,005 Other income 22 1,302 1,682 Livestock assets 8 133,410 122,867 Inventories 9 2,639 2,929 Personnel expenses (15,180) (13,406) Other assets 10 3,078 5,169 Livestock expenses (61,602) (92,820) Total current assets 147,034 143,246 Property repairs and maintenance (4,785) (4,666) Other assets 10 42,459 15,000 Other expenses 23 (23,355) (16,309) Livestock assets 8 192,064 176,288 Share of profits/(losses) of equity accounted investees (net of income tax) - 216 Property, plant and equipment 13 485,826 438,027 Profit from continuing operations before finance costs, income tax, Goodwill 11,12 13,153 13,190 depreciation, amortisation, revaluation and impairment 49,685 37,795 Other investments - 106 Total non-current assets 733,502 642,611 Depreciation and amortisation (6,604) (5,293) Total assets 880,536 785,857 Revaluation of properties and investments 30,840 13,207 Profit before finance costs and income tax expense 73,921 45,709 Liabilities Trade and other payables 15 12,863 15,702 Finance income 24 209 166 Loans and borrowings 16 8,144 2,258 Finance costs 24 (15,538) (16,721) Employee benefits 17 476 1,352 Net finance costs (15,329) (16,555) Deferred income - 78 Provisions 18 3,000 4,734 Profit before income tax 58,592 29,154 Total current liabilities 24,483 24,124 Income tax expense (21,526) (8,890) Trade and other payables 15 2,216 7,025 Profit for the year 25 37,066 20,264 Loans and borrowings 16 211,000 302,500 Employee benefits 17 847 - Other comprehensive income Deferred tax liabilities 14 66,618 13,663 Items that will never be reclassified to profit or loss Total non-current liabilities 280,681 323,188 Fair value revaluation of properties 98,321 1,444 Total liabilities 305,164 347,312 Items that are or may be reclassified to profit or loss Net assets 575,372 438,545 Foreign currency translation reserve – share of other comprehensive income 324 (341) Employee benefits – share of other comprehensive income 20 - (48) Equity Changes in fair value of cash flow hedges 20 1,032 2,106 Share capital 19 368,934 368,934 1,356 1,717 Reserves 20 69,411 (3,080) Accumulated profit/(losses) 137,027 72,691 Other comprehensive income/(loss) for the year, net of tax 99,677 3,161 Total equity 575,372 438,545 Total comprehensive income/(loss) for the year 136,743 23,425 The notes on pages 71 to 96 are an integral part of these financial statements. The notes on pages 71 to 96 are an integral part of these financial statements. 69 Section 5 - Financial Statements Section 5 - Financial Statements 70
STATEMENT OF CHANGES IN EQUITY STATEMENT OF CASH FLOWS For the year ended 31 March 2017 For the year ended 31 March 2017
Consolidated Consolidated
Foreign Employee 31 Mar 2017 31 Mar 2016 Asset Currency Equity Issued Revaluation Hedging Translation Benefit Accumulated Total Cash flows from operating activities Note $’000 $’000 Capital Reserve Reserve Reserve Reserve Profit Equity Cash receipts from customers 118,781 119,137 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Cash paid to suppliers and employees (99,640) (97,308) Balance at 1 April 2016 368,934 2,108 (4,917) (341) 70 72,691 438,545 Total comprehensive income for the Cash generated/(utilised) in operations 19,141 21,829 year Interest and bill discounts received 209 158 Profit/(Loss) for the year - - - - - 37,066 37,066 Interest paid (16,857) (17,024) Other comprehensive income Net cash received from/(used in) operating activities 27 2,493 4,963 Net change in fair value of property - 98,321 - - - - 98,321 Net changes to reserves for asset disposals - (27,270) - - - 27,270 - Cash flows from investing activities Net change in fair value of foreign currency translation reserve - - - 324 - - 324 Proceeds from sale of property, plant and equipment 91,647 319 Changes in fair value of cash flow Acquisition of additional interest equity-accounted investee (now consolidated) 12 (1,734) (10,266) hedges - - 1,032 - - - 1,032 Acquisition of property, plant and equipment 13 (3,343) (2,412) Total other comprehensive income for the year - 71,051 1,032 324 - 27,270 99,677 Net cash used in investing activities 86,570 (12,359) Contributions by owners to the Company Issue of options - - - - 84 - 84 Cash flows from financing activities Balance at 31 March 2017 368,934 73,159 (3,885) (17) 154 137,027 575,372 Repayment of borrowings (91,500) (28,212)
Drawdown of borrowings 6,543 34,706 Balance at 1 April 2015 368,934 3,176 (7,023) - 118 49,915 415,120 Net cash from financing activities (84,957) 6,494 Total comprehensive income for the year
Profit for the year - - - - - 20,264 20,264 Net (decrease)/increase in cash and cash equivalents 4,105 (902) Other comprehensive income Net change in fair value of property - 1,444 - - - - 1,444 Net change in fair value of foreign Cash and cash equivalents opening balance 1,276 2,178 currency translation reserve - - - (341) - - (341) Cash and cash equivalents at balance date 6 5,381 1,276 Net change in fair value of employee benefits - - - - (48) - (48) The notes on pages 71 to 96 are an integral part of these financial statements. Changes in fair value of cash flow hedges - - 2,106 - - - 2,106 Total other comprehensive income for the year - 1,444 2,106 (341) (48) - 3,161 Contributions by owners to the Company Net change in fair value of investment in equity accounted investees - (2,512) - - - 2,512 - Balance at 31 March 2016 368,934 2,108 (4,917) (341) 70 72,691 438,545
The amounts recognised directly in equity are disclosed net of tax. The notes on pages 71 to 96 are an integral part of these financial statements. 71 Section 5 - Financial Statements Section 5 - Financial Statements 72
NOTES TO THE Investments in associates and jointly accounted investees or, if not After initial recognition, goodwill controlled entities are accounted consumed or sold by the equity is measured at cost less any FINANCIAL STATEMENTS for using the equity method (equity- accounted investee, when the accumulated impairment losses. FOR THE YEAR ENDED 31 MARCH 2017 accounted investees) and are initially Group’s interest in such entities is For the purpose of impairment recognised at cost. The Group’s disposed of. testing, goodwill acquired in a investment includes goodwill business combination is, from the • Derivative financial instruments 1. REPORTING ENTITY 3. SIGNIFICANT identified on acquisition, net of any (iv) Business combinations and acquisition date, allocated to each are measured at fair value. Lake Woods Holdings Pty Limited ACCOUNTING POLICIES accumulated impairment losses. goodwill of the Group’s cash-generating units (the “Company”) is domiciled in • Livestock assets are measured at The accounting policies set out Business combinations are that are expected to benefit from the Australia. The Company’s registered fair value less costs to sell. below have been applied consistently The consolidated financial accounted for using the acquisition combination, irrespective of whether office is at Newcastle Waters Station, • Land, buildings and to all periods presented in these statements include the Group’s method. The cost of an acquisition other assets or liabilities of the Drovers Drive, Newcastle Waters, improvements are included consolidated financial statements, share of the profit or loss and is measured as the aggregate of the acquiree are assigned to those units. Northern Territory, Australia. The within property, plant and and have been applied consistently other comprehensive income of consideration transferred, measured consolidated financial statements as equipment and are measured at by the Group entities. equity-accounted investees, after at acquisition date fair value and Where goodwill has been allocated to at and for the year ended 31 March fair value. adjustments to align the accounting the amount of any non-controlling a cash-generating unit and part of the 2017 comprise the Company and its (a) Basis of consolidation policies with those of the Company, interest in the acquiree. For each operation within that unit is disposed subsidiaries (together referred to (i) Subsidiaries from the date that significant business combination, the Group of, the goodwill associated with the (c) Functional and presentation as the “Group” and individually as Subsidiaries are entities controlled influence or joint control commences elects whether to measure the non- disposed operation is included in the “Group entities”). currency by the Group. Control exists when the until the date that significant controlling interest in the acquiree carrying amount of the operation These consolidated financial Group has the power to govern the influence or joint control ceases. at fair value or at the proportionate when determining the gain or loss on statements are presented in The Group is a for-profit entity and financial and operating policies of an share of the acquiree’s identifiable disposal. Goodwill disposed in these Australian dollars, which is the primarily owns and operates pastoral entity so as to obtain benefits from When the Group’s share of losses net assets. Acquisition related circumstance is measured based on Company’s functional currency. properties for the purposes of its activities. In assessing control, exceeds its interest in an equity- costs are expensed as incurred and the relative values of the disposed producing beef cattle. potential voting rights that currently accounted investee, the carrying included in administrative expenses. operation and the portion of the The Company is of a kind referred to are exercisable are taken into amount of that interest, including cash-generating unit retained. in ASIC Class Order 2016/191 dated 2. BASIS OF account. The financial statements any long-term investments that form When the Group acquires a business, 24 March 2016 and in accordance of subsidiaries are included in the part thereof, is reduced to zero, and it assesses the financial assets and (b) Foreign currency PREPARATION with that Class Order, amounts in the (a) Statement of compliance consolidated financial statements the recognition of further losses is liabilities assumed for appropriate (i) Translation of subsidiaries financial report and directors’ report discontinued except to the extent In the opinion of the directors, the from the date that control classification and designation in On consolidation, the assets and have been rounded off to the nearest that the Group has an obligation or Group is not publicly accountable. commences until the date that accordance with the contractual liabilities of foreign operations are thousand dollars, unless otherwise has made payments on behalf of the The financial statements are Tier 2 control ceases. The accounting terms, economic circumstances translated into Australian dollars at stated. investee. general purpose financial statements policies of subsidiaries have been and pertinent conditions as at the the rate of exchange prevailing at the which have been prepared in changed when necessary to align acquisition date. reporting date and their statements (d) Use of estimates and them with the policies adopted by (iii) Transactions eliminated on of profit or loss are translated at accordance with Australian judgements Accounting Standards – Reduced the Group. consolidation If the business combination is exchange rates prevailing at the dates The preparation of financial Intra-group balances and achieved in stages, the previously of the transactions. The exchange Disclosure Requirements adopted by statements requires management the Australian Accounting Standards (ii) Investments in associates transactions, and any unrealised held equity interest is remeasured at differences arising on translation to make judgements, estimates and jointly controlled entities income and expenses arising its acquisition date fair value and any for consolidation purposes are Board and the Corporations Act 2001. and assumptions that affect the (equity-accounted investees) from intra-group transactions resulting gain or loss is recognised in recognised in other comprehensive These financial statements comply application of accounting policies Associates are those entities in which are eliminated in preparing the profit or loss. income. On disposal of a foreign with Australian Accounting Standards and the reported amounts of assets, the Group has significant influence, consolidated financial statements. operation the component of other – Reduced Disclosure Requirements. liabilities, income and expenses. but not control, over the financial Unrealised gains arising from Goodwill is initially measured at cost, comprehensive income relating to Actual results may differ from these and operating policies. Significant transactions with equity accounted being the excess of the aggregate that particular foreign operation is They were authorised for issue by the estimates. Board of Directors on 12th June 2017. influence is presumed to exist when investees are eliminated against of the consideration transferred recognised in profit or loss. the Company holds between 20 and the investment to the extent of the and the amount recognised for Estimates and underlying 50 percent of the voting power of Group’s interest in the investee. non-controlling interest over the Any goodwill arising on the (b) Basis of measurement assumptions are reviewed on another entity. Jointly controlled Unrealised losses are eliminated in net identifiable assets acquired acquisition of a foreign operation The consolidated financial an ongoing basis. Revisions to entities are those entities over the same way as unrealised gains, and liabilities assumed. If the fair and any fair value adjustments to statements have been prepared on accounting estimates are recognised whose activities the Group has joint but only to the extent that there is no value of the net assets acquired is in the carrying amount of assets and the historical cost basis except for in the period in which the estimate control, established by contractual evidence of impairment. excess of the aggregate consideration liabilities arising on the acquisition the following material items in the is revised and in any future periods agreement and requiring unanimous transferred, the gain is recognised in are treated as assets and liabilities of statement of financial position: affected. consent for strategic financial and Gains and losses are recognised profit or loss. the foreign operation and translated operating decisions. when the contributed assets are at the spot rate of exchange at the consumed or sold by the equity reporting date. 73 Section 5 - Financial Statements Section 5 - Financial Statements 74
(ii) Transactions financial asset in a transaction in any directly attributable transaction basis or to realise the asset and settle during the period for which the forecast transaction is no longer Transactions in foreign currencies which substantially all the risks and costs. Subsequent to initial the liability simultaneously. hedge is designated, and whether expected to occur, then the balance are translated to the respective rewards of ownership of the financial recognition loans and receivables are the actual results of each hedge are in equity is reclassified to profit or functional currency of the Group at asset are transferred. Any interest measured at amortised cost using The Group has the following non- within a range of 80-125 percent. loss. exchange rates at the dates of the in transferred financial assets that the effective interest method, less derivative financial liabilities: loans For a cash flow hedge of a forecast transactions. Monetary assets and is created or retained by the Group any impairment losses. and borrowings, bank overdrafts, and transaction, the transaction should Other non-trading derivatives liabilities denominated in foreign is recognised as a separate asset or trade and other payables. be highly probable to occur and When a derivative financial currencies at the reporting date liability. Loans and receivables comprise cash should present an exposure to instrument is not designated in a are retranslated to the functional and cash equivalents and, trade and Such financial liabilities are variations in cash flows that could hedge relationship that qualifies for currency at the exchange rate at Financial assets and liabilities are other receivables. recognised initially at fair value plus ultimately affect reported net hedge accounting, all changes in its that date. The foreign currency gain offset and the net amount presented any directly attributable transaction income. fair value are recognised immediately or loss on monetary items is the in the statement of financial position Cash and cash equivalents costs. Subsequent to initial in profit or loss. difference between amortised cost when, and only when, the Group has Cash and cash equivalents comprise recognition, these financial liabilities Derivatives are recognised initially in the functional currency at the a legal right to offset the amounts cash balances and call deposits with are measured at amortised cost using at fair value; attributable transaction (d) Property, plant and beginning of the period, adjusted and intends either to settle on a net original maturities of three months the effective interest rate method. costs are recognised in profit or equipment for effective interest and payments basis or to realise the asset and settle or less from the acquisition date loss as incurred. Subsequent to (i) Recognition and during the period, and the amortised the liability simultaneously. that are subject to an insignificant (iii) Share capital initial recognition, derivatives are measurement cost in foreign currency translated risk of changes in their fair value, Ordinary shares measured at fair value and changes Fair value – land, buildings and at the exchange rate at the end of The Group has the following non- and are used by the Group in the Ordinary shares are classified as therein are accounted for as improvements the year. Non-monetary assets and derivative financial assets: held-to- management of its short-term equity. Incremental costs directly described below. Land, buildings and improvements liabilities denominated in foreign maturity financial assets and loans commitments. Bank overdrafts attributable to the issue of ordinary are initially measured at cost. currencies that are measured at and receivables. that are repayable on demand and shares and share options are Cash flow hedges Following initial recognition at cost, fair value are retranslated to the form an integral part of the Group’s recognised as a deduction from When a derivative is designated as land, buildings and improvements functional currency at the exchange Held-to-maturity financial assets cash management are included equity, net of any tax effects. the hedging instrument in a hedge are measured on a fair value basis as rate at the date that the fair value If the Group has the positive intent as a component of cash and cash of the variability in cash flows determined by a director’s valuation. was determined. Foreign currency and ability to hold debt securities equivalents for the purpose of the (iv) Derivative financial attributable to a particular risk differences arising on retranslation to maturity, then such financial statement of cash flows. instruments, including hedge associated with a recognised asset or An external, independent valuation are recognised in profit or loss. assets are classified as held to accounting liability or a highly probable forecast company, having appropriate Non-monetary items in a foreign maturity. Held to maturity financial (ii) Non‑derivative financial The Group holds derivative financial transaction that could affect profit or recognised professional currency that are measured in terms assets are recognised initially at fair liabilities instruments to hedge its interest rate loss, the effective portion of changes qualifications and recent experience of historical cost are translated using value plus any directly attributable The Group initially recognises debt risk exposures. in the fair value of the derivative is in the location and category of the exchange rate at the date of the transaction costs. Subsequent to securities issued and subordinated recognised in other comprehensive property being valued, values transaction. initial recognition held-to-maturity liabilities on the date that they On initial designation of the income and presented in the hedging properties within the Group’s financial assets are measured at are originated. All other financial derivative as the hedging instrument, reserve in equity. Any ineffective portfolio on a rotational basis to (c) Financial instruments amortised cost using the effective liabilities (including liabilities the Group formally documents the portion of changes in the fair value ensure that the carrying amount (i) Non‑derivative financial interest method, less any impairment designated at fair value through relationship between the hedging of the derivative is recognised does not differ materially from the assets losses. Any sale or reclassification profit or loss) are recognised initially instrument and hedged item, immediately in profit or loss. asset’s fair value at the balance sheet The Group initially recognises loans of a more than insignificant amount on the trade date, which is the date including the risk management date. Fair value is determined by and receivables and deposits on of held-to-maturity investments not that the Group becomes a party to objectives and strategy in When the hedged item is a non- reference to market values, being the date that they are originated. close to their maturity would result the contractual provisions of the undertaking the hedge transaction financial asset, the amount the estimated amount for which a All other financial assets (including in the reclassification of all held-to instrument. and the hedged risk, together with recognised in equity is included in property could be exchanged on the assets designated at fair value maturity investments as available- the methods that will be used to the carrying amount of the asset date of valuation between a willing through profit or loss) are recognised for-sale, and prevent the Group from The Group derecognises a financial assess the effectiveness of the when the asset is recognised. In other buyer and willing seller in an arm’s initially on the trade date at which classifying investment securities as liability when its contractual hedging relationship. cases the amount accumulated in length transaction after proper the Group becomes a party to held-to-maturity for the current and obligations are discharged or equity is reclassified to profit or loss marketing wherein the parties had the contractual provisions of the the following two financial years. cancelled or expire. The Group makes an assessment, in the same period that the hedged each acted knowledgeably, prudently instrument. both at the inception of the hedge item affects profit or loss. If the and without compulsion. At each Loans and receivables Financial assets and liabilities are relationship as well as on an hedging instrument no longer meets reporting date, the value of each The Group derecognises a financial Loans and receivables are financial offset and the net amount presented ongoing basis, whether the hedging the criteria for hedge accounting, asset in these classes is reviewed to asset when the contractual rights to assets with fixed or determinable in the statement of financial position instruments are expected to be expires or is sold, terminated or ensure that it does not materially the cash flows from the asset expire, payments that are not quoted in when, and only when, the Group has highly effective in offsetting the exercised, or the designation is differ from the asset’s fair value at or it transfers the rights to receive an active market. Such assets are a legal right to offset the amounts changes in the fair value or cash revoked, then hedge accounting is that date. Where necessary, the asset the contractual cash flows on the recognised initially at fair value plus and intends either to settle on a net flows of the respective hedged items discontinued prospectively. If the is revalued to reflect its fair value. 75 Section 5 - Financial Statements Section 5 - Financial Statements 76
A revaluation increment is credited When parts of an item of property, The estimated useful lives for the (e) Intangible assets transaction after proper marketing indications that a debtor or to the asset revaluation reserve plant and equipment have different current and comparative years of (i) Goodwill wherein the parties had each acted issuer will enter bankruptcy, the in equity unless it reverses a useful lives, they are accounted for as significant items of property, plant Goodwill arises on the acquisition of knowledgably, prudently and disappearance of an active market revaluation decrement of the same separate items (major components) and equipment are as follows: subsidiaries, associates and jointly without compulsion. Where market- for a security. In addition, for an asset previously recognised in profit of property, plant and equipment. controlled entities. determined prices or values may not investment in an equity security, a or loss. 2017 2016 be available for a livestock asset in its significant or prolonged decline in its Any gains and losses on disposal Goodwill represents the excess of present condition, the Group use the fair value below its cost is objective Plant and 3 - 13 3 - 13 A revaluation decrement is of an item of property, plant and the cost of the acquisition over the present value of expected net cash evidence of impairment. equipment years years recognised in profit or loss unless it equipment (calculated as the Group’s interest in the net fair value flows from the asset discounted at directly offsets a previous increment difference between the net proceeds Plant and a current market-determined rate in The Group considers evidence 2 - 5 2 - 5 of the identifiable assets, liabilities of the same asset in the asset from disposal and the carrying equipment determining fair value. of impairment for receivables years years and contingent liabilities of the revaluation reserve. In addition, amount of the item) are recognised under lease acquiree. and held-to-maturity investment any accumulated depreciation as at in profit or loss. Motorised 5 - 20 5 - 20 (g) Leased assets securities at both a specific asset revaluation date is eliminated against equipment years years Goodwill is measured at cost less Leases in terms of which the Group and collective level. All individually the gross carrying amount of the (ii) Subsequent costs accumulated impairment losses. assumes substantially all the risks significant assets are assessed for asset and the net amount is restated The cost of replacing a part of an Depreciation methods, useful lives In respect of equity accounted and rewards of ownership are specific impairment. Those found to the revalued amount of the asset. item of plant and equipment is and residual values are reviewed at investees, the carrying amount of classified as finance leases. On not to be specifically impaired are recognised in the carrying amount each reporting date and adjusted if goodwill is included in the carrying initial recognition the leased asset then collectively assessed for any Upon disposal, any revaluation of the item if it is probable that the appropriate. amount of the investment. is measured at an amount equal to impairment that has been incurred reserve relating to the particular future economic benefits embodied the lower of its fair value and the but not yet identified. asset being sold is transferred to within the part will flow to the Group, (iv) Pastoral leases (f) Livestock assets present value of the minimum lease retained earnings. and its cost can be measured reliably. The Group has pastoral leases in Livestock assets are comprised of payments. Subsequent to initial In assessing collective impairment The carrying amount of the replaced the Northern Territory, Queensland livestock (cattle and horses) and are recognition, the asset is accounted the Group uses historical trends of Cost – plant and equipment part is derecognised. The costs of and Western Australia. The Northern measured at fair value less estimated for in accordance with the accounting the probability of default, timing of Items of plant and equipment are the day-to-day servicing of plant and Territory leases are either pastoral point-of-sale costs, with any change policy applicable to that asset. recoveries and the amount of loss measured at cost less accumulated equipment are recognised in profit or lease for term with right to apply therein recognised in profit or loss. incurred, adjusted for management’s depreciation and accumulated loss as incurred. for extension or perpetual pastoral Point-of-sale costs include all costs Other leases are operating leases judgement as to whether current impairment losses. lease. The Queensland and Western that would be necessary to sell the and are not recognised in the Group’s economic and credit conditions are (iii) Depreciation Australia leases are fixed term with assets (eg. road transport costs, statement of financial position. such that the actual losses are likely Cost includes expenditure that Depreciation is calculated over the the right to apply for a new lease agent commissions). to be greater or less than suggested is directly attributable to the depreciable amount, which is the at the expiration of the term of the (h) Impairment by historical trends. acquisition of the asset. The cost of cost of an asset, or other amount existing lease. For cattle in feedlots, where the (i) Non-derivative financial self-constructed assets includes the substituted for cost, less its residual product is homogenous and the assets An impairment loss in respect cost of materials and direct labour, value. (v) Right to use market price is transparent, an A financial asset not carried at of a financial asset measured at any other costs directly attributable “Where the Group enters a internal valuation utilising the recent fair value through profit or loss is amortised cost is calculated as the to bringing the assets to a working Items of property, plant and commercial arrangement with selling price and an estimate of assessed at each reporting date to difference between its carrying condition for their intended use, the equipment are depreciated on a a third party which contains a weight represents fair value for the determine whether there is objective amount and the present value of costs of dismantling and removing straight-line basis in profit or loss lease of a pastoral property where reporting date. evidence that it is impaired. A the estimated future cash flows the items and restoring the site over the estimated useful lives of the present value of future lease For cattle on stations, an external financial asset is impaired if there is discounted at the asset’s original on which they are located, and each component since this most payments is below fair value, the independent valuation company, objective evidence of impairment as effective interest rate. Losses are capitalised borrowing costs. closely reflects the expected pattern Group recognises a right-of-use having appropriate recognised a result of one or more events that recognised in profit or loss and of consumption of the future asset. The initial recognition of the professional qualifications and occurred after the initial recognition reflected in an allowance account Cost also may include transfers economic benefits embodied in the right-of-use asset is equal to the recent experience in the location of the asset, and that the loss against receivables. Interest on from equity of any gain or loss asset. Leased assets are depreciated difference between the fair value and and nature of cattle held by the event had a negative effect on the the impaired asset continues to be on qualifying cash flow hedges over the shorter of the lease term the present value of the future lease Group performs a valuation for estimated future cash flows of that recognised through the unwinding of foreign currency purchases of and their useful lives unless it is payments. The right-of-use asset is the reporting date. Fair value asset that can be estimated reliably. of the discount. When an event property, plant and equipment. reasonably certain that the Group amortised over the term of the lease is determined by reference to occurring after the impairment Purchased software that is integral will obtain ownership by the end of (including options to extend held by market values for cattle of similar Objective evidence that financial was recognised causes the amount to the functionality of the related the lease term. the Group) on a straight line basis. age, weight, breed and genetic assets (including equity securities) of impairment loss to decrease, equipment is capitalised as part of make-up. The fair value represents are impaired includes default the decrease in impairment loss is that equipment. the estimated amount for which or delinquency by a debtor, reversed through profit or loss. cattle could be sold on the date of restructuring of an amount due to valuation between a willing buyer the Group on terms that the Group and willing seller in an arm’s length would not consider otherwise, 77 Section 5 - Financial Statements Section 5 - Financial Statements 78
(ii) Non‑financial assets loss is reversed if there has been voluntary redundancy, it is probable (ii) Change in fair value of construction or production of a purposes and the amounts used for The carrying amounts of the a change in the estimates used to that the offer will be accepted, and livestock assets qualifying asset are recognised in taxation purposes. Deferred tax is not Group’s non financial assets, other determine the recoverable amount. the number of acceptances can be Any increase or decrease in the fair profit or loss using the effective recognised for: than livestock assets and deferred An impairment loss is reversed only estimated reliably. If benefits are value of livestock assets is recognised interest method. tax assets, are reviewed at each to the extent that the asset’s carrying payable more than 12 months after as revenue in the Statement of • temporary differences on the reporting date to determine whether amount does not exceed the carrying the reporting date, then they are Comprehensive Income. The Foreign currency gains and losses are initial recognition of assets or there is any indication of impairment. amount that would have been discounted to their present value. movement is determined as the reported on a net basis. liabilities in a transaction that is If any such indication exists, then determined, net of depreciation or difference between the net market not a business combination and the asset’s recoverable amount is amortisation, if no impairment loss (iv) Long service leave value at the beginning and the end (m) Tax that affects neither accounting estimated. had been recognised. The Group accrues and measures of the period adjusted for purchases Tax expense comprises current nor taxable profit or loss; and the liability for long service leave as and sales during the period. and deferred tax. Current tax and • temporary differences related The recoverable amount of an asset (i) Employee benefits the present value of expected future deferred tax are recognised in profit to investments in subsidiaries or cash generating units (“CGU”) is (i) Short-term employee payments to be made in respect (k) Leases or loss except to the extent that it and jointly controlled entities the greater of its value in use and benefits of services provided by employees Payments made under operating relates to items recognised directly to the extent that it is probable its fair value less costs to sell. In Short-term employee benefit up to the reporting date using the leases are recognised in profit or in equity or in other comprehensive that they will not reverse in the assessing value in use, the estimated obligations are measured on an projected unit credit method. The loss on a straight‑line basis over the income. foreseeable future. future cash flows are discounted to undiscounted basis and are expensed Group gives consideration to the term of the lease. Lease incentives their present value using a pre-tax as the related service is provided. A expected future wage and salary received are recognised as an integral Current tax discount rate that reflects current liability is recognised for the amount levels, experience of employee part of the total lease expense, over Current tax is the expected tax Deferred tax is measured at the tax market assessments of the time expected to be paid under short term departures, and periods of service. the term of the lease. payable or receivable on the taxable rates that are expected to be applied value of money and the risks specific cash bonus or profit sharing plans Expected future payments are income or loss for the year, using to temporary differences when they to the asset or CGU. For the purpose if the Group has a present legal or discounted using market yields Minimum lease payments made tax rates enacted or substantively reverse, using tax rates enacted of impairment testing, assets that constructive obligation to pay this at the reporting date on national under finance leases are apportioned enacted at the reporting date, and or substantively enacted at the cannot be tested individually are amount as a result of past service government bonds with terms to between the finance expense and the any adjustment to tax payable in reporting date. grouped together into the smallest provided by the employee, and the maturity that match, as closely as reduction of the outstanding liability. respect of previous years. group of assets that generates cash obligation can be estimated reliably. possible, the estimated future cash The finance expense is allocated to In determining the amount of inflows from continuing use that outflows. each period during the lease term In determining the amount of current deferred tax the Group takes into are largely independent of the cash (ii) Long‑term employee so as to produce a constant periodic tax the Group takes into account the account the impact of uncertain tax inflows of other assets or CGUs. benefits (j) Revenue rate of interest on the remaining impact of uncertain tax positions and positions and whether additional taxes and interest may be due. The The Group’s net obligation in respect (i) Livestock balance of the liability. whether additional taxes and interest Company believes that its accruals The Group’s corporate assets do not of long term employee benefits Revenue from the sale of livestock may be due. The Company believes for tax liabilities are adequate generate separate cash inflows. If other than defined benefit plans is is measured at the fair value of Contingent lease payments are that its accruals for tax liabilities for all open tax years based on there is an indication that a corporate the amount of future benefit that the consideration received or accounted for by revising the are adequate for all open tax years its assessment of many factors, asset may be impaired, then the employees have earned in return for receivable. Revenue is recognised minimum lease payments over the based on its assessment of many including interpretations of tax recoverable amount is determined their service in the current and prior when the significant risks and remaining term of the lease when the factors, including interpretations of law and prior experience. This for the CGU to which the corporate periods; that benefit is discounted rewards of ownership have been lease adjustment is confirmed. tax law and prior experience. This assessment relies on estimates and asset belongs. to determine its present value, and transferred to the buyer, recovery of assessment relies on estimates and assumptions and may involve a the fair value of any related assets is the consideration is probable, the (l) Finance income and finance assumptions and may involve a series of judgements about future An impairment loss is recognised deducted. associated costs and possible return costs series of judgements about future events. New information may if the carrying amount of an asset of goods can be estimated reliably, Finance income comprises events. New information may become available that causes the or its CGU exceeds its estimated (iii) Termination benefits there is no continuing management interest income. Interest income become available that causes the Group to change its judgement recoverable amount. Impairment Termination benefits are recognised involvement with the goods, and the is recognised as it accrues in profit Group to change its judgement regarding the adequacy of existing losses are recognised in profit or as an expense when the Group is amount of revenue can be measured or loss, using the effective interest regarding the adequacy of existing tax liabilities; such changes to tax loss. Impairment losses recognised committed demonstrably, without reliably. method. tax liabilities; such changes to tax liabilities will impact tax expense in in respect of CGUs are allocated to realistic possibility of withdrawal, liabilities will impact tax expense in the period that such a determination reduce the carrying amount of assets to a formal detailed plan to either The timing of the transfers of risks Finance costs comprise interest the period that such a determination is made. in the CGU (group of CGUs) on a pro terminate employment before and rewards varies depending on expense on borrowings, impairment is made. rata basis. the normal retirement date, or to the individual terms of the contract losses recognised on financial assets, Deferred tax assets and liabilities are provide termination benefits as a of sale. For export sales of cattle, and losses on hedging instruments Deferred tax offset if there is a legally enforceable Impairment losses recognised in result of an offer made to encourage usually transfer occurs when the that are recognised in profit or loss. Deferred tax is recognised in respect right to offset current tax liabilities prior periods are assessed at each voluntary redundancy. Termination product is received at the customer’s of temporary differences between and assets, and they relate to reporting date for any indications benefits for voluntary redundancies port. Borrowing costs that are not directly the carrying amounts of assets and income taxes levied by the same tax that the loss has decreased or are recognised as an expense if attributable to the acquisition, liabilities for financial reporting authority on the same taxable entity, no longer exists. An impairment the Group has made an offer of 79 Section 5 - Financial Statements Section 5 - Financial Statements 80
or on different tax entities, but they Any current tax liabilities (or assets) inter-entity receivable/(payable) (o) New standards and market values. The market value of then fair value is estimated by intend to settle current tax liabilities and deferred tax assets arising from equal in amount to the tax liability/ interpretations not yet adopted property is the estimated amount for discounting the difference between and assets on a net basis or their tax unused tax losses of the subsidiaries (asset) assumed. The inter-entity The following standards, which a property could be exchanged the contractual forward price and the assets and liabilities will be realised are assumed by the head entity of receivables/(payables) is at call. amendments to standards and on the date of valuation between current forward price for the residual simultaneously. the tax-consolidated group and are interpretations have been identified a willing buyer and a willing seller maturity of the contract using a recognised as amounts payable Contributions to fund the current tax as those which may impact the in an arm’s length transaction after credit adjusted risk-free interest rate A deferred tax asset is recognised for (receivable) to other entities in liabilities are payable as per the tax Group in the period of initial proper marketing wherein the parties (based on government bonds). unused tax losses, tax credits and the tax-consolidated group in funding arrangement and reflect the application. They are available for had each acted knowledgeably, deductible temporary differences, conjunction with any tax funding timing of the head entity’s obligation early adoption at 31 December and willingly. The market value of The fair value of interest rate swaps to the extent that it is probable arrangement amounts (refer to make payments for tax liabilities 2015, but have not been applied in items of plant, equipment, fixtures is based on broker quotes. Those that future taxable profits will be below). Any difference between to the relevant tax authorities. preparing this financial report: and fittings is based on the market quotes are tested for reasonableness available against which they can these amounts is recognised by the approach and cost approaches by discounting estimated future be utilised. Deferred tax assets are Company as an equity contribution The head entity, in conjunction • AASB 15 Revenue from using quoted market prices for cash flows based on the terms and reviewed at each reporting date and from or distribution to the head with other members of the tax- Contracts with Customers - similar items when available and maturity of each contract and using are reduced to the extent that it is no entity. consolidated group, has also entered The Group is assessing the replacement cost when appropriate. market interest rates for a similar longer probable that the related tax into a tax sharing agreement. The impact on its consolidated instrument at the measurement benefit will be realised. The Company recognises deferred tax sharing agreement provides financial statements resulting As disclosed in note 3, land, buildings date. Fair values reflect the credit tax assets arising from unused tax for the determination of the from the application of AASB 15. and improvements are measured at risk of the instrument and include Additional income tax expenses losses of the tax-consolidated group allocation of income tax liabilities fair value. An external independent adjustments to take account of that arise from the distribution of to the extent that it is probable that between the entities should the • AASB 9 Financial valuation company, having the credit risk of the Company and cash dividends are recognised at the future taxable profits of the tax- head entity default on its tax Instruments - appropriate recognised professional counterparty when appropriate. same time that the liability to pay consolidated group will be available payment obligations. No amounts The Group is assessing the qualifications and recent experience the related dividend is recognised. against which the assets can be have been recognised in the impact on its consolidated in the location and category of 5. USE OF JUDGEMENTS The Company does not distribute utilised. The Company assesses the financial statements in respect of financial statements resulting property being valued, values non-cash assets as dividends to its recovery of its unused tax losses this agreement as payment of any from the application of AASB properties held by the Group on a AND ESTIMATES shareholders. and tax credits only in the period amounts under the tax sharing 9. rotational basis. In preparing these financial statements in conformity with in which they arise, and before agreement is considered remote. • AASB 16 Leases - Australian Accounting Standards – (i) Tax consolidation assumption by the head entity, in The Group is assessing the (ii) Livestock assets Reduced Disclosure Requirements, The Company and its wholly-owned accordance with AASB 112 applied in (n) Goods and services tax impact on its consolidated As disclosed in note 3, the fair value management has made judgements, Australia resident entities are part the context of the tax-consolidated Revenue, expenses and assets are financial statements resulting of livestock held for sale is based estimates and assumptions that of a tax-consolidated group. As a group. Any subsequent period recognised net of the amount of from the application of AASB 16. on the market price of livestock affect the application of accounting consequence, all members of the adjustments to deferred tax assets goods and services tax (GST), except of similar age, breed, condition policies and the reported amounts tax-consolidated group are taxed as a arising from unused tax losses as where the amount of GST incurred and genetic make-up. An external, of assets, liabilities, income and single entity. The head entity within a result of revised assessments of is not recoverable from the taxation 4. DETERMINATION OF independent valuation company, expenses (refer to notes 8, 12 and 13). the tax-consolidated group is Lake the probability of recoverability are authority. In these circumstances, the FAIR VALUES having appropriate recognised Actual results may differ from these Woods Holdings Pty Limited. recognised by the head entity only. GST is recognised as part of the cost A number of the Group’s accounting professional qualifications and estimates. of acquisition of the asset or as part policies and disclosures require the recent experience in the location Current tax expense/income, (ii) Nature of tax funding of the expense. determination of fair value, for both and nature of cattle held by the Estimates and underlying deferred tax liabilities and deferred arrangement and tax sharing financial and non financial assets Group performs a valuation for assumptions are reviewed on tax assets arising from temporary agreements Receivables and payables are stated and liabilities. Fair values have been the reporting date. Where market an ongoing basis. Revisions to differences of the members of The head entity, in conjunction with the amount of GST included. determined for measurement and / determined prices or values may not accounting estimates are recognised the tax-consolidated group are with other members of the tax- The net amount of GST recoverable or disclosure purposes based on the be available for a livestock asset in its prospectively. recognised in the separate financial consolidated group, has entered into from, or payable to, the ATO is following methods. When applicable, present condition, the Group use the statements of the members of the a tax funding arrangement which included as a current asset or liability further information about the present value of expected net cash tax-consolidated group using the sets out the funding obligations of in the statement of financial position. assumptions made in determining flows from the asset discounted at ‘separate taxpayer within group’ members of the tax-consolidated fair values is disclosed in the notes a current market-determined rate in approach by reference to the carrying group in respect of tax amounts. The Cash flows are included in the specific to that asset or liability. determining fair value. amounts of the assets and liabilities tax funding arrangements require statement of cash flows on a gross in the separate financial statements payments to/from the head entity basis. The GST components of (i) Property, plant and (iii) Derivatives of each entity and their tax values equal to the current tax liability cash flows arising from investing equipment The fair value of forward exchange applying under tax consolidation. (asset) assumed by the head entity and financing activities which are The fair value property, plant and contracts is based on their listed and any tax-loss deferred tax asset recoverable from, or payable to, the equipment recognised as a result of market price, if available. If a listed assumed by the head entity, resulting ATO are classified as operating cash a business combination is based on market price is not available, in the head entity recognising an flows. 81 Section 5 - Financial Statements Section 5 - Financial Statements 82
6. CASH AND CASH EQUIVALENTS 9. INVENTORIES Consolidated Consolidated 2017 2016 2017 2016 $’000 $’000 $’000 $’000 Bank balances 5,377 1,269 Feedstocks 2,029 2,142 Petty cash 4 7 Raw materials and consumables 610 787 5,381 1,276 2,639 2,929
7. TRADE AND OTHER RECEIVABLES 10. OTHER ASSETS Current Current Prepayments 3,078 5,169 Trade receivables 2,526 7,845 3,078 5,169 Other receivables - 3,160 2,526 11,005 Non - Current Lease - right to use 28,809 - 8. LIVESTOCK ASSETS Lease accumulated amortisation (1,350) - Security deposit 15,000 15,000 Current 42,459 15,000 Cattle 133,410 121,042 Horses - 1,825 11. GOODWILL 2,526 11,005 For the purposes of impairment testing, goodwill has been allocated to the group’s cash generating units (CGU) as follows: Non - Current PT Juang Jaya Abdi Alam 13,153 13,190 Cattle 190,496 176,288 13,153 13,190 Horses 1,568 - 192,064 176,288 The value change in Goodwill relates to the change in foreign exchange rate between year end dates.
Total The recoverable amount of the this CGU was based on a fair value estimate using discounted cash flows. No impairment Cattle 323,906 297,330 loss was provided, as the estimate of the recoverable amount (including sensitivity ranges) provided sufficient headroom over the carrying value. Horses 1,568 1,825 325,474 299,155 12. BUSINESS COMBINATIONS As at 31 March 2017, livestock assets with a carrying amount of $325,474,000 (31 March 2016: $299,155,000) were pledged to secure bank loans. PT JUANG JAYA ABDI ALAM (“JJAA”) On 28 December 2015, Consolidated Pastoral Company Pty Limited (“CPC”), a wholy owned subsidiary of Lake Woods Holdings Pty Limited, acquired 30% of the shares of PT Juang Jaya Abdi Alam (“JJAA”), increasing its ownership to 80%. Reconciliation of carrying amount The remaining 20% interest is subject to call and put options under the JJAA share purchase agreement. CPC has taken Balance at 1 April 299,155 283,317 a controlling interest in JJAA (a company based in Indonesia which provides lot feeding services of cattle), to allow it to Purchases 14,245 6,631 control the Indonesian import permits and operations of JJAA, to which CPC (and other external parties) can now export Net increase due to births 29,207 36,431 cattle from Australia. Attrition (17,078) (12,469) During the year ending 31 March 2016 the following table summarises the recognised values of JJAA assets acquired and Change in fair value less costs to sell 96,396 61,466 liabilities assumed at the date of acquisition. Sales (96,451) (76,221) Balance at 31 March 325,474 299,155 83 Section 5 - Financial Statements Section 5 - Financial Statements 84
12. BUSINESS COMBINATIONS (CONTINUED) 13. PROPERTY, PLANT AND EQUIPMENT Indentifiable assets acquired and liabilities assumed Reconciliation of carrying amounts Consolidated Assets as at 31 December 2015 2016 2017 $’000 Freehold Cash 163 buildings and Leasehold Plant and Freehold land improvements properties equipment Total Trade and other receivables 582 $’000 $’000 $’000 $’000 $’000 Inventories 2,344 Cost and fair value Other assets 219 Opening balance - 1 April 2016 71,538 44,322 348,081 20,011 483,952 Property, plant & equipment 14,418 Additions - 319 1,952 2,265 4,536 17,726 Disposals - (8,818) (108,997) (1,072) (118,887) Revaluation recognised in income Liabilities as at 31 December 2015 statement - - 30,840 - 30,840 Trade & other payables (1,632) Revaluation recognised in asset revaluation Loans and borrowings (400) reserve - - 129,306 - 129,306 Employee benefits (515) Closing Balance - 31 March 2017 71,538 35,823 401,182 21,204 529,747 Deferred tax liability (1,541) Lease liability - Accumulated depreciation and (4,088) impairment Total identifiable net assets at fair value 13,638 Opening balance - 1 April 2016 - (6,226) (29,359) Depreciation for the year - (874) (2,402)
Purchase consideration transferred was comprised of: Disposals - 5,400 1,323 Cash paid 6,000 Closing Balance - 31 March 2017 - (1,700) (30,438) (11,783) (43,921) Deferred consideration 6,000 Net carrying amount - 31 March 2017 71,538 34,123 370,744 9,421 485,826 Financial liability in respect of put and call options over 20% interest 3,000 2016 Fair value of initial 50% interest 12,000 Cost and fair value 27,000 Opening balance - 1 April 2015 73,715 41,083 317,474 17,236 449,508 Additions - 1,035 18,418 3,670 23,123 Goodwill arising on acquisition as at 28 December 2015 13,362 Disposals - - - (895) (895) Goodwill as at 31 March 2017: $13,153,000 ( 31 March 2016: $13,190,000). The value change from that recognised at date Net revaluation movement recognised in of acquisition relates to the change in foreign exchange rate between acquisition and year end dates. income statement (2,177) - 12,189 - 10,012 Net revaluation movement recognised in The goodwill on acquisition of $13,362,000 comprises the value of expected synergies arising from the acquisition. None asset revaluation reserve - 2,204 - - 2,204 of the goodwill is expected to be deductable for income tax purposes. Closing Balance - 31 March 2016 71,538 44,322 348,081 20,011 483,952
The Group considers there to be no non-controlling interest in JJAA as the call and put options give CPC present access to returns associated with the investment, and thus CPC has accounted for the business combination as though it Accumulated depreciation and impairment acquired a 100% interest. Opening balance - 1 April 2015 - (5,265) (23,053) (7,299) (35,617) The figures above show the fair values of the identifiable JJAA assets and liabilities acquired as at acquisition date. A gain Depreciation for the year - (961) (6,306) (3,630) (10,897) of $3,200,000 was recognised on acquisition as a result of re-measuring to fair value the equity interest in JJAA held by Disposals - - - 589 589 CPC before the business combination. Closing Balance - 31 March 2016 - (6,226) (29,359) (10,340) (45,925) The fair value of the trade receivable on acquisition amounted to $582,000 and the gross amount of trade receivable was Net carrying amount - 31 March 2016 71,538 38,096 318,722 9,671 438,027 $583,000. All transaction costs were recognised through the Statement of profit or loss and other comprehensive income in Other expenses. Property revaluations were carried out by independent third party valuers as at 31 March 2017.
The fair value of JJAA assets were determined by independent third party valulations. 85 Section 5 - Financial Statements Section 5 - Financial Statements 86
14. DEFERRED TAX BALANCES 15. TRADE AND OTHER PAYABLES Movements in deferred tax balances Consolidated Consolidated 2017 2017 2016 Recognised Current $’000 $’000 Net balance in profit or Recognised Net balance Deferred tax Deferred tax Trade payables 5,653 3,359 at 1 April loss in OCI at 31 March assets liabilities Other payables 3,875 12,343 $’000 $’000 $’000 $’000 $’000 $’000 Derivatives used for hedging – interest rate swap 3,334 - Provision for doubtful debts 2 (2) - (0) - (0) 12,863 15,702 Employee benefits 405 (9) - 397 397 - Accrued expenses 431 (60) - 371 371 - Non-current Deferred income 23 (23) - (0) - (0) Derivatives used for hedging – interest rate swap 2,216 7,025 Blackhole expenditure 237 (74) - 163 163 - 2,216 7,025 Property, plant and equipment (15,741) (8,702) (30,986) (55,429) - (55,429) Derivatives 2,107 - (442) 1,665 1,665 - The interest rate swaps held have a notional amount of $171,000,000 and are broken down into the following tranches: Prepayments (67) 10 - (57) - (57) Livestock assets (75,015) (7,830) - (82,845) - (82,845) • $171,000,000 at a fixed rate of 3.645% per annum and a termination date of 3 December 2018. Inventories (201) 32 - (169) - (169) Foreign exchange (gains)/losses - 275 - 275 275 - DERIVATIVE ASSETS AND LIABILITIES DESIGNATED AS CASH FLOW HEDGES The following table indicates the periods in which cash flows associated with cash flow hedges are expected to occur and Others 10 (7) - 3 3 - the carrying amounts of the related hedging instruments. Tax losses 74,145 (5,136) - 69,009 69,009 - Expected cash flows Tax (liabilities)/assets before set-off (13,663) (21,526) (31,429) (66,618) 71,882 (138,500) 2017 Set off of tax - (71,882) 71,882 Carrying amount 12 Months or less More than one year Total Net tax liabilities (13,663) (21,526) (31,429) (66,618) - (66,618) Interest rate swaps $’000 $’000 $’000 $’000 Liabilities 5,550 3,334 2,216 5,550 2016 5,550 3,334 2,216 5,550 Recognised Net balance in profit or Recognised Net balance Deferred tax Deferred tax at 1 April loss in OCI at 31 March assets liabilities 2016 $’000 $’000 $’000 $’000 $’000 $’000 Carrying amount 12 Months or less More than one year Total Provision for doubtful debts 27 (25) - 2 2 - Interest rate swaps $’000 $’000 $’000 $’000 Employee benefits 250 155 - 405 405 - Liabilities 7,025 (2) 7,027 7,025 Accrued expenses 822 (391) - 431 431 - 7,025 (2) 7,027 7,025 Deferred income 107 (84) - 23 23 - Blackhole expenditure 108 129 - 237 237 - The Group has hedged its exposure to interest rate risk by fixing its interest to a fixed rate. The hedge relationship is considered to be effective by management. Property, plant and equipment (11,454) (3,249) (1,038) (15,741) - (15,741) Derivatives 3,010 - (903) 2,107 2,107 - Prepayments (120) 53 - (67) - (67) Livestock assets (63,098) (11,917) - (75,015) - (75,015) Inventories (298) 97 - (201) - (201) Foreign exchange (gains)/losses - - - - - Others (18) 28 - 10 10 - Tax losses 67,832 6,314 - 74,145 74,145 - Tax (liabilities)/assets before set-off (2,832) (8,890) (1,941) (13,663) 77,361 (91,024) Set off of tax - - - - (77,361) 77,361 Net tax liabilities (2,832) (8,890) (1,941) (13,663) - (13,663) 87 Section 5 - Financial Statements Section 5 - Financial Statements 88
16. LOANS AND BORROWINGS 18. PROVISIONS Consolidated Consolidated 2017 2016 2017 2016 Current $’000 $’000 Current $’000 $’000 Motor vehicles 124 185 Deferred Consideration - 1,734 Financed insurance - 596 Call Option 3,000 3,000 Secured bank loans 8,020 1,477 3,000 4,734 8,144 2,258 19. SHARE CAPITAL Non-current Number of shares Secured bank loans 211,000 302,500 On issue at the end of financial year 361,630,006 361,630,006 211,000 302,500 361,630,006 361,630,006 Secured bank loans are secured by a first ranking security over the assets and undertakings of Consolidated Pastoral Company Pty Limited and its subsidiaries via fixed and floating charges and guarantees by that company and its ORDINARY SHARES subsidiaries as well as limited third party charges from other subsidiaries from within the group. The Company does not have authorised capital or par value in respect of its issued shares. All issued shares are fully paid. The holders of these shares are entitled to receive dividends as declared from time to time, and are entitled to one vote The principal amount of the facility outstanding at year end is $211,000,000 (31 March 2016: $302,500,000) with the debt per share at general meetings of the Company. All rights attached to the Company’s shares that are held by the Company service reserve account being a deposit of $15,000,000 (31 March 2016: $15,000,000). The maturity date on the deposit are suspended until those shares are reissued. All shares rank equally with regard to the Company’s residual assets. is 23 June 2017 and attracts an interest rate of 1.92% on that date (2016: 5 April 2016 at 2.14%). The deposit has been classified as non-current as it will continue to be rolled over at maturity until the maturity of the loan facility on 20 DIVIDENDS December 2018. No dividends were declared or paid during the year (2016: Nil). 2017 Secured bank loans consist of: $’000 $’000 $’000 20. RESERVES Maturity Date Rabobank ANZ Principal CPC Loan facility 20 December 2018 141,694 69,306 211,000 NATURE AND PURPOSE OF RESERVES Hedging reserve 141,694 69,306 211,000 The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedges related to hedged transactions that have not yet affected profit or loss. JJAA has the following loan facilities:
• PT Bank UOB Indonesia for IDR 15 billion ($1,473,000) with a maturity date of 16 December 2017; and Consolidated 2017 2016 • PT Bank CIMB Niaga for IDR 97 billion ($9,524,000) with a maturity date of 19 October 2017. $’000 $’000 17. EMPLOYEE BENEFITS Balance at 1 April (4,917) (7,023) Changes in fair value of cash flow hedges 1,032 2,106 Consolidated Balance at 31 March (3,885) (4,917) 2017 2016 Current $’000 $’000 Asset revaluation reserve Annual leave 476 451 The revaluation reserve relates to the revaluation of property, plant and equipment and share of other comprehensive Long service leave - 440 income of equity accounted investees relating to its revaluation of property, plant and equipment. Post employment benefits - 461 Balance at 1 April 2,108 3,176 476 1,352 Net change in share of other comprehensive income of equity accounted investees - (2,512) Net change in fair value of properties 71,051 1,444 Non-current Balance at 31 March 73,159 2,108 Long service leave 408 - Post employment benefits 440 - Employee equity benefit reserve 847 - The employee equity benefit reserve relates to option fees payable for executive options granted pursuant to the Company’s long term incentive plan. 89 Section 5 - Financial Statements Section 5 - Financial Statements 90
21. REVENUE 25. INCOME TAXES Consolidated (a) Amounts recognised in profit or loss 2017 2016 Consolidated $’000 $’000 2017 2016 Cattle sales 109,988 118,938 Current tax expense / (benefit) $’000 $’000 Change in livestock fair value 42,333 40,862 Current year 5,136 (6,314) Other revenue 984 3,299 Total current tax benefit 5,136 (6,314) 153,305 163,098 Deferred tax expense/(benefit) Origination and reversal of temporary differences 16,354 15,403 22. OTHER INCOME Under/(over) provision for income tax in prior year 36 (199) Sundry income 931 732 Change in recognised deductible temporary differences 16,390 15,204 Rental income from property subleases 371 932 Total income tax expense/(benefit) on continuing operations 21,526 8,890 Gain on disposal of plant and equipment - 18 1,302 1,682 (b) Amounts recognised in other comprehensive income
Tax expense/(benefit) recognised in other comprehensive income 31,429 1,941 23. OTHER EXPENSES 31,429 1,941 Corporate and administrative expenses 7,275 8,011 (c) Numerical reconciliation between tax expense to prima facia tax payable: Fuel 1,216 1,542 Loss on disposal of plant and equipment 479 - Profit/(loss) for the year 37,066 20,264 Operating lease 934 1,020 Total income tax expense/(benefit) 21,526 8,890 Transport expenses 13,451 5,736 Profit/(loss) for the year before income tax 58,592 29,154 23,355 16,309
Prima facie tax payable - tax at the Australian tax rate - on profit/(loss) before income 8,746 24. FINANCE INCOME AND FINANCE COSTS tax at 30% (2016: 30%): 17,578 Add Tax effect of: - - Interest income on bank deposits 209 42 Non-deductible expenses 26 239 Net foreign exchange gain - 124 Tax exempt income 3,886 104 Finance income 209 166 Under/(over) provision for income tax in prior year 36 (199) Total income tax expense/(benefit) 21,526 8,890 Interest expense on financial liabilities measured at amortised cost (14,093) (16,080) Bank charges (1,149) (641) (d) Tax consolidation Net foreign exchange loss (296) - Lake Woods Holdings Pty Limited and its 100% owned subsidiaries are a tax consolidated group. Members of the tax Finance costs (15,538) (16,721) consolidated group have entered into a tax sharing arrangement in order to allocate income tax expense to the wholly- owned subsidiaries based on individual tax obligations. In addition, the agreement provides for the allocation of income Net finance costs recognised in profit or loss (15,329) (16,555) tax liabilities between the entities should the head entity default on its tax payment obligations. At the reporting date, the possibility of default is remote. The head entity of the tax consolidated group is Lake Woods Holdings Pty Limited. 91 Section 5 - Financial Statements Section 5 - Financial Statements 92
26. AUDITOR’S REMUNERATION 29. CONTINGENCIES Consolidated During the normal course of business, the Group is involved in legal claims and litigations. There is significant uncertainty as to whether a future liability will arise in respect of these items. The amount of liability, if any, which may arise cannot 2017 2016 be measured reliably at this time. The Directors are of the opinion that all known liabilities have been brought to account Audit services $’000 $’000 and that adequate provision has been made for any anticipated losses. Auditors of the company - KPMG Australia Audit of financial statements 116 125 116 125 30. RELATED PARTIES
Other Auditors Country of Ownership incorporation interest (%) Audit of subsidiaries financial statements 26 19 Parent entity 26 19 Lake Woods Holdings Pty Limited Australia 100 Total Auditors’ remuneration 142 144
Significant subsidiaries 27. RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIES Lake Woods Group Pty Limited Australia 100 Cash flows from operating activities Lake Woods Acquisitions Pty Limited Australia 100 Profit/(loss) for the period 37,066 20,264 Consolidated Pastoral Company Pty Limited Australia 100 Adjustments for: Consolidated Pastoral Property Pty Limited Australia 100 Depreciation 6,604 5,293 Baines River Cattle Company Pty Limited Australia 100 (Gain)/loss on sale of property, plant and equipment (479) (18) Laverton Nominees Pty Limited Australia 100 (Revaluation)/write down of properties and investments (30,840) (13,207) Crosswalk Pty Limited Australia 100 (Increment)/decrement in net market value of livestock (28,076) (40,862) CPC (China) Holdings Pty Limited Australia 100 Share of profit of equity accounted investees - (216) CPC (SE Asia) Pty Limited Australia 100 Tax expense/(benefit) 21,526 8,890 PT Juang Jaya Abdi Alam Indonesia 80 5,802 (19,855) Balances with related parties: Company 2017 2016 Change in trade and other receivables 5,318 (4,348) Investments $’000 $’000 Change in inventories and livestock assets 2,046 23,087 Lake Woods Group Pty Limited 95,846 95,846 Change in other assets 2,771 (3,046) 95,846 95,846 Change in trade and other payables (13,312) 8,917 Change in employee benefits (54) 488 Loans to/(from) related parties Change in deferred income (78) (280) Lake Woods Group Pty Limited 390,919 390,919 Net cash from operating activities 2,493 4,963 Lake Woods Acquisitions Pty Limited (16,650) (16,652) Baines River Cattle Company Pty Limited (1,409) (1,409) 28. COMMITMENTS Consolidated Pastoral Company Pty Limited (85,484) (85,476) (a) Future minimum lease payments under non-cancellable operating leases are as follows: Consolidated Pastoral Property Pty Limited (239) (239) Leased plant and equipment: Crosswalk Pty Limited (23) (23) Not later than one year 124 173 Laverton Nominees Pty Limited - (26) Total leased land and buildings 124 173 287,114 287,094
Property, plant and equipment lease rental payments are generally fixed. Transactions with related parties: (b) Capital commitments Interest income - Lake Woods Group Pty Limited (7) (19,082) The Group did not have any capital commitments at year end. (2016: Nil) (7) (19,082) 93 Section 5 - Financial Statements Section 5 - Financial Statements 94
30. RELATED PARTIES (CONTINUED) 31. DEED OF CROSS GUARANTEE (CONTINUED) 31 Mar 2017 Loans are made by the parent entity to wholly owned subsidiaries. The loans are repayable on demand. The parent $’000 entity does not expect to call these loans within the next 12 months. Revenue 121,611 Loans between Lake Woods Holdings Pty Limited, Lake Woods Group Pty Limited, Lake Woods Acquisitions Pty Limited Cost of Sales (79,213) and Consolidated Pastoral Company Pty Limited are interest bearing at 7% per annum on the principal amount outstanding at year end. The principal sum may be repaid in whole or in part by the Borrower at any time. The Borrower Operating Expenses (261) will repay the Principal Sum to the Lender on the date that is 9 years and 11 months from the date of the agreement or Revaluation of properties 30,840 on receipt of a written demand from the Lender (which ever is earliest to occur) together with all interest accrued on the Principal Sum as at the date of repayment. Finance income 196 Finance costs (14,721) ULTIMATE CONTROLLING PARTY Profit before tax 58,452 Lake Woods Holdings Pty Limited considers Terra Firma Holdings Limited, a Guernsey registered company, to be the Tax Expense (21,357) ultimate parent company. Profit after tax 37,095 KEY MANAGEMENT PERSONNEL COMPENSATION Key management personnel compensation was $ 1,309,000 for the year ended 31 March 2017 (31 March 2016: Items that will never be reclassified to profit or loss $1,372,000). Fair value revaluation of properties 98,321 Items that are or may be reclassified to profit or loss 31. DEED OF CROSS GUARANTEE Changes in fair value of cash flow hedges 1,032 Pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785 the wholly-owned subsidiaries listed Other comprehensive income/(loss) for the year, net of tax 99,353 below are relieved from the Corporations Act 2001requirements for preparation, audit and lodgement of financial Total comprehensive income/(loss) for the year 136,448 reports, and Directors’ reports.
It is a condition of the Instrument that the Company and each of the subsidiaries enter into a Deed of Cross Guarantee. Retained earnings at beginning of year 73,148 The effect of the Deed is that the Company guarantees to each creditor payment in full of any debt in the event of Transfers to and from reserves 27,704 winding up of any of the subsidiaries under certain provisions of the Corporations Act 2001. If a winding up occurs under Retained earnings at end of year 137,947 other provisions of the Act, the Company will only be liable in the event that after six months any creditor has not been paid in full. The subsidiaries have also given similar guarantees in the event that the Company is wound up. Assets The subsidiaries subject to the Deed are: Cash and cash equivalents 4,818 Trade and other receivables 17,603 • Lake Woods Group Pty Limited Livestock assets 115,236 • Lake Woods Acquisitions Pty Limited Inventories 610 • Consolidated Pastoral Company Pty Limited Prepayments 17,278 Total current assets 155,545 Lake Woods Group Pty Limited became a party to the Deed on 21 February 2017, by virtue of a Deed of Assumption. Trade and other receivables - Lake Woods Acquisitions Pty Limited became a party to the Deed on 21 February 2017, by virtue of a Deed of Other assets - Assumption. Livestock assets 192,064 Property, plant and equipment 496,260 Consolidated Pastoral Company Pty Limited became a party to the Deed on 21 February 2017, by virtue of a Deed of Other investments 27,000 Assumption. Total non-current assets 715,324 A consolidated statement of comprehensive income and consolidated statement of financial position, comprising the Total assets 870,869 Company and controlled entities which are a party to the Deed, after eliminating all transactions between parties to the Deed of Cross Guarantee, for the year ended 31 March 2017 is set out as follows: 95 Section 5 - Financial Statements Section 5 - Financial Statements 96
31. DEED OF CROSS GUARANTEE (CONTINUED) 31 Mar 2017 33. SUBSEQUENT EVENT $’000 There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction Liabilities or event of a material and unusual nature likely, in the opinion of the directors of the Group, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years. Trade and other payables 16,971
Loans and borrowings 124 Employee benefits 476 Deferred income (0) Provisions -
Total current liabilities 17,572 Trade and other payables - Loans and borrowings 211,000 Employee benefits 408 Deferred tax liabilities 65,579 Total non-current liabilities 276,987 Total liabilities 294,559 Net assets 576,310
Equity Share capital 368,935 Reserves 69,428 Retained earnings 137,947 Total equity 576,310
32. PARENT ENTITY DISCLOSURES As at, and throughout, the financial year ending 31 March 2017, the parent entity of the Group was Lake Woods Holdings Pty Limited. Company 31 Mar 2017 31 Mar 2016 Results of the parent entity $’000 $’000 Profit for the year (5) 12,458 Other comprehensive income - (49) Total comprehensive income for the year (5) 12,409
Financial position of parent entity at year end Total current assets 166 119,204 Total assets 556,148 556,097 Total current liabilities - - Total liabilities (103,831) (103,859) Net assets 452,317 452,238
Equity Share capital 368,935 368,935 Reserves 154 69 Retained earnings 83,228 83,234 Total equity 452,317 452,238 97 Section 5 - Financial Statements Section 5 - Financial Statements 98
DIRECTORS’ DECLARATION
In the opinion of the directors of Lake Woods Holdings Pty Limited (“the Company”):
(a) the Company is not publicly accountable;
(b) the consolidated financial statements and notes, set out on pages 71 to 96, are in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 31 March 2017 and of its performance, for the financial year ended on that date;
(ii) complying with Australian Accounting Standards - Reduced Disclosure Regime and the Corporations Regulations 2001; and
(c) There are reasonable grounds to believe that the Company and the group entities identified in Note 31 will be able to meet any obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those group entities pursuant to ASIC Corporations (Wholly owned Companies) Instrument 2016/785.
Signed in accordance with a resolution of directors.
MARGAUX BEAUCHAMP MARK BAHEN Non-Executive Director Non-Executive Director
Brisbane Dated this 12th day of June 2017 99 Section 5 - Financial Statements Section 5 - Financial Statements 100
INDEPENDENT AUDIT REPORT In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we 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. We are required to report if we conclude that there is a material misstatement of this Other Information, and Independent Auditor’s Report based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report. To the members of Lake Woods Holdings Pty Limited Responsibilities of the Directors for the Financial Report Opinion The Directors are responsible for: We have audited the Financial Report of Lake Woods The Financial Report comprises: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Holdings Pty Limited (the “Company”). • Consolidated statement of financial position as at Standards – Reduced Disclosure Requirements and the Corporations Act 2001; In our opinion, the accompanying Financial Report of 31 March 2017; • implementing necessary internal control to enable the preparation of a Financial Report that gives a true the Company is in accordance with the Corporations • Consolidated statement of profit or loss and other and fair view and is free from material misstatement, whether due to fraud or error; and Act 2001, including: comprehensive income, consolidated statement • assessing the Group’s ability to continue as a going concern. This includes disclosing, as applicable, • giving a true and fair view of the Group’s financial of changes in equity, and consolidated statement matters related to going concern and using the going concern basis of accounting unless they either intend position as at 31 March 2017 and of its financial of cash flows for the year then ended; to liquidate the Group or to cease operations, or have no realistic alternative but to do so. performance for the year ended on that date; and • Notes including a summary of significant • Complying with Australian Accounting Standards accounting policies; and – Reduced Disclosure Requirements and the Auditor’s responsibilities for the audit of the Financial Report • Directors’ Declaration. Corporations Regulations 2001. Our objective is: The Group consists of the Company and the entities it controlled at the year-end or from time to time during • to obtain reasonable assurance about whether the Financial Report as a whole is free from material the financial year. misstatement, whether due to fraud or error; and • to issue an Auditor’s Report that includes our opinion. Basis for opinion Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Misstatements can arise from fraud or error. They 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 Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of Financial Report. the Financial Report section of our report. A further description of our responsibilities for the Audit of the Financial Report is located at the Auditing and We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements Assurance Standards Board website at: http://www.auasb.gov.au/auditors_files/ar7.pdf of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional This description forms part of our Auditor’s Report. Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code.
Other Information Other Information is financial and non-financial information in the Group’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information. KPMG Stephen Board Partner The Other Information we obtained prior to the date of this Auditor’s Report was the Directors’ Report for the Brisbane year ended 31 March 2017. 12 June 2017 Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon. 101 Section 5 - Financial Statements
CONTACT INFORMATION
REGISTERED OFFICE:
Consolidated Pastoral Company Pty Ltd
Newcastle Waters Station Newcastle Waters NT 0862
P: +61 8 8964 4527 F: +61 8 8964 4533
CORPORATE OFFICE:
Level 2/72 Newmarket Road Windsor QLD 4030
P: +61 7 3174 5200 F: +61 7 3861 1707 www.pastoral.com
The report complies with the Guidelines for Enhanced Disclosure by Portfolio Companies, issued by the Private Equity Reporting Group.