Annual Report 2016 Consolidated Pastoral Company Pty Ltd CONTENTS PAGE
1 Section 1 — About CPC 1 Business Overview 3 Our Business 5 Our Locations 8 Our Achievements 9 CPC Values 10 Our Strategy
12 Section 2 — Executive Summary 13 Chairman’s Statement 15 CEO Report 17 Board of Directors
19 Section 3 — Corporate and Social Responsibility 21 Our People - One Team 23 Health and Safety 26 Our Environment 27 Corporate and Social Responsibility
29 Section 4 — CPC Operations 31 Indonesian Markets Overview 33 Operations Feature - Rotational Grazing 36 CPC Animal Welfare Duty of Care Statement
37 Section 5 — Financial Statements 39 Corporate Governance Statement 43 Directors’ Report (March 2016) 45 Lead Auditors’ Declaration (March 2016) 46 Financial Statements (12 Months to March 2016) 50 Notes to the Financial Statements (12 months to March 2016) 76 Directors’ Declaration (March 2016) 77 Independent Audit Report (March 2016) 79 Contact Information “Wineglass Brand, Symbol of Quality”
HEALTH & SAFETY | LEADERSHIP | TRUST | COMMUNITY | VALUE CREATION CPC is an Australian managed company that is majority owned by an investment fund managed by Terra Firma, which is a leading European private equity firm. 1 Section 1 – About CPC Section 1 – About CPC 2 BUSINESS OVERVIEW
“Our Team is Proud to Connect the Best Australian Beef to the World” 3 Section 1 – About CPC Section 1 – About CPC 4 OUR BUSINESS
3 Australia’s largest privately owned beef and cattle producer
3 Revenue is up 86% for FY 2016
3 Profit after tax of $20.3 million for FY 2016
3 Workplace health and safety incidents down 33% from FY 2015
3 Increased investment in international joint venture JJAA from 50% to 80%
3 Respected and historic brand 5 Section 1 – About CPC Section 1 – About CPC 6 OUR LOCATIONS
Manbulloo Station • Breeding station • 379,131 hectares • 18,000 head capacity • Annual rainfall 974mm Wrotham Park Station Darwin • Breeding Station • 596,430 hectares • 38,500 head capacity • Annual rainfall 1,118 mm Carlton Manbulloo Hill Auvergne Argyle Downs Newry Dungowan Wrotham Park Kirkimbie Ucharonidge Indonesian Feedlots Bunda Newcastle Waters • Feedlots located in Medan and QLD Lampung Mimong • Combined head capacity of 35,500 at one time Cooinda • Employ over 150 local staff • 2016 winner of Nutrition Service Associates Feedlot Isis Downs Allawah Brahman Stud • CPC head genetics and breeding stud Competition Allawah NT Mt Marlow • 3,069 hectares • 1,300 head capacity WA Gowan Comely • Annual rainfall 625mm
Nockatunga Brisbane SA
NSW Perth Bunda/Kirkimbie Station • Breeding and growing station • 408,400 hectares Sydney “5.6m hectares of • 30,000 head capacity Adelaide land across Australia” • Annual rainfall 656mm VIC Melbourne
TAS Hobart 7 Section 1 – About CPC Section 1 – About CPC 8 OUR ACHIEVEMENTS
3 Further investment in Indonesian Joint Venutre (JJAA), taking ownership from 50% to 80% and moving the company closer to its end customers
3 Significant improvements in company productivity reflecting investments in station assets including water and fencing infrastructure
3 Expanded world class genetics program, with a strong focus on increasing profitability right through the value chain
3 Revenue up 86% in FY 2016 to $164.8 million 9 Section 1 – About CPC Section 1 – About CPC 10 CPC VALUES OUR STRATEGY
Health & Safety CPC is committed to becoming a globally significant At CPC, the welfare of our people, customers, animals and land is paramount. agribusiness with a strong presence in all major beef markets. Leadership At CPC, we show leadership at every level because we are all proud to take ownership and responsibility for what we do. Vertically Integrated Trust At CPC, we have the utmost confidence in the goodwill and reliability of our Operation colleagues, customers and industry partners. We are honest and transparent in our exchange with others. Global Cattle and Beef #1 Australian Producer and Supplier of Live Community Cattle At CPC, we value family, diversity and recognition. Marketer
Value Creation At CPC, we are always on the look out for innovative ways to enhance the productivity of our land, the quality of our cattle, the talents of our people and the experience of our customers.
Operational Creating Value and Portfolio Through Genetic Optimisation Change
Secure Land Tenure with Geographic Diversity 11 Section 2 – Executive Summary Section 2 – Executive Summary 12 EXECUTIVE SUMMARY
3 Continued improvements in work place health and safety, with a 57% decrease in number of time lost injuries in FY 2016
3 Profit after tax of $20.3 million (FY 2015: $0.1 million)
3 Cash generation of $21.8 million (FY 2015: ($4.0) million)
3 Total assets at year end of $785.9 million (FY 2015 : $734.7 million) 13 Section 2 – Executive Summary Section 2 – Executive Summary 14 CHAIRMAN’S STATEMENT
The CEO’s Report highlights As the owner (through various performance excellence awards, the significant operational forms of tenure) of over 5.5 million respectively, and one of our most improvements that have continued hectares of land it is timely to northern stations, Manbulloo, to be implemented. I thank our remind of the opportunities has been implementing southern team for their efforts in this that exist to further develop this Australian grazing techniques to regard for without dedicated land and improve productivity – boost and manage sustainable execution all plans fail. One of particularly against the backdrop pasture use. the most rewarding aspects of of a world population predicted my role as Chairman is to have to reach 9.6 billion by 2050 and This year we welcomed Margaux the opportunity to forge strong a falling area of arable land per Beauchamp to our Board as an friendships with those who are person. CPC believes that the next independent non – executive charged with the delivery of few years will not only see director. Margaux is Executive these improved processes in a continual improvement of Director Corporate Finance at remote and sometimes dangerous improved market access but BDO and has a broad background environments. Led by our CEO, significant breakthroughs in terms of advice in the agrifood this band of talented people of productivity and alternate land transaction and corporate M&A require ranges of skill and levels of use. CPC understands the criticality sectors. She also has significant resilience and commitment rarely of implementing these practices in operational experience in the required in any other industry ways that are fully environmentally beef industry having grown up sector. Too long not heard against sustainable – not only because that on stations in Queensland and the noise of the mining sector it is is consistent with its values but maintaining involvement in her Mark Bahen, CPC Brisbane Office gratifying to see the new level of because increasingly a clean, safe, family properties in Western It is a pleasure to pen this The confidence of the Board’s long (the US herd at a 60 year low and recognition of their contribution to animal welfare focussed production Queensland. Margaux makes statement in the context of CPC’s held belief in the strong future for Australia and Canada currently the national interest. system will become more of a point a major contribution to the achievements in FY 2016. the industry driven primarily by the at 20 year lows) it is not difficult of difference for consumers. execution of CPC’s strategic supply vs demand imbalance, was to justify long term decisions Particularly I pay tribute to those plan with the support of the two Whilst the outcomes were greatly bolstered by the prediction that by for substantial further capital of our team who contribute to the By way of example of our support directors nominated by our major assisted by the rising tide of the 2024 beef consumption in the investment in the improvement of work of our peak industry bodies for environmental projects across shareholder Terra Firma - Ruhul macro industry factors, it was developing countries is set to rise CPC’s assets – something that has and to the debate on political and our stations this year CPC sold Amin and Andrew Miller. gratifying to observe how well to a level equal to half of current been strongly pursued over the social issues. Their contribution 700,000 tonnes of carbon by way of positioned CPC was, through well global imports. When this factor previous years. illustrates the importance of having the federal government’s savannah With more grass around, well planned management decisions is bookended by all-time low herd participants like CPC in the sector burning project. Our two feedlots in positioned properties, a strong and goodLARGEST execution, GROWTH to take IN EXPECTED full BEEFnumbers DEMAND held COMING by someFROM ASIANof the AND MIDDLE EASTERN NATIONS WITH AUSTRALIA UNIQUELY POSITIONED TO BE A KEY SUPPLIER TO THESE REGIONS with the scale and integration of Indonesia at Medan and Lampung outlook on cattle price and advantage of the opportunities on largest beef and cattle exporters activities required to promote and received environmental and market access, an enhanced offer. facilitate that contribution. investment in our Indonesian feedlotting operations and a strong WORLD POPULATION GROWTH VS ARABLE LAND PER PERSON management team and Board we
- 1.15MT are confident of our ability to not With no population only deliver strong results in FY17 0.44MT growth, a but in the knowledge that CPC 1kg/capita increase in is well positioned to continue to - 2.25MT demand from Asia, build its scale and prominence 1.64MT requires an additional 1.8MT of as a leading Australian cattle Beef or 3M head of agribusiness. cattle
1.80MT I thank the Board and the CPC
2.01MT team.
Consumption Growth (2000-2030) (kg/ sqkm)
<0 0–50 100–250 500–1,000 No Data
0 50–100 250–500 >1,000
Million Tonnes Net Production (2014) ______Million Tonnes Net Consumption (2014) Source: FAO – Mapping Supply and Demand Source: USDA
LARGEST GROWTH IN EXPECTED BEEF DEMAND COMING FROM ASIAN AND MIDDLE EASTERN NATIONS WITH Source: FAO United Nations; World Bank AUSTRALIA UNIQUELY POSITIONED TO BE A KEY SUPPLIER TO THESE REGIONS
- 1.15MT With no population growth, a 0.44MT 1kg/capita increase in - 2.25MT demand from Asia, 1.64MT requires an additional 1.8MT of Beef or 3M head of cattle
1.80MT
2.01MT
Consumption Growth (2000-2030) (kg/ sqkm)
<0 0–50 100–250 500–1,000 No Data
0 50–100 250–500 >1,000
Million Tonnes Net Production (2014) ______Million Tonnes Net Consumption (2014) Source: FAO – Mapping Supply and Demand Source: USDA 15 Section 2 – Executive Summary Section 2 – Executive Summary 16 CEO’S REPORT
yield and survivability to meet conditions delivered some of CPC’s team to improve performance and our current and future market best results. Year on year revenue returns. CPC is trialling automated demands. This year CPC invested was up 86% to $164.8 million, Net weighing and drafting equipment in predictive DNA technology, Profit after tax of $20.3m up from that will reduce labour costs and artificial insemination and embryo $0.1m and cash generation of improve animal performance. CPC transfer to further enhance our $21.8m up from ($4.0m). The total is also trialling technology that genetics program. assets of CPC increased in value will reduce the labour required to from $734.7m to $785.9m. move and monitor water as well as Along with genetics, CPC continues monitor animal performance in the to review and improve our Animal Looking forward field. Welfare and Health Standards. This is an exciting time for the CPC has a high quality reputation Australian beef industry, with The combination of increased for global beef production and Eastern Young Cattle Indicator productivity from innovation and our work with State and Federal (EYCI) predictions to reach 700c by technology, tight supply and strong Governments to help improve the end of the calendar year and demand will position CPC well into industry standards. As an industry, Northern Australia cattle prices the future. we work to ensure that all cattle projected to break all records by domestically and internationally the end of the year. The Australian are treated to the highest herd is at a historical low point and standards as this not only ensures demand for beef from traditional a quality of life, it increases animal markets like the USA, Japan and productivity. Korea remains strong and new and developing markets like China and Financial highlights Indonesia continue to grow. The great work of the CPC team, Troy Setter, JJAA Feedlot Lampung Indonesia the continued execution of our CPC continues to invest in strategy and improved market innovation, technology and our This year CPC delivered improved of our Queensland properties Dicky Adiwoso will continue to have results across many parts of its continued to remain dryer than a strong involvement within the business culminating in increasing normal. Interstation cattle JJAA business, along with the JJAA net profit from $0.1m in FY2015 to movements and the continued use Management Team. Combined, $20m in FY2016. Our team success of agistment properties allowed both feedlots have the capacity to was due to improved productivity us to tackle the dryer weather hold 35,500 head of cattle at any on station, the focus of our team on conditions in Queensland and one time, however due to permit execution of our strategy and rising continue to supply our customers restrictions throughout Indonesia Commercial Herd beef market conditions. growing demand. our feedlots have been operating Targeted tic o n i o e ent at 60% capacity for most of the ene The entire team at CPC continues In early January, we completed year. In FY2016 we will continue to External Genetics to focus on workplace health the successful acquisition of an extract more value from JJAA and JJAA and Multiplier Studs other CPC and safety. All new staff receive a additional 30% of our Indonesian implement strategies to increase i o n customers targeted induction program and all Joint Venture, JJAA, increasing efficiency. o i n staff participate in further training our holding to 80%. Our continued Elite Stud and safety programs. In FY2016 investment into JJAA, allows us to At CPC this year we have increased n CPC decreased the number of lost have greater control over the joint our focus on the genetics program. n n n n e c t e te time injuries by 57% compared to venture and extract more value By continuing to invest further Internal n Genetics FY2015. from our cattle and the full value in our genetics program we will o o ite chain for live cattle from northern ensure long term value creation The December 2015 / January 2016 Australia. CPC remains the only and a competitive advantage period saw large amounts of rain Australian beef and cattle producer against our peers. We are targeting to e ee c on our Northern properties setting with international holdings. the best available external and them up for a better season than Our JJAA original partners and internal genetics to produce cattle FY2015, however the majority shareholders Greg Pankhurst and with increased fertility, growth, 17 Section 2 – Executive Summary Section 2 – Executive Summary 18 BOARD OF DIRECTORS as at 31 March 2016
Mark joined the Board in November 2008 Ruhul joined the Board in August 2015 after Mark Bahen and was subsequently appointed as Ruhul Amin being with Terra Firma since 2011. Ruhul Non-Executive Director CEO & Executive Director Chairman in August 2012. Mark is a former has worked on a number of Terra Firma’s partner of Clayton Utz, one of Australia’s portfolio businesses including Odeon & UCI leading commercial law firms, where he practiced corporate and commercial cinemas, Four Seasons Health Care, EverPower and Infinis. Most recently, Ruhul law and headed up the agribusiness practice. He has provided advice to some was seconded into Odeon & UCI cinemas where he led a strategic review of the of Australia’s leading agribusiness companies. He is a Director of St John of God business. Prior to this Ruhul led a successful bolt-on acquisition to Four Seasons. Health Care, a leading Australian private hospital and health care operator. Mark has retained a personal involvement in agriculture all his working life and Before joining Terra Firma, Ruhul worked for Credit Suisse and UBS in their M&A currently farms in the Margaret River region. division. Ruhul graduated with a BSci in Mathematics from Imperial College London.
Troy is one of the top cattlemen and Jim commenced with CPC in July 2015 Troy Setter agribusiness leaders in the country and Jim Hunter following a successful career in finance for CFO & Executive Director Non-Executive Chairman well-renowned for his achievements across the last 25 years. the industry. Prior to being appointed Chief Executive Officer at CPC in July 2014, Troy held key management positions at Jim started his career with KPMG, before holding senior finance positions a variety of agribusinesses including Australian Agricultural Company, Torrens across a range of industries including energy, pharmaceuticals/animal genetics, Investments, North Australian Cattle Company, Killara Feedlot and Twynam information technology and media. Group. Throughout his career Troy has been responsible for all aspects of the supply chain; from cereal and fibre cropping, grain and grass fed cattle Jim brings a wealth of experience across restructuring and merging / integrating operations, domestic and international logistics, trading and shipping through to drive rapid growth. Jim is a Chartered Accountant and Chartered Secretary to genetic improvement, beef and cattle marketing, broad strategy development, with 15 years’ experience in governance roles and a career built on integrity. investment and finance.
Chris has been a Non-Executive Director Mike re-joined the CPC Board in August Chris Evans since November 2008. He is currently an Mike Kinski 2015 as a Non-Executive Director. Mike has Non-Executive Director Non-Executive Director Executive Director at BDO, as well as a been involved in a number of the group’s Director of his family owned companies investments and all of its renewable energy Bulloo River Pastoral Company and Farmshopaustralia. Chris has been involved investments. Mike is a Terra Firma appointed Non-Executive Director of Infinis in agribusiness for over 35 years and was formerly Managing Director of Taylor Energy plc. Prior to joining Terra Firma in 2000, Mike was Group Chief Executive Byrne and then Rural Management Partners, rural valuation and agribusiness Office of Stagecoach Holdings plc (FTSE 250) and Chief Executive Officer of Power consultancies and more recently was Chairman of the Agricultural Management Distribution and Water Operations for Scottish Power plc. Company Pty Ltd. Chris began his working life as a Jackaroo, Overseer, Station Manager and Research and Development Officer for Stanbroke Pastoral Prior to this he was a main board director of Jaguar Cars ltd. He was also a Non- Company. Over the 11 years of employment with Stanbroke, he was based on a Executive Director of the UK Post Office from 1998 to 2002. Mike has an HNC in number of cattle properties and at the head office. Electrical Engineering from Coventry University and an MBA (with distinction) from Warwick University. He is a visiting professor and honorary doctor at Margaux is an experienced corporate Middlesex University and was a visiting professor at both Brunel and Reading Margaux finance executive having spent 20 years plus Universities. advising the private sector and government Beauchamp on the sale, purchase and financing of Non-Executive Director businesses; strategy; feasibility; due diligence; Independent Expert Reports; and valuations. Specific agribusiness experience includes advising on a number of major transactions. Margaux is an Executive Director with BDO Corporate Finance. Before joining BDO she worked with a specialist agribusiness advisory firm, Schroders Investment Bank and a private equity fund. Margaux has a life long association with the agricultural industry from having been raised on a cattle station in Far Western Queensland. She maintains a private investment in the beef industry. 19 Section 3 – Corporate and Social Responsibility Section 3 – Corporate and Social Responsibility 20 CORPORATE AND SOCIAL RESPONSIBILITY 3 33% decrease in workplace incidents
3 40% of our team are female, making CPC industry leaders
3 3% increase in female participation in the management team in FY 2016
3 Enhancing environmental stewardship through carbon farming initiative involving fire management on 36% of the land managed by CPC 21 Section 3 – Corporate and Social Responsibility Section 3 – Corporate and Social Responsibility 22 OUR PEOPLE - ONE TEAM
accomplishments during the year. These annual awards address Station Safety, Team Development and Operational Excellence. During FY 2016 recognition was also given to team members with periods of service ranging from 10 to 20 years with CPC.
HR Transformation During FY2016 a review of the CPC HR Strategy was completed. This CPC fosters a work environment and maintain an enjoyable and remuneration. CPC fosters an review formed the building blocks that attracts, develops and inspires respectful workplace. CPC is an environment where potential and of the CPC HR strategy 2016-2020 a team of people who are capable industry leader in creating equal current employees are selected based on four key areas: Building and informed, well prepared to opportunities for our employees, and promoted based on their Competency and Capability, HR lead CPC forward and meet our CPC acknowledges the human qualifications, merit, aptitude and and Business Alignment, Employee future vision. rights of our team and members of ability. Experience and HR Fundamentals. Jacqui Cannon & Troy Setter presenting Emma Williams with the community. A restructured HR team is now CPC’s 2016 People Choice Award. CPC aims to create a working The Australian Government taking CPC forward on the HR environment which allows Equal employment opportunity Workplace Gender Equality Agency transformation journey. allowing management to identify directly helped 27 Indigenous all employees to realise their principles are adhered to in reports reveal that CPC employs a high performing staff for succession people develop real skills and full potential and contribute all aspects of the employment higher ratio of women to men than planning. careers. This program targets Talent Engagement At CPC we provide additional employment in the pastoral to making CPC a successful relationship including recruitment, its peers for all report categories At CPC we recognise that to create activities to all staff as a means industry through on-property organisation. We are committed access to jobs, promotions, ranging from direct reports to the a high performing workforce of collaborative engagement experience and accredited training to working as one team, to create selection for training, transfers, CEO, management team and the requires a strategic Employee which includes the Spellbore for Indigenous people in the performance reviews and station teams. In fact FY16 saw a Life Cycle Framework based on Campdraft and the Colt Challenge Northern Territory. During FY 3% increase in the women to men role competencies and proactive at Newcastle Waters. 2016 participants in the Real Jobs ratio for management positions behaviours. To ensure an program were based at Newcastle 11% 11% within CPC with 22.6% of Senior alignment between roles and Waters and Auvergne Station. Managers being women. CPC CPC’s vision and values, CPC has Learning and 3% CPC Team continues to set the standard for developed an overarching HR Development others to follow. framework to achieve these goals. GM and Staon Managers CPC maintains a high focus on its Indonesian Exchange This framework includes Reward training and retention activities Head Stockpersons Program Community and Recognition, Recruitment to ensure best in class operations. Staonhands CPC is a proud and active member and Selection, Performance CPC has had business ties with CPC makes use of an effective Indonesia for over 20 years. CPC Supporng Staon Team of the local communities in Management, Learning and combination of external and Development, Career and Talent is involved in a program which Brisbane Support Team which it operates. This includes internal training providers to bridge 42% 33% sponsorship of local sporting Management and Employee is providing a valuable two-way skill gaps and provide an effective learning experience for Indonesian and agricultural events by way of Engagement and Retention. career path development process. financial assistance or provision of university students and our CPC 81% of entry level employees team. Through the NTCA Indonesia livestock and personnel to assist Employee engagement is achieved received training in the FY16 year with the event. CPC is also the through trust, integrity, two way Australian Pastoral Program, CPC which is on par with the FY15 hosts the students on our Northern proud supporter of junior athletes commitment and communication. statistic. in the Northern Territory. The use of Individual Performance Territory stations for six weeks as and Development Plans (IDPD’s) part of their ten week exchange program. Manbulloo, Auvergne Position M F completed mid-year and end Real Jobs Program Recognition of year assists with formulating CPC, in partnership with the and Newcastle Waters Station The CPC team recognises each Directors 6 1 a training needs analysis. This Northern Territory Cattlemen’s hosted the students in 2015 and other’s achievements. At the Senior Managers (other than above) 22 24 allows staff to focus on learning Association (NTCA) has been 2016, providing a life changing annual conference, awards and development needs whilst involved in the Real Jobs program experience for future agribusiness Employees 66 52 are given to individuals and since 2010. In that time CPC has leaders and developing long term Figures represent employee numbers at stations in recognition of their ties between northern Australia the end of FY16 and Indonesia. 23 Section 3 – Corporate and Social Responsibility Section 3 – Corporate and Social Responsibility 24 HEALTH & SAFETY
Claudia Turnbull, Newcastle Waters
Health and safety is a leading value During FY2016, the CPC WHS education programs and awareness at CPC. Strategy was further developed and initiatives, further embedding our aligned to our 2016 Safety Plan, processes into operations. CPC is committed to providing which outlines clear objectives with a safe and healthy workplace timeframes for implementation The health of our people and and promoting a culture where to assist in the continued drive having them fit for work is a unsafe behaviours at work are towards WHS improvement. priority. In FY2016 we continued unacceptable. The CPC team As part of our ongoing focus on our wellness initiatives including a works in diverse and often remote health and safety during 2016, wellness allowance and provision locations across northern Australia, initiatives included job task of a company wide Employee their safety is our core concern. analysis of on-station employees, Assistance Program. In FY2016 significant further review of the station contractor reductions in all round injury data process and early one-on-one CPC has shown a continued were recorded including a 33% contact with incoming new improvement in WHS management decrease in workplace incidents, employees by WHS Management system and statistical data related following a decrease of 17% year during on-boarding. to health and safety during on year in 2015. Occurrence of lost FY16. CPC will continue to build time injuries decreased by 57% in Moving into FY2017 we will on these solid foundations to FY16 and the average time lost for continue to focus on audit reduce incident and injury in the these injuries decreased by 16% compliancy across all stations, workplace and continues to target in this report period. The number maintaining a proactive approach our principal WHS goal of keeping of employee injuries recorded per to reporting near misses and our people safe and healthy. month has decreased by 18% on hazards – preventing injuries before a 12 month rolling average to 31 they happen. We are continuing our March 2016 Reduced workplace incidents Year ended 31 March 2016 2015 2014 Annual reduction in workplace incidents 33% 17% 27%
At CPC, our people foster the highest standards of Workplace Health & Safety at all levels, Jason Purcell, Allawah 25 Section 3 – Corporate and Social Responsibility Section 3 – Corporate and Social Responsibility 26 OUR ENVIRONMENT
In FY 2016 CPC registered and won early dry season (March to April) the right to farm carbon on our and reducing the area required northern most Western Australia to be burnt. The shift from and Northern Territory stations predominantly late to early dry that fall within the 600-1000mm season fires results in fires burning rainfall zone. Carbon farming is at lower intensities due to lower an opportunity for CPC to further fuel loads. This in turn results in enhance our environmental a reduction in the area burnt and stewardship of land assets and in the amount of fuel consumed. potentially generate income Consequently, there is a reduction through the trading of any carbon in greenhouse gas emissions credits generated. This income will released from fires. assist the financial management of the project and assist further asset The current fire regime across development. CPC expects to abate the tropical north of Australia is in the vicinity of 715,000 tonnes of dominated by large, late dry season greenhouse gases over the 10 year wildfires fuelled by very dry pasture period of the contract. and vegetation. These intense, wide frontage, hot fires tend to The Government established burn most of the fuel available, Carbon Farming Initiative (CFI) including the canopies of trees and allows CPC and other land can continue for several days or managers to earn carbon credits by weeks. Mosaic fires (patches) in the storing carbon (sequestration) or early dry season are cooler because reducing greenhouse gas emissions there is less fuel, it is not so dry (abatement). Greenhouse gases and dewy overnight conditions include methane (CH4) and nitrous often limit the spread of the fire or oxide (N2O). Participants earn completely extinguish the burn. carbon credits by establishing a carbon farming project under Strategic early dry season burning an approved CFI methodology, reduces fuel loads and creates which sets out the ground rules burnt fire breaks in the landscape. for the activity of the project. CPC Fire breaks alongside roads or has established a carbon farming water courses help to reduce the project utilising the CFI Savanna risk of hot fires spreading in the Burning Methodology to abate late dry season. Understanding greenhouse gases in the tropical the ecology of fire and taking savanna areas of our northern a big picture view of both the holdings. Stations involved in project and station operation is the project include: Dungowan, critical to a successful project Manbulloo, Newry, Auvergne, the and operations outcome. To this Carlton Hill aggregation, parts end CPC will engage with suitably of Newcastle Waters and Bunda skilled environmental scientists aggregation. These stations total and groups to assist our station 2 million hectares, more than one manager’s develop suitable fire third of the land managed by CPC. management plans to minimise the impact on station operations The CPC Savanna Burning and at the same time maximise the project focuses fire management abatement opportunity. on shifting the seasonality of burning events from late dry season (October to November) to 27 Section 3 – Corporate and Social Responsibility Section 3 – Corporate and Social Responsibility 28 CORPORATE AND SOCIAL RESPONSIBILITY Native Title Rangeland grazing is the basis of local waterbirds. The plan focuses Anti-Corruption cattle. Our techniques ensure more supplementry feeding and care Native Title is a property right CPC’s business and as practiced on maintaining the natural flows CPC is committed to conducting productive and easier to manage for the various classes of breeder which recognises that some by CPC has minimum impact on of water through the catchment to its business in an ethical, honest cattle, reducing stress and harm for cattle. Indigenous Australians have a the largely intact native landscape the lake, reduction in the impact and transparent manner. Bribery both animal and staff. An important traditional right and interest in the in comparison to other more of the invasive weed Parkinsonia and corruption are not consistent factor in the employment of new Animal welfare is of paramount land. Native Title can co-exist with intensive land uses. Station aculeate, monitoring waterbird with the Group’s values and present staff is their affinity with animals importance to CPC and we actively non-indigenous property rights as specific environmental impact populations and recording the significant risks to its business and their ability to demonstrate a manage animal welfare at every is the case on CPC properties with assessments are completed details of the flora and fauna and it is therefore committed passion for what they do. stage of the value chain whilst Native Title determinations. as part of our responsibility to of this special area. On-going to the prevention, deterrence operating within the legislative Non-exclusive Native Title maintain our natural resources. commitment to the Parkinsonia and detection of bribery and All practices and management framework of laws & regulations determinations have been made Furthermore, CPC undertakes control program is producing corruption. decisions utilised to operate a and quality assurance. over the following Northern an extensive pasture monitoring significant results in reducing weed CPC property are in line with the Territory station leases: Newcastle program on the northern infestations, the project has also Under the Group Anti-Bribery fulfilment of the 5 freedoms of Good governance around animal Waters, Auvergne, Newry, properties complementing our produced other benefits. It formed Policy it is prohibited to offer, give, animal welfare set out by the OIE, welfare assists CPC connect the Tandyidgee, Ucharonidge and weed and erosion management the basis for the development of an solicit or accept a bribe, whether the global governing body for best Australian beef to the world. Dungowan. plans in place on several stations. indigenous contracting business, cash or other inducement to or animal welfare. In Queensland there have been two Over the past twelve months, providing mentoring and support from any person or company. Native Title determinations over CPC continued to implement the to a local indigenous contractor We continued to seek out and Nockatunga Station. During June actions within plans as they relate who has grown the business implement new technology to 2016 a determination over Comely to pasture, weed and erosion to create local employment Animal Welfare assist with favourable animal occurred and Indigenous Land Use management, which included opportunities. The project has also CPC believes we have a duty of welfare outcomes. We are actively Agreements were signed with the focus on the management of resulted in the compilation of a care for our animals throughout monitoring the research of pain Iman people. riparian areas on Wrotham Park. book to be published in 2017 which their entire life. At CPC we believe relief products, lobbying the captures local and indigenous plant our social licence to produce beef relevant legislative bodies for The past year has also seen the knowledge. cattle is a privilege and therefore early registration of said products Environment continuation of the conservation we do everything within our power and participating in research & CPC undertakes regular review management project in CPC has also continued to protect to maintain the highest standards development where possible. of compliance with state and partnership with the Northern its native birds by carrying out of animal welfare. To this end we Furthermore, management federal environmental regulations Territory and Federal Government vegetation assessments within, and maintain regular inspections of practices such as breeder as part of its environmental over the Lake Woods area on infrastructure maintenance of, the our service provider and customer segregation continue to be utilised management systems. In addition Newcastle Waters Station. Gouldian Finch enclosure on Newry facilities. CPC supports and to increase the effectiveness of to this regulatory baseline, the Covering an area of almost Station. voluntarily engages in all steps company strives to meet or exceed 140,000 ha, Lake Woods and designed to eliminate the inhuman industry best practice guidelines in its catchment are listed as of and cruel treatment of all animals. environmental management. National Significance for their importance for migratory and Such initiatives as the Cattlecare, Livestock Production Assurance program, Export Supply Chain Assurance System and the Australian Standards for the Export of Livestock are fully utilised both domestically and internationally. Our staff are conversant with the requirements of our animal welfare commitment and policy.
CPC continues to train and refresh the skills of our staff in the areas of low stress stock handling techniques and animal behaviour recognition for the sole purpose of producing calm, quiet, stress free
Source : Livecorp 29 Section 4 – CPC Operations Section 4 – CPC Operations 30 CPC OPERATIONS 31 Section 4 – CPC Operations Section 4 – CPC Operations 32 INDONESIAN MARKET OVERVIEW Indonesia continues to be venture, PT Juang Jaya Abdi Alam JJAA employs over 200 people Australia’s largest live cattle export (JJAA), which owns and operates as permanent and contract market – it is already the 4th most two feedlots in Indonesia. In employees working in the populous country in the world, December 2015, CPC increased its cattle feeding, marketing, crop with a young, rapidly growing investment in JJAA from 50% to farming, composting and support population, and a strong trend 80%, reflecting both commitment divisions. JJAA’s community towards urbanisation driving up to CPC’s strategy of getting closer sustainability program includes per capita income, leading to to its end customers, and CPC’s cattle training program for larger middle and upper classes, confidence in the future of the local farmers along with a which demonstrate increasing Indonesian market as part of CPC’s breeding program supporting consumption of beef per capita. portfolio. Indonesian Government policy, emergency response programs Indonesia has the world’s JJAA’s feedlots are located in and educational scholarships for largest Muslim population and Lampung (South Sumatra) and the local community members beef consumption is central to Medan (North Sumatra). Both and supporting various local Indonesian culinary culture. The feedlots are ESCAS accredited, with community activities. small and fragmented domestic “best in class operations”. Annual Prices cattle market in Indonesia is capacity is 107,000 head with 100 Darwin live export prices continued driving demand for live cattle and day feeding cycles and targeting to strengthen through FY2015 and Australia’s proximity to Indonesia 2kg average daily weight gain. FY2016. Indicative feeder steer makes Australian live cattle very prices peaked at $3.75/kg lwt attractive. Bureau of Agriculture CPC remains the only Australian in February 2016 and, with only and Resource Economics and cattle producer of scale with a slight downturn in April/May Sciences (ABARES) has forecast established value adding 2016 due to permit and shipping that the real value of Indonesian operations in Indonesia. constraints, have since returned domestic beef production will to that peak level. The outlook increase more than 200% by 2050 In FY2016, of the total 49,000 for the remainder of the FY2017 in comparison with 2009, but beef head of cattle exported from its year is positive with demand from consumption will rise more than 14 Northern operations, CPC sold Indonesia and Vietnam likely to times during the same period. 33,000 head into JJAA, comprising remain strong, and prices likely The growth is largely expected to 5% of total beef cattle imports to remain high, the only likely come from the growing population into Indonesia during FY2016. The constraints are permit allocations of urban consumers. remaining exported CPC cattle from Indonesia and availability of were sold to exporters supplying Northern cattle. CPC in Indonesia other customers in Indonesia and CPC has invested in and supplied other Asian markets (Vietnam, cattle for over 15 years to a joint Philippines and Malaysia).
MLA Presentation to LWH Directors 33 Section 4 – CPC Operations Section 4 – CPC Operations 34 OPERATIONS FEATURE - ROTATIONAL GRAZING During 2014, a development capital 2. The cattle are creating ground expenditure project was approved movement with undesirable for time controlled grazing at fodder, hayed off grasses and Manbulloo Station. The concept of excretions being trampled into the project is to improve utilisation, the ground providing natural productivity and sustaining fertilisation and aeration of pastures of these paddocks using the soil. the principles of time controlled 3. The rest period allows the grazing (graze, rest and recover, country to recover and regrow and graze) during the wet the grasses to regenerate season. new leaves that are easily accessible to cattle. The area developed for this project 4. Soil health has improved is approximately 2,000 hectares enhancing the productivity of and is located close to the station the cattle shown in the weight complex. Fences have been gains of the cattle in the erected to enclose 28 paddocks project. ranging from 1 to 100 hectares in size. During the wet season the Monitoring sites have been set paddocks have 1,000 feeder type up throughout the project area cattle and 100 cows (included with and are visited and photographed the feeders to set behavioural regularly by Station Manager examples). Cattle are transferred Cameron Kruckow. Along with into the rotation project from the this, Environmental Consultant Kimberley Group and Manbulloo and Veterinarian Matt Bolam Station in November and December visits the sites annually to record each year. The cattle have on species, quantity and condition average 122 square metres to graze of each species present and soil each day utilising grass in the surface condition. Each site is second phase of growth when it is photographed and recorded on file at its most palatable and highest as part of this process to identify nutritional value along with wet improvement in pasture quality season phosphorous supplement. and sustainability throughout the During the time controlled grazing rotation area. period two people are required Performance of the cattle during to move cattle on motorbikes or the 2015/2016 wet season has horses through the paddocks based been pleasing. During 2016, on the rotation calendar. cattle averaged 175 days in the rotational cells with an average During the two years that this daily gain of 0.6kg. We will use project has been operational at these results and learnings from Manbulloo, the following benefits the last two years to further have been observed: improve the productivity of 1. The cattle are forced to be the cattle in the rotation, the less selective on the pasture sustainability of pastures and that they graze given the utilisation of the area. large number of cattle on a small area of grass, allowing the more desirable grasses opportunity to grow in the area. 35 Section 4 – CPC Operations Section 4 – CPC Operations 36 CPC ANIMAL WELFARE DUTY OF CARE STATEMENT The welfare of our animals is of paramount importance to CPC and our people.
Our people are responsible for the welfare of our animals.
CPC strives to continually improve and promote the standards of animal welfare whilst animals are on our properties and when they are in the care and ownership of others up to the point of slaughter.
CPC applies the principles of low stress stock handling and regularly provides instruction and training to employees in these methods.
CPC cattle have access to sufficient food, supplements and water and every effort is taken to protect our animals from disease and predators.
CPC engages expert veterinarians and management to ensure that all endeavours are used to keep its cattle free from stress, disease and illness.
CPC at all times at least meets the minimum requirements of the Codes of Practice and Regulations for the Management and Transport of Animals for both land and sea.
CPC believes there is an ethical imperative of care extending beyond the change in legal title of its animals. CPC works closely with the Australian and Indonesian Governments, our customers and with our joint venture partner in Indonesia to ensure acceptable standards of animal welfare are in place.
CPC reserves the right to inspect our customers facilities where CPC cattle are transported, managed and slaughtered and withhold supply if, in the company’s absolute discretion, it we not satisfied with the standards under which CPC animals are cared for.
CPC supports all steps designed to eliminate the inhumane and cruel treatment of animals. 37 Section 5 – Financial Statements Section 5 – Financial Statements 38 FINANCIAL STATEMENTS 39 Section 5 – Financial Statements Section 5 – Financial Statements 40 CORPORATE GOVERNANCE STATEMENT Lake Woods Holdings Pty Ltd’s Board believes that effective corporate and any changes to the group’s of the Audit Committee; all non- a formal letter provided by the financing arrangements and executive directors. The Chief external auditors confirming their governance is a fundamental aspect of a well-run company and is financial policies. Regular updates Executive Officer, Chief Financial independence and objectivity on legal and risk management, Officer and external auditors within the context of applicable committed to achieving the highest standards of corporate governance, health and safety, and other key are normally invited to attend regulatory requirements and company policies are given to the Audit Committee meetings. The professional standards. corporate responsibility and risk management in directing and Board. Committee meets at least twice The Committee also reviews annually at appropriate times in the terms of responsibility and controlling the business. Where urgent decisions are the reporting and audit cycle. scope of the audit (including required on matters specifically schedules of unadjusted errors and reserved for the Board in between The Committee oversees the representation letters) as set out in To provide a better understanding we describe the key governance meetings, there is a process in relationship with the external the external auditors’ engagement place to facilitate discussion and auditors. It reviews their audit plan letter; the overall work plan for structures and internal controls operating within the company as at 31 decision-making. The directors and discusses audit findings with the forthcoming year, together also have access to the advice them. In addition, the Committee with the cost effectiveness of March 2016. Through these mechanisms, the company aims to apply and services of the Company reviews the effectiveness of the the audit as well as the auditors’ Secretary and external advisers, as group’s internal controls and risk remuneration and performance; the highest standards of corporate governance. appropriate. management systems and also any major issues which arise during ensures that there is proportionate the course of the audit and their Board and Committee Composition (as at 31 March 2016) and independent investigation resolution; key accounting and Remunerations Consolidated Lake Woods Finance Audit Board Committees Director’s Name and Nominations Pastoral Company The Board has established three of any matter bought to their audit judgements; the level of Holdings Pty Ltd Committee Committee Committee Pty Ltd committees, each with clearly attention. The Committee is errors identified during the audit; required to assist the Board to and the recommendations made to Mark Bahen ✓ C ✓ ✓ ✓ defined terms of reference, procedures, responsibilities and fulfil its responsibilities related to management by the auditors and Chris Evans ✓ ✓ ✓ ✓ ✓ powers. external financial reporting and management’s response. Margaux associated announcements. During ✓ ✓ ✓ Beauchamp the year the Committee reviewed Remuneration and Finance Committee either as a Committee or as part of Mike Kinski ✓ ✓ C As at 31 March 2016 the Finance the Board: Nominations Committee Ruhul Amin ✓ ✓ C ✓ C Committee was chaired by • the annual financial As at 31 March 2016, the Ruhul Amin. This Committee statements, including the Remuneration and Nominations Troy Setter ✓ ✓ C is responsible for making requirements for financial Committee was chaired by Mike Jim Hunter ✓ ✓ recommendations to the Board on reporting; Kinski and comprised three non- funding strategy, capital structure • changes proposed to the executive directors. The Committee C = indicates Chair and management of financial Company’s accounting policies meets at least twice a year and risks as well as the policies and and practices, and at such other times as the Board Lake Woods Holdings reporting to the Board on whether they are able to attend control procedures, approval of • significant accounting issues; requires. operations and the development of or not. This enables the directors Board Constitution and investments and divestments, and the audit plan and The Committee’s specific duties strategic plans for consideration by to make informed decisions on raising of external financing processes. and responsibilities are as follows: Procedures the Board as a whole. corporate and business issues and the granting of securities, • to establish criteria to be used There were two executive directors under consideration. guarantees and indemnities as The Committee is also in selecting Directors and and five non-executive directors The Board meets regularly during set out within the delegated responsible for the development, ensure remuneration packages on the Board as at 31 March 2016, the year. During the twelve months The Board has adopted a Corporate authorities. In certain specific implementation and monitoring of are designed to attract, with Mark Bahen as Chairman. to 31 March 2016, eight scheduled Governance Charter and a formal circumstances the Board has the company’s policy on external motivate and retain staff of the The Chairman is responsible meetings were held, all in Australia. schedule of delegated authorities delegated authorities to the audit. The Committee has oversight highest calibre; for the effective running of the All members of the Board receive to facilitate decision making. Key Committee to make decisions in responsibility for monitoring • to approve the remuneration Board and for communications detailed financial and operational policy and strategic decisions these areas. independence, objectivity and of the executive directors with all directors. He ensures information and regular are made by the full board. Such compliance with ethical and and management, to provide that the Board receives sufficient presentations from executives matters include, but are not limited regulatory requirements. The independent and objective information on financial, trading on the business performance, in to, the final approval of the annual Audit Committee As at 31 March 2016, the Audit Committee recommends the assessment of any benefits and corporate issues prior to the addition to items for decision and accounts and budget, major Committee was chaired by Ruhul appointment and reappointment granted to directors and board meetings. The executive minutes of Board committees in acquisitions and disposals, any Amin. There were three members of the company’s external management, and directors are responsible for advance of each board meeting, new or changes to existing policies auditors and annually reviews 41 Section 5 – Financial Statements Section 5 – Financial Statements 42
Seasonal Risks Risk of currency movements Key Person Risk Whilst CPC’s geographic spread CPC’s major markets are overseas CPC’s key management positions of properties provides a natural (particularly Indonesia) and require considerable knowledge hedge against seasonal variations, any material movements in the and expertise. The loss of people extreme occurrences (eg flood, Australian dollar can impact in key positions would impact the droughts, fires) can have an impact profits. operation of the group. on operations. Disease risk Competition risk The Australian cattle industry is CPC operates in a competitive disease free and has an exceptional global protein market with varied reputation worldwide for provision competitors from other beef of high quality beef. As we have producers and other protein seen in other countries with JJAA and CPC team members at JJAA Lampung feedlot sources (e.g. pork or chicken). foot and mouth disease, if these standards are compromised the Risk of Market Fluctuation reputational risk to Australian beef • to ensure that the pension Cash on hand at 31 March 2016 was Any material decrease in global producers would be significant. arrangements throughout the Cash Position and $16.3m including $15.0m deposited cattle and beef prices will impact Group are appropriate, well as security under the loan facility. the sales and profitability of the Workplace Injury supervised and conform to Finance Facilities company. The nature of CPC’s business Debt finance increased by $5.0m applicable law. means employees are working from 31 March 2015 to 31 March Risk Management and Risk of change in Government with animals and machinery in 2016 due to further drawdowns on The Committee will also review Internal Controls policy remote locations. CPC employs the secured bank loans in order to The company’s aim is to manage the design of incentive and Any change in the policies of a designated WHS Manager fund capital expenditure projects risk and to control its business and performance related pay plans the Governments of Australia or who develops and monitors to maintain and develop the financial activities cost-effectively for approval by the Board and Indonesia with regard to the sale group safety policies and formal group’s operating capacity, and the and in a manner that enables it will review the company’s and transport of cattle can affect operating procedures. Workplace increased investment in JJAA. to explore profitable business remuneration policies as a whole the sales and profitability of the injuries could have an impact on Borrowings comprise two facilities: opportunities in a disciplined way. and remuneration trends across the company. business operations. group. 1. a bilateral loan to Consolidated The Board has overall responsibility Pastoral Company Pty Ltd of for the systems of internal controls, $315.0m that is jointly funded which are designed to manage risk CPC Operating Board by Rabobank ($211.3m) and of failure to achieve the objectives A meeting of the Consolidated ANZ ($103.7m). $302.5m of of the business where such risk Pastoral Company Pty Ltd Board the facility has been utilised cannot be eliminated. The Board is held quarterly as a minimum. leaving $12.5m undrawn has considered the systems of During the twelve months to at 31 March 2016. Interest internal control for the accounting 31 March 2016, four scheduled rates payable are hedged year under review and is satisfied meetings were held. As at 31 March by agreements that covered that they are appropriate. 2016, the Board was chaired by approximately sixty percent Troy Setter and comprises two of the drawn principal at 31 executive directors and one non- Key Business Risks March 2016. As at 31 March The company and its subsidiaries executive director. 2016, the outstanding loan to The Operating Board oversees the in carrying out their principal security value ratio was 37% business activities are affected by day to day management of the compared to 39% at 31 March Group’s on property operations and business risks arising from their 2015. This loan facility expires trading environment and from reports to the Lake Woods Holdings in December 2018. Pty Ltd Board in accordance with an uncertain global economic 2. a loan to subsidiary PT. the Corporate Governance Charter environment. The key business Juang Jaya Abdi Alam of risks are highlighted below: and Board Delegated Authorities. IDR15,000,000 funded by UOB Bank in Indonesia. This loan was fully drawn as at 31 March 2016, and expires in December 2016. 43 Section 5 – Financial Statements Section 5 – Financial Statements 44 DIRECTORS’ REPORT
Indemnification and Rounding Off Lead Auditor’s insurance of officers The Company is of a kind referred Independence The directors present their report together with the During the financial period a to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance Declaration related company paid a premium The Lead auditor’s independence consolidated financial report of the Group, comprising in respect of a contract insuring with that Class Order, amounts in the financial report and directors’ declaration is set out on page 45 the directors of the Company, and and forms part of the directors’ Lake Woods Holdings Pty Limited “the Company” and its all executive officers of the Group report have been rounded off to the nearest thousand dollars, unless report for the financial year ended subsidiaries, for the year ended 31 March 2016 and the and of any related body corporate 31 March 2016. against a liability incurred as otherwise stated. auditor’s report thereon. a director, secretary, executive This report is made with a officer to the extent permitted by resolution of the directors: the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the Directors The profit from continuing Group, to affect significantly the liability and the amount of the The directors of the Company at operations before finance operations of the Group, the results premium. ______any time during or since the end of costs, income tax, depreciation, of those operations, or the state Troy Setter the financial year are: amortisation, revaluation and of affairs of the Group, in future Director Mark Bahen impairment amounted to profit financial years. Brisbane Christopher Evans of $37,795K for the year ended 31 Dated this 16th day of June 2016 March 2016 (31 March 2015: Profit Fergal Leamy (Resigned on 02/04/15) Likely Developments of $22,039K). Sami Kassam (Resigned on 01/08/15) The Group will continue to pursue Elizabeth Walker (Resigned on 01/08/15) its policy of increasing profitability Troy Setter The Group’s livestock assets and market share in the beef Jim Hunter (Appointed on 01/08/15) increased in value to $299,155K as industry during the next financial Ruhul Amin (Appointed on 01/08/15) at 31 March 2016 versus $283,317K year. Mike Kinshi (Appointed on 01/08/15) as at 31 March 2015. Livestock Margaux Beauchamp (Appointed on assets together with property, plant Further information about likely 01/08/15) and equipment comprise of 93.8% developments in the operations of the Group’s total assets as at of the Group and the expected Principal Activities year end. results of those operations in The principal activity of the Group future financial years has not been during the course of the financial Dividends included in this report because year was ownership and operation There were no dividends paid disclosure of the information would of pastoral properties producing or declared by the Company to be likely to result in unreasonable beef cattle. members during the year ended 31 prejudice to the Group. March 2016 (2015: Nil). There were no significant changes in the nature of the activities of the Environmental Group during the year. Events Subsequent to Regulation Reporting Date The Group’s operations are On 27 April 2016 the Group sold one subject to various environmental Operating and Financial station, Humbert River, to optimise regulations under both Review the Group’s property portfolio. Commonwealth and State The profit for the Group after legislation. The Board believes that income tax amounted to $20,264K Apart from this sale, there has the Group has adequate systems for the year ended 31 March 2016 not arisen in the interval between in place for the management of its (31 March 2015: Profit of $140K). the end of the financial year and environmental requirements and is the date of this report any item, not aware of any breaches of those transaction or event of a material environmental requirements as and unusual nature likely, in the they apply to the Group. opinion of the directors of the 45 Section 5 – Financial Statements Section 5 – Financial Statements 46 LEAD AUDITOR’S DECLARATION STATEMENT OF FINANCIAL March 2016 POSITION As at 31 March 2016 Consolidated
Note 31 Mar 2016 31 Mar 2015 $'000 $'000 Lead Auditor’s Independence Declaration under Section Assets 307C of the Corporations Act 2001 Cash and cash equivalents 6 1,276 2,178 Trade and other receivables 7 11,005 6,657
To: the directors of Lake Woods Holdings Pty Limited Biological assets 8 122,867 105,097 Inventories 9 2,929 992 Other assets 10 5,169 2,765 I declare that, to the best of my knowledge and belief, in relation to the audit for the year ended 31st March 2016 Total current assets 143,246 117,689 there have been: Other assets 10 15,000 15,000 Biological assets 8 176,288 178,220 • no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation Property, plant and equipment 13 438,027 413,891 to the audit; and • no contraventions of any applicable code of professional conduct in relation to the audit. Goodwill 12 13,190 - Other investments 106 209 Investment in equity accounted investees 11 - 9,682 Total non-current assets 642,611 617,001 Total assets 785,857 734,691 KPMG Liabilities Trade and other payables 15 15,702 7,300 Stephen Board Loans and borrowings 16 2,258 731 Partner Employee benefits 17 1,352 834 Deferred income 78 357 Brisbane 16th June 2016 Provisions 18 4,734 - Total current liabilities 24,124 9,222 Trade and other payables 15 7,025 10,034 Loans and borrowings 16 302,500 297,483 Deferred tax liabilities 14 13,663 2,832 Total non-current liabilities 323,188 310,349 Total liabilities 347,312 319,571 Net assets 438,545 415,120
Equity Share capital 19 368,934 368,934 Reserves 20 (3,080) (3,729) Accumulated Profit/(Loss) 72,691 49,915 Total equity 438,545 415,120
The notes on pages 50 to 75 are an integral part of these financial statements. 47 Section 5 – Financial Statements Section 5 – Financial Statements 48 STATEMENT OF PROFIT OR LOSS AND STATEMENT OF CHANGES OTHER COMPREHENSIVE INCOME IN EQUITY For the year ended 31 March 2016 For the year ended 31 March 2016 Consolidated Consolidated Issued Asset Hedging Foreign Employee Accumulated Total capital revaluation reserve currency equity profit equity reserve translation benefit Note 31 Mar 2016 31 Mar 2015 reserve reserve $'000 $'000 $'000 $'000 $'000 $’000 $'000 $'000 $'000 Revenue 21 163,098 85,717 Balance at 1 April 2014 368,934 393 (474) - - 49,775 418,628 Other income 22 1,682 2,769 Total comprehensive income for the year Personnel expenses (13,406) (13,988) Profit for the year - - - - - 140 140 Livestock expenses (92,820) (34,018) Other comprehensive income Property repairs and maintenance (4,666) (5,259) Net change in fair value of property - 231 - - - - 231 Other expenses 23 (16,309) (13,131) Net change in fair value of investment in equity accounted - 2,552 - - - - 2,552 Share of profits/(losses) of equity accounted investees (net of 216 (51) investees income tax) Changes in fair value of cash flow Profit from continuing operations before finance costs, income - - (6,549) - - - (6,549) 37,795 22,039 hedges tax, depreciation, amortisation, revaluation and impairment Total other comprehensive income Depreciation and amortisation (5,293) (4,919) - 2,783 (6,549) - - - (3,766) for the year Revaluation of properties and investments 13,207 800 Contributions by owners to the Profit before finance costs and income tax expense 45,709 17,920 Company Issue of options - - - - 118 - 118 Finance income 24 166 90 Balance at 31 March 2015 368,934 3,176 (7,023) - 118 49,915 415,120 Finance costs 24 (16,721) (16,748) Net finance costs (16,555) (16,659) Balance at 1 April 2015 368,934 3,176 (7,023) - 118 49,915 415,120 Profit before income tax 29,154 1,262 Total comprehensive income for Income tax expense 25 (8,890) (1,122) the year Profit for the year 20,264 140 Profit for the year - - - - - 20,264 20,264 Other comprehensive income Other comprehensive income Net change in fair value of property - 1,444 - - - - 1,444 Items that will never be reclassified to profit or loss Net change in fair value of foreign - - - (341) - - (341) Fair value revaluation of properties 1,444 231 currency translation reserve Net change in fair value of - - - - (48) - (48) Items that are or may be reclassified to profit or loss employee benefits Equity-accounted investees – movements 20 - 2,552 Changes in fair value of cash flow - - 2,106 - - - 2,106 Foreign currency translation reserve – share of other (341) - hedges comprehensive income Total other comprehensive income - 1,444 2,106 (341) (48) - 3,161 Employee benefits – share of other comprehensive income 20 (48) 118 for the year Changes in fair value of cash flow hedges 20 2,106 (6,549) Contributions by owners to the Other comprehensive income/(loss) for the year, net of tax 3,161 (3,648) Company Total comprehensive income/(loss) for the year 23,425 (3,508) Net change in fair value of investment in equity accounted - (2,512) - - - 2,512 - investees Issue of options ------Balance at 31 March 2016 368,934 2,108 (4,917) (341) 70 72,691 438,545
The notes on pages 50 to 75 are an integral part of these financial statements. The amounts recognised directly in equity are disclosed net of tax. The notes on pages 50 to 75 are an integral part of these financial statements. 49 Section 5 – Financial Statements Section 5 – Financial Statements 50 STATEMENT OF CASH FLOWS NOTES TO THE For the year ended 31 March 2016 FINANCIAL STATEMENTS For the year ended 31 March 2016 Consolidated 1. Reporting entity • Land, buildings and statement of financial position Lake Woods Holdings Pty improvements are included in relation to the classification Limited (the “Company”) is within property, plant and of biological assets has been Note 31 Mar 2016 31 Mar 2015 domiciled in Australia. The equipment and are measured amended to conform with the $'000 $'000 Company’s registered office is at fair value. 2016 presentation by reallocating $178,220K of biological assets from Cash flows from operating activities at Newcastle Waters Station, Drovers Drive, Newcastle Waters, (c) Functional and presentation current to non-current. Cash receipts from customers 119,137 74,562 Northern Territory, Australia. The currency Cash paid to suppliers and employees (97,308) (78,519) consolidated financial statements These consolidated financial (a) Basis of consolidation Cash generated/(utilised) in operations 21,829 (3,957) of the Company as at and for the statements are presented in (i) Subsidiaries Australian dollars, which is the Subsidiaries are entities controlled Interest and bill discounts received 158 89 year ended 31 March 2016 comprise the Company and its subsidiaries Company’s functional currency. by the Group. Control exists when Interest paid (17,024) (14,700) (together referred to as the the Group has the power to govern Net cash received from/(used in) operating activities 27 4,963 (18,568) “Group” and individually as “Group The Company is of a kind referred the financial and operating policies entities”) and jointly controlled to in ASIC Class Order 98/100 dated of an entity so as to obtain benefits entities. 10 July 1998 and in accordance from its activities. In assessing Cash flows from investing activities with that Class Order, amounts in control, potential voting rights Proceeds from sale of property, plant and equipment 319 609 The Group is a for-profit entity and the financial report and directors’ that currently are exercisable are Investment in other assets - (209) is primarily involved in producing report have been rounded off to the taken into account. The financial beef cattle. nearest thousand dollars, unless statements of subsidiaries are Dividends received - 58 otherwise stated. included in the consolidated Acquisition of additional interest equity-accounted investee (now 12 (10,266) - financial statements from the consolidated) 2. Basis of Preparation (d) Use of estimates and date that control commences until (a) Statement of compliance Acquisition of property, plant and equipment 13 (2,412) (10,854) judgements the date that control ceases. The In the opinion of the directors, the The preparation of financial accounting policies of subsidiaries Net cash used in investing activities (12,359) (10,396) Group is not publicly accountable. statements requires management have been changed when necessary The financial statements are to make judgements, estimates to align them with the policies Tier 2 general purpose financial Cash flows from financing activities and assumptions that affect the adopted by the Group. statements which have been application of accounting policies Repayment of borrowings (28,212) (6,500) prepared in accordance with and the reported amounts of (ii) Investments in associates and Drawdown of borrowings 34,706 34,455 Australian Accounting Standards – assets, liabilities, income and jointly controlled entities (equity- Reduced Disclosure Requirements Net cash from financing activities 6,494 27,955 expenses. Actual results may differ accounted investees) adopted by the Australian from these estimates. Associates are those entities in Accounting Standards Board and which the Group has significant Net (decrease)/increase in cash and cash equivalents (902) (1,009) the Corporations Act 2001. These Estimates and underlying influence, but not control, over the Cash and cash equivalents opening balance 2,178 3,187 financial statements comply with assumptions are reviewed on financial and operating policies. Australian Accounting Standards – Cash and cash equivalents at balance date 6 1,276 2,178 an ongoing basis. Revisions Significant influence is presumed Reduced Disclosure Requirements. to accounting estimates are to exist when the Company holds recognised in the period in which between 20 and 50 percent of the They were authorised for issue by the estimate is revised and in any voting power of another entity. the Board of Directors on 16 June The notes on pages 50 to 75 are an integral part of these financial statements. future periods affected. Jointly controlled entities are those 2016. entities over whose activities the 3. Significant Accounting Group has joint control, established (b) Basis of measurement by contractual agreement and The consolidated financial Policies requiring unanimous consent for statements have been prepared on The accounting policies set strategic financial and operating the historical cost basis except for out below have been applied decisions. the following material items in the consistently to all periods statement of financial position: presented in these consolidated • Derivative financial financial statements, and have instruments are measured at been applied consistently by the fair value. Group entities. • Biological assets are measured Comparative information in the at fair value less costs to sell. 51 Section 5 – Financial Statements Section 5 – Financial Statements 52
Investments in associates and Gains and losses are recognised assets acquired and liabilities that particular foreign operation is the date that they are originated. less any impairment losses. Any jointly controlled entities are when the contributed assets are assumed. If the fair value of the recognised in profit or loss. All other financial assets (including sale or reclassification of a more accounted for using the equity consumed or sold by the equity net assets acquired is in excess assets designated at fair value than insignificant amount of method (equity-accounted accounted investees or, if not of the aggregate consideration Any goodwill arising on the through profit or loss) are held-to-maturity investments investees) and are initially consumed or sold by the equity transferred, the gain is recognised acquisition of a foreign operation recognised initially on the trade not close to their maturity would recognised at cost. The Group’s accounted investee, when the in profit or loss. and any fair value adjustments to date at which the Group becomes a result in the reclassification of all investment includes goodwill Group’s interest in such entities is the carrying amount of assets and party to the contractual provisions held-to maturity investments as identified on acquisition, net of any disposed of. After initial recognition, goodwill liabilities arising on the acquisition of the instrument. available-for-sale, and prevent the accumulated impairment losses. is measured at cost less any are treated as assets and liabilities Group from classifying investment (iv) Business combinations and accumulated impairment losses. of the foreign operation and The Group derecognises a financial securities as held-to-maturity for The consolidated financial goodwill For the purpose of impairment translated at the spot rate of asset when the contractual rights the current and the following two statements include the Group’s Business combinations are testing, goodwill acquired in a exchange at the reporting date. to the cash flows from the asset financial years. share of the profit or loss and accounted for using the acquisition business combination is, from the expire, or it transfers the rights other comprehensive income method. The cost of an acquisition acquisition date, allocated to each (ii) Transactions to receive the contractual cash Loans and receivables of equity-accounted investees, is measured as the aggregate of of the Group’s cash-generating Transactions in foreign currencies flows on the financial asset in a Loans and receivables are financial after adjustments to align the the consideration transferred, units that are expected to benefit are translated to the respective transaction in which substantially assets with fixed or determinable accounting policies with those of measured at acquisition date fair from the combination, irrespective functional currency of the Group at all the risks and rewards of payments that are not quoted in the Company, from the date that value and the amount of any non- of whether other assets or liabilities exchange rates at the dates of the ownership of the financial asset an active market. Such assets are significant influence or joint control controlling interest in the acquiree. of the acquiree are assigned to transactions. Monetary assets and are transferred. Any interest in recognised initially at fair value commences until the date that For each business combination, the those units. liabilities denominated in foreign transferred financial assets that is plus any directly attributable significant influence or joint control Group elects whether to measure currencies at the reporting date created or retained by the Group is transaction costs. Subsequent ceases. the non-controlling interest in Where goodwill has been allocated are retranslated to the functional recognised as a separate asset or to initial recognition loans the acquiree at fair value or at to a cash-generating unit and currency at the exchange rate at liability. and receivables are measured When the Group’s share of losses the proportionate share of the part of the operation within that that date. The foreign currency at amortised cost using the exceeds its interest in an equity- acquiree’s identifiable net assets. unit is disposed of, the goodwill gain or loss on monetary items is Financial assets and liabilities effective interest method, less any accounted investee, the carrying Acquisition related costs are associated with the disposed the difference between amortised are offset and the net amount impairment losses. amount of that interest, including expensed as incurred and included operation is included in the cost in the functional currency presented in the statement of any long-term investments that in administrative expenses. carrying amount of the operation at the beginning of the period, financial position when, and only Loans and receivables comprise form part thereof, is reduced to when determining the gain or loss adjusted for effective interest when, the Group has a legal right cash and cash equivalents and, zero, and the recognition of further When the Group acquires a on disposal. Goodwill disposed in and payments during the period, to offset the amounts and intends trade and other receivables. losses is discontinued except to business, it assesses the financial these circumstance is measured and the amortised cost in foreign either to settle on a net basis or the extent that the Group has an assets and liabilities assumed for based on the relative values of currency translated at the to realise the asset and settle the Cash and cash equivalents obligation or has made payments appropriate classification and the disposed operation and the exchange rate at the end of the liability simultaneously. Cash and cash equivalents on behalf of the investee. designation in accordance with portion of the cash-generating unit year. Non-monetary assets and comprise cash balances and call the contractual terms, economic retained. liabilities denominated in foreign The Group has the following non- deposits with original maturities (iii) Transactions eliminated on circumstances and pertinent currencies that are measured at derivative financial assets: held-to- of three months or less from the consolidation conditions as at the acquisition (b) Foreign currency fair value are retranslated to the maturity financial assets and loans acquisition date that are subject Intra-group balances and date. (i) Translation of subsidiaries functional currency at the exchange and receivables. to an insignificant risk of changes transactions, and any unrealised On consolidation, the assets and rate at the date that the fair value in their fair value, and are used by income and expenses arising If the business combination is liabilities of foreign operations was determined. Foreign currency Held-to-maturity financial assets the Group in the management of from intra-group transactions achieved in stages, the previously are translated into Australian differences arising on retranslation If the Group has the positive intent its short-term commitments. Bank are eliminated in preparing the held equity interest is remeasured dollars at the rate of exchange are recognised in profit or loss. and ability to hold debt securities overdrafts that are repayable on consolidated financial statements. at its acquisition date fair value prevailing at the reporting date Non-monetary items in a foreign to maturity, then such financial demand and form an integral part Unrealised gains arising from and any resulting gain or loss is and their statements of profit or currency that are measured assets are classified as held to of the Group’s cash management transactions with equity accounted recognised in profit or loss. loss are translated at exchange in terms of historical cost are maturity. Held to maturity financial are included as a component of investees are eliminated against rates prevailing at the dates of translated using the exchange rate assets are recognised initially cash and cash equivalents for the the investment to the extent of the Goodwill is initially measured the transactions. The exchange at the date of the transaction. at fair value plus any directly purpose of the statement of cash Group’s interest in the investee. at cost, being the excess of the differences arising on translation attributable transaction costs. flows. Unrealised losses are eliminated in aggregate of the consideration for consolidation purposes are (c) Financial instruments Subsequent to initial recognition the same way as unrealised gains, transferred and the amount recognised in other comprehensive (i) Non‑derivative financial assets held-to-maturity financial assets but only to the extent that there is recognised for non-controlling income. On disposal of a foreign The Group initially recognises loans are measured at amortised cost no evidence of impairment. interest over the net identifiable operation the component of other and receivables and deposits on using the effective interest method, comprehensive income relating to 53 Section 5 – Financial Statements Section 5 – Financial Statements 54
(ii) Non‑derivative financial recognised as a deduction from Cash flow hedges Following initial recognition revalued amount of the asset. (ii) Subsequent costs liabilities equity, net of any tax effects. When a derivative is designated as at cost, land, buildings and Upon disposal, any revaluation The cost of replacing a part of an The Group initially recognises debt the hedging instrument in a hedge improvements are measured on a reserve relating to the particular item of plant and equipment is securities issued and subordinated (iv) Derivative financial of the variability in cash flows fair value basis as determined by a asset being sold is transferred to recognised in the carrying amount liabilities on the date that they instruments, including hedge attributable to a particular risk director’s valuation. retained earnings. of the item if it is probable that are originated. All other financial accounting associated with a recognised asset the future economic benefits liabilities (including liabilities The Group holds derivative or liability or a highly probable An external, independent valuation Cost – plant and equipment embodied within the part will flow designated at fair value through financial instruments to hedge its forecast transaction that could company, having appropriate Items of plant and equipment are to the Group, and its cost can be profit or loss) are recognised interest rate risk exposures. affect profit or loss, the effective recognised professional measured at cost less accumulated measured reliably. The carrying initially on the trade date, which portion of changes in the fair value qualifications and recent depreciation and accumulated amount of the replaced part is is the date that the Company On initial designation of the of the derivative is recognised experience in the location and impairment losses. derecognised. The costs of the becomes a party to the contractual derivative as the hedging in other comprehensive income category of property being valued, day-to-day servicing of plant and provisions of the instrument. instrument, the Group formally and presented in the hedging values properties within the Cost includes expenditure that equipment are recognised in profit documents the relationship reserve in equity. Any ineffective Group’s portfolio on a rotational is directly attributable to the or loss as incurred. The Group derecognises a financial between the hedging instrument portion of changes in the fair value basis to ensure that the carrying acquisition of the asset. The cost of liability when its contractual and hedged item, including the of the derivative is recognised amount does not differ materially self-constructed assets includes the (iii) Depreciation obligations are discharged or risk management objectives and immediately in profit or loss. from the asset’s fair value at the cost of materials and direct labour, Depreciation is calculated over cancelled or expire. strategy in undertaking the hedge balance sheet date. Fair value any other costs directly attributable the depreciable amount, which transaction and the hedged risk, When the hedged item is a non- is determined by reference to to bringing the assets to a working is the cost of an asset, or other Financial assets and liabilities together with the methods that will financial asset, the amount market values, being the estimated condition for their intended use, amount substituted for cost, less its are offset and the net amount be used to assess the effectiveness recognised in equity is included amount for which a property the costs of dismantling and residual value. presented in the statement of of the hedging relationship. in the carrying amount of could be exchanged on the date of removing the items and restoring financial position when, and only the asset when the asset is valuation between a willing buyer the site on which they are located, Items of property, plant and when, the Group has a legal right The Group makes an assessment, recognised. In other cases the and willing seller in an arm’s length and capitalised borrowing costs. equipment are depreciated on a to offset the amounts and intends both at the inception of the amount accumulated in equity is transaction after proper marketing straight-line basis in profit or loss either to settle on a net basis or hedge relationship as well as on reclassified to profit or loss in the wherein the parties had each Cost also may include transfers over the estimated useful lives to realise the asset and settle the an ongoing basis, whether the same period that the hedged item acted knowledgeably, prudently from equity of any gain or loss of each component since this liability simultaneously. hedging instruments are expected affects profit or loss. If the hedging and without compulsion. At each on qualifying cash flow hedges most closely reflects the expected to be highly effective in offsetting instrument no longer meets the reporting date, the value of each of foreign currency purchases of pattern of consumption of the The Group has the following non- the changes in the fair value criteria for hedge accounting, asset in these classes is reviewed to property, plant and equipment. future economic benefits embodied derivative financial liabilities: loans or cash flows of the respective expires or is sold, terminated or ensure that it does not materially Purchased software that is integral in the asset. Leased assets are and borrowings, bank overdrafts, hedged items during the period exercised, or the designation is differ from the asset’s fair value at to the functionality of the related depreciated over the shorter of the and trade and other payables. for which the hedge is designated, revoked, then hedge accounting is that date. Where necessary, the equipment is capitalised as part of lease term and their useful lives and whether the actual results of discontinued prospectively. If the asset is revalued to reflect its fair that equipment. unless it is reasonably certain that Such financial liabilities are each hedge are within a range of forecast transaction is no longer value. the Group will obtain ownership by recognised initially at fair value 80-125 percent. For a cash flow expected to occur, then the balance When parts of an item of property, the end of the lease term. plus any directly attributable hedge of a forecast transaction, in equity is reclassified to profit or A revaluation increment is credited plant and equipment have different transaction costs. Subsequent the transaction should be highly loss. to the asset revaluation reserve useful lives, they are accounted The estimated useful lives for the to initial recognition, these probable to occur and should in equity unless it reverses a for as separate items (major current and comparative years of financial liabilities are measured at present an exposure to variations Other non-trading derivatives revaluation decrement of the same components) of property, plant and significant items of property, plant amortised cost using the effective in cash flows that could ultimately When a derivative financial asset previously recognised in equipment. and equipment are as follows: interest rate method. affect reported net income. instrument is not designated in a profit or loss. 2016 2015 hedge relationship that qualifies Any gains and losses on disposal (iii) Share capital Derivatives are recognised for hedge accounting, all changes A revaluation decrement is of an item of property, plant Plant and 3 - 13 3 - 13 Ordinary shares initially at fair value; attributable in its fair value are recognised recognised in profit or loss unless and equipment (calculated as equipment years years Ordinary shares are classified as transaction costs are recognised immediately in profit or loss. it directly offsets a previous the difference between the net Plant and 2 - 5 2 - 5 equity. Incremental costs directly in profit or loss as incurred. increment of the same asset in proceeds from disposal and the equipment years years attributable to the issue of ordinary Subsequent to initial recognition, (d) Property, plant and equipment the asset revaluation reserve. carrying amount of the item) are under lease shares and share options are derivatives are measured at fair (i) Recognition and measurement In addition, any accumulated recognised in profit or loss. value and changes therein are Fair value – land, buildings and depreciation as at revaluation date Motorised 5 - 20 5 - 20 accounted for as described below. improvements is eliminated against the gross Equipment years years Land, buildings and improvements carrying amount of the asset and are initially measured at cost. the net amount is restated to the 55 Section 5 – Financial Statements Section 5 – Financial Statements 56
Depreciation methods, useful lives An external, independent fair value through profit or loss An impairment loss in respect The Group’s corporate assets do of any related assets is deducted. and residual values are reviewed at valuation company, having is assessed at each reporting of a financial asset measured at not generate separate cash inflows. (iii) Termination benefits each reporting date and adjusted if appropriate recognised date to determine whether there amortised cost is calculated as the If there is an indication that a Termination benefits are appropriate. professional qualifications and is objective evidence that it is difference between its carrying corporate asset may be impaired, recognised as an expense recent experience in the location impaired. A financial asset is amount and the present value of then the recoverable amount is when the Group is committed (iv) Pastoral leases and nature of cattle held by the impaired if there is objective the estimated future cash flows determined for the CGU to which demonstrably, without realistic The Group has pastoral leases in Group performs a valuation for evidence of impairment as a result discounted at the asset’s original the corporate asset belongs. possibility of withdrawal, to a the Northern Territory, Queensland the reporting date. Fair value is of one or more events that occurred effective interest rate. Losses are formal detailed plan to either and Western Australia. The determined by reference to market after the initial recognition of the recognised in profit or loss and Impairment losses recognised in terminate employment before Northern Territory leases are either values for cattle of similar age, asset, and that the loss event had reflected in an allowance account prior periods are assessed at each the normal retirement date, or pastoral lease for term with right weight, breed and genetic make- a negative effect on the estimated against receivables. Interest on reporting date for any indications to provide termination benefits to apply for extension or perpetual up. The fair value represents future cash flows of that asset that the impaired asset continues to be that the loss has decreased or as a result of an offer made to pastoral lease. The Queensland the estimated amount for which can be estimated reliably. recognised through the unwinding no longer exists. An impairment encourage voluntary redundancy. and Western Australia leases are cattle could be sold on the date of the discount. When an event loss is reversed if there has been Termination benefits for voluntary fixed term with the right to apply of valuation between a willing Objective evidence that financial occurring after the impairment a change in the estimates used redundancies are recognised as for a new lease at the expiration of buyer and willing seller in an arm’s assets (including equity securities) was recognised causes the amount to determine the recoverable an expense if the Group has made the term of the existing lease. length transaction after proper are impaired includes default of impairment loss to decrease, amount. An impairment loss is an offer of voluntary redundancy, marketing wherein the parties or delinquency by a debtor, the decrease in impairment loss is reversed only to the extent that the it is probable that the offer will (e) Intangible assets had each acted knowledgably, restructuring of an amount due to reversed through profit or loss. asset’s carrying amount does not be accepted, and the number of (i) Goodwill prudently and without compulsion. the Group on terms that the Group exceed the carrying amount that acceptances can be estimated Goodwill arises on the acquisition Where market-determined prices would not consider otherwise, (ii) Non‑financial assets would have been determined, net reliably. If benefits are payable of subsidiaries, associates and or values may not be available for indications that a debtor or The carrying amounts of the of depreciation or amortisation, more than 12 months after the jointly controlled entities. a biological asset in its present issuer will enter bankruptcy, the Group’s non financial assets, other if no impairment loss had been reporting date, then they are condition, the Group use the disappearance of an active market than biological assets and deferred recognised. discounted to their present value. Goodwill represents the excess of present value of expected net cash for a security. In addition, for an tax assets, are reviewed at each the cost of the acquisition over the flows from the asset discounted at investment in an equity security, reporting date to determine (i) Employee benefits (iv) Long service leave Group’s interest in the net fair value a current market-determined rate a significant or prolonged decline whether there is any indication of (i) Short-term employee benefits The Group accrues and measures of the identifiable assets, liabilities in determining fair value. in its fair value below its cost is impairment. If any such indication Short-term employee benefit the liability for long service leave and contingent liabilities of the objective evidence of impairment. exists, then the asset’s recoverable obligations are measured on as the present value of expected acquiree. (g) Leased assets amount is estimated. an undiscounted basis and are future payments to be made in Leases in terms of which the Group The Group considers evidence expensed as the related service is respect of services provided by Goodwill is measured at cost less assumes substantially all the risks of impairment for receivables The recoverable amount of an provided. A liability is recognised employees up to the reporting accumulated impairment losses. and rewards of ownership are and held-to-maturity investment asset or cash generating units for the amount expected to be paid date using the projected unit In respect of equity accounted classified as finance leases. On securities at both a specific asset (“CGU”) is the greater of its value under short term cash bonus or credit method. The Group gives investees, the carrying amount of initial recognition the leased asset and collective level. All individually in use and its fair value less costs profit sharing plans if the Group consideration to the expected goodwill is included in the carrying is measured at an amount equal significant assets are assessed for to sell. In assessing value in use, has a present legal or constructive future wage and salary levels, amount of the investment. to the lower of its fair value and specific impairment. Those found the estimated future cash flows obligation to pay this amount as a experience of employee departures, the present value of the minimum not to be specifically impaired are are discounted to their present result of past service provided by and periods of service. Expected (f) Biological assets lease payments. Subsequent to then collectively assessed for any value using a pre-tax discount the employee, and the obligation future payments are discounted Biological assets are comprised of initial recognition, the asset is impairment that has been incurred rate that reflects current market can be estimated reliably. using market yields at the reporting livestock (cattle and horses) and accounted for in accordance with but not yet identified. assessments of the time value of date on national government are measured at fair value less the accounting policy applicable to money and the risks specific to (ii) Long‑term employee benefits bonds with terms to maturity that estimated point-of-sale costs, with that asset. In assessing collective impairment the asset or CGU. For the purpose The Group’s net obligation in match, as closely as possible, the any change therein recognised the Group uses historical trends of of impairment testing, assets that respect of long term employee estimated future cash outflows. in profit or loss. Point-of-sale Other leases are operating leases the probability of default, timing cannot be tested individually are benefits other than defined benefit costs include all costs that would and are not recognised in the of recoveries and the amount grouped together into the smallest plans is the amount of future (j) Revenue be necessary to sell the assets Group’s statement of financial of loss incurred, adjusted for group of assets that generates cash benefit that employees have (i) Livestock (eg. road transport costs, agent position. management’s judgement as to inflows from continuing use that earned in return for their service in Revenue from the sale of livestock commissions). whether current economic and are largely independent of the cash the current and prior periods; that is measured at the fair value of (h) Impairment credit conditions are such that the inflows of other assets or CGUs. benefit is discounted to determine the consideration received or (i) Non-derivative financial assets actual losses are likely to be greater its present value, and the fair value receivable. Revenue is recognised A financial asset not carried at or less than suggested by historical when the significant risks and trends. 57 Section 5 – Financial Statements Section 5 – Financial Statements 58
rewards of ownership have been Contingent lease payments are In determining the amount of In determining the amount of at the same time that the liability group to the extent that it is transferred to the buyer, recovery accounted for by revising the current tax the Group takes into deferred tax the Group takes into to pay the related dividend is probable that future taxable profits of the consideration is probable, minimum lease payments over the account the impact of uncertain tax account the impact of uncertain tax recognised. The Company does of the tax-consolidated group the associated costs and possible remaining term of the lease when positions and whether additional positions and whether additional not distribute non-cash assets as will be available against which return of goods can be estimated the lease adjustment is confirmed. taxes and interest may be due. The taxes and interest may be due. The dividends to its shareholders. the assets can be utilised. The reliably, there is no continuing Company believes that its accruals Company believes that its accruals Company assesses the recovery management involvement with the (l) Finance income and finance for tax liabilities are adequate for tax liabilities are adequate (i) Tax consolidation of its unused tax losses and tax goods, and the amount of revenue costs for all open tax years based on for all open tax years based on The Company and its wholly-owned credits only in the period in which can be measured reliably. Finance income comprises its assessment of many factors, its assessment of many factors, Australia resident entities are part they arise, and before assumption interest income. Interest income including interpretations of tax including interpretations of tax of a tax-consolidated group. As by the head entity, in accordance The timing of the transfers of risks is recognised as it accrues in profit law and prior experience. This law and prior experience. This a consequence, all members of with AASB 112 applied in the and rewards varies depending or loss, using the effective interest assessment relies on estimates and assessment relies on estimates and the tax-consolidated group are context of the tax-consolidated on the individual terms of the method. assumptions and may involve a assumptions and may involve a taxed as a single entity. The head group. Any subsequent period contract of sale. For export sales series of judgements about future series of judgements about future entity within the tax-consolidated adjustments to deferred tax assets of cattle, usually transfer occurs Finance costs comprise interest events. New information may events. New information may group is Lake Woods Holdings Pty arising from unused tax losses as when the product is received at the expense on borrowings, become available that causes the become available that causes the Limited. a result of revised assessments of customer’s port. impairment losses recognised Group to change its judgement Group to change its judgement the probability of recoverability are on financial assets, and losses regarding the adequacy of existing regarding the adequacy of existing Current tax expense/income, recognised by the head entity only. (ii) Change in fair value of biological on hedging instruments that are tax liabilities; such changes to tax liabilities; such changes to deferred tax liabilities and deferred assets recognised in profit or loss. tax liabilities will impact tax tax liabilities will impact tax tax assets arising from temporary (ii) Nature of tax funding Any increase or decrease in the expense in the period that such a expense in the period that such a differences of the members of arrangement and tax sharing fair value of biological assets Borrowing costs that are not determination is made. determination is made. the tax-consolidated group are agreements is recognised as revenue in the directly attributable to the recognised in the separate financial The head entity, in conjunction Statement of Comprehensive acquisition, construction or Deferred tax Deferred tax assets and liabilities statements of the members of the with other members of the tax- Income. The movement is production of a qualifying asset are Deferred tax is recognised in are offset if there is a legally tax-consolidated group using the consolidated group, has entered determined as the difference recognised in profit or loss using respect of temporary differences enforceable right to offset current ‘separate taxpayer within group’ into a tax funding arrangement between the net market value at the effective interest method. between the carrying amounts tax liabilities and assets, and they approach by reference to the which sets out the funding the beginning and the end of the of assets and liabilities for relate to income taxes levied by carrying amounts of the assets and obligations of members of the period adjusted for purchases and Foreign currency gains and losses financial reporting purposes and the same tax authority on the same liabilities in the separate financial tax-consolidated group in respect sales during the period. are reported on a net basis. the amounts used for taxation taxable entity, or on different tax statements of each entity and of tax amounts. The tax funding purposes. Deferred tax is not entities, but they intend to settle their tax values applying under tax arrangements require payments to/ (k)Leases (m)Tax recognised for: current tax liabilities and assets consolidation. from the head entity equal to the Payments made under operating Tax expense comprises current • temporary differences on the on a net basis or their tax assets current tax liability (asset) assumed leases are recognised in profit and deferred tax. Current tax and initial recognition of assets or and liabilities will be realised Any current tax liabilities (or assets) by the head entity and any tax- or loss on a straight‑line basis deferred tax are recognised in profit liabilities in a transaction that simultaneously. and deferred tax assets arising loss deferred tax asset assumed over the term of the lease. Lease or loss except to the extent that it is not a business combination from unused tax losses of the by the head entity, resulting in incentives received are recognised relates to items recognised directly and that affects neither A deferred tax asset is recognised subsidiaries are assumed by the the head entity recognising an as an integral part of the total lease in equity or in other comprehensive accounting nor taxable profit or for unused tax losses, tax credits head entity of the tax-consolidated inter-entity receivable/(payable) expense, over the term of the lease. income. loss; and and deductible temporary group and are recognised as equal in amount to the tax liability/ • temporary differences related differences, to the extent that it is amounts payable (receivable) (asset) assumed. The inter-entity Minimum lease payments Current tax to investments in subsidiaries probable that future taxable profits to other entities in the tax- receivables/(payables) is at call. made under finance leases are Current tax is the expected tax and jointly controlled entities will be available against which they consolidated group in conjunction apportioned between the finance payable or receivable on the to the extent that it is probable can be utilised. Deferred tax assets with any tax funding arrangement Contributions to fund the current expense and the reduction of the taxable income or loss for the that they will not reverse in the are reviewed at each reporting amounts (refer below). Any tax liabilities are payable as per outstanding liability. The finance year, using tax rates enacted foreseeable future. date and are reduced to the extent difference between these amounts the tax funding arrangement expense is allocated to each period or substantively enacted at the that it is no longer probable that is recognised by the Company as and reflect the timing of the during the lease term so as to reporting date, and any adjustment Deferred tax is measured at the the related tax benefit will be an equity contribution from or head entity’s obligation to make produce a constant periodic rate of to tax payable in respect of tax rates that are expected to be realised. distribution to the head entity. payments for tax liabilities to the interest on the remaining balance previous years. applied to temporary differences relevant tax authorities. of the liability. when they reverse, using tax rates Additional income tax expenses The Company recognises deferred enacted or substantively enacted at that arise from the distribution tax assets arising from unused the reporting date. of cash dividends are recognised tax losses of the tax-consolidated 59 Section 5 – Financial Statements Section 5 – Financial Statements 60
The head entity, in conjunction and interpretations have been exchanged on the date of valuation then fair value is estimated by with other members of the identified as those which may between a willing buyer and a discounting the difference between tax-consolidated group, has impact the Group in the period willing seller in an arm’s length the contractual forward price and also entered into a tax sharing of initial application. They are transaction after proper marketing the current forward price for the agreement. The tax sharing available for early adoption at 31 wherein the parties had each acted residual maturity of the contract agreement provides for the December 2015, but have not been knowledgeably, and willingly. The using a credit adjusted risk-free determination of the allocation applied in preparing this financial market value of items of plant, interest rate (based on government of income tax liabilities between report: equipment, fixtures and fittings bonds). the entities should the head • AASB 15 Revenue from is based on the market approach entity default on its tax payment Contracts with Customers and cost approaches using quoted The fair value of interest rate obligations. No amounts have The Group is assessing the market prices for similar items swaps is based on broker quotes. been recognised in the financial impact on its consolidated when available and replacement Those quotes are tested for statements in respect of this financial statements resulting cost when appropriate. reasonableness by discounting agreement as payment of any from the application of AASB estimated future cash flows based amounts under the tax sharing 15. As disclosed in note 3, land, on the terms and maturity of each agreement is considered remote. buildings and improvements are contract and using market interest • AASB 9 Financial Instruments measured at fair value. An external rates for a similar instrument (n) Goods and services tax The Group is assessing the independent valuation company, at the measurement date. Fair Revenue, expenses and assets impact on its consolidated having appropriate recognised values reflect the credit risk are recognised net of the amount financial statements resulting professional qualifications and of the instrument and include of goods and services tax (GST), from the application of AASB 9. recent experience in the location adjustments to take account of except where the amount of and category of property being the credit risk of the Company and GST incurred is not recoverable • AASB 16 Leases valued, values properties held by counterparty when appropriate. from the taxation authority. In The Group is assessing the the Group on a rotational basis. these circumstances, the GST is impact on its consolidated 5. Use of judgements and recognised as part of the cost of financial statements resulting (ii) Biological assets estimates acquisition of the asset or as part of from the application of AASB As disclosed in note 3, the fair value In preparing these financial the expense. 16. of livestock held for sale is based statements in conformity on the market price of livestock of with Australian Accounting Receivables and payables are 4. Determination of fair values similar age, breed, condition and Standards – Reduced Disclosure stated with the amount of GST A number of the Group’s accounting genetic make-up. An external, Requirements, management has included. The net amount of GST policies and disclosures require the independent valuation company, made judgements, estimates recoverable from, or payable to, determination of fair value, for both having appropriate recognised and assumptions that affect the the ATO is included as a current financial and non financial assets professional qualifications and application of accounting policies asset or liability in the statement of and liabilities. Fair values have recent experience in the location and the reported amounts of financial position. been determined for measurement and nature of cattle held by the assets, liabilities, income and and / or disclosure purposes based Group performs a valuation for expenses (refer to notes 8, 12 and Cash flows are included in the on the following methods. When the reporting date. Where market 13). Actual results may differ from statement of cash flows on a gross applicable, further information determined prices or values may these estimates. basis. The GST components of about the assumptions made in not be available for a biological cash flows arising from investing determining fair values is disclosed asset in its present condition, Estimates and underlying and financing activities which are in the notes specific to that asset or the Group use the present value assumptions are reviewed on recoverable from, or payable to, the liability. of expected net cash flows from an ongoing basis. Revisions ATO are classified as operating cash the asset discounted at a current to accounting estimates are flows. (i) Property, plant and equipment market-determined rate in recognised prospectively. determining fair value. (o) New standards and The fair value property, plant and interpretations not yet adopted equipment recognised as a result of (iii) Derivatives The following standards, a business combination is based on The fair value of forward exchange amendments to standards market values. The market value of contracts is based on their listed property is the estimated amount market price, if available. If a for which a property could be listed market price is not available, 61 Section 5 – Financial Statements Section 5 – Financial Statements 62
6. Cash and cash equivalents Consolidated 9. Inventories Consolidated 2016 2015 2016 2015 $'000 $'000 $'000 $'000 Bank balances 1,269 2,173 Feedstocks 2,142 - Petty cash 7 5 Raw materials and consumables 787 992 1,276 2,178 2,929 992
7. Trade and other receivables 10. Other Assets
Current Current Trade receivables 7,845 3,497 Prepayments 5,169 2,765 Other receivables 3,160 3,160 5,169 2,765 11,005 6,657 Non-current 8. Biological assets Security deposit 15,000 15,000 15,000 15,000 Current Cattle 121,042 103,472 11. Investment in Equity Accounted Investees Horses 1,825 1,625 122,867 105,097 Interest in associates - 9,682
Refer to note 12 on the Business Combination of JJAA. Non Current Cattle 176,288 178,220 176,288 178,220 12. Business Combinations
PT Juang Jaya Abdi Alam (“JJAA”) Total On 28 December 2015, Consolidated Pastoral Company Pty Limited (”CPC”), a wholy owned subsidiary of Lake Cattle 297,330 281,692 Woods Holdings Pty Limited, acquired 30% of the shares of PT Juang Jaya Abdi Alam (”JJAA”), increasing its Horses 1,825 1,625 ownership to 80%. The remaining 20% interest is subject to call and put options under the JJAA share purchase agreement. CPC has taken a controlling interest in JJAA (a company based in Indonesia which provides lot feeding 299,155 283,317 services of cattle), to allow it to control the Indonesian import permits and operations of JJAA, to which CPC (and other external parties) can now export cattle from Australia. As at 31 March 2016, biological assets with a carrying amount of $299,155K (2015: $283,317K) were pledged to The following table summarises the recognised values of JJAA assets acquired and liabilities assumed at the date secure bank loans. of acquisition.
Reconciliation of carrying amount Balance at 1 April 283,317 256,926 Indentifiable assets acquired and liabilities assumed 2016 Purchases 6,631 12,090 Assets as at 31 December 2015 $'000 Net increase due to births 36,431 41,206 Cash 163 Attrition (12,469) (13,661) Trade and other receivables 582 Change in fair value less costs to sell 61,466 43,741 Inventories 2,344 Sales (76,221) (56,985) Other assets 219 Balance at 31 March 299,155 283,317 Property, plant & equipment 14,418 17,726 63 Section 5 – Financial Statements Section 5 – Financial Statements 64
Consolidated (continued) 12. Business Combinations 13. Property, plant and equipment 2016 Reconciliation of carrying amounts Indentifiable assets acquired and liabilities assumed 2016 $'000 $'000 $'000 $'000 $'000 Liabilities as at 31 December 2015 $’000 Freehold Freehold Leasehold Plant and buildings and Total Trade & other payables (1,632) land properties equipment improvements Loans and borrowings (400) Cost and fair value Employee benefits (515) Opening balance - 1 April 2015 73,715 41,083 317,474 17,236 449,508 Deferred tax liability (1,541) Additions - 1,035 18,418 3,670 23,123 Lease liability - Disposals - - - (895) (895) (4,088) Net revaluation movement recognised in (2,177) - 12,189 - 10,012 Total identifiable net assets at fair value 13,638 income statement Net revaluation movement recognised in - 2,204 - - 2,204 Purchase consideration transferred was comprised of: asset revaluation reserve Cash paid 6,000 Closing Balance - 31 March 2016 71,538 44,322 348,081 20,011 483,952 Deferred consideration 6,000 Financial liability in respect of put and call options over 20% interest 3,000 Accumulated depreciation and Fair value of initial 50% interest 12,000 impairment 27,000 Opening balance - 1 April 2015 - (5,265) (23,053) (7,299) (35,617) Depreciation for the year - (961) (6,306) (3,630) (10,897) Goodwill arising on acquisition as at 28 December 2015 13,362 Disposals - - - 589 589 Closing Balance - 31 March 2016 - (6,226) (29,359) (10,340) (45,925) Goodwill at 31 March 2016 is $13,190K. The value change from that recognised at date of acquisition relates to the Net carrying amount - 31 March 2016 71,538 38,096 318,722 9,671 438,027 change in foreign exchange rate between acquisition and year end dates.
The goodwill of $13,362K comprises the value of expected synergies arising from the acquisition. None of the good- 2015 will is expected to be deductable for income tax purposes. Cost and fair value The deferred consideration amount of $6,000K is payable in tranches as Indonesian cattle import permits are is- Opening balance - 1 April 2014 67,448 40,587 315,015 15,594 438,644 sued to JJAA, in accordance with the terms of the JJAA share purchase agreement. Additions 6,274 496 1,428 2,656 10,854
The Group considers there to be no non-controlling interest in JJAA as the call and put options give CPC present Disposals - - - (1,014) (1,014) access to returns associated with the investment, and thus CPC has accounted for the business combination as Net revaluation movement recognised in (7) - 807 - 800 though it acquired a 100% interest. income statement Net revaluation movement recognised in - - 224 - 224 The figures above show the fair values of the identifiable JJAA assets and liabilities acquired as at acquisition date. asset revaluation reserve A gain of $3,200K has been recognised as a result of re-measuring to fair value the equity interest in JJAA held by Closing Balance - 31 March 2015 73,715 41,083 317,474 17,236 449,508 CPC before the business combination. These items are shown in the Statement of Profit or Loss and Other Compre- hensive Income in the line item “Equity-accounted investees – movements”. Accumulated depreciation and The fair value of the trade receivable amounts to $582K, and the gross amount of trade receivables is $583K. All impairment transaction costs were recognised through the Statement of profit or loss and other comprehensive income in Opening balance - 1 April 2014 - (4,356) (20,603) (6,158) (31,117) other expenses. Depreciation for the year - (910) (2,450) (1,560) (4,920) The fair value of JJAA assets were determined by independent third party valulations. Disposals - - - 420 420 Closing Balance - 31 March 2015 - (5,266) (23,053) (7,298) (35,617) Net carrying amount - 31 March 2015 73,715 35,817 294,421 9,938 413,891
Property revaluations were carried out by independent third party valuers as at 31 March 2016. 65 Section 5 – Financial Statements Section 5 – Financial Statements 66
14. Deferred tax balances 14. Deferred tax balances (continued) Consolidated Movements in deferred tax balances Movements in deferred tax balances Consolidated 2015 2016 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 Net balance Recognised in Recognised Net balance Deferred tax Deferred tax at 1 April profit or loss in OCI at 31 March assets liabilities Net balance Recognised in Recognised Net balance Deferred tax Deferred tax at 1 April profit or loss in OCI at 31 March assets liabilities Provision for doubtful 27 - - 27 27 - debts Provision for doubtful debts 27 (25) - 2 2 - Employee benefits 313 (63) - 250 250 - Employee benefits 250 155 - 405 405 - Accrued expenses 86 736 - 822 822 - Accrued expenses 822 (391) - 431 431 - Deferred income 85 22 - 107 107 - Deferred income 107 (84) - 23 23 - Blackhole expenditure 106 2 - 108 108 - Blackhole expenditure 108 129 - 237 237 - Property, plant and (10,832) 472 - (10,360) - (10,360) Property, plant and (11,454) (3,249) (1,038) (15,741) - (15,741) equipment equipment Derivatives 203 - 2,807 3,010 3,010 - Derivatives 3,010 - (903) 2,107 2,107 - Prepayments 10 (130) - (120) - (120) Prepayments (120) 53 - (67) - (67) Biological assets (54,501) (8,597) - (63,098) - (63,098) Biological assets (63,098) (11,917) - (75,015) - (75,015) Inventories (329) 31 - (298) - (298) Inventories (298) 97 - (201) - (201) Equity accounted - - (1,094) (1,094) - (1,094) Others (18) 28 - 10 10 - investment Tax losses 67,832 6,314 - 74,145 74,145 - Foreign exchange gains/ 72 (72) - - - - Tax (liabilities)/assets before (2,832) (8,890) (1,941) (13,663) 77,361 (91,024) losses set-off Others 1,069 (1,087) - (18) - (18) Set off of tax - - - - (77,361) 77,361 Tax losses 60,268 7,564 - 67,832 67,832 - Net tax liabilities (2,832) (8,890) (1,941) (13,663) - (13,663) Tax (liabilities)/assets (3,423) (1,122) 1,713 (2,832) 72,156 (74,988) before set-off Set off of tax - - - - (72,156) 72,156 Net tax liabilities (3,423) (1,122) 1,713 (2,832) - (2,832) 67 Section 5 – Financial Statements Section 5 – Financial Statements 68
15. Trade and Other Payables Consolidated 16. Loans and Borrowings Consolidated 2016 2015 2016 2015 Current $'000 $'000 Current $'000 $'000 Trade payables 3,359 1,737 Motor Vehicles 185 304 Other Payables 12,343 5,563 Financed Insurance 596 427 15,702 7,300 Secured bank loans 1,477 - 2,258 731 Non-current Derivatives used for hedging – interest rate swap 7,025 10,034 Non-current 7,025 10,034 Secured bank loans 302,500 297,483 302,500 297,483 The interest rate swaps held have a notional amount of $190,000K and are broken down into the following tranches: 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 subsidiaries as well as limited third party charges from other subsidiaries from within the group. • $3,500K at a fixed rate of 2.15% per annum and a termination date of 16 May 2016; • $10,500K at a fixed rate of 2.07% per annum and a termination date of 4 July 2016; The principal amount of the facility outstanding at year end is $302,500K (2015: $297,483K) with the debt service • $5,000K at a fixed rate of 2.06% per annum and a termination date of 12 January 2017; and reserve account being a deposit of $15,000K (2015: $15,000K). The maturity date on the deposit is 5 April 2016 and • $171,000K at a fixed rate of 3.645% per annum and a termination date of 3 December 2018. attracts an interest rate of 2.14% on that date (2015: 25 June 2015 at 2.86%). 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 December Derivative assets and liabilities designated as cash flow hedges 2018. The following table indicates the periods in which cash flows associated with cash flow hedges are expected to occur and the carrying amounts of the related hedging instruments. 2016 2016 2016 Secured bank loans consist of: $’000 $’000 $’000 Expected Cash Flows Maturity Date Rabobank ANZ Principal Carrying 12 Months or More than Total CPC Loan Facility 20 - Dec - 18 202,915 99,585 302,500 amount less one year 202,915 99,585 302,500 2016 2016 2016 2016 The JJAA loan facility is with PT Bank UOB Indonesia for IDR 15 billion ($1,477K) and has a maturity date of 16 $'000 $'000 $'000 $'000 December 2016. Interest rate swaps Liabilities 7,025 (2) 7,027 7,025 17. Employee Benefits Consolidated 7,025 (2) 7,027 7,025 2016 2015 Current $'000 $'000 Carrying 12 Months or More than Total Annual leave 451 420 amount less one year Long service leave 440 414 2015 2015 2015 2015 Post employment benefits 461 - $'000 $'000 $'000 $'000 1,352 834 Interest rate swaps Liabilities 10,034 - 10,034 10,034 10,034 - 10,034 10,034 18. Provisions Current Deferred Consideration 1,734 - Call Option 3,000 - The Group has hedged its exposure to interest rate risk by fixing its interest to a fixed rate. The hedge 4,734 - relationship is considered to be effective by management. 69 Section 5 – Financial Statements Section 5 – Financial Statements 70
19. Share Capital 21. Revenue Consolidated 2015 2014 2016 2015 In number of In number of shares shares $'000 $'000 On issue at the end of financial year 361,630,006 361,630,006 Cattle revenue including revaluation reserve 163,098 85,717 163,098 85,717 Ordinary shares 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 per share at general meetings of the Company. All rights attached to the Company’s shares that are held by the 22. Other Income Company are suspended until those shares are reissued. All shares rank equally with regard to the Company’s residual Sundry income 732 1,787 assets. Rental income from property subleases 932 968 Dividends Gain on disposal of plant and equipment 18 14 No dividends were declared or paid during the year (2015: Nil). 1,682 2,769
20. Reserves
Nature and purpose of reserves 23. Other Expenses Corporate and administrative expenses 8,011 6,952 Hedging reserve The hedging reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedges Fuel 1,542 1,739 related to hedged transactions that have not yet affected profit or loss. Operating lease 1,020 839 Consolidated Transport expenses 5,736 3,601 2016 2015 16,309 13,131 $'000 $'000 Balance at 1 April (7,023) (474) Changes in fair value of cash flow hedges 2,106 (6,549) 24. Finance Income and Finance Costs Balance at 31 March (4,917) (7,023) Interest income on bank deposits 42 90 Net foreign exchange gain 124 -
Asset revaluation reserve Finance income 166 90 The revaluation reserve relates to the revaluation of property, plant and equipment and share of other comprehensive income of equity accounted investees relating to its revaluation of property, plant and equipment. Interest expense on financial liabilities measured at amortised cost (16,035) (15,183) Balance at 1 April 3,176 393 Interest expense on loans from related parties (45) (23) Net change in share of other comprehensive income of equity accounted investees (2,512) 2,552 Bank charges (641) (634) Net change in fair value of properties 1,302 231 Net foreign exchange loss - (908) Balance at 31 March 1,967 3,176 Finance costs (16,721) (16,748) Net finance costs recognised in profit or loss (16,555) (16,658) Employee equity benefit reserve The employee equity benefit reserve relates to option fees payable for executive options granted pursuant to the Company’s long term incentive plan. 71 Section 5 – Financial Statements Section 5 – Financial Statements 72
25. Income Taxes 26. Auditors’ Remuneration Consolidated (a) Amounts recognised in profit or loss Consolidated Audit services 2016 2015 2016 2015 KPMG Australia $'000 $'000 Current tax benefit $'000 $'000 Audit of financial statements 144 105 Current year (6,314) (7,598) Total Auditors’ remuneration 144 105 Under/(over) provision for income tax in prior year - 34 Total current tax benefit (6,314) (7,564) 27. Reconciliation of Cash Flows from Operating Activities
Deferred tax expense/(benefit) Cash flows from operating activities Origination and reversal of temporary differences 15,403 7,969 Profit/(loss) for the period 20,264 140 Prior year under/overs (199) 717 Adjustments for: Change in recognised deductible temporary differences 15,204 8,686 Depreciation 5,293 4,919 Total income tax expense/(benefit) on continuing operations 8,890 1,122 (Gain)/loss on sale of property, plant and equipment (18) (14) (Revaluation)/write down of properties (13,207) (800) (b) Amounts recognised in other comprehensive income (Increment)/decrement in net market value of livestock (40,862) (20,076) Share of profit of equity accounted investees (216) 51 Tax expense/(benefit) recognised in other comprehensive income 1,941 (1,713) Tax expense/(benefit) 8,890 1,122 (19,855) (14,658)
(c) Numerical reconciliation between tax expense and prima facia tax payable: Change in trade and other receivables (4,348) 3,439 Change in inventories and biological assets 23,087 (6,210) Profit/(loss) for the year 20,264 140 Change in other assets (3,046) 517 Total income tax expense/(benefit) 8,890 1,122 Change in trade and other payables 8,917 (1,520) Profit/(loss) for the year before income tax 29,154 1,262 Change in employee benefits 488 (209) Change in deferred income (280) 73 Prima facie tax payable - tax at the Australian tax rate - on profit/(loss) Net cash from operating activities 4,963 (18,567) before income tax at 30% (2015: 30%): 8,746 379 Add Tax effect of: 28. Commitments Non-deductible expenses 239 7 (a) Future minimum lease payments under non-cancellable operating leases are as follows: Tax exempt income 104 (15) Leased plant and equipment: Under/(over) provision for income tax in prior year (199) 751 Total income tax expense/(benefit) 8,890 1,122 Not later than one year 173 166 Later than one year but not later than five years - 173 (d) Tax consolidation Total leased land and buildings 173 339 Lake Woods Holdings Pty Limited and its 100% owned subsidiaries are a tax consolidated group. Members of the tax 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 Property, plant and equipment lease rental payments are generally fixed. of income 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 (b) Capital commitments Holdings Pty Limited. The Group did not have any capital commitments at year end. (2015: Nil) 73 Section 5 – Financial Statements Section 5 – Financial Statements 74
29. Contingencies 30. Related Parties (continued)
During the normal course of business, the Group is involved in legal claims and litigations. There is significant Company uncertainty as to whether a future liability will arise in respect of these items. The amount of liability, if any, which may arise cannot be measured reliably at this time. The Directors are of the opinion that all known liabilities have been 2016 2015 brought to account and that adequate provision has been made for any anticipated losses. Transactions with related parties: $'000 $'000 Interest income - Lake Woods Group Pty Limited (19,082) (19,025) 30. Related Parties (19,082) (19,025) Country of Ownership incorporation interest (%) Loans are made by the parent entity to wholly owned subsidiaries. The loans are repayable on demand. The Parent entity parent entity does not expect to call these loans within the next 12 months. Lake Woods Holdings Pty Limited Australia 100 Loans between Lake Woods Holdings Pty Limited, Lake Woods Group Pty Limited, Lake Woods Acquisitions Pty Significant subsidiaries Limited and Consolidated Pastoral Company Pty Limited are interest bearing at 7% per annum on the principal Lake Woods Group Pty Limited Australia 100 amount outstanding at year end. The principal sum may be repaid in whole or in part by the Borrower at any time. The Borrower will repay the Principal Sum to the Lender on the date that is 9 years and 11 months from the Lake Woods Acquisitions Pty Limited Australia 100 date of the agreement or on receipt of a written demand from the Lender (which ever is earliest to occur) together Consolidated Pastoral Company Pty Limited Australia 100 with all interest accrued on the Principal Sum as at the date of repayment. Consolidated Pastoral Property Pty Limited Australia 100 Baines River Cattle Company Pty Limited Australia 100 Ultimate controlling party Laverton Nominees Pty Limited Australia 100 Crosswalk Pty Limited Australia 100 Lake Woods Holdings Pty Limited considers Terra Firma Holdings Limited, a Guernsey registered company, to be the ultimate parent company. CPC (China) Holdings Pty Limited Australia 100
CPC (SE Asia) Pty Limited Australia 100 Key management personnel compensation PT Juang Jaya Abdi Alam Indonesia 80 The key management personnel compensation was $1,372K for the year ended 31 March 2016 (31 March 2015: $1,744K). Balances with related parties: Company 2016 2015 Investments $'000 $'000 Lake Woods Group Pty Limited 95,846 95,846 95,846 95,846
Loans to/(from) related party Lake Woods Group Pty Limited 390,919 371,841 Lake Woods Acquisitions Pty Limited (16,652) (11,247) Baines River Cattle Company Pty Limited (1,409) 4,440 Consolidated Pastoral Company Pty Limited (85,476) (19,122) Consolidated Pastoral Property Pty Limited (239) 3,790 Crosswalk Pty Limited (23) 970 Laverton Nominees Pty Limited (26) 636 287,094 351,309 75 Section 5 – Financial Statements Section 5 – Financial Statements 76 DIRECTORS' DECLARATION
31. Parent Entity Disclosures In the opinion of the directors of Lake Woods Holdings Pty Limited ("the Company"): (a) the Company is not publicly accountable; As at, and throughout, the financial year ending 31 March 2016, the parent entity of the Group was Lake Woods Holdings Pty Limited. (b) the consolidated financial statements and notes, set out on pages 46 to 75, are in accordance with the Corporations Act 2001, including:
Results of the parent entity Company (i) giving a true and fair view of the Group's financial position as at 31 March 2016 and of its performance, 31 Mar 2016 31 Mar 2015 for the financial year ended on that date; $'000 $'000 (ii) complying with Australian Accounting Standards - Reduced Disclosure Regime and the Corporations Profit for the year 12,458 13,278 Regulations 2001; and Other comprehensive income (49) 118 Total comprehensive income for the year 12,409 13,396 (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
Financial position of parent entity at year end Signed in accordance with a resolution of directors. Total current assets 119,204 100,176 Total assets 556,097 540,083 Total current liabilities - - Total liabilities 103,859 100,256 Troy Setter Net assets 452,238 439,827 Director Equity Share capital 368,935 368,934 Brisbane Dated this 16th day of June 2016 Reserves 69 118 Retained earnings 83,234 70,775 Total equity 452,238 439,827
32. Subsequent event
On 27 April 2016 the Group sold one station, Humbert River, to optimise the Group’s property portfolio.
Apart from this sale, there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction 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. 77 Section 5 – Financial Statements Section 5 – Financial Statements 78 INDEPENDENT AUDIT REPORT March 2016
Independent auditor’s report to the members of Lake Woods Holdings Pty Limited Independent auditor’s report to the members of Lake Woods Holdings Pty Limited (continued) We have audited the accompanying financial report of Lake Woods Holdings Pty Limited (the company), which comprises the consolidated statement of financial position as at 31 March 2016, and consolidated statement of Independence profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. statement of cash flows for the year ended on that date, notes 1 to 32 comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the Group comprising the company and the entities it controlled at the year’s end or from time to time during the financial year. Auditor’s opinion
Directors’ responsibility for the financial report In our opinion the financial report of the Group is in accordance with the Corporations Act 2001, including: The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards – Reduced Disclosure Requirements and the Corporations (a) giving a true and fair view of the Group’s financial position as at 31 March 2016 and of its performance for the Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the year ended on that date; and financial report that is free from material misstatement whether due to fraud or error. (b) complying with Australian Accounting Standards – Reduced Disclosure Requirements and the Corporations Auditor’s responsibility Regulations 2001. Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the KPMG financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the financial report that gives a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating Stephen Board the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Partner directors, as well as evaluating the overall presentation of the financial report. Brisbane We performed the procedures to assess whether in all material respects the financial report presents fairly, 16 June 2016 in accordance with the Corporations Act 2001 and Australian Accounting Standards – Reduced Disclosure Requirements, a true and fair view which is consistent with our understanding of the Group’s financial position and of its performance.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 79 Section 5 – Financial Statements Section 5 – Financial Statements 80 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