CREATING AND RETURNING VALUE TO GROWERS ANNUAL REPORT 2015 CO-OPERATIVE BULK HANDLING LIMITED ANNUAL REPORT 2015 ANNUAL REPORT BULK HANDLING LIMITED CO-OPERATIVE Co-operative Bulk Handling Ltd Gayfer House 30 Delhi Street, West Perth Western Australia 6005 GPO Box L886 Perth WA 6842 Freecall 1800 199 083 Telephone (08) 9237 96589600 Facsimile (08) 9322 3942 Email [email protected] www.cbh.com.au Processing Shipping Marketing and Trading Storage and Handling Growers CREATING AND RETURNING VALUE TO GROWERS The CBH Group is an Owned and controlled by around 4,200 These employees are located across the grain grower members, the core purpose state at one of our nine regional offices, integrated grain storage, of the CBH Group is to create and return 195 receival site locations, four ports, our handling and marketing value to growers. engineering workshops or at our head office in West Perth. co-operative controlled by Since being established in Western Australia more than 80 years ago, CBH has constantly Our marketing division in West Perth, aided growers for their benefit evolved, innovated and grown. The Group by additional offices in Eastern Australia, and the benefit of the grain currently employs approximately 1,200 Hong Kong, Japan, Vietnam, the United industry in Western Australia. permanent employees, supported by States of America and Russia, is responsible up to 2,000 casual employees during for exporting a range of grains to more than We are Australia’s biggest harvest months. 30 markets across the world. co-operative and a leader in the Australian grain industry, with operations extending along the grain supply chain from storage, handling and transport to marketing, shipping and processing. Grain grower YOUR NETWORK 10 members 4200 YOUR MARKETER 14 Receival locations 195 YOUR INVESTMENTS 18 YOUR SUPPORT 22 Global markets 30 YOUR PEOPLE 24 YOUR COMMUNITY 28 Port terminals 4 YOUR ENVIRONMENT 32 YOUR CHAIRMAN'S REPORT The past year was my first full year as Remaining competitive Chairman of CBH and the state’s fourth largest harvest on record, with growers In order to do this, both growers and CBH delivering 13.6 million tonnes. This followed need to remain competitive against local on from the previous season’s all-time and global competition. Your Board has record of 15.9 million tonnes and, at the set management very clear performance time of writing, the 2015-16 season is measures to achieve this by focussing on shaping up to provide another above average lowering our costs to serve, driving better harvest for growers and your co-operative. prices and generating greater returns from Throughout 2015, your Board has spent investments, where possible. a great deal of time re-examining and reconfirming our purpose, and that is to Investment in our core create and return value to growers. In particular, we are committed to working The key way we return value to our growers with management to ensure that your is through our storage and handling network. co-operative is sustainable and can provide Over the past 12 months, we’ve undertaken for both current and future growers. extensive research to clearly understand what demands will be made on the network in the future and what that network should look like in order to serve growers and marketers for generations to come. The co-operative has developed a Network Proposal that has been shared and discussed with growers at more than 90 grower meetings across the state in 2015. Over the coming year, we will use this feedback to determine how we can fine tune the Network Proposal to make sure it’s internationally competitive and maximises competition for growers’ grain. Our network is the core of your co-operative and the best way in which we can create and return value. As such, we invested $177.4 million into capital works and maintenance projects in 2015. This included $51 million spent on our ports, which play a significant role in ensuring WA growers remain competitive by being able to get their grain onto ships and to our customers in a timely and efficient manner. We will continue to invest significant dollars into the network, particularly in good seasons, where it fits in with our Network Proposal. 2 CBH GROUP ANNUAL REPORT 2015 In 2015, WA growers delivered the fourth largest harvest on record. Your Board reconfirmed its commitment to maximise value to growers through better prices and lowering our costs to serve via greater efficiencies and rebates from investments. Investments Board update Returning value to growers As mentioned, one of the ways we There were a number of changes to the I’ve said in the past that returning value endeavour to create and return value to Board in 2015. to growers is at the heart of how we, as a our growers is through the generation of co-operative, can make a difference; by Simon Stead was elected in District 5, rebates from our investments. returning the value made by the business following the retirement of former Chairman, right back to you, after providing the best In 2015, CBH announced an investment Neil Wandel. quality service and assets for now and into rebate to assist growers to offset their Brian McAlpine and John Hassell were re- the future. It is something that both I, and storage and handling charges of $0.20 elected in Districts 1 and 3 respectively. your Board, stand by today. per tonne. This was, in large part, due to the continued growth of our Interflour Following the resignation of Samantha We have made it clear to management investment. Tough in November 2014, the Board that rebates to our growers must form a welcomed Alan Mulgrew as an Independent material part of our vision. It is important Over the past 12 months, your co-operative Director in February 2015. Mr Mulgrew has that we continue to grow value from our has expanded its investments to include brought valuable skills and experience to investments, in the form of rebates back CBH Fertiliser and Blue Lake Milling. the Board from his roles as a Chairman, to growers to lower the cost to serve, but Fertiliser is a major cost of production Director and General Manager of a range also control our costs to ensure we remain and we believe we can offer competitive of public and private companies. an increasingly competitive and leading prices by using our co-operative to drive grower co-operative. efficiencies in the supply chain. Growers Advisory Council As a Board, we will continue to actively Blue Lake Milling, a leading manufacturer of work with management to not only premium Australian oat products, offers the In 2015, five new members were elected optimise the supply chain but to also look opportunity for WA growers to tap into the to the Growers Advisory Council (GAC). at cost efficiencies and ways to develop growing South East Asian oat market and The new members include Jim Heal from more income streams to offset costs, all generate an alternative income stream that Three Springs, Barry West from Kulin, with the intention of maximising the value can increase rebates to help lower storage Royce Taylor from Lake Grace, Dave Cox of growers’ grain and lowering our costs and handling charges. from Esperance and Neville McDonald to serve. from Beaumont. Investment in our communities The successful candidates were selected by a panel consisting of four grower Directors, We remain committed to making a the GAC Chairman and the CBH Group difference in our grower communities and, Government and Industry Relations Manager. Wally Newman in 2015, we delivered more than $1.6 million The GAC makes a valuable contribution to the Chairman back to our communities to enrich the lives CBH Group and the number of nominations of those living in regional Western Australia. received was particularly pleasing. I thank and recognise the significant contribution of our outgoing Councillors Terry Counsel from Wubin, Lindsay Tuckwell from Kondinin, Dwight Ness from Newdegate, Tim Bock from Jerramungup and Andrew Fowler from Esperance. All retiring councillors are eligible to become members of the GAC Alumni, which is growing in numbers and providing valuable information back to your Board and management. CBH GROUP ANNUAL REPORT 2015 3 YOUR CEO'S REPORT 82.7$M 81% Introduced site inductions Achieved NPAT of of growers understand for deliverers at all sites $82.7 million the benefits provided by to improve safety their co-operative 4 CBH GROUP ANNUAL REPORT 2015 The fourth largest harvest on record produced another healthy surplus for the co-operative in 2015. The team at CBH set about delivering on our purpose of creating and returning value to growers through the development of a long-term Network Proposal and investments into fertiliser and oat milling. Financial performance Delivering on the purpose The CBH Group performed well in the Over the past year, we have set about 2014-15 financial year with a Net Profit delivering on our purpose in a number of After Tax (NPAT) of $82.7 million. This result ways. is not just the product of a large harvest. We have undertaken an extensive analysis Regardless of the crop size each year, your of our supply chain and developed a plan to management team strives to manage costs ensure your storage and handling network and operational efficiencies. Such a focus remains competitive and sustainable now not only ensures we can generate a surplus and into the future. We tabled this proposal to fund future capital and maintenance at a number of meetings with growers of your supply chain but continue to throughout the state in 2015 and will now strengthen your co-operative.