ANNUAL REPORT 2020 Co-operative Bulk Handling Limited Annual Report 2019 The CBH Group is an integrated Contents grain storage, handling and marketing co-operative owned and controlled by approximately 3,700 Western Australian Chair’s Report 2 grain growing businesses. CEO’s Report 4 We are Australia’s largest co-operative Year Performance 6 and a leader in the Australian grain industry, with operations extending The Co-operative Benefit 7 along the value chain from grain storage, handling and transport Our Strategy and Operating Model 8 to marketing, shipping and processing. Where We Operate 10 Our core purpose is to sustainably create and return value to current and Board of Directors 12 future Western Australian grain growers. Lead Team 14 Since it was established in Western Australia in 1933, CBH has continuously Growers’ Advisory Council 17 evolved, innovated and grown. Its Operations 19 storage and handling system receives and exports around 90 per cent of Network 22 the Western Australian grain harvest Marketing and Trading 27 to over 30 countries worldwide. Fertiliser 30 DailyGrain 31 Investments 32 Health, Safety and Environment 34 Sustainability 37 Community 40 People 44 Corporate Governance 46 Directors’ Report 56 Auditor’s Independence Declaration 59 Financial Report 61 Five Year Financial and 129 Operational History Thank you to the Letter family from Tambellup for participating in our photography. Chair’s Report On behalf of the Board, I am pleased to report on the CBH Group’s 2020 financial year which has demonstrated the resilience and strength of your co-operative through the continued delivery of a safe, efficient and low-cost supply chain. Simon Stead Chair Like many businesses, CBH experienced trading your grain, and the provision The Marketing and Trading division a great deal of volatility in 2020 brought of low-cost fertiliser – the real value returned to profit this year, totalling $12.2 about by a number of factors including a of the co-operative is retained in your million, by developing and strengthening below average harvest, international trade farm business. existing market ties to capture the benefit tensions and the ongoing COVID-19 of strong demand and tightening stocks. pandemic that has caused economic The 2019-20 harvest was particularly disruption across the globe. challenging for Western Australian This positive result occurred despite growers. Dry conditions, frost and severe an environment of international trade Despite the unique circumstances of the winds had a major impact on production tensions and represents a strong financial year, I am pleased to inform you across large parts of the grainbelt. recovery for Marketing and Trading which we have reported a Group surplus of is now well positioned to rebuild equity. $11.0 million. These events resulted in the lowest To support these endeavours, the division receivals in the CBH network since the did not return a rebate this year. Your co-operative remains in a strong 2012-13 season and impacted revenue financial position with a robust balance for the Operations division which Our Fertiliser business enjoyed year-on- sheet, consisting of $1.8 billion in net recorded a loss of $10.9 million. year growth of 21 per cent. Its continued assets and no long-term debt. This success has allowed us to consider future position will continue to support our Growers continued to benefit from plans to expand the business, capturing ability to manage the business through reduced upfront costs as we held further market share and further driving future growing seasons. supply chain fees flat following the down prices to the benefit of all growers. $4 per tonne reduction in 2018-19, While our financial results are closely cementing our position as the lowest Our Investment portfolio also produced tied to the seasonal nature of our industry, cost grain supply chain in Australia. positive results. Interflour Group’s our purpose is to sustainably create and turnaround plan has continued to make return value to you through low supply Our ongoing investment in developing good progress resulting in a profit for the chain fees and efficient services, rather and improving the network, which year and a strengthened balance sheet. than to generate large profits. totalled $226 million this year, places us Our oat processing business, Blue Lake in a good position to meet the changing Milling, continued to ramp up production By remaining focused on the core needs of your farm businesses and the at its Forrestfield mill, also achieving of our business – our storage and requirements of our global customers. a profit. handling network, marketing and 2 CBH Group Annual Report 2020 While COVID-19 had less of an impact The Board saw significant changes “Your co-operative remains in Western Australia than other parts throughout the year, most notably of the world, the pandemic did present through the departure of former Chair in a strong financial position some challenges for CBH employees Wally Newman. Wally’s passion and with a robust balance sheet, and the regional communities in which contribution to the co-operative over his we operate. 20 years on the Board, including six years consisting of $1.8 billion in as Chair, cannot be understated and I net assets and no long-term From the beginning of the pandemic, would like to thank him for his service. CBH placed the utmost importance on debt, which will continue to ensuring the health, safety and wellbeing I would also like to recognise former of our people and communities, and Deputy Chair Vern Dempster, and support our ability to manage under the leadership of CEO Jimmy Directors Trevor Badger and Rod the business through future Wilson, we introduced a series of robust Madden, who left the Board this year precautionary measures to reduce the and welcome appointed Directors growing seasons.” risk of the virus spreading. John O’Neill, Ken Seymour and Helen Woodhams. On behalf of the Board, I commend Jimmy and the Lead Team for I am proud to have been appointed their strong leadership through the your Chair, alongside Deputy Chair COVID-19 period, along with all Natalie Browning, in April. We are employees for their commitment determined to build on strong foundations during this unprecedented time. and strengthen your business, so it continues to sustainably deliver value Contributing to the wellbeing of our for you over the long-term. regional communities through 2020 To achieve this, we commenced has been another focus for CBH with the a review that sought to improve the delivery of partnerships and programs as governance of our co-operative. part of our Community Investment Fund. I would like to thank all those who This year, we joined forces with attended our grower meetings and four leading mental health service participated in the survey which helped organisations including Lifeline WA, shape the governance improvements Youth Focus, Mental Illness Fellowship we are now seeking to implement. WA and Black Dog Institute, in a new partnership as part of the Fund’s Following your feedback, we will Regional Mental Wellness Program. provide members the opportunity The partnerships will lead to more to vote on proposed changes at our support for growers and community upcoming Annual General Meeting. members in regional Western Australia I encourage you all to have your say. with new activities and campaigns While CBH has faced many challenges that seek to improve mental health. this year, the strength of your Our Growers’ Advisory Council (GAC) co-operative has been demonstrated continued to play a critical role in and I am confident in our ability providing grower feedback to the Board to continue to deliver value to you. and management. I would like to thank As a Board, we are committed to building our 16 grower representatives who each upon the remarkable legacy built by made significant contributions under the generations of Western Australian farmers leadership of Chair Neville McDonald and to ensure our co-operative is set-up for former Deputy Chair Helen Woodhams, long-term, sustainable success. who has since been elected to the Board. We thank our growers for your support I would like to thank Neville and Helen over the past year and look forward for their leadership, as well as outgoing to working with you in 2021. councillors Chris Antonio, Bryan Kilpatrick, Gareth Rowe and Kirrilee Warr, for their many years of service. I also welcome four new growers, Noel Heinrich, Graham Ralph, Bruce Trevaskis and Tony White, who were appointed to the Council in July. Simon Stead CBH Group Annual Report 2020 3 CEO’s Report In our industry we must continually adapt to challenges when they present, and capture opportunities to achieve our purpose of sustainably creating and returning value to Western Australian growers. Jimmy Wilson Chief Executive Officer We have experienced significant external measures are aligned to six pillars and When the COVID-19 pandemic spread forces this year that are out of our control, track our progress towards generating to Western Australia we transitioned more with most of these having an impact and returning value to you. than 400 employees to remote working on various parts of our co-operative. arrangements and made changes Safety is our number one priority at to rostering and hygiene measures I am proud of the CBH team for all times, and it has been particularly on site to keep our people, growers coming together to face the year’s pleasing that the work we have been and communities safe. events with determination, working doing to improve CBH’s safety culture proactively with our growers, customers, is showing excellent results. We have The transition was made with no suppliers and government and industry achieved our lowest ever All Injury disruption to the supply chain, a feat partners to keep the supply chain Frequency Rate (AIFR) of 7.2 and the made possible by the great people we operating efficiently.