2020 Annual Report SUNRICE ANNUAL REPORT 2020 / A About This Report The SunRice Group continuously seeks to improve the way we topics under seven focus areas that the business can relate to communicate long-term sustainable value to A and B Class and affect meaningful change in over time. For FY2020, these shareholders and other important stakeholders. This year focus areas and approaches are described in Our Approach to we have integrated our financial and non-financial reporting Sustainability on pages 27 - 38. Material topics are also discussed to provide information on all aspects of our performance in in the Our Approach to Risk section of this report on pages 39 - 44 one report, the Annual Report, supported where required by and in the SunRice Stakeholder Engagement Statement Contents supplementary information (see Reports Portfolio). www.sunrice.com.au/sustainability-reports. Reporting boundary and period 2020 reports portfolio SunRice’s Annual Report covers Ricegrowers Limited ABN • Annual Report – provides information on SunRice, including 55007481156 and its controlled entities. Unless otherwise stated governance, strategy, key risks, financial and non-financial all disclosures in the Annual Report relate to the Financial Year performance, and includes the Annual Directors’ Report ended 30 April 2020 (FY2020). In this report, ‘the year’, ‘this year’, and Annual Financial Report. www.sunrice.com.au/annual- ‘crop year 2019’ and ‘CY19’ all refer to FY2020. The ‘2020 harvest’, reports 3 15 49 ‘crop year 2020’ and ‘CY20’ all refer to the rice crop harvested in • Interim (Half Yearly) Financial Report – provides Chairman’s Our Brands Corporate 2020, which will be processed and marketed in the Financial Year information on SunRice’s half-yearly financial and non- Report and Products Governance ending 30 April 2021 (FY2021). ‘SunRice’, ‘SunRice Group’, ‘Group’, financial performance and outlook. www.sunrice.com.au/ Overview ‘we’ and ‘our’ refer to Ricegrowers Limited ABN 55007481156 and financial-reports its controlled entities, as defined in this report. • Corporate Governance Statement – provides an online overview of our policies, procedures and practices to ensure Reporting frameworks application of all the ASX Corporate Governance Principles and Recommendations (3rd Edition). www.sunrice.com.au/ The FY2020 Financial Report (on pages 76 - 126) and Directors’ corporate-governance Report (on pages 57 - 74) have been prepared in accordance with 5 17 57 Australian Accounting Standards and Interpretations issued by Other reports and information 70 Years of Our Financial Directors’ the Australian Accounting Standards Board and the Corporations Innovation Act 2001. The Operating and Financial Review, which is a • Sustainability information – provides further online Performance Report required element of the Directors’ Report, can be found on pages information on SunRice’s sustainability strategy, performance and Position 11 - 46 and includes the Our World, Our Strategy, Our Financial and future plans. www.sunrice.com.au/sustainability-reports Performance and Position, Our Approach to Sustainability, Our • GRI Index – is a summary of how SunRice has addressed Approach to Risk and Our Outlook sections. each of the GRI reporting core standards, with references The content of the Our Approach to Sustainability section forms to where the detailed information can be located across part of SunRice’s application of the Global Reporting Initiative the 2020 reports portfolio. www.sunrice.com.au/ 7 27 75 (GRI) Core standards for FY2020. The GRI Standards are the sustainability-reports CEO’s Our Auditor’s world’s most widely used standards for sustainability reporting. • Other information – presentations and announcements Report Approach to Independence The GRI index (see Reports Portfolio) highlights where required made to stakeholders during the year. www.sunrice.com.au/ Sustainability Declaration FY2020 GRI Core disclosures can be found. The sustainability presentations disclosures in this report and the information in SunRice’s sustainability website www.sunrice.com.au/sustainability serve About SunRice’s structure as our Communication on Progress for the United Nations (UN) Global Compact. The structure of Ricegrowers Limited (SunRice) contains non- standard elements including its dual class share structure 9 39 76 comprising A Class Shares and B Class Shares. About Our Approach Financial Report assurance A Class Shares confer on their holders the right to vote at SunRice to Risk Report The Remuneration report on pages 59 - 73 and the Financial general meetings but no right to dividends. A Class Shares are Report on pages 76 - 126 have been audited by PwC Australia. not quoted on ASX and may only be held by Active Growers. All other disclosures in the Annual Report have been subject The right to vote is based on one member, one vote and no to SunRice’s internal review and approval processes by person may hold more than five (5) A Class Shares. In practical management, the executive and the Board, as appropriate. terms the voting rights held by A Class shareholders give those shareholders the right to control the election of directors and any changes to SunRice’s Constitution. 11 45 128 Stakeholder engagement and materiality Our Our Outlook Independent SunRice undertakes a materiality process to identify the issues B Class Shares are quoted on ASX and confer on their holders World Auditor’s the right to receive dividends, as determined by the directors that are significant to the business and to key stakeholders. The Report 2018 materiality assessment for FY2019 reporting included 26 from time to time. Holders of B Class Shares do not have the right stakeholder interviews and a detailed documentary review. It to vote at general meetings of SunRice and may only vote on identified stakeholders’ material topics which were considered proposals involving a variation to their class rights or if required by senior management using the criteria of relevance, control, for the purposes of the ASX Listing Rules. This means B Class influence and impact for discussion in SunRice’s FY2019 reports shareholders have no right to vote on the election of directors of portfolio. SunRice. No person may hold more than 10 per cent of the total 13 47 13 3 13 5 number of B Class Shares on issue. Our Corporate Shareholder Corporate During the FY2020 reporting period, SunRice undertook a detailed review of the material topics with the senior leaders of the For more details of the non-standard elements of SunRice’s Strategy Management Information Directory business. This process resulted in SunRice grouping the material structure see investors.sunrice.com.au. Team SUNRICE ANNUAL REPORT 2020 / 1 SUNRICE ANNUAL REPORT 2020 / 2 The Australian rice industry remains the backbone of SunRice’s heritage. We have not only endured, but thrived, for 70 years and will continue to do so. FY2020 Highlights Chairman’s Report As we celebrate 70 years of SunRice, I acknowledge that FY2020 Despite assurances contained in the 2004 National Water Fully franked dividend per B Class Share was a challenging year. Ongoing low rice production in Australia Initiative, the burden of these NSW and Federal reforms are not and deteriorating conditions in key global markets impacted the being shared equally. This, combined with the complexity and Group. Few companies would be able to retain their profitability lack of clarity in the water allocation process, has led to a loss of when faced with such a dramatic reduction in the availability of confidence by our Riverina growers. As such, the Board intensified cents their core input. This certainly highlights the underlying resilience its advocacy efforts with the NSW and Federal Governments 33 of our company and the performance of our management team. in FY2020 to address these unintended consequences and will continue to do so in FY2021 in conjunction with the RGA. Not only has the Board focused on the Riverina cyclical downturn; 1 Dividend yield but also, for the past three years, the execution of the Group’s Beyond our focus on Group strategic direction and performance, 2022 Growth Strategy. This is designed to strengthen and grow the there were changes to Board membership following the Grower company to provide sufficient scale to navigate challenges and Director Elections and a review of Board composition, size and meet the needs of customers in a dynamic global environment. In tenure during FY2020. This included welcoming new Non- FY2020 we continued to leverage the Group’s strong balance sheet executive Grower Directors Jeremy Morton and Julian Zanatta, 6.4% to pursue strategic growth and build value for our growers and who replaced retiring Non-executive Grower Directors Glen investors following our listing on the ASX in FY2019. Andreazza and Mark Robertson. CY19 paddy price for medium grain Reiziq Despite the operational challenges of FY2020, the Board As a Board, we also strengthened our risk management declared a fully franked dividend of 33 cents per B Class Share, framework and continued to monitor the Group’s performance representing a dividend yield of 6.4 per cent1. This was largely under the Board’s 2017 Sustainability Charter. This included our per made possible due to the diversification of earnings across the commitment to mitigating the risks of a variable climate and the tonne Group’s portfolio and our global sourcing capabilities in a year in approval of a new SunRice Supplier Sustainability Code. We are $500 which