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AWB Limited - 2003 Annual Report

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<strong>Annual</strong> <strong>Report</strong> <strong>2003</strong><br />

imagine the future


contents<br />

Section<br />

Page<br />

<strong>2003</strong> at a Glance 2<br />

Who We Are<br />

4<br />

Chairman’s and Managing Director’s <strong>Report</strong> 6<br />

Pool Management Services<br />

10<br />

Finance and Risk Management<br />

14<br />

Grain Acquisition and Trading<br />

18<br />

Supply Chain and Other Investments<br />

20<br />

Grain Technology<br />

24<br />

Landmark<br />

26<br />

Our People and Systems<br />

28<br />

Our Environment<br />

30<br />

Our Grower Community<br />

31<br />

Executive Profiles<br />

32<br />

Corporate Governance<br />

34<br />

Financial Statements<br />

44<br />

Shareholder Communication<br />

91<br />

Major ASX Announcements<br />

92<br />

Glossary<br />

92


During the past year, Australia has been through one of its most severe droughts, one that<br />

was for some parts of the country, the worst in 100 years.<br />

These conditions have had a significant impact on rural and regional Australia, and in turn,<br />

on the financial performance of <strong>AWB</strong> <strong>Limited</strong> (<strong>AWB</strong>).<br />

In 2002, we reaffirmed our commitment to a strategy of growth and diversification, with a<br />

focus on being a leading global grains marketer and asset manager. In <strong>2003</strong>, we delivered<br />

on this, most noticeably, with the acquisition of Landmark, which has made <strong>AWB</strong> Australia’s<br />

leading agribusiness.<br />

For <strong>AWB</strong>, <strong>2003</strong> has been challenging, but the company has continued to mature and we are<br />

now better positioned than ever to deliver value to both farmers and shareholders.<br />

Andrew Lindberg<br />

Managing Director


<strong>2003</strong><br />

at a glance<br />

Operational performance summary<br />

Finalised the $5.3 billion 2001/02 <strong>AWB</strong> National Pool – representing<br />

the highest ever pool value and pay grade returns.<br />

Achieved $329 million extra value for 2001/02 <strong>AWB</strong> National Pool,<br />

over and above the Wheat Industry Benchmark.<br />

Exported about nine million tonnes during the <strong>2003</strong> year, down from 16<br />

million tonnes in 2002.<br />

Sold and shipped 400,000 tonnes of wheat to Iraq despite logistical<br />

challenges, and secured funding for the outstanding 800,000 tonnes of<br />

Iraqi contracts.<br />

Successfully implemented an innovative “ring fencing” structure,<br />

protecting the <strong>AWB</strong> National Pool from the commercial activities of<br />

<strong>AWB</strong>, and delivering the highest short term credit rating available for<br />

<strong>AWB</strong> Harvest Finance <strong>Limited</strong>.<br />

Despite a reduction in the size of the peak loan book to $1.6 billion,<br />

<strong>AWB</strong> maintained market leadership in wheat harvest finance in the face<br />

of increased competition.<br />

Traded more than three million tonnes of grain, increasing domesticallytraded<br />

volumes from 2002/03 despite the drought.<br />

Successful first full year of operation for <strong>AWB</strong> Geneva, with 1.5 million<br />

tonnes of traded grain.<br />

Established new grain logistics subsidiary, <strong>AWB</strong> GrainFlow Pty Ltd,<br />

which opened nine new greenfield sites for 2002/03 harvest and<br />

constructed four new sites for <strong>2003</strong>/04 harvest.<br />

Successful acquisition of Landmark from Wesfarmers for approximately<br />

$718 million.<br />

2<br />

XXXXX XXXXXX, Pasta Technichan XXXXX XXXXXX, Pasta Technichan XXXXX XXXXXX, Pasta Technichan


FINANCIAL PERFORMANCE SUMMARY<br />

Drought impacts financial results…<br />

NPAT ($m)<br />

120<br />

100<br />

80<br />

60<br />

40<br />

20<br />

0<br />

Net profit reduced by 59%<br />

107.2<br />

Earnings per share (c)<br />

Earnings per share fell by 23 cents<br />

40<br />

39.2<br />

35<br />

34.1<br />

83.7<br />

30<br />

26.2<br />

63.3<br />

25<br />

43.9<br />

20<br />

15<br />

15.9<br />

10<br />

5<br />

0<br />

2000 2001 2002 <strong>2003</strong> 2000 2001 2002 <strong>2003</strong><br />

however…<br />

Dividends per share (c)<br />

25<br />

20<br />

15<br />

10<br />

5<br />

0<br />

Stable dividend policy maintained<br />

25 25<br />

22 22<br />

2000 2001 2002 <strong>2003</strong><br />

Share price ($)<br />

4.30<br />

4.10<br />

3.90<br />

3.70<br />

3.50<br />

3.30<br />

3.10<br />

2.90<br />

2.70<br />

2.50<br />

<strong>AWB</strong>'s share price appreciated 8.5% during 2002/03<br />

Oct 02<br />

Nov 02<br />

Dec 02<br />

<strong>AWB</strong> S&P/ASX 200<br />

Jan 03<br />

Feb 03<br />

Mar 03<br />

Apr 03<br />

May 03<br />

Jun 03<br />

Jul 03<br />

Aug 03<br />

Sep 03<br />

FINANCIAL SUMMARY<br />

YEAR ENDED 30 SEPTEMBER<br />

($A million unless otherwise stated)<br />

<strong>2003</strong><br />

2002<br />

Change<br />

Operating results<br />

Operating revenue<br />

Operating profit before tax<br />

Net profit after tax<br />

2,212.0<br />

58.9<br />

43.9<br />

2,319.0<br />

153.2<br />

107.2<br />

-5%<br />

-62%<br />

-59%<br />

Financial position at year end<br />

Shareholders’ funds<br />

Total assets<br />

932.0<br />

2,415.9<br />

789.5<br />

2,641.0<br />

18%<br />

-8%<br />

Performance<br />

Earnings per share (cents)<br />

Dividends per share (cents)<br />

Return on equity (%)<br />

15.9<br />

25.0<br />

5.1<br />

39.2<br />

25.0<br />

13.9<br />

-59%<br />

0%<br />

-63%<br />

INNOVATION FOCUS TO DELIVER NEW OPPORTUNITIES<br />

3


“Australia’s leading global manager<br />

of agricultural commodity assets,<br />

services and flows”<br />

who we are<br />

<strong>AWB</strong> is Australia’s leading agribusiness and one of the world’s largest<br />

wheat managing and marketing companies. Having evolved from the<br />

Australian Wheat Board, which operated as a government statutory<br />

marketing authority for 60 years, <strong>AWB</strong> is a listed, S&P/ASX 100<br />

Australian public company.<br />

<strong>AWB</strong> is the exclusive manager and marketer of all Australian bulk<br />

wheat exports through what is known as the Single Desk system. It<br />

also markets and trades a range of other grains including barley,<br />

sorghum and oilseeds.<br />

With the acquisition of Landmark, <strong>AWB</strong> now offers a unique one stop<br />

shop for Australian farmers, providing finance and risk management<br />

solutions across a wide range of agricultural enterprises, and has a<br />

considerable investment in rural and regional Australia.<br />

XXXXX XXXXXX, Pasta Technichan<br />

VISION<br />

“Australia’s leading global manager of agricultural<br />

commodity assets, services and flows”<br />

MISSION<br />

“To leverage the existing brand, customer bases and<br />

business model across a broader range of services and<br />

agricultural commodities to become both the producers’,<br />

and end use consumers’, business partner of choice”<br />

4<br />

XXXXX XXXXXX, Pasta Technichan<br />

XXXXX XXXXXX, Pasta Technichan<br />

XXXXX XXXXXX, Pasta Technichan


There are six key business streams that comprise <strong>AWB</strong>’s value chain:<br />

pool management services<br />

This business manages the pooling and global marketing of Australian wheat to<br />

maximise net pool returns to Pool participants. It encompasses management of<br />

commodity price risk and currency risk and involves the implementation of least cost<br />

wheat supply chain pathways from paddock to plate. The Pool secures end user<br />

demand for Australian wheat. It also helps shape the national wheat crop by providing<br />

market information through the value chain to ensure Australian wheat products meet<br />

worldwide customer quality requirements.<br />

finance and risk management products<br />

This business is designed to provide competitive cash flow and underwriting products to<br />

Australian grain growers. It provides the National Pool Payment Options and<br />

underwriting for Australian wheat deliveries, making cash flow available to growers for<br />

wheat crop plantings. It meets the growing demand for risk management products and<br />

services for growers, and increasingly, for international customers. It also undertakes<br />

discretionary trading activities and attains returns on the <strong>AWB</strong> Group’s capital.<br />

grain acquisition and trading<br />

This business develops and offers contract acquisition products that provide growers<br />

with greater marketing flexibility. It trades as a principal in the deregulated domestic<br />

grain market (wheat, feed grain and oilseeds), and exports grain other than wheat, such<br />

as canola, sorghum and pulses.<br />

supply chain and other investments<br />

This business develops domestic supply chain infrastructure to move grain from<br />

paddock to international customer as efficiently as possible. It manages <strong>AWB</strong>’s<br />

chartering activities, providing competitive sea freight services for Australian grain, and<br />

trades sea freight in the international market. It develops end use grain business within<br />

the value chain, including offshore joint ventures in milling and grain processing, to help<br />

secure end user demand for <strong>AWB</strong> wheat products.<br />

grain technology<br />

This business manages <strong>AWB</strong>’s participation in plant breeding and commercialisation of<br />

proprietary seed varieties, as well as research and development projects throughout the<br />

grain value chain. It also provides analytical testing services and quality assurance to<br />

ensure the integrity of grain through the entire supply chain.<br />

landmark<br />

Acquired by <strong>AWB</strong> in August <strong>2003</strong>, Landmark is Australia’s the most significant supplier<br />

of agribusiness products and services, with interests in a wide range of agricultural<br />

industries. It provides customers with rural merchandise, livestock, wool marketing,<br />

agronomy, insurance, real estate and rural financial services. It is also a major distributor<br />

of fertiliser products.<br />

Page<br />

11<br />

15<br />

19<br />

21<br />

25<br />

27<br />

INNOVATION FOCUS TO DELIVER NEW OPPORTUNITIES<br />

Geoff Crockett, Grower<br />

5


Andrew Lindberg, Managing Director and Brendan Stewart, Chairman<br />

6<br />

XXXXX XXXXXX, Pasta Technichan XXXXX XXXXXX, Pasta Technichan XXXXX XXXXXX, Pasta Technichan


chairman’s and<br />

managing director’s<br />

report<br />

For <strong>AWB</strong>, <strong>2003</strong> was an eventful year, marked by unique<br />

operational challenges and a strategically important acquisition.<br />

The challenges we confronted included drought, war, and<br />

extraordinary wheat market volatility. However, we were well<br />

positioned to meet the challenges and have weathered one of the<br />

toughest seasons by capitalising on our strengths, with innovative<br />

and flexible management and retaining a commitment to our<br />

company strategy.<br />

We have laid down a tangible platform for growth with the<br />

acquisition of Landmark from Wesfarmers. It is a transaction that<br />

precisely meets our strategy to diversify revenue streams and<br />

strengthen our core wheat business.<br />

Drought impacts our Financial Result<br />

<strong>AWB</strong>’s profit this year reflects the impact of what was in some<br />

parts of Australia, the worst drought in more than 100 years. It was<br />

a drought that reduced Australian wheat production from a record<br />

24.9 million tonnes to 9.7 million tonnes, and reduced Pool<br />

deliveries from 19.6 million tonnes to about 4.7 million tonnes.<br />

The severity of the drought impacted <strong>AWB</strong>, as well as Australia’s<br />

wheat growers. In response, <strong>AWB</strong> adopted a proactive<br />

management approach for the <strong>AWB</strong> National Pool, and<br />

implemented a significant cost minimisation program to reduce the<br />

operational cost base for the company.<br />

In this environment <strong>AWB</strong> announced a full year financial result of<br />

$43.9 million – a result we believe is a creditable one in the<br />

circumstances. Consistent with its commitment to a stable dividend<br />

policy, <strong>AWB</strong> declared a total dividend of 25 cents per share<br />

for 2002/03.<br />

A Landmark Acquisition<br />

29 August <strong>2003</strong> was an exciting day for the company. It was the<br />

day we positioned <strong>AWB</strong> as Australia’s leading agribusiness with the<br />

acquisition of Landmark.<br />

The acquisition strengthens <strong>AWB</strong>’s core wheat business and<br />

achieves substantial diversification in rural and financial services.<br />

<strong>AWB</strong> now provides a unique, one stop shop for the Australian<br />

farmer, with a suite of products and services that extend across<br />

their inputs and outputs, from inside the farm gate into the hands<br />

of our international customers.<br />

<strong>AWB</strong> has a comprehensive integration plan in place to achieve<br />

revenue and cost synergies, and as part of the plan has<br />

commenced consolidating the head office functions. The<br />

Landmark head office in Sydney will close on 31 March 2004.<br />

Highest ever Gross Pool Value<br />

We have not lost sight of our core business. In fact, during the year<br />

we delivered the highest ever Gross Pool Value - $5.3 billion - with<br />

the finalisation of the 2001/02 <strong>AWB</strong> National Pool. It was a result<br />

that required innovative pool management in the face of some<br />

difficult market circumstances, and involved two “Pool extensions”<br />

which protected an estimated $300 million in value for its<br />

participants.<br />

Success in Iraq<br />

The biggest marketing challenge during 2002/03 was Iraq. When<br />

hostilities erupted in the region in March, we were confronted with<br />

uncertainty – both about the future of our existing 1.2 million tonne<br />

contracts with Iraq, and the long term future of what is one of<br />

Australia’s most important wheat markets.<br />

7


What we were certain of however, was that our long trading history,<br />

the tried and tested relationships in Iraq and the skills and<br />

experience of our team would hold us in good stead. Since then,<br />

<strong>AWB</strong> has delivered on every aspect of our Iraq commitment: we<br />

successfully managed the logistics and execution risks presented<br />

by the outbreak of hostilities, we met the urgent needs of our Iraqi<br />

consumers by being the first to resume trade after the war, and we<br />

have subsequently secured funding for all 1.2 million tonnes of the<br />

wheat contracts previously struck with the Iraqi Grains Board.<br />

There is little doubt the Iraq market will change shape, and we will<br />

face increased competition. However, with a quality product and a<br />

proven track record over 50 years, <strong>AWB</strong> is clearly well positioned<br />

to meet any new competition in the market.<br />

Commitment to the Single Desk<br />

<strong>AWB</strong> remains steadfastly committed to the retention of the Single<br />

Desk for wheat exports, and the benefits it provides to growers.<br />

In 2004, a review will be conducted of <strong>AWB</strong> (International)<br />

<strong>Limited</strong>’s (<strong>AWB</strong>I) operation of the Single Desk. By outperforming<br />

the Wheat Industry Benchmark, as it did during <strong>2003</strong>, <strong>AWB</strong><br />

believes it will demonstrate again, the clear and tangible benefits of<br />

the current Australian wheat marketing system. This is not a<br />

National Competition Policy (NCP) review of the Single Desk. The<br />

Single Desk legislation (Wheat Marketing Act 1989) is scheduled<br />

for review under NCP principles in 2010.<br />

Australian wheat growers have reaffirmed their support for the<br />

current Single Desk system, with an independent and national<br />

Rural Press survey in August <strong>2003</strong> finding more than 80%<br />

supported the system, and that 79% regarded <strong>AWB</strong>’s management<br />

as “good to excellent”.<br />

Strong Credit Rating<br />

During <strong>2003</strong>, <strong>AWB</strong> incorporated changes to “ring fence” its wheat<br />

export related operations from its commercial activities. The reason<br />

for this was to improve and protect the ongoing operations of the<br />

<strong>AWB</strong> National Pool and the credit rating which supports finance to<br />

growers who deliver to it. This benefits the <strong>AWB</strong> National Pool by<br />

protecting it from the commercial activities of <strong>AWB</strong> and providing<br />

the ability to source competitive funding from the international<br />

market. <strong>AWB</strong> now retains the highest credit rating possible given<br />

our business mix and overall capitalisation.<br />

Competitive Global Environment<br />

Australia’s export dependent farmers continue to compete in a<br />

grossly distorted world market, and trade issues remained a key<br />

priority for <strong>AWB</strong> during <strong>2003</strong>.<br />

Trade reform progress through the World Trade Organization has<br />

been difficult, with talks faltering in Mexico in <strong>2003</strong>. However,<br />

<strong>AWB</strong> remains committed to pursuing a more level trade playing<br />

field for Australian growers, who are among the most productive<br />

and self sufficient in the world.<br />

<strong>AWB</strong> has been supportive of the bilateral trade agreements<br />

pursued by the Australian Government. A Free Trade Agreement<br />

(FTA) with Thailand this year presents further opportunities for<br />

Australian wheat in south east Asia. The FTA with the United<br />

States does not deliver significant benefit to the local grains<br />

industry as there is already free trade between the two countries.<br />

<strong>AWB</strong> supports the FTA for the potential benefits it could bring to<br />

other Australian agricultural industries, but is committed to ensuring<br />

wheat growers are not disadvantaged by any trade agreement.<br />

XXXXX XXXXXX, Pasta Technichan<br />

8<br />

Andrew Lindberg meets the Iraqi Interim<br />

Minister of Trade and Interim Deputy Minister<br />

for Planning.<br />

XXXXX Brendan XXXXXX, Stewart Pasta meets Technichan growers in<br />

Esperance, WA.<br />

XXXXX XXXXXX, Pasta Technichan


As a gesture of <strong>AWB</strong>'s appreciation of its long-standing trade relationship with Iraq, Mr Lindberg presented Dr Ali Allawi with two skid steer loaders.<br />

From left to right: Michael Long, General Manager, Africa, Europe & Middle East; Dr Ali Allawi, Iraqi interim Minister for Trade; Andrew Lindberg,<br />

Managing Director; Mr Faik Rasool, Iraqi interim Deputy Minister for Planning and Mr Stephen Belani, Director Case Equipment - Victoria.<br />

A Solid Strategy<br />

<strong>AWB</strong> has two dominant strategic objectives:<br />

Strengthen Core Wheat Business<br />

The equation is simple: by managing the Single Desk system<br />

effectively, and maximising returns to growers, <strong>AWB</strong> will also<br />

generate a commercial return for its shareholders.<br />

We are delivering on that formula, and are well positioned to<br />

continue. Australian growers produce a quality wheat product, at<br />

relatively low cost with a strong brand internationally. We are also<br />

committed to reducing costs and improving services to growers by<br />

increasing competition and efficiencies in the grain supply chain.<br />

We will continue to pursue opportunities to secure end user<br />

demand for Australian wheat by improving our product and service<br />

offering, and the value proposition for our customers.<br />

Grow and Diversify<br />

It is also appropriate that <strong>AWB</strong> pursue sensible and rational<br />

diversification of its revenue streams. Doing so reduces its<br />

exposure to the Australian crop size, while strengthening the<br />

organisation’s capacity as Single Desk manager.<br />

<strong>AWB</strong> plans to diversify within the value chain, by increasing the<br />

volume of grains and other agricultural commodities under<br />

management. We can leverage our world leading expertise in grain<br />

marketing and risk management, and our established global sales<br />

customer base that is spread across 40 countries.<br />

We are also targeting growth by expanding our financial and risk<br />

management offering. <strong>AWB</strong> will use its acquisition of Landmark,<br />

and build on its strong relationship with growers and customers, to<br />

provide an extensive and unique one stop shop of rural and<br />

financial services and commodity management.<br />

Looking Ahead<br />

<strong>AWB</strong>’s financial objectives focus on solid financial growth, stable<br />

dividend payments, efficient capital management and improved<br />

quality of earnings.<br />

In 2004, our priority will be the successful integration of Landmark,<br />

capitalising on synergies and creating opportunities to improve our<br />

earnings. We have a strong integration team in place with clear<br />

goals and challenging performance targets set over a two year<br />

integration period.<br />

The environment for this to take place is encouraging. The<br />

Australian wheat crop has rebounded significantly for the <strong>2003</strong>/04<br />

harvest, returning to levels that exceed the five year average.<br />

Internationally, global wheat stocks are at historically low levels,<br />

which provides a foundation for strength in world grain markets.<br />

Our Thanks<br />

We have asked much of our staff through this tough and<br />

challenging year. On behalf of the <strong>AWB</strong> Board and management,<br />

we would like to thank them for their dedication, commitment and<br />

excellent performance.<br />

Brendan Stewart<br />

Chairman<br />

Andrew Lindberg<br />

Managing Director<br />

INNOVATION FOCUS TO DELIVER NEW OPPORTUNITIES<br />

9


Year in brief<br />

• Finalised the 2001/02 <strong>AWB</strong> National<br />

Pool and achieved highest ever Pool value<br />

and pay grade returns – $5.3 billion.<br />

• Successfully exported about nine million<br />

tonnes during the <strong>2003</strong> year, completing<br />

the 16.8 million tonne export program<br />

from 2001/02 Pool.<br />

• Sold and delivered wheat to more than<br />

130 customers in more than 40 countries.<br />

• Managed customer quality and quantity<br />

requirements with a much smaller crop<br />

and a significantly different quality profile.<br />

• Sold in excess of one million tonnes of<br />

wheat domestically.<br />

• Sold and shipped 400,000 tonnes of<br />

wheat to Iraq despite logistical<br />

challenges, and secured funding for the<br />

outstanding 800,000 tonnes of Iraqi<br />

contracts.<br />

• Extended the 2001/02 <strong>AWB</strong> National<br />

Pool twice to protect and enhance Pool<br />

value.<br />

• Achieved $329 million extra value for the<br />

2001/02 <strong>AWB</strong> National Pool, over and<br />

above the Wheat Industry Benchmark.<br />

Pearl of Abu Dhaui which was loaded with 50,000 tonnes<br />

of premium Australian white wheat at Port Kembla, New South Wales.<br />

10<br />

<strong>AWB</strong> Grain Centre, The Gums, Queensland<br />

Geoff Robbins and Clare McCracken,<br />

Yarrawonga office


pool management<br />

services<br />

<strong>AWB</strong> National Pool<br />

<strong>AWB</strong>, through its wholly owned subsidiary <strong>AWB</strong>I, manages the<br />

<strong>AWB</strong> National Pool. Integrated services are provided by <strong>AWB</strong> to<br />

<strong>AWB</strong>I for a fee under a commercial services agreement. Both the<br />

<strong>AWB</strong> and <strong>AWB</strong>I Boards have negotiated and approved this<br />

agreement, with independent legal advice provided to each Board.<br />

<strong>AWB</strong> National Pool provides growers with a unique grain marketing<br />

and risk management system. All <strong>AWB</strong> National Pool participants<br />

enjoy the value of revenues generated from strong customer<br />

relationships and international sales, arbitrage and blending<br />

opportunities, logistics and supply chain efficiencies, research and<br />

development, physical pricing strategy and sophisticated derivative<br />

management programs.<br />

The Remuneration Model<br />

<strong>AWB</strong> is remunerated for pool management services through a<br />

performance based system introduced in 2001. To provide an<br />

objective and tangible measurement of its performance, <strong>AWB</strong> has<br />

also implemented an assessment model called the Wheat Industry<br />

Benchmark (WIB). The WIB acts as a “competing manager”<br />

generating a theoretical outcome for each seasonal pool against<br />

which actual performance can be measured.<br />

Remuneration is made via a two tiered payment structure. Firstly,<br />

there is a base fee, calculated at 1.5% of Gross Pool Value (GPV)<br />

(subject to a cap of $A61.8 million, and a floor of $A46.4 million –<br />

CPI indexed) which, depending on GPV, covers the majority of<br />

operating costs. Secondly, there is an Out Performance Incentive<br />

which is calculated as 20% of <strong>AWB</strong> National Pool returns achieved<br />

above the WIB and a hurdle (currently set at $US5 per tonne).<br />

Pool participants receive 80% of the revenue achieved above this<br />

level. The Out Performance Incentive is capped at 1.5% of GPV.<br />

<strong>AWB</strong> manages two to three seasonal Pools at any one time, and<br />

receives proportional remuneration from each of those Pools during<br />

the financial year.<br />

For the now finalised 2001/02 <strong>AWB</strong> National Pool, <strong>AWB</strong> achieved<br />

$329 million in additional value over and above the WIB. Under the<br />

remuneration structure, <strong>AWB</strong> received $28.3 million (spread across<br />

two financial years), with the remainder going to Pool participants.<br />

Total remuneration earned by <strong>AWB</strong> for its Pool Management<br />

Services for the 2002/03 financial year was $23.3 million, which<br />

included remuneration from two seasonal pools, as per below:<br />

($million) For the year ended September <strong>2003</strong> For the year ended September 2002<br />

2001/02 Pool 2002/03 Pool Total 2001/02 Pool Total<br />

Base Fee 6.0 41.8 47.8 54.0 54.0<br />

Out performance 14.0 15.3 29.3 14.3 14.3<br />

Administration costs – (53.8) (53.8) (50.9) (50.9)<br />

Total Pool 20.0 3.3 23.3 17.4 17.4<br />

Management Services (EBIT)<br />

25<br />

20<br />

($m)<br />

15<br />

10<br />

5<br />

0 INNOVATION FOCUS The TO leading DELIVER agribusiness NEW OPPORTUNITIES<br />

in Australia.<br />

2000 2001 2002 <strong>2003</strong><br />

NPBT – Pool Management Services<br />

11


Active Pool Management<br />

The past marketing year presented a challenging environment for<br />

the <strong>AWB</strong> National Pool management team, with a highly volatile<br />

world wheat market, a rising Australian dollar and a war in one of<br />

its most important markets.<br />

Yet, <strong>AWB</strong> finalised its largest ever <strong>AWB</strong> National Pool, announcing<br />

a Gross Pool Value of $5.3 billion for the 2001/02 Pool, and<br />

captured significant value for participants in the drought affected<br />

2002/03 Pool.<br />

The record pool returns from 2001/02 were the result of active<br />

and innovative Pool management, involving two “Pool extensions”.<br />

By modifying its sales and shipping program, carrying stock rather<br />

than competing at heavily discounted prices and then “extending”<br />

the Pool, <strong>AWB</strong> was able to protect an estimated $300 million that<br />

could have otherwise been eroded.<br />

International Sales and Marketing<br />

In 2002/03, <strong>AWB</strong> had to manage and ration customer demand<br />

across a significantly smaller crop.<br />

A feature of the world wheat market during the year was the<br />

substantial increase in trade from non-traditional exporters such as<br />

Eastern Europe, the former Soviet Union and India. Exports from<br />

these non-traditional exporters rose by about 70% from 2001/02<br />

to 2002/03, and as part of their aggressive sales campaign, that<br />

wheat was at times discounted by as much as $US70 per tonne to<br />

US parity values.<br />

Despite the smaller harvest in 2002/03, <strong>AWB</strong> has continued to<br />

foster new market opportunities in north and west Africa, which will<br />

be capitalised on in future higher production years.<br />

The biggest market challenge for 2002/03 was Iraq. Despite this<br />

challenge, <strong>AWB</strong> has been successful with its Iraq export program<br />

during <strong>2003</strong>, and is confident it can retain its leading supply<br />

position to Iraq in the future. Increased competition is expected, but<br />

<strong>AWB</strong> will build on its 50 year trading history, a proven wheat<br />

product and the strong relationships with Iraqi customers and<br />

consumers.<br />

The bigger challenge now is to sell a significantly larger crop during<br />

<strong>2003</strong>/04. <strong>AWB</strong> remains committed to securing end user demand<br />

for Australian wheat, by delivering a high quality product, made to<br />

order. <strong>AWB</strong> is also broadening its services to international<br />

customers via value added packages that include finance, credit<br />

and risk management components, along with chartering and<br />

technical wheat processing expertise.<br />

Risk Management Services<br />

<strong>AWB</strong> uses hedging instruments to protect the <strong>AWB</strong> National Pool,<br />

and growers, against risk associated with commodity and currency.<br />

During the life of the 2001/02 Pool, the Australian dollar ($A)<br />

appreciated significantly within a range of 20 cents against the US<br />

dollar ($US). <strong>AWB</strong> limited the exposure to this by delivering an<br />

average $US/$A currency hedge rate of 0.5215 cents, compared<br />

to the seasonal average of 0.5526 cents, and a Wheat Industry<br />

Benchmark result of 0.5261 cents.<br />

The currency hedging program for the 2002/03 Pool is well<br />

advanced, and is on track to achieve an average hedge rate below<br />

0.55 cents, against a seasonal average of above 0.58 cents. <strong>AWB</strong>’s<br />

currency hedging strategies have also allowed it to capture<br />

favourable exchange rates for the <strong>2003</strong>/04 <strong>AWB</strong> National Pool in<br />

a climate of a weakening US dollar.<br />

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For the 2001/02 Pool, <strong>AWB</strong> managed almost 700,000 individual<br />

grain deliveries requiring 7,180 separate train movements to transfer<br />

that grain, a combined total of two million kilometres to port, from<br />

where it was shipped through more than 3,000 separate bills of sale.<br />

Taking advantage of its market intelligence and expertise, <strong>AWB</strong> has<br />

also performed well in managing commodity risk for the <strong>AWB</strong><br />

National Pool. Participating in the US futures exchanges in Kansas,<br />

Chicago and Minneapolis, <strong>AWB</strong> capitalised on the strong rally in<br />

world wheat prices late in 2002 (driven by droughts in key<br />

exporting countries such as Canada, US and Australia), to the<br />

benefit of both the 2001/02 and 2002/03 <strong>AWB</strong> National Pools.<br />

Managing the Wheat Supply Chain<br />

During <strong>2003</strong>, <strong>AWB</strong> improved efficiencies and reduced costs along<br />

the supply chain on behalf of pool participants.<br />

On behalf of <strong>AWB</strong> National Pool, <strong>AWB</strong>’s supply chain management<br />

team continues to renegotiate domestic supply chain contracts on<br />

a more commercial basis. For example, in <strong>2003</strong>, it signed a three<br />

year contract with Queensland Rail, which will deliver more cost<br />

effective rail rates and reduce the rail assets required for the grain<br />

haulage task.<br />

By publishing Estimated Silo Returns on its website for each and<br />

every receival point around Australia, <strong>AWB</strong> is providing more<br />

transparency on site to sea costs, and an environment for more<br />

competition in the supply chain.<br />

In the year ahead, <strong>AWB</strong> will pursue new supply chain service<br />

arrangements with traditional providers, and will introduce new<br />

optimisation technology to better manage and performance monitor<br />

the supply chain program.<br />

Research and Development<br />

<strong>AWB</strong> has set ambitious targets for its product competitiveness in<br />

international markets. One such aim is to be marketing 60% of its<br />

wheat volumes into Asia by 2007. To achieve this, <strong>AWB</strong> remains<br />

focussed on its crop shaping activities, working closely with<br />

customers to identify key characteristics and deliver them through<br />

the wheat product .<br />

During <strong>2003</strong>, <strong>AWB</strong> hosted the first ever wheat breeding forum. Key<br />

market signals were discussed with the wheat research and<br />

breeding community to encourage development of new varieties to<br />

meet specific customer requirements.<br />

Grower Services<br />

During the year, <strong>AWB</strong> met face to face with more than 7,000<br />

growers at various meetings across the country. This year, <strong>AWB</strong><br />

extended its highly successful National Pool Forum concept,<br />

expanding on last year’s single event with four forums across four<br />

states this year. <strong>AWB</strong>’s Grower Services Centre this season<br />

received and managed more than 85,000 grower calls.<br />

<strong>AWB</strong> also launched a new website during <strong>2003</strong>, specifically<br />

designed to meet the increasingly sophisticated needs of growers<br />

and customers. The new site, www.awb.com.au has a dedicated<br />

grower channel which consolidates all relevant information, and will<br />

act as the main business portal for growers’ grain marketing and<br />

finance management requirements.<br />

Outlook<br />

A larger harvest in <strong>2003</strong>/04 will mean increased tonnage into the<br />

<strong>2003</strong>/04 <strong>AWB</strong> National Pool, and a larger export task for the pool<br />

management services businesses. The world wheat market has<br />

continued its trend of volatility into the <strong>2003</strong>/04 financial year, and<br />

should be marked by a return to more normal production levels in<br />

some of the major wheat exporters. <strong>AWB</strong> is committed to<br />

outperforming the benchmarks for all the services it provides to<br />

operate <strong>AWB</strong> National Pool, and is on track to outperform the WIB<br />

for the <strong>2003</strong>/04 Pool.<br />

INNOVATION FOCUS TO DELIVER NEW OPPORTUNITIES<br />

13


Year in brief<br />

• Successfully implemented a “ring fencing” structure which delivered improved credit ratings of A1+ (short term) AA- (long<br />

term) stable outlook from Standard & Poor’s, and P-1 from Moody’s for <strong>AWB</strong> Harvest Finance <strong>Limited</strong>.<br />

• Improved competitiveness of <strong>AWB</strong> National Pool Payment Options, and maintained market leadership in harvest finance<br />

market despite increased competition.<br />

• Loan book peaked at $1.6 billion in December 2002.<br />

• Created a syndicated multi-option facility, which was used to finance the acquisition of Landmark.<br />

• Release of the <strong>AWB</strong> Fixed Basis contract, through <strong>AWB</strong> RiskAssist, for wheat, canola and sorghum.<br />

Matt Holgate, Regional Manager and<br />

Craig Prescott, Grower<br />

14<br />

Craig Prescott, Grower<br />

Ken Hudson and Rick Price,<br />

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finance and<br />

risk management<br />

Harvest Finance<br />

In 2002, <strong>AWB</strong> introduced its new National Pool Payment Options<br />

which provide growers a unique range of loan and payment options<br />

for harvest finance. Despite the drought, the new products<br />

achieved a strong uptake from participants in the 2002/03 <strong>AWB</strong><br />

National Pool.<br />

In <strong>2003</strong>, <strong>AWB</strong> responded to growers’ needs for greater cash flow<br />

flexibility by enhancing its National Pool Payment Options. This<br />

included removing the minimum drawdown amount for the Flexible<br />

Drawdown Loan, and, for the Deferred Payment option, moving all<br />

cash flow to the subsequent financial year. These enhancements<br />

have been well received by growers, third party advisers and staff,<br />

and highlight <strong>AWB</strong>’s responsiveness to growers’ changing financial<br />

requirements.<br />

Volumes through the loan book were lower this season, given that<br />

new season Pool deliveries fell from 19.3 million tonnes in<br />

2001/02, to 4.7 million in 2002/03. <strong>AWB</strong>’s loan book peaked at<br />

$1.6 billion in December 2002, down from a record peak of $2.1<br />

billion in the previous reporting year.<br />

The acquisition of Landmark promises exciting opportunities in the<br />

rural finance area, with access for <strong>AWB</strong> and farmers to a broader<br />

range of lending, transaction, deposit and insurance products. <strong>AWB</strong><br />

will support this broader financial services platform through<br />

investment in product development, recruitment of specialised staff<br />

and the creation of solutions that meet the unique needs of<br />

Australian farmers.<br />

Risk Management Products<br />

Basis Pool<br />

<strong>AWB</strong> Basis Pool remained a popular risk management product for<br />

growers seeking to manage their own commodity and foreign<br />

exchange exposures. After strong growth in Basis Pool volumes<br />

since 1998/99 when it was introduced, volumes assigned to the<br />

Basis Pool were significantly lower in 2002/03 due to the drought.<br />

About 180,000 tonnes were committed to the Basis Pool, although<br />

a significant proportion of that tonnage was cancelled, or<br />

“washed out”.<br />

Although the drought has reduced the general grower appetite for<br />

forward contracting, with increased crop production in <strong>2003</strong>/04,<br />

there will be more grain available for contracting through <strong>AWB</strong><br />

Basis Pool and <strong>AWB</strong> is expecting larger volumes as a result.<br />

<strong>AWB</strong> RiskAssist<br />

As a wholly owned subsidiary, <strong>AWB</strong> RiskAssist <strong>Limited</strong> was<br />

established to provide specialised risk management service to<br />

grower customers. After steady growth in its business, reduced<br />

production impacted the uptake of risk management services<br />

during <strong>2003</strong>. However, <strong>AWB</strong> RiskAssist has expanded its offering<br />

with a new Fixed Basis Contract, and with a significantly larger<br />

crop for <strong>2003</strong>/04, is anticipating a modest increase in the uptake<br />

of risk management services among growers for the year ahead.<br />

Partly offsetting the impact of reduced grower uptake has been<br />

<strong>AWB</strong> RiskAssist’s continued diversification of its customer base.<br />

($m)<br />

100<br />

80<br />

60<br />

40<br />

20<br />

0 INNOVATION FOCUS TO Improve DELIVER performance NEW OPPORTUNITIES<br />

and returns.<br />

2000 2001 2002 <strong>2003</strong><br />

NPBT – Finance and Risk Management<br />

15


During <strong>2003</strong>, <strong>AWB</strong> "ring fenced" its wheat operations from the other<br />

commercial activities of the Group. <strong>AWB</strong> now retains the highest<br />

short term credit rating possible given our business mix and overall<br />

capitalisation.<br />

In <strong>2003</strong>, it provided services to international customers of <strong>AWB</strong><br />

National Pool, the Trading division’s domestic and international<br />

customers, and <strong>AWB</strong> Geneva’s international customer base, by<br />

embedding price risk components into the physical grain contracts.<br />

<strong>AWB</strong> RiskAssist expects to expand this aspect of its business in<br />

the year ahead.<br />

Group Funding Activities<br />

The size and duration of <strong>AWB</strong> Group’s borrowing program is largely<br />

determined by the crop size, timing of both grain delivery and sales,<br />

and the financing options chosen by growers. Group funding for<br />

the year was sourced from global and domestic markets,<br />

specifically a $US1.5 billion US commercial paper program, a<br />

$US1.5 billion global Euro commercial paper program and a $A2.0<br />

billion domestic commercial paper program.<br />

Liquidity support for <strong>AWB</strong> is provided through committed<br />

commercial paper standby facilities with a panel of banks, in<br />

accordance with <strong>AWB</strong>’s relationship banking strategy. <strong>AWB</strong> also<br />

uses various financial hedging instruments to protect its funding<br />

costs against the effects of interest rate fluctuations. These<br />

include interest rate swaps, forward rate agreements, exchange<br />

traded futures contracts and options on futures contracts.<br />

Credit Rating<br />

On 1 October <strong>2003</strong>, <strong>AWB</strong> “ring fenced” its wheat export related<br />

operations from the other commercial activities of the Group. In<br />

doing so, <strong>AWB</strong> improved and protected the credit rating for <strong>AWB</strong><br />

Harvest Finance <strong>Limited</strong> in providing finance to growers who<br />

deliver to the <strong>AWB</strong> National Pool. Growers who deliver to the <strong>AWB</strong><br />

National Pool, and use <strong>AWB</strong> National Pool Payment Options,<br />

benefit through the competitive finance products that are afforded<br />

with the improved credit rating.<br />

To achieve this outcome, <strong>AWB</strong> created three new wholly owned<br />

subsidiary companies:<br />

<strong>AWB</strong> Harvest Finance <strong>Limited</strong> – provides growers delivering to<br />

the <strong>AWB</strong> National Pool with a suite of financing alternatives<br />

(replacing <strong>AWB</strong> Finance <strong>Limited</strong>);<br />

<strong>AWB</strong> Services <strong>Limited</strong> – provides, on a fee for service basis, the<br />

management and business infrastructure required to support<br />

<strong>AWB</strong> Group operations, including asset management (building,<br />

IT software and hardware etc) and staff; and<br />

<strong>AWB</strong> Commercial Funding <strong>Limited</strong> – provides treasury and<br />

funding operations for the commercial subsidiaries of <strong>AWB</strong>.<br />

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Through “ring fencing”, <strong>AWB</strong> was able to achieve the highest<br />

possible short term rating available for <strong>AWB</strong> Harvest Finance<br />

<strong>Limited</strong>. The credit ratings achieved were:<br />

<strong>AWB</strong> Harvest Finance <strong>Limited</strong>:<br />

Standard & Poor’s: A1+ (short term)<br />

AA- (long term) stable outlook<br />

Moody’s: P-1<br />

Outlook<br />

With a considerably larger harvest for <strong>2003</strong>/04, <strong>AWB</strong> is<br />

anticipating strong uptake of its National Pool Payment Options,<br />

and retention of its leading position within the market. The larger<br />

crop should also provide an improved environment for the uptake<br />

of the expanded range of risk management products and services<br />

provided by <strong>AWB</strong>.<br />

<strong>AWB</strong> Commercial Funding <strong>Limited</strong>:<br />

Standard & Poor’s: BBB stable outlook<br />

(supported by an <strong>AWB</strong> <strong>Limited</strong> guarantee).<br />

<strong>AWB</strong> Harvest Finance <strong>Limited</strong> replaced <strong>AWB</strong> Finance <strong>Limited</strong> as at<br />

1 October <strong>2003</strong>, in providing harvest finance products to growers<br />

who deliver to the <strong>AWB</strong> National Pool. Domestic and offshore<br />

commercial paper programs have been created for <strong>AWB</strong> Harvest<br />

Finance <strong>Limited</strong> to finance the <strong>2003</strong>/04 operations.<br />

In addition, a committed $950 million syndicated multi option<br />

facility from five relationship banks has been created to fund <strong>AWB</strong><br />

Commercial Funding <strong>Limited</strong>. This facility provides both cash<br />

advances and bank guarantees for the commercial activities of the<br />

Group and was utilised to finance the acquisition of Landmark.<br />

INNOVATION FOCUS TO DELIVER NEW OPPORTUNITIES<br />

17


Year in brief<br />

• Traded more than three million tonnes of grain,<br />

increasing volumes sold to the domestic market<br />

from 2002/03 despite the drought.<br />

• Successful first full year of operation for <strong>AWB</strong><br />

Geneva, which traded 1.5 million tonnes of grain.<br />

• Developed Washout Assistance Loan, which was<br />

applied to more than 450,000 tonnes.<br />

• Worked, in collaboration with other business<br />

divisions, to provide bundled grain, marketing,<br />

finance and risk management packages to<br />

growers, domestic and overseas customers.<br />

• Expanded oilseed market in Japan in<br />

collaboration with the <strong>AWB</strong>’s Japanese 51%<br />

owned subsidiary Zen-noh Corporation.<br />

Akira Yoshii and Toru Sano, Customers and Ken Hudson, Regional Manager<br />

18<br />

Adrian Hyland, Krissy Dixon, Mitch Morison<br />

and Tim Glass, Trading division


grain acquisition<br />

and trading<br />

Grain Acquisition Products<br />

<strong>AWB</strong>’s Trading division retained its leading position in securing<br />

grain supplies during <strong>2003</strong>. <strong>AWB</strong> was able to forward contract one<br />

million tonnes of grain prior to the 2002/03 harvest, a solid result<br />

given the reduced crop size. However, drought induced production<br />

shortfalls meant about 450,000 tonnes of grain contracts were<br />

cancelled, or “washed out”.<br />

To manage the contract cancellations, the Trading division provided<br />

growers with the flexibility of same day washout values, and<br />

implemented the innovative Washout Assistance Loan (WAL). The<br />

WAL provided a finance offering to help alleviate the cash flow<br />

impact caused by the washouts, and highlighted <strong>AWB</strong>’s innovation<br />

in the face of unusual market circumstances. <strong>AWB</strong> has taken a<br />

conservative approach to provisioning against this exposure.<br />

Domestic Trading<br />

Drought conditions during 2002/03 produced a unique dynamic in<br />

the domestic grain market, with volatile and historically high prices<br />

encouraging traders to import as much as 350,000 tonnes of feed<br />

grain. <strong>AWB</strong>’s Trading division did not import any grain, but remained<br />

the major buyer in the domestic market, and was the major trading<br />

house in terms of volume of supplies across 2002/03.<br />

Backed by its national grower services network and relationships<br />

with more than 50 domestic customers, <strong>AWB</strong> Domestic Trading<br />

was able to increase the volume of grain sold to the domestic<br />

market in 2002/03. By accessing <strong>AWB</strong> National Pool grain stocks<br />

through the public Pool tender system, <strong>AWB</strong> Domestic Trading was<br />

able to provide grain supply solutions to a wide cross-section of<br />

domestic consumers.<br />

With the drop in domestic production, grain exports were down<br />

sharply in <strong>2003</strong>. A pleasing result was that <strong>AWB</strong> was able to<br />

secure export sales of canola and sorghum into the Japanese<br />

market through its subsidiary trading company with Zen-noh<br />

Corporation (AZL) based in Tokyo.<br />

With a better production season ahead, <strong>AWB</strong> Domestic Trading will<br />

be able to build upon the business it has developed during the<br />

2002/03 season and maintain its prominent position in the market.<br />

Global Trading<br />

<strong>AWB</strong> Global Trading completed its first full year of operation in<br />

2002/03, delivering tangible benefits to growers, customers and<br />

shareholders.<br />

With drought reducing the ability of <strong>AWB</strong> National Pool to meet all<br />

customer demand, <strong>AWB</strong> was able to tailor other origin supplies<br />

through its Geneva based Global Trading operations to some of its<br />

long term customers. This provided a commercial return for <strong>AWB</strong>,<br />

but also retained customer relationships for <strong>AWB</strong> as it looks toward<br />

significantly larger crop levels again in <strong>2003</strong>/04.<br />

<strong>AWB</strong> Geneva was also able to secure contracts in markets that<br />

<strong>AWB</strong> National Pool considered not in the best interests of its<br />

participants. It allows improved access to customers in the<br />

Mediterranean basin and in west and north Africa, and facilitates<br />

the supply of grain from the European Union, the former Soviet<br />

Union and subcontinent to these markets. This business is<br />

governed by the strict guidelines of the <strong>AWB</strong> National Pool, which<br />

has the right of veto over any wheat export sales.<br />

A strong contributor to the Global Trading operation was the<br />

performance of the oilseed book into markets that <strong>AWB</strong> has not<br />

serviced previously, notably, soybean exports to Indonesia. The<br />

ability to expand the range and volumes of grains under<br />

management is a key platform for growth for <strong>AWB</strong>.<br />

Outlook<br />

The significantly higher national wheat production in <strong>2003</strong>/04 will<br />

improve prospects for the Trading division, with larger grain<br />

volumes available for contracting though its acquisition products.<br />

As a result, <strong>AWB</strong> is also poised to export much larger tonnages of<br />

non-wheat grain in <strong>2003</strong>/04, and to further capitalise on joint<br />

venture opportunities through AZL. <strong>AWB</strong> is expecting a<br />

consolidation of the solid first year performance of its Global<br />

Trading operations.<br />

($m)<br />

50<br />

40<br />

30<br />

20<br />

10<br />

0<br />

Diversification and investment.<br />

2000 2001 2002 <strong>2003</strong><br />

NPBT – Grain Acquisition and Trading<br />

19


Year in brief<br />

• Launched new grain logistics subsidiary,<br />

<strong>AWB</strong> GrainFlow Pty Ltd, in January <strong>2003</strong>.<br />

• Opened nine greenfield sites for the<br />

2002/03 harvest and constructed four<br />

new sites for the <strong>2003</strong>/04 harvest.<br />

• Managed about 185,000 tonnes of grain<br />

receivals for the 2002/03 harvest.<br />

• Developed new Cost and Freight (CFR)<br />

markets in Tanzania, Indonesia and Japan.<br />

• Physical volumes and financial results for<br />

Geneva Global Freight ahead of budget.<br />

• Maintenance of market share by Five Star<br />

Flour Mill (Egypt), despite near record<br />

prices of Australian wheat.<br />

• Increased wheat sales to the Japanese<br />

Food Agency through the <strong>AWB</strong> – Zen-noh<br />

subsidiary to their highest levels.<br />

West Wyalong Grain Centre<br />

20<br />

<strong>AWB</strong> Grain Centre, The Gums, Queensland


supply chain and<br />

other investments<br />

Domestic Investments<br />

<strong>AWB</strong> continued to pursue investments in 2002/03 that reduce<br />

supply chain costs for growers, strengthen <strong>AWB</strong>’s regional position<br />

and achieve a commercial return to shareholders above the<br />

weighted average cost of capital.<br />

In January <strong>2003</strong>, <strong>AWB</strong> launched its new grain logistics company,<br />

<strong>AWB</strong> GrainFlow, which as a wholly owned subsidiary will operate<br />

<strong>AWB</strong>’s growing supply chain and logistical services. <strong>AWB</strong><br />

GrainFlow provides a new, defined and separate identity for<br />

business ventures, including <strong>AWB</strong> Grain Centres (and the<br />

coordination of services such as on-farm pick-up), company owned<br />

rail stock, the <strong>AWB</strong> investment in the Melbourne Port Terminal and<br />

any future supply chain investments.<br />

<strong>AWB</strong> GrainFlow<br />

Grain Centres<br />

<strong>AWB</strong> GrainFlow opened nine, state of the art greenfield sites in SA<br />

and NSW in time for the 2002/03 harvest. <strong>AWB</strong> GrainFlow has<br />

also constructed a further four new sites in NSW and QLD, and<br />

upgraded the Beanbri site in NSW for the <strong>2003</strong>/04 harvest, taking<br />

total storage capacity to more than three million tonnes. The<br />

drought, particularly in eastern Australia, directly impacted <strong>AWB</strong><br />

GrainFlow receivals for 2002/03, with total grain receipts of about<br />

185,000 tonnes being down considerably from the previous year.<br />

However, <strong>AWB</strong> improved its market share in the storage and<br />

handling sector, and the investments contributed positive gross<br />

margins over direct operating costs. With a considerably larger crop<br />

in <strong>2003</strong>/04, <strong>AWB</strong> GrainFlow’s Grain Centre business is well<br />

positioned to attract significant tonnage, and achieve long term<br />

commercial returns for shareholders over their investment life.<br />

Rail Freight<br />

<strong>AWB</strong> has committed about $5 million for 51 high capacity rail<br />

wagons, to be operated in NSW to improve grain haulage services,<br />

and provide a commercial return on investment. Grain volumes<br />

hauled by the wagons in 2002/03 were down due to the drought,<br />

but <strong>AWB</strong> anticipates the wagons will play an important part in the<br />

grain haulage task for coming seasons. <strong>AWB</strong>’s Waratah train, which<br />

was leased from Freight Australia in 1999, hauled its one millionth<br />

tonne of grain during 2002/03.<br />

Ports<br />

Rental income on <strong>AWB</strong>’s 50% ownership of the Melbourne Port<br />

grain terminal was impacted by reduced grain production and<br />

exports. In total, approximately 450,000 tonnes were handled<br />

through the facility in 2002/03.<br />

<strong>AWB</strong> continues to investigate further opportunities for port<br />

developments. Consistent with <strong>AWB</strong>'s supply chain and investment<br />

strategies, these are focussed on improving port services and<br />

delivering reduced costs to growers, as well as providing long term<br />

commercial returns to shareholders.<br />

Offshore Investments<br />

<strong>AWB</strong>’s offshore investments form a key platform in its strategy to<br />

diversify its income in a manner that expands end user demand for<br />

<strong>AWB</strong> products and services. The investments have extended<br />

<strong>AWB</strong>’s stake in the grain value chain, in the areas of flour and feed<br />

milling, food processing and grain trading, and have established a<br />

foothold for <strong>AWB</strong> in some of the world’s biggest and fastest<br />

growing grain markets. In <strong>2003</strong>, <strong>AWB</strong>’s offshore investments<br />

performed well in the difficult trading environment caused by<br />

drought in Australia.<br />

($m)<br />

30<br />

25<br />

20<br />

15<br />

10<br />

5<br />

0<br />

-5<br />

Commercial strategies to realise efficiency.<br />

2000 2001 2002 <strong>2003</strong><br />

NPBT – Supply Chain and Other Investments<br />

21


Five Star Flour Mills (Egypt)<br />

Five Star Flour Mills Company SAE (FSFM) is the leading producer of<br />

premium grade flour in Egypt and one of <strong>AWB</strong>’s largest wheat<br />

customers. <strong>AWB</strong> is the single largest shareholder with a 30% interest.<br />

FSFM’s strong flour brands are based on quality Australian wheat.<br />

During 2002/03, the mill maintained its market share in Egypt,<br />

despite near record prices for Australian wheat, versus the<br />

significantly lower priced, other origin wheat used by some of its<br />

competitors. This achievement demonstrates the value of FSFM’s<br />

product and the customer loyalty it has generated.<br />

In 2002/03, FSFM also commissioned a new, world-class feed mill<br />

at the same site. <strong>AWB</strong> has directly invested more than $4 million<br />

and has 33% equity. The mill will supply the fast growing stock<br />

feed related industries in the region.<br />

<strong>AWB</strong> – Zen-noh (Japan)<br />

<strong>AWB</strong> – Zen-noh <strong>Limited</strong> (AZL) is a joint venture commodity trading<br />

company established between <strong>AWB</strong> and Japan’s largest<br />

agricultural trading cooperative. <strong>AWB</strong> has a 51% holding.<br />

Drought and tightening supplies of feed grain negatively impacted<br />

the performance of AZL during 2002/03. However, this was partly<br />

offset by the fact that AZL was able to post strong sales to the<br />

Japanese Food Agency.<br />

AZL is aiming to increase grain volumes in <strong>2003</strong>/04 on the back<br />

of much improved production prospects in Australia.<br />

Shenzen Southseas Grain (China)<br />

Shenzen Southseas Grain Industries <strong>Limited</strong> (SSGI) is one of the<br />

largest and most efficient flour and feed milling businesses in<br />

southern China. <strong>AWB</strong> holds a minority 8% stake. Business<br />

performance in 2002/03 was impacted by the SARS virus.<br />

However, SSGI commands a leading position in the premium<br />

segment of the Chinese flour market, which is growing strongly.<br />

Vietnam Flour Mills (Vietnam)<br />

Vietnam Flour Mills <strong>Limited</strong> (VFM) was commissioned in November<br />

2001 and has secured significant market share in the rapidly<br />

expanding Vietnamese market. <strong>AWB</strong> holds a 17.5% share in VFM.<br />

The operations are performing to budget and further sales growth<br />

is expected <strong>2003</strong>/04.<br />

Chartering<br />

<strong>AWB</strong> Chartering provides ocean freight services to <strong>AWB</strong> National<br />

Pool, <strong>AWB</strong>’s Trading division and external customers, generating<br />

income via service fees and trading of freight.<br />

Drought made 2002/03 a difficult year, with a substantially lower<br />

base of cargo to leverage in one of the most volatile freight<br />

markets on record. However, <strong>AWB</strong> Chartering was still able to<br />

exceed budget expectations.<br />

A significant achievement was the successful management of<br />

freight and war execution risk into the Iraq market. <strong>AWB</strong> Chartering<br />

played a key role in landing wheat in Iraq after the hostilities, and<br />

protecting <strong>AWB</strong> National Pool, and <strong>AWB</strong>, from the freight and<br />

execution risk that existed at the time.<br />

Chartering was also able to develop new Cost and Freight (CFR)<br />

markets by securing freight business with traditional Free on Board<br />

(FOB) customers in countries such as Tanzania, Indonesia and<br />

Japan. During the year, <strong>AWB</strong> also reached a significant freight<br />

memorandum of cooperation with Iran. By offering competitive<br />

freight as part of its product and service range, <strong>AWB</strong> is able to<br />

secure end user demand, and thereby capture value, for <strong>AWB</strong><br />

National Pool.<br />

<strong>AWB</strong> Chartering has continued to diversify its revenue streams, and<br />

in 2002/03 began taking vessels on time charter and trading them<br />

in a rising freight market. In November 2002, <strong>AWB</strong> began trading in<br />

the freight swaps paper market using Forward Freight Agreements<br />

(FFAs), and successfully traded in the international freight market.<br />

An important contributor to the Chartering result was the success<br />

of Geneva Global Freight, which in its first year of operation,<br />

exceeded its target grain volumes. <strong>AWB</strong> is aiming to build on this<br />

and capitalise on opportunities in Geneva to expand its non-Pool<br />

related business in the future.<br />

<strong>AWB</strong> continues to sell about 40% of wheat on a CFR basis –<br />

increasing that proportion marginally from 2001/02.<br />

Outlook<br />

<strong>AWB</strong> will receive a significant increase in grain receival into its<br />

<strong>AWB</strong> GrainFlow centres in <strong>2003</strong>/04, and has set targets for<br />

receipts of 60% of its total storage capacity. The improved crop<br />

prospects will also increase throughput at the Melbourne Port<br />

Terminal and its rail investments. <strong>AWB</strong>’s offshore investments are<br />

now well positioned for further growth with a solid contribution<br />

anticipated from the well established FSFM. For its Chartering<br />

business, <strong>AWB</strong> has strategies in place to increase the percentage<br />

of wheat sold on a CFR basis, targeting 45% CFR volumes for<br />

<strong>2003</strong>/04.<br />

XXXXX XXXXXX, Pasta Technichan<br />

22<br />

XXXXX XXXXXX, Pasta Technichan<br />

XXXXX XXXXXX, Pasta Technichan<br />

XXXXX XXXXXX, Pasta Technichan


Children of <strong>AWB</strong> employees enjoying end use products.<br />

From bottom left clockwise:<br />

Rajnita Iyer<br />

Shahrul Azudin<br />

Yurana Twadrous<br />

Sebastian Twadrous<br />

Robert Cassidy<br />

Renee Sinni<br />

Brandon Xiao<br />

INNOVATION FOCUS TO DELIVER NEW OPPORTUNITIES<br />

23


Year in brief<br />

• Delivered a new agreement<br />

introducing Syngenta as a partner<br />

to Graingene II, bringing technology<br />

and germplasm access.<br />

• Expanded the product suite for<br />

<strong>AWB</strong> Seeds, with the addition of<br />

five new grain varieties.<br />

• Expanded the research and<br />

development project list to diversify<br />

the business development potential.<br />

• Completed the open-plot<br />

quarantine trial facility at Agrifood<br />

Technology in Werribee.<br />

• Commissioned and implemented a<br />

new laboratory information system<br />

at Agrifood Technology.<br />

• Participated in industry committees<br />

and discussions to assist the<br />

responsible management of the<br />

potential introduction of genetically<br />

modified grains.<br />

XXXXX XXXXXX, Chan-Yu Pasta Kuo, Technichan Analyst – Quality, Milling and End Products<br />

24<br />

XXXXX Veronica XXXXXX, Lo, Analyst Pasta – Quality, Technichan Milling and Sandra XXXXX XXXXXX, Bruengger, Pasta Analyst Technichan – Quality, Milling Yang XXXXX Chen, XXXXXX, Method Pasta Development TechnichanOfficer<br />

End Products<br />

and End Products


grain technology<br />

<strong>AWB</strong> Grain Technology business invests in opportunities that add<br />

value for growers and customers through superior product<br />

offerings. Value for <strong>AWB</strong> is generated and captured through<br />

strategic participation in, or ownership of, technology such as novel<br />

grain or end product traits.<br />

The Grain Technology business is involved in alliances to develop<br />

these plant traits and new cereal varieties with the aim of<br />

establishing appropriate proprietary positions.<br />

Agrifood Technology<br />

Agrifood Technology Pty Ltd (Agrifood Technology) is a wholly<br />

owned subsidiary of <strong>AWB</strong>, and provides crucial analytical services to<br />

assist <strong>AWB</strong>’s marketing program. Agrifood Technology generates a<br />

commercial return by providing world class analytical and laboratory<br />

services to external clients in the food and feed related industries.<br />

During 2002/03, Agrifood Technology launched an open plot<br />

quarantine trial facility at its Werribee base, one of only two in<br />

Australia. This provides quarantine approved, seed increasing<br />

facilities to responsibly manage the introduction of international<br />

germplasm into Australia’s crop gene pool. Another major<br />

achievement this year was the implementation of a new laboratory<br />

information system, which facilitates faster and more accurate<br />

service to all customers.<br />

<strong>AWB</strong> Seeds<br />

<strong>AWB</strong> Seeds has continued its transition to its Seednet business<br />

structure – which involves partnerships with 22 regionally based<br />

seed merchants.<br />

This will offer improved systems for seed production in Australia,<br />

delivering locally produced seed under strict quality assurance<br />

guidelines. The benefits to seed users, Seednet partners and <strong>AWB</strong><br />

will flow through enhanced inventory management, regionally<br />

tailored grain varieties and more flexible systems to respond to<br />

market demand.<br />

<strong>AWB</strong> Seeds was successful in gaining five new licences for grain<br />

varieties this year, expanding its product suite to 27 varieties, with<br />

an aim to add more broadacre crop varieties in the coming season.<br />

Innovation and Research<br />

The Innovation and Research group remains focussed on improving<br />

efficiencies for farmers, through improved crop yields or disease<br />

resistances, as well as specific end use desired qualities. In the<br />

future, these will become proprietary positions for <strong>AWB</strong>.<br />

In January <strong>2003</strong>, <strong>AWB</strong>, CSIRO and the Grains Research and<br />

Development Corporation signed an agreement to renew<br />

Graingene – the Australian national crop genetics research<br />

consortium. Under the new agreement, global crop protection<br />

company, Syngenta, joined the consortium, bringing to it their global<br />

presence and technology expertise. Known as Graingene II, the<br />

new agreement has earmarked four major research platforms to<br />

improve the value of the national wheat crop – crop stress<br />

resistance, pest and disease resistance, grain quality, and wheat<br />

genomics technologies.<br />

Established in 1999, Graingene has already developed a strong<br />

strategic position in new technologies, particularly in value added<br />

traits in wheat. A direct outcome of this research has been this<br />

year’s commercial release of the new transpiration efficient wheat<br />

varieties, Drysdale and Rees.<br />

LongReach Plant Breeders, the Australian national wheat breeding<br />

joint venture formed by <strong>AWB</strong> and Syngenta in 2002, will have the<br />

first option to develop and commercialise the technology developed<br />

through Graingene II for Australian cereal crops. Syngenta will have<br />

the first option to develop and commercialise technology in other<br />

crops and other countries, which will generate value from the<br />

intellectual property for all Graingene II partners.<br />

Outlook<br />

<strong>AWB</strong>’s Grain Technology strategies remain an important contributor<br />

to the company’s value chain. <strong>AWB</strong> expects positive contributions<br />

from both the Agrifood Technology and <strong>AWB</strong> Seeds businesses in<br />

<strong>2003</strong>/04. Building on its Seednet model, <strong>AWB</strong> Seeds aims to<br />

continue growing its suite of broadacre grain varieties during 2004.<br />

With the signing of Graingene II, <strong>AWB</strong> will further leverage its<br />

research involvement and capitalise on propriety opportunities.<br />

($m)<br />

0<br />

-1<br />

-2<br />

-3<br />

-4<br />

-5<br />

-6<br />

-7<br />

-8<br />

INNOVATION Innovation FOCUS TO focus DELIVER to deliver NEW new OPPORTUNITIES<br />

opportunities.<br />

2000 2001 2002 <strong>2003</strong><br />

NPBT – Grain Technology<br />

25


Paul Lomax, Sue Gilmore and Walter Graham, <strong>AWB</strong> Landmark, Bendigo<br />

26<br />

Craig Prescott, Grower Bill Chilcott and Gary Willis, <strong>AWB</strong> Landmark<br />

with Alton Winter, Grower<br />

Goondiwindi, <strong>AWB</strong> Landmark


landmark<br />

Overview<br />

Landmark is Australia’s largest supplier of farm inputs with about<br />

$1.4 billion in annual sales, and is a significant marketer of wool,<br />

livestock and real estate. It is also a major provider of tailored<br />

finance and insurance packages to primary producers.<br />

Landmark has a diversified earnings base, with its business spread<br />

across all agricultural regions of Australia and all major rural<br />

industries – broadacre cropping, wool, beef, sheep and prime<br />

lambs, cotton, viticulture, sugar and specialist horticulture.<br />

It has an extensive network comprising 230 company owned<br />

locations plus 200 outlets managed by franchisees, agents and<br />

affiliate members. Landmark has about 1,950 staff and services<br />

100,000 customers.<br />

Landmark also has an experienced management team which has<br />

presided over previous successful acquisitions and significant<br />

earnings growth, and is well positioned to extract the most from<br />

new growth opportunities.<br />

Acquisition and Integration<br />

<strong>AWB</strong>’s acquisition of Landmark is consistent with its corporate<br />

strategy, and its vision as Australia’s leading global manager of<br />

agricultural commodity assets, services and flows.<br />

<strong>AWB</strong> acquired Landmark at a cash purchase price of approximately<br />

$718 million, a price which represents good value for <strong>AWB</strong> given<br />

the cross selling opportunities it presents. The acquisition was<br />

funded via cash, debt and new equity, with an Institutional Share<br />

Placement worth $152 million, a Share Purchase Plan for existing<br />

shareholders and an underwritten Dividend Reinvestment Plan.<br />

Integration is governed by the desire to minimise disruption to <strong>AWB</strong><br />

and Landmark during the <strong>2003</strong>/04 harvest period. The integration<br />

process is underway with the head office functions now being<br />

consolidated and the Landmark head office in Sydney due to be<br />

closed in March 2004.<br />

Strategy<br />

Integration, extraction of synergies and building on growth<br />

platforms will be a major focus in <strong>2003</strong>/04.<br />

<strong>AWB</strong> will target growth opportunities for financial and risk<br />

management services, and cross selling of products and services to<br />

farmers and international customers. The acquisition will open<br />

doors to global markets for Australian agriculture, with access to<br />

<strong>AWB</strong>’s customer base in more than 40 countries around the world.<br />

Consolidation of <strong>AWB</strong> and Landmark corporate, head office and<br />

network functions, will also take place where appropriate.<br />

Total earnings enhancement opportunities, derived primarily from<br />

finance growth, are assessed at $5 – $10 million in <strong>2003</strong>/04,<br />

increasing to $30 – $40 million by 2005/06.<br />

Outlook<br />

The outlook for Landmark’s business is positive. The large<br />

<strong>2003</strong>/04 winter harvest has flow-on benefits across the business,<br />

as will strengthening livestock prices, although stock numbers<br />

across Australia are currently low following the drought. Record<br />

land values and strong demand for rural property and real estate in<br />

regional Australia are contributing to positive results in Landmark’s<br />

real estate business. Landmark will continue to focus on<br />

productivity improvements in merchandise, wool, livestock and real<br />

estate, and growth in fertiliser, insurance and finance distribution.<br />

Future growth plans and opportunities.<br />

27


Michelle Sunderland and Lauretta Lane, Information Services<br />

28<br />

Wayne Pearn and Julie-Anne Donnellan,<br />

Document Services<br />

Justin Kearins and Chris Aucote,<br />

<strong>AWB</strong> National Pool<br />

Kate Henderson, Group Trading and<br />

Chris Battle, Mergers & Acquisitions


our people and systems<br />

People<br />

<strong>AWB</strong> employs over 2,500 people (including 1,950 at Landmark),<br />

based in offices in Australia and around the world. <strong>AWB</strong> is<br />

committed to positioning itself as an employer of choice, and<br />

regards engagement of staff as critical to meeting the company’s<br />

objectives. <strong>AWB</strong> has continued to develop its talent and succession<br />

management framework to ensure the business has the leadership<br />

strength to achieve its long term strategic objectives.<br />

A new operating structure for the company was implemented in<br />

order to meet <strong>AWB</strong>’s credit rating objectives. As part of this<br />

process, all employees were asked to transfer across to a new<br />

subsidiary, <strong>AWB</strong> Services <strong>Limited</strong>, with no change to their<br />

entitlements, benefits and terms and conditions. All staff agreed to<br />

the transfer on 1 October <strong>2003</strong>.<br />

During the year, <strong>AWB</strong> installed a revised Safety Management<br />

System, involving implementation of an occupational health and<br />

safety Environmental Risk Register to help track risk information<br />

and company risk profile at an overall and divisional level.<br />

<strong>AWB</strong> also successfully negotiated the simplification of an award for<br />

non-executive employees, providing the company with a simple and<br />

reliable platform for the management of employment terms and<br />

conditions, and help position itself as an employer of choice.<br />

Under its structured Employee Ownership Plan, <strong>AWB</strong> made an<br />

offer of shares to staff in December 2002, which was well received<br />

and accepted by a high percentage of employees. In all, more than<br />

85% of <strong>AWB</strong> employees (excluding Landmark employees) now<br />

own shares in the company by participating in one or more of <strong>AWB</strong><br />

share offers, fostering a high level of staff investment and<br />

ownership in the company.<br />

Systems<br />

<strong>AWB</strong> has continued to focus on system development, and the<br />

improvement of internal work practices and procedures. Leveraging<br />

off last year’s successful introduction of the new SAP Enterprise<br />

Management System, <strong>AWB</strong> now has the ability to process larger<br />

information volumes, with better position management and<br />

inventory controls.<br />

<strong>AWB</strong> has specifically focussed on the development of systems to<br />

meet continually evolving corporate governance requirements. It<br />

has established a central management system for corporate<br />

governance, ensuring <strong>AWB</strong> continues to meet, and stay abreast of,<br />

all industry compliance standards.<br />

The company has also invested in a significant upgrade of its<br />

website. The new site, still located at www.awb.com.au went live in<br />

October <strong>2003</strong>, offering improved functionality to growers and<br />

customers, and building a platform for further development and<br />

enhancement in the future.<br />

Substantial increase in rural and regional presence, by numbers…<br />

…by region<br />

Number of Employees<br />

2500<br />

2000<br />

1500<br />

1000<br />

500<br />

0<br />

Number of Employees<br />

0<br />

2000 2001 2002 <strong>2003</strong> NSW/ACT VIC QLD WA SA NT TAS OS<br />

1000<br />

800<br />

600<br />

400<br />

200<br />

<strong>2003</strong><br />

2002<br />

29


our environment<br />

A core value for <strong>AWB</strong> is accountability for the environment, health<br />

and safety. <strong>AWB</strong> complies with all relevant environmental<br />

legislation, regulations and licences, and environment, health, safety<br />

and community responsibilities are integral to the way the company<br />

conducts its business.<br />

As a sign of its commitment to sustainable development, an initial<br />

environmental audit was undertaken in <strong>2003</strong> by Australian<br />

Corporate Environmental.<br />

The audit identified important environmental Commonwealth and<br />

State legislation which applies to <strong>AWB</strong>’s operations, and as it<br />

moves into areas such as grain storage and handling, the company<br />

recognises that environmental law has become a regulatory risk.<br />

Identified issues in respect to the storage and handling facilities,<br />

and to Agrifood Technology’s laboratory facilities, include the<br />

management of waste and regulations applying to the use of<br />

chemicals. <strong>AWB</strong> is also working with regional and State planning<br />

regulators to meet requirements at a more local level, particularly<br />

with regard to its grain centre business. The audit did note<br />

however, that the activities of <strong>AWB</strong> are not heavily regulated by<br />

environmental legislation relative to other industries.<br />

The company is implementing an Environmental Management<br />

System (EMS) in accordance with the standard AS/NZS ISO<br />

14001. Following recent company developments, <strong>AWB</strong> is<br />

undertaking a thorough risk assessment study to determine priority<br />

environmental risks for the company. This is expected to be<br />

completed by the end of the <strong>2003</strong>/04 financial year.<br />

The EMS is consistent with <strong>AWB</strong>'s Environmental Policy, which<br />

dictates that environment considerations are included in all aspects<br />

of the business, in accordance with <strong>AWB</strong>’s responsibility as a good<br />

corporate citizen. <strong>AWB</strong> is also committed to educating staff and<br />

contractors on pertinent environmental issues, and to regular<br />

consultation with staff, government and the wider community where<br />

operations have an environmental impact.<br />

XXXXX XXXXXX, Pasta Technichan<br />

30<br />

XXXXX XXXXXX, Pasta Technichan<br />

XXXXX XXXXXX, Pasta Technichan


<strong>AWB</strong> has committed itself to a thorough process of<br />

communication and consultation with grower organisations<br />

and community representatives.<br />

our grower community<br />

<strong>AWB</strong> continues to play an active support and developmental role in<br />

regional communities. Ongoing sponsorship programs were<br />

continued with groups such as Women In Agriculture and Partners<br />

in Grain, as well as key industry events such as Grains Week, and<br />

Agriculture Australia.<br />

The annual sponsorship program represents a significant<br />

investment in the industry and in country Australia by <strong>AWB</strong>.<br />

Regionally based sponsorships were also provided to a small<br />

country hospital, rural media awards, grains innovation awards,<br />

agricultural show societies and research foundations and farming<br />

groups. This is complemented by a thorough process of<br />

communication and consultation with farming organisations and<br />

community representatives.<br />

In addition, <strong>AWB</strong> has created a further link with grain growers<br />

across Australia through the formation of 14 Grower Consultative<br />

Groups (GCGs) and the continuation of the Managing Director’s<br />

Roundtable.<br />

The GCGs are regionally based groups that facilitate two way<br />

communication between growers and <strong>AWB</strong> to allow the company to<br />

better meet grower requirements. It is intended the groups meet<br />

three times per year. The Managing Director’s Roundtable operates<br />

simultaneously and allows selected Roundtable growers to provide<br />

direct strategic advice to the Managing Director of the company.<br />

In response to the drought’s impact on regional communities, <strong>AWB</strong><br />

launched a concerted effort to assist by establishing a special<br />

drought committee during 2002. More than $35,000 was raised<br />

via staff initiatives and donations, and these contributions were<br />

matched dollar for dollar by <strong>AWB</strong>. These funds were used to hold<br />

Christmas functions in 25 of the hardest hit, grain growing<br />

communities across regional Australia, with extremely positive<br />

feedback.<br />

Grower Advocate<br />

<strong>AWB</strong> has introduced a new Complaints Handling Procedure for<br />

growers, overseen by the Grower Advocate. Under the new system,<br />

the Grower Advocate acts on behalf of the Managing Director to<br />

seek rapid and mutually beneficial resolutions to grower complaints.<br />

The process complies with the Australian Standard for complaints<br />

handling (AS 4269) and is intended to cater for written complaints<br />

regarding a grower or grower group’s grain marketing transactions<br />

with the <strong>AWB</strong> Group.<br />

It offers improved transparency, and the right for growers to request<br />

intervention (by the Grower Advocate) if they feel their rights under<br />

the process have not been observed or that the complaint has not<br />

been resolved to their satisfaction. The program is a critical part of<br />

<strong>AWB</strong>'s commitment to continuous improvement in the level and<br />

quality of services provided to Australian grain growers.<br />

INNOVATION FOCUS TO DELIVER NEW Sense OPPORTUNITIES<br />

of community.<br />

Ross Haebich, Craig Prescott<br />

and Craig Blick, Growers<br />

Harry Prescott, Grower<br />

31


executive profiles<br />

Andrew Lindberg<br />

Managing Director, 50, BComm, BSc,<br />

MBA, FAICD<br />

Joined <strong>AWB</strong> in 2000. Mr Lindberg is<br />

responsible for the management of <strong>AWB</strong><br />

and is a director on the Boards of <strong>AWB</strong><br />

<strong>Limited</strong> and <strong>AWB</strong> (International) <strong>Limited</strong>.<br />

Mr Lindberg has senior management<br />

experience in both the private and public<br />

sectors, at Federal and State levels. Prior<br />

positions have included senior management<br />

responsibilities in manufacturing, Federal<br />

industry policy development, insurance and<br />

leading key sector financial reforms.<br />

Sarah Scales<br />

General Manager <strong>AWB</strong>I, 37, BAgSc<br />

Joined <strong>AWB</strong> in 1992. Ms Scales is<br />

responsible for managing the <strong>AWB</strong> National<br />

Pool and the operation of the Single Desk<br />

system. Her recent positions within <strong>AWB</strong><br />

include responsibility for pricing and risk<br />

management strategies and the execution<br />

of the commodity hedge book in New York.<br />

She has also worked in the Domestic<br />

Trading division, trading pulses and wheat.<br />

Before joining <strong>AWB</strong>, Ms Scales worked<br />

with Cargill Australia.<br />

Paul Ingleby<br />

Chief Financial Officer, 52, BA<br />

(Accounting), CA<br />

Joined <strong>AWB</strong> in 1998. Mr Ingleby is<br />

responsible for finance and administration,<br />

treasury, trade finance, risk management<br />

and compliance. Before joining <strong>AWB</strong>, he<br />

was the Chief Financial Officer of a major<br />

diversified, agriculturally focussed<br />

corporation. Mr Ingleby’s previous positions<br />

have also been in banking and merchant<br />

banking (where he was involved in the<br />

analysis, valuation and sale of businesses in<br />

Australia, New Zealand and Hong Kong),<br />

chartered accounting (corporate advisory<br />

and audit) and government (companies and<br />

securities regulation and corporate crime<br />

investigation).<br />

Jill Gillingham<br />

Group General Manager, Supply<br />

Chain, Technology and Business<br />

Processes, 53, BEc, MBA<br />

Joined <strong>AWB</strong> in 2000. Ms Gillingham is<br />

responsible for information systems and<br />

supply chain management and the grower<br />

service centre. She has a broad range of<br />

general management experience, having<br />

held executive positions and been<br />

responsible for major business operations in<br />

the general insurance, workers<br />

compensation and occupational health and<br />

safety sectors. Ms Gillingham has also been<br />

responsible for the development and<br />

implementation of large IT initiatives within<br />

the insurance industry. Before joining <strong>AWB</strong>,<br />

Ms Gillingham held the position of Group<br />

General Manager Operations at the Victorian<br />

WorkCover Authority for three years.<br />

Peter Geary<br />

Group General Manager, Trading and<br />

Commodities, 42, BBus, GradDip<br />

(Marketing)<br />

Joined <strong>AWB</strong> in 1985. Mr Geary is<br />

responsible for domestic and global trading,<br />

risk management products for growers and<br />

end users, grower services and chartering.<br />

His previous positions within <strong>AWB</strong> have<br />

included General Manager of National<br />

Wheat Pools, policy and export sales in<br />

Africa, Europe, Middle East and South<br />

America, as well as the management of<br />

<strong>AWB</strong>’s overseas offices in Europe and the<br />

United States. Before joining <strong>AWB</strong>, Mr<br />

Geary was employed with the Grain<br />

Elevators Board of Victoria (now Graincorp<br />

<strong>Limited</strong>) for a period of four years. Mr<br />

Geary has a family farming background in<br />

north east Victoria.<br />

32<br />

Andrew Lindberg Sarah Scales<br />

Paul Ingleby Jill Gillingham<br />

Peter Geary


Charles Stott<br />

Group General Manager, Rural<br />

Services, 44, Dip AppSc (Ag)<br />

Joined <strong>AWB</strong> in 2000. Mr Stott is<br />

responsible for Landmark Rural Services,<br />

which includes procurement, merchandise,<br />

fertiliser, agency business and grain<br />

technology. Prior to this Mr Stott was<br />

responsible for strategy and business<br />

development, investments, mergers and<br />

acquisitions. Previously, he was General<br />

Manager, International Sales and Marketing.<br />

Mr Stott has worked with BHP Petroleum,<br />

where his positions included Project Director<br />

and International Business Development<br />

Manager. Prior to BHP, he was with the<br />

Australian Wheat Board and held various<br />

roles including marketing manager for the<br />

Middle East, Europe and Africa. Mr Stott<br />

has extensive international experience in<br />

trade finance, risk management, business<br />

development and project management<br />

across a broad range of industries including<br />

grain, petroleum and minerals.<br />

Richard Fuller<br />

General Manager Executive and<br />

Company Secretary, 44, BA (Hons)<br />

PhD (Political Science)<br />

Joined <strong>AWB</strong> in 2000. Dr Fuller is<br />

responsible for the management of the<br />

Office of the Managing Director and is the<br />

Company Secretary. Before joining <strong>AWB</strong>, he<br />

held senior management roles in the<br />

insurance industry and positions as a lecturer<br />

with the University of Melbourne and RMIT.<br />

Marcus Kennedy<br />

Group General Manager, Financial<br />

Services, 44, BSc (Hons) (Applied<br />

Mathematics and Chemistry), MSc<br />

(Geophysics), MBA, MAICD, ASIA.<br />

Joined <strong>AWB</strong> in 2002. Mr. Kennedy is<br />

responsible for financial services, insurance<br />

and product development. He has<br />

extensive management experience in both<br />

retail and wholesale financial services, and<br />

across many management functions,<br />

including sales and customer management,<br />

strategy and product development.<br />

Previously he worked in a number of<br />

leadership roles with Westpac including<br />

wealth management, corporate banking and<br />

mortgage businesses. Prior to this, Mr<br />

Kennedy worked in Europe as a consultant,<br />

and in investment banking in Wardley Ltd<br />

(Hong Kong), Shanghai Banking<br />

Corporation and Westpac. He was also a<br />

Geophysicist and Financial Analyst with<br />

Exxon Corporation.<br />

Michael Thomas<br />

General Manager, Corporate, 36, BAgSc,<br />

GradDip AgEc, MEc, ASIA, GAICD<br />

Joined <strong>AWB</strong> in 1998. Mr Thomas is<br />

responsible for stakeholder relations<br />

(media, government, grower and investor<br />

relations), marketing, human resources and<br />

corporate services.<br />

Previously, he held the positions of General<br />

Manager, Stakeholder Relations and Head<br />

of Investor Relations. Before joining <strong>AWB</strong>,<br />

he was an executive at SA Farmers<br />

Federation. Prior to this, Mr Thomas was<br />

the Senior Economist at Primary Industries<br />

South Australia. He was also an economist<br />

with private and public consulting<br />

companies undertaking consultancies in<br />

Asia and the Pacific region.<br />

John Maher<br />

General Manager, Network<br />

Operations, 41, BAgSc (Hons), MBA<br />

Joined Landmark in July 1994. Mr Maher<br />

is responsible for the national network<br />

operations of Landmark. Prior to the<br />

acquisition of the Landmark rural services<br />

business by <strong>AWB</strong> in August <strong>2003</strong>, Mr<br />

Maher was General Manager, Network<br />

Operations with Wesfarmers Landmark. Mr<br />

Maher has also been Regional Manager for<br />

Southern Region and General Manager –<br />

Livestock.<br />

Prior to joining Wesfarmers Landmark, Mr<br />

Maher was the International Livestock<br />

Marketing Manager for the Australian Meat<br />

and Livestock Corporation (AMLC). In that<br />

role, he had accountability for the<br />

development of the AMLC’s marketing<br />

strategy in Australia’s Asia Pacific, Middle<br />

East and North African livestock markets.<br />

Charles Stott<br />

Richard Fuller Marcus Kennedy Michael Thomas<br />

John Maher<br />

33


corporate governance<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Role of the Board<br />

The Board is responsible for the overall<br />

governance of <strong>AWB</strong> and its strategic<br />

direction. This includes setting goals,<br />

monitoring performance and ensuring<br />

<strong>AWB</strong>’s internal control and reporting<br />

procedures are adequate, effective and<br />

ethical and that <strong>AWB</strong>’s strategic direction<br />

provides value for shareholders.<br />

Regardless of who elects or appoints a<br />

director, each director is obliged to act in<br />

the interests of <strong>AWB</strong> as a whole. Although<br />

directors may be elected by particular<br />

shareholders, directors are not considered<br />

the servants or agents of particular groups<br />

of shareholders or required to follow<br />

directions or requests of any group of<br />

shareholders (whether constituted by class<br />

or region).<br />

<strong>AWB</strong> has adopted a formal Board Charter<br />

(available from the Company Secretary) and<br />

the division of responsibilities has recently<br />

been reviewed and re-established by formal<br />

delegations and a system of Board<br />

reserved powers.<br />

Standard Terms of Appointment<br />

Upon appointment to the Board, each<br />

director receives a letter of appointment<br />

which sets out the key terms and<br />

conditions of their appointment.<br />

The Composition of the Board<br />

The constitution of <strong>AWB</strong> contains<br />

provisions which ensure that a majority of<br />

the directors are non-executive directors.<br />

This approach ensures that there are a<br />

sufficient number of non-executive<br />

directors to:<br />

bring an independent view to the Board’s<br />

deliberations;<br />

help the Board (and the Chairman)<br />

provide the company with effective<br />

leadership and ensure that the company<br />

is competently run in the interests of all<br />

shareholders; and<br />

foster the continuing effectiveness of the<br />

Managing Director and management.<br />

The Board of <strong>AWB</strong> comprises:<br />

seven A class directors, elected by the A<br />

class shareholders in various regions as<br />

follows:<br />

NSW/ACT<br />

WA<br />

SA<br />

VIC/TAS<br />

QLD/NT<br />

– two A class directors;<br />

– two A class directors;<br />

– one A class director;<br />

– one A class director;<br />

– one A class director;<br />

two B class directors (elected by B class<br />

shareholders);<br />

two additional directors; and<br />

the Managing Director.<br />

Independence<br />

All non-executive directors are independent,<br />

being independent of management and<br />

having no business or other relationship<br />

that could compromise their autonomy.<br />

The Board has determined that an A class<br />

director is not considered to lack<br />

independence by reason only that the<br />

director (or entities associated with the<br />

director) has a material personal interest in<br />

the sale of wheat or other grain to a<br />

company in the <strong>AWB</strong> Group by the director<br />

and/or is a customer for products or<br />

services of a company in the <strong>AWB</strong> Group.<br />

Board Committees<br />

The Board has several committees of its<br />

members to support effective corporate<br />

governance. These committees are advisory<br />

in nature and do not exercise any powers.<br />

Audit Committee<br />

The role of the Audit Committee is<br />

documented in a Charter which is approved<br />

by the Board of directors. The principal<br />

functions of the Committee are to:<br />

monitor <strong>AWB</strong>’s Risk Management<br />

Program on an overall basis. The Audit<br />

Committee has delegated risk<br />

management activities for market<br />

(commodity price, currency, interest rate)<br />

and credit risks to the Group Corporate<br />

Risk Committee;<br />

ensure that the accounting policies and<br />

practices are appropriate and in<br />

accordance with generally accepted<br />

practices including such advice and<br />

information which the external and<br />

internal auditors are responsible for<br />

providing to the Committee from time to<br />

time;<br />

ensure that the financial statements of<br />

<strong>AWB</strong> <strong>Limited</strong> accurately reflect a true<br />

and fair position of its financial<br />

operations;<br />

ensure that proper internal controls exist<br />

in relation to <strong>AWB</strong> <strong>Limited</strong>’s financial<br />

transactions;<br />

review risk management practices and<br />

processes and monitor the control of<br />

corporate operating risks and exposures;<br />

monitor policies and procedures to<br />

ensure compliance with statutory and<br />

legal, financial and corporate governance<br />

responsibilities and overall efficiency and<br />

effectiveness of <strong>AWB</strong> operations;<br />

provide through regular meetings, a<br />

forum for communication between the<br />

Board, senior financial management and<br />

the internal and external auditors;<br />

provide an advisory and liaison role for<br />

the <strong>AWB</strong> <strong>Limited</strong> Board in regard to audit<br />

advice, risk management advice and<br />

information with relevant external bodies;<br />

and<br />

monitor audit recommendations to ensure<br />

that they are implemented.<br />

The constitution of <strong>AWB</strong> article 3.1(f)<br />

requires the Board to ensure that separate<br />

accounts are prepared for <strong>AWB</strong><br />

(International) <strong>Limited</strong> – that is, in respect<br />

of the <strong>AWB</strong> National Pool. The accounts of<br />

the <strong>AWB</strong> National Pool are reviewed by the<br />

Board of <strong>AWB</strong> (International) <strong>Limited</strong>.<br />

In addition to the Committee members,<br />

meetings are attended by the Managing<br />

Director, the Chief Financial Officer, the<br />

Chief Risk Officer, the Company Secretary,<br />

a representative of internal audit and a<br />

representative of the external auditor.<br />

The Audit Committee consists of six<br />

independent non-executive directors at the<br />

date of this report: Mr Robert Barry (Chair),<br />

Mr Brendan Stewart (ex-officio), Mr Laurie<br />

Marshall, Mr Xavier Martin, Mr Warrick<br />

McClelland and Mr John Thame. Members<br />

of the Committee are financially literate and<br />

34


the chairman, Mr Robert Barry and Mr John<br />

Thame have extensive financial experience.<br />

(Refer to page 38 for details of the<br />

qualifications and experience of committee<br />

members and to page 49 for details of the<br />

number of committee meetings held during<br />

the year).<br />

The company’s external auditors, Ernst &<br />

Young, were appointed prior to <strong>AWB</strong>’s<br />

listing on the Australian Stock Exchange<br />

(ASX) on 22 August 2001. The Audit<br />

Committee will be responsible for<br />

nominating future external auditors. <strong>AWB</strong><br />

has agreed to adopt the external auditors’<br />

procedure that no engagement partner will<br />

serve longer than five years.<br />

Corporate Risk Committee<br />

The role of the Corporate Risk Committee<br />

is documented in a Charter which is<br />

approved by the Boards of <strong>AWB</strong> <strong>Limited</strong><br />

and <strong>AWB</strong> (International) <strong>Limited</strong>.<br />

The principal functions of the Committee<br />

are to:<br />

act as an advisory Committee of both the<br />

<strong>AWB</strong> <strong>Limited</strong> Board and the <strong>AWB</strong><br />

(International) <strong>Limited</strong> Board on<br />

discharging the Boards’ responsibilities as<br />

they relate to policy, guidelines, controls,<br />

management and reporting of market and<br />

credit risks affecting the <strong>AWB</strong> Group<br />

(both <strong>AWB</strong> <strong>Limited</strong> and <strong>AWB</strong><br />

(International) <strong>Limited</strong>);<br />

provide, through regular meetings, a<br />

forum for communication between the<br />

<strong>AWB</strong> <strong>Limited</strong> and <strong>AWB</strong> (International)<br />

<strong>Limited</strong> Boards and senior management<br />

on market and credit risk management<br />

issues;<br />

provide an advisory and liaison role for<br />

the <strong>AWB</strong> <strong>Limited</strong> and <strong>AWB</strong> (International)<br />

<strong>Limited</strong> Boards in relation to advice and<br />

information relating to market and credit<br />

risk management matters. This role is<br />

coordinated with the Audit Committee’s<br />

role of monitoring the Risk Management<br />

Program on an overall basis.<br />

The Committee’s Charter requires that at<br />

least three non-executive directors of <strong>AWB</strong><br />

<strong>Limited</strong> should be members of the<br />

Committee, one of whom should also be a<br />

director of <strong>AWB</strong> (International) <strong>Limited</strong> and<br />

that, where possible, the Chair of the<br />

Committee should be a director of both <strong>AWB</strong><br />

<strong>Limited</strong> and <strong>AWB</strong> (International) <strong>Limited</strong>.<br />

The members of the Corporate Risk<br />

Committee at the date of this report are Mr<br />

Peter Polson (Chair), Mr Brendan Stewart<br />

(ex-officio), Mr Brendan Fitzgerald, Mr<br />

Christopher Moffet and Mrs Kerry<br />

Sanderson.<br />

Remuneration Committee<br />

The role of the Remuneration Committee is<br />

documented in a Charter which is approved<br />

by the <strong>AWB</strong> <strong>Limited</strong> Board. The principal<br />

functions of the Committee are to review<br />

and recommend to the Board, where<br />

appropriate:<br />

the remuneration policy including the<br />

executive incentive policy, employee<br />

share plans and superannuation;<br />

recruitment, retention and termination<br />

policies and procedures for senior<br />

management;<br />

the performance appraisal policy;<br />

the Managing Director’s performance<br />

goals and remuneration.<br />

and to review prior to implementation:<br />

the remuneration and contract terms of<br />

the five most senior executives reporting<br />

to the Managing Director;<br />

the design of new or amendments to<br />

current executive incentive plans and the<br />

total proposed payments from each<br />

executive plan;<br />

the continuing appropriateness of the<br />

performance hurdles in each executive<br />

incentive program;<br />

termination payments to the five most<br />

senior executives reporting to the<br />

Managing Director;<br />

the design of other executive benefit<br />

programs; and<br />

succession planning.<br />

The Committee also provides advice to the<br />

Board on the remuneration of nonexecutive<br />

directors and approval of awards<br />

under the Employee Share Plan, Staff<br />

Ownership Plan, Equity Share Plan and<br />

Performance Rights Plan.<br />

The members of the Remuneration<br />

Committee at the date of this report are Mr<br />

Brendan Stewart (Chair), Mr Andrew<br />

Lindberg, Mr Peter Polson, Mr John<br />

Simpson and Mr John Thame.<br />

Nomination Committee<br />

The role of the Nomination Committee is<br />

documented in a Charter approved by the<br />

<strong>AWB</strong> <strong>Limited</strong> Board. The principal functions<br />

of the Committee are to advise the Board<br />

of <strong>AWB</strong> <strong>Limited</strong> and <strong>AWB</strong> (International)<br />

<strong>Limited</strong> respectively as appropriate on:<br />

the composition of the Board and advice<br />

to be given by the Board to shareholders<br />

in accordance with articles 19.15 and<br />

19.18 of <strong>AWB</strong>’s constitution;<br />

the range of skills available on the Board<br />

and appropriate balance of skills for<br />

future Board membership;<br />

the appointment of an external expert to<br />

advise on the composition of the Board<br />

and candidates for election;<br />

identification of prospective candidates<br />

for positions of director;<br />

recommendations by the Board to<br />

shareholders in connection with Board<br />

elections to enable shareholders to<br />

effectively discharge their role under<br />

article 19.15 of <strong>AWB</strong>’s constitution;<br />

implementation of the election process<br />

generally;<br />

recommendations by the <strong>AWB</strong> Board to<br />

the Chairman of any general meeting on<br />

the allocation of open proxies; and<br />

succession of the Chairman.<br />

The Committee members are required to<br />

consist of the Chair of the <strong>AWB</strong> <strong>Limited</strong><br />

Board and two non-executive directors of<br />

<strong>AWB</strong>. The non-executive directors are to<br />

consist of one A class director and one B<br />

class director.<br />

The members of the Nomination Committee<br />

at the date of this report are Mr Brendan<br />

Stewart (Chair), Mr Robert Barry and Mr<br />

John Simpson.<br />

35


Services Agreement Committee<br />

The Services Agreement is the contract<br />

under which <strong>AWB</strong> <strong>Limited</strong> provides services<br />

to <strong>AWB</strong> (International) <strong>Limited</strong>.<br />

The role of the Services Agreement<br />

Committee is documented in a Charter<br />

which is approved by the <strong>AWB</strong> <strong>Limited</strong><br />

Board. The principal functions of the<br />

Committee are to:<br />

review the Services Agreement;<br />

negotiate any amendments to the<br />

Services Agreement with the Compliance<br />

Committee of the <strong>AWB</strong> (International)<br />

<strong>Limited</strong> Board; and<br />

make recommendations to the <strong>AWB</strong><br />

<strong>Limited</strong> Board on the Services<br />

Agreement.<br />

The members of the Services Agreement<br />

Committee at the date of this report are Mr<br />

Laurie Marshall (Chair), Mr Warrick<br />

McClelland and Mr John Thame.<br />

Investment Committee<br />

The role of the Investment Committee is<br />

documented in a Charter approved by the<br />

<strong>AWB</strong> <strong>Limited</strong> Board. The Committee was<br />

established to oversee, on behalf of the<br />

<strong>AWB</strong> <strong>Limited</strong> Board major acquisitions and<br />

the successful integration of these<br />

acquisitions.<br />

The members of the Investment Committee<br />

at the date of this report are Mr Brendan<br />

Stewart (Chair), Mr Andrew Lindberg, Mr<br />

Robert Barry, Mr Warrick McClelland, Mr<br />

Peter Polson and Mr John Thame.<br />

Board Performance<br />

Every 12 to 18 months, the Board of <strong>AWB</strong><br />

<strong>Limited</strong> and <strong>AWB</strong> (International) <strong>Limited</strong><br />

conduct formal reviews of their<br />

performance. The Chairman also discusses<br />

with each individual director his or her<br />

contribution to the Board.<br />

Director Education<br />

<strong>AWB</strong> provides assistance to directors of<br />

<strong>AWB</strong> <strong>Limited</strong> and <strong>AWB</strong> (International)<br />

<strong>Limited</strong> who wish to complete the<br />

Australian Institute of Company Directors<br />

education program and other programs<br />

which can be shown to add value to the<br />

director’s role. In addition, <strong>AWB</strong> holds<br />

several in-house seminars each year to<br />

update directors on issues relevant to their<br />

position as directors.<br />

Independent Legal Advice and<br />

Access to Company Information<br />

Directors of both <strong>AWB</strong> <strong>Limited</strong> and <strong>AWB</strong><br />

(International) <strong>Limited</strong> are entitled to any<br />

information they need or require from their<br />

respective companies to exercise their<br />

functions and to fulfil their duties as<br />

directors and, subject to prior approval by<br />

the Chairman, may seek independent legal<br />

advice on any issue submitted to the Board<br />

at the company’s expense.<br />

Director Remuneration<br />

At the 2002 <strong>Annual</strong> General Meeting,<br />

shareholders determined that the<br />

aggregate remuneration for non-executive<br />

directors of <strong>AWB</strong> <strong>Limited</strong> would be<br />

$900,000 per annum.<br />

The remuneration paid to each director of<br />

<strong>AWB</strong> <strong>Limited</strong> during the year ended 30<br />

September <strong>2003</strong> is set out in the Directors’<br />

<strong>Report</strong> (refer to page 47). The aggregate<br />

amount of non-executive directors’<br />

remuneration was $792,450.<br />

<strong>AWB</strong> (International) <strong>Limited</strong>’s constitution<br />

provides that the directors are entitled to be<br />

paid out of the funds of the company as<br />

remuneration for their services as directors<br />

such sum as the company determines. As<br />

the sole member of <strong>AWB</strong> (International)<br />

<strong>Limited</strong>, the company has approved the<br />

directors each being paid $25,000 per<br />

annum. However, a person who is a director<br />

of both the company and <strong>AWB</strong><br />

(International) <strong>Limited</strong> does not receive any<br />

additional remuneration in relation to their<br />

services as a director of <strong>AWB</strong> (International)<br />

<strong>Limited</strong> – i.e. they only receive a fee for<br />

services as a director of the company.<br />

(The Directors’ <strong>Report</strong> contains details<br />

about benefits provided to directors.)<br />

The following principles are applied in<br />

determining the amount of remuneration for<br />

non-executive directors:<br />

the amount of time required for directors<br />

to consider <strong>AWB</strong> and Board matters<br />

including preparation time;<br />

acknowledgement of the personal risk<br />

borne as a company director;<br />

a comparison with professional market<br />

rates of remuneration and those offered<br />

by comparative companies and external<br />

independent advice as to appropriate<br />

levels to remain competitive with the<br />

market, having regard to companies of<br />

similar size and complexity; and<br />

the desire to attract directors of a high<br />

calibre, with appropriate levels of<br />

expertise and experience.<br />

Share Dealing by Directors<br />

The Boards of both <strong>AWB</strong> <strong>Limited</strong> and <strong>AWB</strong><br />

(International) <strong>Limited</strong> adopted Share<br />

Dealing Guidelines which restrict share<br />

trading by directors, <strong>AWB</strong> managers, <strong>AWB</strong><br />

staff with financial reporting responsibilities<br />

and their associates to specified “window<br />

periods”.<br />

The window periods are as follows:<br />

six weeks commencing two days after the<br />

announcement of the half year results;<br />

six weeks commencing two days after<br />

the announcement of the annual results;<br />

six weeks commencing two days after<br />

the company’s <strong>Annual</strong> General Meeting;<br />

in the period of a qualifying prospectus,<br />

six weeks from the date of the allotment<br />

of shares.<br />

The guidelines make clear that prohibitions<br />

on insider trading must be complied with at<br />

all times. The guidelines also specify that<br />

any shares acquired by directors and <strong>AWB</strong><br />

employees must not be sold for at least 12<br />

months.<br />

Continuous Disclosure<br />

<strong>AWB</strong> <strong>Limited</strong> has implemented Continuous<br />

Disclosure Guidelines to ensure that <strong>AWB</strong><br />

<strong>Limited</strong> meets its continuous disclosure<br />

obligations under the ASX Listing Rules<br />

and the Corporations Act 2001.<br />

Under these guidelines, information which<br />

may have a material effect on the price or<br />

value of <strong>AWB</strong> <strong>Limited</strong>’s securities is<br />

monitored and referred to a Continuous<br />

Disclosure Coordinator. The Continuous<br />

Disclosure Coordinator is responsible for<br />

examining the material to determine<br />

whether the matter must be disclosed and<br />

may refer the matter to <strong>AWB</strong>’s General<br />

Counsel or external advisers to determine<br />

whether consideration is required by the<br />

Managing Director or the Board.<br />

Conflicts and Declarations of<br />

Interests<br />

The Boards of <strong>AWB</strong> <strong>Limited</strong> and <strong>AWB</strong><br />

(International) <strong>Limited</strong> have procedures in<br />

place for the disclosure and resolution of<br />

any matter which may give rise to actual or<br />

potential conflicts between the interests of<br />

a director and those of their respective<br />

companies.<br />

36


Identification and Management<br />

of Significant Business Risks<br />

<strong>AWB</strong> has in place a transparent monitoring,<br />

management and reporting framework that<br />

allows business risks to be identified,<br />

managed and overseen in a timely and<br />

efficient manner. <strong>AWB</strong> actively mitigates<br />

risks and optimises <strong>AWB</strong>’s resources not<br />

only to protect the company but also to<br />

provide a sound return to shareholders<br />

commensurate with the risk profile adopted.<br />

<strong>AWB</strong> has implemented an Enterprise-wide<br />

Risk Management (ERM) system that<br />

provides a comprehensive risk profile of the<br />

company and allows for formalised ongoing<br />

risk monitoring and reporting to the<br />

company’s Executive Leadership Group, the<br />

<strong>AWB</strong> Group Corporate Risk Committee, the<br />

<strong>AWB</strong> (International) <strong>Limited</strong> Board<br />

Compliance Committee, the Board Audit<br />

Committee and the Board of <strong>AWB</strong> <strong>Limited</strong><br />

and <strong>AWB</strong> (International) <strong>Limited</strong>.<br />

The Internal Audit plan is designed to be risk<br />

focussed and is aligned with the ERM risk<br />

profile. It takes into consideration company<br />

strategic initiatives, and provides assurance<br />

on risks and their control status to the Board<br />

Audit Committee. The internal audit function<br />

is outsourced to a professional firm,<br />

managed in line with the key objectives of<br />

<strong>AWB</strong>’s Corporate Risk Unit.<br />

The Corporate Risk Unit has been formed<br />

with primary responsibility to serve the<br />

Board Audit Committee and the <strong>AWB</strong><br />

Group Corporate Risk Committee. It<br />

continually monitors the company risk<br />

profile, particularly that of the trading<br />

activity and has authority to report to any<br />

level of executive management or the<br />

Board any significant concerns that may<br />

arise. This is particularly relevant to issues<br />

that arise outside of the formal reporting<br />

timetable.<br />

<strong>Annual</strong> financial budgets are compiled and<br />

submitted by management to the Board for<br />

approval. Monthly Chief Financial Officer<br />

and Managing Director reports are provided<br />

to the Board for oversight of financial and<br />

non-financial risk exposures and<br />

performance.<br />

Issues considered worthy of further attention<br />

by the Board are managed through the use<br />

of a corporate action list, controlled by the<br />

company secretary. This is used to register<br />

and manage requests of management raised<br />

by the Board.<br />

Risk mitigation is also undertaken by an<br />

insurance program managed by the<br />

Corporate Risk Unit. It is continually<br />

monitored and enhanced to match the<br />

company’s changing business profile, and is<br />

also regularly reported to the Board.<br />

Corporate Ethics and Code of<br />

Conduct<br />

The Board of <strong>AWB</strong> <strong>Limited</strong> and <strong>AWB</strong><br />

(International) <strong>Limited</strong> are committed to<br />

clearly promoting and demonstrating that<br />

their business affairs and operations are at<br />

all times being conducted legally, ethically<br />

and in accordance with the highest<br />

standards of integrity and propriety. This is<br />

a fundamental principle of their operations<br />

and business affairs. The <strong>AWB</strong> Code of<br />

Conduct policy is based on this principle<br />

and its observance provides the foundation<br />

on which the company’s reputation with<br />

growers, customers, suppliers and<br />

stakeholders is based.<br />

The Code of Conduct (available from<br />

www.awb.com.au) sets out the values,<br />

responsibilities and obligations of Board<br />

members and all people employed,<br />

contracted by, associated with or acting on<br />

behalf of the <strong>AWB</strong> Group.<br />

Occupational Health and Safety<br />

Policy<br />

<strong>AWB</strong> <strong>Limited</strong> is committed to providing and<br />

maintaining a healthy and safe working<br />

environment for all people attending <strong>AWB</strong>’s<br />

workplace and recognises its obligations<br />

under the applicable occupational health<br />

and safety (OH&S) legislation.<br />

<strong>AWB</strong> has an integrated policy to address<br />

OH&S issues which is reviewed regularly to<br />

ensure that <strong>AWB</strong> maintains best practice<br />

procedures in relation to OH&S issues.<br />

Environmental Policy<br />

<strong>AWB</strong> <strong>Limited</strong>’s Environmental Policy states<br />

that:<br />

the company is committed to sustainable<br />

development;<br />

environmental, health, safety and<br />

community responsibilities are integral to<br />

the company’s business operations;<br />

<strong>AWB</strong> employees are encouraged to be<br />

proactive in these matters; and<br />

accountability for the environment, health<br />

and safety is a core value of the company.<br />

<strong>Report</strong>ing to Shareholders<br />

The <strong>AWB</strong> <strong>Limited</strong> Board aims to ensure<br />

that <strong>AWB</strong> <strong>Limited</strong>’s shareholders are<br />

informed of all major developments<br />

affecting the company.<br />

Information is regularly communicated to<br />

shareholders via regular announcements to<br />

the ASX in accordance with <strong>AWB</strong> <strong>Limited</strong>’s<br />

continuous disclosure obligations, media<br />

releases, periodic mail-outs and grower<br />

briefing meetings. Information is also freely<br />

available from <strong>AWB</strong> <strong>Limited</strong>’s Investor<br />

Relations on its website www.awb.com.au<br />

In addition, a copy of the <strong>Annual</strong> <strong>Report</strong> is<br />

distributed to all shareholders who have<br />

elected to receive a copy, and is also<br />

available from the company’s website. The<br />

Board ensures that the <strong>Annual</strong> <strong>Report</strong><br />

includes all relevant and accurate<br />

information about the company including<br />

details of its operations, future development<br />

and any disclosures required by the<br />

Corporations Act 2001 and the ASX Listing<br />

Rules.<br />

The Board encourages full participation by<br />

shareholders at the <strong>Annual</strong> General<br />

Meeting to ensure a high level of<br />

accountability and to ensure that<br />

shareholders remain informed of <strong>AWB</strong><br />

<strong>Limited</strong>’s strategy and goals. Important<br />

issues are presented to shareholders as<br />

single resolutions. <strong>AWB</strong>’s external auditors,<br />

Ernst & Young, are invited to attend the<br />

<strong>Annual</strong> General Meeting to answer<br />

shareholder questions about the conduct of<br />

the audit and the preparation and content<br />

of their reports.<br />

ASX Principles of Good<br />

Corporate Governance<br />

According to the ASX, the enhancement of<br />

corporate accountability and the adoption<br />

of the ASX Principles of Good Corporate<br />

Governance represents a major evolution in<br />

corporate governance practice in Australia 1 .<br />

<strong>AWB</strong> <strong>Limited</strong> is committed to<br />

benchmarking itself against the Principles<br />

of Good Corporate Governance as they<br />

evolve, and is working to ensure that it<br />

meets the substantive aims those principles<br />

represent. Although <strong>AWB</strong>’s governance<br />

currently satisfies the ASX Principles, some<br />

<strong>AWB</strong> policies are currently being enhanced<br />

to deal in detail with all of the matters in<br />

the ASX Best Practice Recommendations.<br />

1 Karen Leslie Hamilton, Chairperson, ASX Corporate<br />

Governance Council, Foreward to ASX Corporate<br />

Governance Council Principles of Good Corporate<br />

Governance and Best Practice Recommendations<br />

37


oard of directors<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Brendan Stewart<br />

Chairman, Non-executive director,<br />

36, MAICD<br />

Committees: Remuneration (Chair),<br />

Nomination (Chair), Investment (Chair),<br />

Audit (ex-officio member) and Corporate<br />

Risk (ex-officio member) (pictured on<br />

page 6)<br />

Appointed on 3 February 2000 and reelected<br />

on 13 March <strong>2003</strong>. Mr Stewart<br />

was elected by the directors as Chairman<br />

on 14 March 2002 and re-elected<br />

Chairman on 13 March <strong>2003</strong>. Mr Stewart is<br />

also Chairman and a non-executive director<br />

of <strong>AWB</strong> (International) <strong>Limited</strong>. Mr Stewart<br />

operates a 3,200 hectare property that<br />

produces grain, cotton and cattle at<br />

Chinchilla, QLD. He is a former President<br />

of Queensland Graingrowers Association<br />

and Grains Council of Australia and was<br />

Chair of the Joint Ministerial Working Group<br />

on the Australian Wheat Board Restructure<br />

and Vice President of National Farmers<br />

Federation (NFF). Mr Stewart is a former<br />

Chairman of the NFF Economics and Trade<br />

Committee and former chairman of<br />

Wideland Insurance Brokers Pty Ltd.<br />

In January <strong>2003</strong>, Mr Stewart was appointed<br />

inaugural Chairman of the Council for<br />

Australian Arab Relations.<br />

Andrew Lindberg<br />

Managing Director, 50, BComm,<br />

BSc, MBA, FAICD<br />

Committees: Investment and Remuneration<br />

(Refer to page 32 for personal details)<br />

(pictured on page 6)<br />

Robert Barry<br />

Deputy Chairman, Non-executive<br />

director, 56, BComm, FCPA, FAICD<br />

Committees: Audit (Chair), Nomination<br />

and Investment<br />

Appointed on 12 January 1999 and reelected<br />

on 15 March 2001. Mr Barry has a<br />

mixed farming enterprise at Willow Tree in<br />

NSW and has extensive financial<br />

experience in domestic and international<br />

capital markets. He was Chief Executive<br />

Officer of Dominguez Barry Samuel<br />

Montagu <strong>Limited</strong> (a predecessor to UBS<br />

Australia) and Head of International Capital<br />

Markets for the Midland Bank Group in<br />

London. Mr Barry is a non-executive<br />

director of Sugar Australia Pty <strong>Limited</strong>, New<br />

Zealand Sugar Company <strong>Limited</strong>, Snowy<br />

Hydro <strong>Limited</strong>, Queensland Cotton <strong>Limited</strong><br />

and Unisearch <strong>Limited</strong>.<br />

Brendan Fitzgerald<br />

Non-executive director, 59, FCDA<br />

Committee: Corporate Risk<br />

Appointed on 13 March <strong>2003</strong>. Mr<br />

Fitzgerald is a grain grower from Kimba in<br />

SA. He has operated in partnership with<br />

his family a farming and contract harvesting<br />

business since 1975. In 1986, Mr<br />

Fitzgerald was elected to the SACBH<br />

Board and as a director was involved in<br />

finance and audit, nomination/remuneration<br />

and listing committees and chaired the<br />

strategic infrastructure committee. Mr<br />

Fitzgerald has studied export grain<br />

marketing and storage in North America,<br />

South Africa and England.<br />

Laurie Marshall<br />

Non-executive director, 53, FCDA<br />

Committees: Services Agreement (Chair)<br />

and Audit<br />

Appointed on 1 May 1998 and re-elected<br />

on 15 March 2001. Mr Marshall has over<br />

30 years experience on his grain and<br />

merino sheep enterprise at Lake Grace,<br />

WA. Mr Marshall is a former president of<br />

the Grains Section of WA Farmers<br />

Federation and a former member of the<br />

Grains Council of Australia Executive and<br />

Wheat Committee and was also Chairman<br />

of the latter.<br />

Mr Marshall was a member of the<br />

Australian Wheat Board from 1995.<br />

Xavier Martin<br />

Non-executive director, 44, MAICD<br />

Committee: Audit<br />

Appointed on 13 March <strong>2003</strong>. Mr Martin is<br />

a wheat grower and director of his family<br />

farming enterprise near Gunnedah, NSW.<br />

During the past decade, Mr Martin has<br />

been representing growers in leadership<br />

positions across a range of organisations<br />

including NSW Farmers Association, Grains<br />

Council of Australia, Durum Wheat Growers<br />

Association and the new Australian Durum<br />

Industry Association. Mr Martin is a director<br />

of various private companies and the public<br />

company, Plant Health Australia Ltd.<br />

Warrick McClelland<br />

Non-executive director, 60, BAgSc<br />

Committees: Audit, Services Agreement<br />

and Investment<br />

Appointed on 4 November 1998 and reelected<br />

on 14 March 2002. Mr McClelland<br />

is a grain and livestock producer from<br />

38<br />

Robert Barry Brendan Fitzgerald Laurie Marshall Xavier Martin<br />

Warrick McClelland


Birchip in Victoria and a former Victorian<br />

Farmers Federation Grains Council<br />

President and Grains Council of Australia<br />

Deputy President. Mr McClelland is a<br />

former director of BRI Australia.<br />

Christopher Moffet<br />

Non-executive director, 59, FAICD<br />

Committee: Corporate Risk<br />

Appointed on 4 November 1998 and reelected<br />

on 14 March 2002 and a nonexecutive<br />

director of <strong>AWB</strong> (International)<br />

<strong>Limited</strong>. Mr Moffet’s grains industry<br />

experience includes ownership of a 16,000<br />

hectare grain and grazing property and<br />

involvement in the areas of finance,<br />

marketing and business management. Mr<br />

Moffet’s qualifications incorporate a former<br />

directorship of the Morawa Cooperative and<br />

over 30 years of WA Farmers Federation<br />

membership, including roles as President of<br />

branch, zone and the Federation’s Grains<br />

Council and executive member of Grains<br />

Council of Australia. As a director of the<br />

Grain Pool of WA for eight years, Mr Moffet<br />

completed studies in grain trading and<br />

futures management at the Chicago Board<br />

of Trade. Mr Moffet is a Fellow of the<br />

Australian Institute of Company Directors<br />

and has recently been awarded the<br />

Advanced Diploma from the Institute.<br />

Peter Polson<br />

Non-executive director, 57, BComm,<br />

MBL<br />

Committees: Corporate Risk (Chair),<br />

Remuneration and Investment<br />

Appointed on 31 March <strong>2003</strong>. Mr Polson<br />

recently held the position of Group<br />

Executive, Investment and Insurance<br />

Services, Commonwealth Bank, responsible<br />

for all investment and insurance services<br />

for the Group, including the Group’s funds<br />

management, master funds, superannuation<br />

and insurance businesses such as Colonial<br />

First State, Colonial Insurance,<br />

Commonwealth Investment Management,<br />

Commonwealth Insurance and third party<br />

support services for brokers, agents and<br />

financial advisers.<br />

Mr Polson was Managing Director of the<br />

international funds management business<br />

at the Colonial Group, which was acquired<br />

by the Commonwealth Banking Group in<br />

mid 2000.<br />

Kerry Sanderson<br />

Non-executive director, 52, BSc,<br />

BEcons, FCIT, FAIM, MAICD<br />

Committee: Corporate Risk<br />

Appointed on 1 May 1998, and re-elected<br />

by shareholders on 14 March 2002. Mrs<br />

Sanderson is Chief Executive Officer of<br />

Fremantle Ports in Western Australia and<br />

Vice President of the Association of<br />

Australian Ports and Marine Authorities Inc.<br />

Mrs Sanderson has specific skills in<br />

business management and trade promotion<br />

with experience in transport and shipping.<br />

She is a member of the Board of Trustees<br />

of the Fremantle Hospital Medical Research<br />

Foundation, a director of Rio Tinto WA<br />

Futures Foundation and a member of the<br />

Australian Logistics Council. She is a<br />

Fellow of the Chartered Institute of<br />

Transport and of the Australian Institute of<br />

Management.<br />

Mrs Sanderson was a member of the Board<br />

of the Australian Wheat Board from 1995.<br />

John Simpson<br />

Non-executive director, 44<br />

Committees: Remuneration and<br />

Nomination<br />

Appointed on 4 November 1998 and reelected<br />

on 14 March 2002. Mr Simpson is<br />

a former director of <strong>AWB</strong> (International)<br />

<strong>Limited</strong>. Mr Simpson is joint Managing<br />

Director of Nowranie Pastoral Co Pty Ltd, a<br />

family owned company farming 10,000<br />

hectares in the Riverina of NSW. He was a<br />

representative for grain growers on the<br />

NSW Farmers’ Association Grains<br />

Committee for seven years, serving two<br />

years as vice chairman. He is also<br />

Chairman of the Billabong Creek Advisory<br />

group and has been appointed by<br />

government to represent landholders and<br />

irrigators on the Murray Unregulated River<br />

Management Committee.<br />

John Thame<br />

Non-executive director, 61, FCPA<br />

Committees: Audit, Remuneration,<br />

Investment and Services Agreement<br />

Appointed a director on 9 April 1999 and<br />

re-appointed on 14 March 2002. Mr<br />

Thame joined the NSW Building Society in<br />

1971 and oversaw the conversion of the<br />

Society to Advance Bank in 1985. He was<br />

Chief Executive Officer of Advance Bank<br />

from 1985 until its merger with St George<br />

Bank in January 1997. Mr Thame is on the<br />

Board of St George Bank <strong>Limited</strong>, Reckon<br />

<strong>Limited</strong>, Village Building Co Ltd, Abacus<br />

Property Group and The Council of the<br />

National Museum of Australia.<br />

Richard Fuller<br />

General Manager, Executive and<br />

Company Secretary, 44, BA (Hons),<br />

PhD (Political Science)<br />

(refer to page 33 for personal details)<br />

(pictured on page 33)<br />

Christopher Moffet<br />

Peter Polson Kerry Sanderson John Simpson<br />

John Thame<br />

39


<strong>AWB</strong> (International)<br />

<strong>Limited</strong><br />

<strong>AWB</strong> (International) <strong>Limited</strong> (<strong>AWB</strong>I), is a<br />

wholly owned subsidiary of <strong>AWB</strong> <strong>Limited</strong>,<br />

created to operate the <strong>AWB</strong> National Pool<br />

as a requirement of the <strong>AWB</strong> constitution<br />

and the Wheat Marketing Act 1989. The<br />

constitution was framed by the<br />

Commonwealth Government in consultation<br />

with the Grains Council of Australia as part<br />

of the process of privatising the Australian<br />

Wheat Board, effective in July 1999.<br />

The Board of <strong>AWB</strong>I under its constitution<br />

has responsibility to maximise net pool<br />

return for growers who sell wheat into the<br />

<strong>AWB</strong> National Pool by securing, developing<br />

and maintaining markets for wheat and<br />

minimising costs as far as practicable.<br />

Directors of <strong>AWB</strong> <strong>Limited</strong> under their<br />

constitution have the same obligation to<br />

growers. Thus, the two constitutions and<br />

the governance obligations of the two<br />

Boards are aligned.<br />

<strong>AWB</strong>I has a separate Board from <strong>AWB</strong><br />

<strong>Limited</strong>. Since <strong>AWB</strong>I should not on its own<br />

account make either a profit or a loss, the<br />

primary function of the Board is to watch<br />

over the interests of growers for maximising<br />

returns from the <strong>AWB</strong> National Pool. While<br />

the Chairman and three other directors are<br />

required under its constitution to be<br />

common to the Boards of <strong>AWB</strong> <strong>Limited</strong> and<br />

<strong>AWB</strong>I, three directors – Wayne Gibson,<br />

Clinton Starr and Ian Donges – are grower<br />

elected directors for <strong>AWB</strong>I only. (Their<br />

qualifications and experience are set out at<br />

the end of this statement.)<br />

The Wheat Export Authority, a<br />

Commonwealth statutory authority, monitors<br />

<strong>AWB</strong>I’s performance in accordance with the<br />

Wheat Marketing Act 1989.<br />

The Board met 10 times during the year.<br />

Compliance Committee<br />

<strong>AWB</strong>I has appointed a Compliance<br />

Committee – the membership of which is<br />

restricted to the three directors directly<br />

appointed to <strong>AWB</strong>I by growers to oversee<br />

the relationship between <strong>AWB</strong> <strong>Limited</strong> and<br />

<strong>AWB</strong>I.<br />

A Charter issued by the Board of <strong>AWB</strong>I<br />

establishes the purpose, role and functions<br />

of that Committee.<br />

The Compliance Committee has the<br />

responsibility of ensuring that:<br />

any dealing that <strong>AWB</strong>I has with its parent<br />

and subsidiaries of <strong>AWB</strong> <strong>Limited</strong> are not<br />

in conflict with the objectives of <strong>AWB</strong>I as<br />

operator of the <strong>AWB</strong> National Pool;<br />

the business rules and obligations as set<br />

down in the Services Agreement with<br />

<strong>AWB</strong> <strong>Limited</strong> are observed and<br />

maintained and are consistent with the<br />

objectives of <strong>AWB</strong>I as operator of the<br />

<strong>AWB</strong> National Pool; and<br />

the requirements of the appropriate laws,<br />

regulations, the constitution of <strong>AWB</strong>I and<br />

appropriate industry codes, agreements<br />

and regulations are observed.<br />

Although both <strong>AWB</strong>I and <strong>AWB</strong> <strong>Limited</strong> have<br />

specific constitutional requirements to<br />

maximise and distribute net pool returns to<br />

growers, the Compliance Committee is<br />

designed as an additional mechanism to<br />

ensure that these obligations to growers are<br />

fulfilled. In fulfilling its Charter, the Compliance<br />

Committee reports to the Board of <strong>AWB</strong>I.<br />

<strong>AWB</strong>I charged the Compliance Committee<br />

with responsibility of negotiating the<br />

Services Agreement with <strong>AWB</strong> <strong>Limited</strong>.<br />

The Committee met nine times during the<br />

year. The members of the Compliance<br />

Committee at the date of this report are Mr<br />

Clinton Starr (Chair), Mr Ian Donges and Mr<br />

Wayne Gibson.<br />

<strong>AWB</strong>I 2004 Review Committee<br />

The role of the <strong>AWB</strong>I 2004 Review<br />

Committee is to oversee the company’s<br />

contribution to the review of <strong>AWB</strong>I’s<br />

performance in managing the Single Desk,<br />

to be conducted in accordance with the<br />

Wheat Marketing Act 1989.<br />

The Committee met twice during the year.<br />

The members of the <strong>AWB</strong>I 2004 Review<br />

Committee at the date of this report are Mr<br />

Clinton Starr (Chair), Mr Brendan Stewart<br />

and Mr Andrew Lindberg.<br />

40


Brendan Stewart<br />

Chairman, Non-executive director<br />

Committee: <strong>AWB</strong>I 2004 Review<br />

(refer to page 38 for personal details)<br />

(pictured on page 6)<br />

Andrew Lindberg<br />

Director<br />

(refer to page 32 for personal details)<br />

(pictured on page 6)<br />

Christopher Moffet<br />

Non-executive director<br />

(refer to page 39 for personal details)<br />

Peter Polson<br />

Non-executive director<br />

(refer to page 39 for personal details)<br />

Ian Donges<br />

Non-executive director, 57, FAICD<br />

Committee: Compliance<br />

Appointed on 15 March 2001. Mr Donges<br />

is a grain grower from central NSW. He<br />

has operated, in partnership with his wife, a<br />

farming business since 1975. Mr Donges<br />

has extensive representative involvement in<br />

farm organisations including at a local level<br />

through NSW Farmers and the NSW<br />

Agricultural Bureau. At a state level, Mr<br />

Donges has been involved with NSW<br />

Farmers and has served that organisation in<br />

a number of capacities including President<br />

for three years and Chairman of the Grains<br />

Committee. Mr Donges has represented<br />

NSW on the Grains Council of Australia for<br />

six years and is a past president of the<br />

National Farmers Federation. Mr Donges<br />

has represented Australia at a number of<br />

international forums. Mr Donges is a<br />

director of Supermarkets Asia <strong>Limited</strong> and<br />

ACS <strong>Limited</strong> and Chairman of the Grain<br />

and Graze Program, an initiative of three<br />

research and development corporations.<br />

Wayne Gibson<br />

Non-executive director, 55, MCDA<br />

Committee: Compliance<br />

Appointed on 3 February 2000 and reelected<br />

13 March <strong>2003</strong>. Mr Gibson is a<br />

grain grower from Kondinin, Western<br />

Australia and a former executive committee<br />

member of the Kondinin Group and former<br />

WA Farmers Federation Zone President<br />

and Grains Council delegate. Mr Gibson is<br />

a Councillor of the Kondinin Shire Council<br />

and a member of the Corporate Directors’<br />

Association of Australia.<br />

Clinton Starr<br />

Non-executive director, 56, BEc, MBA<br />

Committees: Compliance (Chair) and<br />

<strong>AWB</strong>I 2004 Review (Chair)<br />

Appointed on 4 November 1998 and reelected<br />

on 14 March 2002. Mr Starr has<br />

had 20 years experience in international<br />

funds management, including 10 years<br />

experience in international funds marketing.<br />

This extended to all main asset classes and<br />

he served as an executive director from<br />

1986 until 1998 both in Australia and<br />

overseas. Since 1998, he has managed the<br />

family partnership, which has interests in<br />

small company management consulting and<br />

farming. He is also a non-executive<br />

director of Multimedia Ltd (Deputy<br />

Chairman), Biological Farmers of Australia<br />

(Co-op) Ltd, Green Environmental Pty Ltd,<br />

Mulch-Tech Pty Ltd, Green Planet Holdings<br />

Pty Ltd (Chairman), Longboat Holdings Pty<br />

Ltd (Chairman) and Marshall Lord<br />

Launches Australia Pty Ltd (Chairman).<br />

Mr Starr is currently completing a Doctorate<br />

in Business Administration at RMIT,<br />

researching the optimal growth paths for<br />

small/medium entrepreneurial businesses<br />

in Australia.<br />

Richard Fuller<br />

General Manager, Executive and<br />

Company Secretary, 44, BA (Hons),<br />

PhD (Political Science)<br />

(refer to page 33 for personal details)<br />

(pictured on page 33)<br />

Christopher Moffet Peter Polson<br />

Ian Donges Clinton Starr<br />

Wayne Gibson<br />

41


national and<br />

<strong>AWB</strong> National Locations<br />

Landmark National Locations<br />

refer to page 93 for named locations<br />

XXXXX XXXXXX, Pasta Technichan<br />

42<br />

<strong>AWB</strong> staff hosting overseas delegations in regional Australia<br />

XXXXX XXXXXX, Pasta Technichan


international presence<br />

43


financial statements<br />

Contents<br />

Directors' <strong>Report</strong><br />

Statement of Financial Performance<br />

Statement of Financial Position<br />

Statement of Cash Flows<br />

Notes to and forming part of the Financial Statements<br />

Directors' Declaration<br />

Independent Audit <strong>Report</strong><br />

46<br />

50<br />

51<br />

52<br />

53<br />

88<br />

89<br />

XXXXX XXXXXX, Pasta Technichan<br />

44<br />

XXXXX XXXXXX, Pasta Technichan<br />

XXXXX XXXXXX, Pasta Technichan<br />

XXXXX XXXXXX, Pasta Technichan


INNOVATION FOCUS TO DELIVER NEW OPPORTUNITIES<br />

45


DIRECTORS' REPORT<br />

Your directors submit their report for the year ended 30 September<br />

<strong>2003</strong>.<br />

DIRECTORS<br />

The directors of the company in office at the date of this report are:<br />

Brendan Stewart (Chairman) <br />

Robert Barry (Deputy Chairman)<br />

Andrew Lindberg (Managing Director)<br />

Brendan Fitzgerald (elected at <strong>2003</strong> <strong>Annual</strong> General Meeting)<br />

Laurie Marshall<br />

Xavier Martin (elected at <strong>2003</strong> <strong>Annual</strong> General Meeting)<br />

Warrick McClelland <br />

Christopher Moffet <br />

Peter Polson (appointed 31 March <strong>2003</strong>)<br />

Kerry Sanderson<br />

John Simpson <br />

John Thame.<br />

Except where noted, the directors held their position as director for<br />

the financial year and up to the date of this report. A summary of<br />

the experience, qualifications and special responsibilities of each<br />

director is provided on page 38 and 39.<br />

PRINCIPAL ACTIVITIES<br />

The <strong>AWB</strong> Group is Australia's leading rural services provider and<br />

one of the world's largest wheat managers and marketers. Refer<br />

to Note 34(a) to the Financial Statements for details of entities<br />

within the Group.<br />

<strong>AWB</strong> Group's operations can be categorised into six key business<br />

areas:<br />

Pool Management Services – managing the aggregation and<br />

global marketing of Australian wheat to maximise net pool<br />

returns; and providing commodity price and currency risk<br />

management;<br />

Rural Services (Landmark) – Landmark is Australia's largest<br />

supplier of agribusiness products and services. It provides<br />

clients with rural merchandise, fertiliser, livestock, wool<br />

marketing, agronomy, insurance, real estate and rural financial<br />

services;<br />

Finance and Risk Management Products – the provision of<br />

finance and risk management products to grain growers;<br />

Grain Acquisition and Trading – the trading, as principal, of<br />

grains and the provision of marketing products to Australian<br />

grain growers;<br />

Grain Technology – the development and Australian application<br />

of leading edge grain related technologies; and<br />

Supply Chain and Other Investments – the development of,<br />

and direct investment in, supply chain infrastructure and end<br />

user grain businesses, along with the management and trading<br />

of shipping capacity.<br />

RESULTS AND REVIEW OF OPERATIONS<br />

<strong>2003</strong> 2002<br />

$'000 $'000<br />

Consolidated entity profit after tax and<br />

outside equity interests for the financial year 43,891 107,192<br />

A review of the operations and results of the consolidated entity<br />

and its principal businesses during the financial year is contained in<br />

pages 12 to 31 of this annual report.<br />

DIVIDENDS<br />

Subsequent to year end, a fully franked final dividend of 11 cents<br />

per share was approved by the board on 26 November <strong>2003</strong> and<br />

is payable on 19 December <strong>2003</strong>. All dividends paid or provided<br />

for will be fully franked at the company tax rate of 30%. The 2002<br />

final dividend of $30.1 million and the <strong>2003</strong> interim dividend of<br />

$38.4 million were paid to shareholders during the period.<br />

SIGNIFICANT CHANGES IN THE STATE OF<br />

AFFAIRS<br />

Significant changes in the state of affairs of the consolidated entity<br />

during the financial year were as follows:<br />

on 29 August <strong>2003</strong>, the <strong>AWB</strong> Group acquired its rural services<br />

business (Landmark) for cash consideration of approximately<br />

$718 million. Completion accounts, to be finalised, will determine<br />

the final price; and<br />

<strong>AWB</strong> <strong>Limited</strong> completed a new issue of B class shares during<br />

the financial year to fund part of the purchase price of its rural<br />

services business (Landmark). A total of 41,100,000 shares<br />

were issued through the institutional placement at $3.70 per<br />

share raising approximately $152 million.<br />

SIGNIFICANT EVENTS AFTER BALANCE DATE<br />

The following significant events have arisen since the end of the<br />

financial year:<br />

<strong>AWB</strong> <strong>Limited</strong> completed a new issue of B class shares on 20<br />

October <strong>2003</strong> in connection with the purchase of its rural<br />

services business (Landmark). A total of 11,840,908 shares<br />

was issued through the share purchase plan at $3.70 per share<br />

raising approximately $43.8 million; and<br />

a dividend of 11 cents per share resulting in a dividend payable<br />

of $35.97 million was declared on 26 November <strong>2003</strong>.<br />

REGISTERED OFFICE<br />

380 La Trobe Street,<br />

Melbourne, Victoria, 3000<br />

Financial Statements cover: Philip Mills, Grower<br />

46


LIKELY DEVELOPMENTS AND EXPECTED<br />

RESULTS<br />

The consolidated entity will continue to pursue its policy of<br />

increasing the profitability and market share of its major business<br />

areas during the next financial year. Further information about<br />

likely developments in the operations of the consolidated entity and<br />

the expected results of those operations in future financial years<br />

has not been included in this report because disclosure of the<br />

information would be likely to result in unreasonable prejudice to<br />

the consolidated entity.<br />

ENVIRONMENTAL REGULATION AND<br />

PERFORMANCE<br />

The consolidated entity's operations are subject to various<br />

Commonwealth, State and Territory environmental legislation and<br />

regulation. There is no environmental regulation specific to the<br />

consolidated entity. The board is not aware of any significant<br />

environmental breaches during the financial year.<br />

INDEMNIFICATION AND INSURANCE<br />

The constitution of <strong>AWB</strong> <strong>Limited</strong> provides an indemnity for all<br />

current and previous company directors, secretaries and executive<br />

officers. The company indemnifies these people to the maximum<br />

extent permitted by law for any liabilities or expenses incurred in<br />

defending any proceedings where judgement is given in the<br />

person's favour. The indemnity does not however, cover conduct<br />

involving a lack of good faith.<br />

A Deed of Access, Indemnity and Insurance was entered into<br />

between the company and each director during the period which<br />

provides that the company will maintain a directors' and officers'<br />

insurance policy. The Deed also provides an indemnity to the<br />

maximum extent permissible by law to the director for any liabilities<br />

incurred as a director, other than liabilities to the company or a<br />

related body corporate, or liabilities arising out of conduct involving<br />

lack of good faith.<br />

A directors' and officers' insurance policy is maintained; however,<br />

the terms of the contract prohibit disclosure of the amount of the<br />

premium. During or since the end of the financial year, no director,<br />

officer or auditor had recourse to the indemnity or insurance.<br />

DIRECTORS' AND OTHER OFFICERS'<br />

EMOLUMENTS<br />

Remuneration policy<br />

The Remuneration Committee of the board of directors is<br />

responsible for reviewing and recommending remuneration and<br />

performance of the Managing Director, the Performance Appraisal<br />

Policy and any Employee Share Plans and superannuation policies.<br />

The remuneration and performance of the executive team is<br />

assessed by the Managing Director on a periodic basis by<br />

reference to relevant employment market conditions with the<br />

overall objective of ensuring maximum shareholder benefit from the<br />

retention of a high quality executive team.<br />

Details of the nature and amount of each element of the<br />

emolument of each director and each of the five executive officers<br />

of <strong>AWB</strong> <strong>Limited</strong> and the consolidated entity receiving the highest<br />

emolument for the financial year are as follows:<br />

Emoluments of directors of <strong>AWB</strong> <strong>Limited</strong><br />

Base fee<br />

$<br />

Superannuation<br />

$<br />

2002 bonus paid in<br />

current year $<br />

Brendan Stewart 147,425 14,688 – 5,850 167,963<br />

Robert Barry 55,500 5,400 – – 60,900<br />

Andrew Lindberg 630,265 33,087 150,000 3,470 816,822<br />

Ian Cush 1 28,500 2,700 – – 31,200<br />

Brendan Fitzgerald 2 32,857 2,957 – – 35,814<br />

Laurie Marshall 55,500 5,400 – – 60,900<br />

Xavier Martin 2 32,857 2,957 – – 35,814<br />

Warrick McClelland 21,660 39,240 – – 60,900<br />

Christopher Moffet 55,500 5,400 – – 60,900<br />

Peter Polson 3 30,238 2,721 – – 32,959<br />

Kerry Sanderson 55,500 5,400 – – 60,900<br />

Brenda Shanahan 4 28,500 2,700 – – 31,200<br />

Michael Shanahan 1 28,500 2,700 – – 31,200<br />

John Simpson 55,500 5,400 – – 60,900<br />

John Thame 55,500 5,400 – – 60,900<br />

Total 1,313,802 136,150 150,000 9,320 1,609,272<br />

Other<br />

$<br />

Total<br />

$<br />

1<br />

Not re–elected at the <strong>2003</strong> <strong>Annual</strong> General Meeting<br />

2<br />

Elected at the <strong>2003</strong> <strong>Annual</strong> General Meeting<br />

3<br />

Appointed 31 March <strong>2003</strong><br />

4<br />

Resigned 31 March <strong>2003</strong><br />

47


DIRECTORS' REPORT (continued)<br />

Emoluments of the five most highly paid executive officers of <strong>AWB</strong> <strong>Limited</strong> and the consolidated entity<br />

Base fee Superannuation 2002 bonus paid in Other Total<br />

$ $ current year $ $ $<br />

Paul Ingleby 427,253 10,640 99,960 18,618 556,471<br />

Charles Stott 287,783 10,640 58,800 153,665 b 510,888<br />

Tim Goodacre a 62,966 1,952 105,000 310,320 c 480,238<br />

Marcus Kennedy 369,070 10,890 – 76,275 d 456,235<br />

Jill Gillingham 277,445 67,351 83,300 3,716 431,812<br />

Total 1,424,517 101,473 347,060 562,594 2,435,644<br />

Notes: <br />

The terms 'director' and 'officer' have been treated as mutually exclusive for the purposes of this disclosure.<br />

a<br />

Tim Goodacre resigned on 6 December 2002.<br />

b<br />

"Other" emoluments include performance related payments relating to the acquisition of Landmark.<br />

c<br />

"Other" emoluments include the payment of accrued annual leave and long service leave entitlements.<br />

d<br />

"Other" emoluments includes an amount paid on commencement of employment.<br />

DIRECTORS' MEETINGS<br />

The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings<br />

attended by each director were as follows:<br />

Director Board meetings Audit Committee Corporate Risk Remuneration<br />

meetings Committee meetings Committee meetings<br />

Eligible to Attended Eligible to Eligible to Eligible to<br />

attend attend Attended attend Attended attend Attended<br />

Brendan Stewart 13 13 7 7 8 8 3 3<br />

Robert Barry 13 12 7 7<br />

Andrew Lindberg 13 13 5 5 3 3<br />

Ian Cush 1 5 5 4 4<br />

Brendan Fitzgerald 2 8 8 3 3<br />

Laurie Marshall 13 13 7 7<br />

Xavier Martin 2 8 8 3 3<br />

Warrick McClelland 13 13 7 7<br />

Christopher Moffet 13 13 8 8<br />

Peter Polson 3 6 6 4 4 2 2<br />

Kerry Sanderson 13 12 8 7<br />

Brenda Shanahan 4 7 7 4 4 1 1<br />

Michael Shanahan 1 5 5 4 4<br />

John Simpson 13 13 3 3<br />

John Thame 13 13 7 7 3 3<br />

In all cases where a director did not attend a meeting, prior leave of absence was granted by the board or chairman to the director.<br />

1<br />

Not re–elected at the <strong>2003</strong> <strong>Annual</strong> General Meeting.<br />

3<br />

Appointed 31 March <strong>2003</strong>.<br />

2<br />

Elected at the <strong>2003</strong> <strong>Annual</strong> General Meeting.<br />

4<br />

Resigned 31 March <strong>2003</strong>.<br />

48


DIRECTORS' MEETINGS (continued)<br />

Director Nomination Committee Investment Committee Services Agreement<br />

meetings meetings Committee meetings<br />

Eligible to Eligible to Eligible to<br />

attend Attended attend Attended attend Attended<br />

Brendan Stewart 5 5 3 3<br />

Robert Barry 5 5 3 1<br />

Andrew Lindberg 3 3<br />

Ian Cush 1<br />

Brendan Fitzgerald 2<br />

Laurie Marshall 3 3 5 5<br />

Xavier Martin 2<br />

Warrick McClelland 3 3 5 5<br />

Christopher Moffet<br />

Peter Polson 3 3 3<br />

Kerry Sanderson<br />

Brenda Shanahan 4<br />

Michael Shanahan 1<br />

John Simpson 2 2<br />

John Thame 3 3 5 5<br />

In all cases where a director did not attend a meeting, prior leave of absence was granted by the board or chairman to the director.<br />

1<br />

Not re–elected at the <strong>2003</strong> <strong>Annual</strong> General Meeting.<br />

3<br />

Appointed 31 March <strong>2003</strong>.<br />

2<br />

Elected at the <strong>2003</strong> <strong>Annual</strong> General Meeting.<br />

4<br />

Resigned 31 March <strong>2003</strong>.<br />

ROUNDING<br />

The amounts contained in this report and in the financial statements have been rounded off under the option available to the company<br />

under Australian Securities and Investments Commission Class Order 98/100. Amounts in this report have been rounded off in<br />

accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.<br />

Signed in accordance with a resolution of the directors:<br />

Brendan Stewart<br />

Chairman<br />

Sydney<br />

26 November <strong>2003</strong><br />

Andrew Lindberg<br />

Managing Director<br />

49


STATEMENT OF FINANCIAL PERFORMANCE<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

Notes $'000 $'000 $'000 $'000<br />

Revenue from ordinary activities 2 2,211,890 2,319,550 212,399 425,042<br />

Cost of sales (1,889,225) (1,926,340) (6,029) (197,441)<br />

Borrowing costs 3 (70,505) (98,559) (1,250) (4,886)<br />

Other expenses from ordinary activities (195,350) (142,472) (139,589) (132,796)<br />

Share of net profits of associates accounted for using<br />

the equity method 9(b) 2,097 993 – –<br />

Profit from ordinary activities before income tax expense 58,907 153,172 65,531 89,919<br />

Income tax expense relating to ordinary activities 4(a) (14,757) (45,343) (4,234) (11,967)<br />

Net profit from ordinary activities after income tax expense 23 44,150 107,829 61,297 77,952<br />

Net profit attributable to outside equity interests 20 (259) (637) – –<br />

Net profit attributable to members of <strong>AWB</strong> <strong>Limited</strong> 19(b) 43,891 107,192 61,297 77,952<br />

Net exchange differences relating to self sustaining<br />

foreign operations 19(a) (12,975) (336) – –<br />

Total changes in equity other than those resulting<br />

from transactions with owners as owners attributable<br />

to members of <strong>AWB</strong> <strong>Limited</strong> 21 30,916 106,856 61,297 77,952<br />

Basic earnings per share (cents) 35 15.9 39.2<br />

Diluted earnings per share (cents) 35 15.9 39.2<br />

50


STATEMENT OF FINANCIAL POSITION<br />

AS AT 30 SEPTEMBER <strong>2003</strong><br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

Notes $'000 $'000 $'000 $'000<br />

Current assets<br />

Cash assets 5 54,785 69,921 2,328 23,996<br />

Receivables 6 1,006,482 2,137,041 842,188 733,395<br />

Inventories 7 185,377 134,062 – –<br />

Other financial assets 11 59,451 62,598 – 2,488<br />

Current tax assets 4(b) 13,444 – – 9,934<br />

Other assets 8 12,200 3,268 185 201<br />

Total current assets 1,331,739 2,406,890 844,701 770,014<br />

Non–current assets<br />

Receivables 6 6,167 4,085 54,711 4,085<br />

Investments accounted for using the equity method 9(c) 12,910 16,958 – –<br />

Other financial assets 11 138,066 14,419 38,763 36,508<br />

Intangible assets 12 583,574 168 172 114<br />

Property, plant and equipment 13 300,443 170,519 54,917 58,811<br />

Deferred tax assets 4(b) 43,044 28,039 6,585 5,853<br />

Total non–current assets 1,084,204 234,188 155,148 105,371<br />

Total assets 2,415,943 2,641,078 999,849 875,385<br />

Current liabilities<br />

Payables 14 336,066 122,681 46,880 76,927<br />

Interest bearing liabilities 15 668,007 1,637,518 9,752 5,961<br />

Current tax liabilities 4(b) – 10,422 3,122 –<br />

Provisions 16 50,649 40,264 14,650 39,365<br />

Other liabilities 17 22,049 20,076 1,001 –<br />

Total current liabilities 1,076,771 1,830,961 75,405 122,253<br />

Non–current liabilities<br />

Interest bearing liabilities 15 394,877 – – –<br />

Provisions 16 1,721 1,513 1,721 1,513<br />

Deferred tax liabilities 4(b) 10,554 19,141 6,125 6,595<br />

Total non–current liabilities 407,152 20,654 7,846 8,108<br />

Total liabilities 1,483,923 1,851,615 83,251 130,361<br />

Net assets 932,020 789,463 916,598 745,024<br />

Equity<br />

Contributed equity 18 848,958 700,312 848,958 700,312<br />

Reserves 19(a) 1,717 14,692 15,000 15,000<br />

Retained profits 19(b) 78,337 72,815 52,640 29,712<br />

Total parent entity interest 929,012 787,819 916,598 745,024<br />

Outside equity interests 20 3,008 1,644 – –<br />

Total equity 21 932,020 789,463 916,598 745,024<br />

51


STATEMENT OF CASH FLOWS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

Notes $'000 $'000 $'000 $'000<br />

Cash flows from operating activities<br />

Receipts from customers 2,494,079 1,923,350 141,886 241,121<br />

Payments to suppliers and employees (1,975,985) (2,080,800) (149,147) (340,744)<br />

Repayments of grower loans 1,650,882 2,023,180 – –<br />

Loans advanced to growers (587,437) (2,383,910) – –<br />

Interest received 82,997 132,006 33,336 32,701<br />

Borrowing costs paid (70,505) (98,102) (1,250) (4,886)<br />

Dividends received 4,604 279 42,162 62,710<br />

Income taxes paid (54,341) (67,502) 7,620 (22,401)<br />

Net cash flows from/(used in) operating activities 23(a) 1,544,294 (551,499) 74,607 (31,499)<br />

Cash flows from investing activities<br />

Payments for property, plant and equipment (93,167) (81,740) (17,612) (28,516)<br />

Proceeds from sale of property, plant and equipment 572 747 22 747<br />

Payment for controlled entities (net of cash acquired) 34(b) (542,765) – – –<br />

Purchases of investments (122,642) (11,428) (2,402) (21,845)<br />

Proceeds from/(placement of) short term deposits &<br />

securities (net) (25,287) 74,417 – 18,251<br />

Net cash flows from/(used in) investing activities (783,289) (18,004) (19,992) (31,363)<br />

Cash flows from financing activities<br />

Proceeds from issues of ordinary shares 153,967 – 152,484 –<br />

Payment of share issue and listing costs (5,321) (524) (5,321) (524)<br />

Proceeds from/(repayment of) borrowings from related party<br />

(<strong>AWB</strong> National Pools) (234,944) (128,799) 3,791 5,961<br />

Proceeds from/(repayment of) borrowings from wholly owned<br />

group – – (158,793) 98,890<br />

Proceeds from/(repayment of) interest bearing deposits 3,711 – – –<br />

Proceeds from/(repayment of) borrowings (625,015) 768,969 – –<br />

Dividends paid (68,539) (60,145) (68,444) (60,145)<br />

Net cash flows from/(used in) financing activities (776,141) 579,501 (76,283) 44,182<br />

Net increase/(decrease) in cash held (15,136) 9,998 (21,668) (18,680)<br />

Cash at the beginning of the financial year 69,921 59,923 23,996 42,676<br />

Cash at the end of the financial year 23(b) 54,785 69,921 2,328 23,996<br />

52


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

1. SUMMARY OF SIGNIFICANT ACCOUNTING<br />

POLICIES<br />

(a) Basis of preparation<br />

The financial report is a general purpose financial report which has<br />

been prepared in accordance with Accounting Standards, Urgent<br />

Issues Group Consensus Views, other authoritative<br />

pronouncements of the Australian Accounting Standards Board<br />

and the Corporations Act 2001.<br />

It has been prepared on the basis of historical costs and except<br />

where stated, does not take into account fair values of non–current<br />

assets.<br />

(b) Changes in accounting policies<br />

Accounting policies have been consistently applied by each entity<br />

in the consolidated entity and are consistent with those of the<br />

previous year except for the accounting policies with respect to the<br />

provision for dividends and employee benefits. Comparative<br />

information has been repositioned or reclassified where appropriate<br />

to ensure comparability with the current reporting period.<br />

Provision for dividend<br />

The consolidated entity has adopted the new Australian Accounting<br />

Standard AASB 1044: Provisions, Contingent Liabilities and<br />

Contingent Assets which has resulted in a change in the<br />

accounting for the dividends provision. Previously, the consolidated<br />

entity recognised a provision for dividend based on the amount that<br />

was proposed or declared after the reporting date. In accordance<br />

with the requirements of the new Standard, a provision for<br />

dividends will only be recognised at the reporting date where the<br />

dividends have been declared, determined or publicly<br />

recommended prior to the reporting date. In accordance with the<br />

new Standard, no provision for dividend has been recognised for<br />

the year ended 30 September <strong>2003</strong>.<br />

Employee benefits<br />

The consolidated entity has applied the revised AASB 1028:<br />

Employee Benefits issued June 2001 for the first time from<br />

1 October 2002.<br />

The liability for wages and salaries, and annual leave is now<br />

calculated using the remuneration rates <strong>AWB</strong> <strong>Limited</strong> expects to<br />

pay as at each reporting date, not wage and salary rates current at<br />

reporting date. The effect of the revised policy is not material.<br />

(c) Principles of consolidation<br />

Controlled entities<br />

The financial statements of controlled entities are included from<br />

the date control commences until the date control ceases.<br />

Outside interests in the equity and results of the entities that are<br />

controlled by the company are shown as a separate item in the<br />

consolidated financial statements.<br />

Associates<br />

Associates are those entities, other than partnerships, over which<br />

the consolidated entity exercises significant influence and which<br />

are not intended for sale in the near future.<br />

In the consolidated financial statements, investments in associates<br />

are accounted for using equity accounting principles. Investments<br />

in associates are carried at the lower of the equity accounted<br />

amount and recoverable amount. The consolidated entity’s equity<br />

accounted share of the associates’ net profit or loss is recognised<br />

in the consolidated statement of financial performance from the<br />

date significant influence commences until the date significant<br />

influence ceases. Other movements in reserves are recognised<br />

directly in consolidated reserves.<br />

Joint venture operations<br />

Joint venture operations are jointly controlled by the consolidated<br />

entity. The consolidated entity’s interests in unincorporated joint<br />

ventures are brought to account by including its proportionate<br />

share of the joint ventures’ assets, liabilities and expenses and the<br />

consolidated entity’s revenue from the sale of its share of output<br />

on a line–by–line basis, from the date joint control commences to<br />

the date joint control ceases.<br />

Transactions eliminated on consolidation<br />

Unrealised gains and losses and inter–entity balances resulting<br />

from transactions with or between controlled entities are eliminated<br />

in full on consolidation.<br />

Unrealised gains resulting from transactions with associates and<br />

joint ventures, including those relating to contributions of<br />

non–monetary assets on establishment, are eliminated to the<br />

extent of the consolidated entity’s interest. Unrealised gains<br />

relating to associates and joint ventures are eliminated against the<br />

carrying amount of the investment. Unrealised losses are<br />

eliminated in the same way as unrealised gains, unless they<br />

evidence a recoverable amount impairment.<br />

<strong>AWB</strong> National Pools<br />

As in previous years, the activities of the <strong>AWB</strong> National Pools have<br />

not been recognised in the financial statements of the consolidated<br />

entity. The economic benefit from the activities of the <strong>AWB</strong><br />

National Pools are derived by pool participants rather than the<br />

consolidated entity.<br />

(d) Revenue recognition<br />

Revenues are recognised at fair value of the consideration received<br />

net of the amount of goods and services tax payable to the<br />

Australian Taxation Office.<br />

Sales<br />

Revenue from sales made on commercial terms is recognised<br />

when title for the commodity transfers to the customer. In the case<br />

of export sales, the bill of lading (shipment) date is taken as<br />

transaction date unless title is to pass at a materially different time.<br />

Management fee revenue<br />

Management fee revenue is recognised according to when the<br />

costs of providing the services are incurred.<br />

Interest revenue<br />

Interest revenue is recognised as it accrues taking into account the<br />

effective yield of the financial asset.<br />

Underwriting fee<br />

The underwriting fee charged on loan products is a fee for the<br />

service of providing a non–recourse loan. The recourse on this<br />

loan is limited to a percentage of the estimated pool return at a<br />

53


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

1. SUMMARY OF SIGNIFICANT ACCOUNTING<br />

POLICIES (continued )<br />

(d) Revenue recognition (continued)<br />

point in time. For 2002/03, this percentage was 81.8% (2001/02:<br />

81.8%). Underwriting fee revenue is recognised on a basis<br />

consistent with the pattern of the incidence of risk covered by the<br />

service provided.<br />

Sale of non–current assets<br />

The gross proceeds of non–current asset sales are included as<br />

revenue at the date control of the asset passes to the buyer,<br />

usually when an unconditional contract of sale is signed. The gain<br />

or loss on disposal is calculated as the difference between the<br />

carrying amount of the asset at the time of disposal and the net<br />

proceeds on disposal.<br />

(e) Goods and services tax<br />

Revenues, expenses and assets are recognised net of the amount<br />

of goods and services tax (GST), except where the amount of GST<br />

incurred is not recoverable from the Australian Taxation Office<br />

(ATO). In these circumstances, the GST is recognised as part of the<br />

cost of acquisition of the asset or as part of the expense.<br />

Receivables and payables are stated with the amount of GST<br />

included.<br />

The net amount of GST recoverable from, or payable to, the ATO is<br />

included as a current asset or liability in the statement of financial<br />

position.<br />

Cash flows are included in the statement of cash flows on a gross<br />

basis. The GST components of cash flows arising from investing<br />

and financing activities which are recoverable from, or payable to,<br />

the ATO are classified as operating cash flows.<br />

(f) Income tax<br />

Income tax expense is calculated at current rates on the<br />

accounting profit adjusted for permanent differences. Future<br />

income tax benefits and liabilities arise because some items are<br />

included in accounting profit in a period different from that in which<br />

the items are assessed for income tax and are included in the<br />

statement of financial position as a non–current asset and<br />

non–current liability respectively.<br />

As provided for in Australian Accounting Standard AASB 1020:<br />

Income Taxes, these deferred tax balances have been offset<br />

where applicable.<br />

Future income tax benefits are not brought to account unless<br />

realisation of the asset is assured beyond reasonable doubt.<br />

(g) Foreign currencies<br />

Transactions<br />

Transactions in foreign currencies are converted to Australian<br />

currency at the rate of exchange ruling at the date of the<br />

transaction. Amounts receivable and payable in foreign currencies<br />

at reporting date are translated at the rates of exchange ruling on<br />

that date.<br />

Exchange differences relating to amounts receivable and payable<br />

in foreign currencies are brought to account as exchange gains or<br />

54<br />

losses in the statement of financial performance in the financial<br />

year the exchange rates change, except where hedging specific<br />

anticipated transactions. (refer to Note 1(h) Derivatives)<br />

Translation of controlled foreign operations<br />

The assets and liabilities of foreign operations, including controlled<br />

entities and associates, that are self sustaining are translated at the<br />

rates of exchange ruling at balance date. Equity items are<br />

translated at historical rates. The statements of financial<br />

performance are translated at either a weighted average rate for<br />

the year or transaction date. Exchange differences arising on<br />

translation are taken directly to the foreign currency translation<br />

reserve until the disposal, or partial disposal, of the operations.<br />

The assets and liabilities of foreign operations, including controlled<br />

entities and associates, that are integrated are translated using the<br />

temporal method. Monetary assets and liabilities are translated into<br />

Australian currency at rates of exchange current at balance date,<br />

while non–monetary items and revenue and expense items are<br />

translated at exchange rates current when the transactions<br />

occurred. Exchange differences arising on translation are brought<br />

to account in the statement of financial performance.<br />

(h) Derivatives<br />

The consolidated entity is exposed to changes in interest rates,<br />

foreign exchange rates and commodity and freight prices from its<br />

activities. The consolidated entity uses the following derivative<br />

financial instruments to hedge these risks: interest rate swaps,<br />

forward rate agreements, interest rate options, forward foreign<br />

exchange contracts, foreign exchange options, forward commodity<br />

price contracts, commodity options and forward freight agreements.<br />

Hedges<br />

– Anticipated transactions<br />

Where hedge transactions are designated as a hedge of an<br />

anticipated specific purchase or sale of goods or an anticipated<br />

interest transaction, gains and losses on the hedge arising up to<br />

the date of the anticipated transaction, together with any costs or<br />

gains arising at the time of entering into the hedge, are deferred<br />

and included in the measurement of the anticipated transaction<br />

when the transaction occurs as designated. Any gains or losses on<br />

the hedge transaction after that date are included in the statement<br />

of financial performance.<br />

The net amounts receivable or payable under forward foreign<br />

exchange contracts, open swaps, forward rate agreements and<br />

futures contracts and the associated deferred gains or losses are<br />

recorded on the statement of financial position from the date of<br />

inception of the hedge transaction. The net receivables or payables<br />

are revalued using the foreign currency, interest or commodity rates<br />

current at reporting date.<br />

When the anticipated transaction is no longer expected to occur as<br />

designated, the deferred gains and losses relating to the hedged<br />

transaction are recognised immediately in the statement of<br />

financial performance.<br />

Where a hedge transaction is terminated early and the anticipated<br />

transaction is still expected to occur as designated, the deferred<br />

gains and losses that arose on the hedge prior to its termination<br />

continue to be deferred and are included in the measurement of<br />

the purchase or sale or interest transaction when it occurs. Where<br />

a hedge transaction is terminated early because the anticipated


(h) Derivatives (continued)<br />

transaction is no longer expected to occur as designated, deferred<br />

gains and losses that arose on the hedge prior to its termination are<br />

included in the statement of financial performance for the period.<br />

Where a hedge is redesignated as a hedge of another transaction,<br />

gains and losses arising on the hedge prior to its redesignation are<br />

only deferred where the original anticipated transaction is still<br />

expected to occur as designated. When the original anticipated<br />

transaction is no longer expected to occur as designated, any gains<br />

or losses relating to the hedge instrument are included in the<br />

statement of financial performance for the period.<br />

Other derivatives<br />

All other derivative transactions are initially recorded at the relevant<br />

rate at the date of the transaction. Derivatives outstanding at<br />

balance date are valued at the rates ruling on that date and any<br />

gains or losses are brought to account in the statement of financial<br />

performance.<br />

(i) Cash<br />

For the purpose of the statement of cash flows, cash includes cash<br />

on hand and in banks, net of outstanding bank overdrafts. Bank<br />

overdrafts are carried at the principal amount. Interest is charged<br />

as an expense as it accrues.<br />

(j) Receivables<br />

The collectability of debts is assessed at balance date and specific<br />

provision is made for any doubtful accounts.<br />

Trade debtors<br />

Terms of trade receivables generally require settlement within 30<br />

days.<br />

Receivables from related parties have been discounted to their<br />

present value using a market determined discount rate.<br />

(k) Inventories<br />

Inventories are valued at the lower of cost or net realisable value.<br />

(l) Investments<br />

Controlled entities<br />

Investments in controlled entities are carried in the Company’s<br />

financial statements at the lower of cost or recoverable amount.<br />

Associates<br />

Investments in unlisted shares of associates are carried in the<br />

financial statements at the lower of cost or recoverable amount.<br />

Joint venture operations<br />

Investments in joint venture operations are accounted for in the<br />

financial statements as set out in Note 1(c) Principles of<br />

consolidation.<br />

Other entities<br />

Investments in other entities are carried at the lower of cost or<br />

recoverable amount.<br />

(m) Lease assets<br />

Finance leases<br />

Finance leases are capitalised. A lease asset and a lease liability<br />

equal to the present value of the minimum lease payments are<br />

recorded at the inception of the lease.<br />

Lease liabilities are reduced by repayments of principal. The<br />

interest components of the lease payments are expensed.<br />

Operating leases<br />

Payments made under operating leases are expensed on a straight<br />

line basis over the term of the lease.<br />

(n) Constructed non–current assets<br />

The cost of non–current assets constructed by the consolidated<br />

entity includes the cost of all materials used in construction, direct<br />

labour on the project and an appropriate proportion of overheads.<br />

(o) Research and development expenditure<br />

Research and development expenditure is expensed as incurred<br />

except to the extent that its recoverability is assured beyond any<br />

reasonable doubt, in which case it is deferred.<br />

(p) Intangible assets<br />

Goodwill<br />

On acquisition of some, or all, of the assets of another entity, the<br />

identifiable net assets acquired are measured at fair value. The<br />

excess of the fair value of the cost of acquisition over the fair value<br />

of the identifiable net assets acquired is brought to account as<br />

goodwill and will be amortised so that it is recognised as an<br />

expense in the statement of financial performance on a straight<br />

line basis over a period of 20 years or the expected useful life.<br />

Licence fees<br />

Costs associated with licence fees are deferred and amortised on a<br />

straight line basis over the period of their expected benefit.<br />

(q) Recoverable amount of non–current assets<br />

Non–current assets are not carried at an amount above their<br />

recoverable amount, and where carrying values exceed their<br />

recoverable amount, assets are written down to their recoverable<br />

amounts. In determining a recoverable amount, the expected net<br />

cash flows have been discounted to their present value using a<br />

market determined risk adjusted discount rate.<br />

(r) Depreciation of property, plant and equipment<br />

Depreciation is provided on a straight line basis for all property,<br />

plant and equipment, other than freehold land, from the date at<br />

which the asset becomes available for use. Depreciation charges<br />

are calculated to allocate cost or valuation, less estimated residual<br />

value at the end of the useful lives of the assets against revenue<br />

over those estimated useful lives.<br />

The depreciation rates used for each class of depreciable assets are:<br />

– buildings 2%<br />

– plant and equipment 5% to 33%.<br />

55


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

1. SUMMARY OF SIGNIFICANT ACCOUNTING<br />

POLICIES (continued )<br />

(s) Employee benefits<br />

Provision is made for long service leave and annual leave estimated<br />

to be payable to employees on the basis of their terms of<br />

employment and statutory requirements. The provision calculations<br />

include all employee related on–costs and are based on total<br />

remuneration packages. This method of calculating provisions<br />

provides a result that is materially correct in accordance with AASB<br />

1028: Employee Benefits.<br />

In respect of the consolidated entity's accumulation fund, any<br />

contributions made to the superannuation funds by entities within<br />

the consolidated entity are charged against profits when due.<br />

(t) Interest bearing liabilities<br />

All loans are measured at the principal amount. Interest is charged<br />

as an expense as it accrues.<br />

(u) Share capital<br />

Ordinary share capital is recognised at the fair value of the<br />

consideration received by <strong>AWB</strong> <strong>Limited</strong>. Any transaction costs<br />

arising on the issue of ordinary shares are recognised directly in<br />

equity as a reduction of the share proceeds received.<br />

(v) Earnings per share<br />

Basic earnings per share is calculated as net profit attributable to<br />

members, adjusted to exclude costs of servicing equity (other than<br />

dividends) and preference share dividends, divided by the weighted<br />

average number of ordinary shares, adjusted for any bonus element.<br />

Diluted earnings per share is calculated as the net profit<br />

attributable to members, adjusted for:<br />

costs of servicing equity (other than dividends) and preference<br />

share dividends;<br />

the after tax effect of dividends and interest associated with<br />

dilutive potential ordinary shares that have been recognised as<br />

expenses; and<br />

other non–discretionary changes in revenues and expenses<br />

during the period that would result from the dilution of potential<br />

ordinary shares divided by the weighted average number of<br />

ordinary shares and dilutive potential ordinary shares, adjusted<br />

for any bonus element.<br />

56


2. REVENUE FROM ORDINARY ACTIVITIES<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

Notes $'000 $'000 $'000 $'000<br />

Revenue from sale of goods<br />

– other corporations 1,628,916 1,065,762 – –<br />

– related party (<strong>AWB</strong> National Pools) 409,720 1,033,154 8,991 206,128<br />

2,038,636 2,098,916 8,991 206,128<br />

Management fee revenue<br />

– related party (<strong>AWB</strong> National Pools) 77,091 68,305 77,091 68,305<br />

– wholly owned group – – 50,877 54,451<br />

77,091 68,305 127,968 122,756<br />

Dividends<br />

– other corporations 4,448 14 354 14<br />

– other related parties – – 208 266<br />

– wholly owned group – – 41,600 62,430<br />

4,448 14 42,162 62,710<br />

Interest<br />

– other persons/corporations 80,571 123,034 1,143 1,023<br />

– related party (<strong>AWB</strong> National Pools) 2,426 8,972 – 40<br />

– wholly owned group – – 32,193 31,638<br />

82,997 132,006 33,336 32,701<br />

Rental income 406 – – –<br />

Proceeds on sale of non–current assets 572 747 22 747<br />

Underwriting fees 4,176 17,328 – –<br />

Other revenue 3,564 2,234 (80) –<br />

Total revenue from ordinary activities 2,211,890 2,319,550 212,399 425,042<br />

Details of related party transactions are included in Note 27(b).<br />

57


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

3. PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE<br />

Profit from ordinary activities before income tax expense includes<br />

the following specific expenses:<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

Notes $'000 $'000 $'000 $'000<br />

Amortisation of non–current assets<br />

– goodwill 2,441 1 – –<br />

– licence fees 26 15 26 15<br />

2,467 16 26 15<br />

Depreciation of non–current assets<br />

– plant and equipment 25,502 13,601 13,972 9,109<br />

– buildings 1,913 866 307 313<br />

27,415 14,467 14,279 9,422<br />

Total depreciation and amortisation expenses 29,882 14,483 14,305 9,437<br />

Write down in value of property plant and equipment to<br />

recoverable amount 7,182 – 7,182 –<br />

Borrowing costs expensed<br />

Interest expense<br />

– wholly owned group – – 901 3,895<br />

– related party (<strong>AWB</strong> National Pools) 10,353 21,987 – –<br />

– other persons/corporations 57,381 73,716 – 1,194<br />

Other borrowing costs<br />

– other persons/corporations 2,771 2,856 349 (203)<br />

Total borrowing costs 70,505 98,559 1,250 4,886<br />

Research and development costs 6,960 7,030 6,960 7,030<br />

Net (gain) / loss on disposal of property, plant and equipment (21) 1,531 23 1,531<br />

Operating lease rental expense 4,777 2,899 1,853 1,940<br />

Employee benefit expenses 72,350 59,065 54,644 56,663<br />

Net expense for movements in provisions:<br />

– employee benefits (330) 1,049 568 1,286<br />

– restructure costs 5,000 – 5,000 –<br />

– counterparty default relating to other financial assets 8,368 – – –<br />

– onerous contracts 1,548 – – –<br />

Net bad and doubtful debts expensed including movements in<br />

provision for doubtful debts 2,769 (3,478) (2,117) (874)<br />

58


4. TAXATION<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

Notes $'000 $'000 $'000 $'000<br />

(a) Income tax expense<br />

The income tax expense for the year differs from the amount<br />

calculated on the profit. The differences are reconciled as follows:<br />

Prima facie income tax expense calculated at 30% on the profit<br />

from ordinary activities 17,672 45,952 19,659 26,976<br />

Tax effect of permanent differences:<br />

Share of net profits from associates (628) (298) – –<br />

Franking credits on dividends received (828) – (12,484) (18,729)<br />

Research and development concessions (656) (737) (656) (737)<br />

Amortisation of intangible assets 732 – – –<br />

Depreciation of buildings 351 193 – –<br />

Foreign tax credits (1,423) (38) (1,100) (38)<br />

Under/(over) provision of previous year (2,535) (744) (2,063) 4,366<br />

Tax rate differential on foreign entities 502 566 – –<br />

Other items (net) 1,570 449 878 129<br />

Income tax expense attributable to profit from ordinary activities 14,757 45,343 4,234 11,967<br />

(b) Deferred tax assets and liabilities<br />

Current tax assets 13,444 – – 9,934<br />

Future income tax benefit 43,044 28,039 6,585 5,853<br />

Current tax payable – 10,422 3,122 –<br />

Provision for deferred income tax – non–current 10,554 19,141 6,125 6,595<br />

This future income tax benefit will only be obtained if:<br />

• future assessable income is derived of a nature and of an amount sufficient to enable the benefit to be realised;<br />

• the conditions for deductibility imposed by tax legislation continue to be complied with; and<br />

• no changes in tax legislation adversely affect the consolidated entity in realising the benefit.<br />

59


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

5. CASH ASSETS<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

Cash at bank and on hand 54,785 69,921 2,328 23,996<br />

Details of significant terms and conditions are included in Note 32(a).<br />

6. RECEIVABLES<br />

Current<br />

Trade debtors<br />

– other persons/corporations 443,872 67,056 86 14<br />

– less provision for doubtful debts (24,293) (3,752) (1) (668)<br />

419,579 63,304 85 (654)<br />

– related party (<strong>AWB</strong> National Pools) 27(b) 162,100 597,064 – –<br />

581,679 660,368 85 (654)<br />

Grower loan receivables 413,236 1,476,681 – – <br />

Finance advances 5,200 – – – <br />

Goods and services tax receivable 904 (8) 2,718 498<br />

Other receivables <br />

– other persons/corporations 5,463 – – – <br />

– wholly owned group 27(b) – – 839,385 733,551<br />

1,006,482 2,137,041 842,188 733,395<br />

Non–current<br />

Other loans<br />

Employee share loan<br />

Subordinated loan<br />

– wholly owned group 27(b)<br />

3,672 3,073 2,216 3,073<br />

2,495 1,012 2,495 1,012<br />

– – 50,000 –<br />

6,167 4,085 54,711 4,085<br />

All amounts are effectively hedged and there are no material currency exposures.<br />

Details of significant terms and conditions are included in Note 32(a).<br />

7. INVENTORIES<br />

Finished goods 191,128 137,067 – –<br />

Provision for diminution in value (5,751) (3,005) – –<br />

185,377 134,062 – –<br />

60


8. OTHER ASSETS<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $’000<br />

Prepayments<br />

Other assets<br />

6,486<br />

5,714<br />

959<br />

2,309<br />

–<br />

185<br />

–<br />

201<br />

12,200 3,268 185 201<br />

9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD<br />

(a) Details of investments in associates held by the consolidated entity<br />

Consolidated<br />

Principal Balance <strong>2003</strong> 2002<br />

Name % activity date $'000 $'000<br />

Arcadian Wool Brokers <strong>Limited</strong><br />

Sydney Wool Brokers <strong>Limited</strong><br />

ACN 093 163 430 Pty Ltd<br />

Wooldumpers Australia Pty Ltd<br />

Five Star Flour Mills Company SAE (FSFM)<br />

Five Star Feed Mills & Animal Production Company SAE<br />

40 Wool handling 30 June 1,714 –<br />

46.7 Wool handling 30 June – –<br />

25 Rural financing 30 June – –<br />

50 Wool handling 30 June 889 –<br />

30 Flour mill 30 June 8,360 12,790<br />

(i) Feed mill. 30 June 1,947 4,168<br />

12,910 16,958<br />

Five Star Flour and Feed Mills are based in Egypt.<br />

(i) <strong>AWB</strong> Group holds 23.7% directly. The other 9% is indirectly held through FSFM.<br />

(b) Share of associates' profit<br />

Profit from ordinary activities before income tax expense 2,248 993<br />

Income tax expense relating to ordinary activities (151) –<br />

2,097 993<br />

(c) Movement in carrying amount of investments<br />

Carrying amount of investments in associates at the beginning of the year 16,958 12,961<br />

Investments in associates acquired during the year 2,134 3,228<br />

Dividends received from associates (156) (224)<br />

Share of net profits of associates' for the financial year 2,097 993<br />

Share of decrement in associates' revaluation reserve for the financial year (8,123) –<br />

Carrying amount of investments in associates at the end of the year 12,910 16,958<br />

(d) Share of assets and liabilities<br />

Current assets 16,289 15,788<br />

Non–current assets 33,655 20,700<br />

Non–current assets under construction – 4,168<br />

Current liabilities (18,299) (16,106)<br />

Non–current liabilities (18,735) (7,364)<br />

Net assets 12,910 17,186<br />

61


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

9. INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (continued)<br />

Consolidated<br />

Notes <strong>2003</strong> 2002<br />

$'000 $'000<br />

(e) Retained profits of the consolidated entity attributable to associates<br />

Balance at beginning of the year 5,977 5,208<br />

Share of net profits of associates 2,097 993<br />

less share of associates' dividends (156) (224)<br />

Balance at the end of the year 7,918 5,977<br />

(f) Reserves of the consolidated entity attributable to associates<br />

Balance at the beginning of the year (1,578) (545)<br />

Share of associates' reserves (6,545) (1,033)<br />

Balance at the end of the year (8,123) (1,578)<br />

10. INTERESTS IN JOINT VENTURE OPERATIONS<br />

<strong>AWB</strong> <strong>Limited</strong> holds a 50% (2002: 50%) interest in a joint venture operation, Australian Independent Commodity Handlers (AICH). AICH<br />

manages a storage and handling facility known as the Melbourne Port Terminal. The role of <strong>AWB</strong> <strong>Limited</strong> in this joint venture is one of<br />

administration and part financing for the facility. <strong>AWB</strong> <strong>Limited</strong> does not participate in the operation of the facility.<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002<br />

$'000 $'000<br />

Net assets employed in the joint venture operation are included in the<br />

financial statements as follows:<br />

Property, plant and equipment 16,071 16,955<br />

<strong>AWB</strong> <strong>Limited</strong> also holds interests in the following research and development joint venture operations, for which no assets are employed.<br />

Name Principal activity Interest<br />

LongReach Plant Breeders Management Pty Ltd To undertake research projects with the aim of 50%<br />

breeding and developing new proprietary varieties.<br />

The current research project aim is to breed, develop<br />

and commercialise varieties of feed wheat with<br />

improved nutrition, agronomic performance and<br />

resistance to plant diseases that are well adapted<br />

to specified growing areas in Australia.<br />

Stored Grain Research Laboratory To undertake the funding, management and 14.3%<br />

commercialisation of outputs of the Stored Grain<br />

Research Laboratory.<br />

Graingene Agreement To generate intellectual property and germplasm. 33.3%<br />

Capital expenditure commitments and contingent liabilities in respect of the joint venture operations are disclosed in Notes 29 and 30<br />

respectively.<br />

62


11. OTHER FINANCIAL ASSETS<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

Current<br />

Short term deposits 36,005 10,718 – –<br />

Financial assets 31,814 51,880 – 2,488<br />

Provision for counterparty risk (8,368) – – –<br />

59,451 62,598 – 2,488<br />

Non–current assets<br />

Shares<br />

Controlled entities 34(a) – – 21,757 19,355<br />

Other companies<br />

– listed 130,889 8,251 – 5<br />

– unlisted 5,862 5,719 15,691 16,699<br />

Memberships 1,315 449 1,315 449<br />

138,066 14,419 38,763 36,508<br />

12. INTANGIBLE ASSETS<br />

Goodwill<br />

At cost 586,134 29 – –<br />

Accumulated amortisation (2,737) (4) – –<br />

583,397 25 – –<br />

Licence fees<br />

At cost 217 166 212 137<br />

Accumulated amortisation (40) (23) (40) (23)<br />

177 143 172 114<br />

583,574 168 172 114<br />

63


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

13. PROPERTY, PLANT AND EQUIPMENT<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

Freehold land – at cost 16,337 6,180 2,924 2,924<br />

Buildings on freehold land<br />

– at cost 54,401 19,576 8,809 8,568<br />

– accumulated depreciation (7,800) (1,285) (898) (591)<br />

46,601 18,291 7,911 7,977<br />

Leasehold improvements<br />

– at cost 11,715 364 433 272<br />

– accumulated amortisation (5,237) (182) (306) (181)<br />

6,478 182 127 91<br />

Total land and buildings 69,416 24,653 10,962 10,992<br />

Plant and equipment<br />

– at cost 321,568 165,560 70,021 61,586<br />

– accumulated depreciation (90,541) (19,694) (26,066) (13,767)<br />

Total plant and equipment 231,027 145,866 43,955 47,819<br />

Total property, plant and equipment 404,021 191,680 82,187 73,350<br />

Total accumulated depreciation and amortisation (103,578) (21,161) (27,270) (14,539)<br />

Total property, plant and equipment at net book value 300,443 170,519 54,917 58,811<br />

Reconciliations<br />

Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below:<br />

Freehold<br />

Leasehold<br />

land Buildings improvements<br />

$'000 $'000 $'000<br />

Plant and<br />

equipment<br />

$'000<br />

Total<br />

$'000<br />

Consolidated – <strong>2003</strong><br />

Carrying amount at the beginning of the year 6,180<br />

Acquisitions through entity acquired 6,280<br />

Additions 3,992<br />

Disposals (115)<br />

Recoverable amount write down –<br />

Depreciation/amortisation expense –<br />

Net foreign currency difference on translation of self sustaining<br />

foreign operations –<br />

Carrying amount at the end of the year 16,337<br />

18,291 182 145,866 170,519<br />

10,370 6,148 49,141 71,939<br />

20,095 430 68,650 93,167<br />

(242) (11) (184) (552)<br />

– – (7,182) (7,182)<br />

(1,913) (258) (25,244) (27,415)<br />

– (13) (20) (33)<br />

46,601 6,478 231,027 300,443<br />

Consolidated – 2002<br />

Carrying amount at the beginning of the year 4,737 12,010 171 88,616 105,534<br />

Additions 1,461 7,209 109 72,961 81,740<br />

Disposals (18) (62) – (2,208) (2,288)<br />

Depreciation/amortisation expense – (866) (98) (13,503) (14,467)<br />

Carrying amount at the end of the year 6,180 18,291 182 145,866 170,519<br />

64


13. PROPERTY, PLANT AND EQUIPMENT (continued)<br />

Freehold<br />

land<br />

$'000<br />

Parent entity – <strong>2003</strong><br />

Carrying amount at the beginning of the year 2,924<br />

Additions –<br />

Disposals –<br />

Recoverable amount write down –<br />

Depreciation/amortisation expense –<br />

Leasehold<br />

Buildings improvements<br />

$'000 $'000<br />

Plant and<br />

equipment<br />

$'000<br />

Total<br />

$'000<br />

7,977 91 47,819 58,811<br />

241 161 17,210 17,612<br />

– – (45) (45)<br />

– – (7,182) (7,182)<br />

(307) (125) (13,847) (14,279)<br />

Carrying amount at the end of the year 2,924 7,911 127 43,955 54,917<br />

Parent entity – 2002<br />

Carrying amount at the beginning of the year<br />

Additions<br />

Disposals<br />

Depreciation/amortisation expense<br />

Carrying amount at the end of the year<br />

2,942 8,177 171 30,715 42,005<br />

– 175 17 28,324 28,516<br />

(18) (62) – (2,208) (2,288)<br />

– (313) (97) (9,012) (9,422)<br />

2,924 7,977 91 47,819 58,811<br />

14. PAYABLES<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

Trade creditors<br />

Other creditors<br />

183,907<br />

152,159<br />

51,167<br />

71,514<br />

18,959<br />

27,921<br />

41,353<br />

35,574<br />

Australian dollar equivalents of amounts payable in foreign currencies are all effectively hedged.<br />

336,066 122,681 46,880 76,927<br />

15. INTEREST BEARING LIABILITIES<br />

Current<br />

Interest bearing deposits 282,247 – – –<br />

Bank loans 69,965 1,086,779 – –<br />

Loans<br />

– related party (<strong>AWB</strong> National Pools) 27(b) 315,795 550,739 9,752 5,961<br />

668,007 1,637,518 9,752 5,961<br />

Non–current – unsecured<br />

Bank loans 391,800 – – –<br />

Interest bearing deposits 3,077 – – –<br />

Details of significant terms and conditions are included in Note 32(a).<br />

394,877 – – –<br />

65


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

15. INTEREST BEARING LIABILITIES (continued)<br />

Financing arrangements<br />

The consolidated entity has access to the following lines of credit:<br />

Consolidated<br />

Committed credit facilities<br />

<strong>2003</strong> 2002<br />

FACILITY LIMIT<br />

FACILITY LIMIT<br />

Facility Balance Facility Balance<br />

currency undrawn currency undrawn<br />

Currency $'000 A$'000 A$'000 $'000 A$'000 A$'000<br />

Bank overdraft AUD 10,000 10,000 10,000 10,000 10,000 10,000<br />

Liquidity support AUD 250,000 250,000 250,000 850,000 850,000 850,000<br />

Multi option facility – guarantee AUD 310,000 310,000 – – – –<br />

Multi option facility – loan AUD 640,000 640,000 248,200 – – –<br />

1,210,000 508,200 860,000 860,000<br />

Uncommitted credit facilities<br />

Bank overdraft USD 20,000 29,590 29,590 20,000 36,751 36,751<br />

US commercial paper USD 1,500,000 2,219,263 2,219,263 1,500,000 2,756,340 1,979,603<br />

Domestic commercial paper AUD 2,000,000 2,000,000 2,000,000 2,000,000 2,000,000 1,995,000<br />

Euro commercial paper USD 1,500,000 2,219,263 2,219,263 1,500,000 2,756,340 2,489,893<br />

6,468,116 6,468,116 7,549,431 6,501,247<br />

Total facilities 7,678,116 6,976,316 8,409,431 7,361,247<br />

Note: The multi option facility is inclusive of a guarantee facility. At 30 September <strong>2003</strong>, the guarantee facility was fully utilised, with a<br />

drawing of AUD310 million.<br />

66


16. PROVISIONS<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

Current<br />

Employee benefits<br />

Litigation<br />

Surplus leased premises and restoration<br />

Onerous contracts<br />

31 26,669<br />

5,200<br />

6,915<br />

1,548<br />

7,288<br />

2,900<br />

–<br />

–<br />

6,750<br />

2,900<br />

–<br />

–<br />

6,390<br />

2,900<br />

–<br />

–<br />

Restructure 10,317 – 5,000 –<br />

Dividends – 30,075 – 30,075<br />

50,649 40,264 14,650 39,365<br />

Non–current<br />

Employee benefits 31 1,721 1,513 1,721 1,513<br />

Consolidated <strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> <strong>2003</strong><br />

$'000 $'000<br />

Reconciliations<br />

Reconciliations of the carrying amounts of litigation, restructure and dividend provisions are set out below:<br />

Litigation<br />

Carrying amount at the beginning of the year 2,900 2,900<br />

Increase through acquisition of entity 2,300 –<br />

Decrease from favourable foreign currency movements (423) (423)<br />

Resolutions made during the year (334) (334)<br />

Provision made during the year 757 757<br />

Carrying amount at the end of the year 5,200 2,900<br />

Restructure<br />

Carrying amount at the beginning of the year – –<br />

Provision made during the year 5,000 5,000<br />

Increase through acquisition of entity 5,317 –<br />

Carrying amount at the end of the year 10,317 5,000<br />

Dividend<br />

Carrying amount at the beginning of the year 30,075 30,075<br />

Provision made during the year 38,369 38,369<br />

Payment made during the year (68,444) (68,444)<br />

Carrying amount at the beginning of the year – –<br />

17. OTHER LIABILITIES<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

Current<br />

Financial liabilities 8,907 – – –<br />

Unearned income 9,458 120 1,001 –<br />

Deferred gains – hedging contracts 3,684 19,956 – –<br />

22,049 20,076 1,001 –<br />

67


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

18. CONTRIBUTED EQUITY<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

(a) Issued and paid up capital<br />

Ordinary shares fully paid 848,958 700,312 848,958 700,312<br />

<strong>2003</strong> 2002<br />

Number of $'000 Number of $'000<br />

(b) Movements in ordinary share capital shares shares<br />

Movements in B class share capital during the period were as follows:<br />

Balance at the beginning of the year 273,408,454 700,312 273,306,320 700,836<br />

Issued during the year<br />

– institutional placement <strong>2003</strong>: $3.70 per share 41,100,000 152,070 – –<br />

– employee share plan: nil per share 31 116,078 – 102,134 –<br />

– equity share plan: nil per share 31 51,034 – – –<br />

– employee share offer <strong>2003</strong>: $3.90 per share 31 486,418 1,897 – –<br />

– less transaction costs – (5,321) – (524)<br />

Balance at the end of the year 315,161,984 848,958 273,408,454 700,312<br />

<strong>AWB</strong> <strong>Limited</strong>'s corporate structure consists of A class and B class shares. A class shares can only be owned by current wheat growers<br />

and specifically exclude dividends. However, they confer on A class shareholders a number of rights, including the ability to elect the<br />

majority of the board of directors. In contrast, B class shares can be owned by either wheat growers or non–wheat growers. B class<br />

shares carry rights to receive dividends and the right to elect a minority of the board of directors.<br />

19. RESERVES AND RETAINED PROFITS<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

(a) Reserves<br />

Underwriting loss reserve 15,000 15,000 15,000 15,000<br />

Legal reserve 65 65 – –<br />

Foreign currency translation reserve (13,348) (373) – –<br />

Movement in foreign currency translation reserve:<br />

1,717 14,692 15,000 15,000<br />

Balance at the beginning of the year (373) (37) – –<br />

Net translation adjustment (12,975) (336) – –<br />

Balance at the end of the year (13,348) (373) – –<br />

(b) Retained profits<br />

Balance at the beginning of the year 72,815 33,978 29,712 20,115<br />

Net profit attributable to members of <strong>AWB</strong> <strong>Limited</strong> 43,891 107,192 61,297 77,952<br />

Dividend provided for or paid 22 (38,369) (68,355) (38,369) (68,355)<br />

Balance at the end of the year 78,337 72,815 52,640 29,712<br />

68


20. OUTSIDE EQUITY INTERESTS<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

Outside equity interests in controlled entities comprise:<br />

Interests in retained profits at the beginning of the financial<br />

year adjusted for outside equity interests in entities acquired<br />

during the financial year 2,984 964 – –<br />

Interests in profit from ordinary activities after income tax 259 637 – –<br />

Interests in dividends paid (91) – – –<br />

Interests in retained profits at the end of the financial year 3,152 1,601 – –<br />

Interests in share capital 185 185 – –<br />

Interests in reserves (329) (142) – –<br />

Total outside equity interests 3,008 1,644 – –<br />

21. TOTAL EQUITY RECONCILIATION<br />

Balance at the beginning of the year 789,463 751,019 745,024 735,951<br />

Total changes in equity recognised in the statement of<br />

financial performance 30,916 106,856 61,297 77,952<br />

Transactions with owners as owners:<br />

Contributions of equity, net of transaction costs 18(b) 148,646 (524) 148,646 (524)<br />

Dividend provided for or paid 22 (38,369) (68,355) (38,369) (68,355)<br />

Total changes in outside equity interests 20 1,364 467 – –<br />

Balance at the end of the year 932,020 789,463 916,598 745,024<br />

22. DIVIDENDS<br />

Dividends recognised in the current year by <strong>AWB</strong> <strong>Limited</strong> are as follows. All dividends are fully franked:<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002<br />

$'000 $'000<br />

Dividend proposed<br />

– Final: (2002: 11 cents per share) – 30,075<br />

Dividends paid during the year<br />

– Interim: (14 cents per share) (2002: 14 cents) 38,369 38,280<br />

38,369 68,355<br />

– Final: (11 cents per share) (2002: 8 cents) 30,075 21,865<br />

Subsequent events<br />

On 26 November <strong>2003</strong>, the directors declared a final dividend of 11 cents per share resulting in a dividend payable of $35.97 million.<br />

The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 September <strong>2003</strong><br />

and will be recognised in subsequent reports.<br />

Franking credit balance<br />

30% franking credits available to shareholders of <strong>AWB</strong> <strong>Limited</strong> for subsequent financial years 26,476 17,667<br />

Notional fully franked dividend based on available franking credits 61,777 41,223<br />

The above available amounts are based on the balance of the dividend franking account at year end adjusted for:<br />

(a) franking credits that will arise from the payment of the current tax liability;<br />

(b) franking debits that will arise from the payment of dividends recognised as a liability at the year end;<br />

(c) franking credits that will arise from the receipt of dividends recognised as receivables at the year end; and<br />

(d) franking credits that the entity may be prevented from distributing in subsequent years.<br />

The ability to use the franking credits is dependent upon there being sufficient available profits to declare dividends.<br />

69


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

22. DIVIDENDS (continued)<br />

Change in measurement of dividend franking account<br />

In accordance with the New Business Tax System (Imputation) Act 2002, the measurement basis of the dividend franking account<br />

changed on 1 July 2002 from an after tax profits basis to an income tax paid basis.<br />

The amount of franking credits available to shareholders has been measured under the new legislation and represents income tax paid<br />

amounts available to frank distributions. Comparative information has been restated for this change in measurement.<br />

The change in the basis of measurement does not change the underlying value of franking credits or tax offsets available to shareholders<br />

from the dividend franking account.<br />

23. NOTES TO THE STATEMENT OF CASH FLOWS<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

(a) Reconciliation of net profit from ordinary activities after income<br />

tax expense to the net cash flows from operations<br />

Profit from ordinary activities after income tax 44,150 107,829 61,297 77,952<br />

Add/(less) non–cash items:<br />

Net loss/(gain) on disposal of property, plant and equipment (21) 1,531 23 1,531<br />

Depreciation 27,415 14,467 14,279 9,422<br />

Amortisation 2,467 16 26 15<br />

Share of profits of associates' net of dividends received (1,941) (764) – –<br />

Write down in the value of property plant and equipment to<br />

recoverable amount 7,182 – 7,182 –<br />

Increase/(decrease) in income tax payable (26,518) (6,350) 13,056 (13,459)<br />

Increase/(decrease) in deferred income tax liability (11,388) (8,092) (470) (2,125)<br />

Decrease/(increase) future income tax benefit (1,678) (7,718) (732) 5,150<br />

Changes in assets and liabilities adjusted for the effects of<br />

purchasing a controlled entity during the financial year:<br />

Trade receivables 342,716 (237,475) – (90,118)<br />

Grower loan receivables 1,063,445 (360,730) – –<br />

Inventories 66,914 9,622 – –<br />

Prepayments and other debtors 5,354 8,555 873 2,406<br />

Trade and other creditors 20,323 (72,939) (26,495) (23,059)<br />

Provisions 5,874 549 5,568 786<br />

Net cash flow from/(used in) operating activities 1,544,294 (551,499) 74,607 (31,499)<br />

(b) Reconciliation of cash<br />

Cash balance comprises:<br />

– cash at bank and on hand 25,066 39,335 2,328 23,996<br />

– cash on deposit 29,719 30,586 – –<br />

Closing cash balance 54,785 69,921 2,328 23,996<br />

70


24. REMUNERATION OF DIRECTORS<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$ $ $ $<br />

Total income paid or payable, or otherwise made available, to all<br />

directors of the <strong>AWB</strong> <strong>Limited</strong> and controlled entities from<br />

<strong>AWB</strong> <strong>Limited</strong> or any related party:<br />

3,349,407 2,599,042 1,609,272 1,807,123<br />

The number of directors of <strong>AWB</strong> <strong>Limited</strong> whose income (including superannuation contributions) falls within the following bands is:<br />

Number<br />

<strong>2003</strong> 2002<br />

$30,000 – $39,999 6 –<br />

$50,000 – $59,999 – 7<br />

$60,000 – $69,999 7 3<br />

$120,000 – $129,999 – 1<br />

$140,000 – $149,999 – 1<br />

$160,000 – $169,999 1 –<br />

$810,000 – $819,999 1 –<br />

$970,000 – $979,999 – 1<br />

15 13<br />

25. REMUNERATION OF EXECUTIVES<br />

Consolidated<br />

<strong>2003</strong> 2002<br />

$ $<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002<br />

$ $<br />

Remuneration received or due and receivable by executive officers of the<br />

consolidated entity whose remuneration is $100,000 or more, from<br />

<strong>AWB</strong> <strong>Limited</strong> or any related party, in connection with the management of the<br />

affairs of <strong>AWB</strong> <strong>Limited</strong> or any related party, whether as an executive<br />

officer or otherwise:<br />

4,658,085 4,009,967 4,658,085 4,009,967<br />

The number of executives of the consolidated entity and <strong>AWB</strong> <strong>Limited</strong><br />

whose remuneration falls within the following bands:<br />

Number<br />

Number<br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$240,000 – $249,999 1 – 1 –<br />

$260,000 – $269,999 – 1 – 1<br />

$350,000 – $359,999 1 – 1 –<br />

$370,000 – $379,999 – 1 – 1<br />

$380,000 – $389,999 1 – 1 –<br />

$420,000 – $429,999 1 – 1 –<br />

$430,000 – $439,999 1 1 1 1<br />

$440,000 – $449,999 – 3 – 3<br />

$450,000 – $459,999 1 – 1 –<br />

$480,000 – $480,999 1 – 1 –<br />

$510,000 – $519,999 1 – 1 –<br />

$550,000 – $559,999 1 – 1 –<br />

$630,000 – $639,999 – 1 – 1<br />

$810,000 – $819,999 1 – 1 –<br />

$970,000 – $979,999 – 1 – 1<br />

10 8 10 8<br />

For the purposes of Australian Accounting Standard AASB 1034: Financial <strong>Report</strong> Presentation and Disclosures, the company has<br />

interpreted executive officers as being those persons who are members of the Executive Leadership Group which determines the<br />

operational and strategic direction of the <strong>AWB</strong> Group.<br />

71


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

26. AUDITORS' REMUNERATION<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$ $ $ $<br />

Amounts received or due and receivable by the auditors of the company for:<br />

Audit services 679,805 491,000 260,000 260,000 <br />

Other services <br />

– internal audit services 23,000 174,201 23,000 174,201<br />

– other services 49,895 32,500 15,495 32,500<br />

752,700 697,701 298,495 466,701<br />

Internal audit services were outsourced to Andersen in 2002. The amount disclosed in this Note comprises payments made subsequent<br />

to the merger of Andersen with Ernst & Young.<br />

27. RELATED PARTY DISCLOSURES<br />

(a) The directors of <strong>AWB</strong> <strong>Limited</strong> at any time during the financial year are as follows:<br />

– Brendan Stewart (Chairman)<br />

– Robert Barry (Deputy Chairman)<br />

– Andrew Lindberg (Managing Director)<br />

– Ian Cush (not re–elected at <strong>2003</strong> <strong>Annual</strong> General Meeting)<br />

– Brendan Fitzgerald (elected at <strong>2003</strong> <strong>Annual</strong> General Meeting)<br />

– Laurie Marshall<br />

– Xavier Martin (elected at <strong>2003</strong> <strong>Annual</strong> General Meeting)<br />

– Warrick McClelland<br />

– Christopher Moffet<br />

– Peter Polson (appointed 31 March <strong>2003</strong>)<br />

– Kerry Sanderson<br />

– Brenda Shanahan (resigned 31 March <strong>2003</strong>)<br />

– Michael Shanahan (not re–elected at <strong>2003</strong> <strong>Annual</strong> General Meeting)<br />

– John Simpson<br />

– John Thame.<br />

(b) The following related party transactions occurred during the period:<br />

Borrowing costs expensed<br />

– wholly owned group – – 901 3,895<br />

– related party (<strong>AWB</strong> National Pools) 10,353 21,987 – –<br />

Revenue from sale of goods<br />

– related party (<strong>AWB</strong> National Pools) 409,720 1,033,154 8,991 206,128<br />

Management fee revenue<br />

– wholly owned group – – 50,877 54,451<br />

– related party (<strong>AWB</strong> National Pools) 77,091 68,305 77,091 68,305<br />

Dividends<br />

– wholly owned group – – 41,600 62,430<br />

– other subsidiaries – – 53 42<br />

– associates – – 155 224<br />

Interest revenue<br />

– wholly owned group – – 32,193 31,638<br />

– related party (<strong>AWB</strong> National Pools) 2,426 8,932 – –<br />

– associates – 40 – 40<br />

72


27. RELATED PARTY DISCLOSURES (continued)<br />

(b) The following related party transactions occurred during the period (continued):<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

Loans advanced to / receivable from:<br />

– wholly owned group – – 839,385 733,551<br />

– related party (<strong>AWB</strong> National Pools) 162,100 597,064 – –<br />

Non–current advanced to / receivable from:<br />

– wholly owned group – subordinated loan – – 50,000 –<br />

Loans advanced from / payable to:<br />

– related party (<strong>AWB</strong> National Pools) 315,795 550,739 9,752 5,961<br />

Terms and conditions<br />

Interest is charged or credited on amounts with <strong>AWB</strong> <strong>Limited</strong> at prevailing commercial interest rates. All other transactions within the <strong>AWB</strong><br />

<strong>Limited</strong> consolidated entity are based on actual amounts incurred or received and are conducted on commercial terms and conditions.<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$ $ $ $<br />

(c) Transactions with the directors of <strong>AWB</strong> <strong>Limited</strong> and the consolidated entity<br />

The remuneration of directors is set out in Note 24.<br />

Harvest payment loans made to directors 578,808 1,353,919 – – <br />

(d) Transactions with director related entities<br />

Purchases<br />

Messrs Barry, Moffet, Cush, Gibson, Marshall, McClelland, Donges,<br />

Simpson, M. Shanahan, Stewart (2002 only) 4,195,914 4,912,400 – – <br />

The above transactions were conducted with director related entities under normal commercial terms with conditions no more favourable<br />

than those available to other suppliers and customers.<br />

Mrs Kerry Sanderson is Chief Executive and General Manager of Fremantle Ports Authority in Western Australia. A major portion of the<br />

Western Australian harvest was shipped through the Port of Fremantle. All transactions with this Authority were in the ordinary course of<br />

business on normal commercial terms and conditions.<br />

(e) <strong>AWB</strong> <strong>Limited</strong> is the ultimate parent entity.<br />

(f) Equity instruments of directors<br />

The interests of directors of the reporting entity and their director related entities in shares of entities within the consolidated entity at year<br />

end are set out below:<br />

<strong>2003</strong> 2002<br />

Director <strong>AWB</strong> <strong>Limited</strong> <strong>AWB</strong> <strong>Limited</strong><br />

A class B class A class B class<br />

Brendan Stewart 1 15,425 1 15,425<br />

Robert Barry 1 40,579 1 40,579<br />

Andrew Lindberg – 71,574 – 70,000<br />

Ian Cush 1 86,591 1 86,591<br />

Brendan Fitzgerald 1 12,000 – –<br />

Laurie Marshall 1 16,090 1 16,090<br />

Xavier Martin 1 70,695 – –<br />

Warrick McClelland 1 68,035 1 68,035<br />

Christopher Moffet 1 100,577 1 100,577<br />

Peter Polson – – – –<br />

Kerry Sanderson – 5,000 – 5,000<br />

Brenda Shanahan – – – –<br />

Michael Shanahan 1 4,823 1 4,823<br />

John Simpson 1 99,672 1 99,672<br />

John Thame – 5,000 – 5,000<br />

10 596,061 8 511,792<br />

(e) All financial benefits provided by <strong>AWB</strong> <strong>Limited</strong> or its controlled entities to related parties (other than benefits approved at a general<br />

meeting) were provided on arm's length terms. Transactions relating to shares and options of <strong>AWB</strong> <strong>Limited</strong>, including the payment and<br />

receipt of dividends, were on the same basis as similar transactions with other shareholders.<br />

73


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

28. SEGMENT INFORMATION<br />

Business segments<br />

Intersegment pricing is determined on an arm's length basis. Segment results, assets and liabilities include items directly attributable to a<br />

segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total cost incurred during the<br />

period to acquire segment assets that are expected to be used for more than one period.<br />

The consolidated entity comprises the following main business segments, based on the consolidated entity’s management reporting system:<br />

Finance & Risk Pool Rural Grain Supply Chain<br />

Management Management Services Acquisition Grain & Other Other/ Intersegment<br />

Products Services (Landmark) & Trading Technology Investments Corporate eliminations Consolidated<br />

2002 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000<br />

Revenue<br />

External segment revenue 276,389 77,091 118,592 1,500,731 5,463 229,794 3,830 – 2,211,890<br />

Intersegment revenue 60,443 – 667 311,250 9,139 3,639 60,728 (445,866) –<br />

Total consolidated revenue 336,832 77,091 119,259 1,811,981 14,602 233,433 64,558 (445,866) 2,211,890<br />

Results<br />

Consolidated entity profit from<br />

ordinary activities before<br />

income tax expense 64,148 23,331 5,045 8,525 (5,792) (4,244) (32,106) – 58,907<br />

Income tax expense (14,757)<br />

Net profit attributable to<br />

outside equity interests – – (14) – – (245) – – (259)<br />

Net profit attributable to members of <strong>AWB</strong> <strong>Limited</strong> 43,891<br />

Assets<br />

Segment assets 1,313,329 – 635,269 344,225 10,439 213,186 1,565,062 (1,722,055) 2,359,455<br />

Unallocated corporate assets 56,488<br />

Total assets 2,415,943<br />

Liabilities<br />

Segment liabilities 1,034,131 – 518,332 329,420 10,601 206,891 126,960 (752,966) 1,473,369<br />

Unallocated corporate liabilities 10,554<br />

Total liabilities 1,483,923<br />

Other segment information<br />

Equity method investments<br />

included in segment assets – – 2,603 – – 10,307 – – 12,910<br />

Acquisition of<br />

non–current assets 3,216 – – 301 – 72,038 17,612 – 93,167<br />

Depreciation & amortisation – – 1,468 77 – 11,600 16,737 – 29,882<br />

Non–cash expenses other<br />

than depreciation & amortisation – – – 2,769 – 9,915 11,852 – 24,536<br />

Geographical segments<br />

<strong>AWB</strong> <strong>Limited</strong> and its controlled entities operate predominantly in one geographical segment, being Australia.<br />

74


28. SEGMENT INFORMATION (continued)<br />

Finance & Risk Pool Grain Supply Chain<br />

Management Management Acquisition Grain & Other Other/ Intersegment<br />

Products Services & Trading Technology Investments Corporate eliminations Consolidated<br />

2002 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000<br />

Revenue<br />

External segment revenue 349,712 68,305 1,545,065 8,114 320,937 21,254 6,163 2,319,550<br />

Intersegment revenue 48,649 – 2,736 6,548 2,072 62,870 (122,875) –<br />

Total consolidated revenue 398,361 68,305 1,547,801 14,662 323,009 84,124 (116,712) 2,319,550<br />

Results<br />

Consolidated entity profit from<br />

ordinary activities before<br />

income tax expense<br />

Income tax expense<br />

88,450 17,350 49,239 (3,660) 26,815 (25,022) – 153,172<br />

(45,343)<br />

Net profit attributable to<br />

outside equity interests – – – – (637) – – (637)<br />

Net profit attributable to members of <strong>AWB</strong> <strong>Limited</strong> 107,192<br />

Assets<br />

Segment assets 2,799,136 – 1,132,941 10,450 164,733 695,756 (2,189,977)<br />

2,613,039<br />

Unallocated corporate assets<br />

28,039<br />

Total assets 2,641,078<br />

Liabilities<br />

Segment liabilities 2,712,485 – 1,084,899 2,089 118,255 63,915 (2,159,591) 1,822,052<br />

Unallocated corporate liabilities 29,563<br />

Total liabilities 1,851,615<br />

Other segment information:<br />

Equity method investments<br />

included in segment assets – – – – 16,958 – – 16,958<br />

Acquisition of non–current assets – – 238 769 52,988 27,745 – 81,740<br />

Depreciation & amortisation – – 4 406 5,046 9,027 – 14,483<br />

Non–cash expenses other<br />

than depreciation & amortisation – – 1,308 82 – 2,485 – 3,875<br />

Geographical segments<br />

<strong>AWB</strong> <strong>Limited</strong> and its controlled entities operate predominantly in one geographical segment, being Australia.<br />

75


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

29. EXPENDITURE COMMITMENTS<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

At 30 September, the consolidated entity had contracted for<br />

but not provided in the financial report:<br />

(i) Grain sales<br />

Contracts for the sale of grain not later than one year but subject<br />

to variation of +/–10% outturn tolerance 50,045 71,559 – –<br />

(ii) Grain purchases<br />

Contracts for the purchase of grain not later than one year subject<br />

to variation for quality characteristics 47,593 76,419 – –<br />

(a) Capital expenditure commitments<br />

Estimated capital expenditure contracted for at balance date<br />

but not provided for:<br />

– payable not later than one year<br />

– joint venture operations 3,514 3,660 3,514 3,660<br />

– other 17,101 32,736 – –<br />

– payable later than one year but not later than five years<br />

– joint venture operations 9,283 11,760 9,283 11,760<br />

29,898 48,156 12,797 15,420<br />

(b) Lease expenditure commitments<br />

Operating leases (non–cancellable)<br />

– payable not later than one year 3,997 2,387 2,863 917<br />

– payable later than one year but not later than five years 17,624 2,875 16,935 1,298<br />

– payable later than five years 26,590 – 26,565 –<br />

48,211 5,262 46,363 2,215<br />

These lease commitments represent payments due for the head office, regional and overseas offices and motor vehicles under operating<br />

leases. The head office lease is for 12 years commencing in the 2004 financial year. The remaining operating leases have an average<br />

lease term of three years.<br />

Lease payments comprise a base amount plus an incremental contingent rental. Contingent rentals are based on the contract terms.<br />

(c) Other expenditure commitments<br />

– Payable not later than one year<br />

– Payable later than one year but not later than five years<br />

600<br />

–<br />

1,400<br />

–<br />

600<br />

–<br />

1,400<br />

–<br />

600 1,400 600 1,400<br />

30. CONTINGENT LIABILITIES<br />

Litigation claims<br />

Several claims for damages and costs were lodged against <strong>AWB</strong><br />

<strong>Limited</strong> and its controlled entities which denied liability and<br />

defended the claims. The maximum damages/costs claimed<br />

but not otherwise recognised in the statement of financial<br />

position were estimated to amount to:<br />

Consolidated<br />

<strong>2003</strong> 2002<br />

$'000 $'000<br />

4,393<br />

–<br />

76


31. EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTS<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Notes <strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

Employee benefits $'000 $'000 $'000 $'000<br />

The aggregate employee benefits liability is comprised of:<br />

– Provisions 28,390 8,801 8,471 7,903<br />

Number<br />

Number<br />

Number of full time equivalent employees at the end of the year 2,778 573 593 556<br />

Employee share offer<br />

An employee share offer was made to employees of <strong>AWB</strong> <strong>Limited</strong><br />

who were eligible employees as at December 2002. <strong>AWB</strong> <strong>Limited</strong><br />

offered eligible employees an interest free loan (fully repayable at<br />

the end of five years or upon resignation). 222 permanent<br />

employees participated in this offer with 486,418 shares being<br />

allocated, with a value of $1,897,030.<br />

Employee share plan<br />

In December 2002, a second offer was made under the employee<br />

share plan which was established in 2002, where all permanent<br />

employees (other than selected senior executives who may<br />

participate in the performance rights plan) of the consolidated<br />

entity were entitled to be issued with B class shares in <strong>AWB</strong><br />

<strong>Limited</strong>. Each permanent employee who participated received<br />

shares to the value of $1,000 (based on market value at issue<br />

date). Shares were provided under the scheme to a total of 446<br />

employees. The shares were issued for nil consideration in<br />

accordance with the performance guidelines established by the<br />

directors of <strong>AWB</strong> <strong>Limited</strong>. The shares are quoted on the Australian<br />

Stock Exchange (ASX).<br />

During the year, a total of 116,078 (2002: 102,134) B class<br />

shares were issued to employees under the plan. The total market<br />

value of the shares at the date of issue was $456,187. It is the<br />

policy of <strong>AWB</strong> not to charge the value of the shares issued as an<br />

employee benefits expense. In accordance with this policy, no<br />

amounts have been recognised in respect of the share issue during<br />

the year.<br />

Superannuation commitments<br />

All employees are able to choose where their superannuation<br />

contributions are directed, in line with <strong>AWB</strong> Packaging Policy and<br />

Australian Taxation Office rules. <strong>AWB</strong> <strong>Limited</strong> also offers a default<br />

fund, <strong>AWB</strong> Staff Superannuation Plan, which is a subset of the<br />

Mercer Retirement Trust for all other employees. As all schemes<br />

are accumulation schemes, <strong>AWB</strong> <strong>Limited</strong> has no future<br />

superannuation liabilities to report.<br />

Performance rights plan<br />

A performance rights plan exists, whereby selected senior<br />

employees of the consolidated entity are given the opportunity to<br />

acquire rights over unissued B class shares in <strong>AWB</strong> <strong>Limited</strong> by<br />

participating in the plan.<br />

Each performance right is over one unissued B class share in <strong>AWB</strong><br />

<strong>Limited</strong>. The performance rights are issued at no cost and become<br />

exercisable depending on the performance of <strong>AWB</strong> <strong>Limited</strong> (based<br />

on total shareholder return) relative to the performance of the<br />

S&P/ASX200.<br />

The number of performance rights which become exercisable<br />

depends on the company’s ranking relative to companies comprised<br />

in the S&P/ASX200 on total shareholder return in the performance<br />

period. This ranking is calculated at the end of each quarter and<br />

expressed as a percentile. The rights may become exercisable on a<br />

progressive basis once the company’s ranking for the quarter reaches<br />

50. Fifty percent of the rights become exercisable when the<br />

company’s ranking reaches 50. All the rights become exercisable if<br />

the company’s ranking for the quarter exceeds 75. The percentage<br />

of rights which become exercisable increases proportionately if the<br />

company ranks between 50 and 75 for the quarter. Participants<br />

must pay a nominal exercise price to exercise the performance rights.<br />

The total exercise price payable on the exercise of any performance<br />

rights on a particular day will be one dollar in total (irrespective of the<br />

number of rights exercised on that day).<br />

As at 30 September 2002, a total of 183,758 performance rights had<br />

been issued to senior employees. The performance period for these<br />

rights commences on 1 October 2004 and ends on 1 October 2006.<br />

On 31 January <strong>2003</strong>, a further 224,593 performance rights were<br />

issued to senior employees. The performance period for these rights<br />

commences on 1 October 2005 and ends on 1 October 2007.<br />

On 30 June <strong>2003</strong>, the performance rights plan was extended to a<br />

limited number of high potential, business critical senior employees.<br />

A further 168,369 performance rights were issued under the terms<br />

of the 2002 offer.<br />

Should the relative performance of the company to date continue<br />

for the remainder of the performance period, the value of the<br />

shares that would be issued amounts to $1,537,458.<br />

Long term incentive plan<br />

A long term incentive plan for the Managing Director was<br />

established in the prior financial year, where the Managing Director<br />

was given the opportunity to receive cash bonuses by participating<br />

in the plan. Under the plan, notional performance rights are issued<br />

to the Managing Director. The terms and conditions of the plan are<br />

consistent with the performance rights plan except that the benefit<br />

is delivered in cash.<br />

On 30 May 2002, a total of 108,000 notional performance rights<br />

were issued. The performance period for these rights commences<br />

on 1 October 2004 and ends on 1 October 2006. Should the<br />

relative performance of the company to date continue for the<br />

remainder of this performance period, the cash bonus payable<br />

would be $307,828.<br />

On 1 October 2002, a further 124,000 notional performance rights<br />

were issued. The performance period for these rights commences<br />

on 1 October 2005 and ends on 1 October 2007. Should the<br />

relative performance of the company to date continue for the<br />

remainder of this performance period, the cash bonus payable<br />

would be $354,256.<br />

77


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

31. EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTS (continued)<br />

Equity share plan<br />

The equity share plan was established during the year. It provides<br />

the company with the flexibility to provide selected employees with<br />

part of any short term incentive in the form of B class shares in the<br />

company. Selected senior employees were invited to participate in<br />

the equity share plan and acquire a fixed proportion of their short<br />

term incentive in B class shares in the company.<br />

The number of shares allocated under the equity share plan was<br />

based on the weighted average of the prices at which B class<br />

shares in the company were traded on the ASX in the 20 trading<br />

days prior to the issue date, and the value of the remuneration or<br />

short term incentive to be provided.<br />

Under the equity share plan offer made on 31 January <strong>2003</strong>,<br />

51,034 shares were offered to eligible senior employees.<br />

32. FINANCIAL INSTRUMENTS<br />

(a) Interest rate risk<br />

The consolidated entity's exposure to interest rate risks and the effective weighted average interest rates of financial assets and financial<br />

liabilities are as follows:<br />

FIXED INTEREST RATE MATURING IN<br />

Floating 1 year Over 1 More than Non–interest<br />

Weighted average interest rate % interest rate or less to 5 years 5 years bearing Total<br />

Notes CAD USD AUD $'000 $'000 $'000 $'000 $'000 $'000<br />

<strong>2003</strong><br />

Financial assets<br />

Cash assets 5 n/a 1.18<br />

Receivables 6 n/a n/a<br />

Short term deposits 11 n/a n/a<br />

Initial margin deposits 11 1.10 0.45<br />

Financial assets – other 11 n/a n/a<br />

1.34 54,785 – – – – 54,785<br />

7.07 413,236 – – – 593,246 1,006,482<br />

4.77 36,005 – – – – 36,005<br />

5.78 5,387 – – – – 5,387<br />

n/a – – – – 26,427 26,427<br />

509,413 – – – 619,673 1,129,086<br />

Financial liabilities<br />

Payables 14 n/a n/a n/a – – – – 336,066 336,066<br />

Interest bearing liabilities 15 n/a 1.65 4.93 963,805 92,595 4,678 – 1,806 1,062,884<br />

963,805 92,595 4,678 – 337,872 1,398,950<br />

Unrecognised financial derivatives – face value<br />

Assets<br />

Interest rate swaps n/a n/a<br />

Interest rate options n/a n/a<br />

Interest rate futures n/a n/a<br />

n/a 90,000 – – – – 90,000<br />

4.90 – 340,000 – – – 340,000<br />

4.98 – 30,000 – – – 30,000<br />

90,000 370,000 – – – 460,000<br />

Liabilities<br />

Interest rate swaps n/a n/a<br />

Interest rate options n/a n/a<br />

Interest rate futures n/a n/a<br />

5.75 – – 90,000 – – 90,000<br />

4.09 – 295,000 – – – 295,000<br />

4.96 – 15,000 – – – 15,000<br />

– 310,000 90,000 – – 400,000<br />

78


32. FINANCIAL INSTRUMENTS (continued)<br />

(a) Interest rate risk (continued)<br />

FIXED INTEREST RATE MATURING IN<br />

Floating 1 year Over 1 More than Non–interest<br />

Weighted average interest rate % interest rate or less to 5 years 5 years bearing Total<br />

Notes CAD USD AUD $'000 $'000 $'000 $'000 $'000 $'000<br />

2002<br />

Financial assets<br />

Cash assets 5 1.76 1.25<br />

Receivables 6 n/a 3.90<br />

Short term deposits 11 n/a n/a<br />

Initial margin deposits 11 1.76 1.46<br />

Financial assets – other 11 n/a n/a<br />

4.45 69,921 – – – – 69,921<br />

6.64 1,476,681 – – – 660,360 2,137,041<br />

4.93 10,718 – – – – 10,718<br />

n/a 14,198 – – – – 14,198<br />

n/a – – – – 37,682 37,682<br />

1,571,518 – – – 698,042 2,269,560<br />

Financial liabilities<br />

Payables 14 n/a n/a n/a – – – – 122,681 122,681<br />

Interest bearing liabilities 15 n/a 2.06 4.53 1,637,518 – – – – 1,637,518<br />

1,637,518 – – – 122,681 1,760,199<br />

Unrecognised financial derivatives – face value<br />

Assets<br />

Interest rate swaps n/a n/a n/a 90,000 – – – – 90,000<br />

Interest rate options n/a n/a 5.19 – 240,000 15,000 – – 255,000<br />

90,000 240,000 15,000 – – 345,000<br />

Liabilities<br />

Interest rate swaps n/a n/a<br />

Interest rate options n/a n/a<br />

Interest rate futures n/a n/a<br />

5.75 – – 90,000 – – 90,000<br />

5.16 – 265,000 40,000 – – 305,000<br />

5.08 – 50,000 – – – 50,000<br />

– 315,000 130,000 – – 445,000<br />

79


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

32. FINANCIAL INSTRUMENTS (continued)<br />

(b) Foreign exchange risk<br />

The consolidated entity enters into forward exchange contracts and options to hedge (or hedge a proportion) of sale and purchase<br />

commitments denominated in foreign currencies subject to board approved limits.<br />

The following table sets out the gross value to be received under foreign currency contracts, the weighted average exchange rates and<br />

the settlement periods of outstanding contracts for the consolidated entity relating to future anticipated sales and purchases:<br />

Forward exchange contracts:<br />

Consolidated<br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

Weighted average rate $'000 $'000<br />

Buy US dollars<br />

Not later than one year<br />

Later than one year but not later than two years<br />

Sell US dollars<br />

Not later than one year<br />

Later than one year but not later than two years<br />

Buy Canadian dollars<br />

Not later than one year<br />

Later than one year but not later than two years<br />

Sell Canadian dollars<br />

Not later than one year<br />

Later than one year but not later than two years<br />

0.6384 0.5377<br />

n/a 0.5236<br />

0.6146 0.5215<br />

n/a 0.5255<br />

0.8977 0.8325<br />

0.8849 0.8328<br />

0.8706 0.8340<br />

0.8823 0.8361<br />

176,336 521,077<br />

– 4,037<br />

(163,869) (788,517)<br />

– (34,839)<br />

43,822 87,774<br />

1,729 873<br />

(51,205) (108,065)<br />

(1,678) (13,862)<br />

5,135 (331,522)<br />

Currency options:<br />

Buy US dollar put<br />

Not later than one year<br />

Sell US dollar call<br />

Not later than one year<br />

Sell US dollar put<br />

Not later than one year<br />

Buy US dollar call<br />

Not later than one year<br />

0.6481 0.5269 (12,344) (75,921)<br />

0.6760 0.5600 (7,402) (71,432)<br />

0.6452 0.4900 23,256 16,327<br />

0.6938 – 11,532 –<br />

15,042 (131,026)<br />

The net deferred costs and exchange gains and losses on foreign exchange hedges of anticipated foreign currency sales and purchases<br />

recognised in the statement of financial position and the timing of their anticipated recognition as part of sales and purchases are:<br />

Consolidated<br />

Net deferred gains/(losses)<br />

<strong>2003</strong> 2002<br />

$'000 $'000<br />

Not later than one year 2,117 24,804<br />

Later than one year but not later than two years – 38<br />

2,117 24,842<br />

80


32. FINANCIAL INSTRUMENTS (continued)<br />

(c) Commodity price risk<br />

The consolidated entity enters into commodity futures contracts and options to hedge (or hedge a proportion) of commodity selling prices<br />

on anticipated specific future sales and purchases of agricultural products. Major sales and purchases being hedged include wheat,<br />

sorghum and canola.<br />

At year end, the consolidated entity has the following commodity hedges against future anticipated sales and purchases:<br />

Consolidated<br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

Futures AUD per tonne $'000 $'000<br />

Buy<br />

Not later than one year 270.06 256.95 77,907 105,349<br />

Sell<br />

Not later than one year 367.29 284.35 (24,006) (232,474)<br />

Later than one year but not later than two years 382.90 269.26 (1,256) (33,128)<br />

Options<br />

52,645 (160,253)<br />

Buy call option<br />

Not later than one year 204.61 309.27 323,547 179,487<br />

Sell put option<br />

Not later than one year 165.90 292.66 97,054 246,437<br />

Buy put option<br />

Not later than one year 176.43 254.29 (42,623) (221,762)<br />

Sell call option<br />

Not later than one year 217.44 305.09 (244,350) (490,561)<br />

133,628 (286,399)<br />

The net deferred costs and gains and losses on commodity hedges of anticipated sales and purchases recognised in the statement of<br />

financial position and the timing of their anticipated recognition as part of sales and purchases are:<br />

Consolidated<br />

Net deferred gains/(losses)<br />

<strong>2003</strong> 2002<br />

$'000 $'000<br />

Not later than one year 1,567 (4,533)<br />

Later than one year but not later than two years – (353)<br />

1,567 (4,886)<br />

81


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

32. FINANCIAL INSTRUMENTS (continued)<br />

(d) Credit risk exposure<br />

Credit risk reports the loss that would be recognised if counterparties failed to perform as contracted.<br />

Recognised financial instruments<br />

The credit risk on financial assets, excluding investments, of the consolidated entity which have been recognised on the statement of<br />

financial position, is the carrying amount net of any provision for doubtful debts or counterparty risk.<br />

The consolidated entity minimises concentration of credit risk by undertaking transactions with a large number of customers and obtaining<br />

credit insurance for certain customers.<br />

Under the terms of the grower loan contracts, any distributions from the <strong>AWB</strong> National Pools are applied as repayments of the<br />

outstanding loan balance. The loans are advanced on a non-recourse basis; any shortfall on repayment is underwritten by <strong>AWB</strong><br />

Finance <strong>Limited</strong>.<br />

Unrecognised financial instruments<br />

Credit risk on derivative contracts which have not been recognised on the statement of financial position is minimised as counterparties<br />

are recognised financial intermediaries with acceptable credit ratings.<br />

(e) Net fair values<br />

Recognised financial instruments<br />

The carrying amounts and net fair values of financial assets and financial liabilities, at balance date are as follows:<br />

Carrying amount<br />

Net fair value<br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

Financial assets<br />

Cash assets 54,785 69,921 54,785 69,921<br />

Receivables 1,006,482 2,137,041 1,006,482 2,137,041<br />

Short term deposits 36,005 10,718 36,005 10,718<br />

Financial assets – other 23,446 51,880 23,446 51,880<br />

Shares 138,066 14,419 138,066 14,419<br />

Total financial assets 1,258,784 2,283,979 1,258,784 2,283,979<br />

Financial liabilities<br />

Payables 336,066 122,681 336,066 122,681<br />

Borrowings 1,062,884 1,637,518 1,062,884 1,637,518<br />

Financial liabilities 8,907 – 8,907 –<br />

Unearned income 9,458 120 9,458 120<br />

Net deferred gains and losses 3,684 19,956 3,684 19,956<br />

Total financial liabilities 1,420,999 1,780,275 1,420,999 1,780,275<br />

Unrecognised financial instruments<br />

The net fair values of financial instruments not recognised in the statement of financial position held as at the reporting date are:<br />

Consolidated<br />

<strong>2003</strong> 2002<br />

$'000 $'000<br />

Forward rate agreements – (32)<br />

Interest rate swaps (905) (1,295)<br />

Interest rate options 151 (62)<br />

Interest rate futures – –<br />

(754) (1,389)<br />

Interest rate futures and exchange traded options: The net fair value for interest rate futures and exchange traded options is calculated<br />

as the value of the variation margin on the last business day of the period.<br />

Interest rate swaps, over the counter options and forward rate agreements: The net fair value of these instruments represents the value<br />

that would be obtained in a liquid market if these positions were liquidated.<br />

82


33. DEED OF CROSS GUARANTEE<br />

Pursuant to Australian Securities and Investments Commission Class Order 98/1418 (as amended) dated August 1998, the following<br />

wholly owned subsidiaries are relieved from the Corporations Act 2001 requirements for preparation, audit and lodgement of financial<br />

reports and directors’ report: <strong>AWB</strong> Finance <strong>Limited</strong>, <strong>AWB</strong> (Australia) <strong>Limited</strong> and <strong>AWB</strong> Investments <strong>Limited</strong>.<br />

It is a condition of the Class Order that <strong>AWB</strong> <strong>Limited</strong> and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the<br />

Deed is that <strong>AWB</strong> <strong>Limited</strong> guarantees to pay any deficiency in the event of winding up any of the wholly owned subsidiaries listed below.<br />

The subsidiaries that are parties to the Deed are:<br />

<strong>AWB</strong> Finance <strong>Limited</strong> <br />

<strong>AWB</strong> (Australia) <strong>Limited</strong> <br />

<strong>AWB</strong> GrainFlow Pty Ltd (formerly <strong>AWB</strong> Grain Centres Pty Ltd)<br />

<strong>AWB</strong> Investments <strong>Limited</strong>. <br />

<strong>AWB</strong> Investments <strong>Limited</strong> became a party to the Deed on 26 August <strong>2003</strong>, by virtue of a Deed of Assumption.<br />

A consolidated statement of financial performance and a consolidated statement of financial position, comprising <strong>AWB</strong> <strong>Limited</strong> and<br />

controlled entities which are parties to the Deed after eliminating all transactions between parties to the Deed of Cross Guarantee, at 30<br />

September <strong>2003</strong> are set out below:<br />

Consolidated<br />

<strong>2003</strong> 2002<br />

$'000 $'000<br />

Summarised statement of financial performance<br />

Profit from ordinary activities before income tax expense 51,377 148,705<br />

Income tax expense relating to ordinary activities (11,432) (42,787)<br />

Net profit from ordinary activities after income tax expense 39,945 105,918<br />

Retained profits at the beginning of the year 68,639 31,076<br />

Dividends recognised during the year (38,369) (68,355)<br />

Retained profits at the end of the year 70,215 68,639<br />

Statement of financial position<br />

Current assets<br />

Cash assets 2,337 24,003<br />

Receivables 631,273 3,242,114<br />

Inventories 62,111 134,062<br />

Other financial assets 49,616 50,111<br />

Current tax assets 19,562 –<br />

Other assets 767 1,650<br />

Total current assets 765,666 3,451,940<br />

Non–current assets<br />

Receivables 54,711 4,085<br />

Investments accounted for using the equity method 10,307 16,958<br />

Other financial assets 862,734 33,923<br />

Intangible assets 172 115<br />

Property, plant and equipment 210,514 153,327<br />

Deferred tax assets 26,501 26,468<br />

Total non–current assets 1,164,939 234,876<br />

Total assets 1,930,605 3,686,816<br />

Current liabilities<br />

Payables 111,353 104,266<br />

Interest bearing liabilities 863,437 2,710,288<br />

Current tax liabilities – 9,070<br />

Provisions 16,198 39,654<br />

Other liabilities 5,517 19,956<br />

Total current liabilities 996,505 2,883,234<br />

83


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

33. DEED OF CROSS GUARANTEE (continued)<br />

Non–current liabilities<br />

Provisions<br />

Deferred tax liabilities<br />

Total non–current liabilities<br />

Total liabilities<br />

Net assets<br />

<strong>2003</strong><br />

$'000<br />

1,721<br />

6,329<br />

8,050<br />

1,004,555<br />

926,050<br />

Consolidated<br />

2002<br />

$'000<br />

1,513<br />

18,118<br />

19,631<br />

2,902,865<br />

783,951<br />

Equity<br />

Contributed equity<br />

Reserves<br />

Retained profits<br />

Total equity<br />

848,958<br />

6,877<br />

70,215<br />

926,050<br />

700,312<br />

15,000<br />

68,639<br />

783,951<br />

34. CONTROLLED ENTITIES<br />

Percentage of equity interest held<br />

by the consolidated entity<br />

<strong>2003</strong> 2002<br />

(a) Particulars in relation to controlled entities % %<br />

Name<br />

Country of<br />

incorporation<br />

Parent<br />

<strong>AWB</strong> <strong>Limited</strong><br />

Australia<br />

Controlled entities<br />

ACN 005 144 445 Pty Ltd Australia 100 –<br />

ACN 089 443 407 Pty Ltd Australia 100 100<br />

Agrifood Technology Pty Ltd Australia 100 100<br />

Aussigold Produce Pty Ltd Australia 100 –<br />

Australian Seed Inoculants Pty Ltd Australia 100 –<br />

Australian Wheat Board Pty <strong>Limited</strong> Australia 100 100<br />

<strong>AWB</strong> (Australia) <strong>Limited</strong> Australia 100 100<br />

<strong>AWB</strong> (Geneva) SA Switzerland 100 100<br />

<strong>AWB</strong> (International) <strong>Limited</strong> Australia 100 100<br />

<strong>AWB</strong> (USA) <strong>Limited</strong> USA 100 100<br />

<strong>AWB</strong> Asia <strong>Limited</strong> Hong Kong 100 100<br />

<strong>AWB</strong> Commercial Funding Ltd Australia 100 –<br />

<strong>AWB</strong> Custodians Pty Ltd (formerly United Grain Pty Ltd) Australia 100 100<br />

<strong>AWB</strong> Finance <strong>Limited</strong> Australia 100 100<br />

<strong>AWB</strong> GrainFlow Pty Ltd (formerly <strong>AWB</strong> Grain Centres Pty Ltd) Australia 100 100<br />

<strong>AWB</strong> Harvest Finance <strong>Limited</strong> Australia 100 –<br />

<strong>AWB</strong> Investments <strong>Limited</strong> Australia 100 100<br />

<strong>AWB</strong> Japan Pty Ltd Australia 100 100<br />

<strong>AWB</strong> MPT Pty Ltd Australia 100 100<br />

<strong>AWB</strong> Plant Breeding Pty Ltd Australia 100 100<br />

<strong>AWB</strong> Research Pty Ltd Australia 100 100<br />

<strong>AWB</strong> Riskassist <strong>Limited</strong> Australia 100 100<br />

<strong>AWB</strong> Services <strong>Limited</strong> Australia 100 –<br />

<strong>AWB</strong>–Zen-noh <strong>Limited</strong> Japan 51 51<br />

Barrobook Pty <strong>Limited</strong> Australia 100 –<br />

Berriwillock Nominees Pty Ltd Australia 100 –<br />

84


34. CONTROLLED ENTITIES (continued)<br />

Percentage of equity interest held<br />

by the consolidated entity<br />

<strong>2003</strong> 2002<br />

(a) Particulars in relation to controlled entities (continued) % %<br />

Name<br />

Country of<br />

incorporation<br />

Big N Distributors Pty Ltd Australia 100 –<br />

Bushridge Pty Ltd Australia 100 –<br />

Dairy Rural Pty Ltd Australia 100 –<br />

Farmland Pty Ltd Australia 100 –<br />

Frank Sauer and Sons Pty Ltd Australia 100 –<br />

Franklin Smith IAMA Pty Ltd Australia 100 –<br />

Glencoe Distributors Pty Ltd Australia 100 –<br />

Goldref Pty Ltd Australia 100 –<br />

IAMA (Qld) Pty Ltd Australia 100 –<br />

IAMA (SA) Pty Ltd Australia 100 –<br />

IAMA Agribusiness Pty Ltd Australia 100 –<br />

IAMA Insurance Brokers Holdings Pty Ltd Australia 100 –<br />

IAMA Insurance Brokers Pty Ltd Australia 100 –<br />

IAMA Irritech Pty Ltd Australia 60 –<br />

IAMA Superannuation Fund Pty Ltd Australia 100 –<br />

ISP Nominees Pty Ltd Australia 100 –<br />

Johnstone River Transport Pty Ltd Australia 100 –<br />

J O'Malley & Co Pty Ltd Australia 100 –<br />

Kelly & Co Rural Centre Pty <strong>Limited</strong> Australia 67 –<br />

Kerin Lange Rural Pty <strong>Limited</strong> Australia 50 –<br />

Landmark (Qld) <strong>Limited</strong><br />

(formerly Wesfarmers Landmark (Qld) <strong>Limited</strong>) Australia 100 –<br />

Landmark Operations <strong>Limited</strong><br />

(formerly Wesfarmers Landmark <strong>Limited</strong>) Australia 100 –<br />

Landmark Realty (Qld) Pty Ltd<br />

(formerly Wesfarmers Landmark Realty (Qld) Pty Ltd) Australia 100 –<br />

Landmark Realty (WA) Pty Ltd<br />

(formerly Wesfarmers Landmark Realty (WA) Pty Ltd) Australia 100 –<br />

Landmark Risk Management Pty Ltd<br />

(formerly Wesfarmers Landmark Risk Management Pty Ltd) Australia 100 –<br />

Landmark Rural Holdings <strong>Limited</strong><br />

(formerly Wesfarmers Rural Holdings <strong>Limited</strong>) Australia 100 –<br />

Landmark Tenderland Pty Ltd<br />

(formerly Wesfarmers Landmark Tenderland Pty Ltd) Australia 100 –<br />

Landmark Wool Pty Ltd<br />

(formerly Wesfarmers Landmark Wool Pty Ltd) Australia 100 –<br />

Langes Agribusiness Pty Ltd Australia 100 –<br />

Laxstone Pty Ltd Australia 100 –<br />

Lenmost Pty Ltd Australia 100 –<br />

Macquarie Valley Distributors Pty Ltd Australia 100 –<br />

Mallee Chemicals Pty Ltd Australia 100 –<br />

North Central Nominees Pty Ltd Australia 100 –<br />

O'Malley Distribution Group Pty Ltd Australia 100 –<br />

Presoval Pty Ltd Australia 100 –<br />

Rangal Holdings Pty Ltd Australia 100 –<br />

Riverland IAMA Pty Ltd Australia 100 –<br />

R.V.L. Distribution Pty Ltd Australia 100 –<br />

SBS IAMA Real Estate Pty Ltd Australia 100 –<br />

Seed & Grain Sales Pty <strong>Limited</strong> Australia 100 –<br />

Seedtech Pty <strong>Limited</strong> Australia 56 –<br />

Vivco Rural Supplies Pty Ltd Australia 100 –<br />

Wimmal Distributors Pty Ltd Australia 100 –<br />

85


NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS<br />

FOR THE YEAR ENDED 30 SEPTEMBER <strong>2003</strong><br />

34. CONTROLLED ENTITIES (continued)<br />

(b) Acquisition of controlled entities<br />

On 29 August <strong>2003</strong>, the consolidated entity purchased 100% of Landmark Rural Holdings <strong>Limited</strong> and Johnstone River Transport Pty<br />

<strong>Limited</strong>, and the operating result of these entities was included in the consolidated operating profit from that date. Details of the<br />

acquisitions are as follows:<br />

Consolidated<br />

<strong>AWB</strong> <strong>Limited</strong><br />

<strong>2003</strong> 2002 <strong>2003</strong> 2002<br />

$'000 $'000 $'000 $'000<br />

Consideration 718,400 – – –<br />

Associated costs of acquisition 11,660 – – –<br />

730,060 – – –<br />

Less: – third instalment payable after balance date (38,400) – – –<br />

– cash acquired in Landmark (148,895) – – –<br />

Outflow of cash 542,765 – – –<br />

Fair value of net assets of entity acquired<br />

Cash assets 148,895 – – –<br />

Receivables 281,664 – – –<br />

Inventories 120,975 – – –<br />

Other assets 2,738 – – –<br />

Investments accounted for using the equity method 2,134 – – –<br />

Other financial assets 1,048 – – –<br />

Intangible assets 156 – – –<br />

Property, plant and equipment 71,939 – – –<br />

Future income tax benefit 13,327 – – –<br />

Payables (166,272) – – –<br />

Interest bearing deposits (281,613) – – –<br />

Current tax liabilities (2,652) – – –<br />

Provisions (29,482) – – –<br />

Provision for restructure (5,317)<br />

Other liabilities (8,954) – – –<br />

Deferred tax liabilities (2,801) – – –<br />

Outside equity interests at acquisition (1,383) – – –<br />

144,402 – – –<br />

Goodwill on acquisition 585,658 – – –<br />

Consideration (including associated costs) 730,060 – – –<br />

86


35. EARNINGS PER SHARE<br />

Consolidated<br />

<strong>2003</strong> 2002<br />

Basic earnings per share (cents) 15.9 39.2<br />

Diluted earnings per share (cents) 15.9 39.2<br />

Reconciliation of earnings used in calculating earnings per share:<br />

$'000<br />

$'000<br />

Net profit from ordinary activities after income tax expense 44,150 107,829<br />

Net profit attributable to outside equity interests (259) (637)<br />

43,891 107,192<br />

Number<br />

Number<br />

Weighted average number of ordinary shares used in calculating basic earnings per share 276,470,797 273,340,738<br />

Effect of dilutive securities – performance rights 258,306 32,404<br />

Weighted average number of ordinary shares used in calculating dilutive earnings per share 276,729,103 273,373,142<br />

36. SUBSEQUENT EVENTS<br />

(a) <strong>2003</strong><br />

There are no subsequent events which are likely to have a material effect on the consolidated entity's financial statements. For dividends<br />

declared after 30 September <strong>2003</strong>, refer to Note 22.<br />

(b) 2002<br />

There were no subsequent events which were likely to have a material effect on the consolidated entity's financial statements.<br />

87


DIRECTORS' DECLARATION<br />

In accordance with a resolution of the directors of <strong>AWB</strong> <strong>Limited</strong>, we state that:<br />

(1) In the opinion of the directors:<br />

(a) the financial statements and notes of the company and of the consolidated entity are in accordance with the Corporations Act 2001,<br />

including:<br />

– giving a true and fair view of the company's and consolidated entity's financial position as at 30 September <strong>2003</strong> and of their<br />

performance for the year ended on that date; and<br />

– complying with Accounting Standards and the Corporations Regulations 2001; and<br />

(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.<br />

(2) In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the companies and<br />

parent entity which are party to the Deed of Cross Guarantee identified in Note 33 will be able to meet any obligations or liabilities to<br />

which they are or may become subject, by virtue of the Deed of Cross Guarantee.<br />

This declaration is made in accordance with a resolution of the directors on behalf of the board.<br />

Brendan Stewart<br />

Chairman<br />

Andrew Lindberg<br />

Managing Director<br />

Sydney<br />

26 November <strong>2003</strong><br />

88


INDEPENDENT AUDIT REPORT TO MEMBERS OF <strong>AWB</strong> LIMITED<br />

120 Collins Street Tel 61 3 9288 8000<br />

Melbourne VIC 3000 Fax 61 3 96546166<br />

Australia<br />

DX 293 Melbourne<br />

GPO Box 67B<br />

Melbourne VIC 3001<br />

Scope<br />

The financial report and directors’ responsibility<br />

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows,<br />

accompanying notes to the financial statements, and the directors’ declaration for <strong>AWB</strong> <strong>Limited</strong> (the company) and the consolidated entity,<br />

for the year ended 30 September <strong>2003</strong>. The consolidated entity comprises both the company and the entities it controlled during that year.<br />

The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financial position and<br />

performance of the company and the consolidated entity, and that complies with Accounting Standards in Australia, in accordance with the<br />

Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are<br />

designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.<br />

Audit approach<br />

We conducted an independent audit of the financial report in order to express an opinion on it to the members of the company. Our audit<br />

was conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial<br />

report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement,<br />

selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an<br />

audit cannot guarantee that all material misstatements have been detected.<br />

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the<br />

Corporations Act 2001, including compliance with Accounting Standards in Australia, and other mandatory financial reporting<br />

requirements in Australia, a view which is consistent with our understanding of the company’s and the consolidated entity’s financial<br />

position, and of their performance as represented by the results of their operations and cash flows.<br />

We formed our audit opinion on the basis of these procedures, which included:<br />

• examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and<br />

• assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting<br />

estimates made by the directors.<br />

While we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent<br />

of our procedures, our audit was not designed to provide assurance on internal controls.<br />

We performed procedures to assess whether the substance of business transactions was accurately reflected in the financial report.<br />

These and our other procedures did not include consideration or judgement of the appropriateness or reasonableness of the business<br />

plans or strategies adopted by the directors and management of the company.<br />

Independence<br />

We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and<br />

the Corporations Act 2001.<br />

Audit opinion<br />

In our opinion, the financial report of <strong>AWB</strong> <strong>Limited</strong> is in accordance with:<br />

(a) the Corporations Act 2001, including:<br />

(i) giving a true and fair view of the financial position of <strong>AWB</strong> <strong>Limited</strong> and the consolidated entity at 30 September <strong>2003</strong> and of their<br />

performance for the year ended on that date; and<br />

(ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and<br />

(b) other mandatory financial reporting requirements in Australia.<br />

Ernst & Young<br />

Melbourne<br />

26 November <strong>2003</strong><br />

I. H. Miller<br />

Partner<br />

Liability limited by the Accountants Scheme, approved under the Professional Standards Act 1994 (NSW).<br />

89


ASX ADDITIONAL INFORMATION<br />

SHAREHOLDER INFORMATION<br />

Additional information required by the Australian Stock Exchange and not shown elsewhere in this report is as follows. The information is<br />

current as at 12 December <strong>2003</strong>.<br />

a) Distribution of equity securities<br />

The number of shareholders, by size of holding, in each class of share are:<br />

Ordinary shares<br />

Number of holders<br />

Number of shares<br />

1 – 1,000 26,575 9,892,822<br />

1,001 – 5,000 23,810 61,305,213<br />

5,001 – 10,000 7,760 55,017,211<br />

10,001 – 100,000 6,290 124,847,541<br />

100,001 and over 76 75,940,105<br />

64,511 327,002,892<br />

The number of shareholders holding less than a marketable<br />

parcel of shares are: 7,542 463,545<br />

b) Twenty largest shareholders<br />

The names of the twenty largest holders of quoted shares are:<br />

Listed ordinary shares<br />

Number of shares<br />

Percentage of<br />

ordinary shares<br />

1 J P Morgan Nominees Australia <strong>Limited</strong> 18,346,522 5.61<br />

2 Westpac Custodian Nominees <strong>Limited</strong> 13,131,129 4.02<br />

3 National Nominees <strong>Limited</strong> 11,095,671 3.39<br />

4 Citicorp Nominees Pty <strong>Limited</strong> 3,672,251 1.12<br />

5 RBC Global Services Australia Nominees Pty <strong>Limited</strong> 3,171,269 0.97<br />

6 Westpac Financial Services 2,584,499 0.79<br />

7 HSBC Custody Nominees (Australia) <strong>Limited</strong> 2,115,461 0.65<br />

8 AMP Life <strong>Limited</strong> 2,056,498 0.63<br />

9 UBS Private Clients Australia Nominees Pty <strong>Limited</strong> 1,177,469 0.36<br />

10 RBC Global Services Australia Nominees Pty <strong>Limited</strong> 932,861 0.29<br />

11 Cogent Nominees Pty <strong>Limited</strong> 924,642 0.28<br />

12 ANZ Nominees <strong>Limited</strong> 888,796 0.27<br />

13 Queensland Investment Corporation 776,208 0.24<br />

14 ANZ Nominees <strong>Limited</strong> 772,994 0.24<br />

15 Government Superannuation Office 612,425 0.19<br />

16 Permanent Trustee Australia <strong>Limited</strong> 551,351 0.17<br />

17 Australian United Investment Company <strong>Limited</strong> 550,000 0.17<br />

18 RBC Global Services Australia Nominees Pty <strong>Limited</strong> 463,384 0.14<br />

19 <strong>AWB</strong> Custodians Pty <strong>Limited</strong> 460,900 0.14<br />

20 Transport Accident Commission 458,354 0.14<br />

64,742,684 19.81<br />

c) Substantial shareholders<br />

The only substantial shareholder as at 12 December <strong>2003</strong> was J P Morgan Nominees Australia <strong>Limited</strong> with 18,346,522 <strong>AWB</strong> B class<br />

shares representing 5.61% of issued capital.<br />

90


FINANCIAL CALENDAR – 2004<br />

<strong>Annual</strong> General Meeting<br />

Half year end<br />

Half year results and interim dividend announcement<br />

Payment of interim dividend<br />

Full year end<br />

Full year results and final dividend announcement<br />

Payment of final dividend<br />

11 Mar<br />

31 Mar<br />

26 May<br />

2 Jul<br />

30 Sep<br />

24 Nov<br />

17 Dec<br />

DUAL CLASS SHARE STRUCTURE<br />

<strong>AWB</strong> <strong>Limited</strong> has two classes of shares:<br />

A class shares – can only be issued to current wheat growers<br />

(that meet the definition of Grower in the constitution). These<br />

cannot be transferred and must be redeemed when the A class<br />

shareholder ceases to be a Grower. A class shares are not<br />

entitled to receive any dividend; however, they do carry other<br />

important rights giving A class shareholders control of <strong>AWB</strong>,<br />

including giving A class shareholders the ability to elect a<br />

majority of the board of directors; and<br />

B class shares – the only class of shares that are quoted on the<br />

Australian Stock Exchange (ASX). B class shares carry rights to<br />

receive dividends and the right to elect a minority of the board of<br />

directors. They can be freely traded by anyone, subject to no<br />

shareholder owning more than 10% of the B class shares<br />

on issue.<br />

VOTING RIGHTS<br />

The voting rights for holders of each <strong>AWB</strong> share class are as<br />

follows:<br />

A class shares – on a show of hands, the holder of an A class<br />

share has one vote and on a poll the holder has the number of<br />

votes determined by their average annual tonnage of wheat<br />

delivered as follows:<br />

one vote; plus<br />

an additional vote if their average annual tonnage of wheat<br />

delivered to the <strong>AWB</strong> Group is more than 33 1/3 tonnes per<br />

year for the three years ending at the prior financial year; plus<br />

an additional vote for each 500 tonnes, or part thereof, per year<br />

of average annual tonnage delivered by the A class shareholder<br />

to the <strong>AWB</strong> Group above 500 tonnes per year for the three<br />

years ending at the prior financial year.<br />

At 30 September <strong>2003</strong>, there were 33.502 A class shares; and<br />

B class shares – on a show of hands, the holder of a B class<br />

share has one vote and on a poll the holder has one vote for each<br />

B class share held.<br />

At 30 September <strong>2003</strong>, there were 63,522 B class shareholders.<br />

ANNUAL GENERAL MEETING<br />

<strong>AWB</strong>’s <strong>Annual</strong> General Meeting will be held at 12 noon (Melbourne<br />

time) on Thursday 11 March 2004 at the Auditorium, Level 2,<br />

Melbourne Exhibition Centre, 2 Clarendon Street, Southbank,<br />

Melbourne, Victoria. Details of the business of the meeting are<br />

contained in the separate Notice of Meetings.<br />

DIVIDEND PAYMENT<br />

A fully franked final dividend of 11 cents per share was paid on 19<br />

December <strong>2003</strong> to B class shareholders registered on the <strong>AWB</strong><br />

share register at 5 December <strong>2003</strong>. For Australian tax purposes,<br />

the dividend was fully franked at the company tax rate of 30%.<br />

<strong>AWB</strong> has introduced a Dividend Reinvestment Plan (DRP) effective<br />

from the <strong>2003</strong> final dividend. The DRP is fully underwritten for the<br />

<strong>2003</strong> final dividend and 2004 interim dividend. Eligible<br />

shareholders can have all or part of the dividend reinvested in<br />

additional shares at a 5% discount. Participation is entirely<br />

voluntary. The discount is applicable only for the two dividends<br />

mentioned above and may be changed or removed by the board of<br />

<strong>AWB</strong> <strong>Limited</strong>. Further details on the terms and conditions of the<br />

DRP can be found on <strong>AWB</strong>’s website at www.awb.com.au or by<br />

contacting the company’s share registry.<br />

STOCK EXCHANGE LISTING<br />

<strong>AWB</strong> B class shares are listed on the ASX and reported in the<br />

industrial section of daily newspapers under the code <strong>AWB</strong>.<br />

SHARE REGISTRY<br />

Computershare Investor Services Pty Ltd<br />

PO Box 14061 Melbourne City MC VIC 8001<br />

Tel: 1800 810 032<br />

Fax: 1800 800 053<br />

Please quote your current address together with your<br />

Securityholder Reference Number (SRN) or Holder Identification<br />

Number (HIN) as shown on your Issuer Sponsored/CHESS<br />

statements.<br />

CHANGE OF ADDRESS OR BANKING<br />

DETAILS<br />

Shareholders should notify the share registry in writing immediately<br />

of changes of address, or banking details for dividends<br />

electronically credited to a bank account.<br />

REMOVAL FROM ANNUAL REPORT<br />

MAILING LIST<br />

Shareholders who no longer want to receive the annual report<br />

should call the <strong>AWB</strong> share registry on 1800 810 032 to register<br />

their choice. Shareholders will continue to receive all other<br />

information including the notice of the <strong>Annual</strong> General Meeting and<br />

proxy form. The annual report can also be viewed on <strong>AWB</strong>’s<br />

website at www.awb.com.au<br />

INVESTOR RELATIONS<br />

Investors with questions regarding <strong>AWB</strong> financial information are<br />

invited to contact:<br />

Investor Relations<br />

<strong>AWB</strong> <strong>Limited</strong><br />

380 La Trobe Street<br />

Melbourne VIC 3000<br />

Email: investor.relations@awb.com.au<br />

91


MAJOR ANNOUNCEMENTS TO THE AUSTRALIAN STOCK EXCHANGE<br />

2002<br />

4 October 2002<br />

<strong>AWB</strong> announces the <strong>AWB</strong> National Pool has<br />

paid a third distribution payment from the<br />

2001/02 season, with more than $715<br />

million paid to wheat growers across Australia.<br />

15 October 2002<br />

<strong>AWB</strong> revises down its crop forecast for<br />

2002/03 to between 11–13 million tonnes.<br />

20 November 2002<br />

<strong>AWB</strong> announces a record profit of $107.2<br />

million after tax for the 12 months to 30th<br />

September 2002. The result represents a<br />

28% increase on the 2001 reported after<br />

tax profit of $83.7 million.<br />

19 December 2002<br />

<strong>AWB</strong> discloses a substantial shareholding in<br />

Futuris Corporation <strong>Limited</strong> (Futuris) of 5%.<br />

<strong>2003</strong><br />

6 January <strong>2003</strong><br />

<strong>AWB</strong> announces the <strong>AWB</strong> National Pool<br />

has paid its fourth distribution payment<br />

from the 2001/02 season with more than<br />

$766 million paid to wheat growers across<br />

Australia.<br />

13 January <strong>2003</strong><br />

<strong>AWB</strong> revises down its crop forecast for<br />

2001/02 to between 9.5–10.5 million<br />

tonnes.<br />

14 February <strong>2003</strong><br />

<strong>AWB</strong> announces it has acquired a further<br />

60.2 million Futuris ordinary shares bringing<br />

its interest in Futuris to 14.9%.<br />

13 March <strong>2003</strong><br />

Brenda Shanahan resigns as a B class<br />

director of <strong>AWB</strong> <strong>Limited</strong>, and Peter Polson<br />

is appointed as a B class director, effective<br />

from 31 March <strong>2003</strong>.<br />

20 March <strong>2003</strong><br />

<strong>AWB</strong> suspends a discharge of wheat in Iraq<br />

following the United Nations Oil-for-Food<br />

program being temporarily suspended.<br />

7 April <strong>2003</strong><br />

<strong>AWB</strong> National Pool made its first<br />

distribution payment from <strong>AWB</strong>’s 2002/03<br />

National Pool of more than $127 million to<br />

Australian wheat growers.<br />

<strong>AWB</strong> National Pool announced its fifth<br />

distribution payment from the 2001/02<br />

harvest with more than $1.2 billion paid to<br />

wheat growers across Australia<br />

7 May <strong>2003</strong><br />

<strong>AWB</strong> introduces its New Grower Incentive<br />

Program for new A class shareholders who<br />

have never owned B class shares to obtain<br />

shares at a discount.<br />

21 May <strong>2003</strong><br />

<strong>AWB</strong> announces an after tax profit of<br />

$29.9 million for the half year ended 31<br />

March <strong>2003</strong>, and declares an interim<br />

dividend of 14 cents per share.<br />

19 June <strong>2003</strong><br />

<strong>AWB</strong> was successful in defending an appeal<br />

by NEAT Domestic Trading Pty Ltd to the<br />

High Court of Australia, in relation to the<br />

refusal by <strong>AWB</strong> (International) <strong>Limited</strong> to<br />

approve a number of bulk permit<br />

applications to export durum.<br />

1 July <strong>2003</strong><br />

<strong>AWB</strong> revises down its crop forecast for<br />

<strong>2003</strong>/04 to between 20–22 million tonnes.<br />

7 July <strong>2003</strong><br />

<strong>AWB</strong> announces its second distribution<br />

from the No. 1 2002/03 <strong>AWB</strong> National<br />

Pool, distributing more than $185 million to<br />

Australian wheat growers.<br />

31 July <strong>2003</strong><br />

<strong>AWB</strong> finalises its highest returning <strong>AWB</strong><br />

National Pool with $511 million distributed<br />

bringing the total Pool value for 2001/02<br />

to more than $5.3 billion.<br />

29 August <strong>2003</strong><br />

<strong>AWB</strong> announces its acquisition of<br />

Landmark from Wesfarmers for a net<br />

purchase consideration of $718 million. A<br />

capital raising will be undertaken including<br />

an Institutional Placement, Share Purchase<br />

Plan and Dividend Reinvestment Plan.<br />

3 September <strong>2003</strong><br />

<strong>AWB</strong> announces that the Institutional<br />

Placement component of its capital raising<br />

has closed with the offer successful, having<br />

been heavily oversubscribed at a final price<br />

of $3.70 per share.<br />

7 September <strong>2003</strong><br />

<strong>AWB</strong> announces the outstanding 800,000<br />

tonne contracts to Iraq have been honoured<br />

for immediate shipment, completing the 1.2<br />

million tonne contracts with <strong>AWB</strong> struck<br />

with Iraq prior to hostilities.<br />

GLOSSARY<br />

<strong>AWB</strong> Basis Pool is a multi-varietal pool<br />

contract. It takes advantage of the<br />

professionally managed “basis” premium<br />

achieved in the <strong>AWB</strong> National Pool and<br />

provides growers with an opportunity to<br />

establish specific international wheat prices<br />

using the Chicago Board of Trade wheat<br />

futures contracts and prevailing foreign<br />

exchange rates.<br />

<strong>AWB</strong> Golden Rewards is a<br />

comprehensive payment and binning<br />

system for wheat marketed through the<br />

<strong>AWB</strong> National Pool and selected cash<br />

options. Golden Rewards is designed to<br />

provide pricing accuracy and market signals<br />

for Australia’s grain growers, ensuring that<br />

growers are rewarded for delivering the<br />

types of wheat demanded by <strong>AWB</strong>’s<br />

international customers. Growers have<br />

better defined financial targets to aim for in<br />

terms of higher protein content and lower<br />

screenings levels, and are no longer<br />

severely penalised if their wheat narrowly<br />

misses a minimum binning standard for one<br />

of these quality attributes.<br />

<strong>AWB</strong> Group <strong>AWB</strong> <strong>Limited</strong> and its<br />

controlled entities.<br />

<strong>AWB</strong> Multi V cash contracts incorporate<br />

<strong>AWB</strong> Golden Rewards. It is based on multi<br />

varietal classification, with continuous<br />

quality payment scales for protein and<br />

screenings to improve pricing accuracy and<br />

better reflect the market value consistent<br />

with wheat quality.<br />

<strong>AWB</strong> RiskAssist is a specialised risk<br />

management business service designed to<br />

help growers manage commodity futures<br />

and foreign exchange hedging with an<br />

<strong>AWB</strong> Basis Pool contract.<br />

Cost and Freight (CFR) is a freight<br />

option whereby the seller delivers when the<br />

goods pass the ship’s rail in the port of<br />

shipment. The seller must pay the costs and<br />

freight necessary to bring the goods to port,<br />

but the risk of loss or damage to the goods<br />

is transferred from the seller to the buyer.<br />

Forward Freight Agreement (FFA) is a<br />

principal to principal contract where one<br />

counterparty takes the view that the prices<br />

of an agreed freight route, at an agreed<br />

time, will be higher than the agreed level.<br />

The other party contracts to differ.<br />

Free On Board (FOB) means that the<br />

seller delivers when the goods pass the<br />

ship’s rail at the named port of shipment.<br />

The buyer has to bear all costs and risk of<br />

loss or damage to the goods from that point.<br />

Gross Pool Value (GPV) is the sum of all<br />

export revenue and other value added by<br />

<strong>AWB</strong>. It represents the gross return to<br />

growers, and equates to the sum of pool<br />

returns prior to storage, handling, rail and<br />

fobbing deductions.<br />

92


<strong>AWB</strong> GROUP LOCATIONS<br />

ROYCE DESIGN <strong>AWB</strong> 5291<br />

Head Office<br />

Melbourne<br />

380 La Trobe Street<br />

Melbourne, Victoria 3000<br />

(03) 9209 2000<br />

International<br />

Cairo<br />

Tokyo<br />

Hong Kong<br />

Geneva<br />

Portland, Oregon<br />

Australia<br />

New South Wales<br />

Albury<br />

Ardlethan<br />

Ariah Park<br />

Armidale<br />

Barraba<br />

Bathurst<br />

Batlow<br />

Beanbri<br />

Bellata<br />

Bogan Gate<br />

Boggabilla<br />

Bourke<br />

Broken Hill<br />

Collarenebri<br />

Cooma<br />

Coonamble<br />

Cootamundra<br />

Corowa<br />

Cowra<br />

Crookwell<br />

Deniliquin<br />

Dubbo<br />

Forbes<br />

Gilgandra<br />

Glen Innes<br />

Goulburn<br />

Griffith<br />

Grong Grong<br />

Gunnedah<br />

Hay<br />

Hillston<br />

Junee<br />

Maitland<br />

Moree<br />

Moss Vale<br />

Mudgee<br />

Mungindi<br />

Narrabri<br />

Narromine<br />

Newcastle<br />

Nyngan<br />

Oaklands<br />

Orange<br />

Parramatta<br />

Rocklea<br />

Singleton<br />

Stockinbingal<br />

Sydney<br />

Tamworth<br />

Temora<br />

Wagga Wagga<br />

Walcha<br />

Walgett<br />

Walla Walla<br />

Warialda<br />

Warren<br />

Wee Waa<br />

West Wyalong<br />

Yennora<br />

Young<br />

Northern Territory<br />

Darwin<br />

Katherine<br />

Alice Springs<br />

Queensland<br />

Applethorpe<br />

Ayr<br />

Ballandean<br />

Blackall<br />

Bowen<br />

Brisbane<br />

Bundaberg<br />

Cairns<br />

Charleville<br />

Charters Towers<br />

Chinchilla<br />

Clermont<br />

Cloncurry<br />

Colonsay<br />

Croppa Creek<br />

Cunnamulla<br />

Dalby<br />

Dirranbandi<br />

El Arish<br />

Emerald<br />

Gatton<br />

Goondiwindi<br />

Gympie<br />

Home Hill<br />

Hughenden<br />

Injune<br />

Jondaryan<br />

Longreach<br />

Mackay<br />

Mareeba<br />

Maryborough<br />

Meandarra<br />

Mitchell<br />

Mourilyan<br />

Mundubbera<br />

Oakey<br />

Pittsworth<br />

Quilpie<br />

Richmond<br />

Rockhampton<br />

Rocklea<br />

Roma<br />

St George<br />

Talwood<br />

Tambo<br />

Taroom<br />

The Gums<br />

Toowong<br />

Toowoomba<br />

Townsville<br />

Tully<br />

Wallaville<br />

Wandoan<br />

Winton<br />

Yandina<br />

South Australia<br />

Adelaide<br />

Arthurton<br />

Berri<br />

Bordertown<br />

Burra<br />

Bute<br />

Ceduna<br />

Clare<br />

Cleve<br />

Crystal Brook<br />

Gawler<br />

Gepps Cross<br />

Jamestown<br />

Kadina<br />

Kapunda<br />

Keith<br />

Kingston<br />

Lameroo<br />

Lock<br />

Loxton<br />

Lucindale<br />

Maitland<br />

Mallala<br />

Mclaren Vale<br />

Meningie<br />

Millicent<br />

Minalton<br />

Mount Compass<br />

Mount Gambier<br />

Murray Bridge<br />

Naracoorte<br />

Padthaway<br />

Penola<br />

Port Adelaide<br />

Port Lincoln<br />

Renmark<br />

Riverton<br />

Sheaoak Log<br />

Strathalbyn<br />

Streaky Bay<br />

Tintinara<br />

Tumby Bay<br />

Warooka<br />

Tasmania<br />

Launceston<br />

Victoria<br />

Alexandra<br />

Ararat<br />

Ballarat<br />

Benalla<br />

Bendigo<br />

Berriwillock<br />

Birchip<br />

Brooklyn<br />

Camperdown<br />

Casterton<br />

Charlton<br />

Cobden<br />

Colac<br />

Dimboola<br />

Donald<br />

Echuca<br />

Euroa<br />

Foster<br />

Geelong<br />

Hamilton<br />

Heathcote<br />

Heywood<br />

Horsham<br />

Inverleigh<br />

Kaniva<br />

Korumburra<br />

Leongatha<br />

Melbourne<br />

Mortlake<br />

Nhill<br />

Numurkah<br />

Ouyen<br />

Pinnaroo<br />

Poowong<br />

Sale<br />

Sea Lake<br />

Shepparton<br />

Skipton<br />

Stawell<br />

Swan Hill<br />

Timboon<br />

Traralgon<br />

Tullamarine<br />

Wandin<br />

Wangaratta<br />

Warracknabeal<br />

Warragal<br />

Warrnambool<br />

Wonthaggi<br />

Wycheproof<br />

Yarram<br />

Yarrawonga<br />

Yea<br />

Western Australia<br />

Albany<br />

Ballidu<br />

Bassendean<br />

Boyup Brook<br />

Broome<br />

Bunbury<br />

Carnamah<br />

Carnarvon<br />

Coorow<br />

Corrigin<br />

Dalwallinu<br />

Dandaragan<br />

Dowerin<br />

Esperance<br />

Geraldton<br />

Gnowangerup<br />

Hyden<br />

Kalannie<br />

Katanning<br />

Kojonup<br />

Kununurra<br />

Lake Grace<br />

Lake King<br />

Manjimup<br />

Merredin<br />

Midvale<br />

Mingenew<br />

Moora<br />

Morowa<br />

Mullewa<br />

Narrogin<br />

Northam<br />

Perenjori<br />

Perth<br />

Pingrup<br />

Ravensthorpe<br />

Spearwood<br />

Three Springs<br />

Wongan Hills<br />

Wyalkatchem<br />

93


Back Cover: Claire and Craig Prescott, Growers<br />

Front Cover: Adele Prescott<br />

Head Office<br />

380 La Trobe Street<br />

Melbourne, Victoria 3000<br />

Tel: (03) 9209 2000<br />

1800 054 333 (Toll Free)<br />

Fax: (03) 9670 2782<br />

Web: www.awb.com.au<br />

ABN: 99 081 890 459

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