AWB Limited - 2004 Annual Report

More documents

Recommendations

Info

DIRECTORS' REPORT Your directors submit their report for the year ended 30 September 2004. DIRECTORS The directors of the company at any time during or since the end of the financial year are: Brendan Stewart (Chairman) Robert Barry (Deputy Chairman) Andrew Lindberg (Managing Director) Steve Chamarette (elected at 2004 Annual General Meeting on 11 March 2004) Brendan Fitzgerald Laurie Marshall (resigned 11 March 2004) Xavier Martin Warrick McClelland Christopher Moffet Peter Polson Kerry Sanderson John Simpson John Thame. Except where noted, the directors held their position as director for the financial year and up to the date of this report. A summary of the experience, qualifications and special responsibilities of each director is provided on pages 46 and 47. PRINCIPAL ACTIVITIES The AWB Group is Australia's leading rural services provider and one of the world's largest wheat managers and marketers. Refer to Note 33(a) to the financial statements for details of entities within the group. AWB Group's operations can be categorised into five key business areas: Pool Management Services – managing the aggregation and global marketing of Australian wheat to maximise net pool returns, providing commodity price and currency risk management, and providing the development and Australian application of leading–edge grain related technologies; Rural Services (Landmark) – Landmark is Australia's largest supplier of agribusiness products and services. It provides customers with rural merchandise, fertiliser, livestock, wool marketing, agronomy, insurance, real estate and rural financial services; Finance and Risk Management – the provision of finance and risk management products to grain growers; Grain Acquisition and Trading – the trading, as principal, of grains and shipping capacity, and the provision of marketing products to Australian grain growers; and Supply Chain and Other Investments – the development of, and direct investment in, supply chain infrastructure and end–user grain businesses. RESULTS AND REVIEW OF OPERATIONS 2004 2003 $'000 $'000 Consolidated entity profit after tax and outside equity interests for the financial year 96,862 43,891 A review of the operations and results of the consolidated entity and its principal businesses during the financial year is contained in pages 10 to 29. DIVIDENDS Subsequent to year end, a fully franked final dividend of 11 cents per share was approved by the board on 24 November 2004 and is payable on 17 December 2004. All dividends paid will be fully franked at the current tax rate of 30%. The 2003 final dividend of $36.0 million and the 2004 interim dividend of $47.3 million were paid to B class shareholders during the period. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There were no significant changes in the state of affairs of the consolidated entity during the financial year. SIGNIFICANT EVENTS AFTER BALANCE DATE Since 30 September 2004 no matter or circumstance has arisen that has significantly affected, or may significantly affect: (a) the consolidated entity's operations in future financial years; or (b) the results of those operations in future financial years; or (c) the consolidated entity's state of affairs in future financial years. LIKELY DEVELOPMENTS AND EXPECTED RESULTS The consolidated entity will continue to pursue its policy of increasing the profitability and market share of its major business areas during the next financial year. Further information about likely developments in the operations of the consolidated entity and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the consolidated entity. ENVIRONMENTAL REGULATION AND PERFORMANCE The consolidated entity's operations are subject to various Commonwealth, State and Territory environmental legislation and regulation. There is no environmental regulation specific to the consolidated entity. The board is not aware of any significant environmental breaches during the financial year. INDEMNIFICATION AND INSURANCE The constitution of AWB Limited provides an indemnity for all current and previous company directors, secretaries and executive officers. The company indemnifies these people to the maximum extent permitted by law for any liabilities or expenses incurred in defending any proceedings where judgement is given in the person's favour. The indemnity does not however, cover conduct involving a lack of good faith. A Deed of Access, Indemnity and Insurance has been entered into between the company and each director which provides that the company will maintain a directors' and officers' insurance policy. The Deed also provides an indemnity to the maximum extent permissible by law to the director for any liabilities incurred as a director, other than liabilities to the company or a related body corporate, or liabilities arising out of conduct involving lack of good faith. A directors' and officers' insurance policy is maintained; however, the terms of the contract prohibit disclosure of the amount of the premium. During or since the end of the financial year, no director, officer or auditor had recourse to the indemnity or insurance. REGISTERED OFFICE Level 21, 380 La Trobe Street Melbourne, Victoria, 3000 52
REMUNERATION REPORT Remuneration Committee The role of the Remuneration Committee is documented in a charter which is approved by the board. Its principal functions are to review and recommend to the board, where appropriate: the remuneration policy, including the executive incentive policy, employee share plans and superannuation; recruitment, retention and termination policies and procedures for senior management; the performance appraisal policy; and the managing director’s performance goals and remuneration. It also reviews prior to implementation: the remuneration and contract terms, including termination provisions, of executives reporting to the managing director; the design of new or amendments to current executive incentive plans and the total proposed payments from each incentive plan; the continuing appropriateness of the performance hurdles in each executive incentive program; the design of other executive benefit programs; and succession planning. The Remuneration Committee also provides advice to the board on the remuneration of non–executive directors and the approval of awards under the Employee Share Plan, Staff Ownership Plan, Equity Share Plan and Performance Rights Plan. The Remuneration Committee charter requires that four non–executive directors should be members, including the chairman, and at least three of whom must be independent. The members of the Remuneration Committee are Mr Brendan Stewart (Chairman), Mr Peter Polson, Mr John Simpson and Mr John Thame. (Refer to pages 46 and 47 for details of the qualifications and experience of committee members.) The Remuneration Committee met five times during the financial year. Refer to page 58 for details of the attendance by committee members at those meetings. A summary of the Remuneration Committee Charter is available on the Corporate Governance section of AWB’s website. Advisers The Managing Director, the General Manager Corporate and the Head of Human Resources attend committee meetings by invitation and have assisted the Remuneration Committee in its deliberations during the year, except where matters associated with their own remuneration were considered. In November 2002 the board appointed Mercer Human Resource Consulting as an independent external advisor on matters pertaining to the Managing Director’s remuneration. Advice was also sought during the year from Godfrey Remuneration Consulting on both short and long-term incentive plan design and measures as well as executive remuneration advice. Any information received by Human Resources, which is relevant to matters being considered by the Remuneration Committee, is made available to the committee’s members. Remuneration policy The Remuneration Committee recognises the complex nature of the AWB Group’s business operations and that its performance depends on the quality of its people. To be successful, the group must be able to attract, motivate and retain highly skilled executives in a competitive market. The key principles of the group’s remuneration policy are designed to: support AWB’s organisational and people objectives – that is, to attract, motivate and retain employees; provide market competitive fixed pay, and variable performance based pay outcomes; provide appropriate annual incentives for performance that reward executives using financial and non-financial measures of performance; provide a strong emphasis on long-term incentives so that the total package can deliver superior reward for exceptional performance and link rewards to executives to the creation of value for shareholders; ensure remuneration arrangements between executives are equitable and fair, supporting the appropriate deployment of resources and in particular talent across the business; and limit severance payments on termination to pre-established contractual arrangements which do not commit the group to making unjustified payments in the event of non-performance. Remuneration for executives is divided into two components. The first is the fixed component, referred to as “total cost”, which is made up of base salary and benefits, including superannuation benefits. The second component is the “at risk” component which includes the short-term incentives that take the form of cash, and long-term incentives provided via an equity plan. The amount of at risk remuneration, if any, that is earned by an executive is wholly dependent upon the performance of the individual, the team and the businesses against pre–determined Key Performance Indicators (KPIs) and performance hurdles approved by the board. The cost and value of all of the components are considered as a whole. AWB’s remuneration policy is to pay at the median level of remuneration for target performance and to provide the opportunity for upper decile rewards for distinctive (upper decile) performance. Details of each element of remuneration are set out below: Fixed remuneration Total cost is quantified by reference to the scope and nature of the individual’s role and their performance coupled with experience. Market data is used to benchmark salary levels on a national basis, adjusted for regional variance (within Australia) and against cost of living data for local conditions in the instance of expatriates. The executive may elect to have a combination of benefits, including superannuation and the provision of a motor vehicle, provided out of the fixed annual remuneration. The value of any of the non–cash benefits provided to the executive includes the costs of any fringe benefits tax payable by the company as a result of providing the benefit. Benefits are not provided in addition to total cost, unless required as a tool of trade (e.g. a motor vehicle). All benefits received by the specified executives and non–executive directors are included in the following table. Superannuation benefits A range of superannuation, retirement and death in service benefits operate with AWB. These reflect the different statutory entitlements in the jurisdictions in which the AWB Group operates and local market practice. 53
Page 1 and 2:
Annual Report 2004
Page 3 and 4: Who We Are AWB Limited (AWB) is Aus
Page 5 and 6: Finance AWB harvest finance book pe
Page 7 and 8: Five Year Summary 2004 2003 2002 20
Page 9 and 10: Chairman’s and Managing Director
Page 11 and 12: To continue building its capability
Page 13 and 14: Pool Management Services Highlights
Page 15 and 16: AWB National Pool participants. AWB
Page 17 and 18: Landmark Highlights Integrated Land
Page 19 and 20: the integration, Landmark has reloc
Page 21 and 22: Finance and Risk Management Highlig
Page 23 and 24: Finance Limited, a wholly owned, ba
Page 25 and 26: Grain Acquisition and Trading Highl
Page 27 and 28: through the AWB Geneva office, both
Page 29 and 30: Supply Chain & Other Investments Hi
Page 31 and 32: The Five Star Feed Mill, located on
Page 33 and 34: Our People AWB employs over 2,700 p
Page 35 and 36: More than 70% of AWB’s employees
Page 37 and 38: Our Social Commitment Together with
Page 39 and 40: Social service providers While not
Page 41 and 42: 7. Richard Fuller General Manager,
Page 43 and 44: Independence All of the current 11
Page 45 and 46: Services Agreement Committee The Se
Page 47 and 48: its observance provides the foundat
Page 49 and 50: Promotion Committee and Founding Ch
Page 51 and 52: 1. Brendan Stewart Chairman, Non-ex
Page 56 and 57: DIRECTORS' REPORT (continued) REMUN
Page 58 and 59: DIRECTORS' REPORT (continued) DIREC
Page 60 and 61: DIRECTORS' REPORT (continued) DIREC
Page 62 and 63: STATEMENT OF FINANCIAL PERFORMANCE
Page 64 and 65: STATEMENT OF CASH FLOWS FOR THE YEA
Page 66 and 67: NOTES TO AND FORMING PART OF THE FI
Page 104 and 105:
NOTES TO AND FORMING PART OF THE FI
Page 106 and 107:
INDEPENDENT AUDIT REPORT TO THE MEM
Page 108 and 109:
SHAREHOLDER COMMUNICATION FINANCIAL
Page 110 and 111:
GLOSSARY AWB Basis Pool AWB Basis P
Page 112:
Head Office 380 La Trobe Street Mel
show all

AWB Limited - 2004 Annual Report

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?