Annual Report - AWB Limited

6 www.awb.com.auFrom Peter Polson,Chairman

In 2008 AWB significantly improved its financial performance,successfully implemented comprehensive governance reform anddeveloped a strategy for future growth.A 137% increase in net profit after tax and significant itemsto $64.3m was the result of hard work in every business by allemployees in Australia and overseas.We were able to achieve this strong result by focusing on what wecould control in the face of unprecedented global commodity andfinancial market volatility, extensive restructuring of the businessand deregulation of Australia’s wheat exportmarketing arrangements.The new Wheat Export Marketing Act 2008 introducedcompetition into bulk wheat export marketing from 1 July2008. The new regulator, Wheat Exports Australia, subsequentlyapproved a number of export licences to domestic andmultinational grain traders.AWB Limited subsidiaries, AWB Harvest Finance Limited and AWB(Australia) Limited, were also accredited, enabling the companyto continue to be a major exporter of Australian wheat. This isan important step as AWB has retained many loyal internationalcustomers who want to continue to buy wheat from Australia.The deregulation of wheat marketing reinforced the need toreform AWB’s governance arrangements. We needed to replacean out-dated dual shareholder structure and a complexConstitution with a single share structure and a standardcommercial Constitution.After several attempts, 77% of grower shareholders approvedchanges to the Constitution on 3 September 2008 to make thecompany a commercially strong grains marketer under the newwheat marketing arrangements. On behalf of the Board, I wouldlike to thank shareholders for the significant voter turnout and tothank all those who actively supported reform.The majority of the board supported these reforms. Unfortunately,four directors opposed the reforms. Following the successfulshareholder vote, these four directors resigned from the AWBLimited Board.With the adoption of a new commercial Constitution on22 October 2008, Brendan Stewart retired as Chairman of AWBLimited. I would like to recognise Brendan’s strong leadershipon governance reform over several years in very challengingcircumstances.Brendan left a highly focused and commercial AWB that is nowwell equipped for the challenges of the future.Following the deregulation of wheat export marketing, oursubsidiary AWB International Limited will no longer run a NationalPool on behalf of all wheat growers. After the finalisation of the2007-2008 National Pool, the old Single Desk arrangements willeffectively cease to exist.As a result, three directors elected by wheat growers to the Boardof AWB International Limited resigned as part of the governancereforms implemented on 3 September. I would like to thank AWBInternational Chairman, Ian Donges, and his fellow directors,James Rackham and Wayne Gibson, for their support for AWBgovernance reform and their stewardship of the National Poolon behalf of wheat growers over the last few years.AWB has made progress in 2008 on a range of legacy issuesarising from legal actions previously taken against the company.After deregulation of wheat export marketing and companyconstitutional change, AWB has been able to consider a rangeof growth options, including potential industry consolidationopportunities.Under a new dividend policy announced during the year, futuredividends will be more closely aligned to annual earnings.The policy aims for a dividend payout ratio of between 40% to65% of Net Profit After Tax and significant items and wheneverpossible, to fully frank all dividends. As part of the 2007-2008 fullyear results announcement, the Board of Directors approved a5 cents per share final dividend payable that took the full yeardividend payable to 9 cents per share fully franked. The DividendReinvestment Plan will continue to be fully underwritten.Finally, in a difficult and watershed year for the company I wouldlike to thank our employees for their hard work and commitmentto the business, and our customers and shareholders for theirsupport.Peter PolsonChairmanDuring his term as Chairman, Brendan put in place a newConstitution, a new Board, a new management team, anda company culture which focuses on the essential businessprinciples of integrity, accountability, teamwork and customerfocus. We now operate within a far stronger risk managementand compliance framework, and have developed a companystrategy to grow and diversify our revenue streams.www.awb.com.au 7

From Gordon Davis,Managing DirectorAWB made significant progress on a range of fronts in 2008including financial performance, business restructuring andstrategy development that will ensure we are well positionedfor future growth to benefit customers, employees andultimately shareholders.Improved weather conditions in Australia and record globalcommodity prices boosted agricultural activity which contributedto a significant improvement in financial performance in 2007-2008. However, underlying performance also improved as a resultof management actions to restructure the business and improveoperating efficiency.One of the most pleasing outcomes was the record profitperformance by our rural services business comprising Landmarkand our joint venture businesses, Hi-Fert and RD1, in Australia andNew Zealand.Landmark Rural Services made substantial business improvementsduring the year to improve margin control. A number of strategicprojects are also underway to improve the quality of futureearnings, including an extensive rebranding program acrossAustralia and a customer driven program that targets an ‘increasedshare of wallet’. The business is well placed to leverage its currentfootprint and expertise to generate sustainable growth.8 www.awb.com.au

We also made significant advances in rebuilding our reputationwith many stakeholders through constitutional reform and theaccreditation of AWB (Australia) Limited and AWB Harvest FinanceLimited as ‘fit and proper’ companies to export bulk wheat underthe new marketing arrangements.In September 2008, AWB Harvest Finance launched West Coastand East Coast pools for 2008-2009, both of which will have AWBHarvest Finance loan and payment products available to poolparticipants. To ensure the ring-fenced structure of AWB HarvestFinance is maintained, a new trust will be created for each season.This is designed to provide payment protection for both poolparticipants and financiers.I am confident that our 2008-2009 commercial offer will beattractive to Australian wheat growers as I believe we will deliveron the three priorities Australian wheat growers are looking forwhen marketing their wheat – the best price, excellent customerservice and security of payment.Operational performanceIn 2008, total revenue increased 47% to $6.84 billion, up from$4.67 billion in the pcp and EBITDA increased 32% to $228.5m,up from $173.2m in the pcp.Landmark Rural Services delivered its strongest result to date,with higher crop chemical and fertiliser sales and operatingmargins on the back of increased agricultural activity acrossAustralia. Landmark EBITDA was up 66% to $90m. The businessalso benefited from higher earnings from its investments in Hi-Fertand the RD1 rural merchandise joint venture with Fonterra.Landmark Financial Services sustained earnings, recording EBITDAof $27.6m despite an increasingly challenging credit environment.Deposit growth, fee income and insurance commission performedwell; however these were partially offset by increased fundingcosts. The business continued to focus on maintaining margins,a strong credit portfolio and prudently managing growth.Australian Commodity Management significantly improvedperformance on the back of strong origination and sales of wheat,canola and pulses. This was a pleasing result, given the ACM teamand business underwent extensive restructuring in the first halfof the financial year. It contributed EBITDA of $61.9m, up from$5.6m. International Commodity Management’s result was mixedwith an EBITDA contribution of $24m, down 66% against the pcp,after one-off gains in chartering and trading activities in 2007.OutlookIn 2008-2009, our focus will be on growing shareholder valuethrough sustainable returns and earnings growth.The globalisation of agribusiness and changing dynamics ofdemand and supply offer the business a range of opportunities.We will need to adapt our business model to global and domesticchanges in market conditions. However, Australian agricultureremains an attractive industry segment and the new deregulatedwheat market will see the business focus on margin, ratherthan volume.Landmark Rural Services is a key growth platform. In 2008-2009,the business will complete a range of strategic activities designedto increase productivity and further lift operational performance.Growth for the business will come from strategic initiativesfocused on increasing value from existing markets and increasingrevenue from new sources.In the prevailing economic climate, Landmark Financial Serviceswill seek to manage the cost of funds and maintain credit quality.Australian Commodity Management will seek to leverage itsstrong customer network and over 80 years of experience inmarketing Australian wheat. It will focus on maintaining ourproven pooling performance and ensuring competitive harvestfinance loans and payments, regular pool distributions andpayment incentives for grain quality. The focus for InternationalCommodity Management will be to build structural revenueflows and integrate activities with those of Australian CommodityManagement.Employee and customer safety is of paramount importance atAWB. We have not consistently delivered on our promise to sendall employees and customers home healthy from our workplacein the past and we will need to focus more on this objective inthe future.I would like to say thank you to the many employees whocontinued to work long and hard during the year. The strongbusiness result – both financially and operationally – is a positiveoutcome and a reflection of their efforts. It is a result that wecan all be proud of.I am pleased with the progress we are making on rebuilding thebusiness. We still have some way to go on this journey but weremain committed to success for employees, customersand shareholders.Gordon DavisManaging Directorwww.awb.com.au 9

AWB todayOur client base extends to 110,000 customers, serviced by our three core business streams: Landmark Rural Services, Financial Servicesand Commodity Management. We employ more than 2,400 people across points of presence in Australia, India, Brazil, Switzerland,Singapore, the People’s Republic of China, Japan and the Ukraine. Seventy percent of our employee population live and work in rural andremote communities, close to many of our customers.Landmark Rural ServicesLandmark Rural Services offers customers a full range of agribusiness needs from merchandise, fertiliser, farm services, wool and livestockto finance, insurance and real estate. It is Australia’s largest distributor of merchandise and fertiliser, servicing customers from more than400 points of presence across Australia. The business includes investments in Hi-Fert (50%), RD1 (50%), a joint venture with Fonterra, andAustralian Wool Handlers (AWH) (50%).Financial ServicesThe Financial Services business is focused on providing financial solutions to viable and sustainable enterprises across rural and regionalAustralia. The suite of financial services offered by the business includes lending solutions, savings and investment accounts, insurancesolutions and more recently equipment finance and wealth management. Landmark Financial Services has a unique opportunity to growmarket share by leveraging Landmark Rural Services’ existing customer base.Commodity ManagementCommodity Management’s geographic diversity sees the business operate in global commodity markets from offices in Geneva, Delhi,Sao Paulo, Melbourne and more recently the Ukraine. The primary revenue streams include commodity trading, origination and salesof cereals, pulses and oilseeds, logistics, chartering and harvest finance. AWB (Australia) Limited and AWB Harvest Finance Limited areaccredited to export bulk wheat under Australia‘s new marketing arrangements. Commodity Management operates 22 regional storageand handling facilities across Australia’s eastern states, a 50% share of Melbourne Port Terminal and other offshore investments inprocessing.10 www.awb.com.au

Contribution to underlying EBITDAby business segment (%)Corporate %Landmark ural Services 9%Landmark Financial Services 1%Harvest Finance 6%Australian Commodity anagement 7%ool anagement Services 9%Supply Chain and ther Investments %Corporate %Landmark ural Services 9%Landmark Financial Services 1%Harvest Finance 6%International Commodity anagement 11%Australian Commodity anagement 7%ool anagement Services 9%Supply Chain and ther Investments %International Commodity anagement 11%www.awb.com.au 11

Landmark Rural ServicesRural Services (EBITDA)Year $m2004 71.92005 75.72006 53.72007 54.7Landmark Rural Services delivered a robust performance this year, with EBITDA contribution up 66%, to $90m. 2008 A combination 90.0 of improvedseasonal conditions and increased agricultural activity across Australia, along with improved processes and efficiency gains, is evidence ofthe momentum being created by the strategic initiatives started during 2007.This year, the focus for the business has been on improving operating quality andefficiency, growing high-value client relationships and developing opportunities toincrease revenue from new sources.Rural Services (EBITDA)The customer driven program has targeted an increased share of the customerwallet through the training and development of leaders and teams in accountmanagement practices.The business has also made structural changes to its business model to enableregional managers to focus more on managing people and implement key strategicactivities. Improved procurement, better management of margin and the removalof duplication and waste have also delivered benefits.1008071.975.790.0The business is making a $22m investment in an SAP enterprise system, new point 60of sale (POS) systems and simplified customer paperwork. The new POS andpaperwork initiatives will be introduced from the end of 2008, with completionof the enterprise system implementation targeted for the end of 2009. At the40same time, the business is executing a project that will create consistent channelstrategies and a single set of contracts that will be managed nationally.20Safety, health and environment continue to be a major focus for the business,with work underway to minimise risks to people and the business and toimprove compliance. 053.7 54.712 www.awb.com.au

Highlights• Strongest result to date with EBITDAup 66%, to $90m• Improved processes, margin controland efficiency gains• National relaunch of the Landmark brandFertiliser gross profit was $39.5m, up 73% (excluding Hi-Fert).The business benefited from strong early demand as farmers builtup reserves in the first half of the year, particularly across SouthAustralia and Western Australia. On the east coast of Australia,the business buys, holds and sells fertiliser and benefited fromthe price rally. On the west coast, the business on-sells fertiliserand makes a volume gain when agricultural activity is buoyant, asin the first half of the financial year.LivestockLivestock gross profit was $61.8m, up 7%. The livestock businesswas impacted by lower national sales as stock was held back torebuild herds. The strong Australian dollar also affected exportvolumes. Overall, cattle volumes were down 1% and sheepvolumes were down 4.4%. The business benefited froma range of process changes to improve commission controls.WoolWool gross profit was $11.2m, down 21%. Bale volumes sold weredown 13.6% on the pcp, particularly in Western Australia. Volumeswere down generally across the market due to the continuedreduction in flock numbers.Real EstateGrowing high-value client relationships has also been a focusduring the year. With 13,000 clients generating more than 80%of Landmark’s EBIT, this is one of the keys to building a sustainablebusiness. The business is working to improve merchandisestandards, ranging and density and provide better retail trainingfor customer facing employees. Supporting this work is extensiveresearch into customer segmentation and the national relaunchof the Landmark brand.In addition, the business introduced a national rewards program– Landmark Rewards – where customers earn points every timethey make a purchase from the program range at participatingLandmark outlets.Merchandise and FertiliserMerchandise gross profit was up 34% to $172.1m, generatedby a combination of improved margin management and price.Improved weather conditions drove an early start to the seasonon the east coast of Australia and record global commodity pricesand chemical and fertiliser prices increased business activity.Real Estate gross profit was $22.7m, up 6%, due to stronger salesin the pcp in Victoria and Queensland. The business also secureda large proportion of the iconic rural properties offered for saleduring the year including S Kidman & Co in the Western AustraliaKimberley, Clyde Agricultural properties in Queensland and NewSouth Wales and Tipperary in the Northern Territory.Other investmentsThe contribution to net profit from our joint venture businesses –Hi-Fert, RD1 and AWH – was $18.5m, up 68%.Landmark Rural Services’ share of the Profit After Tax (PAT) ofHi-Fert was $10.2m, as a result of rising fertiliser prices andincreased volume. Landmark has a 50% share in this joint venture.Landmark Rural Services’ share of the PAT from the RD1 jointventure with Fonterra was $2.1m on the back of strong globalmilk prices. RD1 is New Zealand’s largest retailer of agriculturalproducts and services to the dairy sector with a national networkof more than 50 branches.Landmark Rural Services’ share of AWH’s PAT was $3.2m andreflects the reduced wool volumes in the market during the year.AWH is Australia’s only complete end-to-end service provider fromfarm gate to ship, handling approximately two-thirds of Australia’sannual wool clip.www.awb.com.au 13

Financial Services (EBITDA)2004 44.52005 31.82006 37.52007 32.52008 42.1Financial Services (EBITDA)5044.54037.542.13031.832.52010014 www.awb.com.au

Highlights• Sustained earnings in a challenging globalfinancial environment• Increase in insurance commission of 17%• Controlled asset growth of 10% in LandmarkFinancial Services• Increased tonnage and higher commodityprices benefited Harvest FinanceInsurance commission was up 17%, following an increase in overallgross written premiums in conjunction with higher crop insurancelevels in Western Australia and South Australia.During the year, the business continued to diversify its financialservices offering. In June, it formed an alliance with E*TRADE tofacilitate access to online share trading services.In July, the business acquired 100% of livestock leasing business,Stocklease Pty Limited. Stocklease is a niche provider of finance,focusing on established operators who are looking to free uppart of the working capital in their business. Livestock leasingis a good option for farmers in a strong financial position withwell established industry experience and will be a key area forgrowth in the short to medium term.Landmark Financial Services has grown conservatively during2007-2008 and is focused on further developing relationshipswith viable and sustainable customers. The business will continueto utilise the strength of the Landmark network for cross-sellingand referral opportunities.AWB Harvest Finance LimitedLandmark Financial ServicesLandmark Financial Services sustained earnings in an increasinglychallenging credit environment. Deposit growth, fee income andinsurance commission performed well; however, these activitieswere partially offset by increased funding costs. A focus onmaintaining margins, a strong credit portfolio and prudentlymanaging growth resulted in an increased EBITDA contributionof $27.6m, up 2% vs. the pcp.Loan balances grew to $2.3 billion (as at 30 September 2008),with controlled asset growth of 10%. Despite tightening ofthe financial credit market, and prolonged drought in partsof regional Australia, the loan portfolio continues to showstrong credit quality.The net interest margin on the loan portfolio was 2.02%, downslightly on last year’s result. This was mainly due to an increasein funding costs following the extension of funding in the ratedcommercial paper trust.In its final season providing pool products to the AWB NationalPool under the old wheat marketing arrangements, AWB HarvestFinance Limited benefited from increased tonnage and highercommodity prices, compared to drought conditions of the pcp.An increase in EBITDA of 164% to $14.5m resulted from thefinalisation of both the 2005-2006 and the 2006-2007 pools inthis financial year. Harvest Finance’s average loan book was also6% higher at $461.7m and its operating expenses decreased by55% to $3.3m. This reflected the reduction in scale of the businessas it prepared for the deregulation of the export wheat market.AWB Harvest Finance’s short term credit rating is A1 and it has along term credit rating of A from Standard & Poor’s.From 1 October 2008, AWB Harvest Finance will be managedand reported as part of Australian Commodity Management.www.awb.com.au 15

Commodity ManagementCommodity Management (EBITDA)Commodity Management had a solid year, with the operating environment less volatile 2004 in the second 156.6half of the financial year.International grain prices reached an all-time high in the first half of the year, due to 2005 limited global 136.1 supply and concerns about northernhemisphere crop prospects. Volatility eased in the second half with improved global 2006 supplies of 100.8 wheat and coarse grains and the exit ofhedge funds from global commodities markets.2007 88.42008 100.9ACM’s performance rebounded with strong results from origination and sales of wheat, canola and pulses. There was also continuedrevenue growth from trading activity across a broader range of crops. The performance of Geneva returned to more sustainable levels,after one-off gains in chartering and trading activities during 2007.In August 2008, ACM announced a rail freight agreement with El Zorro and thecommissioning of 84 new rail wagons. The agreement ensures that AWB GrainFlowcan provide its customers with an integrated storage, handling and freight serviceon the east coast of Australia.In September 2008, AWB subsidiaries, AWB Harvest Finance and AWB Australia,were accredited to export wheat under new wheat marketing arrangements.200Commodity Management (EBITDA)A master trust structure was created to ensure the ring-fenced structure of AWBHarvest Finance is maintained. A new trust will be created each season to providepayment protection for both pool participants and financiers.150156.6136.1AWB Harvest Finance subsequently launched West Coast and East Coast pools for2008-2009, both of which will have Harvest Finance loan and payment productsavailable to pool participants.100100.8 100.988.4The 2008-2009 commercial offer focused on the three priorities of Australian wheatgrowers when marketing their wheat – best possible price, excellent customerservice and security of payment. The pre-commitment campaign for the 2008-2009pools generated an encouraging take up of in excess of 800,000 tonnes for the $10pre-commitment offer. This offer closed in mid-October.50016 www.awb.com.au

Highlights• Commodity management’s EBITDA was$100.9m up from $88.4m in the pcp• AWB Harvest Finance and AWB Australiaaccredited to export wheat• A new rail freight agreement with El Zorroand the commissioning of 84 newrail wagonsSupply chain and other investmentsAn EBITDA loss of -$4.7m reflected the impact of two years ofdrought across the east coast of Australia. Continued low receivalvolumes adversely affected GrainFlow, although the better thanexpected sorghum harvest on the east coast partially offsetlower wheat volumes. The utilisation of Melbourne Port Terminalcontinued to be disappointing due to ongoing drought conditionsin the catchment area.International Commodity ManagementThe International Commodity Management businesses ofAWB Brasil, AWB Geneva and AWB India delivered an EBITDAcontribution of $24m, down 66% from the pcp.AWB BrasilAWB Brasil’s EBITDA contribution was -$9.8m. AWB Brasil is now inits second full year of operation and had a disappointing tradingperformance for the year, due in part to unexpected increasesin inland freight costs and reliance on soy bean origination. Thebusiness model is now being adjusted to reduce working capitalrequirements in part with the addition of cattle feedlotting to thegrain origination business to diversify earnings.Australian Commodity ManagementACM’s EBITDA increased to $61.9m, up from $5.6m in the pcp,with continued strong activity across the domestic grain portfoliofor wheat, canola and pulses as the business broadened itscommodity profile ahead of wheat marketing deregulation.The container market performed well during the year; however,this business is expected to slow as bulk sea freight prices declineas slower global economic growth impacts all vessel types. Thedomestic chartering business is expected to be increasinglycompetitive with the entrance of 16 accredited bulk wheatexporters.Pool ManagementThe implementation of new wheat marketing arrangementsintroduced changes to wheat pooling operations, with AWBImanaging the final National Pool in 2007-2008. This pool recordedthe highest ever estimated pool return of $420 per tonne, on theback of record high commodity prices.Pool Management Services costs were contained on the back oftwo small previous National Pools and this has positioned thebusiness to manage future competitive pools in a deregulatedenvironment.The 2006-2007 National Pool was finalised and final paymentsmade in April 2008.During the year, AWB Brasil entered into a joint venture cattlefeedlot business with LASA, which is located in Goias Province.The business also entered into a joint venture called Nova Agri,with AG Angra, an investment fund with a focus on agriculturalinfrastructure and Agristock, a management company. AWB Brasiltransferred three upcountry warehouses and operations into theJV, which allows growers to warehouse their product and selectmarketers rather than being obliged to sell to the owner of thewarehouse.AWB GenevaAWB Geneva’s EBITDA contribution was $31.9m, down 39% onthe pcp. AWB Geneva delivered a solid performance, particularlyin trading oilseeds and freight and also through structuredtrade finance. The business is the linkage point that creates anintergrated model between AWB India, AWB Brasil and AWBAustralia by facilitating trade flows and custom managementcoordination from point of origin through to the end customer.AWB Geneva is in the early stages of developing a start upoperation in the Ukraine that will replicate aspects of the businessmodels of Australia, Brazil and India, with a presence capable oforiginating grain from the farm gate.AWB IndiaAWB India’s EBITDA contribution was $1.9m, down 74% from thepcp. Following its start-up phase, AWB India focused on a broaderrange of activities, including warehousing and grain, pulse andoilseed origination and some exports in feed grains. Investmentswere made during the year in warehousing, storage and handlinginfrastructure and there are plans to expand the network to meetthe significant demand for improved storage infrastructure.In future, AWB’s pooling options will be offered through AWBHarvest Finance Limited.www.awb.com.au 17

CorporateCredit ratingsAWB maintains a dual credit rating structure whereby AWB Harvest Finance and AWB Limited are separately rated by Standard & Poor’s.On 12 September 2008, Standard & Poor’s reaffirmed the investment grade ratings of AWB Harvest Finance and AWB Limited.AWB Harvest Finance has a short term rating of A-1 and a long term rating of A (Negative Outlook). The A-1 rating reflects the structuralprotection and credit enhancements provided by the ring-fenced corporate structure.AWB Limited’s BBB- (Negative Outlook) long-term corporate credit rating was reaffirmed.Following the official closure of the US Commercial Paper program in May 2008, AWB Harvest Finance requested that Moody’s removetheir short term rating on 5 September 2008.Current AWB credit ratingsAWB Harvest Finance LimitedStandard & Poor’sA-1 (short term)A (long term)OutlookNegativeAWB LimitedStandard & Poor’sOutlookBBB-Negative18 www.awb.com.au

Group fundingAWB’s overall financing position includes:• non-current assets that are largely matched by equity –excluding Landmark Financial Services term loans• current assets that are largely matched by short term facilities.AWB has a variety of financing activities that includes seasonalfinancing, inventory financing, working capital financing andfunding of financial services assets. AWB’s strategy is to diversifyfunding sources to minimise costs and broaden funding andliquidity options. Due to the diversity of businesses, AWBborrows for specific purposes to minimise its cost.The Rural Master Trust finances the Landmark Financial Servicesloan book. This trust is funded through a committed warehousefacility and a rated commercial paper trust. In May 2008, thecommercial paper facility (which funds over 90% of the portfolio)was extended with staggered maturities out to November 2010.In the newly deregulated wheat export market, AWB HarvestFinance will provide funding to pools under a master truststructure. AWB Harvest Finance is financed through inventoryfinancing facilities.Domestic working capital requirements are funded througha syndicated bank facility, inventory financing which fluctuateswith seasonal requirements, a receivables securitisation facilityas well as unsecured deposit notes.Offshore working capital requirements are primarily fundedthrough dedicated offshore facilities, supported by equity andlimited credit enhancement provided by AWB Limited.www.awb.com.au 19

People and communityPeopleThe business continued to realign teams to meet new market imperatives in the grains industry in Australia, with a change in staffinglevels as we integrated National Pool and AWB International operations. The business also outsourced its payroll operations duringthe year.Safety, health and environment (SH&E) and compliance remain a key area of focus for the business. Manual handling, fatigue, livestockhandling on-farm and in saleyards remain our biggest activity risk factors. A new National SH&E manager was appointed to increasethe focus on employees behaving and operating safely in the workplace.Our development of people processes this year saw the introduction of an improved talent identification and development program,which feeds into business succession planning. Landmark also offered graduate programs - the cadetship program and the graduateagronomy program. The cadetship program offers broad exposure to all Landmark activities including wool, merchandise, financialservices, real estate, livestock and agronomy over a 12 month rotation. The graduate agronomy program focuses on agronomy andalso offers some exposure and understanding of other activities over a 12 month period.The business launched its business principles + ways of working, an updated version of the code of conduct. The updated versionincorporates our values more explicitly to provide a robust framework for how we do business and a clear link to specific group,country and business unit policies.These principles apply to each person who works for the AWB Group of companies, in each country where we conduct business.Each of us – as an employee, contractor, agent, representative or director of the AWB Group – is expected to conduct business in linewith our principles, values and all relevant laws and regulations.The business principles + ways of working explain in a practical way the basic principles that apply to all employees and talks aboutconsequences if employees choose to operate outside of our agreed framework. It provides an insight into an employee’s role andthe expectations for acting responsibly and ethically in the workplace.20 www.awb.com.au

The FFI CRC is a unique co-investment and integration ofactivities between Landmark, Meat & Livestock Australia,Grains R&D Corporation, Australian Wool Innovation and thecombined research effort of six state agencies, CSIRO and fouruniversities. Landmark plays a strategic role as the FFI CRC’s onlyagribusiness participant, supporting the FFI CRC’s adoption andcommercialisation activities. Landmark’s investment in the FFI CRCis central to its Farm Services strategy, building the capacity of itsteam of professional service providers and establishing a point ofdifference from its competitors.In its first year of operation, the FFI CRC achieved a number ofmilestones. It established and delivered EverTrainTM, an industrytraining program focusing on current issues, which also providesa formal accreditation path for Landmark agronomists. The FFICRC held a series of regional harvest and delivery workshops,focusing on headline technologies and products, including newlydeveloped varieties. Thirty-five new research and developmentprojects were also approved for commencement in 2008-2009,including a perennial wheat research project that will involvefuture research collaboration with Landmark.Industry groups and educationAWB and its business units sponsored a range of local grainsindustry groups and associations including Birchip CroppingGroup, Yorke Peninsula Alkaline Soils Group, Hart Field Site Group,Southern Farming Systems, Partners in Grain, South East PremiumWheat and Barley Growers Association, Western Australian No TillFarming Association, Liebe Group and Facey Group.CommunityThe business continued to play an active role in supporting therural and regional communities in which it operates through avariety of local sponsorship programs and community grants.AWB donated the proceeds from the dividend rounding programtowards the valuable work undertaken by beyondblue in rural andregional Australia to raise community awareness of depression andsupport prevention and early intervention.Landmark continued its sponsorship of the Nuffield AgriculturalScholarship Program, with the 2008 Landmark Nuffield scholarstudying the use of livestock in improving the diversity, healthand regeneration of semi-arid rangelands during a tour ofSouth Africa, the US and New Zealand.Landmark marked its thirty-fifth year as the major sponsorof the Western Australian Country Football Championships,and this year extended the sponsorship of country football toinclude sponsorship of the Landmark Australian Country FootballChampionships.SustainabilityThe Landmark Rural Services business continued its participation inthe Future Farm Industries Cooperative Research Centre (FFI CRC).The FFI CRC develops new farming systems and plant varieties forAustralia to make agriculture more productive, better adapted todrought and more sustainable in natural resource use.www.awb.com.au 21

22 www.awb.com.auManagement team

Gordon Davis Managing Director,B Forest Sc (Hons), MAgSc, MBAJoined AWB Limited in September 2006.Prior to joining AWB Limited, Gordon heldpositions with Orica Mining Services in theAustralia Asia region, was General Managerof Incitec Fertilizers and held roles at ICIAustralia and then Orica in public affairs andchemicals businesses. Gordon was Science andEnvironment Adviser to the federal Leader ofthe Opposition from 1990 to 1993 and workedfor the Tasmanian Forestry Commission as aresearch and field forester. He also attendedthe Advanced Management program atHarvard Business School in 2003.Philip Gentry Chief Financial Officer, BSc MBAJoined AWB in 2007 as Head of Strategy andMergers & Acquisitions. Philip was appointedChief Financial Officer in April 2008. He has19 years experience in financial servicesacross Australia and New Zealand in corporatebanking, strategic planning and development,commodity and international trade financeand investor relations. Philip was most recentlyHead of International Trade Finance and hasalso worked as Head of Investor Relations andRegional Executive Corporate Banking withthe ANZ Bank. He has a Bachelor of Sciencedegree from the University of NSW, a MBA fromthe International Management DevelopmentInstitute in Switzerland and is a graduate ofthe Royal Military College, Duntroon.John Russell General Manager Strategy andOperations, MBA, BEc (Hons), GAICDJoined AWB Limited in May 2008. John waspreviously Group General Manager-OperationsTabcorp Holdings Limited and has held seniorexecutive management positions acrossboth private equity and public ownershipcompanies. With experience as both CFO andCOO, his past roles include finance, strategyand operational responsibilities, incorporatingcompany float and takeover defence andM&A experience. Prior to Tabcorp, John heldsenior executive roles at Ausdoc InformationManagement, Australian Leisure andHospitality Group, Foster’s Group and KPMGConsulting.Robert Hadler General Manager,Corporate Affairs, BEc (Hons)Joined AWB Limited in July 2006. Beforejoining AWB Limited, Robert was head ofCorporate Affairs at National Australia Bankand was previously head of Corporate Affairsat Goodman Fielder. He has also worked in anumber of roles in Canberra and Melbourne,including Deputy Director of the NationalFarmers Federation, Government RelationsManager for ANZ Bank and as a Policy Adviserin the Prime Minister’s Department. Robertworked for five years as economics writerfor The Australian in the Canberra PressGallery and as that newspaper’s Londoncorrespondent.Kate Hughes Chief Risk Officer,BComm (Ec & Fin), GDip AppFin, AACIJoined AWB Limited in June 2006 as Manager,Compliance and Risk Reviews. Kate wasappointed Chief Risk Officer in December2007 with responsibility for market, credit andoperational risks, as well as the internal auditfunction. With broad experience in financialservices, risk management, governance andpublic administration, Kate has worked with theNSW State Treasury, Sydney Futures Exchangeand the Australian Securities and InvestmentsCommission. Kate has also provided riskmanagement and compliance consultingservices on trade practices, employmentand environmental issues.Graeme Jacobs General Manager, LandmarkJoined AWB Limited in February 2007.Graeme spent 27 years in Orica Limited in rolesincluding General Manager of Dulux, GeneralManager of Orica Chemnet, Australia’s largestchemical trading business, General Manager/Director of Crop Care and Managing Directorof Australian Vinyls, a PVC manufacturing andmarketing joint venture between Orica Limitedand PolyOne Corporation, USA. Graeme hasextensive experience in successfully executinggrowth strategies, business re-engineeringand building organisational and customeralignment.Colin Taylor General Manager, Financial Services,FFin, MAICD, MNIAJoined AWB Limited in March 2006. With over32 years of banking experience, Colin waspreviously General Manager for Commercialand Regional Banking, BankSA. Colin heldsenior roles in network management, property,marketing and finance prior to his appointmentin 1995 as General Manager. As well asmanaging a distribution network, Colin wasresponsible for driving the product strategyand managed the expansion of St GeorgeBank’s rural financial activities in regional NewSouth Wales and Victoria. Colin’s knowledgeof the rural sector, combined with commercialacumen, puts him in good stead to lead thegrowth of the Landmark Financial Servicesbusiness.Mitch Morison General Manager, CommoditiesJoined AWB Limited in 1993. Mitch wasappointed Acting General Manager-Commodities in April 2008 with responsibilityfor AWB’s trading operations in Australia, Brazil,India and Geneva. With broad experience inagribusiness, Mitch started his career as acommodity trader, then moved to the US tomanage AWB’s commodity hedge books andexecute price risk management strategies onboth the Chicago Mercantile Exchange andKansas City Board of Trade. Mitch has alsomanaged AWB’s grain marketing activities andLandmark’s strategy development for Wooland Livestock. He was General Manager ofAustralian Commodities before taking up hiscurrent role.Byron Collins General Manager,Technology and Business Services, BSc, MBAJoined AWB Limited in 1998. Byron wasappointed General Manager, Technologyand Business Services in February 2008 withresponsibility for the Group’s informationtechnology, property management, corporateprocurement, payment operations and HRservices. He was most recently Head of SharedServices. With broad experience in consulting,process improvement, business re-engineering,operations and IT, Byron has worked in a rangeof roles with AWB Limited, and in businessconsulting across the technology and utilitiesindustries.Left to right: Mitch Morison, Graeme Jacobs,Colin Taylor, Robert Hadler, Gordon Davis,Kate Hughes, Byron Collins, John Russell,Chris Davie, Philip Gentry, Peter PattersonPeter Patterson Company Secretary, LLM, FCISJoined AWB Limited in November 2006. Peteris responsible for compliance, corporategovernance and Board relations for AWBLimited. He has more than 12 years experiencein ASX listed companies and prior to joiningAWB Limited, Peter was the Deputy CompanySecretary at Coles Myer Limited and GeneralCounsel and Company Secretary of BonlacFoods Limited.Adviser to management teamChris Davie General Counsel, BA, LLBJoined AWB Limited in November 2006. Beforejoining AWB Limited, Chris was with ClaytonUtz for over 18 years, 17 of them as a partneradvising clients on joint ventures, mergersand acquisitions, project finance, energy andnatural resources, infrastructure development,Aboriginal native title and commodity sales.Before that, Chris spent 10 years as in-housecounsel with Shell in Australia and London,advising on petroleum exploration productionand marketing, mining, infrastructure projectdevelopment, project finance and internationaltrading of crude oil, petroleum products,coal and minerals.www.awb.com.au 23

24 www.awb.com.au

Corporate governancewww.awb.com.au 25

Governance at AWBAWB’s Board and management are committed to ensuringstakeholders’ expectations of sound corporate governancepractices are met.The Board determines the corporate governance arrangementsfor AWB. AWB Limited’s Constitution (Constitution) (which isavailable on AWB’s website www.awb.com.au) is a key governancedocument. The previous Constitution (which applied at thecommencement of the reporting period) was framed by theAustralian Government, in consultation with the Grains Council ofAustralia, as part of the process of privatising the Australian WheatBoard, effective in July 1999. As part of a program of constitutionalreform, on 3 September 2008 shareholders approved amendmentsto the previous Constitution. The principal effects of theamendments were that AWB’s primary object ceased to beinvolvement in “Grain Trading”, and the immediate redemption ofthe A class shares (which could only be held by wheat growers).On 22 October 2008, shareholders approved the adoption of anew Constitution, appropriate for a company with a single classof ordinary shares. The new Constitution is in relatively standardform for an ASX listed company, but has three special provisions:• one of AWB’s objects is to be involved in grain trading• at least two directors must be directly or indirectly involvedin agricultural production on a commercial scale• a 10% shareholding limit applies, which ceases in October2011 (three years after adoption of the new Constitution).Compliance with ASX Principles andRecommendationsThe Board has received a Corporate Governance AnnualAttestation from AWB management regarding compliance of allaspects of the business with AWB’s operating standards, ethicalstandards, areas of non-compliance and risk managementexecution and strategy.Details of AWB’s compliance (or otherwise) with the ASX CorporateGovernance Council’s Principles of Good Corporate Governanceand Best Practice Recommendations and its key corporategovernance practices for the reporting period ended 30 September2008 are disclosed in this corporate governance statement.Principle 1 - Lay solid foundations for management andoversightRecommendation 1.1 - Formalise and disclose the functionsreserved to the board and those delegated to management.AWB practiceRoles and responsibilities of the Board and managementThe Board is responsible for the overall governance of AWB andits strategic direction. This includes setting goals, monitoringperformance, and ensuring that AWB’s internal control andreporting procedures are effective and ethical and that AWB’sstrategic direction provides value for shareholders.AWB has adopted a formal Board charter.The Board has delegated general authority to the ManagingDirector to manage, control and direct the business of thecompany, whilst reserving certain high level matters for the Board’sown decision. In addition to this general authority, the Boardhas approved a management authorisations policy to formalisedelegations to the Managing Director and to the managementteam members who report directly to the Managing Director.The matters reserved to the Board include strategic matters,corporate governance, the appointment of corporate officers,capital raisings and other share capital matters, major acquisitionsand matters involving amounts over specified limits. Themanagement authorisations policy sets out the financial andnon-financial parameters within which managers can exercisedelegated authorities.The Board has established Board committees to assist theBoard perform its duties and discharge its responsibilities. Allcommittees have charters approved by the Board. The existence ofa committee does not, however, reduce the overall responsibilityof the Board, which assumes ultimate responsibility for anydecision making.The Board and the committee charters and a summary of themanagement authorisations policy are available on the CorporateGovernance section of AWB’s website.Allocation of individual responsibilitiesUpon appointment to the Board, each director receives acomprehensive letter of appointment which sets out the key termsand conditions of their appointment.Although under the previous Constitution directors wereelected by particular shareholders, directors are not consideredthe servants or agents of particular groups of shareholders orrequired to follow directions or expectations from any group ofshareholders (whether constituted by class or region).The Managing Director, the Chief Financial Officer and otherkey executives each have letters of appointment, or contractualequivalents, describing their terms of office, duties, rights andresponsibilities and their entitlement on termination.Principle 2 - Structure of the board to add valueRecommendation 2.1 - A majority of the board should beindependent directors.AWB practiceThe profiles of the directors at the date of this report, including adescription of their skills, experience and expertise relevant to theposition of director, are set out on pages 34–45.The Board met 13 times during the financial year. Refer to page 40for details of the attendance by directors at those meetings.Assessment and disclosure of independenceThe Board has adopted a definition of independence. Anindependent director is independent of management and free ofany business or other relationship that could materially interferewith, or could reasonably be perceived to materially interfere with,the exercise of their unfettered and independent judgement.26 www.awb.com.au

When assessing the independence of a director, the Board willconsider the following matters:(a) whether the director is a substantial shareholder of thecompany or is a director or officer of a substantial shareholderof the company(b) whether the director has been employed by the company inany capacity in the last three years(c) whether, within the last three years, the director has been adirector, officer or employee of a body which has providedprofessional services to the company where the fees paid tothat body by the company have exceeded $100,000 in any oneof the last three years(d) whether the director (or an immediate family member ofthe director) is a material supplier to, or customer of thecompany, or is an officer of a body that is a material supplierto or customer of the company. For the purposes of this clausea material supplier is one where the Company accounts formore that 20% of the supplier’s annual consolidated revenue.A material customer is one where the customer accounts formore than 5% of the company’s consolidated revenue in anyone year(e) whether the director (or an immediate family member of thedirector) has any material contractual relationship with thecompany or any of its subsidiaries. (A material contractualrelationship is one where the total value of the contractexceeds $1,000,000.)Failure to meet one of the above matters will not automaticallymean that the director is not independent. Instead the Board willconsider all relevant facts and circumstances when making itsdecision.The Board periodically assesses the independence of each director.Having regard to the above, the Board has determined that atthe date of this report all of its non-executive directors wereindependent.The Board has procedures in place to manage actual, potential orperceived conflicts of interests. In particular, directors are obligedto make disclosures of material personal interests in accordancewith legal requirements and Board policy in relation to particulardecisions being considered by the Board and generally. Thisincludes director interests and any business or other relationshipswhich could, or could reasonably be perceived to, materiallyinterfere with the director’s ability to act in the best interests ofthe company.Independent decision makingPeriodically the non-executive directors confer withoutmanagement present.To facilitate independent decision making, directors are entitledto any information they need or require and, subject to priorapproval by the Chairman (which is not to be unreasonablywithheld), may seek independent legal advice at the company’sexpense on any issue submitted to the Board. Any such legaladvice is then provided to all directors.Recommendation 2.2 - The chairperson should be anindependent director.AWB practiceAt the date of this statement, the Board considers that theChairman is an independent director (refer to independencestatement on page 26).Role of the ChairmanThe Chairman’s role is pivotal in the effective corporategovernance of AWB, in terms of both performance andconformance. The Chairman is responsible for ensuring thatthe Board functions effectively and provides leadership tooversee the operation of AWB.The Chairman is also responsible for ensuring that appropriateBoard procedures and structures are in place, so that relevantissues are considered by the Board properly and in a timelymanner. Outside the Board, the Chairman is responsible for publicrepresentation of AWB and for managing the relationship betweenthe Board members and between Board and management.A comprehensive document detailing the procedures to beundertaken in the role as Chairman is articulated in an annexureto AWB’s Corporate Governance Manual.Recommendation 2.3 - The roles of chairperson and chiefexecutive officer should not be exercised by the same individual.AWB practiceThe roles of the Chairman and the Chief Executive Officer are notexercised by the same individual.Recommendation 2.4 - The board should establish a nominationcommittee.AWB practiceThe Board has a Nomination Committee. In February 2007, theBoard restructured its committees and approved the establishmentof a combined Nomination & Remuneration Committee to replacethe previously separate Nomination Committee and RemunerationCommittee.The committee’s charter requires that the committee consist onlyof non-executive directors, and be composed of at least threemembers including the chair of the AWB Limited Board.Selection processThe Nomination & Remuneration Committee charter is availableon the Corporate Governance section of AWB’s website. Alsoavailable on the website is a description of the procedure for theselection and appointment of new directors to the Board, whichincludes the policy of the Nomination & Remuneration Committeefor the appointment of directors.Director competencies and commitmentThe Board, with the assistance of the Nomination & RemunerationCommittee, undertakes an annual review of the required mixof skills, experience and other qualities, including the corecompetencies and commitment which the non-executive directorsshould bring to the Board in order for AWB Limited to functioncompetently and efficiently. During the reporting period, thiswww.awb.com.au 27

process was conducted within the confines of the restrictionsimposed by the previous Constitution.Election and term of directorsThe Constitution requires directors to retire and submit themselvesfor re-election at the third annual general meeting followingtheir initial (and each subsequent) appointment. At the date ofthis report, the period of office of each director of AWB Limited(rounded to the nearest year) is as follows:Peter Polson (Chairman)6 yearsSteve Chamarette5 yearsGordon Davis (Managing Director) 2 yearsJohn Schmoll4 yearsBrendan Fitzgerald6 yearsTony Howarth4 yearsFred Grimwade1 yearPrinciple 3 – Promote ethical and responsible decision makingRecommendation 3.1 - Establish a code of conduct to guide thedirectors, the chief executive officer (or equivalent), the chieffinancial officer (or equivalent) and any other key executivesas to the:3.1.1 practices necessary to maintain confidence in thecompany’s integrity3.1.2 responsibility and accountability of individuals forreporting and investigating reports of unethicalpractices.AWB practiceAWB’s values, and the behaviours that support those values, weredeveloped by employees in a consultative process involving a largenumber of employees across all business areas and locations. Animplementation program has been conducted, and is continuing,to communicate the values to all employees and to ensure thevalues are embedded in all decisions and activities across theorganisation.The Board is committed to clearly promoting and demonstratingthat the company’s business affairs and operations are at alltimes being conducted legally, ethically and in accordance withthe highest standards of integrity and propriety. AWB’s businessprinciples + ways of working (formerly the Code of Conduct)are based on this principle and their observance provides thefoundation on which the company’s reputation with growers,customers, suppliers and stakeholders is based. The businessprinciples + ways of working reflect the values, behaviours,responsibilities and obligations of Board members and all peopleemployed by, contracted by, associated with or who act on behalfof the AWB Group. The business principles + ways of working areavailable on AWB’s website.The whistleblower policy includes a system which allowsthe confidential reporting of questionable, unacceptable orundesirable conduct. It also affords protection to all individualsreporting potential violations of policy (including the businessprinciples + ways of working) or other questionable, unacceptableor undesirable conduct.Recommendation 3.2 - Disclose the policy concerning trading incompany securities by directors, officers and employees.AWB practiceThe Board has adopted Share Dealing Guidelines which restrictshare trading by directors, AWB managers, AWB employees withfinancial reporting responsibilities and their associates to specified“window periods”. The window periods are as follows:(a) six weeks commencing two days after the announcementof the half year results(b) six weeks commencing two days after the announcement ofthe annual results(c) six weeks commencing two days after the company’s annualgeneral meeting(d) in the period of a qualifying prospectus, six weeks from thedate of the allotment of shares(e) any other period, of such duration, as determined by theBoard of AWB Limited from time to time.The window periods described in (a) and (b) automatically openwhile the window periods described in (c), (d) and (e) operate onlyif the Board of AWB Limited determines they should operate.The guidelines make clear that prohibitions on insider tradingmust be complied with at all times. The guidelines also prohibitdealing in AWB securities on a short term basis by directors andAWB management, with limited exceptions. The guidelines alsorestrict employees from hedging shares and performance rights.A summary of the Share Dealing Guidelines is available on theCorporate Governance section of AWB’s website.Principle 4 – Safeguard integrity in financial reportingRecommendation 4.1 - Require the chief executive officer (orequivalent) and the chief financial officer (or equivalent) to statein writing to the board that the company’s financial reportspresent a true and fair view, in all material respects, of thecompany’s financial condition and operational results and arein accordance with relevant accounting standards.AWB practiceThe Managing Director and the Chief Financial Officer have statedin writing to the Board that the company’s financial reports for theyear ended 30 September 2008 present a true and fair view, in allmaterial respects, of AWB’s financial condition and operationalresults and are in accordance with relevant accounting standards.The Board also received a similar attestation from the ManagingDirector and the Chief Financial Officer on the half year financialposition and performance of AWB.All AWB executives are also required to make attestations withregard to the results and financial condition of their businessdivisions.Recommendation 4.2 - The board should establish an auditcommittee.AWB practiceThe AWB Board has always had an audit committee.28 www.awb.com.au

Recommendation 4.3 - Structure the audit committee so that itconsists of:• only non-executive directors• a majority of independent directors• an independent chairperson, who is not chairpersonof the board• at least three members.AWB practiceThe committee’s charter requires that the committee consist onlyof non-executive directors. The committee is to be composed of atleast three members the majority of whom must be independentand must include the Chairman of the Risk Committee. Allmembers of the committee must be financially literate and atleast one member must have financial expertise.All members of the committee are considered financiallyliterate. The Chairman, Mr John Schmoll, has relevant financialqualifications and extensive financial experience. (Refer topages 34–35 for details of the qualifications and experienceof committee members.)The Board has determined that all of the members of the AuditCommittee (including the Chairman) are independent (refer toindependence statement on page 26).Recommendation 4.4 - The audit committee should have aformal charter.AWB practiceCharter and responsibilitiesThe Audit Committee charter is available on the CorporateGovernance section of AWB’s website.The primary responsibilities of the Audit Committee are toreview the integrity of the company’s financial reporting and tooversee the independence of the external auditor. (Review of riskmanagement and internal compliance and control systems is theresponsibility of the Risk Committee.)MeetingsThe Audit Committee met 5 times during the financial year. Referto page 40 for details of the attendance by committee members atthose meetings. The Managing Director, the Chief Financial Officerand the Chief Risk Officer attend each meeting of the committee.The Company Secretary, a representative of internal audit and arepresentative of the external auditor were also present for atleast part of each meeting at the invitation of the committee. Thecommittee meets privately with each of the Chief Financial Officer,the Chief Risk Officer and the internal and the external auditors.A description of the arrangements for the selection andappointment of the external auditor, and for the rotation ofexternal audit engagement partners, is available on the CorporateGovernance section of AWB’s website (www.awb.com.au).Principle 5 - Make timely and balanced disclosureRecommendation 5.1 - Establish written policies and proceduresdesigned to ensure compliance with ASX Listing Rule disclosurerequirements and to ensure accountability at a seniormanagement level for that compliance.AWB practiceAWB’s Continuous Disclosure Guidelines ensure that AWB Limitedmeets its continuous disclosure obligations under the ASX ListingRules and the Corporations Act 2001.The guidelines:• outline the legal and regulatory disclosure requirements thatapply to AWB Limited• give guidance as to the types of information that may requiredisclosure• give practical guidance for dealing with analysts, institutions,the media and other members of the public• establish and document a system for disclosure of materialinformation, and identify the channels for employees to passon potentially market-sensitive information as soon as it comesto hand• allocate responsibility for approving the form of any publicdisclosures and the making of other public statements orcommunications.The Board has delegated to a Continuous Disclosure Committee,comprising the Company Secretary, General Counsel, ChiefFinancial Officer and General Manager, Corporate Affairs,the responsibility for examining potentially market-sensitiveinformation and determining whether the information isrequired to be disclosed.A summary of the Continuous Disclosure Guidelines is availableon the Corporate Governance section of AWB’s website.Commentary on financial resultsThe Board is also committed to ensure that companyannouncements provide a balanced view of operating andfinancial performance. To assist this, the 2008 directors’ reportincludes an Operating and Financial Review commentary whichaids investors in making informed assessments of AWB’s activitiesand results.Principle 6 - Respect the rights of shareholdersRecommendation 6.1 - Design and disclose a communicationsstrategy to promote effective communication with shareholdersand encourage effective participation at general meetings.AWB practiceCommunications and websiteThe Board aims to ensure that AWB Limited’s shareholders areinformed of all major developments affecting the company.www.awb.com.au 29

Information is regularly communicated to shareholders viaannouncements to the ASX in accordance with AWB Limited’scontinuous disclosure obligations, media releases and periodicmail-outs. Information is also available from AWB Limited’s website(www.awb.com.au) under the heading “About AWB”.In addition, a copy of the annual report is distributed to allshareholders who elect to receive it, and is available from thecompany’s website. The Board aims to ensure that the AnnualReport accurately includes all relevant information about thecompany including details of its operations, future developmentsand any disclosures required by the Corporations Act and theASX Listing Rules.MeetingsThe Board encourages full participation by shareholders at theannual general meeting to ensure a high level of accountabilityand to ensure that shareholders remain informed about AWBLimited’s strategy and goals. Important issues are presented toshareholders as single resolutions.Information about AWB’s arrangements to promotecommunications with shareholders, including by electronic means,is available on the Corporate Governance section of AWB’s website.Recommendation 6.2 - Request the external auditor to attendthe annual general meeting and be available to answershareholder questions about the conduct of the audit and thepreparation and content of the auditor’s report.AWB practiceAWB’s external auditor, Ernst & Young, attend the annual generalmeeting to answer shareholder questions about the conductof the audit and the preparation and content of the auditor’sreports. In addition to their right to ask questions at the annualgeneral meetings, shareholders may submit written questions forthe external auditor to the Company Secretary no later than fivebusiness days before an annual general meeting.Principle 7 – Recognise and manage riskRecommendation 7.1 - The board or appropriate boardcommittee should establish policies on risk oversight andmanagement.AWB practicePurpose, composition and responsibilities of the Risk CommitteeThe Risk Committee is responsible for the review and oversight ofthe risk management and internal control system, the compliancemanagement framework and the management of market, credit,operational and business risks.The committee’s charter requires that the committee consist onlyof non-executive directors. The committee is to be composed of atleast three members and must include the Chairman of the AuditCommittee.Refer to pages 34–35 for details of the qualifications andexperience of committee members.The Risk Committee met 4 times during the financial year. Referto page 40 for details of the attendance by committee membersat those meetings.The Risk Committee charter is available on the CorporateGovernance section of AWB’s website (www.awb.com.au).Framework and policiesAWB has established a framework for risk management at AWBin which:• the Board and senior management demonstrate a strongcommitment to the management and oversight of risks• there is a process in place for the Board and seniormanagement to determine and articulate the acceptablelevel of risk• there is alignment between the stated appetite for risk, theapproach to risk management, and the company’s strategicand operational objectives• responsibilities and protocols are clearly defined• the Board receives regular reports and assurances fromsenior management in relation to risk exposures and riskmanagement practices.The consistent application of practices across the company isdesigned to guide decision making in relation to all significantrisks that impact on the company’s reputation and performance.The methodology is consistent with AS/NZS 4360 RiskManagement.The Managing Director and the management team areresponsible for managing risk and reporting to the Board andBoard committees. A key feature of this arrangement is the roleof the Chief Risk Officer (as head of the Corporate Risk unit). TheChief Risk Officer reports to the Managing Director. The ChiefRisk Officer also has an independent reporting line to the AuditCommittee, and the Risk Committee. The Corporate Risk Unitmonitors AWB’s risk profile, particularly that of the trading activity,and has authority to report to any level of executive managementor the Board, any significant concerns that may arise.Assessment of effectivenessThe internal audit plan is designed to be risk focused and isendorsed by the Audit Committee. It takes into considerationcompany business initiatives and the associated risks and theircontrol status. The internal audit function is outsourced to KPMG,and is independent of the external audit function.30 www.awb.com.au

Recommendation 7.2 - The Board or appropriate Boardcommittee should establish policies on risk oversight andmanagement. The chief executive officer (or equivalent) and thechief financial officer (or equivalent) should state to the board inwriting that:7.2.1 the statement given in accordance with best practicerecommendation 4.1 (the integrity of financialstatements) is founded on a sound system of riskmanagement and internal compliance and controlwhich implements the policies adopted by the board7.2.2 the company’s risk management and internal complianceand control system is operating efficiently and effectivelyin all material respects.AWB practiceThe Managing Director and the Chief Financial Officer have statedin writing to the board that the statement in accordance with ASXbest practice recommendation 4.1 is founded on a sound systemof risk management and internal compliance and control, whichimplements the policies adopted by the Board, and that system ofrisk management and internal compliance is operating efficientlyand effectively in all material respects.Each member of the AWB management team is similarly requiredto attest that a sound system of risk management, compliance andcontrol exists within the business units or functions under his orher control.Principle 8 – Encourage enhanced performanceRecommendation 8.1 - Disclose the process for performanceevaluation of the Board, its committees and individual directors,and key executives.AWB practicePerformance reviewThe Board has adopted a policy of annual performance evaluationfor the Board, Board committees and individual directors. Howeverdue to the restructure of the company (see page 26 for details),an evaluation process was not conducted during the reportingperiod. This is viewed as a departure from recommendation 8.1.It is the principal responsibility of the Chairman and theNomination & Remuneration Committee to formally review, at leaston an annual basis, the performance of the Managing Director.At the end of each Board meeting, the Board critiquesthe meeting.Facilitating performance by educationAWB provides structured induction programs for every newdirector elected or appointed to the Board. The objective of theinduction program is to give directors an overview of AWB’scorporate structure, directors’ duties, obligations and protocols,risk management and business operations, such that they canparticipate fully and actively in Board decision making at theearliest opportunity.AWB provides ongoing assistance to the further education ofdirectors where it can be shown to add value to the director’s roleand competencies.Access to informationDirectors are entitled to any information they need or require toexercise their functions and to fulfil their duties as directors and,subject to the prior approval by the Chairman (which is not to beunreasonably withheld), may seek independent legal advice at thecompany’s expense on any issue submitted to the Board.Role of the Company SecretaryThe Company Secretary, Peter Patterson, supports the Board’seffectiveness by monitoring Board policy and procedures andcoordinating Board and committee meeting agendas, meetingproceedings, information packs, meeting minutes and followupactions. The Company Secretary is accountable to the Board,through the Chairman.Principle 9 – Remunerate fairly and responsiblyRecommendation 9.1 - Provide disclosure in relation to thecompany’s remuneration policies to enable investors tounderstand (i) the costs and benefits of those policies and (ii) thelink between remuneration paid to directors and key executivesand corporate performance.AWB practiceInformation in relation to AWB’s remuneration policies and detailsabout the remuneration paid to directors and executives are setout in the Remuneration Report forming part of the directors’report (pages 41–54).Recommendation 9.2 - The board should establish aremuneration committee.AWB practicePurpose, composition and responsibilities of the committeeThe Board has a combined Nomination & RemunerationCommittee.The Nomination & Remuneration Committee reviews AWB’sremuneration setting framework and policies, including theremuneration of the Board and the Managing Director.Refer to page 34–35 for details of the committee’s compositionand membership.Refer to pages 34–35 for details of the qualifications andexperience of committee members.According to the Board’s assessment of director independence(refer to independence statement on page 26), all members ofthe Nomination & Remuneration Committee are independent.The Nomination & Remuneration Committee met 5 times duringthe financial year. Refer to page 40 for details of the attendanceby committee members at those meetings.The Nomination & Remuneration Committee charter is availableon the Corporate Governance section of AWB’s website(www.awb.com.au).www.awb.com.au 31

Recommendation 9.3 - Clearly distinguish the structure of nonexecutivedirectors’ remuneration from that of executives.AWB practiceThe Remuneration Report forming part of the directors’ report(pages 41–54) clearly articulates the separate structure of AWB’snon-executive directors’ remuneration from that of executives.Unlike AWB executives, the non-executive directors do not receiveequity-based remuneration or performance-based remuneration.Other than statutory superannuation and voluntary additionalcontributions to superannuation, there are no schemes forretirement benefits for non-executive directors.Recommendation 9.4 - Ensure that payment of equity-basedexecutive remuneration is made in accordance with thresholdsset in plans approved by shareholders.AWB practiceAWB’s equity-based executive remuneration plans were approvedby shareholders in 2002. Payments made under the plans complywith thresholds set in the plans. Details in relation to the ‘atrisk’ component of executive remuneration are set out in theRemuneration Report forming part of the directors’ report onpages 41–54.Principle 10 – Recognise the legitimate interests of stakeholdersRecommendation 10.1 - Establish and disclose a code of conductto guide compliance with legal and other obligations tolegitimate stakeholders.AWB practiceAs discussed in Principle 3 above, AWB maintains businessprinciples + ways of working and a whistleblower policy whichdrive AWB’s compliance with legal and other obligations tolegitimate stakeholders. The business principles + ways of workingare available on AWB’s website (www.awb.com.au).Additional company policiesIn addition to the policies mentioned previously, AWB hasimplemented a range of policies and procedures governingits operations. Many relate to Board Operating Standards andProtocols which are detailed in the Board’s Corporate GovernanceManual. Other governance policies relevant to AWB stakeholdersare summarised below:Safety, Health and Environment (SH&E) PolicyAWB aims to provide and maintain both a workplace and workpracticeswhich are safe and healthy, and without adverse impactson the environment.AWB has determined that an integrated approach to themanagement of SH&E in the workplace is the most effectiveand sustainable approach. This SH&E Policy articulates theorganisational approach to the management of all aspects ofSH&E including broad SH&E objectives and specifically recognisingAWB’s obligations under the applicable legislation.The SH&E Policy is underpinned by an integrated SHE managementsystem which is broken into 10 strategic elements:• SH&E leadership• environment• hazard and compliance management• learning and development• major hazards• workplace health• contractor management• emergency management• incident and injury management• performance management.The SH&E management system allows a strategic and structuredapproach to the pro-active management of SH&E within theorganisation and its operations.In 2004, AWB became the first business in the grains industryto achieve AS4801 accreditation, the Australian ManagementStandard for occupational health and safety managementsystems. Landmark is expected to join AWB, by becomingone of the first agricultural organisations to achieve the sameaccreditation to AS4801 during 2008. This achievement will meanthat AWB as a whole will have a ‘SH&E best practice’ approach tothe management of SH&E which is externally and independentlyassessed.Sanctioned Trade PolicyA Sanctioned Trade Policy applies to all employees, contractors,agents and representatives of AWB and provides a standard forthe provision of trade services that involve sanctioned countries,individuals and entities.Anti Money Laundering and Counter-Terrorism Financing PolicyThe Anti Money Laundering and Counter-Terrorism FinancingPolicy sets out AWB’s approach for managing money launderingand terrorist financing risks within its operations. It will bethe foundation for the development of detailed policies andprocedures and associated compliance and risk mitigationcontrols.Sponsorships and Donations PolicyAWB’s Sponsorship and Donations Policy is designed to enhanceAWB’s relationship and reputation with AWB’s key stakeholders,including growers, customers and the financial, business andlocal communities in which AWB operates. The policy outlines thecriteria which must be addressed and met before any sponsorshiparrangements are agreed to.Decisions on charitable donations above $100,000 and all politicaldonations are reserved to the Board and all charitable donationsover $50,000 require reporting to the Board.32 www.awb.com.au

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AWB Limited BoardPeter Polson Non-executive Chairman, BComm, MBLCommittees: Risk, Audit and Nomination & Remuneration (Chair)Directorships of other listed companies - past three years: ChallengerFinancial Services Group Limited (April 2003 to date), Challenger ListedInvestments Limited as responsible entity for Challenger Wine Trustand Challenger Infrastructure Fund (February 2005 - August 2006)Mr Polson has been a director of AWB Limited since 31 March 2003and Chairman since 22 October 2008. Mr Polson has broadexperience in the financial services industry, first as Managing Directorof the international funds management business with the ColonialGroup, then as an executive with the Commonwealth Banking Groupwith responsibility for all investment and insurance services for theGroup, including the Group’s funds management, master funds,superannuation and insurance businesses and third party supportservices for brokers, agents and financial advisers. In 2003, Mr Polsoncommenced his career as a non-executive director. Mr Polson isChairman of Challenger Financial Services Group Limited, ChallengerLife No. 2 Limited and IDP Education Pty Ltd and a director of AvantInsurance Limited, Bennelong Group Holdings Pty Limited,Bennelong Foundation and Escor Pty Limited.John Schmoll Non-executive director, BComm (Rhodes), FCA, FAICDCommittees: Audit (Chair), Risk and Nomination & RemunerationDirectorships of other listed companies - past three years: HousewaresInternational Limited (November 2004 to date), Oroton Group Limited(November 2005 to date), Chandler Macleod Group Limited (December2005 to date)Appointed on 10 March 2005. Mr Schmoll built a successful 32 yearexecutive management career primarily in South Africa and Australiain finance, investor relations, information technology, governanceand large scale process activities in major corporations. Mr Schmollspent seven years as the Chief Financial Officer of Coles Myer Limitedand prior to this held senior corporate and professional roles inAustralia and South Africa which exposed him to a broad spectrum ofcommercial, financial services, retail distribution, and public serviceactivities. Mr Schmoll is a chairman of Housewares InternationalLimited, and a director of Chandler MacLeod Group Limited andOroton Group Limited. He was also a director of Golden CircleLimited from April 2005 to November 2007.Gordon Davis Managing Director, BForestSc (Hons), MAgSc, MBACommittees: Audit (by invitation), Risk (by invitation) and Nomination& Remuneration (by invitation)Directorships of other listed companies - past three years: NilRefer to page 23 for profile.Peter Patterson Company Secretary, LLM, FCISRefer to page 23 for profile.34 www.awb.com.au

Left to right: Fred Grimwade, Gordon Davis, Brendan Fitzgerald,John Schmoll, Peter Polson, Tony Howarth, Steve ChamaretteBrendan Fitzgerald Non-executive director, CertRuralMgmt, FCDACommittees: Nomination & RemunerationDirectorships of other listed companies - past three years: NilElected on 13 March 2003, and re-elected on 23 February 2006 and22 October 2008. Mr Fitzgerald is a grain grower from Kimba inSouth Australia supplying both the domestic and export markets. Hehas operated, in partnership with his family, a farming and contractharvesting business since 1975. Mr Fitzgerald was previously a directorof South Australian Cooperative Bulk Handling and was also DeputyChairman of Ausbulk. As a director, Mr Fitzgerald was involved infinance and audit, nomination, remuneration and listing committeesand has chaired a strategic infrastructure committee. Mr Fitzgeraldhas studied export grain marketing and storage in North America,South Africa and England and holds an Advanced Diploma from theAustralian Institute of Company Directors.Fred Grimwade Non-executive director, BComm, LLB (Hons), MBA,MAICD, SF Fin, FCISCommittees: Risk (Chair), Audit and Nomination & RemunerationDirectorships of other listed companies - past three years: CPTGlobal Limited (October 2002 to date)Member of the Board since February 2008. Mr Grimwade is anExecutive Director of Fawkner Capital, a corporate advisory andinvestment firm. He has a broad range of experience in strategicmanagement, agribusiness, finance, corporate governance and law.Mr Grimwade was Managing Director of the Colonial AgriculturalCompany from 1998 to 2006 and previously held senior executiveroles with Colonial and WMC. He also worked with US investment bankGoldman, Sachs & Co. in New York and as a lawyer. Mr Grimwade isChairman of CPT Global Limited and a former Joint National Presidentof the Financial Services Institute of Australasia (Finsia).Tony Howarth Non-executive Director, AO, SFFin, FAIMCommittees: Audit, Risk and Nomination & RemunerationDirectorships of other listed companies - past three years: AlintaLimited (January 2000 - July 2006), Home Building Society Limited(June 2003 - December 2007), Bank of Queensland Limited (December2007 to date), Mermaid Marine Australia Limited (July 2003 to date),Wesfarmers Limited (June 2007 to date)Appointed on 10 March 2005. Mr Howarth spent over 35 yearsin the banking and finance industry. Uniquely, Mr Howarth heldexecutive positions in government, regional and major banks as wellas in building societies and stockbroking and has had internationalexperience in London, Hamburg and New York. Mr Howarth isChairman of Mermaid Marine Australia Limited, Deputy Chairman ofBank of Queensland Limited and a director of Wesfarmers Limited. Heis a former Chairman of Alinta Limited (retired July 2006) and HomeBuilding Society Limited (up until its merger with Bank of Queenslandin December 2007). In addition, Mr Howarth is involved in a number ofcommunity organisations including St John of God Health Care Group,the Australian Chamber of Commerce and Industry and the Universityof Western Australia.Steve Chamarette Non-executive director, BEcons, MSc, FAICDCommittees: Nomination & RemunerationDirectorships of other listed companies - past three years: NilElected on 11 March 2004 and re-elected on 22 February 2007 and22 October 2008. Mr Chamarette is a grain grower from Trayning,Western Australia and a former Western Australia Farmers GrainsCouncil delegate. Mr Chamarette has completed the Graduate Memberand Advanced Diploma courses at the Australian Institute of CompanyDirectors and is a Fellow of the Institute.www.awb.com.au 35

36 www.awb.com.au

AWB Limited ABN 99 081 890 459Consolidatedfinancial reportfor the year ended30 September 2008www.awb.com.au 37

AWB LIMITED Directors’ reportYour directors submit their report for the year ended30 September 2008.DirectorsThe directors of the company at any time during or since the end ofthe financial year are:• Peter Polson (Chairman from 22 October 2008)• Brendan Stewart (former Chairman - retired 22 October 2008)• Gordon Davis (Managing Director)• Steve Chamarette• Brendan Fitzgerald• Tony Howarth• John Schmoll• Fred Grimwade (appointed 13 February 2008)• Xavier Martin (resigned 8 September 2008)• Warrick McClelland (retired 12 February 2008)• Christopher Moffet (retired 12 February 2008)• John Simpson (retired 12 February 2008)• Colin Nicholl (appointed 12 February 2008, resigned8 September 2008)• Russell McKenzie (appointed 12 February 2008, resigned8 September 2008)• Rodger Schirmer (appointed 12 February 2008, resigned8 September 2008).Except where noted, the directors held their position as director forthe financial year and up to the date of this report. Details of theexperience, qualifications and special responsibilities of each directorare provided in the Corporate Governance section of this report.Peter Patterson is the company secretary at the time of this report.Details of qualifications and experience of Peter Patterson areprovided in the Corporate Governance section of this report.Principal ActivitiesThe Group’s operations can be categorised into three business areas:Rural Services, Financial Services and Commodity Management.Rural ServicesRural Services offers customers a full range of agribusiness servicesincluding merchandise, fertiliser, farm services, wool and livestock,finance, insurance and real estate. This operation is comprised ofRural Services within the Segment Information (note 27 to theFinancial Statements).Financial ServicesThe Financial Services business provides financial solutions to clientsacross rural and regional Australia, including lending solutions,savings and investment accounts, insurance solutions, equipmentfinance, wealth management and online trading. These operations arecomprised of Landmark Financial Services and Harvest Finance withinthe Segment Information (note 27 to the Financial Statements).Commodity ManagementCommodity Management operates in global commodity markets fromoffices in Switzerland, India, Brazil and Australia. The primary revenuestreams for the business include commodity trading, originationand sales of commodites such as wheat, canola and pulses, logisticsand chartering and risk management. The business also operates22 regional storage and handling facilities across Australia’s easternstates. These operations are comprised of Pool Management Services,Australian Commodity Management, International CommodityManagement and Supply Chain and Other Investments within theSegment Information (note 27 to the Financial Statements).Registered OfficeAWB Limited is a company limited by shares, incorporated anddomiciled in Australia. Its registered office is:Level 21380 La Trobe StreetMelbourne, Victoria, 3000Results and Review of Operations2008$’0002007$’000The Group profit after tax andminority interest for the financial year 64,286 27,145A review of the operations and results of the consolidated entity andits principal businesses during the financial year is contained in theChairman’s and Managing Director’s reports and the various businesssegment reports.DividendsSubsequent to year end, a fully franked dividend of 5 cents perordinary share was approved by the board on 18 November 2008 andis payable on 5 January 2009. The 2007 final dividend of $13.9 million(4 cents per share) and the 2008 interim dividend of $13.9 million(4 cents per share) were paid to ordinary shareholders during theperiod.Significant Changes in the State of AffairsOn 3 September 2008, shareholders approved amendments to theprevious constitution. The effect of the amendments was that the Aclass shares (which could only be held by wheat growers and had theright to elect a majority of the directors) were immediately redeemed.On 22 October 2008, shareholders approved the adoption of a newconstitution.Following the introduction of the wheat export accreditation schemeunder the Wheat Export Marketing Act 2008, AWB Limited subsidiariesAWB Harvest Finance Limited (AWBHF) and AWB (Australia) Limitedreceived accreditation by Wheat Exports Australia for the bulk exportof Australian wheat.With the repeal of the Wheat Marketing Act 1989, the monopoly bulkwheat marketing arrangements were opened to greater competitionand the status of AWB (International) Limited (AWBI) as the companynominated to manage those arrangements was concluded. Thetemporary export accreditation for AWBI expired on 30 September2008 and on 1 October 2008 AWBHF replaced AWBI as the trustee forthe National Pool.Except as mentioned above, during and since the end of the financialyear there were no significant changes in the state of affairs of theconsolidated entity.Significant Events after Balance DateSince 30 September 2008, no matter or circumstance has arisen thathas 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 ResultsThe consolidated entity will continue to pursue its policy of increasingthe profitability and market share of its major business segmentsduring the next financial year. Further details of likely developments inthe operations of the Group and its prospects in future financial yearsare contained in the Annual Report in the Chairman’s and ManagingDirector’s Reports and the various business segment reports. In theopinion of the directors, disclosure of any further information mayresult in unreasonable prejudice to the consolidated entity.Environmental Regulation and PerformanceThe consolidated entity’s operations are subject to various Australian,state and territory environmental legislation and regulation. Theboard is not aware of any significant environmental breaches duringthe financial year. The consolidated entity is subject to measurementand reporting against the National Greenhouse Emissions ReportingStrategy and will report to the Greenhouse and Energy Data Officerin 2009.38 www.awb.com.au

Directors’ report AWB LIMITEDAudit and Non-Audit ServicesErnst & Young is authorised to perform all ‘audit services’, being anexamination or review of the financial statements of the companyin accordance with the laws and rules of each jurisdiction in whichfilings are made, for the purpose of expressing an opinion on suchstatements. The Audit Committee approves the provision of auditservices as part of the annual approval of the audit plan. Whereadditional audit services not contemplated in the annual audit planare subsequently deemed to be necessary during the course of theyear, the provision of these services is separately approved by theAudit Committee prior to commencement of the services.AWB Limited has not engaged Ernst & Young to perform any of thefollowing non-audit services:• bookkeeping services and other services related to preparing theGroup’s accounting records of financial statements;• financial information system design and implementation services;• appraisal or valuation services, fairness opinions, or contributionin kind reports;• actuarial services;• internal audit services;• management functions or human resources;• broker or dealer, investment adviser, or investment bankingservices;• legal services or expert services unrelated to the audit; and• taxation advice.In addition, all other non-audit services may only be provided by Ernst& Young if the Audit Committee has expressly approved the provisionof the non-audit service prior to commencement of the work, andthe performance of the non-audit service will not cause the totalannual revenue to Ernst & Young from non-audit work to exceed theaggregate annual amount of Ernst & Young’s audit fees. The AuditCommittee will not approve the provision of a non-audit service byErnst & Young if the provision of the service would compromise Ernst& Young’s independence. The Audit Committee requires Ernst & Youngto submit annually to the Audit Committee a formal written statementdelineating all relationships between Ernst & Young and AWB Limitedand its controlled entities. The statement includes a report of allaudit and non-audit fees billed by Ernst & Young in the most recentfiscal year, a statement of whether Ernst & Young is satisfied that theprovision of the audit and any non-audit services is compatible withauditor independence and a statement regarding Ernst & Young’sinternal quality control procedures.A copy of the auditor’s independence declaration is set out on page 55and forms part of this report. The Audit Committee considers whetherErnst & Young’s provision of non-audit services to the company iscompatible with maintaining the independence of Ernst & Young. TheAudit Committee also submits annually to the board a formal writtenreport describing any non-audit services rendered by Ernst & Youngduring the most recent fiscal year, the fees paid for those non-auditservices and explaining why the provision of these non-audit servicesis compatible with auditor independence. If applicable, the AuditCommittee recommends that the board take appropriate action inresponse to the Audit Committee’s report to satisfy itself of Ernst &Young’s independence.Amounts paid or payable to the auditor for non-audit servicesprovided during the year are located in note 25 to the financialstatements.For the reasons set out above, the directors are satisfied that theprovision of non-audit services by the external auditor during the yearended 30 September 2008 is compatible with the general standard ofindependence for auditors imposed by the Corporations Act 2001.Indemnification and InsuranceThe company has not given any indemnity to a current or formerofficer or auditor against any liability that is covered by section199A(2) or (3) of the Corporations Act 2001, nor has the companyentered into any relevant agreement under which an officer or auditormay be given an indemnity of that kind.Under the constitution of AWB Limited, every person who is or hasbeen a director, secretary or executive officer of the company isindemnified, to the maximum extent permitted by law, out of theproperty of the company against any liability incurred by that personas such an officer, other than:• liability to the company or related body corporate of the company;or• liability arising out of conduct involving a lack of good faith.In addition, under the constitution every such person is indemnified,to the maximum extent permitted by law, out of the property of thecompany against any liabilities for costs and expenses incurred bysuch a person:• in defending any proceedings relating to that person’s positionwith the company, whether civil or criminal, in which judgement isgiven in that person’s favour or in which that person is acquitted orwhich are withdrawn before judgement; or• in connection with any administrative proceedings relating to thatperson’s position with the company, except proceedings whichgive rise to proceedings against that person in which judgementis not given in that person’s favour or in which that person is notacquitted; or• in connection with any application in relation to any proceedingsrelating to that person’s position with the company, whether civilor criminal, in which relief is granted to that person under theCorporations Act 2001 by the court.A Deed of Access, Indemnity and Insurance has been entered intobetween the company and each director and former director of thecompany and agreements have been reached with certain officersand former officers of the company under which the company hasagreed to indemnify the individual in terms similar to the indemnitiescontained in the company’s constitution.In addition, AWB Limited has provided a limited indemnity to itsauditor, Ernst & Young, for all reasonably foreseeable liabilities, claims,costs and expenses reasonably incurred by it in respect of any claimby a third party related to the audit service provided by Ernst & Young.The indemnity does not cover indirect or consequential losses orlosses resulting from the proved negligent, wrongful or wilful acts oromissions of Ernst & Young.Under the Deeds of Access, Indemnity and Insurance, the companyhas also agreed to maintain a directors’ and officers’ insurancepolicy. During and since the end of the financial year, the companyhas paid a premium for such a policy for the benefit of current andformer directors, secretaries and officers of the company; currentand former directors, secretaries and officers of subsidiaries of thecompany; and current and former outside directorships and companysecretary positions held by employees of the company at the requestof the company. In accordance with common commercial practice,the insurance policy prohibits disclosure of the nature of the liabilityinsured against and the amount of the premium.Except as mentioned above, during and since the end of the financialyear, the company has not paid any other insurance premiums for anyperson who is or has been an officer or auditor of the company.Director’s InterestsThe relevant interest of each director in the shares issued by AWBLimited, as notified by the directors to the Australian SecuritiesExchange (ASX) in accordance with section 205G(1) of theCorporations Act 2001, at the date of this report is as follows:Ordinary shares heldPeter Polson 15,000Gordon Davis 10,000Steve Chamarette 10,500Brendan Fitzgerald 12,000Tony Howarth 31,587Frederick Grimwade 10,000John Schmoll 7,500www.awb.com.au 39

AWB LIMITED Directors’ reportDirectors’ MeetingsThe number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attendedby each director were as follows:Directors Board Audit CommitteeAttended Eligible to attend Attended Eligible to attendPeter Polson 10 13 5 5Brendan Stewart 13 13 5 5Gordon Davis 13 13 - -Steve Chamarette 13 13 - -Fred Grimwade 10 10 - -Brendan Fitzgerald 13 13 - -Tony Howarth 12 13 5 5Xavier Martin 12 12 5 5Warrick McClelland 3 3 2 2Christopher Moffet 3 3 - -John Schmoll 11 13 5 5Russell McKenzie 9 9 - -Colin Nicholl 9 9 - -Rodger Schirmer 9 9 2 2John Simpson 3 3 - -Directors Nomination & Remuneration Committee Risk CommitteeAttended Eligible to attend Attended Eligible to attendBrendan Stewart 5 5 3 4Peter Polson 5 5 4 4Gordon Davis - - - -Steve Chamarette - - 4 4Fred Grimwade - - 1 1Brendan Fitzgerald 5 5 - -Tony Howarth 5 5 4 4Xavier Martin - - - -Warrick McClelland - - - -Christopher Moffet - - 1 1John Schmoll - - 4 4Russell McKenzie - - 1 1Colin Nicholl 3 3 - -Rodger Schirmer - - - -John Simpson 1 1 - -RoundingThe amounts contained in this report and in the financial statements have been rounded off under the option available to the company underAustralian Securities and Investments Commission (ASIC) Class Order 98/100. Amounts in this report have been rounded off in accordance withthat Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.Signed in accordance with a resolution of the directors:Peter PolsonChairmanGordon DavisManaging Director19 November 200840 www.awb.com.au

Directors’ report AWB LIMITEDRemuneration Report (Audited)The information provided in this Remuneration Report has been audited as required by section 308(3C) of the Corporations Act. ThisRemuneration Report forms part of the Directors’ Report.Reporting requirementsFor the purposes of this report, the board has determined that in addition to the company’s directors, the Key Management Personnel (KMP)are the members of the Business Management Group (BMG) who served during the year. Relevant details are also provided within this reportfor Piero Ravano, Managing Director, AWB Geneva, and Thierry Dubois, Former General Manager, International Commodity Management whoare the only senior managers within the five highest-paid executives who are not KMP. Details of the BMG members are provided in Table 1.Table 1 – Details of BMG Members who served during the yearNamePositionDate of commencement inKMP role (where applicable)Date of cessation in KMP role(where applicable)Current BMG membersGordon DavisManaging DirectorPhilip Gentry Chief Financial Officer 1 4 April 2008Mitch MorisonColin TaylorGraeme JacobsGeneral Manager,Commodities 2General Manager,Financial ServicesGeneral Manager,LandmarkKate Hughes Chief Risk Officer 18 December 2007David JohnsonGeneral Manager,30 September 2008National Pool 3John Russell Head of Strategy & Operations 26 May 2008Former BMG membersPhillip MeurerDivision Head,30 April 2008Commodities 4Mark Hosking Chief Financial Officer 4 April 2008Margaret Wade Chief Risk Officer 18 December 20071 Philip Gentry was Head of Strategy, Mergers & Acquisitions until 4 April 2008 when he was appointed Acting Chief Financial Officer.On 19 May 2008, he was appointed Chief Financial Officer.2 Mitch Morison was General Manager, Australian Commodities until 1 May 2008 when he was appointed Acting General Manager,Commodities. On 1 October 2008 he was appointed General Manager, Commodities.3 David Johnson commenced as General Manager - Client Services, Landmark on 1 October 2008.4 Phillip Meurer was Division Head, Commodities until 30 April 2008 when he was appointed Strategy Advisor.www.awb.com.au 41

AWB LIMITED Directors’ reportNon-executive director remunerationNon-executive director remuneration policyThe board’s focus is on strategic direction, long term corporate performance and the creation of shareholder value.The AWB Limited constitution requires that the remuneration of non-executive directors be by fixed sum and not a proportion of profits orrevenue. At the 2004 Annual General Meeting, shareholders determined that the maximum aggregate remuneration for non-executive directorsbe $1,200,000 per annum. The fixed fees (paid in cash) are determined by the board with assistance from the Nomination & RemunerationCommittee and external advisors.The following principles are applied in determining the amount of remuneration for non-executive directors:• the amount of time required for directors to consider board matters including preparation time;• acknowledgement of the personal risk borne as a company director;• a comparison with professional market rates of remuneration and those offered by comparable companies and external independent adviceas to appropriate levels to remain competitive with the market, having regard to companies of similar size and complexity; and• the desire to attract directors of a high calibre, with appropriate levels of expertise and experience.Non-executive directors do not receive equity-based remuneration or performance-based remuneration. Other than statutory superannuation,there are no other schemes for retirement benefits for non-executive directors. Table 2 details the elements comprising non-executive directorremuneration:Table 2 – Elements of non-executive director remuneration (amounts are inclusive of statutory superannuation)Director fees Committee Chair fees Other fees/benefits Post-employment benefitsCurrent fees per annum are: Current committee fees for• $90,000 for directorChairman of committee perannum are:• $225,000 for Chairman 1 • $25,000 for Chairman ofAudit Committee• $20,000 for Chairman ofRisk CommitteeDirectors are entitled to bereimbursed for all business relatedexpenses, including travel, as maybe incurred in the discharge oftheir duties.Superannuation contributionsare made on behalf of the nonexecutivedirectors at a rate of9% in accordance withthe company’s statutorysuperannuation obligations.The company does not payadditional benefits to nonexecutivedirectors upon theirretirement from office.1 The Chairman receives 2.5 times the amount paid to other directors to take into account the greater time commitment required.Table 3 - Non-executive director remuneration for the year ended 30 September 20082008 Short term benefits Post Employment benefitsNameCash salaryand fees BonusNonmonetarybenefits Other SuperannuationRetirementBenefits Total$ $ $ $ $ $ $Non-executive directorsBrendan Stewart (former Chairman -retired 22 October 2008) 211,717 - - - 13,283 - 225,000Steve Chamarette 53,670 - - - 36,330 - 90,000Brendan Fitzgerald 41,284 - - - 48,716 - 90,000Fred Grimwade (appointed 13 February 2008) 52,532 - - - 4,728 - 57,260Tony Howarth 75,138 - - - 14,862 - 90,000Xavier Martin (resigned 8 September 2008) 27,523 - - - 57,141 - 84,664Warrick McClelland (retired12 February 2008) 13,038 - - - 19,558 - 32,596Russell McKenzie (appointed 12 February2008, resigned 8 September 2008) 47,636 - - - 4,287 - 51,923Christopher Moffet (retired 12 February 2008) 29,905 - - - 2,691 - 32,596Colin Nicholl (appointed 12 February 2008,resigned 8 September 2008) 33,345 - - - 18,578 - 51,923Peter Polson (Chairman - from22 October 2008) 100,917 - - - 9,083 - 110,000John Simpson (retired 12 February 2008) 29,905 - - - 2,691 - 32,596Rodger Schirmer (appointed 12 February2008, resigned 8 September 2008) 36,193 - - - 15,730 - 51,923John Schmoll 33,505 - - - 81,495 - 115,000Total - Non-executive directors 786,308 - - - 329,173 - 1,115,48142 www.awb.com.au

Directors’ report AWB LIMITEDTable 4 - Non-executive director remuneration for the year ended 30 September 20072007 Short term benefits Post Employment benefitsNameCash salaryand feesBonusNonmonetarybenefits Other SuperannuationRetirementBenefitsTotal$ $ $ $ $ $ $Non-executive directorsBrendan Stewart (Chairman) 272,409 - - - 30,490 - 302,899Steve Chamarette 53,670 - - - 36,330 - 90,000Brendan Fitzgerald 41,284 - - - 48,716 - 90,000Tony Howarth 75,138 - - - 14,862 - 90,000Xavier Martin 82,569 - - - 7,431 - 90,000Warrick McClelland 36,000 - - - 54,000 - 90,000Christopher Moffet 82,569 - - - 7,431 - 90,000Peter Polson 16,820 - - - 93,180 - 110,000John Simpson 82,569 - - - 7,431 - 90,000John Schmoll 36,477 - - - 68,683 - 105,160Robert Barry (retired 22 February 2007) - - - - 46,148 - 46,148Total - Non-executive directors 779,505 - - - 414,702 - 1,194,207Executive Remuneration and Reward Policy and structureThe board has a Nomination & Remuneration Committee which operates under delegated authority from the board. The Committee’s activitiesare governed by a charter (approved by the board on 26 September 2007) which is available on the Group’s website. All members of theNomination & Remuneration Committee are non-executive directors.Key principles of Executive Remuneration and Reward PolicyThe key principles of the Group’s Executive Remuneration and Reward Policy are to:• ensure the remuneration structure provides a clear link between performance and reward;• support AWB’s organisational and people objectives – which are to attract, motivate and retain talented employees;• provide appropriate annual incentives for performance which reward executives using financial and non-financial measures of performance;• provide a strong emphasis on long term incentives to link rewards to the creation of long term value for shareholders;• ensure remuneration arrangements are equitable, supporting the appropriate deployment of resources and in particular talent across thebusiness; and• limit severance payments on termination to pre-established contractual arrangements which do not commit the Group to making unjustifiedpayments in the event of non-performance.The Executive Remuneration and Reward Policy is governed by the Nomination & Remuneration Committee. It draws a direct link between rewardand performance through the application of variable pay arrangements via short term incentives (bonus programs) and long term incentives(equity plans).The Policy ensures remuneration practices are structured to support the organisational and people objectives of the Group. The approach is toprovide a base level of reward for senior executives at the 75th percentile of the market reflecting the size, scope and responsibilities of each rolein addition to variable or “at risk” components which offer potential rewards in line with individual and Group-wide performance.The Committee takes independent external advice from Guerdon Associates and Mercer.Fixed and at-risk remunerationThe relative proportions of total 2008 financial year remuneration that is at-risk are set out in Table 5.Table 5 – Proportions of fixed and at-risk remuneration% of total target remuneration (annualised)FixedAt-riskShort term incentive (STI)*At-risk Long termincentive (LTI)*Managing Director 35% 29% 35%BMG members (other than Managing Director) 48% – 65% 16% - 24% 19% - 29%* These amounts are based on ‘target’ performance levels being achieved.www.awb.com.au 43

AWB LIMITED Directors’ reportFixed RemunerationFixed remuneration comprises base salary and post-employment benefits.Base salaries are targeted at the 75th percentile of reward reflecting the size, scope and responsibilities of each role and are reviewed by theNomination & Remuneration Committee on an annual basis. In reviewing remuneration levels, the Committee draws upon market data providedby external remuneration consultants including a comparison with remuneration of similar positions (both scope and duties) across multiplesectors. The Committee also considers peer groups based on market capitalisation and sector as this is considered to be the most reliable andvalid predictor for remuneration once a role has been matched.Post-employment benefits include statutory superannuation and any salary sacrifice arrangements.At-risk remuneration includes both short term and long term incentives, and is available where specific key performance indicators (KPIs) andperformance hurdles have been met.Short term incentive (STI)Table 6 – Summary of STI programWhat is the STI program?The STI program is an annual cash incentive plan linked to performance against specific annualtargets approved by the Nomination & Remuneration Committee.A cash-based (STI) payment is made to the individual in proportion to their level ofperformance against the annual targets.The STI payment date is 15 December 2008.Who participates in the STI program?Is the STI program based on a pool amount forallocation between BMG members?Why does the board consider the STI programan appropriate incentive?Are both target and stretch performanceconditions imposed?What percentage of total fixed remunerationdoes the STI program represent?BMG members and the wider employee population.The STI program is based on a predetermined percentage of the participant’s fixedremuneration and applied against threshold, target and stretch results as described below in‘What percentage of total fixed remuneration does the STI program represent?’The STI program is designed to reserve a proportion of remuneration at-risk against meetingtargets linked to the Company’s annual business objectives.Yes, the STI and the performance conditions set under the STI have been designed to motivateand reward high performance. If performance exceeds the targets, the STI will deliver higherrewards to executives.The table below shows the percentage of fixed remuneration which BMG members may earnas an STI (in excess of fixed remuneration) if relevant performance measures are met:% of total fixed remunerationThreshold Target StretchManaging Director 75% 83% 100%Other BMG members 22.5% - 45% 25% - 50% 30% - 60%What are the performance conditions andmeasures?The eligible STI payment comprises team and individual results.The objectives and measures for BMG members are outlined in a ‘Balanced Scorecard’ whichfor the 2008 financial year comprised the following targets: financial, customer, businessprocesses and capability. Balanced Scorecards for the Managing Director and General Manager,Landmark also include a safety target (the measure being Loss Time Injury Frequency Rate(LTIFR)) as these positions have the greatest ability to influence performance against this target.The objectives were weighted in accordance with the relevance of each component to thenature of the role.Why were these conditions chosen?Who assesses the performance of the BMGmembers and how are the performanceconditions measured?How did BMG members perform againsttheir targets?These measures are chosen as they directly align the individual’s reward to the KPIs of theGroup and to its strategy and performance. Additionally, non-financial measures are includedas they are considered to be indicators of the sustainability of future shareholder value.At the end of the financial year, the Nomination & Remuneration Committee reviews theperformance of the Group, the relevant business units and individual BMG members.The Committee approves the STI payment to be made to each BMG member and in doingso seeks an assessment from the Managing Director (other than in relation to his ownperformance) on performance against the Balanced Scorecards. The Committee assesses theManaging Director’s performance and makes a recommendation to the board in relationto the Managing Director’s STI payment. This method of assessment was chosen as theCommittee is able to provide an objective assessment of the individual’s performance.Strong financial results were achieved in the 2008 financial year which resulted in all financialKPIs being met for the year. Performance against the LTIFR target (for relevant BMG members)was not met. Further information in relation to STI payments is provided in the section titled‘Retention of key executives’ and in table 8.44 www.awb.com.au

Directors’ report AWB LIMITEDLong term incentive (LTI)LTI’s are provided to eligible executives in the form of rights over unissued shares granted annually under the Performance Rights Plan (PRP).Table 7 summarises the terms of the PRP granted to BMG members on 1 October 2007 as this is the most recent issue of performance rightswithin the reporting period. This plan measures long term performance relative to Absolute Total Shareholder Return (ATSR). The board hasrecently approved participation by BMG members in a PRP with a grant date of 1 October 2008 under the same terms as the 1 October 2007grant. It is the board’s intention that the 1 October 2008 grant will be the final offer of performance rights under these terms. Further informationis provided in ‘Why does the company think the ATSR hurdle is appropriate?’ below. Future issues of performance rights will be made under theterms of a new plan which is currently being developed. The performance hurdles under the new plan will not be based on ATSR.In prior years, the measure of Total Shareholder Return (TSR) under the company’s PRPs has varied between ATSR, Relative TSR (RTSR) and acombination of both ATSR and RTSR with measures weighted 30% and 70% respectively. For ATSR plans, vesting begins if TSR is at least 14%over a three year performance period and for RTSR plans vesting begins to occur proportionately if AWB Limited’s ranking during the three yearperformance period reaches the 50th percentile. The share price is relative to the companies which comprise the S&P/ASX 200 Industrial Index.Of the PRP performance periods which ended during the 2008 financial year, no performance rights vested as the performance hurdles relevantto each plan were not achieved.Table 7 – Summary of LTI programWhat is the LTI program?A long term reward plan where rights over unissued shares in the company are issuedto participants on an annual basis. Vesting of performance rights occur if prescribed TSRperformance hurdles are met. On exercise, each performance right entitles the participant toone ordinary share in AWB Limited.What is the purpose of the LTI program?Who participates in the LTI program?What proportion of total remuneration doesthe LTI represent?How is reward delivered under the LTI program?The number of performance rights issued was equal to the participant’s long term incentivevalue 1 divided by the 20 day weighted average share price on the ASX prior to the issue dateof 1 October 2007.To incentivise executives to increase long term shareholder value by aligning their reward withthe company’s long term performance.Members of the BMG and other selected executives who occupy positions which have asignificant impact on company performance.This ranges from 100% of total fixed remuneration for the Managing Director through to 30%to 60% for BMG members (other than the Managing Director). Within this range, the actualallocation is based on the individual’s ability to influence TSR.Participants are provided with LTIs in the form of rights over unissued shares in AWB Limitedwith rights becoming exercisable if the performance of the company exceeds certain TSRs.Do participants pay for the Performance Rights? No, there is no fee payable for receiving or exercising performance rights.What is the performance hurdle?ATSR (over a three year performance period). TSR seeks to measure the pre-tax return ashareholder would obtain from holding the shares in a defined period taking into account,amongst other things, changes in the market value of the shares and dividends on the shares.How is TSR measured?Why does the company think the ATSR hurdle isappropriate?What if a BMG member ceases employment?TSR is independently tested by Standard & Poor’s at the conclusion of each performanceperiod. The Board then determines whether TSR hurdles have been achieved.Company’s TSR ranking% of performance rights that vestTSR below 14%NilTSR between 14% and 17.5% Progressive vesting from 50% to 99%TSR above 17.5% 100%The board considered that given the number of unusual external factors impacting thecompany, it was appropriate for the performance rights issued on 1 October 2006 and1 October 2007 to use an ATSR performance hurdle. The board believed it would be in thecompany’s best interests if senior executives were incentivised to improve the Company’sperformance in an absolute sense during this unsettled period, rather than measureperformance relative to a peer group. It is the board’s intention to adopt a new LTI plan withdifferent hurdles for future issues of performance rights, commencing 1 October 2009.If the rights have vested, the participant has the earlier of 90 days or one year after the lastday of the performance period to which the performance right became a vested performanceright to exercise their rights.If the rights have not vested, generally they will lapse. In circumstances of death, redundancyor retirement, some rights may still become exercisable.In the event of serious misconduct, performance rights lapse on cessation of employmentwhether vested or not.www.awb.com.au 45

AWB LIMITED Directors’ reportTable 7 – Summary of LTI program (continued)What happens in the event of a change incontrol?Does re-testing apply?Is there a policy to prevent hedging?The Board has the discretion to vest performance rights in certain circumstances includingchange in control.At the end of the initial three year performance period, quarterly re-testing occurs on a rollingthree year basis ending on 30 September 2012.Yes, the Group’s Share Dealing Guidelines prevent participants of PRPs from entering into anytransaction which would have the effect of hedging or otherwise transferring to any otherperson the risk of any fluctuation of the value of performance rights under the Plan (exceptwith the prior approval of the Managing Director which would only apply in extraordinarycircumstances). A copy of the Share Dealing Guidelines is available on the Group’s website.Breach of the Group’s Share Dealing Guidelines would be regarded as a breach of Group policyand may result in disciplinary action against the employee up to and including dismissal.Employee Share PlanDuring the 2008 financial year, eligible employees were given the opportunity to be issued with shares in AWB Limited to the value of $1,000for nil consideration under the Employee Share Plan 2 . Employees must have been employed by the Group as at 1 April 2007 and still beemployed on the issue date to be eligible to participate in the offer. The offer is not available to the Managing Director, participants of the PRP,casual employees and contractors, employees engaged in offshore locations or any employee for whom formal performance counselling hascommenced and is in progress at the offer date. A further offer of Employee Share Plan shares on the same terms has been made since the endof the reporting period.1 For rights granted under the 2007 PRP, LTI value was between 30% and 60% of a BMG member’s total fixed remuneration with the actualpercentage allocation based on the individual executive’s ability to influence TSR.2 The Employee Share Plan was approved by shareholders at the 2002 Annual General Meeting.Service AgreementsAll members of the BMG, including the Managing Director have open-ended contracts which may be terminated by AWB at any time with threemonths notice or payment in lieu of notice. In addition to the notice period, members of the BMG are entitled to a severance allowance of threemonths (David Johnson), six months (Philip Gentry, Mitch Morison, Colin Taylor, Graeme Jacobs, Kate Hughes and John Russell) or nine months(Gordon Davis) payment of the then current total cost of their remuneration package, excluding incentive payments.Piero Ravano has an open-ended contract which may be terminated by AWB at any time with nine months notice or payment in lieu of notice.46 www.awb.com.au

Directors’ report AWB LIMITEDRetention of key executivesDuring the year, the Company faced a number of unprecedented challenges. These included the loss of the Single Desk, the opening up ofbulk wheat exports to other companies, uncertainty regarding whether the company would be able to reform its dual share structure and thecontinued threat from several class actions. As a result of these challenges, the Board considered that it would be appropriate and responsible toapprove a number of retention mechanisms to ensure that key executives remained with the Company during these uncertain times.For BMG members, their retention mechanisms included guaranteeing their 2008 STI payment at stretch (excluding any element relating tosafety as the Board did not consider it appropriate to make a payment based on a safety measure if the measure had not been met), as wellas providing further retention payments if the individual remains employed by the Company as at 15 December 2009 and 15 December 2010.Details of these retention payments are included in the table below:Table 8 - Retention payments – 2009 and 2010BMG member Retention Payment 15 December 2009 Retention Payment 15 December 2010Gordon Davis $356,250 $356,250Graeme Jacobs $200,000 $200,000Colin Taylor $150,000 $150,000Mitch Morison $125,000 $125,000Philip Gentry $150,000 $150,000John Russell $150,000 $150,000Kate Hughes $60,000 $60,000The board did not approve any changes to the severance payments for any executives.Managing Director’s remunerationThe following specific arrangements apply to the Managing Director’s remuneration. Unless otherwise stated in this report, remunerationarrangements for the Managing Director are the same as the arrangements for the other BMG members.Managing Director’s LTIAt the 2002 Annual General Meeting, shareholders were asked to approve a PRP for the Managing Director on similar terms to the plans offeredto other eligible senior executives. As shareholder approval for the Managing Director’s plan was not granted, the Board made a decision tolink the Managing Director’s reward with long-term company performance by offering the Managing Director a plan mirroring the PRP with theexception that ‘phantom’ share rights would be issued which would be paid in cash subject to meeting or exceeding the necessary performancehurdles. The performance hurdles for the Managing Director are identical to the PRP hurdles.In 2008, the Managing Director received cash-based performance rights equal to 100% of his base salary.www.awb.com.au 47

AWB LIMITED Directors’ reportKMP of AWB Limited Group and AWB Limited 1Table 9 - Executive Director, KMP and Senior Managers remuneration for the year ended 30 September 20082008 Short term benefitsCash salary and feesBonusNon-monetarybenefits 2 Other 3$ $ $ $Executive DirectorGordon Davis (Managing Director) 858,717 902,500 - 12,000Other KMP and Senior ManagersMark Hosking (resigned 4 April 2008) 271,967 - - -Philip Gentry (appointed 4 April 2008) 233,496 300,000 - 2,489John Russell (appointed 26 May 2008) 126,242 - - -Mitch Morison 375,908 270,000 - 6,671Graeme Jacobs 461,994 333,300 - 29,997Margaret Wade (resigned 18 December 2007) 102,293 - - -Kate Hughes (appointed 18 December 2007) 238,714 96,000 - 15,806Phillip Meurer (resigned 30 April 2008) 287,581 - - -David Johnson 304,640 95,455 2,794 -Colin Taylor 446,841 330,000 - 8,923Thierry Dubois (resigned 26 January 2008) 242,531 - - -Piero Ravano (appointed 16 January 2008) 5 400,172 1,764,501 - -Total Executive Director, Other KMP and Senior Managers 4,351,096 4,091,756 2,794 75,8861 KMP remuneration in this table includes those meeting the definition of KMP under AASB 124 (excluding non-executive directors) as wellas the five executives who received the highest remuneration who were not KMP for the year in accordance with the Corporations Act 2001.2 Interest free portion of loan under employee share scheme.3 ‘Other’ remuneration for other key management personnel, includes motor vehicles, housing benefits and other allowances subject tofringe benefits tax.4 Retirement benefits relates to termination payments made during the year.5 All remuneration including the bonus have been prorated.48 www.awb.com.au

Directors’ report AWB LIMITEDPost Employment benefitsEquity settled sharebasedpaymentsCash settled sharebasedpaymentsSuperannuation Retirement Benefits 4 issuedAmortised valueof performance rightsAccrual for sharebasedpaymentTotal$ $ $ $ $% ofcompensation that isperformance based91,282 - - 443,422 2,307,921 58%15,984 630,000 67,574 - 985,525 7%6,573 - 13,360 - 555,918 56%33,859 - - - 160,101 0%14,921 - 28,559 - 696,059 43%100,154 - 70,153 - 995,598 41%4,376 21,306 6,086 - 134,061 5%12,026 - 8,596 - 371,142 28%62,419 24,124 45,806 - 419,930 11%13,610 - 28,286 - 444,785 28%100,154 - 113,753 - 999,671 44%12,127 6,499,523 - - 6,754,181 0%20,009 - - - 2,184,682 81%487,494 7,174,953 382,173 443,422 17,009,574www.awb.com.au 49

AWB LIMITED Directors’ reportKey management personnel of AWB Limited Group and AWB Limited 1Table 10 - Executive Director, KMP and Senior Managers remuneration for the year ended 30 September 20072007 Short term benefitsCash salary and fees Bonus 2 Non-monetarybenefits 3 Other 4$ $ $ $Executive DirectorGordon Davis (Managing Director) 757,803 708,750 - -Other KMP and Senior ManagersMark Hosking (appointed 16 April 2007) 216,793 127,500 - 3,707Mitch Morison (appointed 20 October 2006) 338,469 45,000 - -Graeme Jacobs (appointed 15 February 2007) 197,560 149,040 - 2,422Margaret Wade (appointed 8 January 2007) 192,028 64,460 - -Phillip Meurer (appointed 11 July 2007) 103,651 56,520 - -David Johnson 289,876 77,260 1,785 -Colin Taylor 293,450 277,500 - -Kevin Lynch 328,756 249,750 - -Robert Hadler 362,291 198,000 - 5,552James Hatherley (resigned 12 October 2007) 431,562 - 2,536 -Thierry Dubois 297,125 5,859,441 - 413,701Paul Ingleby (redundant 30 October 2006) 51,405 - 5,900 1,038Peter Geary (redundant 3 November 2006) 43,825 - 1,641 4,916Michael Thomas (resigned 29 June 2007) 347,905 - 475 -Sarah Scales (resigned 2 February 2007) 166,223 - 1,332 1,214Total Executive Director, KMP and Senior Managers 4,418,722 7,813,221 13,669 432,5501 KMP remuneration includes those meeting the definition of KMP under AASB 124 as well as the five executives who received the highestremuneration for the year in accordance with the Corporations Act 2001. It excludes Non-Executive Directors.2 Bonuses in respect of the 2006/07 financial year have been revised to be presented on an accruals basis. In prior years, these have beenpresented on a cash basis.3 Interest free portion of loan under employee share schemes.4 ‘Other’ remuneration for other key management personnel, includes motor vehicles, housing benefits and other allowances subject tofringe benefits tax. Included in other for Thierry Dubois is an allowance for successful implementation of the international tradingoperations strategy.5 Retirement benefits includes termination payments made during the year, Paul Ingleby $1,319,548, Peter Geary $951,207,Michael Thomas $898,473 and Sarah Scales $775,288.6 The fair value of the rights is calculated at the date of grant using a Black-Scholes model and allocated to each reporting period evenlyover the period from grant date to vesting date. The value disclosed above is the portion of the fair value of all the rights that havebeen expensed during the period.50 www.awb.com.au

Directors’ report AWB LIMITEDPost Employment benefitsEquity settled sharebasedpaymentsCash settled sharebasedpaymentsSuperannuation Retirement Benefits 5 issued 6Amortised valueof performance rightsAccrual for sharebasedpaymentTotal$ $ $ $ $% ofcompensation that isperformance based117,197 - - 122,534 1,706,284 49%54,885 - 19,478 - 422,363 35%14,435 - 17,107 - 415,011 15%110,916 - 24,347 - 484,285 36%9,447 - 6,086 - 272,021 26%19,748 - - - 179,919 31%13,124 - 28,286 - 410,331 26%106,550 - 71,764 - 749,264 47%138,552 - 29,216 - 746,274 37%32,157 - 25,970 - 623,970 36%12,797 - 18,340 - 465,235 4%- - - - 6,570,267 89%10,057 1,319,548 49,159 - 1,437,107 3%3,438 951,207 36,026 - 1,041,053 3%27,095 898,473 26,200 - 1,300,148 2%4,359 775,288 26,200 - 974,616 3%674,757 3,944,516 378,179 122,534 17,798,148www.awb.com.au 51

AWB LIMITED Directors’ reportTable 11 - Factors and assumptions used in determining the fair value of performance rights on grant dateGrant dateExpirydate (i)Fair value perperformancerightExerciseprice (ii)Price of shareson grant dateEstimatedvolatilityRisk freeinterest rateDividendYield1 October 2003 1 October 2007 $3.01 $1.00 $3.90 13% 5.30% 6.40%1 October 2004 1 October 2008 $3.63 $1.00 $4.54 18% 5.40% 5.50%30 June 2006 30 June 2010 $2.73* $1.00 $4.33 24% 6.15% 5.93%1 October 2006 1 October 2010 $1.90 $- $3.38 29% 6.06% 5.90%1 October 2007 1 October 2011 $1.77 $- $2.57 37% 6.34% 3.29%* represents weighted average share price(i) With the exception of the 2006 plans the assumed expiry date disclosed is one year after vesting date as the performance rights are expectedto be exercised at this time. However, under the terms of the plans the performance rights expire 10 years after the grant date.(ii) The total consideration payable on the exercise of any performance rights granted on 1 October 2003, 1 October 2004 and 30 June 2006 on aparticular day will be one dollar in total (irrespective of the number of rights exercised on that day).Performance rights granted to KMPDuring the financial year, AWB Limited granted performance rights for no consideration over unissued ordinary shares in AWB Limited to thefollowing executive officers of the company as part of their remuneration:2008Table 12 - Performance rights granted to KMPKMPNumber ofrights granted Exercise price Expiry dateGordon Davis 369,649 $0 1 October 2011Philip Gentry (appointed 4 April 2008) 40,856 $0 1 October 2011Mark Hosking (resigned 4 April 2008) 147,081 $0 1 October 2011Phillip Meurer (resigned 30 April 2008) 140,077 $0 1 October 2011Mitch Morison 35,019 $0 1 October 2011Graeme Jacobs 140,077 $0 1 October 2011Kate Hughes (appointed 18 December 2007) 14,708 $0 1 October 2011Colin Taylor 128,404 $0 1 October 20112007Table 13 - Performance rights granted to KMPKMPNumber ofrights granted Exercise price Expiry dateGordon Davis 258,875 $0 1 October 2010Mark Hosking (appointed 16 April 2007) 53,254 $0 1 October 2010Mitch Morison (appointed 20 October 2006) 26,627 $0 1 October 2010Graeme Jacobs (appointed 15 February 2007) 66,567 $0 1 October 2010Margaret Wade (appointed 8 January 2007) 16,641 $0 1 October 2010David Johnson 53,786 $0 1 October 2010Colin Taylor 88,757 $0 1 October 2010Kevin Lynch 79,881 $0 1 October 2010Robert Hadler 71,005 $0 1 October 201052 www.awb.com.au

Directors’ report AWB LIMITEDOptions and Rights held by KMPTable 14 - Options and Rights held by KMPRight holdingsHeld at1 October 2007Granted duringthe yearExercisedduring the yearLapsedduring the yearHeld at30 September2008Vested andExercisable asat 30 September2008Gordon Davis 258,875 369,649 - - 628,524 -Mark Hosking(resigned 4 April 2008) 53,254 147,081 - (200,335) - -Philip Gentry(appointed 4 April 2008) (i) - 40,856 - - 40,856 -John Russell(appointed 26 May 2008) - - - - - -Mitch Morison 62,396 35,019 - (10,311) 87,104 -Graeme Jacobs 66,567 140,077 - - 206,644 -Margaret Wade(resigned 18 December 2007) 16,641 - - (16,641) - -Kate Hughes(appointed 18 December 2007) (i) 10,355 14,708 - - 25,063 -Phillip Meurer(resigned 30 April 2008) - 140,177 - (140,177) - -David Johnson 53,786 - - (10,218) 43,568 -Colin Taylor 159,015 128,404 - - 287,419 -(i) These KMP were appointed during the year, as such, opening balances and certain grants made during the year were prior to these personsbeing considered KMP.The accounting value of the senior executives’ performance rights that were granted, exercised and lapsed in the 2008 financial year is detailedin the table below. As these values represent accounting values, the executive may not actually receive these amounts.The value of lapsed performance rights is based on accounting value. This value is included to address our reporting obligations only. Wherethese instruments lapse, there is no benefit at all to the executive, and therefore no transfer of any equity or equity-related instrument.The value of performance rights granted, exercised and lapsed in 2008 financial year is shown in Table 15.Table 15 - Value of performance rights holdingsRight holdingsGranted duringthe year (ii)Granted as% of totalremunerationExercisedduring the yearLapsed duringthe year (iii)Gordon Davis $750,387 33% $- $0Mark Hosking (resigned 4 April 2008) $192,386 20% $- -$552,925Philip Gentry (appointed 4 April 2008) $53,441 10% $- $0John Russell (appointed 26 May 2008) $0 - $- $0Mitch Morison $45,806 7% $- -$28,665Graeme Jacobs $183,225 18% $- $0Margaret Wade (resigned 18 December 2007) $0 - $- -$45,097Kate Hughes (appointed 18 December 2007) $19,239 5% $- $0Phillip Meurer (resigned 30 April 2008) $183,225 44% $- -$337,827David Johnson $0 - $- -$28,406Colin Taylor $167,956 17% $- $0(ii) Amounts granted during the year are amortised over four years.(iii) Lapsed values have been calculated in accordance with the Corporations Act 2001.Shares issued on exercise of performance rightsDuring or since the end of the financial year, the company issued ordinary shares as a result of the exercise of performance rights as follows:Table 16 - Shares issued on exercise of performance rightsNumber of sharesAmount paid on each exercise of performance rights0 $0.00www.awb.com.au 53

AWB LIMITED Directors’ reportGroup PerformanceOur remuneration policy links the remuneration of executives and the wider employee population with short term and long term performance.The Nomination & Remuneration Committee approves the overall share of profit distributed to employees based on the Group’s performance.The total return to an investor over a given period consisted of the combination of dividends paid and the movement in market value of theirshares over that period.The closing share price on the ASX of AWB Limited securities on 30 September 2008 was $2.78. AWB Limited’s highest and lowest share pricesin the year ended 30 September 2008 were $3.92 (8 May 2008) and $2.02 (1 February 2008) respectively.In addition to TSR, company performance is also reflected in the movement in the company’s earnings per share. Table 17 shows AWB Limited’sbasic Earnings Per Share (EPS) history for the past five years.Table 17 - AWB Limited’s Basic EPS history for past five yearsYear ended30 September 2008Year ended30 September 2007Year ended30 September 2006Year ended30 September 2005Year ended30 September 2004Share price ($) 2.78 2.46 3.27 5.11 4.53Total dividends paid per share(cents) 8.0 8.0 20.0 29.0 25.0Basic earnings per share(cents) 18.5 7.8 16.8 53.5 28.8EPS for 2004 are based on figures prepared under previously recognised Australian Accounting Standards (AGAAP).Earnings performanceEarnings performance over the last five years is represented by profit attributable to AWB Limited shareholders and is detailed in Table 18.Table 18 - AWB Limited’s earnings performance over the last five yearsProfit attributable to membersof the AWB GroupFinancial Year$’0002008 64,2862007 27,1452006 58,1402005 157,1212004 96,862Profit attributable to members of the AWB Group for 2004 is based on figures prepared under previously recognised Australian AccountingStandards (AGAAP).54 www.awb.com.au

Audit independence declaration AWB LIMITEDwww.awb.com.au 55

AWB LIMITED Income statements for the year ended 30 September 2008ConsolidatedAWB Limited2008 2007 2008 2007Notes $’000 $’000 $’000 $’000Revenue 2(a) 6,501,548 4,325,278 - -Cost of sales (6,005,429) (3,969,079) - (1,801)Gross profit/(loss) 496,119 356,199 - (1,801)Finance revenue 2(b) 303,156 262,558 96,402 84,169Finance costs 2(c) (304,253) (238,769) (604) (369)Other income 2(d) 39,995 84,254 54,343 56,403Other expenses 2(e) (471,745) (422,975) (70,441) (88,509)Share of profit of associates 10(b) 20,734 11,233 - -Profit before income tax 84,006 52,500 79,700 49,893Income tax expense 3 (18,683) (24,945) (12,055) (9,494)Net profit for the period 65,323 27,555 67,645 40,399Profit attributable to minority interest 1,037 410 - -Profit attributable to members of the parent 20(b) 64,286 27,145 67,645 40,399Earnings per share (cents)- basic earnings per share 36 18.5 7.8- diluted earnings per share 36 18.4 7.856 www.awb.com.au

Balance sheets as at 30 September 2008 AWB LIMITEDConsolidatedAWB Limited2008 2007 2008 2007Notes $’000 $’000 $’000 $’000AssetsCash and cash equivalents 4 551,656 546,387 5,664 44,951Loans and advances 5 4,046,740 3,061,458 1,089,399 1,024,218Inventories 6 558,797 354,901 - -Derivative financial instruments 32 388,123 516,088 - -Investments 7 - - 144,918 113,405Available for sale financial assets 8 7,313 18,310 3,141 8,824Other assets 9 146,772 82,474 - 9Investments accounted for using the equity method 10 122,646 107,178 - -Property, plant and equipment 12 144,020 158,160 - -Intangible assets 11 538,238 550,477 305 313Deferred income tax assets 13 100,082 63,233 2,799 3,154Total assets 6,604,387 5,458,666 1,246,226 1,194,874LiabilitiesTrade and other payables 14 789,884 530,033 94,713 96,187Interest-bearing loans and borrowings 15 4,153,314 3,369,217 - -Income tax payable 59,107 33,412 15,224 15,586Provisions 16 67,984 47,948 675 627Derivative financial instruments 32 352,596 353,702 - -Other liabilities 17 324 2,106 - -Deferred income tax liabilities 18 5,449 10,301 2,448 2,490Total liabilities 5,428,658 4,346,719 113,060 114,890Net assets 1,175,729 1,111,947 1,133,166 1,079,984EquityContributed equity 19 983,540 969,743 983,540 969,743Reserves 20(a) 14,023 (358) 24,793 25,324Retained profits 20(b) 174,878 140,431 124,833 84,917Total parent entity interest 1,172,441 1,109,816 1,133,166 1,079,984Minority interest 21 3,288 2,131 - -Total equity 1,175,729 1,111,947 1,133,166 1,079,984www.awb.com.au 57

AWB LIMITED Statement of cash flows for the year ended 30 September 2008ConsolidatedAWB Limited2008 2007 2008 2007Notes $’000 $’000 $’000 $’000Cash flows from operating activitiesReceipts from customers 5,992,709 4,251,287 - -Payments to suppliers and employees (6,290,684) (4,368,186) (62,254) (77,902)Borrowing costs paid (305,359) (239,077) (604) (369)Dividends received 5,156 11,583 46,453 57,271Income tax refund received 3,066 20,693 - 20,508Income taxes paid (27,348) (22,135) (21,644) (23,396)Interest received 302,857 256,596 96,402 84,169Net cash flows from/(used in) operating activities 23 (319,603) (89,239) 58,353 60,281Cash flows from investing activitiesPayments for property, plant and equipment (22,169) (20,620) - -Payments for intangible assets (7,416) (10,008) - (148)Proceeds from sale of property, plant and equipment 8,639 2,909 - -Proceeds from sale of intangible assets 896 - - -Proceeds from sale of investments 6,560 3,165 3,592 1,415Payment for controlled entities (net of cash acquired) (3,332) (1,618) - (11,218)Purchases of investments and associates - (5,388) - -Net cash flows from/(used in) investing activities (16,822) (31,560) 3,592 (9,951)Cash flows from financing activitiesProceeds from issues of ordinary shares 13,797 - 13,797 -Proceeds from/(repayment of) borrowings from related party(AWB National Pools) 214,723 (46,418) - -Proceeds from/(repayment of) borrowings from wholly-owned group - - (87,299) (45,630)Proceeds from/(repayment of) borrowings 536,706 66,833 - -Proceeds from/(repayment of) interest bearing deposits 32,668 (64,967) - -Dividends paid (27,730) (27,706) (27,730) (27,706)Receipts - grower payment products 93,148 333,028 - -Payments - grower payment products (165,200) (3,106) - -Repayments of grower loans 459,921 575,610 - -Loans advanced to growers (606,704) (114,085) - -Repayment of customer loans 3,063,846 3,188,808 - -Loans advanced to customers (3,273,481) (3,287,725) - -Net cash flows from/(used in) financing activities 341,694 620,272 (101,232) (73,336)Net increase/(decrease) in cash held 5,269 499,473 (39,287) (23,006)Cash at the beginning of the financial year 546,387 46,914 44,951 67,957Cash at the end of the financial year 4 551,656 546,387 5,664 44,95158 www.awb.com.au

Statement of changes in equity for the year ended 30 September 2008 AWB LIMITEDConsolidatedAttributable to equity holders of the parentIssuedcapitalRetainedearningsStaffshare planreservesequityOtherreservesTotalMinorityinterestTotalequity$’000 $’000 $’000 $’000 $’000 $’000 $’000At 1 October 2006 969,743 141,247 4,670 7,437 1,123,097 2,186 1,125,283Currency translation differences - - - (19,396) (19,396) (409) (19,805)Share-based payments - - 923 - 923 - 923Available for sale revaluation - - - 5,753 5,753 - 5,753Appropriation to general legal reserve - (255) - 255 - - -Total income and expense for the periodrecognised directly in equity - (255) 923 (13,388) (12,720) (409) (13,129)Profit/(loss) for the period - 27,145 - - 27,145 410 27,555Total income/(expense) for the period - 26,890 923 (13,388) 14,425 1 14,426Issue of share capital - - - - - - -Net deferred tax - - - - - - -Equity dividends - (27,706) - - (27,706) (56) (27,762)At 30 September 2007 969,743 140,431 5,593 (5,951) 1,109,816 2,131 1,111,947At 1 October 2007 969,743 140,431 5,593 (5,951) 1,109,816 2,131 1,111,947Currency translation differences - - - 16,520 16,520 120 16,640Share-based payments - - 3,390 - 3,390 - 3,390Available for sale revaluation - - - (7,637) (7,637) - (7,637)Appropriation to general legal reserve - (2,108) - 2,108 - - -Total income and expense for the periodrecognised directly in equity - (2,108) 3,390 10,991 12,273 120 12,393Profit/(loss) for the period - 64,286 - - 64,286 1,037 65,323Total income/(expense) for the period - 62,178 3,390 10,991 76,559 1,157 77,716Issue of share capital 13,797 - - - 13,797 - 13,797Equity dividends - (27,730) - - (27,730) - (27,730)At 30 September 2008 983,540 174,878 8,983 5,040 1,172,441 3,288 1,175,729www.awb.com.au 59

AWB LIMITED Statement of changes in equity for the year ended 30 September 2008Attributable to equity holders of the parentAWB LimitedIssuedcapitalRetainedearningsStaffshare planreservesequityOtherreservesTotal equity$’000 $’000 $’000 $’000 $’000At 1 October 2006 969,743 72,224 4,670 17,273 1,063,910Share-based payments - - 923 - 923Available for sale revaluation - - - 2,458 2,458Total income and expense for the period recognised directly in equity - - 923 2,458 3,381Profit/(loss) for the period - 40,399 - - 40,399Total income/(expense) for the period - 40,399 923 2,458 43,780Net deferred tax - - - - -Issue of share capital - - - - -Equity dividends - (27,706) - - (27,706)At 30 September 2007 969,743 84,917 5,593 19,731 1,079,984At 1 October 2007 969,743 84,917 5,593 19,731 1,079,984Share-based payments - - 3,390 - 3,390Available for sale revaluation - - - (3,922) (3,922)Total income and expense for the period recognised directly in equity - - 3,390 (3,922) (532)Profit/(loss) for the period - 67,645 - - 67,645Total income/(expense) for the period - 67,645 3,390 (3,922) 67,113Issue of share capital 13,797 - - - 13,797Equity dividends - (27,730) - - (27,730)At 30 September 2008 983,540 124,833 8,983 15,810 1,133,16660 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED1 Summary of significant accounting policies2 Revenues and expenses3 Income tax expense4 Cash and cash equivalents5 Loans and advances6 Inventories7 Investments8 Available for sale financial assets9 Other assets10 Investments accounted for using the equity method11 Intangible assets12 Property, plant and equipment13 Deferred income tax assets14 Trade and other payables15 Interest-bearing loans and borrowings16 Provisions17 Other liabilities18 Deferred income tax liabilities19 Contributed equity20 Reserves and retained profits21 Minority interest22 Dividends23 Reconciliation of profit after income tax to net cash flow from/(used in) operating activities24 Key management personnel disclosures25 Auditors’ remuneration26 Related party disclosures27 Segment information28 Expenditure commitments29 Contingent liabilities30 Share-based payments31 Financial risk management objectives and policies32 Derivative instruments33 Deed of cross guarantee34 Controlled entities35 Interests in joint venture operations36 Earnings per share37 Subsequent events38 Business combinations39 Class actions40 Oil-for-food inquiry41 Standard Chartered Bank Litigation1. Summary of Significant Accounting Policies(a) Basis of preparationThe financial report is a general purpose financial report which hasbeen prepared in accordance with Australian Accounting Standards,other authoritative pronouncements of the Australian AccountingStandards Board and the Corporations Act 2001. The financial reporthas also been prepared on a historical cost basis, except for derivativefinancial instruments, available for sale investments, inventories heldin commodity broker-trader arrangements and fixed rate loans whichhave been measured at fair value.The financial report is presented in Australian dollars and all valuesare rounded to the nearest thousand dollars ($000) unless otherwisestated under the option available to the company under ASIC classorder 98/0100.Compliance with IFRSThe financial report complies with Australian Accounting Standardsand International Financial Reporting Standards (IFRS).Adoption of new accounting standardsThe Group has adopted AASB 7 Financial Instruments; Disclosures andall consequential amendments which became applicable on 1 January2007. The adoption of this standard has modified the basis and detailsof disclosures concerning financial instruments. There has been noeffect on the profit and loss or the financial position of the entity as aresult of adopting this standard.The group has also adopted amendments to AASB 101 ‘Presentationof Financial Statements’ which requires new disclosures concerningthe objectives, policies and processes for managing capital.Critical Accounting EstimatesThe preparation of financial statements in conformity with AustralianAccounting Standards requires the use of certain critical accountingestimates. It also requires management to exercise its judgement inthe process of applying the Group’s accounting policies. The areasinvolving a higher degree of judgement or complexity, or areas whereassumptions and estimates are significant to the financial statementsare disclosed in note (1aa).This report was authorised for issue on 19 November 2008 inaccordance with a resolution of the directors.(b) Basis of consolidationThe consolidated financial statements comprise the financialstatements of AWB Limited and its subsidiaries (‘the Group’) (asoutlined in Note 34).The financial statements of subsidiaries are prepared for the samereporting period as the parent company with the exception of AWBIndia Private Limited (reporting date 31 March) and AWB Brasil TradingSA (reporting date 31 December). AWB India Private Limited and AWBBrasil Trading SA prepare, for consolidation purposes, additionalfinancial statements as of the same date as the financial statementsof AWB Limited.Consistent accounting policies have been applied to subsidiaries.In preparing the consolidated financial statements, all intercompanybalances and transactions, including unrealised profits arising fromintra group transactions, have been eliminated in full.Subsidiaries are consolidated from the date on which control istransferred to the Group and cease to be consolidated from the dateon which control is transferred out of the Group. Where there isloss of control of a subsidiary, the consolidated financial statementsinclude the results for the part of the reporting period which AWBLimited has control.Investments in subsidaries held by AWB Limited are accounted forat cost in the separate financial statements of the parent entity.Interests in associates are equity accounted (see note (d) below).www.awb.com.au 61

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 2008AWB National PoolsThe Group operates grain pools on behalf of growers and has legaltitle over the pool inventory; however, the majority of the risks andbenefits associated with the pools, principally price risk and benefit,together with credit risk, are attributable to growers. As a result, poolinventory and other related balances held by the Group on behalfof growers are not recognised in the Group’s financial statements.Separate financial records are maintained for these grain pools.(c) ComparativesComparative data has been presented on a consistent basis with theprior reporting period, unless classification of items in the financialreport have been amended, in which case comparative amounts havebeen reclassified.(d) Investment in associatesThe Group’s investment in its associates is accounted for under theequity method of accounting in the consolidated financial statementsand at cost in the parent. The associates are entities over which theGroup has significant influence and which are neither subsidiaries norjoint ventures.The financial statements of the associates are used by the Group toapply the equity method. Both use consistent accounting policies.The investment in associates is carried in the consolidated balancesheet at cost plus post-acquisition changes in the Group’s shareof net assets of the associates, less any impairment in value. Theconsolidated income statement reflects the Group’s share of theresults of operations of the associates. Dividends receivable fromassociates are recognised in the parent entity’s income statement,while in the consolidated financial statements they reduce thecarrying amount of the investment.Where there has been a change recognised directly in the associate’sequity, the Group recognises its share of any changes and disclosesthis, when applicable, in the consolidated statement of changes inequity.(e) Joint venturesJoint Venture OperationsThe Group has an interest in a joint venture that is a jointly controlledoperation. The Group recognises its interest in the jointly controlledoperation by recognising its interest in the assets and liabilities of thejoint venture. The Group also recognises the expenses that it incursand its share of the income that it earns from the sale of goods orservices by the jointly controlled operation.Joint Venture EntitiesThe interest in a joint venture partnership is accounted for in theconsolidated financial statements using the equity method and iscarried at cost by the parent entity. Under the equity method, theshare of the profits or losses of the partnership is recognised inthe income statement, and the share of movements in reserves isrecognised in reserves in the consolidated balance sheet.(f) Foreign currency translationFunctional and presentation currencyBoth the functional and presentation currency of AWB Limited andits Australian subsidaries is Australian Dollars ($). The consolidatedfinancial statements are presented in Australian dollars. The Group’soffshore subsidaries use the functional currencies of the primaryeconomic environment in which the entity operates (‘the functionalcurrency’), this is primarily United States Dollars.Transactions and balancesForeign currency transactions are initially recorded in the functionalcurrency by applying the exchange rates ruling at the date of thetransaction. Monetary assets and liabilities denominated in foreigncurrencies are translated at the rate of exchange ruling at the balancesheet date.Non-monetary items that are measured in terms of historical cost in aforeign currency are translated using the exchange rate as at the dateof the initial transaction. Non-monetary items measured at fair valuein a foreign currency are translated using the exchange rates at thedate when fair value was determined.Group CompaniesThe results and financial position of all the Group’s entities that havea functional currency different from the presentation currency aretranslated into the presentation currency as follows:• assets and liabilities for balance sheet presented are translated atthe closing rate at the date of that balance sheet;• income and expenses for each income statement are translated ataverage exchange rates; and• exchange variations resulting from translation are recognised inthe foreign currency translation reserve in equity.Group entities that have a different functional currency from thepresentation currency are:• AWB Geneva SA (United States dollars);• AWB Brazil Trading SA (United States dollars);• AWB USA Limited (United States dollars);• AWB India Private Limited (Indian rupee);• AWB Krishi Suvida Parisar (Kota) Private Limited (Indian rupee);• AWB Krishi Upaaj Vipnan Parisar (Talera) Private Limited(Indian rupee);• AWB Mauritius Private Ltd (United States dollars);• AZL Ltd (Japanese Yen); and• AWB Singapore Private Limited (Singapore dollars).On disposal of a foreign entity, the deferred cumulative amountrecognised in equity relating to that particular foreign operation isrecognised in the income statement.(g) Property, plant and equipmentPlant, property and equipment is stated at historical cost lessaccumulated depreciation and any impairment losses.Depreciation is calculated on a straight-line basis at the followingrates:• Land - not depreciated;• Buildings - 2%;• Leasehold improvements - 7% to 50%; and• Plant and equipment - 5% to 33%.Depreciation rates are determined using the estimated useful life ofassets as follows:• Buildings 50 years;• Leasehold improvements 2 - 14.3 years; and• Plant and equipment 3 to 20 years.The assets’ residual values, useful lives and amortisation methods arereviewed, and adjusted if appropriate, at each financial year end.ImpairmentThe carrying values of plant and equipment are reviewed forimpairment when events or changes in circumstances indicate thecarrying value may not be recoverable.For an asset that does not generate largely independent cash inflows,the recoverable amount is determined for the cash-generating unitto which the asset belongs. If any such indication exists, and wherethe carrying values exceed the estimated recoverable amount, theassets or cash-generating units are written down to their recoverableamount.(h) GoodwillGoodwill acquired in business combinations are initially measuredat cost, being the excess of the cost of the business combinationover the Group’s interest in the net fair value of the acquiree’sidentifiable assets, liabilities and contingent liabilities. Followinginitial recognition, goodwill is measured at cost less any accumulatedimpairment losses.Goodwill is not amortised but is tested for impairment annually ormore frequently if events or changes in circumstances indicate thatthe carrying value may be impaired.62 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDFor the purpose of impairment testing, goodwill acquired in abusiness combination is, from the acquisition date, allocated to eachof the Group’s cash-generating units that are expected to benefit fromthe synergies of the combination, irrespective of whether other assetsor liabilites of the Group as assigned to those units. Each unit to whichthe goodwill is allocated includes:• Landmark Financial Services; and• Landmark Rural Services.Impairment is determined by assessing the recoverable amount of thecash-generating unit, to which the goodwill relates.AWB Limited performs its impairment testing during September eachyear using a value in use, discounted cash flow methodology for boththe Landmark Financial Services and Landmark Rural Services cashgeneratingunits to which goodwill has been allocated. Further detailson the methodology and assumptions used are outlined in note 11.When the recoverable amount of the cash-generating unit is less thanthe carrying amount, an impairment loss is recognised. Impairmentlosses recognised are not subsequently reversed.(i) Intangible assetsAcquired both separately and from a business combinationIntangible assets acquired separately or in a business combination areinitially measured as cost. The cost of an intangible asset acquired ina business combination is its fair value as at the date of acquisition.Following initial recognition, intangible assets are carried at costless any accumulated amortisation and any accumulated impairmentlosses. Internally generated intangible assets, excluding capitalisedsystem development costs, are not capitalised and expenditureis recognised in the income statement in the year in which theexpenditure is incurred. System development costs are capitalisedwhen they are expected to produce future economic benefits.The useful lives of intangible assets are assessed to be either finite orindefinite. Other than goodwill, all of AWB Limited’s intangible assetsare assessed to have finite useful lives. Intangible assets with finitelives are amortised over the useful life and tested for impairmentwhenever there is an indication that the intangible asset may beimpaired. The amortisation period and method for an intangible witha finite life is reviewed at least at each financial year-end. Changesin the expected useful life or the expected pattern of consumptionof future economic benefits embodied in the asset are accountedfor prospectively by changing the amortisation period or method, asappropriate, which is a change in accounting estimate.Intangible assets with finite useful lives are amortised as follows:• Licences 7-10 years; and• System development costs 2.5-5 years.(j) InvestmentsInvestments in controlled entities are held at cost in AWB Limited’sbalance sheet.Available for sale investments, principally equity securities, are initiallyrecognised at fair value plus directly attributable transaction costs.After initial recognition, available for sale investments are measuredat fair value with gains or losses recognised as a separate componentof equity until the investment is derecognised or determined tobe impaired, at which time the cumulative gain or loss previouslyreported in equity is included in the income statement.For investments that are actively traded in organised financial markets,fair value is determined by reference to quoted market bid prices atthe close of business on the balance sheet date.For investments where there is no quoted market price, fair valueis determined by reference to the current market value of anotherinstrument which is substantially the same.(k) InventoriesInventories, other than those held in a commodity broker-traderrelationship are valued at the lower of cost and net realisable value.Net realisable value is the estimated selling price in the ordinarycourse of business, less estimated costs of completion and theestimated costs necessary to make the sale.AWB grain acquisition and trading activities are conducted as acommodity broker-trader, where inventories are acquired principallyfor the purpose of selling in the near future and generating a profitfrom fluctuations in price or broker-traders’ margin. Grain acquisitionand trading inventories are measured at fair value less costs tosell with changes in fair value less costs to sell recognised in theconsolidated income statement.(l) Loans and advancesTrade receivablesTrade receivables, which generally have 30 day terms, are recognisedinitially at fair value and subsequently measured at amortised costusing the effective interest method, less an allowance for creditimpairment.An estimate for provision for impairment is made when there isobjective evidence that the Group will not be able to collect allamounts due according to the original terms of receivables. Bad debtsare written off when identified.Loans and advancesLoans and advances are non derivative financial assets with fixed ordeterminable payments that are not quoted in an active market. Theyarise when the Group provides money or goods or services directlyto a debtor with no intention of selling the receivable. Loans andadvances on variable rate terms are initially recognised at fair valueplus transaction costs that are directly attributable to the issue of theloan or advance. They are subsequently measured at amortised costusing the effective interest method. Refer to 1(ac) for the accountingpolicy in relation to loans and advances on fixed rate terms. Loans andadvances are derecognised when the rights to receive cash flows haveexpired or the group has transferred substantially all the risks andrewards of ownership.Impairment of loans and advancesIf there is objective evidence that an impairment loss on loans andadvances carried at amortised cost has been incurred, the amountof the loss is measured as the difference between the asset’scarrying amount and the present value of estimated future cashflows (excluding future credit losses that have not been incurred)discounted at the financial asset’s original effective interest rate (i.e.the effective interest rate computed at initial recognition). The carryingamount of the assets is reduced either directly or through use of anallowance account. The amount of the loss is recognised in the incomestatement.The Group first assesses whether objective evidence of impairmentexists individually for financial assets that are individually significant,and individually or collectively for financial assets that are notindividually significant. If it is determined that no objective evidence ofimpairment exists for an individually assessed financial asset, whethersignificant or not, the asset is included in a group of financial assetswith similar credit risk characteristics and that group of financial assetsis collectively assessed for impairment. Assets that are individuallyassessed for impairment and for which an impairment loss is orcontinues to be recognised are not included in a collective assessmentof impairment.If, in a subsequent period, the amount of the impairment lossdecreases and the decrease can be related objectively to an eventoccurring after the impairment was recognised, the previouslyrecognised impairment loss is reversed. Any subsequent reversal of animpairment loss is recognised in profit or loss, to the extent that thecarrying value of the asset does not exceed its amortised cost at thereversal date.(m) Cash and cash equivalentsCash and cash equivalents in the balance sheet comprise cash at bankand on hand and short-term deposits with an original maturity ofthree months or less that are readily convertible to known amounts ofcash and which are subject to an insignificant risk of changes in value.For the purposes of the Cash Flow Statement, cash and cashequivalents consist of cash and cash equivalents as defined above, netof outstanding bank overdrafts. Bank overdrafts are included withininterest bearing loans and borrowings in current liabilities on thebalance sheet.www.awb.com.au 63

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 2008(n) Interest-bearing loans and borrowingsAll loans and borrowings are initially recognised at the fair value ofthe consideration received less directly attributable transaction costs.After initial recognition, interest-bearing loans and borrowings aresubsequently measured at amortised cost using the effective interestmethod. Fees paid for the establishment of loan facilities that are yieldrelated are included as part of the carrying amount of the loans andborrowings, and amortised over the life of the loan.Borrowings are classified as current liabilities unless the Group hasan unconditional right to defer settlement of the liability for at least12 months after the balance sheet date.Borrowing costsBorrowing costs are recognised as an expense when incurred. AWBLimited does not currently hold qualifying assets but, if it did, theborrowing costs directly associated with these assets would becapitalised (including other associated costs directly attributable tothe borrowing and temporary investment income earned on theborrowing).(o) ProvisionsProvisions are recognised when the Group has a present obligation(legal or constructive) as a result of a past event, it is probable that anoutflow of resources embodying economic benefits will be requiredto settle the obligation and a reliable estimate can be made of theamount of the obligation. All provisions recognised are expected tobe settled within the next 12 months, as such they have not beendiscounted.(p) Employee benefits(i) Wages, salaries, annual leave and sick leaveLiabilities for wages and salaries, including non-monetary benefits,annual leave and accumulating sick leave expected to be settledwithin 12 months of the reporting date are recognised in respectof employees’ services up to the reporting date. They are measuredat the amounts expected to be paid when the liabilities are settled.Expenses for non-accumulating sick leave are recognised when theleave is taken and are measured at the rates paid or payable.(ii) Long service leaveThe liability for long service leave is recognised and measured as thepresent value of expected future payments to be made in respect ofservices provided by employees up to the reporting date using theprojected unit credit method. Consideration is given to expectedfuture wage and salary levels, experience of employee departures,and periods of service. Expected future payments are discountedusing market yields at the reporting date on national governmentbonds with terms to maturity and currencies that match, as closely aspossible, the estimated future cash outflows.(iii) Retirement benefit obligationsFor defined contribution plans, the Group has no further paymentobligations once the contributions have been paid. The contributionsare expensed as they fall due.(q) Share-based payment transactionsThe Group provides benefits to its employees in the form of sharebasedpayments, whereby employees render services in exchange forshares or rights over shares (equity settled transactions).The cost of equity settled transactions with employees is measuredby reference to the fair value of the equity instrument at the date atwhich they are granted.The cumulative expense recognised for equity-settled transactions ateach reporting date until vesting date reflects:(i) the extent to which the vesting period has expired; and(ii) the number of performance rights that, in the opinion of thedirectors of the Group, will ultimately vest. This opinion is formedbased on the best available information at balance date.No expense is recognised for performance rights that do notultimately vest, except for awards where vesting is conditionalupon a market condition. The dilutive effect, if any, of outstandingperformance rights is reflected as additional share dilution in thecomputation of earnings per share.(r) Income taxDeferred income tax is provided on all temporary differences at thebalance sheet date between the tax bases of assets and liabilities andtheir carrying amounts for financial reporting purposes.Deferred income tax liabilities are recognised for all taxable temporarydifferences:• except where the deferred income tax liability arises from theinitial recognition of an asset or liability on a transaction that is nota business combination and, at the time of the transaction, affectsneither the accounting profit nor taxable profit or loss; and• in respect of taxable temporary differences associated withinvestments in subsidiaries, associates and interests in jointventures, except where the timing of the reversal of the temporarydifferences can be controlled and it is probable that the temporarydifferences will not reverse in the foreseeable future.Deferred income tax assets are recognised for all deductible temporarydifferences, carry-forward of unused tax assets and unused tax losses,to the extent that it is probable that taxable profit will be availableagainst which the deductible temporary differences, and the carryforwardof unused tax assets and unused tax losses can be utilised:• except where the deferred income tax asset relating to thedeductible temporary difference arises from the initial recognitionof an asset or liability on a transaction that is not a businesscombination and, at the time of the transaction, affects neither theaccounting profit nor taxable profit or loss; and• in respect of deductible temporary differences associated withinvestments in subsidiaries, associates and interests in jointventures, deferred tax assets are only recognised to the extentthat it is probable that the temporary differences will reverse inthe foreseeable future and taxable profit will be available againstwhich the temporary differences can be utilised.The carrying amount of deferred income tax assets is reviewed ateach balance sheet date and reduced to the extent that it is no longerprobable that sufficient taxable profit will be available to allow all orpart of the deferred income tax asset to be utilised.Deferred income tax assets and liabilities are measured at the tax ratesthat are expected to apply to the year when the asset is realised orthe liability is settled, based on tax rates (and tax laws) that have beenenacted or substantively enacted at the balance sheet date.Income taxes relating to items recognised directly in equity arerecognised in equity and not in the income statement.Tax consolidationThe company is the head entity in the tax-consolidated groupcomprising all the Australian wholly-owned subsidiaries set out innote 34. The implementation date for the tax-consolidated group was1 October 2003.The head entity, AWB Limited and the controlled entities in the taxconsolidated group continue to account for their own current anddeferred tax amounts. The Group has applied the group allocationapproach in determining the appropriate amount of current taxes anddeferred taxes to allocate to members of the tax consolidated group.In addition to its own current and deferred tax amounts, AWB Limitedalso recognises the current tax liabilities (or assets) and the deferredtax assets arising from unused tax losses and unused tax creditsassumed from controlled entities in the tax consolidated group.Assets or liabilities arising under tax funding agreements with the taxconsolidated entities are recognised as amounts receivable or payableto other entities in the Group. Any difference between the amountsassumed and amounts receivable or payable under the tax fundingagreement are recognised as a contribution to (or distribution from)wholly-owned tax consolidated entities.64 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDOther taxesRevenues, expenses and assets are recognised net of the amount ofGST except:• when the GST incurred on a purchase of goods and services is notrecoverable from the taxation authority, in which case the GST isrecognised as part of the cost of acquisition of the asset or as partof the expense item as applicable; and• receivables and payables, which are stated with the amount of GSTincluded.The net amount of GST recoverable from, or payable to, the taxationauthority is included as part of receivables or payables in the balancesheet.(s) Derivative financial instrumentsThe Group uses derivative financial instruments to economically hedgeits risk associated with foreign currency, interest rate and commodityprice risk. Such derivative financial instruments are initially recognisedat fair value on the date on which a derivative contract is enteredinto and subsequently remeasured to fair value. Hedge accounting isnot applied and, as such these instruments are classified as held fortrading as required by AASB 139 Financial Instruments: Recognition andMeasurementThe fair value of forward exchange contracts is calculated byreference to current forward exchange rates for contracts withsimilar maturity profiles. The fair value of interest rate swapcontracts is determined by reference to market values for similarinstruments. The fair value of forward freight agreements, forwardpurchases and forward sales of inventory is determined by referenceto market values for similar instruments. The fair value of physicalfreight contracts is determined with an element of judgement byreference to quoted prices and adjustments are made based onactual route and vessel size.Derivatives outstanding at balance date are valued at the rates rulingon that date and any gains or losses are brought to account in theincome statement.Changes in the fair value of any derivatives instruments are recognisedimmediately in the income statement.(t) LeasesLeases where the lessor retains substantially all the risks and benefitsof ownership of the assets are classified as operating leases. Initialdirect costs incurred in negotiating an operating lease are added tothe carrying amount of the leased asset and recognised over the leaseterm on the same bases as the lease income.Operating lease payments are recognised as an expense in the incomestatement on a straight-line basis over the lease term.(u) Revenue recognition and other incomeRevenues are recognised and measured at fair value of theconsideration received or receivable to the extent it is probable thatthe economic benefits will flow to the Group and the revenue can bereliably measured.SalesRevenue from sales made on commercial terms is recognised whentitle for the commodity transfers to the customer. In the case of exportsales, the bill of lading (shipment) date is taken as the transaction dateunless title is to pass at a materially different time.Service and commission revenueService and commission revenue charged on a range of businessservices are a fee for the service of providing rural merchandise andfertiliser, agronomy services, livestock and wool marketing services,insurance, real estate marketing services and financial products.Service and commission revenue are recognised according to whenthe costs of providing the services are incurred.Interest revenueInterest revenue is recognised as it accrues using the effective interestrate method. The accrual of income is suspended on accounts whichare impaired.DividendsDividend revenue is recognised when the Group’s right to receive thepayment is established.Underwriting feeThe underwriting fee charged on loan products is a fee for theservice of providing a non-recourse loan. Underwriting fee revenue isrecognised on a basis consistent with the pattern of the incidence ofrisk covered by the service provided.Sale of non-current assetsThe gain or loss on the sale of non-current assets is included as otherincome at the date control of the asset passes to the buyer, usuallywhen an unconditional contract of sale is signed. The gain or loss ondisposal is calculated as the difference between the carrying amountof the asset at the time of disposal and the net proceeds on disposal.Rental incomeRental income from sub-lease of offices is accounted for on a straightline basis over the lease term. Contingent rental income is recognisedas income in the periods in which it is earned. Lease incentivesgranted are recognised as an integral part of the total rental income.(v) Trade and other payablesTrade and other payables are carried at amortised cost and due totheir short term nature they are not discounted. The amounts areunsecured and typically paid within 30 days of recognition.(w) Finance costsBorrowing costs are recognised as an expense when incurred.(x) Contributed EquityOrdinary share capital is recognised at the fair value of theconsideration received by AWB Limited. Any transaction costsarising on the issue of ordinary shares are recognised directlyin equity as a reduction of the share proceeds received.(y) Earnings per shareBasic earnings per share is calculated as net profit attributable tomembers of the parent, adjusted to exclude costs of servicing equity(other than dividends), divided by the weighted average number ofordinary shares, adjusted for any bonus element. Diluted earningsper share is calculated as the net profit attributable to members,adjusted for:• costs of servicing equity (other than dividends); · the after-taxeffect of dividends and interest associated with dilutive potentialordinary shares that have been recognised as expenses; and• other non-discretionary changes in revenues and expenses duringthe period that would result from the dilution of potential ordinaryshares divided by the weighted average number of ordinary sharesand dilutive potential ordinary shares, adjusted for any bonuselement.(z) New accounting standards and interpretationsCertain new accounting standards and interpretations have beenpublished that are not mandatory and have not been adopted for the30 September 2008 reporting period. The Group’s assessment of theimpact of these new standards and interpretations in future periods isset out below.(i) AASB Interpretation 13 Customer Loyalty Programmes -(Applicable reporting period beginning 1 October 2008)Deals with the accounting for customer loyalty programmes, whichare used by companies to provide incentives to their customers to buytheir products or use their services. The Group has customer loyaltyprogrammes and has not at this stage determined the impact onimplementation of this interpretation.(ii) AASB 8 and AASB 2007-3 - Operating Segments and consequentialamendments to other Australian Accounting Standards (applicableperiods beginning 1 October 2009)AASB 8 is a disclosure standard and will have no direct impact on theamounts included in the Group’s financial statements, although it mayindirectly impact the level at which goodwill is tested for impairment.In addition, the amendments may have an impact on the Group’ssegment disclosures.www.awb.com.au 65

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 2008(iii) AASB 101 (revised) and AASB 2007-8 Presentation of FinancialStatements and consequential amendments to other AustralianAccounting Standards. (Applicable 1 October 2009)The revised standard introduces a statement of comprehensiveincome. Other revisions include impacts on the presentation of itemsin the statement of changes of equity, new presentation requirementsfor restatements or reclassifications of items in the financialstatements, changes in the presentation requirements for dividendsand changes to the titles of financial statements. These amendmentsare only expected to affect the presentation of the Group’s financialreport and will not have a direct impact on the measurement andrecognition of the amounts disclosed in the financial report. TheGroup has not determined at this stage whether to present a singlestatement of comprehensive income or two separate statements.(iv) AASB 2008-1 Amendments to Australian Accounting Standard- Share-based Payments: Vesting Conditions and Cancellations(Applicable 1 October 2009)The amendments clarify the definition of ‘vesting conditions’,introducing the term ‘non-vesting conditions’ for conditions other thanvesting conditions as specifically defined and prescribe the accountingtreatment of an award that is effectively cancelled because a nonvestingcondition is not satisfied. The Group has share-based paymentarrangements that may be affected by these amendments. However,the Group has not yet determined the extent of the impact, if any.(v) AASB 3 (revised) Business Combinations(Applicable reporting period beginning 1 October 2009)The revised standard introduces a number of changes to theaccounting for business combinations, the most significant of whichallows entities a choice for each business combination entered into- to measure a non-controlling interest in the acquiree either at itsfair value or at its proportionate interest in the acquiree’s net assets.This choice will effectively result in recording goodwill to 100% ofthe business (applying the fair value option) or recognising goodwillrelating to the percentage interest acquired. The changes applyprospectively. The Group may enter into business combinations duringthe next financial year and therefore may consider early adopting therevised standard. The Group has not yet assessed the impact of earlyadoption, including which accounting policy to adopt.(vi) AASB 127 (revised) Consolidated and Separate FinancialStatements and AASB 2008-3 Amendments to Australian AccountingStandards arising from AASB 3 and AASB 127 (Applicable reportingperiod beginning 1 October 2009)Under the revised standard, a change in the ownership interest of asubsidiary (that does not result in loss of control) will be accounted foras an equity transaction. If the Group changes its ownership interest inexisting subsidiaries in the future, the change will be accounted for asan equity transaction. This will have no impact on goodwill, nor will itgive rise to a gain or a loss in the Group’s income statement.(vii) AASB 2008-7 Amendments to International Financial ReportingStandards - Cost of an Investment in a Subsidiary, Jointly ControlledEntity or Associate (Applicable reporting period beginning1 October 2009)The distinction between pre and post acquisition dividends is nolonger required. However, the payment of such dividends requiresthe entity to consider whether there is an indicator of impairment.AASB 127 has also been amended to effectively allow the cost of aninvestment in a subsidiary, in limited reorganisations, to be based onthe previous carrying amount of the subsidiary (i.e. share of equity)rather than its fair value.Recognising all dividends received from subsidaries, jointly controlledentities and associates as income will likely give rise to greaterincome being recognised by the parent entity after adoption ofthese amendments. In addition, if the Group enters into any groupreorganisation establishing new parent entities, an assessmentwill need to be made to determine if the reorganisation meets theconditions imposed to be effectively accounted for on a ‘carry overbasis’ rather than at fair value.(viii) AASB 2008-8 Amendments to Australian Accounting Standards -Eligible Hedged Items (Applicable reporting period beginning1 October 2009)The amendment to AASB 139 clarifies how the principles underlyinghedge accounting should be applied when (i) a one-sided risk in ahedged item and (ii) inflation in a financial hedged item existed or waslikely to exist. The Group does not apply hedge accounting and is notexpected to be impacted by the amendment.AASB 127 has also been amended to effectively allow the cost of aninvestment in a subsidiary, in limited reorganisations, to be based onthe previous carrying amount to the subsidary (i.e. the share of equity)rather than its fair value.(aa) Significant accounting judgements, estimates and assumptionsThe preparation of financial statements requires management to makejudgements, estimates and assumptions that affect the applicationof accounting policies and the reported amounts of assets, liabilities,income and expenses. Actual results may differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoingbasis. Revisions to accounting estimates are recognised in the periodin which the estimate is revised and in any future period affected.For the Group, the accounting estimates, judgements and assumptionsare principally in relation to:• Impairment of loans and advances - see policy (l), Notes 5 and 31;• Measurement of recoverable amounts of cash-generating unitscontaining goodwill - see policy (h) and Note 11;• Measurement of recoverable amount of non-current assets -see policy (g) and Note 12;• Fair valuation of financial instruments - see policy (s);• Non-consolidation of AWB National Pools - see policy (b); and• Recoverability of Deferred tax assets (including overseas tax losses)- see policy (r).(ab) Segment reportingA business segment is identified for a group of assets and operationsengaged in providing products or services that are subject to riskand returns that are different to those of other business segments.A geographical segment is identified when products or services areprovided within a particular economic environment subject to risksand returns that are different from those of segments operating inother economic environments.(ac) Fair valuesAll financial assets and liabilities are measured at fair value or dueto their short term maturities carrying value equates to fair value.See policy (s) for details on fair valuation methodology of derivativeinstruments.The estimated fair value of fixed loans and advances is based on thediscounted amount of estimated future cash flows and accordinglyhas not been adjusted for the provision for impairment. Estimatedcontractual cash flows for performing loans are discounted atestimated current credit spreads to determine fair value. For loanswith doubt as to collection, expected cash flows (inclusive of the valueof security) are discounted using a rate, which includes a premium foruncertainty of flows. For variable rate loans, fair value equates to thecarrying amount net of the provision for impairment.Fair values of interest bearing loans and borrowings held at amortisedcost are considered to equate to fair value as all borrowings are atfloating rates.66 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED2. Revenues and ExpensesConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’000Profit from continuing operations before income tax expense includesthe following specific items:(a) RevenueSale of goodsCommodity sales 4,003,019 2,489,365 - -Merchandise and fertiliser 1,787,699 1,402,204 - -Other 229,969 167,416 - -Related party (AWB National Pools) 480,861 266,293 - -6,501,548 4,325,278 - -(b) Finance revenueInterest revenueFinancial institutions 46,584 36,155 - -Loans and advances - variable rate portfolio 216,431 186,611 847 1,828Loans and advances - fixed rate portfolio 36,313 30,945 - -Related party (AWB National Pools) 3,828 8,847 - -Wholly-owned group - - 95,555 82,341Total finance revenue 303,156 262,558 96,402 84,169(c) Finance costsInterest expenseFinancial institutions 265,772 185,267 599 323Interest rate swaps (11,284) 3,641 - -Notes - 272 - -Related party (AWB National Pools) 31,562 28,688 - -Total interest expense 286,050 217,868 599 323Other finance costs 18,203 20,901 5 46Total finance costs 304,253 238,769 604 369Net finance income (1,097) 23,789 95,798 83,800www.awb.com.au 67

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 2008ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’0002. Revenues and Expenses (continued)(d) Other incomeFees and commissions incomeRelated party (AWB National Pools) 46,028 47,068 - -Net foreign exchange gain/(loss) (18,921) 1,735 1,293 (3,154)Underwriting fees 4,073 5,863 - -DividendsOther persons/corporations 275 793 190 424Related party - - 1,254 1,004Wholly-owned group - - 45,009 55,843275 793 46,453 57,271Profit/(loss) on sale of non-current assetsProperty, plant and equipment 2,528 (270) - (137)Joint venture - 1,750 - -Available for sale financial assets 6,561 1,415 3,592 1,4159,089 2,895 3,592 1,278Rental income 1,028 986 - -Fair value gain/(loss) on fixed rate loans (11,199) 4,157 - -Fair value gain/(loss) on derivative instruments measured at fair valuethrough profit or loss (16,938) 9,278 - -Other 26,560 11,479 3,005 1,008Total other income 39,995 84,254 54,343 56,403(e) Other expensesAmortisation 19,044 21,955 48 40Depreciation 18,426 20,088 - -Total amortisation and depreciation expenses 37,470 42,043 48 40Write down of assets/investments to recoverable amount 1,000 9,208 - 5,581Communication and information technology costs 43,111 35,738 - -Commission and sales related costs 10,519 7,056 - -Legal, professional and consultancy costs 58,690 21,235 - -Travel costs 13,720 13,544 31 53Motor vehicle costs 10,328 9,863 - -Advertising and promotion costs 9,085 4,662 - -Equipment and supplies costs 3,835 3,132 - -Operating lease rental expense 43,533 42,731 - -Employee benefits expenses 222,028 215,611 2,782 3,746Superannuation expenses 15,036 14,495 408 537Share-based payment and employee share issue expenses 3,390 3,657 1,727 2,438Service agreement fees - - 65,445 76,114471,745 422,975 70,441 88,50968 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’0003. Income Tax Expense(a) Income tax expenseCurrent Tax 67,109 57,491 20,972 11,404Deferred Tax (38,427) (26,416) 1,995 (1,526)Under/(over) provided in prior years 1 (9,999) (6,130) (10,912) (384)18,683 24,945 12,055 9,494Income tax expense is attributable to:Profit from continuing operations 18,683 24,945 12,055 9,494Total income tax expense 18,683 24,945 12,055 9,494Deferred income tax (revenue)/expense included in income tax expense comprises:Decrease/(increase) in deferred tax assets (note 13) (36,849) (20,939) 355 (895)(Decrease)/increase in deferred tax liabilities (note 18) (1,578) (5,477) 1,640 (631)(38,427) (26,416) 1,995 (1,526)1 Included in this line is the receipt of foreign tax credits in relation to the prior year.(b) Numerical reconciliation of income tax expense to prima facie tax payableProfit from continuing operations before income tax expense 84,006 52,500 79,700 49,893Tax at Australian tax rate of 30% 25,202 15,750 23,910 14,968Tax effect of amounts which are not deductible (taxable) in calculating income:Share of net profits from associates (6,494) (2,874) - -Franking credits on dividends received (7) (16) - -Amortisation of intangible assets 1,920 2,878 - 1,752Depreciation of buildings - (425) - (425)Depreciation of plant and equipment not allowed for tax (46) 416 - -Foreign tax credits (38) (179) - (108)Under/(over) provision of previous year (8,065) (4,312) (10,914) (72)Tax rate differential on foreign entities (6,638) (6,962) - -Increase/(decrease) in value of investments 4,552 (468) 1,654 (698)Attributable income of foreign entities 21 15,766 (6,069) 15,745Non assessable capital gain 88 - - -Non assessable debt recoveries (651) (620) (651) (620)Non-deductible legal and consulting 8,711 1,078 - -Tax consolidation intra group transactions - 3,352 3,911 1,219Other items (net) 128 1,562 214 48118,683 24,945 12,055 32,242Unrecognised Subsidiary losses available to head company - - - (22,748)Income tax expense 18,683 24,945 12,055 9,494www.awb.com.au 69

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 20083. Income Tax Expense (continued)ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’000(c) Amounts recognised directly in equityAggregate current and deferred tax arising in the reporting period and notrecognised in net profit or loss but directly debited or credited to equity - - - -Net deferred tax - debited/(credited) directly to equity (3,274) 2,465 (999) 1,053(3,274) 2,465 (999) 1,053AWB Limited2008 2007$’000 $’000(d) Tax consolidationAWB Limited has recognised the following amounts as tax-consolidation adjustments:Total increase/(reduction) to tax payable of AWB Limited 38,657 10,409Total increase/(reduction) to intercompany assets of AWB Limited 69,084 33,157Total increase/(reduction) to investment in subsidiary accounts of AWB Limited 30,427 22,748ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’0004. Cash and Cash EquivalentsCash at bank and on hand 49,935 69,533 5,664 44,951Short term deposits 501,721 476,854 - -551,656 546,387 5,664 44,951The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows.70 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’0005. Loans and AdvancesTrade receivables 1,263,499 667,306 61 (29)Related party (AWB National Pools) 169,681 139,699 881,932 849,057Grower loans receivable 275,847 129,094 - -Finance advances 3,556 4,495 - -Rural loans and advances 2,308,566 2,097,293 - -Employee Share loan 10,040 10,190 10,040 10,190Subordinated loan - wholly owned group - - 196,289 165,000Loans to other persons/corporations 1,246 1,120 - -Loans to wholly owned group - - 1,077 -Loans to associates 14,305 12,261 - -4,046,740 3,061,458 1,089,399 1,024,218Staff Ownership PlanAWB previously offered eligible employees an interest free loan (fully repayable at the end of 10 years or upon resignation)for purchase of AWB Limited shares.Trade receivablesTrade receivables 1,281,786 687,804 61 (29)Collective provision for impairment (6,353) (8,410) - -Specific provision for impairment (11,934) (12,088) - -1,263,499 667,306 61 (29)Related party trade receivables - AWB National Pools 169,681 139,699 - 591,433,180 807,005 61 30Past due not impaired trade receivablesPast due 1 to 30 days 86,359 67,662 - -Past due 31 to 60 days 16,962 18,164 - -Past due 61+ days 28,711 13,750 - -132,032 99,576 - -Movements in the provision for impairment of trade receivablesCarrying amount at the beginning of the year (20,498) (12,376) - -Provision raised during the year (7,709) (9,849) - -Provisions utilised (written off during the year) 5,258 751 - -Provision released during the year 4,667 852 - -Foreign currency difference on translation of foreign currency entities (1) 124 - -Acquisition of subsidary (4) - - -(18,287) (20,498) - -All amounts provided for via the provision for impairment are considered to be impaired.www.awb.com.au 71

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 2008ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’0005. Loans and Advances (continued)Loans and advancesGrower loan receivables 275,847 129,094 - -Finance advances 3,556 4,495 - -Rural loans and advances 2,342,270 2,129,187 - -Collective provison for impairment - rural loans and advances (20,266) (17,658) - -Specific provision for impairment - rural loans and advances (13,438) (14,236) - -2,587,969 2,230,882 - -The grower loans and finance advance loan portfolios do not have past due components and are not impaired; both portfolios are secured byharvested and graded grain which is ready for sale.Past due not impaired rural loans and advancesPast due to 90 days 9,227 20,262 - -Past due 91+ days 46,605 59,902 - -55,832 80,164 - -Past due not impaired rural loans and advances include full loan amounts of customer accounts which have exceeded loan facility amountsor have passed their payment dates. Full recovery of these accounts is considered likely.Renegotiated loans and advancesLoans and advances which are expected to be fully recovered, but where the terms have been renegotiated to provide concessions such thatthey are no longer considered impaired:Carrying value of renegotiated loans and receivables 13,684 1,964 - -Movements in the provision for impairment on rural loans and advancesCarrying amount at the beginning of the year (31,894) (20,915) - -Provision raised during the year (7,488) (7,899) - -Provisions released during the year 4,105 - - -Non-accrual interest (4,873) (4,098) - -Provisions utilised (written off during the year) 6,446 1,018 - -(33,704) (31,894) - -72 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’0006. InventoriesFinished goods at fair value 343,741 208,833 - -Finished goods at cost 219,047 150,564 - -Provision for diminution in value (3,991) (4,496) - -558,797 354,901 - -Inventories recognised as an expense for the year ended 30 September 2008 totalled $5,305,032 thousand (2007: $3,200,320 thousand).Inventory write downs recognised as an expense totalled $1,881 thousand (2007: $1,335 thousand) for the Group. These expenses areincluded in the cost of sales line item as a cost of inventories.7. InvestmentsControlled entities - - 133,349 101,836Investments in associates - - 11,569 11,569- - 144,918 113,4058. Available For Sale Financial AssetsListed securities 4,395 13,689 2,197 6,844Unlisted securities 1,291 1,297 318 3185,686 14,986 2,515 7,162Memberships 1,627 3,324 626 1,6627,313 18,310 3,141 8,824Fair value of listed securities and memberships is determined by reference to quoted market bid prices at the close of business on balance date.Memberships are held in the Chicago Mercantile Exchange and Kansas City Board of Trade.9. Other AssetsPrepayments 136,367 72,404 - 9Other assets 10,405 10,070 - -146,772 82,474 - 9Prepayments consist of interest paid in advance and prepaid purchases.www.awb.com.au 73

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200810. Investments Accounted for Using the Equity Method(a) Carrying amountsInformation relating to associates is set out below:Consolidated2008 2007Name Principal activity % Balance date$’000 $’000Arcadian Wool Brokers Limited Wool handling 40 30 June 1,199 1,223AWH Pty Ltd (formerly Wooldumpers Australia Pty Ltd) Wool handling 50 30 June 4,580 5,706Five Star Flour Mills Company SAE (FSFM) Flour mill 30 30 June 15,759 11,532Five Star Feed Mills and Animal Production Company SAE Feed mill (i) 30 June 3,929 2,624ELF Australia Pty Ltd Rural merchandise 50 31 December 74,930 64,779Temora Grains Unit Trust Rural merchandise 50 30 June 101 101RD1 Limited Rural services - dairy sector 50 31 May 20,952 19,420Farmerequip Pty Ltd Rural financing 50 30 September 93 (26)Genstock Pty Ltd Rural livestock 50 30 June 1,103 1,819122,646 107,178Five Star Flour Mills and Five Star Feed Mills are based in Egypt.(i) The Group holds 23.7% directly. The other 9% is indirectly held through FSFM.(b) Share of associates’ profit or lossesProfit before income tax 27,486 14,279Income tax expense (6,752) (3,046)Profit after income tax 20,734 11,233(c) Movement in carrying amount of investmentsCarrying amount at the beginning of the financial year 107,178 105,458- Investments in associates acquired during the financial year 275 4,068- Dividends received/receivable (4,541) (10,808)- Share of profits after income tax 20,734 11,233- Impairment losses charged to profit (1,000) -- Share of increment/(decrement) on revaluation reserve for the financial year - (2,773)Carrying amount at the end of the financial year 122,646 107,178(d) Share of assets and liabilitiesCurrent assets 319,955 184,113Non-current assets 76,253 68,430Current liabilities (264,270) (130,613)Non-current liabilities (9,292) (14,752)Net assets 122,646 107,178(e) Retained profits of the Group attributable to associatesBalance at the beginning of the financial year 29,272 28,847Share of net profits of associates 20,734 11,233less Share of associates’ dividends (4,541) (10,808)Balance at the end of the financial year 45,465 29,272(f) Reserves of the Group attributable to associatesBalance at the beginning of the financial year (10,545) (7,772)Share of associates’ reserves - (2,773)Balance at the end of the financial year (10,545) (10,545)74 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED11. Intangible Assets(a) Reconciliation of carrying amounts at the beginning and end of the periodConsolidated Goodwill LicencesSystemDevelopment Other Total$’000 $’000 $’000 $’000 $’000Year ended 30 September 2008Opening net book amount 515,632 1,278 22,670 10,897 550,477Acquisitions/Additions 2,823 40 3,643 910 7,416Fair value adjustment from previous year acquisition 210 - - - 210Impairment charge - - - - -Amortisation charge - (161) (15,669) (3,214) (19,044)Transfers - - (20) - (20)Disposals - (860) (16) - (876)Net foreign currency translation on foreign operations - 8 67 - 75Closing net book amount 518,665 305 10,675 8,593 538,238At 30 September 2008Cost 518,665 496 126,110 17,725 662,996Accumulated amortisation and impairment - (191) (115,435) (9,132) (124,758)Net book amount 518,665 305 10,675 8,593 538,238Year ended 30 September 2007Opening net book amount 514,788 1,328 31,522 12,448 560,086Additions 844 309 7,435 1,420 10,008Impairment charge - - - - -Amortisation charge - (198) (18,786) (2,971) (21,955)Transfers - - 2,564 - 2,564Disposal - - (12) - (12)Net foreign currency translation on foreign operations - (161) (53) - (214)Closing net book amount 515,632 1,278 22,670 10,897 550,477At 30 September 2007Cost 515,632 1,569 116,776 17,232 651,209Accumulated amortisation and impairment - (291) (94,106) (6,335) (100,732)Net book amount 515,632 1,278 22,670 10,897 550,477www.awb.com.au 75

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200811. Intangible Assets (continued)(a) Reconciliation of carrying amounts at the beginning and end of the period (continued)A segment level summary of the goodwill allocation is presented as follows:Consolidated 2008 2007$’000 $’000Landmark Rural Services 303,169 300,136Landmark Financial Services 215,496 215,496518,665 515,632AWB Limited Licences Total$’000 $’000Year ended 30 September 2008Opening net book amount 313 313Additions 40 40Amortisation charge (48) (48)Closing net book amount 305 305At 30 September 2008Cost 496 496Accumulated amortisation and impairment (191) (191)Net book amount 305 305Year ended 30 September 2007Opening net book amount 165 165Additions 188 188Amortisation charge (40) (40)Closing net book amount 313 313At 30 September 2007Cost 456 456Accumulated amortisation and impairment (143) (143)Net book amount 313 31376 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED11. Intangible Assets (continued)(b) Description of the Group’s intangible assetsSystem developmentSystem development costs are carried at cost less accumulatedamortisation and accumulated impairment losses. This intangible assethas been assessed as having a finite life and is amortised using thestraight line method over a period of 2.5 - 5 years. The amortisationhas been recognised in the income statement in the line item ‘otherexpenses’. If an impairment indication arises, the recoverable amountis estimated and an impairment loss is recognised to the extent thatthe recoverable amount is lower than the carrying amount.LicencesLicences are carried at cost less accumulated amortisation andaccumulated impairment losses. These intangible assets have beenassessed as having a finite life and are amortised using the straightline method over a period of 7-10 years. The amortisation has beenrecognised in the income statement in the line item ‘other expenses’.If an impairment indication arises, the recoverable amount isestimated and an impairment loss is recognised to the extent that therecoverable amount is lower than the carrying amount.OtherOther intangible assets relate to non-contractual customerrelationships or customer lists purchased as part of a businesscombination. Other intangibles assets are carried at cost lessaccumulated amortisation and accumulated impairment losses.These intangible assets have been assessed as having a finite lifeand are amortised using the straight line method over a period of 5-8years. The amortisation has been recognised in the income statementin the line item ‘other expenses’. If an impairment indication arises,the recoverable amount is estimated and an impairment loss isrecognised to the extent that the recoverable amount is lower thanthe carrying amount.GoodwillAfter initial recognition, goodwill acquired in a business combinationis measured at cost less any accumulated impairment losses. Goodwillis not amortised but is subject to impairment testing on anannual basis or whenever there is an indication of impairment.(c) Impairment tests for goodwillGoodwill acquired through business combinations has been allocatedto two individual cash-generating units, each of which is a reportablesegment, for impairment testing as follows:• Landmark Financial Services; and• Landmark Rural Services.Landmark Financial ServicesThe recoverable amount of the Landmark Financial Services unit hasbeen determined based on a value in use calculation using cash flowprojections based on financial budgets approved by managementcovering a three year period, with an appropriate terminal value atthe end of that period.The pre-tax, real discount rate (the real discount rate assumes noinflation in cash flows and hence adjusts the discount rate downwardsfor inflation, when compared to a nominal discount rate) applied tothe cash flow projections is 8.19% (2007: 9.58%) per annum and thecash flows beyond the three year period are extrapolated using a 5%real growth rate (2007: 6.78%), which is in line with the long-termaverage growth rate for the agribusiness financial sector.Landmark Rural ServicesThe recoverable amount of the Landmark Rural Services unit hasbeen determined based on a value in use calculation using cash flowprojections based on financial budgets approved by managementcovering a three year period, with an appropriate terminal value atthe end of that period.The pre-tax, real discount rate (the real discount rate assumes noinflation in cash flows and hence adjusts the discount rate downwardsfor inflation, when compared to a nominal discount rate) appliedto the cash flow projections is 8.54% (2007: 9.71%) per annum andthe cash flows beyond the three year period are extrapolated usinga 3.39% growth rate (2007: 2.37%) per annum, which is in line withthe long-term average growth rate for the agribusiness rural servicessector.(d) Key assumptions used in the value in use calculations forthe Landmark Financial Services and Landmark Rural ServicesCash-generating units for 30 September 2008 and 2007.The calculation of value in use for both Landmark Financial Servicesand Landmark Rural Services is most sensitive to the followingassumptions:• Gross and net interest margins;• Discount rates; and• Growth rates used to extrapolate cash flows beyond the budgetperiod.Sensitivity to changes in assumptionsWith regard to the assessment of the value in use for the LandmarkRural Services and Landmark Financial Services cash generating units(CGUs), management believes that no reasonably possible changein any one of the key assumptions would cause the carrying valueof either CGU to materially exceed its recoverable amount.www.awb.com.au 77

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200812. Property, Plant and EquipmentReconciliationsReconciliations of the carrying amounts for each class of property, plant and equipment are set out below:FreeholdLeasehold Plant andland Buildings improvements equipment Total$’000 $’000 $’000 $’000 $’000Consolidated - 2008Carrying amount at the beginning of the year 16,992 43,101 14,879 83,188 158,160Additions 127 1,147 1,824 19,071 22,169Disposals/Transfers (2,379) (5,329) (275) (9,750) (17,733)Depreciation expense - (2,207) (2,435) (13,784) (18,426)Net foreign currency difference on translation of foreign operations (86) (48) (23) 7 (150)Carrying amount at the end of the year 14,654 36,664 13,970 78,732 144,020Consolidated - 2007Carrying amount at the beginning of the year 15,722 42,303 15,183 92,546 165,754Additions 2,015 1,593 1,926 15,086 20,620Disposals/Transfers (745) 1,530 147 (5,367) (4,435)Recoverable amount write down - - - (3,627) (3,627)Depreciation/amortisation expense - (2,327) (2,355) (15,406) (20,088)Net foreign currency difference on translation of foreign operations - 2 (22) (44) (64)Carrying amount at the end of the year 16,992 43,101 14,879 83,188 158,160AWB Limited - 2008Carrying amount at the beginning of the year - - - - -Additions - - - - -Disposals/Transfers - - - - -Recoverable amount write down - - - - -Depreciation/amortisation expense - - - - -Carrying amount at the end of the year - - - - -AWB Limited - 2007Carrying amount at the beginning of the year - - - 105 105Additions - - - - -Disposals/Transfers - - - (105) (105)Recoverable amount write down - - - - -Depreciation/amortisation expense - - - - -Carrying amount at the end of the year - - - - -78 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDConsolidatedAWB Limited2008 2007 2008 2007Notes $’000 $’000 $’000 $’00013. Deferred Income Tax AssetsThe balance comprises temporary differences attributable to:Amounts recognised in profit or lossProvision for impairment 8,188 10,946 1,200 1,200Employee benefits 10,493 9,816 40 20Accruals 13,670 7,344 988 942Unearned Income 171 510 - -Inventory 16,551 (2,726) - -Property, Plant and Equipment 10,172 10,275 - 408Unrealised foreign exchange (450) (587) - -Other Provisions 14,275 15,191 180 179Capital, Trust and Overseas Losses (including the prepayment of tax) 27,679 10,768 - 14Investments 726 92 - -Other (2,302) 695 - -99,173 62,324 2,408 2,763Amounts recognised directly in equityInvestments 909 909 391 391Net deferred tax assets 100,082 63,233 2,799 3,154MovementsOpening balance at 1 October 63,233 42,294 3,154 2,258Credited/(charged) to the income statement 36,849 20,939 (355) 895Credited/(charged) to equity - - - 1Closing balance at 30 September 100,082 63,233 2,799 3,154Deferred tax assets to be recovered after more than 12 months 53,761 26,467 391 978Deferred tax assets to be recovered within 12 months 46,321 36,766 2,408 2,176100,082 63,233 2,799 3,15414. Trade and Other PayablesTrade creditors- other persons/corporations 670,070 398,928 - -- related party (AWB National Pools) 26(e) 5,877 59,704 - -- wholly-owned group 26(e) - - 90,997 92,963Other creditors 115,155 68,143 3,716 3,223Goods and services tax payable/(receivable) (1,218) 3,258 - 1789,884 530,033 94,713 96,187www.awb.com.au 79

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 2008ConsolidatedAWB Limited2008 2007 2008 2007Notes $’000 $’000 $’000 $’00015. Interest-Bearing Loans and BorrowingsInterest-bearing deposits 410,361 377,693 - -Bank loans 2,967,848 2,529,894 - -Inventory financing 99,202 - - -Loans- related party (AWB National Pools) 26(e) 675,903 461,180 - -- other - 450 - -4,153,314 3,369,217 - -The carrying amount of the Group’s borrowings approximates their fair value, as they are all variable rate borrowings. Amounts which are duebeyond 12 months are disclosed via contractual maturity analysis in Note 31, including comparative data.Assets pledged as securityAssets pledged as security for interest bearing loans facilities:Security Trust DeedCash and cash equivalents 46,020 57,458 5,664 44,951Loans and advances 282,000 805,046 207,467 175,947Inventories 476,322 186,460 - -Other financial assets 245,268 337,749 - -Other assets 100,965 21,315 2,799 3,154Investments 226,760 225,185 148,058 122,542Intangible assets 527,092 537,364 305 -Property, plant and equipment 137,174 122,478 - 9Total 2,041,061 2,293,055 364,293 346,603Assets pledged as security by offshore entities to internationalfinanciers:- AWB India Private Limited 22,322 49,899 - -- AWB (Geneva) SA 596,258 169,852 - -- AWB Brasil Trading SA 283 226 - -618,863 219,977 - -80 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED15. Interest-Bearing Loans and Borrowings (continued)A summary of committed debt and other funding facilities available to the Group by business segment as at balance date is detailed as follows:Landmark Financial ServicesCommitted Credit Facilities Ref CurrencyFacility Limit$’000FacilityMaturityUtilisation$’000Rural CP Warehouse Trust - Securitisation Program Sub Limit (1 Yr Tranche) AUD 1,172,400 May 2009Rural CP Warehouse Trust - Securitisation Program Sub Limit (1.5 Yr Tranche) AUD 468,960 November 2009Rural CP Warehouse Trust - Securitisation Program Sub Limit (2 Yr Tranche) AUD 468,960 May 2010Rural CP Warehouse Trust - Securitisation Program Sub Limit (2.5 Yr Tranche) AUD 234,480 November 2010Rural CP Warehouse Trust - Securitisation Program Limit (Total Facility) (1) AUD 2,344,800 refer above 1,979,480Rural Warehouse Trust No 1 – Bank Facilities (1) AUD 250,000 December 2008 218,931Landmark - Stocklease Finance Securitisation Facility AUD 200,000 July 2010 9,412Rural Services/Australian Commodity ManagementCommitted Credit Facilities Ref CurrencyFacility Limit$’000FacilityMaturityUtilisation$’000AWBCF – Syndicated Bank Facility (1 Yr Tranche) (2) AUD 280,000 October 2008 35,044AWBCF – Syndicated Bank Facility (2 Yr Tranche) (2) AUD 120,000 October 2009 -AWB Australia – Committed Inventory Financing Facility AUD 100,000 December 2008 99,202AWB Australia – Committed Inventory Financing Facility AUD 50,000 June 2009 -Rural Trade Receivables Trust - Committed Securitisation Program Limit AUD 280,000 April 2009 255,000Uncommitted Credit Facilities Ref CurrencyFacility Limit$’000FacilityReviewUtilisation$’000AWB Australia – Uncommitted Inventory Financing Facility AUD 60,000 December 2008 -Other Funding Platforms Currency Facility MaturityUtilisation$’000Unsecured Deposit Notes AUD At Call and Various Terms 410,411Harvest FinanceUncommitted Credit Facilities Ref CurrencyFacility Limit$’000FacilityReviewUtilisation$’000AWB Harvest Finance - Euro Commercial Paper (3) USD 1,500,000 N/A -AWB Harvest Finance - Domestic Commercial Paper (3) AUD 2,000,000 N/A -AWB Harvest Finance - Medium Term Notes (3) AUD 500,000 N/A -Credit Facilities Executed post 30 September 2008 Ref CurrencyFacility Limit$’000FacilityReviewUtilisation$’000AWB Harvest Finance - Committed Inventory Financing Facility (4) AUD 225,000 October 2009 -AWB Harvest Finance - Committed Inventory Financing Facility (4) AUD 180,000 September 2009 -Other Funding Platforms Currency Facility MaturityUtilisation$’000Related Party Loans - AWB National Pools AUD At Call 675,898International Commodity ManagementUncommitted/ Committed Credit FacilitiesCurrencyFacility Limit$’000FacilityReviewUtilisation$’000Offshore Credit Financing Facilities AUD equivalent 6,258 Annual -Offshore Inventory Financing Facilities AUD equivalent 716,944 Annual 463,317www.awb.com.au 81

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200815. Interest-Bearing Loans and Borrowings (continued)Group wideOther Funding Platforms Currency Facility MaturityUtilisation$’000Accrued Interest and Other AUD 6,619Total 4,153,314(1) The Rural CP Warehouse Trust (CPWT) securitisation programme funds the majority of the Landmark Financial Services loan book through theissuance of commercial paper and/or liquidity backstop facilities provided by banks. The remainder of the Landmark Financial Services loan bookis funded through the Rural Warehouse Trust No 1 (RWT) which is a bank funded warehouse structure (this funding is substantially non-recourseto AWB) with facilities again provided by the same banks, together with a First Loss Note and provisions.At 30 September 2008, the current $2.3 billion CPWT Liquidity and LC Programme facilities Limits were renegotiated during the second half of2008 with varying maturity terms out by two and a half years. Subsequent to balance date, the extension of the existing one year RWT facilityarrangements for a further 11 month period is currently awaiting execution.(2) The $400 million Syndicated Loan Facility is a general corporate purpose loan facility provided by four banks to AWB Commercial Funding(AWBCF). The $280 million one year tranche of this facility encompasses an evergreen mechanism, which provides for a formal process uponwhich management have requested the banks to extend this one year tranche for a further 364 days ahead of the existing maturity datein October 2008. Since 30 September 2008, the syndicate banks have approved and executed an extension of this tranche for an additional12 months with no significant pricing change.As at 30 September 2008, AWB Commercial Funding Limited is fully compliant with all financial covenants.(3) AWBHF has not issued any commercial paper in the current financial year and has funded its activities via inventory financing arrangementswith the AWB National Pool. Inventory Financing provides access to competitive short term liquidity and will continue as the primary source ofdebt funding for AWBHF as an accredited exporter and manager for the upcoming year’s harvest. Since the balance date, AWBHF is at variousstages of documenting a number of bi-lateral inventory financing facilities with relationship banks totalling $852 million.(4) During October and November 2008 AWB Harvest Finance executed two inventory financing facilities which had total limits of $225 millionand $180 million respectively.82 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’00016. ProvisionsEmployee benefits 33,116 31,255 91 43Litigation 31,376 1,503 584 584Surplus leased premises and restoration 481 565 - -Restructure 3,011 14,625 - -67,984 47,948 675 627ReconciliationsReconciliations of the carrying amounts of litigation, surplus lease premises and restoration and restructure provisions are set out below:LitigationCarrying amount at the beginning of the year 1,503 2,906 584 1,805Provision made during the year 26,472 74 - -Provision (utilised)/recovered during the year (443) (1,327) - (1,221)Provision written back during the year (15) (150) - -Impact of foreign currency movements 3,859 - - -Carrying amount at the end of the year 31,376 1,503 584 584Surplus leased premises and restorationCarrying amount at the beginning of the year 565 866 - -Provision made during the year 85 - - -Utilised during the year (61) (301) - -Provision written back during the year (108) - - -Carrying amount at the end of year 481 565 - -RestructureCarrying amount at the beginning of the year 14,625 4,971 - 2,163Provision made during the year - 21,721 - -Payments made during the year (11,614) (12,067) - (2,163)Carrying amount at the end of the year 3,011 14,625 - -LitigationRefer to Note 41 for details.RestructureThe restructuring provision has been raised following a review of the company’s cost base and potential impacts from changes to thewheat marketing arrangements. The two areas impacted by the restructure will be Pool Management Services and Australian CommodityManagement. The restructure is expected to be completed within 12 months.17. Other LiabilitiesUnearned income 324 2,106 - -324 2,106 - -Unearned income relates to sales proceeds received in advance of delivery of goods.www.awb.com.au 83

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 2008ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’00018. Deferred Income Tax LiabilitiesThe balance comprises temporary differences attributable to:Amounts recognised in profit or lossPrepayments (284) 24 - 3Property, Plant and Equipment (3,838) (2,075) (36) (25)Unrealised foreign exchange (4,842) (88) - -Accrued Income - 1,086 - -Investments 8,888 3,702 952 (702)Provisions 2,503 2,052 - -Other 493 (203) - -2,920 4,498 916 (724)Amounts recognised directly in equityInvestments 2,529 5,803 1,532 3,2142,529 5,803 1,532 3,214Net deferred tax liabilities 5,449 10,301 2,448 2,490MovementsOpening balance at 1 October 10,301 13,313 2,490 2,067(Credited)/charged to the income statement (1,578) (5,477) 1,640 (631)(Credited)/charged to equity (3,274) 2,465 (1,682) 1,054Closing balance at 30 September 5,449 10,301 2,448 2,490Deferred tax liabilities to be recovered after more than 12 months 10,083 7,276 2,448 2,487Deferred tax liabilities to be recovered within 12 months (4,634) 3,025 - 35,449 10,301 2,448 2,49019. Contributed Equity(a) Share CapitalOrdinary shares, fully paid 983,540 969,743 983,540 969,7432008 2007No. of shares $’000 No. of shares $’000(b) Movements in ordinary share capitalMovements in share capital during the period were as follows:Balance at the beginning of the year 346,333,077 969,743 346,327,737 969,743Issued during the year- Dividend Reinvestment Plan ($2.83 per share) 4,894,224 13,851 - -- Performance Rights Plan: $nil per issue - - 5,340 -- Employee Share Plan 579,348 - - -Transaction costs - (54) - -Balance at the end of the year 351,806,649 983,540 346,333,077 969,743At the date of this report, AWB’s issued capital consisted of fully paid ordinary shares, carrying the normal rights associated with ordinaryshares. Prior to 22 October 2008, being the date of adoption of a new constitution, these shares were known as B class shares. Prior to3 September 2008, being the date the constitution was amended and the A class shares redeemed, the capital structure consisted of A classand B class shares. A class shares were redeemable preference shares, could only be owned by wheat growers, had no dividend rights orredemption value, and could not be transferred, but they did carry the right to elect a majority of the board of directors.84 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’00020. Reserves and Retained Profits(a) ReservesUnderwriting loss reserve 15,000 15,000 15,000 15,000Legal reserve 3,262 1,154 - -Foreign currency translation reserve (15,533) (32,053) - -Share plan reserve 8,983 5,593 8,983 5,593Available for sale revaluation reserve 2,311 9,948 810 4,73114,023 (358) 24,793 25,324Movement in legal reserve:Balance at the beginning of the year 1,154 899 - -Transfer from retained profits 2,108 255 - -Balance at the end of the year 3,262 1,154 - -Movement in foreign currency translation reserve:Balance at the beginning of the year (32,053) (12,657) - -Net translation adjustment 16,520 (19,396) - -Balance at the end of the year (15,533) (32,053) - -Movement in share plan reserve:Balance at the beginning of the year 5,593 4,670 5,593 4,670Share based payments and employee share issue 3,390 923 3,390 923Balance at the end of the year 8,983 5,593 8,983 5,593Movement in available for sale revaluation reserve:Balance at the beginning of the year 9,948 4,195 4,731 2,273Transfer to profit - gain realised on sale (6,561) - (3,592) -Unrealised gains/(losses) on revaluation of assets (1,076) 5,753 (329) 2,458Balance at the end of the year 2,311 9,948 810 4,731Nature and purpose of reservesUnderwriting loss reserveThe underwriting loss reserve was established to set aside a portion of retained profits in recognition of the underwriting risk contained withincertain financial products offered by AWB.Foreign currency translation reserveThe foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements andresults of foreign subsidiaries, joint ventures and associates.Legal ReserveAccording to the Swiss Federal Code of Obligations and the AWB (Geneva) SA’s articles of incorporation, 5% of the net profit of each year is to beappropriated to the general legal reserve until this is equivalent to 20% of the Company’s share capital. In addition, an amount equal to 10% ofsuch part of any dividend, which may be declared or paid in excess of a 5% dividend, is required to be transferred to the general legal reserve.The general legal reserve up to 50% of the share capital is not available for distribution.Performance rights reserveThe performance rights reserve is used to record the cost of equity settled transactions over the period in which performance conditions arefulfilled in relation to the Performance Rights Plan and the Employee Share Plan.Available for sale revaluation reserveGains or losses arising on the revaluation of available for sale assets are recorded in the available for sale revaluation reserve.www.awb.com.au 85

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 2008ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’00020. Reserves and Retained Profits (continued)(b) Retained profitsBalance at the beginning of the year 140,431 141,247 84,917 72,224Net profit attributable to members of AWB Limited 64,286 27,145 67,645 40,399Dividend paid 22 (27,730) (27,706) (27,730) (27,706)Transfer to legal reserve (2,108) (255) - -Balance at the end of the year 174,878 140,431 124,833 84,91721. Minority InterestMinority interests in controlled entities comprises:Interests in retained profits at the end of the financial year 3,234 2,540 - -Interests in share capital 341 268 - -Interests in reserves (287) (677) - -Total minority interest 3,288 2,131 - -AWB Limited2008 2007$’000 $’00022. DividendsDividends recognised in the current year by AWB Limited are as follows. All dividends are fully franked:Dividends paid during the year- interim - franked 4 cents per share (2007: 4 cents per share) 13,854 13,853- final franked dividend: 4 cents per share (2006: 4 cents per share) 13,876 13,85327,730 27,706During the year shares were issued to fund the dividend reinvestment plan, as such the dividend was not funded from internal cash resources.Subsequent eventsOn 18 November 2008, the directors declared a final dividend of 5 cents per ordinary share resulting in a dividend payable of $17,590 thousand.The financial effect of this dividend has not been brought to account in the financial statements for the year ended 30 September 2008 and willbe recognised in the subsequent period.Franking credit balance30% franking credits available to shareholders of AWB Limited for subsequent financial years 94,904 49,351Notional fully franked dividend based on available franking credits 221,444 115,152The above available amounts are based on the balance of the dividend franking account at year end adjusted for:(a) franking credits that will arise from the payment of the current tax liability; 53,879 15,586(b) franking debits that will arise from the payment of dividends recognised as a liability at the year end; - -(c) franking credits that will arise from the receipt of dividends recognised as receivables at the year end; and - -(d) franking credits that the entity may be prevented from distributing in subsequent years. - -The ability to use the franking credits is dependent upon there being sufficient available profits to declare dividends.86 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’00023. Reconciliation of Profit after Income Tax to Net Cash Flow from/(used in) Operating ActivitiesProfit for the year 65,323 27,555 67,645 40,399Adjustment forNet loss/(gain) on disposal of property, plant and equipment (2,528) 270 - 137Net loss/(gain) on disposal of investment in associate - (1,750) - -Net loss/(gain) on disposal of available for sale investments (6,561) (1,415) (3,592) (1,415)Depreciation 18,426 20,088 - -Amortisation of intangible assets 19,044 21,955 48 40Amortisation of purchase premium 4,573 5,778 - -Net fair value change on derivatives and fixed rate loans 47,058 (15,170) - -Write down of property, plant and equipment to recoverable amount - 3,627 - -Write down of intangible assets to recoverable amount - 5,581 - 5,581Write down of associates to recoverable amount 1,000 - - -Share-based payment expense 3,390 923 1,727 923Non-cash distribution to subsidiaries - - 65,445 76,114Share of associates’ net (profits)/losses (20,734) (11,233) - -Changes in assets and liabilitiesIncrease/(decrease) in income tax payable 25,695 45,016 (363) 29,827Increase/(decrease) in deferred income tax liability (4,852) (3,012) (41) 423Decrease/(increase) in deferred income tax asset (36,849) (20,939) (355) (897)Decrease/(increase) in receivables (569,388) 249,267 (70,744) (39,948)Decrease/(increase) in inventories (203,896) (43,285) - -Decrease/(increase) in prepayments and other assets (64,298) (28,202) 9 4,613Increase/(decrease) in trade and other payables 259,881 (173,130) (1,474) (51,711)Increase/(decrease) in provisions 20,036 2,330 48 (3,805)Decrease/(increase) in derivative assets 127,965 (180,672) - -Increase/(decrease) in derivative liabilities (1,106) 8,250 - -Increase/(decrease) in unearned income (1,782) (1,071) - -Net cash flow from/(used in) operating activities (319,603) (89,239) 58,353 60,281www.awb.com.au 87

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200824. Key Management Personnel Disclosures(a) DirectorsThe following persons were directors of AWB Limited during the financial year:Brendan Stewart (former Chairman - retired 22 October 2008)Gordon Davis (Managing Director)Steve ChamaretteBrendan FitzgeraldTony HowarthXavier Martin (resigned 8 September 2008)Warrick McClelland (retired 12 February 2008)Christopher Moffet (retired 12 February 2008)Peter Polson (Chairman - from 22 October 2008)John Simpson (retired 12 February 2008)John SchmollFred Grimwade (appointed 13 February 2008)Colin Nicholl (appointed 12 February 2008, resigned 8 September 2008)Russell McKenzie (appointed 12 February 2008, resigned 8 September 2008)Rodger Schirmer (appointed 12 February 2008, resigned 8 September 2008)(b) Other key management personnelThe following persons also had authority and responsibility for planning, directing and controlling the activities of the Group, directly orindirectly, during the financial year.Name Position EmployerMark Hosking (resigned 4 April 2008) Chief Financial Officer AWB Services LimitedPhilip Gentry (appointed 4 April 2008) Chief Financial Officer AWB Services LimitedMitch Morison Acting General Manager Commodities (i) AWB Services LimitedGraeme Jacobs General Manager, Landmark AWB Services LimitedMargaret Wade (resigned 18 December 2007) Chief Risk Officer AWB Services LimitedKate Hughes (appointed 18 December 2007) Chief Risk Officer AWB Services LimitedPhillip Meurer (resigned 30 April 2008) General Manager, Commodities AWB Services LimitedDavid Johnson General Manager, National Pool AWB Services LimitedColin Taylor General Manager, Financial Services AWB Services LimitedJohn Russell (appointed 26 May 2008) General Manager, Strategy & Operations AWB Services Limited(i) Appointed General Manager, Commodities on 1 October 2008(c) Key management personnel compensationConsolidatedAWB Limited2008 2007 2008 2007$ $ $ $Short-term benefits 6,900,636 13,457,667 1,773,217 1,466,553Post-employment benefits 784,531 1,089,459 91,282 117,197Termination payments 675,430 3,944,516 - -Share-based payments 825,595 500,713 443,422 122,5349,186,192 18,992,355 2,307,921 1,706,284Note: Key management personnel compensation will not reconcile to total amounts within the remuneration report, as the remunerationreport includes amounts paid to executives who received the highest remuneration during the year (as required by the Corporations Act 2001)in addition to key management personnel as defined by AASB 124. Information in this note includes payments made to key managementpersonnel in accordance with AASB 124 only.88 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED24. Key Management Personnel Disclosures (Continued)(d) Equity instrument disclosure relating to key management personnel(i) Performance Rights2008Balance at thestart of the yearGranted duringthe year ascompensationExercisedduring the yearLapsedduring the yearBalance at theend of the yearVested andExercisableas at 30September 2008NameGordon Davis 258,875 369,649 - - 628,524 -Mark Hosking(resigned 4 April 2008) 53,254 147,081 - (200,335) - -Philip Gentry(appointed 4 April 2008) - 40,856 - - 40,856 -John Russell(appointed 26 May 2008) - - - - - -Mitch Morison 62,396 35,019 - (10,311) 87,104 -Graeme Jacobs 66,567 140,077 - - 206,644 -Margaret Wade(resigned 18 December 2007) 16,641 - - (16,641) - -Kate Hughes(appointed 18 December 2007) 10,355 14,708 - - 25,063 -Phillip Meurer(resigned 30 April 2008) - 140,177 - (140,177) - -David Johnson 53,786 - - (10,218) 43,568 -Colin Taylor 159,015 128,404 - - 287,419 -2007Balance at thestart of the yearGranted duringthe year ascompensationExercisedduring the yearLapsedduring the yearBalance at theend of the yearVested andExercisableas at 30September 2007NameGordon Davis - 258,875 - - 258,875 -Mark Hosking(appointed 16 April 2007) - 53,254 - - 53,254 -Mitch Morison(appointed 20 October 2006) 37,554 26,627 - (1,785) 62,396 -Graeme Jacobs(appointed 15 February 2007) - 66,567 - - 66,567 -Margaret Wade(appointed 8 January 2007) - 16,641 - - 16,641 -David Johnson - 53,786 - - 53,786 -Colin Taylor 70,258 88,757 - - 159,015 -Kevin Lynch - 79,881 - - 79,881 -Robert Hadler - 71,005 - - 71,005 -James Hatherley(resigned 12 October 2007) 44,117 - - - 44,117 -Paul Ingleby(redundant 30 October 2006) 235,006 - - (235,006) - -Peter Geary(redundant 3 November 2006) 159,844 - - (159,844) - -Michael Thomas(resigned 29 June 2007) 106,426 - - (106,426) - -Sarah Scales(resigned 2 February 2007) 126,315 - - (126,315) - -www.awb.com.au 89

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200824. Key Management Personnel Disclosures (continued)(ii) Share holdingsThe number of shares in the company held during the financial year by each director of AWB Limited and other key management personnel ofthe Group, including their personally related parties, are set out below.B classshares heldin AWBLimited(number)2008BalanceHeld at1-Oct-07 Net change 1 30-Sep-08Directors of AWB LimitedBrendan Stewart (Chairman - resigned 22 October 2008) 16,776 - 16,776Gordon Davis (Managing Director) 10,000 - 10,000Steve Chamarette 10,500 - 10,500Brendan Fitzgerald 12,000 - 12,000Fred Grimwade (appointed 13 February 2008) - 10,000 10,000Tony Howarth 24,998 6,589 31,587Peter Polson (Chairman - from 22 October 2008) 5,000 10,000 15,000John Schmoll 7,500 - 7,500Xavier Martin (resigned 8 September 2008) 72,046 (72,046) -Warrick McClelland (retired 12 February 2008) 68,035 (68,035) -Christopher Moffet (retired 12 February 2008) 100,769 (100,769) -John Simpson (retired 12 February 2008) 119,672 (119,672) -Russell McKenzie (appointed 12 February 2008, Resigned 8 September 2008) - - -Colin Nicholl (appointed 12 February 2008, resigned 8 September 2008) - - -Rodger Schirmer (appointed 12 February 2008, resigned 8 September 2008) - - -Other key management personnelMark Hosking - (resigned 4 April 2008) - - -Philip Gentry - (appointed 4 April 2008) - - -John Russell (appointed 26 May 2008) - 5,000 5,000Mitch Morison 8,841 - 8,841Graeme Jacobs - - -Margaret Wade - (resigned 18 December 2007) - - -Kate Hughes - (appointed 18 December 2007) - - -Phillip Meurer (resigned 30 April 2008) - - -David Johnson 15,884 - 15,884Colin Taylor 3,000 83 3,0831. Net change includes the movement in equity holdings after the date of resignation or retirement.90 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED24. Key Management Personnel Disclosures (continued)2007Directors of AWB LimitedA classshares heldin AWBLimited(number)Held at30-Sep-07B classshares heldin AWBLimited(number)BalanceHeld at1-Oct-06 Net change 1 30-Sep-07Brendan Stewart (Chairman) 1 16,776 - 16,776Gordon Davis (Managing Director) - - 10,000 10,000Steve Chamarette 1 10,500 - 10,500Brendan Fitzgerald 1 12,000 - 12,000Tony Howarth - 24,380 618 24,998Xavier Martin (resigned 8 September 2008) 1 72,046 - 72,046Warrick McClelland (retired 12 February 2008) 1 68,035 - 68,035Christopher Moffet (retired 12 February 2008) 1 100,769 - 100,769Peter Polson - 5,000 - 5,000John Simpson (retired 12 February 2008) 1 119,672 - 119,672John Schmoll - 7,500 - 7,500Robert Barry (retired 22 February 2007) - 40,579 (40,579) -Other key management personnelMark Hosking (resigned 4 April 2008) - - - -Mitch Morison - 8,841 - 8,841Graeme Jacobs - - - -Margaret Wade (resigned 18 December 2007) - - - -Phillip Meurer (resigned 30 April 2008) - - - -David Johnson - 15,844 - 15,844Colin Taylor - 3,000 - 3,000Kevin Lynch - - - -Robert Hadler - - - -James Hatherley (resigned 12 October 2007) - 9,108 (5,010) 4,098Thierry Dubois - - - -Paul Ingleby (redundant 30 October 2006) - 46,959 (46,959) -Peter Geary (redundant 3 November 2006) - 34,293 (34,293) -Michael Thomas (resigned 29 June 2007) - 15,266 (15,266) -Sarah Scales (resigned 2 February 2007) - 54,616 (54,616) -1. Net change includes the movement in equity holdings after the date of resignation or retirement.(e) Loans to key management personnelDetails of loans made to directors of AWB Limited and other key management personnel of the Group, including their personally related parties,are set out below:(i) Aggregates for key management personnelGroupBalance at the startof the yearInterest paid andpayable for the yearBalance at the endof the yearNumber in Group atthe end of the year$ $ $2008 76,365 2,794 36,620 12007 316,820 14,069 76,365 2For all loans to directors, interest is payable at prevailing commercial interest rates. The terms are no more favourable than those available toother suppliers and customers.www.awb.com.au 91

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200824. Key Management Personnel Disclosures (continued)(ii) Individuals with loans above $100,000 during the financial yearGroupBalance at the startof the yearInterest paid andpayable for the yearBalance at the endof the yearHighestindebtednessduring the year$ $ $ $2008- - - -2007Paul Ingleby 1 169,776 5,900 - 169,7761 A notional interest charge has been included in key management personnel’s total remuneration for employee loans.(f) Other transactions with key management personnelA number of directors and other key management personnel, or their personally related entities, hold positions in other entities that result inthem having control or significant influence over the financial or operating policies of those entities.These entities transacted with the company or its subsidiaries in the reporting period. The terms and conditions of those transactions were nomore favourable than those available, or which might reasonably be expected to be available, on similar transactions to unrelated entities on anarm’s length basis.The aggregate amounts recognised in respect of the following types of transactions during the year with directors and other key managementpersonnel and their personally related entities, were as follows:Other transactions with the company or its controlled entities2008 2007Transaction Specified directors/other key management personnel $ $Purchases - grains Stewart, Fitzgerald and Chamarette 299,622 907,994Rural commercial sales Fitzgerald 58,323 789,641Rural commercial purchases Davis, Fitzgerald, Chamarette and Stewart 184,406 193,412Risk management Products Simpson Payable to AWB - (178,550)Net loss for the year ended - (702,314)Fees paid during the year ended - (54,808)Deposit Account Taylor Interest earned 317 -From time to time, key management personnel of the company or its controlled entities, or their personally related entities, may purchasegoods from the Group. These purchases are on terms and conditions no more favourable than those entered into by unrelated customersand are trivial or domestic in nature.ConsolidatedAWB Limited2008 2007 2008 2007$ $ $ $25. Auditors’ RemunerationThe auditor of AWB Limited is Ernst & Young.Audit or review of the financial report of the entity and any otherentity in the Consolidated GroupOther services in relation to the entity and any other entity in theConsolidated Group - Assurance related1,835,825 1,775,800 507,000 260,000538,993 53,175 - -2,374,818 1,828,975 507,000 260,00092 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED26. Related Party Disclosures(a) Parent entityAWB Limited is the ultimate Australian parent entity and ultimate parent of the Group.(b) Subsidiaries, Associates and Joint VenturesInterests in subsidiaries are set out in note 34.Interests in Associates (Investments Accounted for Using the Equity Method) are set out in Note 10.Interests in Joint Ventures are set out in Note 35.(c) Key management personnelDisclosures relating to key management personnel are set out in note 24.ConsolidatedAWB Limited2008 2007 2008 2007Notes $’000 $’000 $’000 $’000(d) Transactions with related partiesFinance costs expensed- related party (AWB National Pools) 2 31,562 28,688 - -Revenue from sale of goods- related party (AWB National Pools) 2 480,861 266,293 - -Purchases from related party (AWB National Pools) 301,113 394,535 - -Purchases from associates 127,566 100,853 - -Management fee revenue- related party (AWB National Pools) 2 46,028 47,068 - -Dividends- wholly-owned group 2 - - 45,009 55,843- other subsidiaries 2 - - - 28- associates 2 - - 1,254 976Interest revenue- wholly-owned group 2 - - 95,555 82,341- related party (AWB National Pools) 2 3,828 8,847 - -Terms and conditionsInterest is charged or credited on amounts with AWB Limited at prevailing commercial interest rates. All other transactions within the Group arebased on actual amounts incurred or received and are conducted on commercial terms and conditions.(e) Outstanding balances arising from sales/purchases of goods and servicesThe following balances are outstanding at the reporting date in relation to transactions with related parties:Receivable from- wholly-owned group 5 - - 1,077 -- related party (AWB National Pools) 5 169,681 139,699 881,932 849,057- associates 5 14,305 12,261 - -- wholly-owned group - subordinated loan 5 - - 196,289 165,000Payable to- wholly-owned group 14 - - 90,997 92,963- related party (AWB National Pools) 14, 15 681,780 520,884 - -No provision has been raised in relation to any outstanding balances, and no expense has been recognised in respect of bad or doubtful debtsdue from related parties.(f) Related party transactions with director related entitiesPurchases:Chamarette, Fitzgerald and Stewart 299,622 1,316,599 - -Terms and conditionsAll transactions within director related entities are based on actual amounts incurred or received and are conducted on commercial termsand conditions.www.awb.com.au 93

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200827. Segment InformationThe Group’s primary segment reporting format is business segments as the Group’s risks and rates of return are affectedpredominantly by differences in the products and services produced. Secondary segment information is reported geographically.Inter-segment pricing is determined on an arm’s length basis. Segment results, assets and liabilities include items directlyattributable to a segment as well as those that can be allocated on a reasonable basis. Segment capital expenditure is the total costincurred during the period to acquire segment assets that are expected to be used for more than one period.Business segmentsThe Group comprises the following main business segments, based on the group’s management reporting system:Continuing operationsPool ManagementServicesAustralianCommodityManagementInternationalCommodityManagementSupply Chain andOther Investments2008 $’000 $’000 $’000 $’000RevenueExternal segment revenue 45,611 1,113,832 3,194,394 140,060Intersegment revenue - 156,884 208,978 21,887Total consolidated revenue 45,611 1,270,716 3,403,372 161,947ResultsUnderlying EBITDA 19,711 61,909 24,014 (9,355)Share of associates’ profits - - - 4,668Total underlying EBITDA 19,711 61,909 24,014 (4,687)Amortisation and depreciation - - (659) (8,350)Underlying EBIT 19,711 61,909 23,355 (13,037)Significant items - - - -Segment result 19,711 61,909 23,355 (13,037)Corporate net interest expenseProfit/(loss) before income tax and minority interestIncome tax expenseProfit attributable to minority interestProfit attributable to members of the parentAssetsSegment assets - 812,953 1,217,890 115,148Unallocated corporate assetsTotal assetsLiabilitiesSegment liabilities - 779,952 1,066,627 216,628Unallocated corporate liabilitiesTotal liabilitiesUnallocated net corporate assetsNet assets excluding net corporate assets - 33,001 151,263 (101,480)Net AssetsOther segment informationInvestments in associates - - - 19,688Acquisition of non-current assets - - 2,592 3,985Non-cash expenses other than depreciation and amortisation - - - -94 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDTotal OperationsLandmarkFinancial Services Harvest Finance Rural Services Other/ corporateIntersegmenteliminations$’000 $’000 $’000 $’000 $’000 $’000242,017 176,240 1,915,552 16,993 - 6,844,6999 1,839 44 198,145 (587,786) -242,026 178,079 1,915,596 215,138 (587,786) 6,844,69927,510 14,538 74,095 (4,688) - 207,734120 - 15,946 - - 20,73427,630 14,538 90,041 (4,688) - 228,468(1,310) - (8,253) (18,911) - (37,483)26,320 14,538 81,788 (23,599) - 190,985- - - (33,302) - (33,302)26,320 14,538 81,788 (56,901) - 157,683(73,677)84,006(18,683)(1,037)64,2862,657,374 393,273 764,763 1,742,900 (1,199,996) 6,504,305100,0826,604,3872,640,549 390,418 549,791 590,001 (869,864) 5,364,10264,5565,428,65835,52616,825 2,855 214,972 1,152,899 (330,132) 1,140,2031,175,72993 - 102,865 - - 122,646- - 6,518 9,074 - 22,169- - - 26,423 - 26,423Geographical segments Australia Switzerland OtherIntersegmenteliminations Consolidated$’000 $’000 $’000 $’000 $’000Segment revenue 3,582,732 2,860,141 933,785 (531,959) 6,844,699Segment assets 6,543,292 954,770 310,277 (1,203,952) 6,604,387Other segment informationAcquisition of non-current assets 19,577 21 2,571 - 22,169www.awb.com.au 95

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200827. Segment Information (continued)Pool ManagementServicesContinuing operationsAustralianCommodityManagementInternationalCommodityManagementSupply Chain andOther Investments2007 $’000 $’000 $’000 $’000RevenueExternal segment revenue 46,254 745,508 1,952,102 63,558Intersegment revenue - 18,508 (249) 3,035Total consolidated revenue 46,254 764,016 1,951,853 66,593ResultsUnderlying EBITDA 9,471 5,638 70,530 867Share of associates profits - - - 1,882Total underlying EBITDA 9,471 5,638 70,530 2,749Amortisation and depreciation - - (460) (8,900)Underlying EBIT 9,471 5,638 70,070 (6,151)Significant items - - - (3,627)Segment result 9,471 5,638 70,070 (9,778)Corporate net interest expenseProfit/(loss) before income tax and minority interestIncome tax expenseProfit attributable to minority interestProfit attributable to members of the parentAssetsSegment assets - 433,644 664,810 101,500Unallocated corporate assetsTotal assetsLiabilitiesSegment liabilities - 426,991 537,709 187,265Unallocated corporate liabilitiesTotal liabilitiesUnallocated net corporate assetsNet assets excluding net corporate assets - 6,653 127,101 (85,765)Net AssetsOther segment informationInvestments in associates - - - 14,156Acquisition of non-current assets - - 11,304 1,901Non-cash expenses other than depreciation and amortisation - - - 3,62796 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITEDTotal OperationsLandmarkFinancial Services Harvest Finance Rural Services Other/ corporateIntersegmenteliminations$’000 $’000 $’000 $’000 $’000 $’000213,859 81,724 1,530,047 39,038 - 4,672,090(1,839) 547 6,344 163,063 (189,409) -212,020 82,271 1,536,391 202,101 (189,409) 4,672,09027,000 5,510 45,303 (2,302) - 162,017(26) - 9,377 - - 11,23326,974 5,510 54,680 (2,302) - 173,250(1,260) - (8,956) (22,467) - (42,043)25,714 5,510 45,724 (24,769) - 131,207- - - (38,075) - (41,702)25,714 5,510 45,724 (62,844) - 89,505(37,005)52,500(24,945)(410)27,1452,530,983 176,832 429,018 1,822,358 (762,072) 5,397,07361,5935,458,6662,466,737 165,063 280,920 620,615 (383,038) 4,302,26244,4574,346,71917,13664,246 11,769 148,098 1,201,743 (379,034) 1,094,8111,111,947(26) - 93,048 - - 107,178- - - 2,956 - 16,161- - - 20,081 - 23,708Geographical segments Australia Switzerland OtherIntersegmenteliminations Consolidated$’000 $’000 $’000 $’000 $’000Segment revenue 2,773,671 1,654,167 350,277 (106,025) 4,672,090Segment assets 4,773,804 514,511 264,568 (94,217) 5,458,666Other segment informationAcquisition of non-current assets 4,841 51 11,269 - 16,161www.awb.com.au 97

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 2008ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’00028. Expenditure Commitments(a) Capital expenditure commitmentsEstimated capital expenditure contracted for at balance datebut not provided for:- payable not later than one year 12,478 3,128 - -- payable later than one year but not later than five years - 4,495 - -12,478 7,623 - -(b) Lease expenditure commitmentsOperating leases (non-cancellable)- payable not later than one year 35,716 22,201 - -- payable later than one year but not later than five years 80,406 67,450 - -- payable later than five years 20,094 24,773 - -136,216 114,424 - -These lease commitments represent future minimum lease payments due for the head office, regional and overseas offices and motor vehiclesunder operating leases. The head office lease is for 12 years which commenced in the 2004 financial year. The remaining operating leases havean average lease term of three years. Lease payments comprise a base amount plus an incremental contingent rental. Contingent rentals arebased on the contract terms.29. Contingent LiabilitiesAWB Limited2008 2007$’000 $’000Litigation claimsSeveral claims for damages and costs were lodged against AWB Limited and itscontrolled entities which AWB Limited denied liability and defended the claims.The maximum damages/costs claimed but not otherwise recognised in the balancesheet were estimated to amount to: 587 1,364IndemnitiesThe parent entity had contingent liabilities at 30 September 2008 in respect of indemnities given by the AWB Limited to AWB (International)Limited against possible costs incurred by AWB (International) Limited arising in relation to proceedings under the Oil for Food Inquiry and anypossible tax assessments issued against AWB (International) Limited by the ATO. This indemnity may give rise to liabilities in the parent entity inthe event that AWB (International) Limited incurs an indemnified liability. Any possible liabilities cannot be quantified at the date of this report.98 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED30. Share-Based PaymentsEmployee Share PlanDuring the year, an offer was made under the Employee Share Plan which was established in 2002, under which all permanent employees of thegroup are entitled to be issued with ordinary shares. Each employee who participated received shares to the value of $1,000 (based on the shareprice $2.92 at the issue date (4 January 2008)) for nil consideration. A total of 579,348 shares were provided under the plan to 1,694 employees.Performance Rights PlanA Performance Rights Plan exists, whereby selected senior employees (including key management personnel) of the group are given theopportunity to acquire rights over unissued ordinary shares in AWB Limited by participating in the plan.The terms and valuation of performance rights granted are consistent with those granted to key management personnel and disclosed withinthe remuneration report.Recognised share based payments expenseThe expense recognised for employee services received during the year is shown in the table below:ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’000Expense arising from equity-settled share based payment transactions 1,646 923 1,646 923Expense arising from cash-settled share based payment transactions 443 123 443 123Total expense arising from share based transactions 2,089 1,046 2,089 1,046Summary of performance rights grantedThe following table illustrates the number (No.) and weighted average exercise price (WAEP) of, and movements in, performance rights issuedduring the year:2008 2008 2007 2007No. WAEP No. WAEPEquity settledOutstanding at the beginning of the period 1,915,982 nil 1,718,587 nilGranted during the year 2,209,261 nil 1,342,329 nilForfeited during the year (677,086) nil (1,026,880) nilExercised during the year - nil - nilExpired during the year (86,683) nil (118,054) nilOutstanding at the end of the year 3,361,474 nil 1,915,982 nilCash settledOutstanding at the beginning of the period 258,875 nil - nilGranted during the year 369,649 nil 258,875 nilOutstanding at the end of the year 628,524 nil 258,875 nilAs the exercise price is $1 for the exercise of large parcels of performance rights, combined with certain tranches which have a nil exercise price,the effective weighted average exercise price is nil.Weighted average remaining contractual lifeThe weighted average remaining contractual life for equity settled performance rights outstanding as at 30 September 2008 is 2.39 years(2007: 2.64 years). The weighted average remaining contractual life for cash settled performance rights outstanding as at 30 September 2008is 2.59 years (2007: 3 years).Range of exercise priceThe range of exercise prices for performance rights outstanding at the end of the year was $nil to $1 (2007: $nil to $1).Weighted average fair valueThe weighted average fair value of cash settled performance rights granted during the year was $2.03 (2007: $1.42). The weighted averagefair value of equity settled performance rights granted during the year was $1.77 (2007: $1.90).Recognised cash settled share based payment liabilityThe carrying amount of the liability relating to the cash settled share based payment at 30 September 2008 is $565,956 (2007: $122,966).No cash settled awards vested during the period ended 30 September 2008 (2007: nil).Option pricing modelThe equity and cash settled rights have been valued using market data as at the grant date. A Monte-Carlo simulation-based valuation modelwas developed to simulate the date of vesting, the percentage vesting, the share price and its associated TSR. Once the simulated date ofvesting and share prices were determined, the fair value obtained at each vesting date was discounted back to the grant date. Refer to theremuneration report for a listing of inputs to the valuation model.www.awb.com.au 99

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200831. Financial Risk Management Objectives and PoliciesThis note presents information about the Company’s and Group’s exposure to each of the risk factors set out below and the Group’s relatedobjectives, policies and processes for measuring and managing these risks.Financial risk factorsDue to the diversity of its business in Australia and abroad, AWB is exposed to market risk from a variety of activities such as:• The purchase and sale of commodities, including the chartering of ships to manage actual and anticipated transport commitments;• Hedging and proprietary trading in commodity products and related derivative instruments; and• Foreign exchange and interest rate risk associated with commodity trading, the provision of financial services and Group funding.The Group’s risk appetite is reviewed annually by the management team and is approved by the Board of Directors (‘the Board’).The Board has overall responsibility for the establishment and oversight of the risk management framework. The Board has established theBoard Risk Committee (BRC), which is responsible for developing and monitoring risk management policies. The BRC reports regularly tothe Board on its activities. The BRC monitors AWB’s risk management profile principally via the Chief Risk Officer’s (CRO’s) report.The Group’s risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effectson the financial performance of the Group. The Group uses derivative financial instruments to economically hedge certain risk exposures.Derivatives are used to manage foreign currency, commodity, freight and interest rate exposures. Group Treasury and the divisions may onlydeal in authorised markets, exchanges, products and instruments. Limits on the size and nature of transactions permitted have been establishedby the BRC and are subject to strict internal controls. Changes to limits must be approved by the CRO.Markets, products and instrumentsApproved markets, exchanges and products are defined in the Group’s risk management policy. All authorised products and instrumentsare listed in a register of approved products and instruments maintained by the CRO. Before entering into any contract, the authority toact is verified. All new products must be approved by the CRO and notified to the BRC. When significant new product approvals are sought(or significant changes to existing products), the CRO consults with the BRC prior to approving.AWB uses a combination of limits and operational thresholds to ensure that exposures remain within acceptable limits. Operational thresholdsare found in the register of limits and authorisations and they are approved by the Managing Director in consultation with the ManagementRisk Committee.AWB’s business and operating environment requires management to undertake a broad variety of trading, particularly in relation tocommodities, in addition, a strictly controlled amount of strategic proprietary trading is undertaken. Controlled proprietary trading isundertaken in accordance with the risk management policy which includes strict levels of authorisation and control which are monitoredby the CRO and Group Treasury.The accounting classifications of each category of financial instruments, and their carrying amounts are set out below:Loans andreceivablesAvailable-forsalefinancialassetsAt fair valuethrough profitand loss(designated)At fair valuethrough profitand loss (heldfor trading)Financialliabilitiesmeasured atamortised costTotal carryingamount$’000 $’000 $’000 $’000 $’000 $’000Consolidated30 September 2008Financial assetsCash and cash equivalents 551,656 - - - - 551,656Loans and advances 2,142,045 - 445,914 - - 2,587,959Trade and other receivables 1,458,781 - - - - 1,458,781Investments - listed securities - 4,395 - - - 4,395Investments - unlisted securities - 1,291 - - - 1,291Derivative financial instruments - - - 388,123 - 388,123Other assets - 1,627 - - - 1,627Financial liabilitiesTrade and other payables - - - - (789,884) (789,884)Derivative financial instruments - - - (352,596) - (352,596)Interest bearing loans and borrowings - - - - (4,153,314) (4,153,314)4,152,482 7,313 445,914 35,527 (4,943,198) (301,962)100 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED31. Financial Risk Management Objectives and Policies (continued)Loans andreceivablesAvailable-forsalefinancialassetsAt fair valuethrough profitand loss(designated)At fair valuethrough profitand loss (heldfor trading)Financialliabilitiesmeasured atamortised costTotal carryingamount$’000 $’000 $’000 $’000 $’000 $’000Consolidated30 September 2007Financial assetsCash and cash equivalents 546,387 - - - - 546,387Loans and advances 1,875,305 - 355,577 - - 2,230,882Trade and other receivables 830,576 - - - - 830,576Investments - listed securities - 13,689 - - - 13,689Investments - unlisted securities - 1,297 - - - 1,297Derivative financial instruments - - - 516,088 - 516,088Other financial assets - 3,324 - - - 3,324Financial liabilitiesTrade and other payables - - - - (530,033) (530,033)Derivative financial instruments - - - (353,702) - (353,702)Interest bearing loans and borrowings - - - - (3,369,217) (3,369,217)3,334,742 18,310 355,577 162,386 (3,902,050) (31,035)AWB Limited30 September 2008Financial assetsCash and cash equivalents 5,664 - - - - 5,664Trade and other receivables 1,089,399 - - - - 1,089,399Investments - listed securities - 2,197 - - - 2,197Investments - unlisted securities - 318 - - - 318Other financial assets - 626 - - - 626Financial liabilitiesTrade and other payables - - - - (94,713) (94,713)1,095,063 3,141 - - (94,713) 1,003,491AWB Limited30 September 2007Financial assetsCash and cash equivalents 44,951 - - - - 44,951Trade and other receivables 1,024,218 - - - - 1,024,218Investments - listed securities - 6,844 - - - 6,844Investments - unlisted securities - 318 - - - 318Derivative financial instruments - - - - - -Other financial assets - 1,662 - - - 1,662Financial liabilitiesTrade and other payables - - - - (96,187) (96,187)1,069,169 8,824 - - (96,187) 981,806www.awb.com.au 101

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200831. Financial Risk Management Objectives and Policies (continued)Interest Rate RiskInterest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instruments will fluctuate due tochanges in market interest rates.Group ExposureThe Group has a net exposure to interest rate risk through the combination of its interest bearing assets and liabilities. The main assets of theGroup impacted by movements in interest rates are the Landmark Financial Services loan book, which lends funds on both a fixed and variableinterest rate basis and the Harvest Finance products. The Harvest Finance loan products are provided on a floating interest rate basis whilst theHarvest Finance payment products are provided on a fixed interest rate basis.The Landmark Financial Services and Harvest Finance loan books are funded on a floating rate basis. The working capital requirements for theGroup are funded via the Syndicated Loan Facility, inventory financing and securitisation of the Landmark Rural Services receivables, all of whichare exposed to floating interest rates, and Unsecured Deposit Notes (“UDNs”). Offshore subsidiaries utilise letter of credit and bank facilities tofund their working capital, all of which are exposed to floating rates.Group Treasury will at times enter into derivative interest rate products such as exchange traded and over the counter options, forward rate agreementsand interest rate swaps for proprietary purposes within the Board delegated limits. Such transactions create interest rate risk for the Group.Management of ExposureGroup Treasury actively manages the Group’s interest rate exposure by monitoring interest rate markets and quantifying the risk forpredetermined outlook periods. When appropriate, the Group will enter into hedges to reposition its risk. Due to the assets being short termin nature or exposed to variable rates, the Group’s policy is to be exposed to floating interest rates on borrowings to ensure that the assets andliabilities are suitably matched. Where there have been loans provided by Landmark Financial Services on a fixed interest rate basis, these loanswill be hedged back to floating interest rates utilising interest rate swaps. Such interest rate swaps result in the Group exchanging fixed interestrate receipts for floating interest rate receipts. Whilst the Harvest Finance payment products are on a fixed interest rate basis, currently there areno hedges in place for these as they are deemed to have an immaterial impact on the Group’s interest rate profile.The manner in which the interest rate risk is managed will affect the net profit of the group. The interest receipts on the fixed rate loan portfolioare swapped to variable, reducing fluctuations in fair value movements. The Group’s exposure to variable interest rates arises from the excess offinancial liabilities (borrowings) over financial assets (loans and advances), giving rise to a net variable interest rate exposure.Interest rate risk exposure as at balance dateA 10 basis point movement in interest rates would have a $0.8 million impact on post tax profit/(loss). The table below provides an example ofthe impact of a 50 basis point increase or a 200 basis point decrease (2007: 75 basis point increase/decrease) to the post tax profit and loss as atbalance date. Other than retained earnings, there would be no impact on equity.ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’000Variable rate exposureNet Financial (liabilities)/assets exposed to variable interest rates (1,293,353) (574,324) 1,083,885 1,058,223Sensitivity analysisEffect of a 50 basis point (2007: 75 basis point) increase on post tax profit/(loss) (4,317) (2,813) 3,794 5,556Effect of a 200 basis point (2007: 75 basis point) decrease on post tax profit/(loss) 17,364 2,815 (15,174) (5,556)Fair value exposure also arises on the fixed rate loan book and related interest rate derivatives, the net effect of these is included in the sensitivityanalysis above.Discussion of sensitivity analysisThis analysis assumes that all other variables will remain constant, in particular credit margins on assets and liabilities as well as foreignexchange rates. The balances depicted in the table above will not remain constant throughout the 2009 financial year, and therefore shouldbe used with care.The results of the above sensitivity analysis are within the risk appetite of the Group, and are a result of external debt exposure being subjectto variable interest rates. The exposure is caused by the working capital requirements of the Group which is a required risk of operating.102 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED31. Financial Risk Management Objectives and Policies (continued)Foreign Currency Exchange RiskForeign currency risk (or foreign exchange risk) arises on financial instruments that are denominated in a foreign currency, i.e. in a currency otherthan the functional currency in which they are measured. Currency risk does not arise from financial instruments that are non-monetary items.There are two types of currency risk - transaction risk and translation risk. Transaction risk arises when the Group enters into transactions thatwill be settled in the future in foreign currency. Translation risk is the risk that arises when the Group has assets and liabilities denominated in aforeign currency, whose carrying amounts will fluctuate with movements in foreign currency exchange rates.Group ExposureThe Group’s shareholders’ equity, earnings and cash flows are influenced by a wide variety of currencies due to the geographic diversity ofthe Group’s sales and the countries in which it operates. Transaction risk arises from various activities of the Group. Such activities include themajority of physical as well as hedging contracts of wheat and other grains being denominated in USD whilst shipping contracts are also pricedin USD. Offshore subsidiaries will at various points in time pay dividends to the parent which will create transaction risk as the dividends will bedenominated in the subsidiaries’ transactional currency which is generally USD. From time to time, the Group will have small foreign currencytransactions which relate to purchases of supplies in foreign currencies.The functional currency of the Group’s Australian operations is AUD. The functional currencies of the Group’s international subsidiaries ispredominantly USD as the majority of revenues, operating costs and debt are denominated in USD. Therefore translation risk arises when theinternational subsidiaries’ accounts are translated into AUD for reporting purposes.Group Treasury will at times enter into derivative foreign exchange products such as currency options, cross currency contracts (spot and forwards)and currency swaps for proprietary purposes within the Board delegated limits. Such transactions create foreign exchange risk for the Group.Management of ExposureGroup Treasury actively manages the foreign exchange risk for the Group by monitoring the foreign exchange markets and where appropriateentering into hedges. Hedging instruments include cross currency contracts (spot and forward), currency swaps and currency options.It is the Group’s policy to hedge the majority of transactional exposures to foreign currencies arising from forward sale and purchase commoditycontracts. These commodity contracts are entered into by the Group to manage against commodity price risk that arises as a result of commodityprices being denominated and at expiry, being settled in foreign currencies. Business units are required to identify their transactional exposuresand notify Group Treasury which will then enter into the appropriate hedge.Translation exposures arising from translating offshore subsidiaries into AUD for reporting purposes are not hedged. However, should anoffshore subsidiary pay a dividend to the parent, the foreign currency transaction will be hedged at the point in time the dividend is declared.Foreign currency exposure/sensitivity analysis as at balance dateA 1 cent movement in the US dollar against the Australian dollar would have a $0.8 million impact on post tax profit/(loss) on net monetaryassets/(liabilities) excluding hedging of future commodity purchases and sales.As at balance date, the Group’s foreign currency exposure before taking into account foreign currency derivatives that have been entered into aseconomic hedges to hedge future foreign currency receipts that will arise from settlement of forward purchase and sale commodity contracts isas follows (note - all sensitivity amounts are tax effected, the parent entity does not directly have exposure to foreign exchange):www.awb.com.au 103

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200831. Financial Risk Management Objectives and Policies (continued)ConsolidatedAUD functional currencyUSD EUR CADA$’000 A$’000 A$’00030 September 2008Net exposure of financial assets and liabilities to foreign currency before the effect of economichedges on forward purchase and sale contracts 1 (2,497) 696 (1,739)Sensitivity - movements in functional currency: 2Appreciate 10% 315 184 1,019Depreciate 10% (384) (224) (1,251)Exposure to USD donominated borrowings via cross currency swap (89,700)Exposure to USD denominated inventory 89,700Net exposure -Appreciate 10% 5,708Depreciate 10% (6,977)USD borrowings (via AUD borrowings swapped to USD) have been used for funding the purchase of USD denominated inventory. Whileinventory is not a financial asset it has been included above to show the net position of these transactions to the Group. The sensitivity arisesdue to the swap being marked to market and the inventory being held as historic cost. The inventory is held by a USD functional currency entity.30 September 2007Net exposure of financial assets and liabilities to foreign currency before the effect of economichedges on forward purchase and sale contracts 1 (3,069) (22,039) 1,621Sensitivity - movements in functional currency: 2Appreciate 10% (451) 3,137 (89)Depreciate 10% 551 (3,444) 90USD functional currencyINR functional currencyEUR BRL USD AUDA$’000 A$’000 A$’000 A$’00030 September 2008Net exposure of financial assets and liabilities to foreign currencybefore the effect of economic hedges on forward purchase andsale contracts 1 5,858 3,120 99 -Sensitivity - movements in functional currency: 2Appreciate 10% (916) (199) (6) -Depreciate 10% 1,102 243 8 -30 September 2007Net exposure of financial assets and liabilities to foreign currencybefore the effect of economic hedges on forward purchase andsale contracts 1 13,061 (9,995) (13,239) (6,300)Sensitivity - movements in functional currency: 2Appreciate 10% 736 (1,998) 2,041 401Depreciate 10% (547) 2,844 (2,229) (490)1 Net exposures include the effect (notional value) of foreign currency related derivatives, which do not relate to forward purchases and salesof commodities.2 The sensitivity includes the effect of a 10% movement on non-derivative financial assets and liabilities net of the sensitivity on the fair valueof derivatives (as defined in footnote 1). For this reason profit and loss sensitivity results for some currencies are significant when comparedto the underlying exposure.104 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED31. Financial Risk Management Objectives and Policies (continued)As discussed above, the Group manages its exposure to commodity prices by taking out forward purchases and sale commodity contracts.These forward purchase and sale commodity contracts are settled in foreign currency and therefore result in the Group being exposed toforeign currency risk. To mitigate the risk arising from future foreign currency cash flows, the Group enters into foreign exchange contracts(FECs) and currency options. At 30 September 2008, the Group’s exposure arising from open FECs and currency options is as follows:ConsolidatedAUD functional currencyUSD EUR CADA$’000 A$’000 A$’00030 September 2008Fair value of foreign currency derivatives that are economic hedges on future sale and purchasecommodity contracts (39,737) 206 -Sensitivity - movements in functional currency:Appreciate 10% 45,614 (1,998) -Depreciate 10% (55,501) 2,517 -30 September 2007Fair value of foreign currency derivatives that are economic hedges on future sale and purchasecommodity contracts 3,137 (9) 79Sensitivity - movements in functional currency:Appreciate 10% 8,221 62 1,254Depreciate 10% (9,629) (68) (1,520)ConsolidatedUSD functional currency INR functional currencyEUR BRL USDA$’000 A$’000 A$’00030 September 2008Fair value of foreign currency derivatives that are economic hedges on future saleand purchase commodity contracts - 1,343 (32)Sensitivity - movements in functional currency:Appreciate 10% - 3,396 (346)Depreciate 10% - (3,447) 36230 September 2007Fair value of foreign currency derivatives that are economic hedges on future saleand purchase commodity contracts (1,427) - (716)Sensitivity - movements in functional currency:Appreciate 10% 2,087 - 1,257Depreciate 10% (2,551) - (1,428)www.awb.com.au 105

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200831. Financial Risk Management Objectives and Policies (continued)The impact to profit and loss as disclosed in the sensitivity on the FECs and currency options (on the previous page) will be over 90%(2007: 90%) offset by the future net receipt of foreign currency proceeds on settlement of the forward sale and purchase contracts. This isdepicted by the following analysis of notional values of the FECs and the gross cash flows expected from the forward purchase and sale contracts.ConsolidatedAUD functional currencyUSD EUR CADA$’000 A$’000 A$’00030 September 2008Net future receipts/(payments) on settlement of forward purchase and sale contracts 357,484 (14,666) -Net buy/(sell) cash flows arising from foreign currency derivatives that are economic hedges onfuture sale and purchase commodity contracts(353,972) 14,185 -Net position (3,512) 481 -30 September 2007Net future receipts/(payments) on settlement of forward purchase and sale contracts 57,468 470 9,955Net buy/(sell) cash flows arising from foreign currency derivatives that are economic hedges onfuture sale and purchase commodity contracts(60,873) (463) (10,132)Net position 3,405 (7) 177USD functional currencyINR functional currencyEUR BRL USDA$’000 A$’000 A$’00030 September 2008Net future receipts/(payments) on settlement of forward purchase and sale contracts - 26,909 (2,503)Net buy/(sell) cash flows arising from foreign currency derivatives that are economichedges on future sale and purchase commodity contracts - (26,909) 2,503Net position - - -30 September 2007Net future receipts/(payments) on settlement of forward purchase and sale contracts 32,798 - 12,114Net buy/(sell) cash flows arising from foreign currency derivatives that are economichedges on future sale and purchase commodity contracts (32,798) - (12,114)Net position - - -Management through its specialised treasury function actively monitors foreign currency positions held by the Group to ensure that no materialexposure to foreign currency outside of economic relationships arises.The analysis above does not include translation of foreign subsidaries, and as the Group does not enter into cash flow hedges, the sensitivityanalysis does not result in an impact on equity reserves. The balances in the tables above will not remain constant throughout the 2009 financialyear, and therefore should be used with care.106 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED31. Financial Risk Management Objectives and Policies (continued)Commodity price riskCommodity price risk arises from the potential impact of changes in commodity prices on the value of a transaction. It may include:• The impact of holding positions that are exposed to price changes;• The risk of loss because a position cannot be liquidated without incurring significant losses compared to fair market value; and• The risk of loss from incorrect valuation or pricing of unfavourable terms and conditions in a contract.Group ExposureCommodity prices can fluctuate widely in response to changing levels of supply and demand. This is a natural risk of the Group’s businessmodel and is managed by trading in a wide variety of physical and derivative products on a number of different markets and exchanges.AWB is exposed to commodity price risk from a variety of activities including:• The purchase and sale of commodities;• Chartering of ships to manage actual and anticipated transport commitments; and• Hedging of the above activities.Management of ExposureEach trading business unit actively manages commodity price risk exposure by monitoring commodity markets and outlooks as well ascommodity positions to which it is exposed. When appropriate, the Group will enter into hedges (futures and options) to reposition its riskwhile ensuring that derivative positions are not of a magnitude that can make it difficult to liquidate within a reasonable time period.The Group’s commodity risk management framework includes Value at Risk (VAR) limits for exposures to commodities by region which aredocumented in the Register of Limits. These limits are designed to allow business decisions to be made with integrity while protecting AWB’sreputation and competitive position. The Corporate Risk Unit independently monitor the limits discussed above to ensure commodity exposuresremain within the Group’s risk appetite.At balance date the group had the following physical and derivative positions related to exposures to commodity price risk and the impact ofa 10% change in commodity prices would increase/(decrease) the profit and loss by the amounts shown below. Other than retained earnings,there would be no impact on equity as a result of shift in commodity prices. AWB Limited does not have direct exposure to commodity price riskin its capacity as parent entity.Commodity price risk exposure/sensitivity analysis at balance dateFair value ofderivatives andphysical inventoryNet effect of a10% appreciationin price on post taxprofit or lossNet effect of a10% depreciationin price on post taxprofit or loss$’000 $’000 $’000Consolidated30 September 2008Commodities 412,825 (5,669) 5,667Freight 6,827 396 (396)419,652 (5,273) 5,271Consolidated30 September 2007Commodities 132,818 11,252 (11,677)Freight (127) 1,538 (1,538)132,691 12,790 (13,215)Discussion of sensitivity analysisA 10% movement in commodity prices has been determined as a reasonably possible change based on recent market history specific toagricultural commodities, however, due to controls the Group has in relation to commodity trading, such as trading limits and stop losses, it isnot expected that a change of this magnitude would crystallise. The fair value exposure on derivatives and physical inventory above includesinventory held in a broker-trader relationship (because it is integral to the profile of the commodity risk), the associated forward sales agreementsare included in the derivative financial instrument exposures.Commonly traded commodities include:• Wheat; • Soy beans;• Soy meal; • Soy oil;• Sorghum; • Barley;• Canola; • Corn; and• Cattle.The relationship between commodity prices and foreign currencies is complex and movement in foreign exchange can impact commodity prices.These exposures and related sensitivities are not expected to remain constant throughout 2009 and therefore should be used with care.www.awb.com.au 107

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200831. Financial Risk Management Objectives and Policies (continued)Capital management and Liquidity riskCapital ManagementThe capital structure of the Group consists of debt, cash and cash equivalents and equity attributable to equity holders of the parent, comprisingissued capital, retained earnings and reserves.The Group has a Capital Management Strategy which provides guidelines for:• Determining the appropriate level of total equity and debt for the AWB Limited Group;• Setting appropriate benchmark rates for return on capital for the AWB Group, AWB businesses and new investments;• Allocating, measuring and monitoring the level of capital held by each AWB business and the return on capital invested;• Prioritising the allocation of capital to new business activities;• Ensuring compliance with risk parameters set by the board; and• The dividend policy.The strategy is reviewed by the CFO and is approved by the AWB Limited Board.AWB aim’s for a dividend payout of between 40% and 65% of its Net Profit After Tax post significant items, and aims to fully frank all dividends.This policy is reviewed annually and takes into account industry conditions and the AWB group’s overall capital management strategy andinvestment view. Any dividend paid is subject to final approval by the Board.Capital restrictionsIn accordance with the Swiss Federal Code of Obligations and AWB (Geneva) SA’s articles of incorporation, 5% of the net profit of each year isto be apportioned to the general legal reserve until this is equivalent to 20% of the Company’s share capital. In addition, an amount equal to10% of such part of any dividend, which may be declared or paid in excess of a 5% dividend, is required to be transferred to the general legalreserve. The general legal reserve up to 50% of the share capital is not available for distribution. Refer to Note 20 for a numerical reconciliationof this reserve.Liquidity RiskLiquidity risk is the possibility that an entity will be unable to meet its obligations as they become due because of an inability to liquidate assetsor obtain adequate funding.Group ExposureThe Group is exposed to liquidity risk principally due to:• its working capital requirements for the Landmark and Commodity businesses, including funding and settlement of derivative instrumentsof the Group;• the funding requirements of the Landmark Financial Services loan book; and• the funding requirements of Harvest Finance loans and payment products.Management of ExposureThe primary objective of the Group’s liquidity management framework and processes is to ensure that the Group has sufficient liquidity to meetits obligations as they fall due across a variety of operating circumstances. In managing its liquidity risk, the Group has access to funding throughcapital markets and banks. Group Treasury, centrally co-ordinates the relationships with banks (the Group has a panel of relationship banks), theborrowing requirements of the Group and the day to day cash management.In managing the Group’s liquidity, cash flow forecasting is performed. Cash flow forecasting is largely dominated by the cyclical nature of thebusiness and is based on cash flow model projections. Group Treasury utilises these cash flow forecasts combined with the funding profile toobtain short dated and longer-term liquidity arrangements which are generally funded through external borrowings. Group Treasury ensuresthat there is a diverse range of funding facilities for the Group and has structured the maturity dates to ensure that facility maturities are notunduly concentrated.The Group has multiple funding facilities, each of which are used to fund certain areas of the business. Working capital for the Group is providedin various forms, including a Syndicated Loan Facility, inventory financing and discounting of receivables. The Syndicated Loan Facility is providedby four major banks. Discounting of the Landmark Rural Services receivables provides funding to the Group as receivables are sold to a financingspecial purpose vehicle (RURAL Trade Receivables Trust) at a discounted rate upon creation of the receivable. The Trust is funded by way of a bankwarehouse facility. Offshore subsidiaries are typically capitalised to a sufficient level to allow them to obtain bank facilities to fund their workingcapital requirements as and when they are required.The Landmark Financial Services loan book is funded via the RURAL Warehouse Trust No 1 (“RWT”) and the RURAL CP Warehouse Trust (“CPT”).RWT is funded by a bank warehouse. The CPT is funded by Commercial Paper, where available, with liquidity and letter of credit facilities tosupport the Commercial Paper programme provided by two banks.Harvest Finance loan and payment products are funded via inventory financing utilising the same mechanisms as outlined above.In order to maintain access to the global capital markets, the Group has sought and maintains a short and term credit rating for AWB HarvestFinance from the global credit rating agency Standard and Poor’s of A1 short term and A long term. A long term credit rating is also obtainedfor AWB Limited from Standard and Poor’s which is currently BBB-.Maturity profiles of funding facilities are outlined in Note 15.108 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED31. Financial Risk Management Objectives and Policies (continued)Liquidity risk (continued)The table below analyses the Group’s financial liabilities across the defined maturity groupings based on the remaining period at the reportingdate to the earliest contractual maturity date.Contractual maturities non-derivative financial liabilitiesBetween0-3 monthsBetween3-6 monthsBetween6-12 monthsBetween 1and 2 yearsBetween 2and 5 yearsOver5 years Total$’000 $’000 $’000 $’000 $’000 $’000 $’00030 September 2008ConsolidatedTrade Payables 786,003 - - - - - 786,003Bank Overdraft 3,881 - - - - - 3,881Interest bearing liabilities 2,018,406 202,667 873,731 974,774 236,933 - 4,306,511Total contractual cash outflow 2,808,290 202,667 873,731 974,774 236,933 - 5,096,39530 September 2007ConsolidatedTrade Payables 485,885 7,996 - - - - 493,881Bank Overdraft 36,152 - - - - - 36,152Interest bearing liabilities 1,125,750 197,094 108,511 2,080,815 683 101 3,512,954Total contractual cash outflow 1,647,787 205,090 108,511 2,080,815 683 101 4,042,98730 September 2008AWB LimitedTrade Payables 94,713 - - - - - 94,713Total contractual cash outflow 94,713 - - - - - 94,71330 September 2007AWB LimitedTrade Payables 96,187 - - - - - 96,187Total contractual cash outflow 96,187 - - - - 96,187As the amounts in the tables above are the contractual undiscounted cash flows, some balances will not agree with the amounts presented inthe balance sheet.www.awb.com.au 109

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200831. Financial Risk Management Objectives and Policies (continued)Liquidity risk (continued)The Group manages liquidity risk associated with derivative contracts on a portfolio basis, combining commodity sale and purchasecontracts with financially-settled derivative assets and liabilities.The table below represents the cash inflows and outflows of the derivative instrument portfolio held by the Group as at balance date.AWB Limited does not hold derivative instruments.Contractual maturities on derivative instrumentsBetween0-3 monthsBetween3-6 monthsBetween6-12 monthsBetween 1and 2 yearsBetween 2and 5 yearsOver5 years Total$’000 $’000 $’000 $’000 $’000 $’000 $’00030 September 2008ConsolidatedTotal inflow 3,184,454 652,591 210,351 24,387 - - 4,071,783Total outflow (3,329,467) (472,272) (171,764) (33,721) (3,501) (16) (4,010,741)Net inflow/(outflow) (145,013) 180,319 38,587 (9,334) (3,501) (16) 61,04230 September 2007ConsolidatedTotal inflows 1,794,254 238,025 53,803 33,998 3,930 78 2,124,088Total outflows (1,809,473) (236,267) (37,350) (40,201) (2,343) - (2,125,634)Net inflow/(outflow) (15,219) 1,758 16,453 (6,203) 1,587 78 (1,546)Discussion of contractual maturity on derivative instrumentsExpected net inflows and outflows have been calculated using spot rates as at balance date and reflect gross and net settled positions whereapplicable. The maturity analysis includes contractual cash flows on both derivative assets and derivative liabilities. Contracted cash outflows arenot expected to equate to actual cashflows as the group utilises inventory and other financing facilities whereby title to inventory passes to thefinancier as security for the funding.Credit riskCredit risk is the risk of loss caused by another party not fulfilling its obligations, including:• The risk that a customer or counterparty that has been provided with a product or service is unable or unwilling to meet its obligations; and• The risk that a party reneges on a forward contract prior to the due date or delivery date without settling the price differential.Group ExposureThe Group is exposed to credit risk in the form of:• loans to customers for the purchase of farm assets including land, crops and livestock;• short term commercial trading accounts for customer purchases of farm supplies;• amounts owing for grain trading and derivative financial instruments over commodities; and• exposures to financial institutions.Management of ExposureCredit risk is overseen by a Credit Risk Management Committee (‘the Committee’). The Committee has authority to approve transactions, reviewcredit policy, consider emerging risks and adjust credit risk appetite.The credit risk control system includes:• Risk assessment and measurement tools at the counterparty level;• Regular reporting on credit quality for all portfolios and products;• A system of delegated approval authorities based on the experience and training of the personnel concerned; and• Determination of an impairment allowance that represents an estimate of incurred losses in respect of loans and receivables.110 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED31. Financial Risk Management Objectives and Policies (continued)(a) Loan credit riskExposure to loan credit risk is managed through regular analysis of the ability of credit customers and borrowers to repay principal and interestin a timely manner, and by changing lending limits where appropriate as the risk profile changes. Exposure to credit risk is also managed byobtaining collateral and corporate and personal guarantees.The ability to repay is assessed and risk rated for individual customers and for a portfolio of customers. An independent credit team is responsiblefor assessing credit information, determining the risk rating for customers, providing approval for limits and for structuring a transaction thatprovides an acceptable risk profile. Customer risk rating profiles and portfolio risk are reviewed regularly. Where collateral is taken, the type andvaluation of collateral is reviewed by credit personnel, and policies for types of acceptable security are set.When a customer loan becomes impaired, it is put under the control of specialist staff who work with the business unit and customer to analysethe issues, determine a collection strategy and, if necessary, manage recourse to collateral.The entity holds collateral in the form of first mortgage securities over rural properties, and fixed or floating charges over livestock and crops.It is not the Group’s policy nor does it have the ability to sell or repledge collateral in the absence of default by a debtor. As at 30 September2008, the Group held collateral over the financial assets that are past due but not impaired and impaired financial assets as detailed in Note 5,with an estimated fair value of $232 million (2007: $377.4 million). The estimated fair value of the collateral is based on the market value of thesecurity held for each individual loan which is reviewed every 3 years. However, for financial assets that are past due and or impaired, it is theGroup’s policy that the valuations of the security held are reviewed and updated at least annually. As such, management believe they represent areasonable estimate of the fair value of collateral held at balance date. During the year the Group took possession of $1.4 million (2007: $nil) ofrural property which is currently being prepared for sale and is expected to fully cover the outstanding debt.The maximum exposure to credit risk on rural loans designated as ‘at fair value through profit or loss’ is $445.9 million (2007: $355.6 million).(b) Commercial trading accountsThe ability and willingness to repay are assessed on major customer accounts in this portfolio in a similar way as for customer loans. However,there is also a large volume of small commercial trading accounts which are assessed, rated and controlled on a portfolio basis. Typically,collateral is not taken on the trading account portfolio, as exposures are smaller than for customer loans and are generally for periods ofbetween 7 and 30 days.(c) Accounts for grain trading and derivative contractsCounterparties in the trading environment are evaluated for credit worthiness as for other portfolios. Open contracts are revalued regularly andthe capacity to repay contracts at today’s market values is assessed. Given the shorter term nature of the obligations, collateral is taken onlyselectively and includes retaining ownership to grain under shipment and letters of credit.(d) Financial Institution credit riskGroup Treasury establishes, reviews and monitors bank and financial institution counterparty credit limits, within Board approved guidelines.A predetermined matrix exists for the approval of counterparty credit limits by the Credit Risk Committee. The size of the credit limit approvedis dependent on the rating given by either Standard and Poor’s and/or Moody’s, and in certain circumstances will be limited by a maximumpercentage of the counterparty’s shareholders’ funds and/or its total assets. Limits exceeding guidelines require Board approval. All counterpartycredit limits are required to be reviewed at least once a year. Group Treasury is required to manage its derivative dealings within certain creditlimits and to administer and manage exposures to ensure that no excessive exposures occur.Management of concentration of riskConcentration of risk is managed at a portfolio level, each month through quality reviews and delinquency and loss reviews. The Groupminimises its concentration of credit risk by undertaking transactions with a large number of customers. The Group is not materially exposed toany individual overseas country or individual customer.Credit quality of financial assets that are neither past due nor impairedSpecific and collective provisions for impairment exist for all loans and advances including trade receivables for balances known or anticipatedto be uncollectible. The risk grading and monitoring systems of the Group are such that credit exposures which are not provided for by animpairment provision are considered to be of high credit quality. Further, the average loan to value ratio of the rural loans and advances portfoliois 39% (2007: 40%), reducing the loss exposure should unanticipated future defaults occur on the rural loan portfolio.The Group has cash, short term deposits and certain derivative contracts with financial institution counterparties. Via the use of limits outlinedabove, as well as the high credit ratings of financial institution counterparties, management assess the credit quality of these financial assets tobe sound. Due to the short term nature of the trading accounts, combined with the credit assessment process, with the exception of those tradereceivables provided for by a specific provision, the credit quality of these financial assets is considered to be sound.Equity price riskThe Group holds equity investments that are classified as available for sale financial assets and are initially measured at fair value with subsequentchanges in fair value recognised directly in equity. On disposal, accumulated fair value changes are recycled to the income statement. Theseinvestments primarily relate to shares and a membership held in the Chicago Mercantile Exchange and a membership held with the Kansas CityBoard of Trade. As at 30 September 2008, it is estimated that a change of 10% in equity prices would result in a charge or credit to consolidatedequity of $0.5 million (2007: $1.2 million).www.awb.com.au 111

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200832. Derivative Instruments And Fixed Rate Loan Fair Value MovementsDerivatives held for tradingThe Group holds a variety of derivative instruments. As hedge accounting is not applied, all derivative contracts are classified as held for trading,and are recognised at fair value with changes recognised in the income statement as required by AASB 139.The fair value of derivative positions held at 30 September 2008 is as follows:ConsolidatedAWB Limited2008 2007 2008 2007$’000 $’000 $’000 $’000Derivative assets 388,123 516,088 - -Derivative liabilities (352,596) (353,702) - -Net fair value position 35,527 162,386 - -Net gains/(losses) taken to profit and loss during the financial year for derivative assets and liabilities classified as held for trading was($5.6 million) (2007: $4.8 million).Fixed rate loansChanges in fair value attributable to:Credit Risk 3,632 500 - -Market Risk (14,831) 3,600 - -(11,199) 4,100 - -Cumulative movements for all fixed rate loans since their inception have been $7.3 million (credit risk $0.4 million and market risk $6.9 million).The effect of changes in fair value on fixed rate loans are largely offset by interest rate swaps which produced an $11.2 million gain(2007: $3.6 million loss).33. Deed of Cross GuaranteePursuant to ASIC Class Order 98/1418 (as amended) dated August 1998, the following wholly-owned subsidiaries are relieved from theCorporations Act 2001 requirements for preparation, audit, and lodgement of financial reports and directors’ reports: AWB Finance Limited,AWB (Australia) Limited, AWB GrainFlow Pty Ltd, AWB Investments Limited, Landmark Rural Holdings Limited, Landmark (Qld) Limited and IAMAAgribusiness Pty Ltd.It is a condition of the Class Order that AWB Limited and each of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed isthat AWB Limited guarantees to pay any deficiency in the event of winding up any of the wholly-owned subsidiaries listed below.The subsidiaries that are parties to the Deed are:AWB Finance LimitedAWB (Australia) LimitedAWB GrainFlow Pty LtdAWB Investments LimitedAWB Commercial Funding LimitedLandmark Rural Holdings LimitedLandmark (Qld) LimitedIAMA Agribusiness Pty Ltd.112 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED33. Deed of Cross Guarantee (continued)A consolidated summarised income statement and a consolidated balance sheet, comprising AWB Limited and controlled entities which areparties to the Deed after eliminating all transactions between parties to the Deed of Cross Guarantee, are set out below.Consolidated2008 2007$’000 $’000Summarised income statementProfit from continuing operations before tax 93,641 53,993Income tax benefit/(expense) (14,694) (21,744)Profit from continuing operations 78,948 32,249Retained profits at the beginning of the year 71,428 66,885Dividends recognised during the year (27,730) (27,706)Retained profits at the end of the year 122,646 71,428Balance sheetAssetsCash and cash equivalents 25,154 106,942Loans and receivables 950,629 791,053Inventories 374,269 184,742Other financial assets 203,029 99,317Available for sale financial assets 130,790 103,184Other assets 4,305 3,962Investments accounted for using the equity method 116,063 100,595Intangible assets 528,004 537,084Property, plant and equipment 102,095 107,334Deferred income tax assets 69,076 38,307Total assets 2,503,415 2,072,520LiabilitiesTrade and other payables 332,530 256,274Interest-bearing loans and borrowings 810,455 622,916Income tax payable 53,202 21,501Provisions 27,543 26,295Other financial liabilities 158,336 87,467Deferred income tax liabilities - 2,067Total liabilities 1,382,066 1,016,520Net assets 1,121,348 1,056,000EquityContributed equity 983,541 969,743Reserves 15,161 14,829Retained profits 122,646 71,428Total equity 1,121,348 1,056,000www.awb.com.au 113

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200834. Controlled EntitiesThe consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with theaccounting policy described in note 1(b):Particulars in relation to controlled entitiesPercentage of equityinterest held by the GroupName Details Country of incorporation 2008 2007% %ParentAWB Limited Australia 100 100Controlled entitiesACN 005 144 445 Pty Ltd Australia 100 100ACN 053 109 069 Pty Ltd 2 Australia 0 100ACN 082 719 775 Pty Ltd Australia 100 100ACN 089 443 407 Pty Ltd Australia 100 100ACN 085 032 104 Pty Ltd (formerly Agrifood Technology Pty Ltd) Australia 100 100Aussigold Produce Pty Ltd Australia 100 100Australian Seed Inoculants Pty Ltd Australia 100 100Australian Wheat Board Pty Ltd Australia 100 100AWB (Australia) Limited* Australia 100 100AWB (Geneva) SA Switzerland 100 100AWB (International) Limited Australia 100 100AWB (USA) Limited USA 100 100AWB Asia Limited Hong Kong 100 100AWB Brasil Trading SA Brazil 100 100AWB Commercial Funding Ltd* Australia 100 100AWB Custodians Pty Ltd 3 Australia 0 100AWB Finance Limited* Australia 100 100AWB GrainFlow Pty Ltd* Australia 100 100AWB Harvest Finance Limited Australia 100 100AWB India Private Limited India 100 100AWB Investments Limited* Australia 100 100AWB Japan Pty Ltd Australia 100 100AWB Krishi Suvida Parisar (Kota) Private Limited India 88 88AWB Krishi Upaaj Vipnan Parisar (Talera) Private Limited India 88 88AWB Mauritius Private Ltd Mauritius 100 100AWB MPT Pty Ltd 1 Australia 0 100AWB Pools Pty Ltd (formerly AWB National Pool Pty Ltd) Australia 100 100AWB Plant Breeding Pty Ltd Australia 100 100AWB Research Pty Ltd Australia 100 100AWB Riskassist Limited Australia 100 100AWB Services Limited Australia 100 100AWB Singapore Private Limited Singapore 100 100AZL (Australia) Pty Ltd Australia 51 51AZL Ltd Japan 51 51Barrobook Pty Limited Australia 100 100Bushridge Pty Ltd Australia 100 100Ceres Risk & Insurance Solutions Pty Ltd New Zealand 100 100Dairy Rural Pty Ltd Australia 100 100Farmland Pty Ltd Australia 100 100Frank Sauer and Sons Pty Ltd Australia 100 100Franklin Smith IAMA Pty Ltd Australia 100 100Giswey S.A. Uruguay 100 0Glencoe Distributors Pty Ltd Australia 100 100114 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED34. Controlled Entities (continued)Particulars in relation to controlled entitiesPercentage of equityinterest held by the GroupName Details Country of incorporation 2008 2007% %Goldref Pty Ltd Australia 100 100IAMA (Qld) Pty Ltd Australia 100 100IAMA (SA) Pty Ltd Australia 100 100IAMA Agribusiness Pty Ltd* Australia 100 100IAMA Insurance Brokers Holdings Pty Ltd Australia 100 100IAMA Insurance Brokers Pty Ltd Australia 100 100IAMA Irritech Pty Ltd Australia 100 100IAMA Superannuation Fund Pty Ltd Australia 100 100ISP Nominees Pty Limited Australia 100 100J O’Malley & Co Pty Ltd Australia 100 100Kelly & Co Rural Centre Pty Limited Australia 100 100Kerin Lange Rural Pty Ltd Australia 50 50Landmark (Qld) Limited* Australia 100 100Landmark Distributors Pty Ltd Australia 100 100Landmark Global Exports Pty Ltd Australia 51 0Landmark Holdings (Vic) Pty Ltd Australia 100 100Landmark Operations Limited Australia 100 100Landmark Realty (Qld) Pty Ltd Australia 100 100Landmark Realty (Tas) Pty Ltd Australia 100 100Landmark Realty (WA) Pty Ltd Australia 100 100Landmark Risk Management Pty Ltd Australia 100 100Landmark Rural Holdings Limited* Australia 100 100Landmark Tenderland Pty Ltd 2 Australia 0 100Landmark Wool Pty Ltd Australia 100 100Langes Agribusiness Pty Ltd Australia 100 100Laxstone Pty Ltd Australia 100 100Lenmost Pty Limited 2 Australia 0 100Macquarie Valley Distributors Pty Ltd Australia 100 100Mallee Chemicals Pty Ltd Australia 100 100North Central Nominees Pty Ltd Australia 100 100NovaAgri Infra-estrutura de Armazenagem e Escoamento Agricola S.A. Brazil 52 0O’Malley Distribution Group Pty Limited Australia 100 100Presoval Pty Limited Australia 100 100R.V.L. Distribution Pty Ltd Australia 100 100Riverland IAMA Pty Ltd Australia 100 100Rural Consolidated Holdings Pty Ltd Australia 91 0SBS IAMA Real Estate Pty Ltd 2 Australia 0 100Seed & Grain Sales Pty Limited Australia 100 100Seedtech Pty Limited Australia 56 56Stocklease Pty Ltd Australia 100 0Stocklease Finance Pty Ltd Australia 100 0Vivco Rural Supplies Pty Ltd 2 Australia 0 100Wimmal Distributors Pty Ltd Australia 100 100* These subsidiaries have been granted relief from the necessity to prepare financial reports in accordance with Class Order 98/1418 issued bythe Australian Securities and Investments Commission. For further information refer to note 33.1. Voluntarily deregistered on 21 November 2007.2. Voluntarily deregistered on 26 December 2007.3. Voluntarily deregistered on 4 June 2008.www.awb.com.au 115

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200835. Interest in Joint Venture OperationsACN 089 443 407 Pty Ltd, a wholly-owned subsidiary of AWB Limited, holds a 50% (2007: 50%) interest in a joint venture operation, AustralianIndependent Commodity Handlers (AICH). AICH manages a storage and handling facility known as the Melbourne Port Terminal. The roleof AWB in this joint venture is one of administration and part financing for the facility. ACN 089 443 407 Pty Ltd does not participate in theoperation of the facility.Consolidated2008 2007$’000 $’000Net assets employed in the joint venture 12,029 12,838Capital expenditure commitments and contingent liabilities in respect of the joint venture operations are disclosed in notes 28 and29 respectively.36. Earnings Per ShareConsolidated2008 2007Basic earnings per share (cents) 18.5 7.8Diluted earnings per share (cents) 18.4 7.8$’000 $’000Reconciliation of earnings used in calculating earnings per share:Profit from continuing operations 64,286 27,145NumberNumberWeighted average number of ordinary shares used in calculating basic earnings per share 347,897,102 346,003,815Effect of dilutive securities - performance rights 1,769,326 1,528,619Weighted average number of ordinary shares used in calculating dilutive earnings per share 349,666,428 347,532,43437. Subsequent EventsOn 22 October 2008, shareholders approved the adoption of a new constitution, appropriate for a company with a single class of shares.Following the introduction of the Wheat Export Accrediation Scheme, AWB Limited subsidiaries AWB Harvest Finance Limited (“AWBHF”) andAWB (Australia) Limited received accreditation by Wheat Exports Australia for the bulk export of Australian wheat.With the repeal of the Wheat Marketing Act 1989, the monopoly bulk wheat marketing arrangements were opened to greater competition andthe status of AWB (International) Limited (“AWBI”) as the company nominated to manage those arrangements was concluded. The temporaryexport accreditation for AWBI expired on 30 September 2008 and on 1 October 2008 AWBHF replaced AWBI as the trustee for the National Pool.116 www.awb.com.au

Notes to and forming part of the financial statements for the year ended 30 September 2008 AWB LIMITED38. Business CombinationsOn 9 July 2008, Landmark Operations Limited (a subsidary of AWB Limited) acquired 100% of the voting shares of Stocklease Pty Ltd (andits wholly owned subsidiary Stocklease Finance Pty Ltd), an unlisted private company based in Australia specialising in livestock leasing.The total cost of the combination was $3,842,597 and comprised an issue of equity instruments, intercompany loan, payment of cash andcosts directly attributable to the combination. In addition, Landmark Operations Limited (a subsidiary of AWB Limited) was subscribed to$1,000,000 of B Notes issued by Stocklease Finance Pty Ltd.The acquired business contributed revenue of $275,403 and a net loss of $105,052 to the Group for the period from 9 July 2008 to30 September 2008.The goodwill arising on the combination is attributed to the ability to expand the Stocklease business and to obtain operating synergiesexpected to arise from the acquisition of the business.Details of net assets acquired and goodwill are as follows:Purchase considerationConsolidated 2008$’000Cash paid 3,700Direct costs relating to the acquisition 143Total purchase consideration 3,843Fair value of identifiable net assets/(liabilities) (1,274)Subordinated loan from Landmark to Stocklease 2,294Goodwill arising on acquisition 2,8233,843The cash outflow on acquisition is as follows:Net cash acquired 368Cash paid (3,700)Net consolidated cash outflow (3,332)Acquiree’scarryingamount Fair value2008 2008$’000 $’000Assets and liabilities acquiredCash and cash equivalents 368 368Receivables 9,961 9,961Payables (452) (452)Interest bearing liabilities (11,151) (11,151)Net identifiable assets/(liabilities) acquired (1,274) (1,274)During the financial year AWB Brasil (as subsidiary of AWB Limited) entered into a business transaction with a local investment fund and athird party with experience in agricultural infrastructure management to create a new company NovaAgri Infra-estrutura de Armazenageme Escoamento Agricola S.A. AWB Brasil’s share of the company was established at 51.8%, representing the interest as at 30 September 2008.AWB Brasil’s share of the cost of investment was $10.9 million, with no goodwill arising on the combination.www.awb.com.au 117

AWB LIMITED Notes to and forming part of the financial statements for the year ended 30 September 200839. Class ActionsProceedings were commenced against AWB Limited in four separateclass actions and one quasi-class action. The resultant impact, if any,on the financial position of AWB Limited arising directly and indirectlyfrom these class actions is unknown and therefore not reflected in thisreport.Boyd (US Grower Class Action)This class action Complaint against AWB Limited and AWB (USA)Limited was filed on 10 July 2007, also in the U.S. District Court for theSouthern District of New York, on behalf of a number of US farmersincluding Mr Boyd.The Complaint alleged that AWB engaged in conduct in relation to theOil-For-Food (“OFF”) Programme which had the effect of achieving andmaintaining a monopoly on wheat sold to Iraq, thereby foreclosingthat market to US-grown wheat, contrary to the RICO Act and severalUS anti-trust statutes. On 25 February 2008 AWB’ s Motion to Dismissthe Complaint was granted by the Court. No appeal was filed againstthe dismissal and the Complaint stands dismissed.Mastafa and Ismail ClaimIn September 2007, a class action Complaint was filed against AWBLimited, AWB (USA) Limited and BNP Paribas in the US District Courtfor the Southern District of New York on behalf of Saadya Mastafaand Kafia Ismail, allegedly representing a class comprising victims(or the surviving immediate family members of victims) of crimesallegedly perpetrated by the Saddam Hussein regime in Iraq from 1996to 2003. The Complaint asserted causes of action under the US AlienTort Claims Act. The damages alleged to have been suffered by theplaintiffs were unspecified.On 25 September 2008, the Court granted each of the Defendants’Motions to Dismiss the Complaint. The complaint against AWB Limitedwas dismissed on grounds that Australia was the proper forum to hearthe complaint. The court ruled that (as is standard in the case of suchdismissals by the Court) if an Australian court of last review refusejurisdiction over any action brought in Australia by the plaintiffs, orif AWB does not waive any statute of limitations defences availableto it, the US court will ‘resume’ jurisdiction over the plaintiffs’ claims.The Judge noted that a conditional dismissal such as this is standardin this Court. The complaint against AWB (USA) Limited was dismissedon the grounds of a failure to properly plead a claim against it. TheCourt granted the Plaintiff leave to re-plead its case against AWB (USA)Limited. No such repleading has been filed to date.Karim (Iraqi Residents’ Class Action)The Karim Class action was filed against AWB Limited, AWB (USA)Limited and BNP Paribas in the US District Court for the SouthernDistrict of New York on 22 December 2006. Commodity SpecialistsCompany (CSC) of New York was subsequently joined as a Defendantby the Plaintiffs. The plaintiffs are stated to be residents of the3 northern governorates of Iraq.The complaint (as amended and filed on the 17 June 2007) allegesthat by reason of AWB’s conduct during the Oil-for-Food (“OFF”)Programme, AWB depleted the UN OFF escrow account, and therebyunlawfully deprived these plaintiffs and the others in the class(all of whom it is alleged are or were residents of the 3 northerngovernorates of Iraq) of the humanitarian benefits which those fundswould have purchased for them. It also alleges that BNP Paribas, CSCand AWB engaged in an illegal conspiracy. The Complaint alleges thatthese actions amounted to violations of the U.S. Racketeer-Influencedand Corrupt Organisations (“RICO”) Act and the plaintiffs are claimingtreble damages under RICO. No specified amount of damages is statedin the amended Complaint.On 30 September 2008, all of the Defendants’ Motions to Dismissthe Complaint were granted by the Court. On 22 October 2008 thePlaintiffs filed in the US Court of Appeals for the Second Circuit aNotice of Appeal against the dismissals. No timetable for the appealhas yet been fixed by the Court of Appeals.Iraq Government civil lawsuitOn the 1 July 2008 the Iraqi Government filed a civil lawsuit(technically not a class action) in the US District Court for theSouthern District of New York against AWB and 92 other companieswho participated in the UN Oil-for-Food Program, including banks,petroleum companies, motor manufacturers, pharmaceuticalcompanies, etc., alleging the defendants participated in an illegalconspiracy with the ‘former Saddam Hussein regime’, contrary tothe US Racketeer-Influenced and Corrupt Organisations Act (RICO),to divert funds from the UN Oil-for-Food Program escrow account.Damages alleged are US$10.4bn, and treble damages are claimedunder RICO. The claim has yet to be served on AWB. The Plaintiff hasbeen granted an extension until 22 February 2009 to serve the claimon the 93 defendants.Watson (Shareholder) Class ActionOn 9 October 2007 proceedings were filed in the Federal Court ofAustralia against AWB Limited by John and Kaye Watson as a classaction under Part IVA of the Federal Court Act. The plaintiffs sought adeclaration that AWB Limited contravened the continuous disclosureprovisions of the Corporations Act by not informing the ASX ofAWB Limited’s knowledge of the facts surrounding its activities inrelation to the OFF Programme and also sought an order that AWBLimited pay the plaintiffs compensation for damage resulting fromthat contravention, on the grounds that had the facts been publiclyavailable the plaintiffs would not have purchased AWB Limited shareseither at all or at the prices paid. In October 2008 the Plaintiffs fileda further amended Statement of Claim, extensively re-pleading theircase. AWB will shortly file its Defence to the amended claim.The damage alleged by the plaintiffs John and Kaye Watson in theamended statement of claim is $20,400. However, those funding theclass action have estimated the maximum potential damages for allplaintiffs in the class as approximately $25 million.40. Oil-for-Food InquiryThe Report of the Commission of Inquiry in relation to the UnitedNations Oil-for-Food Programme (the “Cole Report”), tabled inParliament in November 2006, found that certain acts and conduct byAWB Limited, AWB (International) Limited (“AWBI”) and certain of theirformer employees and officers, in conjunction with the UN Oil-for-Food Programme for Iraq (“OFF Programme”), might have breachedcertain provisions of the Criminal Code, Crimes Act 1958 (Vic) andBanking (Foreign Exchange) Regulations 1959. It recommended theestablishment of a joint Task Force comprising the Australian FederalPolice, Victoria Police and the Australian Securities and InvestmentsCommission (‘ASIC’) to consider possible prosecutions of AWB, AWBIand certain of those individuals. The Task Force recommended by theCole Report was established in December 2006.In December 2007 ASIC issued civil proceedings in the Supreme Courtof Victoria against two former directors and four former employees ofAWB Limited. In November 2008, the Court stayed those proceedings,except for those against Mr Andrew Lindberg, AWB’s former managingdirector.At the date of writing, no legal action has been commenced againstAWB Limited or any of its subsidiaries in relation to the findings of theCole Inquiry.The resultant impact, if any, on the financial position of AWB Limitedarising directly and indirectly from these and other potential legalactions arising from the Cole Inquiry is unknown and therefore notreflected in the annual report.41. Standard Chartered Bank LitigationIn February 2005, Standard Chartered Bank plc brought an actionagainst AWB (USA) Ltd in the US District Court for the Southern Districtof New York in respect of a promissory note dispute. The amountclaimed was approximately USD35m. On 14 January 2008 JudgeHellerstein issued his opinion directing the entry of judgement againstAWB (USA) Ltd, and on 16 January 2008, judgment was enteredagainst AWB (USA) Ltd in the amount of approximately USD24.2m.On 23 January 2008, AWB (USA) Ltd filed a notice of appeal with theUnited States Court of Appeals for the Second Circuit, and filed itsAppeal Brief on 15 April 2008. AWB has taken steps to secure thejudgment debt to the satisfaction of Standard Chartered Bank plc,finalisation of which will result in a stay of execution of the judgment.The decision of the Court of Appeals is awaited.AWB Limited has chosen to take up a provision against this liability,even though it is of the view that AWB (USA) Ltd has a strong position,and AWB (USA) Ltd will continue to pursue its appeal avenues.118 www.awb.com.au

Directors’ declaration AWB LIMITEDIn the directors’ opinion(a) the financial statements and notes set out on pages 37 to 118 are in accordance with the Corporations Act 2001, including:(i)complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;and(ii) giving a true and fair view of the company’s and Group’s financial position as at 30 September 2008 and of their performance, asrepresented by the results of their operations, changes in equity and their cash flows, for the financial year ended on that date;(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;(c) the audited remuneration disclosure set out on pages 6 to 16 of the directors’ report complies with Accounting Standard AASB 124 RelatedParty Disclosures and the Corporations Regulations 2001; and(d)at the date of this declaration, there are reasonable grounds to believe that the companies and parent entity which are party to the Deed ofCross Guarantee identified in Note 33 will be able to meet any obligations or liabilities to which they are, or may become subject, by virtueof the Deed of Cross Guarantee.The directors have been given the declarations by the Managing Director and the Chief Financial Officer required by section 295A of theCorporations Act 2001.This declaration is made in accordance with a resolution of the directors.Peter PolsonChairmanGordon DavisManaging Director19 November 2008www.awb.com.au 119

120 www.awb.com.auAWB LIMITED Independent auditor’s report to the memebers of AWB Limited

Independent auditor’s report to the memebers of AWB Limited AWB LIMITEDwww.awb.com.au 121

AWB LIMITED Australian Securities Exchange (ASX) additional informationAdditional information required by the Australian Securities Exchange and not shown elsewhere in this report.The information is as at 11 December 2008Distribution of equity securitiesThe number of shareholders by size of holding wasOrdinary shares Number of holders Number of shares1 - 1,000 21,372 7,908,7571,001 - 5,000 19,487 49,210,8555,001 - 10,000 6,155 43,782,09410,001 - 100,000 4,788 94,309,808100,001 and over 71 157,204,23151,873 352,415,745Less than a marketable parcel (175 shares) 7,943 615,888Top 20 holders Number of shares % of issued capital1 HSBC Custody Nominees (Australia) Limited 31,831,525 9.03%2 J. P. Morgan Nominees Australia Limited 28,375,526 8.05%3 National Nominees Limited 26,955,927 7.65%4 Citicorp Nominees Pty Ltd 21,255,686 6.03%5 ANZ Nominees Limited 14,659,416 4.16%6 CPU Share Plans Pty Limited 5,508,946 1.56%7 Warbont Nominees Pty Limited 4,489,771 1.27%8 Cogent Nominees Pty Limited 3,390,387 0.96%9 UBS Nominees Pty Ltd 3,238,392 0.92%10 Queensland Investment Corporation 1,394,134 0.40%11 Australian Reward Investment Alliance 1,329,996 0.38%12 AMP Life Limited 1,240,365 0.35%13 Neweconomy.com.au Nominees Pty Limited 1,141,269 0.32%14 Gwynvill Trading Pty Ltd 1,085,000 0.31%15 BNP Paribas 925,248 0.26%16 Bond Street Custodians Limited 846,809 0.24%17 Brickworks Investment Company Limited 750,000 0.21%18 Bainpro Nominees Pty Ltd 670,474 0.19%19 CS Fourth Nominees Pty Limited 617,895 0.18%20 Warnford Nominees Pty Ltd 565,804 0.16%150,272,570 42.63%Substantial holdersThere were no substantial shareholders in AWB Limited.122 www.awb.com.au

Shareholder communication AWB LIMITEDFinancial Calendar for 2009Annual General MeetingHalf year end10 February31 MarchAnnouncement of half year results 20 May *Full year end30 SeptemberAnnouncement of full year results 18 November ** Dates are subject to change and may varyVoting RightsOn a show of hands, the holder of an ordinary share has one vote andon a poll the holder has one vote for each ordinary share held.Annual general meetingAWB’s AGM will be held at 2.30pm (Melbourne time) on Tuesday,10 February 2009 at Melbourne Park Function Centre, River Room,Swan Street, Melbourne, Victoria. Details of the business of themeeting are contained in the separate Notice of Meeting sent toshareholders.Dividend paymentA final fully franked dividend of five cents per share will be paidon 5 January 2009 to ordinary shareholders registered on the AWBregister at 28 November 2008. For Australian tax purposes, thedividend was fully franked at the company tax rate of 30%.AWB continues to offer a Dividend Reinvestment Plan (DRP). Eligibleshareholders can have all or part of the dividend reinvested inadditional shares. Participation is entirely voluntary. Further details onthe terms and conditions of the DRP can be found on AWB’s website atwww.awb.com.au or by contacting the company’s share registry.Share registryComputershare Investor Services Pty LimitedPO Box 14061 Melbourne, City MC, Vic 8001Tel: 1800 810 032Fax: 1800 800 053Web: www.computershare.com.auPlease quote your current address together with your SecurityholderReference Number or Holder Identification Number as shown on yourIssuer Sponsored/CHESS statement.Change of bank detailsShareholders should immediately notify the share registry in writingof changes of address or banking details for dividends electronicallycredited to a bank account.Annual report mailing listShareholders who wish to receive the annual report in hard copycan call the AWB share registry on 1800 810 032 to register theirchoice. The annual report is also available on AWB’s website atwww.awb.com.au.Investor relationsInvestors with questions regarding AWB’s financial informationcan contact:Investor RelationsAWB Limited380 La Trobe StreetMelbourne VIC 3000Tel: +61 (0)3 9209 2000Stock exchange listingAWB ordinary shares are listed on the ASX and reported in theindustrial section of daily newspapers under the code AWB.www.awb.com.au 123

AWB LIMITED Notes124 www.awb.com.au

Notes AWB LIMITEDwww.awb.com.au 125

AWB Limited ABN 99 081 890 459380 La Trobe Street Melbourne Victoria 3000 Australiawww.awb.com.au