LIC Annual Results 2020-21
Private Bag 3016
Hamilton 3240
New Zealand
0800 651 156
www.lic.co.nz
LIC is the trading name of Livestock Improvement Corporation Limited
Market Announcement
21 July 2021
LIC Annual Results 2020-21
Farmers investing in high value genetics to help meet sector’s climate goals
Performance highlights
• Net Profit After Tax (NPAT): $22.9 million, up 31% from $17.5 million last year
• Total revenue from continuing operations (excl automation*): $249.0 million, up 3.4% from $240.9 million last year
• Underlying Earnings*: $22.3 million, down 1.9% from $22.7 million last year after a one-off tax benefit in prior year
• Strong balance sheet with no debt at year end: Total assets $382 million, 0.5% increase $379.9 million last year
• Dividend: $17.8 million - 12.51 c per share, representing 80% of Underlying Earnings
*Refer notes to financial information on last page of statement
Livestock Improvement Corporation (NZX: LIC) announces its financial results for the year ending 31 May
2021, reporting increased revenue, profit and a strong balance sheet with no debt at year end.
The farmer-owned co-operative will return $17.8 million in dividend to shareholders, which equates to 12.51
cents per share. The fully imputed dividend represents a 14.4% gross yield based on the current share
price of $1.21. The dividend will be distributed on 20 August.
“The LIC Board is proud to present another strong result to our farmer shareholders for the fourth
consecutive year,” said Murray King, LIC Board Chair.
“This result is in line with our market guidance and a credit to our shareholders for their support of
significant initiatives in the last five years to transform LIC into a modern, progressive co-op. These
initiatives have delivered the benefits we said they would, including focussed investment in the business
and a better return for our farmers.
“We’ve seen good growth across core business areas this year but particularly in our premium genetics
range where young, genomically-selected bulls are used to fast track genetic gain and deliver more value
on-farm through increased productivity and efficiency, including improved environmental efficiency.
“That value combined with a solid dividend makes this result a win-win for our farmers. It also means we
can continue our work to invest in products, services and technology that drive long term and sustainable
customer value.”
LIC’s premium genetics range accounted for almost half of the co-op’s total artificial breeding (AB)
inseminations (41.3% or 1.79 of 4.3 million semen straws), more than double three years ago. This is
predominantly from the Forward Pack and A2/A2 bull teams (1.6 million straws combined).
It also includes sexed semen, which experienced significant growth with triple the number of straws sold on
the previous year (110,125 vs 33,804).
“This growth will have a significant impact on-farm this spring and deliver a huge amount of value to our
farmers, with more high quality heifer replacements and fewer bobby calves. We’re expecting this to be
even greater next year with sexed semen orders likely to almost double again,” King said.
Meanwhile, the number of traditionally daughter proven bulls used for AB continued to decline, now down
40% from three years ago (1.2M straws in 20-21 vs 2.02M in 17-18).
Page 2 of 3
King said this shift reflects farmers’ growing confidence in LIC’s proprietary genomic work and a willingness
to adopt new tools and solutions to help them meet sustainability goals.
“LIC exists to deliver superior genetics and technological innovation to help our shareholders sustainably
farm a profitable animal. We have a fundamental role in helping New Zealand’s dairy farmers reduce their
environmental footprint and we are committed to providing solutions to help them meet climate targets.
“We’ve invested heavily into genomics for our farmers because the DNA of our dairy herd can do a lot of
the heavy lifting to help meet our sectors’ climate goals.
“World leading pastoral dairy genetics and genomics are a much more precise tool for farmers than the
blunt instrument of reduced cow numbers. Farmers are adopting these tools now to get ahead of the
curve.”
The co-op is continuing its work with NZAEL (subsidiary of DairyNZ) to include genomics in future animal
evaluations to support the national breeding objective.
In other core business activity, herd testing was up 7.3% and animal health testing up 23.9% primarily for
Johnes disease and milk pregnancy testing. International exports were also up 23% by value after some
initial challenges getting product to market due to COVID-19.
The co-op invested $17.1 million in R&D, up 15.4% from the previous year (or up 11.5% including
automation*), reaffirming its position as one of the biggest investors for the primary sector. LIC also spent
$3.0 million to improve its MINDA LIVE herd management system, with 66 new features added based on
farmer feedback.
King said the co-op also refined its business strategy earlier in the year to put value for farmer shareholders
at its heart.
“We’ve listened to our shareholders. They want us to focus on doing what we’re good at and play to our
strengths in pastoral dairy genetics and herd improvement. Our strategy is focussed on ensuring our
farmers optimise value from their livestock and this result means we are strongly positioned to deliver on
that.”
During the year, the co-op negotiated divestment of its automation* business to MSD Animal Health, a
division of Merck & Co., Inc., Kenilworth, N.J., USA (NYSE:MRK) for NZ$38.1 million (NZX, 8.6.2021). The
sale was completed on 11 June 2021 and net assets of $23.8 million have been recorded as held for sale
on the balance sheet. The Board is considering options for the use of these funds.
Outlook
King says recruitment of a new chief executive is a priority for the Board over the coming months, following
Wayne McNee’s decision to step down at the end of November 2021 (NZX, 14.6.2021).
The co-op will also be firmly guided by its primary focus of delivering value for farmer shareholders and
three commitments in its refined strategy, he said, with operational excellence, faster genetic improvement
and software reliability and performance.
LIC expects Underlying Earnings* in 2021-22 to be in the range of $19-25 million, assuming no significant
climate event or milk price change takes place between now and then, nor any major impacts from M. bovis
or COVID-19.
ENDS
Visit ayearinreview.lic.co.nz for more information and commentary from Murray King (Board Chair) and Wayne McNee
(Chief Executive).
Contact
For shareholder enquiries, phone 0800 264 632
For media enquiries, contact Ashleigh Sattler (LIC Communications Manager) 0276171942.
Page 3 of 3
*Notes to Financial Information
These annual results include the annual non-cash revaluations of its major biological asset, the bull team,
and the outstanding Nil Paid Ordinary Shares receivable, which are both required to reflect “fair value”
under accounting standards. Figures have been audited.
Divestment of LIC Automation – discontinued operations
Accounting standards require profits from the Automation business results for both 2019-20 and 2020-21
to be separately disclosed as Discontinued Operations. This has resulted in restatement of all results for
2019-20 to exclude Automation (including revenue and R&D), therefore some 2019-20 figures used in
this statement for comparison to 2020-21 will differ from the 2019-20 Annual Results disclosure.
Underlying Earnings
This is the company’s NPAT (excluding bull valuation, nil paid share valuation movements and any gain
from the automation business divestment) and is considered useful to investors as it is the basis on
which LIC has historically reported and on which LIC makes its determination of dividends. Non-GAAP
financial information does not have a standardised meaning prescribed by GAAP and therefore may not
be comparable to similar financial information presented by other entities. There was a one-off tax
benefit in 2019-20 from the reinstatement of tax depreciation on commercial buildings as part of the
Government’s COVID-19 response package. LIC has not utilised the Government COVID-19 wage
subsidy in either the current or prior period.
Nil Paid Ordinary Shares
These were issued to shareholders as a result of the share simplification in 2018, which brought
together LIC’s two previous classes of shares into one Ordinary Share. For each co-operative share
held, one Fully Paid Ordinary Share and three Nil Paid Ordinary Shares were issued. Nil Paid Ordinary
Shares carry the same rights to dividends and voting as Ordinary Shares but cannot be traded on the
NZX until they are fully paid up. Over time, shareholders are obliged to pay-up each Nil Paid Ordinary
Share and once fully paid (up to $1) they become subject to market pricing. The Nil Paid Ordinary
Shares are repaid by way of retention of dividends paid on any of those shares, and any repayments of
the shares required to satisfy LIC’s Share Standard. LIC records an estimate of the fair value of the
outstanding Nil Paid Ordinary Shares receivable at balance date.
Bull team
The bull team valuation is based on a model designed independently of LIC that looks at future revenue
streams and costs associated with the current bulls owned, discounted back to current value. The recent
downward trend of the bull team value is a result of the increasing number of genomic bulls on the team,
which deliver more value on-farm but have a negative impact on the calculation model as they are used
for a shorter period.
About LIC
LIC is a farmer-owned co-operative and world leader in pasture based dairy genetics and herd
management. LIC exists to deliver superior genetics and technological innovation to help its shareholders
sustainably farm a profitable animal.
With origins dating back to 1909, LIC has a long history of developing and delivering world-leading
innovations for the dairy industry. The co-op continues to be one of the sector’s biggest private investors in
research and development.
Today the New Zealand-based co-op employs more than 700 permanent staff, swelling to 2000 during the
spring peak dairy mating season. LIC also has offices in the United Kingdom, Ireland and Australia. All LIC
profit is returned to its farmer owners/shareholders in dividends, or reinvested for new solutions, research
and development. www.lic.co.nz
---
Livestock Improvement
Corporation Limited (LIC)
Annual Report
For the year ended
31 May 2021
Contents
Key results and position
Our results for the year2
Our position at year end3
Our cash flows for the year4
Changes in our position for the year4
More details
Accounting policies5
Business analysis6 - 7
Our core assets7 - 10
Our funding 11
Risk and Other assets12
Tax and Other expenses13
Other Liabilities, Transactions with
Related Parties, Cash flow reconciliation
14
Discontinued operations15
Subsequent events16
Independent auditor's report17
Directors' report21
Corporate Governance report23
STATEMENT OF RESULTS FOR THE YEAR
For the year ended 31 May 2021
Note20212020
In thousands of New Zealand dollars
Continuing operations
Revenue1249,013240,932
Purchased materials(40,795)(35,493)
People costs(103,576)(98,443)
Depreciation and amortisation
3,4,5(21,999)(26,866)
Research and development(17,124)(14,844)
Other expenses10(33,615)(33,062)
Net finance costs(1,376)(484)
Bull team revaluation2(718)(7,220)
Fair value change in Nil Paid Share receivable61,200-
Profit/(loss) before tax expense from continuing operations31,01024,520
Tax expense9(7,397)(3,465)
Profit/(loss) for the year from continuing operations23,61321,055
Discontinued operations
Profit/(loss) after tax expense from discontinued operations14(669)(3,568)
Profit/(loss) for the year22,94417,487
Hedge revaluations6(134)(29)
Investment revaluations6(195)(3,415)
Land and buildings revaluations3,61,4431,160
1,114(2,284)
Comprehensive income for the year24,05815,203
Profit from continuing operations per Ordinary Share (excl. treasury stock) $ 0.17$ 0.15
Profit per Ordinary Share (excl. treasury stock)$ 0.16$ 0.12
Supplementary non-GAAP note to the results for the year:
Profit/(loss) for the year22,94417,487
Plus Bull team revaluation7187,220
Less Fair value change in Nil Paid Share receivable(1,200)-
Tax effect on Bull team revaluation(201)(2,022)
Underlying earnings22,26122,685
Underlying earnings per Ordinary Share (excl. treasury stock)$ 0.16$ 0.16
Key results and position
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/212
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/213
STATEMENT OF POSITION FOR THE YEAR
As at 31 May 2021
Note20212020
In thousands of New Zealand dollars
Cash18,82116,488
Debtors842,97341,144
Assets held for sale1426,471-
Other assets825,04227,869
Nil Paid Shares receivable613,49115,727
Bull team2114,790115,508
Land, buildings and equipment - owned & leased3,595,11495,394
Software, goodwill and other intangible assets445,30367,810
Total assets382,005379,940
Creditors 724,54122,363
Liabilities held for sale142,656-
Borrowings 7-1,616
Deferred tax931,93534,543
Other liabilities1128,75031,176
Total liabilities87,88289,698
Net assets294,123290,242
Share capital676,73778,432
Retained earnings6175,565170,720
Other reserves641,82141,090
Total equity294,123290,242
Director
Date: 21 July 2021
Director
Date: 21 July 2021
Key results and position
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/214
STATEMENT OF CASH FLOWS FOR THE YEAR
For the year ended 31 May 2021
Note20212020
In thousands of New Zealand dollars
Customer receipts1254,989253,702
Supplier payments(200,765)(192,981)
Tax payments(13,477)(8,385)
Other operating cash flows(291)(318)
Net operating cash flows1340,45652,018
Software development4(7,658)(13,822)
Net sales/(purchases) of land, buildings and equipment3(7,845)(6,229)
Other investment cash flows(612)(1,350)
Net investment cash flows(16,115)(21,401)
Payment of principal portion of lease liabilities(3,460)(2,964)
Drawdown/(repayment) of borrowings(1,616)(3,000)
Investment Share repurchases6(1,695)-
Nil Paid Share receipts352386
Dividends paid(15,398)(13,117)
Net financing cash flows(21,817)(18,695)
Movement in cash for year2,52411,922
Cash at beginning of the year16,4884,529
Currency movement on cash holdings(191)37
Cash at end of the year18,82116,488
STATEMENT OF CHANGES IN POSITION FOR THE YEAR
For the year ended 31 May 2021
Key results and position
In thousands of New Zealand dollars
Note
Share
capital
Retained
earnings
Other
reserves
Total equity
Balance at 1 June 202078,432170,72041,090290,242
Profit/(loss) for the year-22,944-22,944
Dividends paid-(18,156)(326)(18,482)
Hedge revaluations--(134)(134)
Investment revaluations--(195)(195)
Land and buildings revaluations3--1,4431,443
Acquisition of minority interest in subsidiary-57(57)-
Investment share repurchases6(1,695)--(1,695)
Balance at 31 May 202176,737175,56541,821294,123
Balance at 1 June 201978,432169,76543,240291,437
Adjustments on adoption of NZ IFRS 16-(704)-(704)
Profit/(loss) for the year-17,28120617,487
Dividends paid-(15,622)(72)(15,694)
Hedge revaluations--(29)(29)
Investment revaluations--(3,415)(3,415)
Land and buildings revaluations3--1,1601,160
Balance at 31 May 202078,432170,72041,090290,242
Accounting Policies
The accounting policies have been applied consistently with prior periods.
Accounting entity
These financial statements set out the performance, position and cash flows of Livestock Improvement Corporation
Limited ("LIC" or the "Company") and its subsidiaries (the "Group") for the year ended 31 May 2021.
LIC is domiciled in New Zealand, registered under the Companies Act 1993 and the Co-operative Companies Act 1996,
and listed on the Main Board of the New Zealand Stock Exchange Limited ("NZX"). LIC is an FMC Reporting Entity for
the purposes of the Financial Reporting Act 2013 and the Financial Markets Conduct Act 2013.
Basis of Preparation
(i) Statement of compliance
These financial statements comply with NZ GAAP as appropriate for Tier 1, for-profit entities, NZIFRS and IFRS.
(ii) Basis of measurement
The financial statements have been prepared on a GST exclusive basis, with the exception of trade receivables and
trade payables, which are reported inclusive of GST.
(iii) Functional and presentation currency
The functional currency of the Company and the presentation currency of the financial statements is New Zealand
Dollars ("NZD"), with amounts rounded to the nearest thousand.
(iv) Use of estimates and judgements
The key estimations and judgements made in preparing these financial statements are the valuation of the Bull team
and the impairment testing of software and other intangible assets.
(v) New or amended standards adopted in current year and standards issued but not yet effective
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
5
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/215
Notes to the Financial Statements
In thousands of New Zealand dollars
2021
NZ market
genetics Herd testing
Farm
softwareDiagnosticsOtherEliminations
Total
99,25635,39750,81023,33140,219- 249,013
---- 4,026(4,026)-
External revenue
Inter-segment revenue
Total revenue99,25635,39750,81023,33144,245(4,026)249,013
Depreciation & amortisation(1,059)(5,308)(3,591)(1,124)(10,917)- (21,999)
36,60710,59716,494- 149,519
(718)
(117,791)
Segment gross profit before tax 65,720 20,101
Bull team revaluation
Unallocated amounts
Profit/(loss) before tax expense from continuing operations
31,010
2020
NZ market
genetics Herd testing
Farm
softwareDiagnosticsOtherEliminations
Total
97,159External revenue 32,05149,96924,67737,077- 240,932
Inter-segment revenue----3,126(3,126)-
49,96924,67740,203(3,126)240,932
(7,528)(1,119)(12,638)- (26,866)
31,63314,14412,584- 142,355
(7,220)
(110,615)
Total revenue 97,159 32,051
Depreciation & amortisation (1,106) (4,475)
Segment gross profit before tax 65,226 18,768
Bull team revaluation
Unallocated amounts
Profit/(loss) before tax expense from continuing operations
24,520
1.Business analysis
(i) Operating segments
The Group operates in four key operating segments, and across four key geographies as set out below. Figures in
the following tables reflect information regularly reported to the Chief Executive on those key operating segments:
- NZ market genetics: provides bovine genetic breeding material and related services, predominately
to dairy farmers.
- Herd testing: herd testing and animal recording for pastoral farmers.
- Farm software: data recording, tags and farm management information services.
- Diagnostics: provides DNA and animal health testing services.
The Other segment includes international operations, research & development and support services. Unallocated
amounts include personnel costs, other expenses and net finance costs. The 2020 segments have been updated to
replace Farm automation (discontinued operations) with Diagnostics and to use a consistent measure of segment gross
profit before tax.
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
6
In thousands of New Zealand dollars
2021
NZ market
genetics
Herd testingFarm
software
DiagnosticsOtherEliminationsTotal
External revenue99,25635,39750,81023,33140,219-249,013
Inter-segment revenue----4,026(4,026)-
Total revenue99,25635,39750,81023,33144,245(4,026)249,013
Depreciation & amortisation(1,059)(5,308)(3,591)(1,124)(10,917)-(21,999)
Segment gross profit before tax65,72020,10136,60710,59716,494-149,519
Bull team revaluation(718)
Unallocated amounts(117,791)
Profit/(loss) before tax expense from continuing operations31,010
2020
NZ market
genetics
Herd testingFarm
software
DiagnosticsOtherEliminationsTotal
External revenue97,15932,05149,96924,67737,077-240,932
Inter-segment revenue----3,126(3,126)-
Total revenue97,15932,05149,96924,67740,203(3,126)240,932
Depreciation & amortisation(1,106)(4,475)(7,528)(1,119)(12,638)-(26,866)
Segment gross profit before tax65,22618,76831,63314,14412,584-142,355
Bull team revaluation(7,220)
Unallocated amounts(110,615)
Profit/(loss) before tax expense from continuing operations24,520
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/216
The Other segment includes international operations, research & development and support services. Unallocated
amounts include personnel costs, other expenses and net finance costs. The 2020 segments have been updated to
replace Farm automation (discontinued operations) with Diagnostics and to use a consistent measure of segment
gross profit before tax.
1. Business analysis (cont.)
(ii) Geographic analysis
In thousands of New Zealand dollars
New
Zealand AustraliaIreland
United
KingdomOtherTotal
2021
Revenues229,1739,1152,3463,4334,946249,013
Non-current assets267,6085,5825638,274-282,027
2020
Revenues223,9478,1371,7164,0003,132240,932
Non-current assets292,6286,1434848,701-307,956
In thousands of New Zealand dollars20212020
Opening balance115,508122,728
Bull team revaluation(718)(7,220)
Closing balance114,790115,508
Key drivers of the model:
Mean 3 year forward Fonterra Farmgate Milk Price*$7.51$6.35
WACC annualised post tax rate5.16% - 7.20%5.59% - 6.48%
Number of bulls in the team136120
Run off profile - % of Genomic bulls in the team from 2-4 years53% - 0%53% - 0%
* This is the average of market analyst consensus
The impact on the fair value of a change to these key drivers is summarised below:
20212020
Milk Price (and associated impact on demand) changes by $1.50 (2020: $0.75)$14.2m$20.0m
WACC moves 100 basis points$3.6m$3.7m
Run off profile$1.0m impact per 1% shift in profile
Notes to the Financial Statements
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
Non-current assets includes the Bull team, Land, buildings & equipment, Software, goodwill and other intangible assets,
Nil Paid Share receivable and investments.
The Group’s significant subsidiaries are:
- New Zealand: LIC Agritechnology Company Limited (100%), LIC Automation Limited (100%) (discontinued operations)
- Australia: Livestock Improvement Pty Ltd (100%), Beacon Automation Pty Ltd (100%)
- Ireland: LIC Ireland Limited (100%)
- United Kingdom: Livestock Improvement Corporation (UK) Ltd (100%)
The Group is not dependent on any one major customer in any of its reportable segments. New Zealand revenues
include government research and development grant income of $7.273 million (2020: $4.834 million).
2. Bull team
The bull team is the cornerstone asset of LIC’s genetics business. The 938 total bulls (2020: 943 bulls) from which the bull
team are selected are carried at their fair value, which is based on LIC’s modelling of future cash flows from the bulls (a
“Level 3 valuation”). Changes in their fair value are reported in profit. The fair value from the bulls is partly dependent on
the future sales mix of LIC’s genetics products, which is historically strongly correlated to the Farmgate Milk Price paid by
Fonterra Co-operative Group. The valuation is also sensitive to a change in the WACC rate used to discount future cash
flows and the run off profile of bulls that make up the bull team.
7
Notes to the Financial Statements
LandBuildingsEquipmentTotalLandBuildingsEquipmentTotal
34,26539,17221,95795,39435,41728,15417,46381,034
4,7418,496- 2,2824,9557,237
(240)(1,152)(336)(1,601)
(6,040)
(113)
(5,954)
(7,942)
1,490(238)
(297)
(7,970)
1,252
-(1,988)
1,721
- 1,721
-3015(19) (29)
758 (189)
(15)
9,3545,57614,930
(875) (265)(403) (1,543)
-
----
34,88039,48020,75495,11434,26539,17221,95795,394
11,69121,030N/A11,691
N/A10-60 years3-10 yearsN/A
19,322 N/A
10-40 years 3-10 years
Software
& IPGoodwillDatabaseTotal
Software
& IPGoodwill DatabaseTotal
50,8106,50010,50067,81056,810
6,471
73,781
7,750--7,75013,713--13,713
(3,260)--(3,260)-(71)
(14,194)-
-
(14,194)(19,765)
(71)
-(19,765)
(64)12329
(8,569)
(26)
(4,144)
(90)
(12,713)
--
- 152
- -
In thousands of New
Zealand dollars
Opening balance
Additions
Disposals/impairment
Amortisation
Foreign exchange
Held for sale - note 14
Closing balance32,4732,33010,50045,30350,8106,50010,50067,810
20212020
3.Land, buildings and equipment
Land and buildings are carried at fair value, determined by an independent valuer at least every three years (most recent
full valuation as at April 2021). Revaluations are reflected in the revaluation reserve. Equipment includes plant, vehicles,
furniture and fittings and IT hardware, and is carried at depreciated cost. Buildings and equipment are depreciated on a
straight-line basis over their estimated useful lives, and reviewed annually for any indications of impairment.
20212020
In thousands of New
Zealand dollars
Opening balance
Additions
Disposals
Depreciation
Revaluation
Foreign exchange
Leased assets movement - note 5
Held for sale - note 14
Closing balance
Value if carried at cost
Estimated useful lives
4.Software and other intangibles
(i) Software and other intangible asset balances
Software development expenditure is capitalised only where costs are directly attributable, and once the product or process
is commercially feasible, the benefits are probable, and the Group intends to sell or use the completed software.
Software assets are amortised over their useful lives of up to seven years on a straight line basis, and reviewed annually for
indicators of impairment.
Intellectual property (IP) assets are amortised over their estimated useful lives, being up to 13 years.
The genetic data in the LIC database increases in value with each successive generation. Both goodwill and the LIC
database have indefinite useful lives. They are recognised at cost and are not amortised, are allocated to a cash generating
unit ("CGU") and tested for impairment annually.
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
8
-
10,500
-
3,755
(57)
(1,930)
-
-
-
-
(10)
(947)
-
-
-
-
-
Notes to the Financial Statements
LandBuildingsEquipmentTotalLandBuildingsEquipmentTotal
34,26539,17221,95795,39435,41728,15417,46381,034
4,7418,496- 2,2824,9557,237
(240)(1,152)(336)(1,601)
(6,040)
(113)
(5,954)
(7,942)
1,490(238)
(297)
(7,970)
1,252
-(1,988)
1,721
- 1,721
-3015(19) (29)
758 (189)
(15)
9,3545,57614,930
(875) (265)(403) (1,543)
-
----
34,88039,48020,75495,11434,26539,17221,95795,394
11,69121,030N/A11,691
N/A10-60 years3-10 yearsN/A
19,322 N/A
10-40 years 3-10 years
Software
& IPGoodwillDatabaseTotal
Software
& IPGoodwill DatabaseTotal
50,8106,50010,50067,81056,810
6,471
73,781
7,750--7,75013,713--13,713
(3,260)--(3,260)-(71)
(14,194)-
-
(14,194)(19,765)
(71)
-(19,765)
(64)12329
(8,569)
(26)
(4,144)
(90)
(12,713)
--
- 152
- -
In thousands of New
Zealand dollars
Opening balance
Additions
Disposals/impairment
Amortisation
Foreign exchange
Held for sale - note 14
Closing balance32,4732,33010,50045,30350,8106,50010,50067,810
20212020
3.Land, buildings and equipment
Land and buildings are carried at fair value, determined by an independent valuer at least every three years (most recent
full valuation as at April 2021). Revaluations are reflected in the revaluation reserve. Equipment includes plant, vehicles,
furniture and fittings and IT hardware, and is carried at depreciated cost. Buildings and equipment are depreciated on a
straight-line basis over their estimated useful lives, and reviewed annually for any indications of impairment.
20212020
In thousands of New
Zealand dollars
Opening balance
Additions
Disposals
Depreciation
Revaluation
Foreign exchange
Leased assets movement - note 5
Held for sale - note 14
Closing balance
Value if carried at cost
Estimated useful lives
4.Software and other intangibles
(i) Software and other intangible asset balances
Software development expenditure is capitalised only where costs are directly attributable, and once the product or process
is commercially feasible, the benefits are probable, and the Group intends to sell or use the completed software.
Software assets are amortised over their useful lives of up to seven years on a straight line basis, and reviewed annually for
indicators of impairment.
Intellectual property (IP) assets are amortised over their estimated useful lives, being up to 13 years.
The genetic data in the LIC database increases in value with each successive generation. Both goodwill and the LIC
database have indefinite useful lives. They are recognised at cost and are not amortised, are allocated to a cash generating
unit ("CGU") and tested for impairment annually.
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
8
-
10,500
-
3,755
(57)
(1,930)
-
-
-
-
(10)
(947)
-
-
-
-
-
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/218
In thousands of New20212020
Zealand dollars
LandBuildingsEquipmentTotalLandBuildingsEquipmentTotal
Opening balance34,26539,17221,95795,39435,41728,15417,46381,034
Additions-3,7554,7418,496-2,2824,9557,237
Disposals-(57)(240)(297)(1,152)(336)(113)(1,601)
Depreciation-(1,930)(6,040)(7,970)-(1,988)(5,954)(7,942)
Revaluation1,490(238)-1,252-1,721-1,721
Foreign exchange-(10)(19)(29)-(15)3015
Leased assets movement - note 5 -(947)758(189)-9,3545,57614,930
Held for sale - note 14(875)(265)(403)(1,543)----
Closing balance34,88039,48020,75495,11434,26539,17221,95795,394
Value if carried at cost11,69121,030N/A11,69119,322N/A
Estimated useful lives
N/A10-60
years
3-10 yearsN/A10-40 years3-10 years
20212020
In thousands of New
Zealand dollars
Software
& IP
GoodwillDatabaseTotalSoftware
& IP
GoodwillDatabaseTotal
Opening balance50,8106,50010,50067,81056,8106,47110,50073,781
Additions7,750--7,75013,713--13,713
Disposals/impairment(3,260)--(3,260)(71)--(71)
Amortisation(14,194)--(14,194)(19,765)--(19,765)
Foreign exchange(64)(26)-(90)12329-152
Held for sale - note 14(8,569)(4,144)-(12,713)----
Closing balance32,4732,33010,50045,30350,8106,50010,50067,810
Notes to the Financial Statements
In thousands of
New Zealand
dollars
Farm software
and herd testing
CGU
Farm
automation
CGU
Other
CGU
Total
Farm software
and herd testing
CGU
Farm
automation
CGU
Other
CGU
Total
LIC database10,500--10,50010,500--10,500
Goodwill2,3306,4742,3566,500
Held for sale - note 14
-4,144
-(4,144)
- (4,144)
-
--
10,500
- 2,330
12,83010,5004,1442,35617,000
20202021
options. The Group's discount or incremental borrowing rate applicable to leases is 4.4% (2020: 4.4%).
The Group also has certain leases of machinery with lease terms of 12-months or less and leases of office equipment with low
4.Software and other intangibles (cont.)
At reporting date, software includes $18.155 million (2020: $20.565 million) of work in progress of which $4.162 million is
held for sale. Work in progress is not amortised until it is ready for use.
(ii) Impairment testing of intangible assets
Allocation of Goodwill and the LIC Database to CGUs:
The LIC database and Other CGU goodwill recoverable amounts have been determined using value in use. The
recoverable amount of Farm automation goodwill has been determined using a fair value less costs of disposal method.
For the LIC database and Other Goodwill CGU a discounted cash flow model is used for impairment testing based on
expected results and capital expenditure from the current year forecast, Board approved budgets and a projection for
further periods using a terminal growth rate. A five year cash flow projection period is used. The terminal growth rate
used is 0-1.0% (2020: 0-1.0%) for the Database and Goodwill. The discount rate applied is reviewed and updated annually
for movements in published Treasury risk-free rates and is 7.2% for the Database and 7.2% for Goodwill (2020: 6.8% for the
Database and 6.8-10.2% for Goodwill).
5.Leases
(i) LIC as a lessee
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
9
4,144
-
-
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/219
Allocation of Goodwill and the LIC Database to CGUs:
20212020
In thousands of
New Zealand
Farm software
and herd testing
Farm
automationOther
Farm software
and herd testing
Farm
automationOther
dollarsCGUCGUCGUTotalCGUCGUCGUTotal
LIC database10,500--10,50010,500--10,500
Goodwill-4,1442,3306,474-4,1442,3566,500
Held for sale - note 14-(4,144)-(4,144)----
10,500-2,33012,83010,5004,1442,35617,000
The LIC database and Other CGU goodwill recoverable amounts have been determined using value in use. The
recoverable amount of Farm automation goodwill has been determined using a fair value less costs of disposal method.
For the LIC database and Other Goodwill CGU a discounted cash flow model is used for impairment testing based on
expected results and capital expenditure from the current year forecast, Board approved budgets and a projection
for further periods using a terminal growth rate. A five year cash flow projection period is used. The terminal growth
rate used is 0-1.0% (2020: 0-1.0%) for the Database and Goodwill. The discount rate applied is reviewed and updated
annually for movements in published Treasury risk-free rates and is 7.2% for the Database and 7.2% for Goodwill (2020:
6.8% for the Database and 6.8-10.2% for Goodwill).
5. Leases
(i) LIC as a lessee
The Group has lease contracts for buildings, equipment and vehicles used in its operations. The Group’s obligations
under its leases are secured by the lessor’s title to the leased assets. Several lease contracts include extension and
termination options. The Group’s discount or incremental borrowing rate applicable to leases is 4.4% (2020: 4.4%).
The Group also has certain leases of machinery with lease terms of 12-months or less and leases of office equipment
with low value. The Group applies the ‘short-term lease’ and ‘lease of low-value assets’ recognition exemptions for these
leases.
Notes to the Financial Statements
Buildings EquipmentVehiclesTotalBuildings EquipmentVehiclesTotal
Opening Balance9,3543655,21114,93010,3862504,91115,547
(1,271)(3,385)(1,295)
(153) (1,657)
(3,105)
414
(186) (1,928)
(187) 2,935
3,3492732681,9522,493
(77) (153)(10) 5(5)
(273) (1,155)---
7,5331855,86813,5869,3543655,21114,930
2-10 years2-5 years3-7 years2-10 years2-5 years3-7 years
Depreciation
Additions
Adjustments/
Derecognition
Held for sale - note 14
Closing balance
Lease terms
Lease liabilities
Buildings EquipmentVehiclesTotalBuildings EquipmentVehiclesTotal
9561011,9162,9731,2682021,6923,162
3,365463,9927,4034,2821703,4007,852
3,873- 4,0554,596- 4,896
8,1941476,09014,43110,1463725,39215,910
(iii) Lease balances in the Statement of Results for continued operations
Buildings EquipmentVehiclesTotalBuildings EquipmentVehiclesTotal
9211811,8012,9031,2951531,6573,105
350925461340412278694
- 75- 75
- 75- 75
1,2712652,0553,5911,6992401,9353,874
The Group had total cash outflows for leases of $4.230 million in 2021 ($4.075 million in 2020).
In thousands of New Zealand
dollars
2020
5.Leases (cont.)
(ii) Lease balances in the Statement of Position
Right of use assets
Set out below are the carrying amounts of right-of-use assets recognised (under Land, buildings and equipment) and
the movements during the period:
Set out below are the carrying amounts of lease liabilities recognised at 31 May 2021 (included in Other liabilities)
excluding lease liabilities held for sale:
2021
In thousands of New Zealand
dollars
Within 1 year
Between 1 to 5 years
More than 5 years
2021
In thousands of New Zealand
dollars
Depreciation
Interest expense
Short-term and low-value leases
Total amount
2021
2020
2020
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
10
-
182
- 300
-
(874)
(90)
14
(8)
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2110
20212020
In thousands of
New Zealand dollarsBuildingsEquipmentVehiclesTotalBuildingsEquipmentVehiclesTotal
Opening Balance9,3543655,21114,93010,3862504,91115,547
Depreciation(1,271)(186)(1,928)(3,385)(1,295)(153)(1,657)(3,105)
Additions 414-2,9353,3492732681,9522,493
Adjustments/Derecognition (90)14(77)(153)(10)-5(5)
Held for sale - note 14(874)(8)(273)(1,155)----
Closing balance7,5331855,86813,5869,3543655,21114,930
Lease terms2-10 years2-5 years3-7 years2-10 years2-5 years3-7 years
Lease liabilities
Set out below are the carrying amounts of lease liabilities recognised at 31 May 2021 (included in Other liabilities)
excluding lease liabilities held for sale:
20212020
In thousands of
New Zealand dollarsBuildingsEquipmentVehiclesTotalBuildingsEquipmentVehiclesTotal
Within 1 year9561011,9162,9731,2682021,6923,162
Between 1 to 5 years3,365463,9927,4034,2821703,4007,852
More than 5 years3,873-1824,0554,596- 3004,896
8,1941476,09014,43110,1463725,39215,910
(iii) Lease balances in the Statement of Results for continued operations
20212020
In thousands of
New Zealand dollarsBuildingsEquipmentVehiclesTotalBuildingsEquipmentVehiclesTotal
Depreciation9211811,8012,9031,2951531,6573,105
Interest expense350925461340412278694
Short-term and low-value leases-75-75-75-75
Total amount1,2712652,0553,5911,6992401,9353,874
The Group had total cash outflows for leases of $4.230 million in 2021 ($4.075 million in 2020).
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2111
(iii) Other reserves and equity
In thousands of New Zealand dollars
Hedge
revaluation
reserve
Investment
revaluation
reserve
Land & building
revaluation
reserve
Non-
controlling
interests
Other
reserves
Balance at 1 June 2020685,05835,58138341,090
Profit/(loss) for the year-----
Dividends paid---(326)(326)
Revaluations(134)(195)1,443-1,114
Acquisition of minority interest in subsidiary---(57)(57)
Balance at 31 May 2021(66)4,86337,024-41,821
Balance at 1 June 2019978,47334,42124943,240
Profit/(loss) for the year---206206
Dividends paid---(72)(72)
Revaluations (29)(3,415)1,160-(2,284)
Balance at 31 May 2020685,05835,58138341,090
(iv) Bank debt
Bank loans are secured by a Negative Pledge granted to Westpac and Rabobank over certain New
Zealand-based subsidiaries.
Notes to the Financial Statements
6. Funding
The Group’s funding comes from Share capital, retained earnings, other reserves and borrowings.
(i) Ordinary
Shares In July 2018 LIC’s share structure was simplified and its two classes of shares, Investment Shares and Co-
operative Control Shares, were brought together into a single class of Ordinary Shares. All Ordinary Shares have voting
rights and the right to receive dividends based on the profits of the Company.
Following approval by the Shareholders of the share simplification described above, a small number of Shareholders
elected to exercise their minority buy-out rights arising from the proposal under the Companies Act 1993. As a result, LIC
agreed to purchase the 1.3 million Investment Shares held by the Shareholders concerned, to be held as treasury stock.
During the current year LIC has been required to pay an additional $1.7 million to acquire these Investment Shares and
as a consequence Share Capital has decreased to $76.7 million (2019: $78.4 million).
At reporting date there were 142,344,836 Ordinary Shares on issue, excluding 5,337,584 shares held as treasury stock
(2020: 142,344,836 Ordinary Shares, excluding 5,337,584 shares held as treasury stock).
(ii) Nil Paid Shares
Ordinary Shares includes both fully paid shares and shares on which full payment has not yet been made. These Nil
Paid Shares must be paid up over time by Shareholders via a combination of dividend payments forgone, voluntary
payments and payments made on exit as a Shareholder. At year-end the outstanding amount on Nil Paid Shares has
been recorded in the Statement of Position as a receivable, valued at $13.491 million (2020: $15.727 million) using a
discounted cash flow model. The model uses assumptions on expected future dividends, voluntary and compulsory
payments and applies a discount rate of 4.5% (2020: 4.5%).
Notes to the Financial Statements
6 months
to 1 year
1 year
plusTotal
6 months
to 1 year
1 year
plus
Total
----1,616--1,616
In thousands of New
Zealand dollars
Borrowings
Creditors24,541--24,54122,363--22,363
24,541-- 24,54123,979-- 23,979
20212020
11,03813,599
13,32913,516
-61
(ii) Other assets
In thousands of New Zealand dollars
Inventories
Investments
Derivatives used for hedging
Other livestock
675693
25,04227,869
Inventories utilised and expensed during the period amounted to $30.053 million (2020: $22.857 million), of which
$7.126 million (2020: $3.925 million) related to discontinued operations. Inventories written off in 2021 totalled
$0.478 million (2020: $0.259 million).
7.Liquidity and interest rate risk
(i) Liquidity risk
Liquidity risk is the risk of having insufficient liquid assets to pay the Group's debts as they fall due. The Group
manages the risk by monitoring forecast cash flows and holding sufficient bank facilities to meet the Group's
needs. The contractual maturity of the Group's funding is shown below.
20212020
Demand to
6 months
Demand to
6 months
The Group has bank funding facilities in place until February 2023 and expects to be able to meet any obligations
which fall due.
(ii) Interest rate risk
Interest rate risk is the risk that changes in interest rates will impact the Group's results or position. The weighted
average effective interest rate paid on borrowings in 2021 was 3.8% (2020: 3.2%). A 1% increase in interest rates would
reduce profit after tax by approximately $0.087 million (2020: $0.126 million).
8. Debtors and other assets
(i) Debtors
Bad debts of $0.070 million have been expensed during the year (2020: $0.038 million), and 90% of trade receivables
are not past due (2020: 92%).
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
12
Notes to the Financial Statements
6 months
to 1 year
1 year
plusTotal
6 months
to 1 year
1 year
plus
Total
----1,616--1,616
In thousands of New
Zealand dollars
Borrowings
Creditors24,541--24,54122,363--22,363
24,541-- 24,54123,979-- 23,979
20212020
11,03813,599
13,32913,516
-61
(ii) Other assets
In thousands of New Zealand dollars
Inventories
Investments
Derivatives used for hedging
Other livestock
675693
25,04227,869
Inventories utilised and expensed during the period amounted to $30.053 million (2020: $22.857 million), of which
$7.126 million (2020: $3.925 million) related to discontinued operations. Inventories written off in 2021 totalled
$0.478 million (2020: $0.259 million).
7.Liquidity and interest rate risk
(i) Liquidity risk
Liquidity risk is the risk of having insufficient liquid assets to pay the Group's debts as they fall due. The Group
manages the risk by monitoring forecast cash flows and holding sufficient bank facilities to meet the Group's
needs. The contractual maturity of the Group's funding is shown below.
20212020
Demand to
6 months
Demand to
6 months
The Group has bank funding facilities in place until February 2023 and expects to be able to meet any obligations
which fall due.
(ii) Interest rate risk
Interest rate risk is the risk that changes in interest rates will impact the Group's results or position. The weighted
average effective interest rate paid on borrowings in 2021 was 3.8% (2020: 3.2%). A 1% increase in interest rates would
reduce profit after tax by approximately $0.087 million (2020: $0.126 million).
8. Debtors and other assets
(i) Debtors
Bad debts of $0.070 million have been expensed during the year (2020: $0.038 million), and 90% of trade receivables
are not past due (2020: 92%).
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
12
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2112
20212020
In thousands of New
Zealand dollars
Demand to
6 months
6 months
to 1 year
1 year
plusTotal
Demand to
6 months
6 months
to 1 year
1 year
plusTotal
Borrowings ----1,616--1,616
Creditors24,541--24,54122,363--22,363
24,541--24,54123,979--23,979
(ii) Other assets
20212020
In thousands of New Zealand dollars
Inventories 11,03813,599
Investments13,32913,516
Derivatives used for hedging-61
Other livestock675693
25,04227,869
Inventories utilised and expensed during the period amounted to $30.053 million (2020: $22.857 million), of which
$7.126 million (2020: $3.925 million) related to discontinued operations. Inventories written off in 2021 totalled
$0.478 million (2020: $0.259 million).
Notes to the Financial Statements
20212020
23,61321,055
7,3973,465
31,01024,520
8,6836,866
31(11)
(1,582)44
265(410)
-(3,024)
7,3973,465
9,98710,211
(2,590)(6,746)
In thousands of New Zealand dollars
Profit/(loss) for the year from continuing operations
Tax expense
Profit/(loss) before tax expense from continuing operations
Tax at 28% NZ company tax rate
Effect of overseas income
Non-deductible items
Adjustments from prior periods
Impact of changes to building depreciation
Tax expense
Current tax expense
Deferred tax expense
Imputation credits available
27,18121,244
As at 31
May 2021
Through
Profit/(loss)
Through
Other
reserves
As at 31
May 2020
Through
Profit/(loss)
Through Other
reserves
As at 31
May 2019
31,784(199) -31,983(1,983)
151(2,391)(18) 2,560(4,763)451
- 33,966
6,872
31,935(2,590)(18) 34,543(6,746)45140,838
Other expenses includes the following amounts paid to the Group's auditors, KPMG:
20212020
187147
2939
2049
In thousands of New Zealand dollars
Audit of the financial statements - current year
Audit of the financial statements - prior year
Research & development tax incentive services
Other assurance work
-6
420201
9. Tax
Tax expense is recognised for items arising this year that are either taxable this year (current tax) or in other years
(deferred tax). The main items giving rise to deferred tax are revaluations of the Bull team and Buildings.
(i) Tax expense
In thousands of New Zealand
dollars
Livestock
Buildings & other
Total
10.Other expenses
KPMG provided compliance services in 2021 relating to the R&D Tax Incentive.
LIC is in the process of transitioning to the R&D Tax Incentive from the Callaghan Growth Grant and has made an
initial claim for the year ended 31 May 2020. The R&D Tax Incentive claim includes both core R&D expenditure, as
well as other expenses that support R&D. The R&D Tax Incentive is recorded as non-taxable revenue.
(ii) Deferred tax liability
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
13
Notes to the Financial Statements
20212020
23,61321,055
7,3973,465
31,01024,520
8,6836,866
31(11)
(1,582)44
265(410)
-(3,024)
7,3973,465
9,98710,211
(2,590)(6,746)
In thousands of New Zealand dollars
Profit/(loss) for the year from continuing operations
Tax expense
Profit/(loss) before tax expense from continuing operations
Tax at 28% NZ company tax rate
Effect of overseas income
Non-deductible items
Adjustments from prior periods
Impact of changes to building depreciation
Tax expense
Current tax expense
Deferred tax expense
Imputation credits available
27,18121,244
As at 31
May 2021
Through
Profit/(loss)
Through
Other
reserves
As at 31
May 2020
Through
Profit/(loss)
Through Other
reserves
As at 31
May 2019
31,784(199) -31,983(1,983)
151(2,391)(18) 2,560(4,763)451
- 33,966
6,872
31,935(2,590)(18) 34,543(6,746)45140,838
Other expenses includes the following amounts paid to the Group's auditors, KPMG:
20212020
187147
2939
2049
In thousands of New Zealand dollars
Audit of the financial statements - current year
Audit of the financial statements - prior year
Research & development tax incentive services
Other assurance work
-6
420201
9. Tax
Tax expense is recognised for items arising this year that are either taxable this year (current tax) or in other years
(deferred tax). The main items giving rise to deferred tax are revaluations of the Bull team and Buildings.
(i) Tax expense
In thousands of New Zealand
dollars
Livestock
Buildings & other
Total
10.Other expenses
KPMG provided compliance services in 2021 relating to the R&D Tax Incentive.
LIC is in the process of transitioning to the R&D Tax Incentive from the Callaghan Growth Grant and has made an
initial claim for the year ended 31 May 2020. The R&D Tax Incentive claim includes both core R&D expenditure, as
well as other expenses that support R&D. The R&D Tax Incentive is recorded as non-taxable revenue.
(ii) Deferred tax liability
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
13
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2113
(i) Tax expense
In thousands of New Zealand dollars
20212020
Profit/(loss) for the year from continuing operations23,61321,055
Tax expense7,3973,465
Profit/(loss) before tax expense from continuing operations31,01024,520
Tax at 28% NZ company tax rate8,6836,866
Effect of overseas income31(11)
Non-deductible items(1,582)44
Adjustments from prior periods265(410)
Impact of changes to building depreciation-(3,024)
Tax expense7,3973,465
Current tax expense9,98710,211
Deferred tax expense(2,590)(6,746)
Imputation credits available27,18121,244
(ii) Deferred tax liability
In thousands of New Zealand
dollars
As at 31
May 2021
Through
Profit/(loss)
Through
Other
reserves
As at 31
May 2020
Through
Profit/(loss)
Through Other
reserves
As at 31
May 2019
Livestock31,784(199)-31,983(1,983)-33,966
Buildings & other151(2,391)(18)2,560(4,763)4516,872
Total31,935(2,590)(18)34,543(6,746)45140,838
10. Other expenses
Other expenses includes the following amounts paid to the Group’s auditors, KPMG:
In thousands of New Zealand dollars
20212020
Audit of the financial statements - current year187147
Audit of the financial statements - prior year2939
Research & development tax incentive services2049
Other assurance work-6
420201
KPMG provided compliance services in 2021 relating to the R&D Tax Incentive.
Notes to the Financial Statements
20212020
7,8995,597
2,6702,582
3,2146,964
14,43115,910
11. Other liabilities
In thousands of New Zealand dollars
Provisions for employee entitlements
Provision for sire proving rebate
Provision for tax
Lease liabilities
Other
536123
28,75031,176
20212020
4,5734,507
In thousands of New Zealand dollars
Remuneration of key Management and Directors
Sale of goods and services to key Management and Directors
598620
Purchases of goods and services from key Management and Directors213108
20212020
22,94417,487
In thousands of New Zealand dollars
Profit/(loss) for the year
Adjusted for:
22,16427,707
7187,220
Depreciation and amortisation on owned assets
Bull team revaluation
Lease liability principal repayment
(classified as financing activity)
(3,460)(2,964)
(1,910)2,568
Working capital movements and other non-cash items
Net operating cash flows
40,45652,018
12.Transactions with Related Parties - Directors and Management
The Group has had the following short-term transactions with key Management and Directors during the year, noting
sale of goods and services were under normal trade terms:
Directors of the Company and their related entities hold 285,426 Ordinary Shares, representing 0.19% of shares on
issue (2020: 307,952 Ordinary Shares, representing 0.21%).
There are no loans or deposits with related entities outside of the consolidated Group.
13.Reconciliation of the Profit/(loss) for the year to Net operating cash flows
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
14
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2114
11. Other liabilities
In thousands of New Zealand dollars
20212020
Provisions for employee entitlements7,8995,597
Provision for sire proving rebate2,6702,582
Provision for tax3,2146,964
Lease liabilities14,43115,910
Other536123
28,75031,176
12. Transactions with Related Parties - Directors and Management
The Group has had the following short-term transactions with key Management and Directors during the year,
noting sale of goods and services were under normal trade terms:
In thousands of New Zealand dollars
20212020
Remuneration of key Management and Directors4,5734,507
Sale of goods and services to key Management and Directors598620
Purchases of goods and services from key Management and Directors213108
Directors of the Company and their related entities hold 285,426 Ordinary Shares, representing 0.19% of shares
on issue (2020: 307,952 Ordinary Shares, representing 0.21%).
There are no loans or deposits with related entities outside of the consolidated Group.
13. Reconciliation of the Profit/(loss) for the year to Net operating cash flows
In thousands of New Zealand dollars
20212020
Profit/(loss) for the year22,94417,487
Adjusted for:
Depreciation and amortisation on owned assets22,16427,707
Bull team revaluation7187,220
Lease liability principal repayment (classified as financing activity)(3,460)(2,964)
Working capital movements and other non-cash items(1,910)2,568
Net operating cash flows40,45652,018
Notes to the Financial Statements
20212020
17,39913,048
(6,693)(4,591)
(4,453)(5,452)
(3,551)(3,946)
(716)(1,163)
(3,014)(2,765)
In thousands of New Zealand dollars
Revenue
Purchased materials
People costs
Depreciation and amortisation
Research and development
Other expenses
Net finance costs99(87)
(929)(4,956)Profit/(loss) before tax expense from discontinued operations
Tax expense2601,388
Profit/(loss) for the year from discontinued operations(669)(3,568)
$ (0.03)
2021
8,973
3,242
1,543
In thousands of New Zealand dollars
Assets
Debtors
Other assets
Land, buildings and equipment - owned & leased
Software, goodwill and other intangible assets12,713
Total assets held for sale26,471
1,289
Liabilities
Creditors
Other liabilities
1,367
Total liabilities held for sale2,656
Net assets23,815
20212020
1,094459
(708)(2,824)
150(125)
Movement in cash for the year536(2,490)
14.Discontinued operations
On 8 June 2021 LIC announced it had entered into an agreement to divest its automation business for $38.1 million,
subject to customary requirements. The transaction was completed on 11 June 2021.
Accordingly the Farm automation segment has been reclassified as a discontinued operation and is no longer presented
in the business analysis note. The results for discontinued operations are presented below:
Profit from discontinued operations per Ordinary Share (excl. treasury stock) $
The major classes of assets and liabilities classified as held for sale at 31 May are as follows:
The net cash flows arising from discontinued operations are presented below:
In thousands of New Zealand dollars
Operating
Investing
Financing
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/21
15
-
In thousands of New Zealand dollars
20212020
Revenue17,39913,048
Purchased materials(6,693)(4,591)
People costs(4,453)(5,452)
Depreciation and amortisation(3,551)(3,946)
Research and development(716)(1,163)
Other expenses(3,014)(2,765)
Net finance costs99(87)
Profit/(loss) before tax expense from discontinued operations(929)(4,956)
Tax expense2601,388
Profit/(loss) for the year from discontinued operations(669)(3,568)
Profit from discontinued operations per Ordinary Share (excl. treasury stock)
$ -$ (0.03)
The major classes of assets and liabilities classified as held for sale at 31 May are as follows:
In thousands of New Zealand dollars
2021
Assets
Debtors8,973
Other assets3,242
Land, buildings and equipment - owned & leased1,543
Software, goodwill and other intangible assets12,713
Total assets held for sale26,471
Liabilities
Creditors1,289
Other liabilities1,367
Total liabilities held for sale2,656
Net assets23,815
The net cash flows arising from discontinued operations are presented below:
In thousands of New Zealand dollars
20212020
Operating1,094459
Investing(708)(2,824)
Financing150(125)
Movement in cash for the year536(2,490)
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2115
Notes to the Financial Statements
15. Subsequent events
After 31 May 2021 a dividend of 12.51 cents per Ordinary Share was proposed by the Directors in relation to the 2021 year,
or $17.8 million (2020: 12.75 cents per Ordinary Share, or $18.1 million).
The agreement to divest LIC's automation business was settled on 11 June 2021 - please refer to note 14 for details.
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/ 21
16
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2116
17
Independent Auditor’s Report
To the shareholders of Livestock Improvement Corporation Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Livestock Improvement
Corporation Limited (the ’company’) and its
subsidiaries (the 'group') on pages 2 to 16:
i. present fairly in all material respects the Group’s
financial position as at 31 May 2021 and its
financial performance and cash flows for the
year ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of position as at 31
May 2021;
— the consolidated statements of results, changes
in position and cash flows for the year then
ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 International Code of
Ethics for Assurance Practitioners (Including International Independence Standards) (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the group comprising compliances services relating to the research
and development tax incentive scheme. Subject to certain restrictions, partners and employees of our firm may
also deal with the group on normal terms within the ordinary course of trading activities of the business of the
group. These matters have not impaired our independence as auditor of the group. The firm has no other
relationship with, or interest in, the group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality for the consolidated financial
statements as a whole was set at $1.2m determined with reference to a benchmark of profit/(loss) for the year
before tax (excluding bull team revaluation movements).
17
Independent Auditor’s Report
To the shareholders of Livestock Improvement Corporation Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Livestock Improvement
Corporation Limited (the ’company’) and its
subsidiaries (the 'group') on pages 2 to 16:
i. present fairly in all material respects the Group’s
financial position as at 31 May 2021 and its
financial performance and cash flows for the
year ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of position as at 31
May 2021;
— the consolidated statements of results, changes
in position and cash flows for the year then
ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 International Code of
Ethics for Assurance Practitioners (Including International Independence Standards) (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the group comprising compliances services relating to the research
and development tax incentive scheme. Subject to certain restrictions, partners and employees of our firm may
also deal with the group on normal terms within the ordinary course of trading activities of the business of the
group. These matters have not impaired our independence as auditor of the group. The firm has no other
relationship with, or interest in, the group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality for the consolidated financial
statements as a whole was set at $1.2m determined with reference to a benchmark of profit/(loss) for the year
before tax (excluding bull team revaluation movements).
17
Independent Auditor’s Report
To the shareholders of Livestock Improvement Corporation Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Livestock Improvement
Corporation Limited (the ’company’) and its
subsidiaries (the 'group') on pages 2 to 16:
i. present fairly in all material respects the Group’s
financial position as at 31 May 2021 and its
financial performance and cash flows for the
year ended on that date; and
ii. comply with New Zealand Equivalents to
International Financial Reporting Standards and
International Financial Reporting Standards.
We have audited the accompanying consolidated
financial statements which comprise:
— the consolidated statement of position as at 31
May 2021;
— the consolidated statements of results, changes
in position and cash flows for the year then
ended; and
— notes, including a summary of significant
accounting policies and other explanatory
information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (New Zealand) (‘ISAs (NZ)’). We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We are independent of the group in accordance with Professional and Ethical Standard 1 International Code of
Ethics for Assurance Practitioners (Including International Independence Standards) (New Zealand) issued by the
New Zealand Auditing and Assurance Standards Board and the International Ethics Standards Board for
Accountants’ International Code of Ethics for Professional Accountants (including International Independence
Standards) (‘IESBA Code’), and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the IESBA Code.
Our responsibilities under ISAs (NZ) are further described in the auditor’s responsibilities for the audit of the
consolidated financial statements section of our report.
Our firm has also provided other services to the group comprising compliances services relating to the research
and development tax incentive scheme. Subject to certain restrictions, partners and employees of our firm may
also deal with the group on normal terms within the ordinary course of trading activities of the business of the
group. These matters have not impaired our independence as auditor of the group. The firm has no other
relationship with, or interest in, the group.
Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine the
nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the consolidated financial statements as a whole. The materiality for the consolidated financial
statements as a whole was set at $1.2m determined with reference to a benchmark of profit/(loss) for the year
before tax (excluding bull team revaluation movements).
17
18
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the consolidated financial statements in the current period. We summarise below those matters and our key audit
procedures to address those matters in order that the shareholders as a body may better understand the process
by which we arrived at our audit opinion. Our procedures were undertaken in the context of and solely for the
purpose of our statutory audit opinion on the consolidated financial statements as a whole and we do not express
discrete opinions on separate elements of the consolidated financial statements
The key audit matter How the matter was addressed in our audit
Valuation of the Bull Team
Refer to Note 2 to the Financial Statements
Determining the valuation of the bull team,
which is the core asset to both the domestic
and international genetics operations of the
Group, is a highly judgemental and complex
area. Management prepare a model that
projects the number of straws that the current
team can produce and will be sold over the life
of the bulls. The valuation model factors the
cost of rearing, animal and farm management
costs, and forecasts of processing costs to
make sales. The calculated surplus is
discounted to reflect the time value of money.
Our audit procedures included, among others, valuation
specialist review of the model and challenge of management’s
significant assumptions such as:
• Projected sales volumes and pricing;
• Discount rates applied; and
• Runoff Profile of the bulls.
We compared sales and costs growth, and inflation rates to
historical data and published market forecast data where
available. We reviewed market and industry data to assess
management’s discount rate applied to the financial model. We
assessed the runoff profile of the bulls against historical data.
We found the inputs to be comparable.
We also considered management’s forecasts in previous years
and found it to be sufficiently accurate based on actual results
achieved.
Carrying Value of Intangible Assets
Refer to Note 4 to the Financial Statements.
The Group has two categories of intangible
assets with indefinite useful lives:
• Goodwill of $6.5m, arising primarily from
acquisitions made to facilitate growth and
diversification of the Group’s farm
automation products; and
• The LIC Animal Database of $10.5m
which is used by the Group to deliver its
Herd Testing and Farm Software services.
Two of the three significant cash generating
units (CGUs) holding these assets are tested
annually for impairment using discounted
cashflow models to determine the recoverable
amount. The third significant cash generating
unit was tested for impairment by determining
the fair value less costs of disposal.
The annual impairment tests performed by the
Group were significant to our audit due to the
We challenged management on the reasonableness of the
assumptions included in the cashflow forecast models, with
particular attention paid to the following:
• Assessing management’s future sales and growth
assumptions compared to external market and industry
data and historical performance of each of the CGU’s. We
used our own valuation specialists to assist us with the
consideration of the discount rates;
• Comparing management’s previous forecasts to actual
results achieved in each CGU; and
• Performing sensitivity analysis around the key assumptions
used in the model.
We compared the fair value less costs of disposal amount for
the third cash generating unit to the supporting sale agreement.
We also challenged management on whether the market
capitalisation of the Group is an indicator of impairment and
subsequently used our own valuation specialists to challenge
18
19
The key audit matter How the matter was addressed in our audit
magnitude of the intangible assets and
because the discounted cashflow models
involve judgement about the future
performance of the CGU’s, including
considering future economic and market
conditions.
management’s assessment of appropriate maintainable
earnings and earnings multiple applied in their impairment test.
Our testing supported management’s conclusion that there is
no impairment.
Other information
The Directors, on behalf of the group, are responsible for the other information included in the entity’s Annual
Report. Other information includes the Directors Report and the Governance Report. Our opinion on the
consolidated financial statements does not cover any other information and we do not express any form of
assurance conclusion thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears materially
misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Use of this independent auditor’s report
This independent auditor’s report is made solely to the shareholders as a body. Our audit work has been
undertaken so that we might state to the shareholders those matters we are required to state to them in the
independent auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the shareholders as a body for our audit work, this independent
auditor’s report, or any of the opinions we have formed.
Responsibilities of the Directors for the consolidated financial
statements
The Directors, on behalf of the company, are responsible for:
— the preparation and fair presentation of the consolidated financial statements in accordance with generally
accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards) and International Financial Reporting Standards;
— implementing necessary internal control to enable the preparation of a consolidated set of financial statements
that is fairly presented and free from material misstatement, whether due to fraud or error; and
— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless they either intend to liquidate or to
cease operations, or have no realistic alternative but to do so.
19
20
Auditor’s responsibilities for the audit of the consolidated financial
statements
Our objective is:
— to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from
material misstatement, whether due to fraud or error; and
— to issue an independent auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs NZ will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these
consolidated financial statements.
A further description of our responsibilities for the audit of these consolidated financial statements is located at
the External Reporting Board (XRB) website at:
http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/
This description forms part of our independent auditor’s report.
The engagement partner on the audit resulting in this independent auditor's report is Trevor Newland.
For and on behalf of
Hamilton
21 July 2021
20
21
Directors’ R eport 2020-21
Farmers investing in high value genetics to help meet sector’s climate goals
The LIC Board announces the co-op’s financial results for the year ended 31 May 2021, reporting
increased revenue, profit and a strong balance sheet with no debt at year end.
The farmer-owned co-operative will return $17.8 million in dividend to shareholders, which equates to
12.51 cents per share. The fully imputed dividend represents a significant gross yield based on the
current share price. The dividend will be distributed on 20 August.
The LIC Board is proud to present another strong result to our farmer shareholders for the fourth
consecutive year. This result is in line with our market guidance and a credit to our shareholders for
their support of significant initiatives in the last five years to transform LIC into a modern, progressive
co-op. These initiatives have delivered the benefits we said they would, including focussed investment
in the business and a better return for our farmers.
We have seen good growth across core business areas this year but particularly in our premium
genetics range where young genomically-selected bulls are used to fast track genetic gain and
deliver more value on-farm through increased productivity and efficiency, including improved
environmental efficiency.
That value combined with a solid dividend makes this result a win-win for our farmers. It also means
we can continue our work to invest in products, services and technology that drive long term and
sustainable customer value.
LIC’s premium genetics range accounted for almost half of the co-op’s total artificial breeding (AB)
inseminations (41.3% or 1.79 of 4.3 million semen straws), more than double three years ago. This is
predominantly from the Forward Pack and A2/A2 teams with young genomic bulls (1.6 million
straws).
The range also includes sexed semen which experienced significant growth with triple the number of
straws sold on the previous year (110,125 compared with 33,804).
This growth will have a significant impact on-farm this spring and deliver a huge amount of value to
our farmers, with more high quality heifer replacements and fewer bobby calves. We are expecting
this to be even greater next year with sexed semen orders likely to almost double again.
Meanwhile, the number of daughter proven bulls used for AB continued to decline, now down 40% (1.2
million straws in 20-21 vs 2.02
million three years ago), reflecting farmers’ growing confidence
in LIC’s proprietary genomic work and a willingness to adopt new tools and solutions to help
them meet sustainability goals.
LIC exists to deliver superior genetics and technological innovation to help our shareholders
sustainably farm a profitable animal. We have a fundamental role in helping New Zealand’s
dairy farmers reduce their environmental footprint and we are committed to providing solutions
to help them meet climate targets.
We have invested heavily into genomics for our farmers, because the DNA of our dairy herd can do a
lot of the heavy lifting to help meet our sectors’ climate goals.
World leading pastoral dairy genetics and genomics are a much more precise tool for farmers than
the blunt instrument of reduced cow numbers. Farmers are adopting these tools now to get ahead
of the curve.
The co-op is continuing its work with NZAEL (subsidiary of DairyNZ) to include genomics in future
animal evaluations to support the national breeding objective.
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2121
22
Directors’ R eport 2020-21
In other core business activity, herd testing was up 7.3% and animal health testing up 23.9% primarily
for Johnes disease and milk pregnancy testing. International exports were also up 23% by value after
some initial challenges getting product to market due to COVID-19.
The co-op invested $17.1 million in R&D, up 15.4% from the previous year (or up 11.5% including
automation), reaffirming its position as one of the biggest investors for the primary sector. LIC also
spent $3.0 million to improve its MINDA LIVE herd management system, with 66 new features added
based on farmer feedback.
During 2020-21 LIC also refined its business strategy to put value for farmer shareholders at its heart.
We have listened to our shareholders. They want us to focus on doing what we are good at and play
to our strengths in pastoral dairy genetics and herd improvement. Our strategy is focussed on
ensuring our farmers optimise value from their livestock, and this result means we are strongly
positioned to deliver on that.
During the year, the co-op negotiated the divestment of its automation business to MSD Animal
Health, a division of Merck & Co., Inc., Kenilworth, N.J., USA (NYSE:MRK) for NZ$38.1 million (NZX, 8
June 2021). The sale was completed on 11 June 2021. Net assets of $23.8 million have been recorded
as held for sale on the balance sheet. The Board is considering options for the use of these funds.
Outlook
Recruitment of a new chief executive is a priority for the Board over the coming months, following
Wayne McNee’s decision to step down at the end of November 2021 (NZX, 14 June 2021).
The co-op will also be firmly guided by its primary focus of delivering value for farmer shareholders
and three commitments in its refined strategy, with operational excellence, faster genetic
improvement and software reliability and performance.
LIC expects underlying earnings in 2021-22 to be in the range of $19-25 million, excluding the gain on
divestment of the automation business and assuming no significant climate event or milk price
change takes place between now and then, nor any major impacts from M. bovis or COVID-19.
We thank you for all your support over the last 12-months and look forward to the year ahead.
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2122
23
Corporate Governance Report
Corporate Governance Statement
Livestock Improvement Corporation (“LIC” or the “Company”) is a New Zealand Co-operative
Company, owned by NZ dairy farmers. Its shares are quoted on the New Zealand Stock Exchange
(NZX). In this section of the 2021 Annual Report, we report against the Principles and
Recommendations of the NZX Corporate Governance Code (t he NZX Code) and the extent that LIC
has followed the NZX Code’s recommendations. This statement is current to 31 May 2021, and has
been approved by the Directors of LIC.
LIC is primarily involved in the development, production and marketing of artificial breeding, genetics,
farm software, and herd testing services in the New Zealand dairy industry, the control and
maintenance of the LIC database and the execution of research relating to dairy herd improvement.
On LIC's website (https://www.lic.co.nz/shareholders/corporategovernance/) you will find the
following corporate governance documents:
§Constitution
§Code of Conduct and Ethics
§LIC Board Charter
§Audit, Finance & Risk Committee Charter
§Remuneration and Appointment Committee Charter
§Disclosure Committee Charter
§External Audit Independence Policy
§Share Trading and Disclosure Policy
§Continuous Disclosure Policy
§Diversity and Inclusion Policy
§Dividend Policy
Co-operative Principles
LIC’s co-operative principles are set out in its Constitution and are:
a)The Company will remain a Co-operative Company;
b)The Company is controlled by Users of the Company’s qualifying products and services;
c)Core products and services are made available to all Shareholders at fair commercial prices;
d)Products and services which benefit Shareholders and which otherwise might not be m
ade
available, are developed and made available to Shareholders, provided that the company
receives a commercial return; and
e)Shareholders co-operate with the Company and each other, including the sharing of
information to promote their common interests
.
NZX Code Principle 1, Code of Ethical Behaviour: Directors should set high standards of
ethical behaviour, model this behaviour and hold management accountable for these
standards being followed throughout the organisation.
Code of Conduct and Ethics
LIC's Code of Conduct and Ethics sets out the ethical and behaviour standards expected of Directors
and employees of LIC. The Policy is reviewed biennially (or as required) to keep it up to date with
employee, shareholder and other stakeholder expectations. Directors and employees are also
expected to uphold LIC's values of integrity, innovation, being in-tune with our farmers, passion and
spirit of cooperation.
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2123
24
Corporate Governance Report
Whistleblowing
The Code of Conduct and Ethics and the Company's Employment Relations Policy, which are available
to employees on LIC's intranet, include guidance on specific action to be taken by a person who
suspects a serious wrongdoing.
Avoiding conflicts of interest
The Code of Conduct and Ethics includes direction on disclosing and managing conflicts of interest.
The Board updates changes in interests and any potential conflicts at each meeting. The Company
Secretary holds a Directors' interests register and the Board reviews the register at each meeting.
The register records relevant transactions and disclosures of interests. The Directors’ interests are
set out on page 40.
Trading in securities
The Company has a Share Trading and Disclosure Policy for Directors, members of the Company’s
Shareholder Reference Group (SRG), Restricted Persons and other Employees wanting to deal in the
securities of the Company.
The Policy outlines:
§when Directors, members of the SRG, Restricted Persons and other Employees of the
Company may deal in the shares of the Company;
§procedures to reduce the risk of insider trading; and
§disclosure requirements.
The Policy records the Company's procedures for compliance with the Financial Markets Conduct Act
2013 (FMC Act), the NZX Listing Rules and other relevant legislation/regulation for the trading and
disclosure of trading in the shares of the Company and details the exemption granted by the Financial
Markets Authority from certain provisions of the FMC Act. The exemption permits LIC’s constitutional
and co-operative requirements and the Rules of its Employee Share Scheme to operate alongside the
insider trading provisions of the FMC Act.
The Policy aims to protect Directors, members of the SRG, Restricted Persons and Employees, as well
as the Company and the Company's Shareholders, against acts of insider trading that could
disadvantage holders of the Company's shares.
An Elected Director must hold the minimum shareholding requirement and can hold additional shares
in accordance with the Company’s Constitution.
NZX Code Principle 2, Board composition and performance: To ensure an effective
board, there should be a balance of independence, skills, knowledge, experience and
perspectives.
Role of the Board
Legislation, the NZX Listing Rules and the Constitution establish the Board's responsibility and include
provisions for how the Company will operate. The structure of the Board and its governance
arrangements are set out in the Company's Constitution and in the Board's written Charter which
outlines the Board and Management's roles and responsibilities. The Board is responsible for the
direction and control of LIC's activities. It is also committed to the guiding values of the Company.
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2124
2!
Corporate Governance Report
Board responsibilities
The Board is responsible for setting the strategy of LIC and monitoring delivery against that strategy,
recognising the Company’s economic, environmental and social responsibilities.
In 2021 the Board refined LIC’s business strategy and purpose – to deliver superior genetics and
technological innovation to help shareholders sustainably farm a profitable animal. Value for our
farmer shareholders is at the heart of our strategy.
LIC will drive value, innovate and deliver a positive impact for customers and shareholders by
focussing on helping farmers optimise value from their livestock by enabling them to produce the most
sustainable and efficient animals and the highest value product.
The refined strategy makes three commitments to farmers:
1.Operational Excellence. LIC commits to getting the basics right and delivering for farmers, on
time, every time.
2.Faster Genetic Improvement. LIC commits to having farmers’ backs when it comes to helpi
ng
them meet the environmental challenges they face, in particular animal efficiency, and
nitrogen and methane mitigation.
3.Software Reliability and Performance. LIC commits to being better at delivering its software
to farmers. LIC renews its commitment to continuous improvement and transparency around
delivery of new features.
Full details of the strategy are available on LIC’s website at https://www.lic.co.nz/about/our-
strategy/”
The Board is also responsible for approval of significant expenditures, policy determination, selection
of Appointed Directors, and stewardship of the Company's assets. Management is responsible for
implementing the strategic objectives, operating within the risk appetite set by the Board, and for all
other day-to-day running of the Company. The Board delegates the day-to-day leadership and
management of the Company to the Chief Executive (CE). The delegations are set out in the Board
Charter and in a Delegated Authorities framework, which also sets out authority levels for types of
commitments that the Company's management can make. A copy of the Board Charter is available
on LIC's website.
Notwithstanding the responsibilities of the Board, the Board and Shareholders will not, except with
the written consent of the Minister for Primary Industries, or other relevant Minister, exercise any of
their rights, directions and powers under, or alter the Constitution so as to cause or permit the
Company to cease to be a Co-operative supplying goods and services to Shareholders.
Boar
d composition
Following approval by Shareholders at the 2020 Annual Meeting of changes to LIC’s governance and
representation structure, the Board is comprised of six Elected Directors and three Appointed
Directors, although the changes to the governance of LIC now allows for up to four Appointed
Directors to be appointed to the Board.
Elected Directors are elected by Shareholders within the region each Director represents (two regions
in total) and hold office for a period of approximately three years. The term will coincide with the
Rotation Schedule upon completion of a transition period. All recommendations and deliberations
on the selection of Appointed Directors are undertaken by the full Board. Appointed Directors hold
office for approximately three years.
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A retiring Director is eligible for re-election or re-appointment as a Director of the Company. All
Appointed Directors have entered into written agreements setting out the terms of their engagement
and all newly Elected Directors will also do so.
In relation to the nomination and appointment of Directors, appropriate checks are undertaken. This
includes the provision of key information about candidates to Shareholders and/or the Board, such
as relevant skills, experience and directorships and any material adverse information of which the
Company has become aware.
Information about each Director, including their independence, ownership interests and attendance
at board meetings is included in this section. A profile of each Director's experience, including the
length of their service, is included on the LIC website.
The current Board of Directors is made up as follows:
•Elected Directors are Murray King (Chair), Gray Baldwin, Ben Dickie, Ken Hames, Matt Ross
and Alison Watters. Former Elected Director David Jensen retired from the Board on 14
October 2020 following shareholder approval of the changes to LIC’s governance
arrangements.
•Appointed Directors are Tim Gibson, Sophie Haslem and Candace Kinser.
Sophie Haslem was due to retire by rotation in October 2020 and sought re-appointment. Sophie’s
appointment as an Appointed Director was ratified by shareholders at the 2020 Annual Meeting for
a further term of approximately three years.
Current South Island Elected Directors, Murray King and Matt Ross, are due to retire by rotation in
2021 and are both seeking re-election. The elections are timed to coincide with the 2021 Annual
Meeting.
Appointed Director, Candace Kinser is due to retire by rotation in October 2021 and with the support
of the Board, is seeking re-appointment for a further term of three years at the 2021 Annual Meeting.
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Meetings
The Board met six times in 2020/21 with four additional strategy days. A further three additional
meetings of the Board were held to receive updates on the ongoing impact of COVID-19 on LIC and
consider the divestment of LIC’s automation business.
Board Attendance:
Board Meetings Special
Board Meetings
Board Strategy Days
Number
of
meetings
held
Number of
meetings
attended
Number of
meetings
held
Number of
meetings
attended
Number of days
or part
days held
Number of days
or part days
attended
Gray Baldwin 6 6 3 3 4 4
Ben Dickie 6 6 3 3 4 4
Tim Gibson 6 6 3 3 4 4
Ken Hames 6 6 3 3 4 4
Sophie Haslem 6 6 3 3 4 4
David Jensen* 2 2 2 2 - -
Murray King 6 6 3 3 4 4
Candace Kinser
6 6 3 3 4 4
Matt Ross 6 6 3 3 4 4
Alison Watters 6 6 3 3 4 4
*Number of meetings held and attended prior to David Jensen’s retirement from the Board in October 2020
Director training
Directors each undertake appropriate education to remain current in how to best perform their
duties as directors. Directors maintain memberships of relevant bodies such as the Institute of
Directors, and receive information individually and from Management in relation to specific issues
relevant to LIC, the markets in which it operates and the dairy industry.
The Chair has discussed development plans with each of the Directors. These plans
specifically focus on areas that will not only develop the individual Director but will also enhance the
overall Board capability. The Board development and engagement plan is actively referenced and
reviewed at each Board meeting.
Board, Committee and Director Performance
The Board uses an external party to assist with reviewing the performance of the Board, individual
directors and its committees on a regular basis. A formal, independent review is scheduled to be
undertaken in 2021.
Director Independence
Directors are appointed in accordance with the Constitution. The current Appointed Directors are not
co-operative members and are appointed to bring their external expertise to the Board.
For the purposes of the Listing Rules, the Board has assessed all of the Directors to be independent
with the exception of Gray Baldwin, who may not be perceived as independent due to his role as a
Director of Trinity Lands Limited, LIC's largest shareholder.
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The Board has assessed Murray King’s tenure on the Board. The Board has reached the conclusion
that Murray’s tenure does not interfere, nor could it reasonably be seen to interfere, with his capacity
to bring independent judgment to issues before the Board and to act in the best interests of the
company and to represent the interests of its shareholders generally.
Murray King has stated his intention to re-stand for election as an Elected Director in 2021 for the
South Island Region. The Board considers it appropriate that he seeks re-election to provide
shareholders with the option of electing a director able to provide ongoing support of the Board’s
transition to the new governance structure and to implement the Board’s succession plans. In
addition, the Chair’s experience and expertise will be vital in the appointment of a successor to the
current Chief Executive, Wayne McNee, who has recently announced his resignation.
While a number of the Directors are co-operative members and purchase from and sell goods and
services to LIC, the Board does not consider them to have a relationship that could reasonably
influence, or be perceived to influence, their ability to bring an independent view to decisions in
relation to LIC, to act in the best interest of LIC or to represent the interests of LIC Shareholders
generally.
Chair
As noted above, LIC's Chair is assessed to be an independent Director. LIC's Board also endorses the
separation of the roles of the Chair and Chief Executive (CE) and a Director should not simultaneously
hold both roles.
In addition, to ensure appropriate management where necessary, the LIC Board Charter sets out an
exception to this whereby the Board may appoint a Director to assume the post of CE concurrently on
a temporary basis when the post of CE is vacant, for a period of no longer than six months. This can
be extended, only where the position of CE is still vacant for a further maximum period of six months.
At the termination of that further period, that Director shall resign from the Board.
NZX Code Principle 3, Board committees: The board should use committees where this
will enhance its effectiveness in key areas, while still retaining board responsibility.
Committees
LIC Board committees review and consider in detail the policies and proposals dev
eloped by
Management and make recommendations to the Board. They do not take action or make decisions
on behalf of the Board unless specifically mandated to do so. A committee or an individual Director
can engage independent legal counsel at LIC's expense with the prior approval of the Board Chair.
The Board will occasionally appoint a committee of Directors to consider or approve a specific
proposal or action if the timing of meetings or availability of Directors means the matter cannot be
considered by the full Board. Their deliberations and decisions are reported back to the Board no
later than the next meeting.
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Audit, Finance & Risk Committee
A Sub-Committee of the Board, the Audit, Finance & Risk Committee ensures the Company complies
with its audit, financial and risk management responsibilities. It operates under a written charter,
which is available on the LIC website. The Committee is chaired by Appointed Director Sophie Haslem
with the other members being Murray King, Gray Baldwin, Ken Hames and Ben Dickie. Ken Hames
joined the Committee in October 2020 following David Jensen’s retirement. A majority of the current
members of the Committee are considered to be independent. Management only attends
Committee meetings at the invitation of the Committee.
The Committee meets at least four times a year and met six times in 2020/21.
Remuneration and Appointment Committee
A Sub-Committee of the Board, the Remuneration and Appointment Committee approves
appointments and terms of remuneration of the Chief Executive, oversees the people policies for LIC
and also considers and assists the Board in its director appointment process, and if appropriate
recommends to the Board any wage and salary percentage adjustments for the Co-operative's
employees. It operates under a written charter, which is available on the LIC website. The Committee
is chaired by Appointed Director Tim Gibson with the other members being Murray King, Alison
Watters and Matt Ross. All current members of the Committee are considered to be independent.
Management only attends Committee meetings at the invitation of the Committee.
The Committee meets at least four times a year and met four times in 2020/21.
Disclosure Committee
A Sub-Committee of the Board, the Disclosure Committee assists the Board and Company in ensuring
that all material information is identified, reported for review by the Committee, and if required,
disclosed in a timely manner to the NZX. It operates under a written charter, which is available on the
LIC website. The Committee is chaired by Board Chair Murray King with the other members
being
Appointed Director Sophie Haslem, the Chief Executive, Chief Financial Officer, Company
Secretary/General Counsel and Senior Communications Advisor. Disclosure Committee meetings are
also attended by key senior managers as required.
The Committee meets as and when required and met four times in 2020/21.
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Board Committee attendance:
The number of meetings shown below is the number that a Director is expected to attend as a member
of the relevant Committee
Audit, Finance & Risk
Committee
Remuneration
& Appointments
Committee
Disclosure Committee
Number of
meetings
held
Number of
meetings attended
Number of
meetings
held
Number of
meetings attended
Number of
meetings
held
Number of
meetings attended
Gray Baldwin 6 6
Ben Dickie 6 6
Tim Gibson 4 4
Ken Hames * 5 5
Sophie Haslem 6 6 4 4
David Jensen* 1 1 1 1
Murray King 6 6 4 4 4 4
Candace Kinser
Matt Ross 4 4
Alison Watters 4 4
*Number of Audit, Finance and Risk Committee meetings held and attended prior to David Jensen’s retirement
from the Board in October 2020 and Ken Hames’ appointment to the Committee in October 2020.
Technology Advisory Board
In addition to the above Committees, Appointed Director Candace Kinser chaired five meetings of
LIC's Technology Advisory Board during 2020/21. Three senior external technology experts with
leading technology management and strategy experience are members of the Technology Advisory
Board which was established by the Board to provide guidance and advice to senior management
and the Board on LIC’s technology direction and strategy.
Governance and Representation Review Working Group
A Working Group, with equal representation from the Board and the Shareholder Council, was
charged by the Board with progressing the review of LIC’s governance and representation
structures. The Working Group met twice in 2020/21 to finalise the proposal that was put to
Shareholders to change the co-op’s governance and representation structure. At the heart of the
proposal was how LIC could enhance shareholder engagement and introduce a structure that
was more efficient, effective, and fit for purpose. Shareholders gave their approval of the proposed
changes at the 2020 Annual Meeting. The members of the Working Group were Directors Ben Dickie
(Chair), Murray King and Matt Ross and former Shareholder Councillors Nathan Keoghan, Mark
Meyer, and Bruce Murphy.
Takeovers
Due to LIC’s Co-operative Company status and Constitution based shareholding restrictions, it is not
necessary to have takeover protocols in place. Under LIC’s Constitution no person shall hold a
relevant interest of more than 5% of the total number of ordinary shares in the Company.
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NZX Code Principle 4, Reporting and disclosure: The Board should demand integrity in
financial and non-financial reporting, and in the timeliness and balance of corporate
disclosures.
Financial reporting
The Board is responsible overall for ensuring the integrity of the Company's reporting to
Shareholders, including financial statements that comply with generally accepted accounting
practice (NZ GAAP).
The Board's Audit, Finance & Risk Committee oversees the quality, reliability and accuracy of the
financial statements and related documents and its role is more fully described in its Charter which is
available on the LIC website. In undertaking its role, the Committee makes enquiries of Management
and the external auditors, including requiring Management representations, so that the Directors can
be satisfied as to the validity and accuracy of all aspects of LIC's financial reporting.
Non-financial reporting
Sustainability
Following publication of this Annual Report, later in 2021 LIC will publish a standalone sustainability
report for the first time. This report is being prepared in accordance with the core option of the
Global Reporting Initiative (GRI) Standards. This is in line with our commitments under our
memberships of the Climate Leaders Coalition and the Sustainable Business Council and will be
the start of LIC’s journey towards more integrated reporting.
Diversity and Inclusion
The Company fosters
an inclusive working environment that promotes employment equity and
workforce diversity at all levels, including within the Senior Leadership Team and the Board. The
Diversity and Inclusion Policy is available on LIC's website.
The year-end gender composition of the Board and the Senior Leadership Team were:
2021 2020
Male Female Male Female
LIC Board 6 3 7 3
LIC Senior Leadership Team 6 2 7 2
A Diversity and Inclusion Committee has been established with agreed Terms of Reference. The
objectives of the Committee are to:
•foster a shared vision of embracing diversity across all areas of LIC
•assist in building a welcoming, inclusive and safe environment that enables LIC to attract
and retain the best employees
•assist in increasing the diversity of the LIC workforce and leadership team to better reflect
the diversity of the community in which LIC operates
•build a culture that enables all employees to reach their full potential and create a true
sense of inclusive collegiality.
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•All external advertising for positions at LIC are worded to encourage a diverse range of
applicants and state LIC’s desire to drive for diversity and inclusion within our workplace;
•Any management appointment interviews are conducted by a panel that represents
diversity of thought;
•Training for all employees on the benefits of diversity and inclusion; and
•Training developed and implemented for all employees to drive an understanding of
unconscious bias.
In addition to the above, LIC is looking at employment practices, including protection of vulnerable
persons, regional presence and youth employment.
Non-financial risks
LIC's assessment of exposure to non-financial risks, including economic, environmental and health
and safety risks, is included in LIC's risk assessment process described under Principle 6.
Disclosure to the market
LIC has a written disclosure policy: the Continuous Disclosure Policy can be found on our website. It
sets out requirements for full and timely disclosure to the market of material information, so that all
stakeholders have equal access to information. The Board's Disclosure Committee reviews and
approves disclosure of material information. The Board also specifically consider with Management
at each board meeting whether there are any issues which might require disclosure to the market
under the NZX continuous disclosure requirements.
Corporate Governance Report
Committee members, as well as others within LIC, have undertaken training on “creating an inclusive
work environment” with further training planned for the coming year.
LIC has collected baseline data from its employees in relation to age, gender and ethnicity. This
information has highlighted that LIC is a reasonably diverse company with a number of staff from
different ethnicities as well as a larger percentage of females than males. This survey, carried out in
2019, is to be conducted again in 2021 with additional and more specific data to be collected around
cultural diversity. The aim is to continually update our baseline data so that targeted initiatives can
be completed.
The Board has also approved the following:
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NZX Code Principle 5, Remuneration: The remuneration of directors and executives
should be transparent, fair and reasonable.
Directors Remuneration
The total remuneration for LIC's Directors is approved by Shareholders at the Annual Meeting and
the current pool of $669,600 was approved at the meeting held in October 2019.
Directors of the Company received the following remuneration for the twelve months ending 31 May
2021:
In thousands of New Zealand dollars
Fees
M King 124
G Baldwin 54
B Dickie 54
T Gibson 67
S Haslem 72
K Hames 54
D Jensen* 20
C Kinser 67
M Ross 54
A Watters 54
620
*For the period 1 June 2020 to 14 October 2020
Directors of subsidiaries of the Company received the following remuneration for the twelve months
ending 31 May 2021:
In thousands of New Zealand dollars
Fees
E Ruiz 10
10
Except as set out above, no other Directors of subsidiaries received any remuneration or other
benefits in their role as a Director of that subsidiary. The remuneration of employees that receive
more than $100,000 as a result of employee remuneration (and other benefits) is included in the
Employees' Remuneration table on page 34.
Under LIC's constitution, LIC has an Honoraria Committee, comprised of up to four elected
Shareholders, that is responsible for considering and recommending to Shareholders, the form and
amount of Director remuneration. LIC also has a Remuneration Policy for all employees, which is
available to employees on LIC's intranet.
Chief Executive Remuneration
The Chief Executive’s remuneration package is made up of a combination of base salary, vehicle and
a short term incentive based on performance objectives set by the Board. His performance is
assessed on a range of targets including:
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•health and safety
•overall financial performance
•organisational health
•stakeholder engagement (including customer service response times being met
or exceeded)
•sustainability
•delivery of key projects
Employee Remuneration
LIC aims to have a remuneration framework and policies to attract and retain talented and motivated
people. The Company wants to:
1.Be recognised as a great place to work;
2.Recognise and reward successes, while encouraging teamwork and a high performance
culture;
3.Be fair and consistent;
4.Be true to our values of integrity, innovation, spirit of co-operation, in tune and passion.
We use market data to determine fair remuneration levels for all staff. Short term incentives apply to
executive and certain Management roles for achievement of specific objectives and in relation to
achievement of project initiatives. During the period 1 June 2020 to 31 May 2021 the following numbers
of employees (not being Directors) received total remuneration, including benefits, of at least
$100,000:
Remuneration Range (Gross) Current Employees Exited Employees Total
100,000 – 109,999 46 1 47
110,000 – 119,999 32 3 35
120,000 – 129,999 35 - 35
130,000 – 139,999 26 1 27
140,000 – 149,999 5 - 5
150,000 – 159,999 7 1 8
160,000 – 169,999 5 - 5
170,000 – 179,999 8 - 8
180,000 – 189,999 8 - 8
190,000 – 199,999 4 1 5
200,000 – 209,999 2 - 2
210,000 – 219,999 7 - 7
220,000 – 229,999 4 - 4
230,000 – 239,999 3 - 3
240,000 - 249,999 1 1 2
250,000 – 259,999 - 1 1
280,000 – 289,999 1 - 1
300,000 - 309,999 1 - 1
310,000 – 319,999 1 - 1
390,000 – 399,999 1 - 1
430,000 – 439,999 1 - 1
500,000 – 509,999 2 - 2
1,010,000 – 1,019,999 1 1
201 9 210
-
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NZX Code Principle 6, Risk Management: Directors should have a sound understanding
of the material risks faced by the issuer and how to manage them. The Board should
regularly verify that the issuer has appropriate processes that identify and manage
potential and material risks.
Managing Risk
LIC has a risk management framework in place to identify, oversee, manage and control risk. A
refresh of LIC’s risk management framework in 2020 fostered improved ownership of
risk identification and management across all levels of the business. Key risk indicators were
introduced and provide management with a heat map of any risks requiring increased focus. LIC’s
risks status is reported to the Audit, Finance & Risk Committee on a regular basis with each risk
category and its associated risk causes and mitigations reviewed periodically by the Committee.
LIC’s risk categories include:
Of particular interest to shareholders and stakeholders are the following updates on LIC’s key risk
categories:
Health and safety
The health and safety of people, our staff, customers, contractors and anyone we come in contact
with, is of utmost importance to LIC and remains our highest priority, regardless of the country they
are based in, or which site they are based at. Due to the diverse nature of our business, LIC has a wide
variety of health and safety risks, including: working with hazardous substances, driving, on farm
activities (large animals, machinery and regular presence on customer farms) lone working and
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manual handling. The Senior Leadership Team is responsible for reviewing, monitoring and mitigating
LIC's health and safety risk. The Board ensures that the systems used to identify and manage health
and safety risks are fit for purpose, are being effectively implemented, regularly reviewed and
improved. Regular reporting to Management and the Board supports the provision of assurance that
LIC’s health and safety framework is operating effectively. The Board continues to maintain visibility
and focus on health and safety with their commitment to health and safety walk-arounds. Business
units have health and safety representatives and there is a regular formal governance forum chaired
by LIC’s CE.
LIC uses a Total Reportable Incident Rate (TRIR) to measure health and safety performance against
lag indicators: notifiable events, lost time injuries, medical treatment claims and traffic infringements.
The rate is based on the number of incidents per 100 full-time equivalent employees. The TRIR for
2020/21 was 3.49, a decrease from 4.5 in 2019/20.
There was one event notified to Worksafe in 2020/21 (compared to none in 2019/20).
The Company’s ongoing focus is to be more proactive – to take personal ownership, learn from our
safety events and anticipate future safety risks and needs. LIC’s 2020/21 health and safety strategy
included five focus areas: leadership development, working together, critical risks management,
measuring performance and supporting workers.
We also focused on enhancing near miss reporting and the wellbeing of our people through the
introduction of the five ways to wellbeing programme, which centres on connecting, being active,
learning, giving, and taking notice. A mental health for managers training module is being rolled out
in 2021/22.
LIC’s continued focus on health and safety has seen LIC retain its secondary level status following the
annual ACC audit.
Disruption to production or service
The Company’s ability to provide sufficient quality semen during a season relies on a number of
factors, including the maintenance and operation of key equipment, staff training and adherence to
approved procedures and processes. An inability to meet demand for the Company’s semen would
result in significant reputational damage as well as a reduction in New Zealand revenue. Standard
operating procedures are well documented and regularly reviewed. Semen quality is monitored daily
and non-return rates are monitored weekly during the peak of the season.
Reliance on technology, IT systems and services increases the impact of system outages and data
loss should a significant adverse technology event occur. LIC’s toolsets and the visibility across the
technology environment has been significantly enhanced in the last two years improving the ability to
detect potential threats. Business continuity and disaster recovery plans are in place and reviewed
regularly and all backups have been reviewed to ensure LIC can recover from a significant event.
Economic conditions on farm
The Company’s revenue may be reduced as farmers decrease expenditure as a consequence
of
reduced returns, availability of cash or an increased cost of production. Reductions in New Zealand’s
milk price will affect returns paid to farmers: as a net exporter of milk, New Zealand’s milk price is
heavily influenced by reference to the price set by the Global Dairy Trade (GDT). Rural lenders
approach to their lending portfolio may result in a tightening in policy and in turn less cash on farm.
As a result, farmers may look to reduce both their capital spend as well as farm working expenses,
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including herd improvement. Increased compliance costs on farm may increase production costs,
with farmers seeking to reduce costs elsewhere.
The Board and Management continue to explore growth opportunities and ways to improve efficiency
within LIC and for dairy farmers through innovative products and solutions. There is also a continued
focus on genomic evaluation, appropriate selection principles and careful monitoring of the elite
portion of the national herd to ensure LIC’s breeding scheme continues to deliver superior dairy
genetics to assist farmers in improving productivity.
Financial Risk
LIC has stringent processes in place to ensure budgets, forecasts and financial reporting are
accurate and timely. LIC maintains strict internal controls to manage delegated authority and remove
the opportunity for fraudulent activity. LIC also has a well-documented and verified accounts
payable and receivable process which has been independently verified.
Bio-security and animal health
Quarantine procedures are in place in all LIC-controlled locations with heightened controls on LIC’s
bull farms to reduce the risk of the transmission of Mycoplasma bovis (M.bovis). Animals are
maintained at separate locations and bulls are regularly inspected and undergo health testing.
Business continuity plans are in place with regular reviews and scenario testing. LIC has veterinary
and epidemiological expertise within the Company.
The purchase of an additional quarantine block has further reduced the M.bovis risk to LIC’s
production bulls held on LIC's main Newstead centre.
Market disruption
The inability to commercialise innovations and/or respond quickly to market disruption or emerging
technologies could cause reduced use by Shareholders of existing products and services with a
resultant reduction in revenue. LIC has adopted agile product development methodologies to enable
quicker commercialisation of new and improved products and services and the Board prioritises
capital spend to ensure developments align with farmer needs.
Compliance
Breaches of laws, regulations, licences, standards, NZX continuous disclosure requirements, or
market access requirements, could result in restrictions, penalties, or loss. LIC uses the New Zealand
legal compliance software tool ComplyWith to ensure clarity of obligations across the organisation
and for tracking adherence to compliance requirements.
Strategic risk
Disruption, planning, risk, resourcing or other barriers not identified or managed could lead to an
inability to deliver on LIC’s strategy, as too would the lack of availability, capability and engagement
of our people and key vendors.
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The environment
Environmental risks are covered in one or more of LIC's key risk areas.
LIC is a member of the Climate Leaders Coalition and the Sustainable Business Council. LIC now
measures and publicly reports our greenhouse gas emissions, and has set a public, science based,
emissions reduction target, and is working with our suppliers to reduce their emissions as well as
building sustainability into our purchasing decisions. LIC continues to offer farmers the tools and
genetics they need to breed more efficient cows and drive sustainability improvements on-farm. Our
Resilient Dairy programme is a great example of this.
NZX Code Principle 7, Auditors: The Board should ensure the quality and independence
of the external audit process.
External Audit
LIC has an External Auditor Independence Policy that requires the external auditor to be independent
and to be seen as independent. The Board is satisfied that there is no relationship between the
Auditor and LIC or any related person at this time, which could compromise the Auditor's
independence. The Board also obtains confirmation of independence formally from the Auditor.
To ensure full and frank discussion between the Audit, Finance & Risk Committee and the auditors,
the auditor's senior representatives meet separately with the Committee.
The External Auditor Independence Policy sets out restrictions on non-audit work that can be
performed by the auditor and the Audit, Finance & Risk Committee is required to approve all
engagements with the auditor. The policy requires rotation of the key audit partner every five years
a requirement we are fully compliant with. LIC’s external auditor
attends its annual shareholder
meeting each year to answer questions from shareholders in relation to the audit.
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Internal Audit
LIC does not have a separate internal audit function. The Risk & Assurance Team performs,
reviews and arranges for external audit resource to perform internal audits as agreed with the
Audit, Finance & Risk Committee. The Risk & Assurance Manager reports to each Audit, Finance
& Risk Committee meeting on audit or review issues and incidents, improvements and changes to
internal controls.
NZX Code Principle 8, Shareholder rights and relations: The Board should respect the rights
of shareholders and foster constructive relationships with shareholders that encourage them
to engage with the issuer.
The Board recognises that as its shareholders are the Company’s owners, customers and
stakeholders, it is responsible for overseeing shareholder engagement. Shareholder engagement
reflects LIC’s co-operative ownership structure and values and aims to be efficient, effective, fit
for purpose and meet shareholder expectations with regard to increased transparency about
LIC’s activities.
The LIC website is the key place for LIC's financial and operational information including the
Company's presentations, reports, announcements and media releases. The website is updated
immediately when any announcement is made to the NZX. Important corporate governance
documents such as the Charters and policies referred to in this section of the Annual Report can
also be found on the LIC website and the Annual Report is available in both electronic and hard
copy formats.
LIC provides half-year and annual reporting to the NZX to keep Shareholders informed,
and discloses information to the NZX
to meet its continuous disclosure obligations as required.
The Company communicates with Shareholders through its Annual Report, half-year
financial statements and at Shareholder meetings, as well as through a range of media channels
on topics which it believes will be of interest to Shareholders. We encourage all
Shareholders to receive communications electronically, and provide hard copies of
information as and when required.
All Shareholders have the right to vote on major decisions which may change the nature of
the Company and the Board encourages all Shareholders to attend and participate in
shareholder meetings.
This year the LIC Annual Meeting will be held on 14 October 2021 in Hamilton. LIC welcomes
Shareholders' attendance either on-line or in person. A Notice of Meeting will be sent to
Shareholders in September 2021.
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Corporate Governance Report
STATUTORY REQUIREMENTS
ENTRIES IN THE INTERESTS REGISTER
DIRECTORS
All Elected Directors are customers and Shareholders of Livestock Improvement Corporation Limited
and purchase products and services for their farming operations on an ongoing basis.
Directorships and Memberships
Gray Walter Baldwin:
Director of:
Farmlands Co-operative Society Limited
Trinity Lands Limited
Longview Trust Board
Wuppertal Farming Limited
Benjamin John Dickie:
Director of:
Taranaki Veterinary Centre Limited
Timothy Dunlop Gibson:
Director of:
The Equanut Company Limited (Chair)
Manage My Health Global Limited
Miraka Limited and subsidiaries:
Miraka Brands Limited
Miraka Holdings Limited
Port Otago Limited and subsidiaries:
Chalmers Properties Limited
Fiordland Pilot Services Limited
Te Rapa Gateway Limited
Silver Fern Farms Co-Operative Limited
Silver Fern Farms Limited and subsidiaries:
Silver Fern Farms Joint Ventures Limited
Silver Fern Farms Holdings Limited
Skills Consulting Group Limited
Tuhana Consulting Limited
Kenneth Charles Hames:
Director and shareholder of:
Ahipara Agri Limited
Chair of:
Auckland Ballance Farm Environment Awards (Ceased April 2020)
Extension 350
Duke of Edinburgh Award NZ.
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Corporate Governance Report
Sophie Haslem:
Director of:
Akina Foundation (Ceased November 2020)
Centreport Ltd and subsidiaries:
Centreport Captive Insurance Limited
Centreport Property Management Limited (removed from the Company Register 15 January
2021)
Centreport Properties Limited
Harbour Quays Property Limited (removed from the Company Register 15 January 2021)
Kordia Group Ltd
Meteorological Service of New Zealand Ltd (Chair)
Oyster Property Group Ltd and subsidiaries:
Oyster Management Limited
Oyster Property Holdings Limited
Oyster Industrial Limited
Tauranga Crossing GP Limited
Rangitira Ltd
Shareholder of:
CH4 Global Inc
Murray Grant King:
Director of:
Appleby Limited
Callura Dairies Management Limited (Chair)
Cawthron Institute
Dry Steam Irrigation Company Limited
Long Plantation Investments Limited
Director and Shareholder of:
New Zealand Dairy Dessert Company Limited
Waimea Irrigators Limited
Waimea Community Dam Limited
Candace Nicole Kinser:
Director of:
Auckland Unlimited, previously Regional Facilities Auckland Limited (Ceased 9 September 2020)
Cancer Society of New Zealand Incorporated
Eastland Group Limited and subsidiaries:
Eastland Network Limited
Gisborne Airport Limited
EROAD Limited (Ceased 24 July 2020)
EROAD LTI Trustee Limited (Ceased 24 July 2020)
NZ Health Partnerships Limited
Ultrafast Fibre Limited (Ceased 30 September 2020)
UFF Holdings Limited (Ceased 30 September 2020)
WEL Networks Limited
Chair of:
Cancer Society of New Zealand, Auckland Northland Division Incorporated
Investment Committee Member of:
Return on Science Investment Scheme at the University of Auckland.
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Corporate Governance Report
Matthew Fraser Ross:
Director of:
North Otago Irrigation Company Ltd (Chair)
Waitaki Irrigators Collective Limited (Ceased 19 April 2021)
Director and Shareholder of:
Bortons Agri Ltd.
Alison Jane Watters:
Director of:
Agriculture Resources Limited
AsureQuality Limited (Chair)
BV-AQ (Singapore) Holding Pte Limited
High-Value Nutrition (National Science Challenge)
Totally Vets Limited
Shareholder of:
AgInvest Holdings Limited (27.66%) AgInvest owns MyFarm Limited
SENIOR STAFF
In addition to the directorships of LIC subsidiaries as detailed below, senior members of staff have
recorded the following interests:
David James Hazlehurst
Director of:
Agrigate GP Limited
Figured Limited
Simon Wayne McNee
Director of:
Agrigate GP Limited
Advisory Board Member of:
Sustainable Business Council
Shareholder of:
LIC, by way of membership of the LIC Employee Share Scheme
Simon David O’Connor
Director of:
Eurogene AI Services (Ireland) Ltd
Shareholder of:
Canterbury Grasslands Limited (and member of its Audit Committee)
Rimu S.A. (carries out farming operations in Chile through Manuka Limited)
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Corporate Governance Report
The Directors of the Company’s subsidiaries as at 31 May 2021 are set out below:
§LIC Agritechnology Company Limited: Murray King, Gray Baldwin, Ben Dickie, Tim Gibson, Ken
Hames, Sophie Haslem, Candace Kinser, Matt Ross and Alison Watters
§Livestock Improvement (New Zealand) Corporation Limited: David Hazlehurst, Murray King
and Wayne McNee
§LIC Deer Limited: Wayne McNee (removed from the Company Register on 16 September 2020)
§LIC Automation Limited: David Hazlehurst and Wayne McNee
§LIC Ventures No.3 Limited: David Hazlehurst and Wayne McNee
§Livestock Improvement Pty Limited: Simon O’Connor and Michael Rose
§Farmkeeper Pty Limited: Simon O’Connor and Michael Rose
§Overland Corner Holdings Pty Limited: Simon O’Connor and Michael Rose
§Beacon Automation Pty Limited: Simon O’Connor, David Hazlehurst and Michael Rose
§Livestock Improvement Corporation (UK) Limited: David Hazlehurst, Wayne McNee and Mark
Ryder
§LIC Ireland Limited: David Hazlehurst, Wayne McNee and Mark Ryder
§Livestock Improvement Automation Limited: David Hazlehurst, Wayne McNee and Mark
Ryder
§LIC Automation UK Limited: David Hazlehurst and Wayne McNee
The winding up of the Company’s subsidiary in Brazil, NZ Brasil Producao Animal Ltda, has
commenced and as part of the process, directors David Hazlehurst and Simon O'Connor resigned
from the Board on 1 May 2021. In accordance with local legal requirements, the subsidiary is being run
by an in country Administrator, currently Rodrigo Cauduro.
During 2020/21 the directors named below resigned from the boards of the Company’s subsidiaries
as follows:
§Geoffrey Corbett: resigned from LIC Deer Limited, Livestock Improvement Pty Limited,
Farmkeeper Pty Limited, Overland Corner Holdings Pty Limited, Beacon Automation Pty
Limited and LIC Automation UK Limited
§Jock Roberts: resigned from Beacon Automation Pty Limited.
§David Jensen: resigned from LIC Agritechnology Company Limited.
§David Hazlehurst and Simon O'Connor: resigned from NZ Brasil Producao Animal Ltda
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Corporate Governance Report
ENTRIES IN THE INTEREST REGISTER
a)Participation in the Company’s Contract Mating Scheme could lead to the potential sale of
bull calves to LIC in the 2021/2022 season. Directors participating in the scheme include:
Director Potential Calf Sales Potential Value
Matt Ross
17
$238,000
b)Share Dealings by Directors
As at 31 May 2021 the Directors other than the Appointed Directors (either in their own names and/or
in the name(s) of their dairy farming entities) as qualifying users of LIC’s products and services are
holders of, or control the exercise of the right to vote or the acquisition or disposal of, the following
shares:
* Includes shares from participation in the Voluntary Investment Scheme by B Dickie
** Includes 20,000 Ordinary Shares held by Callura Dairies Management Limited, of which M King is
Chair
*** This total does not include 9,600 shares held by Te Pahau Management Limited, which is no
longer considered to be a relevant farming interest of A Watters
Ordinary Shares include fully paid shares which are quoted on the NZX and Nil Paid Shares, which
must be paid up over time by Shareholders.
c)Loans to Directors of the Parent and Subsidiaries
There have been no loans during the year.
d)Directors Indemnity and Insurance
The Company has issued a Deed of Indemnity and insured all its Directors and Senior Managers
against liabilities to third parties for any acts or omissions in their capacity as Directors of the
Company and its Related Parties.
e)Use of Company Information
There were no notices from Directors of the Company requesting to use Company Information
received in their capacity as Directors, which would not otherwise have been available to them.
31 May 2021 31 May 2020
Director Ordinary
Shares
Ordinary
Shares
Gray Baldwin 14,276 14,276
Ben Dickie* 23,922 10,360
Ken Hames 3,204 3,204
Murray King 136,704** 135,040
Matt Ross 93,744 93,076
Alison Watters 33,576*** 42,732
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Corporate Governance Report
RESOLUTION OF DIRECTORS
DATED 21 JULY 2021 CONFIRMING THE CO-OPERATIVE STATUS OF
LIVESTOCK IMPROVEMENT CORPORATION LIMITED
RESOLVED THAT:
Livestock Improvement Corporation Limited (Company) was registered as a Co-operative Company
under the provisions of the Co-operative Companies Act 1 996 (Act) on 1 March 2002.
In the opinion of the Board of Directors, the Company has been a Co-operative Company from that
date to the end of the accounting year ended 31 May 2021.
The grounds for this opinion are:
1.The principal activity of the Company involves supplying artificial breeding, herd testing, herd
recording and other services to transacting Shareholders (as that term is defined in section 4
of the Act). Accordingly, the principal activity of the Company is, and is stated in the
Constitution of the Company as being, a co-operative activity (as the term is defined in
section 3 of the Act); and
2.Not less than 60 percent of the voting rights attached to shares in the Company are held by
transacting Shareholders.
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Corporate Governance Report
Spread of Shareholders as at 31 May 2021
(including treasury stock and nil paid shares)
Size of Shareholding Number of
Shareholders*
Shares Held % of Total
1 - 999 731 452,109 0.31%
1,000 - 1,999 1,000 1,521,182 1.03%
2,000 - 2,999 847 2,085,544 1.41%
3,000 - 3,999 652 2,223,195 1.51%
4,000 - 4,999 682 3,010,770 2.04%
5,000 - 5,999 483 2,662,517 1.80%
6,000 - 6,999 407 2,641,628 1.79%
7,000 - 7,999 330 2,461,077 1.67%
8,000 - 8,999 369 3,123,836 2.12%
9,000 - 9,999 293 2,787,207 1.89%
10,000 - 14,999 1,078 13,242,603 8.97%
15,000 - 19,999 751 13,055,305 8.84%
20,000 - 24,999 450 10,064,195 6.81%
25,000 - 29,999 333 9,057,655 6.13%
30,000 - 34,999 224 7,245,060 4.91%
35,000 - 39,999 173 6,438,863 4.36%
40,000 - 49,999 217 9,690,620 6.56%
50,000 - 99,999 280 18,478,198 12.51%
100,000 - 199,999 55 7,397,073 5.01%
200,000 - 299,999 14 3,387,214 2.29%
300,000 - 499,999 8 3,224,060 2.18%
500,000 - 999,999 6 4,402,001 2.98%
1,000,000 + 8 19,030,508 12.89%
9,391 147,682,420 100%
* The number of shareholders above is based on the number of separate/individual farms. The table
below in relation to the twenty largest shareholdings, amalgamates shareholders with multiple farms.
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Corporate Governance Report
Twenty Largest Shareholdings as at 31 May 2021
(including treasury stock and nil paid shares)
Shareholder
Shares
held
% of total
shares
Trinity Lands Limited 7,348,913 4.98%
LIC Treasury Stock
5,337,584 3.61%
Schmidt Farms Limited 2,385,898 1.62%
Melrose Dairy Limited 1,500,087 1.02%
Anglesea Agriculture Limited 1,418,903 0.96%
Sim Brothers Limited 1,101,207 0.75%
Kotare Pastoral Limited 978,858 0.66%
CIP Nominees No 1 Limited (LIC’s Employee Share Scheme) 881,133 0.60%
David Lockhart Easton & Anthea Clare Easton 746,221 0.51%
Christopher John Stark & Graham Garr 718,372 0.49%
Mark Braden Neil Dewdney, Anne Heather Dewdney &
Victoria Ann Dewdney 687,404 0.47%
D B Douglas Limited 615,756 0.42%
Robert Laurentius Johannes Bruin & Annmarie Bruin 601,913 0.41%
Landcorp Farming Ltd 594,540 0.40%
Farnley Tyas (2018) Limited 451,944 0.31%
Malrose Properties Limited 439,376 0.30%
Kodie Farms Limited 428,436 0.29%
Laird Farm Limited 427,772 0.29%
Mangatarata Farms Limited 423,252 0.29%
Bishop Farms Oxford Limited 410,123 0.28%
27,497,692 18.62%
LIVESTOCK IMPROVEMENT CORPORATION - CONSOLIDATED ANNUAL REPORT 2020/2147
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Corporate Governance Report
Credit Rating Status
LIC currently does not have a credit rating.
Substantial product holders
Based on the Company records and substantial product holder notices provided, as at 31 May 2021,
the following parties were substantial product holders of the Company:
Substantial product
holders
Number of quoted fully paid
ordinary shares in
substantial holding at
31 May 2021
Percentage of quoted fully
paid ordinary shares in
substantial holding at
31 May 2021
Trinity Lands Ltd 7,310,899 5.7535%
Peter James McBride
7,314,441 5.7563%
The total number of quoted fully paid ordinary shares in the Company was 127,068,234 as at 31 May
2021.
LIC understands that Peter James McBride’s above substantial product holder disclosure is in relation
to financial products held by Trinity Lands Limited (7,310,899 fully paid ordinary shares), which is also
disclosed above, and Crocodile Farm Limited (3,542 fully paid ordinary shares). Peter James
McBride’s substantial product holding arises because he has the power to exercise, or to control the
exercise of, a right to vote attached to the financial products held by Trinity Lands Ltd and Crocodile
Farm Limited and has the power to acquire or dispose of, or to control the acquisition or disposal of,
the same financial products held by Trinity Lands Ltd and Crocodile Farm Limited.
LIC notes that the substantial product holders’ original notices to the market were provided on 19
September 2019. Shareholders are advised that the change in the substantial holdings has not been
1% or more subsequent movement (relative to the number of quoted fully paid ordinary shares on
issue), which would otherwise require a disclosure to the market pursuant to s277 of the Financial
Markets Conduct Act 2013. We have set out below, for completeness, the disclosures made at the
date of the original notice (which are also available on nzx.com under LIC’s announcements).
Substantial product
holders
Number of quoted fully paid
ordinary shares in
substantial holding at date
of notice
Percentage of quoted fully
paid ordinary shares held at
date of notice
Date of
notice
Trinity Lands Ltd 7,328,983 5.943% 19/09/19
Peter James McBride 7,329,577 5.943% 19/09/19
Donations
The Company made donations totalling $14,048 during the year ended 31 May 2021 (2020: $12,123).
No political contributions are made by the Company.
Non-Standard Listing
Livestock Improvement Corporation Limited has been classified as a Non-Standard NZX Issuer by the
NZX, pursuant to NZX Listing Rule 1.18, by reason of it being a Co-operative Company having a
Constitution which includes provisions having the following effect:
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Corporate Governance Report
The acquiring of Ordinary Shares is restricted to New Zealand dairy farmers who derive an income
from the farming of dairy cows in New Zealand, whose milk is supplied to a New Zealand
milk processor and who purchase qualifying products and services from Livestock
Improvement Corporation Limited.
WAIVERS AND APPROVALS GRANTED BY NEW ZEALAND EXCHANGE LIMITED (“NZX”) IN
THE PROCESS OF THE APPROVAL OF THE CONSTITUTION OF LIVESTOCK
IMPROVEMENT CORPORATION LIMITED
On 1 October 2020, NZX Regulation (NZXR) granted waivers, rulings and approvals in respect of the
following NZX Listing Rules:
1 A Ruling that treats the “Shareholding Requirement” as defined in LIC’s Constitution as
the "Minimum Holding" requirement for LIC for the purposes of the Listing Rules.
2 A Ruling to the extent that the definition of “Renounceable” refers to a Right or an offer of
securities by LIC that is transferrable to any person entitled to hold those securities under
the Constitution. This reflects the ownership restrictions on shares, resulting from the co-
operative nature of LIC.
3 A waiver in respect of Rules 2.3.1 and 2.3.2, to allow for the following aspects of the
Company’s corporate governance structure:
a)Director nominations for Elected Directors by Ordinary Shareholders to be
restricted by region, as set out in clause 22.4(b) of the Constitution
and
qualification, as set out in Schedule 3 of the Constitution;
b)the nomination procedures for Appointed and Elected Directors (including
casually appointed directors) as set out in Schedule 3 of the Constitution
;
4 A waiver in respect of Rule 3.13.1 to allow LIC to release to the NZX details of the Nil Paid
Shares that have been converted into Fully Paid Shares on a monthly basis, in the form as
required under Rule 3.13.1, on the first business day of each month, aggregating the
number of Nil Paid Shares that have been paid up (if any) in the preceding month.
5 A waiver in respect of Rule 6.2.4 to allow Nil Paid Ordinary Shares to carry full voting rights.
Without this waiver, the Nil Paid Shares could only carry voting rights in proportion to
which the Share is paid up.
6 A waiver in respect of Rule 6.6.1 to allow the lien provision in clause 18 in the Constitution
to be read in place of this Rule.
7 An approval under Rule 8.1.6(b) to include the following restrictions in the Constitution:
a)LIC is restricted in relation to the voting securities that may be issued, as set out
in clause 3.2(b) of the Constitution, thereby maintaining its co-operativ
e
structure;
b)ordinary shares in LIC may only be held by or transferred to certain persons, as
set out in clause 3.2(c) of the Constitution;
c)ordinary shares in LIC shall not be held or acquired for the benefit of any pers
on
who is not a User, unless an exception is provided, as set out in clause 3.2(d) of
the Constitution;
d)no person shall hold a relevant interest in more than 5% of the total number of
ordinary shares in LIC on issue, as set out in clause 6.3(a) of the Constitution;
e)LIC may require Users who have spent in excess of the Minimum Purchase Amount
to compulsorily acquire sufficient ordinary shares to meet the Shareholding
Requirement, as set out in clause 7.1 of the Constitution;
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Corporate Governance Report
50
f)LIC may require Users who no longer spend the Minimum Purchase Amount to
compulsorily dispose of their ordinary shares, as set out in clause 7.2 of the
Constitution; and
g)While the Dairy Industry Restructuring Act 2001 restricts voting rights in LIC, no
person can exercise, or control the exercise of, more than 1% of the maximum
number of votes exercisable at any meeting of LIC, as outlined at clause 20.4 of
the Constitution.
On 31 August 2020, NZXR granted a waiver from Rule 2.7.1 to allow LIC’s Elected Directors’ terms of
tenure to be extended as set out in the transitional arrangements in the 2020 LIC Notice of Annual
Meeting. The waiver is required to streamline the implementation of the governance changes as
approved by shareholders at the 2020 LIC Annual Meeting.
On 30 August 2019, NZXR granted a waiver from Rule 4.15.1 to allow LIC to provide financial assistance
to an Approved Holding Entity, for the purposes of, or in connection with, the acquisition of Equity
Securities issued, or to be issued, under the Voluntary Investment Scheme.
DISCLOSURE OF FINANCIAL ASSISTANCE AS REQUIRED UNDER THE COMPANIES ACT 1993
A.Dividend Reinvestment Plan: LIC proposes to provide financial assistance to those
Shareholders who elect to participate in the Dividend Reinvestment Plan ("Dividend Plan") by
agreeing to pay to the Guardian Trust Company of New Zealand Limited ("Guardian Trust"), as t
he
Approved Holding Entity, the services and administration fees and brokerage and commission costs
incurred for the purposes of the Dividend Plan. Craigs Investment Partners Limited ("Craigs") has
been appointed as the Broker to purchase Ordinary Shares on the NZX market for the purposes of
the Dividend Plan, and the moneys paid by LIC to Guardian Trust as Approved Holding Entity will
include the administration fee, brokerage and commission costs of Craigs.
LIC is required to make disclosures to all Shareholders in respect of this financial assistance. The
exact amount of the net costs depends upon the extent to which Shareholders participate in the
Dividend Plan. However, the total amount of net costs in the next twelve months is estimated to be in
the region of $15,000.
In relation to the financial assistance provided for the Dividend Plan, the LIC Board resolved on 21 July
2021 that LIC should provide the financial assistance referred to above (“Dividend Plan Financial
Assistance”), for the period of 12 months commencing 10 working days after sending this disclosure to
Shareholders, and that the giving of the Dividend Plan Financial Assistance is in the best interest of
LIC and is of benefit to Shareholders not receiving that financial assistance; and that the terms and
conditions under which the Dividend Plan Financial Assistance is given are fair and reasonable to LIC
and to the Shareholders not receiving that financial assistance. The grounds for the Board’s
conclusions are:
a)The Dividend Plan Financial Assistance enables LIC to provide Shareholders with an efficient
means of acquiring additional Shares in LIC without incurring transaction costs which they
would otherwise incur;
b)The Dividend Plan Financial Assistance is available to all eligible Shareholders, giving equal
opportunity to participate in the benefits of the Dividend Plan;
c)The additional Shares will be acquired by Craigs through on-market transactions, by the
transfer of LIC shares held as treasury stock and/or subscribing for new shares (on behalf of
the Shareholder).
d)Participating Shareholders will pay no greater than the higher of:
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Corporate Governance Report
!
i.the volume-weighted average price of shares trading on the NZX market during the
20 Business Days prior to the date that the Board determines to issue shares from
treasury stock; and
ii.the average price paid by Craigs on behalf of Participants for on-market
acquisitions.
e)The Dividend Plan will enhance the liquidity in the market for the Shares, providing a mor
e
liquid market for both participating and non-participating Shareholders wishing to trade in
LIC Shares;
f)The Dividend Plan enables LIC to offer Shareholders a mechanism to reinvest dividends in
Shares without resulting in unnecessary new capital being raised through the issue of new
shares; and
g)The amount of Dividend Plan Financial Assistance is minimal in comparison to the benefits
arising out of the Dividend Plan for Shareholders and LIC.
B.Voluntary Investment Scheme: LIC proposes to provide financial assistance to those eligibl
e
Shareholders who elect to participate in the Voluntary Investment Scheme (" Investment Scheme") by
agreeing to pay to the Guardian Trust Company of New Zealand Limited ("Guardian Trust"), as the
Approved Holding Entity, the services and administration fees and brokerage and commission costs
incurred for the purposes of the Investment Scheme. Craigs has been appointed as the Broker to
purchase Ordinary Shares on the NZX market for the purposes of the Investment Scheme, and t
he
moneys paid by LIC to Guardian Trust as Approved Holding Entity will include the administration fee,
brokerage and commission costs of Craigs.
LIC is required to make disclosures to all Shareholders in respect of this financial assistance. The
exact costs depends upon the extent to which eligible Shareholders participate in the Investment
Scheme. However, the total costs in the next twelve months is estimated to be in the region of $12,000.
In relation to the financial assistance provided for the Investment Scheme, the LIC Board resolved on
21 July 2021 that LIC should provide the financial assistance referred to above (“VIS Assistance”), for
the period of 12 months commencing 10 working days after sending this disclosure to Shareholders,
and that the giving of the VIS Assistance is in the best interest of LIC and is of benefit to Shareholders
not receiving that financial assistance; and that the terms and conditions under which the VIS
Assistance is given are fair and reasonable to LIC and to the Shareholders not receiving that financial
assistance. The grounds for the Board’s conclusions are:
a)The VIS Assistance enables LIC to provide eligible shareholders with a means of acquiri
ng
additional shares in LIC through a fixed trading plan, given the risk they will often be
information insiders, without incurring transaction costs which they would otherwise incur;
b)The VIS Assistance is a method of aligning of eligible shareholders with the interests of
Company by providing a legally compliant way of acquiring LIC shares by individuals who may
often be information insiders;
c)The additional shares will be acquired by Craigs either through on-market transactions or
from LIC (whether by way of a share issuance or by the transfer of treasury stock).
d)Participating Shareholders will, as far as is practicable, pay a uniform price in relation to a
season.
e)The Investment Scheme will enhance the liquidity in the market for the shares, providing
a
more liquid market for both participating and non-participating Shareholders wishing to
trade in LIC shares; and
f)The Investment Scheme enables LIC to offer eligible shareholders a mechanism to invest in
LIC shares without resulting in unnecessary new capital being raised through the issue of new
shares.
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Corporate Governance Report
C. LIC Employee Share Scheme: LIC proposes to provide financial assistance to those
employees who elect to participate in the LIC Employee Share Scheme (“Employee Scheme”) which
from the 1 April 2011 has been managed by Craigs, with Custodial Services Limited acting as
custodian. LIC proposes to pay the Manager's and Custodian's fees and expenses (including
brokerage). The amount of the fees will depend on how many employees participate in the Employee
Scheme and the level of their contributions. However, it is estimated that the total fees in the next
twelve months will be in the region of $18,000.
In relation to the financial assistance provided for the Employee Scheme, the Board of LIC resolved
on 21 July 2021 that LIC should provide the financial assistance referred to above (“Employee Scheme
Assistance”) for the period of 12 months commencing 10 working days after the date of sending this
disclosure to Shareholders, and that the giving of the Employee Scheme Assistance is in the best
interests of LIC, and is of benefit to Shareholders not receiving that financial assistance; and that the
terms and conditions under which the Employee Scheme Assistance is given are fair and reasonable,
to LIC, and to the Shareholders not receiving that financial assistance. The grounds for the Board’s
conclusions are:
a)The Employee Scheme is a valuable addition to the benefits available to the employees of LIC
and will assist in retaining them as valuable staff;
b)The Employee Scheme is a method of aligning the interests of employees with the interests of
Shareholders and is an effective means of motivating future performance of the employees;
c)Shareholders will not be diluted or otherwise disadvantaged as no new Ordinary Shares are
being issued under the Employee Scheme;
d)The Employee Scheme will enhance the liquidity in the market for the Shares, providing a mor
e
liquid market for Shareholders wishing to trade in LIC Shares;
e)The amount of financial assistance is minimal in comparison to the benefits arising out of the
Employee Scheme for Shareholders and LIC.
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Results announcement
21 July 2021
Results for announcement to the market
Name of issuer Livestock Improvement Corporation Limited
Reporting Period 12 months to 31 May 2021
Previous Reporting Period 12 months to 31 May 2020
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$249,013 +3.35%
Total Revenue $266,412 +4.89%
Net profit/(loss) from
continuing operations
$23,613 +12.15%
Total net profit/(loss) $22,944 +31.21%
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.12511026 per share
Imputed amount per Quoted
Equity Security
$0.04865399 per share
Record Date 6 August 2021
Dividend Payment Date 20 August 2021
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.86 $1.80
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
The Net Tangible Assets per Quoted Equity Security excludes LIC ordinary
shares held as treasury stock and unquoted LIC Nil Paid shares which have
the same voting and dividend rights as LIC’s quoted ordinary shares.
Any dividends paid on LIC Nil Paid Shares and on any ordinary shares
required to be held to satisfy LIC’s share standard will be applied to repay
outstanding commitments on LIC Nil Paid Shares.
Authority for this announcement
Name of person
authorised
to make this announcement
Marise Winthrop
Contact person for this
announcement
Marise Winthrop
Contact phone number +64 27 488 4615
Contact email address Marise.Winthrop@lic.co.nz
Date of release through MAP
21 July 2021
Audited financial statements accompany this announcement.
---
Distribution Notice
21 July 2021
Section 1: Issuer information
Name of issuer Livestock Improvement Corporation Limited
Financial product name/description Final Dividend
NZX ticker code LIC
ISIN (If unknown, check on NZX
website)
NZLICE0001S1
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year X Quarterly
Half Year Special
DRP applies X
Record date 6 August 2021
Ex-Date (one business day before the
Record Date)
5 August 2021
Payment date (and allotment date for
DRP)
20 August 2021
Total monies associated with the
distribution
$17,808,800.00
Source of distribution (for example,
retained earnings)
Profit
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution $0.17376426 per share
Total cash distribution $0.12511026 per share
Excluded amount (applicable to listed
PIEs)
N/A
Supplementary distribution amount N/A
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed Fully imputed
If fully or partially imputed, please
state imputation rate as % applied
100%
Imputation tax credits per financial
product
$0.04865399 per share
Resident Withholding Tax per
financial product
$0.00868821 per share
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
23 August 2021
Not known – dependent on
the time it takes to acquire
the shares on market.
Date strike price to be announced (if
not available at this time)
Not known at this stage. The price of the share will be
determined when all shares have been acquired. The
strike price under the DRP is the volume-weighted
average price per share paid on-market in acquiring
shares to fulfil demand under the DRP for the relevant
period. The period for acquisitions to fulfil demand under
the DRP is from the date noted above until the date that
is 20 Business Days before the next Record Date
(“Acquisition Period”).
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
Shares to be purchased on market
DRP strike price per financial product
The strike price under the DRP is the volume-weighted
average price per share paid on-market in acquiring
shares to fulfil demand under the DRP within the
Acquisition Period.
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
6 August 2021
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Marise Winthrop
Contact person for this
announcement
Marise Winthrop
Contact phone number +64 27 488 4615
Contact email address Marise.Winthrop@lic.co.nz
Date of release through MAP
21 July 2021
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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