2021 Annual Report
Annual Report
for the period ended 30 June 2021
www.alliedfarmers.co.nz
Listed on:
CONTENTS
1
6
7
3
4
5
SECTION
SECTION
SECTION
SECTION
SECTION
SECTION
CHAIR
REPORT
CONSOLIDATED
FINANCIAL
STATEMENTS
DIRECTORSSTATUTORY
DISCLOSURES
04 Chair Report
25 Consolidated Financial Statements
06 NZFL
12 NZRLM
13 Directors16 Statutory Disclosures
INVESTMENT
REPORT
8
SECTION
This report is dated 9 September 2021 9 September 2021 and is signed on behalf of the Board of Allied Farmers Limited:
Richard Perry - ChairMarise James - Director
9
SECTION
COMPANY
DIRECTORY
45 Company Directory40 Independent Auditor’s Report
INDEPENDENT
AUDITOR’S
REPORT
HISTORY
01 History
2
SECTION
BUSINESS
OVERVIEW
02 Business Overview
Allied Farmers Limited (ALF.NZX) is a NZX-listed investment company that has a legacy dating back
to 1889 with the formation of The Egmont Farmers’ Union Limited as a stock and station company.
This company was ultimately sold to Hawera based The Farmers’ Co-operative Organisation Society
of New Zealand Limited and 1914 is the recorded starting date of the company today. In 1997, the
company revised its constitution and changed the name to comply with the new Companies Act to
Allied Farmers Limited. Allied Farmers listed on the NZX on 9 May 2002 (after having traded on
the NZX’s unlisted security facility since 1998) and throughout its history of providing services to the
agricultural sector has also operated as an investment company with strategic stakes in such companies
as SouthPort, Allied Pine, and a number of finance companies.
Allied Farmers Limited today is a Stratford headquartered investment company focused on the
agricultural sector with two principal investments at present - a 67% shareholding in New Zealand
Farmers Livestock and a 50% shareholding in New Zealand Rural Land Management Partnership, the
Manager of NZX-listed company New Zealand Rural Land Company (NZL).
1
SECTION
HISTORY
1
2
Our Business:
Allied Farmers is a NZX-listed investment company with two principal investments in the rural sector: livestock services company
- NZ Farmers Livestock Limited; and asset manager - New Zealand Rural Land Management Limited Partnership, the contracted
manager of NZX listed rural landowner New Zealand Rural Land Company Limited.
Livestock Services:
Allied Farmers owns 67% of national livestock agency business, NZ Farmers Livestock Limited (NZFL). A mix of NZ Farmers
Livestock agents and staff own the balance of NZFL.
Livestock agency is NZFL’s core business, generating commission revenue from the marketing, purchase and sale of livestock
on behalf of clients. At its core are trusted client relationships and rural networks, (increasingly digital) marketing tools, and
infrastructure such as saleyards and online auction technology. NZFL’s agents provide a depth of livestock and market expertise,
broad contact networks, price discovery and market intelligence. These services are augmented by its processed veal export and
livestock lending activities.
New Zealand Rural Land Management:
Allied Farmers owns 50% of New Zealand Rural Land Management Limited Partnership (NZRLM).
NZRLM is the external manager of New Zealand Rural Land Company Limited (NZL), which successfully listed on the NZX in
December 2020 after having raised $75 million in an Initial Public Offering (IPO).
Allied Farmers supported the NZL IPO by acquiring 900,000 shares at an issue price of $1.25 per share ($1,125,000).
The other owners of NZRLM are entities associated with the contracted management of NZRLM (Elevation Capital Management
Limited, Richard Milsom and Haydon Dillon) and investors Clyde and Rena Holland who also own ~9.9% of NZL.
Allied Farmers has a call option to acquire the 50% of NZRLM that it currently does not own which is exercisable for 12 months
from 18 December 2022.
Allied Farmers Strategy Refresh:
Allied Farmers is now one of the only NZX listed investment companies focused solely on the agricultural sector.
Allied Farmers’s recent investment in NZRLM means that it is no longer simply the major shareholder of NZFL. Accordingly, the
NZRLM investment has provided the opportunity for Allied Farmers to review and update its strategy to emphasise its role as an
investment company that is currently focused on supporting and growing its NZFL and NZRLM investments.
2
SECTION
BUSINESS
OVERVIEW
Five Year Earnings Summary:
In addition, Allied Farmers’s has decided that rural lending (which is solely focused on livestock finance) will continue to reside
and expand within NZFL.
Consistent with its strategy, Allied Farmers will continue to look to other opportunities within the agricultural sector and continue to
optimise and expand its current investments, further reduce debt and operating costs, and continue to improve its communications
to the market and its shareholders.
Tax Losses:
Allied Farmers has tax losses as at 30 June 2021 which amount to $40,568,976.
These losses are subject to shareholder continuity which is currently estimated at approximately 80% and is closely monitored
by the company.
Financial Year Ending 30 JuneFY 2021FY 2020FY 2019FY 2018FY 2017
Allied Farmers Net Profit After Tax (NPAT)
- attributable to Allied Farmers shareholders - $ 000’s
2,0217671,2581,5351,552
Allied Farmers Earnings Per Share – cents per share7.024.307.589 . 519. 61
Allied Farmers Dividend Per Share – cents per share-1.22.02.02.0
Comprising
NZFL incl. Finance - earnings attributable to Allied
Farmers shareholders* - $ 000’s
1,370
1,1751, 76 41,6631,794
NZRLM - earnings attributable to Allied Farmers
shareholders - $ 000’s
1,15 2----
Asset Management (Legacy Finance Co’s) - $ 000’s---44930
Allied Farmers Holding Co (Parent)** - $ 000’s(501)(408)(506)(577)(272)
Allied Farmers NPAT - attributable to Allied Farmers
shareholders - $ 000’s
2,0217671,2581,5351,552
3
SECTION 2. BUSINESS OVERVIEW
* Recognises Allied Farmers’ 67% NZFL ownership and 52% Redshaw Livestock ownership.
** In FY 2021 from Parent Operations costs of $812,000 disclosed in Note A1 of the Financial Statements, deferred tax benefits arising from tax losses and refunds are deducted.
The Directors of Allied Farmers Ltd (“Allied Farmers” or “Allied Group”) (ALF:NZX) are pleased to report an audited net profit
before tax for the year to 30 June 2021 of $2.481 million (FY2020 $1.099 million), with an audited net profit after tax attributable
to Allied Farmers’ shareholders of $2.021 million (FY2020 $0.767 million) which was a +163% increase from the previous year.
A segmental contribution comparison is provided below which reflects the contribution to Allied Farmers of our two principal
investments and our holding company operating and financing costs:
The result reflected an improved performance from our livestock agency business which recovered from the prior year impacts of
Covid and drought. However, this improvement was partially offset by a lower contribution from our veal business reflecting the
impact of Covid on in-market pricing and returns. The result also includes an inaugural half year contribution from our investment
in rural property manager New Zealand Rural Land Management Limited Partnership (NZRLM).
The livestock business result reflects the continued hard work of our staff and ongoing initiatives aimed at providing them with the
right tools, support and environment to safely and efficiently deliver our services to farmers. We continued to invest in our digital
technologies, recognising that while sale yards play a critical role in the rural value chain, there is ongoing need for innovation to
support the changing needs of farmers. We hosted 303 auctions via our digital platform and now have live auction capabilities
at all our sales yards and the ability to livestream paddock auctions on farm throughout New Zealand.
We are pleased with the growth of our livestock lending business, with the loan book expanding by an additional $1.6 million
to $5.2 million, largely made possible following the successful capital raise in late 2020. In addition, this business concluded a
successful first year introduction of a new seasonal store lamb financing facility (Lamb Plan) which we expect to grow over coming
seasons.
NZRLM produced a strong result in its first six months of operations, delivering earnings of $1.152 million for the year ending 30
June 2021. The NZRLM team undertook extensive due diligence for NZX-listed New Zealand Rural Land Company Limited to
enable its significant acquisitions of rural land following its successful IPO on the NZX in December 2020.
Segmental Contribution attributable to
Allied Farmers’ Shareholders ($ 000’s)
FY 2021FY 2020
NZFL + Finance1,3701,175
NZRLM1,15 2-
Allied Farmers (Parent)(501)(408)
Allied Farmers NPAT2,021767
4
3
SECTION
CHAIR
REPORT
As we outlined last year, we have been heavily focused on both growing our underlying business and diversifying through
targeted investment. The Board appreciates shareholders’ support of last year’s rights issue and placement that enabled the
acquisition of 50% in NZRLM, growth in our livestock lending business, and a modest investment in New Zealand Rural Land
Company Limited. These investments have resulted in growth in earnings per share (EPS) of 63%.
The Allied Farmers’s Board has completed a review of its capital requirements and concluded that its strategic goals can be
achieved through utilisation of its current balance sheet, and therefore has determined that it will not undertake the additional
share placement that was approved by shareholders at the 2020 Annual Meeting.
As at 30 June 2021, Allied Farmers had a net cash position of approximately $1.5 million (compared to a net debt position of
$1.7 million at 30 June 2020). Post balance date, we will repay the $1.0 million Bond which term expires in September 2021,
thereby lowering debt and funding costs in the year now underway.
Having completed a strategy refresh, Allied Farmers will continue to optimise and invest in its existing businesses and evaluate
new opportunities. The refresh includes consideration of options such as growing our livestock lending business (through our NZ
Farmers Livestock Finance Limited subsidiary), investing to increase our market share in our livestock business, and supporting
NZRLM as New Zealand Rural Land Company Limited continues its growth.
The Directors will update shareholders at the Annual Meeting in November as to whether a dividend (or other forms of capital
return) will be paid.
The Board wish to thank and acknowledge the efforts of our NZFL and NZRLM teams over the last year, which had the added
uncertainty of the Covid environment.
5
SECTION 3. CHAIR REPORT
Richard Perry - Chair
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21
Livestock Volumes (000's)
New Zealand Farmers Livestock Limited (NZFL) - 67% owned:
The 2020/21 year saw New Zealand farming rise to the challenges of a severely Covid-affected world, and the NZFL team
were pleased to work with farmers for farmers to support that effort. The business remains heavily focused on supporting livestock
farmers going to market, building the relationships and confidence that support that, and on bringing valued support tools to all
involved.
The business, like most livestock farmers, is enjoying the benefits of relatively buoyant sheep prices, beef prices improving from a
good base, strong dairy prices, and farms sales are seeing some upward movement.
Agency:
Despite the lockdown impacts early in the period, and the winter challenges faced in some areas, the agency business has
recovered from the Covid, drought, and M Bovis impacted prior year. This improvement essentially offset the impact of the
negative effect of Covid on our veal business.
The agency result reflected a creditable performance across all operating regions. While Waikato and Taranaki remain the major
contributors, we are very happy with the positioning of the livestock teams across New Zealand, and NZFL will focus on its goal
to grow market share and agent teams.
The following graphs include Redshaw Livestock Limited (52% owned by NZFL).
4
SECTION
INVESTMENT
REPORT
Livestock Volumes - Sheep
*
* Covid-19 affected year
6
0
50,000
100,000
150,000
200,000
250,000
300,000
Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21
Livestock Volumes (000's)
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21
Livestock Volumes (000's)
Livestock Volumes - Cattle*
**
* Excluding herds
**Covid-19 affected year
Livestock Volumes - Herds
*
* Covid-19 affected year
SECTION 4. INVESTMENT REPORT
7
0
2000
4000
6000
8000
10000
12000
14000
20142015201620172018201920202021
Commissions (in NZ$ 000's)
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
20142015201620172018201920202021
Livestock Volume
NZFL Group Livestock Volumes
* Covid-19 affected year
Year2 0142 0152 0162 0172 0182 0192020
*
2021
NZFL Group
Livestock Volume
395,549 3 4 7 , 11 0364,905464,893606,740594,3145 3 2 ,121 629,507
*
NZFL Group CommissionsNZFL Group Commissions
Year2 0142 0152 0162 0172 0182 0192020
*
2021
NZFL Group Commissions
(in NZ$ 000’s)
9,755 $9,456 $9,755 $12,246 $12,852 $12,141 $11,267 $12,875
*
* Covid-19 affected year
Veal:
Higher value veal cuts saw similar demand/pricing impacts to those reported for other higher value foodservice meats, and skin
values were impacted by the reduced demand for related luxury goods. This reduced veal business performance followed a very
strong 2019/20 year despite slightly higher headage.
SECTION 4. INVESTMENT REPORT
8
Saleyards:
The business sees a critical role for saleyards, and recognises the need for innovation and quality execution to meet the growing
operational and compliance requirements, to better integrate with the wider value chains, and to ensure optimal utilisation of
these assets. This will be a continued focus for the business in the year ahead.
NZFL’s owned saleyards are detailed below:
Saleyard LocationsOwnership
Frankton (Waikato)50%
Rongotea (Manawatu)100%
Stratford (Taranaki)50%
Te Kuiti (King Country)33%
Raglan (Waikato)33%
Digital:
NZFL has continued investment in its MyLiveStock web, app and live auction platforms. Most notably, we recently launched an
industry-leading app interface to all platforms, that will put ready access in the hands of agents and farmers, on-farm, in the
saleyard or anywhere in this increasingly connected world.
The app will support listings where there is no internet or mobile coverage, and will automatically synchronise on the return to
coverage. We have rolled out the live auction platform wherever possible to all major yards and most on-farm sales we conduct.
This enables the app to support yard activities, and provides participants with a convenient and reliable tool that they can use
with confidence.
SECTION 4. INVESTMENT REPORT
9
NZFL also operates from other sales yards around New Zealand being: Morrinsville, Stortfold Lodge, Temuka, Matakohe, and NZFL also operates from other sales yards around New Zealand being: Morrinsville, Stortfold Lodge, Temuka, Matakohe, and
various minor and on-farm yards.various minor and on-farm yards.
MyLiveStock - No. of Daily Users*MyLiveStock - Annual Average Daily Users
0
200
400
600
800
1000
1200
1400
No. of Daily Users
* Daily users are those who have initiated at least one session
on the website from any device inclulding mobile phones.
181
252
337
0
50
100
150
200
250
300
350
400
1 July 2018 - 30 June 20191 July 2019 - 30 June 20201 July 2020 - 30 June 2021
Annual Average Daily Users
Period
1 July 2018 -
30 June 2019
1 July 2019 -
30 June 2020
1 July 2020 -
30 June 2021
Average Daily User
Growth Rate
+7%+39%+34%
Livestock Finance:
Livestock financing has continued a relatively consistent level of contribution. This business continues to support and integrate well
with our livestock agency business.
Our livestock finance business has undergone rigorous (and independent) strategic review. This has confirmed an intention, given
the close agency alignment, to build our finance offering within NZFL, and initially target a $10 million loan book over the next
two to three years. The lamb plan lending initiative and a range of digital and other promotions are contributing well. The business
continues to review refinement and funding options that will support this development.
The graph and table below details a breakdown of the loan book size and age profile of loans:
0-6 Months6-12 Months12-18 monthsOverdue
TOTAL
(prior to
provisioning)
As at 30 June 2021$3,688,767$1,290,205$184,316$56,047$5,219,335
As at 30 June 2020$2,610,864$766,693$118,319$132,305$3,628,181
SECTION 4. INVESTMENT REPORT
Loan Book Size & Age Profile
10
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
$2,500,000
$3,000,000
$3,500,000
$4,000,000
0-6 Months6-12 Months12-18 monthsOverdue
As at 30 June 2021As at 30 June 2020
People and Environment:
The business continues to implement a number of staff support initiatives, including a major focus on health and safety, and to
further develop our team and workplace. Animal handling and driving safety remain primary areas of focus.
The business has continued its efforts as a Biosecurity Pledge signatory, focused around supporting NAIT development and
execution. It also actively participates in NZ Stock and Station Agents Association efforts to ensure appropriate industry regulation,
to support and guide more recent OSPRI work seeking to formalise regulation of the industry, and to guide the development of the
industry’s contribution to NZ farming.
NZFL Outlook:
NZFL plans to deepen its presence nationally, with ongoing digital innovation, and relevant further yard accesses. This includes
work to further support livestock transport coordination, effort to reduce the documentation and process requirements around
livestock sale and purchase, ongoing effort to improve the provision of information to prospective purchasers, and app-based
access to on-line client account history.
We particularly highlight our appreciation of the team efforts that have delivered this development and result, and positioned the
group for further diversification and growth.
SECTION 4. INVESTMENT REPORT
11
New Zealand Rural Land Management (NZRLM) - 50% owned:
NZRLM is the external manager of NZX listed New Zealand Rural Land Company (NZL).
NZL was formed for the purpose of acquiring rural land across the New Zealand agricultural sector. NZL is an agricultural
sector landlord only, and leases the rural land that it acquires to experienced tenants under long term leases. Tenants, not NZL,
undertake the on-land agricultural operations and pay rental to NZL.
As at the date of this Annual Report NZL has acquired approximately $143 million of rural land in the South Island utilising equity
funds it had raised in its IPO (plus a subsequent rights issue), and via a debt facility with Rabobank.
NZL has a management agreement with NZRLM to provide NZL with management, investment and administrative services. In
consideration for these services NZL receives:
A management fee of 0.5% per annum of Net Asset Value;
An acquisition/divestment fee of 1.25% of transaction values;
A $30,000 lease fee per lease put in place; and,
A performance fee of 10% of Net Asset Value Growth (if any) on an annual basis – paid in shares at the
prevailing Net Asset Value, with 50% of these shares escrowed for five years.
NZRLM delivered earnings of $ 1,152,000 to Allied Farmers for the year ending 30 June 2021 following its investment of $ 2.5
million (see Note C2 of the Financial Statements).
SECTION 4. INVESTMENT REPORT
New Zealand Rural Land Management LTD
12
21 December 2020
Completed $75M IPO
and listed on the NZX.
23 March 2021
Announced first $ 10.24M
unconditional acquisition in
Southland, New Zealand.
01 June 2021
Settled $ 124.25M of
acquisitions in North Otago,
South Canterbury and Southland
New Zealand.
04 June 2021
Announced 2:3 Rights Issue at
$ 1.10 / share
to raise $ 44.3M.
01 August 2021
Completed $12M acquisition in
South Canterbury,
New Zealand.
30 August 2021
NZL released
Annual Result for
the period ending
30 June 2021.
28 June 2021
Closed 2:3 Rights Issue raising
$20.32M (shortfall to be placed
within 3 months from this date).
22 September 2021
Closing date of NZL rights issue
shortfall placement.
Timeline Since Listing:
NEW ZEALAND Rural Land Co
Richard Perry - Chair
Richard was appointed a director of Allied Farmers Limited in June 2019 and Chair in July 2020. He has a
strong knowledge and experience of the agribusiness, finance and technology sectors. He has previously held
senior finance and executive roles at the Reserve Bank of New Zealand, Landcorp Farming Ltd and Callaghan
Innovation and has been a Technical Advisor to the International Monetary Fund. He currently provides strategic
and financial consulting advice to a number of start up and established companies including Rocket Lab and
Biolumic Ltd. He is a member of the New Zealand Accounting Standards Board, the Rural Advisory Committee
of Chartered Accountants Australia and New Zealand, and an independent director of Deep Creek Fruits LP
and GP. As an experienced company director he has acted for several company boards across the agri-tech,
property and food and beverage sectors including start-ups, mergers and established companies. Mr Perry
is not an independent director as he is providing advisory services to the Allied Group. He has the following
qualifications: B Com (Hons), F.C.A (Fellow of Chartered Accountants Australia and New Zealand) and CTP
(Certified Treasury Professional).
Marise James - Lead Independent Director
Marise was appointed a Director of Allied Farmers Limited in October 2018. She is a chartered accountant
and partner at Baker Tilly Staples Rodway in Taranaki, where she services agri sector and professional services
clients. She was a founding director of Fonterra Co-operative Group, and has held directorships of FMG
Insurance Limited, Landcorp Farming Limited and the TSB Bank. She has chaired the Audit Committees of FMG
and Landcorp. Her current governance roles include Chair of Firstlight Wagyu NZ Limited, Chair of Southern
Cross Pet Insurance, and the Taranaki Rugby Football Union. Ms. James is an independent director. She has the
following qualifications; Fellow, Institute of Directors New Zealand (Accredited); and F.C.A (Fellow of Chartered
Accountants Australia and New Zealand).
Philip Luscombe - Independent Director
Philip was appointed a Director of Allied Farmers Limited in December 2005 and is Chair of New Zealand
Farmers Livestock Limited. As a former Agricultural Research Scientist, and with a broad farming background, he
has extensive experience in the agricultural sector. He is a shareholder and Chair of the Argyll Dairy Farm group
of farms in Otago, a partner in the family dairy farm in Taranaki, and has interests in farm forestry. He is a trustee
of The Massey-Lincoln and Agricultural Industry Trust, and is an Independent Director of dairy farming business,
Te Rua O Te Moko Limited. He is a former director of PKW Farms Ltd, Kiwi Cooperative Dairies Limited, Kiwi Milk
Products Limited, Dairy Insight, Dexcel, and NZAEL Limited. Mr Luscombe is an independent director. He has the
following qualifications: BAgSci(Hons).
5
SECTION
DIRECTORS
13
Christopher Swasbrook - Non-Independent Director
Chris is one of the founders and directors of New Zealand Rural Land Management and NZX-listed New Zealand
Rural Land Company. He is also the founder and managing director of Elevation Capital Management Limited.
He was previously a Partner of Goldman Sachs JBWere Pty, co-head of institutional equities at Goldman Sachs
JBWere (NZ) and a foundation broker of the New Zealand Exchange (“NZX”). Before that he was an Individual
Full Member of the NZ Stock Exchange (“NZSE”). He has been a board member of the Financial Markets
Authority since 2019, the NZX Listing Sub-Committee since 2008, a member of the NZ Markets Disciplinary
Tribunal since 2013 and an Advisory Board Member of the Auckland Art Gallery Toi o Tamaki. He is also a
director of Bethunes Investments Limited and Swimtastic Limited. Mr. Swasbrook is not an independent director as
he is an Associated Person of an Allied Farmers’s Substantial Product Holder. Chris graduated from the University
of Auckland with a BCom (Economics) in 1996, and has undertaken further study at the University of Auckland,
Columbia University (New York), New York University (NYU), London School of Economics (LSE) and the Harvard
Kennedy School in Boston, Massachusetts
Note: Former Director Mark Benseman resigned from the Board with effect from 19 November 2020, and former
Director Ross Verry resigned from the Board with effect from 15 July 2021.
SECTION 5. DIRECTORS
14
Director Independence:
As at 30 June 2021, Marise James and Philip Luscombe are considered by the Board to be independent directors. Former Director
Ross Verry was also considered to be an independent director. They are/were considered to be independent due to the following
factors:
They are non-executive directors who are not substantial shareholders and who are free of any interest, business
or other relationship that would materially interfere with, or could reasonably be seen to materially interfere with,
the independent exercise of their judgement;
They have not been employed or retained, within the last three years, to provide material professional services to
the Company;
Within the last 12 months, they were not a partner, director, senior executive or material shareholder of a firm that
provided material professional services to the Company or any of its subsidiaries; and
None of those directors:
o have been, within the last three years, a material supplier to the Company or have any
other material contractual relationship with the Company or another group member other
than as a director of the Company;
o receive performance-based remuneration from, or participates in, an employee share
scheme of the Company; and
o control, or is an executive or other representative of an entity which controls, 5% or more of
the Company’s voting securities.
Richard Perry is not considered to be independent because, through a company he owns (Waimatai Group Limited), he provides
material advisory services to the Company.
Christopher Swasbrook is not considered to be independent because he is associated with a significant shareholder of the
Company (Elevation Capital Management Limited).
Former Director Mark Benseman was not considered to be independent because he is associated with a significant shareholder
of the Company (Albany Braithwaite Holding Limited).
SECTION 5. DIRECTORS
15
Statutory Disclosures:
More information on Allied Farmers governance is set out in the Corporate Governance Report, a copy of which is available on
the Allied Farmers’ website, www.alliedfarmers.co.nz/investors.
Disclosure of Interest:
Pursuant to section 140 of the Companies Act 1993, the following changes in interests were disclosed during FY21 (excluding
directorships of wholly owned subsidiaries) in the Interests Register:
6
SECTION
STATUTORY
DISCLOSURES
NameEntityRelationship/Disclosure
Marise James
NZ Rural Land Management GP Ltd
Southern Cross Pet Insurance
Director
Chair
Richard Perry
Deep Creek Fruits LP and GP Ltd
Biolumic Limited
External Reporting Advisory Panel
NZ Accounting Standards Board
Director and Shareholder
Part time CFO
Resigned as Member
Board Member
Christopher Swasbrook
Financial Markets Authority
NZ Rural Land Management LP and GP
NZ Rural Land Company Ltd
Elevation Capital Management Ltd
NZX Listing Sub-Committee
NZX Markets Disciplinary Tribunal
Bethunes Investments Ltd
Swimtastic Ltd
Board Member
Partner and Shareholder
Director and Shareholder
Director and Shareholder
Member
Member
Director & Shareholder
Director
Philip Luscombe
Riverview Dairy Ltd
Allangrange Farming Ltd
McCallbraes Dairy Ltd
Director
Director
Director
16
Directors’ Share Trading and Holdings:
Directors and former directors disclosed the following acquisitions and disposals of relevant interests in Allied Farmers Limited
shares during FY21 pursuant to section 148 of the Companies Act 1993.
DirectorDate(s)Details
Mark
Benseman
18 - 29 January 2021
19 - 24 March 2021
15 - 19 April 2021
30 April - 3 May 2021
21 May - 2 June 2021
On market sale of 182,686 ordinary shares for an average price of 57cps
On market sale of 20,000 ordinary shares for an average price of 53cps
On market sale of 10,419 ordinary shares for an average price of 54cps
On market sale of 44,684 ordinary shares for an average price of 64cps
On market sale of 182,686 ordinary shares for an average price of 58cps
Christopher
Swasbrook
18 December 2020
Allotment of 2,455,025 ordinary shares in partial consideration for the sale of
interests in NZ Rural Land Management Partnership to Allied Farmers
14 January 2021
Allotment of 294,975 ordinary shares in partial consideration for the sale of
interests in NZ Rural Land Management Partnership to Allied Farmers
As at 30 June 2021 directors, or entities related to them, held relevant interests (as defined in the Financial Markets Conduct Act
2013) in Allied Farmers Securities as follows:
NameNumber of shares and percentage of shares on issue
Christopher Swasbrook
2,750,000 (9.55%)
Philip Luscombe
15,557 (0.000054%)
SECTION 6. STATUTORY DISCLOSURES
17
Directors’ Fees:
Director20212020
Philip Luscombe$45,000$45,000
Andrew McDouall- $72,667
1
Mark Benseman$11,731
2
$49,500
Marise James$48,750$40,000
Richard Perry
$60,000$35,000
Ross Verry
$35,000
3
$26,250
Christopher Swasbrook
$18,846-
Total$219,327$268,417
Directors other Remuneration:
Director20212020
Marise James
4
$3,260$11,093
Richard Perry
5
$121,687$56,500
Total$124,947$67,593
1 Includes a retirement allowance of $58,917.
2 Resigned on 19 November 2020.
3 Resigned on 15 July 2021.
4 Baker Tilly Staples Rodway, a firm in which Marise James is a Partner provided HR and tax consulting services to the Allied Group.
5 Waimatai Group Limited, a company associated with Mr Perry, provided services to the Allied Group.
SECTION 6. STATUTORY DISCLOSURES
18
Shareholders approved a cap on directors’ fees of $332,000 p.a. at the 2007 Annual Meeting. This cap includes all directors’
fees paid in relation to Group subsidiary companies as well as for the Parent. In addition to the above payments, Oliver
Carruthers, a director of NZ Farmers Livestock Limited received total remuneration and benefits from NZ Farmers Livestock Limited
of $201,312, and Simon Williams, a director of NZ Farmers Livestock Limited and NZ Farmers Livestock Finance Limited, received
total remuneration and benefits from NZ Farmers Livestock Limited of $106,961. In neither case did this remuneration and benefits
include any director’s fees.
Particular Disclosures:
Bonds:
Albany Braithwaite Holdings Limited, an Associated Person of former Director Mark Benseman, is currently the holder of 600,000
first ranking bonds issued in a $1 million bond issue on 9 October 2014. The Bond will be repaid on the maturity date of 30
September 2021.
NZ Rural Land Management:
On 18 December 2020, Elevation Capital Management, an Associated Person of Director Chris Swasbrook (but immediately
prior to Mr. Swasbrook being appointed a Director) sold a 27.5 percent interest in NZ Rural Land Management GP Limited and
NZ Rural Land Management Limited Partnership to Allied Farmers. The purchase price for this interest was satisfied by the issue of
2,750,000 ordinary shares in Allied Farmers to Elevation Capital Management Limited at an issue price of 50 cents per share.
General:
Except to the extent described above, no Director has entered into any transactions with the Company or its subsidiaries other
than in the normal course of business, on the Company’s normal terms of trade, and on an arms-length basis.
No Director issued a notice requesting to use Group information received in their capacity as a Director which would not otherwise
have been available to them.
During the year the Company paid premiums on contracts insuring directors and officers in respect of liability and costs permitted
to be insured against in accordance with Section 162 of the Companies Act 1993 and the Company’s constitution.
Further information on related party transactions is set out in E1 of the FY 2021 Financial Statements.
CEO Remuneration:
The review and approval of the CEO’s remuneration is the responsibility of the Board.
The CEO’s remuneration comprises a fixed base salary, fringe benefits and an at-risk short-term incentive payable annually. At-
risk incentives are paid against targets agreed with the CEO, and are based on financial measures including earnings targets and
progress against objectives related to the strategic plan and other personal objectives.
Financial
Year
SalaryBenefits
Performance –
Short-term Incentive
Total
Remuneration
FY 2021$255,487$11,458
$37,680.00 being 63% of maximum
achievable from FY20
$304,625
FY 2020$255,266$ 11 , 1 3 4
$47,949.00 being 77% of maximum
achievable from FY19
$314,349
SECTION 6. STATUTORY DISCLOSURES
19
Employee Remuneration:
The number of employees whose remuneration and benefits were over $100,000 for FY21 is within the specified bands as
follows:
Remuneration Range20212020
100,000110,00044
110,001120,00044
120,001130,0005
130,001140,0001
140,001150,0002
150,001160,0001
160,001170,00011
170,001180,0001
180,001190,00012
190,001200,00033
200,001210,00014
210,001220,0003
220,001230,000
230,001240,00011
240,001250,000
250,001260,000
260,001270,000
270,001280,000
280,001290,000
290,001300,000
300,001310,0001
310,001320,0001
320,001330,000
Total 2227
The remuneration figures shown in the above table include all monetary remuneration actually paid, plus the cost of all benefits
provided, during the year. The table does not include independent contractors.
SECTION 6. STATUTORY DISCLOSURES
20
Substantial Product Holders:
Notices given under the Financial Markets Conduct Act 2013 up to the date of this Annual Report:
HolderRelevant InterestDate of Notice
Elevation Capital Management Limited2,750,000 (9.55%)14 January 2021
Stockmans Holdings Limited
2,594,026 (9.01%)24 December 2020
Subsidiary Companies:
Directors of subsidiary companies as at 30 June 2021 were as follows:
Subsidiaries of the ParentPrincipal ActivityDirectors
Allied Farmers Rural LimitedRural ServicesP Luscombe, R Perry, M James,
ALF Nominees Limited
Nominee companyR Perry
Allied Farmers (New Zealand) LimitedNon-tradingR Perry, M James, O Carruthers
Rural Funding SolutioNZ LimitedRural Financing R Perry, M James, O Carruthers
Subsidiaries of Allied Farmers (New Zealand) Limited
Allied Farmers Property Holdings LimitedNon-trading
R Perry
QWF Holdings LimitedNon-tradingR Perry
Lifestyles of NZ Queenstown LimitedNon-tradingR Perry
LONZ 2008 LimitedNon-tradingR Perry
LONZ 2008 Holdings LimitedNon-tradingR Perry
Clearwater Hotel 2004 LimitedNon-tradingR Perry
Subsidiaries of Allied Farmers Property Holdings Limited
UFL Lakeview LimitedNon-tradingR Perry
5M No 2 LimitedNon-tradingR Perry
Subsidiaries of Allied Farmers Rural Limited
NZ Farmers Livestock Limited Livestock Trading
P Luscombe, M James, S Williams,
O Carruthers
Subsidiaries of NZ Farmers Livestock Limited
Farmers Meat Export Limited
Meat Processing and
Trading
S Morrison, W Sweeney, P Luscombe
NZ Farmers Livestock Finance LimitedRural FinanceR Perry, M James, O Carruthers
Redshaw Livestock LimitedLivestock Trading
D Freeman, A Hiscox, M MacDonald,
W Sweeney
SECTION 6. STATUTORY DISCLOSURES
21
Shareholder Information:
The ordinary shares of Allied Farmers Limited are listed on the NZX. The NZX share code is ‘ALF’.
Twenty Largest Registered Shareholders:
The shareholder information in the following disclosures has been taken from the Company’s share register at 4 August 2021.
RankInvestor NameTotal Shares% Issued Capital
1Elevation Capital Management Limited2,750,0009.55
2Stockmans Holdings Limited2,594,0269. 01
3Custodial Services Limited1,254,3694.35
4Albany Braithwaite Holdings Limited1,234,9534.29
5Hopeton Trustee Company Limited1,000,0003.47
5Richard Milsom1,000,0003.47
6Donald Clifton Jacobs831,0502.88
7Deborah Lee Seerup600,0012.08
8Geoffrey Richard Field Seerup600,0002.08
9New Zealand Depository Nominee589,7742.05
10Glenn Leslie Ballinger458,6671.59
11Raoul John Daroux348,0001 . 21
12Caspar Petrus Alydis Van Den Broek333,3341 .16
13Garry Charles Bluett313,0001.09
14Ronald Alfred Brierley303,1591.05
15Ross Phillip Drew288,0001.00
16Fortune Capital Group Limited284,1670.99
17Jade NZ Limited263,9760.92
18Rpmilsom Investments Limited250,0000.87
19Colin Stuart Loveday229,0000.79
20FNZ Custodians Limited216,4960.75
SECTION 6. STATUTORY DISCLOSURES
22
Analysis of Shareholding:
Range
Holders Holders %
Issued Capital Issued Capital %
1-1,0001,55260.72602,2372.09
1,001-5,00048619. 011,236,0684.29
5,001-10,00019 27. 511,435,5824.98
10,001-50,00025810.095,514,94419 .14
50,001-100,000321.252,347,8638 .15
Greater than 100,000361. 4117,669,74061.34
Diversity and Gender:
In June 2020, Allied Farmers adopted a Diversity and Inclusion Policy. More information on the Policy is set out in the Corporate
Governance Report and a copy is available on the Allied Farmers’ website. The Board has evaluated Allied Farmers’s performance
against its Diversity Policy objectives to operate the business in a way that:
does not tolerate discrimination of any kind;
is objective, open-minded and free from discrimination;
empowers management to cultivate a culture of inclusion in which the strengths of every individual are
recognised and valued;
seeks to ensure that all staff receive equal and fair treatment under our policies and practices, so that success is
unhindered by individual differences;
recognises and values individual diversity, different skills, ability and experiences; and,
complies with the New Zealand Human Rights Act 1993, New Zealand Bill of Rights Act 1990, and all other
relevant Human Rights laws.
The Board considers that these objectives have been met.
As at 30 June 2021, females represented 20% (FY20: 20%) of Directors and 20% (FY20: 25%) of Officers of Allied Farmers.
Officers are defined as being the Chief Executive Officer and specific direct reports of the CEO having key functional responsibility.
Subsequent to the resignation of Ross Verry as a Director in July 2021, females currently represent 25% of the Directors.
Current YearPrevious Year
MaleFemaleMaleFemale
Number of Directors4141
Percentage of Directors80%20%80%20%
Number of Officers4131
Percentage of Officers80%20%75 %25%
SECTION 6. STATUTORY DISCLOSURES
23
Shareholder Enquiries:
Shareholders should send changes of address, dividend queries, and instructions and shareholding information requests to Link
Market Services Limited, which acts as the Company’s share registrar.
Annual Meeting of Shareholders:
Allied Farmers Limited’s Annual Meeting of shareholders is proposed to be held at the offices of Link Market Services (Level 30, Link Market Services (Level 30,
PWC Tower, 15 Customs Street West, Auckland) on Wednesday, 24 November 2021 from 11am. PWC Tower, 15 Customs Street West, Auckland) on Wednesday, 24 November 2021 from 11am. A Notice of Annual Meeting
and Proxy Form will be circulated to shareholders prior to the meeting.
Dividends Paid:
A fully imputed per share of $0.012 per share (2020: $0.02) was paid to eligible shareholders on 15 January 2021.
SECTION 6. STATUTORY DISCLOSURES
24
7
SECTION
CONSOLIDATED
FINANCIAL STATEMENTS
25
Allied Farmers Group
Profit and Loss Statement
For the Year Ending 30 June 2021
Note
2021
2020
$000
$000
Revenue and other income
A1
21,661
20,061
Cost of sales and operating expenses
A1
(18,594)
(18,425)
Depreciation and amortisation
A1
(827)
(784)
Net interest income
B7
241
247
Profit before tax
2,481
1,099
Income tax (expense) / benefitA2
95
119
Profit after tax
2,576
1,218
Total comprehensive income
2,576
1,218
Profit attributable to:
Shareholders of Allied Farmers Limited ('Allied')
2,021
767
Minority shareholders of NZ Farmers Livestock Limited ('NZFL')
555
451
Basic Earnings per share (cents)
7.02
4.30
Statement of other Comprehensive Income
For the Year Ending 30 June 2021
2021
2020
$000
$000
Profit after tax
2,576
1,218
C2
(135)
-
Total comprehensive income
2,441
1,218
Group
Group
Change in value of investment in equity securities
The notes to the Group financial statements form an integral part of these financial statements.
26
Allied Farmers Group
Statement of Cash Flows
For the Year Ending 30 June 2021
Note
2021
2020
Cash flows from/(to) operating activities$000
$000
Cash receipts from customers
21,815
18,499
Interest received
631
700
Distribution from NZRLM
350
-
Cash paid to suppliers and employees
(18,119)
(17,705)
Interest paid
(389)
(453)
Income tax received/(paid)
213
(274)
Net cash flow from operating activities4,501 767
Cash flows from/(to) investing activities
Decrease (Increase) in finance receivables NZ Farmers Livestock Finance Ltd/Rural Financial SolutioNZ Ltd(1,559) 1,127
Acquisition of New Zealand Farmers Land Company Limited shares(1,130) -
Rights Issue of shares in Allied Farmers Limited2,686 -
Purchase of shares in NZ Farmers Livestock Ltd(28) (11)
Acquisition of intangibles, property, plant and equipment (847) (794)
Net cash flow from/(used in) investing activities(878) 322
Cash flows from/(to) financing activities
Drawdown of finance receivables borrowings - 1,500
Repayment livestock trading borrowings(448) (412)
Repayment of vehicle finance borrowings- (32)
Repayment of finance receivables borrowings(301) (1,775)
Dividends paid(418) (585)
Net cash flow used in financing activities(1,167) (1,304)
Net movement in cash and cash equivalents2,456 (215)
Opening cash and cash equivalents2,086 2,301
Closing cash and cash equivalentsB34,542 2,086
Reconciliation of Profit to Cash Surplus from Operating Activities
Profit for the year
2,576
1,218
Adjustments for items not involving cash flows:
Impairment on receivables
41
67
(Profit)/loss on sale of assets
(17)
(80)
Depreciation
827
784
(Increase) Decrease in Deferred Tax
(163)
(18)
Movement in Investments
C2
(667)
(17)
Other - including non cash items
14
-
35
736
Movement in trade and other receivables
1,632
(653)
Movement in inventories
245
(99)
Movement in trade, other payables and employee benefits
(200)
(171)
Movement in taxation
213
(264)
Cash flow from operating Activities4,501
767
Group
The notes to the Group financial statements form an integral part of these financial statements.
27
Allied Farmers Group
Balance Sheet
As at 30 June 2021
Note
2021
2020
$000
$000
Equity
Share capitalB2
158,204
153,018
Accumulated Losses
(146,566)
(148,210)
Equity attributable to owners of the Parent
11,638
4,808
Non-controlling interests
1,933
1,582
Total equity
13,571
6,390
Liabilities
Trade and other payablesB6
11,452
11,779
Employee benefits
1,100
973
Income tax payable
39
-
Finance receivables bank borrowingsB4
300
300
Bank borrowings and bondsB4
1,447
441
Lease liabilitiesB5
599
593
Total current liabilities14,937
14,086
Bank borrowings and bondsB4
669
2,122
Finance receivables bank borrowingsB4
625
925
Lease LiabilitiesB5
1,534
732
Total non-current liabilities2,828
3,779
Total liabilities17,765
17,865
Total liabilities and equity31,336
24,255
Assets
Cash and cash equivalentsB3
4,542
2,086
Trade ReceivablesC1
10,116
11,287
Inventories
51
296
Income tax receivable
-
319
Finance receivablesC1
5,142
3,583
Other receivables
246
749
Total current assets20,097
18,320
Deferred tax assetsA2
953
790
GoodwillD2
742
742
Intangible asset - computer software
271
216
InvestmentsC2
4,297
-
Property - owned and leasedC3
4,976
4,187
Total non-current assets11,239
5,936
Total assets31,336
24,255
Group
The notes to the Group financial statements form an integral part of these financial statements.
28
Allied Farmers Group
Statement of Changes in Equity
For the Year Ending 30 June 2021
Group
Share
Capital
Accumulated
losses
Revaluation
Reserve
Belonging to
Allied
Shareholders
Minority
Shareholders
Interests
Total
$000$000$000$000$000$000
Balance at 1 July 2019
153,018 (148,609)- 4,409 1,359
5,768
Profit after tax for the year- 767 - 767 451
1,218
Total comprehensive income for the year- 767 - 767 451
1,218
Dividends paid- (357)- (357)(228)(585)
Sale of Shares in NZ Farmers Livestock Limited- - - - - -
AFL Purchase Minority Shareholders Shares- (11)- (11)- (11)
AFL Shares issued- - - - - -
Total transactions with owners
- (368)- (368)(228)(596)
Balance at 30 June 2020
153,018 (148,210)- 4,808 1,582
6,390
Balance at 1 July 2020 153,018 (148,210)
-
4,808 1,582
6,390
Profit after tax for the year
- 2,021
-
2,021 555
2,576
Revaluation of Equity Securities (refer Note C2)
-
-
(135)(135)- (135)
Total comprehensive income for the year- 2,021 (135)1,886 555
2,441
Dividends paid
- (214)
-
(214)(204)(418)
AFL Purchase Minority Shareholders Shares
- (28)
-
(28)- (28)
AFL Shares issued in purchase of New Zealand Rural
Land Management Limited Partnership
2,500
-
-
2,500 -
2,500
Pro rata renounceable rights issue
2,686 -
-
2,686 -
2,686
Total transactions with owners
5,186 (242)- 4,944 (204)
4,740
Balance at 30 June 2021 158,204 (146,431)(135)11,638 1,933
13,571
The notes to the Group financial statements form an integral part of these financial statements.
29
Allied Farmers Group
A. Financial performance
In this section
-
-
A1: How we operate and generate returns for shareholders
Livestock services: An agency business facilitating livestock transactions and the procurement and export of veal.
Financial services: Providing livestock finance to farmer client.
Parent operations: The ultimate holding company for Allied Group's investments and governance activity for the Group.
Segment information for 2021
Livestock
Services
Financial
Services
Rural Land
Management
Parent
Operations
Total
$000$000$000$000$000
Commission and fee income
12,875 -
-
-
12,875
Sale of goods
7,547
-
-
-
7,547
Interest incomeB7
187 443
-
-
630
Other Income
87
-
-
-
87
Equity Accounted Earnings NZRLM
-
-
1,152 -1,152
Total Income
20,696 443
1,152 -22,291
Cost of goods sold
6,823
-
-
-
6,823
Personnel expenses
7,942
46 -
95 8,083
Depreciation and amortisation
827 -
-
-
827
Rental and operating leases - -
-
-
-
Other operating expenses
2,958
86 -644
3,688
Total Expenses
18,550 132
-739
19,421
Finance Costs
B7
(195)(121)-(73)
(389)
Profit/(loss) before tax
1,951
190
1,152 (812)2,481
Income tax (expense) / benefit
95
Profit/(loss) after tax
2,576
Current Assets
14,450 5,142
-505
20,097
Non Current Assets
6,847
100
3,302 990
11,239
Assets
21,297 5,242
3,302 1,495
31,336
Current Liabilities13,345 351 -1,241 14,937
Non Current Liabilities
2,203 625 -
- 2,828
Liabilities
15,548 976
-1,241
17,765
Segment information for 2020
Livestock
services
Financial
Services
Rural Land
Management
Parent
Operations
Total
$000$000$000$000
Commission and fee income
11,267 -
-
-
11,267
Sale of goods
8,724
-
-
-
8,724
Interest incomeB7
215 485
-
-
700
Other Income
70
-
-
-
70
Total Income
20,276 485
-
- 20,761
Cost of goods sold
7,122
-
-
-
7,122
Personnel expenses
6,979
37 -
95
7,111
Depreciation and amortisation783 - - - 783
Rental and operating leases
(3)-
-
-(3)
Other operating expenses3,486 86 -6244,196
Total Expenses
18,367 123
-719
19,209
Finance Costs
B7
(230)(150)-(73)
(453)
Profit/(loss) before tax
1,679
212
-(792)
1,099
Income tax (expense) / benefit
119
Profit/(loss) after tax
1,218
Current Assets14,6333,583
-
104 18,320
Non Current Assets5,836100
-
- 5,936
Assets
20,468 3,683
-104
24,255
Current Liabilities12,3961,572
-
11814,086
Non Current Liabilities1,854
925
-
1,0003,779
Liabilities14,2502,497
-1,118
17,865
Group
Rural Land Management: Investment in New Zealand Rural Land Managment Partnership the contracted asset manager of New Zealand Rural
Land Company Limited.
Group
This section explains the financial performance of the Group providing additional information about individual items in the Profit and Loss Statement, including:
accounting policies, judgements and estimates that are relevant for understanding items recognised in the Profit and Loss Statement.
the key operating segment information regularly reported to the Chief Executive and reviewed by the Directors.
30
Allied Farmers Group
A2 Taxation
2021
2020
Current tax expense
Current income tax expense (benefit)
68
(102)
Deferred tax expense (benefit)
(163)
(17)
Total income tax expense (benefit) in income statement(95)
(119)
Income tax expense calculation
Net profit before tax for the year
2,481
1,099
Income tax using the company's tax rate (28%)
695
308
Expenditure not deductible for tax
3
14
Timing differences
18
56
Recognition of deferred tax asset
(163)
(17)
Prior period adjustments
-
34
Use of Group tax losses
(648)
(514)
Income tax expense (benefit)(95)
(119)
Deferred Tax
Movement in temporary differences during the year
Opening
balance
Recognised in
income
Closing
Balance
$000$000$000
Financial receivable credit loss provision
20 16 36
Employee benefits
204
1 205
Tax loss carry forward
566
146 712
790
163 953
Financial receivable credit loss provision
13 7 20
Employee benefits
154
50 204
Tax loss carry forward
605
(39)566
772
18 790
2021
Key Judgement:
A deferred tax asset is recognised to the extent it is probable that future taxable profits will be available to use the asset. This is reviewed at each balance
date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available in the future to utilise the asset.
Measurement and Recognition:
Deferred tax is income tax that is expected to be payable or recoverable in the future as a result of the unwinding of temporary differences. These arise from
differences in the recognition of assets and liabilities for financial reporting and for the filing of income tax returns. Deferred tax is recognised on all temporary
differences, other than those arising from goodwill and the initial recognition of assets and liabilities in a transaction (other than in a business combination)
that affects neither the accounting nor taxable profit or loss.
Deferred tax is calculated at the tax rates that are expected to apply to the year when a liability is settled or an asset realised, based on tax rates and tax laws
that have been enacted or substantively enacted at balance date.
Group unrecognised deferred tax assets comprise unused tax losses as at 30 June 2021 total $40,568,976 gross (June 2020: $41,737,685). The ability to
utilise tax losses is dependent upon continuing to meet shareholder continuity requirements of prevailing income tax legislation.
As at balance date imputation credits available to the shareholders of only the Parent Company in subsequent periods totalled $89,248 (2020: $79,040)
Measurement & Recognition
Income tax expense is the income tax assessed on taxable profit for the year. Taxable profit differs from profit before tax reported in the statement of
comprehensive income as it excludes items of income and expense that are taxable or deductible in future years (i.e. deferred tax) and also excludes items
that will never be taxable or deductible.
Group
Revenue Measurement and Recognition
Commission income on facilitating a livestock sale agreement, grazing agreement or forward livestock sale agreement is recognised when the sale is agreed
by a vendor and purchaser. The Group is acting as an agent as it doesn't have inventory risk and isn't able to set a price.
Forward delivery contracts in relation to herd sales on which commission income is earned contain an element of variable consideration due to the timeframe
between when the sale is agreed and its completion. At 30 June 2021 all (2020: all) forward delivery contracts have settled and therefore the variable
consideration has no impact on the revenue recognised.
Sale of goods (veal meat and skins) revenue is recognised when delivered to the customer, or once goods are delivered to the customer. The Group is
deemed a principal, rather than an agent, as it holds inventory risk.
Fee income relates to RFID scanning fees, yard fees charged at saleyards and valuation fees. The income is recognised when livestock are scanned, a sale
is agreed within the auction or when the livestock are weighed. The Group is acting as a principal as it is primarily responsible for the service rendered and is
able to set a price.
Finance receivables interest income is recognised using the effective interest method. The calculation of the effective interest rate includes all fees that are
integral to the effective interest rate. All fees except those charged to customer accounts in arrears are considered to be integral to the effective interest rate.
Fees charged to customer accounts in arrears are recognised as income at the time the fees are charged.
2020
31
Allied Farmers Group
B. Funding and Related Financial Risks
In this section
B1 Capital management
B2
Share Capital
20212020
Share capital ($000)
158,204
153,018
Number of shares issued and fully paid (000's)
Balance at beginning of year
17,855 178,547
Consolidation/Cancellation of shares
-(160,692)
Issue of ordinary sharesC2
5,000
-
Pro rata renounceable rights issue
5,952
-
Balance at end of year
28,807 17,855
B3Cash and cash equivalents
20212020
$000 $000
Cash and cash equivalents
5,442
4,086
Finance Receivables overdraft facility offset per agreement(900)(2,000)
Net cash and cash equivalents
4,542
2,086
Undrawn overdraft facilities
8,000
9,000
Cash is held at banks with a credit rating of A- or higher.
B4Debt funding
Payable within 1
year
Payable after 1
year
UndrawnInterest rate
$000$000$000
Finance receivables bank borrowings
300 625 -
4.35%
Bank borrowings
447 669 -
4.35%
Bonds
1,000
-
- 7.30%
Total debt funding
1,747
1,294 -
Finance receivables bank borrowings
300 925 -
4.35%
Bank borrowings
441 1,122 -
4.35%
Bonds
- 1,000 -
7.30%
Total debt funding
741 3,047 -
The Allied Group's capital includes share capital, accumulated losses and non controlling interests.
The Board manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the Group may issue new shares, sell assets, seek new debt funding, or adjust
the amount of dividends paid to shareholders.
Group
This section explains how the Allied Group manages its various funding sources including capital structure and debt. It also explains the financial risks
that the Group faces and how these risks are managed.
2020
2021
Group
Group
Measurement and recognition
Borrowings are initially measured at fair value, net of transaction costs. They are subsequently measured at amortised cost (using the effective
interest method). Fees for establishing new borrowings are spread over the term of those borrowings.
The borrowing facilities are secured, by way of a first ranking General Security Agreement and gross guarantee and indemnity, against the
assets of NZ Farmers Livestock Limited, NZ Farmers Livestock Finance Limited and Farmers Meat Export Limited. The financial covenants
under these facilities have been fully complied with during the year.
NZ Farmers Livestock Limited guarantees the bank overdraft of its subsidiary Redshaw Livestock up to $338,000 (FY20: $338,000), plus
interest and costs.
Bonds of $1,000,000 were issued by Allied Farmers Rural Limited on 30 September 2014. The Bonds are secured by way of a first charge
General Security Agreement over all of the assets and undertakings of Allied Farmers Limited and subsidiaries excluding NZ Farmers Livestock
Limited and subsidiaries and a specific security over the shares held by Allied Farmers Rural Limited in NZ Farmers Livestock Limited plus a
guarantee from Allied Farmers Limited and subsidiaries. The Bonds repayment date is 30 September 2021 and have an interest rate of a 450
basis point margin over the 4 year swap rate as at 30 September 2017 as advised in writing to the Allied Farmers Rural Limited by ANZ Bank
NZ Limited, but not less than 6.50% per annuum and not more than 7.50% per anum. There are no specific financial covenants.
On 24 December 2020 Allied Farmers Limited completed a one for three pro rata renounceable rights issue. Shareholders received one
ordinary share for every three ordinary shares held at 5pm on the closing date of 18 December 2020. As a result of the renounceable rights
issue the number of shares was increased by 5,951,576.
All ordinary shares rank equally as to voting, dividends and distribution of capital on liquidation.
32
Allied Farmers Group
B5 Lease liabilities
PropertyMotor VehiclesPropertyMotor Vehicles
$000$000$000$000
Opening
540 785 620 818
Leases entered into during the period -
1,411 -
451
Interest expense
11
124 15
136
Principal repayments
(95)(603)(95)(620)
Remeasurements
- (40)-
-
456 1,677
540 785
Short-term lease liabilities
88
511 83
510
Long-term lease liabilities
368 1,166 457 275
B6
Balance Sheet
Contractual
Cashflow< 6 months6 - 12 mths1 - 5 yrs
$000$000$000$000$000
Trade and other payables
11,452 11,452 11,452 -
-
Finance receivables bank borrowings
925 984 173 169
642
Bank borrowings
1,116
1,167 249 249
669
Bonds
1,000
1,018 1,018
-
-
Lease liabilities
2,133
1,707 340 316
1,051
16,626 16,328 13,232 734
2,362
Trade and other payables
11,779 11,779 11,779 -
-
Finance receivables borrowings
1,225
1,235 150 150
935
Bank borrowings
1,563
1,678 256 255
1,167
Bonds
1,000
1,090 36
1,054
-
Lease liabilities
1,325
1,424 352 225
847
16,892 17,206 12,573 1,684
2,949
Interest Rate Risk
20212020
$000 $000
Effect on net profit for the year / equity
+/-
10 14
B7
Net Interest income/(costs)
20212020
$000 $000
Interest received
630 700
Total interest income
630 700
Interest paid on borrowings
(143)(200)
Interest paid on bonds
(73)(73)
Lease costs
(173)(180)
Total interest expenses
(389)(453)
Net Interest income/(costs)241
247
2020
2021
2020
Group
The Group is exposed to interest rate risk on movements in floating interest rates on bank borrowings.
In managing interest rate risk, the group aims to reduce the impact of short-term fluctuations on the group’s earnings. Over the longer term,
however, permanent changes in interest rates will have an impact on profit.
If market interest rates for bank borrowings were to increase or decrease by 50 basis points (bps) the affect on net profit after tax, and equity,
for the year as applied to year end balances would be as follows:
Group
Group
Measurement and recognition
The above lease liabilities are in relation to leases of regional offices and the leases of Motor Vehicles.
The increase in motor vehicle leases in the current period is due to the inclusion of the residual buy back value included in new lease
arrangements which management expects to exercise at the inception of the lease.
The Group recognises a lease liability at the lease commencement date. The lease liability is initially measured at the present value of the
lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be
readily determined, The Group’s incremental borrowing rate. Generally, The Group uses its incremental borrowing rate 6.98% (2020 6.91%) as
the discount rate, with adjustments for the type and term of the lease.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases that have lease terms of 12 months or less
and leases of low-value assets. The Group recognises the lease payments associated with these leases within operating expenses on a
straight-line basis over their lease terms.
Liquidity risk
Liquidity risk represents the Group’s ability to meet its contractual obligations as they fall due.
Liquidity risk is reviewed on an ongoing basis and managed to meet requirements. Cash flow forecasting is performed in the operating entities
of the Group and aggregated at Group level. The Group monitors rolling forecasts of the Group's liquidity requirements to ensure it has
sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that
the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities.
The amounts disclosed in the tables below show the contractual undiscounted cash flows (including interest) due on financial liabilities, so will
not always reconcile to the amount disclosed on the statement of financial position. The amounts below also reflect the contractual repricing
timing on financial liabilities, if applicable.
2021
33
Allied Farmers Group
C. Our receivables, other assets and other payables
In this section
C1Receivables
20212020
$000 $000
Receivables from livestock sales
10,116 11,287
Finance receivables
5,142 3,583
Total receivables15,258 14,870
Amounts are stated at carrying value, net of credit loss allowance
provisions
132 115
Receivables written off during the year
30 52
The status of receivables at the reporting date is as follows:
Group receivables
Not yet due
1 - 30 days
overdue
31 - 60 days
overdue
61 - 90 days
overdue
Total
$000 $000 $000$000$000
Receivables from livestock sales
7,709 2,282
86
94
10,171
Credit loss allowance (livestock)
(16)(6)(2)(31)(55)
Finance receivables
5,192 -
-
27
5,219
Credit loss allowance (finance)
(68)-
-
(9)(77)
Net receivable
12,817 2,276
84
81
15,258
Receivables from livestock sales9,661 791 240 665 11,357
Credit loss allowance (livestock)- - - (70)(70)
Finance receivables3,393 165 19 51 3,628
Credit loss allowance (finance)
-
-
- (45)(45)
Net receivable
13,054 956
259 601 14,870
Credit Risk Management
C2Investments Held by Group
20212020
$000 $000
990 -
3,302 -
5
-
Total Investments
4,297 -
New Zealand Rural Land Company Limited
$
Acquistion Cost 16 December 2020
1,125,000
Change in Value Credited to Other Reserves
(135,000)
At 30 June 2021
990,000
New Zealand Rural Land Company Limited
New Zealand Rural Land Management Partnership
Other Investments
This section explains:
- The assets the Group is due to receive from third parties and the credit risk associated with these assets.
- The property and motor vehicles the Group owns and has a right to use under lease arrangements.
- The obligations to third parties, other than banks and bond holders.
Group
2020
Credit risk is the risk that a counterparty to a transaction with the Group will fail to discharge its obligations and make payment, causing the Group to incur a
financial loss.
The Group manages its exposure using a credit policy that includes limits on exposures with significant counterparties that have been set and approved by the
Board and are monitored on a regular basis and does not have any significant concentration of risk with any single party.
Receivables are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the Group. The
Group categorises a loan or receivable for write-off when a debtor fails to make contractual payments more than 180 days past due. Where loans or
receivables have been written off, the company continues to engage in enforcement activity to attempt to recover the receivable due. Where recoveries are
made these are recognised in profit or loss.
2021
Measurement and recognition
Receivables from livestock sales and Finance Receivables are measured on initial recognition at fair value, and are subsequently carried at amortised cost,
less provision for expected credit losses.
For Receivables from livestock sales, the provision for expected credit losses is based on the simplified approach, as permitted by NZ IFRS 9, and records the
loss allowances as lifetime expected credit losses from recognition. These are the expected credit losses that result from all possible default events over the
life of the financial instrument.
Finance Receivables are reviewed on an individual basis to determine whether any amounts are unrecoverable and an expected credit loss provision is
recorded. The expected credit losses are based on management's assessment of amounts considered uncollectible for specific customers based on age of
debt, history of payments, account activity, current and future economic factors and other relevant information. Debts known to be uncollectible are written-off
as bad debts to the profit and loss when identified.
In December 2020 Allied Farmers Limited acquired 900,000 shares at an issue price of $1.25 per share in New Zealand Rural Land Company Limited. The
total cost was $1,125,000. This holding represented a 1.49% ownership in New Zealand Rural Land Company Limited as at 30 June 2021. These shares are
equity investments, quoted in the active market, which the Group has elected to designate as a financial asset at fair value through other comprehensive
income (FVOCI). The fair value of these shares as at 30 June 2021 is $990,000.
Key Judgement
The loss allowances for receivables are based on assumptions about risk of default and expected loss rates. The Group uses judgement in making these
assumptions and selecting the inputs to the impairment calculation, based on the Group's past history and existing market conditions, as well as forward-
looking estimates at the end of each reporting period.
34
Allied Farmers Group
New Zealand Rural Land Management
Summarised Balance Sheet
20212020
$000 $000
Current Assets
2,011 -
Current Liabilities
(407)-
Net Assets
1,604 -
Summarised Statement of Profit or Loss
20212020
$000 $000
Income
3,081 -
Expenses
(777)-
Profit
2,304 -
Reconciliation of Summarised Financial Information
20212020
$000 $000
Profit for Period
2,304 -
Dividend
(700)-
Closing Net Assets
1,604 -
Increase in net assets
802 -
Reconciliation of Interest in Associate @ 30 June 2021
Cost of investment
2,500 -
Increase in Net Assets (50% of Profit for Period)
1,152 -
Less Dividend paid (50% of Dividend)
(350)-
Carrying Value 30 June 2021
3,302 -
C3
Property owned and leased (including Right Of Use assets)
2020
LandBuildings
Plant and
equipment
Motor VehiclesTotalTotal
$000 $000 $000 $000 $000 $000
Cost at beginning of year
2,019 1,038
550 172 3,779
3,427
Additions
- 11
32
153 196
742
Disposals
-
-
(8)(78)(86)(390)
Cost at end of year
2,019 1,049
574 247 3,889
3,779
Accumulated depreciation at beginning of the year
- (423)(288)(30)(741)(960)
Depreciation
- (62)(85)(4)(151)(121)
Disposals
-
-
- (1)(1)340
Accumulated depreciation at end of year
- (485)(373)(35)(893)(741)
Net value 2021
2,019 564
201 212 2,996
Net Value 2020
2,019
615
262
142
3,038
Property leased
PropertyMotor VehiclesProperty
Motor Vehicles
$000 $000 $000$000
Opening
525 624
620 757
Additions
- 1,411
- 451
Less Disposals
- (40)-
-
Less Amortisation
(95)(446)(95)(584)
Total Right of use Asset
430 1,549
525 624
Current Right of Use Asset
92 306
95
246
Non-Current Right of Use Asset
338 1,244
430 378
2021
Measurement and recognition
Land is not depreciated. All other owned property, plant and equipment is depreciated on a straight line basis at rates over their estimated useful lives, as
follows:
- Buildings: 8 - 30 years.
- Plant and equipment: 1 - 30 years.
- Motor Vehicles: 1-3 years.
2021
Group
On 18 December 2020 Allied Farmers Limited purchased a 50 percent interest in NZ Rural Land Management Limited Partnership ('NZRLM'). NZRLM is the
external manager of The NZ Rural Land Company Limited (NZRLC) which listed on the NZX on Monday 21 December 2020. The NZRLM acquisition price paid
was 5 million Allied Farmers shares at NZ$0.50 cents per share (cps) representing a total cost of $2,500,000. The Group has determined that it has significant
influence but not control over NZRLM. Accordingly, the Group applies the equity method of accounting to its investment in NZRLM. Under the equity method
the investment is initially recognised at cost, and the carrying amount is increased or decreased to recognise the investors share of the profit or loss of the
investee after the date of acquisition.
2020
35
Allied Farmers Group
D. Group Structure
In this section
D1Subsidiaries and Associates
2021
2020
Ownership
interest
Ownership
interest
Operating Subsidiaries of the Parent
Allied Farmers Investments Limited
Investment
100%100%
Allied Farmers Rural Limited
Investment
100%100%
Rural Funding Solutionz Limited
Finance
100%100%
Subsidiaries of Allied Farmers Rural Limited
NZ Farmers Livestock Limited
Livestock Agency and Finance
67%
67%
Subsidiaries of NZ Farmers Livestock Limited
Farmers Meat Exports Limited
Meat Processing and Trading
100%
100%
NZ Farmers Livestock Finance Ltd
Livestock Finance
100%
100%
Redshaw Livestock Limited
Livestock Agency
52%
52%
Associates of the Parent
New Zealand Rural Land Management Partnership
Rural Property Management
50%-
D2Goodwill
20212020
Cash generating units:
$000 $000
Redshaw
642 642
NZFLFL
100 100
742 742
Impairment assessment
Redshaw CGU
20212020
Revenue growth rate
2.0%
2.0%
Long term growth rate
2.0%
2.0%
Pre tax discount rate
12.6%
12.7%
20212020
Revenue growth rate
2.0%
1.6%
Pre tax discount rate
0.9%
0.8%
Management has identified that a reasonably possible change in key assumption could cause the carrying amount to exceed the recoverable amount.
The following table shows the amount by which these two assumptions would need to change individually for the estimated recoverable amount to be
equal to the carrying amount.
The financial statements include the financial statements of Allied Farmers Limited and the operating subsidiaries listed below.
Subsidiaries are entities controlled by the group. Control exists when the Group has the power to govern the financial and operating policies of the entity so
as to obtain benefit from its activities. The financial records of operating subsidiaries are included in the consolidated financial statements from the date on
which control commences until the date on which control ceases.
There are a number of subsidiaries within the Group that are non-trading and therefore have no financial records during the year or balances as at year-end,
they are not included within these consolidated financial statements.
This section provides information to help readers understand the Group structure and how it affects the financial position and performance of the Group.
All companies within the Group are incorporated in and have their principal place of business in New Zealand, and have a balance date of 30 June.
Group
On an annual basis, the recoverable amount of Goodwill is determined based on value in use calculations specific to the Redshaw CGU. These
calculations use pre-tax cash flow projections based on financial budgets prepared by management covering a five year period. Cash flows beyond
the five year period are extrapolated by way of a terminal value calculation using the estimated growth rates stated below. The growth rates adopted
are consistent with internal forecasts and budgets. The discount rate reflects the specific risks relating to the cash flow being discounted.
Below is a sensitivity analysis showing the impact on value of changes to the key variables:
The estimated recoverable amount of the Redshaw CGU is estimated to have exceeded the carrying amount of the CGU at 30 June 2021 by
approximately $133,000 (2020: $132,000).
Goodwill in Redshaw arose on the acquisition of a controlling interest in Redshaw Livestock Limited and the NZFL goodwill arose from the acquisition
of a finance book from Stock Plan Limited previously supplying finance to a number of NZ Farmers Livestock Limited customers.
Key Judgement
The assessment that there was no impairment of the goodwill in the Redshaw CGU ('cash generating unit') at 30 June 2021. The valuation of the
CGU is based on a discounted cashflow of management forecasts of future financial performance and therefore there is inherent estimation
uncertainty.
36
Allied Farmers Group
NZ Farmers Livestock Finance CGU
D3 Associated Auctioneers
Group's Share
of Profit
Group's Share
of Assets
Group's Share
of Liabilities
Group's Share
of Revenues
Group's Share
of Expenses
$000$000$000$000$000
20210
386
(39)616
(616)
202054
354
(39)510
(456)
Measurement & Recognition
The Group's subsidiary NZ Farmers Livestock Limited owns a proportion (25-50%) of various sale yard tangible assets and has joint arrangements in
relation to the operation of these sale yards (referred to as 'Associated Auctioneers'). The Group has assessed the nature of its investment in Associated
Auctioneers as joint operations. As joint operations, the Group accounts for its share of the revenue, expenses, assets and liabilities.
These joint operations are in five different locations. These joint operations are charged with the operating activities of the sale yards including conducting
sales of livestock via the auction process, maintaining the sale yards, collecting levies on livestock sales and meeting operating costs of the yards. If there
is a shortfall in the income to meet the operating costs in any one year then the joint operation's parties are required to contribute to the shortfall in the
proportion of their ownership of the sale yards.
The joint operation of the sale yards is strategically vital to the interests of NZ Farmers Livestock Limited as the sale yards activity provide significant income
to NZ Farmers Livestock Limited via commission on the sale of livestock handled through the sale yards.
On an annual basis the recoverable amount of this goodwill is tested by undertaking an assessment of its fair value less costs of disposal specific to
the NZFLFL CGU (being the Livestock Financing business).
No impairment charge was required to be recognised in the financial statements. There are no foreseeable changes in assumptions which could
result in a material impairment and this was supported by an independent valuation undertaken during the period.
37
Allied Farmers Group
E. Other
In this section
E1Related parties
The Group has a related party relationship with its key management personnel.
Key management personnel ('KMP') compensation
2021
2020
$000
$000
Short term employee benefits
523
504
Directors fees
219
210
Key management personnel and their related parties
2021
2020
Transactions
$000
$000
Livestock sales
368
506
Livestock purchases
447
669
Commission revenue
22
36
Consultant Fees
-
13
Dividends received as minority shareholders of NZFL
119
73
2021
2020
Amount receivable from KMP
5
36
Amount payable to KMP
70
106
Bonds on issue - (holder Mark Benseman retired as a Director on
19 November 2020)600
600
No debts with key management personnel were written off during the year (2020: nil)
Consulting fees paid to entities associated with directors on an arms length basis total $135,684 (2020 $66,995)
2021
2020
E2Auditors’ remuneration
$000
$000
Audit fees - KPMG
180
165
Fees for other services - KPMG
25
73
Direct expenses associated with the audit
14
15
Total
219 253
Transactions with related parties, including directors, are made on terms equivalent to those that prevail in arm's length transactions.
This section includes information required to comply with financial reporting standards that is not covered in other sections.
Group
Group
Group
Allied Farmers Limited during the year has lent surplus funds to its subsidiary NZ Farmers Livestock Limited on commercial terms set at arms length,
these funds being on call and interest bearing at a rate comparable to the bank facilities. As at 30 June 2021 the total of these funds lent to NZ
Farmers Livestock Limited was $550,000 (2020: $614,000 lent by Allied Farmers Rural Limited).
Consulting fees together with a share of distribution (due to its 16.5% shareholding) were paid by NZ Rural Land Management Partnership to Elevation
Capital Management Limited, a company associated with Mr Christopher Swasbrook who is a director of Allied Farmers Limited. During the year, these
totalled $179,843 (2020 Nil). These were on commercial terms in accordance with a contract for service.
Group
Other services provided by KPMG included Taxation services relating to return preparation and advice on shareholder continuity.
Identity of related parties
The Group has a related party relationship with each of its subsidiary companies and an associated entity outlined in Section D.
.
38
Allied Farmers Group
About this report
In this section
-
-
-
-
It relates to an aspect of Allied's operations that is important to future performance.
Statement of compliance and basis of preparation
The financial statements have been prepared:
-
-
-
presented on the basis of historical cost; and
-
The fair value of Financial Assets and liabilities approximates their carrying value.
Other accounting policies
-Note A2
-Note D2
Goodwill impairment assessment
Deferred tax asset recognition
In preparing the Group financial statements, all material intragroup transactions, balances, income and expenses have been eliminated. Subsidiaries are
consolidated on the date on which control is obtained to the date on which control is lost.
Other accounting policies that are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements
other. The accounting policies have been consistently applied to the periods in these financial statements. Where the presentation and structure of the
financial statements has changed comparative figures have been amended to align with the current year presentation.
Critical Judgements and Estimates
The preparation of financial statements requires management to exercise its judgement in applying Allied's accounting policies. Estimates and judgements
are reviewed by management on an on-going basis, with revisions recognised in the period in which the estimate is revised and in any future periods
affected. Areas of estimate or judgement that have most significant impact on the amounts recognised in the financial statements are:
The notes to the financial statements within sections A to E include information that is considered relevant and material to assist a reader in understanding
changes in the Group's financial position or performance. Information is considered material if:
Allied Farmers Limited is a for-profit entity domiciled in New Zealand and registered under the Companies Act 1993. The company is an FMC Entity in terms
of the Financial Markets Conduct Act 2013 and prepares its financial statements in accordance with that Act, the Financial Reporting Act 2013, and NZX
Main Board Listing Rules.
The consolidated financial statements are for Allied Farmers Limited and its subsidiaries (together referred to as "Allied") and Allied's interests in associates
as at end for the year ended 30 June 2021.
in New Zealand dollars, with all values rounded to the nearest thousand dollars unless otherwise stated.
on the basis of going concern. The directors, having considered projected future performance and the availability of financing, consider the going
concern basis to be appropriate;
These Consolidated Financial Statements ("Financial Statements") have been approved for issue by the Board of Directors on 30th August 2021.
in accordance with Generally Accepted Accounting Practice (GAAP) in New Zealand and comply with International Financial Reporting Standards
(IFRS) and the New Zealand equivalents to IFRS (NZ IFRS) and other applicable financial reporting standards, as appropriate for a Tier 1 for-profit
entity;
The amount is significant because of its size or nature;
It is important for understanding the results of Allied;
It helps explain changes in Allied's business; or
39
8
SECTION
INDEPENDENT
AUDITOR’S REPORT
40
© 2021 KPMG, a New Zealand Partnership and a member firm of the KPMG global organisation of
independent member firms affiliated with KPMG International Limited, a private English company
limited by guarantee. All rights reserved.
Independent Auditor’s Report
To the shareholders of Allied Farmers Limited
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the accompanying consolidated
financial statements of Allied Farmers Limited
(the ’company’) , its subsidiaries and associates (the
'group') on pages 26 to 39:
i.present fairly in all material respects the Group’s
financial position as at 30 June 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 balance sheet as at 30 June
2021;
— the consolidated statements of profit and loss,
other comprehensive income, changes in
equity 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 in relation to taxation services. 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.
Scoping
The scope of our audit is designed to ensure that we perform adequate work to be able to give an opinion on the
consolidated financial statements as a whole, taking into account the structure of the group, the financial
reporting systems, processes and controls, and the industry in which it operates.
In establishing the overall approach to the group audit, we determined the type of work that needed to be
performed at the component level by us, as the group engagement team. A full scope audit was performed on
4
the most significant entities for the group using specific component materiality’s which were lower than group
materiality. The component materiality took into account the size and the risk profile of each component.
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 $211,000 determined with reference to a benchmark of group total revenue.
We chose the benchmark because, in our view, this is a key measure of the group’s performance.
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 the matters and our key
audit procedures to address the 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
Allied Farmers – Livestock agency revenue recognition ($12.9m - refer to note A1)
The Allied Farmers group has a
number of revenue streams
including livestock agency services,
veal processing and livestock
financing.
Livestock agency services
commission is considered to be a
key audit matter given the volume of
transactions and the impact on the
financial statements of the
determination of net or gross
presentation (i.e. as either principal
or agent).
Our audit procedures included:
— Assessing the Group’s revenue recognition policy for consistency
with the requirements of NZ IFRS 15 Revenue from Contracts with
Customers, specifically whether the commission revenue should
be recognised on a principal (gross) or agency (net) basis.
— Examining the processes and related controls undertaken to
recognise livestock agency revenue.
— Assessing the commissions calculated on livestock agency
transactions including:
•Comparing the commission rate applied against the
standard company rates (by livestock type); and
•Recalculating the agency commission and comparing this
against the amount presented as commission revenue.
— Agreeing a sample of livestock agency transactions to the
underlying purchase and sale agreements and subsequent cash
receipt and payment.
— Assessing the appropriateness of the timing of revenue recognition
by agreeing a sample of pre and post year end transactions to
supporting evidence.
Based on the above procedures there were no matters to report.
4
2
Other information
The Directors, on behalf of the group, are responsible for the other information included in the entity’s Annual
Report. Other information may include the Chairman’s report, Chief Executive’s report, and disclosures relating
to corporate governance. Our opinion on the consolidated financial statements does not cover any other
information and we do not express any form of assurance conclusion thereon.
The Annual Report is expected to be made available to us after the date of this Independent Auditor's Report. Our
responsibility is to read the Annual Report when it becomes available and consider whether the other information
it contains is materially inconsistent with the consolidated financial statements, or our knowledge obtained in the
audit, or otherwise appear misstated. I f so, we are required to report such matters to the Directors.
Use of this independent auditor’s r eport
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.
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.
4
3
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 Sonia Isaac.
For and on behalf of
KPMG
Wellington
30 August 2021
4
4
Richard Perry (Chair) BCom (Hons), FCA, CTP
41 Dorset Street
Westmere
Auckland 1022
Christopher Swasbrook BCom
1 Warrington Road
Remuera
Auckland 1050
Philip C Luscombe BAgSci (Hons)
8 Ronald Street,
Strandon
New Plymouth, 4312
Marise James FCA, FInstD
54b Buller Street
New Plymouth 4312
Registered Office of the Company:
201 Broadway
Stratford 4332
Postal Address of the Company:
P.O. Box 304
Stratford 4352
Ph: 06 765 6199
Auditors:
KPMG
10 Customhouse Quay
Wellington 6011
Share Registrar:
Link Market Services Limited
PO Box 91976
Auckland 1142
Shareholder Enquiries:
Link Market Services Limited
Ph: 09 375 5998
Fax: 09 375 5990
Email: lmsenquiries@linkmarketservices.com
PO Box 91976
Auckland 1142
Directors:
9
SECTION
COMPANY
DIRECTORY
45
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.
Other issuers discussed similar conditions around this time
Matched by meaning across NZX announcement text, not keywords — based on our semantic index of announcement bodies.
- NZL — New Zealand Rural Land Company Limited: New Zealand Rural Land Company Limited 2021 Annual Report2021-09-30
“www.nzrlc.co.nz 3 The 2021 financial year was New Zealand Rural Land Company’s (NZL) inaugural year as an NZX listed company. Since concluding NZL’s initial public offering at the end of 2020 NZL’s focus has been on establishing a rural asset portfolio in the New Zealand dairy…”