Full Year Result 2022-23
MEDIA RELEASE
20 July 2023
LIC announces strong full year result, as co-op’s genomics investment
continues to deliver for farmers
LIC has today announced its financial result for the 2022-23 year, fuelled by an increased farmer
uptake in premium genetics and herd improvement services to breed highly efficient cows, with a
lower emissions footprint.
LIC will return $23.3 million in dividend* to its co-operative shareholders, equating to 16.38 cents per
share with a 20.1% gross yield on the share price. The dividend will be paid on 18 August 2023.
Reporting increased revenue* (up 5.1%) but a drop in underlying earnings* (down 7.6%) compared to
the same period last year, Board Chair Murray King said the co-op has delivered a solid financial
performance, considering the challenging economic conditions.
“The Board is pleased to present another strong result to our farmer shareholders for the sixth
successive year, despite facing rising costs due to increased inflation.
“This result is a credit to our farmers for their continued support of their co-op, who like us have been
faced with a challenging economic landscape. It enables LIC to deliver a solid dividend to
shareholders at a time when increased cost pressures are being felt on farm and ensures we can
continue to invest in critical R&D and technology to support a more profitable and sustainable dairy
industry for Kiwi farmers.”
Summary of financials*
• Net Profit After Tax (NPAT): $27.4 million, up 2.4% from $26.7 million last year
• Total revenue from continuing operations (excl automation*): $276.5 million, up 5.1% from
$263.2 million last year
• Underlying Earnings*: $23.7 million, down 7.6% from $25.7 million last year
• Strong balance sheet with no debt at year end: Total assets $382.3 million, 0.9%
decrease from $385.6 million last year
• Dividend: $23.3 million – 16.38 cents per share
*Refer notes to financial information at end
King said the result is largely driven by more farmers opting for the co-op’s premium bull teams to
breed high genetic merit cows which produce more milk and have a lower emissions footprint per
kilogram of milksolid.
LIC’s premium genetics range accounted for 79% of the co-op’s total artificial breeding (AB)
inseminations, up from 71% the year prior.
“We’ve seen an increased uptake of our premium genetics where young, genomically selected bulls
are used to fast-track genetic gain; in turn delivering more value on farm through increased
productivity and improved environmental outcomes.
“The production efficiency of our national herd has never been more important than it is today. To
help our sector meet its environmental goals we need to be breeding highly efficient cows, and this
result shows that farmers are continuing to sharpen their focus in this area."
King said the co-op has invested more than $80 million into genomics over the last 30 years and
research has confirmed that farmers are capitalising on this investment.
“Farmers consistently using LIC genetics have almost doubled the rate of genetic gain in their herds
over the last 10 years - achieving 18gBW per annum.
“The increased utilisation of genomics in our breeding programme and farmer uptake of young,
genomic bulls has gone hand-in-hand with the higher rates of increased genetic gain we are seeing in
farmers’ herds. Not only are these farmers breeding more environmentally efficient cows, they are
breeding them at a much faster rate.”
In other business highlights, DNA testing services and animal health testing increased – showing
farmers remain committed to investing in technology to keep their cows healthy, protected, and
productive. Of particular note was the increase in Johne’s disease testing which reached a milestone
of over 1.1 million test samples processed, an increase of 16% from the year prior.
The adoption of technology to support herd improvement and extend the artificial breeding period was
also reflected in the result, with more cow wearable devices integrated with the co-op’s MINDA herd
management software.
“Cow wearables are being increasingly used on New Zealand dairy farms to monitor herd
performance, health, and fertility, and it’s great to see farmers integrating this technology with their
MINDA software to unlock even more value,” said King.
Orders for sexed semen increased, as more farmers factor sexed semen into their breeding goals to
accelerate the rate of genetic gain on farm. International exports also saw increased demand for
sexed semen (up 52%), while overall straws numbers sent offshore decreased due to a challenging
supply environment.
“Sexed semen continues to be an important tool on farm to enable farmers to generate more heifer
replacements from their best-performing animals,” said King.
“We see this technology as being a central part of the industry’s future and we are committed to
reducing the variation in conception rates year-on-year. This season the non-return rate for sexed
semen was below what we usually expect and several enhancements and changes to our processes
have been made. This will continue to be monitored closely through the winter mating period.”
During the 2022-23 year, the co-op invested $18.6 million into research & development, up from
$18.2 million the year prior - retaining its position as one of the largest investors in R&D and new
product development for the agri sector, at 6.7% of revenue.
King said the co-op’s investment into R&D and technology is increasingly important, with the growing
environmental challenges the dairy sector is facing.
“As a farmer-owned co-op, we know that investment in R&D is key to helping our sector meet its
environmental goals and drive positive change when it comes to tackling problems like climate
change.
“New Zealand farmers are already some of the most efficient milk producers in the world, and our
continued investment and focus on innovation is supporting them to retain this title.”
A significant share of the co-op’s R&D investment contributes to its world-leading methane research
programme alongside CRV, with funding support from the New Zealand Agricultural Greenhouse Gas
Research Centre. The programme is investigating the genetic link between methane emissions from
bulls and their genetics to ultimately enable farmers to breed low methane-emitting cows.
King said the programme, now in its third year, has been working in partnership with Pāmu to breed
from bulls identified to be high or low methane emitters. After their daughters are born, their emissions
will be measured during their first milking season to ensure they’re representative of their fathers.
Outlook
King said LIC will continue to be firmly guided by its primary focus of delivering on their three
commitments to farmer shareholders - operational excellence, faster genetic improvement, and
software reliability and performance. The co-op’s performance against these commitments during the
2022-23 year will be reported on at its Annual Meeting in October.
The co-op expects underlying earnings* for 2023-24 to be in the range of $22-28 million, assuming no
significant climate event or milk price change takes place between now and then.
This will be King’s final full year result with LIC after announcing he will retire from the Board at the
co-op’s October Annual Meeting. After 14 years of service to LIC, King said the co-op’s outlook is
bright.
“LIC is fit to play its role in supporting farmer shareholders as they navigate the unique challenges
facing the dairy sector both now and into the future. As I approach the end of my term as Board Chair,
I’m proud to be leaving the co-op in a strong position with a healthy balance sheet, and to have
watched LIC’s transformation into the modern, progressive co-op it is today.”
ENDS
This statement has been authorised for release by the Board of Directors.
Contact:
• For shareholder enquiries, contact the Share Registry team on shareregistry@lic.co.nz or phone 0800 542 742.
• For media enquiries, contact LIC Senior Communications Advisor: Amy.Wickliffe@lic.co.nz, 027 225 0298.
*Notes to financial information
These annual results include the annual non-cash revaluations of LIC’s 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. These numbers should be all read in conjunction with the financial accounts.
• Underlying Earnings: This is LIC’s NPAT excluding bull valuation, nil paid share valuation movements and, for the previous
year, the one-off gain on divestment of Automation and is considered useful to investors as it is the basis on which LIC has
historically reported and 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.
• Discontinued operations: LIC completed the divestment of its automation business in 2021-22. Accounting standards
require profits from the Automation business results to be separately disclosed as Discontinued Operations.
• Nil Paid Ordinary Shares: These were issued to shareholders in 2018 as part of the share simplification process 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. Dividends paid on
remaining Nil Paid Shares are automatically retained by LIC to pay down the remaining unpaid shares. LIC records an
estimate of the fair value of the outstanding Nil Paid Ordinary Shares receivable at balance date.
• Bull team valuation: The annual non-cash revaluation of the co-op’s largest biological asset was $97.6 million. This is up
from $93.1 million the previous year, mainly due to the continuing shift to premium products. The valuation is based on an
independent model that looks at future revenue streams and costs associated with the current bulls owned, discounted back
to current value.
• Dividend: The fully imputed dividend represents 80% of underlying earnings, consistent with previous years, but also
includes an additional $4.3m to recognise the portion of cash dividends on Nil Paid Shares in 2022-23 that had been retained
to pay down unpaid shares.
---
Livestock Improvement
Corporation Limited (LIC)
Annual Report
For the year ended 31 May 2023
There's always room for improvement
Contents
Key metrics 4
Directors' report 5
Key results and position 7
Our results for the year 7
Our position at year end 8
Our cash flows for the year 9
Changes in our position for the year 10
More details 11
Accounting policies 11
Business analysis 12
Our core assets 13
Our funding 17
Risk and Other Assets 18
Tax and Other Expenses 19
Other Liabilities, Transactions with
Related Parties, Cash flow reconciliation 20
Discontinued operations,
Subsequent events 21
Independent auditor's report 22
Corporate Governance report 26
2 Livestock Improvement Corporation Consolidated Annual Report 2022/23
2.4%
Net Profit After
Tax (NPAT)
$27.4m versus
$26.7m last year
5.1%
Total revenue
from continuing
operations
(excl automation)
$276.5m versus
$263.2m last year
7.6%
Underlying
Earnings
$23.7m versus
$25.7m last year
0.9%
Total assets
$382.3m versus
$385.6m last year
Key Metrics
Full year
dividend
$23.3m – 16.38 cents
per share vs $26.2m and
18.43 cents last year
R&D
investment
$18.6m, up 2.2% from
$18.2m last year
(6.7% of revenue)
Investment &
capital spend
in business
$20.6m, up 15.1%
from $17.9m last year
Earnings
per share
19 cents, no change
from 19 cents last year
LIC announces strong full-year result, as the co-op’s genomics investment
continues to deliver for farmers
The LIC Board announces its financial result
for the 2022-23 year, fuelled by an increased
farmer uptake in premium genetics and herd
improvement services to breed highly efficient
cows, with a lower emissions footprint.
LIC will return $23.3 million in dividend to its co-
operative shareholders, equating to 16.38 cents
per share with a 20.1% gross yield on the share
price. The dividend will be paid on 18 August 2023.
Reporting increased revenue (up 5.1%) but a drop
in underlying earnings (down 7.6%) compared to
the same period last year, the Board believes the
co-op has delivered a solid financial performance,
considering the challenging economic conditions.
The Board are pleased to present another strong
result to our farmer shareholders for the sixth
successive year, despite facing rising costs due to
increased inflation.
This result is a credit to our farmers for their
continued support of their co-op, who like us
have been faced with a challenging economic
landscape. It enables LIC to deliver a solid
dividend to shareholders at a time when increased
cost pressures are being felt on-farm and ensures
we can continue to invest in critical R&D and
technology to support a more profitable and
sustainable dairy industry for Kiwi farmers.
Summary of financials
• Net Profit After Tax (NPAT): $27.4 million, up
2.4% from $26.7 million last year
• Total revenue from continuing operations
(excl automation): $276.5 million, up 5.1% from
$263.2 million last year
• Underlying Earnings: $23.7 million, down 7.6%
from $25.7 million last year
• Strong balance sheet with no debt at year end:
Total assets $382.3 million, 0.9% decrease from
$385.6 million last year
• Dividend: $23.3 million – 16.38 cents per share
The result is largely driven by more farmers opting
for the co-op’s premium bull teams to breed high
genetic merit cows which produce more milk and
have a lower emissions footprint per kilogram of
milksolid.
LIC’s premium genetics range accounted for
79% of the co-op’s total artificial breeding (AB)
inseminations, up from 71% the year prior.
The co-op has seen an increased uptake of our
premium genetics where young, genomically-
selected bulls are used to fast-track genetic
gain; in turn delivering more value on-farm
through increased productivity and improved
environmental outcomes.
The production efficiency of our national herd has
never been more important than it is today. To help
our sector meet its environmental goals we need
to be breeding highly efficient cows, and this result
shows that farmers are continuing to sharpen their
focus in this area.
The co-op has invested more than $80 million into
genomics over the last 30 years and research has
confirmed that farmers are capitalising on this
investment.
Farmers consistently using LIC genetics have
almost doubled the rate of genetic gain in their
herds over the last 10 years - achieving 18gBW
per annum.
Directors' Report 2022 -23
Livestock Improvement Corporation Consolidated Annual Report 2022/23 54 Livestock Improvement Corporation Consolidated Annual Report 2022/23
STATEMENT OF RESULTS FOR THE YEAR
For the year ended 31 May 2023
in thousands of New Zealand dollars
Note20232022
Continuing operations
Revenue1276,506263,182
Purchased materials(46,585)(44,561)
People costs(118,995)(108,969)
Depreciation and amortisation3,4,5(23,116)(22,749)
Other expenses10(56,855)(53,531)
Net finance costs157(277)
Bull team revaluation24,524(21,674)
Fair value change in Nil Paid Share receivable6363 1,202
Profit/(loss) before tax expense from continuing operations35,99912,623
Tax expense9(8,647)(2,000)
Profit/(loss) for the year from continuing operations27,35210,623
Discontinued operations
Profit/(loss) after tax expense from discontinued operations14-16,100
Profit/(loss) for the year27,35226,723
Hedge revaluations6113 124
Foreign currency translation movements6(85)-
Investment revaluations61,711 (5)
Land and buildings revaluations3,61,580 4,756
3,319 4,875
Comprehensive income for the year 30,67131,598
Profit from continuing operations per Ordinary Share (excl. treasury stock) $0.19 $0.07
Profit per Ordinary Share (excl. treasury stock) $0.19 $0.19
Supplementary non-GAAP note to the results for the year:
Profit/(loss) for the year27,35226,723
Plus/(less): Bull team revaluation(4,524)21,674
Tax effect on Bull team revaluation1,267(6,069)
Less: Gain on divestment of Automation business14-(15,449)
Less: Fair value change in Nil Paid Share receivable(363)(1,202)
Underlying earnings23,73225,677
Underlying earnings per Ordinary Share (excl. treasury stock) $0.17 $0.18
The increased utilisation of genomics in our
breeding programme and farmer uptake of young,
genomic bulls has gone hand-in-hand with the
higher rates of increased genetic gain we are
seeing in farmers’ herds. Not only are these farmers
breeding more environmentally efficient cows, they
are breeding them at a much faster rate.
In other business highlights, DNA testing services
and animal health testing increased – showing
farmers remain committed to investing in
technology to keep their cows healthy, protected,
and productive. Of particular note was the increase
in Johne’s disease testing which reached a
milestone of over 1.1 million test samples processed,
an increase of 16% from the year prior.
The adoption of technology to support herd
improvement and extend the artificial breeding
period was also reflected in the result, with more
cow wearable devices integrated with the co-op’s
MINDA herd management software.
Cow wearables are being increasingly used on New
Zealand dairy farms to monitor herd performance,
health, and fertility, and the Board are pleased to
see farmers integrating this technology with their
MINDA software to unlock even more value.
Orders for sexed semen saw an increase, as more
farmers factor sexed semen into their breeding
goals to accelerate the rate of genetic gain on
farm. International exports also saw increased
demand for sexed semen (up 52%), while overall
straws numbers sent offshore decreased due to a
challenging supply environment.
Sexed semen continues to be an important tool
on farm to enable farmers to generate more heifer
replacements from their best-performing animals.
We see this technology as being a central part
of the industry’s future and we are committed
to reducing the variation in conception rates
year-on-year. This season the non-return rate for
sexed semen was below what we usually expect
and several enhancements and changes to our
processes have been made. This will continue
to be monitored closely through the winter
mating period.
During the 2022-23 year, the co-op invested $18.6
million into research & development, up from $18.2
million the year prior - retaining its position as one
of the largest investors in R&D and new product
development for the agri sector, at 6.7% of revenue.
The co-op’s investment into R&D and technology
is increasingly important, with the growing
environmental challenges the dairy sector is facing.
As a farmer-owned co-op, we know that
investment in R&D is key to helping our sector
meet its environmental goals and drive positive
change when it comes to tackling problems like
climate change.
New Zealand farmers are already some of the
most efficient milk producers in the world, and our
continued investment and focus on innovation is
supporting them to retain this title.
A significant share of the co-op’s R&D investment
contributes to its world-leading methane research
programme, alongside CRV, with funding support
from the New Zealand Agricultural Greenhouse Gas
Research Centre. The programme is investigating
the genetic link between methane emissions
from bulls and their genetics to ultimately enable
farmers to breed low-methane-emitting cows.
The programme, now in its third year, has been
working in partnership with Pāmu to breed from
bulls identified to be high or low methane emitters.
After their daughters are born, their emissions will
be measured during their first milking season to
ensure they are representative of their fathers.
Outlook
LIC will continue to be firmly guided by its primary
focus of delivering on three commitments to farmer
shareholders - operational excellence, faster
genetic improvement and software reliability and
performance. The co-op’s performance against
these commitments during the 2022-23 year will be
reported on at its Annual Meeting in October.
The co-op expects underlying earnings for 2023-24
to be in the range of $22-28 million, assuming no
significant climate event or milk price change takes
place between now and then.
This will be Board Chair Murray King’s final full-year
result with LIC after announcing he will retire from
the Board at the co-op’s October Annual Meeting.
The Board thanks Murray King for 14 years of
service to LIC.
Key Results and Position
Livestock Improvement Corporation Consolidated Annual Report 2022/23 76 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Key results and position
STATEMENT OF CASH FLOWS FOR THE YEAR
For the year ended 31 May 2023
In thousands of New Zealand dollars
Note20232022
Customer receipts276,609261,249
Supplier payments(236,542)(206,181)
Net tax payments(3,983)2,125
Other operating cash flows707 (63)
Net operating cash flows1336,79157,130
Software development(9,611)(6,580)
Net sales/(purchases) of land, buildings and equipment(10,966)(10,570)
Sale of net assets held for sale14- 35,571
Other investment cash flows(4)(739)
Net investment cash flows(20,581)17,682
Payment of principal portion of lease liabilities(4,319)(3,597)
Drawdown/(repayment) of borrowings- -
Nil Paid Share receipts334 352
Dividends paid(21,881)(26,363)
Net financing cash flows(25,866)(29,608)
Movement in cash for year(9,656)45,204
Cash at beginning of the year64,135 18,821
Currency movement on cash holdings117110
Cash at end of the year54,59664,135
Key results and position
STATEMENT OF POSITION FOR THE YEAR
As at 31 May 2023
In thousands of New Zealand dollars
Note20232022
Cash54,59664,135
Debtors837,62848,190
Other assets835,89226,484
Nil Paid Shares receivable64,327 8,651
Bull team297,64093,116
Land, buildings and equipment - owned & leased3,5113,547106,426
Software, goodwill and other intangible assets438,661 38,608
Total assets382,291385,610
Creditors723,50528,612
Borrowings7- -
Deferred tax927,73226,262
Other liabilities1133,56037,679
Total liabilities84,79792,553
Net assets297,494293,057
Share capital676,737 76,737
Retained earnings6170,742169,624
Other reserves650,015 46,696
Total equity297,494293,057
Director
Date: 19 July 2023
Director
Date: 19 July 2023
Livestock Improvement Corporation Consolidated Annual Report 2022/23 98 Livestock Improvement Corporation Consolidated Annual Report 2022/23
In thousands of New Zealand dollarsNoteShare capitalRetained earningsOther reserves Total equity
Balance at 1 June 202276,737 169,624 46,696 293,057
Profit/(loss) for the year- 27,352- 27,352
Dividends paid- (26,234)- (26,234)
Hedge revaluations- - 113 113
Foreign currency translation movements--(85)(85)
Investment revaluations- - 1,711 1,711
Land and buildings revaluations3, 6- - 1,580 1,580
Balance at 31 May 202376,737 170,74250,015 297,494
Balance at 1 June 202176,737 174,687 41,821 293,245
Profit/(loss) for the year- 26,723 - 26,723
Dividends paid- (32,052)- (32,052)
Hedge revaluations- - 124124
Investment revaluations- - (5)(5)
Land and buildings revaluations3, 6- - 4,756 4,756
Adjustments on divestment-266 - 266
Balance at 31 May 202276,737 169,624 46,696 293,057
Key results and position
STATEMENT OF CHANGES IN POSITION FOR THE YEAR
For the year ended 31 May 2023
More Details
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 2023.
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 NZX Ltd. 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.
The majority of the Group's business does not follow a
clearly identifiable operating cycle, therefore the balance
sheet is presented in order of liquidity as it is more relevant
to the users of the financial statements.
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
Accounting policies have been applied consistently
with prior periods.
Accounting policies
Accounting entity
Livestock Improvement Corporation Consolidated Annual Report 2022/23 1110 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Key drivers of the model:20232022
Forecasted Fonterra Farmgate Milk Price*$8.25 - $9.00$7.50 - $9.60
WACC annualised post tax rate7.75% - 8.78%7.03% - 7.94%
Number of bulls in the team128136
Average % of run-off profile (years 2-5)43%41%
*This is the long term to short term Milk Price outlook.
(ii) Geographic analysis
In thousands of New Zealand dollars
2023
New ZealandAustraliaIrelandUnited KingdomOtherTotal
Revenues254,001 10,186 3,605 2,724 5,990276,506
Non-current assets253,959 4,7561,060 9,425 - 269,200
2022
Revenues242,308 9,494 2,548 3,501 5,331 263,182
Non-current assets245,406 5,614 907 8,135 - 260,062
2. Bull Team
The bull team is the cornerstone asset of LIC's genetics business. The 915 total bulls (2022: 967 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/(loss) for the year. 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 (revenue attributable) that make up the bull team.
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%)
• 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
grants and R&D tax incentives income of $8.477 million (2022: $9.820 million).
In thousands of New Zealand dollars
20232022
Opening balance93,116 114,790
Bull team revaluation4,524(21,674)
Closing balance97,64093,116
The impact on the fair value of a change to these key drivers is
summarised below:
20232022
Run off profile $5.8m - average of 5% shift across years 2-5
Impact on demand incorporating effect of reducing the 2023 forecast Farmgate
Milk Price by $1.25 in the short term and $2.00 in the long term
$17.9m$10.8m
WACC moves 100 basis points$2.9m$2.5m
Notes to the Financial Statements
1. Business analysis (cont.)
(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 dairy farmers.
• Farm software: data recording, tags and farm management information services.
• Diagnostics: provides DNA and animal health testing services.
NZ Market Genetics revenue is primarily recognised at a point in time, upon delivery of product to the customer. All other revenue lines
are primarily recognised over time, as the service to the customer is provided.
In thousands of New Zealand dollars
2023
NZ market
genetics
Herd
testing
Farm
software
DiagnosticsOtherEliminationsTotal
External revenue113,46739,472 53,249 29,067 41,251 - 276,506
Inter-segment revenue- - - - 5,706 (5,706)-
Total revenue113,46739,472 53,249 29,067 46,957 (5,706) 276,506
Depreciation & amortisation(1,540)(5,835)(1,293)(3,528)(10,920)- (23,116)
Segment gross profit before tax72,815 20,633 40,043 13,208 16,578 -163,277
Bull team revaluation4,524
Unallocated amounts(131,802)
Profit/(loss) before tax expense from continuing operations35,999
2022
NZ market
genetics
Herd
testing
Farm
software
DiagnosticsOtherEliminationsTotal
External revenue104,621 36,803 51,548 26,881 43,329 - 263,182
Inter-segment revenue- - - - 4,281 (4,281)-
Total revenue104,621 36,803 51,548 26,881 47,610 (4,281)263,182
Depreciation & amortisation(1,228)(5,606)(2,279)(3,297)(10,339)- (22,749)
Segment gross profit before tax69,091 19,874 38,439 10,682 18,542 - 156,628
Bull team revaluation(21,674)
Unallocated amounts(122,331)
Profit/(loss) before tax expense from continuing operations12,623
The Other segment includes international operations, research & development and support services. Unallocated amounts include
personnel costs, other expenses and net finance costs and are unallocated because the effort and cost involved to accurately
allocate these amounts to individual business segments would outweigh the benefit.
Notes to the Financial Statements
1. Business analysis
Livestock Improvement Corporation Consolidated Annual Report 2022/23 1312 Livestock Improvement Corporation Consolidated Annual Report 2022/23
In thousands of New Zealand dollars
20232022
Farm software and
herd testing CGU
Other CGUTotal
Farm software
and herd
testing CGU
Other CGUTotal
LIC database10,500 - 10,500 10,500 - 10,500
Goodwill- 2,363 2,363 - 2,348 2,348
10,500 2,363 12,863 10,500 2,348 12,848
At reporting date, software includes $8.994 million (2022: $9.513 million) of work in progress, which is not being 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.
For the LIC database and Other CGU Goodwill, 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 1.0-2.0% (2022: 0-1.0%)
for the LIC database and Other CGU Goodwill. The discount rate applied is reviewed and updated annually for movements in
published Treasury risk-free rates and is 8.3-10.4% for the LIC database and Other CGU Goodwill (2022: 8.0% for the LIC database
and Other CGU Goodwill).
Notes to the Financial Statements
4. Software and other intangibles (cont.)
(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 4.9% (2022: 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.
5. Leases
In thousands of New Zealand dollars
20232022
Land BuildingsEquipmentTotalLand BuildingsEquipmentTotal
Opening balance38,092 45,901 22,433 106,42635,755 38,870 20,489 95,114
Additions35 4,484 7,574 12,093- 2,507 8,081 10,588
Disposals- (663)(424)(1,087)- (5)(147)(152)
Depreciation- (2,503)(6,733)(9,236)- (2,133)(6,228)(8,361)
Revaluation(137)2,460 - 2,323 2,337 3,358 - 5,695
Foreign exchange- (3) (25) (28) - 8 21 29
Leased assets movement - note 5- 1,824 1,232 3,056 - 3,296 217 3,513
Closing balance37,990 51,500 24,057 113,547 38,092 45,901 22,433 106,426
Value if carried at cost11,726 21,331 N/A 11,691 21,399 N/A
Estimated useful lives N/A 10-60 years 3-10 years N/A 10-60 years 3-10 years
Land and buildings are carried at fair value, determined by an independent valuer every year with a desktop valuation at April 2023
(most recent full valuation as at April 2021). Fair value is based on comparable sales for land and based on depreciated replacement
cost for buildings. 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 are reviewed annually for any indications of impairment.
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 are reviewed annually for
indicators of impairment.
Intellectual property (IP) assets are amortised over their estimated useful lives of up to 13 years.
The genetic data in the LIC database increases 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.
Notes to the Financial Statements
3. Land, buildings and equipment
In thousands of New Zealand dollars
20232022
Software & IP GoodwillDatabaseTotalSoftware & IP GoodwillDatabaseTotal
Opening balance25,760 2,348 10,500 38,608 31,595 2,330 10,500 44,425
Additions9,646 - - 9,6466,501 - - 6,501
Disposals/impairment- - - - (2,278)- - (2,278)
Amortisation(9,557)- - (9,557)(10,220)- - (10,220)
Foreign exchange(51)15 - (36)162 18 - 180
Closing balance25,798 2,363 10,500 38,66125,760 2,348 10,500 38,608
Livestock Improvement Corporation Consolidated Annual Report 2022/23 1514 Livestock Improvement Corporation Consolidated Annual Report 2022/23
The Group's funding comes from Share Capital, Retained earnings, Other reserves and Borrowings.
(i) Ordinary Shares
All Ordinary Shares have voting rights and the right to receive dividends based on the profits of the Company.
At reporting date there were 142,344,836 Ordinary Shares on issue, excluding 5,337,584 shares held as treasury stock (2022:
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 $4.327 million (2022: $8.651 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 8.0% (2022: 5.0%).
(iv) Bank debt
Bank loans for seasonal funding requirements are secured by a Negative Pledge granted to Westpac and Rabobank over certain
New Zealand-based subsidiaries.
Notes to the Financial Statements
6. Funding
(iii) Other reserves and equity
In thousands of New Zealand dollars
Hedge
revaluation
reserve
Investment
revaluation
reserve
Land & building
revaluation reserve
Foreign currency
translation reserve
Other
reserves
Balance at 1 June 202258 4,858 41,780 - 46,696
Profit/(loss) for the year- - - -
-
Dividends paid- - - - -
Revaluations113 1,711 1,580 (85)3,319
Balance at 31 May 2023171 6,569 43,360 (85)50,015
Balance at 1 June 2021(66)4,863 37,024 - 41,821
Profit/(loss) for the year- - - - -
Dividends paid- - - --
Revaluations124 (5)4,756 - 4,875
Balance at 31 May 202258 4,858 41,780 - 46,696
Lease liabilities
Set out below are the carrying amounts of lease liabilities recognised at 31 May 2023 (included in Other liabilities) excluding lease
liabilities held for sale:
The Group had total non-variable cash outflows for leases of $4.868 million in 2023 ($4.492 million in 2022).
(iii) Lease related amounts in the Statement of Results
(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:
In thousands of New Zealand dollars
20232022
Buildings EquipmentVehiclesTotalBuildings EquipmentVehiclesTotal
Opening Balance10,829 273 5,997 17,099 7,533 185 5,868 13,586
Depreciation(1,402)(96)(2,825)(4,323)(1,233)(166)(2,362)(3,761)
Additions3,322 3 4,389 7,7144,529 249 2,461 7,239
Disposals/Modifications(97)- (238)(335)- 5 30 35
Closing balance12,652 180 7,32320,15510,829 273 5,997 17,099
Lease terms 2-28 years 2-5 years 2-7 years 2-20 years 2-5 years 3-7 years
Notes to the Financial Statements
5. Leases (cont.)
In thousands of New Zealand dollars
20232022
Buildings EquipmentVehiclesTotalBuildings EquipmentVehiclesTotal
Within 1 year1,208 23 3,013 4,244 1,191 138 2,113 3,442
Between 1 to 5 years4,466 -4,754 9,220 3,788 22 4,081 7,891
More than 5 years8,004 - - 8,004 6,706 - 34 6,740
Closing balance13,678 237,767 21,468 11,685 160 6,228 18,073
In thousands of New Zealand dollars
20232022
Buildings EquipmentVehiclesTotalBuildings EquipmentVehiclesTotal
Depreciation1,402 962,825 4,323 1,233 166 2,362 3,761
Interest expense478 4 370 852 403 8 295 706
Variable lease payments- - 1,123 1,123 - - 1,274 1,274
Short-term and low-value leases- 9- 9 - 67 - 67
Total amount 1,880 1094,3186,307 1,636 241 3,931 5,808
Livestock Improvement Corporation Consolidated Annual Report 2022/23 1716 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Notes to the Financial Statements
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
As part of business activities, LIC incurs research and development expenses while working on a number of projects. Research and
Development expenses were previously disclosed separately on the face of the 'Statement of Results', however are now presented in
the notes as include both people costs and other expenses.
*Agreed upon procedures related to the R & D Tax Incentive scheme and disclosure of historical financial data in a sustainability report.
LIC has transitioned to the R&D Tax Incentive from the Callaghan Growth Grant. The R&D Tax Incentive scheme includes both core
R&D expenditure, as well as other expenses that support R&D, and is recorded as non-taxable revenue.
In thousands of New Zealand dollars
20232022
Profit/(loss) for the year from continuing operations27,35210,623
Tax expense8,6472,000
Profit/(loss) before tax expense from continuing operations35,99912,623
Tax at 28% NZ company tax rate10,0803,534
Effect of overseas income(683)(156)
Non-deductible items(774)(1,563)
Adjustments from prior periods24185
Tax expense8,6472,000
Current tax expense7,8438,612
Deferred tax expense804(6,612)
Imputation credits available19,00616,687
In thousands of
New Zealand dollars
As at
31 May 2023
Through
Profit/(loss)
Through
Other reserves
As at
31 May 2022
Through
Profit/(loss)
Through
Other reserves
As at
31 May 2021
Bull team & livestock26,8351,168- 25,667 (6,117)- 31,784
Buildings & equipment
1,762 (212)666 1,308 147 939 222
Intangible assets
1,460 - - 1,460 (569)- 2,029
Other
(2,325)(152)- (2,173)(73)- (2,100)
Total27,732804666 26,262 (6,612)939 31,935
10. Other expenses
Other expenses includes the following amounts paid to the Group's auditors, KPMG:
In thousands of New Zealand dollars20232022
Audit of the financial statements
210 196
Tax - compliance services for R&D Tax Incentive scheme
17 287
Agreed upon procedures*
24 -
Compilation of dataset of metrics
11-
Total262 483
(ii) Deferred tax liability
(i) Debtors
Bad debts of $0.007 million have been expensed during the year (2022: $0.029 million), and 94.0% of trade receivables are not past
due (2022: 98.0%).
(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 2023 was 5.3% (2022: 3.2%). A 1.0% increase in interest rates would increase interest paid and
reduce profit after tax by approximately $0.003 million (2022: $0.003 million).
(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.
The Group has bank funding facilities in place until February 2024 and expects to be able to meet any obligations which fall due.
Notes to the Financial Statements
7. Liquidity and interest rate risk
In thousands of New Zealand dollars20232022
Demand to
6 months
6 months
to 1 year
1 year
plus
Total
Demand to
6 months
6 months
to 1 year
1 year
plus
Total
Borrowings- - - - - - - -
Creditors23,505- - 23,50528,612 - - 28,612
23,505- - 23,50528,612 - - 28,612
(ii) Other assets
Inventories utilised and expensed during the period amounted to $33.113 million (2022: $27.563 million). Inventories written off in 2023
totalled $0.038 million (2022: $0.684 million).
Investments are non-current assets and are held at fair values based on available share prices and other market information. Gains
and losses are recognised in other comprehensive income, as investments are not held for trading. Significant investments include
National Milk Records PLC $9.319 million (2022: $7.975 million) and Figured Limited $4.207 million (2022: $3.999 million).
In 2022 Debtors included an amount in relation to LIC's transition to the R&D Tax Incentive scheme, from 2023 such balances are
reported as part of Provision for tax in Other liabilities due to the IRD approving the 2021 and 2022 R&D tax incentive claim in the
current year.
In thousands of New Zealand dollars
20232022
Inventories19,92312,368
Investments15,027 13,261
Derivatives used for hedging164 51
Other livestock778804
35,89226,484
8. Debtors and other assets
In thousands of New Zealand dollars
20232022
Research & Development Expenses18,577 18,184
Livestock Improvement Corporation Consolidated Annual Report 2022/23 1918 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Notes to the Financial Statements
14. Discontinued operations
Notes to the Financial Statements
11. Other liabilities
On 8 June 2021, LIC announced it had entered into an agreement to divest its automation business for $38.100 million (with $3.788
million held in escrow until June 2023 and the remainder paid in cash). The escrow was released to LIC on 28 June 2023.
The transaction was completed on 11 June 2021 and LIC provided transitional services to the purchaser until 10 June 2023.
The results for discontinued operations are presented below:
The net cash flows arising from discontinued operations are presented below:
Total gain on sale of net assets of $15.449 million arose from the sale price of $38.100 million plus agreed working capital adjustments,
less value of net assets held for sale of $23.815 million (as at 31 May 2021).
Cash and Creditors in the 2023 Statement of Position includes $0.041 million (2022: $3.005 million) for balances held in LIC bank
accounts on behalf of the purchaser of LIC's automation business.
In thousands of New Zealand dollars
20232022
Revenue-1,052
Purchased materials-(264)
People costs-(94)
Other expenses-(626)
Gain on sale of net assets-15,449
Net finance costs-232
Profit/(loss) before tax expense from discontinued operations-15,749
Tax expense-351
Profit/(loss) for the year from discontinued operations-16,100
Profit from discontinued operations per Ordinary Share (excl. treasury stock)
$
-
$0.11
On 7 June 2023, LIC announced it's intention to divest it's 19.8% shareholding in National Milk Records PLC by way of a scheme of
arrangement. The scheme is subject to approval by the UK courts and other customary conditions. The transaction is expected to
close in the third quarter of 2023 and, if approved, LIC would divest 4,194,880 shares in National Milk Records PLC at £2.15 per share.
After 31 May 2023, a dividend of 16.38 cents per Ordinary Share was proposed by the Directors in relation to the 2023 year, or $23.323
million (2022: 18.43 cents per Ordinary Share, or $26.232 million).
In thousands of New Zealand dollars
20232022
Operating- 956
Investing-35,571
Financing- -
Movement in cash for the year-36,527
15. Subsequent events
The provision for sire proving rebate represents a rolling three years of expected rebate payments, with approximately $1 million due
to be paid in each of the next three years, discounted to 31 May 2023.
13. Reconciliation of the Profit/(loss) for the year to Net operating cash flows
In thousands of New Zealand dollars
20232022
Provisions for employee entitlements9,340 7,521
Provision for sire proving rebate2,547 2,599
Provision for tax(327)8,910
Lease liabilities - current4,244 3,442
Lease liabilities - non-current17,224 14,631
Other532576
33,56037,679
In thousands of New Zealand dollars
20232022
Profit/(loss) for the year27,35226,723
Adjusted for:
Depreciation and amortisation on all assets23,11622,749
Bull team revaluation(4,524)21,674
Deferred tax expense804(6,612)
Working capital movements and other non-cash items(9,957)(7,404)
Net operating cash flows36,79157,130
Directors of the Company and their related entities hold 375,359 Ordinary Shares, representing 0.3% of shares on issue (2022: 294,950
Ordinary Shares, representing 0.2%).
There are no loans or deposits with related entities outside of the consolidated Group.
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:
In thousands of New Zealand dollars
20232022
Remuneration of key Management and Directors 4,197 5,280
Sale of goods and services to key Management and Directors597 512
Purchases of goods and services from key Management and Directors166 274
Livestock Improvement Corporation Consolidated Annual Report 2022/23 2120 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Independent Auditor’s Report
To the shareholders of Livestock Improvement Corporation
Report on the audit of the consolidated financial statements
Opinion
In our opinion, the consolidated financial statements
of Livestock Improvement Corporation Limited
(the ’Company’) and its subsidiaries (the 'Group') on
pages 7 to 21:
i.Present fairly, in all material respects the
Group’s financial position as at 31 May 2023 and
its financial performance and cash flows for the
year ended on that date; in accordance 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 2023;
— The consolidated statements of result, 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 compliance services relating to the research
and development tax credit, agreed upon procedure engagements over the research and development tax credit
and the disclosure of historical financial data in a sustainability report, and a compilation of a dataset of metrics.
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 $1,480,000 determined with reference to a benchmark of profit/(loss) for the year before tax
(excluding bull team revaluation movements). We chose the benchmark because, in our view, this is a key measure
of the Group’s performance.
© 2023 KPMG, a New Zealand Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company
limited by guarantee. All r ights reserved.
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 prepares a model that
projects the number and types of straws
that the current team can produce and
will be sold over the useful 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 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 utilised our valuation specialists to review 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.
We considered the adequacy of the related financial statement
disclosures.
We had no matters to report as a result of our procedures.
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 $2.3m, arising from a
number of acquisitions; and
‒ The LIC Animal Database of
$10.5m.
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
Livestock Improvement Corporation Consolidated Annual Report 2022/23 23
The key audit matter How the matter was addressed in our audit
The two significant cash generating units
(CGUs) holding these assets are tested
twice a year for impairment using
discounted cashflow models to
determine the recoverable amount.
The annual impairment tests performed
by the Group were significant to our
audit due to the 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.
The market capitalisation deficit that
exists at balance date is an indicator of
impairment.
‒ Performing sensitivity analysis around the key assumptions
used in the model.
We challenged management on whether the market capitalisation of
the Group is an indicator of impairment and subsequently used our
own valuation specialists to challenge 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 Key Metrics, Directors Report and the Corporate 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 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.
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
KPMG
Hamilton
19 July 2023
Livestock Improvement Corporation Consolidated Annual Report 2022/23 2524 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Corporate Governance Statement
Livestock Improvement Corporation (“LIC” or the “Company”) is a New Zealand Co-operative Company,
owned by New Zealand dairy farmers. Its shares are quoted on the Main Board of the New Zealand Stock
Exchange (NZX) and it is a Climate Reporting Entity (as defined under The Financial Sector (Climate-related
Disclosures and Other Matters) Amendment Act 2021). LIC’s first climate statement reporting period will be
for the year ended 31 May 2024.
In this section of the 2023 Annual Report, we report against the Principles and Recommendations of the
NZX Corporate Governance Code dated 17 June 2022 (the NZX Code) and the extent that LIC has followed
the NZX Code’s recommendations. This statement is current to 31 May 2023 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 (www.lic.co.nz/shareholders/corporategovernance/) you will find the following corporate
governance documents:
• Constitution
Charters
• LIC Board Charter
• Audit, Finance & Risk Committee Charter
• Remuneration and Appointments Committee Charter
• Disclosure Committee Charter
• LIC Shareholder Reference Group, Board and Management Engagement Charter
Other Corporate Governance Documents
• Code of Conduct and Ethics
• Continuous Disclosure Policy
• Diversity and Inclusion Policy
• Dividend Policy
• External Audit Independence Policy
• Honoraria Committee Terms of Reference
• Shareholder Reference Group Terms of Reference
• Share Trading and Disclosure Policy
Our latest Sustainability Report can also be accessed on LIC’s website at
https://www.lic.co.nz/about/environment-and-sustainability/sustainability/
Corporate Governance Report
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 made 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.
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. LIC’s General
Counsel 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 44.
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.
Livestock Improvement Corporation Consolidated Annual Report 2022/23 2726 Livestock Improvement Corporation Consolidated Annual Report 2022/23
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 responsibilities
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.
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 the following:
The Board is also directly responsible for approval
of significant expenditures, policy determination,
selection of Appointed Directors, oversight of risk
(including climate-related risks and opportunities
and setting risk appetite for all risk categories)
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.
Board composition
The Board is comprised of six Elected and three
Appointed Directors. The LIC Constitution allows
for up to four Appointed Directors to be appointed
to the Board.
The current Board of Directors is made up
as follows:
• Elected Directors: Murray King (Chair), Ben
Dickie, Ken Hames, Matt Ross, Corrigan
Sowman (Chair-designate) and Alison Watters.
• Appointed Directors: Tim Gibson, Sophie
Haslem and Candace Kinser.
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, can be found
on the LIC website.
Full details of the strategy, including the measures for each of these commitments, are available on LIC’s
website at www.lic.co.nz/about/our-strategy
LIC’s strategy makes three commitments to farmers:
Operational
Excellence
LIC commits to getting the
basics right and delivering for
farmers, on time, every time.
Faster Genetic
Improvement
LIC commits to having farmers’
backs when it comes to helping
them meet the environmental
challenges they face, in
particular animal efficiency,
and nitrogen and methane
mitigation.
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.
123
Livestock Improvement Corporation Consolidated Annual Report 2022/23 2928 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Nomination, election and appointment
of Directors
The nomination, election and appointment of
Directors to the Board of LIC is also governed by
the LIC Constitution. The relevant NZX Rulings and
waivers to the NZX Listing Rules are set out on
pages 50 and 51.
Elected Directors are nominated and elected
by eligible Shareholders within the region each
Director represents (two regions in total). Once
elected they will hold office for a period of
approximately three years. The term will be in
accordance with the Rotation Schedule.
All recommendations and deliberations on the
selection of Appointed Directors are undertaken by
the full Board. Appointed Directors hold office for
approximately three years.
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.
Tim Gibson was due to retire by rotation in
October 2022 and sought re-appointment. His
appointment as an Appointed Director was ratified
by shareholders at the 2022 Annual Meeting for a
further term of approximately three years.
In this year’s Director elections, North Island
Director Ken Hames and South Island Director
Murray King are due to retire by rotation at the
Annual Meeting. Murray King has decided, after
fourteen years on the LIC Board, to not seek re-
election while Ken Hames is seeking re-election as
a North Island Director.
The elections are timed to coincide with the 2023
Annual Meeting.
Appointed Director, Sophie Haslem is due to retire
by rotation in October 2023 and, with the support
of the Board, will be seeking ratification of her re-
appointment for a further term of three years at the
2023 Annual Meeting.
Meetings
The Board met seven times in 2022/23 with seven
additional strategy days. One further meeting
of the Board was held with members of the
DairyNZ and New Zealand Animal Evaluation
Limited (NZAEL) boards to discuss NZAEL’s
proposals in relation to a national genomic animal
evaluation system.
Board Attendance:
Board Meetings
Special
Board Meetings
Board Strategy Days
No of meetingsHeldAttendedHeld AttendedHeldAttended
Gray Baldwin*731-7-
Ben Dickie771176
Tim Gibson761177
Ken Hames771177
Sophie Haslem771-77
Murray King771177
Candace Kinser 771177
Matt Ross771177
Corrigan Sowman **751176
Alison Watters751177
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. Directors also undertake in-market
and stakeholder visits.
During the period the Board and members of the
Senior Leadership Team visited the United States
of America on a study tour to understand the latest
innovations in information technology as well as
advanced breeding technologies.
The Chair revises development plans for each of
the Directors annually. These plans specifically
focus on areas that will not only develop the
individual Director but will also enhance overall
Board capability. The Board development and
engagement plan is actively referenced and
reviewed at each Board meeting. In addition,
budget provision is in place for Directors who want
to undertake approved specific higher-level study,
the cost of which is shared on a 50:50 basis.
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. Independent consultants, Propero
Consulting Limited, were last engaged in 2021
and undertook a formal, independent review
of the performance of the Board, individual
Directors and Board committees. The Board was
found to be operating effectively and specific
areas for further development were shared with
some Directors.
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,
including the current Chair and the Chair-designate.
The Board has considered Murray King’s tenure on
the Board and 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,
to act in the best interests of the company and to
represent the interests of its Shareholders generally.
*retired at the 2022 Annual Meeting
** elected at the 2022 Annual Meeting
Livestock Improvement Corporation Consolidated Annual Report 2022/23 3130 Livestock Improvement Corporation Consolidated Annual Report 2022/23
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 developed 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.
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:
All the current members of the Committee are
considered to be independent. Employees only
attend Committee meetings at the invitation of
the Committee.
The Committee meets at least four times a year
and met six times in 2022/23.
While all farmer Elected 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 and Chair-designate
are assessed to be independent Directors. 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.
As at 1 June 2022Murray King, Gray Baldwin,
Ben Dickie and Ken Hames
As at 14 November 2022Murray King, Ben Dickie,
Matt Ross and Corrigan Sowman
Remuneration and
Appointments Committee
A Sub-Committee of the Board, the
Remuneration and Appointments 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:
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 2022/23.
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, General
Counsel and Communications Manager. Disclosure
Committee meetings are also attended by key
members of management as required.
The Committee meets as and when required and
met once in 2022/23.
New Zealand Animal
Evaluation Committee
This Sub-Committee of the Board was established
in October 2021. Under its terms of reference, the
Committee has been asked to consider and advise
the Board on the ongoing and future use of LIC
intellectual property in a national genomic animal
evaluation system. The Committee is chaired by
Murray King with the other Director members being
Tim Gibson, Matt Ross and Alison Watters.
The Committee met twice in 2022/23, and the
Board was provided with multiple updates
during 2022/23.
The Board believes that the importance of LIC’s
contribution to a future national genomic animal
evaluation system should not be underestimated
or undervalued and it remains a Board priority that
discussions with DairyNZ and NZAEL reflect this.
As at 1 June 2022Murray King, Matt Ross
and Alison Watters
As at 14 November 2022Murray King, Ken Hames
and Alison Watters
Livestock Improvement Corporation Consolidated Annual Report 2022/23 3332 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Board Committee attendance:
Audit, Finance &
Risk Committee
Remuneration &
Appointments
Committee
Disclosure
Committee
NZ Animal
Evaluation
Committee
No of meetingsHeldAttendedHeldAttendedHeldAttendedHeldAttended
Gray Baldwin*62
Ben Dickie66
Tim Gibson4421
Ken Hames*** 6343
Sophie Haslem6611
Murray King66441122
Candace Kinser
Matt Ross***644122
Corrigan Sowman**641 (observer)
Alison Watters4421
Technology Advisory Board
In addition to the above Committees, Appointed
Director Candace Kinser chaired two meetings of
LIC's Technology Advisory Board during 2022/23.
Four 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.
Takeovers
Due to LIC’s co-operative company status, its
Constitution and the Dairy Industry Restructuring
Act 2001 (DIRA) 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.
*retired at the 2022 Annual Meeting
** elected at the 2022 Annual Meeting
***meetings attended impacted by changes to committee membership during 2022/23
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.
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 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.
Non-financial reporting
Sustainability
LIC’s annual sustainability report is prepared in
accordance with the core option of the Global
Reporting Initiative (GRI) Standards and in
line with our commitments as members of the
Climate Leaders Coalition and the Sustainable
Business Council. The Sustainability Report
is a key component of LIC’s move towards
integrated reporting.
LIC’s first climate statement reporting period will
be for the year ended 31 May 2024.
Diversity, Equity 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.
As at the 2022/23 year-end, members of the
Board and Senior Leadership Team self-identified
as follows:
LIC’s staff-led Diversity, Equity and Inclusion
Committee aims 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.
A variety of diversity, equity and inclusion related
topics, information and events have been presented
to staff and a regular newsletter is produced which
highlights specific cultural and international events
and celebrations. The newsletter also provides
educational information for staff on topics relating
to diversity, equity and inclusion to increase the
wider staff’s understanding of these concepts.
The Committee identified two main areas of focus
for the coming year. These are:
• Implementation of a Te Ao Māori Strategy
• Establishment of a Women in
Leadership Group.
20232022
MFGDMFGD
LIC Board
63-63-
LIC Senior
Leadership
Team
62-52-
Key: M = Male / F = Female / GD = Gender Diverse
Livestock Improvement Corporation Consolidated Annual Report 2022/23 3534 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Te Ao Māori Strategy:
LIC has partnered with Tūtira Mai NZ, a leading
cultural competency and Māori advisory
consultancy organisation to design and implement
a Te Ao Māori Strategy. Work has commenced on
this and will be rolled out in the next 2-3 years.
Women in Leadership Group:
This group has been set up with the aim of fostering
a community of women and empowering them
to become leaders in their respective fields. The
group seeks to build strong connections across
various industries, and to provide mentorship and
development advice from experts with diverse
backgrounds and skill sets.
LIC continues to collect baseline data from
its employees on an opt-in basis, which now
includes religion, gender identity and disability,
in addition to age and ethnicity. This information
has highlighted that LIC is a reasonably diverse
company. The aim is to continually update our
baseline data so that targeted initiatives can
be completed.
In support of initiatives that foster an inclusive
working environment, 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, equity and inclusion within our
workplace. Management appointment interviews
are conducted by a panel that represents diversity
of thought. Training for all employees is provided on
the benefits of diversity, equity and inclusion and
has been developed and implemented to drive an
understanding of unconscious bias.
In addition to the above, LIC continues to look at
its 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.
NZX Code Principle 5, Remuneration: The remuneration of directors and executives should be
transparent, fair and reasonable.
In thousands of New Zealand dollars
Fees
E Ruiz4
4
Directors Remuneration
Under LIC's Constitution, LIC has an Honoraria
Committee tasked with considering and
recommending to Shareholders the form and
amount of fees paid to LIC’s Directors. The
Honoraria Committee is made up of between
two and four Shareholders, elected by their
fellow Shareholders. The Honoraria Committee’s
terms of reference are on the LIC website. LIC
does not have a directors’ remuneration policy,
relying instead on the Honoraria Committee to
recommend to Shareholders the remuneration to
be paid to the Directors.
The total remuneration for LIC's Directors is
approved by Shareholders at the Annual Meeting
and the current pool of $664,000 was approved
at the meeting held in October 2022.
Directors of the Company received the following
remuneration for the twelve months ending
31 May 2023:
In addition to the above remuneration, and in
accordance with the Constitution, Directors
are reimbursed for any actual and reasonable
expenses incurred while on LIC business. This is
In thousands of New Zealand dollars
BoardAFRCRem TA B
Total
Fees
M King129129
G Baldwin*2121
B Dickie5757
T Gibson571370
K Hames5757
S Haslem572077
C Kinser 571370
M Ross5757
C Sowman**3636
A Watters5757
631
*retired at the 2022 Annual Meeting
** elected at the 2022 Annual Meeting
paid in the form of a standard annual incidental
allowance with any further actual and reasonable
expenses incurred while on LIC business also
reimbursed. The standard annual incidental
allowance is set at $1,200 for each Director and
$6,000 for the Chair. The payment of a standard
incidental allowance reduces the administrative
effort required in submitting and processing
transactions of a relatively low value.
The Directors receive no other benefits.
Directors of subsidiaries of the Company received
the following remuneration for the twelve months
ending 31 May 2023:
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 38.
Chief Executive Remuneration
Chief Executive (CE) David Chin’s remuneration
package is made up of a combination of base
salary and annual performance payments. His
performance is assessed based on a range of
factors including:
• Overall financial performance (40%): delivery
of the annual plan and financial budget
• Overall strategic performance (60%), including:
• Organisational health (target to be a top
quartile organisation)
• Customer delivery (target to achieve
improvement in customer Net
Promoter Score)
• Delivery of strategy and key projects
The remuneration paid to LIC’s CE for the year
ending 31 May 2023 is set out below:
The CE’s current remuneration package consists
of $500,000 TPV and short-term incentive
target of achieving both budget goals and other
standard objectives (20% of TPV) as well as stretch
objectives in relation to strategy (20% of TPV)
and does not include any long-term incentives or
share options.
In thousands of New Zealand dollars
2023
Base Salary (TPV)500
Short-term incentive payment received
67
Total
567
Livestock Improvement Corporation Consolidated Annual Report 2022/23 3736 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Remuneration Range (Gross)Current EmployeesExited EmployeesTotal
100,000 – 109,99958563
110,000 – 119,99943245
120,000 – 129,99938 1 39
130,000 – 139,99926 1 27
140,000 – 149,99925227
150,000 – 159,99911- 11
160,000 – 169,99913215
170,000 – 179,999718
180,000 – 189,9992 - 2
190,000 – 199,9995 - 5
200,000 – 209,999 3 - 3
210,000 – 219,9995-5
220,000 – 229,999 3 14
230,000 – 239,9996 - 6
250,000 – 259,999 4 - 4
260,000 – 269,9993-3
270,000 – 279,9993-3
300,000 – 309,999 1 - 1
370,000 – 379,9991-1
390,000 – 399,9991-1
500,000 – 509,9992 - 2
560,000 – 569,9991 - 1
640,000 – 649,9991 - 1
26215277
LIC has a Remuneration Policy for all employees which is available to employees on LIC's intranet.
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 2022 to 31 May 2023 the following numbers of
employees (not being Directors) received total remuneration, including benefits, of at least $100,000:
Employee Remuneration
Biosecurity & Animal Health
A biosecurity or animal health event
impacts LIC’s livestock or its ability to
provide products or services to
its customers.
Disruption to Production or Service
Any disruption caused by processes, people,
equipment, systems, software availability or
external events which affects LIC’s ability to
deliver quality semen or other products and
services to its customers.
Brand Damage
Continued short-term reputational
damage results in damage to LIC’s brand.
Economic Conditions on Farm
LIC’s revenue may be reduced as farmers
decrease expenditure as a consequence of
reduced returns, availability of cash or an
increased cost of production resulting from
milk price, exchange rates, government
regulation or political stability.
Market Disruption
The inability to commercialise innovations
or respond quickly to market disruption or
emerging technologies causes reduce use by
Shareholders of existing products or services
with a resultant reduction in revenue.
Compliance
Breaches of laws, regulations, licences,
standards, NZX continuous disclosure
requirements or OMARs result in
restrictions, penalties, or loss.
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.
Financial Risk
Failure to manage LIC’s debts and financial
leverage or to identify fraud, internal errors
or money owned results in LIC being unable
to cover operational costs and or pay back
its debts.
People & Capability
Availability, capability and engagement of
our people and key vendors to effectively
execute LIC strategic plan.
Strategic Risk
An inability to deliver LIC’s agreed strategy
due to disruption, planning, risk, resourcing
and other barriers not identified or managed.
Health & Safety
The potential for injury or loss of life for
employees, contractors or visitors engaged
in LIC business activities or on LIC sites or
prosecution of the PCBU.
Managing Risk
LIC has a risk management framework in place
to support the identification, quantification and
management of risk. LIC’s risk management
framework fosters improved ownership of risk
identification and management across all levels
of the business and a new risk tool launched in
2022 supports this occurring in real time. Key
risk indicators provide management with early
warning of any risks requiring increased focus.
LIC’s risk ratings against appetite are reported
to the Senior Leadership Team and the Audit,
Finance & Risk Committee on a regular basis,
with each risk category and its associated risk
causes and controls reviewed periodically by the
Senior Leadership Team and the Audit, Finance &
Risk Committee.
LIC’s risk categories are:
Livestock Improvement Corporation Consolidated Annual Report 2022/23 3938 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Of particular interest to Shareholders and
stakeholders will be 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 (animal handling,
agrichemicals, farm machinery use and regular
presence on customer farms) lone working, working
at heights and 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.
For the last 14 years, LIC used the TRIR (Total
Recordable Incident Rate) as the enterprise safety
measure of notifiable events, lost time injuries,
medical treatment claims and traffic infringements.
From 1 June 2022, LIC has used LTIFR (Lost Time
Injury Frequency Rate) as the enterprise safety
measure. LTIFR is the number of lost time injuries
within a certain accounting period, relative to the
total number of hours worked in that period.
The main benefits of using LTIFR are:
• It enables benchmarking with others in
New Zealand and in the dairy sector
• It provides for a focus on more severe injuries
(injuries resulting in an employee being unable
to attend work for at least one full day or shift
known as ‘lost time injuries’).
The LTIFR is not LIC’s sole safety measure – it
complements a range of other leading and lagging
safety measures, which are regularly reported to
the Senior Leadership Team and the Board.
As can be seen from the table above, the TRIR and
LTIFR values increased since 2021/22. The 2021/22
TRIR and LTIFR values set a high comparative
benchmark, as LIC was still affected by Covid-19
lockdowns during that time.
The number of notifiable events decreased in
2022/23 with only one notifiable incident compared
with two in 2021/22.
Other performance indicators also showed that the
number of events reported increased in 2022/23
and more of these were of lower consequence
compared to the previous year.
The Company’s safety strategy concentrates on:
ongoing health and safety improvement, critical
risk management, learning from our safety events,
supporting workers, and providing development
opportunities.
This year we focused on:
• Improvements to our hazardous substance
training and capability, emergency response
plans, and our storage facilities.
• Implementing health and safety objectives
within all business units, focussing on their
unique risks to enable ongoing improvement.
• Improving near miss reporting, timely
completion of event investigations and
improvement actions through training and
enhancements to our reporting system.
• Providing all Health and Safety
Representatives with the opportunity to
receive additional training to enhance their
health and safety knowledge.
• The revision of our health and safety risk
management procedure to provide more
guidance on how to manage risks at LIC, and
to clarify the expectations for managing our
critical risks.
We have also started a review to help fully
understand LIC’s safety culture and leadership,
the outcomes of which will be used to develop
Company-wide safety leadership training and
2022/232021/22
TRIR (100 FTE)3.792.13
LTIFR (200,000 h)2.231.81
Notifiable Events12
to improve the Company’s proactive risk control
verification processes.
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 bull semen during a season relies on a
number of factors, including the maintenance and
operation of key equipment, staff and 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.
A Crisis Management Framework is in place,
supported by defined key roles and alternates
and business continuance plans, and these are
reviewed and tested regularly including an annual
crisis simulation exercise.
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 visibility across
the technology environment provide the ability to
detect potential threats. Business continuity and
disaster recovery plans are in place (including for
cyber attacks) and reviewed regularly and backups
are performed regularly to support LIC’s recovery
should it be needed.
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. 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,
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. Off-shore business activity
also provides a buffer for NZ-specific impacts.
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
through the segregation of duties. 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 quarantine bulls
maintained separately to production bulls.
Controls are in place on LIC’s bull farms, including
segregation of bulls and double-fencing, for safety
and to reduce the risk of unwanted organisms, such
as Mycoplasma bovis (M.bovis). Bulls are regularly
inspected and undergo health testing. Business
continuity plans are in place and tested. LIC has
veterinary and epidemiological expertise within
the Company.
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 maintains a watching brief on the innovation
and technology landscape and follows 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.
Livestock Improvement Corporation Consolidated Annual Report 2022/23 4140 Livestock Improvement Corporation Consolidated Annual Report 2022/23
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. LIC regularly
reviews progress against strategic objectives and
has developed key metrics to ensure delivery of the
commitments made to Shareholders.
Climate
Climate risk is a sub-category risk in LIC’s risk
management tool as it impacts more than one of
LIC's key risk areas. LIC has identified transition
and physical risks related to climate change.
LIC is a member of the Climate Leaders Coalition
and the Sustainable Business Council. LIC
measures and publicly reports our greenhouse
gas emissions, and has set a public, science
based, emissions reduction target, and works
with our staff and suppliers to build 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. The Resilient Dairy
programme is a great example of our commitment
to long-term future improvement.
NZX Code Principle 7, Auditors: The Board should ensure the quality and independence of the external
audit process.
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 both
virtually and in person on Thursday 12 October
2023 at 5pm at the Hotel Ashburton, Ashburton
and online (www.lic.co.nz/annualmeeting). LIC
welcomes Shareholders' attendance either on-line
or in person. A Notice of Meeting will be sent to
Shareholders in September 2023.
External Audit
LIC has an External Auditor Independence Policy
that requires the external auditor to be independent
and to be seen as independent. This policy can be
found on the LIC website. The Board is satisfied that
there is no relationship between the Auditor and
LIC or any related person at this time, that 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 that we are fully compliant with. LIC’s
external auditor attends its Annual Meeting each
year to answer questions from Shareholders in
relation to the audit.
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 internal audit or review
issues and incidents, improvements and changes
to internal controls.
Livestock Improvement Corporation Consolidated Annual Report 2022/23 4342 Livestock Improvement Corporation Consolidated Annual Report 2022/23
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
Benjamin John Dickie:
Director of:
• Taranaki Veterinary Centre Limited
Timothy Dunlop Gibson:
Director of:
• The Equanut Company Limited (Chair)
• Manage My Health Global Limited
(Ceased 31 May 2023)
• Miraka Limited (Ceased 10 February 2023)
and subsidiaries:
• Miraka Brands Limited
(Ceased 10 February 2023)
• Miraka Holdings Limited
(Ceased 10 February 2023)
• Omnieye Holdings Limited
• Port Otago Limited Port Otago Limited
(Chair from 1 January 2023)
and subsidiaries:
• Chalmers Properties Limited
• Fiordland Pilot Services Limited
• Port Chalmers Container Terminal Limited
(from 19 December 2022)
• 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
(Ceased 27 June 2022)
• The Skills Organisation Incorporated
• Tūhana Business & Human Rights Limited
• Tūhana Consulting Limited
Kenneth Charles Hames:
Chair of
• Extension 350 (Ceased October 2022)
• Duke of Edinburgh Award NZ
Sophie Haslem:
Director of:
• Centreport Limited and subsidiaries:
• Centreport Captive Insurance Limited
• Centreport Properties Limited
• Kordia Group Limited
(Chair from 1 November 2022)
and subsidiaries:
• Kordia Limited (from 10 June 2022)
• Kordia New Zealand Limited (from 10
June 2022)
• Meteorological Service of New Zealand Limited
(Ceased 1 April 2023)
• Ngāi Tahu Holdings Corporation Limited
• Payments NZ Limited
• Rangitira Limited
Shareholder of:
CH4 Global Inc
Murray Grant King:
Director of:
• Appleby Limited
(Removed from Companies Register
25 May 2023)
• Cawthron Institute
• Dry Steam Irrigation Company Limited
Board member of:
• NZ Rural Leadership Trust (from 30 May 2023)
Director and Shareholder of:
• Callura Dairies Management Limited
• Long Plantation Investments Limited
• New Zealand Dairy Dessert Company Limited
• Waimea Irrigators Limited
• Waimea Community Dam Limited
Candace Nicole Kinser:
Director of:
• Cancer Society of New Zealand Incorporated
• Eastland Group Limited and subsidiaries:
• Eastland Generation Limited
• Firstlight Network Limited (formerly Eastland
Network Limited) (Ceased 31 March 2023)
• Eastland Port Limited
• Gisborne Airport Limited
• Helius Therapeutics Limited (Chair)
• New Zealand Health Partnerships Limited
(Ceased 1 July 2022)
• Punakaiki Fund Limited (Ceased 31 March 2023)
Chair of:
• Cancer Society of New Zealand, Auckland
Northland Division Incorporated
• Advisory Board of Superb Herb Company
Limited (Ceased 31 May 2023)
Investment Committee Member of:
Return on Science Investment Scheme at the
University of Auckland
Matthew Fraser Ross:
Director of
• North Otago Irrigation Company Limited (Chair)
Director and Shareholder of:
• Bortons Agri Limited
Corrigan George Sowman:
Member of:
• Fonterra Sustainability Advisory Panel
Alison Jane Watters:
Director of:
• AsureQuality Limited
(Ceased 31 October 2022)
• Fonterra Co-Operative Group Limited
(from 10 November 2022)
• High-Value Nutrition
(National Science Challenge)
• Meteorological Service of New Zealand Limited
(Acting Chair as of 1 April 2023)
• Totally Vets Limited
Shareholder of:
• AgInvest Holdings Limited (27.61%) AgInvest
owns MyFarm Limited which in turn has a
16.71% holding in Figured Limited.
• Agriculture Resources Limited
Livestock Improvement Corporation Consolidated Annual Report 2022/23 4544 Livestock Improvement Corporation Consolidated Annual Report 2022/23
Senior Staff
In addition to the directorships of LIC subsidiaries as detailed below, senior members of staff have recorded
the following interests:
Emma Jane Blott (GM Commercial)
Director of:
• Eurogene AI Services (Ireland) Limited
• Pastoral Greenhouse Gas Research Limited
(from 22 June 2020 to 17 November 2022)
David James Hazlehurst (Chief Financial Officer)
Director of:
• Dairy Goat Co-operative (NZ) Limited
(from 4 April 2023)
• Figured Limited
Michael Rose (Country Manager, Australia)
Director of:
• National Herd Improvement Australia (NHIA)
The Directors of the Company’s subsidiaries as at 31 May 2023 are set out below:
• LIC Agritechnology Company Limited: Murray
King, Ben Dickie, Tim Gibson, Ken Hames,
Sophie Haslem, Candace Kinser, Matt Ross,
Corrigan Sowman and Alison Watters.
• Livestock Improvement (New Zealand)
Corporation Limited: David Chin, David
Hazlehurst and Murray King
• LIC Ventures No. 1 Limited (formerly LIC
Automation Limited): David Chin and David
Hazlehurst
• LIC Ventures No.3 Limited: David Chin and
David Hazlehurst
• Agrigate GP Limited (a 100% owned subsidiary
of LIC Ventures No. 3 Limited from 18 August
2021): Emma Blott, David Hazlehurst and
Dhaya Sivakumar
• Livestock Improvement Pty Limited: Emma
Blott and Michael Rose
• Farmkeeper Pty Limited: Emma Blott and
Michael Rose
• Overland Corner Holdings Pty Limited: Emma
Blott and Michael Rose
• Beacon Automation Pty Limited: Emma Blott,
David Hazlehurst and Michael Rose
• Livestock Improvement Corporation (UK)
Limited: David Hazlehurst and Mark Ryder
• LIC Ireland Limited: David Hazlehurst and
Mark Ryder
• Livestock Improvement Automation Limited:
David Hazlehurst and Mark Ryder
• LIC Automation UK Limited: David Hazlehurst
No directors resigned from the boards of the Company’s subsidiaries during 2022/23.
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 2023/2024 season. Directors
participating in the scheme include:
B) Share Dealings by Directors
As at 31 May 2023 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:
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.
F) Participation in third party Firstlight
Wagyu scheme
During the year LIC operated a scheme in
co-ordination with Firstlight Wagyu (NZ) Ltd
wherein participants sold calves to LIC, as an
intermediary, for on-sale to Firstlight Wagyu
(NZ) Ltd. Directors participating in the scheme
during the year were as follows:
DirectorCalf Sales Made to LIC
Gray Baldwin$67,999
Matt Ross$76,035
31 May 202331 May 2022
DirectorOrdinary SharesOrdinary Shares
Ben Dickie*40,86532,650
Ken Hames 4,0004,000
Murray King **136,704136,704
Matt Ross***94,54493,744
Corrigan Sowman80,488N /A
Alison Watters33,57633,576
*Includes shares purchased through participation in the Voluntary
Investment Scheme and shares compulsorily purchased to meet LIC’s
Shareholding Requirements.
**Includes 20,000 Ordinary Shares held by Callura Dairies Management
Limited, of which M King is Chair
***Includes shares compulsorily purchased to meet LIC’s Shareholding
Requirements.
DirectorPotential
Calf Sales
Potential Value
Murray King1$18,000
Matt Ross25$450,000
Corrigan Sowman1$18,000
Alison Watters1$18,000
Livestock Improvement Corporation Consolidated Annual Report 2022/23 4746 Livestock Improvement Corporation Consolidated Annual Report 2022/23
RESOLUTION OF DIRECTORS
DATED 19 JULY 2023 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 1996 (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 2023.
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.
Size of ShareholdingNumber of Shareholders* Shares Held% of Total
1 - 999664423,8490.29
1,000 - 1,9999221,428,2010.97
2,000 - 2,9998001,954,9631.32
3,000 - 3,9995931,990,1421.35
4,000 - 4,9997883,463,7342.35
5,000 - 5,9994452,461,3411.67
6,000 - 6,9994022,600,6521.76
7,000 - 7,9993422,538,0221.72
8,000 - 8,9994033,402,3562.30
9,000 - 9,9992692,563,9261.74
10,000 - 14,9991,05912,926,0698.75
15,000 - 19,99970012,135,6348.22
20,000 - 24,9994159,256,6536.27
25,000 - 29,9993058,289,2195.61
30,000 - 34,9992126,852,9554.64
35,000 - 39,9991495,539,0983.75
40,000 - 49,9992049,123,6786.18
50,000 - 99,99927318,018,80912.20
100,000 - 199,999567,497,5855.08
200,000 - 299,999133,183,5982.16
300,000 - 499,99972,759,7991.87
500,000 - 999,99975,439,8773.68
1,000,000 +1123,832,26016.14
9,039147,682,420100%
Spread of Shareholders as at 31 May 2023
(including treasury stock and nil paid shares)
*The number of Shareholders above is based on the number of separate/individual farms. The table below setting out the twenty largest
shareholdings, amalgamates Shareholders with multiple farms.
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 2023,
the following parties were substantial product
holders of the Company:
The total number of quoted fully paid ordinary
shares in the Company was 137,779,275 as at
31 May 2023.
LIC understands that Peter James McBride’s
substantial product holder disclosure is in relation
to financial products held by Trinity Lands Limited
(7,313,073 fully paid ordinary shares), which is also
disclosed above and Crocodile Farm Limited (6,817
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 Limited 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
Limited and Crocodile Farm Limited.
ShareholderShares held% of total shares
Trinity Lands Limited7,320,9134.96
LIC Treasury Stock5,337,5843.61
Schmidt Farms Limited2,637,432 1.79
David Lockhart Easton & Anthea Clare Easton & RFH Trustees1,801,430 1.22
Sim Brothers Limited1,708,358 1.16
Melrose Dairy Limited1,590,087 1.08
Anglesea Agriculture Limited1,481,119 1.00
Mark Braden Neil Dewdney, Anne Heather Dewdney & Victoria Ann Dewdney1,015,099 0.69
Cayuga Limited1,015,0530.69
CIP Nominees No 1 Limited (LIC’s Employee Share Scheme)997,021 0.68
Kotare Pastoral Limited978,858 0.66
Mangatarata Farms Limited850,000 0.58
Robert Laurentius Johannes Bruin & Annemarie Bruin782,345 0.53
Christopher John Stark & Graham Carr718,372 0.49
D B Douglas Limited616,956 0.42
Pilsen 2021 Limited616,9440.42
JD & RD Wallace General Partnership Limited491,0800.33
Bishop Farms Oxford Limited474,5720.32
Kaimanawa Farms Limited443,5020.30
Malrose Properties Limited439,376 0.30
31,021,02121.01
Twenty Largest Shareholdings as at 31 May 2023
(including treasury stock and nil paid shares)
Substantial
product
holders
Number of
quoted fully paid
ordinary shares
in substantial
holding at
31 May 2023
Percentage of
quoted fully paid
ordinary shares
in substantial
holding at
31 May 2023
Trinity Lands Ltd7,313,0735.3078%
Peter James
McBride
7,319,8905.3128%
Livestock Improvement Corporation Consolidated Annual Report 2022/23 4948 Livestock Improvement Corporation Consolidated Annual Report 2022/23
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).
Donations
The Company made donations totalling $11,597
during the year ended 31 May 2023 (2022: $14,874).
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:
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.
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
Limited
7,328,9835.943%19/09/19
Peter James
McBride
7,329,577 5.943%19/09/19
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-operative 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 person
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;
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
the 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
19 July 2023 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:
Livestock Improvement Corporation Consolidated Annual Report 2022/23 5150 Livestock Improvement Corporation Consolidated Annual Report 2022/23
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, or the
issue of Shares from treasury stock.
d) Shareholders who do not participate will not
be diluted or otherwise disadvantaged as
no new Shares are being issued under the
Dividend Plan;
e) Participating Shareholders will pay no greater
than the higher of:
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.
f) The Dividend Plan 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;
g) 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
h) 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 Directors and Senior Managers who are
eligible and 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 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 costs depends upon the extent to which
eligible Directors and Senior Managers participate
in the Investment Scheme. However, the total costs
in the next twelve months is estimated to be in the
region of $11,000.
In relation to the financial assistance provided for
the Investment Scheme, the LIC Board resolved on
19 July 2023 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 Directors and Senior Managers a
means of acquiring additional shares in LIC
through a fixed trading plan, given the risk
they will often be information insiders, and
without incurring transaction costs which they
would otherwise incur;
b) The additional shares will be acquired by
Craigs either through on-market transactions
or the issue of Shares by LIC from treasury
stock. Participating Directors and Senior
Managers will pay the average NZX
market price paid by Craigs on market for
those Shares.
c) Participating Directors and Senior Managers
will pay a uniform price in relation to a season.
d) The Investment Scheme will enhance the
liquidity in the market for the Shares, providing
a more liquid market for both participating
Directors and Senior Managers and non-
participating Shareholders wishing to trade in
LIC shares; and
e) The Investment Scheme enables LIC to offer
eligible Directors and Senior Managers a
mechanism to invest in LIC Shares without
resulting in unnecessary new capital being
raised through the issue of new shares.
f) The amount of financial assistance is minimal
in comparison to the benefits arising out of the
Investment Scheme for participating Directors
and Senior Managers, non-participating
Shareholders and LIC.
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 $22,000.
In relation to the financial assistance provided
for the Employee Scheme, the Board of LIC
resolved on 19 July 2023 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 Shares are being
issued under the Employee Scheme;
d) The additional shares will be purchased
through Craigs at the market price.
e) The Employee Scheme will enhance the
liquidity in the market for the Shares, providing
a more liquid market for Shareholders wishing
to trade in LIC Shares;
f) The amount of financial assistance is minimal
in comparison to the benefits arising out of the
Employee Scheme for Shareholders and LIC;
Livestock Improvement Corporation Consolidated Annual Report 2022/23 5352 Livestock Improvement Corporation Consolidated Annual Report 2022/23
605 Ruakura Road
Newstead 3286
Hamilton
New Zealand
07 856 0700 | lic.co.nz
---
Results announcement
19 July 2023
Results for announcement to the market
Name of issuer Livestock Improvement Corporation Limited
Reporting Period 12 months to 31 May 2023
Previous Reporting Period 12 months to 31 May 2022
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$276,506 +5.06%
Total Revenue $276,506 +4.64%
Net profit/(loss) from
continuing operations
$27,352 +157.48%
Total net profit/(loss) $27,352 +2.35%
Interim/Final Dividend
Amount per Quoted Equity
Security
$0.16384578 per share
Imputed amount per Quoted
Equity Security
$0.06371780 per share
Record Date 4 August 2023
Dividend Payment Date 18 August 2023
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$1.88 $1.91
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
19 July 2023
Audited financial statements accompany this announcement.
---
Distribution Notice
19 July 2023
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 4 August 2023
Ex-Date (one business day before the
Record Date)
3 August 2023
Payment date (and allotment date for
DRP)
18 August 2023
Total monies associated with the
distribution
$23,322,600.00
Source of distribution (for example,
retained earnings)
Profit
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution $0.22756358 per share
Total cash distribution $0.16384578 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
$0.06371780 per share
Resident Withholding Tax per
financial product
$0.01137818 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
21 August 2023 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
7 August 2023
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
19 July 2023
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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