2019 ANNUAL REPORTCONTENTSYEAR IN REVIEWTOGETHERWE ARE BUILDINGTHE FUTURE OF
SPECIALISED DAIRY

6-7

2019 Key Highlights

8-10

Report from the Chairman and Chief Executive Officer

11

Welcome Richard Luxton and Farewell Kevin Old

12-13

Tatua Together

14-15

Tatua Cares

16-17

Our Global Reach

18-19

Building the Future of Specialised Dairy

FINANCIAL STATEMENTS
22-23

Key Financial Performance Summary

24-27

Statutory Information

28

Balance Sheet

29

Statement of Comprehensive Income

30

Statement of Changes in Equity

31

Statement of Cash Flows

32-55

Notes to the Financial Statements

56-58

Audit Report59

Statistics and Progress Table

60

Directory

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

2019 KEY HIGHLIGHTSGROUP OPERATING REVENUE

364

m

$

TOTAL EARNINGS PER KG MILKSOLIDS

CASH PAYOUT TO SHAREHOLDERSPER KG MILKSOLIDS$$PRODUCTS EXPORTED

SUPPLY FARMS

9.66 8.50

88%
27%

107

GEARING RATIO

6

TOGETHER WE ARE BUILDING THE
FUTURE OF SPECIALISED DAIRYSPECIALTY ADDED VALUE SALES% OF TOTAL REVENUEWE’VE LOVED DAIRY SINCE 1914

53%
REINVESTMENTPER KG MILKSOLIDS

116c
MILKSOLIDS RECEIVED FROM SUPPLIERS(KG)% OF EMPLOYEES WHO ARE PROUDTO WORK AT TATUA – 2019 EMPLOYEESURVEY RESULTS

14.5 90%m7

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

PASSIONATEAND
DEDICATEDREPORT FROM THE CHAIRMAN
AND CHIEF EXECUTIVE OFFICER“Thank you to all our people at Tatua for yourdedication and commitment in what was anothervery productive and complete year. The financial
result is only one indicator of the contribution
you have made and all that you have achieved.”

The 2018/19 financial year was
outstanding for Tatua. This wasparticularly so when viewed against
the background of an uncertain andchallenging international and domestic
environment, including growing tradetensions between some of our important
markets.
At home in New Zealand, ourfarmers have faced a wave of policy
developments - most notably, newenvironmental policy relating to carbon
emissions and healthy waterways. We
continue to support our farmers andapproach these matters constructively
alongside our industry colleagues.
Given this economic and politicalenvironment, we are delighted to haveachieved record revenue of $364 million
and earnings of $140 million in the Cooperative’s 105th year of business. This
was the result of combined effort by allof our people; from our supplying farms
through to our teams in market, and all
who partner and support us.
A total of 14.5 million kilograms ofmilksolids was received from ourShareholders, which is our divisor for
earnings. Supply was slightly lower
than last season, reflecting the very dry
summer conditions. We also purchased
less milksolids from external suppliers.
Demand for our bulk ingredientproduct mix of caseinate, whey protein
concentrate and anhydrous milk fat

8through the year was steady, withpricing relatively stable at favourable
levels. However, the overall income
from this important part of our business
reduced due to the lower volume ofmilksolids processed.
Continued focus on developing ourmore specialised businesses, including
bionutrients, nutritional ingredientpowders, flavour ingredients, andconsumer and foodservice products,
contributed significantly to the growth
in income and the annual result.
Our total earnings of $140 million
divided by the shared milksolids
supplied equates to $9.66 per kilogramof milksolids before retentions andtaxation. We elected to retain $1.16
per kilogram of milksolids from total
earnings for reinvestment, leaving acash payout of $8.50 per kilogram ofmilksolids.
In deciding our retention, we sought tostrike a balance between providing astrong cash payout to our Shareholders,being able to continue to fund ourcapital programme in the business, andmaintaining our debt levels within an
acceptable range.
We have progressed our environmental
sustainability initiatives, including
completing farm environmental plans
with the co-operation and supportof our Shareholders on just less than
20% of our supplying farms. We have

9

captured learnings from this first yearof the rollout and will be targetingcompletion of a greater number of plansover the year ahead.
After nearly twelve months of planning,
we have committed $15 million of capitalto the next phase of our wastewater
treatment development, following an
earlier investment of over $6 million. It is
our long term goal to have water leave
our processing facilities as pure as thewater that we have received. We intend
to progressively improve our overall
environmental performance as part ofour broader sustainability platform.

OUTLOOK
Our capital investment programme forthe year ahead will be almost double
our annual depreciation and will befocussed mainly on infrastructure andmanufacturing process improvements.
We continue to have sufficient capacity
within our existing processing plant toenable growth and further optimisationof our more specialised businesses inparticular.
We acknowledge the considerable
uncertainty that still exists within the
global trade environment and therequirement to remain well diversified
across markets, customers and productgroups. We also believe it is importantto remain nimble and flexible in order

The Tatua Co-operative Dairy Company Limited

to respond to the evolving risks andopportunities.
We remain concerned about aspects ofthe proposed domestic environmental
policy changes as well as how theconsiderable uncertainty createdis impacting farmers. We value theopportunity to submit our views on thepolicy changes through the various
consultation processes, both directly
and via industry organisations.
We are encouraging our Shareholders
to scrutinise the proposed policies andcommunicate their concerns to theGovernment, as well as relaying thesubstantial improvements they havealready made to the environmental
performance of their farms.
It is our very sincere hope that throughconsultation, and broad industry andcommunity engagement, sensible

and pragmatic policy outcomes will
be achieved that will benefit theenvironment without being detrimental
to our urban and rural communities.
Despite heightened uncertainty, weare encouraged that global demand fordairy remains strong and that supply
and demand deficits continue to widen
in a number of the markets in which we
operate. For these reasons we remain
positive in our outlook for the year
ahead and the longer term viability ofdairy.

ACKNOWLEDGEMENTSFirstly, thank you to all our people
at Tatua for your dedication andcommitment in what was another very
productive and complete year. The

financial result is only one indicator of
the contribution you have made and allthat you have achieved.
Thank you to our Shareholders for yourfull and continued support for the Cooperative and our people, as well as thehigh quality milk you continue to supply.
We would also like to thank all of ourproviders of goods and services who
work closely with us in our day-to-day
operations across the business. We
value the relationships we have withyou, some of which began when the
Company was established over 105
years ago.
Finally, a sincere thank you to all of
our very valued customers in all of ourmarkets. We appreciate your businessand look forward to continuing to work
collaboratively with you over the year
ahead.

Annual Report 2019

WELCOME RICHARD LUXTONDIRECTOR
Richard joined the Tatua Board of
Directors in November 2018. Richard
continues a proud family history
with Tatua; the Luxton family havecontinuously supplied milk to Tatua since1921. Richard is a sixth generation dairy
farmer.
Richard’s career has included timein manufacturing and supply chain
roles, both locally and globally, prior
to focusing on dairy farming. He has
extensive corporate farming experience
having been involved in managing twolarge scale farming businesses in boththe North and South Island. He has a
Commerce Degree and a Diploma in
Agribusiness. In 2013, Richard completed
the Kellogg Rural Leadership Programme.
He is a director of JD & RD Wallace Ltd
and Kotare Ltd, two Waikato and KingCountry based farming groups. Richard isalso on the St Peter’s School Foundation
Committee.

FAREWELL DR. KEVIN OLD
DIRECTORSTEPHEN ALLENCHAIRMAN

BRENDHAN GREANEY
CHIEF EXECUTIVE OFFICER

2019 marks Kevin Old’s 26th year asa Tatua Director, although his links
with Tatua go back more than three
generations to 1922.

animal traceability scheme and the Dairy
Companies Association of New Zealand.
Kevin is currently an academic at Lincoln
University teaching Agri-business.

Kevin’s contributions over his 26 years
as a board member have included timeas Tatua’s Deputy Chairman, Chairman of
the People and Remuneration Committeeof the Board, as well as serving on
the Finance, Audit and Risk and Farm
Advisory Committees.

When Kevin joined the Tatua Board
in 1993 the Company processed theequivalent of seven million kilograms ofmilksolids from 142 shareholder suppliers.
This compares to approximately 15
million kilograms from 107 shareholder
suppliers today. Tatua’s gross revenue
was $46.3 million in 1993 versus $364
million in the year ended July 2019.

During his farming career, Kevin has
continued his academic studies,completing a Ph.D. entitled: ‘An
Integrated Theory of the Roles ofGoverning Boards of New Zealandand Australian Co-operative Dairy
Companies’. This research gave him aunique perspective on Tatua and the cooperative style of organisation that has
served the Company so well.
With extensive dairy industry experience,
including a prestigious Nuffield
Scholarship he has been closely involved
with the development of New Zealand’s

10

11

It gives us great pleasure to acknowledge
and thank Kevin for his 26 years ofservice to Tatua. We will miss Kevin’s
wisdom, great intellect, sense of humour
and unparalleled commitment to, andunderstanding of, co-operative principals.
Fortunately Kevin and the Old family willcontinue as part of the Tatua Shareholder
family.
Thank you so much Kevin for yourwonderful contribution to Tatua.

The Tatua Co-operative Dairy Company Limited

Annual Report 2019TATUA
TOGETHERAT TATUA WE SHARED MANYACHIEVEMENTS AND EVENTSTOGETHER DURING THE YEAR85%
OF TATUA EMPLOYEESCOMPLETED THE 2019
EMPLOYEE SURVEY“I LOVE WORKINGHERE AND BELIEVE
THAT TATUA VALUESIT’S EMPLOYEES AND
TREATS THEM WELL
GIVING PLENTY OFOPPORTUNITY FORPERSONAL AND CAREERGROWTH.”NEW TANKER DESIGNLAUNCHED

150
CORPORATE CHALLENGECYCLE TEAM

STAFF AND SHAREHOLDERSATTENDED FAMILY DAY

12

13

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

CARE
AT TATUA WE

ALL TATUA FARMS
WILL HAVE A FARMENVIRONMENT PLAN
BY 2023

PHASE TWO OF WASTEWATERTREATMENT PLANTCONSTRUCTION BEGINSGREATER UTILISATION OFRECOVERED WATER ACROSS SITE

GREENHOUSE GAS EMISSIONSARE ESTIMATED AND REPORTED
FOR ALL TATUA FARMS

STOCK ARE EXCLUDED
FROM ALL WATERWAYS

ALL FARMS HAVE A
NUTRIENT BUDGETCOMPLETED TO MODELNUTRIENT UTILISATION

ALL WATERWAYCROSSINGS ON TATUASUPPLY FARMS ARE
BRIDGED OR CULVERTED

14

10 PROJECTSCOMPLETED, SAVING
31 MILLION LITRES OF
WATER ANNUALLY

15

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

OUR GLOBAL
REACH% OF REVENUEMIDDLEEAST
EUROPE

10%

3%

CHINA

16%

USA

JAPAN

18%

10%
PHILIPPINES

OTHER
ASIA

3%
SINGAPORE

INDONESIA

4%

4%

7%

SOUTH
AMERICA

1%

AUSTRALIA

12%
NZ

12%

200+

88%

INDIVIDUAL
PRODUCTSOF PRODUCTS
EXPORTED

16

TOP 5 DESTINATIONS:JAPAN, CHINA, NZ,
AUSTRALIA, USATATUA JAPANESTABLISHED 2004

TATUA SHANGHAIESTABLISHED 201517

TATUA USAESTABLISHED 2015

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

BUILDING
THE FUTURE
OF SPECIALISEDDAIRYNZ FOOD AWARDS
2019 WINNER

12%

SALES
GROWTH IN
THE USA30DAIRY WHIPSILOREBRANDED

RECIPE VIDEOSDEVELOPED AND
100 RECIPES ADDEDTO WEBSITE

FINALIST NZ BESTDESIGN AWARDS 2019Best Design Awards
Finalist 2019

NEW ECOLEAN
PACKAGING LAUNCHED

6%SALES GROWTH IN
DAIRY WHIP

6,000
TONNES OFCASEINATE

8,000
TONNES OF AMF
AND

13%

800

GROWTH IN
PREMIUM CREAM
SALES IN NZTONNES OF WPC
SOLD

18

12%

14%

GROWTH IN
DAIRY FLAVOURINGREDIENTSSALES GLOBALLYSALESGROWTH IN
HYDROLYSATESGLOBALLY

26%

SALES GROWTH IN CHINA

19

The Tatua Co-operative Dairy Company Limited

Annual Report 2019

KEY
FINANCIALPERFORMANCESUMMARY

20

21

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

KEY FINANCIALPERFORMANCESUMMARY

2018/2019
IN REVIEWGROUP OPERATING REVENUE

4%

2017/18

Milk Received from Suppliers (litres)

163,244,553

165,693,452

Milksolids Received from Suppliers (kgs)

14,458,814

14,686,362

Group Revenue ($)$364,281,708$349,988,970

Group Surplus Before Payout & Tax (cts/kg m’solids)

966

862

Group Depreciation (cts/kg m’solids)

95

84

Cash Payout to Suppliers (cts/kg m’solids)

850

810

Capital Expenditure ($)$9,676,146$15,159,140

Group Assets ($)$255,763,421$254,913,805

Gearing: Debt to Debt + Equity (%)

27%

37%

G ROU P SU RPLU S B E FORE PAYOU T A N D TA X

GROUP SURPLUS

900
800

200

70 0
600
50 0

850

810

710

200

630

30 0

710

400

900

966

862

760

641

400

C ENTS/KG MILKSOLIDS

600

773

12%

C ENTS/KG MILKSOLIDS

800

CENTS/KGMILKSOLIDS

100
0

0
2 01 3/1 4 2 01 4 /1 5 2 01 5/1 6 2 01 6/1 7 2 01 7/1 8 2 01 8/1 9

2 01 3/1 4 2 01 4 /1 5 2015 / 16 2016/ 17 2017/ 18 2018/ 19

G E A RIN G ( %DE BT TO DE BT PLU S ME MB E R S F U N DS)

ME MB E R S F U N DS

40%

140

3 5%

120

30 %

$135m

$121m

40

$126m

80

$117m

26.8%

36.7%

35.3%

35.7%

5%

15%

36.6%

20%

$100m

2 5%

$ MIL L ION S

CENTS/KGMILKSOLIDS

100

$106m

PAYOUT TO SUPPLIERS

22

PAYOU T – IN C OM E EQ U I VA L EN T

1000

1032

$

2018/19

25.2%

364
966
850

m

Summary

20

5%
0

0
2 01 3/1 4 2 01 4 /1 5 2 01 5/1 6 2 01 6/1 7 2 01 7/1 8 2 01 8/1 9

23

2 01 3/1 4 2 01 4 /1 5 2015 / 16 2016/ 17 2017/ 18 2018/ 19

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

STATUTORY INFORMATIONF O R T H E Y E A R E N D E D 3 1 J U LY 2 0 1 9

Principal Activities

Board Composition

Directors’ Remuneration

Employees’ Remuneration

The principal activity of the Group is the collection of milk fromshareholders and processing this milk into a diverse range of
products for sale in domestic and international markets.

The Board can have up to seven elected directors from
Shareholders, and up to three appointed directors. Pursuant
to the Constitution of the Company, one third of elected
directors retire by rotation each year, while appointed directors
are appointed for a term not longer than three years, after
which they are eligible to re-appointment for a further threeyear term. Elected directors, Mark Dewdney and Bruce Wilton
retired by rotation during the year. Mark Dewdney was relected.

Directors’ remuneration is approved by shareholder resolution
at the Annual General Meeting based upon a recommendationfrom the Directors’ Remuneration Committee, which iscomprised of non-Director shareholders. The following persons
held office as Director during the year and received thefollowing remuneration:

During the year to 31 July 2019 the following number of
employees of the Group received total remuneration of atleast $100,000: Total remuneration includes salaries, bonus
payments, and other benefits received in the capacity as an
employee during the year, e.g. company vehicles, insurance andsuperannuation. Bonus payments may relate to multiple years,
but paid in one lump sum.

Co-operative Company
The Board of Directors resolved on the 26 July 2019 that, inthe opinion of the Board, the Company has been a co-operative
company during the year ended 31st July 2019 because its
principal activity has been processing and marketing products
derived from milk supplied by its shareholders and because
100% of the voting rights in the Company are held by thoseshareholders.
Role of the Board
Tatua’s Board of Directors is committed to managing the Groupin an ethical and professional manner, and in the best interestsof the Company and its shareholders.
Key responsibilities of the Board include:
•

•
•
•
•
•
•

Setting the strategic direction for Tatua and establishingpolicies to support the effective management of theCompany;
Appointing and reviewing the performance of the CEO;
Setting the terms of CEO and executive management
employment;
Monitoring the financial performance of the Company, andTatua’s risk management;
Ensuring that Tatua has robust corporate governancepractices;
Ensuring Tatua’s regulatory and legislative compliance;
andEnsuring Tatua has robust health and safety processes
which protect all people associated with the Company.

The Board and Management are committed to continuous
improvement and achieving governance practices which meet
best practice.
Framework
The Board delegates the day-to-day operations of theCompany to the CEO through a framework of formaldelegations. The Company’s corporate governance framework
includes the Company’s Constitution, Charter, Terms ofReference for the Board’s Committees and a range of policies
including Ethics, Risk Management, Environment, Health &Safety, and policies and procedures for employees.		

Board Meetings Held During the YearM E E T I N G S AT T E N D E DStephen Allen (Chairman)

7

N U M B E R O F E M P LOY E E SStephen Allen$115,667

Louise Cullen$56,000

Mark Dewdney$61,000$100,000 - $109,999

49

Richard Luxton (elected Nov 18)$31,000$110,000 - $119,999

28

David Muggeridge$51,000$120,000 - $129,999

23$46,000$130,000 - $139,999

12
11

Louise Cullen

7

Kevin Old

Mark Dewdney

7Peter Schuyt$61,000$140,000 - $149,999

5Ross Townshend$46,000$150,000 - $159,999

2David Muggeridge

7

Bruce Wilton (retired Nov 18)$15,000$160,000 - $169,999

4

Kevin Old

7$482,667$170,000 - $179,999

5$180,000 - $189,000

3$190,000 - $199,999

2Richard Luxton (elected Nov 18)

Peter Schuyt

7

Ross Townshend

6

Bruce Wilton (retired Nov 18)
Board Meetings Held2
7

Directors’ Shareholdings
At 31 July 2019 Directors held the following shares in the
Company:B E N E F I C I A L LY
HELD

Board Committees
People and Remuneration Committee: Membership comprises
Mark Dewdney (Chairman), Stephen Allen, Louise Cullen andRoss Townshend. The function of the committee is to assist
the Board in ensuring the organisation fulfils its remuneration,
performance management and organisational development
needs. It also assists with senior management appointments.
Audit, Risk and Compliance Committee: Membership comprisesPeter Schuyt (Chairman), Mark Dewdney, David Muggeridge,
Kevin Old, Ross Townshend and Richard Luxton. The
function of the committee is to assist the Board in ensuring
the organisation fulfils its audit, legal, financial and risk
management obligations and responsibilities. Approval of theannual accounts is undertaken by the full Board.
Responsible Farming Committee: Membership comprises:
Louise Cullen (Chair), Stephen Allen, David Muggeridge, Kevin
Old and Richard Luxton. The function of the committee is toassist the Board in ensuring the Company fulfils its governanceand related responsibilities in regard to the farming activities of
the Company and its supplying shareholders.		
					

NONB E N E F I C I A L LY
HELD

H E L D BY
A S S O C I AT E D
PERSONS

Stephen Allen

1,954,500-

833,900

Louise Cullen

2,867,290--

Mark Dewdney

1,984,530--

Richard Luxton

3,626,770--

David Muggeridge

1,277,840--

Kevin Old

1,139,500-

2,577,130

1$210,000 - $219,999

2$220,000 - $229,999

2$230,000 - $239,999

1$240,000 - $249,999

1$280,000 - $289,999

1$290,000 - $299,999

1$360,000 - $369,999

1$410,000 - $419,999

1$420,000 - $429,999

1$430,000 - $439,999

2$910,000 - $919,999

1
154

Donations & Grants

Directors’ Insurance
The Company paid insurance premiums during the year for
Directors and Officers Liability Insurance as permitted by theConstitution and the Companies Act 1993. This insurance
provides cover against costs and expenses involved indefending legal actions and any resulting payments arisingfrom a liability to persons (other than the Company or related
body corporate) incurred in their capacity as Director or
executive employee unless the conduct involves a wilful breachof duty or an improper use of inside information or position to
gain advantage.

					

24

$200,000 - $209,999

25

Donations and grants for the year ended 31 July 2019 were
$10,005 (2018: $nil).

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

Disclosure of Interests
Directors have declared that they are to be regarded as having
an interest in any contract that may be made with entities
below by virtue of their directorship or membership of thoseentities.

All elected Directors, in their capacity as Supplying
Shareholders, conduct business with the Company. Directors
who hold shares in the Company do so on the basis that they
are Supplying Shareholders.

D I R E C TO R

POSITIONC O M PA N Y

Stephen Allen

Director

Farmers’ Mutual Group (FMG)

Director

Farmers’ Mutual Insurance Ltd (FMIL)

Director

Mowata GP Ltd

D I R E C TO R

POSITIONC O M PA N YDavid Muggeridge

Director, Shareholder

Muggeridge Farms Ltd

Kevin Old

Director, Shareholder

Kold Holdings Ltd

Director

Rangitata GP Ltd

Director, Shareholder

VGO Ltd

PartnerRangitata Dairies LP Ltd

Trustee

VGO TrustDirector, Shareholder

Claybrook Farms Ltd

Trustee/Beneficiary

CR & AL Old Trust

Director, Shareholder

Claybrook No 7 Ltd

Director, Shareholder

Claybrook South Ltd

Director

TSB Bank Ltd

Director, Shareholder

Cheadle Farms Ltd

Director, Shareholder

Dairy Investment Fund Ltd

Director, Shareholder

Allen Children Ltd

Director

Tax Management NZ Ltd

TrusteeSarah Ethne Allen Trust

Director

Foodstuffs North Island Ltd

TrusteeSB & BL Allen Family Trust

Director

DairyNZ Inc.

Peter Schuyt

Trustee

Cheadle Trust

Director

Alliance Group Ltd

TrusteeDavid Johnstone Charitable Trust

Director, Shareholder

Ahikouka Holdings Ltd

Trustee

JES Allen Estate

TrusteeSchuyt Family Trust

Trustee

JR Allen Estate
Chairman

MSC Consulting Group Ltd

Ross Townshend
Louise Cullen

Director, Shareholder

Cookson Trust Farms Ltd

Chairman

Robert Monk Transport Ltd

Director, Shareholder

Balachraggan Farms Ltd

Chairman

Bector Automation RML Pvt Ltd (India)

Director, Shareholder

Capra Farming Ltd

Chairman

RML Engineering Ltd, and subsidiaries

Director, Shareholder

Acorn Goats Ltd

Director, Shareholder

Ranworth Farm Ltd

Trustee

Te Aroha Free Kindergarten Association Inc.

Director, Shareholder

Townshend Holdings (2015) Ltd

Director, Shareholder

Townshend Developments Ltd

Director

Yanakie Farm Management Pty Ltd

Shareholder

Elanza Technologies Ltd

Director

Dairy Goat Co-operative

Shareholder

Architectural Investments Ltd

Director

Nicholson United Autos Ltd

Consultant

Murray Goulburn Co-operative Company Ltd

Director, Shareholder

Namaste Farming Pty Ltd

Consultant

Walter and Wild Ltd

Director, Shareholder

Namaste Land Pty Ltd

Trustee/Beneficiary

Dewdney Family Trust

Trustee

Marvic Family Trust

TrusteeMark Dewdney Family Trust

TrusteeVicki Dewdney Trust

Director, Shareholder

Fidus Management Group Ltd

Director, Shareholder

Promass Ltd

Director

Wallace Hybrid General Partner Ltd

Director

Templeview Dairies Ltd

Mark Dewdney

Richard Luxton

Director, Shareholder

Aslan Farms Ltd

Director

Kotare Pastoral Ltd

26

Director

J.D. & R.D. Wallace (1951) Ltd

Director

JD & RD Wallace General Partner Ltd

Director

Luxton Group General Partner Ltd

Director

Pukekara Ltd

Director

Tui Dale Ltd

Shareholder

Marire Holdings Ltd
27

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

BALANCE SHEETSTATEMENT OF COMPREHENSIVE INCOMEA S AT 3 1 J U LY 2 0 1 9

F O R T H E Y E A R E N D E D 3 1 J U LY 2 0 1 9
GROUP
N OT E2019 ($)

Current Assets

GROUP
2018 ($)
R E S TAT E D *N OT EY E A R E N D E D 3 1 J U LY 2 0 1 9 ( $ )Y E A R E N D E D 3 1 J U LY 2 0 1 8 ( $ )Profit or Loss Items

R E S TAT E D *Cash and Cash Equivalents

14

12,914,511

9,302,159

Revenue from Contracts with Customers

364,281,708

349,988,970

Derrivates

18

1,158,318

1,640,760

less Payments for Milk Supplied(122,858,294)(118,919,379)

Receivables and Prepayments

13

48,842,867

48,506,299

less Other Cost of Sales(184,437,293)(190,731,005)--

56,986,121

40,338,586

51,004,174

54,868,652

Tax Receivable
Inventories

12

Biological Assets
Total Current Assets

714,767

437,281

114,634,637

114,755,151

Gross Profit
plus Other Income
less Administration Expenses

Non Current Assets
Property Plant and Equipment

9126,338,873

127,406,241

Investment Property

11

1,586,000

1,175,000

Intangible Assets

10

5,540,900

6,154,272

Deferred Tax Asset

8

6,613,365

4,653,946

Equity Accounted Investments

1,049,646

769,195

Total Non Current Assets

141,128,784

140,158,654

Total Assets

255,763,421

254,913,805

3less Sales and Marketing Expenses
4

Surplus from Operating Activities

1,140,723(24,116,040)(13,030,247)(11,879,693)

23,357,665

5,483,576

Finance Income

641,607

6,551,427

less Finance Expenses

6(6,562,344)(3,683,148)(6,520,737)

2,868,279

Net Finance Income
Surplus before Income Taxless Income Tax Expense

7

Net Surplus

Current Liabilities

1,372,496(21,970,705)

16,836,928

8,351,855(4,541,505)(2,523,647)

12,295,423

5,828,208

Loans and Borrowings

16

37,442,563

56,176,909

Derrivates

188,962,038

6,185,267

Accounts Payable and Accruals

17

23,788,865

24,540,780

Movement in Land Revaluation Reserve

3,133,928-(3,014,825)(17,326,769)

Other Comprehensive Income

Tax Payable

2,383,574

1,658,641

Change in Fair Value of Cash Flow Hedges

Owing to Suppliers

23,591,197

22,559,535

Movement in Foreign Exchange Reserve389,513776,560

Total Current Liabilities

96,168,237

111,121,132

Income Tax on Other Comprehensive Income

844,152

4,851,495

Other Comprehensive Income for the Year

1,352,768(11,698,714)

Total Comprehensive Income

13,648,191(5,870,506)

Non Current Liabilities
Loans and Borrowings

16

24,850,000

23,150,000

Deferred Tax Liability

8

-

-

Total Non Current Liabilities

24,850,000

23,150,000

Total Current Liabilities Excluding Co-operative

121,018,237

134,271,132

Shares Classified as a Liability
PLUS Co-operative Shares

73,450,586

72,603,030

Total Liabilities

194,468,823

206,874,162

Net Assets

61,294,598

48,039,643

Retained Earnings

50,755,867

38,853,679

Reserves

10,538,731

9,185,964

Equity61,294,598

48,039,643

73,450,586

72,603,030

Retained Earnings

50,755,867

38,853,679

Reserves

10,538,731

9,185,964

Total Members Funds

134,745,184

120,642,673* The Group has initially applied NZ IFRS 15 and NZ IFRS 9 at 1 August 2018. Under the transition methods chosen, comparative information has not been
restated except for certain hedging requirements, refer to Note 2(f)(i)
The accompanying notes form part of and are to be read in conjunction with these financial statements.

Members Funds Memorandum Account:
Co-operative Shares Classified as a Liability

15*T he Group has initially applied NZ IFRS 15 and NZ IFRS 9 at 1 August 2018.
Under the transition methods chosen, comparative information has notbeen restated except for certain hedging requirements, refer to Note 2(f)(i)
SB Allen Chairman of Directors
6 November 2019

PM Schuyt Chairman of Audit,
Risk and Compliance Committee
6 November 2019

The accompanying notes form part of and are to be read in conjunction
with these financial statements.
28

29

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

STATEMENT OF CHANGES IN EQUITYSTATEMENT OF CASH FLOWSF O R T H E Y E A R E N D E D 3 1 J U LY 2 0 1 9

F O R T H E Y E A R E N D E D 3 1 J U LY 2 0 1 9
GROUP

GROUP

N OT E

Balance at 1 August 2017

T R A N S L AT I O N
RESERVE ($)

HEDGINGRESERVE ($)

R E VA LUAT I O N
RESERVE ($)

R E TA I N E D
EARNINGS ($)

TOTA LEQUITY ($)(501,950)

9,408,790

11,977,838

33,025,471

53,910,149

N OT EY E A R E N D E D 3 1 J U LY 2 0 1 9 ( $ )Y E A R E N D E D 3 1 J U LY 2 0 1 8 ( $ )361,454,781

354,839,216

Cash Flows From Operating Activities
Cash was provided from:

Other Comprehensive Income
Movement in Foreign Exchange Reserve

776,560---

776,560

Movement in Land Revaluation Reserve

-

-

-

-

-

Movement in Hedging Reserve, Net of Tax
Restated Total Other Comprehensive Income-(12,475,274)--(12,475,274)

776,560(12,475,274)--(11,698,714)

Receipts from Customers
Dividends Received

285

330

Interest Received

41,607

29,186

361,496,673

354,868,732

Payments for Milk

(121,826,632)(114,476,309)

Payments to Creditors & Employees(201,480,628)(217,525,397)

Cash was applied to:Tax Paid Surplus/(Deficit)
Restated Total Comprehensive Income

-

-

-

5,828,208

5,828,208

776,560(12,475,274)-

5,828,208(5,870,506)

Transactions with Owners of Company
Issue of Ordinary Shares

-

-

-

-

Interest Paid

(3,687,326)(3,657,425)

Taxation Paid

(4,931,839)(2,529,998)(331,926,426)(338,189,129)

29,570,248

16,679,603

77,871

131,723

Net Cash Flows From / (Applied To)

Restated balance at 31 July 2018274,610(3,066,484)

11,977,838

38,853,679

48,039,643

Balance at 1 August 2018274,610(3,066,484)

11,977,838

38,853,679

48,039,643

-

-

-

(393,234)(393,234)

Adjustment on initial application of2(f)(i)IFRS 15, Net of Tax

Operating Activities
Cash Flows From Investing Activities
Cash was provided from:
Proceeds from Sale of Property, Plant & Equipment
Proceeds from Sale of Investments

Other Comprehensive Income
Movement in Foreign Exchange Reserve389,512---389,512

Movement in Land Revaluation Reserve--

3,133,928-

3,133,928

Movement in Hedging Reserve, Net of Tax-(2,170,674)--(2,170,674)

Related Total Other Comprehensive Income

20

389,512(2,170,674)

3,133,928(393,234)

959,532

62,159-140,030

131,723

Acquisition of Property, Plant & Equipment(9,676,149)(16,341,404)

Acquisition of Intangible Assets(234,987)-

Cash was applied to:

Purchase of Share Investments
Tax Paid Surplus/(Deficit)

-

-

-

12,295,423

12,295,423

389,512(2,170,674)

3,133,928

11,902,189

13,254,955

Issue of ordinary shares

-

-

-

-

-

Balance at 31 July 2019

664,122(5,237,158)

15,111,766

50,755,868

61,294,598

Restated Total Comprehensive Income
Transactions with owners of Company-(121,069)(9,911,136)(16,462,473)(9,771,105)(16,330,750)

Net Cash Flows From / (Applied To)
Investing Activities
Cash Flows From Financing Activities
Cash was provided from:
Increase in Co-operative Shares

15

3,261,981

19,556-

3,296,709

3,261,981

3,316,265

Decrease in Co-operative Shares(2,414,425)(1,288,366)

Repayment of Borrowings(17,034,346)-(19,448,771)(1,288,366)(16,186,790)

2,027,899

3,612,352

2,376,752

9,302,159

6,925,407

12,914,511

9,302,159

Proceeds from Borrowings

The accompanying notes form part of and are to be read in conjunction with these financial statements.
Cash was applied to:

Net Cash Flows From / (Applied To)
Financing Activities
Net Increase / (Decrease) in Cash and Cash
Equivalents
Add: Opening Cash and Cash Equivalents Balance
Closing Cash and Cash Equivalents Balance

14

The accompanying notes form part of and are to be read in conjunction with these financial statements.

30

31

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

NOTES TOTHE FINANCIAL
STATEMENTS
01

REPORTING ENTITY

02

BA S I S O F P R E PA R AT I O N

03

O P E R AT I N G R E V E N U E A N D OT H E R I N C O M E

01 — REPORTING ENTITY
The Tatua Co-operative Dairy Company
Limited (the parent company) is a
co-operative company domiciled andincorporated in New Zealand, andregistered under the Co-operative
Companies Act 1996 and the Companies
Act 1993.

At 31 July 2019 the Group consists of
The Tatua Co-operative Dairy Company
Ltd and its subsidiaries Tatua Japan Co.
Ltd, Tatua Dairy Products (Shanghai)Co., Ltd and Tatua USA Ltd.

Tatua is an FMC reporting entity interms of the Financial Markets Conduct
Act. The Group is a producer andmarketer of dairy products with sales
to both domestic and export markets.
These financial statements are for theyear ended 31 July 2019.

•

Note 12. - Milk cost included in inventory.

02 — BASIS OF PREPARATION
The financial statements have been
prepared on a going concern basis.
(a) Statement of Compliance and Basisof Preparation

04

A D M I N I S T R AT I O N E X P E N S E S

05

PERSONNEL EXPENSES

06

FINANCE INCOME AND EXPENSE07

I N C O M E TA X E X P E N S E

08

D E F E R R E D TA X A S S E T S A N D LI A B I LI T I E S

09

P R O P E R T Y, P L A N T A N D EQ U I P M E N T

10I N TA N G I B LE A S S E T S

11INVESTMENT PROPERTY12I N V E N TO R I E S

13R EC E I VA B LE S A N D P R E PAY M E N T S

14CA S H A N D CA S H EQ U I VA LE N T S

15

MEMBERS FUNDS

16

LOA N S A N D B O R R OW I N G S

17AC C O U N T S PAYA B LE A N D AC C R UA L S

18

D E R I VAT I V E S

19F I N A N C I A L R I S K M A N AG E M E N T

The financial statements are prepared on
the historical cost basis except for thefollowing:

20

R EC O N C I LI AT I O N O F CA S H F LOW S F R O M O P E R AT I N G AC T I V I T I E S•Land is measured at fair value. Refer
to Note 9.

21

R E L AT E D PA R T Y T R A N S AC T I O N S•

22

GROUP ENTITIES

Biological assets are measured atfair value less point-of-sale costs.

•
23

S U B S EQ U E N T E V E N T S

Investment property is measured atfair value. Refer to Note 11.

The financial statements have been
prepared in accordance with Generally
Accepted Accounting Practice in New
Zealand (NZ GAAP). They comply withNew Zealand equivalents to International
Financial Reporting Standards (NZ
IFRS) and other applicable Financial
Reporting Standards, as appropriate
for profit oriented entities. These
financial statements also comply
with International Financial ReportingStandards (IFRS).
These accounting policies have been
applied consistently to all periods
presented in these financial statements
except as noted in Note 2(f)(i).
These financial statements wereapproved by the Board of Directors on 6
November 2019, and have been preparedin accordance with the New ZealandCompanies Act 1993 and the Financial
Reporting Act 2013.
(b) Basis of Measurement32•

Derivative financial instruments
are measured at fair value. Refer toNote 18.
The carrying value of financial
instruments measured at amortised
cost equals their fair values.

(c) Functional and Presentation
Currency
The financial statements are presented
in New Zealand dollars (NZD), whichis the Company’s functional currency.
Monetary assets and liabilities
denominated in foreign currencies at
the reporting dates are retranslated to
the functional currency at the exchange
rate at that date. All financial information
presented has been rounded to thenearest dollar.
(d) Use of Estimates and Judgement
The preparation of financial statements
requires management to makejudgements, estimates and assumptions
that affect the application of accounting
policies and the reported amounts ofassets, liabilities, income, and expenses.
Actual results may differ from theseestimates.
Estimates and underlying assumptions
are reviewed on an ongoing basis.
Revisions to accounting estimates arerecognised in the period in which theestimate is revised and in any future
periods affected. In particular, information
about significant areas of estimation,
uncertainty and critical judgements inapplying accounting policies that havethe most significant effect on the amountrecognised in the financial statements
are described in the following notes.
33(e) Goods and Services Tax
The financial statements have been
prepared on a GST exclusive basis,
except for Accounts Receivable andAccounts Payable which are statedinclusive of GST.
(f) New Standards and Interpretations(i) New and amended standards
adopted by the GroupNZ IFRS 15 - Revenue from Contracts
with Customers
NZ IFRS 15 establishes a comprehensive
framework for determining whether, howmuch and when revenue is recognised.
It replaced NZ IAS 18 Revenue, NZ IAS 11
Construction Contracts and related
interpretations. Under NZ IFRS 15,
revenue is recognised when a customer
obtains control of the goods or services.
Determining the timing of the transfer ofcontrol – at a point in time or over time
– requires judgement.
The Group has adopted NZ IFRS 15
retrospectively using the cumulative
effect method (without practical
expedients), with the effect of initiallyapplying this standard recognised at thedate of initial application (i.e.
1 August 2018). Accordingly, theinformation presented for 2018 has notbeen restated – i.e. it is presented, as
previously reported, under NZ IAS 18,
NZ IAS 11 and related interpretations.
Additionally, the disclosure
requirements in NZ IFRS 15 have notgenerally been applied to comparative
information.

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

The following table summarises the impact, netof tax, of transition to NZ IFRS 15 on retained
earnings at 1 August 2018.

I M PAC T O F A D O P T I N G N Z I F R S 1 5 AT 1 AU G U S T 2 0 1 8
N OT E($)

Retained Earnings
Contracts with overseas based customers(a)(393,234)(393,234)

management. The hedge accounting
requirements of the standard areapplied on a prospective basis fromthe date of initial application except
for the requirements relating to thetime value of options which are applied
retrospectively to hedge relationshipsthat existed at the beginning of thecomparative period or were designatedthereafter.
The adoption of NZ IFRS 9 has therefore
resulted in a change in accounting

The following tables summarise the impactsof adopting NZ IFRS 15 on the Group’s Balance
Sheet as at 31 July 2019 and its Statement ofComprehensive Income for the year then ended

for each of the line items affected. There wasno material impact on the Group’s Statement of
Cash Flows for the year ended 31 July 2019.

policy for options. The Group previously
designated only the intrinsic value of
options into hedging relationships.
Under NZ IAS 39 the fair value change
in the time value component of these
options has been recognised in profit orloss, which led to unnecessary volatility
in earnings. Under NZ IFRS 9 the timevalue of options is treated as a nonprofit and loss item and recognisedin the hedging reserve initially.
Subsequently the cumulative amount3 1 J U LY 2 0 1 8 A S
P R E V I O U S LY R E P O R T E D ( $ )is transferred to profit and loss at thesame time as the hedged item impacts
the Statement of Comprehensive
Income.
Retrospective application of NZ IFRS
9 for the above change in accountng
policy for time value of options has had
the following effects on the amounts
presented for 2018. Note that the impact
at 1 August 2017 of the retrospective
application was not material.

ADJUSTMENTS($)

R E S TAT E D AT 3 1 J U LY 2 0 1 8($)

Balance Sheet
AS REPORTED UNDERNZ IFRS 15 ($)

ADJUSTMENTS ($)

AMOUNTS WITHOUTADOPTION OF NZ IFRS 15 ($)

Retained Earnings

38,406,559

447,120

38,853,679

Reserves

9,633,084(447,120)

9,185,964

Impact on the Group's Balance Sheet
Receivables and Prepayments

48,842,867

4,631,210

53,474,077

Inventories

51,004,174(2,907,594)

48,096,580

Retained Earnings

50,755,867

1,722,103

52,477,970

Reserves

10,538,731

1,513

10,540,244

Impact on the Group's Statement ofComprehensive Income
Revenue from Contracts with Customers

364,281,708

4,829,354

369,111,062

Other Cost of Sales(184,437,293)(2,656,875)(187,094,168)

passed to the customer in the 2018 financial
year to recognise that revenue and therefore acorresponding adjustment to opening retained
earnings was made to reflect the revenue being
recognised in 2019 instead.
On application of NZ IFRS 15, the Grouphas determined there are two performanceobligations in its contracts for export sales;
firstly, supplying the goods and secondly,

arranging and paying for shipping on behalfof the customer. Therefore, the Group’s
revenue now excludes the amount attributable
to shipping costs incurred on behalf of thecustomer. The effect of this adjustment isto reduce reported revenue by $1,909,777.
Distribution costs are reduced by the sameamount. This change in measurement of revenue
has no impact on opening retained earnings ofthe Group.

To apply the classification andmeasurement requirements, theGroup’s financial assets were
evaluated based on the facts andcircumstances as at the date of initial
application and the classifications

5,930,427

621,000

6,551,427

7,730,855

621,000

8,351,855

Income Tax(2,349,767)(173,880)(2,523,647)

Net Surplus

5,381,088

447,120

5,828,208

Change in Fair Value of Cash Flow Hedges(16,705,769)(621,000)(17,326,769)

Income Tax on Other Comprehensive Income

4,677,615

173,880

4,851,495

The Group has not early adopted thefollowing new and revised standards,
amendments or interpretations thathave been issued but are not yet
effective:
NZ IFRS 16 - Leases (effective for the2020 financial statements)
This standard will replace all existingguidance on leases, including NZ IASNZ IFRS 9 - Financial Instruments
NZ IFRS 9 sets out requirements forrecognising and measuring financial
assets, financial liabilities and some
contracts to buy or sell non-financial
items. This standard replaces NZ IAS 39
Financial Instruments: Recognition andMeasurement.

Finance Income
Surplus before Income Tax(ii) New and amended standards
issued but not yet effective(a) Contracts with overseas customers
Under NZ IAS 18, revenue for these contracts
focused on when the significant risks andrewards were transferred to the customer. Under
NZ IFRS 15, revenue is recognised when control
has passed to the customer. The definition ofcontrol is widened to take into account fivecriteria, one of which is when the significant
risks and rewards transfer to the customer.
On review of certain open contracts it wasdeemed that under NZ IFRS 15, control had notStatement of Comprehensive Income

were applied retrospectively. The
only change in classification was that
Trade Receivables and Cash & Cash
Equivalents changed from ‘Loans &Receivables’ to ‘Financial Assets at
Other Amortised Cost’. There wereno material changes to the basis ofmeasurement, or carrying values of any
financial assets or financial liabilities asa result of the analysis.

for a triggering event to occur before
impairment loss is recognised. The
Group is required to assess for
impairment loss on receivables at
the time that revenue is recognised.
Management has performed anassessment of receivables under the
expected loss model andconcluded that expected losses are notmaterial.

The standard introduces an ‘expectedcredit loss model’ for receivables, underwhich it will no longer be necessary

NZ IFRS 9 introduces new hedge
accounting requirements which aim
to align hedge accounting with risk

34(a) Leases in which the Group is a lessee
The Group will recognise new assets andliabilities for its operating leases of subsidiary
offices and the New Zealand based electricity
sub-station. The nature of expenses related tothose leases will now change because the Groupwill recognise a depreciation charge for rightof-use assets and interest expense on leaseliabilities.
Previously, the Group recognised operatinglease expense on a straight-line basis over
the term of the lease, and recognised assets
and liabilities only to the extent that there

17 Leases. The standard introduces asingle, on balance sheet accounting
model for leases that is similar tocurrent financial lease accounting. The
Group has assessed the estimatedimpact that initial application of NZ
IFRS 16 will have on its consolidated
financial statements, as described
below. The actual impacts of adopting
the standard on 1 August 2019 maychange because the new accounting
policies are subject to change until
the Group presents its first financial

statements that include the date ofinitial application. A lessee recognises
a right-of-use asset representing its
right to use the underlying asset and alease liability representing its obligation
to make lease payments. There arerecognition exemptions for short-termleases and leases of low-value items.
Lessor accounting remains similar to thecurrent standard – i.e. lessors continue
to classify leases as finance or operatingleases.

was a timing difference between actual lease
payments and the expense recognised.

(c) Transition

Based on the information currently available, theGroup estimates that it will recognise additionalright to use assets and lease liabilities of $1.4m
as at 1 August 2019. The Group does not expect
the adoption of NZ IFRS 16 to impact its ability
to comply with the loan covenants as detailedin Note 19.
(b) Leases in which the Group is a lessor
No significant impact is expected for otherleases in which the Group is a lessor.

35

The group plans to apply NZ IFRS 16 as of 1
August 2019 using the modified retrospective
approach. The lease liability is measured at thepresent value of the remaining lease payments,
discounted using an appropriate incremental
borrowing rate. The right to use asset ismeasured at an amount equal to the leaseliability on transition. The group intends to use
practical expedients such as applying a single
discount rate to a portfolio of leases.

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

04 — ADMINISTRATION EXPENSES

03 — OPERATING REVENUE AND OTHER INCOME

GROUP

GROUP
2019 ($)

2018 ($)

364,281,708

349,988,970-

33,082

Audit of Financial Statements

75,00075,000

Other Services

Rental Income from Farm Houses

48,97052,338Fair Value movement in Investment Property

411,000-

Directors' Fees

Insurance Claim Proceeds

111,145-

Directors' Expenses

MilkTest NZ Ltd Income

338,347

239,823

Sundry Income

388,034

740,480

1,372,496

1,140,723

Total Revenue

365,654,204

351,129,693

Revenue from contracts with customers

2019 ($)

2018 ($)

171,479

143,864

8,275

6,275

482,667

469,905

3,650

5,548

The following items are included in administration expenses:
Auditors Remuneration (KPMG)

Other Income
Sundry Asset Sales / Gain on Disposal of Property, Plant & Equipment
Rental Income from Investment Property

Analysis of revenue from contracts with customers
2019 ($)

Other services are in relation to advice on
operational tax matters such as transfer pricing,as well as a share registry audit.

05 — PERSONNEL EXPENSES

Nature of Revenue
Sale of goods

350,955,687

Royalties / Commissions

13,326,021

GROUP

364,281,708

2019 ($)

2018 ($)

Wages and Salaries

43,491,570

39,708,369

Superannuation Contributions and3,725,203

3,831,486

Timing of revenue recognition
At a point in time

345,405,864

Over time

18,875,844
364,281,708

Disaggregation of Revenue
Australasia (NZ and AUS)

105,197,985

Asia / Pacific

184,425,203

Americas / Europe

71,932,976

Other

2,725,544
364,281,708

Increase in Liability for Short-term Employee Benefits(Annual Leave and Days in Lieu)
Personnel expenses are included in cost of sales,
sales & marketing expenses and administration
expenses.

PolicyPolicy(a) Revenue from contracts withcustomers

on behalf of the customer as that is anagency arrangement.

Revenue from the sale of goods ismeasured based on the consideration
specified in a contract with customers,
net of returns and allowances, trade
discounts and volume rebates.

Revenue is recognised when theperformance obligation, being the supply
of goods, has been satisfied and control
has passed to the customer. Transfer ofcontrol varies depending on the individual
terms of the contract of sale but for the
majority of the Group’s export sales,
revenue is recognised at the point in time
when the goods have been loaded onto aship at the port of departure. In respectof the majority of domestic sales within
New Zealand, control is considered to
be transferred to the customer when the
goods have been dispatched from the

Revenue recognised at a point in time
The Group has assessed that its
contracts include two performanceobligations, being the supply of goods
and the arrangement of and payment for
shipping on behalf of the customer. The
amount of revenue recorded excludes
the amount attributable to shipping costs

Other Employee Related Expenses

36

Tatua warehouse.

Employee Benefits

Revenue recognised over time
Revenue relating to contract
manufacturing is recognised over time.
Under these contracts the product ismade to a customer’s specifications using
the customer’s intellectual property,
and if the contract is terminated by thecustomer then the Group is entitled toreimbursement of the costs incurred todate, including a reasonable margin.

Defined Contribution Plans

Short-Term Benefits

Obligations for contributions todefined contribution pension plans arerecognised as an expense in profit orloss when they are due.

Short-term employee benefit obligations
are measured on an undiscounted
basis and are expensed as the related
service is provided. A liability isrecognised for the amount expected
to be paid if the Group has a present
legal or constructive obligation to pay
this amount as a result of past service
provided by the employee and theobligation can be estimated reliably.

(b) Other Income
Sundry income is measured at thefair value of consideration received or
receivable.

37

1,844,290

542,554

49,061,063

44,082,409

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

06 — FINANCE INCOME AND EXPENSEGROUP
R E C O N C I L I AT I O N O F E F F E C T I V E TA X R AT E

2019 (%)

2019 ($)

2018 (%)

2018 ($)

GROUP
R E C O G N I S E D I N P R O F I T O R LO S S

2019 ($)

Interest Income
Net Foreign Exchange Gain

2 0 1 8 R E S TAT E D ( $ )41,607

29,186-

6,522,241

Profit for the Period

12,295,423

Total Income Tax Expense

4,541,505

2,523,647

Profit Excluding Income Tax

16,836,928

8,351,855

Income Tax Using the Group’s Domestic Tax Rate
Total Finance Income

41,607

Net Foreign Exchange Loss
Financial Overheads
Interest Expense on External Borrowings

6,551,427(2,855,193)-(19,825)(25,723)(3,687,326)(3,657,425)

28.0%

4,714,339

Impact of Tax Rate in Foreign Countries(0.1%)Tax Exempt Income(0.7%)

Non-deductible Expenses
Tax Credits Converted to Losses
Recognition of Previously Unrecognised Tax Losses
Under / (Over) Provided in Prior Periods

Total Finance Expense(6,562,344)(3,683,148)

Net Finance Income / (Expense)(6,520,737)

2,868,279

5,828,208

28.0%

2,338,520(10,609)(0.7%)(56,812)(116,511)(0.0%)(3,357)(0.3%)(50,503)

3.2%

263,386(0.0%)(80)(0.0%)

(92)

0.0%

-

(0.7%)(60,291)

0.0%

4,869

0.5%

42,29327.0%

4,541,505

30.2%

2,523,647

GROUP

Policy(a) Finance Income and Expense(b) Foreign Currency Transactions

Interest income is recognised as it
accrues, using the effective interest
method.

Transactions in foreign currencies aretranslated to NZD at exchange rates atthe dates of the transactions. Foreign
currency differences arising on translation
are recognised in profit or loss.

All borrowing costs are recognised in
profit or loss using the effective interest
method, except for those that are
directly attributable to the acquisition,
construction or production of a qualifying
asset, in which case they are capitalised
as part of the cost of that asset.

I N C O M E TA X R E C O G N I S E D D I R E C T LY I N
OT H E R C O M P R E H E N S I V E I N C O M E

2019 ($)

2018 ($)

Derivatives

844,152

4,851,495

Other Comprehensive Income

844,152

4,851,495

I M P U TAT I O N C R E D I T S

2019 ($)

2018 ($)

27,369,425

24,329,569

Total Income Tax Recognised Directly in

Imputation Credits Available for use in
Subsequent Reporting Periods

Policy07 — INCOME TAX EXPENSEGROUP
I N C O M E TA X R E C O G N I S E D I N P R O F I T O R LO S S

2019 ($)

2 0 1 8 R E S TAT E D ( $ )5,653,195

3,286,359

Current Tax Expense
Current Period
Adjustment for Prior Periods(134,265)

9,105

5,518,930

3,295,464(1,116,559)(805,005)

139,134

33,188(977,425)(771,817)

4,541,505

2,523,647

Income tax expense comprises current
and deferred tax. Income tax expense
is recognised in profit or loss except
to the extent that it relates to items
recognised directly in equity or in othercomprehensive income, in which case
it is recognised in equity or in othercomprehensive income.

Current tax is the expected tax payable
on the taxable income for the year, using
tax rates enacted or substantially enacted
at the reporting date, and any adjustment
to tax payable in respect of previous
years.

Deferred Tax Expense
Origination and Reversal of Temporary Differences
Adjustment for Prior Periods

Total Income Tax Expense

38

39

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

08 — DEFERRED TAX ASSETS AND LIABILITIES

09 — PROPERTY, PLANT AND EQUIPMENT

Recognised Deferred Tax Assets and Liabilities — GROUPGROUPASSETSLIABILITIESLAND ($)

LAND
I M P R OV E MENTS ($)

BUILDINGS($)

PLANT ANDEQIUIPMENT($)

VEHICLES ($)

CAPITAL
WORK IN
PROGRESS ($)

TOTA L ( $ )15,372,071

3,818,590

49,842,841

169,412,532

3,562,199

13,678,073

255,686,306

Additions--

689,240

20,011,897

127,217(5,669,214)

15,159,140

Revaluation of Land & Improvements

-

-

-

-

-

-

-

Disposals---(211,202)(302,507)-(513,709)

Effect of Movement in Exchange Rates

-

-

-

-

-

-

-

Balance at 31 July 201815,372,071

3,818,590

50,532,081

189,213,227

3,386,909

8,008,859

270,331,737

Balance at 1 August 201815,372,071

3,818,590

50,532,081

189,213,227

3,386,909

8,008,859

270,331,737--

608,939

11,594,108

365,923(2,892,824)

9,676,146

3,133,929

-

-

-

-

-

3,133,929

Disposals--(161,922)(207,006)(364,725)-(733,653)

Effect of Movement in Exchange Rates

-

-

-

-

-

-

-

18,506,000

3,818,590

50,979,098

200,600,329

3,388,107

5,116,035

282,408,159

Balance at 1 August 2017-

1,408,582

14,633,034

112,035,681

2,878,687-

130,955,984

1,165,030

Depreciation-

175,298

1,264,605

10,775,039

186,541-

12,401,483

Disposals---(197,019)(234,953)-(431,972)

Effect of Movement in Exchange Rates

-

-

-

-

-

-

-

Balance at 31 July 2018-

1,583,880

15,897,639

122,613,701

2,830,275-

142,925,495

Balance at 1 August 2018-

1,583,880

15,897,639

122,613,701

2,830,275-

142,925,495-

Depreciation-

174,198

1,308,637

12,037,490

180,434-

13,700,759

Disposals--(160,284)(130,464)(266,220)-(556,968)

Effect of Movement in Exchange Rates

-

-

-

-

-

-

-

Balance at 31 July 2019-

1,758,078

17,045,992

134,520,727

2,744,489-

156,069,286

At 1 August 201715,372,071

2,410,008

35,209,807

57,376,851

683,512

13,678,073

124,730,322

At 31 July 201815,372,071

2,234,710

34,634,442

66,599,526

556,634

8,008,859

127,406,242

At 1 August 201815,372,071

2,234,710

34,634,442

66,599,526

556,634

8,008,859

127,406,242

At 31 July 201918,506,000

2,060,512

33,933,106

66,079,602

643,618

5,116,035

126,338,873

NET

D E F E R R E D TA X A S S E T S A N D L I A B I L I T I E S A R E
AT T R I B U TA B L E TO T H E F O L LO W I N G :2019 ($)

2018 ($)

2019 ($)

2018 ($)

2019 ($)

2018 ($)

Property, Plant and Equipment

1,165,030

1,351,007--

1,165,030

1,351,007--(81,014)(81,014)(81,014)(81,014)2,036,673

1,018,641--

2,036,673

1,018,641

Investment Property
Derivatives
Biological Assets

-

-

-

-

-

-

Inventory

1,602,526

1,119,482--

1,602,526

1,119,482

Provisions and Accruals

1,890,150

1,245,830--

1,890,150

1,245,830

-

-

-

-

-

-

6,694,379

4,734,960(81,014)(81,014)

6,613,365

4,653,946

Other items
Tax Assets / (Liabilities)

Cost or Deemed Cost
Balance at 1 August 2017

to Fair Value

Additions
Revaluation of Land & Improvements
to Fair Value

Movement in Temporary Differences During The Year
BAL ANCE

D E F E R R E D TA X A S S E T S A N D
LIABILITIES ARE
AT T R I B U TA B L E TO T H E
F O L LO W I N G :Property, Plant and Equipment
Investment Property

1 AUGUST2017 ($)

1,195,703

RECOGNISEDIN

RECOGNISEDINBAL ANCE

PROFIT OR
LOSS ($)

OTHER
COMPREHENSIVE INCOME($)

31 JULY 2018($)

155,304---(81,014)(3,658,974)(173,880)

4,851,495---

Inventory

443,907675,575

Provisions and Accruals

1,134,750

111,080

Derivatives

Other items(3,736)

3,736

RECOGNISEDIN

RECOGNISEDINBAL ANCE

OPENINGRETAINING
EARNINGS($)

PROFIT OR
LOSS ($)

OTHER
COMPREHENSIVE INCOME($)

31 JULY 2019($)

1,351,007(81,014)Biological Assets

RECOGNISED
IN-(185,977)-

Balance at 31 July 2019

-

(0)

-

(81,014)1,018,641-

173,880

844,152

2,036,673

-

-

-

-

-

-

1,119,482

137,843

345,201-

1,602,526-

1,245,830-

644,320-

1,890,150

-

-

-

-

-

Tax Loss Carry-forwards

-

-

-

-

-

-

-

-

Tax Assets / (Liabilities)(969,364)

771,815

4,851,495

4,653,946

137,843

977,425

844,152

6,613,365

Depreciation and Impairment Losses

Carrying Amounts

PolicyDeferred tax is recognised in respectof temporary differences between the
carrying amounts of assets and liabilities
for financial reporting purposes and theamounts used for taxation purposes.
A deferred tax asset is recognised
to the extent that it is probable that
future taxable profits will be available

against which temporary differences
can be utilised based on the ability of
the Company to record taxable profits
through retentions or through thereclassification of payout. Deferred tax
assets are reviewed at each reporting
date and are reduced to the extent that it
is no longer probable that the related tax
benefit will be realised.

40

41

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

10 — INTANGIBLE ASSETS

Policy(a) Recognition and Measurement for
Assets at Cost
Items of property, plant and equipment(except land) are measured at cost lessaccumulated depreciation and impairment
losses. Purchased software that is
integral to the functionality of the related
equipment is capitalised as part of that
equipment.
Borrowing costs that are directly
attributable to the acquisition,
construction or production of a qualifying
asset are capitalised as part of the costof the asset. Borrowing costs capitalised
during the year were nil (2018: nil).
When parts of an item of property, plantand equipment have different useful lives,
they are accounted for as separate items(major components) of property, plantand equipment.
(b) Depreciation
Depreciation is recognised in profit
and loss on a straight line basis overthe estimated useful lives of the itemsof plant, property and equipment.
Land is not depreciated. Depreciationis recognised as part of other cost of
sales in the Profit or Loss. Depreciation
methods, useful lives and residual values
are reassessed at the reporting date.
The Group has established the following
useful lives:•

Land Improvements ­- 10 to 20 years•

Buildings - 3 to 50 years•

Plant and Equipment - 2.5 to 20
years

•

Vehicles - 5 to 10 years(c) Impairment
At each reporting date, the Group reviews
its assets to determine whether there is
any indication of impairment. If any such
indication exists, the recoverable amountof the asset (or any cash generating unit
it belongs to) is estimated in order todetermine the extent of the impairment
loss (if any).
Recoverable amount is the higher of fairvalue less costs to sell and value in use(estimated future cashflows).
If the recoverable amount of an asset
is estimated to be less than its carrying
amount, the carrying amount of the asset
is reduced to its recoverable amount.
An impairment loss is recognised in theStatement of Comprehensive Income
immediately.
Impairment losses recognised in priorperiods are assessed at each reporting
date for any indications that the loss
has decreased or no longer exists. An
impairment loss is reversed if there has
been a change in the estimates used
to determine the recoverable amount(other than goodwill). An impairment loss
is reversed only to the extent that theassets carrying amount does not exceed
the carrying amount that would havebeen determined, net of depreciation oramortisation, if no impairment loss had
been recognised.

(d) Recognition and Measurement for
Assets at Fair Value
Land is stated at its fair value. The fairvalue of land within property, plant andequipment is based on market values
determined by an independent valuer.
A revaluation was undertaken as at 31
July 2019 by Fergusson Lockwood andAssociates Ltd, independent registeredvaluers. The land was valued at $18.506m,
an increase of $3.134m from the 2018 year.
The valuation established a market value
using a direct sales comparison approach
and was undertaken in accordance with
the Property Institute of New Zealand(PINZ) International Valuation Standards.
The value of the land at cost is $3,414,704(2018: $3,414,704).
Any gain on remeasurement is recognisedin other comprehensive income and heldin equity, any loss is recognised in profit
and loss, unless there is a credit balance
existing in the revaluation surplus.
Property, Plant & Equipment iscategorised within level 2 of the fairvalue hierarchy.

GROUP
S O F T WA R E ( $ )TOTA L ( $ )CostBalance at 1 August 2017

8,742,680

8,742,680

Additions

794,155

794,155

Disposals--

Balance at 31 July 2018

9,536,835

9,536,835

Balance at 1 August 2018

9,536,835

9,536,835

234,987

234,987

Additions
Disposals--

9,771,822

9,771,822

Balance at 1 August 2017

2,506,214

2,506,214

Amortisation for the Year876,349

876,349

Balance at 31 July 2019
Amortisation and Impairment Losses

Disposals--

Balance at 31 July 2018

3,382,563

3,382,563

Balance at 1 August 2018

3,382,563

3,382,563

Amortisation for the Year

848,360

848,360

Disposals--

4,230,923

4,230,923

At 1 August 2017

6,236,466

6,236,466

At 31 July 2018

6,154,272

6,154,272

Balance at 31 July 2019

Capital Commitments
During the period ended 31 July 2019, theGroup entered into contracts to purchaseplant and equipment. The balance
outstanding at balance date is $1,286,314(2018: $982,617). These commitments are
expected to be settled in the following
financial year.

Carrying Amounts

At 1 August 2018

6,154,272

6,154,272

At 31 July 20195,540,900

5,540,900

Policy(a) Recognition and Measurement(b) Amortisation

Intangible assets that are acquired by
the Group which have finite useful lives
are measured at cost less accumulated
amortisation and accumulated impairment
losses.

Amortisation is recognised in profit orloss on a straight-line basis over theestimated useful lives of intangible assets
from the date that they are available foruse. The amortisation is recognised aspart of administration expenses in theProfit or Loss. The estimated useful lives
for the current and comparative periods
are as follows:•

42

Software - 2.5 to 10 years

43Annual Report 2019

The Tatua Co-operative Dairy Company Limited

11 — INVESTMENT PROPERTY

13 — RECEIVABLES AND PREPAYMENTS
GROUP

GROUP
2019 ($)

2018 ($)

Balance at 1 August

1,175,000

1,175,000

Change in Fair Value

411,000-

Balance at 31 July

1,586,000

1,175,000

Trade Receivables
Prepayments and Sundries

2019 ($)

2018 ($)

42,505,472

45,450,324

6,337,395

3,055,975

48,842,867

48,506,299

GROUP

PolicyInvestment property is held either to earnrental income or for capital appreciationor for both. Investment property ismeasured at fair value with any change
therein recognised in profit or loss andincluded in ‘Other Income’. Investment

property comprises the land and buildingsthat are leased to PGG Wrightson Ltd.
The fair value of investment property
was determined by external, independent
property valuers, having appropriate
recognised professional qualifications andrecent experience in the locationand category of the property being
valued.

T R A D E R E C E I VA B L E S D E N O M I N AT E D I N F O R E I G N C U R R E N C I E S

Investment property is categorised within
level 2 of the fair value hierarchy.

USD ($)AU D ( $ )JPY (¥ )E U R (€ )CNY (¥)

2019

10,648,777

2,271,279

1,024,834,588

12,783

26,517,369

2018

8,451,164

2,391,783

1,655,592,518-

13,952,164

PolicyThe trade receivables are classed asa financial asset at amortised cost. As
all receivables are current they are notdiscounted.

12 — INVENTORIESThe Group is required to assess for
impairment loss on receivables at the timethat revenue is recognised. Management
has performed an assessment ofreceivables under the expected loss
model and concluded there are nomaterial impairments to be recorded.

GROUP
2019 ($)

2018 ($)

Finished Goods

40,925,785

44,908,284

Raw Materials

10,078,389

9,960,368

51,004,174

54,868,652

PolicyInventories are measured at the lower ofcost or net realisable value. The cost of
inventories is based on weighted average
cost, and includes expenditure incurredin acquiring the inventories and bringing
them to their existing location andcondition. In the case of manufactured
inventories and work in progress,
cost includes an appropriate share of
production overheads based on normal
operating capacity. Net realisable value isthe estimated selling price in the ordinary
course of business, less the estimatedcosts of completion and selling expenses.
The cost of milk within inventory is a key
judgement as it involves a number of
inputs and estimations. The cost of milk
within inventory is based on a weighted

average of both shareholder supplied milk
and third party supplied milk. Shareholder
supplied milk is valued at the Farmgate
milk price rate. The weighted average costof milk is then separated into three coreingredients, Fat, Whey Protein and Casein
Protein, with the Valued Component Ratio(value of fat to protein) being a key input
to calculate the separation.
Impairment

realisable value less than its cost of
manufacture.

14 — CASH AND CASH EQUIVALENTS
Cash and Cash Equivalents comprise
cash balances. Bank overdrafts that are
repayable on demand and form an integral
part of the Group’s cash management
are included as a component of Cash andCash Equivalents for the purpose of thestatement of cash flows.
Cash and Cash Equivalents are classified
as a financial asset at amortised cost.

Inventory valued at net realisable value
included in finished goods above:

GROUP

2018

918,010

581,991

JPY Bank Deposits

5,818,772

646,962

USD Bank Deposits

249,292

1,586,421

CNY Bank Deposits

6,688,815

2,921,000

Cash and Cash Equivalents in the Statement of Cash Flows

There was a write down of $2,512,251
during the period (2018: $769,305)
relating to inventory that had a net

442018 ($)

GROUP
2019

NZD Bank Deposits

Inventories are reviewed for impairment
based on their age and/or condition. If
any impairment exists the asset is written
down to its net realisable value (if any).

2019 ($)

45

157,632

4,147,776

12,914,511

9,302,159

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

15 — MEMBERS FUNDS
Voting Rights - Under the Company
Constitution, voting may take place byshow of hands, voice or poll. On a poll,
one vote may be case for every whole1000 shares held. No shareholder shallcast votes exceeding 5% of the total votes
which could be cast if all shareholders
were present and voting. Redemption
Features - Shares are redeemed atnominal value of 50 cents, or paid up
value if lower.

16 — LOANS AND BORROWINGS
Policya bonus share issue, with new sharesissued at the same rate as existing shares,
retained earnings is decreased to matchthe increase in co-operative shares.

Shares in the co-operative are held inproportion to the current or expected milk
supply. The share standard is ten 50 centshares for every kilogram of milksolids.
Shares are issued or redeemed annually
to ensure compliance with the sharestandard. Due to their redemption nature,shares are classified as a liability in thebalance sheet. When the group performs

Interest-bearing borrowings are classified as financial
liabilities and are measured at amortised cost using theeffective interest rate.

GROUP
2019 ($)

2018 ($)

JPY Bank Loans

9,881,698

13,854,120

USD Bank Loans

7,560,865

7,322,789

NZD Bank Loans

20,000,000

35,000,000

37,442,563

56,176,909

Current

Non Current

Movements in the Company’s Issued Shares were as follows:
2019

JPY Bank Loans--NZD Bank Loans

24,850,000

23,150,000

Total

62,292,563

79,326,909

2018

SHARES($)

SHARES($)
2019

Shares at the beginning of the Year
Shares Issued

145,206,060

72,603,030

145,146,947

72,573,473

6,523,962

3,261,981

6,394,993

3,197,497

Shares Repurchased(4,828,850)(2,414,425)(6,335,880)(3,167,940)

Fully Paid Shares at the end of the Year

146,901,172

73,450,586

145,206,060

72,603,030

Treasury Stock

5,408,723

Retained Earnings

Translation Reserve

All retained earnings are attributable toequity holders of the Company.

Hedging Reserve
The hedging reserve comprises theeffective portion of the cumulative netchange in the fair value of cash flow
hedging instruments related to hedgedtransactions that have not yet occurred.
Revaluation Reserve

Current Bank Loans

7,103,835

Non Current Bank Loans

Reserves

The translation reserve comprises all
foreign currency differences arising fromthe translation of the financial statementsof foreign operations.

C U R R E N CYNOMINALI N T E R E S T R AT E

YEAR OFM AT U R I T Y

FAC E VA LU E

C A R RY I N G
A M O U N T ( N Z D)

JPY

1.32%

2020

¥710,000,000$9,881,698

USD

3.45%

2020

$5,000,000$7,560,865

NZD

2.70%

2020

$20,000,000$20,000,000

NZD

3.45%

2021

$350,000$350,000

NZD

2.88%

2022

$24,500,000$24,500,000

NOMINALI N T E R E S T R AT E

YEAR OFM AT U R I T Y

FAC E VA LU E

C A R RY I N G
A M O U N T ( N Z D)

$13,854,120

Treasury Stock

2018

When shares recognised as members
funds are repurchased, the amount of
the consideration paid, which includes
directly attributable costs, is recognised
as a deduction from members funds.
Repurchased shares are classified astreasury shares. When treasury shares are
sold or reissued subsequently, the amountreceived is recognised as an increase inmembers funds.

C U R R E N CY

Current Bank Loans

Non Current Bank Loans

JPY

1.04%

2019

¥1,050,000,000

USD

3.28%

2019

$5,000,000$7,322,789

NZD

3.7%

2019

$35,000,000$35,000,000

NZD

2.98%

2020

$20,000,000$20,000,000

NZD

2.73%

2021

$3,150,000$3,150,000

The revaluation reserve relates to therevaluation of land.
The Group’s bank loans are secured byregistered first mortgages, preferred
security interest in all present and after
acquired property, and an interlocking
guarantee from companies within theGroup. The Group’s borrowings are
subject to various covenants such as
minimum equity, interest cover ratio

46

and gearing ratio and the Group was incompliance with the various covenants.
The Group has committed (but undrawn)
facilities with expiry dates through to2022 of NZD $55.2 million, JPY ¥ 1,050
million and USD $2 million. The JPY and
USD loans are held by the respective
subsidiaires.

47

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

17 — ACCOUNTS PAYABLE AND ACCRUALS

Foreign Currency Hedges
The Group’s foreign exchange rate
contracts and options notional amounts
and fair values are presented below.

GROUP
2019 ($)

2018 ($)

Trade Payables

8,142,162

9,053,003

Employee Entitlements

8,435,997

6,591,707--

7,210,706

8,896,070

23,788,865

24,540,780

Income in AdvanceAccruals

The Group uses zero cost collar
structures for option contracts. All
options are bought options. Exposure iscovered in Note 19.
2 0 1 9 N OT I O N A L A M O U N T S
LESS THAN 12 MONTHS

MORE THAN 12 MONTHSTOTA LBuy

151,223,957

50,051,560

201,275,517

Sell

-

-

-

Foreign Exchange Contracts:

Option Contracts:

PolicyTrade payables and accruals — Trade
payables are recognised at fair value andmeasured at cost and classed as otherfinancial liabilities.

				
Employee entitlements — Employee					benefits which remain unused at balance				date, and amounts expected to be paid
under short-term cash bonus plans are
accrued for.				

Call44,673,309

23,693,680

68,366,989

Put(47,078,502)(25,271,843)(72,350,345)

2 0 1 8 N OT I O N A L A M O U N T S
LESS THAN 12 MONTHS

MORE THAN 12 MONTHSTOTA L

Buy

92,582,615

43,387,388

135,970,003

Sell

-

-

-

Foreign Exchange Contracts:

18 — DERIVATIVES

Option Contracts:

Interest Rate Hedges
The Group has a policy of monitoring
interest rate movements and whereappropriate taking out interest rate cover.

					
The Group currently has a number ofinterest rate swaps in place.			 				
					

Call

80,321,705

18,850,171

99,171,876

Put(85,436,541)(19,836,985)(105,273,526)

GROUP
GROUP
2019 ($)
I N T E R E S T R AT E S WA P S

Notional Contract Amount2019 ($)

2018 ($)

32,000,000

44,000,000

2018 ($)

Fair Value:
Assets1,158,318

1,640,760

Liabilities(7,223,709)(5,239,875)

Net Fair Value(6,065,391)(3,599,115)

Fair Value
Assets--Liabilities(1,738,329)(945,392)

PolicyNet Fair Value(1,738,329)(945,392)

Derivatives are recognised at fair value atthe date a derivative contract is enteredinto and are subsequently remeasured totheir fair value at each balance sheet date.
The resulting gain or loss is recognised
in profit or loss immediately unless thederivative is designated into an effective
hedge relationship.

2019
LESS THAN 12 MONTHS

MORE THAN 12 MONTHSTOTA L-32,000,000

32,000,000

Interest Rate Hedges

The Group’s derivatives are classified
as being within Level 2 of the fair value
hierachy. The fair value of forward
exchange contracts is determined using
forward exchange rates at balance sheet
date, with the resulting value discounted
back to present value. The fair value of
option contracts is determined using

2018

Interest Rate Hedges

LESS THAN 12 MONTHS

MORE THAN 12 MONTHSTOTA L

12,000,000

32,000,000

44,000,000

48

49

forward exchange rates and other inputs
required for the Black Scholes option
pricing model. The fair value of interest
rate swaps is calculated as the present
value of the estimated future cash flows
based on observable yield curves.

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

Hedge Accounting
All derivatives are classified as cash
flow hedges. The effective portion ofchanges in the fair value of the hedging
instruments are recognised in othercomprehensive income and accumulated
in the hedging reserve.
The following are recognised in profit
or loss:••

any gain or loss relating to theineffective portion of the hedging
instrument; andthe periods when the hedged item isrecognised in profit or loss.
Once hedging is discontinued, any
cumulative gain or loss previously
recognised in other comprehensive
income is recognised in profit or loss
either:••

The amount reclassified from othercomprehensive income to profit or loss
on settlement of the derivatives in the2019 financial was a loss of $2,199,518(2018: gain of $12,542,918). There was anineffectiveness in the cash flow hedges in
the 2019 year.

at the same time as the forecast
transaction; or

The Group’s maximum exposure to credit risk for trade and otherreceivables, by geographic region, is as follows:

GROUP - CARRYING AMOUNT2019 ($)

Australasia (NZ and AUS)

7,408,941

7,879,660

Asia / Pacific

25,223,319

28,979,515

Americas / Europe

9,872,602

8,591,149

Other

The status of Group trade receivables at thereporting date is as follows:

immediately if the transaction is nolonger expected to occur

fair value changes in the hedging
instrument previously accumulated
in other comprehensive income, in2018 ($)

610-

42,505,472

45,450,324

GROSS
R E C E I VA B L E

I M PA I R M E N T

GROSSR E C E I VA B L E

I M PA I R M E N T

2019 ($)

2019 ($)

2018 ($)

2018 ($)

Not Past Due

39,882,643-

42,722,119-

Past Due 0-30 days

2,353,290-

1,828,371-

Past Due 31-120 days

269,539-

899,834-

42,505,472-

45,450,324-

19 — FINANCIAL RISK MANAGEMENT
b. Liquidity Risk
Capital Management
The Group’s members funds includes cooperative shares, reserves and retained
earnings. The Group’s policy is to maintaina strong members funds base so as
to maintain shareholder, creditor andmarket confidence and to sustain future
development of the business.
The Group’s objective is to provide
returns for shareholders and to maintainan optimal capital structure to reduce thecost of capital. The Group distributes
its surplus by way of payout. However,in order to retain or modify the capital

structure, the Group may decide to retain
profits within the business.
The Board primarily monitors capitalon the basis of the gearing ratio. For
the period ending 31 July 2019 thegearing ratio was 27% (2018: 37%).
This ratio is calculated as net interest
bearing debt divided by total capital.
Net interest bearing debt is calculated
as total borrowings less cash and cash
equivalents. Total capital is calculated as
members funds plus net interest bearing
debt. Tatua is a co-operative company,

and as such, members funds change inproportion to milk supplied. Refer to Note
15. The Group is required to meet certain
ratios under its bank covenants, whichhave been met, including a requirementthat Group members funds be not lessthan $70,000,000 (2018: $70,000,000),but otherwise the Group is not subject
to any externally imposed capitalrequirements.
There have been no material changes in
the Group’s management of capital during
the period.

Liquidity risk represents the Group’s
ability to meet its contractual obligations.
The Group evaluates its liquidity

The following table sets out the contractual
cash flows for all financial liabilities that are
settled on a gross cash flow basis.

meet its obligations arising from financial
liabilities and has credit lines in place tocover any timing differences.

requirements on an ongoing basis. In
general, the Group generates sufficient
cash flows from its operating activities to2019 BALANCESHEET ($)

CONTRACTUAL
CASH FLOWS($)

Loans & Borrowings (note 16)

62,292,563

Accounts Payable and Accruals (note 17)

23,788,865

LESS THAN
6 MONTHS ($)

6-12
MONTHS ($)

1-2
YEARS ($)

MORE THAN
2 YEARS ($)

62,292,563-

37,442,563

350,000

24,500,000

23,788,865

23,788,865

-

-

-

Derivative Liabilities (note 18)

7,223,709

7,223,709

3,046,032

2,552,698

1,624,979-

Owing to Suppliers

23,591,197

23,591,197

23,591,197

-

-

-

Co-operative Shares

73,450,586

73,450,586-

73,450,586--

Total Non-derivative Liabilities

190,346,920

190,346,920

50,426,094

113,445,847

1,974,979

24,500,000

2018 BALANCESHEET ($)

CONTRACTUAL
CASH FLOWS($)

LESS THAN
6 MONTHS ($)

6-12
MONTHS ($)

1-2
YEARS ($)

MORE THAN
2 YEARS ($)

Quantitative Disclosures
Exposure to credit, liquidity, foreign
currency and interest rate risks arisesin the normal course of the Group’sbusiness.
a. Credit Risk
The Group’s exposure to credit risk ismainly influenced by its customer base.
There is no risk concentration either
geographically or by sector.
Tatua has a credit policy under which
each customer is assessed for credit
worthiness and assigned a credit limit.
Where available the Group reviews
external credit reports for both country

and customer risk. Credit limits arereviewed on a regular basis. The Group’s
credit policy requires certain risk
mitigations such as insurance, letters ofcredit or prepayment depending on the
country and / or customer.
The Group does not require collateral for
trade and other receivables. However,where practicable, purchase money
security interests over New Zealandbased customers are registered on the
Personal Property and Securities Register.
The Group is required to assess for
impairment loss on receivables at the time

50

that revenue is recognised. Management
has performed an assessment ofreceivables under the expected loss
model and concluded that as the Group’s
control over receivables has resulted invery few bad debts, expected losses are
not material.
The carrying amount of financial assets
represents the Group’s maximum credit
exposure. The Group has not renegotiatedthe terms of any financial assets which
would result in the carrying amount nolonger being past due or avoid a possible
past due status.

Loans & Borrowings (note 16)

79,326,909

79,326,909-

56,176,909

20,000,000

3,150,000

Accounts Payable and Accruals (note 17)

24,540,780

24,540,780

24,540,780

-

-

-

Derivative Liabilities (note 18)

5,239,875

5,239,875

1,622,792

1,541,073

2,076,010-

Owing to Suppliers

22,559,535

22,559,535

22,559,535

-

-

-

Co-operative Shares

72,603,030

72,603,030-

72,603,030--

Total Non-derivative Liabilities

204,270,129

204,270,129

48,723,107

130,321,012

22,076,010

3,150,000

51

Annual Report 2019

The Tatua Co-operative Dairy Company Limitedc. Foreign Currency Exchange Risk
The Group is exposed to foreign currency
risk predominantly on sales that are
denominated in a currency other thanthe Group’s functional currency. The
New Zealand dollar is the presentation
currency of the Group. The currencies
in which transactions are primarily
denominated are United States dollars,
Japanese Yen and Australian dollars.

The Group has a policy of maintaining
a level of foreign currency hedging thatallows for a degree of certainty in its
future cash flows and to help protect itagainst sudden increases in the value of
the New Zealand dollar against the UnitedStates dollar, Japanese yen and Australian
dollar.

The Group uses forward exchange
contracts and currency options to hedge
its foreign currency exposure. All of theforward exchange contracts and options
have maturities of less than two years
at balance date. The Group classifies its
forward exchange and option contracts,
which are hedging forecast transactions,as cash flow hedges.

The Group's exposure to foreign currency risk for the
next 12 months can be summarised as follows:

2019

Net Cash Flow Exposure Before Hedging
less Foreign Exchange Contracts and Options
Net Unhedged Exposuree. Sensitivity Analysis

Interest Rates:

Foreign Exchange Rates:

In managing interest rate and currency
risks the Group aims to reduce the impact
of short-term fluctuations on the Group’s
earnings. Over the longer-term, however,permanent changes in foreign exchange
and interest rates will have an impact on
profit.

At 31 July it is estimated that a generalincrease of one percentage point in NZ
interest rates would decrease Group
profit before income tax by approximately$427,224 (2018: $425,993). Interest
rate swaps have been included in thiscalculation.

The Group has a foreign exchange policy
to mitigate the risk associated with thefluctuations in the value of the New
Zealand Dollar. At 31 July it is estimatedthat a general increase of one cent in the
NZD / USD exchange rate would decrease
the Group’s profit by $869,430 (2018:$1,802,026). Foreign exchange hedging
has been included in this calculation.

20 — RECONCILIATION OF CASH FLOWS FROM OPERATING ACTIVITIESUSD ($)AU D ( $ )CNY (¥)JPY (¥ - 000’S)

79,670,495

19,541,962

288,605,176

4,984,829(68,500,000)(11,000,000)(167,000,000)(3,600,000)

11,170,495

8,541,962

121,605,176

1,384,829

GROUP
Y E A R E N D E D 3 1 J U LY 2 0 1 9 ( $ )Y E A R E N D E D 3 1 J U LY 2 0 1 8 R E S TAT E D($)

12,295,423

5,828,208

13,700,759

12,401,483

848,360

876,349

Movement in Deferred Tax(1,959,419)(5,623,311)

Revaluation of Investment Property(411,000)-

Revaluation of Biological Assets(185,754)-

Movement in Investments(342,611)-

98,814-24,044,572

13,482,729

Profit / (Loss) For The Year2018
USD ($)AU D ( $ )Adjustments for Non Cash Items:
CNY (¥)JPY (¥ - 000’S)

Depreciation
Amortisation of Intangible Assets

Net Cash Flow Exposure Before Hedging
less Foreign Exchange Contracts and Options
Net Unhedged Exposure

101,730,258

20,504,000-

5,105,625(88,000,000)(12,000,000)-(3,400,000)

13,730,258

8,504,000-

1,705,625

Loss / (Gain) on Sale of Property, Plant and Equipment
The Group also has foreign currency loans in foreign currency operations to minimise the translation risk in those locations.
Movements in Working Capital:d. Interest Rate Risk - Repricing Analysis
Interest rate risk is the risk that thevalue of the Group’s assets and liabilities
will fluctuate due to changes in market
interest rates.

The Group is exposed to interest rate risk
primarily through its cash balances andadvances, bank overdraft and borrowings.

The Group’s exposure to interest rate risk
can be summarised as follows:

Interest rate swaps have been enteredinto to achieve an appropriate mix of fixedand floating rate exposure within theGroup’s policy.

2019
NZD ($)USD ($)AU D ( $ )CNY (¥)JPY (¥ )82,131

173,310

18,24030,484,543

420,553,356

Loans and Borrowings(44,850,000)(5,000,000)--(710,000,000)

Interest Rate Swaps

32,000,000

-

-

-

-

Net Unhedged Exposure(12,767,869)(4,826,690)

18,24030,484,543(289,446,644)

Cash and Cash Equivalents

Cash and Cash Equivalents
Loans and Borrowings

USD ($)AU D ( $ )CNY (¥)

27,303

1,090,519

29,562

13,586,742

357,874,264(58,150,000)(5,000,000)--(1,050,000,000)(4,955,561)

482,442

15,155,740

Derivatives - Liabilities

2,776,771

3,938,011

Inventories

3,864,478(5,029,635)

Biological Assets(91,732)(300,156)

Owing to Suppliers

1,031,662

3,154,704

Trade and Other Payables(26,982)

1,305,995

7,700,071

13,269,098

Items Classified as Investing / Financing Activities(2,174,395)(10,072,224)

Net Cash Flows From / (Applied to) Operating Activities

29,570,248

16,679,603

JPY (¥ )Interest Rate Swaps

44,000,000

-

-

-

-

Net Unhedged Exposure(14,122,697)(3,909,481)

29,562

13,586,742(692,125,736)

52(336,568)

Items classified as Investing / Financing Activities relate to
movements in the hedging reserve and translation reserve
as well as amounts owing for the repurchase of shares.

2018
NZD ($)

Trade and Other Receivables
Derivatives - Assets

53

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

21 — RELATED PARTY TRANSACTIONS

22 — GROUP ENTITIES

Directors and Shareholders

K E Y M A N AG E M E N T P E R S O N N E L

Key Management Personnel Compensation

GROUP
Y E A R E N D E D 3 1 J U LY 2 0 1 9 ( $ )Y E A R E N D E D 3 1 J U LY 2 0 1 8 ( $ )Short Term Employee Benefits

2,089,761

1,838,776

Long Term Employee Benefits--

Transactions and Balances with Key
Management Personnel
Key management personnel may conductbusiness with the Group.
The aggregate value of transactions andoutstanding balances relating to key
management personnel and entities overwhich they have control or significant
influence were as follows: Nil (2018: Nil).
Transactions and Balances with Other
Related Parties
Elected directors conduct business with
the Group in the normal course of theirbusiness activities.
The Group has paid directors fees of$482,667 (2018: $469,905), which isseparately disclosed within the directors
report.

The following entities are consideredrelated parties because they havecommon directors:
Tax Management NZ Ltd (Peter Schuyt)
During the year the group utilised theservices of Tax Management Limited tomake tax payments through to the IRD in
the ordinary course of business.
Foodstuffs North Island Ltd (Peter
Schuyt) - Sales during the year (GST
inclusive) $3,443,575 (2018: $2,658,405),
Receivable at year end (GST inclusive)$291,567 (2018: $270,276).

C O U N T RY O FI N C O R P O R AT I O NSUBSIDIARIES

Directors and Shareholders may conduct business with the Group in the normal course of their business.

RML Engineering Ltd (Ross Townshend)- Amounts paid during the year (GST
inclusive) $18,063 (2018: $32,827), Payableat year end (GST inclusive) $7,152 (2018:$446).
Nicholson United Autos Ltd (Mark
Dewdney) - Amounts paid during the year
(GST inclusive) $140,184 (2018: $76,444),
Payable at year end (GST inclusive) $1,353(2018: $1,348).

DairyNZ Ltd (Peter Schuyt) - Amounts
paid during the year (GST inclusive)$10,031 (2018: $nil), Payable at the year
end (GST inclusive) $10,031 (2018: $nil).

BALANCEO U T S TA N D I N G

VA LU E O F
T R A N S AC T I O N S

BALANCEO U T S TA N D I N G

18/19 ($)

3 1 J U LY 2 0 1 9 ( $ )1 7/ 1 8 ( $ )3 1 J U LY 2 0 1 8 ( $ )

Japan

100%

100%

USA

100%

100%

Tatua Dairy Products (Shanghai) Co., Ltd

China

100%

100%

New Zealand

10%

10%

Equity Accounted Investee
Milktest New Zealand Limited

Policy(a) Basis of Consolidation
Subsidiaries
Subsidiaries are entities controlled by
the Group. Control exists when the Group
has the power over the entity, exposureor rights to variable returns from its
involvement with the entity, and theability to use its power over the entity toaffect the amount of the entity’s return.
In assessing control, potential voting
rights are only considered if the rights
are substantive. The financial statementsof subsidiaries are included in the
consolidated financial statements fromthe date that control commences until thedate that control ceases.

9,865,100

1,738,913

8,477,067

1,463,386

has rights to the net assets rather thanrights to the assets and obligations forthe liabilities. Joint ventures are initiallyrecognised at cost (including any goodwill
identified on acquisition). Subsequent
to initial recognition they are accounted
for using the equity method in the
consolidated financial statements.
The consolidated financial statements
include the Group’s share of the profit
or loss after tax of joint ventures after
adjustments to align the accounting
policies of the Group, from the date thatsignificant influence or joint control
commences until the date that significant
influence or joint control ceases.
Transactions Eliminated on
Consolidation(b) Foreign Currency
The assets and liabilities of foreign
operations, including goodwill and fairvalue adjustments arising on acquisition,
are translated to New Zealand dollars
at exchange rates at the reporting date.
The income and expenses of foreign
operations are translated to New Zealanddollars at exchange rates at the dates of
the transactions.
Foreign currency differences arerecognised in the foreign currencytranslation reserve (FCTR). When aforeign operation is disposed of, in part orin full, the relevant amount in the FCTR istransferred to profit or loss as part of thegain or loss on disposal.

Intra-group balances, and any unrealised
income and expenses arising from intragroup transactions, are eliminated in
preparing the consolidated financial
statements.

23 — SUBSEQUENT EVENTS

Directors’ Farm Supply(including Owing to Suppliers)

54

2018

Tatua USA Limited

Joint ventures are those arrangements inwhich the Group has contractually agreed
to share control and where the GroupVA LU E O F
T R A N S AC T I O N S

2019

Tatua Japan Limited

Equity Accounted Investees(Joint Ventures)

Directors Farm Supply(included in Owing to Suppliers)

OWNERSHIP INTEREST

There were no material events subsequent to 31 July 2019 that would impact these financial statements.

55

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

Independent Auditor’s Report
To the shareholders of The Tatua Co-operative Dairy Company Limited
Report on the audit of the consolidated financial statements

OpinionKey audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our auditof 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 theprocess 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

In our opinion, the accompanying consolidated
financial statements of The Tatua Co-operative
Dairy Company Limited (the ’Company’) and its
subsidiaries (the 'Group') on pages 28 to 55:

We have audited the accompanying consolidated
financial statements which comprise:

Inventory – Milk Cost

— the consolidated balance sheet as at 31 July

Refer to Note 12 of the Financial statements

i. present fairly in all material respects the Group’s
financial position as at 31 July 2019 and its
financial performance and cash flows for theyear ended on that date; and— the consolidated statements of comprehensive

The Group has inventory of $51 million (2018: $55
million) which represents 20% of total assets.

Our audit procedures included, among others, challengeof management’s significant input assumptions in themodel.

A significant portion of the cost of finished goods
inventory is represented by an estimated cost for
milk solids supplied by co-operative shareholders
and actual cost for milk produced by other suppliers.

We considered the appropriateness of management’s
use of the Farmgate Milk Price as the best estimate of
the cost of milk solids supplied from the co-operative
shareholders.

The Group has determined that the estimated costof the milk solids supplied from co-operative
shareholders is best represented by the Farmgate
Milk Price calculated in accordance with the
Farmgate Milk Price Manual.

We compared the Farmgate Milk Price used to thelatest publicised rate for the 2018/19 season.

2019;

income, changes in equity and cash flows forthe year then ended; and— notes, including a summary of significant

ii. comply with New Zealand Equivalents toInternational Financial Reporting Standards andInternational Financial Reporting Standards.

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 (Revised) Code of
Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board and theInternational Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (‘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 theconsolidated financial statements section of our report.
Our firm has also provided other services to the group in relation to tax advice and a share registry audit. 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.

A model is prepared to calculate the weighted
average cost of milk solids supplied from both cooperative shareholders and other suppliers. The
weighted average cost of milk solids supplied isthen split into the individual cost for three coreproduct ingredients (Fat, Whey protein and Casein
protein). The model incorporates a number ofsignificant inputs, including the Farmgate Milk Price,purchased milk cost from other suppliers, and avalued component ratio of fat to protein.
The judgment required to consider these variabilities
and uncertainties are the reason we haveconsidered this a key audit matter.

We compared a sample of purchased wholemilk andcream (quality and value) from other parties to theirrespective invoices.
We compared the valued component ratio of fat toprotein in the model to the ratio that was physically paid
to farmers based on their fat and protein supply split
during the 2018/19 season.
We checked that the split of protein into its casein andwhey components was calculated correctly. We
checked that the mechanics of the model were
calculating correctly and were consistent with theprior year.
We did not identify material exceptions from theprocedures performed and found the judgements andassumptions to be balanced and consistent.

Other information

Materiality
The scope of our audit was influenced by our application of materiality. Materiality helped us to determine thenature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individuallyand on the consolidated financial statements as a whole. The materiality for the consolidated financial
statements as a whole was set at $1.7m determined with reference to a benchmark of Group total revenue. We
chose total revenue as the benchmark for the Group as this is a key measure of the Group’s performance. We
agreed with the Audit, Risk and Compliance Committee that we would report misstatements identified during
our audit, to them, above $85,000 as well as misstatements below that amount that in our view, warranted
reporting for qualitative reasons.

56

56

The Directors, on behalf of the Group, are responsible for the other information included in the entity’s Annual
Report. Other information includes the Report from the Chairman & Chief Executive Officer, the Key Financial
Performance Summary, Statutory Information, Statistics & Progress Table, and Directory. Our opinion on the
consolidated financial statements does not cover any other information and we do not express any form ofassurance conclusion thereon.
In connection with our audit of the consolidated financial statements our responsibility is to read the otherinformation and, in doing so, consider whether the other information is materially inconsistent with theconsolidated 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 thisother information, we are required to report that fact. We have nothing to report in this regard.

57

57

Annual Report 2019

The Tatua Co-operative Dairy Company Limited

STATISTICS
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.

2018/192 0 1 7/ 1 8

2016/172015/16

2014/15

2013/14

Litres163,244,553

165,693,452

166,517,809

Milksolids

14,458,814

14,686,362

14,968,366

173,184,398

173,353,171

147,647,758

15,568,586

15,663,949

13,223,427

Made up of: Cash Payout

850.0

810.0

710.0

630.0

710.0

900.0

Total Income Equivalent Payout

850.0

810.0

710.0

630.0

710.0

900.0

C E N T S / KG
FATC E N T S / KG
P R OT E I N

C E N T S / KG
FATC E N T S / KG
P R OT E I N

C E N T S / KG
FATC E N T S / KG
P R OT E I N

Milk Received from Suppliers

Income Equivalent Payout (cents/kg ms)

2018/19

Responsibilities of the Directors for the consolidated financial
statements

Summary of Milk Payment Rates

2 0 1 7/ 1 8

2016/17

Advance Rate

20 July

406.0

507.0

347.0

518.0

252.0

600.0

The Directors, on behalf of the Company, are responsible for:Retrospective Increase

20 December

22.0

28.0

21.0

31.0

27.0

64.0

— the preparation and fair presentation of the consolidated financial statements in accordance with generally

Retrospective Increase

20 March

37.0

46.0

34.0

50.0

19.0

46.0

Retrospective Increase

20 April

36.0

46.0

33.0

50.0

16.0

38.0

Retrospective Increase

20 May

37.0

45.0

33.0

49.0

16.0

38.0

Retrospective Increase

20 June

45.0

57.0

33.0

50.0

22.0

53.0

Retrospective Increase

20 July

45.0

56.0

49.0

74.0

22.0

52.0

statements that is fairly presented and free from material misstatement, whether due to fraud or error; andRetrospective Increase

20 August

45.0

57.0

50.0

74.0

22.0

52.0

— assessing the ability to continue as a going concern. This includes disclosing, as applicable, matters related

Retrospective Increase

20 September

45.0

56.0

33.0

49.0

22.0

53.0

Final Payment

20 October

45.409656.262033.0032

49.0347

25.2675

59.3988763.410954.262666.003994.035

443.268

1,055.399

accepted accounting practice in New Zealand (being New Zealand Equivalents to International Financial
Reporting Standards);— implementing necessary internal control to enable the preparation of a consolidated set of financial

to going concern and using the going concern basis of accounting unless they either intend to liquidate or tocease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the consolidated financial
statements
Our objective is:

Total Payout Averaged Over All Grades

PROGRESS TABLEYEARNO. OF
SUPPLIERS— to obtain reasonable assurance about whether the consolidated financial statements as a whole are freefrom material misstatement, whether due to fraud or error; andM I L KS O L I D SFROM OWNS U P P LY ( KG)

PAYO U T
C E N T S / KG M S(INCOMEE Q U I VA L E N T )TOTA LSHAREHOLDERSFUNDS $C O M M O D I T Y P R O D U C T S ( TO N N E S )P R OT E I N S

POWDERSCHEESE

AMF

2018/19107

14,458,814

850.0

134,745,184

8,272

7,802

2017/18110

14,686,362

810.0

120,642,673

8,590

8,833

2016/17113

14,968,366

710.0

126,493,623

9,018

10,735

2015/16114

15,568,586

630.0

116,869,514

9,645

10,194

2014/15118

15,663,949

710.0

100,371,192

9,654

9,791

2013/14109

13,223,427

900.0

106,167,944

7,408

9,535

2012/13108

12,523,609

740.0

87,044,650

7,168

8,069

2011/12109

13,186,565

750.0

76,825,363

8,037

9,469

2010/11111

12,041,622

810.0

75,438,331

6,715

7,288

2005/06

121

12,237,952

459.1

50,988,615

6,718

8,364

2000/01

136

8,908,866

552.3

25,376,429

8,000

http://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-responsibilities/audit-report-1/

1995/96146

7,989,118

418.7

15,082,806

7,863

1990/91130

6,382,505

261.7

11,604,650

2,705This description forms part of our independent auditor’s report.

1985/86

104

5,013,554

241.4

5,611,760

1,753

The engagement partner on the audit resulting in this independent auditor's report is Murray Dunn

1980/8187

3,618,763

155.2

1,738,208

971

761

1975/7674

2,938,277

81.3

752,270

1,144

1,275

For and on behalf of

1970/7170

2,182,343

48.9

275,015

1,005

609

1965/6670

1,926,323

47.0

232,534926

1960/6162

1,314,518

40.6

157,920474

1955/56

56

1,038,843

42.5

111,051

347

1950/5149

916,178

36.1

84,624318

1945/4643

613,418

24.2

40,832885

1940/4145

752,929

19.4

37,342

1,112

1935/3646

763,155

14.3

32,113

1,110

1930/3149

697,178

12.4

29,788

1,024

1925/2651

324,125

20.3

23,213846— 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 accordancewith 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:

Hamilton
6 November 2019

Note: For seasons to 1985/86 milkfat has been converted to “milksolids” using a factor of 1kg milk fat = 1.74 kg milksolids
58
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Dr. LE Cullen
MBN Dewdney
RJ Luxton
DP Muggeridge
Dr. KM Old
PM Schuyt
RE Townshend
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BA Greaney
GENERAL MANAGER MARKETING AND SALESSJ Rolfe
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GENERAL MANAGER FINANCE
AND ADMINISTRATION

KPMG

ML Bull

SOLICITORSGENERAL MANAGER CO-OPERATIVE AFFAIRSHarkness Henry & Co

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BANKERSGENERAL MANAGER STRATEGIC PROJECTSBank of New Zealand Ltd

TA Winter

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Willis Towers Watson Ltd

PA Pilkington

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