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A N N U A L R E P O R T

2OI3Local Service, National Strength

www.ruralco.com.au

contents

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Chairman’s Report

Managing Director’s Report

Review of Operations

Executive Team

Directors’ Report

Remuneration Report

Corporate Governance Statement

Auditor’s Independence Declaration

Financial Report

Consolidated Statement of Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements

Directors’ Declaration

Independent Auditor’s Report

Five Year Review

Shareholder Information

Corporate Social Responsibility

Overview of Key Companies & Brands

Corporate Directory & Financial Calendar

C O N T E N T S

2OI3

contents

Chairman’s Report



Executive Team

Directors’ Report

Remuneration Report



Financial Report








Five Year Review




Corporate Directory

Financial Calendar

C O N T E N T S

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$1,158.8mOperating Revenue for the

12 months to 30 September 2013

$37.1m(earnings before interest

expense, tax and depreciation)

Underlying EBITDA

3,790Shareholders

as at 30 November 2013

$182mMarket Capitalisation as at 30 November 2013

1,781Employees

as at 30 September 2013

Ruralco’s businesses around the country operate

under their own brands. They have their own

cultures, their own service models and their own

unique value propositions - all designed to meet

the demands of local or regional markets.

Local Service, National Strength

Ruralco Structure

The financial report contained in this Annual Report covers the group consisting

of Ruralco Holdings Limited and its subsidiaries. The financial report is presented

in Australian currency. Ruralco Holdings Limited is a public company limited by

shares, incorporated and domiciled in Australia. Its registered office is:

2 Collins Street, Hobart Tasmania, 7000

A description of the nature of the group’s operations and its principal activities is

included in the review of operations and activities on pages 18-31.

The financial report was authorised for issue by the Directors on 11 December 2013.

The Company has the power to amend and reissue the financial report.

Corporate reporting is timely, complete and available globally at minimal cost

to the Company through the use of the internet. All media releases, financial

reports and other information are available at the Investor Information menu on

our website: www.ruralco.com.au

Rural Supplies

Ruralco’s major operations are;

GrainMarketing

Financial Services

Real Estate & Rural Property Marketing

Water & Environment

Wool Broking & LivestockMarketing

ANNUAL REPORT 2013 | 4

A shared passion for meeting the needs of our customers and communities underscores what it means to belong to the Ruralco Group.

C H A I R M A N ’ S R E P O R T

I am pleased to be able to report to shareholders that Ruralco has

consolidated its position as one of Australia’s leading agribusinesses

during the 2013 financial year. This was despite industry wide

difficulties experienced during the first half of the year, including

adverse seasonal conditions and commodity prices.

Our results for the 2012/13 financial year are sound considering

the challenging year and conditions that we operated under.

The consistent, focussed approach of our Managing Director,

John Maher and his team, has been a major factor behind our

performance and ability to recover from the impacts felt during

the first half.

Your directors have declared a final fully franked dividend of

10 cents per share, payable on 20 December 2013. Total dividends

for the year of 20 cents per share fully franked, maintain the dividend

levels declared in the previous year. The Dividend Reinvestment Plan

will not apply to this dividend.

Strategy

Ruralco continues to work hard to deliver measurable outcomes

against its key strategies. This determination has contributed

strongly to our ability to respond to adverse trading conditions and

produce sound results for shareholders.

Details of our growth and performance against key strategies are

contained in the Managing Director’s report.

The Board

We were very pleased to welcome a new member to the Board

on 1 October 2013 following the resignation of Shane Smith on

24 July 2013.

John Tuskin was appointed as a non executive director on 1 October

2013. John is the Managing Director of T P Jones & Co Pty Ltd,

the CRT member in Youngtown and Longford, Tasmania. John is

also a non executive director of XLD Grain Pty Ltd, an independent

grain trading business based in Tasmania. Until recently John was

chairman of the CRT National Council. He has also been involved

at state level with Agsafe and the Rural Industry Training Board.

John Tuskin, as a new appointment to the Board will retire from

office and be eligible for re-election at the upcoming Annual

General Meeting (AGM) in February 2014. Bruce Dixon and

Michele Allan will also retire by rotation in accordance with the

Constitution and be eligible for re-election at the upcoming AGM.

Further information with respect to the AGM is contained in the

Notice of Meeting.

Corporate Governance

The Board is committed to achieving high standards of corporate

governance practice and supports the ASX Corporate Governance

Council’s principles of Good Corporate Governance and Best

Practice. We adopted a policy in December 2012 with respect to

diversity and are committed to increasing not only the number of

women on our Board and in senior management roles in accordance

with that policy but are also developing strategies to incorporate

diversity principles into our recruitment and appointment processes.

The Company’s performance in relation to these principles is reported

later in this report. The Company and your Directors continue to

reassess the appropriateness of its corporate governance structures

and processes including the Board and Committee Charters which

are available on Ruralco’s website.

Conclusion

I would like to thank my fellow Board members for their valued

input and express my sincere appreciation for the support of

management and our dedicated staff, joint venture partners and

members which has been especially valuable during a challenging

but rewarding year. Your dedication, hard work, contributions and

loyalty is appreciated.

The coming year will no doubt bring its challenges but I look

forward to 2014, confident in the knowledge that we have a

sound platform from which to pursue our strategic objectives while

continuing to provide an exceptional level of service to rural and

regional Australia.

Richard A F England

Chairman

ANNUAL REPORT 2013 | 6ANNUAL REPORT 2013 | 6

Ruralco has consolidated its position as one of Australia’s leading agribusinesses during the 2013 financial year despite adverse seasonal conditions and commodity prices.

Richard England

Chairman


Including Group Performance, Capital Management, Strategy,

Outlook and Risks sections of the Operating & Financial Review

The 2013 financial year was marked by generally unfavourable

seasonal conditions which challenged Ruralco, our customers,

and the sector. The hot and dry weather experienced throughout

the period combined with lower livestock commodity prices were

significant contributors to Ruralco reporting a lower Underlying Net

Profit after Tax (NPAT) of $8.7m for 2013, which was 44.2% below

the previous corresponding year.

Despite the difficulties experienced during the 2013 financial year

it is encouraging to see a number of favourable indicators in the

result that demonstrate delivery on our core strategies and provide

the business with a strong foundation to rebound strongly as

operating conditions shift in our favour.

These positive indicators include Ruralco’s ability to grow sales

revenue in 2013 despite the poor season reducing demand in the

marketplace and also higher gross profit contributions from several

key activities including Rural Supplies, Wool, Real Estate and Water.

Our focus on the achievement of savings in our operating cost base

is another positive achievement simultaneously we have continued

to invest in footprint growth and secure new, quality people as

those opportunities arise.

I would like to thank, in what has been a demanding year, our

staff, joint venture partners and members for their resilient efforts

to maximise every opportunity and provide their focused support

towards achieving our strategic goals in a demanding year.

Group Performance

Ruralco achieved a 2% lift in revenue to $1,158.8 million despite

persistently dry conditions across most areas of the nation for

the first six to eight months of the financial year. A brief financial

performance summary appears below:

Gross profit of $208.9m was 6% lower compared to the prior year,

as a result of:

• Significantly lower average livestock prices due to unfavourable

conditions limiting feed and water availability and leading to

an oversupply of underweight sheep and cattle. The resultant

reduction in the average prices of sheep and cattle by 26% and

15% respectively impacted livestock gross profit by $9.0m.

• Grain gross profit was 11% lower due to the Agfarm business

being unable to repeat its record 2012 year with grain tonnes

marketed for 2013 down by 23%.

• Farm machinery gross profit was lower by 18% due to reduced

spending in the Tasmanian tractor market as the dry summer/

autumn period and weaker prices in some commodities led to a

reduction in capital equipment spending.

Cost control was a key element of the Group’s business

improvement strategy:

• Same store operating expenses were 2% lower on the prior

year, driven by a focussed operational cost reduction programme

which captured a $6.3m network cost saving for 2013 compared

to the prior year, after excluding incremental cost associated with

footprint growth (13 extra branches).

• The full benefit of the above cost reduction programme was

diluted by Bad & Doubtful Debt expense being $0.8m higher

than the prior year, due to a CRT member insolvency and a small

number of debtors experiencing difficulties in the northern

Australia cattle segment.


Year ended 30 September 2013 2012 % change $ million $ million

Financial Performance Summary

Reported Revenue 1,158.8 1,136.3 2.0%

Underlying EBITDA1 31.7 44.8 (29.2%)

Underlying NPAT2 8.7 15.6 (44.2%)

Reported NPAT 5.7 13.8 (58.7%)

MANAGING DIRECTOR’S REVIEWF I N A N C I A L Y E A R 2 0 1 3


It is encouraging to see a number of favourable indicators in the 2013 result that demonstrate delivery on our core strategies and provide Ruralco with a strong foundation for 2014.

John Maher

Managing Director

Despite the susceptibility to volatile trading conditions in the agricultural sector, the Company continues to sustain long-term growth trends in sales

revenue and underlying profitability as illustrated in the following seven year history of the Group since 2006:


Despite the susceptibility to volatile trading conditions in the

agricultural sector, the Company continues to sustain long-term

growth trends in sales revenue and underlying profitability as

illustrated in the seven year history of the Group since 2006 set

out above.

Reported Net Profit after Tax (NPAT) of $5.7m included net expense

of $3.0m (post-tax) related to significant items, with the major item

($2.1m post-tax) being project costs associated with the acquisition

offer for Elders Rural Services.

Our People

Ruralco would not have been able to perform as strongly as it

did in such challenging circumstances without the outstanding

contribution of the people in our organisation. Their commitment,

not only to their individual businesses, but the Ruralco Group

as a whole, has been pivotal to our ability to meet market and

climate challenges over the past twelve months. Their enthusiasm

and support for our goals places us in good stead as we move the

organisation forward.

UNDERLYING ROCE

SALES REVENUE ($mil)

1,600

$m

1,400

1,200

1,000

800

600

400

200

02006 2007 2008 2009 2010 2011 2012 2013

709

751

885

837

904

1,00

3

1,13

6

1,15

9

UNDERLYING EBITDA ($mil)

$m

10

20

30

40

50

60

02006 2007 2008 2009 2010 2011 2012 2013

21.3

27.1

38.6

29.5

32.1 44

.8

44.8

31.7


We remain firm on our commitment to providing a safe and

satisfying work environment for our staff and contractors and

will diligently implement all relevant WH&S guidelines to ensure

this. The diversity of our operation necessitates the provision of

education and training programmes specifically developed for and

targeted to the industries in which our people work and we will

continue to adhere to this standard.

As a consequence of our employees’ ongoing commitment to

safety, the Group’s Lost Time Injury Frequency Rate remained low

throughout the year. All staff are to be congratulated for taking

responsibility to ensure not only their safety, but that of their co-

workers and our clients.

I am proud that our organisation continues to attract talented, high

calibre individuals whose drive and determination has taken them

to the top of their field. It is a reflection of our standing within the

industry, which has been built within a relatively short timeframe, that

such people seek us out and we welcome their contribution. We will

continue to develop the skills of our workforce through professional

development training and provide succession opportunities.

The 2013 Ruralco Leadership Conference held in Melbourne in

November brought together over 80 of our business leaders for an

informative, interactive series of business sessions with particular

focus on continuously improving our leadership qualities and

business performance at all levels of the Company.

In recognition of the contribution our staff make to the business,

I am very pleased to announce the continuation of the General

Employee Share Plan to eligible employees. This plan gifts shares in

the Company to eligible employees and further aligns employees

with the Company’s long term goals. Offers made in 2013 are the

fifth offer to employees under the General Employee Share Plan.

Strategy and growth

Underpinning all of Ruralco’s core strategies is the drive to foster in

our people a culture of innovation, excellence and customer focus

which, together with our strong culture of local and independent

management, sets Ruralco apart from its competitors.

Progress on our four core strategies in 2013 is detailed below:

Broadening the company’s operating platform geographically

by partnering with quality regional businesses and people on a

majority equity basis

Over the past seven years, Ruralco has expanded its footprint of

equity locations by a total of 117 outlets. This strategy has delivered a

national retail presence for the Group during this period, partnering

with people and businesses that are leaders in their local markets and

utilising a blend of corporate and joint venture operating structures.

Newmarket Livestock & Real Estate Euroa (VIC)

Northern Rural Group Townsville and Hughenden (QLD)

WMG Agriservices Moree (NSW) – joining with the Goondiwindi and Wee Waa existing outlets

AgriWest Parkes, Peak Hill (NSW) – joining with the Forbes existing outlet

Saffin Kerr Bowen Warrnambool (VIC)

Murraylands Ag Services Mypolonga (SA)

This growth strategy continued in 2013 with the following new partners welcomed to the Group’s retail network:

We also opened three greenfield outlets at Mt Barker in WA and Barham and Culcairn in NSW.



Add product/activity portfolio throughout expanded operating

platform

In addition to growing our business geographically within our

core activities, Ruralco continues to diversify its earnings base into

new sectors complimentary to the core business. The new sectors

utilise our current operating platform, have attractive growth and

profitability prospects and reduce the Group’s inherent exposure

to revenue volatility arising from seasonal and commodity price

fluctuations in the traditional parts of the business.

Progress against these benchmarks has seen income generated by

new sector activities grow from 7% of Group gross profit in FY07 to

some 19% in FY13.

Key strategic activities in this sector include the following:

Financial services

• Ruralco now has finance specialists based in most Australian states

providing our customers with rural finance solutions sourced

through Ruralco Finance’s panel of lenders. The product offering

has seen our term finance book grow from zero to in excess of

$200m over the four years since inception.

• Ruralco Insurance also continues to be a strong growth story

for Ruralco. Written premium has more than doubled over the

past three years.

• Ruralco’s Ag Concepts Unlimited business unit is our provider

of risk management solutions to customers in selected primary

production commodities (wool, livestock and grain) noted for

their price volatility.

Grain

Recognising the opportunity for an innovative and grower-oriented

business model within the grain marketing space, saw Agfarm join

the Group as a joint venture partner in 2009.

Development of the Agfarm business continues with the Group

recently welcoming major North American grower-owned grain

and food company, CHS Inc as a 50% joint venture partner in the

Agfarm business.

Water

Ruralco continues to position itself as a leading provider of water

related services including design and installation of farm irrigation

solutions, distribution of water solution products through our

ProWater Nationwide affiliate network and the provision of water

broking services. The Ruralco water businesses are well positioned

to cater to any increase in the demand for water solutions in order

to increase farm irrigation productivity and support environmentally

efficient agriculture.

During the year, Ruralco further consolidated its dominant water

broking and advisory position in the Murray Darling Basin catchment

with the addition of Wentworth based Sunraysia Water Exchange

(SWEX), and National Water Exchange (WEX). These acquisitions

bring an expanded client base and electronic water trading platform

capability to the Group.

Drive business improvement benefits including one ‘back office’

and actively managing our portfolio of assets

The Group has a range of strategies focussed on increasing business

productivity, improving the customer service experience and managing

our portfolio of businesses and assets to ensure we concentrate on

our core strengths and meet internal hurdle rates of return.

Progress against these benchmarks is set out below:

• 2013 saw considerable investment in the customer service

aspects of our retail business including:

- A new point of sale system (POS) was deployed across all

corporate and joint venture branches providing a fast and

modernised counter sales experience for our customers.

- A programme to revitalise our branch presentations and

merchandising areas is now well advanced with 45 locations

complete.

- The RuralcoLink internal web portal is proving to be an

outstanding innovation for our agronomy, water solutions

and rural supplies teams who utilise the supplier data and

the pooled technical knowledge of our network to deliver

quality recommendations and service to customers.

• The ‘one back office’ strategy was also significantly progressed in the

later stages of 2013 with the finance and information technology

functions relocated from Tasmania to the existing Sydney site.

• The active management of our portfolio of assets has seen a

range of actions in 2013:

- The completion of the sale of the Roberts seed cleaning

business early in the financial year.

- The rationalisation of the scope of our hardware importing

channel due to the business not delivering an acceptable rate

of return.



Own our local positioning with significant and enduring contributions

to our regional communities

Ruralco’s engagement with our people, customers, and the

local communities where they live and work in is a pivotal point

of difference we work hard to own within our industry sector.

Illustrations of the strategy at work are:

• Our marketing consistently reinforces the Local Bloke trademark

which has been used by the Group for 40+ years, with the

people who represent us being the key identities in how we

promote the business.

• Over $2m is contributed annually by the Ruralco family of local

businesses towards numerous important causes including rural

community health, Leukaemia Foundation, local hospitals and

aged care.

• Ruralco’s Ambassador, Lee Kernaghan, partnered with Ruralco’s

local businesses in charity and fundraising events throughout

the year.

• Our involvement on the advisory committee for the Blueprint

for Australian Agriculture through our membership of the

National Farmers Federation is illustrative of our commitment to

work with farmers and local communities in the development

and shaping of Australian agriculture.

Capital & Cash Flow Management

The Company’s balance sheet continues to be soundly positioned

despite the lower reported profit for FY13.

Improved inventory management and run-off in the seasonal

finance book enabled a reduction in working capital by $15.8m as

at the reporting date when compared to the prior year.

The moderate increase in net debt to $53.9m together with gearing

ratio rising from 26.4% to 33.7% reflects:

• Continued reinvestment of cash flow in the operating platform

with $10.2m invested in footprint growth acquisitions and in

excess of $6m in capital expenditure. Increase in capex on the

prior year of $1.1m was entirely due to acceleration of the SAP

standard IT platform rollout and also delivery of the new point

of sale system across our retail network;

• maintaining dividend payout level; and

• financing of project costs associated with the Elders merger proposal.

The favourable movement in operating working capital compared

to FY12 helped deliver a $9.6m improvement in operating cash

flow compared to FY12.

High level summaries of the Group’s Consolidated Balance Sheet

and Consolidated Statement of Cash Flows is provided in the

Supplementary Information following this Review.

Management Changes

Management are focussed on delivering on the Group’s strategies.

Management changes of note during the year have been:

• We welcome Ruth Martin as incoming Chief Financial Officer

(CFO), commencing on 9th December 2013. Ruth replaces

Andrew Ferguson who resigned in the second half of the

reporting year. Ruth has previously held senior finance roles

at several widely recognised enterprises including Microsoft,

Stockland Property and Sydney Airport Corporation.

• We will also welcome Richard Norton to the Group in early 2014

in the role of General Manager – Network Development. Mr

Norton brings to the role a significant background in the rural

services business, including recent leadership of the Landmark

agribusiness and executive positions held in retail, logistics and

rural network development over more than twenty years.

• Company Secretary and General Counsel, Angie Somann-

Crawford, also stepped into the broader role of General Manager

Corporate Services which encompasses the functions of human

resources, risk and corporate communications.

Outlook

Ruralco’s progress of its strategic agenda enables the Group to

be well placed to return to, or exceed, the underlying profitability

levels achieved in FY11 and FY12 with further normalisation of

seasonal conditions.

Considerations in forming this positive outlook are:

Sound winter growing conditions in SA, Victoria and most of WA

• Conditions in Southern Australia have benefited from late

winter rainfall in 2013.

• Pending 2013/14 winter crop production forecast7of 39.2m

tonnes (wheat 24.5m tonnes) is a 7% increase on 2012/13.

• We anticipate the above factors will lead to improved sentiment,

farm cash flows, discretionary rural supplies expenditure and

rural property sales enquiry.

Tasmanian Operations well placed to trade positively in first half 2014

• Solid rainfall across Tasmania leading into spring together with

increased confidence in the dairy price outlook is likely to benefit

rural supplies, irrigation infrastructure and our refocussed farm

machinery business.

Water trading anticipated to increase in first half 2014

• There is good irrigator interest in temporary water allocations to

support a likely increase in summer crop production in the lower

Murray Darling Basin regions.

Our financial outlook will also see the ongoing benefit of productivity

gains and tight cost control.

Business Risks

The material business risks that will be influential in Ruralco’s ability

to achieve its stated performance expectations are detailed in the

Supplementary Information to this Review on pages 15-17.

Conclusion

In closing, I would like to sincerely thank the Executive, our

staff, joint venture partners and members for their support and

commitment. My thanks also go to the Board whose valuable

contribution, insight and support is greatly appreciated.

John S. Maher

Managing Director

11 December 2013


Footnotes

Explanatory Notes on ‘Underlying’ measures

‘Underlying’ measures of profitability provide useful additional informa-

tion.

1. Underlying EBITDA means reported earnings before interest,

tax, depreciation & amortisation, with the additional add-back

of pre-tax significant items as detailed in the Supplementary

Information on pages 15-17.

2. Underlying NPAT means reported net profit after tax attribut-

able to equity holders of Ruralco with the additional add-back

of post-tax significant items as detailed in the Supplementary

Information on pages 15-17.

Other Notes

3. Working Capital = Trade Receivables plus Inventories less Trade

Payables.

4. Net Debt = Total borrowings less cash assets.

5. Interest Cover (Underlying EBITDA) = Underlying EBITDA

divided by finance costs.

6. Return on Equity (Underlying NPAT) = Underlying NPAT divided

by average shareholders’ equity

7. ABARES Crop report Sep-13.


Supplementary Information - Managing Director’s review

Significant items

For the purposes of calculating Underlying profit measures (EBITDA and NPAT) the following significant items included in Reported EBITDA and

NPAT have been excluded:

Capital & Cash Flow Management

The Company’s Consolidated Statement of Financial Position displays the following key comparatives as at the reporting date:

office consolidation strategy, including the relocation of finance

and IT functions from Hobart to the existing Sydney site.

• Inventory write-down provisions of $3.0m were incurred as a

result of:

- Consistent with the company’s strategy of actively managing

its business portfolio, the decision was taken to rationalise

the scope of the hardware importing business. Remaining

inventory intended for prompt disposal has been written

down by $2.2m to net realisable value.

- As part of a recent business review of our Tasmania Farm

Equipment business, which included management renewal and

a reduction in operating costs and capital usage, the inventory

of second hand machinery was written down by $0.8m.

Comments on material significant items (pre-tax basis) are:

• Advisory, legal, and funding arrangement costs associated with

the Elders offer amounted to $3.0m.

• On 26 July 2013, Ruralco sold a 1% interest in Agfarm Pty Ltd to

CHS Inc. (CHS), a grower-owned company and a leading global

agribusiness, in conjunction with the minority shareholders in

Agfarm also selling their 49% interest to CHS. As a result, Agfarm

is now structured as a 50:50 joint venture business equally owned

by Ruralco and CHS, with the conversion from a controlled entity

to an equity accounted associate triggering an investment gain on

loss of control of $5.0m (net of transition costs).

• Business restructure and redundancy costs of $2.4m are associated

with operational savings initiatives and Ruralco executing its back

Year ended 30 September 2013 2012 $million $million

Balance sheet

Working Capital3 79.9 95.5

Net Debt4 53.9 45.4

Shareholders’ Equity (incl non-controlling interest) 160.0 171.7

Gearing (Net Debt/Shareholders’ Equity) 33.7% 26.4%

Interest Cover (Underlying EBITDA1/Finance Costs) 5.2 times 7.9 times

Underlying NPAT2 5.7% 10.0%

Year ended 30 September 2013 2012 ( ) = Expense Item $million $million

Significant items

Elders Rural Services - bid costs (3.0) (0.3)

Restructuring costs (2.4) (1.0)

Hardware importing - inventory reduction provision (2.2) -

Farm machinery - trade-in inventory provision (0.8) -

Agfarm - investment gain on loss of control following conversion to Associate 5.0 -

Net other expense items (0.9) (0.8)

Net significant items - before tax (4.3) (2.1)

Tax on significant items 1.3 0.3

Net significant items - after tax (3.0) (1.8)



Investment in Associates increased by $8.8m due to reclassification

of Agfarm following formation of 50:50 joint venture with CHS Inc

(loss of control revaluation gain of $5m reported in significant items).

Ruralco’s debt facilities as at balance date 30 September 2013 had

$134.6m in undrawn facilities. Approximately $50m of this head

room is intended to repay the depositor loan book ($46.9m owing

as at 30 September 2013).

Total facilities approved: $165.0m

Total facilities drawn at balance date: $ 30.4m

Total unused facilities available $134.6m

The group operated within its loan covenants throughout the year.

The Company’s Consolidated Statement of Cash Flows includes the

following key comparatives:

Business Risks

Ruralco operates in an industry that is recognised for its volatility

in terms of seasonal conditions, commodity price fluctuations,

competitor pressure and other variables. Any number of these

factors may have an effect on our results and operations.

Explanation of these material risks and our associated risk

management strategies follows:

Capital & Cash Flow Management (continued)

Additionally:

Working capital levels were approximately 10% higher in the first

half compared to the prior period due to slowing sales driven

by adverse seasonal conditions, however a pleasing second half

performance enabled a 17% improvement in working capital by

year-end. This was a result of:

- A strong focus on inventory run-off, assisted by centralised

warehouse management;

- Trade creditor average days normalised in second half with

disciplined purchasing;

- On-balance sheet seasonal finance book run-off $15m during

FY13.

Additionally:

$15.9m favourable movement in balance sheet (operating items)

due to control of inventories, seasonal finance run-off and

normalised average creditor days.

Capital expenditure higher due to a total of $2.6m committed to

SAP and point of sale upgrades and greenfield outlets (FY13) which

were funded from operating cash flow increased by $1.2m on FY12.

Finance costs of $7.5m compares to $6.9m for FY12 due to higher

bank charges and higher average working capital levels in first half of

year when seasonal conditions initially slowed sales and stock-turns.


Year ended 30 September 2013 2012 $million $million

Cash flow summary

Reported EBITDA (adjusted for non-cash items) 24.2 46.5

Income tax payments (7.6) (12.5)

Finance costs (7.5) (6.9)

Net movement - other balance sheet operating items 15.9 (11.7)

Operating cash flow 25.0 15.4

Capital expenditure (6.6) (5.5)

Acquisitions & subsidiary investments (10.2) (14.4)

Purchase of investment in Elders (12.6)

Sale of assets & other investing items 3.4 3.3

Investing cash flow (13.4) (29.2)

Dividends paid (18.7) (15.4)

Net increase (decreased) in borrowings (16.3) 16.1

Financing cash flow (35.0) 0.7

Net movement in cash held (23.4) (13.1)

Cash at year end 26.7 50.1


Business risks

Material risk area Explanation of risk Risk management strategy

Seasonal weather conditions and natural events

Volatility in agricultural commodity prices

Risk of key people capability losses

Other risks to the performance outlook

External conditions which reduce the production prospects of Ruralco’s customers, including:• Actual rainfall experience in Australia’s agricultural production

areas which is materially below long-term averages.• Extreme weather and natural events such as storms, floods,

drought, bushfire etc; and• Abnormal incidence of disease or pests which result in

material plant or livestock losses.

The cash flows of both Ruralco and its customers are significantly influenced by fluctuations in the supply and demand of many agricultural commodities.Ruralco’s operating performance is impacted by this risk in the following ways:• Most of our agency (service) activities are conducted on

a commission percentage basis. We are therefore directly affected by changes in the underlying value of the livestock, wool or other commodity being marketed.

• Very high or low prices in a given commodity category may reduce the marketing advantage that an intermediary such as Ruralco can offer the primary producer compared to other marketing options and, hence, their demand for our services; and

• Customers experiencing below-average prices are as a consequence at risk of reductions in both farm profitability and business confidence levels. This may result in reduced demand for Ruralco’s products and services.

The agribusiness sector is commonly structured around long-term working relationships between customers and the staff of participant businesses. Loss of key people from Ruralco, whether a member, joint venture partner or staff within the corporate store network can lead to revenue loss if customer loyalties to Ruralco are not retained.

Credit risk

The risk of material bad debts reducing profitability.

Competitor pressure

Competitor pressure on Ruralco’s performance can manifest itself in several respects including:• Strong price-focussed competition in commonly available

products;• Competitors approaching our people and network

representatives with rival offers of acquisition, employment or affiliation; and

• Larger competitors with significant balance sheet capacity utilising that advantage to finance offers to customers that Ruralco may find difficult to match if such offers were used extensively in the marketplace.

Ruralco operates a geographically diverse network of branches to spread the risk of adverse weather conditions and other naturally occurring events.The Company’s sector diversification strategy is also a measure which reduces exposure to external seasonal risks by providing revenue streams in business activities that are either insensitive to, or counter-cyclical against, the prevailing conditions.

Ruralco utilises a range of risk mitigation measures to manage downside impacts in this area:• Our above mentioned sector diversification strategy also

spreads risk across more products and services, some of which are less sensitive to agricultural commodity prices.

• We commonly utilise staff remuneration policies in commission-driven business activities which in part tie expense to sales revenue.

• We work to profitably increase our units handled in activities such as livestock, wool, grain and real estate to provide additional volume which compensates for lower average prices.

Ruralco utilises a range of risk mitigation measures to manage downside impacts in this area:• Our multiple channel footprint is designed to personalise

the local operating structure to the interests and needs of our people. This results in a long-term alignment of interests that strongly encourages loyalty to Ruralco and provides mechanisms for profit sharing and succession.

• We regularly review remuneration and short / long-term incentive policies to ensure they meet industry benchmarks and reward loyalty of high performers.

• Our human resources strategy focuses on the recruitment and development of our future operational leaders.

• We work to protect the goodwill and intellectual property inherent in our customer relationships with protective covenants in employment and other legal agreements.

• Ruralco maintains credit insurance cover for both the largest category of livestock receivables (meat processors, exporters and some feedlots).

• Ruralco’s credit policy and resourcing of its credit function enforces regular approval and oversight of material credit exposures.

• Ruralco’s four core strategies are all influential in both defending and growing our business regardless of the competitive environment. These strategies interact to:- Provide service offerings that go beyond price only;

including innovations in our technical services capability and locally managed business units who have flexibility in how they best service client needs;

- Operating structures that retain people in the long term and who are embedded in their local communities;

- Footprint growth in local marketplaces where our competitors may have less effective service coverage; and

- Ruralco is a prudently geared company and has the balance sheet flexibility to respond to competitor offers where directed at our higher value customers.

Activity Performance

Despite a particularly dry first eight months of FY13, rural supplies sales of $1,006.1m represents a 3% increase on

FY12, with margin maintained by way of a similar 3% increase in activity gross profit to $91.9m.

Reduced demand during the first part of the year for agricultural chemical and animal health inputs was notable due

to lack of weed and disease pressure on summer horticultural crops and limited need for preparatory spraying ahead

of the winter broad-acre cropping season.

Selected areas did sustain their inputs spending in this period, with good sales made in the Riverina irrigated rice

region and nationally, increased fertiliser sales (tonnes sold up 27% on FY12) provided some volume to the activity.

Late autumn and early winter rainfall permitted winter cropping programmes to proceed, which provided a late sales

uplift. However, demand for weed and disease management products has been variable with South Australia, parts

of Victoria and Western Australia providing strongest demand. The lack of spring rains in northern New South Wales

and southern Queensland has curtailed activity levels in these cropping areas.

R U R A L S U P P L I E S

Activity Highlights

Ruralco’s continued strategic partnering with respected local businesses and people continues to strengthen the

Group’s position and provide new avenues for growth in the Rural Supplies division.

A joint venture partnership with AgriWest in central west New South Wales, together with the establishment of

greenfield sites in far north Queensland trading as the Northern Rural Group has provided a platform for solid

geographical growth into the future.

A continued effort has been made to improve trading arrangements for the Group and limit member sales leakage.

Real benefits have emerged as a result of this focus and assisted in reducing the impact of adverse weather conditions.

The CRT brand continues to grow its market share on the strength of its strong commitment to primary producers and

rural and regional communities across the country. Building the service offering for CRT independents has attracted

new members to the group and strengthened relationships with the wider Ruralco network.

The expertise of its members and a culture of supporting the communities that support them, underscores what it

means to be a CRT Local Bloke.



Livestock gross profit of $40.2m was 19% below FY12.

Hot and dry conditions across large areas of Australia during the 2012/13 financial year resulted in a dramatic drop

in sheep and lamb prices and a corresponding drop in gross profit. A decline in live export levels during the reporting

period, particularly from northern Australian ports, had a negative impact on cattle prices.

The lower result was despite stable cattle volumes and sheep volumes increasing 13% compared to the prior year,

which highlights the adverse impact of lower average prices achieved during FY13. The lower sheep prices (-26%

on FY12) reflected the poor seasonal conditions, with customers responding to declining feed levels by marketing

significant quantities of sheep and lambs, many lacking sufficient weight to attract reasonable prices. While lamb and

mutton indicator prices did strengthen in the second half of FY13, this only translated into a moderate lift in average

prices due to lag time for feed levels and resultant average sale weights to recover.

Cattle prices followed a similar trend (-15% on FY12), with dry conditions continuing to be prevalent across northern

Australia which is leading to an oversupply of stock, with only limited marketing channels available, particularly in

the context of live export loadings from northern Australian ports falling 18% compared to 2011/12. Recent monthly

statistics indicate that this trend is now showing signs of turnaround with shipments to the key Indonesian market 7%

above the same time last year for calendar year 2013 to date.1

Dairy cattle activity and confidence levels continues to rebound as seasonal conditions have improved in Ruralco’s key

south eastern Australian dairy markets, where farm gate milk prices have also firmed. Export demand into Asia, while

soft early in the year, has responded well in the second half with dairy customers now starting to look to bolster herds.

Wool performed soundly with gross profit rising 11% compared to FY12.

W O O L B R O K I N G & L I V E S T O C K M A R K E T I N G

Bales sold increased approximately 10% on prior year, a credible result given industry tested wool volumes increased

by 3%2 for the last wool selling season. The Eastern Market Indicator (EMI) averaged 8% lower for FY13 compared to

FY12, although the market rallied approaching the end of the FY13 reporting year. Overall the market remains volatile

linked to a range of factors including fluctuating inventories held by the major Asian processors, oscillations in the

$AUD and weekly offering sizes.

Activity Highlights

Dry conditions across large areas of Australia during the 2012/13 financial year placed huge pressure on supply chains

for both export and domestic livestock and meat markets.

Despite the economic uncertainty in some key wool consuming countries over the previous 12 months, the physical

wool market has held up well with demand for medium micron, crossbred and carding wool leading the way.

Carding wools such as short lambs, crutchings and locks have been selling at levels not experienced for two decades.

Conversely, fine and superfine merino wool is still experiencing lacklustre demand with the slowdown in the suiting

market in Europe.

W O O L B R O K I N G & L I V E S T O C K M A R K E T I N G


Footnotes

1.Live export data sourced from Meat & Livestock Australia

– Livelink publications for y/e Jun-13 and monthly reports.

2.Australian Wool Testing Authority Ltd. Published testing data for y/e Jun-13.

G R A I N M A R K E T I N G


The Agfarm grain marketing business was unable to repeat its record result for FY12 with FY13 grain gross profit

lower by 10%. This reflected less favourable grain accumulation conditions for the 2012/13 harvest.

The peaking of global wheat prices in the lead up to the harvest period was a significant positive for Australian

growers, although this favoured grain traders and mills offering cash on delivery prices, rather than pool marketing

providers, such as Agfarm.

Activity Highlights

Australia’s total winter crop production for 2012 was down 22% and wheat was lower by 26% which was below the

five year production average. Consequently, 2013 was a challenging year for our grain marketing business, Agfarm,

who have been a part of the Ruralco group since 2009. It maintains a strong presence across the country’s east coast

and in South Australia and is establishing a growing presence in Western Australia.

In July, Ruralco announced the formation of a 50:50 joint venture with CHS Inc. (CHS) in Agfarm. CHS is a farmer-

owned cooperative and leading global agribusiness.

Agfarm continues to offer growers independent marketing and sale of their grain. The management team and day-to-day

operations remain unchanged with Bob McKay, Agfarm’s founder, continuing with the business as Chief Executive Officer.

The 2013-14 outlook for grain production is positive, particularly for Agfarm’s key regions in South Australia, southern

New South Wales and Victoria. Agfarm continues to develop innovative systems, including an online trading platform.


W A T E R & E N V I R O N M E N T


Water activity gross profit increased by 5% on FY12, which was driven by continuing growth in sales by the irrigation

services businesses – primarily Roberts Irrigation and Archards Irrigation.

Although the water broking segment was able to grow market share, trading approximately 80% more water volume

compared to FY12, overall results were impacted by lower temporary water prices, high water storages and lower

permanent entitlement market activity.

Activity Highlights

Notwithstanding the subdued market for water, Ruralco traded in excess of 300,000 megalitres of temporary and

permanent water and increased its market share through organic growth and acquisitions that included water

brokerage business Sunraysia Water Exchange and water trading platform National WaterExchange.

The formation of Ruralco Water Brokers via the merger of the WaterNet and Sunraysia Water Exchange businesses in

2013 continues to build strong market penetration throughout the whole Murray Darling Basin.

Specialist retail and on-farm project businesses, Archards Irrigation and Roberts Irrigation, performed strongly

achieving sales growth of 37% and 10% respectively. These businesses focus on upgrading customers’ on-farm

irrigation infrastructure and providing assistance to deliver water efficiencies and savings.

Now in its third year, ProWater Nationwide, Ruralco’s independent, water retailing group, has increased its membership

to 31. Total group sales grew by more than 10% on last year’s result. New marketing initiatives in partnership with key

suppliers are contributing to new sales, building brand equity and positioning members as the local experts in water.



The rural property and residential real estate activity increased gross profit to $25m, which was a 4% increase on FY12.

This result was highlighted by a 23% increase in the value of property sales settled by Ruralco across the mainland

Australia market. The majority of business units contributed to this growth, which was a combination of both an increase

in the number of properties sold and a 12% lift in average price. Improvement was indicative of confidence firming in a

number of categories, including residential and lifestyle, irrigation properties and add on farming parcels in secure cereal

cropping areas.

Growth achieved is partially a result of the benefit from the addition of experienced sales staff primarily in the SA and

NT markets.

The Tasmanian residential business achieved a substantial lift in EBITDA despite properties sold contracting by 6%. This

reflects the benefit of restructuring work undertaken in the residential segment over the FY12 and FY13 years.

R E A L E S TAT E & R U R A L P R O P E R T Y M A R K E T I N G

Activity Highlights

Tight economic conditions and continued dry weather across parts of Australia have contributed to a subdued rural

property market, notably in the pastoral cattle and broad acre farming segments.

Despite subdued economic conditions in Tasmania, Roberts Real Estate continues to maintain a strong foothold in

rural and residential markets.

Ruralco Property’s profile continues to grow through increased branding and marketing across the entire Ruralco

network.

Increasing demand for property is expected over the coming year with improved seasonal and economic conditions

anticipated.


R E A L E S TAT E & R U R A L P R O P E R T Y M A R K E T I N G

Activity Performance & Highlights

Financial Services gross profit segment comprising finance, insurance, and soft commodities risk advisory services

reported a 6% fall in gross profit to $15.7m.

Ruralco reported lower interest income from on-balance sheet seasonal finance due to book run-off during the course

of FY13. This reflects Ruralco’s preference to provide off-balance sheet financing solutions for our customers’ seasonal

financing requirements, wherever appropriate.

The Ruralco Finance broking business continues to achieve incremental growth in profitability and book volume, with

the total term loan book growing 28% compared to FY12.

Improved credit conditions, commodity market indicators and farmer confidence enabled Ruralco Finance to capitalise

on opportunities with an increase in its asset finance portfolio and book growth in Western Australia and South

Australia. The strategic appointment of experienced agribusiness finance specialists was also a contributing factor in

this expansion.

F I N A N C I A L S E R V I C E S

While the insurance activity reported a flat gross profit result of $5.6m for FY13, this included reduced transit insurance

commission revenue directly related to lower livestock and wool commodity prices. The core general insurance

business performed credibly, with a 10% growth in written premium. Strongest performances were achieved in South

Australia and New South Wales where targeted specialists introduced to those states in recent years have now built

up insurance books with good scale.

The soft commodities advisory business, Ag Concepts Unlimited, reported a steady EBITDA for FY13 as it continues

to invest in growing its portfolio of risk management and marketing advisory products. Its cornerstone Riemann wool

forward contract product achieved a 22% growth in wool kilograms transacted. Additionally, August saw the launch

of the innovative Mecardo commodities analysis subscription product, which integrates daily tracking of livestock,

wool, and grain indices with risk management and interpretive marketing advice.


Our People

The energy and local knowledge of our people contributes strongly to Ruralco’s competitive advantage and reputation

as a leading force in the industry.

Our flexible workforce of over 1700 employees comprises full-time, part-time and casual staff and we work closely

with our businesses to provide a stimulating and rewarding work environment.

We also strive to meet the career aspirations of our people and offer opportunities for career advancement and

specialisation within the network.

Safety

We remain diligent to our responsibility of ensuring the safety of our people and are committed to achieving our goal

of zero lost time injuries.

We continue to review our Workplace Health and Safety systems and provide a framework for addressing hazard

identification, risk assessment and management across all business units.

The group’s Lost Time Injury Frequency Rate remained low throughout the year as a result of our employee’s ongoing

commitment to safety.

O U R P E O P L E

Talent

Supporting the professional development of our staff across all business units is an ongoing priority and numerous

programmes were offered throughout the year to upskill and further the knowledge of staff relevant to our business.

Programmes offered included a Certificate IV in Agriculture (new entrant), Diploma of Agriculture (Commercial

Agronomy), Diploma of Agriculture (Commercial Horticulture), Diploma of Agriculture (Commercial Livestock Specialist)

and Advanced Diploma of Agriculture (Commercial Manager). A training plan is currently being finalised to provide a

coordinated approach to training for the entire Group.

Career mobility throughout the Ruralco group is actively supported with promotions and transfers possible not only

within individual business units but across the wider group.

Share Plan

Eligible employees have again received the opportunity to participate in the General Employee Share Plan, with 2013

being the fifth year of offer.



John Maher - BAgSc (Hons), MBA, GAICD, FAIM

Managing Director and CEO

Appointed to Ruralco Holdings Limited in October 2006, John is

responsible for the parent company and branded entities that form

the largest network of independently owned stores and regional

companies in agribusiness and real estate throughout Australia.

John has over 25 years experience in Australia’s agribusiness industry

in a number of roles including executive positions at Wesfarmers

Limited, Australian Meat and Livestock Corporation (now MLA) and

organisations involved in the international marketing of Australian

agricultural commodities and rural consultancy.

In his role as Managing Director John chairs a number of management

committees including the IT Governance and the Business Development

Committees.

Angie Somann-Crawford - BA LLB, GAICD, CSA (Cert)

General Manager Corporate Services (including Company Secretary

& General Counsel)

Angie is Ruralco’s General Counsel and was appointed Company

Secretary on 3 May 2011, having acted in the role between

9 February 2010 and 6 September 2010.

In her role as General Counsel, Angie is responsible for all of the

Group’s legal functions and has over 14 years legal experience.

Prior to being appointed General Counsel, Angie was the Group’s

Legal Counsel. She joined Ruralco in July 2008 and her background

is in corporate and commercial law, having worked as an associate

at a boutique law firm specialising in complex commercial law.

Angie is also responsible for human resources, risk and corporate

communications.

Allan Barr - BCom - AG

General Manager - Tasmanian Operations

Allan commenced as General Manager Tasmanian Operations in

November 2011 and is responsible for Ruralco’s business units in

Tasmania.

Allan joined Roberts in 1998 and has been part of the senior

management team for the Roberts business since 2007.

His career spans 30 years in agriculture in both Australia and New

Zealand and he has extensive experience in rural merchandising,

grain, seed trading and agronomy.

Travis Dillon - Adv Dip RBM

General Manager - Mainland Operations

Travis joined Ruralco in 2007 and was appointed General Manager

– Mainland Operations in 2012. Travis is responsible for businesses

on the Australian mainland that Ruralco has equity participation in.

These businesses consist of joint venture and 100% owned

operations and include some iconic rural supplies brands such as

Rodwells, Primaries of WA, GDL and Davidson Cameron & Co.

Travis has been involved with the agribusiness industry for almost

20 years and has extensive experience in agronomy, branch and

category management.

Greg O’Neil

General Manager - CRT, Marketing & Communication

Greg has over 30 years experience with CRT and is responsible for the

merchandise business of the CRT/Town & Country membership and

marketing and communications for the Ruralco Group. He has held

various senior positions with Ruralco including marketing, category

and state management and, since 1996, general management.

Rick Maybury - BAS (Ag), Adv Dip BM

General Manager - Rural Supplies

Rick joined Ruralco’s Rural Supplies division in 2009 after seven

years with Rawlinson & Brown, one of Ruralco’s specialist rural

businesses based out of Griffith (NSW). He has held national roles

for Ruralco including Crop Protection Category Manager and

National Merchandise Manager.

In his current role, appointed 31 July 2012, Rick is accountable for

the Rural Supplies national procurement team, supply chain and

logistics, and the Grow Force fertiliser business unit.

E X E C U T I V E T E A M



< John Maher

Allan Barr

Angie Somann-Crawford

<

Travis Dillon<

Rick Maybury<

<

Greg O’Neil

<

D I R E C T O R S ’ R E P O R T

The Directors present their report on the Group consisting of Ruralco

Holdings Limited (“Ruralco”) and the entities it controlled for the

year ended 30 September 2013. Ruralco Holdings Limited and its

controlled entities together are referred to as the Group in this report.

Directors

The Directors who served on the Board of Ruralco during the

financial year and up to the date of this report were Richard

England, John Maher, Michael Millner, Bruce Dixon, Michele

Allan, John Tuskin and Shane Smith. Director profiles, including

their qualifications, experience, special responsibilities and past

directorships are outlined further below.

Mr Maher was appointed to the role of Managing Director on

2 October 2006. At the AGM held on 6 February 2013 Mr England

and Mr Millner retired by rotation, stood for re-election and were

re-elected. On 24 July 2013 Mr Smith resigned from the Board. On

1 October 2013, Mr Tuskin was appointed to the Board.

The Directors of Ruralco also serve on the boards of Ruralco’s

subsidiary companies Roberts Limited and Combined Rural Traders

Pty Ltd, apart from Mr Tuskin who is not a director of Roberts Limited.

Information on Directors

Richard A F England - FCA, MAICD

Non-executive Chair. Member of the Audit, Risk & Corporate

Governance Committee, Capital Expenditure Review Committee

and the Remuneration and Nomination Committee.

Appointed to the Board as Chairman on 9 July 2002, became

Deputy Chairman at the time of the merger with Roberts Ltd in

June 2006 and was reappointed Chairman on 5 February 2007.

Richard brings to the Company over 30 years of experience in

the accounting and financial services profession as well as broad

management experience.

Until 1994, Richard spent most of his professional career with

Peat Marwick and Ernst & Young and its predecessor firms, first

becoming a partner in 1982. He practiced in the areas of Corporate

Recovery and Restructuring. Richard is currently Chairman of

Chandler Macleod Group Limited. He is a Non-executive Director

of Macquarie Atlas Roads Limited and Nanosonics Limited. He is

a former director of Healthscope Limited (from 1996 to 2010) and

Choiseul Investments Limited (from 2004 to 2010).

John S Maher - BAg Sc (Hons), MBA, GAICD, FAIM

Managing Director and Chief Executive Officer.

Appointed as Managing Director on 2 October 2006. John is

responsible for the parent company and branded entities that form

the largest network of independently owned stores and regional

companies in agribusiness and real estate throughout Australia. He

is a director of some of Ruralco’s subsidiary companies, including

Combined Rural Traders Pty Ltd, Roberts Ltd and chairman of

Agfarm Pty Ltd.

John was a foundation director of Australian Livestock Export

Corporation (LiveCorp) and was also previously a director of

AuctionsPlus Pty Ltd, Wesfarmers Landmark Ltd and Landmark

Operations Ltd. He is a member of the National Farmers’ Federation

Members’ Council and Australian Agriculture’s Blueprint advisory

group. John is also a Director of Autism Awareness Australia.

John was awarded the 2012 Faculty Alumni Award for Outstanding

Community Achievement from the University of Sydney Faculty of

Agriculture and Environment.

Michael J Millner - MAICD

Non-executive Director. Chair of the Capital Expenditure Review

Committee. Member of the Audit, Risk & Corporate Governance

Committee and the Nomination & Remuneration Committee.

Appointed as a Non-executive Director in 2003 (resigned June 2006,

re-appointed February 2007). Michael is a director and deputy

Chairman of Brickworks Limited and, until 1 October 2012, was a

director and deputy Chairman of Washington H Soul Pattinson and

Company Limited, a substantial shareholder in Ruralco.

Michael has extensive experience in the investment industry and is

a Councillor of the Royal Agricultural Society of New South Wales

and is Chairman of the Royal Agricultural Society of New South

Wales (RAS) Foundation.

Bruce Dixon - BA (Econ), MAICD

Non-executive Director. Chair of the Nomination & Remuneration

Committee.

Appointed to the Board on 16 February 2012, Bruce brings to the

Company extensive corporate managerial experience, overseeing

profitable growth in the companies within which he has been involved.

Bruce was appointed CEO of Spotless Group Ltd in August

2012. From 1997 to 2010 Bruce was Managing Director/CEO of

Healthscope Ltd and until June 2012 was a non-executive director

of Greencross Ltd. ANNUAL REPORT 2013 | 34


< Richard England

< John Tuskin

Bruce Dixon

John Maher

<

<Michael Millner

<

Michele Allan

<



Michele J Allan - BAppSc, MMgmtTec, DBA, MComm Law, FAICD

Non-executive Director. Chair of the Audit, Risk & Corporate

Governance Committee.

Appointed to the Board on 15 March 2012. Michele currently

holds board positions at William Angliss Institute (Chair Board and

Chair of Remuneration Committee), Grains and Legumes Nutrition

Council (Chair), CRC Hearing, Meat and Livestock Australia (Chair),

Grape and Wine Research and Development Corporation (Chair

Audit and Risk), Innovation Australia, Grain Growers Limited and

Tasmanian Irrigation Pty Ltd.

Until September 2008, Michele was Chief Executive Officer and

Managing Director of Patties Foods Limited, a manufacturer and

marketer of frozen food. Prior to that role she was Group General

Manager Risk and Sustainability for Amcor Limited. Michele has

held executive roles with the Bioinformatics Centre of Excellence

Tasmania, Kraft Foods, Bonlac Foods Limited, ICI and Nestle.

John H Tuskin - MAICD

Non-executive Director, Member of the Capital Expenditure Review

Committee

Appointed to the Board on 1 October 2013. John is the Managing

Director of T P Jones & Co Pty Ltd, the CRT member in Youngtown

and Longford, Tasmania. John is also a non executive director of

XLD Grain Pty Ltd, an independent grain trading business based in

Tasmania. Until recently John was chairman of the CRT National

Council. He has also been involved at state level with Agsafe & the

Rural Industry Training Board.

Shane M Smith - GAICD

Non-executive Director. Chair of the Capital Expenditure Review

Committee and member of the Audit, Risk & Corporate Governance

Committee.

Shane was appointed as director on 15 December 2009 and is the

Managing Director of Williams & Jackson Pty Ltd, the CRT member

in Geelong, Victoria. Shane has been involved in agribusiness

for over 30 years and previously served as Chairman of the CRT

National Member Council.

Shane resigned from the Board on 24 July 2013.

Company Secretary

Angie Somann-Crawford - BA LLB, GAICD, CSA (Cert)

Angie is Ruralco’s General Counsel and was appointed Company

Secretary on 3 May 2011.

Details of Angie’s experience are contained in the Executive

biographies on page 32.

Susannah Ball - BA LLB

Susannah was appointed acting joint Company Secretary from

31 July 2013 until 26 August 2013 while Angie was on leave.

Susannah is a member of Ruralco’s legal team and commenced

with the Group in May 2010, previously working as a solicitor with

a national law firm.

Principal Activities

During the year the principal activities of the Group were sales and

marketing of products to rural and related industries (merchandising)

and agency services in relation to real estate, livestock, wool, grain,

water, fertiliser and financial services.

Operating & Financial Review

Results of Operations

Total revenue was $1,158.8m in FY13, up 2% on the same period

last year. Reported EBITDA was $27.4m down 35.7% on the pcp.

Net profit after tax (NPAT) including significant items attributable to

equity holders was $5.7m for the year ended 30 September 2013.

This is a reduction of 58.7% on the same period last year. Earnings

per share of 10.5 cents was a reduction of 58.8% on FY12.

Ruralco’s trading is structured into two key segments:

• Rural Services encompassing CRT & Rural Supplies, Mainland

Operations and Tasmanian Operations.

• Financial services.

Further information on the operations and financial position of

Ruralco Holdings and its business strategies and prospects is set out

in the Managing Director’s Review on pages 8-17 of this Annual

Report and the Review of Activities on pages 18-31 of this Annual

Report.


Risk Management

The Board oversees the establishment, implementation and annual

review of the Group’s risk management system. Management

has established and implemented a risk management system for

assessing, monitoring and managing all risks, including material

business risks, for the Group. The Chief Executive Officer has

provided assurance, in writing to the Board, that the financial

reporting, risk management and associated compliance and controls

have been assessed and found to be operating effectively. The

operational and other risk management compliance and controls

have also been assessed and found to be operating effectively.

Management provide the risk profile to the Audit, Risk and

Corporate Governance Committee that outlines the material

business risks to the Group. Risk reporting includes the status of

risks through integrated risk management programmes aimed at

ensuring risks are identified, assessed and appropriately managed.

Each business operational unit is responsible and accountable

for implementing and managing the standards required by the

programme.

Further details of the Group’s risk management system, including

the Risk Management Policy are available on Ruralco’s website:

www.ruralco.com.au.

Material business risks for the Group may arise from such matters

as actions by competitors, government policy changes, the impact

from loss of key staff, environment, occupational health and safety,

property, financial reporting, and the purchase, development and

use of information systems.

Dividends

A final dividend of 10 cents per share will be paid on 20 December

2013. Further details of the dividends paid are set out on page 127

(Five Year Review) of the Report.

Significant Changes in the State of Affairs

No significant change in the state of affairs of the Group occurred

during the financial year.

Matters Subsequent to the End of the Financial Year

Since 30 September 2013, the Board resolved to market a property at

2 Collins Street, Hobart.

Future Developments and Results

Information on the development of the Group and likely

developments in future years appears in the Chairman’s Report,

Managing Director’s Report and Review of Operations sections of

this report. The Directors believe that to include further information

on strategic matters and expected results of the Ruralco Group in this

report would likely result in unreasonable prejudice to the Group.

Accordingly, this information has not been disclosed in this report.

Options

No rights or options over issued shares or interests in the Company

or a controlled entity are held by any of the Non-executive Directors.

The rights or options held by other Key Management Personnel

including Mr John Maher as Managing Director are set out under

the section detailing their remuneration and incentive plans.

Meetings of Directors

During the year ended 30 September 2013, the number of meetings of

the Board of Directors and of each Board Committee and the number

of meetings attended by each of the Directors were as follows:

No. eligible No. eligible No. eligible No. eligible to attend No. attended to attend No. attended to attend No. attended to attend No. attended

Audit, Risk & Corporate Nomination & Capital Expenditure Board Governance Committee Remuneration Committee Review Committee

* attended by invitation

# S Smith resigned as Director on 24 July 2013

R A F England 20 19 7 7 4 4 1 1

M J Millner 20 14 1 4* 4 3 6 5

J S Maher 20 18 - 7* - - - 6*

S M Smith# 19 14 6 3 - - 5 5

B Dixon 20 12 - 4* 4 4 - -

M Allan 20 18 7 7 - - - -



No relevant interests in shares of a related body corporate were held by any Director.

# S Smith resigned as a director on 24 July 2013

Directors’ Shareholdings

At 30 September 2013, the relevant interests of the Directors in shares of Ruralco were:

Debentures

As at 30 September 2013 and also at the date of this report,

Directors do not have any holdings in unsecured notes issued by

Roberts Limited, a controlled entity of Ruralco Holdings Ltd.

Retirement, Election and Continuation in Office of Directors

In accordance with the Ruralco Constitution, at each Annual

General Meeting the following Directors must retire from office:

• one third of the Directors (or a number nearest one third). The

Directors to retire will be those who have been longest in office

since their last election. This does not apply to the Managing

Director.

• Directors must not hold office past the third Annual General

Meeting following their appointment or election or three

years, whichever is longer; and

• any other Director appointed to fill a casual vacancy or as an

addition to the existing Directors must also stand for election

at the next Annual General Meeting.

Mr Dixon and Dr Allan will retire by rotation as Directors at the next

Annual General Meeting and each being eligible, offer themselves

for re-election. Mr Tuskin, being a new appointment to the Board

during 2013, will also stand for election at the next Annual General

Meeting. Details are included in the notice of meeting.

Indemnities and Insurance

The Company has paid insurance premiums in respect of Directors’

and Officers’ liability for current and former Directors of Ruralco, its

controlled entities and related bodies corporate.

Those officers of Ruralco that are covered by insurance include

the current Directors, Secretaries, executive officers and former

Directors. The contract of insurance prohibits disclosure of the

nature of the liability insured against and the amount of the

premium paid.

Clause 38 of Ruralco’s Constitution provides that Ruralco must

indemnify Directors and Secretaries (and may indemnify executive

officers) against any liability incurred in that capacity in defending any

proceedings, whether civil or criminal, in which judgment is given in

their favour or where they are acquitted or in connection with any

relief granted for proceedings under the Corporations Act 2001.

The Company has entered into and proposes to enter (for recently

appointed Directors) Indemnity and Access Deeds with current and

former Directors of Ruralco Holdings Limited and its subsidiaries on

terms which comply with the Corporations Act 2001. The Company

has not entered into any agreement to indemnify its auditor or paid

any insurance premiums in respect of its auditor.

Directors’ and Key Management Personnel Remuneration

The details are set out in the Remuneration Report which appears

on pages 40-55 and forms part of this report.

As at Acquired during Disposed during Balance as at 30 September 2012 the year the year 30 September 2013

Ruralco Holdings Limited – Ordinary Shares

R A F England 66,540 - - 66,540

J S Maher 180,040 226,412 - 406,452

M J Millner 12,958,775 - - 12,958,775

S M Smith# 23,960 - - n/a

B Dixon - - - -

M Allan - - - -


Directors’ Interests in Contracts

No contract involving Directors’ interests was entered into since

the end of the previous financial year or existed at the end of the

financial year other than the transactions detailed in Note 27 to the

consolidated financial statements.

Proceedings on Behalf of the Company

No proceedings have been brought on behalf of Ruralco Holdings

Limited or any related entities, nor any application made under

section 237 of the Corporations Act 2001.

Environmental Regulation and Performance

The Group has an ongoing commitment to conduct its business

activities with respect to the environment while continuing to meet

expectations of shareholders, employees, customers, and suppliers.

The Group is committed to achieving a level of environmental

performance which meets or exceeds Commonwealth, State or

local regulatory requirements.

The Directors are not aware of any material breaches of

environmental regulations during the year, and to the date

of this report, under any applicable environmental law of the

Commonwealth or of a State or Territory.

Corporate Governance

The Company’s Corporate Governance Statement is contained on

pages 56-68 and forms part of this Directors’ Report.

Auditor’s Independence

The auditor’s independence declaration for the year ended 30

September 2013 has been received and can be found on page 69

and forms part of this Directors’ Report.

Non-audit services

The Group may engage the external auditor on assignments or

projects additional to its statutory audit duties where the external

auditor’s expertise and experience with the Group are of benefit.

The amounts paid to the external auditor (KPMG) for audit and

non-audit services provided throughout the year are set out in Note

6 of the consolidated financial statements.

The Board of Directors, in accordance with advice from the Audit,

Risk and Corporate Governance Committee, is satisfied that the

provision of non-audit services during the year is compatible with

the general standards of independence and ethics for auditors

imposed by the Corporations Act 2001 and APES 320 and

Professional standards. All non-audit services are reviewed and

approved by the Audit, Risk and Corporate Governance Committee

prior to commencement to ensure they do not adversely affect the

integrity and objectivity of the auditors.

Proceedings on behalf of the Company

No person has applied for leave of Court to bring proceedings on

behalf of the Company.

Remuneration Report

The Remuneration Report on pages 40-55 forms part of this Directors’

Report.

Rounding of Amounts

The company is of a kind referred to in Class Order 98/0100 dated

10 July 1998, issued by the Australian Securities and Investments

Commission, relating to ‘rounding off’ of amounts in the financial

statements. Amounts in the financial statements have been

rounded off in accordance with that Class Order to the nearest

thousand dollars, or in certain cases, the nearest dollar unless

otherwise stated.

Signed in accordance with a resolution of the Board.

Richard A F England

Chairman

John S Maher

Managing Director

Dated this 11th day of December 2013


Section 1: Letter from the Nomination & Remuneration Committee

Chair

The Ruralco Holdings Limited Nomination & Remuneration

Committee presents the Remuneration Report for the year

ended 30 September 2013. The remuneration report outlines

the remuneration arrangements for key management personnel

(“KMP”) comprising the Group Executives and the Non-Executive

directors.

Ruralco’s Board is committed to a remuneration framework

which ensures that Ruralco attracts and retains a high quality

Executive team who are appropriately rewarded for achieving

financial outcomes for the Company which provide shareholders

with reasonable returns. To achieve this, a significant portion of

executive remuneration is “at risk” and subject to Company

performance. The Company’s remuneration policy and structure

for its Group Executives comprises a combination of the following

two main components:

- a fixed component which is the total base salary and includes

compulsory employer superannuation contributions; and

- a variable “at risk” component which is performance based

and comprises a part cash, part share-based short term

incentive (“STI”) plan that is linked to both the performance

of the Company and individual performance, and a long term

incentive (“LTI”) programme under which executives, at the

discretion of the Board, are offered performance rights which

vest if the Company achieves certain hurdles over a three year

period.

The combination of fixed and variable “at risk” remuneration

ensures that Ruralco’s remuneration policies are consistent with

generally accepted best practice.

Events and Board Decisions Affecting Remuneration

KMP fixed annual remuneration was increased effective 1 October

2012, based on business and individual performance and aligned

to market remuneration levels. The “at target” pay levels for KMP

are set with reference to other ASX companies and peers. The

weighted average KMP fixed remuneration increase was 4.4%.

Subsequent to 30 September 2013, the Remuneration and

Nomination Committee have met and the directors approved a

STI bonus relating to key executives totalling $221,082 that was in

relation to service provided during the 2013 financial year.

The other amounts that were paid, were in recognition of the

executives meeting or exceeding the KPI’s that were set at the start

of each respective financial year.

Changes to Key Management Personnel

There have been a number of changes to the executive management

team during the 2013 financial year. Peter Homann ceased to be

a KMP on 18 March 2013 as he was no longer a member of the

Executive team from that date. Michael Cullinan, Ian Armstrong and

Rachel Cofrancesco ceased to be KMP’s on 10 July 2013 as a result of

a revised Executive Team structure. Further, Andrew Ferguson resigned

effective 30 September 2013 at which point he ceased to be a KMP.

The Non-Executive director Shane Smith resigned as a director on 24

July 2013 and ceased to be a KMP as of that date.

For the period that these directors and executives were considered

KMP’s, their remuneration has been included within this report.

On 1 October 2013, the Company announced the appointment of

John Tuskin as a director. John will be considered a KMP from this date.

2013 Financial Performance

As described in the Operating and Financial Review, FY 13 was

a challenging year with dry conditions for the first 8 months and

significant reductions in sheep and cattle prices. Despite these

challenges, the strong financial performance of Wool, Rural Property

and Real Estate and Grain Marketing limited the year on year impact

on underlying EBITDA which reduced from $44.8m to $31.7m.

The Group successfully transitioned a back office consolidation and

completed operational savings strategies, including the relocation

of finance and IT functions from Hobart to the existing Sydney site.

FY 13 operational cash flow was strong. The Group mitigated

its lower cash profit for FY13 with a favourable movement in

operating working capital, which secured a $9.6m improvement in

operating cash flow.

On behalf of the Committee, I recommend this year’s remuneration

report to you.

Bruce Dixon

Chair of the Nomination & Remuneration Committee

R E M U N E R AT I O N R E P O R TD I R E C T O R S ’ R E P O R T


Section 2: Introduction

The remuneration report forms part of the Directors’ report. The remuneration report details the remuneration of Ruralco’s ‘Key Management

Personnel’ (KMP) in accordance with disclosure requirements prescribed in the Australian Accounting Standards, the Corporations Act 2001

and the ASX Corporate Governance Principles and Recommendations.

KMP are persons having authority and responsibility for planning, directing and controlling the activities of the Group, whether directly or

indirectly. For the purposes of this Report, Ruralco has determined KMP are the directors and members of the executive management team,

as set out below.

Richard A F England Chairman John Maher Managing Director and CEO

Michael J Millner Director Angie Somann-Crawford General Manager

Corporate Services (including

Company Secretary and General Counsel)

Bruce Dixon Director Travis Dillon General Manager

Mainland Operations

Michele J Allan Director Greg O’Neil General Manager

CRT, Marketing & Communication

John H Tuskin Director Allan Barr General Manager

Tasmanian Operations

Rick Maybury General Manager

Rural Supplies

Key Management Personnel at the date of this report

Non-Executive Directors Executive Management Team

Name Position Name Position


Section 3: Remuneration policy, governance and framework

The Board recognises that in order for the Group to prosper,

it must be able to attract, motivate and retain key employees.

The Company’s approach to remuneration, as documented in

its Remuneration Policy, plays a significant role in the attraction,

motivation and retention of key employees.

The key principles of the Remuneration Policy are:

• remuneration must reflect the market in which the Group operates;

• the achievement of Group results will be supported through the

use of key performance indicators in remuneration structures; and

• remuneration is to be linked to the creation of value to shareholders

and reward both financial and non-financial performance.

The Committee also has responsibility for:

• recommending the Managing Director’s package and determining

the Managing Director’s reward framework;

• reviewing KMP remuneration;

• reviewing the executive reward framework and the principles

applicable to the calculation of the Short Term Incentives (STI)

and any Long Term Incentives (LTI) awarded; and

On advice from the Nomination and Remuneration Committee

(Committee), the Board is responsible for reviewing and proposing

changes to the Remuneration Policy, as required.

No changes were made to the Remuneration Policy during

the reporting period. The Board believes that the payment of

remuneration as specified in this report and as paid in prior years

to the Directors and to Executives of the Group has been beneficial

to the Group’s earnings and to shareholder wealth, and accurately

reflects the Group results achieved.

Key financial and market related indicators are incorporated

as performance criteria in the reward structure in order to link

performance and reward. The Group’s overall performance in the

current and past 4 years is as follows:

• setting and assessing the various key performance indicators for

any STI or LTI to be paid

The Managing Director’s and executive reward frameworks are

discussed in detail below.


Operating profit attributable to members of

Ruralco Holdings Limited ($000) 5,738 13,849 14,979 12,053 8,450

Total dividends paid attributable to

equity holders of the Company ($000) 10,912 10,418 9,354 7,700 9,258

Share price at 30 September $3.35 $3.40 $3.25 $2.64 $2.65

2013 2012 2011 2010 2009


Section 4: Reward framework overview

Each executive received a base salary during the year ended 30 September 2013. In addition, a STI may be earned based on an individual

meeting Key Performance Indicators (KPIs) during the year, with each of these weighted. Executives may also participate in an equity-based

long-term incentive plan. Further detail regarding the reward framework are summarised in section 7 of this report.

Remuneration levels are reviewed annually and upon change of position. Individual remuneration is determined by the Group’s remuneration

mix policy, referencing available market data and consideration of individual factors. The remuneration mix policy is outlined in the table below:

Managing Director 44.5% 22.22% 33.33%

(i.e. 50% of total fixed remuneration) 1 (i.e. 75% of total fixed remuneration)

Executives 62.5% 18.75% 18.75%

(i.e. 30% of total fixed remuneration) (i.e. 30% of total fixed remuneration)

New policy remuneration mix (% of total maximum remuneration)

Role Total fixed Target short-term incentive Long-term incentive

remuneration (grant value)

1 A discretionary bonus in addition to the target STI may be payable in accordance with the terms of the Managing Director’s contract of employment, capped at 50% of the maximum STI

payable in respect of a performance period. The Board’s exercise of its discretion to award the discretionary bonus is separate and in addition to the STI conditions set out in the Managing

Director’s contract of employment.



Section 5: 2013 Reward outcomes

Total Fixed Remuneration

Each executive received a base salary during the year ended 30

September 2013. The weighted average salary increase for the

executive team (including the Managing Director) from 2012 to

2013 was 4.4%.

Short-term Incentives

The Remuneration and Nomination Committee have met and the

directors approved an STI bonus relating to key executives totalling

$221,082 that was in relation to service provided during the 2013

financial year.

Base

LTI

STI

44.44%

22.22%

33.33%18.75%

18.75%

Managing Director’s remuneration mix Average remuneration mix - other Key Management Personnel

Section 4: Reward framework overview (continued)

62.50%


(A) Amounts included in remuneration for the financial year

represent the amount that vested in the financial year based

on achievement of personal goals and satisfaction of specified

performance criteria.

(B) The amounts forfeited are due to the performance or service

criteria not being met in relation to the current financial year.

Long-term incentives

Managing Director

On 1 October 2012, the Managing Director’s 2009 grant of

Performance Rights reached their first TSR Measurement Date.

The testing conducted ranked Ruralco at the 73rd percentile of

the comparator group of companies. Accordingly, 96% of the

Performance Rights vested, resulting in an allocation of 170,398

fully paid ordinary shares in Ruralco.

Subsequent to the balance date, the Performance Rights that had

not vested were re-tested over the 4 years to 1 October 2013. This

testing ranked Ruralco at the 70th percentile of the comparator

group which was not better than the testing conducted on 1

October 2012. Accordingly, no further vesting has resulted.

On 1 October 2013, the Managing Director’s 2010 grant of

Performance Rights reached their first Measurement Date. At the

date of this Report, the alternative TSR Measure was still being

determined and accordingly any performance rights will vest

subsequent to the date of this Report.

In relation to the additional grant of Performance Rights to the

Managing Director (September 2012), 75,000 Performance Rights

were tested against the relevant EBITDA and revenue hurdles as at

30 September 2013. These Performance Rights will vest subsequent

to the date of this Report.

Executives

No long-term incentives vested for Executives in the 2013 reporting

period.

John Maher 120,000 30.00% 70.00%

Angie Somann-Crawford 40,000 44.44% 55.56%

Greg O’Neil - - 100.00%

Travis Dillon 36,082 30.00% 70.00%

Allan Barr - - 100.00%

Rick Maybury 25,000 31.98% 68.02%

Short-term incentive bonus

Name Included in % vested % forfeited

remuneration $ (A) in year in year (B)

Section 5: 2013 Reward outcomes (continued)

Details of the vesting profile of the short-term incentive cash bonuses awarded as remuneration to each executive of the Company relating to

2013 are detailed below:


Section 6: Disclosure table for executives


Proportion of Non- Share Long remuneration Cash Cash monetary Super- based Termination Service performance Date Salary Bonus Benefits* annuation payments** Benefits Leave Total related $ $ $ $ $ $ $ $ %

Share Post Based Short-term Employment Payments Other

* Non-monetary benefits are in the form of salary sacrifice arrangements such as motor vehicles and additional superannuation

** This amount is an accounting expense for performance rights and therefore no physical cash received by the individuals. Refer to Note 27 for basis of how fair value has been determined.

1 Resigned 30 September 2013 (Appointed 16 April 2012)

2 No longer KMP from 10 July 2013

3 No longer KMP from 18 March 2013

F Leicester (Chief Financial Officer) was not KMP in 2013 as he left the organisation in 2012. His remuneration for 2012 was $416,985.

P Watkins (General Manager, Northern and Western Operations) was no longer KMP from 31 July 2012, therefore was not KMP in 2013. His remuneration for 2012 was $236,077.

D Foung (General Manager, Commercial) was no longer KMP from 31 July 2012, therefore was not KMP in 2013. His remuneration for 2012 was $249,136.

# The 2012 cash bonus has been restated to correct an error for bonuses of $564,296 relating to 2012 paid subsequent to finalising the 2012 financial statements.

John S Maher 2013 727,697 120,000 47,304 25,033 758,456 - - 1,678,490 52

Managing Director 2012# 711,925 407,042 44,126 49,981 395,378 - - 1,608,452 50

Angie Somann-Crawford 2013 256,259 40,000 - 23,234 24,862 - - 344,355 19

Company Secretary 2012# 183,414 58,340 - 16,507 10,681 - - 268,942 26

& General Counsel

Greg O’Neil 2013 259,276 - 23,824 41,646 25,828 - 4,306 354,880 7

General Manager - CRT 2012# 257,388 45,114 18,000 41,182 14,046 - 5,873 381,603 16

Marketing & Communication

Travis Dillon 2013 370,030 36,082 29,263 33,532 29,676 - - 498,583 13

General Manager 2012# 293,578 57,000 - 26,422 15,844 - - 392,844 19

Mainland Operations

Allan Barr 2013 227,523 - 28,804 20,564 20,854 - 6,008 303,753 7

General Manager 2012 184,747 8,945 - 17,379 6,176 - 27,451 244,698 6


Rick Maybury 2013 239,063 25,000 20,109 21,665 16,136 - - 321,973 13

General Manager 2012# 29,665 17,800 - 2,670 7,500 - - 57,635 44

Rural Supplies

Andrew Ferguson1 2013 366,972 - - 33,257 - 166,667 - 566,896 -

Chief Financial Officer 2012 148,082 - - 13,327 - - - 161,409 -

Ian Armstrong2 2013 202,801 - - 18,206 16,483 - - 237,490 7

General Manager 2012 236,950 30,000 - 41,097 13,805 - - 321,852 14

Credit, Compliance & Risk

Rachel Cofrancesco2 2013 118,834 - 11,900 11,784 12,363 - - 154,881 8

Human Resources Manager 2012# 141,782 36,523 17,621 16,825 8,492 - - 221,243 20

Michael Cullinan2 2013 190,600 - 25,559 33,129 16,262 - - 265,550 6

General Manager 2012 225,419 - - 40,432 14,364 - - 280,215 5

Sector Operations

Peter Homann3 2013 123,745 - 16,380 11,138 9,772 - - 161,035 6

General Manager 2012 250,714 - - 43,575 14,513 - - 308,802 5

Agency


Section 7: Remuneration element disclosure

Total fixed remuneration Total fixed remuneration (TFR) includes base salary, superannuation and benefits.

TFR is reviewed annually and, if required, adjusted for the calendar year.

Short-term incentives General The STI is a cash-bonus opportunity, based on performance outcomes measured over a single financial year.

KPIs Each STI has hurdles which must be met in order to receive the STI. The STI hurdles are established on the

basis that they provide incentive for the executives based on the short-term goals of the Group. These

hurdles differ for each KMP and include an occupational health and safety compliance gateway and

financial measures involving profit performance at both the Group level and the individual business

unit level for which the executive is responsible. Financial measures can include growth of Return on

Shareholder Funds Before Tax (ROSFBT), growth of Earnings Before Interest and Tax (EBIT) and growth in

Return on Capital Employed over the year.

Maximum

opportunity level 50% of TFR 30% of TFR

Performance A STI is offered for each financial year and is calculated in the following December. If required hurdles

assessment are met the executive receives the monetary payment in cash in the following February provided they

are still employed on the payment date. Audited financial statements are used to determine the

achievement or non-achievement of the financial performance hurdles.

If an executive joins the Company prior to 30 June in a financial year, the STI is paid pro-rata to the

number of days worked for the financial year.

Discretionary bonus A discretionary bonus in addition to the target

STI may be payable in accordance with the

terms of the Managing Director’s contract

of employment, following a determination

by the Board that extraordinary, unforeseen

or unusual circumstances have arisen and

have been dealt with by the Managing

Director to the advantage of Ruralco during

the performance period, capped at 50% of

the maximum STI payable in respect of a

performance period. The Board’s exercise of its

discretion to award the discretionary bonus is

separate and in addition to the STI conditions

set out in the Managing Director’s contract of

employment.

Long-term incentives General Long-term incentives are in the form of Performance Rights. Each Performance Right is a right to acquire

one ordinary fully paid Ruralco share, at no cost, subject to satisfaction of specified performance conditions.

Executives are not required to pay anything for the Performance Rights or the shares allocated on vesting of

the Performance Rights.

Any Performance Rights granted are conditional and non-transferable. They must not be hedged, sold,

transferred, mortgaged, charged or otherwise disposed of or dealt with. The Board has adopted a policy in

this regard and has put in place parameters to continually monitor its compliance.

Maximum

opportunity level 75% of TFR 30% of TFR

Detail regarding remuneration elements in framework

Element Managing Director Executives

N/A

Proportion of Non- Share Long remuneration Cash Cash monetary Super- based Termination Service performance Date Salary Bonus Benefits* annuation payments** Benefits Leave Total related $ $ $ $ $ $ $ $ %

Share Post Based Short-term Employment Payments Other

John S Maher 2013 727,697 120,000 47,304 25,033 758,456 - - 1,678,490 52

Managing Director 2012# 711,925 407,042 44,126 49,981 395,378 - - 1,608,452 50

Angie Somann-Crawford 2013 256,259 40,000 - 23,234 24,862 - - 344,355 19

Company Secretary 2012# 183,414 58,340 - 16,507 10,681 - - 268,942 26

& General Counsel

Greg O’Neil 2013 259,276 - 23,824 41,646 25,828 - 4,306 354,880 7

General Manager - CRT 2012# 257,388 45,114 18,000 41,182 14,046 - 5,873 381,603 16

Marketing & Communication

Travis Dillon 2013 370,030 36,082 29,263 33,532 29,676 - - 498,583 13

General Manager 2012# 293,578 57,000 - 26,422 15,844 - - 392,844 19

Mainland Operations

Allan Barr 2013 227,523 - 28,804 20,564 20,854 - 6,008 303,753 7

General Manager 2012 184,747 8,945 - 17,379 6,176 - 27,451 244,698 6


Rick Maybury 2013 239,063 25,000 20,109 21,665 16,136 - - 321,973 13

General Manager 2012# 29,665 17,800 - 2,670 7,500 - - 57,635 44

Rural Supplies

Andrew Ferguson1 2013 366,972 - - 33,257 - 166,667 - 566,896 -

Chief Financial Officer 2012 148,082 - - 13,327 - - - 161,409 -

Ian Armstrong2 2013 202,801 - - 18,206 16,483 - - 237,490 7

General Manager 2012 236,950 30,000 - 41,097 13,805 - - 321,852 14

Credit, Compliance & Risk

Rachel Cofrancesco2 2013 118,834 - 11,900 11,784 12,363 - - 154,881 8

Human Resources Manager 2012# 141,782 36,523 17,621 16,825 8,492 - - 221,243 20

Michael Cullinan2 2013 190,600 - 25,559 33,129 16,262 - - 265,550 6

General Manager 2012 225,419 - - 40,432 14,364 - - 280,215 5

Sector Operations

Peter Homann3 2013 123,745 - 16,380 11,138 9,772 - - 161,035 6

General Manager 2012 250,714 - - 43,575 14,513 - - 308,802 5

Agency


Section 7: Remuneration element disclosure (continued)

Long-term incentive Performance See table below

(continued) measures

Performance The first testing date for Performance Rights occurs 3 years after the Grant Date.

assessment For grants up to and including 2 October 2009, the rights that do not vest at the 3-year test are re-tested

over the 4-year period from the grant date. Those Performance Rights that do not vest by the second date

for testing will expire.

Delivery When Performance Rights vest they give rise to an allocation of ordinary shares in the Company on a 1 for

1 basis calculated by the average closing price of Ruralco shares over the 5 trading days prior to the Grant Date.

All shares required for the LTI plan are purchased on market.

Ceasing No LTI Performance Rights will vest where the executive ceases employment due to termination by the

employment Company for breach, misconduct/neglect or a criminal offence, does not satisfy the performance hurdles or

has acted fraudulently or dishonestly or has brought the Company into disrepute.

Change of control If a Capital Event occurs before the end of a Performance Period any Performance Rights in respect of that

Performance Period which had been granted to the Managing Director at that time but which had not yet

vested will, despite any contrary provision in the LTIP Rules and unless the Board in its absolute discretion

(acting reasonably) determines otherwise, vest (subject to the relevant performance conditions).

Historic grants The Managing Director has participated in a long term incentive plan with offers being made in October

2006,2007,2008, 2009, 2010, 2011 and 2012.

Detail regarding remuneration elements in framework

Element Managing Director Executives


For the LTI offer made in 2009 for the Managing

Director, the Board has determined that Performance

Rights are only to vest upon meeting the performance

hurdles of the Company’s Total Shareholder Return

(TSR) performance relative to the TSR of a comparator

group of companies. Performance is measured at the

end of the 3-year period commencing on the relevant

Grant Date. The unvested Performance Rights are

retested at the end of the 4-year performance period

commencing on the relevant Grant Date.

For all Performance Rights in an offer to vest, Ruralco’s

TSR must equal or exceed the TSR of the Company at

the 75th percentile of the comparator group. Half of

the Performance Rights will vest where Ruralco’s TSR

performance matches the TSR of the Company at the

median of the comparator group, and no Performance

Rights will vest where Ruralco’s TSR is below the TSR

of the Company at the median of the comparator

group. The number of Performance Rights to vest where

Ruralco’s TSR performance is between the median and

Detail regarding LTI plan performance conditions

Grant Date Managing Director Executives

N/A2 October 2008 and

2 October 2009





N/A75th percentile of the comparator group increases from

50% to 100% on a linear basis (an additional 2% vesting

for each 1 percentile increase in relative TSR performance).

The comparator group consists of 100 ASX

companies, being the 50 companies above Ruralco

and 50 companies below Ruralco based on market

capitalisation at the Grant Date, excluding listed

property trusts and similar entities.

1 October 2010 For the LTI offers made to the Managing Director from

2010 onwards, the Board has determined that vesting

will be determined according to a Return on Equity

(ROE) test, with minimum or threshold performance

hurdles of 8.5%, 9% and 9.5% average annual ROE,

respectively, required to be met over the relevant 3-year

performance periods before any Performance Rights

vest. 20% of the Managing Director’s Performance

Rights will vest if the threshold performance hurdles are

achieved. Performance Rights will vest pro rata on a

sliding scale to 100% vesting if the Company achieves

12.5%, 13% and 13.5% ROE, respectively, or better,

for the 2010, 2011 and 2012 offers. An alternative

performance condition in respect of the 2010, 2011

and 2012 offers of Performance Rights may also be

negotiated between the Board and the Managing

Director, relating to Ruralco’s total shareholder return

measured against the comparative returns for a

selection of ASX companies (“TSR Measure”). Once the

TSR Measure has been decided, the Managing Director

may elect for these offers of Performance Rights to be

assessed against the TSR Measure, instead of the ROE

test referred to above.

The Board has determined that Performance Rights are

only to vest upon meeting the performance hurdles of the

Company’s Total Shareholder Return (TSR) performance

relative to the TSR of a comparator group of companies.

For all Performance Rights in an offer to vest, Ruralco’s

TSR must equal or exceed the TSR of the Company at

the 75th percentile of the comparator group. Half of

the Performance Rights will vest where Ruralco’s TSR

performance matches the TSR of the Company at the

median of the comparator group, and no Performance

Rights will vest where Ruralco’s TSR is below the TSR of

the Company at the median of the comparator group. The

number of Performance Rights to vest where Ruralco’s

TSR performance is between the median and 75th

percentile of the comparator group increases from 50%

to 100% on a linear basis (an additional 2% vesting for

each 1 percentile increase in relative TSR performance).

In the case of the executive management team Perform-

ance Rights, the comparator group consists of 26 ASX

companies, being the 10 companies above Ruralco and

10 companies below Ruralco based on market capitali-

sation at the Grant Date (excluding listed property trusts

and similar entities) plus 6 other companies which the

Board considers are Ruralco’s major peers.

For the offers made to the executive management team,

additional vesting criteria required Ruralco’s return on

shareholder’s equity to be on average greater than 10%

for the relevant 3-year performance period.

2 October 2008 and

2 October 2009

(continued)




1 October 2011 For the LTI offers made to the Executive

Team in 2011, vesting will be determined according to

the Company’s ROE performance, with average annual

ROE of at least 9% required over the 3-year performance

period before any Performance Rights vest. 20% of the

Performance Rights will vest if this threshold performance

hurdle is achieved. Performance Rights will then vest pro

rata on a sliding scale to 100% vesting if the Company

achieves 13% ROE, or better.

For the LTI offers made to the Executive Team in 2012,

vesting will be determined according to the Company’s

ROE performance, with average annual ROE of at least

9.5% required over the 3-year performance period before

any Performance Rights vest. 20% of the Performance

Rights will vest if this threshold performance hurdle is

achieved. Performance Rights will then vest pro rata on

a sliding scale to 100% vesting if the Company achieves

13.5% ROE, or better. An alternative performance

measure, being the TSR Measure, will apply to the 2012

offers if the Managing Director has elected that the TSR

Measure applies to the 2012 offer.

As above

As above1 October 2012

At the date of this Report, LTI offers have

not been determined.

At the date of this Report, LTI offers have not been

determined.

1 October 2013

First testing date Second testing date

Grant date Test date Performance Vesting outcome % Test date Relative TSR Additional vesting (# shares vesting) percentile outcome (%)

2 October 2008 1 October 2011 61st percentile 72% 1 October 2012 65th 8%

(Managing Director grant) relative TSR (54,129) 2012 (6,014 shares)

2 October 2008 1 October 2011 ROE gateway 0% N/A N/A N/A

(Executive grant) not met

2 October 2009 1 October 2012 73rd percentile 96% 1 October 2013 70th 0%

(Managing Director grant) relative TSR (170,398)

1 October 2010 1 October 2013 TBD* TBD* N/A N/A N/A

(Managing Director grant)

2 October 2010 2 October 2013 ROE gateway 0% N/A N/A N/A

(Executive grant) not met

* The TSR Measure was still being determined at the date of this Report and accordingly, any performance rights will vest subsequent to the date of this report.




Award of Performance Rights to the Managing Director

Long-term Incentive Plan

Mr Maher was granted Performance Rights over ordinary shares by Ruralco after shareholder approval was received at the AGMs of 5 February

2007, 4 February 2008 and 2 February 2009. Subsequent grants have been made in accordance with the Long-term Incentive Plan. The

performance hurdles required to be met are explained on pages 47-50 (Long-term Incentives) of this Report.

The Managing Director’s LTI Performance Rights grants are detailed below:

Vesting of these Performance Rights is subject to the Managing Director continuing in employment with the Company and satisfaction of

specified EBITDA and revenue performance hurdles, as determined at the discretion of the Board. Of these Performance Rights, 50,000 were

tested as at 30 September 2012 and vested; 75,000 were tested as at 30 September 2013 and will vest subsequent to date of this report;

125,000 are to be tested on 30 September 2014; and 150,000 are to be tested on 30 September 2015.

The estimated minimum value of rights yet to vest is $251,250. The maximum value is the number of Rights multiplied by the share price of

the Company’s shares, which at 30 September 2013 amounted to $3,038,507.

2-Oct-08 50% 315,000 $4.19 75,179 60,143 15,036 1-Oct-11 1-Oct-12 $4.31

2-Oct-09 75% 472,500 $2.66 177,498 170,398 - 1-Oct-12 1-Oct-13 $2.01

2-Oct-10 75% 525,000 $2.64 199,165 - - 1-Oct-13 n/a $2.54

2-Oct-11 75% 581,250 $3.26 178,462 - - 1-Oct-14 n/a $2.73

1-Oct-12 75% 600,000 $3.48 172,290 - - 30-Sep-15 n/a $2.83

First Second Grant LTI% Ave share No. date award date award Fair Value date of Salary LTI $ price* granted Vested Lapsed is tested is tested Per Share# (A) (B) (A)/(B)

10 Sept 12 50,000 30 Sept 12 50,000 - $3.46

10 Sept 12 75,000 30 Sept 13 - - $3.22

10 Sept 12 125,000 30 Sept 14 - - $3.03

10 Sept 12 150,000 30 Sept 15 - - $2.86

Grant No. Date award is Fair value date granted tested Vested Lapsed per share

* The average closing price of Ruralco shares over the 5 trading days prior to the Grant date.

# This fair value is used to calculate the value of performance rights when granted.

Managing Director’s Additional Performance Rights

In addition to the LTI Performance Rights, the Managing Director was granted 400,000 Performance Rights in September 2012, to vest in four

tranches, pursuant to his employment contract effective 10 September 2012 as follows:



Award of Performance Rights to the Executive Management Team

Long-term Incentive Plan

Members of the executive management team (other than the Managing Director) as at 2 October 2008 were granted Performance Rights over

ordinary Ruralco shares after shareholder approval was received at the AGM of 2 February 2009. The number of Performance Rights granted

was determined by dividing their LTI component (30% of salary) by the average closing price of Ruralco shares over the 5 trading days prior

to the Grant Date ($4.19).

Further grants of Performance Rights were made to members of the executive management team as at 2 October 2010 and 1 October 2011.

The number of Performance Rights granted was determined by dividing their LTI component (30% of salary) by the average closing price of

Ruralco shares over the 5 trading days prior to the Grant Date ($2.64 and $3.26 respectively).

The performance hurdles for the executive management Performance Rights are explained on pages 47-50 (Long-term Incentives) of this Report.

The Performance Rights granted to executive management team members are detailed below:


First date Fair value Value ofName Grant date No. granted Vested Lapsed award is tested per share shares lapsed

Peter Homann 2-Oct-10 33,494 - 33,494 2-Oct-13 $1.31 $112,540

1-Oct-11 27,109 - - 30-Sep-14 $2.67 -

1-Oct-12 25,532 - - 30-Sep-15 $2.79 -

Greg O’Neil 2-Oct-10 31,525 - 31,525 2-Oct-13 $1.31 $105,924

1-Oct-11 26,897 - - 30-Sep-14 $2.67 -

1-Oct-12 26,093 - - 30-Sep-15 $2.79 -

Travis Dillon 2-Oct-10 29,590 - 29,590 2-Oct-13 $1.31 $99,423

1-Oct-11 26,713 - - 30-Sep-14 $2.67 -

1-Oct-12 32,967 - - 30-Sep-15 $2.79 -

Ian Armstrong 2-Oct-10 22,232 - 22,232 2-Oct-13 $1.31 $74,699

1-Oct-11 24,870 - - 30-Sep-14 $2.67 -

1-Oct-12 24,127 - - 30-Sep-15 $2.79 -

Michael Cullinan 2-Oct-10 26,176 - 26,176 2-Oct-13 $1.31 $87,952

1-Oct-11 23,949 - - 30-Sep-14 $2.67 -

1-Oct-12 24,291 - - 30-Sep-15 $2.79 -

Rachel Cofrancesco 1-Oct-11 14,277 - - 30-Sep-14 $2.67 -

1-Oct-12 15,616 - - 30-Sep-15 $2.79 -

Angie Somann-Crawford 1-Oct-11 22,107 - - 30-Sep-14 $2.67 -

1-Oct-12 22,556 - - 30-Sep-15 $2.79 -

Allan Barr 1-Oct-11 22,088 - - 30-Sep-14 $2.67 -

1-Oct-12 20,804 - - 30-Sep-15 $2.79 -

David Foung 1-Oct-11 26,713 - 26,713 30-Sep-14 $2.67 $90,557

Andrew Ferguson 1-Oct-12 34,702 - 34,702 30-Sep-15 $2.79 $116,252

Rick Maybury 1-Oct-12 20,388 - - 30-Sep-15 $2.79 -

The estimated minimum value of Rights yet to vest is nil. The maximum value is the number of Rights multiplied by the share price of the Company’s shares, which

at 30 September 2013 amounted to $1,341,286.



Senior Management Share Plan

Under the Senior Management Share Plan, $15,000 worth of shares will be provided to selected senior managers over 3 years, with 20%

($3,000) of the total amount allocated at the end of each of the first 2 years and the remaining 60% ($9,000) at the end of the third year. The

senior manager must remain employed on the relevant vesting date in order to receive the shares.

On 30 June 2009 and 20 December 2010, five Senior Managers selected by the Managing Director were made offers under the Senior

Management Share Plan. On 21 December 2011 and 31 October 2012, six Senior Managers selected by the Managing Director were made

offers under the Senior Management Share Plan. The terms of the offer were those given shareholder approval at the AGM of 2 February 2009.

Three current members of the executive management team received offers under the Senior Management Share Plan on 30 June 2009 and

two current members of the executive management team received offers under the Senior Management Share Plan on 20 December 2010.

One current member of the executive management team received an offer under the Senior Management Share Plan on 21 December 2011.

Details of these offers, including the annual accounting expense values of the shares, for current members are set out below.

Section 8: Contracts

Service Contracts and Termination

In accordance with Board policy, the service contracts for the Managing Director and the executive management team have no fixed term. The

contracts outline the remuneration to be paid at the commencement of the contract and how remuneration levels are to be reviewed from year

to year. Contract terms are reviewed periodically and revised if required. Specific details of the service contracts are set out in the table below:

* Under this scenario termination notice payments would total $1.557m.

$ Value over End of year 1 End of year 2 End of year 3 Name Grant date 3 years 20% 20% 60%

Travis Dillon 30-Jun-09 15,000 7,500 4,500 3,000

Angie Somann-Crawford 2-Oct-10 15,000 7,500 4,500 3,000

Rick Maybury 1-Oct-11 15,000 7,500 4,500 3,000

Name Contract commencement Notice period Notice period initiated initiated by employee by employing company*

Executive Director

John Maher 10-Sep-12 6 months 12 months

Other executives

Angie Somann-Crawford 5-Aug-13 3 months 6 months

Greg O’Neil Jan-07 3 months 6 months

Travis Dillon 1-Aug-12 3 months 6 months

Allan Barr 28-Nov-11 3 months 6 months

Rick Maybury 1-Aug-12 3 months 6 months



Section 9: Non-executive Director fees

The Non-executive Directors receive fees (including statutory superannuation) and are entitled to be reimbursed for reasonable expenses. Their

fees are set by the Board, having regard to companies of similar complexity and size, and are within the aggregate set by shareholders.

The remuneration consists of a base fee, with the chair and members of each of the committees receiving additional amounts commensurate

with their responsibilities. Ruralco’s fee policy is set out in the table below.

Non-executive Directors have no entitlement to any performance-based remuneration or participation in any share-based incentive schemes.

This does not prevent directors holding shares in Ruralco, subject to the Securities Trading Policy available at www.ruralco.com.au.

The current maximum aggregate fee pool is $700,000, as last approved by shareholders at the AGM held 9 February 2006. For the reporting

period, the total amount paid to Non-executive Directors was $545,643, as set out in the table below. This amount includes superannuation

and fees to Non-executive Directors in their capacity as directors of subsidiary boards.


Chair of the Board (base fee) $160,367 Additional committee fees are not payable to the Chair of the Board

Non-executive Director (base fee) $60,140 Additional committee fees paid as below

Audit, Risk & Corporate Governance $21,850 $5,463

Nomination and Remuneration $10,925 $5,463

Capital Expenditure Review $10,925 $5,463

Non-executive Director policy fees FY13

Role / committee Board fees Committee Chair fees Committee member fees


Non- Super- Cash Extraordinary Cash monetary annuation Termination Date Salary Fee Bonus Benefits Benefits Benefits Total $ $ $ $ $ $ $

Short-term Post Employment Long-term

R A England 2013 146,789 80,000 - - 20,579 - 247,368

Chair 2012 146,789 - - - 13,212 - 160,001

Member: Audit, Risk & Corporate Governance, Nomination and Remuneration and Capital Expenditure Review* Committees.

M J Millner 2013 75,943 - - - 6,904 - 82,847

Director 2012 65,046 - - - 5,856 - 70,902

Member: Nomination and Remuneration, Capital Expenditure Review and Audit, Risk & Corporate Governance* Committees.

S M Smith 2013 58,372 - - - 5,268 - 63,640

Director 2012 69,593 - - - 6,263 - 75,856

Former Chair: Capital Expenditure Review Committee. Former Member: Audit, Risk & Corporate Governance Committee.

B Dixon 2013 64,046 - - - 5,895 - 69,941

Director 2012 39,612 - - - 3,565 - 43,177

Chair: Nomination and Remuneration Committee.

M Allan 2013 75,046 - - - 6,801 - 81,847

Director 2012 40,706 - - - 3,658 - 44,364

Chair: Audit, Risk & Corporate Governance Committee.

Director S M Smith resigned on 24 July 2013.

Director N J Edwards was not KMP in 2013 as he retired in 2012. His total remuneration for 2012 was $23,057.

Director J Lord was not KMP in 2013 as he resigned in 2012. His total remuneration for 2012 was $30,675.

* Effective 24 July 2013.

^ The Chair received an extraordinary fee for his additional duties and workload while the Company pursues a number of strategic objectives.

Section 9: Non-executive Director fees (continued)


Introduction

The Board is committed to driving shareholder value growth and

considers excellent corporate governance as both integral in its

delivery and correspondingly in the best interests of the Company

and its stakeholders. The Company’s governance philosophy is

based on the view that governance is not just a matter for the

Board and that a good governance culture must be fostered

throughout the Company. The Board believes it has the necessary

mix of skills and experience to oversee the high standard of

corporate governance, integrity and accountability that is required.

Reflective of the nature, scale and complexity of Ruralco’s

operations, the Board has established a transparent and high

quality corporate governance framework comprising codes, policies

and charters under which the Company operates. The framework

outlines the Company and Management’s commitment to act

ethically, openly, fairly and diligently when promoting the interests

of stakeholders such as shareholders, employees, CRT and Town

& Country members, customers and broader community interests.

Copies of the corporate governance framework documentation

referred to in this Corporate Governance Statement are publicly

available on the Company’s website at www.ruralco.com.au and

may be accessed within the Corporate Governance section.

The Board reviews its corporate governance codes, policies and

charters to ensure practices are in place that remain in line with

best practice and which continue to encourage the growth of

shareholder value.

Ruralco’s corporate governance practices for the year ended

30 September 2013, and at the date of this financial report, are

outlined in this Corporate Governance Statement. Other than where

explicitly stated otherwise, the Board believes that Ruralco’s policies

and practices comply with the Australian Securities Exchange (ASX)

Corporate Governance Council’s Corporate Governance Principles

and Recommendations (“ASX Principles”).

Ruralco acknowledges the Corporate Governance Council’s

amendments to the ASX Principles released on 30 June 2010 which

take effect for the first financial year of listed entities beginning on

or after January 2011. The Company complies with the revised ASX

Principles and is developing and implementing recommendations

in key areas in line with the new reporting requirements, including

gender diversity and Board member renewal and selection processes.

Principle 1: The Board lays foundations for management and oversight

Role of the Board

The Board’s fundamental role is to represent the shareholders. The

Board is accountable to them for creating and delivering value

through the effective governance of the business and through

setting and reviewing Ruralco’s strategic direction and monitoring

the implementation of that strategy by Management.

The Board’s roles and responsibilities are formalised in a Board

Charter which is available on the Company’s website. The Charter

is reviewed at least annually during the course of the year to ensure

it remains appropriate given the operations of the business and the

responsibilities and composition of the Board.

Pursuant to the Board Charter, the Board has specifically reserved

for its decision matters such as:

• establishing the Company’s vision, mission, values and ethical

standards;

• appointing (or removing) the Managing Director and

determining his or her terms and conditions of service;

• where appropriate, approving the appointment (or removal) of

senior executives who report directly to the Managing Director;

• approval of the overall strategy and operating budgets of the

business at least annually;

• monitoring and assessing Management’s performance in

achieving strategies and budgets approved by the Board;

• monitoring the financial performance of the Company;

• assessing and reviewing Company performance and communicating

related updates to shareholders and other stakeholders;

• the acquisition, establishment, disposal or cessation of any

significant business of Ruralco;

• determination of matters in accordance with, and any changes

to, approved delegations of authority by the Board; and

• the issue of any shares, options, equity instruments or other

securities in Ruralco.

For other matters, the Board has delegated authority to the

Managing Director, who is free to take all decisions and actions

consistent with his delegations and which, in the opinion of

the Managing Director, are in the best interests of Ruralco. The

Managing Director remains accountable to the Board for authority

that is delegated and for the performance of the business. In

addition, a delegations policy sets out the decision-making powers

which may be exercised at various levels of management.

CORPORATE GOVERNANCE STATEMENTD I R E C T O R S ’ R E P O R T


Board Committees

The Board has delegated specific matters to three Board Committees

that assist in discharging and exercising its responsibilities by

examining various issues and making recommendations to the

Board. Those Committees are:

• Audit, Risk and Corporate Governance Committee (Additional

information - refer discussion at ASX Principles 4 and 7);

• Nomination and Remuneration Committee (Additional

information - refer discussion at ASX Principles 2 and 8); and

• Capital Expenditure Review Committee.

Each Committee is governed by a charter under which authority

is delegated by the Board and which set out matters relevant

to the composition, responsibilities and administration of

those Committees. The Audit, Risk and Corporate Governance

Committee charter and Nomination and Remuneration Committee

charter are available on the Company’s website.

The Board may also delegate specific responsibilities to adhoc

Committees from time to time.

All Committees review matters on behalf of the Board and (subject

to the terms of the relevant charter):

• refer matters to the Board for decision, with a recommendation

from the Committee (where the Committee acts in an advisory

capacity); or

• determine matters (where the Committee acts with delegated

authority), which it then reports to the Board.

The details of each Board Committee member’s respective skills,

qualifications as well as the number of Committee Meetings

that were held over the reporting period and the attendance of

Committee members at these Meetings are set out in the Directors’

Report on pages 34-37. The members of each Board Committee as

at the date of this financial report are shown in the following table:

Letters of Appointment

At the time of joining the Company, Directors and senior executives

are provided with letters of appointment setting out the key terms and

conditions of their appointment including such matters as their duties,

rights, responsibilities and expectations of the role and remuneration.

Performance Evaluation of Senior Executives

The Managing Director’s compensation arrangements and

performance is reviewed, monitored and evaluated by the Board and

Nomination and Remuneration Committee on an annual basis, against

annually established and mutually agreed performance criteria.

The senior executives’ compensation arrangements and performance

is reviewed, monitored and evaluated by the Managing Director in

conjunction with the Nomination and Remuneration Committee

or Board Chair against annually established and mutually agreed

performance criteria. A formal performance review methodology

is also in place.

The Managing Director provides the Nomination and Remuneration

Committee with an overview of individual senior executive

performance and compensation recommendations for Committee

assessment and review.

Principle 2: The Board is structured to add value

Composition of the Board

The Board determines its size within the limits provided in the

Company’s Constitution, which currently provides for a minimum

of three Directors and a maximum of nine Directors. The size of the

Board is reviewed annually and currently comprises six Directors,

with five Non-executive Directors, including the Chair, and one

Executive Director, being the Managing Director.

Details of the term of office held by each Director and the skills,

experience and expertise relevant to the position of Director held by

each Director in office at the date of this annual report is contained

in this Annual Report.

The Board is structured to ensure that it consists of Directors who

have a proper understanding of the business and who can add

value in the context of Ruralco’s business. The Board considers

that all Directors have an understanding of Ruralco’s business

and the industry within which it operates and that the Directors’

diverse range of skills and experience is appropriate to discharge its

responsibilities and duties.

Audit,

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R A F England Member Member Member

J S Maher - - -

M J Millner Member Member Chair

J H Tuskin - - Member

B Dixon - Chair -

M J Allan Chair - -


The Board has a policy on Independence of Directors and in defining

the characteristics of an independent Director, the Board uses the

ASX Principles (including considerations highlighted in Box 2.1

‘relationships affecting independent status’) together with its own

consideration of the Company’s operations and business, applying

appropriate materiality thresholds on a case-by-case basis with

reference to each Director. The Independence Policy is available on

the Company’s website.

When assessing Director independence the Company adopts the

following test:

‘Is this Director independent of Management and free of any

business or other relationship with Ruralco that could materially

interfere, or could reasonably be perceived to materially interfere,

with the exercise of objective, unfettered and independent

judgment of Directors?’

Information about any such relationships, including any related

financial or other details, is assessed by the Board to determine

whether the relationship could, or could reasonably be perceived

to, materially interfere with the exercise of a Director’s unfettered

and independent judgment.

The Board considers that executive postings, substantial shareholdings,

acting in a professional advisory capacity, material business

relationships, serving as a long-term Director, being a material supplier

or customer or having a material contractual relationship are all

indicative of a Director lacking the appropriate independence.

Two-thirds of the Directors on the Board have been classified

as independent, as shown in the table below. The Board has a

majority of independent Directors (and consequently the Board’s

composition complies with ASX Principle 2.1).

Pursuant to the Board Charter:

• the Board should include an appropriate number of Directors

who satisfy the criteria for independence set out in Ruralco’s

Policy on Independence of Directors;

• the Board should comprise a majority of Non-executive

Directors; and

• the Chair of the Board is appointed by the Board and is to

be an independent Non-executive Director in accordance with

the criteria for independence set out in Ruralco’s Policy on

Independence of Directors.

In line with the Board Charter, the respective roles of Chair and

Managing Director are separated.

Skills, Knowledge, Experience and Attributes of Directors

Although the shareholders appoint Directors, the Board seeks to

ensure that the Directors have a broad range of experience and

commercial expertise or appropriate professional qualifications.

Board members must have (or develop) a thorough understanding

of the business conducted by Ruralco and be able to bring value to

the Board’s deliberations.

The Board considers that a diverse range of skills, backgrounds,

knowledge and experience is required in order to effectively govern the

business. The Board and its Committees actively work to ensure that they

continue to have the right balance of skills, experience, independence

and Company and industry knowledge to discharge their responsibilities

in accordance with the highest standards of governance.

Directors must demonstrate unquestioned honesty and integrity,

preparedness to question, challenge, and critique, and a willingness

to understand and commit to the highest standards of governance.

Each Director must ensure that no decision or action is taken that

places their interests in front of the interests of the business.

Further, Directors must be prepared to and are expected to commit

sufficient time and resources in order to satisfactorily perform their

role effectively.

Independence

The Board is conscious of the need to have independent Directors

but must also ensure that Board members can add value in the

context of Ruralco’s business. Therefore, the Board seeks to ensure

that the Board comprises Directors who have a strong understanding

of Ruralco’s core business whilst also being able to bring independent

views and judgment to the Board’s deliberations.


Director Status

R A F England Independent

J S Maher Non-independent

M J Millner Non-independent

J H Tuskin Independent

B Dixon Independent

M J Allan Independent


The Board has adopted a number of policy measures to ensure that

independent judgment is achieved and maintained in respect of its

decision-making processes. These include:

• the Chair is an independent Director;

• Directors are entitled to seek independent professional advice at

the Company’s expense, subject to approval by the Board;

• Directors who have a conflict of interest in relation to a particular

item of business must absent themselves from the Board or

Committee Meeting before commencement of discussion on

the topic; and

• Non-executive Directors are able to confer on a needs basis

without Management in attendance.

Ruralco does not consider the appointment of substantial

shareholder nominee Mr Millner to the Board as detrimental

to Ruralco’s interests. Mr Millner has significant experience and

expertise in business and brings a broad depth of knowledge to

the Ruralco Board. The Board feels that it has an appropriate mix

of skills to provide the required depth of knowledge and industry

experience to meet the Board’s responsibilities and objectives.

The Chair, Mr England and Directors, Dr Allan, Mr Dixon and Mr

Tuskin are considered to be independent under the terms of the

Company’s Policy on Independence of Directors. Mr Dixon was

appointed to the Board on 16 February 2012, Dr Allan on 16

March 2012 and Mr Tuskin on 1 October 2013 as part of a process

of Director and Board renewal initiated following an externally

facilitated Board review.

Mr John Maher, the Managing Director, is the only executive on

the Board.

The Board regularly assesses the independence of its Non-executive

Directors. Where a Director’s independence status changes, the

Company provides timely disclosure to the market of the change.

Nomination and Remuneration Committee

The Board has established a Nomination and Remuneration

Committee that assists the Board with Board structural and

performance matters.

The members of the Committee as at the date of this financial report

and details of their respective skills, qualifications, the number of

Committee Meetings that were held over the reporting period and

the attendance of Committee members at these Meetings are set

out in the Directors’ Report on pages 34-37.

The Committee has a written charter which sets out its structure,

roles, responsibilities, resource access protocols (internal and

external), meeting process, Board reporting requirements and

performance evaluation requirements. The charter is available on

the Company’s website.

Under its charter, the Committee is responsible for assisting the Board

in fulfilling its corporate governance responsibilities with regard to:

• making recommendations to the Board on:

- the criteria to be adopted for assessing the skills,

expertise and experience required of a Ruralco Director;

- Board size, composition and tenure of Directors;

- induction and education of Directors, including

continual education and development;

• determining the criteria for assessing the skills and experience

required for a Ruralco Director;

• setting and following procedure for the selection of new

Directors for nomination;

• recommendations to the Board on candidates for appointment

as Directors to ensure that appropriate candidates are put

forward as replacements for retiring Directors;

• reviewing and making recommendations on the performance

of the Board, including the provision of assistance to the

Chair (if requested) in reviewing the performance of individual

Directors;

• conducting regular reviews of the Board’s succession plans to

enable and maintain an appropriate mix of skills, experience,

expertise and diversity;

• coordinating the Board’s review of the Chair’s performance;

• conducting a formal review of the Board’s composition, size

and performance;

• reviewing and considering matters of conflict of interest;

• formulating strategies and make recommendations to the

Board on gender diversity and diversity in general; and

• monitor achievement against gender diversity objectives.

The Committee is structured so that it consists of at least three

Non-executive Directors, with the Chair appointed by the Board.

The Committee is chaired by Mr Dixon. The other Committee

members are Mr England, Chair of the Board and Mr Millner.

The current composition of the Committee has a majority of

independent Directors (and consequently the Committee’s



Where appropriate, external consultants may be engaged to

identify potential new candidates and to review the suitability of

candidates for appointment based on formally adopted criteria for

Director selection.

The term in office as at 30 September 2013 and year in which each

Non-executive Director was re-elected by Shareholders is as follows:

*Note: Mr Millner was a Director of the Company prior to the merger

in 2006. His term in office is based on his current appointment. Mr

Tuskin was appointed to the Board on 1 October 2013.

Induction and Professional Development

The Company provides an induction programme to assist new Directors

to gain an appropriate understanding of, among other things:

• the Company’s financial, strategic, operational and risk

management position;

• the Company’s culture and values;

• the respective rights, duties and responsibilities and roles of the

Board and senior executives;

• the role of Board Committees;

• meeting arrangements; and

• Director interaction with each other, senior executives and

other stakeholders.

The induction process will be undertaken to facilitate the respective

appointee’s full and active participation in decision-making at the

earliest opportunity.

All Directors are expected to maintain the skills required to discharge

their obligations to the Company.

Directors are regularly provided with papers, presentations and

briefings on Ruralco business and on matters that may affect

Company operations.

Director Selection, Appointment and Re-election

The procedures for the appointment and removal of Directors are

ultimately governed by the Company’s Constitution. The Board

may appoint Directors to fill casual vacancies that occur or to

add additional persons to the Board up to the maximum number

(currently nine) prescribed by the Constitution. If the Board

appoints a new Director during the year, that person will stand

for election by shareholders at the next Annual General Meeting,

but that Director will not be taken into account in determining the

number of Directors who are to retire by rotation. Shareholders are

provided with relevant information on the candidates standing for

election in the Notice of Meeting.

Ruralco Directors do not have a prescribed fixed term of office

but are subject to the retirement provisions contained in the

Constitution, Company policies and the ASX Listing Rules. At least

one-third of Directors retire at each Annual General Meeting and

Directors must submit themselves to shareholders for re-election

at least every three years. Shareholders are provided with relevant

information on the candidates standing for re-election in the

relevant Notice of Meeting.

The Board has delegated to the Nomination and Remuneration

Committee the responsibility for recommending to the Board

candidates to be nominated to act as new Directors and for

recommending to the Board the reappointment of retiring Directors.

The Board’s Nomination and Remuneration Committee regularly

reviews the composition of the Board to ensure that there is an

appropriate mix of abilities and experience to serve the interests of

shareholders. Any recommendations are presented to the full Board.

In considering the selection, appointment and re-election of

Directors, the Nomination and Remuneration Committee assesses

candidates against a range of criteria developed for the role and

in doing so considers, among other things, their background,

knowledge of Ruralco’s business and industry, business experience,

personal attributes and professional skills. Following this

assessment, the Committee provides its recommendation to the

Board for assessment and actioning.

Board support for reappointment is not automatic. Retiring Directors

who are seeking re-election are subject to a performance appraisal

overseen by the Nomination and Remuneration Committee, or its Chair.


Non-executive Director Term in office AGM last re-elected

R A F England 11 years 5 months 2013

M J Millner 6 years 10 months* 2013

J H Tuskin -* -

B Dixon 1 year 7 months 2013

M J Allan 1 year 6 months 2013


Board and Director Performance Evaluation

The Board is committed to transparency in determining Board

membership and in assessing the performance of Directors. The Board

conducts annual evaluations of its performance, the performance

of its Committees, the Chair, individual Directors and the key

governance processes that support the Board’s work. This process

enables the Board to identify any scope to improve its effectiveness

and assists in the Board’s ongoing Director development programme.

In particular the process:

• compares the Board’s performance with the requirements of the

Board Charter including its role and composition, engagement

with Management, shareholders and stakeholders;

• assists in setting the goals and objectives of the Board for the

upcoming year; and

• underpins any desirable improvements to the Board Charter.

Board Access to Information and Independent Advice

All Directors have access to Company employees, advisers and records.

Directors may meet independently with Management at any time

to discuss areas of interest or concern.

Each Director may obtain independent professional advice at the

Company’s expense, to assist the Director in the proper exercise of

powers and discharge of duties as a Director or as a member of a

Board Committee.

Directors are entitled to reimbursement of all reasonable costs

where a request for reimbursement of the cost of such advice is

approved by the Chair. In the case of a request made by the Chair,

approval is required from the Board.

Indemnities and Insurance

The Company has paid insurance premiums in respect of Directors’

and officers’ liability for current and former Directors of Ruralco, its

controlled entities and related bodies corporate.

Those officers of Ruralco who are covered by insurance include the

current Directors, Secretaries, executive officers and former Directors.

The contract of insurance prohibits disclosure of the nature of the

liability insured against and the amount of the premium paid.

Clause 38 of Ruralco’s Constitution provides that Ruralco must

indemnify Directors and Secretaries (and may indemnify any other

officers of the Company) against any liability incurred in that

capacity, subject to certain exceptions.

The Company has entered into and proposes to enter (for recently

appointed Directors) Indemnity and Access Deeds with current and

former Directors and Secretaries of Ruralco Holdings Limited and

its subsidiaries on terms which comply with the Corporations Act.

The Company has not entered into any agreement to indemnify its

auditor or paid any insurance premiums in respect of its auditor.

Meetings of the Board and Conduct of Meetings

Details of Directors’ respective attendance at Board Meetings are

set out in the Directors’ Report on page 37.

The Chairman and Managing Director establish Meeting agendas

to ensure adequate coverage of key issues during the year. Senior

executives attend Board Meetings by invitation and are also

available to be contacted by Directors between Meetings.

The Board and its Committees have the ability to meet without

the Managing Director or senior executives present. Such sessions

could, for example, deal with Management performance and

remuneration issues, Board performance evaluation issues and

discussions with external and internal auditors to promote a robust

independent audit process.

Principle 3: The Board promotes ethical and responsible decision-

making

The Board is firmly of the view that the reputation and integrity of

the Company, the Board and employees will only be maintained

through conducting its operating and corporate activities based on

adopting the highest ethical standards.

In recognition of the above, the following codes and policies have

been adopted:

• Directors’ Code of Conduct (including Securities Trading Policy);

• Corporate Code of Conduct and Business Ethics;

• Whistleblowing Policy; and

• Fair Dealing and Compliance with the Competition and

Consumer Act.

Directors’ Code of Conduct and Corporate Code of Conduct and

Business Ethics

The Directors’ Code of Conduct guides Directors and promotes high

ethical and professional standards and responsible decision-making

practices. In addition, the Company has adopted a Corporate Code

of Conduct and Business Ethics for all employees (which includes

Directors).


Securities Trading Policy

The Board encourages Key Management Personnel (including

Directors) and employees to own Ruralco’s securities to further

align their interests with the interests of shareholders. Details of

Directors’ shareholdings are set out in the Directors’ Report on

page 38.

The Board has adopted a Securities Trading Policy which regulates

dealing by Key Management Personnel (including Directors) and

employees in shares and other securities issued by Ruralco. The

rationale for the Policy is to establish a best practice procedure

relating to buying and selling Ruralco Securities that provides

protection to the Company, Directors and employees to ensure that

they do not abuse, and do not place themselves under suspicion

of abusing, inside information that they have or may be thought

to have, especially in periods leading up to an announcement

of Ruralco’s results, and to explain the type of conduct that is

prohibited under the Corporations Act.

The Securities Trading Policy further aims to ensure that Ruralco

officers and employees are aware of the legal restrictions on trading

Ruralco shares while a person is in possession of unpublished

price-sensitive information. Additionally, the policy is intended to

minimise any chance that misunderstandings or suspicions that

Ruralco officers and employees may be trading while in possession

of unpublished price-sensitive information. Ruralco’s officers and

employees who are in possession of price-sensitive information

must not procure others to trade in Ruralco shares.

The Company’s Securities Trading Policy regulates dealings by the

following persons in Ruralco securities:

• Key Management Personnel (which includes Directors and

senior executives);

• Designated Persons, defined as Key Management Personnel, all

employees at a director level or higher, Commercial Managers,

Group Financial Accountants and any other employee

specifically designated by the Managing Director from time to

time, and members of their immediate family or household.

All Key Management Personnel and Designated Persons are

prohibited from trading in Ruralco shares or other securities while

in possession of unpublished Ruralco price-sensitive information

which is not generally available. Price-sensitive information is

information which a reasonable person would expect to have a

material effect on the price or value of securities.

These respective codes are available on the Company’s website and

address, among other things:

• ethical conduct and expected behaviours based on the principles

of openness, mutual respect, fairness, honesty and integrity;

• compliance with the law;

• trading in Ruralco securities;

• continuous disclosure compliance;

• privacy;

• intellectual property;

• integrity of records;

• improper payments, gifts, entertainment and travel;

• confidentiality of information;

• conflicts of interests and disclosure protocols;

• protection of Ruralco assets;

• personal transactions; and

• whistleblower protection.

The Corporate Code of Conduct and Business Ethics are actively

promoted throughout the Company and are easily accessible to

new and existing employees via the Company’s intranet.

Consultants, contractors and business partners are also expected to

act in accordance with the Code.

Whistleblower Policy

Ethical and responsible decision-making at Ruralco is also promoted

by the Company’s Whistleblower Policy. This policy is designed to

encourage employees to confidently and responsibly (anonymously

if they wish via an externally hosted web site and hotline) raise

any concerns and report instances of unethical, fraudulent, non-

compliant, suspicious or improper conduct without being subject

to victimisation, harassment or discriminatory treatment. The

policy formalises Ruralco’s commitment to absolute confidentiality

and fairness in dealing with all matters raised and to support and

protect those who report violations in good faith.

Fair Dealing and Compliance with the Competition and Consumer Act

The Company’s Code with respect to Fair Dealing and Compliance

with the Competition and Consumer Act guides persons dealing

with the Company, including employees, through the legal

requirements as well as the Company’s expectations. It provides a

list of “do’s and don’ts” to assist employees on a day-to-day basis.



Accordingly, a Key Management Personnel or Designated Person

must not deal in Ruralco’s securities if they are in possession of

unpublished information that, if generally available, might affect the

price of the Ruralco’s securities. Subject always to this, the Board has

established a policy that Key Management Personnel and Designated

Persons may trade in the Company’s securities at any time, but shall

not deal in the Company’s securities in the following periods:

• from the date that is the end of the half year to 24 hours after

the Company announces the results for that half year; and

• from the date that is the end of the full year to 24 hours after

the Company announces the results for that full year.

Prior to trading in Ruralco securities, the Chair must notify the

Chair of the Audit, Risk and Corporate Governance Committee, a

Director must notify the Chair, the Company Secretary must notify

the Managing Director and senior executives or employees must

notify the Company Secretary, of their intention to trade. Directors

must advise the Company which in turn advises the ASX of any

transactions conducted by them in the Company’s securities within

five business days after the transaction occurs.

Under the Policy, Key Management Personnel and Designated Persons

may be permitted, with approval, to trade in Ruralco securities during

a closed period where that person is not in possession of inside

information and is experiencing financial hardship or is affected by

some other exceptional circumstance. In these circumstances, the Chair

must seek approval from the Chair of the Audit, Risk and Corporate

Governance Committee, a Director must seek approval from the

Chair, the Company Secretary must seek approval from the Managing

Director and senior executives or employees must seek approval from

the Company Secretary, before undertaking any trading.

Ruralco’s Securities Trading Policy is available on the Company’s

website.

Diversity Policy

The Board has formalised its oversight role in relation to diversity

practices in line with the proposed revisions to the ASX Principles.

In December 2012 the Board approved a Diversity Policy which is

being implemented throughout the Company. The Board has set

and assesses annually the gender diversity objectives set out in the

policy. It will also through the Audit, Risk & Corporate Governance

Committee consider diversity issues and propose strategies for

recommendation to the Board; a Company wide diversity report

will be provided to the Board annually.

Currently the female to male ratios are: Board 17% female and the

senior executive 17% female.

Principle 4: The Board safeguards the integrity of financial reporting

The Board has established an Audit, Risk and Corporate Governance

Committee.






Senior executives and internal and external auditors attend

Committee Meetings on invitation by the Committee.


roles, responsibilities, resource access protocols (internal and external),

meeting process, Board reporting requirements and performance

evaluation requirements.


in fulfilling its corporate governance responsibilities in relation to

financial reporting, risk management, internal control and compliance.

Broadly, the Committee is responsible for:

• overseeing the Company’s financial reporting and financial

reporting systems;

• overseeing and assessing the effectiveness of enterprise-wide

risk management and compliance systems and the internal

control framework;

• monitoring the activities and performance of the internal audit

function;

• overseeing the procedures for the selection and appointment (or

removal) of the external auditor;

• monitoring the activities and performance of the external auditor

and coordinating its operation with the internal audit function;

• overseeing and assessing the independence of the external and

internal auditors;

• reviewing the Company’s corporate governance policy

documentation; and

• providing full reports to the Board on all matters relevant to the

Committee’s responsibilities.

The charter and the Company’s Policy on the Appointment of External

Auditors are available on the Company’s website.


The Committee’s charter provides that the Committee is structured so

that it consists of at least three Non-executive Directors, a majority of

the Committee must be independent Directors and the Committee

Chair must be an independent Director who is not also Chair of the

Board. The current Committee composition complies with the charter.

The Board considers that all members of the Committee are

financially literate and that the Committee possesses sufficient

financial expertise and knowledge of the industry in which the

Company operates. The Committee is chaired by Dr Allan (an

independent Non-executive Director with relevant experience). The

other Committee members are Mr England and Mr Millner, both of

whom are independent Non-executive Directors).

External Auditor

One of the chief functions of the Audit, Risk and Corporate

Governance Committee is to review and monitor the performance

and independence of the external auditor. The Company’s external

auditor for the financial year was KPMG who were appointed as

external auditors by shareholders at the 2009 AGM. The Committee

has established guidelines to ensure the independence of the

external auditor. The external audit partner is rotated at least every

five years and the auditor is required to make an independence

declaration annually. KPMG has provided an independence

declaration for the financial year ended 30 September 2013. The

independence declaration forms part of the Directors’ Report and

is set out on page x of this report.

Information about the total remuneration of the external auditor,

including details of remuneration for any non-audit services, is set

out in Note 6 to the financial report.

The Committee is satisfied that the level of non-audit work carried

out by the external auditor is compatible with maintaining audit

independence taking into account the Committee’s related guidelines.

The KPMG audit partner attends the Company’s AGM and is

available to answer shareholder questions about the conduct of

the audit and the preparation and content of the Auditor’s Report.

Principle 5: The Board makes timely and balanced disclosure

The Company understands and respects that timely disclosure of

price sensitive information is central to the efficient operation of

the securities market. The Board is committed to complying with its

continuous disclosure obligations under the ASX Listing Rules and

the Corporations Act and by doing so ensuring that shareholders

and investors have equal and timely access to material information

about the Company including its financial position, performance,

ownership and governance.

To ensure compliance with these obligations, the Company has

established a Disclosure Compliance Policy which sets out the

measures adopted by the Board to ensure its continuous disclosure

obligations are met and to attribute accountability at a senior

executive level for that compliance. In particular, the Policy sets out

how information will be identified and considered for disclosure

and then (if necessary) disclosed by the Company to the market.

The Policy is available on the Company’s website.

Ruralco’s policy is designed to ensure that the Company:

• provides timely and accurate information equally to all

shareholders and market participants regarding Ruralco

including its financial situation, performance, ownership,

strategies, activities and governance; and

• adopts channels for disseminating information that are fair,

timely and cost-efficient.

The Disclosure Compliance Policy is designed to facilitate the

Company’s compliance with its obligations under the Listing Rules by:

• providing guidance as to the types of information that may

require disclosure, including examples and practical application

of the Rules;

• providing quantitative and qualitative materiality guidelines

and interpretative guidance to assist in determining whether

information is, or may be, material;

• providing guidelines and interpretative guidance to assist in

determining whether information is, or may be, confidential

pursuant to the Listing Rules;

• providing practical guidance for dealing with market rumours,

market analysts and the media;

• identifying the correct channels for passing on potentially

market-sensitive information as soon as it comes to hand; and

• establishing regular occasions at which senior executives and

Directors are actively prompted to consider whether there is

any potentially market-sensitive information which may require

disclosure.

Ruralco’s website contains copies of ASX releases covering such

publications as Annual Financial Reports, half year results, Notices

of Meeting, media releases and analyst briefings, with the latter

released prior to the commencement of the briefing.



Significant ASX announcements (such as announcements of

financial results, market guidance or major transactions) are to be

approved by the Board.

Under the Disclosure Compliance Policy, the Company Secretary,

as the nominated disclosure officer, has the responsibility for

overseeing and coordinating the disclosure of information to the

ASX and for administering the Policy.

The Board periodically reviews the Disclosure Compliance Policy

and practices and protocols governing investor/analysts briefings,

major announcements and media communications to ensure they

are effective and remain consistent with relevant regulations and

best practice in the market place.

Principle 6: The Board respects the rights of shareholders

The Company regards clear and transparent communication with

its shareholders, trading members and other stakeholders as a

core element of best practice corporate governance. Ruralco is

committed to delivering communications that are in plain, easily

understood language with the primary aim of ensuring that

all its stakeholders can find the information they need, read it,

understand it, and use it in a useful and practical way.

Accordingly, the Board has adopted a Communications Policy

which requires communication with shareholders in an open,

balanced, regular and timely manner so that the market has

sufficient information to make informed investment decisions on

the operations and results of the Company. The Policy is available

on the Company’s website.

The Board is committed to monitoring ongoing developments that

may improve the Company’s shareholder communication practices,

including technological developments, regulatory changes and the

continuing development of market place ‘best practice’ and, whenever

reasonably practicable, to implement changes to the Company’s

communication protocols to reflect any such developments.

The Company’s website (www.ruralco.com.au) is a key part of

the Company’s communication strategy with shareholders and

the market and is a valuable source of information. It has been

designed to enable information to be obtained in a clear and

readily accessible manner. The Company has a dedicated Corporate

Governance section on the Company’s website which supplements

the communication to shareholders in the Annual Report regarding

the Company’s corporate governance policies and practices.

Company announcements (including analyst briefing material

and media releases) are made available on the Company website

immediately following confirmation of their release to the market.

In addition to its formal disclosure obligations under the ASX

Listing Rules, the Board also uses a number of additional means of

communicating with shareholders.

These include:

• the Half-year and Annual Reports;

• posting media releases, public announcements, Notices of

General Meetings and voting results, and other investor related

information on the Company’s website; and

• Annual General Meetings (“AGM”).

Annual General Meeting

The Company’s AGM is a major forum for shareholders to ask

questions about the performance of the Company and also

provides an opportunity for shareholders to provide feedback to

the Company about information provided to shareholders.

The Board encourages and welcomes shareholder attendance at, and

participation in, the AGM at which the external auditor is available

to answer shareholder questions about the conduct of the audit and

preparation and content of the Independent Audit Report.

Shareholders are encouraged to use this opportunity to ask

questions of the Board and the external auditor.

The Notice of Annual General Meeting is provided to all shareholders

and posted on the Ruralco website.

To encourage participation in General Meetings, the Board has

adopted Guidelines for Notices of Meetings. They provide clear

procedures which the Company will follow to ensure that shareholders

have the opportunity to attend and vote in a fully informed manner

on the matters to be considered at General Meetings.

Principle 7: The Board recognises and manages risk approach to

risk management

The Board and Management clearly recognise that the Company’s

continued growth and success is dependent on responsibly managing

its risks, with their effective identification and management regarded

as critical to achieving the Company’s operational and strategic

goals. Accordingly, understanding the material business risks faced

by its business, and its tolerance for risk, are key factors in Company

strategy formulation and in all decision-making processes.


The Board believes in a measured approach to risk management

and has overall responsibility for reviewing and overseeing the

Company’s risk management strategy and control framework and

ensuring that Management has developed and implemented a

robust risk management system.

The Company has established polices for the oversight and

management of material business risks formalised in a Risk

Management Statement and a Risk Management Policy both of

which are available on the Company’s website. These documents:

• govern the steps taken in the Company’s risk management

process;

• detail the responsibilities of the key stakeholders involved;

• detail the ongoing monitoring that is required;

• outline the core principles of the Company’s risk framework

including how material business risks, via a formalised

risk register, are identified, classified, analysed, rated and

hierarchically ranked and quantified (as extreme, high,

moderate and low risks); and

• highlight Management action plans and timelines for risk mitigation.

Each identified risk is assessed for potential consequences, inherent

risk and residual risk and is allocated to a ‘risk owner’. Each

risk and its key controls are evaluated and reassessed by senior

Management and other groups within the Company on a regular

basis and the risk register is updated to reflect this reassessment.

A risk software system is used across the Group to monitor risks,

their controls and assist in managing the steps taken in order to

implement the controls.

Risk Management Roles and Responsibilities

To assist the Board in fulfilling its corporate governance responsibilities

in relation to risk management, internal control and compliance

the Board has delegated the oversight of risk management to the

Audit, Risk & Corporate Governance Committee. In addition, the

Board specifically requires the Managing Director (together with

senior executives) to implement a system of control for identifying

and managing risk.

The functions and responsibilities of the Audit, Risk & Corporate

Governance Committee are set out in its charter and specifically

encompass ensuring Management has established a risk

management framework that includes policies and procedures to

effectively identify, treat and monitor material business risks. More

broadly, the Committee’s responsibilities are to:

• review, recommend and oversee implementation of the risk

management process, particularly the internal controls, policies

and procedures the Company uses to identify business risks;

• provide assistance and guidance on risk management;

• monitor and review the risk management process;

• review the efficacy of internal control framework generally,

including the interaction between risk management and

internal audit;

• provide advice to the Board on any non-compliance with the

risk management framework;

• monitor the activities and effectiveness of the internal audit

function;

• ensure risk management is promoted throughout the Company,

particularly to senior Managers and their direct reports to ensure

it is embedded within the overall Company culture; and

• providing full reports to the Board on all matters relevant to

these responsibilities.

In addition to an annual re-assessment, the major risks are a regular

focus area for senior Management with the risks and resultant

controls being subject to a regular review process. Material risks

and the effectiveness of risk management plans are escalated to

the Audit, Risk and Corporate Governance Committee and/or

the Board as appropriate and are reported quarterly. During the

quarterly risk reporting process the detailed risk register outlining

the key risks to achieving business and strategic objectives and the

status of mitigating actions are reviewed. Beyond formal reporting,

the identification, assessment and management of risks is also

integrated into key business decision-making activities such as

strategy development, projects and change initiatives.



Internal Audit

The Company uses the services of external accounting firms to

further support the Company’s risk management system and to

reinforce the Company’s ongoing commitment to ensuring sound

risk management and corporate governance principles are adopted

and functioning Company-wide. The internal audit function is

independent of the external auditor, has full access to Management

and the right to seek information and explanation.

The Audit, Risk and Corporate Governance Committee oversees,

formally approves and regularly reviews the scope of the internal

audit function to ensure that its activities remain aligned with changes

to Ruralco’s business and risk profile. The Committee reviews the

performance of internal audit on an annual basis as well as assessing

its ongoing independence. The Committee also has access to the

internal auditor without the presence of Management.

Accordingly, the internal audit function provides independent

and objective feedback on Ruralco’s system of risk management,

internal compliance, control framework and governance. Working

closely with the Audit, Risk and Corporate Governance Committee

and Management, internal audit adopts a targeted risk-based

approach in formulating its audit plan to align its activities to the

material business risks across the Company.

Their activities include assisting the Board, Audit, Risk and

Corporate Governance Committee and Management with, among

other things:

• assessing the design and operating effectiveness of controls for

key business processes to mitigate business risks identified in

the Company’s risk register;

• monitoring material business risk management;

• review the Company’s risk register annually;

• ensuring compliance with the Company’s Risk Management

Policy;

• providing guidance on existing controls and their adequacy to

the respective risk; and

• monitoring, in particular, the financial risks within the Group.

Management is responsible for ensuring appropriate corrective

actions are taken on reported improvement areas arising from

internal audit activity. The status of Management’s actions and

corrective action close-out activities are regularly reported to and

monitored by the Audit, Risk and Corporate Governance Committee.

Managing Director and Group Financial Controller Assurance

As required by section 295A of the Corporations Act 2001, the

Managing Director and Group Financial Controller have declared

that, in their opinion:

• the financial records for the financial year have been properly

maintained in accordance with section 286 of the Corporations Act;

• the financial statements and the notes referred to in section

295(3)(b) of the Corporations Act for the financial year comply

with the accounting standards;

• the financial statements and notes for the financial year give a

true and fair view of the financial position and performance in

accordance with section 297 of the Corporations Act; and

• any other matters that are prescribed by the regulations for the

purposes of section 295A of the Corporations Act in relation to

the financial statements and the notes for the financial year are

satisfied.

In addition, in accordance with Recommendation 7.3 of the ASX

Principles, the Managing Director and Group Financial Controller

also have stated to the Board, in respect of the Ruralco Group for

the financial year, that in their opinion:

• The declaration given in accordance with section 295A is

founded on a sound system of risk management and internal

compliance and control; and

• the system is operating effectively in all material respects in

relation to financial reporting risks.

The statement given in accordance with Recommendation 7.3

(above) regarding the risk management and internal compliance

and control system provides a reasonable, but not absolute level of

assurance and does not imply a guarantee against adverse events

or more volatile outcomes arising in the future.


Principle 8: The Board remunerates fairly and responsibly

The Company is committed to ensuring that it has both competitive

remuneration practices and sound remuneration policies that offer

appropriate and fair rewards and incentives in order to attract, motivate

and retain key executives whilst also demonstrating a clear and aligned

relationship between their performance and remuneration.

Details on the Company’s remuneration policies and practices

are set out in the Remuneration Report which forms part of the

Directors’ Report attached to the financial report. The Remuneration

Report includes details of remuneration of Directors and other

key management personnel of the Company and details of the

Company’s Long-Term Incentive Plans.

The Board has established a Nomination and Remuneration

Committee that assists the Board in reviewing remuneration

policies and practices across the Company and ensures appropriate

succession planning is taking place.







roles, responsibilities, resource access protocols (internal and

external), meeting process, Board reporting requirements and

performance evaluation requirements.

The charter is available on the Company’s website.


in fulfilling its corporate governance responsibilities with regard to:

• reviewing and making recommendations to the Board with

respect to the remuneration framework for Non-executive

Directors taking into account market practices and trends,

the level of complexity of the Ruralco business and the

commitments required of each Non-executive Director;

• reviewing and approving the remuneration and incentive

framework, including any proposed equity incentives, for the

Managing Director and senior executives;

• reviewing and making recommendations to the Board on

remuneration and all incentive awards for the Managing

Director and senior executives;

• reviewing and making recommendations to the Board on the

Company’s remuneration policies, succession plans and human

resource practices generally; and

• providing full reports to the Board on all matters relevant to the

Committee’s responsibilities.

The Committee is structured so that it consists of at least three

Non-executive Directors, with the Chair appointed by the Board.

The Committee is chaired by Mr Dixon. The other Committee

members are Mr England, Chairman of the Board, and Mr Millner.

The current composition of the Committee has a majority of

independent Directors (and consequently the Committee’s


The remuneration of Non-executive Directors is structured separately

from that of executive Directors and senior executives.

Non-executive Directors receive a cash fee for service and do not

have any entitlement to any performance-based remuneration or

participation in any share-based incentive schemes. This policy reflects

the differences in the role of the Non-executive Directors, which is

to provide oversight and guide strategy, and that of Management,

which is to operate the business and execute the Company’s strategy.

Non-executive Directors are not entitled to retain a retirement benefit

beyond the statutory superannuation obligations.

The remuneration packages of the Managing Director and senior

executives may include a Short-Term Incentive component that

is linked to the overall financial and operational performance of

the Company and based on the achievement of specific Company

and individual/team goals. The Managing Director and senior

executives may also be invited to participate in the Company’s

Long-Term Incentive Plan. The long-term benefits of the Long-Term

Incentive Plan are conditional upon the Company achieving certain

performance criteria. Accordingly, the Managing Director’s and

senior executives’ remuneration packages incorporate a balance

between fixed and incentive pay, reflecting both short and long-

term performance objectives which the Board regard as appropriate

for the Company’s circumstances and goals.

Further details of Ruralco’s remuneration policies and remuneration

are set out in the Remuneration Report on pages 40-55 in the

Directors’ Report.



Lead Auditor’s Independence Declaration under Section 307C of

the Corporations Act 2001

To: the Directors of Ruralco Holdings Limited

I declare that, to the best of my knowledge and belief, in relation

to the audit for the financial year ended 30 September 2013 there

have been:

(i) no contraventions of the auditor independence requirements

as set out in the Corporations Act 2001 in relation to the audit;

and

(ii) no contraventions of any applicable code of professional

conduct in relation to the audit.

KPMG

Greg Boydell

Partner

Sydney

11 December 2013

AUDITOR’S INDEPENDENCE DECLARATION

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Financial statements

Consolidated statement of comprehensive income

Consolidated statement of financial position

Consolidated statement of changes in equity

Consolidated statement of cash flows

Notes to the financial statements

Reporting entity and summary of significant accounting policies

Revenue

Other income

Expenses

Income tax

Auditors’ remuneration

Dividends

Earnings per share

Cash and cash equivalents

Trade and other receivables

Inventories

Investments accounted for using the equity method

Other financial assets

Property, plant and equipment

Intangible assets

Trade and other payables

Loans and borrowings

Current tax assets and liabilities

Deferred tax assets and liabilities

Provisions

Issued capital

Reserves

Capital and leasing commitments

Contingent liabilities

Segment reporting

Cash flow information

Key management personnel disclosures

Subsidiaries

Business combinations

Related party transactions

Financial risk management

Parent entity disclosures

Disposal of operations

Events after the balance sheet date

Directors declaration

Independent auditor’s report

C O N T E N T S

F I N A N C I A L R E P O R T

2OI3

Notes 2013 2012

$’000 $’000


Revenue 2 1,158,836 1,136,314

Other income 3 5,342 1,363

Raw materials and consumables used net of changes in inventories of finished goods 4 (949,935) (914,885)

Depreciation and amortisation expenses 4 (5,432) (5,540)

Personnel expenses 4 (121,355) (116,169)

Property and equipment expenses (17,936) (17,097)

Motor vehicle expenses (14,713) (14,693)

Other expenses 4 (33,671) (32,998)

Results from operating activities 21,136 36,295

Share of net profits of equity accounted investees (net of income tax) 12 817 793

Finance costs 4 (7,520) (6,931)

Profit before income tax 14,433 30,157

Income tax expense 5 (3,992) (8,566)

Profit for the period 10,441 21,591

Other comprehensive income

Items that may be reclassified subsequently to profit or loss:

Fair value movement in investment in listed equities (7,564) -

Income tax on other comprehensive income 2,269 -

Items that will not be reclassified to profit or loss:

Revaluation of property - (2,138)

Income tax on other comprehensive income - 641

Other comprehensive income for the period, net of income tax (5,295) (1,497)

Total comprehensive income for the period 5,146 20,094

Total profit attributable to:

Owners of the company 5,738 13,849

Non-controlling interest 4,703 7,742

Total profit for the period 10,441 21,591

Total comprehensive income attributable to:

Owners of the company 443 12,352

Non-controlling interest 4,703 7,742


Earnings per share (cents per share)

- Basic 8 10.49 25.46

- Diluted 8 10.28 25.12

The accompanying notes form part of these financial statements.

for the year ended 30 September 2013

Ruralco Holdings Limited and Controlled Entities ABN 40 009 660 879

consolidated statement of comprehensive income

Notes 2013 2012

$’000 $’000


Current Assets

Cash and cash equivalents 9 26,694 52,729 Trade and other receivables 10 303,724 301,455 Inventories 11 92,288 108,149 Current tax assets 18 2,546 - Assets held for sale 14 2,528 3,274 Total Current Assets 427,780 465,607 Non-Current Assets

Trade and other receivables 10 1,081 1,100 Investments in equity accounted investees 12 12,929 4,052 Other financial assets 13 6,172 13,736 Property, plant and equipment 14 41,538 41,940 Intangible assets 15 78,851 72,896 Deferred tax assets 19 12,136 8,674 Total Non-Current Assets 152,707 142,398 Total Assets 580,487 608,005 Current Liabilities

Trade and other payables 16 316,272 314,094 Loans and borrowings 17 71,358 70,406 Current tax payable 18 - 845 Provisions 20 12,213 13,189 Total Current Liabilities 399,843 398,534 Non-Current Liabilities

Loans and borrowings 17 9,248 27,682 Deferred tax liabilities 19 8,615 7,783 Provisions 20 2,784 2,259 Total Non-Current Liabilities 20,647 37,724 Total Liabilities 420,490 436,258 Net Assets 159,997 171,747 Equity

Share capital 99,565 99,565 Retained earnings 39,426 44,792 Reserves 7,799 11,626 Total equity attributable to equity holders of the Company 146,790 155,983

Non-controlling interests 13,207 15,764

Total Equity 159,997 171,747


As at 30 September 2013


consolidated statement of financial position




consolidated statement of changes in equity

Balance at 1 October 2012 99,565 44,792 - (2,024) 13,650 155,983 15,764 171,747

Total comprehensive income for the period

Profit for the period - 5,738 - - - 5,738 4,703 10,441


- Transfer of reserve on sale of property - 100 - - (100) - - -

- Fair value movement in investment in listed entities - - (5,295) - - (5,295) - (5,295)

Total comprehensive income for the period - 5,838 (5,295) - (100) 443 4,703 5,146

Transactions with owners of the Company

recorded directly in equity

Contributions by and distributions to owners

- Dividends to owners of the Company - (10,912) - - - (10,912) (7,814) (18,726)

- Performance rights reserve - - - - 522 522 - 522

Total contributions by and distributions to owners of the Company - (10,912) - - 522 (10,390) (7,814) (18,204)

Treasury shares

- Own shares held in trust allocated - (321) - 1,046 - 725 - 725

Total treasury shares - (321) - 1,046 - 725 - 725

Changes in ownership interests in subsidiaries that do

not result in a change of control

- Change in non-controlling interest - 29 - - - 29 554 583

Total changes in ownership interests in subsidiaries that do

not result in a change of control - 29 - - - 29 554 583

Total transactions with owners of the Company - (11,204) - 1,046 522 (9,636) (7,260) (16,896)

Balance at 30 September 2013 99,565 39,426 (5,295) (978) 14,072 146,790 13,207 159,997


Non- Issued Retained Fair value Reserves for controlling Total capital earnings reserve own shares Reserves Total iterests equity $000 $’000 $000 $’000 $’000 $’000 $’000 $’000

Attributable to equity holders of the Company




consolidated statement of changes in equity

Balance at 1 October 2011 99,565 42,065 - - 14,981 156,611 10,890 167,501

Total comprehensive income for the period

Profit for the period - 13,849 - - - 13,849 7,742 21,591


- Revaluation of properties, net of tax - - - - (1,504) (1,504) 7 (1,497)

- Other reserve movements - 138 - - (138) - - -

Total comprehensive income for the period - 13,987 - - (1,642) 12,345 7,749 20,094

Transactions with owners of the Company recorded

directly in equity

Contributions by and distributions to owners

- Dividends to owners of the Company - (10,418) - - - (10,418) (4,924) (15,342)

- Performance rights reserve - - - - 311 311 - 311

Total contributions by and distributions to owners of the Company - (10,418) - - 311 (10,107) (4,924) (15,031)

Treasury shares

- Own shares held in trust - - - (2,024) - (2,024) - (2,024)

Total treasury shares - - - (2,024) - (2,024) - (2,024)

Changes in ownership interests in subsidiaries that do

not result in a change of control

- Change in non-controlling interest - (842) - - - (842) 2,049 1,207

Total changes in ownership interests in subsidiaries that do

not result in a change of control - (842) - - - (842) 2,049 1,207

Total transactions with owners of the Company - (11,260) - (2,024) 311 (12,973) (2,875) (15,848)

Balance at 30 September 2012 99,565 44,792 - (2,024) 13,650 155,983 15,764 171,747


Non- Issued Retained Fair value Reserves for controlling Total capital earnings reserve own shares Reserves Total interests equity $000 $’000 $000 $’000 $’000 $’000 $’000 $’000

Attributable to equity holders of the Company

Notes 2013 2012

$’000 $’000



consolidated statement of cash flows

Cash flows from operating activities

Receipts from customers 1,268,394 1,247,257

Payments to suppliers and employees (1,237,530) (1,223,402)

Interest received 9,292 10,925

Finance costs (1,820) (1,453)

Interest paid (5,700) (5,478)

Income taxes paid (7,643) (12,498)

Net cash flows from operating activities 26 24,993 15,351

Cash flows from investing activities

Proceeds from sale of property, plant and equipment 1,990 1,981

Proceeds from sale of investments 42 56

Proceeds from sale of rent roll 82 -

Proceeeds from loss of control in subsidiary (Agfarm) 151 -

Proceeds from disposal of shares in subsidiaries 678 -

Proceeds from sale of business - 850

Distribution from equity accounted investment 318 260

Dividends received 181 173

Purchase of property, plant and equipment (6,236) (4,287)

Purchase of intangible assets (403) (1,205)

Purchase of investments - (12,653)

Purchase of shares in subsidiaries (766) (867)

Contingent consideration paid - (550)

Payments for purchase of controlled entities net of cash acquired 29 (9,416) (12,958)

Net cash flows used in investing activities (13,379) (29,200)

Cash flows from financing activities

Loans advanced to related entities 1,152 470

Repayment of finance lease liabilities (1,186) (713)

Proceeds from / (repayment of) borrowings 7,959 (189)

Net (repayments to) / proceeds from depositors (24,246) 16,523

Dividends on ordinary shares in the company (10,912) (10,418)

Dividends to non-controlling interests (7,814) (4,924)

Net cash flows (used in) / from financing activities (35,047) 749

Net decrease in cash and cash equivalents (23,433) (13,100)

Cash and cash equivalents at beginning of year 50,127 63,227

Cash and cash equivalents at end of year 9 26,694 50,127

Represented by:

Cash and cash equivalents 26,694 52,729

Bank overdrafts - (2,602)

26,694 50,127





notes to the consolidated financial statements


Note 1: Reporting entity

Ruralco Holdings Limited (the “Company”) is a company limited

by shares, incorporated and domiciled in Australia. The registered

office and principal place of business of the Company is 2 Collins

Street, Hobart, Tasmania 7000.

The consolidated financial statements of the Company for the

year ended 30 September 2013 comprise the Company and its

subsidiaries (together referred to as the “Group”) and the Group’s

interest in associates and jointly controlled entities.

The Group is a for-profit entity and operates in the agribusiness

sector.

Its principle activity is the provision of rural supplies and services.

Summary of significant accounting policies

The principal accounting policies adopted in the preparation

of the financial statements are set out below. These policies

have been consistently applied, unless otherwise stated, to all

periods presented and by all Group entities. Certain comparative

amounts have been reclassified to conform with the current year’s

presentation.

(a) Basis of preparation

The consolidated financial statements are general purpose

financial statements which have been prepared in accordance with

Australian Accounting Standards (AASBs) adopted by the Australian

Accounting Standards Board (AASB) and the Corporations Act

2001. The consolidated financial statements of the Group comply

with International Financial Reporting Standards (IFRSs) adopted by

the International Accounting Standards Board (IASB).

The consolidated financial statements were authorised for issue by

the Board of Directors on 3 December 2013.

Historical cost convention

These consolidated financial statements have been prepared on an

accruals basis under the historical cost convention, as modified by

the revaluation of available-for-sale financial assets, financial assets

and liabilities at fair value through profit and loss, and certain

classes of property, plant and equipment.

Rounding

The Company is of a kind referred to in Class order 98/0100 dated

10 July 1998, issued by the Australian Securities and Investments

Commission, relating to ‘’rounding off’’ of amounts in the financial

statements. Amounts in the financial statements have been

rounded off in accordance with that Class Order to the nearest

thousand dollars, or in certain cases, the nearest dollar unless

otherwise stated.

Critical accounting estimates and judgements

The preparation of consolidated financial statements requires

management to make judgements, estimates and assumptions

that affect the application of accounting policies and the reported

amounts of assets, liabilities, income and expenses. Actual results

may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing

basis. Revisions to accounting estimates are recognised in the

period in which the estimate is revised and in any future periods

affected.

In particular, information about significant areas of estimation

uncertainty and critical judgements in applying accounting policies

that have the most significant effect on the amount recognised in

the consolidated financial statements are as follows:

Key Estimates — Impairment

The Group assesses impairment at each reporting date by evaluating

conditions specific to the Group that may lead to impairment

of assets. Where an impairment indicator exists, the recoverable

amount of the asset is determined. Value-in-use calculations

performed in assessing recoverable amounts incorporate a number

of key estimates.

Further details are included in note 15.

Changes in accounting policy

– Presentation of transactions recognised in other comprehensive

income

From 1 October 2012 the Group applied amendments to AASB

101 Presentation of Financial Statements outlined in AASB 2011-9

Amendments to Australian Accounting Standards – Presentation of

Items of Other Comprehensive Income. The change in accounting

policy only relates to disclosures and has had no impact on consolidated

earnings per share or net income. The changes have been applied

retrospectively and require the Group to separately present those items

of other comprehensive income that may be reclassified to profit or

loss in the future from those that will never be reclassified to profit or

loss. These changes, where applicable, are included in the statement

of comprehensive income.






(a) Basis of preparation (continued)

- Financial instruments

The Group has elected to early adopt AASB 9 Financial Instruments

(2010) (AASB 9 (2010) and AASB 2009-11 Amendments to

Australian Accounting Standards arising from AASB 9, with a date

of initial application of 1 October 2012. The Group has applied the

transitional provisions contained in AASB 9.

As a result, the Group has classified its financial assets as subsequently

measured at either amortised cost or fair value depending on the

entity’s business model for managing the financial assets and the

contractual cash flow characteristics of the financial assets.

These changes in accounting policy are applied on a retrospective

basis, except as described below. In accordance with the transitional

provisions of AASB 9 (2010), the classification of financial assets that

the Group held at the date of initial application was based on the facts

and circumstances of the business model in which the financial assets

were held at that date. AASB 9 (2010) requires entities with a date

of initial application on or after 1 January 2012 and before 1 January

2013 either to provide certain additional transitional disclosures or to

restate prior periods. The Group has elected not to restate prior period,

but rather provide additional transitional disclosures.

Because the Group does not have any financial liabilities designated

at fair value through profit or loss, the adoption of AASB 9 (2010)

did not impact the Group’s accounting policies for financial

liabilities as disclosed in its consolidated financial statements as at

and for the year ended 30 September 2012.

- Impact of change in accounting policy

The key change arising from this change in accounting policy is in

respect to the accounting for investments in listed entities.

Prior to adoption of AASB 9 (2010), these financial assets were

classified as ‘financial assets designated at fair value through profit

and loss’ however under AASB 9 (2010) the new measurement

category is ‘fair value through other comprehensive income’.

The methodology for assessment of fair value for these investments

has not changed under AASB 9 (2010), however on transition

the Group elected to apply the transition provisions which

allowed the Group to revoke its previous designation of these

investments at ‘fair value through profit or loss’ and instead apply

from the application date of 1 October 2012 a model where the

movement in fair value is taken directly to reserves through other

comprehensive income. This election is made on an asset-by-asset

basis and is irrevocable and was undertaken as it was considered

to provide more relevant information to the users of the Group’s

financial report. As the measurement basis of fair value has not

changed under AASB (2010), there was no adjustment required to

opening retained earnings.

As the fair value of investments in listed entities decreased during

the current financial reporting period, this change has had the

impact of increasing the 30 September 2013 basic earnings per

share by 9.68 and diluted earnings per share by 9.48.

Given the timing of this election to early adopt AASB 9 (2010) was

after the interim results presented as at, and for the period ending,

31 March 2013, the impact of this change in accounting policy for

the interim result would have increased profit before tax by $7.024m

from $2.316m to $9.340m (after tax increase by $4.917m from

$1.612m to $6.529m). Further, this change would have increased

basic earnings per share from (0.91) to 8.08 and diluted earnings

per share from (0.91) to 7.95 for the period ended 31 March 2013.

The following table summarises the classification and measurement

changes to the Group’s financial assets and liabilities on 1 October

2012, the Group’s date of initial application of AASB 9 (2010).

Financial assets

Cash and cash equivalents Loans and receivables Amortised cost 52,729 52,729

Trade and other receivables Loans and receivables Amortised cost 302,555 302,555

Listed investments (a) Fair value though profit or loss Fair value though other 13,507 13,507

comprehensive income

Unlisted investments (a) At cost Fair value though other 229 229

comprehensive income

Originl carrying New carrying amount under amount under Original measurement New measurement category AASB 139 AASB 9 (2010) Note category under AASB 139 under AASB 9 (2010) $’000 $’000

a) These equity investments represent investment holdings that the Group intends to hold for strategic purposes. As permitted by AASB 9 (2010),

the Group has designated these investments to be measured at fair value through other comprehensive income at the date of initial application.





(a) Basis of preparation (continued)

(b) Principles of consolidation

(i) Subsidiaries

Subsidiaries are all those entities (including special purpose entities)

controlled by the Group. Control exists when the Group has the

power to govern the financial and operating policies, generally

accompanying a shareholding of more than one half of the voting

rights. The existence and effect of potential voting rights that are

currently exercisable or convertible are considered when assessing

whether the Group controls another entity.

Subsidiaries are consolidated from the date on which control is

transferred to the Group. They are de-consolidated from the date

that control ceases. The acquisition method of accounting is used to

account for the purchase of subsidiaries by the Group (refer note 1(h)).

Inter-company transactions, balances and unrealised gains on

transactions between Group companies are eliminated. Unrealised

losses are also eliminated unless the transaction provides evidence

of the impairment of the asset transferred. Accounting policies

of subsidiaries have been changed where necessary to ensure

consistency with the policies adopted by the Group.

Non-controlling interests in the results and equity of subsidiaries are

shown separately in the consolidated statement of comprehensive

income and consolidated statement of financial position respectively.

(ii) Associates and jointly controlled entities (equity accounted investees)

Associates are all entities over which the Group has significant

influence but not control over the financial and operational

policies, generally accompanying a shareholding of between

20% and 50% of the voting rights. Jointly controlled entities are

those entities over whose activities the Group has joint control,

established by contractual agreement and requiring unanimous

consent for strategic financial and operating decisions. Investments

in associates and jointly controlled entities are accounted for in the

Group’s consolidated financial statements using the equity method

of accounting, after initially being recognised at cost. The Group’s

investment in associates and joint ventures includes goodwill (net

of any accumulated impairment loss) identified on acquisition.

The Group’s share of its equity accounted interests post-acquisition

profits or losses after tax are recognised in the consolidated

statement of comprehensive income, and its share of post-

acquisition movements in ‘other comprehensive income’ within the

consolidated statement of comprehensive income from the date

that significant influence commences until the date that significant

influence ceases. The cumulative post-acquisition movements are

adjusted against the carrying amount of the investment. Dividends

receivable from equity accounted interests are recognised in the

consolidated financial statements as a reduction to the carrying

amount of the investment.

When the Group’s share of losses in an equity accounted interest

equals or exceeds its interest in the equity accounted investee,

including any other unsecured long-term receivables, the Group

does not recognise further losses, unless it has incurred obligations

or made payments on behalf of the equity accounted investee.

Unrealised gains on transactions between the Group and its

equity accounted interests are eliminated to the extent of the

Group’s interest in the equity accounted investee. Unrealised

losses are also eliminated unless the transaction provides evidence

of an impairment of the asset transferred. Accounting policies

of associates have been changed where necessary to ensure

consistency with the policies adopted by the Group.

Financial liabilities

Trade and other payables (b) Other financial liabilities Amortised cost 314,094 314,904

Loans and borrowings (b) Other financial liabilities Amortised cost 98,088 98,088

Originl carrying New carrying amount under amount under Original measurement New measurement category AASB 139 AASB 9 (2010) Note category under AASB 139 under AASB 9 (2010) $’000 $’000

b) Other financial liabilities were measured at amortised cost under AASB 139.

There have been no other reclassifications or remeasurement to the Group’s other financial assets or financial liabilities upon the early

adoption of AASB 9.





(b) Principles of consolidation (continued)

(iii) Accounting for acquisitions and disposals of non-controlling interests

Changes in ownership interest by the Group in a subsidiary, while

maintaining control, are recognised as an equity transaction. When

the Group loses control of a subsidiary, any interest retained in the

former subsidiary is measured at fair value with the gain or loss

recognised in profit or loss.

(c) Segment reporting

The Group determines and presents operating segments based

on the information that is internally provided to the Managing

Director, who is the Group’s chief operating decision maker.

An operating segment is a component of the Group that

engages in business activities from which it may earn revenues

and incur expenses, including revenues and expenses that relate

to transactions with any of the Group’s other components. All

operating segments’ operating results are regularly reviewed by the

Group’s Managing Director to make decisions about resources to

be allocated to the segment and assess its performance, and for

which discrete financial information is available.

Segment results that are reported to the Managing Director include

items directly attributable to a segment as well as those that can

be allocated on a reasonable basis. Unallocated items comprise

mainly corporate assets (primarily the Group’s headquarters and

related intangible assets, treasury cash, related party loans and

prepayments), head office expenses, income taxes and deferred tax

assets and liabilities.

Segment capital expenditure is the total cost incurred during the

period to acquire property, plant and equipment, and intangible

assets other than goodwill.

(d) Revenue and other income

Revenue

Revenue is measured at the fair value of the consideration received

or receivable. Amounts disclosed as revenue are net of returns,

rebates, allowances, duties and taxes paid.

The Group recognises revenue when the amount of revenue can

be reliably measured, it is probable that the economic benefits will

flow to the entity and specific criteria have been met for each of the

Group’s activities as described below. The amount of revenue is not

considered to be reliably measurable until all contingencies relating

to the sale have been resolved. The Group bases estimates of revenue

on historical results, taking into consideration the type of customer,

the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

(i) Sale of goods

Revenue from the sale of goods is recognised when the significant

risks and rewards of ownership have been transferred to the buyer,

recovery of the consideration is probable, the associated costs

and possible return of goods can be estimated reliably, there is

no continuing management involvement with the goods, and the

amount of revenue can be measured reliably. This is generally upon

the delivery of goods to customers.

(ii) Services

Revenue from the rendering of a service is recognised as the service

is provided.

(iii) Commissions

When the Group acts in the capacity of an agent rather than as the

principal in a transaction, the revenue recognised is the net amount

of commission made by the Group. Commission related revenue is

recognised as the sales occur or unconditional contracts are signed.

(iv) Interest income

Interest revenue is recognised as it accrues using the effective

interest method.

(v) Dividends

Dividend revenue is recognised when the right to receive a dividend

has been established. Dividends received from associates are

accounted for in accordance with the equity method of accounting.

(e) Foreign currency translation

(i) Functional and presentation currency

Items included in the consolidated financial statements of each

of the Group’s entities are measured using the currency of the

primary economic environment in which the entity operates (“the

functional currency”). The consolidated financial statements are

presented in Australian dollars, which is the Group’s functional and

presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional

currency using the exchange rates prevailing at the dates of the

transactions. Foreign exchange gains and losses resulting from the

settlement of such transactions and from the translation at year-

end exchange rates of monetary assets and liabilities denominated

in foreign currencies are recognised in profit or loss, except when

deferred in equity as qualifying cash flow hedges and qualifying net

investment hedges.





(e) Foreign currency translation (continued)

Non-monetary items that are measured in terms of historical cost

in a foreign currency are translated using the exchange rate on the

date of the initial transaction. Non-monetary items measured at

fair value in a foreign currency are translated using the exchange

rates at the date fair value was determined.

(f) Income tax

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, in which case it is

recognised in equity.

Income tax expense excludes the profit before tax of unit trusts

controlled by the Group to the extent non-controlling interests are

beneficially entitled to that profit.

Current tax is the expected tax payable on the taxable income for the

year, using tax rates enacted or substantively enacted at the reporting

date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised in respect of temporary differences

between the carrying amounts of assets and liabilities for financial

reporting purposes and the amounts used for taxation purposes.

Deferred tax is not recognised for the following temporary

differences: the initial recognition of assets or liabilities in a

transaction that is not a business combination and that affects

neither accounting nor taxable profit or loss, and differences relating

to investments in subsidiaries to the extent that it is probable that

they will not reverse in the foreseeable future. In addition, deferred

tax is not recognised for taxable temporary differences arising on

the initial recognition of goodwill.

Deferred tax is measured at the tax rates that are expected to be

applied to the temporary differences when they reverse, based on

the laws that have been enacted or substantively enacted by the

reporting date.

In determining the amount of current and deferred tax the Group

takes into account the impact of uncertain tax positions and whether

additional taxes and interest may be due. The Group believes that

its accruals for tax liabilities are adequate for all open years based

on its assessment of many factors, including interpretations of tax

law and prior experience. This assessment relies on estimates and

assumptions and may involve a series of judgements about future

events. New information may become available that causes the

Group to change its judgement regarding the adequacy of existing

tax liabilities; such changes to tax liabilities will impact tax expense

in the period that such a determination is made.

Deferred tax assets and liabilities are offset if there is a legally

enforceable right to offset current tax liabilities and assets, and they

relate to income taxes levied by the same tax authority on the same

taxable entity, or on different tax entities, but they intend to settle

current tax liabilities and assets on a net basis or their tax assets and

liabilities will be realised simultaneously.

A deferred tax asset is recognised to the extent that it is probable

that future taxable profits will be available against which the

temporary difference can be utilised. 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.

Additional income taxes that arise from the distribution of dividends

are recognised at the same time as the liability to pay the related

dividend is recognised.

Ruralco Holdings Limited and its wholly owned subsidiaries formed

a tax consolidated group with effect from 1 October 2002 and

also entered into a tax sharing and funding agreement. Under the

terms of this agreement, the wholly owned subsidiaries reimburse

Ruralco Holdings Limited, as the head entity of the tax consolidated

group, for any current income tax payable by Ruralco Holdings

Limited arising in respect of their activities.

(g) Leases

Leases of property, plant and equipment where the Group as

lessee has substantially all the risks and rewards of ownership

are classified as finance leases. Finance leases are capitalised at

the lease’s inception at the lower of the fair value of the leased

property and the present value of the minimum lease payments.

The corresponding rental obligations, net of finance charges, are

included in other short term or long term payables. Each lease

payment is allocated between the liability and finance cost. The

finance cost is charged to profit or loss over the lease period so

as to achieve a constant periodic rate of interest on the remaining

balance of the liability for each period.

Leases in which a significant portion of the risks and rewards of

ownership are not transferred to the Group as lessee are classified

as operating leases. Payments made under operating leases (net of

any incentives received from the lessor) are charged to profit or loss

on a straight line basis over the period of the lease.

Lease income from operating leases where the Group is a lessor is

recognised in profit or loss on a straight line basis over the lease term.





(h) Business combinations

Business combinations are accounted for using the acquisition

method as at the acquisition date.

For every business combination, the Group identifies the acquirer,

which is the combining entity that obtains control of the other

combining entities or businesses. Control is the power to govern

the financial and operating policies of an entity so as to obtain

benefits from its activities. In assessing control, the Group takes

into consideration potential voting rights that currently are

exercisable. The acquisition date is the date on which control is

transferred to the acquirer. Judgement is applied in determining

the acquisition date and determining whether control is transferred

from one party to another.

(i) Measuring goodwill

The Group measures goodwill as the fair value of the consideration

transferred including the recognised amount of any non-controlling

interest in the acquiree, less the net recognised amount (generally

fair value) of the identifiable assets acquired and liabilities assumed,

all measured as of the acquisition date.

Consideration transferred includes the fair values of the assets

transferred, liabilities incurred by the Group to the previous

owners of the acquiree, and equity interests issued by the Group.

Consideration transferred also includes the fair value of any

contingent consideration, with subsequent changes therein to be


When the excess is negative, a bargain purchase gain is recognised

immediately in profit or loss.

Where settlement of any part of cash consideration is deferred, the

amounts payable in the future are discounted to their present value

as at the date of exchange. The discount rate used is the entity’s

incremental borrowing rate, being the rate at which a similar

borrowing could be obtained from an independent financier under

comparable terms and conditions.

(ii) Contingent liabilities

A contingent liability of the acquiree is assumed in a business

combination only if such a liability represents a present obligation and

arises from a past event, and its fair value can be measured reliably.

(iii) Non-controlling interest

The non-controlling interest is measured at either fair value or at its

proportionate interest in the identifiable assets and liabilities of the

acquiree on a transaction by transaction basis.

(iv) Transaction costs

Transaction costs, other than share and debt issue costs, that

the Group incurs in connection with a business combination are

expensed as incurred.

(i) Impairment of assets

Financial assets

A financial asset is assessed at each reporting date to determine

whether there is any objective evidence that it is impaired. A

financial asset is considered to be impaired if objective evidence

indicates that one or more events have had a negative effect on the

estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised

cost is calculated as the difference between its carrying amount, and

the present value of the estimated future cash flows discounted at

the original effective interest rate. Cash flows relating to short-term

financial assets are not discounted if the effect of discounting is

immaterial. An impairment loss in respect of an available-for-sale

financial asset is calculated by reference to its fair value.

Individually significant financial assets are tested for impairment

on an individual basis. The remaining financial assets are assessed

collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. Any cumulative

loss in respect of an available-for-sale financial asset recognised

previously in equity is transferred to profit or loss.

An impairment loss is reversed if the reversal can be related

objectively to an event occurring after the impairment loss was

recognised. For financial assets measured at amortised cost

and available-for-sale financial assets that are debt securities,

the reversal is recognised in profit or loss. For available-for-sale

financial assets that are equity securities, the reversal is recognised

directly in equity.

Non-financial assets

The carrying amounts of the Group’s non-financial assets, other than

inventories and deferred tax assets, are reviewed at each reporting

date to determine whether there is any indication of impairment.

If any such indication exists then the asset’s recoverable amount is

estimated. For goodwill and intangible assets that have indefinite

lives or that are not yet available for use, the recoverable amount is

estimated each year at the same time.

The recoverable amount of an asset or cash-generating unit is the

greater of its value in use and its fair value less costs to sell.





(i) Impairment of assets (continued)

In assessing value in use, the estimated future cash flows are discounted

to their present value using a pre-tax discount rate that reflects

current market assessments of the time value of money and the risks

specific to the asset. For the purpose of impairment testing, assets

are grouped together into the smallest group of assets that generates

cash inflows from continuing use that are largely independent of the

cash inflows of other assets or groups of assets (the “cash-generating

unit”). The goodwill acquired in a business combination, for the

purpose of impairment testing, is allocated to cash-generating units

that are expected to benefit from the synergies of the combination.

An impairment loss is recognised if the carrying amount of an

asset or its cash-generating unit exceeds its recoverable amount.

Impairment losses are recognised in profit or loss. Impairment

losses recognised in respect of cash-generating units are allocated

first to reduce the carrying amount of any goodwill allocated to the

units and then to reduce the carrying amount of the other assets in

the unit (group of units) on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect

of other assets, impairment losses recognised in prior periods 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. An impairment loss is reversed only to the

extent that the asset’s carrying amount does not exceed the carrying

amount that would have been determined, net of depreciation or

amortisation, if no impairment loss had been recognised.

(j) Non-current assets held for sale

Non-current assets, or disposal groups comprising assets and

liabilities, that are expected to be recovered primarily through sale

rather than through continuing use, are classified as held for sale.

Immediately before classification as held for sale, the assets, or

components of a disposal group, are remeasured in accordance with

the Group’s accounting policies. Thereafter generally the assets, or

disposal group, are measured at the lower of their carrying amount

and fair value less costs to sell. Any impairment loss on a disposal

group first is allocated to goodwill, and then to remaining assets

and liabilities on a pro rata basis, except that no loss is allocated to

inventories, financial assets and deferred tax assets which continue

to be measured in accordance with the Group’s accounting policies.

Impairment losses on initial classification as held for sale and

subsequent gains or losses on remeasurement are recognised in

profit or loss. Gains are not recognised in excess of any cumulative

impairment loss.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost

comprises of direct materials and, where appropriate, a proportion of

variable and fixed overhead. Costs are assigned to individual items of

inventory predominantly on the basis of weighted average cost. Net

realisable value is the estimated selling price in the ordinary course of

business less the estimated costs necessary to make the sale.

(l) Non-derivative financial instruments

Policy applicable from 1 October 2012 (AASB 9)

Non-derivative financial assets

The Group initially recognises financial assets on the trade date at

which the Group becomes a party to the contractual provisions of

the instrument.

Financial assets are initially measured at fair value. If the financial

asset is not subsequently measured at fair value through profit or

loss, then the initial measurement includes transaction costs that

are directly attributable to the asset’s acquisition or origination. The

Group subsequently measures financial assets at either amortised

cost or fair value.

The Group derecognises a financial asset when the contractual rights to

the cash flows from the asset expire, or it transfers the rights to receive

the contractual cash flows in a transaction in which substantially all the

risks and rewards of ownership of the financial asset are transferred. Any

interest in such transferred financial assets that is created or retained by

the Group is recognised as a separate asset or liability.

On initial recognition, the Group classifies its financial assets as

subsequently measured at either amortised cost or fair value,

depending on its business model for managing the financial assets

and the contractual cash flow characteristics of the financial assets.

In accordance with the transitional provisions of AASB 9 (2010), the

classification of the financial assets that the Group held at the date

of initial application was based on the facts and circumstances of the

business model in which the financial assets were held at that date.

Financial assets measured at amortised cost

A financial asset is subsequently measured at amortised cost using

the effective interest method and net of any impairment loss, if:

- the asset is held within a business model with an objective to

hold assets in order to collect contractual cash flows; and

- the contractual terms of the financial asset give rise, on

specified dates, to cash flows that are solely payments to

principal and interest.





(l) Non-derivative financial instruments (continued)

The Group’s policy on impairment is the same as that applied in

its consolidated financial statements as at and for the year ended

30 September 2012 for loans and receivables and held-to-maturity

investments (see Note 1(i)).

Financial assets measured at fair value

Financial assets other than those classified as financial assets

measured at amortised cost are subsequently measured at fair

value with all changes in fair value recognised in profit or loss.

However, for investments in listed and non-listed equity investments

that are not held-for-trading, the Group may elect at initial

recognition to present gains and losses in other comprehensive

income. For instruments measured at fair value through other

comprehensive income, gains or losses are never reclassified to

profit or loss and no impairments are recognised in profit or loss.

Dividends earned from such investments are recognised in profit or

loss unless the dividends clearly represent a repayment of part of

the cost of the investment.

Non-derivative financial liabilities

The Group initially recognises debt securities issued and subordinated

liabilities on the date that they are originated. Financial liabilities for

contingent consideration payable in a business combination are

recognised at the acquisition date. All other financial liabilities are

recognised initially on the trade date, which is the date that the Group

becomes a party to the contractual provision of the instrument.

The Group classified all other non-derivative financial liabilities into

the amortised cost measurement category. Such financial liabilities are

recognised initially at fair value less any directly attributable transaction

costs. Subsequent to initial recognition, these financial liabilities are

measured at amortised cost using the effective interest method.

Other financial liabilities comprise loans and borrowings, bank

overdrafts and trade and other payables.

Bank overdrafts are included as a component of cash and cash

equivalents for the purpose of the statement of cash flows.

Policy applicable prior to 1 October 2012 (AASB 139)

Non-derivative financial instruments comprise investments in equity

securities, trade and other receivables, cash and cash equivalents,

loans and borrowings, and trade and other payables. Non-derivative

financial instruments are recognised initially at fair value, plus, for

instruments not at fair value through profit and loss, any directly

attributable transaction costs. Subsequent to initial recognition, non-

derivative financial instruments are measured as described below.

The classification of the Group’s non–derivative financial instruments

depends on the purpose for which the financial instruments were

acquired. Management determines the classification of its financial

instruments at initial recognition.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed

or determinable payments that are not quoted in an active market.

They arise when the Group provides money, goods or services

directly to a debtor, with no intention of selling the receivable.

They are included in current assets, except for those with maturities

greater than 12 months after the balance date which are classified

as non-current assets. Loans and receivables are included in trade

and other receivables in the consolidated statement of financial

position and measured at amortised cost using the effective interest

rate method, less any impairment losses (refer note 1(i)).

(ii) Cash and cash equivalents

For statement of cash flows presentation purposes, cash and

cash equivalents include cash on hand, deposits held at call with

financial institutions, other short term, highly liquid investments

with original maturities of three months or less that are readily

convertible to known amounts of cash and which are subject to an

insignificant risk of changes in value, and bank overdrafts. Bank

overdrafts are shown within borrowings in current liabilities in the

consolidated statement of financial position.

(iii) Fair value through profit and loss

A financial asset is classified as at fair value through profit or loss if

it is designated as such upon initial recognition. Financial assets are

designated at fair value through profit or loss if the Group manages

such investments and makes purchase and sale decisions based

on their fair value in accordance with the Group’s documented

investment strategy. Attributable transaction costs are recognised

in profit or loss when incurred. Financial assets at fair value through

profit or loss are measured at fair value, and changes therein are






(l) Non-derivative financial instruments (continued)

(iv) Derecognition

Financial assets are derecognised when the rights to receive

cash flows from the financial assets have expired or have been

transferred and the Group has transferred substantially all the risks

and rewards of ownership.

(v) Fair value

The fair value of financial assets and financial liabilities must be

estimated for recognition and measurement or for disclosure purposes.

The fair values of quoted investments are based on current bid

prices. If the market for a financial asset is not active (and for

unlisted securities), the Group establishes fair value by using

valuation techniques. These include the use of recent arm’s length

transactions, reference to other instruments that are substantially

the same, discounted cash flow analysis, and option pricing models

making maximum use of market inputs and relying as little as

possible on entity-specific inputs.

The carrying value of trade receivables and payables are assumed to

approximate their fair values due to their short term nature.

The fair value of financial liabilities for disclosure purposes is

estimated by discounting the future contractual cash flows at the

current market interest rate that is available to the Group for similar

financial instruments.

(vi) Borrowings

Borrowings are initially recognised at fair value, net of transaction

costs incurred. Borrowings are subsequently measured at amortised

cost. Any difference between the proceeds (net of transaction costs)

and the redemption amount is recognised in profit or loss over the

period of the borrowings using the effective interest rate method.

Borrowings are removed from the statement of financial position

when the obligation specified in the contract is discharged,

cancelled or expires. The difference between the carrying amount

of a financial liability that has been extinguished or transferred

to another party and the consideration paid, including any non-

cash assets transferred or liabilities assumed, is recognised in other

income or other expenses.

Borrowings are classified as current liabilities unless the Group has

an unconditional right to defer settlement of the liability for at least

12 months after the reporting date.

(m) Property, plant and equipment

Land and buildings are shown at fair value, based on periodic, but

at least triennial, valuations by external independent valuers, less

subsequent depreciation for buildings. Any accumulated depreciation

at the date of revaluation is eliminated against the gross carrying

amount of the asset and the net amount is restated to the revalued

amount of the asset. All other property, plant and equipment are

stated at historical cost less depreciation and impairment losses

(refer to note 1(i)). Historical cost includes expenditure that is directly

attributable to the acquisition of the items.

When parts of an item of property, plant and equipment have

different useful lives, they are accounted for as separate items

(major components) of property, plant and equipment.

Subsequent costs are included in the asset’s carrying amount or

recognised as a separate asset, as appropriate, only when it is

probable that future economic benefits associated with the item

will flow to the Group and the cost of the item can be measured

reliably. The carrying amount of the replaced part is derecognised.

All other repairs and maintenance are charged to profit or loss

during the financial period in which they are incurred.

Increases in the carrying amounts arising on revaluation of land

and buildings are credited, net of tax, to asset revaluation reserve in

shareholders’ equity. To the extent that the increase reverses a decrease

previously recognised in profit or loss, the increase is first recognised in

profit and loss. Decreases that reverse previous increases of the same

asset are first charged against revaluation reserves directly in equity to

the extent of the remaining reserve attributable to the asset. All other

decreases are charged to the profit and loss.

Land is not depreciated. Depreciation of other assets in the current

and comparative period has been calculated using the straight-line

method to allocate their cost or revalued amounts, net of their

residual values, over their estimated useful lives, as follows:

Freehold buildings 25-50 years

Leasehold improvements the lease term ranging from 1 to 10 years

Plant and equipment 3 to 20 years

The assets’ depreciation methods, residual values and useful lives

are reviewed, and adjusted if appropriate, at each reporting date.

An asset’s carrying amount is written down immediately to its

recoverable amount if the asset’s carrying amount is greater than

its estimated recoverable amount.





(iv) Subsequent expenditure

Subsequent expenditure is capitalised only when it increases the future

economic benefits embodied in the specific asset to which it relates.

All other expenditure, including expenditure on internally generated

goodwill and brands, is recognised in profit or loss as incurred.

(o) Borrowing costs

Borrowing costs are recognised in profit and loss using the effective

interest method, except when they relate to qualifying assets.

Borrowing costs incurred for the construction of any qualifying

asset are capitalised during the period of time that is required to

complete and prepare the asset for its intended use or sale.

(p) Provisions

Provisions are recognised when: the Group has a present legal or

constructive obligation as a result of past events; it is probable that

an outflow of resources will be required to settle the obligation;

and the amount has been reliably estimated. Provisions are not

recognised for future operating losses.

Where there are a number of similar obligations, the likelihood

that an outflow will be required in settlement is determined by

considering the class of obligations as a whole. A provision is

recognised even if the likelihood of an outflow with respect to any

one item included in the same class of obligations may be small.

Provisions are measured at the present value of management’s best

estimate of the expenditure required to settle the present obligation

at the balance date. The discount rate used to determine the present

value reflects current market assessments of the time value of money

and the risks specific to the liability. The increase in the provision due

to the passage of time is recognised as interest expense.

(q) Employee benefits

(i) Short-term benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits,

annual leave and accumulating sick leave expected to be settled

within 12 months of the reporting date are recognised in respect

of employees’ past services up to the reporting date if the Group

has a present legal or constructive obligation to pay these amounts

and the obligation can be estimated reliably. These liabilities are

measured on an undiscounted basis at the amounts expected to be

paid when the liabilities are settled including appropriate on-costs.

(m) Property, plant and equipment (continued)

Gains and losses on disposals are determined by comparing

proceeds with carrying amount. These are included net in the profit

or loss. When revalued assets are sold, it is Group policy to transfer

the amounts included in other reserves in respect of those assets

to retained earnings.

(n) Intangible assets

(i) Goodwill

Goodwill is measured at cost less accumulated impairment losses.

In respect of equity accounted investees, the carrying amount of

goodwill is included in the carrying amount of the investment, and

an impairment loss on such an investment is not allocated to any

asset, including goodwill, that forms part of the carrying amount of

the equity accounted investee.

Acquisitions of non-controlling interests

Acquisitions of non–controlling interests are accounted for as

transactions with equity holders in their capacity as equity holders and

therefore no goodwill is recognised as a result of such transactions.

(ii) Other intangible assets

Other intangible assets are carried at cost less any accumulated

amortisation and any impairment losses (refer note 1(i)). Internally

generated intangible assets are only capitalised when the costs can be

measured reliably, the product or process is technically and commercially

feasible, future economic benefits are probable, and the Group intends

to and has sufficient resources to complete development and to use or

sell the asset. The expenditure capitalised includes the cost of materials,

direct labour, overhead costs that are directly attributable to preparing

the asset for its intended use, and capitalised borrowing costs. All other

expenditure is recognised in profit or loss as incurred.

Brand names with indefinite useful lives are not amortised and

instead are tested for impairment annually either individually or at

the cash generating unit level. The Group assesses the useful life

of all intangible assets at each reporting date.

(iii) Amortisation

The estimated useful lives of existing finite lived intangible assets

are as follows:

Customer relationships 10 years

Application software 3 to 5 years

Rent rolls 10 years





(q) Employee benefits (continued)

Profit-sharing and bonus plans

The Group recognises a liability and an expense for bonuses and

profit-sharing based on a formula that takes into consideration

the profit attributable to the Group’s shareholders after certain

adjustments. The Group recognises a provision where contractually

obliged or where there is a past practice that has created a

constructive obligation.

(ii) Long-term benefits

Long service leave

The liability for long service leave is recognised and measured as

the present value of expected future payments to be made in

respect of services provided by employees up to the reporting date,

including appropriate on-costs. Consideration is given to expected

future wage and salary levels, experience of employee departures

and periods of service. Expected future payments are discounted

using market yields at the reporting date on national government

bonds with terms to maturity and currency that match, as closely as

possible, the estimated future cash outflows.

(iii) Retirement benefits obligations

All employees of the Group are entitled to benefits from the Group’s

superannuation plan on retirement, disability or death. The Group

has a defined contribution section within its plan. The defined

contribution section receives statutory fixed contributions from

Group companies and the Group’s legal or constructive obligation

is limited to these contributions.

Contributions to the defined contribution fund are recognised

as an expense as they become payable. Prepaid contributions

are recognised as an asset to the extent that a cash refund or a

reduction in future payments is available.

(iv) Termination benefits

Termination benefits are payable when employment is terminated

before the normal retirement date, or when an employee accepts

voluntary redundancy in exchange for these benefits. The Group

recognises termination benefits when it is demonstrably committed

to either terminating the employment of current employees

according to a detailed formal plan without possibility of withdrawal

or providing termination benefits as a result of an offer made to

encourage voluntary redundancy. Benefits falling due more than

12 months after the balance date are discounted to present value.

(v) Share-based payments

The grant date fair value of performance rights granted to employees

is recognised as an employee expense, with a corresponding increase

in equity, over the period that the employees become unconditionally

entitled to the options. The amount recognised as an expense is

adjusted to reflect the actual number of performance rights for

which the related service and non-market vesting conditions are met.

Share-based payment arrangements in which the Group receives

goods or services as consideration for its own equity instruments are

accounted for as equity-settled share-based payment transactions,

regardless of how the equity instruments are obtained by the Group.

(r) Share capital

(i) Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly

attributable to the issue of new shares or options are shown in

equity as a deduction, net of tax, from the proceeds. Incremental

costs directly attributable to the issue of new shares or options for

the acquisition of a business are not included in the cost of the

acquisition as part of the purchase consideration.

(ii) Repurchase and reissue of share capital (treasury shares)

The Company controls an employee share plan trust which holds

Company shares for the purposes of allocating Company shares to

eligible employees.

When share capital recognised as equity is repurchased by the

employee share plan trust, the amount of the consideration

paid is recognised as a deduction from equity on consolidation.

Repurchased shares are classified as a separate component of

equity in reserve for own shares. When treasury shares are issued

to eligible employees, the cost of the shares allocated is recognised

as an increase in equity and an expense in profit or loss.

(s) Dividends

Provision is made for the amount of any dividend declared, being

appropriately authorised and no longer at the discretion of the

Group on or before the end of the financial year but not distributed

at balance date.

(t) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable

to equity holders of the Company, excluding any costs of servicing

equity other than ordinary shares, by the weighted average number

of ordinary shares outstanding during the financial year, adjusted for

bonus elements in ordinary shares issued during the year.





(t) Earnings per share (continued)

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the

determination of basic earnings per share to take into account

the after income tax effect of interest and other financing costs

associated with dilutive potential ordinary shares and the weighted

average number of shares assumed to have been issued for no

consideration in relation to dilutive potential ordinary shares.

(u) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of

associated GST, unless the GST incurred is not recoverable from the

taxation authority. In this case it is recognised as part of the cost of

acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST

receivable or payable. The net amount of GST recoverable from, or

payable to, the taxation authority is included with other receivables

or payables in the consolidated statement of financial position.

Cash flows are presented on a gross basis. The GST components

of cash flows arising from investing or financing activities which

are recoverable from, or payable to the taxation authority, are

presented as operating cash flows.

(v) Standards and interpretations not yet adopted

A number of new standards, amendments to standards and

interpretations are effective for annual periods beginning after

1 October 2012, and have not been applied in preparing these

consolidated financial statements. Those which may be relevant to

the Group are set out below. The Group does not plan to adopt

these standards early.

• AASB 2011-4 Amendments to Australian Accounting Standards

to Remove Individual Key Management Personnel Disclosure

Requirements removes the requirements to include individual

key management personnel disclosures in the notes to the

financial statements, whilst still disclosing this information in

the Remuneration Report under s300A of the Corporations Act

2001. Early adoption of this amendment is not permitted, with

the amendment being mandatory for the Group’s 30 September

2014 consolidated financial statements.

• AASB 10 Consolidated Financial Statements, AASB 11 Joint

Arrangements, AASB 12 Disclosure of Interests in Other Entities

(2011): AASB 10 introduces a single control model to determine

whether an investee should be consolidated. As a result, the

Group may need to change its consolidation conclusion in

respect of its investees, which may lead to changes in the

current accounting for these investees.

Under AASB 11, the structure of the joint arrangement, although

still an important consideration, is no longer the main factor in

determining the type of joint arrangement and therefore the

subsequent accounting. The Group’s interest in a joint operation,

which is an arrangement in which the parties have rights to the

assets and obligations for the liabilities, will be accounted for on

the basis of the Group’s interest in those assets and liabilities.

The Group’s interest in a joint venture, which is an arrangement

in which the parties have rights to the net assets, will be equity

accounted.

The Group may need to reclassify its joint arrangements, which

may lead to changes in current accounting for these interests.

AASB 12 brings together into a single standard all the disclosure

requirements about an entity’s interest in subsidiaries, joint

arrangements and associates.

The impacts of these new standards, which become mandatory

for the Group’s 30 September 2014 consolidated financial

statements, have not yet been quantified.

• AASB 13 Fair Value Measurement (2011) replaces the fair value

measurement guidance in individual AASB’s with a single source

of fair value measurement guidance. It does not introduce new

requirements to measure financial assets and financial liabilities

at fair value, nor does it eliminate the practicability exceptions to

fair value measurements that currently exist in certain standards.

The new standard will require the Group’s non-financial

property assets to value on a ‘highest and best use’ basis rather

than ‘existing use’ basis. The impacts of this new standard,

which become mandatory for the Group’s 30 September 2014

consolidated financial statements, have not yet been quantified.

• AASB 119 Employee Benefits (2011) changes the definition of

short term employee benefits. The distinction between short-

term and other long-term employee benefits is now based

on whether the benefits are expected to be settled wholly

within 12 months are the reporting date. The impacts of this

new standard, which become mandatory for the Group’s 30

September 2014 consolidated financial statements, have not

yet been quantified.





Note 2: Revenue

Sale of goods 1,052,058 1,014,061

Rendering of services 94,792 108,202

Interest revenue 9,292 10,925

Sundry revenue 2,694 3,126

1,158,836 1,136,314

Note 3: Other income

Dividend income 181 173

Gain on disposal of investments 23 22

Gain on loss of control of subsidiary 5,122 -

Gain on investment held at fair value through profit and loss - 1,168

Net gain on disposal of property, plant and equipment 16 -

5,342 1,363

Note 4: Expenses

Cost of goods sold

Inventory write-downs – hardware & farm machinery (3,032) -

Other cost of goods sold (946,903) (914,885)

Total cost of goods sold (949,935) (914,885)

Depreciation

Buildings (165) (195)

Leasehold improvements (315) (265)

Plant and equipment (3,166) (3,179)

Total depreciation (3,646) (3,639)

Amortisation

Application software (1,404) (1,519)

Customer relationships (380) (380)

Rent rolls (2) (2)

Total amortisation (1,786) (1,901)

Total depreciation and amortisation (5,432) (5,540)

Finance costs

Bank charges (1,820) (1,453)

Interest expense (5,700) (5,478)

Total finance costs (7,520) (6,931)

Rental expense on operating leases

Lease payments (17,761) (16,998)

Total rental expense on operating leases (17,761) (16,998)

Personnel expenses

Salaries and wages (100,877) (95,768)

Contributions to defined contribution plans (8,901) (8,672)

Share based payments (equity settled) (1,087) (574)

Business restructure costs (2,142) (1,012)

All other personnel expenses (8,348) (10,143)

Total personnel expenses (121,355) (116,169)

Loss on disposal of property, plant and equipment

Net loss on disposal of property, plant and equipment - (636)

Other expenses

Elders Rural Services bid – project costs (2,991) (301)

Business restructure costs (268) -

All other expenses (30,412) (32,697)

Total other expenses (33,671) (32,998)

2013 2012

$’000 $’000





2013 2012

$’000 $’000

Note 5: Income tax

(a) Income tax expense

Current tax expense

Current period 4,201 7,348

Under provision in prior years 152 308

4,353 7,656

Deferred tax expense

Origination and reversal of temporary differences (361) 910

(361) 910

Income tax expense 3,992 8,566

The income tax expense calculated for the Group does not include income tax expense on the profit before tax of unit trusts controlled by

the Company to the extent non-controlling interests are beneficially entitled to that profit.

(b) Reconciliation of income tax expense to prima facie tax payable

Profit for the period before tax 14,433 30,157

Prima facie tax at 30% (2012: 30%) 4,330 9,047

Other items

Non-deductible acquisition expense (Agfarm Unit Trust) - 265

Non-controlling interest share of trust profit (361) (899)

Change in tax legislation relating to Rights to Future Income - 270

Other 23 (117)

3,992 8,566

(c) Income tax recognised directly in equity

There were no items recognised directly in equity in both 2013 and 2012.

(d) Income tax recognised in other comprehensive income

2013 2012

$’000 $’000(e) Tax losses

Tax effect of unrecognised tax losses 123 117

Before Tax Net of Before Tax Net of tax expense tax tax expense tax $’000 $’000 $’000 $’000 $’000 $’000

Revaluation of properties - - - (2,138) 641 (1,497)

Listed investments at fair value through other comprehensive income (7,564) 2,269 (5,295) - - -

(7,564) 2,269 (5,295) (2,138) 641 (1,497)

2013 2012





2013 2012

$’000 $’000

Note 6: Auditors’ remuneration

Audit services

Auditors of the Company

Audit and review of financial reports

KPMG 411,700 347,700

Other assurance services

KPMG - 12,750

Special audits for regulators

KPMG 52,100 42,850

Other auditors 30,760 41,552

494,560 444,852

Other services

Auditors of the Company

Other non-assurance services

KPMG - due diligence 598,329 23,100

Tax compliance services

KPMG 117,626 116,930

Other auditors 770 -

716,725 140,030

Total 1,211,285 584,882

It is the Group’s policy to engage its financial statement auditor on assignments additional to their statutory audit duties where their

expertise and experience with the Group are important and where these services would not impair independence. These assignments

are principally tax advice, due diligence and other advisory services, or where the auditor is awarded assignments on a competitive

basis. It is the Group’s policy to seek competitive tenders for any major consulting projects.





2013 2012

$’000 $’000

Note 7: Dividends

Dividends paid during the year to owners of the Company

Final franked dividend for the year ended 30 September 2012 of 10 cents per fully paid share paid on 18 December 2012 (2012:

9 cents in respect of the year ended 30 September 2011) 5,441 4,919

Interim franked dividend for the year ended 30 September 2013 of 10 cents per fully paid share paid on 27 June 2013 (2012:

10 cents in respect of the year ended 30 September 2012) 5,471 5,499

10,912 10,418

Franked dividends declared or paid during the year were franked at the tax rate of 30% (2012: 30%)

Dividends not recognised at year end

Since the year end, the directors recommended the payment of a final franked dividend to Ruralco Holdings Limited shareholders of

10 cents per fully paid ordinary share (2012: 10 cents). The aggregate amount of the proposed dividend, expected to be paid on

20 December 2013 out of 2013 profits, but not recognised as a liability at year end is $5,501,928. 5,502 5,502

The declaration and subsequent payment of dividends has no income tax consequences.

Dividend franking account balance

The amounts of franking credits calculated at 30% (2012: 30%) available for subsequent financial years are:

Franking account balance at the end of the financial year 17,642 22,349

The above available amounts are based on the balance of the dividend franking account at year end adjusted for:

(a) franking credits that will arise from the payment of the current tax liabilities;

(b) franking debits that will arise from the payment of dividends recognised as a liability at the year end;

(c) franking credits that will arise from the receipt of dividends recognised as receivables by the tax consolidated group at year end; and

(d) franking credits that the entity may be prevented from distributing in subsequent years.

The ability to utilise the franking credits is dependent upon there being sufficient available profits to declare dividends. The impact

on the dividend franking account of dividends proposed after the balance date but not recognised as a liability is to reduce it by

$2,357,969 (2012: $2,357,969). In accordance with the tax consolidation legislation, the Company as the head entity in the tax

consolidated group has also assumed the benefit of $13,789,538 (2012: $20,242,440) franking credits.





2013 2012

$’000 $’000

Note 8: Earnings per share

Reconciliation of Earnings to Profit and Loss

Profit from ordinary activities after income tax 10,441 21,591

Less profit attributable to non-controlling interests (4,703) (7,742)

Earnings used to calculate basic EPS 5,738 13,849

Earnings used in the calculation of diluted EPS 5,738 13,849

No. No.

Weighted average number of shares used as a denominator

Weighted average number of ordinary shares 55,019,284 55,019,284

Adjusted for treasury shares outstanding (303,705) (618,678)

Weighted average number of ordinary shares used as the denominator in calculating basic earnings per share 54,715,579 54,400,606

Diluted earnings per share

The calculation of diluted earnings per share at 30 September 2013 was based on a weighted average number of ordinary shares

outstanding after adjustment for the effect of all dilutive potential ordinary shares of 55,845 thousand (2012: 55,032 thousand)

$’000 $’000

Note 9: Cash and cash equivalents

Cash on hand 78 70

Cash at bank 26,616 52,659

26,694 52,729

Reconciliation of cash

Cash and cash equivalents at the end of the financial year as shown in the statement of cash flows is reconciled to items

in the statement of financial position as follows:


Bank overdrafts - (2,602)

26,694 50,127

Note 10: Trade and other receivables

Current

Trade receivables 279,735 280,730

Amounts receivable from related parties 2,679 239

Other receivables 17,198 16,648

Prepayments 4,112 3,838

303,724 301,455

For terms and conditions in related to trade receivables, refer to note 31.

Non-current

Amounts receivable from related parties 1,081 1,100

Note 11: Inventories

Current

Finished goods 92,288 108,149

Inventory write downs

Inventory write downs included in cost of goods sold 2,263 922





2013 2012 2013 2012 % % $’000 $’000

Associates

Western Riverina Fertilisers Pty Ltd Rural merchandising 64.55 62.76 554 368

Lachlan Fertilisers Rural Pty Ltd Rural merchandising 50 50 4,122 3,684

Joint Ventures

Agfarm Pty Ltd Grain marketing 50 (a) - -

Agfarm Unit Trust Grain marketing 50 (a) 8,253 -

12,929 4,052

Carrying Amount of Ownership Investment using theName Principal activities interest equity method

Investments in associates and joint ventures are accounted for in the consolidated financial statements using the equity method of accounting.

Lachlan Fertilisers Rural Pty Ltd is accounted for as an associate using the equity method of accounting as the Group exercises significant influence, but does not exercise

control due to the other shareholders having control of the day to day operations of the entity and control through the shareholders agreement.

Western Riverina Fertilisers Pty Ltd is accounted for as an associate using the equity method of accounting as the Group does not have a majority on the board and as such

does not have the power to control the financial and operating policies of this associate.

(a) During 2012, Agfarm Pty Ltd and Agfarm Unit Trust were controlled subsidiaries of the Ruralco Group with 51% ownership interest and therefore the results consolidated within

the Group result with an allocation for non-controlling interests. In July 2013, the ownership structure of these entities were changed to a 50% joint venture arrangement with

CHS Inc. Accordingly, Agfarm Pty Ltd and Agfarm Unit Trust were deconsolidated and accounted for as joint ventures using the equity method of accounting at that time, as the

Group does not have a majority on the board and as such does not have the power to control the financial and operating policies of this associate.

2013 2012

$’000 $’000

Movements during the year in equity accounted investments in associates and joint ventures

Balance at beginning of the financial year 4,052 3,546

Share of associated company’s net profit after tax 817 793

Dividends (318) (261)

Fair value of joint venture at inception 8,378 -

Disposal during the year - (26)

Balance at end of the financial year 12,929 4,052

Summary financial information for equity accounted investees, as at 30 September 2013, and for the year ended on that date. Balances have not been adjusted for the

percentage ownership held by the Group nor from the date that the entity was held as an equity accounted investment:

Ownership Profit interest Assets Liabilities Revenues after tax % $’000 $’000 $’000 $’000

2013

Western Riverina Fertilisers Pty Ltd 64.55 1,955 762 4,117 264

Lachlan Fertilisers Rural Pty Ltd 50 13,322 5,708 35,126 1,325

Agfarm Pty Ltd 50 - - - -

Agfarm Unit Trust 50 2,602 1,771 10,131 1,323

17,879 8,241 49,374 2,912

2012

Western Riverina Fertilisers Pty Ltd 62.76 1,357 649 2,362 120

Lachlan Fertilisers Rural Pty Ltd 50 13,043 6,118 37,118 764

14,400 6,767 39,480 884

All of the above associates and joint ventures are incorporated in Australia.

Note 12: Investments accounted for using the equity method

Interests are held in the following associates and joint ventures.





2013 2012

$’000 $’000

Note 13: Other financial assets

Non-current

Listed investments designated at fair value through profit or loss (a) - 13,507

Listed investments at fair value through other comprehensive income (a) 5,943 -

5,943 13,507

Unlisted Investments, at fair value through other comprehensive income (previously at amortised cost) (b)

- shares in other corporations 150 150

- other 79 79

229 229

Total other financial assets 6,172 13,736

(a) As described in Note 1(a), the Group elected to adopt AASB 9 with a date of initial application of 1 October 2012. The Group has

elected to classify its investment in Elders Limited as fair value through other comprehensive income.

(b) For the year ended 30 September 2012, unlisted investments that were traded in inactive markets were valued at cost as their fair

value could not be reliably measured in accordance with AASB 139. Upon the early adoption of AASB 9, the Group has adopted the

carrying amount of these unlisted investments as a reasonable proxy for fair value as at 30 September 2013.

Note 14: Property, plant and equipment

Freehold land

At fair value 9,992 10,165

9,992 10,165

Buildings

At fair value 15,470 15,216

Accumulated depreciation (587) (430)

14,883 14,786

Leasehold improvements

At cost 3,550 2,950

Accumulated depreciation (1,887) (1,693)

1,663 1,257

Total land, buildings and leasehold improvements 26,538 26,208

Plant and equipment

At cost 37,623 39,993

Accumulated depreciation (22,623) (24,261)

Total plant and equipment 15,000 15,732

Total property, plant and equipment 41,538 41,940





Note 14: Property, plant and equipment (continued)

Movements in carrying amounts

Movements in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the current financial year are reconciled as

follows:

Land and buildings were revalued in August 2012 by an independent valuer on the basis of current market value. The net revaluation deficit in 2012 was debited to the

asset revaluation reserve in shareholder’s equity. Management has reviewed the carrying value of land and buildings and having regard to current market conditions is

satisfied that their carrying value is satisfactory as at 30 September 2013.

Land has been classified as non-specialised assets and accordingly valued on the basis of market value with reference to observable prices in an active market, using

traditional valuation methods including sales comparison.

Buildings have been mainly valued on the capitalisation basis where the current market net income is capitalised (multiplied) in perpetuity to arrive at the market value

of the property. Some building assets are specialised, but most are considered non-specialised but with few sales of properties to reliably assess market values. These

specialised assets have been valued on a depreciated replacement cost basis. These valuations assume adequate service potential and profitability and a continuation

of the need for the asset. Regard has been given to market prices for construction costs, the likely economic life of the buildings, the condition at the date of inspection

and design aspects.

Security

Land and buildings are held as security for the bank overdraft and loan facilities, refer to note 17.

Assets held for sale

The Group has classified three properties (2012: four properties) as assets held for sale in the statement of financial position as they are surplus to requirements. These

asssets include land and buildings and associated property, plant and equiment which are actively being marketed for sale but had not sold at balance date. These assets

are included in the Rural Services segment in note 25.

Leasehold Plant & Capital work Land Buildings improvements equipment in progress Total $’000 $’000 $’000 $’000 $’000 $’000

Balance at 1 October 2012 10,165 14,786 1,257 14,933 799 41,940

Assets purchased during the year 85 21 746 4,416 2,234 7,502

Assets acquired on acquisition of business - - 9 796 - 805

Transfer to assets held for sale - - - (145) - (145)

Disposals during the year (258) (165) (5) (1,457) - (1,885)

Depreciation expense - (165) (315) (3,166) - (3,646)

Reclassifications - 406 (29) (377) (3,033) (3,033)

Balance at 30 September 2013 9,992 14,883 1,663 15,000 - 41,538

During the year, $3.033 million of capital work in progress was

reclassified to application software.

Balance at 1 October 2011 10,671 20,698 1,102 15,458 - 47,929

Assets purchased during the year 128 132 315 2,913 799 4,287

Assets acquired on acquisition of business - - - 744 - 744

Transfer to assets held for sale (560) (2,302) - - - (2,862)

Disposals during the year (100) (1,310) (3) (1,008) - (2,421)

Depreciation expense - (195) (265) (3,179) - (3,639)

Revaluation of assets (43) (2,055) - - - (2,098)

Reclassifications 69 (182) 108 5 - -

Balance at 30 September 2012 10,165 14,786 1,257 14,933 799 41,940





2013 2012

$’000 $’000

Note 14: Property, plant and equipment (continued)

Movements during the year in assets held for sale:

Balance at beginning of the financial year 3,274 412

Classified as held for sale 145 2,862

Disposal during the year (409) -

Impairment (482) -

Balance at end of the financial year 2,528 3,274

Note 15: Intangible assets

Goodwill 58,460 53,828

Accumulated impairment losses (1,255) (1,255)

57,205 52,573

Brand names 14,400 14,400

Customer relationships 3,800 3,800

Accumulated amortisation (1,510) (1,130)

2,290 2,670

Patents and licences 2 2

Accumulated amortisation - -

2 2

Application software 13,088 10,314

Accumulated amortisation (8,232) (7,177)

4,856 3,137

Rent rolls 110 121

Accumulated amortisation (12) (7)

98 114

78,851 72,896





Brand Customer Application Patents & Rent Goodwill names relationships software licences rolls Total $’000 $’000 $’000 $’000 $’000 $’000 $’000

Consolidated movements in intangible assets

during the year

Balance at 1 October 2012 52,573 14,400 2,670 3,137 2 114 72,896

Additions - external - - - 403 - - 403

Additions - reclassified from capital work in progress - - - 3,033 - - 3,033

Assets acquired in business combinations 6,496 - - 20 - - 6,516

Amortisation charge - - (380) (1,404) - (2) (1,786)

Disposals (1,864) - - (333) - (14) (2,211)

Balance at 30 September 2013 57,205 14,400 2,290 4,856 2 98 78,851

Balance at 1 October 2011 44,615 14,400 3,050 3,503 2 116 65,686

Additions - external - - - 1,125 - - 1,125

Additions - internal - - - 80 - - 80

Assets acquired in business combinations 7,959 - - - - - 7,959

Amortisation charge - - (380) (1,519) - (2) (1,901)

Disposals (1) - - (52) - - (53)

Balance at 30 September 2012 52,573 14,400 2,670 3,137 2 114 72,896

Note 15: Intangible assets (continued)

Movements in carrying amounts

Movements in the carrying amounts for each class of intangible asset between the beginning and the end of the current financial year are reconciled as follows:

Intangible assets, other than goodwill and brand names, have finite useful lives. Goodwill and brand names have indefinite useful lives on the basis that the benefits arising

from these intangible assets are expected to be earned into perpetuity. The current amortisation charges in respect of intangible assets which have finite useful lives are

included under depreciation and amortisation expense in profit or loss.

The amortisation period for the intangible assets with definite lives are as follows:

- Application software: 3 to 5 years

- Rent rolls: 10 years

- Customer relationships: 10 years

For the purpose of impairment testing, goodwill is allocated to the Group’s cash-generating units (CGUs) or Groups of CGUs which represent the lowest level within the

Group at which the goodwill is monitored for internal management purposes and those CGUs expected to benefit from the goodwill. The recoverable amount of a CGU is

determined based on value-in-use calculations.

These calculations use cash flow projections based on financial budgets for FY14 and forecasts for FY15 to FY18 with the following key assumptions:

- Terminal growth rate of 2.5% (2012: 2.5%).

- Budgeted cash flows based on past performance and its expectations for the future.

- Growth rates of nil to 3.5% (2012: nil to 3.5%) used for revenue and expense projections which are considered to be not inconsistent with historical trends and forecasts

included in reports prepared by market analysts.

- Pre tax weighted average cost of capital of 11.2% (2012: 13.32% to 14.02%), reflecting the risk estimates from a market perspective for the various CGUs.

Management believes any reasonable change in key assumptions would not cause the Group’s intangible assets carrying amount to exceed the recoverable amount of these

CGUs.

During the year, due to a change in the Group’s reporting structures, CGUs have been re-assessed and where relevant, adjusted to more accurately align with this change.

The aggregate carrying amounts of goodwill and brand names among CGUs for the comparative period have been restated accordingly.





2013 2012

$’000 $’000

Note 15: Intangible assets (continued)

The aggregate carrying amounts of goodwill and brand names allocated to each CGU are as follows:

Goodwill

Combined Rural Traders (CRT) 12,051 12,051

Mainland Operations 39,294 33,436

Tasmanian Operations 4,434 4,434

Sector Operations 1,426 2,652

57,205 52,573

Brand names

Combined Rural Traders (CRT) 14,400 14,400

Note 16: Trade and other payables

Current

Trade payables 259,569 271,239

Sundry payables and accrued expenses 56,703 42,855

316,272 314,094

The Group’s exposure to liquidity risk related to trade and other payables is disclosed in Note 31.

Note 17: Loans and borrowings

Current

Secured

Bank overdrafts - 2,602

Bank loans 23,000 40

Finance lease liabilities 516 912

23,516 3,554

Unsecured

Depositors 45,908 66,071

Loans from related parties 1,934 781

47,842 66,852

71,358 70,406

Non-current

Secured

Bank loans 7,375 22,375

Finance lease liabilities 909 260

8,284 22,635

Unsecured

Depositors 964 5,047

964 5,047

9,248 27,682

Financing facilities

At balance date, the following financing facilities had been negotiated and were available:

Total facilities

- Bank overdraft 2,070 12,170

- Bank loans 162,902 97,425

164,972 109,595





2013 2012

$’000 $’000

Note 17: Loans and borrowings (continued)

Facilities used at balance date

- Bank overdraft - 2,602

- Bank loans 30,375 22,415

30,375 25,017

Facilities unused at balance date

- Bank overdraft 2,070 9,568

- Bank loans 132,527 75,010

134,597 84,578

Bank loans

Bilateral bank loans and overdraft

These facilities are provided on a committed unsecured negative pledge funding (with a guarantor group arrangement) and security over the parent company and a key

subsidiary. The Multi-Option Facility matures 2014 and Cash Advance Tranche matures in 2016, both have options to extend subject to the agreement of the lenders and

the borrower. These bank loans are subject to certain financial undertakings as detailed below.

Deposit book

The Board sets the interest rate payable to depositors on a monthly basis. The average effective interest rate on depositors at 30 September 2013 is 3.94% (2012: 5.75%).

Finance leases

Lease liabilities are effectively secured as the rights to the leased assets recognised in the consolidated financial statements, and revert to the lessor in the event of default.

Covenants of financing facilities

The Group’s financing facilities contain undertakings including an obligation to comply at all times with certain financial covenants which require the Group to operate

within certain financial ratio threshold levels as well as ensuring that subsidiaries that contribute minimum threshold amounts of Group EBITDA and Group’s total assets.

The main financial covenants which the Group is subject to are Interest Cover Ratio, Working Capital Ratio, Leverage Ratio and Tangible Net Worth.

Financial covenants testing is undertaken and reported to the Board on a monthly basis. Reporting to the financiers occurs quarterly. The Group was in compliance with all

its financial covenants as at 30 September 2013.

Refinancing requirements

Where existing facilities approach maturity, the Group will seek to renegotiate with existing and new financiers to extend the maturity date of those facilities. The Group’s

earning profile, state of economy, conditions in financial markets and other factors may influence the outcome of those negotiations.





2013 2012

$’000 $’000

Note 18: Current tax assets and liabilities

Current tax assets / (liabilities) 2,546 (845)

Note 19: Deferred tax assets and liabilities

(a) Deferred tax liabilities

Deferred tax liability comprises temporary differences attributable to:

Property, plant and equipment 2,356 2,137

Equity accounted investments 2,099 1,000

Intangibles 3,997 4,168

Other 163 478

Total 8,615 7,783

(b) Deferred tax assets

Deferred tax assets comprise temporary differences attributable to:

Provisions 4,715 4,958

Receivables 1,306 1,683

Accruals 722 354

Property, plant and equipment 702 415

Inventory 807 285

Tax losses carried forward 549 546

Intangibles 52 5

Investments at fair value 1,919 -

Capital raising - 70

Other 1,364 358

Total 12,136 8,674

(c) Movements in deferred tax balances

The net movement in deferred taxes is as follows:

Opening balance 891 1,172

Net credit to statement of comprehensive income 361 (910)

Amounts recognised in other comprehensive income 2,269 629

Closing balance 3,521 891





2013 2012

$’000 $’000

Note 20: Provisions

Current - employee benefits

Annual leave 6,209 7,012

Long service leave 5,850 5,805

12,059 12,817

Current - other

Make good 154 372

154 372

Total current provisions 12,213 13,189

Non-current - employee benefits

Long service leave 2,784 2,259

Superannuation contributions

The principal type of benefit provided by The Spectrum Plan – Sub Plan: Ruralco Holdings Limited and its Subsidiary / Associated

Companies is a lump sum determined on the basis of the accumulation of contributions less tax and expenses plus investment

earnings. Members of the Plan are able to select any combination of investment options offered by the Plan.

Employees may contribute to the Plan but are not required to do so. The Company contributes to the Plan at the minimum required

under the Superannuation Guarantee Charge Act 1993 as amended. The contributions made by the Company are legally enforceable.

The Company has no other legal liability to contribute to the superannuation plan.

The Trustee of the Spectrum Plan, SMF Funds Management Limited (ACN 009 564 354), has elected that the Plan be a Regulated

Fund for the purposes of the Superannuation Industry (Supervision) Act which ensures that the Plan retains its tax concessional status.

A Sub Plan Committee with equal representation of Employer & Employees exists to advise the Trustee.

Make good provision

Movements in the carrying amount for the provision for make good liability between the beginning and the end of the current

financial year are reconciled as follows:

Balance at the beginning of the year 372 409

Provisions made during the year 36 37

Amounts charged against the provision (254) (74)

Balance at the end of the year 154 372





Note 21: Issued capital

55,019,284 (2012: 55,019,284) ordinary shares fully paid 55,019,284 55,019,284

There were no movements in fully paid ordinary shares during the current or previous year.

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the company in proportion to the

number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person, or by proxy, is entitled to one vote, and upon a poll

each share is entitled to one vote.

Dividend reinvestment plan

The Company has established a dividend reinvestment plan, which operates at the discretion of the Board. This plan did not operate

for the dividends paid during this financial year.

Capital risk management

The Group’s objectives when managing capital are to safeguard their ability to continue as a going concern, so that they can continue

to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost

of capital. There was no change in the Group’s approach to capital management during the year.

Refer to Note 17 for details in respect to bank convenants the Group is required to maintain.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital

to shareholders, issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is calculated as net debt

divided by total equity. Net debt is calculated as total borrowings less cash and cash equivalents. Total equity is as shown in the

statement of financial position (including non-controlling interest).

During 2013 the Group’s strategy, which was unchanged from 2012, was to maintain a gearing ratio of not more than 75%. The

gearing ratios at 30 September 2013 and 30 September 2012 were as follows:

Total borrowings 80,606 98,088

Less: cash and cash equivalents (26,694) (52,729)

Net debt 53,912 45,359

Total equity 159,997 171,747

Gearing ratio 33.7% 26.4%

2013 2012

$’000 $’000





2013 2012

$’000 $’000

Note 22: Reserves Capital profits reserve 2,179 2,179 Asset revaluation reserve 7,809 7,909 General reserve 2,800 2,800 Fair value reserve (5,295) - Share based payments reserve 1,284 762 Reserve for own shares (978) (2,024) 7,799 11,626 Capital profits reserve

Balance at the beginning of the year 2,179 2,179 Balance at the end of the year 2,179 2,179 Asset revaluation reserve

Balance at the beginning of the year 7,909 9,551 Revaluation increment (net of tax) - (1,504)Transfer to retained earnings (100) (138)Balance at the end of the year 7,809 7,909 General reserve

Balance at the beginning of the year 2,800 2,800 Balance at the end of the year 2,800 2,800 Fair value reserve

Balance at the beginning of the year - - Adoption of AASB 9 (5,295) - Balance at the end of the year (5,295) - Share based payments reserve

Balance at the beginning of the year 762 451 Performance rights expense 522 311 Balance at the end of the year 1,284 762 Reserve for own shares

Balance at the beginning of the year (2,024) - Shares held in Employee Share Plan Trust - (2,024)Own shares held in trust allocated 1,046 - Balance at the end of the year (978) (2,024)

Nature and purpose of reserve (i) Capital profits reserve and General reserve The capital profits reserve and the general reserve were established to accumulate profits.

(ii) Asset revaluation reserve The asset revaluation reserve is used to recognise the changes to fair values of each property carried at fair value.

(iii) Share based payments reserve The share based payments reserve is used to recognise the fair values of performance rights granted to the Managing Director and other management but not vested and exercised yet.

(iv) Fair value reserve The fair value reserve is used to recognise the change in fair values of equity instruments that are measured at fair value though other comprehensive income.

(v) Reserve for own shares Treasury shares are the Company’s own shares, which are held in trust for employees in a special purpose entity. The Company has created the trust for the purpose of holding shares for the benefit of eligible employees who are the beneficial owners of shares in accordance with the Company’s employee share plan and forms part of the consolidated group.

At 30 September 2013, the Group held 303,705 (2012: 618,678) of the Company’s shares.





2013 2012

$’000 $’000

Note 23: Capital and leasing commitments

a. Operating lease commitments

Leases as lessee

The Group has operating lease commitments for rental of property, equipment and motor vehicles.

The Group leases a number of office, warehouse and saleyard facilities under operating leases. The leases vary considerably in

lease terms, with the majority for a period of 3-5 years, with options to renew the leases for a further 3-5 years. Lease payments

are increased according to the various lease agreements, usually in line with the local consumer price index.

Non-cancellable operating leases are payable as follows:

Less than one year 13,787 13,926

Between one and five years 16,844 18,406

More than five years 2,330 1,335

32,961 33,667

Leases as lessor

The Group leases space in four of its warehouses and four office spaces for periods up to 48 months.

Non-cancellable operating leases are receivable as follows:

Less than one year 1,718 2,156

Between one and five years 356 1,632

2,074 3,788

b. Capital expenditure commitments

The Group has no capital expenditure commitments contracted for at the reporting date but not recognised as liabilities payable.

c. Finance lease commitments

The Group has finance lease commitments for motor vehicles payable as follows:

Less than one year 590 978

Between one and five years 948 290

Minimum lease payments 1,538 1,268

Future finance charges (113) (96)

Total lease liabilities 1,425 1,172

Representing lease liabilities:

Current 516 912

Non-current 909 260

1,425 1,172





2013 2012

$’000 $’000

Note 24: Contingent liabilities

The consolidated entity has guarantees issued in respect of contract performance in the normal course of business for both

wholly-owned controlled entities and joint ventures. 7,525 11,896

In the ordinary course of business:

i) The Group is called upon to give guarantees and indemnities to counterparties, relating to the performance of

contractual and financial obligations (including for controlled entities and related parties). Other than as noted above,

these guarantees and indemnities are indeterminable in amount.

ii) The Group has entered into various partnerships and joint ventures under which the controlled entity could ultimately

be jointly and severally liable for the obligations of the partnership or joint venture





Note 25: Segment reporting

The Group comprises the following operating segments:

- Rural Services which offers livestock agency, wool broking, rural merchandise, rural machinery service and sales, water broking, real estate operations and stockfeed

manufacture, seed and grain marketing.

- Financial Services comprising finance broking and agricultural advisory services.

2013 2012 2013 2012 2013 2012 2013 2012

$’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

External revenues 1,148,175 1,124,338 1,369 1,051 - - 1,149,544 1,125,389

Interest revenue 8,822 10,252 470 673 - - 9,292 10,925

Segment revenue 1,156,997 1,134,590 1,839 1,724 - - 1,158,836 1,136,314

Segment profit/(loss) before income tax 40,915 53,137 226 (179) - - 41,141 52,958

Unallocated expenses

Corporate overheads (20,005) (16,663)

Results from operating activities 21,136 36,295

Interest expense (2,744) (3,277) (2,956) (2,201) - - (5,700) (5,478)

Corporate finance costs (1,820) (1,453)

Share of profit/(loss) of equity

accounted investees 817 793 - - - - 817 793

Income tax expense (3,992) (8,566)

Profit for the period 10,441 21,591

Assets

Segment assets 606,195 631,278 949 1,229 (65,211) (82,540) 541,933 549,967

Investment in associates & joint ventures 12,929 4,052 - - - - 12,929 4,052

Unallocated assets 25,625 53,986

Total assets 580,487 608,005

Liabilities

Segment liabilities 421,812 449,609 257 1,536 (47,001) (47,249) 375,068 403,896

Unallocated liabilities 45,422 32,362

Total liabilities 420,490 436,258

Other segment information

Acquisitions of non-current segment assets 6,736 4,265 18 4 - - 6,754 4,269

Depreciation and amortisation of segment

assets 4,637 4,840 9 12 - - 4,646 4,852

Material non cash expenses other than

depreciation and amortisation 758 2,440 - - - - 758 2,440

Rural Services Financial Services Eliminations Total

During the financial year there were no changes in segment accounting policies that had a material affect on the segment information.





2013 2012

$’000 $’000

Note 25: Segment reporting (continued)

Accounting Policies

Segment revenues and expenses are those directly attributable to the segments and include any joint revenue and expenses where a

reasonable basis of allocation exists. Segment assets include all assets used by a segment and consist principally of cash, receivables,

inventories, intangibles and property, plant and equipment, net of allowances and accumulated depreciation and amortisation. While

most of these assets can be directly attributed to individual segments, the carrying amount of certain assets used jointly by two or

more segments is allocated to the segments on a reasonable basis. Segment liabilities consist principally of payables, employee

benefits, accrued expenses, provisions and borrowings. Segment assets and liabilities do not include deferred tax balances.

Note 26: Cash flow information

Reconciliation of cash flow from operations with net profit

Net profit after tax

10,441 21,591

Non-cash and non-operating items in profit from ordinary activities

Depreciation and amortisation 5,432 5,540

Provision for impairment of receivables (1,305) 646

Provision for make good (218) (36)

Performance rights reserve 192 311

Change in fair value of investment - (1,168)

Fair value gain on loss of control of subsidiary (4,972) -

Impairment on property, plant & equipment 566 -

(Profit)/loss on sale of property, plant and equipment (16) 636

Profit on sale of investments (23) (22)

Profit on sale of business - (369)

Contingent consideration - 883

Impairment of intangibles and investments - 1

Share of associated entities profits not received as distributions (817) (793)

Dividend income reclassified as investment income

(181) (172)

Changes in assets and liabilities, net of the effects of purchase and disposal of subsidiaries

Decrease in trade and other receivables 2,959 9,067

Decrease / (increase) in inventories 17,875 (11,223)

Increase in trade and other payables (756) (6,038)

Decrease in current and deferred taxes (3,652) (3,953)

(Decrease)/increase in provisions (532) 450

Net cash flows from operating activities 24,993 15,351





2013 2012

$’000 $’000

Note 27: Key management personnel disclosures

The following persons were key management personnel of the Group during the financial year:

Non-executive Directors

Richard England, Chairman

Michael Millner

Shane Smith Resigned 24 July 2013

Bruce Dixon

Michele Allan

Executive Director

John Maher, Managing Director

Executives

Name Position

A Somann-Crawford General Manager, Corporate Services (including Company Secretary and General Counsel)

P Homann General Manager, Agency

No longer an Executive from 18 March 2013

G O’Neil General Manager, CRT, Marketing & Communication

T Dillon General Manager, Mainland Operations

M Cullinan General Manager, Sector Operations

No longer an Executive from 10 July 2013

A Barr General Manager, Tasmanian Operations

R Maybury General Manager, Rural Supplies

A Ferguson Chief Financial Officer

Resigned 30 September 2013

I Armstrong General Manager, Credit, Compliance and Risk


R Cofrancesco Human Resources Manager


Key management personnel compensation:

Short-term employee benefits 3,850,239 3,435,307

Post employment benefits 273,188 391,149

Other long-term benefits 10,314 33,324

Termination benefits 166,667 205,730

Share-based payments 930,691 520,086

5,231,099 4,585,596

Information regarding individual directors’ and executive compensation is provided in the Remuneration Report section of the Directors’ Report.





Note 27: Key management personnel disclosures (continued)

Equity interests in the company

The movement during the reporting period in the number of ordinary shares in the Company held directly, indirectly or beneficially by key management personnel of the Group,

including their personally related parties, are set out below:

* The table above represents shareholdings at date of resignation or retirement.

# the table above includes shareholdings held by employees who were KMP during the financial year but not at balance date.

Granted as compensation Received on Balance at options or exercise of Other Balance at 1 Oct 12 rights options changes 30 Sep 13

Key management personnel

Directors

R A F England 66,540 - - - 66,540

M J Millner 12,958,775 - - - 12,958,775

S M Smith 23,960 - - - 23,960

B Dixon - - - - -

M Allan - - - - -

Executives

J S Maher 180,040 226,412 - - 406,452

A Somann-Crawford 920 2,699 - - 3,619

P Homann - - - - -

G O’Neil 5,426 - - - 5,426

T Dillon 4,968 - - - 4,968

M Cullinan 4,968 - - - 4,968

A Barr - - - - -

R Maybury 920 896 - - 1816

A Ferguson * - - - - -

I Armstrong # 4,968 - - - 4,968

R Cofrancesco # 920 2,699 - - 3,619

Total 13,252,405 232,706 - - 13,485,111

30 September 2013






Granted as compensation Received on Balance at options or exercise of Other Balance at 1 Oct 11 rights options changes 30 Sep 12


Directors

R A F England 66,540 - - - 66,540

M J Millner 12,958,775 - - - 12,958,775

S M Smith 23,960 - - - 23,960

B Dixon - - - - -

M Allan - - - - -

Executives

J S Maher 107,339 72,701 - - 180,040

A Somann-Crawford - 920 - - 920

P Homann - - - - -

G O’Neil 5,426 - - - 5,426

T Dillon 2,025 2,943 - - 4,968

M Cullinan 2,025 2,943 - - 4,968

A Barr - - - - -

R Maybury - 920 - - 920

A Ferguson * - - - - -

I Armstrong # 2,025 2,943 - - 4,968

R Cofrancesco # - 920 - - 920

Total 13,168,115 84,290 - - 13,252,405

30 September 2012

Performance rights holdings

The number of performance rights in the Company held during the financial year by key management personnel is set out below:

30 September 2013

Balance Balance at Other at 1 Oct 12 Granted Vested Exercised Forfeited changes 30 Sep 13


J S Maher 976,175 172,290 (226,412) - (15,036) - 907,017

A Somann-Crawford 26,187 22,556 (2,699) - - - 46,044

P Homann 60,603 25,532 - - - - 86,135

G O’Neil 58,422 26,093 - - - - 84,515

T Dillon 56,303 32,967 - - - - 89,270

M Cullinan 50,125 24,291 - - - - 74,416

A Barr 22,088 20,804 - - - - 42,892

R Maybury 4,080 20,388 (896) - - - 23,572

A Ferguson - 34,702 - - (34,702) - -

I Armstrong 47,102 24,127 - - - - 71,229

R Cofrancesco 18,357 15,616 (2,699) - - - 31,274

Total 1,319,442 419,366 (232,706) - (49,738) - 1,456,364






As at 30 September 2013 232,706 performance rights had vested (2012: 84,290).

The Board has determined for the offers made up to and including 2009 for the Managing Director and for the offers made up to and including 2010 for the executive

management team that performance rights are only to vest upon meeting the performance hurdles of the Company’s Total Shareholder Return (TSR) performance relative

to the TSR of a comparator group of companies. Performance will be measured at the end of the 3-year period commencing on the Grant Date. For the offers made to the

executive management team, additional vesting criteria required Ruralco’s return on shareholder’s equity to be on average greater than 10% for the 3 year period.

For the offers made in 2010, 2011 and 2012 to the Managing Director, the Board has determined that the vesting criteria will be aligned to a Return on Equity (ROE) test

with a performance hurdle of at least 8.5%, 9% and 9.5% respectively required to be met before any performance rights vest. Performance rights will then vest pro rata

on a sliding scale whereby the Company achieving 12.5%, 13% and 13.5% respectively ROE permits 100% of the Performance Rights to vest. An alternative performance

condition in respect of the 2010, 2011 and 2012 offers of Performance Rights may also be negotiated between the Board and the Managing Director, relating to the total

shareholder return of Ruralco’s shareholders measured against the comparative returns for a selection of ASX listed companies (“TSR Measure”). Once the TSR Measure has

been decided, the Managing Director may elect for these offers of Performance Rights to be assessed against the TSR Measure, instead of the ROE test referred to above.

Any performance rights held at the final testing date that do not vest will expire at that time.

Fair value of performance rights granted

Managing Director performance rights

The assessed fair value at grant date of the performance rights granted during the year ended 30 September 2013 was $2.83 per right (2012: $2.73). The fair value at grant

date is independently determined using a Black-Scholes-Merton option pricing model that takes into account the exercise price, the term of the rights, the share price at grant

date, the expected return on equity, the expected dividend yield and the risk free interest rate for the term of the rights.

The model inputs for rights granted during the year ended 30 September 2013 included:

(a) Performance rights are granted for no consideration and vest based on performance hurdles as disclosed in section 7 of the Remuneration report.

(b) Exercise price: nil

(c) Grant date: 1 October 2012

(d) Share price at grant date: $3.40

(e) Expected return on equity: 10.27% to 14.09%

(f) Expected dividend yield: 6.7%

(g) Discount rate: 3.4%

30 September 2012

Balance Balance at Other at 1 Oct 11 Granted Vested Exercised Forfeited changes 30 Sep 12

Key Management Personnel

J S Maher 474,699 578,462 (72,701) - (4,285) - 976,175

A Somann-Crawford - 27,107 (920) - - - 26,187

P Homann 49,246 27,109 - - (15,752) - 60,603

G O’Neil 47,384 26,897 - - (15,859) - 58,422

T Dillon 32,565 26,713 (2,943) - (32) - 56,303

M Cullinan 29,151 23,949 (2,943) - (32) - 50,125

A Barr - 22,088 - - - - 22,088

R Maybury - 5,000 (920) - - - 4,080

A Ferguson - - - - - - -

I Armstrong 25,207 24,870 (2,943) - (32) - 47,102

R Cofrancesco - 19,277 (920) - - - 18,357

Total 658,252 781,472 (84,290) - (35,992) - 1,319,442






On 2 October 2009, the Managing Director’s 2006 grant of Performance Rights reached their first TSR Measurement Date. The testing conducted ranked Ruralco in the 54th

percentile when compared to its comparator group of companies. Accordingly, 58% of the Performance Rights vested, resulting in an allocation of 39,617 fully paid ordinary

shares in Ruralco. The Rights which did not vest were re-tested on 2 October 2010. The testing conducted ranked Ruralco Holdings Limited 53rd when compared to its

comparator group of companies which was not better than the testing conducted on 2 October 2009. Accordingly, no further vesting has resulted.

As at 2 October 2010, the Managing Director’s 2007 grant of Performance Rights reached their first TSR Measurement Date. The testing conducted ranked Ruralco in the 59th

percentile when compared to its comparator group of companies. Accordingly, 68% of the Performance Rights vested, resulting in an allocation of 48,572 fully paid ordinary

shares in Ruralco Holdings Limited. The Rights which did not vest were re-tested 2 October 2011. The testing ranked Ruralco in the 72nd percentile of the comparator group

of companies which resulted in an additional 26% of Performance Rights vesting, being an allocation of 18,572 fully paid ordinary shares in Ruralco.

On 2 October 2011, the Managing Director’s 2008 grant of Performance Rights reached their first TSR Measurement Date. The testing conducted ranked Ruralco Holdings

Limited in the 61st percentile when compared to its comparator group of companies. Accordingly, 72% of the Performance Rights vested, resulting in an allocation of 54,129

fully paid ordinary shares in Ruralco Holdings Limited. Subsequent to the balance date, the Rights which had not vested were re-tested on 2 October 2012 and the testing

ranked Ruralco in the 65th percentile of the comparator group of companies which resulted in an additional 8% of performance rights vesting, being an allocation of 6,014

fully paid ordinary shares in Ruralco. This has not been reflected in the balances of the Performance Rights at 30 September 2012.

Also subsequent to balance date, on 1 October 2013, the Managing Director’s 2010 grant of Performance Rights reached their first Measurement Date. At the date of this

Report, the alternative TSR Measure was still being determined and accordingly any performance rights will vest subsequent to the date of this Report.

Executive performance rights

The assessed fair value at grant date of the performance rights granted during the year ended 30 September 2013 was $2.79 per right (2012: $2.67). The fair value at grant

date is independently determined using a Black-Scholes-Merton option pricing model that takes into account the exercise price, the term of the rights, the share price at grant

date, the expected return on equity, the expected dividend yield and the risk free interest rate for the term of the rights.

The model inputs for rights granted during the year ended 30 September 2013 included:

(a) Performance rights are granted for no consideration and vest based on performance hurdles as disclosed in section 7 of the Remuneration report.

(b) Exercise price: nil

(c) Grant date: 1 October 2012

(d) Share price at grant date: $3.40

(e) Expected return on equity: 10.27% to 14.09%

(f) Expected dividend yield: 6.7%

(g) Discount rate: 3.4%

On 1 October 2011, the executive management team’s 2008 grant of Performance Rights reached their first TSR Measurement Date. As the offers made to the executive

management team included additional vesting criteria which required Ruralco’s return on shareholder’s equity to be on average greater than 10% for the 3 year period, no

vesting of rights has resulted.

Also subsequent to balance date, on 2 October 2013, the executive team’s 2010 grant of Performance Rights reached their first TSR Measure Date. As the offers made to the

executive management team included additional vesting criteria which required Ruralco’s return on shareholder’s equity to be on average greater than 10% for the 3 year

period, no vesting of rights has resulted.

Further information on the performance right are disclosed in section 7 of the Remuneration Report.

Other transactions with key management personnel

Directors and director related entities sold goods to the Group on normal commercial terms and conditions with an aggregate value of $119 (2012: $461).

There are no amounts payable at 30 September 2013 (2012: $102).

Directors and director related entities purchased goods and services from the Group on normal commercial terms and conditions with an aggregate value of $8,591,952

(2012: $10,270,735). These directors and their related entities included Lachlan Fertilisers Rural Pty Ltd of which John Maher is a director, Williams & Jackson Pty Ltd of which

Shane Smith is a director.

The amount of $3,409,295 (2012: $1,627,182) is receivable at 30 September 2013.

There are no loans to key management personnel and their related parties at 30 September 2013.





Note 28: Subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following entities. The proportion of ownership interest is equal to the proportion

of voting power held.

Subsidiaries

Percentage Owned ACN 2013 2012

Ruralco Holdings Limited – Company 009 660 879*

A company incorporated in Australia

Subsidiaries

ACN 103 517 522 Pty Ltd 103 517 522* 100 100

Ag Concepts Unlimited Pty Ltd 109 746 278 50.1 50.1

Agfarm Pty Ltd 106 819 167 (a) 51.0

Agfarm Unit Trust n/a (a) 51.0

Agritech Rural Pty Ltd 107 217 934 50.1 50.1

Agritech Unit Trust n/a 50.1 50.1

Agriwest Rural Pty Ltd (formerly Wesfal Pty Limited) 076 454 192 51.0 62.1

Archards Irrigation Pty Ltd 117 472 867 51 51

B J Underwood Pty Ltd 107 351 379* 100 100

BGA AgriServices Pty Ltd 011 057 079* 100 100

BR&C Agents Pty Ltd 006 807 629 51 51

BR&C Real Estate Pty Ltd 104 026 351 51 51

Combined Rural Traders Pty Limited 000 838 899* 100 100

Cortex Pty Ltd (deregistered 28 August 2013) 008 042 420 - 80.83

CQ Ag Services Pty Ltd 147 904 630 57.49 57.49

Dairy Livestock Services Pty Ltd 132 806 609 51 51

Davidson Cameron & Co Dubbo Pty Ltd 128 553 186 38.51 38.51

Davidson Cameron & Co. Narrabri Pty Ltd 117 488 767 30.6 30.6

Davidson Cameron Clydsdale & Co. Pty Ltd 127 567 695 34.17 34.17

Davidson Cameron McCulloch Pty Ltd 118 609 537 26.01 26.01

Davidson Cameron Pty Ltd 003 464 757 51 51

Farmworks Rural Pty Ltd 155 698 516* 100 100

FNQG8 Pty Ltd 154 531 807 55 55

GDL Real Estate Pty Ltd 078 347 850 72.5 72.5

Grant Daniel Long Pty Ltd 077 478 801 72.5 72.5

Ingham Farm Centre Pty Ltd 097 693 224* 100 100

Kimberley Rural Pty Ltd 123 392 861 100 100

Merredin Rural Supplies Pty Limited 096 206 343* 100 100

MRW Merchandise Pty Limited (deregistered 15 May 2013) 072 026 629* - 100

National Waterexchange Pty Ltd (formerly CRT Real Estate Pty Ltd) 097 693 466* 100 100

North West Farm Equipment Company Pty Ltd 009 480 951* 100 100

North Western Rural Pty Ltd 142 091 183 53.5 60

Northern Rural Group Pty Ltd 161 370 074 100 -

NT Rural Pty Ltd 097 339 403* 100 100

Overall & Brammer Real Estate Pty Ltd (deregistered 22 May 2013) 056 654 070 - 80.83

Platinum Operations Pty Ltd 140 741 153 50.1 50.1

Primaries of WA Pty Ltd 108 324 456 86 86

Primaries Property Pty Ltd 127 209 698 86 86

Queensland Rural Pty Ltd 123 137 815* 100 100

Rahoom Pty Ltd 100 917 717 79.1 75.52

Rawlinson & Brown Pty Ltd 002 179 740 79.1 75.52





Note 28: Subsidiaries (continued)

Subsidiaries

Percentage Owned ACN 2013 2012

Subsidiaries (continued)

Roberts Don Mac Pty Ltd 075 996 404 50 50

Roberts Hawkins Pty Ltd 109 399 028 50 50

Roberts Huon Valley Pty Ltd 133 638 258 50 50

Roberts Limited 009 475 647* 100 100

Roberts Orford Triabunna Pty Ltd 115 817 546 50 50

Roberts Regional North Pty Ltd 100 725 095 50 50

Roberts Shearwater Pty Ltd 130 293 766 50 50

Rodwells & Co Pty Ltd 009 481 752* 100 100

Ruralco Employee Share Plan Pty Ltd 102 432 968* 100 100

Ruralco Employee Share Plan Trust n/a 100 100

Ruralco Finance Pty Ltd 137 199 378 60 60

Ruralco Water Brokers Pty Ltd 154 594 019 70 100

Ruralco Wool Pty Ltd 094 605 286* 100 100

RuralSmart Pty Ltd 140 531 362 51 51

Saffin Kerr Bowen Pty Ltd 083 882 651 63 -

Saffin Kerr Bowen Wilson Pty Ltd 050 199 945 63 -

Southern Australian Livestock Pty Ltd 008 070 577 80.83 80.83

Stevens Egan Johnston Pty Ltd 108 324 465 71 70

Suncoast Rural Pty Ltd 151 675 419 51 51

Tasmania Farm Equipment Pty Ltd 009 591 271* 100 100

Tasmanian Grain Elevators Pty Ltd 117 186 848* 100 100

Terra Firma Fertilisers Pty Limited 061 622 866* 100 100

Territory Rural McPherson Pty Ltd 131 986 420 51 51

Territory Rural Pty Ltd 123 192 398 62.7 50.1

The Farm Shop (WA) 1999 Pty Ltd 147 298 173* 100 100

WMG Agriservices Pty Ltd (formerly Macintyre Rural Pty Ltd) 154 509 823 53.5 100

* denotes that the entities are party to the Deed of Cross Guarantee.

(a) As per note 12, during 2013 the ownership structure of Agfarm Pty Ltd and Agfarm Unit Trust were changed to a 50% joint venture arrangement with CHS Inc.

Control is considered to exist where the controlling entity has the capacity to dominate decision making directly or indirectly in relation to the financial and operating policies

of the controlled entity. Controlled entities are all incorporated in Australia.

Although the Group owns less than half of the voting power of Davidson Cameron & Co. Narrabri Pty Ltd, Davidson Cameron & Co Dubbo Pty Ltd, Davidson Cameron

Clydsdale & Co. Pty Ltd and Davidson Cameron McCulloch Pty Ltd, it is able to govern the financial and operating policies of the company by virtue of an agreement with its

controlling investment in Davidson Cameron Pty Ltd (the parent of these companies). Consequently, the Group consolidates its investment in these companies.

A deed of cross-guarantee between Ruralco Holdings Limited and its wholly owned subsidiaries was enacted on 29 September 2006. During the year, it was amended as follows:

- 26 September 2013 to add National Waterexchange Pty Ltd (formerly CRT Real Estate Pty Ltd).

- MRW Merchandise Pty Ltd was deregistered on 15 May 2013. This company will be removed from the deed of cross guarantee subsequent to 30 September 2013.

Under the deed Ruralco Holdings Limited and all the subsidiaries subject to the deed of cross guarantee support the liabilities and obligations of Ruralco Holdings Limited

and all its wholly owned entities listed in the deed.

On entering into the deed, the wholly-owned entities have been relieved from the requirements to prepare a financial report and directors’ report under Class Order 98/1418

(as amended) issued by the Australian Securities and Investments Commission.

There are no significant restrictions on the ability of subsidiaries to transfer funds to the Company in the form of cash dividends or to repay loans or advances.





2013 2012

$’000 $’000

Note 28: Subsidiaries (continued)

Set out below is a summary of the consolidated statement of comprehensive income, and movement in consolidated retained earnings, for the

year ended 30 September 2013 and the consolidated statement of financial position as at 30 September 2013 of the Cross Guarantee Group.

Statement of Comprehensive Income

Profit before income tax 8,160 14,022

Income benefit/(tax expense) 136 (3,304)

Other comprehensive income after tax (5,295) (1,055)

Total comprehensive income 3,001 9,663

Retained Profits

Retained profits at the beginning of the financial year 31,864 29,978

Net profit 8,296 10,718

Dividends provided for or paid (10,912) (10,454)

Transfer of reserve on sale of property 29 138

Transfer of performance rights reserve (329) -

Members released from the Cross Guarantee Group 168 1,484

Retained profits at the end of the financial year 29,116 31,864

Statement of Financial Position

Current Assets


Trade and other receivables 280,506 273,323

Inventories 53,520 60,157

Current tax assets 3,355 653

Assets classified as held for sale 2,528 3,274

Total Current Assets 358,940 379,467

Non - Current Assets

Trade and other receivables 1,081 1,099

Investments and other financial assets 50,960 48,642

Property, plant and equipment 33,964 35,269

Deferred tax assets 8,294 5,248

Intangible assets 46,303 42,630

Total Non - Current Assets 140,602 132,888

Total Assets 499,542 512,355

Current Liabilities

Trade and other payables 270,066 258,416

Loans and borrowings 68,934 66,352


Total Current Liabilities 347,147 333,321

Non - Current Liabilities

Loans and borrowings 5,964 25,073

Deferred tax liability 8,389 7,599


Total Non - Current Liabilities 15,975 34,086

Total Liabilities 363,122 367,407

Net Assets 136,420 144,948

Equity

Share capital 99,565 99,565

Reserves 7,739 13,519

Retained profits 29,116 31,864

Total Equity 136,420 144,948





Note 29: Business combinations

Acquisition of controlling interest in the following legal entities on the following dates:

Saffin Kerr Bowen Pty Ltd 63% 1 July 2013

Saffin Kerr Bowen Wilson Pty Ltd 63% 1 July 2013

Acquisition of businesses on the following dates:

National Waterexchange 100% 23 January 2013

Newmarket Livestock 100% 4 February 2013

Moree Independent Rural 100% 11 February 2013

Hughenden Agribusiness Services 100% 20 April 2013

Central West Agricentre (Agriwest) 100% 3 May 2013

Sunraysia Water Exchange 100% 21 June 2013

The acquisition of the above-mentioned entities and businesses is consistent with the Group’s strategy of

broadening its geographic footprint by joining quality agribussinesses and people.

Consideration transferred:

Cash consideration paid on acquisition date net of cash acquired 8,785

Contingent consideration not yet paid 48

8,833

The Group has included $47,512 as contingent consideration, which represents its fair value at acquisition

date. The fair value of the contingent consideration was calculated by applying the income approach using the

probability-weighted expected contingent consideration and a discount rate of 10.5%.

For the purposes of the consolidated statement of cash flows, the cash consideration including cash acquired and

overdrafts equated to $9,416,023.

Identifiable assets acquired and liabilities assumed:

Assets (100% of entity acquired @ fair value)

Cash (in overdraft) (631)

Receivables 2,152

Other assets 5

Inventories 2,013

Property, plant and equipment 805

Intangible assets

Software 20

Tax assets 99

Liabilities (100% of entity acquired @ fair value)

Payables (1,750)

Provisions (298)

Borrowings (175)

2,240

Goodwill

Fair value of the consideration paid 8,785

Add: Recognised amount of non-controlling interest using proportionate interest method (49)

Less: Recognised amount of identifiable assets acquired and liabilities assumed (2,240)

Goodwill 6,496

The acquisition accounting for this year-end has been determined provisionally to allow the Group sufficient time

to form a view as to the value of any separately identifiable net assets acquired.

New business established:

Northern Rural Group Pty Ltd 23 November 2012

Date Acquired

Date Established

$’000

Percentage Acquired





2013 2012

$ $

Note 30: Related party transactions

(a) Subsidiaries

Interests in subsidiaries are set out in Note 28.

(b) Associates and joint ventures

Interests in associates and joint ventures are set out in Note 12.

(c) Directors and key management personnel

Disclosures relating to directors and key management personnel are set out in note 27.

(d) Transactions with related parties

Transactions between related parties are on normal commercial terms and conditions and are no more favourable than

those available to other parties unless otherwise stated.

The following transactions occurred with related parties:

Purchase of goods by subsidiaries from director related entities 119 461

Purchase of goods from subsidiaries by associates 6,471,922 7,726,420

Purchase of goods from subsidiaries by directors and their related entities 2,120,030 2,544,315

Services rendered by related parties and their entities - 1,096,845

Interest received by parent from joint ventures 31,479 -

(e) Outstanding balances arising from sales/purchase of goods and services

The following balances are outstanding at the reporting date in relation to transactions with related parties

Current receivables (sale of goods and services)

- Other related parties 3,409,295 1,627,182

Current payables (purchase of goods and services)

- Other related parties - 102

Receivable from joint venture 2,609,906 -

No provisions for doubtful debts have been raised in relation to any outstanding balances, and no expense has been

recognised in respect to bad or doubtful debts due from related parties.

Note 31: Financial risk management

The Group’s activities expose it to a variety of financial risks: market risk (including interest rate risk, secondary foreign exchange risk

and limited commodity price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on seeking to

minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types

of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate risk and aging analysis for credit risk.

Risk management is carried out by a central finance (Group Finance) and credit risk department (National Credit, Compliance &

Risk) under policies approved by the Board of Directors. Group Finance identifies, evaluates and manages financial risks in close co-

operation with the Group’s operating units. The Board provides written principles and strategic guidance for overall risk management,

as well as policies covering specific areas of credit risk, liquidity risk and commodity risk.





2013 2012

$’000 $’000

Note 31: Financial risk management (continued)

Credit risk

Credit risk is managed on a group basis. Credit risk arises from cash and cash equivalents, deposits with banks and financial

institutions, as well as credit exposures to trade receivables, seasonal finance and meat processor customers, including outstanding

receivables and committed transactions.

National Credit, Risk & Compliance assesses the credit quality of the customer, taking into account its financial position, past

experience and other factors. Individual risk limits are set based on internal ratings in accordance with limits set by the Board. If

the limit required is greater than that delegated, the limit is referred to the Board for approval. The compliance with credit limits is

regularly monitored by line management. Customers requiring seasonal finance are usually required to provide security for the debt,

while butcher clients debts have credit limits approved by the insurer.

The security taken is over livestock, wool and plant and equipment or a charge over the proceeds of cropping or dairy activities.

Trade indemnity insurance is arranged over Farmworks and meat processors. Until June 2013 trade indemnity insurance also included

CRT member trade credit however a commercial decision was made to discontinue this cover. The insurance amounts are those that

are considered prudent for the level of activities and the exposure to individual debts. Excluding wholly owned subsidiaries and joint

venture party receivables, 14.4% (2012: 45.6%) of the total exposure to trade receivables is insured.

The Group is also exposed to credit risk through its seasonal finance facility arrangements with an external financier. This seasonal

finance facility contains a put option that allows the external financier to legally transfer debts meeting certain criteria. The put option

is in place for those loans of an amount equal to or greater than the expected defaults of these loans and accordingly, Ruralco retains

substantially all the risks and rewards of ownership of the seasonal finance debtors funded by the external financier and therefore

recognises the seasonal finance debtors as a receivable with an equal amount payable to the external financier.

The carrying amounts of financial assets represents the maximum credit exposure and at reporting date this exposure was:

Financial assets

Cash 26,694 52,729

Current tax assets 2,546 -

Listed investments designated at fair value through profit or loss - 13,507

Listed investments designated at fair value through other comprehensive income 5,943 -

Other financial assets at cost 229 229

Loans and receivables:

Receivables – trade 279,735 280,730

Receivables – other 20,958 17,987

Total financial assets 336,105 365,182

The carrying amounts noted above approximate their fair value.

Impairment losses

The carrying values of trade receivables at the reporting date was:

Trade receivables 284,175 286,475

Provision for impairment of receivables (4,440) (5,745)

279,735 280,730

Credit sales are on 14 to 30 day terms except where supplier agreements provide for extended terms or seasonal facilities are

approved, which extend from 32 to 365 days. Interest is charged on overdue accounts, seasonal facilities and client advances at rates

determined by the Group from time to time.






Trade receivables ageing

The movement in the allowance for impairment of trade receivables during the year was as follows:

Balance at the beginning of the year 5,745 5,498

Increase to provision 4,209 1,546

Amount charged against provision (5,514) (1,299)

Balance at the end of the year 4,440 5,745

Individually impaired accounts totalling $8,889,095 (2012: $9,335,138) have a provision of $4,440,064 (2012: $5,744,967) raised against them as at 30 September 2013.

These individually impaired accounts include customers that have gone into liquidation or been declared bankrupt. No collateral is held for these accounts.

The value of trade receivables shown as past due 90 days includes amounts classified as seasonal finance, as reporting systems do not currently allow for separation, however

all debts are reviewed to ensure adequate provisioning.

Based on historic default rates, the Group believes that no impairment allowance is necessary in respect of trade receivables not past due or past due by up to 30 days. Except

for those accounts individually identified as impaired, the Group’s customer base has a good long term credit history with the Group.

The Group’s customer base are CRT members who sell merchandise to rural and other customers, and farmers and others with rural services requirements for rural supplies,

wool and livestock agency services, water trading and stock feed seed and grain. Real estate agency services are also provided.

Liquidity risk

Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an adequate amount of committed credit facilities. The Group

manages liquidity risk by monitoring forecast and actual cash flows on a daily basis and matching the maturity profiles of financial assets and liabilities. Surplus funds are

generally kept at call.

Financing arrangements

The Group had access to the following undrawn borrowing facilities at the reporting date:

Floating rate facilities unused at balance date

- Expiring within one year (interchangeable bank overdraft and working capital facilities) 79,597 84,578

- Expiring after one year 55,000 -

134,597 84,578

The interchangeable facility of overdraft and working capital may be drawn at any time and is a revolving facility that is subject to annual review.

Gross Impairment Gross Impairment 2013 2013 2012 2012 $’000 $’000 $’000 $’000

Not past due 226,609 - 210,650 -

Past due 0-30 days 18,665 (475) 28,650 -

Past due 31 - 90 days 19,556 (276) 21,453 (70)

Past due 90 days to one year 18,100 (2,998) 21,892 (3,731)

More than one year 1,245 (691) 3,830 (1,944)

284,175 (4,440) 286,475 (5,745)

2013 2012

$’000 $’000

2013 2012

$’000 $’000






Maturities of financial liabilities

The tables below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity

date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Market risk

Interest rate risk exposures

Interest rate risk arises from the Group taking deposits from customers, advancing seasonal finance loans to customers, holding cash at bank and borrowings to finance its

activities.

The Group manages interest rate risk by constantly monitoring and analysing its interest sensitive assets and liabilities, and reviews the rates offered to depositors and

charged by borrowers at minimum on a monthly basis or more frequently to reflect market movements. The Group does not hedge its interest rate position.

The following table sets out the Group’s exposure to interest rate risk, including the contractual repricing dates and the effective weighted average interest rate as at the

reporting date by class of asset or liability.

Carrying Total 1 year Over 1 to 2 Over 2 to 3 Over 3 to 4 Over 4 to 5 Over 5 amount amount At call or less years years years years years $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

At 30 September 2013


Bank loans 30,375 32,238 - 24,097 2,545 5,596 - - -

Trade and other payables 316,272 316,272 - 316,272 - - - - -

Loans from related parties 1,934 1,991 1,991 - - - - - -

Depositors 46,872 48,731 14,392 33,297 942 100 - - -

Lease liability 1,425 1,620 - 552 705 150 210 3 -

Total financial liabilities 396,878 400,852 16,383 374,218 4,192 5,846 210 3 -



Bank overdraft 2,602 2,603 2,603 - - - - - -

Bank loans 22,415 25,024 - 42 - 24,982 - - -

Trade and other payables 314,094 314,094 - 314,094 - - - - -

Loans from related parties 781 822 822 - - - - - -

Depositors 71,118 75,536 13,890 55,980 4,884 770 12 - -

Lease liability 1,172 1,304 - 989 174 117 17 7 -

Total financial liabilities 412,182 419,383 17,315 371,105 5,058 25,869 29 7 -

Maturities of financial liabilities






Floating 1 year Over 1 to 2 Over 2 to 3 Over 3 to 4 Over 4 to 5 Over 5 Interest interest rate or less years years years years years Total Rate $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000


Financial assets

Cash 2.09% 26,694 - - - - - - 26,694

Receivables – trade

(interest bearing) 12.56% 5,410 29,385 - - - - - 34,795

Loans to related parties 5.95% 3,760 - - - - - - 3,760

Total financial assets 35,864 29,385 - - - - - 65,249


Bank loans 4.77% 28,000 - 2,375 - - - - 30,375

Loans from related parties 5.09% 1,139 - - - - - - 1,139

Depositors 3.88% 13,854 32,053 874 90 - - - 46,871

Lease liability 7.00% - 516 619 124 164 2 - 1,425

Total financial liabilities 42,993 32,569 3,868 214 164 2 - 79,810

Net exposure to interest rate risk (7,129) (3,184) (3,868) (214) (164) (2) - (14,561)


Financial assets

Cash 3.18% 52,729 - - - - - - 52,729

Receivables – trade

(interest bearing) 13.70% 3,607 30,183 - - - - - 33,790

Loans to related parties 6.78% 1,339 - - - - - - 1,339

Total financial assets 57,675 30,183 - - - - - 87,858


Bank overdraft 8.74% 2,602 - - - - - - 2,602

Bank loans 4.66% 22,375 40 - - - - - 22,415

Loans from related parties 5.66% 721 - - - - - - 721

Depositors 5.75% 13,135 52,936 4,380 657 10 - - 71,118

Lease liability 8.43% - 912 149 93 13 5 - 1,172

Total financial liabilities 38,833 53,888 4,529 750 23 5 - 98,028

Net exposure to interest rate risk 18,842 (23,705) (4,529) (750) (23) (5) - (10,170)

Interest rate repricing





2013 2012

$’000 $’000


Sensitivity analysis

The following sensitivity analysis is based on the interest rate risk exposures in existence at the balance sheet date. At 30 September

2013, if interest rates had moved as illustrated in the table below, with all other variables held constant, profit after income tax and

equity would have been affected as follows:

+ 100 basis points (102) (71)

- 100 basis points 102 71

Commodity price risk

The Group enters into physical forward contracts with wool growers and simultaneously enters into a back to back hedge contract,

equal to and opposite to the wool grower forward contract. If the grower defaults in delivering the wool or a sufficient quantity or

quality then Ruralco carries the risk of the hedge. No material price risk arises from these transactions.

Foreign exchange risk

The Group has an indirect exposure to foreign exchange risk through secondary price risk. Costs of inputs can increase due to changes

in exchange rates, however these changes are passed on to the customers.

Equity price risk - investment in Elders Limited

The Group invested in shares in Elders Limited during the year ended 30 September 2012. This investment is recorded at fair value

through other comprehensive income (2012: through profit or loss).

The carrying amount is adjusted periodically based on the closing price of Elders Limited’s share as quoted on the Australian Stock

Exchange.

Fair value hierarchy of investment in Elders Limited

The valuation method of the Group’s investment in Elders Limited is via quoted prices (unadjusted) in active markets for

identical assets (Level 1).

Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure

purposes.

The carrying value of trade receivables and payables are assumed to approximate their fair values due to the short-term nature. The

fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current

market interest rate that is available to the Group for similar financial instruments.





Company

2013 2012

$’000 $’000

Note 32: Parent entity disclosures

As at, and throughout, the financial year ended 30 September 2013 the parent company of the Group was Ruralco Holdings Limited.

Result of the parent entity

Profit for the period after tax 12,623 5,304

Other comprehensive income (5,295) -


Financial position of the parent entity at year end

Current assets 41,027 47,004

Total assets 224,162 225,044

Current liabilities 30,058 11,413

Total liabilities 37,559 32,887

Total equity of the parent entity comprising of:

Share capital 188,168 188,168

Retained earnings 2,513 3,263

Share based payments reserve 1,217 726

Fair value reserve (5,295) -

Total equity 186,603 192,157

Parent entity contingencies

The directors are of the opinion that provisions are not required in respect of the Company’s performance guarantees disclosed in

note 24.

Contingent liabilities not considered remote

The directors are of the opinion that there are no contingent liabilities not considered remote in respect to the Company.

Parent entity guarantees in respect of debts of its subsidiaries

The parent entity has entered into a Deed of Cross Guarantee with the effect that the Company guarantees debts in respect of its

subsidiaries.

Further details of the Deed of Cross Guarantee and the subsidiaries subject to the deed, are disclosed in note 28.

Note 33: Disposal of operations

In the prior year, the group disposed of the Monds & Affleck business and brand for sales proceeds totalling $2.3 million effective

9 December 2011. Pre-tax losses of approximately $0.8 million were recorded in the Group’s profit or loss for the year ended 30

September 2012. These losses incorporate costs associated with discontinuing the Monds & Affleck business.

Note 34: Events after the balance sheet date

Since 30 September 2013, the Board resolved to market a property at 2 Collins Street, Hobart.


1. In the opinion of the Directors of Ruralco Holdings Limited (the Company):

(a) the consolidated financial statements and notes that are contained in pages 72-124 and the Remuneration report in the Directors’ report, set out on pages 40-55 are

in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Group’s financial position as at 30 September 2013 and of its performance for the financial year ended on that date; and

(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and

(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

2. There are reasonable grounds to believe that the Company and the Group entities identified in Note 28 will be able to meet any obligations or liabilities to which they are

or may become subject to by virtue of the Deed of Cross Guarantee between the Company and those Group entities pursuant to ASIC Class Order 98/1418.

3. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Group Financial Controller

for the financial year ended 30 September 2013.

4. The Directors draw readers’ attention to Note 1(a) to the consolidated financial statements, which includes a statement of compliance with International Financial Reporting

Standards.

Signed in accordance with a resolution of the Directors:

Richard A F England

Chairman

John S Maher

Managing Director

Dated at Sydney this 11th day of December 2013



directors’ declaration


Independent auditor’s report to the members of Ruralco Holdings

Limited

Report on the financial report

We have audited the accompanying financial report of Ruralco

Holdings Limited (the Company), which comprises the consolidated

statement of financial position as at 30 September 2013, and

consolidated statement of comprehensive income, consolidated

statement of changes in equity and consolidated statement of cash

flows for the year ended on that date, notes 1 to 34 comprising

a summary of significant accounting policies and other explanatory

information and the directors’ declaration of the Company and the

Group comprising the Company and the entities it controlled at the

year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the Company are responsible for the preparation of

the financial report that gives a true and fair view in accordance with

Australian Accounting Standards and the Corporations Act 2001 and

for such internal control as the directors determine is necessary to

enable the preparation of the financial report that is free from material

misstatement whether due to fraud or error. In note 1 (a), the directors

also state, in accordance with Australian Accounting Standard AASB

101 Presentation of Financial Statements, that the financial statements

of the Group comply with International Financial Reporting Standards.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based

on our audit. We conducted our audit in accordance with Australian

Auditing Standards. These Auditing Standards require that we comply

with relevant ethical requirements relating to audit engagements and

plan and perform the audit to obtain reasonable assurance whether

the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence

about the amounts and disclosures in the financial report. The

procedures selected depend on the auditor’s judgement, including

the assessment of the risks of material misstatement of the

financial report, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the

entity’s preparation of the financial report that gives a true and fair

view in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the entity’s internal control. An audit also

includes evaluating the appropriateness of accounting policies

used and the reasonableness of accounting estimates made by

the directors, as well as evaluating the overall presentation of the

financial report.

We performed the procedures to assess whether in all material

respects the financial report presents fairly, in accordance with the

Corporations Act 2001 and Australian Accounting Standards, a

true and fair view which is consistent with our understanding of

the Group’s financial position and of its performance.

We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence

requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

(a) the financial report of the Group is in accordance with the

Corporations Act 2001, including:

(i) giving a true and fair view of the Group’s financial position

as at 30 September 2013 and of its performance for the

year ended on that date; and

(ii) complying with Australian Accounting Standards and the

Corporations Regulations 2001.

(b) the financial report also complies with International Financial

Reporting Standards as disclosed in note 1 (a).

Report on the remuneration report

We have audited the Remuneration Report included in pages 40 to

55 of the directors’ report for the year ended 30 September 2013.

The directors of the Company are responsible for the preparation

and presentation of the remuneration report in accordance with

Section 300A of the Corporations Act 2001. Our responsibility is to

express an opinion on the remuneration report, based on our audit

conducted in accordance with auditing standards.

Auditor’s opinion

In our opinion, the remuneration report of Ruralco Holdings Limited

for the year ended 30 September 2013, complies with Section

300A of the Corporations Act 2001.

KPMG

Greg Boydell - Partner

Sydney

11 December 2013



independent auditor’s report




five year review

2013 2012 2011 2010 2009 $’000 $’000 $’000 $’000 $’000

Five Year Review

2013 2012 2011 2010 2009

Financial Position

Total assets 580,487 608,005 586,817 506,280 451,855

Total liabilities 420,490 436,258 419,316 348,895 300,302

Total equity 159,997 171,747 167,501 157,385 151,553

Results

Total revenue 1,158,836 1,136,314 1,003,186 902,666 836,682

Operating profit before interest, depreciation, amortisation

and income tax 25,565 41,175 40,203 30,842 25,614

Interest on borrowings 5,700 5,478 5,107 4,892 6,535

Depreciation and amortisation 5,432 5,540 5,315 5,059 3,933

Operating profit before income tax 14,433 30,157 29,781 20,891 15,146

Operating profit attributable to members of

Ruralco Holdings Limited 5,738 13,849 14,979 12,053 8,450

Dividends

Total dividends paid and declared 10,912 10,418 9,354 7,700 9,258

Dividends per ordinary share 20.0 cents 20.0 cents 18.0 cents 16.0 cents 12.0 cents

Statistics

Issued ordinary fully paid shares 55,019,284 55,019,284 55,019,284 55,019,284 55,019,284

Share price at 30 September $3.35 $3.40 $3.25 $2.64 $2.65

Market capitalisation ($’000) 184,315 187,066 178,813 145,251 145,801

Net tangible assets per share $1.41 $1.78 $1.86 $1.80 $1.76

Basic earnings (cents per share) 10.49 25.46 27.22 21.91 15.97

Earnings on equity after tax 3.8% 8.8% 9.7% 8.1% 6.4%

Interest times covered by earnings 4.5x 7.5x 7.6x 5.4x 3.3x

Number of permanent employees 1,428 1,549 1,521 1,434 1,375


Substantial Shareholder Details at 30 November 2013 were:



shareholder information

Distribution of Shareholdings as at 30 November 2013

Holders of Relevant Interest Number of Shares Held % of Shares

Neale Edwards Pty Ltd and its related entity 14,481,148 26.32

Washington H Soul Pattinson and Company Limited and its related entity 12,958,775 23.55

Range of Investors Securities % Issued capital

Name Number of Shares Percentage %

20 Largest Holders of Ordinary Shares at 30 November 2013

1 - 500 303,091 0.55

501 - 1,000 359,815 0.65

1,001 - 5,000 2,963,997 5.39

5,001 - 10,000 3,492,997 6.35

10,001 - 100,000 11,794,923 21.44

100,001 - 9,999,999,999 36,104,461 65.62

55,019,284 100.00

1. WASHINGTON H SOUL PATTINSON AND COMPANY LIMITED 12,938,775 23.52

2. NEALE EDWARDS PTY LTD 12,032,733 21.87

3. BONA VISTA ESTATE PTY LTD 2,448,415 4.45

4. TAVERNERS N PTY LTD 1,631,204 2.96

5. RBC INVESTOR SERVICES AUSTRALIA NOMINEES PTY LIMITED <BKCUST A/C> 1,250,000 2.27

6. J P MORGAN NOMINEES AUSTRALIA LIMITED 1,119,593 2.03

7. CITICORP NOMINEES PTY LIMITED 960,896 1.75

8. RURALCO EMPLOYEE SHARE PLAN PTY LTD 600,000 1.09

9. MR CECIL DESMOND SHEEDY + MRS MARILYN PATRICIA SHEEDY <SHEEDY SUPER FUND A/C> 470,000 0.85

10. DEAN WHITESTONE PTY LTD 400,000 0.73

11. RURALCO EMPLOYEE SHARE PLAN PTY LTD <RURALCO EMP SHARE PLAN A/C> 389,941 0.71

12. MR DOUGLAS FENTON-LEE + MRS CAROL ADELE FENTON-LEE <SUPER FUND A/C> 264,265 0.48

13. TRONES INVESTMENTS PTY LTD 256,823 0.47

14. Y G P GRAIN & HARDWARE PTY LTD 234,860 0.43

15. MEADGATE PTY LTD 160,554 0.29

16. GRANTULLY INVESTMENTS PTY LIMITED 137,195 0.25

17. MR GEOFFREY WILLIAM GOODE 131,120 0.24

18. MR JEFFREY DOUGLAS PAPPIN 130,000 0.24

19. MR RICHARD HENRY HOLLAND DAVIS 122,930 0.22

20. MRS HELEN TRAVERS HAWKER 118,447 0.22

At a local and national level we are actively involved in supporting the communities in which we operate.

C O R P O R AT E S O C I A L R E S P O N S I B I L I T Y

Ruralco takes seriously its economic, social and environmental

responsibility to its staff, shareholders and the communities in

which they operate.

Our focus is on providing a safe and satisfying workplace for our

people and pursuing environmentally sustainable solutions for our

businesses that have a negative impact on the environment.

We strive to be a good corporate citizen in all aspects of our operation

and, in partnership with our national business network, we have aligned

many of our business strategies with our corporate social responsibility.

Economic

With more than 3,700 shareholders and over 1,700 employees,

Ruralco is one of Australia’s larger publicly listed agribusinesses and

one of the industry’s largest private sector employers. Consequently,

many Australians have a shared interest, both directly and indirectly,

in the sustainable future of Ruralco and our capacity to continually

provide satisfactory returns.

In the course of our day-to-day operations we conscientiously

uphold our ongoing commitment to act in accordance with the high

ethical standards as outlined in our Corporate Code of Conduct.

We also strive to ensure we treat our employees, customers,

shareholders, suppliers and the public with decency and respect.

Ruralco makes a significant contribution to the local communities

of the many rural and regional towns it operates in across Australia.

This includes more than $120m paid in salaries, wages and other

benefits to our employees, dividends to our shareholders totalling

$10.9m and $7.6m paid to government bodies at all levels in the

form of taxes and levies.

We continue to utilise an online risk assessment approach to ensure the

sustainability of the business in the face of ever increasing regulatory,

operational and financial risk. This system is continually being updated

and enhanced to provide Ruralco with the most appropriate risk

control measures. Further details on risk management are contained

in the Corporate Governance report on pages 56-68 of this report.

Environment

Ruralco’s commitment to sustainability is underpinned by its

continuous improvement initiatives to reduce energy and water

usage throughout the Group and seek environmentally friendly

agricultural solutions for the network and its customers.

Amongst the initiatives developed to reduce greenhouse emissions

and increase energy efficiencies and recycling within the Group

include the introduction of new technology, the monitoring of

energy usage, benchmarking our national network, interactive staff

communications and energy efficiency planning.

We continue to take a leadership position in seeking new

opportunities in the environment sector that support our

communities. The development of solar solutions, a suite of eco-

friendly cost-effective products, bio-fertilisers, Carbon Farming

Initiative training and extension are just part of our programme to

deliver on this commitment.

Ruralco will continue to pursue programmes and initiatives that

position the Group at the forefront of sustainability in agriculture.

Social

Internal

We greatly value the important contribution our employees make

to the success of our company.

Respecting their rights and helping them to develop fulfilling

careers with us is one of our key objectives and we work closely

with our business units to achieve this.

Safety, education and succession planning feature strongly in

our commitment to this goal. Careful consideration goes into

developing and implementing programmes and strategies that

deliver positive outcomes for our staff.

We take great pride in the strong camaraderie that exists throughout

our Group and we will continue to foster events and activities that

unify our organisation and benefit the communities in which we work.

External

When it comes to lending a helping hand to those in need, Ruralco

and its businesses are there, whether it is providing financial

assistance, donating materials or getting out in the paddocks and

rebuilding fences in communities devastated by natural disasters.

At local and national level, we are actively involved in supporting

the communities in which we operate, not just in times of crisis but

through the good times too.

Our businesses have long and established connections with the

communities in which they operate and their commitment to

ensuring the success and longevity of the many organisations and

groups that make a community is sincere and ongoing.


< Blaze Aid

< Local Schools

Ruralco Reefers

Mega Swim

Lindsay Hassett T20 Challenge

Primary Club of Australia

This year, Ruralco and its businesses donated over $2 million to help

a wide range of organisations and charities across Australia continue

their great work.

This support takes many forms and assistance is provided to schools,

hospitals, sporting clubs and local service groups including Lions,

Legacy and Rotary.

Local and regional charities also receive support, as do state and

nationally recognised charities such as Beyond Blue, Blaze Aid, the

Cancer Council, MS Australia, the Royal Flying Doctor Service, Men’s

Shed and Variety.

Ruralco’s staff are also active supporters of these and many other

charities and they regularly participate in activities that support a wide

range of worthwhile causes.

Ruralco’s Ambassador, Lee Kernaghan, OAM, has also helped our

businesses and the Group with its fundraising activities, most recently

attending the opening of the BC&C Agents outlet at Barham (VIC)

where funds raised went to three local schools. Lee was also a guest of

Territory Rural McPherson in Alice Springs (NT) where auction proceeds

went to support the local Butterfly Connection charity.

In line with our obligation to our shareholders, we will continue to

focus on the responsible management of our business, the professional

endeavours of our employees and our community support.

< Blaze Aid

< <


AG CONCEPTS UNLIMITED

Ag Concepts Unlimited was established in 1996 and has developed

into one of Australia’s leading independent, specialist agricultural

advisory businesses.

The company delivers high quality proactive risk analysis and

management services to clients and specialises in grain, livestock and

wool. Ag Concepts Unlimited is the holder of Australian Financial

Services Licence 316516. This ASIC licensing is used to provide price

and risk management services to Australian agricultural businesses,

including strategy and execution advice to commodity producers,

as well as domestic consumers (feedlots, etc). The company is also

a market leader in the provision of comprehensive commodity

market intelligence and education services.

200 Skipton Street, Ballarat VIC 3350 • 1300 987 742

www.agconcepts.com.au

AGFARM

Established in 1992, Agfarm offers independent marketing advice

to grain growers across Australia. The experienced team also

facilitates grain sales and provides intelligence, logistics, export

market access and managed grain marketing programmes.

Level 29, 126 Phillip Street, Sydney NSW 2000 • 1300 243 276

www.agfarm.com.au

AGRITECH RURAL

Agritech Rural is one of the leading rural merchandise businesses

in Victoria’s Wimmera region. The business operates outlets in

Horsham and Dimboola with its core activities centred around

broadacre cropping. In 2012 Agritech Rural formed a joint

venture partnership with Ruralco that also incorporated the

Westech Ag business which operates outlets in Kaniva and Nhill.

The experienced teams at Agritech Rural and Westech Ag, which

include 13 agronomists, provide an extensive range of farm inputs

and related services, including finance and insurance.

91 Dimboola Road, Horsham VIC 3402 • (03) 5381 0040

www.agritechrural.com.au

AGRIWEST

Agriwest has a proud history servicing the farming communities in

and around Parkes, Peak Hill and Forbes, New South Wales. Their

strong agronomic focus supports the region’s agricultural activities

which centre around broadacre cropping, cattle and sheep grazing.

20 Clarinda Street, Parkes NSW 2870 • (02) 6862 1066

ARCHARDS IRRIGATION

Established in the mid 1970s, Archards Irrigation specialises in the

design, supply and construction of an extensive range of irrigation

products and resources.

Archards Irrigation also provides engineering designs, farm surveys

and designs, consulting and certification, irrigation and water

supply consultation and assistance with water trading.

22 Leitchville Road, Cohuna VIC 3568 • (03) 5456 2664

www.archards.com.au

BGA AGRISERVICES

BGA AgriServices provides a large range of agricultural products

and services to Queensland’s Wide Bay, South Burnett and Brisbane

Valley regions and areas of northern New South Wales. The

company operates out of stores in Kingaroy, Murgon, Goomeri,

Bundaberg, Childers, Oakwood, Toogoolawah, Kumbia, Tyndale,

Casino and Grafton servicing customers’ needs for agricultural

chemicals, animal health, crop protection, fencing, fertiliser, rural

hardware, irrigation, packaging, produce and seed.

21-29 Youngman Street, Kingaroy QLD 4610 • (07) 4162 2766

www.bgaagri.com.au

BJ UNDERWOOD

Established in 1955, BJ Underwood works in partnership with

Woolgrowers Independent Selling Services Ltd (WISS), a grower-

owned and controlled wool broking company, to provide commercial

wool broking services including warehousing and marketing.

137-143 Fitzgerald Road, Laverton North VIC 3026 • (03) 9240 4700

OVERVIEW OF COMPANIES AND BRANDS


BR & C AGENTS

BR & C Agents commenced in 1987 as a stock and station agency

business. Since then, the company has grown to be one of Victoria’s

most successful private agencies providing livestock marketing, rural

merchandise, real estate agency and financial services to rural customers

across north west Victoria and south west New South Wales.

97 Curlewis Street, Swan Hill VIC 3585 • (03) 5032 9911

www.brcagents.com.au

COMBINED RURAL TRADERS

(CRT AND TOWN & COUNTRY)

Established in 1970, the Combined Rural Traders group incorporates

both the CRT and Town & Country businesses.

Both brands have a strong focus on crop protection and animal

health and support an extensive general products portfolio.

With over 400 outlets and 240 agronomists, CRT is the largest

independent rural retailing group in Australia. Great service,

knowledge and expertise underscores what it means to be a CRT

Local Bloke, as does a strong commitment to local communities.

96-100 Toongabbie Road, Girraween NSW 2145 • (02) 9688 8555

www.crt.com.au

CQ AG SERVICES

CQ Ag Services provides a comprehensive range of goods and services

to its clients in the Central Highlands of Queensland. Their expertise

and experience with seed, fertiliser and chemicals is attracting strong

support from the region’s grain and cotton producers.

89 Macauley Road, Emerald QLD 4720 • (07) 4982 0385

DAIRY LIVESTOCK SERVICES

The Dairy Livestock Services business commenced in August 2008

and specialises in dairy marketing advice, commercial and registered

cattle dispersals and sales, private treaty cattle sales, live export, dairy

consulting and dairy property marketing throughout Australia.

Unit 11, 85-91 Keilor Park Drive, Tullamarine VIC 3043 • (03) 9338 9259

www.dairylivestockservices.com.au

DAVIDSON CAMERON & CO

The Davidson Cameron & Co business commenced in Quirindi,

New South Wales, in 1982 and has subsequently expanded across

northern New South Wales with offices in Coolah, Coonabarabran,

Dubbo, Gunnedah, Inverell, Narrabri, Quirindi, Scone and Tamworth.

The business provides livestock agency, real estate marketing and

financial services to rural customers within these regions.

179 Conadilly Street, Gunnedah NSW 2380 • (02) 6742 1828

www.davidsoncameron.com.au

FARMWORKS

FarmWorks is one of Western Australia’s largest rural merchandise

groups. The group operates 12 outlets in key locations, 7 of

which are CRT Local Blokes and 5 which trade as Town & Country.

Their expertise and experience withseed, fertiliser and chemicals

is attracting strong support from the region’s grain and livestock

producers. They also provide finance and insurance services.

18 Wellard Street, Bibra Lake WA 6163 • (08) 9418 4324

GRANT DANIEL & LONG

The Grant Daniel & Long business commenced in February 1997 and

has developed into one of the most successful private agencies in

Queensland with a network of 11 branches. The business provides

livestock and real estate marketing services, rural merchandise and

financial services through its branch network across southern and

central Queensland.

8 Drayton Street, Dalby QLD 4405 • (07) 4669 6955

www.grantdaniellong.com

GROW FORCE

Founded in 1929, Grow Force is one of Australia’s leading fertiliser

brands. The company merged with Ruralco in 2001 and is now the

group’s fertiliser brand. Grow Force’s granular and specialty fertilisers

are strongly represented in the sugar and horticultural markets of

eastern Australia. The extensive Grow Force range also includes

crystalline solubles, Flowfeed soluble blends and other specialty

solid and liquid fertilisers for use in Australian agriculture.

227 Orchard Road, Richlands QLD 4077 • (07) 3714 9844

www.growforce.com.au


INGHAM FARM CENTRE

Ingham Farm Centre has been servicing north Queensland’s Herbert

River area for more than fifty years. The business provides an

extensive range of rural merchandise, animal health, irrigation and

crop protection products, and specialises in custom blend fertilisers.

49506 Townsville Road, Ingham QLD 4850 • (07) 4776 1477

LACHLAN FERTILIZERS RURAL

Lachlan Fertilizers Rural is a foundation CRT business with a strong

history dating back more than fifty years. A diverse and dynamic

business, Lachlan Fertilizers Rural is the leading agribusiness in the

Cowra district in southern New South Wales. It specialises in rural

merchandise, fertiliser, Big N, grain storage and handling, grain

marketing and agronomy services. The business also operates a

branch in Grenfell.

Boorowa Road, Cowra NSW 2794 • Ph (02) 6342 1844

MERREDIN RURAL SUPPLIES

Merredin Rural Supplies operates 300km east of Perth in Western

Australia’s grain region. The business carries an extensive range

of fertilisers and agricultural chemicals to meet the needs of its

predominantly broadacre clients.

Cnr McKenzie & East Barrack Streets, Merredin WA 6415 • (08) 9041 5574

NATIONAL WATEREXCHANGE

National WaterExchange is one of the oldest, largest and most

trusted electronic water trading platforms in Australia. It provides

access to an extensive network of brokers servicing the Murray-

Darling Basin and its irrigation areas along the Murray, Darling and

Murrumbidgee Rivers.

1A Cullen Street, Cohuna VIC 3568 • Ph (03) 5480 3762

www.waterexchange.com.au

NORTHERN RURAL GROUP

Established in March 2013, Northern Rural Group supplies

an extensive range of products and services to support north

Queensland’s cattle producers through its branches in Townsville

and Hughenden. They also provide insurance and financial services

to their clients.

383-385 Woolcock Street, Townsville QLD 4810 • (07) 4779 8799

PAT RICE & HAWKINS

Pat Rice & Hawkins markets some of the finest properties

throughout Victoria and the southern Riverina. Pat Rice & Hawkins’

reputation has grown over the years by providing a standard of

excellence in service and effort to achieve the most successful

results possible.

Ground Floor, 441 St Kilda Road, Melbourne VIC 3004 • (03) 9866 5588

www.prh.com.au

PLATINUM OPERATIONS

The South Australian Platinum Operations group services a

diverse client base that incorporates rural merchandise, viticulture,

horticulture, cattle, dairy and broadacre interests. The group operates

branches in Clare, Crystal Brook, Balaklava, Kimba, Loxton, Meningie,

Mypolonga, Port Lincoln, Renmark and Mildura offering real estate,

livestock, insurance, finance and grain marketing programmes.

Unit 3, Level 1, 128 Fullarton Road, Norwood SA 5067 • (08) 8130 5000

PRIMARIES OF WA

Established in Western Australia in 1981, Primaries has expanded

its original wool based business to incorporate livestock broking,

real estate, grain, finance and insurance. Primaries’ personalised,

professional service has forged strong client relationships and

contributed to its excellent reputation not only in Western Australia

but across the country.

18 Wellard Street, Bibra Lake WA 6163 • (08) 9434 1622

www.primaries.com.au



PROWATER NATIONWIDE

ProWater Nationwide is a water specialist group providing expertise,

products and equipment for efficient water use and retention

across domestic, agricultural, horticultural, commercial, industrial

and mining sectors.

www.prowater.com.au

QUEENSLAND RURAL

Based in Charters Towers and with a branch at Mareeba,

Queensland Rural provides outstanding service and expertise in

livestock marketing for the region’s producers. The business also

offers real estate and insurance services and is committed to

providing a premium level of service to its clients.

28 Mosman Street, Charters Towers QLD 4820 • (07) 4787 2466

www.qldrural.com.au

RAWLINSON & BROWN

Rawlinson & Brown was established in 1955 and is one of the

western Riverina’s oldest and most respected rural businesses. With

branches in Griffith, Hillston and Coleambally, Rawlinson & Brown

provide their clients with an extensive range of services that includes

rural merchandise, livestock, water trading, insurance, mortgage

broking, auction clearing sales, rural and residential real estate.

50-56 Banna Avenue, Griffith NSW 2680 • (02) 6964 1933

www.rawbrown.com.au

ROBERTS

Established in Tasmania in 1865, Roberts has extensive interests in

wool and livestock agency, real estate, irrigation, rural finance and

insurance. With over 400 staff, 15 outlets and 20 real estate offices,

Roberts is a significant operation with a strong community focus and

prominent corporate presence.

2 Collins Street, Hobart TAS 7000 • (03) 6235 1444

www.robertsltd.com.au

ROBERTS DON MAC

Roberts Don Mac is a specialist small machinery business operating

in Hobart.

Their range includes chainsaws, water pumps, garden tools

and a range of specialist small machines for backyard, rural and

commercial operations.

200 Argyle Street, Hobart TAS 7000 • (03) 6234 4322

www.robertsdonmac.com.au

RODWELLS

Rodwells has been providing professional, personalised service to

its clients

since its establishment in 1981. With 24 locations across Victoria

and southern New South Wales, Rodwells offers a comprehensive

range of products and services to assist their wool and livestock,

real estate and rural merchandise clients. Their diverse range of

services includes livestock selling, wool broking, water broking and

tailored financial and insurance solutions.


www.rodwells.com.au

RURALCO FINANCE

Ruralco Finance was established in 2009 to provide financial

products and services to the Ruralco customer base. Through

its carefully selected lender panel, Ruralco Finance’s experienced

finance specialists can broker competitive agri and commercial

lending packages to suit a broad range of needs including term

loans, vehicle and equipment finance, seasonal finance and line

of credit.

Solid support from the Ruralco network has seen the Ruralco Finance

footprint grow steadily with the business now represented in all states.


www.ruralcofinance.com.au



RURALCO INSURANCE

With national representation and access to over 80 underwriters,

Ruralco Insurance can source and tailor an extensive range of

products that includes rural, commercial/business/industrial,

professional, motor vehicle/truck, domestic, landlords, life and

income protection insurance. Ruralco Insurance’s profile has

strengthened through the strong commitment of its team and

support from the Ruralco network.


www.ruralcoinsurance.com.au

RURALCO PROPERTY

With over 100 real estate offices across Australia, Ruralco Property

provides rural and residential property sales, property management

and business broking services to its broad client base.


www.ruralcoproperty.com.au

RURALCO WATER BROKERS

Ruralco Water Brokers is Australia’s largest water asset transfer

facilitator providing an independent and transparent trading

platform for all classes of water, in all areas. With in excess of 30

agents operating across Victoria, New South Wales, Queensland,

South Australia and Tasmania, Ruralco Water Brokers services a

regionally diverse customer base through a wide range of local

water facilitators and resources.

5 Short Street, Wentworth NSW 2648 • (03) 5027 2517

www.waternet.com.au

RURALCO WOOL

Ruralco Wool provides wool handling and logistics, warehousing,

administration, show floor, bulk class services and auctions to a

range of clients in southern Australia.


SAFFIN KERR BOWEN

RODWELLS (SKB)

Founded in 1990, SKB was welcomed to the Ruralco group in

2013. Now affiliated with the Ruralco’s Rodwells network, SKB is

a leading agency business based in Warrnambool Victoria. SKB’s

specialties are livestock agency services and also the marketing of

rural and residential real estate.

266 Timor Street, Warrnambool VIC 3280 • (03) 5562 4022

www.skbw.com.au

SAVAGE, BARKER & BACKHOUSE (SBB)

Formed in 1979 and based in Rockhampton, SBB is the region’s

largest livestock agency. The business’s focus is predominantly on

commercial cattle marketing through the Gracemere saleyards,

stud cattle marketing, rural merchandise supplies, clearing sales

and rural real estate.

266 Denison Street, Rockhampton QLD 4700 • (07) 4927 1677

www.sbbrocky.com.au

STEVENS EGAN JOHNSTON

Established in 1983, Stevens Egan Johnston is a local market leader

in Victoria’s Gippsland region with an excellent reputation for

providing outstanding service.

Licensed real estate agents, auctioneers, property managers

and livestock agents, Stevens Egan Johnston operates out of

Leongatha, Pakenham, Warragul and Foster. The business also

conducts weekly sales at the Koonwarra, Warragul and Pakenham

livestock marketing complexes.

South Gippsland Highway, Leongatha VIC 3953 • (03) 5662 4033

www.sej.com.au


SOUTHERN AUSTRALIAN LIVESTOCK

Southern Australian Livestock commenced operations in 1984 and

principally services the south eastern and Mallee regions of South

Australia. The company operates from several offices in south east

South Australia where it offers livestock agency and real estate services.

2 Smith Street, Naracoorte SA 5271 • (08) 8762 3933

www.salivestock.com.au

SUNCOAST RURAL

Suncoast Rural operates out of Wamuran in south east Queensland

in an area predominantly involved with the production of

strawberries, pineapples, ginger, avocados, macadamias, citrus,

stone fruits and grapes. The business supplies hardware, fertiliser,

animal health and fencing products. They also specialise in irrigation

and rural merchandise products and provide expertise to support

local producers.

D’Aguilar Highway, Wamuran QLD 4512 • (07) 5496 6500

www.suncoastrural.com.au

TASMANIA FARM EQUIPMENT

Tasmania Farm Equipment is the largest farm machinery distributor

in Tasmania with branches strategically located across the state in

Devonport, Burnie, Smithton, Hobart and Launceston. The business

also caters to vineyards and small acreages and sells a range of

construction equipment.

1 Ferguson Drive, Quoiba TAS 7310 • (03) 6424 1511

www.tfe.com.au

TERRITORY RURAL

Territory Rural was established in April 2007 to provide a full range

of services to primary producers across Australia’s Top End and the

Kimberleys. With outlets in Darwin and Katherine, Territory Rural

provides rural merchandise, livestock marketing, real estate and

financial services.

Pinelands Estate, 870 Stuart Highway, Palmerston NT 0831 • (08) 8932 4688

www.territoryrural.com.au

TERRITORY RURAL MCPHERSON

Territory Rural McPherson was established in July 2008 to provide

a full range of services to primary producers across Australia’s Red

Centre. Based in Alice Springs, Territory Rural McPherson provides

rural merchandise, livestock marketing, real estate marketing and

financial services to rural customers.

291 North Stuart Highway, Alice Springs NT 0870 • (08) 8953 4255

THE FARM SHOP

The Farm Shop is a respected rural merchandise group in Western

Australia with stores in Midland, Moora, Wongan Hills, Northam,

York and Quairading.

The Farm Shop services general rural merchandise and broadacre

markets and provides agronomic services, agricultural chemicals

and related farm inputs.

32 Clayton Street, Bellevue WA 6056 • (08) 9274 0455

WMG Agriservices

Formed in 2013 from the merger of three established businesses,

WMG Agriservices provides a comprehensive range of ag chem,

seed, fertiliser, animal health and rural merchandise products to

support their clients in Moree, Goondiwindi and Wee Waa in north-

west New South Wales. WMG Agriservices’ team offer specialist

technical services to meet the region’s broadacre cropping, cotton

farming, beef and sheep production activities.

83-89 Marshall Street, Goondiwindi QLD 4390 • (07) 4671 0099

corporate directory

Registered Office

2 Collins Street, Hobart Tasmania 7000

Telephone: (03) 6235 1444

Facsimile: (03) 6234 1023

Website: www.ruralco.com.au

Email: [email protected]

Visit Ruralco’s website at

www.ruralco.com.au

for shareholder and company information,

news announcements, background

information on Ruralco’s businesses and

previous annual reports.

Executive Director

John S Maher, Managing Director

Non-executive Directors

Richard A F England, Chairman

Michael J Millner

Bruce Dixon

Michele J Allan

John H Tuskin

Company Secretary

Angie L Somann-Crawford

Share Registry

Computershare Investor Services Pty Ltd

GPO Box 7045, Sydney NSW 2001

Yarra Falls, 452 Johnston Street,

Abbotsford VIC 3067

Toll Free: 1300 950 505

International : 61 3 9415 4000

Facsimile: 61 3 9473 2500

Email: [email protected]

Website: www.computershare.com

Auditor

KPMG - 10 Shelley Street, Sydney NSW 2001

Solicitors

KW Mallesons

Banker

Commonwealth Bank of Australia

Cooperatieve Centrale

Raiffeisen-Boerenleenbank B.A. (Rabobank)

financial calendar

Record date for 2013 Final Dividend

29 November 2013

Payment of 2013 Final Dividend

20 December 2013

2014 Annual General Meeting

13 February 2014

2014 Half Year End

31 March 2014

Announcement of Results for Half Year

Ending 31 March 2014

20 May 2014

2014 Year End

30 September 2014

Announcement of Results for Year

Ending 30 September 2014

18 November 2014

Note: Above dates are subject to change

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Chairman’s Report



Executive Team

Directors’ Report

Remuneration Report



Financial Report








Five Year Review




Corporate Directory & Financial Calendar

C O N T E N T S

2OI3

A N N U A L R E P O R T

2OI3Local Service National Strength

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