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Queensland Sugar Limited Annual Report 2019-2020

QSL: Your trusted partner

2 | Queensland Sugar Limited Annual Report 2019-2020

Our MembersQSL works on behalf of its members to promote the development of the Queensland sugar industry. Under our constitution, we have two types of members – Mill Owner Members and Grower Representative Members.Mill Owner MembersThe owners of Queensland sugar mills are eligible to be members of QSL. We currently have eight (8) Mill Owner Members:

� Bundaberg Sugar Limited� Far Northern Milling Pty Ltd� Isis Central Sugar Mill Company Limited� Mackay Sugar Limited� MSF Sugar Limited� Tully Sugar Limited� W H Heck & Sons Pty Ltd� Wilmar Sugar Australia Limited

Grower Representative MembersQSL has 23 Grower Representative Members – 21 elected Members representing 21 Queensland mill areas, and two appointed Members representing peak industry groups Queensland Cane Growers Organisation Limited (CANEGROWERS) and the Australian Cane Farmers Association (ACFA). Elected representatives serve three-year terms, with the most recent election completed in July 2020. Current QSL Grower Representative Members are:

� Gerard Puglisi – Mossman Mill Area� Trevor Adil – Tableland Mill Area� Jeffrey Day – Mulgrave Mill Area� Barry Stubbs – Northern Region Mill Area� Thomas Harney – Tully Mill Area� Robert Lyon – Herbert River Mill Area� Vince Russo – Herbert River Mill Area � Dean Sgroi – Burdekin Mill Area� Denis Pozzebon – Burdekin Mill Area� Russell Jordan – Burdekin Mill Area� Roger Piva – Burdekin Mill Area� Peter Quod – Proserpine Mill Area� Francis Perna – Central Mill Area� Col Stephen – Central Mill Area� Warwick Volker – Central Mill Area� Kevin Borg – Plane Creek Mill Area� Mark Pressler – Southern Mill Area� Allan Dingle – Southern Mill Area� Peter McLennan – Isis Mill Area� Jeffrey Atkinson – Maryborough Mill Area� Greg Zipf – Rocky Point Mill Area� Don Murday – ACFA representative� Paul Schembri – CANEGROWERS representative

Our Purpose

Contents

Queensland Sugar Limited (QSL) is a not-for-profit, pass-through organisation devoted to serving the interests of Queensland cane growers and sugar millers for the long-term prosperity of our state’s sugar industry.

Established in 2000 to replace the Queensland Sugar Corporation, QSL is Queensland’s leading provider of sugar marketing and terminal services, and employs approximately 160 people at 13 sites around the state.

Our ring-fenced Marketing and Operations divisions are supported by a shared Corporate Services function, which together with our tax-exempted status, helps to maximise the value returned to the industry we serve.

Our Business 3Chairman’s Report 4Chief Executive Officer’s Report 5FY20 Highlights 6

QSL MarketingChief Operating Officer’s Report 7Marketing and Pricing 10Grower Services & Supplier Relations 12

QSL OperationsGeneral Manager’s Report 13Terminal Environment, Health and Safety 14

QSL Corporate ServicesChief Financial Officer’s Report 15Our People 16Corporate Governance 17

Statutory Financial Report 19

3Queensland Sugar Limited Annual Report 2019-2020 |

QSL is a public company limited by guarantee and incorporated under the Corporations Act 2001.

We are a pass-through organisation which operates on a cost-recovery basis, returning all net value created through our activities to the industry we serve and the Queensland cane growers and sugar millers who choose to use our services.

Driven by the best interests of our members and the long-term prosperity of the Queensland sugar industry rather than corporate profits or shareholder dividends, we are a registered charitable institution and as such, are exempt from income and payroll taxes.

QUEENSLAND SUGAR LIMITEDA not-for-profit, pass-through organisation serving the Queensland sugar industry

QSL MEMBERS31 representatives of Australian sugar mills and cane growers

QSL BOARDGuy Cowan – Chairman & Independent Director

Sarah Scales – Independent DirectorCraig Doyle – Independent Director

Greg Beashel – Managing Director (Executive)

QSL CORPORATE SERVICESGreg Beashel – Chief Executive Officer Aaron Searle – Chief Financial OfficerJoanne Nugent – GM Human Resources

Susan Campbell – Company Secretary and Legal CounselFinance, Accounting, Legal, Company Secretarial, Human Resources,

Environment, Health and Safety, IT, Communications

QSL MARKETINGRobert Hines – Chief Operating Officer

Grower Services Supplier RelationsPricing Services

Marketing and Sales

QSL OPERATIONSDamian Ziebarth – General Manager

Quality & LogisticsTerminal Operations

EngineeringTerminal Environment, Health and Safety

STORAGE & HANDLING AGREEMENTQSL Marketing accesses terminal facilities for

marketing purposes

OPERATING AGREEMENTQSL Operations manages

STL terminal facilities

SUGAR TERMINALS LIMITED (STL)Publicly listed owner of Queensland’s six bulk sugar terminals

Our Business


The past financial year delivered a series of events that not only challenged Queensland sugar producers, but also highlighted the value QSL delivers to the industry it serves.

A continuing global raw sugar surplus drove a low price environment of the first half of the financial year, and again reinforced the value of forward pricing for Australian sugar producers.

Introduced to the QSL product range over a decade ago, grower-managed pricing is now more accessible to cane growers than ever before, with innovations such as our industry-first app, multiple product options and 10-tonne nomination levels enabling even the smallest producers to easily monitor the market and act quickly to lock in a guaranteed return.

In recent years, QSL growers have increasingly embraced the opportunities provided by our grower-managed product range. Consequently, when a drop in Thai sugar production sparked a market rally in early 2020, QSL processed record levels of pricing orders through the QSL App and QSL Direct, as growers moved to lock in what are currently the strongest returns for the year.

While this recovery in ICE 11 raw sugar prices and strong physical premiums brought increased optimism prior to the start of the 2020 harvest, this proved to be fleeting, with the COVID-19 pandemic subsequently sparking economic and social upheaval on a global scale.

At the time of writing, COVID-19 continues to have significant ramifications on returns for Australian sugar producers, with a high Australian dollar and reduced global sugar consumption dampening ICE 11 returns. The practicalities of operating in a pandemic have also brought a completely new set of challenges for our farmer and miller members.

Throughout this period of disruption, QSL has delivered a continuity of service that has helped to underpin our industry’s successful response to the challenge at hand.

Our Operations team leveraged their considerable expertise in order to quickly devise and embed arrangements to manage potential threats to terminal operations and maintain our industry’s vital export channels.

QSL’s robust IT systems and protocols enabled our corporate and marketing teams to transition to remote operating arrangements at short notice, enabling continuous service provision despite the closure of our corporate and regional offices in line with Queensland’s COVID-19 work-from-home directive.

Despite heightened macroeconomic uncertainty, QSL’s strong credit standing and long-term relationships with blue-chip customers enabled the QSL team to progress our sales and export program uninterrupted, maintaining all-important cash flow to both our grower and miller members.

While many other businesses struggled with the practicalities of paper-based systems and centralised business models in a lockdown environment, growers on QSL Direct were able to continue to manage their pricing through the QSL App and online portal. Our growers also embraced new technology and engagement initiatives, such as training sessions via videoconference platforms and interactive market briefings on social media.

The forward pricing undertaken by QSL growers earlier in the year has helped to temper the pricing impacts of an ICE 11 price battered by a drop in ethanol production, falling sugar consumption, a stormy global economic outlook and a high Australian dollar.

The QSL marketing team is focused on optimising returns in these highly volatile market conditions, and has already released a number of industry-first products for next season designed to give QSL growers expanded pricing options.

On the operations front, our strategic partnership with terminal owner Sugar Terminals Limited (STL) continues to deliver world-class logistics services to Queensland sugar producers, and we remain committed to working closely with STL to secure the ongoing efficiencies and new opportunities so critical to our industry’s future success.

While 2020 has brought unexpected challenges, I am proud to say that the QSL team has risen to meet these and is now using the learnings of the past year to seek out new ways to provide value for the industry we serve. As we head into the new financial year and continuing uncertainty, QSL is well positioned to help the Queensland sugar industry navigate a safe course forward.

Guy Cowan, QSL Chairman and Independent Director

Chairman’s Report


QSL remained the largest marketer of Queensland sugar and an effective and reliable provider of terminal services during the past year, in what evolved to be a tumultuous time for our industry and the wider Australian economy.

The 2019/2020 financial year marked the third year of our Strategic Operating Agreement with our business partner Sugar Terminals Limited (STL), under which the QSL Operations division supplies logistics services for STL’s six Queensland bulk sugar terminals. This important partnership remains focused on the safe optimisation of these pivotal industry assets, and this year took a significant step forward through the implementation of an extensive new performance framework to establish clear service requirements and critical performance indicators for all terminal operations, in line with STL’s strategic imperatives.

It was another busy year for our Operations teams, who received over 3.6 million tonnes of sugar across the state and also loaded 113 sugar shipments, 2 wood pellet shipments and 31 molasses shipments, ending the year with a Delivered In-Full, On-Time and In-Specification rate for sugar shipments of 98% – a strong result in light of the added operational challenges presented by the COVID-19 pandemic.

A swift transition to new shift configurations, working-from-home arrangements, office protocols and other precautionary measures helped to effectively manage the risks associated with COVID-19 across the business, with no major interruptions to our activities during the reporting period. However, our Operations team did experience six recordable injuries during the year, including four Lost Time Injuries, resulting in a Total Recordable Injury Frequency Rate (TRIFR) of 14.6. This is an increase on last year’s rate of 2.5 and above our target of 5. While a disappointing result, it serves as a timely reminder that safety is a continuous journey. We have taken away some significant learnings from these incidents and are confident that our ongoing programs are developing a strong culture in this regard.

In addition to necessitating adjustments to operational activities, the pandemic also had significant ramifications for our Marketing division, with the 2019 Season a case of feast and famine in rapid succession on the raw sugar market. A Thai sugar-cane crop failure delivered respite from sub-$400/tonne sugar prices experienced earlier in the year, with a new-year rally peaking in February and providing a great chance for the QSL pricing team to hedge at levels not seen for several seasons. Sadly, the bullish sentiment quickly evaporated as the emergence of the COVID-19 pandemic drove millions into lockdown and global markets into disarray.

Despite the resulting elevated levels of volatility, all of QSL’s managed ICE 11 pools outperformed the market-average benchmark in the 2019 Season, with QSL’s total ICE 11 pool return for the season of $401 per tonne IPS net coming in at $14.64 per tonne above the market-average result. The Harvest Pool was our best-performing ICE 11 pool, finishing at $406.09 per tonne IPS net, while the QSL US Quota pool was our highest performer overall, returning $605.66 per tonne IPS net.

Market fluctuations experienced during the latter half of the season highlighted the importance of QSL’s reliable and easy-to-access pricing platform, with record numbers of clients taking advantage of pricing opportunities to lock in prices. Following its launch last year, the QSL App has become increasingly pivotal to growers’ pricing activities, with new features such as a free price alert service and the ability to lodge pool nominations further adding to its value.

More growers than ever before were able to enjoy the benefits of QSL Direct, following Far Northern Milling Limited’s (FNM) purchase of the Mossman sugar mill from Mackay Sugar Limited in July 2019. Under FNM’s new supply agreement with QSL, growers supplying Mossman Mill were able to access our full range of products and services for the first time, dealing directly with QSL for pricing and payment services via the QSL Direct online portal and app. This growth also led to an expansion of our Grower Services Team network, as we established a new Mossman office and appointed a designated Grower Relationship Officer role to help support growers in this region.

Behind the scenes, QSL’s Corporate Services division continued to support both the Operations and Marketing divisions, delivering efficiencies and savings through the provision of shared services in the areas of environment and safety, human resources, legal, finance, IT and communications. The Corporate Services team also secured more competitive finance rates in 2020 through the successful renewal of QSL’s finance facilities for a further 18 months.

While 2020 has unfolded in a way few could have imagined, the QSL team has responded with an agility and level of commitment that has helped to ensure our continued success. I thank all of those within our business who went the extra mile during the past year to ensure the services that underpin our industry’s success during trying times.

I would also like to thank all of our clients, suppliers and our business partners for your support and understanding during this very challenging year.

Greg Beashel, Managing Director and Chief Executive Officer

Chief Executive Officer’s Report


FY20 Highlights

Marketing

Corporate Services

Operations

Price Alert launched on QSL app

Finance facilities renewed

Realising Potential program developed future leaders

QSL-managed ICE 11 pools outperformed

the market average by

$14.64 per tonne IPS

QSL Direct implemented for Far

Northern Milling growers

Filled 3295 grower

pricing orders

Highest returning QSL-managed pool =

Harvest Pool

$406/t Net IPS

The largest marketer of

Australian sugar

Unloaded 43,190 trucks and

44,601 train wagons

Loaded

3.68 million tonnes of sugar for shipment

Received 3.62 million tonnes at 6 terminals

113 sugar shipments loaded

98%delivered in full, on time

Retained safety and environment

certifications

Strategic Operating Agreement renewed


Rob Hines, Chief Operating Officer

QSL Marketing

Chief Operating Officer’s Report

The 2019 Season presented somewhat of a rollercoaster in pricing opportunities, with over $170 per tonne separating the highs and lows of the prompt ICE 11 contract during the reporting period.

Starting the new financial year below the cost of production at an Australian-dollar-per-tonne price of $392.31 actual on 1 July 2019, the spot ICE 11 price remained below the $400 mark for most of the first quarter, slipping to a low for the reporting period of just $342.43 per tonne actual on 13 September 2019. Thankfully, Australian producers started to see some respite shortly after, with prices climbing back above $400 later that month and eventually peaking five months later at $514.25 per tonne actual on 13 February 2020.

While the February price rally came too late to contribute significant value to QSL’s 2019-Season managed pools, it did buoy the 2019 Harvest Pool, which was our best-performing ICE 11 pool for the season, finishing at $406.09 per tonne IPS net. The 2019 Actively Managed Pool and 2019 Early-Start Actively Managed Pool finished the season at $392.04 and $392.80 per tonne IPS net respectively, while the 2019 2-Season Forward Pool finished close behind with $390.56 per tonne IPS net.

All of QSL’s managed ICE 11 pools outperformed the market-average benchmark, with the total ICE 11 pool return for the 2019 Season of $401.47 per tonne IPS net coming in at $14.64 per tonne above the market-average result.

The 2019 Guaranteed Floor Pool, which set a minimum return (floor) of $383.61 per tonne IPS on 1 May 2019, finished with a weighted average return of $389.38 per tonne IPS net.

Our best performing pool for the 2019 Season was the US Quota Pool, which achieved a weighted average return of $605.66 per tonne IPS net using the ICE 16 as its basis.

While the QSL Shared Pool applied in each milling district reflects contractual variances and region-specific costs, the weighted average Shared Pool result for the 2019 Season was +$0.96 per tonne IPS for ICE 11 pools, and -$212.36 per tonne IPS for the US Quota Pool (derived from the ICE 16).

Eligible growers received a Loyalty Bonus of $2.03 per tonne IPS via the Shared Pool, in recognition of their commitment to QSL, taking the amount paid to growers via QSL’s Loyalty Bonus scheme since its inception in the 2017 Season to over $8 million.

In addition to these managed-pool results, growers used the QSL pricing platform to fill 3295 orders during the year, with $514.10 per tonne actual the highest order achieved for the 2019 Season (March 2020 contract in the Self-Managed Harvest Pool). The best Target Price result for the 2019 Season was $510 per tonne actual, with $500 per tonne actual against the May 2020 contract the best 2019-Season result in the Individual Futures Contract.

QSL growers were also quick to use the new-year rally to lock in high volumes of pricing for the 2020 Season, with over 375,000 tonnes priced at $450 per tonne actual or more. On the managed-pool front, QSL also acted swiftly to capture value for the 2020 Season, creating the February 2020 Guaranteed Floor Pool. This pool, offered prior to the traditional 2020 Pricing Declaration Date of 30 April 2020, locked in a floor of $477.14 per tonne actual ($460.47 per tonne IPS), and attracted strong interest, particularly among growers keen to keep their options open for further upside returns. At the time of writing, this pool is the best performing of our managed ICE 11 pool options for the 2020 Season, and together with the large amount of grower-managed pricing already achieved, has helped to temper the subsequent drop in 2020-Season ICE 11 prices experienced since the emergence of the COVID-19 in March 2020.

The results above illustrate the importance of having a range of pricing products and platforms that enable growers of all sizes and experience levels to capitalise on market opportunities when they arise. Whether it is through a QSL-managed pool or a grower-managed pricing option, QSL’s Marketing team is focused on providing the tools and support our members need to help maximise their pricing returns.

Note: All net QSL pool results featured on this page are inclusive of an allocation from the QSL Shared Pool. Please refer to pages 8 and 9 for full details of these results and note the weighted average Shared Pool incorporates a weighted average Loyalty Bonus allocation of $2.03 per tonne. The information in the graphs and tables and in the pricing and marketing information included in the Annual Report is of a general or summary nature and, whilst care is taken in the preparation of that information, its reliability, accuracy or completeness is not guaranteed. The information on marketing and pricing activities does not constitute financial product or investment advice and growers need to seek their own financial advice when making pricing and pool selection decisions and read the full Pricing Pool Terms which are available at www.qsl.com.au. QSL cannot guarantee the performance of any pool. Past performance is provided for reference only and may not be indicative of future performance. In addition, costs and charges may vary from year to year.

Ingham

AyrProserpine

SarinaMackay

QSL MARKETING: OUR LOCATIONS

Mossman

Brisbane


Marketing Report Continued

2019-SEASON POOL PRICES (AFTER SHARED POOL ALLOCATION)19/20 FINANCIAL YEAR

$0

$365

$395

$390

$385

$380

$375

$370

$400

$405

$410

Performance above benchmark A$ per mt IPS

Net Performance Benchmark

A$ P

OOL P

RICE

/MET

RIC

TONN

E IP

S

QSL EARLY-START ACTIVELY MANAGED POOL

QSL HARVESTPOOL

QSL ACTIVELY MANAGED POOL

QSL 2-SEASON FORWARD POOL

TOTAL QSL-MANAGED ICE 11 POOLS

$16.71

$406.09

$389.38 $386.17

$6.63

$380.65

$392.04

$11.39

$379.74

$10.82

$386.83

$14.64

$401.47

$390.56$392.80

This graph presents the net pool performance above the Performance Benchmark for the QSL-Managed Pools for the 2019 Season. The Performance Benchmark represents the price achieved if no market view was taken by following an evenly spread sales pattern, adjusted for applicable constraints such as infrastructure, storage, production risk constraints (Harvest Pool) and the time available to price. This performance above the benchmark highlights the dollar value per QSL-managed pool that QSL provides to suppliers (millers) and growers. In the 2019 Season, QSL outperformed the Performance Benchmark on a weighted average basis by $14.64 per tonne IPS net. A weighted average Shared Pool was used in the calculation of the above results, and so prices may vary as a result of regional-specific costs. The Guaranteed Floor Pool achieved a net price of $389.38 per tonne IPS. This pool has not been benchmarked as the price was locked in at the start of the season. The US Quota Pool, which was priced on the ICE 16, achieved a weighted average net price of $605.66 per tonne IPS. See disclaimer on page 9.


OVERALL VALUE CREATED IN THE QSL-MANAGED ICE 11 POOLS COMPONENTS OF TOTAL QSL-MANAGED ICE 11 POOLS VERSUS THE NET PERFORMANCE BENCHMARK FOR THE 2019 SEASON

$A/T

ONNE

IPS

$0

$370

$380

$390

$440

$430

$420

$410

$360

$350

$400$401.47

$400.51

+$34.81 -$25.61

-$3.51

-$4.25

Finance Costs

Regional Specific Costs

Valueaddedabovebenchmark

Performancebenchmark$386.83

$14.64

Gross ICE 11Pools

Net Market Premiums

-$2.51+$2.03

+$0.96Loyalty Bonus

Storage andHandling Costs

Marketing and SharedServices Costs

Shared Pool including

Loyalty BonusNet ICE 11

Pools

This graph shows the components that make up the QSL ICE 11 Shared Pool and highlights the value created above the Performance Benchmark, which is the benchmark that QSL uses to internally measure its performance.

The information in the graphs and tables and in the pricing and marketing information included in the Annual Report is of a general or summary nature and, whilst care is taken in the preparation of that information, its reliability, accuracy or completeness is not guaranteed. The information on marketing and pricing activities does not constitute financial product or investment advice and growers need to seek their own financial advice when making pricing and pool selection decisions and read the full Pricing Pool Terms which are available at www.qsl.com.au. QSL cannot guarantee the performance of any pool. Past performance is provided for reference only and may not be indicative of future performance. In addition, costs and charges may vary from year to year.

Pool results are presented on a weighted-average basis.

EXPLANATORY NOTESNet Market Premiums include:�AUD Free on Board (FOB) return Queensland�Port differential levy�Port differential rebate�Supplementary Commitment premium cost�Accounting allocations�Brand allowancesStorage and Handling costs include:�All costs associated with using the Bulk Sugar Terminals

payable to Sugar Terminals LtdFinance costs include:�Finance facilities charges�Finance charges

Marketing and Shared Services Costs include:�Marketing costs�QSL Shared Services costsRegional specific costs include, where applicable:�Quality Scheme costs�OSA incremental costs�Non-recoverable Harbour Dues�Supplier sugar quality allocationsLoyalty Bonus includes, where applicable:�QSL Shared Services Charge Rebate�Supplementary Commitment Premium

Marketing Report Continued


Sugar FuturesThe 2019/2020 financial year certainly felt like a year of two contrasting halves in sugar futures.

The first few months was a largely dull and forgettable affair that saw the hangover of two years’ worth of surplus raw sugar reflected in prices within an 11-13 USc/lb range. A weaker Brazilian currency that reset from a high of 3.00 against the US Dollar to a low 4.00-level over the period, as well as an oil price stuck around $US60 per barrel, did little to incentivise speculators to cover their reasonably large net-short position.

However, a turning point came in November when the first concerns over the state of the 2019/2020 Thai sugar-cane crop began to emerge. A steady swing in momentum ensued either side of Christmas as both the commercial and speculative sectors began buying into the story, with the latter swinging from a net-short to a net-long position. The confirmation of one

of the smallest Thai cane crops on recent record at 8.3 million tonnes of sugar saw ICE 11 prices peak just below 16 USc/lb, providing excellent hedging opportunities for producers.

Unfortunately, the bullish euphoria was short lived as the gravity of the unfolding COVID-19 crisis hit markets around mid-February. As economies went into hibernation to stem the spread, oil demand and thus price evaporated, sending Brent crude tumbling from $US60 to $US20/barrel. Sugar’s direct relationship to the Brazilian ethanol price meant that the ICE 11 was not spared. The Brazilian ethanol parity price shifted from paying a premium over the ICE 11 to being well below, resulting in a ~10 million tonne swing in sugar production forecasts out of Brazil for the 2020 crop. Within the space of a month or so, the global balance sheet moved from a 5 million tonne deficit to a 5 million tonne surplus and the bullish momentum was gone. Naturally, the speculators liquidated their net-long position and ICE 11 prices sank from 16 USc/lb all the way down to 9 USc/lb by the end of April.

8.00

0

11.00

17.00

16.00US c/

lb

12.00

13.00

14.00

15.00

10.00

9.00

JUL 19 FEB 20 MAR 20 APR 20 MAY 20 JUN 20 JUL 20JAN 20DEC 19NOV 19AUG 19 SEP 19 OCT 19

RAW SUGAR ICE 11 19/20 FINANCIAL YEAR

This graph represents the trend of the raw sugar ICE 11 price for the prompt futures contract for the 2019/2020 Financial Year. The average prompt sugar price for the 2019/2020 Financial Year was 12.22 US cents per pound. See disclaimer on page 9.

Mark Hampson, QSL Executive Manager Marketing and Risk

Marketing and Pricing

QSL Marketing

250

300

0

550

AUD$

/TON

NE

350

400

500

450

JUL 19 FEB 20 MAR 20 APR 20 MAY 20 JUN 20 JUL 20JAN 20DEC 19NOV 19AUG 19 SEP 19 OCT 19

RAW SUGAR AUD/TONNE 19/20 FINANCIAL YEAR

This graph shows the trend of the Australian dollar price per tonne for the ICE 11 prompt futures contract for the 2019/2020 Financial Year. The average Australian dollar price per tonne for the 2019/2020 Financial Year was $399.39 per tonne (weekly close). See disclaimer on page 9.


0.5250

0.5450

0

0.7250

AUD/

USD

JUL 19

0.5650

FEB 20 MAR 20 APR 20 MAY 20 JUN 20 JUL 20JAN 20DEC 19NOV 19AUG 19 SEP 19 OCT 19

0.5850

0.6050

0.6250

0.6450

0.6650

0.6850

0.7050

AUD/USD CURRENCY 19/20 FINANCIAL YEAR

This graph shows the trend of the Australian dollar against the United States dollar for the 2019/2020 Financial Year. The average Australian dollar price for the 2019/2020 Financial Year was 0.6713 US cents (weekly close). See disclaimer on page 9.

The final quarter of the financial year saw prices steady themselves to close out around 12 USc/lb as COVID-19 fears settled and the market slowly began to digest the task of moving the additional Brazilian sugar through the world market.

The rally at the turn of the new year provided a great chance for the QSL pricing team to hedge at levels not seen for a couple of seasons and helped to lift 2019-Season pool values. Similarly, we saw a huge volume of grower-executed pricing during the period, which locked in some 400,000 tonnes at $A450 or better for the next three seasons.

Currency The Australian Dollar (AUD) followed a similar pattern to sugar futures over the financial year. A quiet first six months saw our currency bounce in a relatively narrow range of 67 to 70 cents against the US Dollar, followed by a virus-affected second half of the year where ranges and volatility exploded. The vaporisation of risk appetite as the virus ran rampant saw the AUD collapse 15 cents from 0.7015 on 1 January 2020 to an 18-year low of 0.5510 by mid-March 2020.

However, an equally rapid recovery followed as monetary and fiscal policy responses on a scale never seen before were deployed worldwide in order to support the global economy and financial markets. Central banks moved virtually all interest rate settings close to zero and flooded markets with liquidity, while governments borrowed vast sums to roll out income protection schemes as business ground to a halt. Australia’s relatively favourable experience of the virus compared with elsewhere as well as our close economic ties with China, which also saw a relatively small economic

impact, has seen the AUD identified as an ideal vehicle for investors betting on a v-shaped economic recovery. This spurred the Australian Dollar to quickly recover back to pre-virus levels by 30 June and stands it in good stead for further strength as we move into the 2020/2021 financial year.

While the rapid dip over the first quarter of the year provided some great opportunities for the QSL pricing team to add value to production-buffer exposures in the 2019 Harvest Pool and other QSL-managed pricing pools, its very short-term nature as well as the associated spike in volatility created a particularly risky trading environment.

Physical Premiums Thailand’s bumper 2018/2019 cane crop weighed down physical premiums during the first half of the financial year, with Thai sugar frequently trading at a discount to the ICE 11 as large stocks competed to find homes. Following a smaller Brazilian crop, the unexpected collapse of the subsequent Thai crop in the 2019/2020 Season saw premiums appreciate from late November. As the crush progressed through January, it became apparent that the crop was far smaller than previously forecast and physical values rallied strongly as the Far East market became undersupplied.

QSL was well placed to take advantage of this rally, using our significant storage footprint to supply premium customers in South Korea, Japan and Indonesia. This activity resulted in a significant improvement in Shared Pool returns for the 2019 Season.

Marketing and Pricing Continued


QSL remained Australia’s largest sugar marketer during the 2019/2020 financial year, delivering pricing and payment services to more Queensland cane growers and millers than any other provider.

In addition to servicing growers in Mackay Sugar and Wilmar milling districts, the QSL Direct platform was extended to growers contracted to Far Northern Milling Limited (FNM) following FNM’s purchase of the Mossman sugar mill from Mackay Sugar Limited in July 2019. Under their new supply agreement with QSL, FNM markets all of their bulk raw sugar (both Miller Economic Interest and Grower Economic Interest tonnages) through QSL. This new contractual relationship gave FNM growers access to our full range of products and services for the first time, and the ability to deal directly with QSL for pricing and payment services via the QSL Direct online portal.

While this portal continues to offer growers the convenience of 24/7 access to their accounts and pricing services, QSL retains a strong focus on face-to-face communications and personalised grower support. A Mossman office was opened in December 2019 to support our new direct relationship with FNM and their growers, adding to our existing service centres in Ingham, Ayr, Proserpine, Mackay and Sarina. These regional sites have emerged as valued and popular resources for our grower clients and serve as important bases for the QSL Grower Services Team, which services milling districts stretching from Mossman in the state’s north to Maryborough in the south. Focused on delivering

active and multi-faceted engagement programs, our Grower Services representatives work with growers, collectives and local professional services such as accountants and solicitors to provide tailored support and information when and where it is needed most. While the COVID-19 pandemic did result in the temporary closure of our regional offices in April and May 2020, our Grower Services Team remained on the job while working from home, and continued to stay in close contact with growers during this time, providing one-on-one support and training via phone and video-chat.

Product developmentQSL’s development of supplier-managed pricing options continued to lead the industry during the reporting period, allowing millers and growers to make their own pricing decisions on as much as 98% of their tonnage, whilst also enjoying the benefits of collective marketing and QSL’s wholesale platform.

In addition to a wide range of QSL-managed and grower-managed pricing options, QSL expanded its product range in February 2020 to offer an additional QSL Guaranteed Floor Pool designed to take advantage of the attractive ICE 11 prices available at that time. Offered outside the traditional April pricing declaration period, the February 2020 Guaranteed Floor Pool attracted strong interest and served as a precursor to our new Grower Guaranteed Floor Contract product, subsequently announced this year for the 2021 Season.

Bryce Wenham, Executive Manager Supplier Relations and Systems

Grower Services & Supplier Relations

QSL Marketing


Damian Ziebarth, QSL Operations General Manager

General Manager’s Report

QSL Operations

The 2019/2020 financial year was another successful one for QSL’s Operations team, with 113 sugar shipments exported through STL’s six bulk sugar terminals (BSTs).

Of these shipments, all but two (98%) of these were despatched in full, on time and within specification – a strong performance in light of the added challenges posed during the reporting period by COVID-19.

The emergence of the COVID-19 pandemic in early 2020 prompted a swift response from the QSL Operations team, with the aim of ensuring the continued and safe delivery of services. As a result, temporary working arrangements for all BST employees were negotiated and implemented in March to enable two separate teams to be established at each site. Each team incorporated the skillsets required to, wherever possible, continue maintenance, capital and operations task in isolation, and worked different hours to its site counterpart to minimise the risk of virus transmission within our local workforce. Shift start and finish times were also adjusted to allow for increased hygiene and social distancing requirements to be incorporated into daily operations. QSL continues to monitor and review the impacts of the COVID-19 pandemic, with the goal of protecting both our people and our industry’s vital supply chain.

Shed Reroofing ProjectBundaberg Bulk Sugar Terminal’s Shed #1 was successfully reroofed during the reporting period. This project, which was completed in October 2019 in readiness to store the last of the 2019-Season Bundaberg-district crop, was part of a wider and ongoing roof replacement program that has already seen work completed at the Mackay, Lucinda, Mourilyan and Cairns terminals.

Each individual project in this program must be completed in the short window between the end of the cyclone season each year and a mid-point in the annual harvest. But despite this added challenge, QSL has secured the safe and timely delivery of the 12 projects undertaken to date within their allocated budgets. The project team is now working on the third shed in Mackay, with just sheds #1 and #2 at the Townsville BST remaining in the program and scheduled for completion in the next two years.

Business Excellence TeamA QSL Operational Business Excellence Team (BEX) was created in June 2019 with a view to establishing a process for the identification and management of operational improvements. This team is comprised of a representative from each terminal who also acts as a BEX champion at each site. Since the inception of BEX, the group has identified numerous opportunities at each BST, with many resulting in business-wide change. The project is off to a strong start, delivering improvements valued at $143,000 during the past financial year, with a further $450,000 in improvements already underway.

QSL OPERATIONS: OUR LOCATIONS

Cairns

Mourilyan

TownsvilleLucinda

Mackay

Bundaberg

Brisbane

TONNES HANDLED THROUGH STL’S BULK SUGAR TERMINALSLAST 5 SEASONS

0

1,000

2,000

3,000

4,500

4,000

500

1,500

2,500

3,500

TOTA

L TON

NES

ACTU

AL (’

000)

Tonnage

20162015 2017

4,211,774

4,092,376

3,796,779

2018

4,053,832

2019

3,717,181

This graph reflects the tonnage of raw sugar handled at the six BSTs over the last five seasons. It shows the amount that is handled through storage and handling agreements. See disclaimer on page 9.


Rob Cooper, Manager – Operational Risk & Leadership

Terminal Environment, Health and Safety

QSL Operations

The ‘Terrible Ten’ safety risks and sweetwater management all remained key areas of focus for QSL’s environmental, health and safety activities during the 2019/2020 financial year.

Unfortunately despite our best efforts, there were six incidents that resulted in injuries requiring treatment beyond first aid. The most serious of these was an employee suffering significant injuries as a result of a fall from a conveyor work platform. The employee’s injuries are being managed under a WorkCover claim and QSL continues to work with the employee to facilitate his return to work.

Three of the incidents were the result of people tripping and falling. In response, the terminal teams undertook a targeted review of walkways and handrails. This found that generally the walkways have been in good condition and so we continue to work with our people to be mindful about our actions whilst we go about our business, both at work and at home. The remaining injuries involved minor sprains and strains.

QSL continued to maintain a certified EHS management system and in March 2020 underwent its regular annual audit and assessment. This audit process included the transition to ISO 45001, the new ISO standard for occupational health and safety (OH&S) and confirmed QSL’s ISO 14001:2015 certification, the international standard for environmental management systems. Both certifications are an endorsement that demonstrates to external parties that QSL has achieved compliance with these contemporary standards.

The environment and sustainability continued to be an important priority. During the reporting period each terminal implemented at least one environmental continuous-improvement project, with these including the continued implementation of oil-water separators for stormwater systems, the introduction of improved dry, shed-floor cleaning methods, and the rollout of washboxes for conveyor systems following a successful trial.

The business also expanded its sweetwater irrigation processes and conducted two trials as part of ongoing research into the use of probiotics in sweetwater management.

In addition to a host of operating challenges, the COVID-19 pandemic brought new stresses for the QSL workforce. Thankfully, our previous work under the ASIST mental health first aid program left us well placed with the skills and confidence needed during this challenging time. This program aims to help participants recognise when someone may be at risk of suicide, and explores how to connect with them in ways that understand and clarify that risk, increase their immediate safety and link them with further help.

The past year also saw continuation of the QSL Front Line Leader (FLL) training program, albeit using video conferencing facilities rather than in-person workshops. This program continues to help coach our managers and supervisors to extend their skills in risk conversations with the work force and contractors.

QSL ROLLING 12-MONTH INCIDENT STATISTICS FOR PERIOD ENDED JUNE 2020

5555 5 5

10.1

5 5

12.6

5

Jul Aug Sep Oct Nov Dec JanMonths

TRIFRs

No o

f TRI

s

Feb Apr May Jun

20

16

12

8

4

0

5

4

3

2

1

0Mar

5 5 5

0000

2 1 1 1 1

0 0

15.1

12.5

14.8

14.7 14.6

7.6

2.52.52.5 2.5

Number of Total Recordable Injuries (TRIs). These can include a wide variety of outcomes, including fatalities, lost-time injuries, substitute work, and other injuries requiring treatment by a medical professional.

Total Recordable Injury Frequency Rate (TRIFR). This rate is expressed as the total number of recordable injuries per million hours worked.

TRIFR Target. QSL aims to achieve a TFIFR of 5 over 5 years.


QSL Corporate Services provides specialist in-house expertise to both QSL’s Marketing and Operations businesses. These services are provided to both businesses in order to negate costly duplication whilst still retaining ring-fencing restrictions as required under the Operating Agreement with Sugar Terminals Limited.

The primary functions of Corporate Services include:

Environment, Health and Safety (EHS) – The EHS function oversees the development and implementation of the health, safety and training programs within QSL to ensure these assist our people to make good decisions regarding the work they undertake.

People and Culture – This function is responsible for developing systems and strategies targeted at sourcing, engaging, rewarding, developing and retaining high-quality employees who are driven to achieving outstanding business targets and generating superior results and performance for the benefit of the industry. It is committed to establishing a stable pipeline of leaders and talent aligned to our values, so there is no perceived risk with our performance.

Legal and Governance – The QSL Legal and Governance function manages the legal risks at QSL, which includes legal compliance, negotiation, review and drafting of contracts and the management of any legal claims. This function also includes establishing and maintaining corporate governance frameworks for QSL as well as managing the QSL Board process and providing Company Secretarial support to the QSL Board.

Finance and Accounting – The provision of accounting, finance and payroll services for the whole company. Additionally, the team manages funding across the organisation to ensure adequate levels of financing are sourced at the lowest cost.

Information, Communications and Technology (ICT) – This team designs, maintains and supports QSL’s unified communications and information technology infrastructure and develops and maintains specialised information and technology in an efficient, productive and secure manner.

Communications – The provision of external communications across multiple platforms, including the QSL website, the QSL mobile App, social media pages, corporate publications, presentations and media content.

Key Corporate Services highlights from the past year include:

�QSL’s finance facilities were renewed in March 2020 for the 2020 Season at more competitive rates for a further 18 months.

�The QSL Operations team worked with Sugar Terminals Limited (STL) to implement a framework to achieve commercial and operational best practice and expand other income opportunities at the Bulk Sugar Terminals.

�Our latest Organisational Cultural Inventory showed a significant strengthening of constructive behaviours and thinking across all our corporate teams.

�The triennial QSL Grower Representative Member elections were held at the end of the financial year, with the 21 successful elected-holder candidates formally appointed in July 2020.

�The QSL Direct portal and QSL App had uptimes of greater than 99.8% during the financial year, enabling growers to easily place, edit and cancel pricing orders in order to take advantage of a fast-moving market.

�A new Sugar Marketing Agreement was executed with Far Northern Milling in November 2019, allowing their growers to start dealing directly with QSL for the first time.

�Future-season forward pricing limits were increased and a new QSL-managed pricing option was introduced for the 2020 Season.

�The QSL App released a number of new features, including a free price alert service and the ability to submit pool nominations.

�A new general ledger accounting system was successfully implemented during the financial year to replace outdated technology. The project was delivered to specification on time and under budget.

Aaron Searle, Chief Financial Officer

Chief Financial Officer’s Report

QSL Corporate Services


Our QSL People strategyQSL’s three-year people and culture strategy is focused on four main goals:

1. Culture & Values

QSL is envied by the industry and valued by our staff for our constructive, customer-focused culture of collaboration, innovation and value creation.

2. Source/Deploy

3. Develop

To grow our leadership and talent so that QSL can pursue our future strategy confidently, knowing that our people have the right skills and are supported by the right systems to make it happen. We have a stable pipeline of both leaders and talent so there is no perceived risk with our performance.

4. Retain Our team feel well-connected to our future strategy and can see how they will be personally and professionally rewarded by it.

Talent managementOur 2019-2020 financial year activity focused significantly on talent management, taking specific and purposeful action to shape and sharpen the capability and capacity of our team to build relationships, maximise returns, think differently, outperform the market and enhance our productivity in a challenging and complicated environment.

Our strategy has a three-pronged approach:

1. Organisational Capability – Grow key capabilities and capacity to ensure business success and growth. Outputs include talent maps and leadership development plans.

2. Critical Role – Manage critical roles and capabilities for business success, ensuring they are filled by talented and capable individuals. Outputs include critical role strategies, development plans for incumbents, succession plans and capability inventories.

3. Top Tier Talent – Identify individuals with the most potential for promotion or broader roles/influence and accelerate their development, both now and for the future. The key output is accelerated development plans.

QSL management and the Board have evidenced the new potential for the business that has been realised from the second year of investment under each of the plans outlined above, ensuring that succession planning and critical talent risks are being well managed.

2020 saw QSL invest significantly in deeper management and capability development through our Realising Potential program. This program focuses on leading through change and complexity, driving growth, building trust and managing risk – all relevant to the challenges and opportunities facing the business and the industry at present. Eleven participants took part in the program this year, with a further cohort identified for 2021.

We have also continued our work on organisational culture during the reporting period. We see that QSL’s culture is unique and is therefore a source of competitive advantage

within our new operating context. In May 2020, we took another snapshot of our culture, using the Human Synergistics Organisational Cultural Inventory (OCI). Across all our corporate teams, we have witnessed some significant and impressive strengthening of constructive behaviours and thinking, giving confidence that those responsible for designing and executing the QSL strategy and performance are doing so in an environment focused on achievement, growth, innovation, collaboration and trust.

Remuneration QSL continued its long association with Korn Ferry during the reporting period, ensuring all decisions around its Total Reward Framework were well informed and supported by timely, independent, market-aligned benchmarking. The Board’s People and Remuneration sub-committee (PRC) has oversight into the design and effectiveness of QSL’s Total Reward and Remuneration framework, including specific details of remuneration packages for the Chief Executive Officer and Managing Director, Executives and Directors. The Committee continues to monitor the effectiveness and market competitiveness of QSL’s reward and remuneration mechanisms.

QSL reviews its Total Reward Framework annually. During the reporting period the PRC reviewed the mechanics of QSL’s short-term incentive (STI) plans to ensure they were not only relevant to drive the performance of the annual business plan, but that Board discretion to award payments also considered other factors, including general macroeconomic indicators, internal outperformance measures, forecast sugar prices and pool values (as appropriate to the relevant area of the business).

With this level of scrutiny and independent reference, QSL continues to remunerate staff conservatively to market and in a way where variable pay is only awarded on the achievement of agreed business goals, mitigating possible risks of loss of critical talent and capability while also ensuring costs are sustainable for the future.

Our focus for the year ahead is:

�Maintain momentum in strengthening QSL’s constructive culture to best position it for a more customer-focused strategy.

�Continue the gains achieved through our Talent Management Strategy across all parts of the business.

�Embed some of the key learnings and innovations achieved during our COVID-19 response for future opportunity and potential in the business going forward.

Director Remuneration A review of Board Fees was conducted in May 2018, with an increase in Board Fees being effective from 1 July 2019, but still remaining well under the Board Fee Cap set in 2001. The review took into consideration the increased risks and complexities of the business within its new operating environment, the QSL Board’s current operating structure of only three of the four approved Non-Executive Director roles, and the increased workload associated with both these factors.

Joanne Nugent, General Manager Human Resources

Our People



Queensland Sugar Limited (QSL) is a public company limited by guarantee, incorporated under the Corporations Act 2001. The principal object of the company, without limiting its powers under the law, is to promote the development of the sugar industry.

The company has 31 members (refer page 2) representing the Australian sugar industry, consisting of:

�eight mill owner members

�23 grower representative members, comprising:

– 21 elected holders, who are growers elected to represent the 21 sugar-growing regions in Queensland

– two representatives, one appointed by each of the peak organisations representing cane growers – Australian Cane Farmers Association Limited and Queensland Cane Growers Organisation Limited.

The voting rights of members are outlined in QSL’s Constitution. A copy of QSL’s Constitution is available in the Corporate Structure section of QSL’s website (www.qsl.com.au).

The QSL Board of Directors

Role of the BoardThe Board has in place a Board Charter that sets out its role and responsibilities, with the objective of promoting the development of the sugar industry. The Board is responsible to QSL’s members for the strategic direction of QSL, monitoring of risk and governance, and overall performance of QSL. Other responsibilities of the Board include guiding the culture of QSL; strategy, planning and policy development; oversight of QSL’s management; monitoring compliance and risk management; health, safety and the wellbeing of employees and contractors; and stakeholder liaison and communication. The Board Charter is available in the Governance section of QSL’s website (www.qsl.com.au).

In addition, a key function of the Board includes monitoring, reviewing and overseeing risk management, in particular financial risk. Policies and procedures are in place to manage QSL’s strategic, financial and operational risks. A key QSL policy regarding risk management is the Corporate Risk Management Policy. Specific policies are in place to govern the management of sugar price and foreign exchange risk. Speculative transactions are not permitted and hedging is only permitted within policy parameters.

As part of QSL’s commitment to managing exposure to significant business risk, the company also has policies in place covering areas such as fraud and corruption, whistleblowers, ethics and conduct, appropriate workplace behaviour, privacy, and Competition and Consumer law compliance, as well as Work Health and Safety, and Environmental Policies.

Composition of the BoardThere are currently four Directors on the Board of QSL. QSL’s Constitution provides for a Board of a maximum of four independent Non-Executive Directors (and a minimum of three independent Directors), plus a Managing Director/Chief Executive Officer. There is an option in QSL’s Constitution for mill owner members and grower representative members to elect Mill Owner Directors and Grower Directors respectively, but this option has not been exercised.

There are currently three independent Non-Executive Directors on the QSL Board, these being Guy Cowan (Chairman), Sarah Scales and Craig Doyle.

Greg Beashel is the Managing Director/Chief Executive Officer of QSL. Details about the current Directors are in the Directors’ Report in the Financial Statements.

Appointment of DirectorsIndependent Non-Executive Directors are appointed to the QSL Board by QSL’s Board Selection Committee. The Board Selection Committee comprises four members: two members elected for a three-year term by mill owner members and two members elected for a three-year term by grower representative members.

Under the Constitution, when selecting independent Non-Executive Directors, the Board Selection Committee has regard to the mix of skills required for the Board to properly meet the company’s objectives, as well as the independence of the candidate.

Board CommitteesThere are currently four Board committees to assist the Board to carry out its functions: the Audit and Risk Committee, the Trading Risk Committee, the People and Remuneration Committee and the Operations Committee. Each Committee has authority from the Board to review and investigate any matter within the scope of its Charter and make recommendations to the Board.

Copies of QSL’s Board Committee Charters, which set out each Committee’s area of responsibilities, are available in the Governance section of QSL’s website (www.qsl.com.au).

Audit and Risk CommitteeThe Audit and Risk Committee (ARC) assists the Board to discharge its responsibilities via oversight of the enterprise risk management, control and compliance framework established by the Board and QSL management, and review of QSL’s risk management, finance and audit reporting.

The current members of the ARC are Guy Cowan (Committee Chair), Sarah Scales and Craig Doyle. The Managing Director, the Chief Financial Officer, Chief Operating Officer, Risk and Compliance Manager and representatives of the external and internal auditors attend meetings of this Committee by invitation.

Corporate Governance

Susan Campbell, Company Secretary/Legal Counsel



Trading Risk CommitteeThe Trading Risk Committee (TRC) assists the Board to discharge its responsibilities via oversight of risk management, control and compliance measures established by the Board and management relating to commodity and foreign currency hedging, marketing and sale of sugar, and chartering activities.

The current members of the TRC are Sarah Scales (Committee Chair) and Guy Cowan. The Managing Director, the Chief Financial Officer, Chief Operating Officer, Executive Manager Trading and Risk, and representatives of external and internal auditors attend meetings of this Committee by invitation.

Operations CommitteeThe Operations Committee (OC) assists the Board to discharge its responsibilities relating to workplace health and safety, environmental compliance, industrial relations and BST governance. In addition, this Committee also monitors of the operating environment at the BSTs, including the delivery of services by QSL and compliance by QSL of the key agreements in relation to operational activities at the BSTs.

The current members of the OC are Craig Doyle (Committee Chair) and Guy Cowan. The Managing Director, General Manager Operations and the Company Secretary are invited to attend meetings as appropriate.

People & Remuneration CommitteeThe People and Remuneration Committee (PRC) assists the Board to discharge its responsibilities relating to the composition, remuneration and performance of the Board and QSL employees, and remuneration and culture strategies/policies for QSL.

The current members of the PRC are Craig Doyle (Committee Chair), Guy Cowan and Sarah Scales. The Managing Director and General Manager Human Resources are invited to attend meetings as appropriate.

From left: Guy Cowan, Sarah Scales, Craig Doyle, Greg Beashel

Corporate Governance Continued

ContentsDirectors’ Report 20

Auditor’s Independence Declaration 24

Consolidated Statement of Comprehensive Income 25

Consolidated Statement of Financial Position 26

Consolidated Statement of Changes in Equity 27

Consolidated Statement of Cash Flows 28

Notes to the Financial Statements 29

Independent Auditor’s Report 46


Statutory Financial Report

DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2020 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

The Directors of Queensland Sugar Limited (‘QSL’ or ‘Parent Entity’) present their report on QSL and its Controlled Entities (‘Consolidated Entity’) for the year ended 30 June 2020 and the auditor’s report thereon.

DIRECTORS

The names and details of QSL’s Directors in office during the financial year and until the date of this report are as follows. Directors were in office for the entire period unless otherwise stated.

GUY COWAN BSc (Hons), FCA (UK), MAICD

CHAIRMAN OF THE BOARD, CHAIRMAN OF THE AUDIT & RISK COMMITTEE, MEMBER OF THE TRADING RISK COMMITTEE, MEMBER OF THE OPERATIONS COMMITTEE AND MEMBER OF THE PEOPLE AND REMUNERATION COMMITTEE

Guy joined the QSL Board on 1 January 2009 and was appointed Chairman at QSL on 1 January 2015. Guy has 11 years’ experience as an independent director and currently holds directorships with Santos Limited, Buderim Group Ltd, Winson Group Pty and Ability First Australia.

Guy was CFO of Fonterra Co-operative Group Limited, the New Zealand-based world leading exporter of dairy products from 2005 to 2009.

Prior to that he had a 23 year career in Shell International in various senior commercial and financial roles.

SARAH SCALES BAgSc, GAICD

NON-EXECUTIVE DIRECTOR OF THE BOARD, CHAIRMAN OF THE TRADING RISK COMMITTEE, MEMBER OF THE AUDIT & RISK COMMITTEE AND MEMBER OF THE PEOPLE AND REMUNERATION COMMITTEE

Sarah joined the QSL Board as a Non-Executive Director on 1 January 2013 and is Chairman of the Trading Risk Committee.

Sarah brings to the role more than 25 years of senior management experience working in domestic and international agribusiness. This includes six years working as the General Manager of AWB International Limited looking after the Single Desk wheat business for AWB Limited.

Sarah has extensive experience in business strategy development and soft commodity marketing with specific skills in the area of managing pools and price risk, including foreign exchange and commodity derivatives. Through her company, Clear Point Consulting, Sarah provides strategic management advice to agribusinesses and new entrants to the Australian agriculture sector.

Sarah’s non-executive directorships include The Pastoral Pork Company Pty Ltd, Boorolite Pastoral Company Pty Ltd, Aroona Holdings Pty Ltd, Agracom Pty Ltd, Busselton Farms Pty Ltd and AustOn Corporation Pty Ltd.

CRAIG DOYLE MBA (TechMgmt), AssocDipSc, PostGradDipMgt

NON-EXECUTIVE DIRECTOR OF THE BOARD, CHAIRMAN OF THE OPERATIONS COMMITTEE, CHAIRMAN OF THE PEOPLE AND REMUNERATION COMMITTEE AND MEMBER OF THE AUDIT & RISK COMMITTEE

Craig joined the QSL Board as a Non-Executive Director on 11 October 2016 and is the Chairman of the Operations Committee and Chairman of the People and Remuneration Committee.

Craig is currently the Chief Executive Officer at Coal Chain Capacity Pty Ltd. Prior to this, Craig was Chief Executive Officer at Mackay Regional Council.

Craig has held numerous senior executive roles specialising in operations, project management, and commercial including international greenfield and brownfield growth projects spanning the Australian refined and raw sugar industries and other areas.

GREG BEASHEL BE Chem (Hons), MBA, GAICD

MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER

Greg joined QSL in June 2000. Prior to being appointed as Managing Director and Chief Executive Officer on 1 February 2012, Greg was responsible for operations including port terminal management, capital and maintenance management, shipping operations, chartering and trade finance.

Before joining QSL, Greg spent seven years with CSR in a range of roles including operations, sugar marketing, hedging and trading. He has extensive experience in sugar refining and a strong understanding of customer perspectives and requirements. Greg is a graduate of the AGSM MBA Executive program and has a Bachelor of Chemical Engineering (Hons) from the University of New South Wales.

COMPANY SECRETARY

SUSAN CAMPBELL BComm, LLB (Hons), GradDip Sec Institute, GradDip App Corp Gov, GradCert Bus Admin

COMPANY SECRETARY AND LEGAL COUNSEL

Susan Campbell joined QSL as Company Secretary and Legal Counsel in October 2013 and is responsible for QSL’s corporate governance functions and the management of QSL’s legal issues. Susan has held a number of equivalent positions in other companies, including with Ergon Energy and North Queensland Bulk Ports Corporation.

Prior to QSL, Susan held the role of General Counsel/Company Secretary at Ergon Energy, having developed from the role of Group Legal Counsel. Susan brings more than 25 years’ experience in private practice and corporate in-house roles, specialising in commercial and corporate law.


SIGNIFICANT CHANGES

There were no significant changes in the state of affairs or in the nature of QSL’s or its Controlled Entity’s principal operations during the year.

PRINCIPAL OPERATIONS AND OBJECTIVES

The Consolidated Entity has its business activities in two segregated businesses, QSL Marketing and QSL Operations, which are supported by QSL’s Corporate Services division.

The principal operations of QSL Marketing is the marketing of raw sugar, the management of financial risk in connection with such marketing, financing of the Advances program and ancillary services in logistics. In pursuing these short and long term objectives, the company seeks to maximise the returns to marketing clients through revenues generated from pooling activity, enhancing its product and service offering to clients and focusing on adding value for the benefit of clients who have elected to utilise QSL Marketing’s services. The company’s strategy of maximising pool returns is achieved by keeping a tight control of costs, outperforming relevant benchmarks and optimising pool returns including the purchase and sale of raw sugar from other origins where opportunities arise.

The principal operations of QSL Operations is the safe and efficient operations of the Bulk Sugar Terminals (‘BSTs’) in accordance with the Operating Agreement (‘OA’) with Sugar Terminals Limited (‘STL’). The BST operations are performed for the whole of industry on a cost-recovery basis. This part of the business is “ring-fenced” to ensure that there is no conflict of interest in terms of sharing any logistical information of any BST user.

The principal operations of QSL Corporate Services is to support both business units by sharing resources including corporate governance, finance, legal, information technology, human resources and payroll.

The company measures its performance against key performance indicators. The most significant key performance indicator for QSL Marketing is in relation to the revenues generated for marketing clients from pooling activity against relevant benchmarks, while for QSL Operations it is efficient and safe operation of the BSTs.

REVIEW OF OPERATIONS AND RESULTS

A review of the Consolidated Entity’s operations and results for the year ended 30 June 2020 is set out below:

QSL’s Activities

The 2020 financial year (which predominately covers the 2019 Season) saw QSL Marketing provide raw sugar export marketing services to three (2019: three) Queensland milling companies under Raw Sugar Supply Agreements (‘RSSA’) and growers under four (2019: three) On-Supply Agreements (‘OSA’). QSL had four RSSAs (2019: four) and four OSAs (2019: three) during the year.

At the end of the 2019 Season, the RSSA with Far Northern Milling Pty Ltd (‘FNM’) expired. On 21 November 2019 QSL signed a Sugar Marketing Agreement (‘SMA’) with FNM for the 2020 Season and beyond. This agreement is in place until at least the end of the 2024 financial year (2023 Season). Bundaberg Sugar Limited, Isis Central Sugar Mill Company Ltd and WH Heck & Sons Pty Ltd have RSSAs until at least the end of the 2024 financial year (2023 Season).

DIRECTORS’ REPORT CONTINUED

FOR THE YEAR ENDED 30 JUNE 2020 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

DIRECTORS’ MEETINGS

The number of meetings of QSL’s Directors (including meetings of Committees of Directors) and the number of meetings attended by each Director during the financial year were:

BOARD OF DIRECTORS

AUDIT RISK COMMITTEE (A&RC)

TRADING & RISK COMMITTEE (TRC)

OPERATIONS COMMITTEE (OC)

PEOPLE & REMUNERATION

COMMITTEE (PRC)

HE

LD1

ATTE

ND

ED

HE

LD

ATTE

ND

ED

HE

LD

ATTE

ND

ED

HE

LD

ATTE

ND

ED

HE

LD

ATTE

ND

ED

Guy Cowan 11 11 5 5 5 5 4 4 3 3

Sarah Scales 11 11 5 5 5 5 4 42 3 3

Craig Doyle 11 11 5 5 5 53 4 4 3 3

Greg Beashel4 11 11 5 5 5 5 4 4 3 3

1 Represents the number of meetings held during the time the Director held office during the 2020 financial year2 Sarah Scales is not a member of OC but attended the meetings by invitation3 Craig Doyle is not a member of TRC but attended the meetings by invitation4 Greg Beashel is not a member of the Board Committees, but attends meetings by invitation




REVIEW OF OPERATIONS AND RESULTS CONTINUED

QSL’s Activities (continued)

QSL Operations operates six BSTs under an OA with STL. The OA was signed on 7 June 2017 with an initial five year term with a three year rolling term thereafter. During the year the OA rolled over and will be in place until at least 30 June 2024.

Revenues

QSL recorded sales revenue from raw sugar for the 2020 financial year of $879.5 million (1.9 million tonnes), a decrease of $145.3 million from the previous year’s revenue of $1,024.8 million (2.3 million tonnes). The lower sales revenue number compared to the prior year is a result of decreased tonnage supplied to and purchased by QSL. QSL provided marketing services, including inventory financing, for 2.2 million tonnes (2019: 2.3 million tonnes) of raw sugar in the financial year. Consistent with prior years, QSL continues to be focused on marketing raw sugar to Asian markets to obtain the highest net return for pooling participants. QSL continues to transact in other-origin sugar activities to complement the existing marketing program by allowing pool sales to be fulfilled through either supplying Queensland sugar or by supplying sugar from other destinations in order for QSL to meet customer demand and maintain its marketing presence in a growing Asian market.

QSL received service fees of $37.5 million from STL for the operation of its six BSTs (2019: $38.2 million) under the terms of the OA. QSL Operations performs the operational services, maintenance and repairs, and capital works program at the BSTs under the supervision of STL. QSL Operations charges service fees to STL on a cost-recovery basis without mark-up or margin. The corresponding costs are included in the Expenses from Continuing Operations.

Expenses

Payments for raw sugar for the year ended 30 June 2020 were $769.1 million, a decrease of $128.8 million from the prior year’s payments of $897.9 million. This was predominately the result of decreased tonnage.

Freight and brokerage costs were down by $4.7 million this year compared to the prior year of $50.7 million primarily due to lower tonnage shipped. QSL Marketing incurred storage and handling charges of $41.6 million for the year ended 30 June 2020 (2019: $46.0 million). Borrowing costs decreased by $2.1 million to $7.0 million (2019: $9.1 million) from the prior year due to a decrease in tonnage and interest rates.

Net Surplus / (Deficit)

QSL’s activities delivered a nil surplus (2019: $0.4 million deficit) for the Consolidated Entity in the 2020 financial year. All net returns have been passed back to QSL Marketing’s sugar suppliers through the Shared Pool. QSL Marketing will continue to maximise pool returns and pass net pool returns through to those using QSL’s marketing services. All net costs incurred by QSL Operations in relation to the OA are passed onto STL for recovery under the OA.

Banking and Financing

QSL’s funding arrangements supports both QSL Marketing and QSL Operations businesses. QSL’s funding has both committed and uncommitted facilities to support the company’s activities. QSL’s funding requirements are met by the limits contained in the committed facilities. The committed facilities comprise of a Syndicated Facility Agreement (‘SFA’) and a Syndicated Inventory Facility (‘SIF’) agreement.

QSL had the use of a total facility limit of A$450.0 million SFA with the SIF having a sub-limit of up to A$250.0 million in committed funding during the year, which was due for expiry in September 2020. This was used to fund the 2019 Season financing requirements. The SFA limit was adjusted downwards during the year based on seasonal requirements and to save finance charges.

In April 2020 QSL renewed its committed financing arrangements with its existing syndicate members for a further 18 months to 30 September 2021. The total facility limit has been set at A$400.0 million for the funding requirements of the 2020 Season. The renewed facility comprises a total funding limit of A$400.0 million SFA with the SIF having a sub-limit of up to A$200.0 million. The terms and conditions of the new committed facilities have substantially the same terms. Consistent with the prior facility, QSL may request a further 12 month extension to the maturity date of the committed financing arrangements prior to 31 March 2021. These arrangements allow a seasonally based flexible solution providing the company’s core liquidity requirements at a competitive rate on a revolving basis.

QSL continues to have a number of uncommitted facilities with financiers for short-term money market funding. As at 30 June 2020 uncommitted funding was unutilised (2019: $14.4 million).

COVID-19 Impact

COVID-19 is a respiratory illness which was declared a world-wide pandemic by the World Health Organisation in March 2020. COVID-19 and measures to slow the spread of the illness have had a significant impact on organisations and markets throughout the world. QSL has largely been unaffected by the impact of COVID-19 with operations continuing throughout the pandemic and lockdown periods. QSL’s revenue is directly impacted by tonnage supplied, sugar prices and currency. The Consolidated Entity has considered the impact of COVID-19 in preparing its financial statements which is negligible.

EVENTS AFTER REPORTING DATE

Other than the items reported in Note 19 of the financial report, no matter or circumstance has arisen since the end of the reporting period that has significantly affected or may significantly affect:

� The Consolidated Entity’s operations in future financial years

� The result of those operations in future financial years

� The Consolidated Entity’s state of affairs in future financial years.


LIKELY DEVELOPMENTS

The Consolidated Entity will continue to provide marketing of raw sugar, the management of financial risk in connection with such marketing and ancillary services in transport and logistics for those mill owners and growers that choose QSL’s Marketing division as their marketer of raw sugar. Additionally, QSL will continue to provide BST operational services by QSL Operations for all users under the OA with STL. QSL will continue to promote the development of the Queensland sugar industry in accordance with the objects set out in its Constitution.

GUARANTEE AMOUNT BY MEMBERS

As at 30 June 2020 the Company had 31 members representing the Australian sugar industry. These members consisted of:

� eight mill owner members; and

� 23 grower representative members

For each class of membership in the Company the amount which a member of that class is liable to contribute if the Company is wound up is $100 per member. The total amount that mill owner members and grower representative members of the Company are liable to contribute if QSL is wound up is $800 and $2,300 respectively, totalling $3,100.

On 25 July 2019, Far Northern Milling Pty Ltd was admitted as a mill owner member of QSL, as they became eligible under QSL’s constitution due to their acquisition of the Mossman Mill from Mackay Sugar Limited on 8 July 2019.

ENVIRONMENTAL REGULATION

The Consolidated Entity’s operations are subject to significant environmental regulation under Commonwealth and Queensland law, particularly with regard to air, noise, water, waste management and site contamination at its BST operations. The Directors are not aware of any significant breaches of environmental regulation during the reporting period.

AUDITOR INDEPENDENCE

The auditor’s independence declaration is set out on page 24 and forms part of the Directors’ Report for the year ended 30 June 2020.

INDEMNITIES AND INSURANCE

The Constitution of QSL provides that the company, to the extent permitted by law, must indemnify each person who is, or has been, a Director or Secretary of the company against any liability (resulting directly or indirectly from facts or circumstances relating to the person serving in that capacity in relation to the company):

� To any person (other than the company) which does not arise out of conduct involving the lack of good faith or conduct known to the person to be wrongful

� For costs and expenses incurred by the person in defending proceedings, whether civil or criminal, in which judgement is given in favour of the person or in which the person is acquitted, or in connection with any application in relation to such proceedings in which the court grants relief to the person under the Corporations Act 2001.

The Constitution of the company also provides that the Board of Directors may authorise the company to, and the company may, enter into any insurance policy for the benefit of any person who is, or has been, a Director, Secretary, auditor, employee or other officer of the company. The obligation of the company to indemnify persons as set out in the preceding paragraph is reduced to the extent that a person is entitled to an indemnity in respect of that liability under a contract of insurance. The company has paid, or has agreed to pay, premiums in respect of contracts insuring against liability, persons who are or have been officers of the company, namely, any past, present or future Director or officer of the company. The contracts prohibit disclosure of the extent of the cover and amounts of the premium.

ROUNDING OF AMOUNTS

Unless otherwise shown in the financial report, amounts have been rounded to the nearest $1,000 (where rounding is applicable and where noted ($’000)) under the option available to the Controlled Entities under ASIC Corporations (rounding in Financial/Directors Report) Instrument 2016/191. QSL is a company to which the Class Order applies.

The Directors’ Report is signed for and on behalf of the Directors in accordance with a resolution of the Board of Directors of QSL.

Guy Cowan Chairman

14 September 2020




AUDITOR’S INDEPENDENCE DECLARATION FOR THE YEAR ENDED 30 JUNE 2020 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Ernst & Young 111 Eagle Street Brisbane QLD 4000 Australia GPO Box 7878 Brisbane QLD 4001

Tel: +61 7 3011 3333 Fax: +61 7 3011 3100 ey.com/au

Auditor’s independence declaration to the directors of Queensland Sugar Limited As lead auditor for the audit of Queensland Sugar Limited for the financial year ended 30 June 2020, I declare to the best of my knowledge and belief, there have been:

a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of Queensland Sugar Limited and the entities it controlled during the financial year.

Ernst & Young

Rebecca Burrows Partner 14 September 2020


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2020 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

Note2020 $’000

2019 $’000

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

REVENUES FROM CONTINUING OPERATIONSSales of raw sugar 879,458 1,024,782

Service fee revenue from terminal operations 37,488 38,168

Net foreign currency exchange loss (5,648) (10,507)

Interest income 198 310

Share investment income 3 3,601 3,255

Other revenues 612 584

915,709 1,056,592

EXPENSES FROM CONTINUING OPERATIONSPayments for raw sugar 769,104 897,886

Freight and brokerage 46,050 50,732

Storage and handling charges 41,613 46,030

Operating lease rental - 504

Salaries and employee benefits 25,035 23,680

Borrowing costs 4 6,966 9,088

Depreciation 3,305 3,629

Other expenses 5 23,636 25,417

915,709 1,056,966

NET SURPLUS/(DEFICIT) ATTRIBUTABLE TO MEMBERS OF QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES - (374)

OTHER COMPREHENSIVE INCOME FOR THE YEAR

Items that may be reclassified subsequently to profit or loss

Net gain on equity instruments at fair value through other comprehensive income 1,795 471

TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO MEMBERS OF QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES 1,795 97

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.


CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2020 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

Note

2020 $’000

2019 $’000

ASSETS

CURRENT ASSETSCash and cash equivalents 15 31,062 2,544

Trade and other receivables 6 35,505 74,991

Inventories 7 87,665 99,652

Prepayments 1,806 36

Other financial assets 8 30,323 9,713

TOTAL CURRENT ASSETS 186,361 186,936

NON-CURRENT ASSETSEquity instruments at fair value through other comprehensive income 9 33,242 29,780

Property, plant and equipment 10 21,463 18,481

Other financial assets 8 4,757 151

TOTAL NON-CURRENT ASSETS 59,462 48,412

TOTAL ASSETS 245,823 235,348

LIABILITIES

CURRENT LIABILITIESTrade and other payables 11 65,255 63,252

Other financial liabilities 12 37,285 8,082

Interest bearing liabilities 13, 15 79,104 107,210

Provisions 14 8,108 6,863

TOTAL CURRENT LIABILITIES 189,752 185,407

NON-CURRENT LIABILITIESTrade and other payables 11 874 -

Other financial liabilities 12 4,852 793

Provisions 14 767 1,365

TOTAL NON-CURRENT LIABILITIES 6,493 2,158

TOTAL LIABILITIES 196,245 187,565

NET ASSETS 49,578 47,783

EQUITYReserves 29,734 27,939

Retained surpluses 19,844 19,844

TOTAL EQUITY 49,578 47,783

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2020 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

RETAINED SURPLUSES

RESERVES TOTAL EQUITY

Capital Fair value reserve of financial assets

at FVOCI $’000 $’000 $’000 $’000

BALANCE AT 1 JULY 2018 20,218 23,242 4,226 47,686

Net surplus/(deficit) (374) - - (374)

Other comprehensive income - - 471 471

Total comprehensive gain / (loss) (374) - 471 97

BALANCE AT 30 JUNE 2019 19,844 23,242 4,697 47,783

BALANCE AT 1 JULY 2019 19,844 23,242 4,697 47,783

Net surplus/(deficit) - - - -

Other comprehensive income - - 1,795 1,795

Total comprehensive gain / (loss) - - 1,795 1,795

BALANCE AT 30 JUNE 2020 19,844 23,242 6,492 49,578

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.


CONSOLIDATED STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2020 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

2020 2019NOTE $’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from sales to customers (inclusive of GST) 961,845 970,246

Payments for raw sugar (inclusive of GST) (797,193) (946,890)

Payments to suppliers and employees (inclusive of GST) (151,141) (131,367)

Receipts under financing arrangement (inclusive of GST)* 678,347 481,094

Payments under financing arrangement (inclusive of GST)* (687,692) (476,426)

GST recovered 68,112 77,537

Interest and other costs borrowing costs paid (6,966) (9,088)

Interest received 198 310

Cash settlements of derivative instruments (5,476) (9,281)

Other receipts 577 552

NET CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES 60,611 (43,313)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of equity instruments (1,682) (2,214)

Purchase of plant and equipment (4,571) (3,296)

Proceeds from sale of plant and equipment 138 151

Dividends and franking credits received 3,486 3,133

NET CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES (2,629) (2,226)

CASH FLOWS FROM FINANCING ACTIVITIES

Other loans to suppliers (447) (867)

Payment of principal portion of lease liabilities (480) -

NET CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES (927) (867)

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 57,055 (46,406)

Cash and cash equivalents at beginning of the year (104,666) (58,260)

Effects of exchange rate changes on cash and cash equivalents (431) -

CASH AND CASH EQUIVALENTS AT END OF YEAR 15 (48,042) (104,666)

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

* Under the Syndicated Inventory Financing (‘SIF’) agreement, refer to Note 15, QSL transfers the legal title of the sugar to the financing bank as collateral for the amount borrowed. Upon repayment of the SIF the legal title is transferred back to QSL. The transfer to/from the bank is subject to GST however the transfer to/from the bank is not recognised as revenue/expense in the Consolidated Statement of Profit or Loss as control remains with QSL.


1 CORPORATE INFORMATION

The financial report of QSL and its Controlled Entities for the year ended 30 June 2020 was authorised for issue in accordance with a resolution of the Directors on 14 September 2020.

QSL is a company limited by guarantee and incorporated in Australia. The Consolidated Entity’s principal activities are the sale of raw sugar for export and the operation of the six BSTs located in Queensland.

QSL’s Controlled Entities comprise of QSL Investments (No1) Pty Ltd, QSL Investments (No2) Pty Ltd and QSL Investments (No3) Pty Ltd.

The registered office of QSL is located at Suite A, Level 12, 348 Edward Street, Brisbane, Queensland.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) BASIS OF PREPARATION

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards – Reduced Disclosure Requirements and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has also been prepared under the historical cost convention, except for derivative financial instruments and equity financial assets at fair value through other comprehensive income which have been measured at fair value.

The financial report includes consolidated financial statements of QSL and its Controlled Entities with supplementary information about the Parent Entity included in Note 22 to the financial statements.

The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($000) unless otherwise stated.

(b) BASIS OF CONSOLIDATION

The consolidated financial statements comprise the financial statements of QSL and its Controlled Entities as at 30 June 2020. Under the Corporations Amendment (Corporate Reporting Reform) Act 2010 supplementary information about the Parent Entity is included in Note 22 to the financial statements.

The financial statements of the Controlled Entities are prepared for the same reporting period as the Parent Entity, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and surplus and losses resulting from intra-group transactions have been eliminated in full.

(c) STATEMENT OF COMPLIANCE

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards – Reduced Disclosure Requirements and other authoritative pronouncements of the Australian Accounting Standards Board. Queensland Sugar Limited is a not-for-profit entity for financial reporting purposes under Australian Accounting Standards. The consolidated financial statements for the Group are tier 2 general purpose financial statements which have been prepared in accordance with Australian Accounting Standards – Reduced Disclosure Requirements (AASB-RDRs). The Consolidated Entity prepares one set of consolidated financial statements and provides supplementary information about the Parent Entity, QSL in Note 22 of the financial statements.

(d) ACCOUNTING STANDARDS

Newly adopted standards

The Consolidated Entity has adopted the following new accounting standards, which have become effective this year:

AASB 16 Leases

AASB 16 Leases was issued in January 2016 and replaces AASB 117 Leases. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases; and requires lessees to account for all leases under a single on-balance sheet model.

This standard was adopted on 1 July 2019 using the modified retrospective approach. On adoption of the standard, a lease liability and right-of-use asset of $1.7m was recognised. The adoption of the standard did not have a material impact on profit or loss.

AASB 15 Revenue from Contracts with Customers

AASB 15 Revenue from Contracts with Customers was issued in September 2018 and replaces AASB 118 Revenue and AASB 111 Construction Contracts. The standard provides a comprehensive framework for determining the timing and quantum of revenue to be recognised, replacing the notion of risk and rewards with control.

This standard was adopted on 1 July 2019 and had no material impact on the Consolidated Entity.

(e) CASH AND CASH EQUIVALENTS

Cash in the Consolidated Statement of Financial Position includes cash on hand and at bank, which are subject to insignificant risk of changes in value.

(f) FUTURES AND OPTIONS MARKET HEDGING

Transactions in sugar futures and options are carried out as part of the range of pricing mechanisms for physical sales of sugar. The results of such transactions are linked with the appropriate sugar sales contracts and are thus included in sales revenue. At reporting date, those relating to future years are accounted for as derivatives (refer Note 2(i)).

(g) REVENUE RECOGNITION

Revenue is recognised to the extent that the entity can conclude that control has passed to the customer and when the performance obligations of a contract have been satisfied. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes. The specific recognition criteria described below must also be met before revenue is recognised.

(i) Sales of raw sugar

Sales to customers are made on commercial terms with settlement generally on a cash against documents or letter of credit basis, predominantly in United States (‘US’) dollars. Sales are recognised when the transfer of control occurs and individual performance obligations are satisfied. A sales contract can contain two performance obligations as follows:

� The supply of a quantity and suitable quality of raw sugar. This performance obligation is deemed complete once the customer has control of the sugar.

� The provision of freight. This performance obligation is met as the ship reaches its nominated discharge port, specified in the contract.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2020 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES



2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(g) REVENUE RECOGNITION CONTINUED

Sales revenue also includes transactions relating to foreign exchange, sugar futures and options operations. Sales revenue and derivatives are presented on a net basis as the derivatives are entered into to hedge exposure on sales contracts resulting in offsetting that accurately reflects the substance of the transaction.

(ii) Service fee revenue from terminal operations

Service fee revenue from terminal operations is recognised when the Consolidated Entity is entitled to recover all costs incurred in providing operational services under the Operating Agreement and performance obligations are satisfied. These fees represent the recovery of operating costs free of any mark-ups or margins. The associated matching costs recovered are included in the Expenses from Continuing Operations.

(iii) Dividend and franking credit income

Revenue is recognised when the Consolidated Entity’s right to receive the payment is established.

(iv) Interest income

Interest income is recorded using the effective interest rate method.

(h) FOREIGN CURRENCY TRANSLATION

The US dollar is the principal currency in which sugar is traded. The financial statements are presented in Australian dollars, which is the Consolidated Entity’s functional and presentation currency.

Transactions denominated in foreign currencies are initially recorded in the functional currency at the exchange rates prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of foreign currency denominated monetary assets and liabilities using rates applicable at reporting date are recognised in the Consolidated Statement of Profit or Loss.

Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date.

(i) DERIVATIVES

Derivative instruments are used by the Parent Entity to manage commodity and foreign currency exposures connected with the sale of each season’s Australian raw sugar production and purchases and sales of non-Australian third-party sugar. The Parent Entity does not transact without an underlying physical exposure. In accordance with the Parent Entity’s Financial Risk Management Policy, derivatives are entered into to manage defined sugar price and currency exposures. These exposures relate to known or anticipated sales of raw sugar. Derivatives are stated at fair value with any gains or losses arising from changes in fair value taken directly to the Consolidated Statement of Profit or Loss.

Forward foreign currency and sugar swap contract terms do not exceed five years. Sugar futures and option contracts are entered into with terms no greater than three years. Details of open contracts at reporting date are provided in Note 23.

Amounts receivable or payable at reporting date under sugar futures and options and foreign currency transactions relating to future pools’ production are recognised as amounts owing to or amounts owing from future pools, and are included in the Statement of Financial Position on a net basis (netting performed in accordance with AASB132) with gains or losses arising from changes in the value of amounts owing to or amounts owing from future pools taken directly to the Consolidated Statement of Profit or Loss (refer to Notes 8 and 12).

In relation to the fair value hierarchy, exchange traded instruments are valued using Level 1 inputs, Over-the-Counter (‘OTC’) instruments are valued using Level 2 inputs and OTC exotic instruments are valued using Level 3 inputs.

(j) FAIR VALUE MEASUREMENT

QSL measures financial instruments, such as, derivatives, and non-financial assets, at fair value at each reporting date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

� In the principal market for the asset or liability, or

� In the absence of a principal market, in the most advantageous market for the asset or liability

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

QSL uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For the purpose of fair value disclosures, QSL has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

(k) TRADE AND OTHER RECEIVABLES

Trade receivables, which are generally settled against documents when each vessel is loaded, are recognised and carried at amortised cost, recognising any lifetime expected credit losses.

(l) INVENTORIES

Materials and general store items used for maintenance at BSTs are expensed in the year in which they are incurred.

Raw sugar stock on hand at reporting date has been valued at the lower of cost and net realisable value. The cost of stock on hand in respect of each season’s production has been determined as the respective weighted average of pool prices payable to sugar suppliers as calculated in accordance with the Pricing Pool terms.




(l) INVENTORIES CONTINUED

In respect of the following season’s stock on hand, where the final pool price has not been established, the cost has been determined on the basis of the weighted average of forecast pool prices at reporting date. Where sales of the following season’s production are made prior to reporting date, those stocks are valued on the basis of the net proceeds expected to be received from those shipments.

Raw sugar on hand comprises stock on hand at BSTs at reporting date. Sugar stocks are recognised when sugar is received and property to the sugar passes to the Consolidated Entity. In relation to the determination of pool prices each season, any raw sugar on hand at reporting date is valued as follows:

(i) Sugar priced - valued at the lower of cost and net realisable value and converted to Australian dollars at the exchange rate ruling at reporting date

(ii) Sugar unpriced - valued at the lower of cost and the value at reporting date on the basis of the Intercontinental Exchange (‘ICE’) No 11 or No 16 futures settlement price for the quoted positions or market day average prices in respect to specific contracts of sale and converted to Australian dollars at the exchange rate ruling at reporting date.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(m) CURRENT ASSETS

Current assets comprise cash at bank and on hand, term deposits, debtors, other receivables relating to pre-crush advances, prepayments, raw sugar stock on hand, amounts owing from future pools, unrealised gains on foreign currency transactions and unrealised gains on sugar futures and options contracts that are expected to be realised within 12 months from reporting date. The Consolidated Entity classifies all other assets as non-current.

(n) PROPERTY PLANT AND EQUIPMENT

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such costs include the costs of replacing parts that are eligible for capitalisation when the cost of replacing the part is incurred.

(i) Depreciation

Depreciation is provided on a straight-line basis on all plant and equipment, over the estimated useful life of the assets as follows:

Asset Class 2020 2019

Plant and equipment 2 to 30 years 3 to 50 years

The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each reporting date.

(ii) Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with the recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. Impairment exists when the carrying value of an asset or cash-generating unit exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount.

(iii) Derecognition and disposal

An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the Consolidated Statement of Profit or Loss in the year the asset was derecognised.

(o) LEASES

The Consolidated Entity applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Consolidated Entity recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

(i) Right-of-use assets

Right-of-use assets are recognised at the commencement date of the lease and are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful life of the asset.

(ii) Lease Liabilities

At the commencement date of the lease, the Consolidated Entity recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments less any lease incentives receivable, variable lease payments that depend on an index or rate, and amounts expected to be paid under residual value guarantees.

In calculating the present value of lease payments, the Consolidated Entity uses its incremental borrowing rate at the lease commencement date. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for lease payments made. The carrying amount of lease liabilities is remeasured if there is a modification, change in lease term or change in lease payment.

(iii) Short-term leases and leases of low-value assets

Lease payments on short-term leases and leases of low-value assets are recognised as an expense on a straight-line basis over the lease term.

(p) IMPAIRMENT OF ASSETS

The Consolidated Entity assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Consolidated Entity makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use determined for the individual asset, unless the asset does not generate cash inflows that are largely independent of those from the other assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of the asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.



(p) IMPAIRMENT OF ASSETS CONTINUED

In assessing value in use, the estimated 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. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at the revalued amount (in which case the impairment loss is treated as a revaluation decrease).

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in the prior years. Such reversal is recognised in the Consolidated Statement of Profit or Loss unless the asset is carried at a revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future years to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(q) CURRENT LIABILITIES

Current liabilities comprise all amounts owing at reporting date and payable within 12 months, including amounts due to suppliers. The Consolidated Entity classifies all other liabilities as non-current.

(r) TRADE AND OTHER PAYABLES

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year that are unpaid and arise when the Consolidated Entity becomes obliged to make future payments in respect of the purchase of those goods and services.

(s) INTEREST BEARING LOANS AND BORROWINGS

All loans and borrowings are initially recognised at fair value of the consideration received less directly attributable transaction costs. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

(t) PROVISIONS

Provisions are recognised when the Consolidated Entity has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability.

(u) EMPLOYEES LEAVE BENEFITS

(i) Wages, salaries, annual leave and sick leave

Liability 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 other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience in employee departures, and years of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity that match as closely as possible the estimated future cash outflows.

(v) POST-EMPLOYMENT BENEFITS

Defined Benefit Plan

The Consolidated Entity contributes to one defined benefit superannuation plan on behalf of certain eligible employees.

In respect of QSL’s defined benefit superannuation plan, any contributions made to the superannuation plan by the Consolidated Entity are recognised against surpluses when due. Employees of QSL who have a defined benefit plan are members of QSuper (refer Note 17).

For employees who are members of QSuper, the Treasurer of Queensland, based on advice received from the State Actuary, determines employer contributions for superannuation expenses.

No liability is recognised for accruing the above superannuation benefit in these financial statements; the liability being held on a whole-of-government basis and reported in the whole-of-government financial report prepared pursuant to AAS 31 - Financial Reporting by Governments.

(w) NATURE AND PURPOSE OF RESERVES

(i) Capital reserve

The capital reserve represents the value of equity transferred from Queensland Sugar Corporation in 2000, which was deducted from pool proceeds to fund purchases of plant and equipment.

(ii) Fair value reserve of financial assets at FVOCI

Changes in the fair value of equity investments at fair value through other comprehensive income are taken to the fair value reserve of financial assets at FVOCI in the Consolidated Statement of Other Comprehensive Income. Amounts are recognised in the Consolidated Statement of Profit or Loss when the associated assets are sold or impaired.




(x) INCOME TAX

Parent Entity

In accordance with sections 50-1 and 50-40 of the Income Tax Assessment Act 1997, QSL is exempt from income tax.

Controlled Entities

The Controlled Entities are income tax paying entities. However, the Controlled Entities have made tax losses as a result of excess franking credits from the dividends from their holding in STL G class shares. These Controlled Entities continue to carry forward their tax losses to offset their taxable income. No deferred tax asset has been recognised in relation to these tax losses.

(y) DEFERRED INCOME AND EXPENSES

Income and expenses have been carried forward only in circumstances relating to future sales proceeds, the receipt of which is reasonably assured.

(z) GOODS AND SERVICES TAX

Revenues, expenses and assets are recognised net of the amount of Goods and Services Tax (‘GST’), except:

(i) Where the amount of GST incurred is not recoverable from the Australian Taxation Office (‘ATO’), it is recognised as part of the cost of the acquisition of an asset or as a part of the item of expense; or

(ii) For receivables or payables, which are recognised inclusive of GST, the net amount of GST recoverable from or payable to the ATO is shown under current receivables or payables.

(aa) BORROWING COSTS

Borrowing costs are recognised as an expense when incurred.

(ab) COMPARATIVES

Where necessary, comparative information has been reclassified to achieve consistency in disclosure with current financial year amounts and other disclosures.





2020 $’000

2019 $’000

3 SHARE INVESTMENT INCOME

Dividends from STL G class shares 2,654 2,423

Refund of franking credits (STL G class shares) 947 832

TOTAL SHARE INVESTMENT INCOME 3,601 3,255

4 EXPENSES FROM CONTINUING OPERATIONS

Borrowing costs expense

Interest expense 4,196 6,442

Facility fees and bank charges 2,770 2,646

TOTAL BORROWING COST EXPENSE 6,966 9,088

5 OTHER EXPENSES FROM CONTINUING OPERATIONS

Other Expenses 23,636 25,417 These expenses predominately relate to operating expenditure incurred in operating the six BSTs under the OA with STL.

Under the OA, QSL Operations provide BST logistics services for all Storage and Handling Agreement (‘SHA’) users under the direction of STL. These services are provided directly to STL on a cost-recovery pass-through basis. The revenue for these services is reflected in QSL’s Statement of Profit or Loss as “Service fee revenue from terminal operations”.


2020 2019$’000 $’000

6 TRADE AND OTHER RECEIVABLES

CURRENTTrade debtors 431 46,575

Other debtors

Futures margins and deposits 2,876 3,487

GST receivable 914 2,724

Other loans to sugar suppliers 1,314 867

Receivables – STL a 23,469 16,206

Other 6,501 5,132

35,074 28,416

TOTAL TRADE AND OTHER RECEIVABLES (CURRENT) 35,505 74,991

a Under the OA with STL, QSL purchases capital items on behalf of STL. This receivable relates to these capital purchases and service fees payable under the OA.

7 INVENTORIES

Bulk Australian raw sugar 87,665 99,652

TOTAL INVENTORIES 87,665 99,652

At 30 June 2020, 140,000 tonnes of 2019 Season raw sugar and 78,594 tonnes of 2020 Season raw sugar remained on hand totalling 218,594 tonnes of bulk raw sugar, inclusive of 3,686 tonnes loaned to Wilmar (see note 8). This raw sugar held in the BSTs was used as collateral towards a drawdown of $29.1m under the Sugar Inventory Financing (SIF) Agreement at 30 June 2020 (refer to note 13).

At 30 June 2019, 134,450 of 2018 Season and 96,442 tonnes of 2019 Season raw sugar remained on hand totalling 230,892 tonnes of inventory. There was a single drawdown of $92.8m under the SIF at 30 June 2019.

8 OTHER FINANCIAL ASSETS

CURRENTUnrealised gains on derivatives:

Sugar futures and option contracts 28,821 7,769

Sugar receivable – from Wilmar a 1,502 1,944

TOTAL OTHER FINANCIAL ASSETS (CURRENT) 30,323 9,713

NON-CURRENTUnrealised gains on derivatives:

Sugar futures and option contracts 4,757 -

Amount owing from future pools b - 151

TOTAL OTHER FINANCIAL ASSETS (NON-CURRENT) 4,757 151

a Relates to the supply of sugar pursuant to the Sugar Inventory Loan Agreement between QSL and Wilmar dated 22 May 2018 in relation to Grower Economic Interest Sugar

b Represents unrealised losses on sugar hedges, foreign exchange hedges and option contracts which will be allocated against future years’ raw sugar sales in relation to tonnage for 2021 Season and beyond



2020 2019$’000 $’000

9 EQUITY INSTRUMENTS

Equity instruments at fair value through other comprehensive income:

NON-CURRENT

Shares at fair value a 33,242 29,780

a QSL holds 16.7% (2019: 16.0%) of the G (Grower) class of share capital of STL, a company that owns bulk raw sugar storage facilities in Queensland. Under the OA with STL, QSL operates and maintains these facilities of behalf of the asset owner, STL. The STL G class shares are traded on the National Stock Exchange of Australia. These investments have been classified as Level 2 in terms of the fair value hierarchy.

QSL also holds shares in the Intercontinental Exchange, Inc which is listed on the New York Stock Exchange. These shares are classified as Level 1 in relation to the fair value hierarchy.

10 PROPERTY, PLANT AND EQUIPMENT

Plant and equipment a:

At cost 32,952 31,964

Accumulated depreciation (12,863) (13,483)

20,089 18,481Right-of-use asset b:

At cost 1,819 -

Accumulated depreciation (445) -

1,374 -

TOTAL PROPERTY, PLANT AND EQUIPMENT 21,463 18,481

a Plant and equipment relates predominately to BST sugar loading equipment (“yellow goods” including front end loaders, excavators), motor vehicles, mobile plant and IT equipment in relation to inloading and outloading raw sugar from the BSTs.

b Right-of-use asset predominately relates to levels 11 & 12 Brisbane office leases.

Reconciliations

Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the financial year are set out below.

Plant and equipment:

Carrying amount at the beginning of the year 18,481 19,083

Additions 4,571 3,296

Disposals (103) (269)

Depreciation expense (2,860) (3,629)

Carrying amount at the end of the year 20,089 18,481

Right-of-use asset:

Opening balance on adoption of standard 1,684 -

Additions 135 -

Depreciation expense (445) -

Carrying amount at end of the year 1,374 -

TOTAL PROPERTY, PLANT AND EQUIPMENT 21,463 18,481



2020 2019$’000 $’000

11 TRADE AND OTHER PAYABLES

CURRENTCreditors

Queensland sugar suppliers 51,020 37,926

Trade creditors 4,247 4,842

Other 9,488 20,484

Lease liability 500 -

TOTAL TRADE AND OTHER PAYABLES (CURRENT) 65,255 63,252

NON-CURRENTLease liability 874 -

TOTAL TRADE AND OTHER PAYABLES (NON-CURRENT) 874 -

12 OTHER FINANCIAL LIABILITIES

CURRENTUnrealised losses on derivatives:

Foreign currency contracts 278 711

Deferred income relating to the next year:

Amounts owing to future pools a 37,007 7,371

TOTAL OTHER FINANCIAL LIABILITIES (CURRENT) 37,285 8,082

NON-CURRENT Unrealised losses on derivatives:

Foreign currency contracts 175 15

Sugar futures and option contracts 57 778

Deferred income relating to a future period:

Amounts owing to future pools b 4,620 -

TOTAL OTHER FINANCIAL LIABILITIES (NON-CURRENT) 4,852 793

a Represents unrealised gains on sugar hedges, foreign exchange hedges and option contracts which will be allocated against next year’s raw sugar sales in relation to 2020 Season tonnage

b Represents unrealised gains on sugar hedges, foreign exchange hedges and option contracts which will be allocated against future year’s raw sugar sales in relation to 2021 Season tonnage and beyond

13 INTEREST BEARING LIABILITIES

CURRENTSecured

Short-term facilities (uncommitted) a - 14,426

Syndicated Inventory Financing agreement (committed) b 29,104 92,784

Syndicated Facility Agreement (committed) b 50,000 -

TOTAL INTEREST BEARING LIABILITIES (CURRENT) 79,104 107,210

a Uncommitted short-term facilities providing funding for the advances program, sugar futures settlements and margins, and working capital under various uncommitted bank facilities

b Represents funding for the advances program, sugar futures settlements and margins, and general working capital



14 PROVISIONS STAFF INCENTIVE

ANNUAL LEAVE

LONG SERVICE

LEAVE

SICK LEAVE a

TOTAL

$’000 $’000 $’000 $’000 $’000

BALANCE AT 1 JULY 2018 3,554 1,429 3,043 32 8,058

Arising during the year 2,994 1,448 319 27 4,788

Utilised (3,081) (1,363) (178) (32) (4,654)

Discount rate adjustment - - 36 - 36

BALANCE AT 30 JUNE 2019 3,467 1,514 3,220 27 8,228

REPRESENTED AS:

Current 2,809 1,514 2,513 27 6,863

Non-Current 658 - 707 - 1,365

TOTAL 3,467 1,514 3,220 27 8,228

BALANCE AT 1 JULY 2019 3,467 1,514 3,220 27 8,228

Arising during the year 2,714 1,529 490 24 4,757

Utilised (2,395) (1,405) (312) (26) (4,138)

Discount rate adjustment - - 28 - 28

BALANCE AT 30 JUNE 2020 3,786 1,638 3,426 25 8,875

REPRESENTED AS:

Current 3,786 1,638 2,659 25 8,108

Non-Current - - 767 - 767

TOTAL 3,786 1,638 3,426 25 8,875

a QSL provides sick leave for a small number of eligible BST employees as outlined in the QSL Bulk Terminals Agreement



2020 2019$’000 $’000

15 CASH AND CASH EQUIVALENTS

For the purposes of the statement of cash flows, cash and cash equivalentscomprise the following at 30 June:

Cash on hand 31,062 2,544

Short-term facilities (uncommitted) - (14,426)

Syndicated Inventory Financing agreement (committed) (29,104) (92,784)

Syndicated Facility Agreement (committed) (50,000) -

TOTAL CASH AND CASH EQUIVALENTS (48,042) (104,666)

(a) FINANCING FACILITIES AVAILABLE

At reporting date, the following financing facilities had been negotiated and were available:

(i) Committed Facilities

Syndicated Facility Agreement (SFA)

During the year, QSL continued to have access to a borrowing base facility to cover all of the Company’s funding requirements. The facility was renewed in April 2020 with the syndicate members for a further 18 months to fund the 2020 Season. This new facility is on substantially the same terms with the syndicate members for a further 18 months expiring on 30 September 2021. The total facility limit has been set at A$400.0 million (the SIF is a sub-limit within this total facility limit as outlined below).

As at 30 June 2020 $A50.0m (2019: nil) had been drawn against the facility. The facility expires on 30 September 2021. The SFA can be drawn in Australian or United States dollars. Under the facility QSL may request a further 12 month extension to the maturity date of the SFA prior to 31 March 2021.

Syndicated Inventory Financing (SIF) agreement

This facility is a sale and repurchase arrangement using sugar inventory at the BSTs. This facility was renewed in April 2020 to fund the 2020 Season funding profile. This new facility is on substantially the same terms with the syndicate members for a further 18 months expiring on 30 September 2021. The facility sub-limit is $200.0 million – this is a sub-limit of the total committed funding limit of A$400.0 million.

As at 30 June 2020, A$29.1 million (2019: A$92.8m) had been drawn against the facility. The SIF can be drawn in Australian or United States dollars. Under the facility QSL may request a further 12 month extension to the maturity date of the SIF prior to 31 March 2021.

(ii) Uncommitted Facilities

Other funding facilities

At 30 June 2020, the Parent Entity had additional available facilities with various financial institutions of A$136.0 million (2019: A$136.0 million). As at 30 June 2020, the uncommitted facilities were undrawn (2019: $14.4 million). These facilities were available but are generally uncommitted and used as a short-term funding alternative to the committed facilities when it is economical to do so. The Parent Entity does not rely on these facilities as they are uncommitted funding facilities.



2020 2019$’000 $’000

16 CAPITAL EXPENDITURE COMMITMENTS Estimated capital expenditure contracted for at reporting date, but not provided for, payable

Not later than one year 49 107

17 EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTS EMPLOYEE BENEFITS

Accrued wages, salaries and on-costs 594 385

Provisions for employee benefits (current) 8,108 6,863

Provisions for employee benefits (non-current) 767 1,365

TOTAL EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTS 9,469 8,613

AMOUNT CONTRIBUTED BY QSL TO THE QSUPER DEFINED BENEFIT PLAN 100 115

18 CONTINGENT LIABILITIES

There are no known contingent liabilities at 30 June 2020 of a material nature.

19 SUBSEQUENT EVENTS

There are no known events of a material nature that have occurred after 30 June 2020.



2020 2019$ $

20 DIRECTOR AND EXECUTIVES DISCLOSURES

Compensation of Key Management Personnel and Directors

Key Management Personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Consolidated Entity, directly or indirectly, including any Director. The Directors and the Executive Team of the Consolidated Entity have been classified as Key Management Personnel.

TOTAL COMPENSATION 3,129,870 3,228,465

21 RELATED PARTY DISCLOSURES

Queensland cane growers and sugar millers can elect to use QSL’s marketing and pricing services for raw export sugar in which they have an ‘economic interest’ (QSL Marketing). QSL purchases this nominated sugar from supplying growers and millers through either a RSSA, OSA or SMA. Bundaberg Sugar Limited, Isis Central Sugar Mill and W H Heck & Sons Pty Limited have RSSAs in place with QSL at least until 30 June 2024 (the end of the 2023 Season). Tully Sugar, MSF Sugar, Mackay Sugar and Wilmar are contracted under OSAs. On 21 November 2019 QSL signed a SMA with FNM for the 2020 Season and beyond. This agreement is in place until at least the end of the 2024 financial year (2023 Season).

Under the terms of the RSSA, nominated sugar becomes the absolute property of QSL upon receival at the BST. Under the OSAs with Tully Sugar and MSF Sugar the title to sugar is transferred to QSL weekly in arrears upon receival at the BST. Under the OSA with Wilmar, title to sugar is transferred to QSL upon payment after the receival at the BST. Under the OSA with Mackay Sugar the title to sugar is transferred to QSL upon receival at the BST. Under the SMA with FNM the title of the majority of sugar is transferred to QSL upon receival at the BST. In return, growers and millers marketing through QSL receive a right of payment for the sugar delivered, to be calculated in accordance with the pricing options and other provisions within their contracts. The amount due to each participating grower and miller is determined by QSL, following the sale and pricing of that season’s supplied sugar on commercial terms, with progressive payments made in accordance with the terms of the contracts. The final payment to each marketing customer is made in July each year in respect to sugar production in the previous calendar year.

In some instances QSL pays supplying millers who in turn make payments to participating cane growers for the cane they delivered to their mill, based on cane payment formulas incorporated into the local collective agreement for each area and advance payments received from QSL. Where applicable, the pool price forms part of the cane payment formulas. Growers who supply Wilmar mills and elect QSL as their marketer receive their advance payment directly from QSL rather than their miller. Growers who supply Mackay Sugar’s three Mackay based mills and elect QSL as their marketer will either receive their advance payment directly from QSL or via their miller, depending on the grower’s election.

All other related party transactions are on normal commercial terms and conditions.



22 PARENT ENTITY INFORMATION AND CONTROLLED ENTITIES

(a) CONTROLLED ENTITIES

QSL has three controlled entities:

CONTROLLED ENTITY

COUNTRY OF INCORPORATION

PRINCIPAL ACTIVITIES OWNERSHIP

QSL Investments (No1) Pty Ltd Australia Holding company for STL G class shares



(b) PARENT ENTITY DISCLOSURES

2020 2019$’000 $’000

Information relating to QSL:

Current assets 204,303 201,562

TOTAL ASSETS 241,528 232,259Current liabilities 189,752 185,407

TOTAL LIABILITIES 196,245 187,565

Retained surpluses 18,660 18,736

Reserves 26,623 25,958

TOTAL EQUITY 45,283 44,694

NET SURPLUS / (LOSS) (76) (387)

TOTAL COMPREHENSIVE INCOME / (LOSS) 589 84

Commitments

All expenditure commitments in Note 16 relate to the Parent Entity.

Contingent Liabilities

All contingent liabilities in Note 18 relate to the Parent Entity.

Guarantees

The Parent Entity guarantees all the debts of the Controlled Entities.



23 FAIR VALUE OF FINANCIAL INSTRUMENTS

Fair value measurement for assets as at 30 June:

The following table provides the fair value measurement of the Consolidated Entity financial assets and liabilities:

2020 2019$’000 $’000

FINANCIAL ASSETS

COMMODITY INSTRUMENTSSugar futures contracts a 13,233 1,542

Sugar swaps b

Australian dollars 31,543 2,382

US dollars 2,569 5,017

OTHER FINANCIAL INSTRUMENTSEquity instruments at fair value through other comprehensive income 33,242 29,780

TOTAL 80,587 38,721

a Exchange Traded Options b OTC and OTC exotic

Exchange traded futures and options are valued using fair values of exchange traded futures and options determined by reference to the corresponding published price quotations in an active market (Level 1 inputs).

OTC instruments are valued using fair values of OTC instruments (swaps and options) determined by reference to the observable forward curve for commodity instruments or spot rate for foreign currency instruments (Level 2 inputs).

OTC exotic instruments are valued using fair values obtained from the counterparty at balance date (Level 3 inputs).

Equity instruments at fair value through other comprehensive income:

– Shares in STL G class shares are based on directly or indirectly observable data (Level 2).

– Shares in the ICE are based on quoted market prices on an active market via a listed exchange (Level 1).



23 FAIR VALUE OF FINANCIAL INSTRUMENTS CONTINUED

2020 2019$’000 $’000

FINANCIAL LIABILITIES

FOREIGN EXCHANGE INSTRUMENTSForward exchange rate contracts

Sell USD a (11) (453)

Currency options

Sold AUD Call against USD a (43) -

Sold AUD Put against USD a (504) -

TOTAL (558) (453)

a OTC

OTC instruments are valued using fair values of OTC instruments (swaps and options) determined by reference to the observable forward curve for commodity instruments or spot rate for foreign currency instruments (Level 2 inputs).


DIRECTORS’ DECLARATIONFOR THE YEAR ENDED 30 JUNE 2020 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

In accordance with a resolution of the Directors’ of Queensland Sugar Limited, I state that:

In the opinion of the Directors:

(a) The financial statements and notes set out on pages 25 to 44 for the year ended 30 June 2020 are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2020 and of its performance for the financial year ended on that date

(ii) complying with Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001.

(b) There are reasonable grounds to believe that the Consolidated Entity and Company will be able to pay its debts as and when they become due and payable.

This declaration is made on behalf of the Board.

Guy Cowan Chairman

14 September 2020


INDEPENDENT AUDITOR’S REPORTFOR THE YEAR ENDED 30 JUNE 2020 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES


Ernst & Young 111 Eagle Street Brisbane QLD 4000 Australia GPO Box 7878 Brisbane QLD 4001

Tel: +61 7 3011 3333 Fax: +61 7 3011 3100 ey.com/au

Independent auditor's report to the members of Queensland Sugar Limited

Opinion

We have audited the financial report of Queensland Sugar Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

a) giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020 and of its consolidated financial performance for the year ended on that date; and

b) complying with Australian Accounting Standards – Reduced Disclosure Requirements and the Corporations Regulations 2001.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Information other than the financial report and auditor’s report thereon

The directors are responsible for the other information. The other information is the directors’ report accompanying the financial report.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.


INDEPENDENT AUDITOR’S REPORT CONTINUED



Responsibilities of the directors 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 – Reduced Disclosure Requirements 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 gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor's responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to

fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit 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 Group’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the

disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.



• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Ernst & Young

Rebecca Burrows Partner Brisbane 14 September 2020

INDEPENDENT AUDITOR’S REPORT CONTINUED



Queensland Sugar Limited ABN 76 090 152 211

Level 12 348 Edward Street Brisbane Queensland 4000

GPO Box 891 Brisbane Queensland 4001 Australia

Telephone +61 7 3004 4400

[email protected] www.qsl.com.au

queensland sugar limited · queensland’s leading provider of sugar marketing and terminal...

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