queensland sugar limited

Queensland Sugar Limited Annual Report 2020-2021

QSL: Your trusted partner

2 | Queensland Sugar Limited Annual Report 2020-2021

Our MembersQSL has 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 21 Grower Representative Members – 19 elected Members representing 19 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� Peter McLennan – Isis Mill Area� Greg Zipf – Rocky Point Mill Area� Don Murday – ACFA representative� Paul Schembri – CANEGROWERS representative

Our Purpose

Queensland Sugar Limited (QSL) is a not-for-profit, pass-through organisation focused on working with our industry partners to create a world-leading Queensland sugarcane industry and flourishing communities.

Established in 2000 to replace the Queensland Sugar Corporation, QSL is Queensland’s leading provider of sugar marketing and terminal services, and employs approximately 170 people at 14 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.

Front cover: Proserpine grower Warren Watts and QSL Grower Relationship Officer Karen Vloedmans in the field.

CairnsMourilyan

TownsvilleLucinda

Mackay

Bundaberg

Brisbane

Ingham

AyrProserpine

Sarina

Mossman

Our LocationsQSL OPERATIONS

QSL MARKETING

3Queensland Sugar Limited Annual Report 2020-2021 |

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 tax.

Our Business

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

QSL MEMBERS29 representatives of Australian sugar mills and cane growers

QSL BOARDGuy Cowan – Chairman & Independent Director

Sarah Scales – Independent DirectorCraig Doyle – Independent Director

Mark Hayward – Independent Director (commenced 1 September 2021)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 MARKETINGMark Hampson – General Manager Marketing

Grower Services Supplier RelationsPricing Services

Marketing and Sales

QSL OPERATIONSDean O’Brien – Acting 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


After successfully navigating the emergence of COVID-19 in early 2020, the past financial year has seen QSL continue to evolve to meet the challenges of a global marketplace shaped by infection rates, lockdowns and vaccination levels.

Thankfully the Queensland sugar industry suffered minimal interruption due to the ongoing pandemic during the past financial year, with the initial market shock experienced by the ICE 11 in March 2020 followed by a recovery which saw the first green shoots of improved prices emerge, finishing the reporting period with prompt prices over $500/tonne gross actual. After rapidly slipping into recession, the Australian economy rebounded quickly as the year wore on, despite COVID-19 casting a pall over global economies and powering a volatile macro environment that continues to this day.

As I write this, the pandemic is far from over, with significant potential repercussions for our industry as sugar-producing nations grapple with new waves of outbreaks and lockdowns, and the associated impacts on global production, consumption and sugar prices. Yet, the continuing global pandemic is not the greatest threat facing our industry.

During the past financial year the Queensland sugar industry saw two sugar mills close – MSF Sugar’s Maryborough Mill and Bundaberg Sugar’s Bingera Mill. Both situated within southern milling districts of the state, they had struggled to remain viable in the face of prolonged drought, low global sugar prices and the loss of land under cane to other, more profitable crops.

In an environment where every dollar is critical, the glacial progress of the formal WTO dispute against the Indian sugar export subsidy was particularly disappointing for Australian sugar producers, as artificially elevated levels of Indian sugar exports exacerbated the global surplus, with tangible implications for their returns.

Unfortunately the issues faced by the mills and growers in Maryborough and Bundaberg are echoed in cane-growing communities throughout the state, as escalating input costs, volatile sugar prices and increasing regulatory requirements feed an ongoing decline in Queensland sugar production. These challenges were front of mind for QSL during the past year as we sought to capture the learnings of our pandemic experience and translate these into new ways to support the industry we serve.

As I flagged in my address at last year’s Annual General Meeting, QSL is keen to find new ways to further our industry at the grassroots level. To this end, we hope to make an announcement shortly regarding a planned investment in the cane farming sector. This investment is to be debt funded, like our existing stake in Sugar Terminals Limited (STL), and seeks to protect and expand sugar cane production while further opening the sector to broader investor interest. But beyond this, QSL is unhalting in its belief

that providing growers with easy access to a range of pricing and payment options is pivotal for their long-term viability. Since the implementation of Marketing Choice for the 2017 Season, we’ve seen growers increasingly embrace the new products and services available to them, culminating in record levels of grower-managed pricing experienced in early 2021. Spurred on by this increasingly engaged and sophisticated grower customer base, QSL continued to refine its product offering during the past year, introducing the new Grower Floor Price Contract, simplified Self-Managed Harvest Contract (SMHC) and optional rolling on demand in our SMHC and Individual Futures Contract in a bid to give growers increased pricing flexibility.

Our industry-first app remained the only platform of its kind within the Australian sugar industry and further cemented its position as an invaluable grower tool, with its features expanded to include payment notifications, access to payment information and new account management services. With snap lockdowns and travel restrictions an ongoing part of Australian life, we’ve seen more growers than ever before embrace our digital services and communications, with video updates, market podcasts, instructional how-to videos and FaceTime appointments all supplementing our regionally based teams, ensuring growers continue to have unfettered access to the market and the support they need to navigate the best path forward for their businesses. We also continue to work with those Mills which have not yet allowed grower access to our platforms, in the belief that these offer benefits for the entire industry.

The QSL Operations team continued to work closely with STL to seek out new ways to capture efficiencies and opportunities at their six Bulk Sugar Terminals around the state. In addition to the safe and efficient management of these industry assets, there is an enduring focus on innovation, with the QSL Operations team involved in the construction of a new multi-use conveyor within the Port of Bundaberg, and our Business Excellence Team consistently unearthing new ways to add value.

Just as the ability to maximise the returns derived from these important industry assets is a key focus for our operations team, so too must we start to think beyond the traditional value models of sugar pricing in the marketing space. While QSL is committed to leading the world in its grower pricing and payment options and platforms, it has become increasingly evident that new value streams must be harnessed if our industry is to gain the economic resilience required to remain a mainstay of the Queensland economy. As environmental and social sustainability becomes a licence to operate for any industry, it also brings opportunities to capture new value for our members. Queensland sugar producers have a history of innovation that leaves us uniquely positioned to tackle this latest challenge, and QSL looks forward to working with our industry partners to progress this, and our industry’s continued success, over the year to come.

Guy Cowan, QSL Chairman and Independent DirectorChairman’s Report


The past financial year has been an exciting and progressive period for our business, with QSL achieving the trifecta of a record Shared Pool result, reduced Operations costs and no recordable injuries.

As the logistics provider for Sugar Terminals Limited’s (STL’s) six bulk sugar terminals, the QSL Operations team had yet another successful year serving the industry safely, reliably and efficiently. Handling over 3.8 million tonnes of raw sugar and loading 110 sugar shipments during the reporting period, the team successfully dispatched 99.1% of shipments in full, on time and within specification – an absolutely amazing and world-class result. I am very proud to say that a deep commitment to safety underpinned this effort, with our team achieving a Total Recordable Injury Frequency Rate (TRIFR) of zero for the reporting period.

Their efforts to implement cost savings to offset inflationary and other unavoidable cost increases whilst maintaining operational and safety performance levels has also been very pleasing, not only absorbing such pressures but securing an additional $0.3 million reduction in actual operating costs year on year. This achievement, together with the QSL Operations team’s ability to successfully navigate the ongoing significant challenges presented by the global pandemic, ensured uninterrupted, world-class service once again for our industry partners’ operations.

On the marketing front, the QSL team was able to take advantage of historically high physical premiums to secure a record Shared Pool result for our business, finishing at +$31/tonne sugar IPS weighted average (including Loyalty Bonus). Every grower and miller using QSL benefited from these additional returns, with the Shared Pool applied to all ICE 11 tonnage running through our system. As growers increasingly take control of their own pricing rather than using managed pools, our Shared Pool has emerged as our most important pool, delivering significant value regardless of individual pricing decisions.

The impact of COVID-19 also continued to be felt in the sugar market, with sustained low interest rates and a weakened US Dollar incentivising investors to abandon cash in favour of commodity markets. An increase in speculators taking up a long position helped the ICE 11 raw sugar price to lift from around 12 USc/lb in July 2020 to a high of 18.94 US cents/lb in February 2021.

The market’s long-awaited transition from surplus to deficit saw an increase in pool results, with the US Quota Pool taking out the honours as our highest-returning pool for the 2020 Season at $702/t IPS net. The February 2020 Guaranteed Floor pool provided the best ICE 11 pool return at $493/tonne IPS net. Growers utilising QSL’s grower-managed pricing options also secured improved results, with the average price of $456/tonne gross actual achieved in the popular QSL Target Price Contract exceeding the average market price for the season by $27/tonne gross actual.

The 2020-2021 financial year saw a number of exciting developments in the Grower Services space. The team introduced two new industry-leading grower-managed pricing products and improvements were made to the existing Self-Managed Harvest Contract and Individual Futures Contract to provide increased pricing flexibility. Commitment limits were also increased, giving growers and millers the ability to price up to 98% of their economic interest in sugar.

The support that QSL’s Corporate Services team provided the business was once again invaluable through the delivery of finance, IT, communications, environment and safety, human resources and legal services. The team reported lower operating costs across both the Operations and Marketing functions and secured more competitive margins when financial facilities were renewed in June. A significant amount of work continued on the development of the QSL App, with the team working hard to roll out numerous new features allowing QSL Direct growers to better manage their accounts on-the-go. The QSL Grow program also supported industry conferences, agricultural shows, cane competitions, field days and other initiatives right around the state, as part of QSL’s continuing commitment to building a strong and prosperous Queensland sugar industry.

The achievements the team at QSL have made this past year are a testament to their dedication to delivering outstanding value and service. As we all continue to navigate through unprecedented times, I would like to sincerely thank our valued refining clients, growers, milling partners and STL for their continued custom and support. We look forward to seeking out new ways to maximise the value we provide to you and the rest of our industry in the year to come.

Greg Beashel, Managing Director and Chief Executive Officer

Chief Executive Officer’s Report


Best Performing PoolsBest 2020 result = $702/t IPS net – US Quota

Best ICE 11 Pool = $493/t IPS net – Feb 2020 Guaranteed Floor

FY21 Highlights

Marketing

Corporate Services

Payment info & notifications added to QSL App

Increased finance facility flexibility

Lower operating costs

QSL pools surpassed the performance benchmark by

+$39/t IPS net

Record 2020 Shared Pool

+$31/t IPS (weighted average) incorporating Loyalty Bonus

+$1 millionTotal extra returns generated by

Self-Managed Harvest participants above the 2020 Harvest Pool return

The largest marketer of Australian sugar

Operations

Unloaded 48,948 trucks

and 47,798 train wagons

Loaded 3.52 million tonnes of sugar for shipment

Received 3.84 million tonnes at 6 terminals

0 fatalities, serious or recordable injuries

110 sugar shipments loaded

99.1% of deliveries made in full, on time and in

specification


2020-Season Pricing Results

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 2020 SEASON

$A/T

ONNE

IPS

$0

$430

$450

$470

$490

$410

$370

$390

$438.36

$407.27

+$63.86 -$26.20

-$1.90 -$3.99

Finance CostsRegional

Specific Costs

Valueaddedabovebenchmark

Performancebenchmark$399.54

$38.82

Gross ICE 11Pools

Net Market Premiums

-$2.92 +$2.24+$31.09

Loyalty Bonus

Storage andHandling Costs

Marketing and SharedServices Costs

Shared Pool including

Loyalty Bonus

Net ICE 11Pools

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:�QSL 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


2020-Season Pricing Results Continued

2020-SEASON POOL PRICES (AFTER SHARED POOL ALLOCATION)20/21 FINANCIAL YEAR

GROWER PRICING FILLS 2020 SEASON

$0

$360

$420

$400

$380

$440

$460

$480

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-MANAGEDICE11 POOLS

$40.30

$436.90

$396.60

$414.24

$27.67

$395.95

$435.71

$39.76

$443.79

$399.54

$22.76

$38.82

$466.55

$441.91 $438.36

$0

20,000

80,000

60,000

40,000

100,000

120,000

140,000

SMHP

IFC

TPC

TONN

ES

$410<$400 $420 $430 $440 $450 $460 $470 $480 $490 >$500

This graph presents the net pool performance above the benchmark for the QSL-Managed Pools for the 2020 Season. The Performance Benchmark represents the price achieved if no market view was taken by following an evenly spread sales pattern, adjusted for applicable contraints such as infrastructure, storage, production risk constraints (Harvest Pool) and time available to price. This peformance above the benchmark highlights the dollar value per QSL-managed pool that QSL provides to suppliers (millers) and growers. In the 2020 Season, QSL outperformed the Performance Benchmark on a weighted average basis by $38.82 per tonne IPS. A weighted average Shared Pool was utilised in the calculation of the above results, as actual prices may vary as a result of regional-specific costs. The February 2020 Guaranteed Floor Pool achieved a net price of $492.69. 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 $701.96 per tonne IPS. See disclaimer on page 7.

This graph presents all grower pricing achieved using QSL’s Target Price Contract, Individual Futures Contract and Self-Managed Harvest Contract products for the 2020 Season. Prices quoted are AUD/tonnes actual gross. The 2020-Season ICE 11 market average result was $429/t actual gross (rounded to the nearest dollar). The average grower pricing achieved through QSL’s grower-managed pricing products for the 2020-Season was $458/t actual gross (rounded to the nearest dollar). See disclaimer on page 7.


The past financial year saw a continuation of the effects of the COVID-19 pandemic, as economies and markets across the globe battled to cope with the fallout of the deadly virus.

SugarPrice action for raw sugar futures was largely positive as the combination of near-zero interest rates and a depreciating US Dollar saw investors switch into commodity markets in heavy fashion as a hedge against inflation.

The inflow of new money saw speculators move from a small net long of circa 50,000 lots at the beginning of July 2020 to a high of 263,000 lots net long by the end of October, lifting prices from ~12 US cents to ~15 US cents. From there, the spec long position was largely maintained between 200,000 and 250,000 lots net long, supporting prices to move higher still, peaking at just under 19 US cents in February 2021.

Despite the bumper Brazilian sugar production of 38.2 million tonnes during their 2020 season, the contraction in demand brought on by the virus was much smaller than originally feared, holding prices firm. This, paired with a significant Chinese stock build, saw all the available sugar supply cycle through the global balance sheet. Since then, the fundamentals have turned more bullish and supportive of prices.

A second successive underwhelming Thai sugar crop saw northern hemisphere supply constrained in Q1 of 2021, while a drought across Centre South Brazil saw estimated cane availability for their 2021 season decrease by around 10% year on year. With this, the market is now staring at a small but growing deficit of approximately 1 million tonnes in the global supply-and-demand picture.

The positive macro environment and the developing fundamental outlook seen in first-half 2021 allowed QSL and growers alike the opportunity to achieve pricing levels not seen since early 2017. This was a welcome break after several seasons of prices below the cost of production, and has resulted in markedly improved 2021-Season pricing results.

0

20.00

18.00

US c/

lb

10.00

12.00

14.00

16.00

JUL 20 FEB 21 MAR 21 APR 21 MAY 21 JUN 21 JUL 21JAN 21DEC 20NOV 20AUG 20 SEP 20 OCT 20

RAW SUGAR ICE 11 20/21 FINANCIAL YEAR

This graph represents the trend of the raw sugar ICE 11 price for the prompt futures contract for the 2020/2021 Financial Year. The average prompt sugar price for the 2020/2021 Financial Year was 14.99 US cents per pound. See disclaimer on page 7.

Mark Hampson, General Manager MarketingMarketing and Logistics

0

600

AUD$

/TON

NE

300

400

500

JUL 20 FEB 21 MAR 21 APR 21 MAY 21 JUN 21 JUL 21JAN 21DEC 20NOV 20AUG 20 SEP 20 OCT 20

RAW SUGAR AUD/TONNE 20/21 FINANCIAL YEAR

This graph shows the trend of the Australian dollar price per tonne for the ICE 11 prompt futures contract for the 2020/2021 Financial Year. The average Australian dollar price per tonne for the 2020/2021 Financial Year was $440.43/mt AUD per tonne (weekly close). See disclaimer on page 7.

QSL Marketing


0.62

0.64

0

0.82

AUD/

USD

JUL 20

0.66

FEB 21 MAR 21 APR 21 MAY 21 JUN 21 JUL 21JAN 21DEC 20NOV 20AUG 20 SEP 20 OCT 20

0.68

0.70

0.72

0.74

0.76

0.78

0.80

AUD/USD CURRENCY 20/21 FINANCIAL YEAR

This graph shows the trend of the Australian Dollar against the United States Dollar for the 2020/2021 Financial Year. The average Australian Dollar price for the 2020/2021 Financial Year was 0.7467 US cents (weekly close). See disclaimer on page 7.

CurrencyThe Australian Dollar (AUD) traded in a similar fashion to sugar over the second half of 2020, with burgeoning risk appetite fuelled by loose monetary and fiscal policy settings seeing it rally by over 10 cents from 69.15 cents to just under 80 cents against the US Dollar by late February.

In particular, Australia was attractive to investors as we appeared to have kept the virus at arm’s length while also taking advantage of elevated levels for our export commodities, most notably iron ore trading to historically high levels over $US200 per tonne.

However, since then the AUD subsequently traded sideways as the positive commodity backdrop was largely offset by growing inflationary pressures in the US and an increasingly hawkish Federal Reserve. Where Australia originally looked ahead of the recovery curve, a slow vaccine rollout here gradually saw the US economy move ahead and economic activity begin to return to more normal levels as a result.

Most recently, an uptick in domestic virus infections and the lockdowns and economic downturn this entails has cemented the dovish outlook of the Reserve Bank of Australia and as such, the diverging yield outlook further favours the US Dollar. This saw the AUD close the FY21 year at 74.98 US cents.

FreightFY21 saw bulk shipment freight rates hit levels not seen since before the global financial crisis. This, combined with a dynamically changing regulatory environment as a result of the pandemic, posed plenty of challenges for our chartering team. Notwithstanding these, QSL was able to contract and deliver 43 vessels within the financial year, with a 100% on-time and in-full delivery record.

Physical PremiumsThe collapse of the 2019/2020 Thai sugar crop led to a significantly under-supplied Far East region throughout 2020. The subsequent Brazilian crush was very big, with a bumper cane crop and a maximum sugar make as ethanol returns were below those achieved by manufacturing sugar. However, the Brazilians’ inability to service several key Asian markets, coupled with a large Chinese purchasing program and a widening freight disadvantage meant that physical premiums remained elevated throughout the calendar year.

The reporting period brought the smallest Thai sugar production in over a decade, again leading traditional buyers of Thai sugar to pay a premium to secure supply. A large Indian crop resulted in subsidised Indian exports filling part of the deficit and with the rally in the futures price in the first half of 2021, some unsubsidised Indian raws were able to make their way onto the market. Whilst this did dampen demand for Australian raw sugar, premiums remained at historically elevated levels. This can be seen in QSL’s record Shared Pool result for the 2020 Season of $31.09/tonne IPS (weighted average).

Marketing and Logistics Continued

-100

-50

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50

100

150

200

250

300

1/01/20161/03/20161/05/20161/07/20161/09/20161/11/20161/01/20171/03/20171/05/20171/07/20171/09/20171/11/20171/01/20181/03/20181/05/20181/07/20181/09/20181/11/20181/01/20191/03/20191/05/20191/07/20191/09/20191/11/20191/01/20201/03/20201/05/20201/07/20201/09/20201/11/20201/01/20211/03/20211/05/20211/07/2021

EQUIVALENT QLD FOB PREMIUMS FOR THAI AND BRAZIL PARITY (US C/LB*100, “POINTS”)

Thais

Brazil


QSL maintained its position as Queensland’s leading provider of raw sugar marketing and pricing services during the past year through continued product and pricing innovation and dedicated, on-the-ground service.

New pricing productsQSL’s pricing product development continued to lead the industry, with increased commitment limits allowing millers and growers to make their own pricing decisions on up to 98% of their production whilst also enjoying the benefits of collective marketing and QSL’s pricing platform.

During the reporting period, QSL released two new pricing products:

�The Grower Floor Price Contract: This grower-managed pricing option gives participants the opportunity to enjoy the benefits of forward pricing by securing a known floor price, with the potential for further returns should the market rise after the order is filled. This product is available at any time up to three seasons in advance of the harvest.

� The Defaulting Target Price Contract: This grower-managed pricing option enables growers to set pricing targets up to three years in advance, with any unpriced tonnage automatically returning to the Harvest Pool if the target is not reached before the commencement of the season.

In addition to these innovations, improvements were also made to a number of existing QSL pricing products. The Individual Futures Contract and the Self-Managed Harvest Contract were modified to allow participants to defer pricing decisions by rolling unpriced tonnage on the day of their choice. This new feature provides participants with greater pricing flexibility by extending the window in which they can achieve their target price.

Last year QSL moved to offer a Guaranteed Floor Pool outside the traditional April pricing declaration period and this initiative proved popular once again during the reporting period, with growers taking advantage of the product being offered in both March and April.

A number of QSL-managed products were also streamlined, with a new Harvest Pool pricing ratio and allocation, and earlier nomination deadlines for the 2-Season and 3-Season Actively Managed Pools coming into effect from the 2021 Season.

Increased pricing limitsThe 2020-2021 financial year saw QSL increase commitment limits to 70% of the amount of sugar millers and growers can elect to price prior to the commencement of a season. This limit is available for the current season plus two seasons ahead.

Improved Payment arrangementsIn November 2020 QSL reached agreement with the Australian Taxation Office on new, simplified GST arrangements for QSL growers in Wilmar milling districts. These payment arrangements subsequently came into effect for all QSL Advance payments from 1 July 2021. The QSL App’s features were also expanded to include payment information and payment notifications.

Grower SupportThe QSL Grower Services Team again provided unrivalled one-on-one service through our regional offices around the state and the QSL Direct helpline. In addition to this, QSL growers also had access to a comprehensive program of video updates, podcasts, in-person training sessions, market briefings and other initiatives all devised to help keep them up to date on the raw sugar market and the QSL products and services available to support their business.

Bryce Wenham, Executive Manager Supplier Relations and Systems

QSL Marketing

Products and Services

Plane Creek grower Ron Gurnett with QSL Grower Relationship Officer Kathy Zanco.


Dean O’Brien, Acting QSL Operations General Manager

QSL Operations

QSL Operations retained its reputation as a world-class logistics operator during the 2020/2021 financial year, safely dispatching 99.1% of shipments in full, on time and within specification.

Despite the continuing challenges of the COVID-19 pandemic, the QSL Operations team successfully provided full and uninterrupted service at Sugar Terminal Limited’s (STL’s) six Bulk Sugar Terminals (BSTs) throughout the reporting period, with extensive pre-emptive measures in place to ensure our industry partners’ operations could continue unabated in what has become an increasingly volatile operating environment.

After three years of reducing operating costs year on year, the Operations team continued to leverage in-house expertise, innovations and efficiencies to offset inflationary increases and reduce actual operating costs in FY21 by a further $0.3 million. QSL’s Business Excellence Team (BEX) played a key role in this achievement and since its inception in June 2019 has cultivated a mindset of continuous improvement and innovation across our workforce by nurturing the efforts of local teams and sharing their learnings across our sites around the state.

In addition to enhancements and savings, the QSL Operations team remains focused on new opportunities to add value and during the past year worked closely with STL and designers on the construction of a new multi-use conveyor within the Port of Bundaberg. This new asset will dovetail into existing Bundaberg terminal infrastructure and will be used to transfer multiple products from different customers within the port.

QSL’s Quality and Logistics department also created important value for the industry we serve by continually seeking out new and improved ways to store and blend sugar products. Recent initiatives by this team have included a revised Allocated Storage Capacity (ASC) swap based on the Townsville Shed 2 unavailability during the shed roof replacement project. This provided 65,000 tonnes of extra storage for the 2021 Season. In addition to this, QSL remained the only operator providing Near Infrared (NIR) technology for spot sampling to help terminal users more effectively monitor and adjust their product in order to meet their customers’ specifications.

Asset Management LeadersQSL Operations has a dedicated engineering department managing the STL asset infrastructure which has developed and maintains a 15-year maintenance plan across the six BST sites. This long-term strategic approach provides the QSL engineering team with valuable insight into the plant requirements and enables them to plan and schedule in a manner that secures the most effective, economical and safe procurement practices. These procurement practices allow for early works that can provide a greater

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

2016 2017

4,092,376

3,796,779

2018

4,053,832

2019

3,717,181

2020

3,712,841

This graph reflects the tonnage of raw sugar handled at the six bulk sugar terminals over the last five seasons through storage and handling agreements. See disclaimer on page 7.

General Manager’s Report

understanding of the performance and benefits of new products and maintenance innovations well in advance of completing any major expenditure. The trial of the pile wrapping on the Lucinda wharf instead of blasting and painting is one such example. Projects utilising this new approach have been undertaken at Lucinda and other sites, securing significant savings while also decreasing future expenditure by extending the useful life of each pile on the applicable jetty and wharf structures. QSL is a world leader in this area and has been asked to share this innovation with other marine-based asset owners within engineering forums around Australia.

As part of the long-term asset management activities under the 15-year maintenance plan, QSL was tasked with replacing 12 shed roofs across the six BST sites. This major program of work commenced in 2011, with each individual project to be completed in the short window between the end of the cyclone season each year and a mid-point in the annual harvest.

Despite this challenge, QSL has secured the safe and timely delivery of all 10 projects undertaken to date, delivering each within their allocated budgets. Mackay BST’s Shed 1 is the most recent of these projects and was successfully completed in September 2020 without interruption to receiving and or shipping activities, ensuring product integrity was upheld and no delays endured by our industry partners. The QSL project team is now working on the first of two shed roof replacements at the Townsville BST.


Rob Cooper, Manager – Operational Risk & Leadership

QSL Operations

There were no fatalities, serious or recordable injuries at any QSL-operated sites during the past financial year.

This achievement is a direct result of our continued focus on the following critical risks to environment, health and safety (EHS):

�The “Terrible Ten”, which include electrocution, falls from height, drowning, stored energy, entanglement, mobile plant, engulfment, falling objects, confined spaces and change management;

�The correct capture and disposal of wastewater that has come into contact with sugar (known as sweetwater).

QSL continues to maintain an EHS management system that is certified to both ISO 45001 (health and safety) and ISO 14001 (environment), after successfully completing our first recertification audit in April 2021. This audit marked three years of certification and presented new opportunities to refine our systems to ensure they remain effective for the ever-evolving risks we manage.

With the COVID-19 pandemic continuing to present challenges around travel, group settings and visitors to site, the QSL Operations team explored new ways to deliver our leadership and technical training programs. By embracing external training through video conferencing and deploying our own inhouse operational training and competency programs, we successfully maintained operations and continued our team’s development without compromising the safety of our people and supporting communities.

The mental health and welfare of our employees has been an important consideration during the reporting period, with concerted efforts to maintain engagement and support throughout the challenges of lockdowns and changed operating arrangements. Company and site-level initiatives included our Employee Support Program and Applied Suicide Intervention Skills Training (ASIST), which both embody our focus on authentic conversations and understanding over bureaucratic process.

We also continued to foster close partnerships with our supporting contractors, and actively engaged them in open dialogues about how we can both succeed. Engaging local contractors whenever we can not only supports regional communities, but provides a unique opportunity to extend the reach of our safety programs. Heartfelt, work-based conversations with our contractors at least once a month at every site have formed a solid platform for improved results, safer sites and more effective partnerships.

In addition to safety, a strong commitment to the environment, sustainability and a sense of social responsibility were also integral to our business and its activities. Our teams continued to seek out more efficient and effective solutions for sweetwater management including:

�Improving our conveyor systems to reduce the amount of sugar that is spilt around the terminals;

�Enhancing our equipment to support better ‘dry pick’ of sugar with machines; and

�Continuing to separate and capture sweetwater for proper disposal.

We also continued to drive improvement through at least one environmental improvement project at each site during the reporting period. These local projects encouraged critical thinking, innovation, and a sense of ownership as we sought to identify improvements and learnings that could ultimately be replicated across all sites. Projects undertaken in the past year included the installation of freestanding filter units for washdown pit pumps to improve sweetwater irrigation systems, and extending washdown wastewater drainage to allow increased sweetwater capture.

QSL ROLLING 12-MONTH INCIDENT STATISTICS FOR PERIOD ENDED JUNE 2021

5555 5 5

10.7

5 5 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 00 0000 0 0

14.714.6

7.3

2.4 2.4

14.5 14.4

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 remain under a TFIFR of 5 over 5 years.

Terminal Environment, Health and Safety


QSL Corporate Services provides specialist in-house expertise to QSL’s Marketing and Operations businesses. These services are provided to both businesses in order to negate costly duplication whilst 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. This team is responsible for the development and ongoing maintenance of QSL’s core ICT systems, including its stock and logistics management system, LMF (Logistics, Marketing, and Forecasting) system, QSL Direct applications such as the portal and customer relationship management (CRM) system, as well as the QSL mobile app.

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.

Industry Support – The QSL Grow Program seeks to promote the long-term sustainability of the Queensland sugar industry by supporting initiatives focused on protecting and

increasing sustainable sugar production at a grassroots level. Initiatives supported by this program during the reporting period included the Next Gen and Women in Sugar Australia conferences, the Australian Hand Cane Cutting Championships, and agricultural shows, field days, sugar cane competitions and productivity awards events around the state.

Key Corporate Services highlights from the past year include:

�QSL’s finance facilities were renewed in June 2021 for the 2021 Season for a further 18 months. These facilities were refined during the renewal process to provide QSL with increased flexibility around drawing directly from our financiers at more competitive rates than the 2020 Season.

�QSL managed its cost base during the financial year, keeping costs flat against the prior year through tight cost management. Total operating costs in both the QSL Operations and QSL Marketing divisions were marginally lower than the prior year. A primary driver of cost reduction was managing annual leave and freezing salaries for staff.

�Improved statements for QSL Direct growers and new GST arrangements for our growers in Wilmar milling districts came into effect from 1 July 2021. A significant amount of work was done with growers and the Australian Taxation Office during the reporting period to implement these improvements designed to simplify GST bookwork and make QSL payment information more user friendly.

�A substantial amount of development work on QSL’s ICT systems continued during the year to update the technology to modern platforms. This is in addition to the QSL App releasing a number of new features to assist growers managing their price risk and interactions with QSL.

�Despite keeping costs flat, QSL continued to invest in people through its Realising Your Potential Program, with the first cohort of staff finishing the program. The second cohort of future leaders in the business commenced the program in the second half of FY21, with completion due prior to December 2021.

Aaron Searle, Chief Financial Officer

QSL Corporate Services

Chief Financial Officer’s Report


QSL’s people and culture strategy continues to focus on four main goals:

1. Culture & Values

QSL strives for a culture that is a source of real competitive advantage within the industry and is 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 to our performance.

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

Talent managementQSL continues to invest in our people and focus 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 broader roles/influence and accelerate their development, both now and for the future. The key output is accelerated development plans.

In its third year, the QSL Realising Potential program continues to deliver on its promise to provide participants a development opportunity which 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.

QSL’s organisational culture continues to provide an environment where 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. We continue to believe that QSL’s culture is unique and is therefore a source of competitive advantage.

RemunerationThe Board’s People and Remuneration sub-committee (PRC) has oversight into the design and effectiveness of QSL’s Total Reward and Remuneration framework and reviews this annually. During FY21, QSL continued to manage through the impacts of COVID-19, so the decision was made to freeze any general remuneration increases for salaried staff across the business for the duration of the year until the full effects of COVID-19 were better understood.

While the business environment remains challenging, it is reassuring to witness the flexibility of the QSL team and their ability to remained focused on delivering our core objectives and strategic initiatives in new ways.

The PRC continues to monitor the effectiveness and market competitiveness of QSL’s reward and remuneration mechanisms. During the reporting period, the PRC reviewed the mechanics of QSL’s 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 out-performance 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.

In line with the freeze in salary increases, there were no increases in Director Remuneration during the reporting period and Board Fees continued to remain well under the Board Fee Cap set in 2001.

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 29 members (refer page 2) representing the Australian sugar industry, consisting of:

�Eight mill owner members

�21 grower representative members, comprising:

– 19 elected holders, who are growers elected to represent the 19 sugar-growing regions in Queensland; and

– 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 workplace health and safety, and environmental policies.

Composition of the Board There are currently five 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 four independent Non-Executive Directors on the QSL Board, these being Guy Cowan (Chairman), Sarah Scales and Craig Doyle, with Mark Hayward, who joined the QSL Board on 1 September 2021.

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 Directors Independent 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 Committees There 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 Committee The 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. Mark Hayward will join this Committee from 1 September 2021 and will take over the Chairmanship of this Committee at the end of September 2021.The Managing Director, the Chief Financial Officer, Risk and Compliance Manager and representatives of the external and internal auditors attend meetings of this Committee by invitation.

Susan Campbell, Company Secretary/Legal Counsel


Corporate Governance


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), Guy Cowan and (from 1 September 2021), Mark Hayward. The Managing Director, the Chief Financial Officer, General Manager Marketing, and representatives of internal auditors attend meetings of this Committee by invitation.

Operations Committee The Operations Committee (OC) assists the Board to discharge its responsibilities relating to workplace health and safety, environmental compliance, industrial relations and bulk sugar terminal (BST) governance. In addition, this Committee also monitors 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 Committee The 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, with Mark Hayward joining this Committee from 1 September 2021. 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 and Mark Hayward

Corporate Governance Continued

ContentsDirectors’ Report 19

Auditor’s Independence Declaration 23

Consolidated Statement of Comprehensive Income 24

Consolidated Statement of Financial Position 25

Consolidated Statement of Changes in Equity 26

Consolidated Statement of Cash Flows 27

Notes to the Financial Statements 28

Directors’ Declaration 44

Independent Auditor’s Report 45


Statutory Financial Report

DIRECTORS’ REPORTFOR THE YEAR ENDED 30 JUNE 2021 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 2021 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, Winson Group (Chair), Ability First Australia, Port of Brisbane Pty Ltd (Chair) and Stahmann Webster Group (Chair).

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 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 (Chair), Emerald Grain Pty Ltd (Chair), Tarac Australia Limited, Agracom Pty Ltd, and AustOn Corporation Pty Ltd and related entities.

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, projects management, and commercial including international greenfield and brownfield growth projects spanning the Australian refined and raw sugar industries and other areas.

MARK HAYWARD B. Bus(Acc), FCA, MAICD

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

Mark joined the QSL board on 1 September 2021 and will take over the Chairmanship of the Audit & Risk Committee from 15 September 2021. Mark has experience both locally and internationally in various industry sectors including agribusiness (particularly sugar, cotton and beef).

Mark was a Partner at Ernst & Young (EY) for 31 years until 30 June 2020. During his time as an EY partner, he served as auditor and adviser for companies with activities throughout Australia, Asia, the Middle East, Canada, the USA and South America.

In addition to his role on the QSL Board, Mark is a director of Blue Energy Limited.

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 2021 is set out below:

QSL’s Activities

The 2021 financial year (which predominately covers the 2020 season) saw QSL Marketing provide raw sugar export marketing services to suppliers under two (2020: two) Raw Sugar Supply Agreements (‘RSSA’), four (2020: four) On-Supply Agreements (‘OSA’) and one (2020: one) Sugar Marketing Agreement (‘SMA’). QSL had three RSSA (2020: three), four (2020: four) OSAs and one (2020: one) SMAs in place during the year.

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 2025.

DIRECTORS’ REPORT CONTINUED

FOR THE YEAR ENDED 30 JUNE 2021 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

LDa

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 13 13 5 5 5 5 4 4 4 4

Sarah Scales 13 13 5 5 5 5 4 3b 4 4

Craig Doyle 13 13 5 5 5 5c 4 4 4 4

Greg Beasheld 13 13 5 5 5 5 4 4 4 4

a Represents the number of meetings held during the time the Director held office during the 2021 financial yearb Sarah Scales is not a member of OC but attended the meetings by invitationc Craig Doyle is not a member of TRC but attended the meetings by invitationd Greg Beashel is not a member of the Board Committees, but attends meetings by invitation




REVIEW OF OPERATIONS AND RESULTS CONTINUED

Revenues

QSL recorded sales revenue from raw sugar for the 2021 financial year of $844.8 million (1.5 million tonnes), a decrease of $34.7 million from the previous year’s revenue of $879.5 million (1.9 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 for 1.7 million tonnes (2020: 2.2 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 $37.2 million from STL for the operation of its six BSTs (2020: $37.5 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 2021 were $766.7 million, a decrease of $2.4 million from the prior year’s payments of $769.1 million. This was predominately the result of decreased tonnage.

Freight and brokerage costs were down by $5.9 million this year compared to the prior year of $46.1 million primarily due to lower tonnage shipped on a cost and freight basis (CFR). QSL Marketing incurred storage and handling charges of $41.3 million for the year ended 30 June 2021 (2020: $41.6 million). Borrowing costs decreased by $3.2 million to $3.8 million (2020: $7.0 million) from the prior year due to a decrease in tonnage and interest rates.

Net Surplus / (Deficit)

QSL’s activities delivered a net deficit of $0.5 million (2020: nil) for the Consolidated Entity in the 2021 financial year. The deficit relates to costs incurred in preliminary investigations into investments into the sugar cane farming sector that QSL chose not to recover through the pools.

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 Sugar Inventory Facility (‘SIF’) agreement.

QSL had the use of a total facility limit of A$400.0 million SFA with the SIF having a sub-limit of up to A$200.0 million in committed funding during the year, which was due for expiry in September 2021. This was used to fund the 2020 season financing requirements. The SFA limit was adjusted downwards during the year based on seasonal requirements and to minimise finance charges.

In June 2021 QSL renewed its committed financing arrangements with its existing syndicate members for a further 15 months to 30 September 2022. The total facility limit has been set at A$350.0 million for the funding requirements of the 2021 season. The renewed facility comprises a total funding limit of A$350.0 million SFA, with this amount interchangeable with the SIF. The terms and conditions of the new committed facilities have similar 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 2022. 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 2021, $12.9m of uncommitted funding lines were being utilised (2020: nil).

COVID-19 Impact

The impact of COVID-19 on both the health of the Company and our staff continues to be monitored closely. 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 20 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

In April 2021, the QSL board signed an agreement to invest in a cane farming business for $20m. At the time of signing the 30 June 2021 financial statements, the investment is still subject to a number of conditions precedent that are outside of the control of QSL.

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 2021 the Company had 29 members representing the Australian sugar industry. These members consisted of:

� Eight mill owner members; and

� 21 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 $2,100 respectively, totalling $2,900.

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 23 and forms part of the Directors’ Report for the year ended 30 June 2021.

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; and

� 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

13 September 2021




AUDITOR’S INDEPENDENCE DECLARATION FOR THE YEAR ENDED 30 JUNE 2021 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 2021, 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 13 September 2021


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2021 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

Note2021 $’000

2020 $’000

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

REVENUES FROM CONTINUING OPERATIONSSales of raw sugar 844,816 879,458

Service fee revenue from terminal operations 37,183 37,488

Net foreign currency exchange gain/(loss) 18,064 (5,648)

Interest income 36 198

Share investment income 4 3,670 3,601

Other revenues 695 612

904,464 915,709

EXPENSES FROM CONTINUING OPERATIONSPayments for raw sugar 766,714 769,104

Freight and brokerage 40,241 46,050

Storage and handling charges 41,265 41,613

Salaries and employee benefits 23,739 25,035

Borrowing costs 5 3,845 6,966

Depreciation 4,315 3,305

Other expenses 6 24,808 23,636

904,927 915,709

NET DEFICIT ATTRIBUTABLE TO MEMBERS OF QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES 2 (463) -

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 4,634 1,795

TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO MEMBERS OF QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES 4,171 1,795

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


CONSOLIDATED STATEMENT OF FINANCIAL POSITIONAS AT 30 JUNE 2021 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

Note

2021 $’000

2020 $’000

ASSETS

CURRENT ASSETSCash and cash equivalents 16 2,483 31,062

Trade and other receivables 7 49,790 35,505

Inventories 8 134,074 87,665

Prepayments 1,914 1,806

Other financial assets 9 42,930 30,323

TOTAL CURRENT ASSETS 231,191 186,361

NON-CURRENT ASSETSTrade and other receivables 7 1,500 -

Equity instruments at fair value through other comprehensive income 10 38,858 33,242

Property, plant and equipment 11 21,096 21,463

Other financial assets 9 153 4,757

TOTAL NON-CURRENT ASSETS 61,607 59,462

TOTAL ASSETS 292,798 245,823

LIABILITIES

CURRENT LIABILITIESTrade and other payables 12 65,960 65,255

Other financial liabilities 13 37,677 37,285

Interest-bearing liabilities 14, 16 126,043 79,104

Provisions 15 6,776 8,108

TOTAL CURRENT LIABILITIES 236,456 189,752

NON-CURRENT LIABILITIESTrade and other payables 12 418 874

Other financial liabilities 13 1,157 4,852

Provisions 15 1,018 767

TOTAL NON-CURRENT LIABILITIES 2,593 6,493

TOTAL LIABILITIES 239,049 196,245

NET ASSETS 53,749 49,578

EQUITYReserves 34,368 29,734

Retained surpluses 19,381 19,844

TOTAL EQUITY 53,749 49,578

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 2021 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

Note RETAINED SURPLUSES

RESERVES TOTAL EQUITY

Capital Fair value reserve of financial assets

at FVOCI $’000 $’000 $’000 $’000

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

Net surplus/(deficit) 2 - - - -

Other comprehensive income - - 1,795 1,795

Total comprehensive gain - - 1,795 1,795

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

BALANCE AT 1 JULY 2020 19,844 23,242 6,492 49,578

Net surplus/(deficit) 2 (463) - - (463)

Other comprehensive income - - 4,634 4,634

Total comprehensive (loss)/gain (463) - 4,634 4,171

BALANCE AT 30 JUNE 2021 19,381 23,242 11,126 53,749

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 2021 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES

2021 2020NOTE $’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers (inclusive of GST) 834,891 961,845

Payments for raw sugar (inclusive of GST) (895,434) (797,193)

Payments to suppliers and employees (inclusive of GST) (108,641) (151,141)

Receipts under financing arrangement (inclusive of GST)* 567,348 678,347

Payments under financing arrangement (inclusive of GST)* (559,006) (687,692)

GST recovered 71,124 68,112

Interest and other borrowing costs paid (3,822) (6,966)

Interest received 36 198

Cash settlements of derivative instruments 21,595 (5,476)

Other receipts 686 577

NET CASH FLOWS FROM / (USED IN) OPERATING ACTIVITIES (71,223) 60,611

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of equity instruments (915) (1,682)

Purchase of property, plant and equipment (4,103) (4,571)

Proceeds from sale of property, plant and equipment 179 138

Dividends and franking credits received 3,737 3,486

NET CASH FLOWS FROM / (USED IN) INVESTING ACTIVITIES (1,102) (2,629)

CASH FLOWS FROM FINANCING ACTIVITIES

Other loans to sugar suppliers (2,628) (447)

Payment of principal portion of lease liabilities (539) (480)

NET CASH FLOWS FROM / (USED IN) FINANCING ACTIVITIES (3,167) (927)

NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS (75,492) 57,055

Cash and cash equivalents at beginning of the year (48,042) (104,666)

Effects of exchange rate changes on cash and cash equivalents (26) (431)

CASH AND CASH EQUIVALENTS AT END OF YEAR 16 (123,560) (48,042)

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

* Under the Sugar Inventory Financing (‘SIF’) agreement, refer to Note 16, 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 Comprehensive Income as control remains with QSL.


1 CORPORATE INFORMATION

The financial report of QSL and its Controlled Entities for the year ended 30 June 2021 was authorised for issue in accordance with a resolution of the Directors on 13 September 2021.

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 Bulk Sugar Terminals (‘BSTs’) located in Queensland.

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

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

2 NET DEFICIT RESULT

2021

$’000

2020

$’000

Other costs a 463 -

TOTAL DEFICIT 463 -

a Other costs relate to expenses incurred in preliminary investigations into

investments into the sugar cane farming sector that QSL chose not to recover through the pools.

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) BASIS OF PREPARATION

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 financial report 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 23 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 2021. Under the Corporations Amendment (Corporate Reporting Reform) Act 2010 supplementary information about the Parent Entity is included in Note 23 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) 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.

(d) 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 3(h)).

(e) 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 has 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 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.

Sales revenue also includes transactions relating to foreign exchange, sugar futures and options operations.

(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. 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.

NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2021 QUEENSLAND SUGAR LIMITED AND ITS CONTROLLED ENTITIES



3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CONTINUED

(e) REVENUE RECOGNITION CONTINUED

(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.

(f) 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 Comprehensive Income.

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

(g) 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.

(h) 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 Comprehensive Income.

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 24.

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 Comprehensive Income (refer to Notes 9 and 13).

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.

(i) 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.

(j) 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.

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.




(j) INVENTORIES CONTINUED

(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.

(k) 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.

(l) 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 property, plant and equipment, other than land, over the estimated useful life of the assets as follows:

Asset Class 2021 2020

Plant and equipment 2 to 30 years 2 to 30 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 property, 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 Comprehensive Income in the year the asset was derecognised.

(m) 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.

(n) 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.

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).



(n) IMPAIRMENT OF ASSETS CONTINUED

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 Comprehensive Income 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.

(o) 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.

(p) 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.

(q) 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.

(r) 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.

(s) 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.

(t) 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 18).

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.

(u) 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 property, 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 Comprehensive Income when the associated assets are sold or impaired.




(v) 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.

(w) 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.

(x) 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.

(y) BORROWING COSTS

Borrowing costs are recognised as an expense when incurred.

(z) COMPARATIVES

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





2021 $’000

2020 $’000

4 SHARE INVESTMENT INCOME

Dividends from STL G class shares 2,790 2,654

Refund of franking credits (STL G class shares) 880 947

TOTAL SHARE INVESTMENT INCOME 3,670 3,601

5 EXPENSES FROM CONTINUING OPERATIONS

Borrowing costs expense

Interest expense 1,449 4,196

Facility fees and bank charges 2,396 2,770

TOTAL BORROWING COST EXPENSE 3,845 6,966

6 OTHER EXPENSES FROM CONTINUING OPERATIONS

Other Expenses 24,808 23,636 These expenses predominately relate to operating expenditure incurred in operating the six BSTs under the OA with STL.

Under the OA, QSL Operations provides 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 included in QSL’s Statement of Profit or Loss as “Service fee revenue from terminal operations”.


2021 2020$’000 $’000

7 TRADE AND OTHER RECEIVABLES

CURRENTTrade debtors 16,889 431

Other debtors

Futures margins and deposits 3,028 2,876

GST receivable 5,546 914

Other loans to sugar suppliers 2,442 1,314

Receivables – STL a 17,604 23,469

Other 4,281 6,501

32,901 35,074

TOTAL TRADE AND OTHER RECEIVABLES (CURRENT) 49,790 35,505

NON-CURRENTOther debtors

Other loans to sugar suppliers 1,500 -

TOTAL TRADE AND OTHER RECEIVABLES (NON-CURRENT) 1,500 -

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.

8 INVENTORIES

Bulk Australian raw sugar 134,074 87,665

TOTAL INVENTORIES 134,074 87,665

At 30 June 2021, 170,115 tonnes of 2020 season raw sugar and 87,911 tonnes of 2021 season raw sugar remained on hand totalling 258,026 tonnes of bulk raw sugar inclusive of 4,777 tonnes loaned to Wilmar (see Note 9). This raw sugar excluding amounts loaned to Wilmar held in the BSTs was used as collateral towards a drawdown of $113.1m under the Sugar Inventory Financing (SIF) Agreement at 30 June 2021 (refer to Note 14).

At 30 June 2020, 140,000 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. There was a single drawdown of $29.1m under the SIF at 30 June 2020.

9 OTHER FINANCIAL ASSETS

CURRENTUnrealised gains on derivatives:

Sugar futures and option contracts - 28,821

Sugar receivable – from Wilmar a 2,315 1,502

Amount owing from future pools b 40,615 -

TOTAL OTHER FINANCIAL ASSETS (CURRENT) 42,930 30,323

NON-CURRENTUnrealised gains on derivatives:

Sugar futures and option contracts - 4,757

Amount owing from future pools c 153 -

TOTAL OTHER FINANCIAL ASSETS (NON-CURRENT) 153 4,757

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

c 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 2022 season and beyond



2021 2020$’000 $’000

10 EQUITY INSTRUMENTS

Equity instruments at fair value through other comprehensive income:

NON-CURRENT

Shares at fair value a 38,858 33,242

a QSL holds 17.1% (2020: 16.7%) of the G (Grower) class of share capital of STL, a company that owns bulk raw sugar storage facilities in Queensland. Under an OA with STL during the 2021 financial year, QSL operated and maintained these facilities on 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.

11 PROPERTY, PLANT AND EQUIPMENT

Plant and equipment: a

At cost 35,663 32,952

Accumulated depreciation (15,445) (12,863)

20,218 20,089 Right-of-use asset: b

At cost 1,830 1,819

Accumulated depreciation (952) (445)

878 1,374

TOTAL PROPERTY, PLANT AND EQUIPMENT 21,096 21,463a 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 Brisbane office leases.

Reconciliations

Reconciliations of the carrying amounts of land and buildings and 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 20,089 18,481

Additions 4,103 4,571

Disposals (166) (103)

Depreciation expense (3,808) (2,860)

Carrying amount at the end of the year 20,218 20,089

Right-of-use asset:

Carrying amount at the beginning of the year 1,374 1,684

Additions 11 135

Depreciation expense (507) (445)

Carrying amount at end of the year 878 1,374

TOTAL PROPERTY, PLANT AND EQUIPMENT 21,096 21,463



2021 2020$’000 $’000

12 TRADE AND OTHER PAYABLES

CURRENTQueensland sugar suppliers 29,172 51,020

Trade creditors 7,775 4,247

Other 28,562 9,488

Lease liability 451 500

TOTAL TRADE AND OTHER PAYABLES (CURRENT) 65,960 65,255

NON-CURRENTLease liability 418 874

TOTAL TRADE AND OTHER PAYABLES (NON-CURRENT) 418 874

13 OTHER FINANCIAL LIABILITIES

CURRENTUnrealised losses on derivatives:

Foreign currency contracts 3,880 278

Sugar futures and option contracts 33,797 -

Deferred income relating to the next year:

Amounts owing to future pools a - 37,007

TOTAL OTHER FINANCIAL LIABILITIES (CURRENT) 37,677 37,285

NON-CURRENT Unrealised losses on derivatives:

Foreign currency contracts 146 175

Sugar futures and option contracts 1,011 57

Deferred income relating to a future period:

Amounts owing to future pools b - 4,620

TOTAL OTHER FINANCIAL LIABILITIES (NON-CURRENT) 1,157 4,852

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 2021 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 2022 season tonnage and beyond

14 INTEREST BEARING LIABILITIES

CURRENTSecured

Short-term facilities (uncommitted) a 12,913 -

Sugar Inventory Financing agreement (committed) b 113,130 29,104

Syndicated Facility Agreement (committed) b - 50,000

TOTAL INTEREST BEARING LIABILITIES (CURRENT) 126,043 79,104

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



15 PROVISIONS STAFF INCENTIVE

ANNUAL LEAVE

LONG SERVICE

LEAVE

SICK LEAVE a

TOTAL

$’000 $’000 $’000 $’000 $’000

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

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

Arising during the year 2,382 1,361 403 22 4,168

Utilised (3,324) (1,658) (253) (22) (5,257)

Discount rate adjustment - - 8 - 8

BALANCE AT 30 JUNE 2021 2,844 1,341 3,584 25 7,794

REPRESENTED AS:

Current 2,544 1,341 2,866 25 6,776

Non-Current 300 - 718 - 1,018

TOTAL 2,844 1,341 3,584 25 7,794

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



2021 2020$’000 $’000

16 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 2,483 31,062

Short-term facilities (uncommitted) (12,913) -

Sugar Inventory Financing agreement (committed) (113,130) (29,104)

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

TOTAL CASH AND CASH EQUIVALENTS (123,560) (48,042)

(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 June 2021 with the syndicate members for a further 15 months to fund the 2021 season funding profile. This renewed facility is on substantially the same terms with the syndicate members for a further 15 months expiring on 30 September 2022. The total facility limit has been set at A$350.0 million. On request by QSL, any amount of the facility limit can be transferred to the SIF agreement as outlined below.

As at 30 June 2021 there was no drawdown against this facility (2020: $A50.0m). 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 2022.

Sugar Inventory Financing (SIF) agreement

This facility is a sale and repurchase arrangement using sugar inventory at the BSTs. This facility was renewed in June 2021 to fund the 2021 season funding profile. This new facility is on similar terms, however the agreement is on a bilateral basis with QSL’s funding banks rather than through a syndicate arrangement. The funding limit under the SIF continues to operate in conjunction with the facility limit under the SFA. At any time QSL can elect to transfer any part of the available facility limit under the SFA to the SIF. This facility expires on 30 September 2022.

As at 30 June 2021, A$113.1 million (2020: A$29.1m) 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 2022.

(ii) Uncommitted Facilities

Other funding facilities

At 30 June 2021, the Parent Entity had additional available facilities with various financial institutions of A$103.2 million (2020: A$136.0 million). As at 30 June 2021, $12.9 million had been drawn against the facilities (2020: nil). These facilities 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.



2021 2020$’000 $’000

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

Not later than one year 224 49

18 EMPLOYEE BENEFITS AND SUPERANNUATION COMMITMENTS EMPLOYEE BENEFITS

Accrued wages, salaries and on-costs 819 594

Provisions for employee benefits (current) 6,776 8,108

Provisions for employee benefits (non-current) 1,018 767

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

AMOUNT CONTRIBUTED BY QSL TO THE QSUPER DEFINED BENEFIT PLAN 75 100

19 CONTINGENT LIABILITIES

There are no known contingent liabilities at 30 June 2021 of a material nature.

20 SUBSEQUENT EVENTS

There are no known events of a material nature that have occurred after 30 June 2021.



2021 2020$ $

21 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 2,837,581 3,129,870

22 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. Tully Sugar, MSF Sugar, Mackay Sugar and Wilmar are contracted under OSAs. FNM has a SMA in place.

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.



23 PARENT ENTITY INFORMATION AND CONTROLLED ENTITIES

(a) CONTROLLED ENTITIES

QSL has four controlled entities:

CONTROLLED ENTITY

COUNTRY OF INCORPORATION

PRINCIPAL ACTIVITIES OWNERSHIP

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



QSL Farm Investments Pty Ltd Australia Company established for future investments

(b) PARENT ENTITY DISCLOSURES

2021 2020$’000 $’000

Information relating to QSL:

Current assets 249,099 204,303

TOTAL ASSETS 285,317 241,528Current liabilities 236,456 189,752

TOTAL LIABILITIES 239,050 196,245

Retained surpluses 18,162 18,660

Reserves 28,105 26,623

TOTAL EQUITY 46,267 45,283

NET SURPLUS / (LOSS) (498) (76)

TOTAL COMPREHENSIVE INCOME / (LOSS) 984 589

Commitments

In April 2021, the QSL board signed an agreement to invest in a cane farming business for $20m. At the time of signing the 30 June 2021 financial statements, the investment is still subject to a number of conditions precedent that are outside of the control of QSL.

All expenditure commitments in Note 17 relate to the Parent Entity.

Contingent Liabilities

All contingent liabilities in Note 19 relate to the Parent Entity.

Guarantees

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



24 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:

2021 2020$’000 $’000

FINANCIAL ASSETS

COMMODITY INSTRUMENTSSugar futures contracts a - 13,233

Sugar swaps

Australian dollars b - 31,543

US dollars b - 2,569

OTHER FINANCIAL INSTRUMENTSEquity instruments at fair value through other comprehensive income 38,858 33,242

TOTAL 38,858 80,587

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).



24 FAIR VALUE OF FINANCIAL INSTRUMENTS CONTINUED

2021 2020$’000 $’000

FINANCIAL LIABILITIES

FOREIGN EXCHANGE INSTRUMENTSForward exchange rate contracts

Sell USD a (3,995) (11)

Currency options

Sold AUD Call against USD a - (43)

Sold AUD Put against USD a (121) (504)

Purchased AUD Call against USD a (898) -

COMMODITY INSTRUMENTSSugar futures contracts (8,874) -Sugar swap

Australian dollars (33,332) -US dollars (1,026) -

TOTAL (48,246) (558)

a OTC and OTC exotic

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).


DIRECTORS’ DECLARATIONFOR THE YEAR ENDED 30 JUNE 2021 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 24 to 43 for the year ended 30 June 2021 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 2021 and of its performance for the financial year ended on that date; and

(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

13 September 2021


INDEPENDENT AUDITOR’S REPORTFOR THE YEAR ENDED 30 JUNE 2021 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 2021, 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 2021 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.


INDEPENDENT AUDITOR’S REPORT CONTINUED



• 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 13 September 2021


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

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