GEOFFREY GARDINER DAIRY FOUNDATION LIMITED · Chief Executive M Harney . ... The Directors of Geoffrey Gardiner Dairy Foundation Limited ... B.Agr.Sc, MBA, FAICD

GEOFFREY GARDINER DAIRY FOUNDATION LIMITED (Limited by Guarantee)

A.C.N. 094 733 418

ANNUAL FINANCIAL REPORT

Year Ended

30 June 2016

GEOFFREY GARDINER DAIRY FOUNDATION LIMITED A.C.N. 094 733 418

CONTENTS

Company particulars 3

Directors’ Report 4

Directors’ Declaration 11

Statement of Profit or Loss and Other Comprehensive Income 12

Statement of Financial Position 13

Statement of Cash Flows 14

Statement of Changes in Equity 15

Notes to the Financial Statements 16

Independent Audit Report 28

Auditor’s Independence Declaration 30


COMPANY PARTICULARS

Registered Office Suite 3, Level 9, 470 Collins Street

MELBOURNE VIC 3000

Telephone: (03) 8621 2900

Email: [email protected] Website: www.gardinerfoundation.com.au Board of Directors B Kefford – Chairman

M Carroll

B Irvin

A Maughan

N Pye

J Slocombe

Chief Executive M Harney

Company Secretary J Lal

Solicitors FAL Lawyers

Bankers ANZ Business Bank

Investment Portfolio Manager Equity Trustees Limited

Auditors Grant Thornton Audit Pty Ltd

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mailto:[email protected]

http://www.gardinerfoundation.com.au/


DIRECTORS' REPORT

The Directors of Geoffrey Gardiner Dairy Foundation Limited ("Gardiner Dairy Foundation") present their Report together with the financial statements for the financial year ended 30 June 2016.

Director details

During the financial year, two Directors retired at the October 2015 AGM, and subsequently two new Directors were elected. In December 2015, the Farmer Director resigned and the position was vacant until March 2016. The following persons were Directors of the Gardiner Dairy Foundation during the financial year.

Period

1 Jul 15 - 30 Jun 16: 1 Jul 15 - 8 Oct 15: 8 Oct 15 - 30 Jun 16: 1 Jul 15 – 9 Dec 15 22 Mar 16 -30 Jun 16

Dr Bruce Kefford

Mr Michael Carroll

Mr Barry Irvin

Mr Michael Taylor

Prof. Robert Clark

Dr Judith Slocombe

Mr Andrew Maughan

Ms Roma Britnell

Ms Naomi Pye

Company Secretary

Mr Jainesh Lal was appointed to the role of Company Secretary of the Gardiner Dairy Foundation at the

November 2014 Annual General Meeting.

Entity

Gardiner Dairy Foundation is a public company, limited by guarantee and does not have share capital.

The company is incorporated in Australia.

Principle Activity

Gardiner Dairy Foundation's principle activity is to manage the investment of funds to maximise the

benefits to all sectors of the Victorian Dairy Industry and Victorian Dairy Communities and the wider

community, in accordance with section 65 of the Dairy Act 2000.

There were no significant changes in the nature of Gardiner Dairy Foundation's principle activities

during the financial year.

Strategy

Our strategy is to build a unique asset for the Victorian dairy industry, with an organisation embedded

across the dairy value chain. Gardiner Dairy Foundation invests a ‘meaningful’ amount into a small number

of well targeted projects, generally as a co-investor to maximize the investment’s critical mass and focus on

innovative outcomes for end users. Gardiner Dairy Foundation has the ability to be agile and flexible in its

response to emerging priorities. Our strategic activities and project investments are broadly categorized

into four areas:

Innovation:

To foster innovation in RD&E in the pre and post - farm gate sector, enhance capability and act as a

catalyst for change. The Gardiner Dairy Foundation manages a small portfolio of innovation

projects. These projects are targeted to increase the profitability and sustainability across the dairy

value chain.

Our measure of success is outcomes that increase the global competitiveness of our stakeholders.

People Development:

Our strategy is to attract, retain and develop talented dairy people and to continue to invest in

emerging leaders.

Our measure of success is talent being developed and encouraged to take up leadership positions in

the Victorian dairy industry.

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DIRECTORS' REPORT

Community Development:

Our strategy is to ensure small communities in dairy regions are an exciting and vibrant place to

live. Initiatives include small infrastructure grants to community groups and scholarships.

Our measure of success is vibrant dairy communities supporting the people and infrastructure that underpin a globally competitive dairy industry.

Industry Wide Support:

Our strategy is to proactively identify gaps in capability across the dairy supply chain and to take a

leadership position to address that gap and deliver an industry benefit.

Our measure of success is leverage of Gardiner Dairy Foundation funding resulting in significantly

greater impact at farm, factory, advocacy, leadership or community levels.

Financial Key Performance Measures:

The Gardiner Dairy Foundation measures its own performance through the use of both quantitative and

qualitative benchmarks. These benchmarks are used by the Directors to assess the financial sustainability

of the company and whether the company’s short term and long term objectives are being met.

With respect to the Gardiner Dairy Foundation’s investment portfolio1, over the twelve months to 30

June 2016 the Australian sharemarket was impacted by a period of market weakness towards the end

of the year, including adverse reaction to the United Kingdom deciding to exit the European Union. This

saw a decline in the Gardiner Dairy Foundation portfolio from $101.7m at the start of the year to $96.9m

at 30 June 2016. The market however fully recovered the BREXIT loses and posted healthy gains

through the first weeks of July 2016. Notwithstanding the decline in the value of the investment portfolio

over the last 12 months the closing value remains above the inflation adjusted value of $62m, thereby

maintaining its real value. Moreover, the portfolio is supported by the Foundation’s healthy liquidity

reserve ($3.9m). The Foundation’s portfolio has a significant exposure to ’blue chip’, high yielding

shares and consistently produces, stable and growing income, in addition to long term capital growth.

Income earned from investments (net of management fee) at the end of 30 June 2016 was $5.71m,

which was marginally higher than 30 June 2015 investment income of $5.68m (net of management

fees).

On a triennial basis, the investment portfolio and investment manager’s performance is reviewed by an

external and independent party. Mercer completed the independent audit in 2011 and 2014. The next

triennial audit is scheduled for 2017.

In the 2016 financial year, Gardiner Dairy Foundation received the first tranche payment of $3m as part

of a bequest to the Foundation from the Estate of Niel Black. Following receipt of further bequest funds

in next and subsequent financial years the full amount will be invested and managed within the Gardiner

Dairy Foundation corpus. The objects of the Foundation as outlined in the Constitution are aligned with

the intent for developing programs in honour of Niel Black.

Our measure of success will be funds directed to programs with the greatest impact for the Victorian dairy industry and wider communities.

1 The Gardiner Foundation’s investment portfolio includes Australian Equities and Capital Cash. In the Statement of Financial Position, the Australian

Equities is represented as Financial Assets under the Non-Current Assets category ($85.2m). The Capital Cash component is embedded within Cash and

Cash Equivalents under the Current Assets category and further explained in Note 4 of the Notes to the Financial Statement section as ‘Capital cash held by

the Equity Trustees’ ($11.7m). The aggregate of the two amounts is $96.9m.

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DIRECTORS' REPORT

Financial Overview

$

$

Revenue

Investment Revenue

Interest Revenue 362,284

Dividend Revenue 4,275,042

Franking Credit Revenue 1,405,397

Other Income

Bequest Income 3,000,000

Other Income 193,381

Total Revenue 9,236,104

Project payments and other expenses

Project Payments (4,927,728)

Other Expenses (776,480)

Total Operating Expenses

(5,704,208)

Gain/(Loss) on disposal of financial assets at fair value 104,251

Change in fair value of financial assets (5,011,137)

Other comprehensive income (4,906,886)

Net Deficit for the year

(1,374,990)

Net deficit through reduction in market value of financial assets for the 2016 financial year was $(1,374,990)

Operating Results:

Total Revenue

9,236,104

Less Total Expenses

(5,704,208)

Total Operating Surplus

3,531,896

The operating surplus for the 2016 financial year was $3,531,896.

Funds received at inception of Gardiner Dairy Foundation were $62,126,314. Total project funding

expensed from inception to 30 June 2016 is in excess of $60,000,000

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DIRECTORS' REPORT

Information on Directors

The Directors of Gardiner Dairy Foundation in office at the date of this report are:

Bruce Kefford, PSM, Chairman

B. Sc (Hons), PhD, MAICD, MAGSM, FIPAA

Bruce Kefford joined the Gardiner Dairy Foundation Board in November 2014. Bruce was appointed Chairman at the AGM in October 2015. An experienced strategic leader with an in-depth knowledge of the food and agriculture sectors and the dairy industry in particular, he is passionate about the application of innovation and science to improve industry competitiveness and sustainability. He is recognised nationally and internationally as a thought leader in the reshaping of the national primary industries innovation system. Until July 2013, Bruce was Deputy Secretary with the Department of Environment and Primary Industries, fulfilling senior advisory roles to industry, state and national governments. Bruce also has a deep understanding of the investment, evaluation and delivery of research, development and extension, extensive relevant board experience as well as a track record of brokering significant partnerships and joint ventures.

Special Responsibilities:

Member: Finance, Investment and Audit Committee

Member: Community and People Development Committee

Member: HR and Governance and Communications Committee

Michael Carroll

B.Agr.Sc, MBA, FAICD

Mike Carroll joined the Gardiner Dairy Foundation Board in November 2010 and chairs the Finance, Investment and Audit Committee. He brings to the Board diverse experience from executive and non-executive roles in food and agribusiness. Current board roles include, Sunny Queen Farms, Select Harvests, Tassal, Rural Funds Management, Paraway Pastoral Company and the Australian Rural Leadership Foundation. Previous board roles include the Australian Farm Institute, Rural Finance Corporation, Queensland Sugar Limited, Meat and Livestock Australia and Warrnambool Cheese & Butter. During his executive career Mike established and led the NAB’s agribusiness division with earlier senior executive roles including marketing, investment banking and corporate advisory services. Mike also has experience in agricultural research and product development. He and his family have been involved in cattle production for over 130 years and he has a strong personal commitment to Australian agriculture.


Chairman: Finance, Investment and Audit Committee.

Barry Irvin AM

Barry Irvin joined the Gardiner Board in November 2010. As Executive Chairman of Bega Cheese and a director of other prominent dairy industry organisations, he brings broad dairy industry knowledge to his role on the Gardiner Dairy Foundation Board, including expertise in financial and investment management. Barry has first-hand experience of the philanthropic sector, chairing the Board of Giant Steps Sydney, which caters for children and young adults with autism.

Special responsibilities:

Chairman: Community and People Development Committee

Chairman: HR and Governance and Communications Committee

Member: Finance, Investment and Audit Committee

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DIRECTORS' REPORT

Andrew Maughan

BSc, LLB, MBA, FFinsia, FAICD

Andrew Maughan joined the Gardiner Dairy Foundation Board in October 2015. Andrew is a lawyer, corporate advisor and experienced company director. His background spans international trade and agriculture, strategy and risk management, corporate finance and investment management. He is currently Managing Director of corporate advisory firm Somerset Capital and is Chairman of food and agriculture companies, AgLink (IDH Pty Ltd), Langdon Group and The Pastoral Pork Company. He is a Director and Investment Committee Member of the Norman Beischer Medical Research Foundation. Andrew has previously been an Independent Director of the Pork CRC and a Director of the Mt Hotham Alpine Resort. Before founding Somerset Capital in 1999, Andrew worked for Cargill (USA, Canada and Australia), Hudson Conway Limited and legal firm Freehills.


Member: Finance Investment and Audit Committee

Naomi Pye

Naomi Pye joined the Gardiner Dairy Foundation Board in June 2016. Naomi is a Director and Manager of Boldrewood Dairies Pty Ltd, a multi-generational family dairy farm. She holds qualifications and experience in education and agriculture. Naomi has been an active member of the dairy industry for over 20 years through roles with United Dairy farmers Victoria, Victorian Farmers Federation, Australian Dairy Farmers Federation and West Vic Dairy. She has ten years’ experience on government boards, previously Glenelg Hopkins Catchment Management Authority and currently Southern Rural Water. Naomi is a graduate, and member, of the Australian Institute of Company Directors.

Judith Slocombe

BVSc, MRCVS, MBA, FAICD, FAIM

Judith Slocombe was appointed as a Director of the Gardiner Dairy Foundation Board at the AGM in October 2015. From entrepreneurial beginnings in the business of Veterinary Pathology to senior executive roles, Judith’s extensive board experience covers the corporate, government and not-for-profit sectors. Judith is the former Chief Executive Officer of the not-for-profit community organisation, Alannah and Madeline Foundation and Chair of the Consumer Advisory Panel at Walter + Eliza Hall Institute. She also holds director positions with the Victorian Government’s Agriculture Victoria Services, Children’s Rights International, Leadership Victoria and the Young and Well Co-operative Research Centre. Judith was named the Telstra Australian Business Woman of the Year in 2001 and awarded the Centenary Medal for service to Australian Society in Business Leadership in 2003.

Special responsibilities: Member: Community and People Development Committee

Member: Human Resources, Governance and Communications Committee

Page 8


DIRECTORS' REPORT

Meetings of Directors:

The number of board and board committee meetings held during the year ended 30 June 2016, and director attendance:

Directors

Board (9 Meetings) Meetings of committees

FI&A

(4 Meetings) CPD

(2 Meetings) HR & Gov

(2 Meetings)

A B A B A B A B

B Kefford(i)

9 9 3 3 2 2 2 2

R Britnell(ii)

1 4 1 1 - - - -

M Carroll(i)

9 9 4 4 - - - -

R J Clark(iii)

2 2 - - - - - -

B Irvin(i)

6 9 2 4 2 2 2 2

A Maughan(iv)

7 7 3 3 - - - -

N Pye (v)

3 3 - - - - - -

J Slocombe(iv)

6 7 - - 1 1 1 1

M J Taylor(iii)

2 2 1 1 1 1 1 1

A Number of meeting attended

B Meetings held or entitled to attend

(i) Indicates Director from 1 July 2015 – 30 June 2016

(ii) Indicates Director from 1 July 2015 – 9 December 2015 following resignation

(iii) Indicates Director from 1 July 2015 – 8 October 2015 following rotation at 2015 AGM

(iv) Indicates Director from 8 October – 30 June 2016 following rotation at 2015 AGM

(v) Indicates Director from 22 March – 30 June 2016

Index to Committees

FI&A Finance, Investment and Audit Committee

CPD Community and People Development Committee

HR & Gov HR and Governance and Communications Committee

Retirement, election and continuation in office of Directors Mr M J Taylor and Professor R J Clark were the Directors retiring by rotation who did not offer

themselves for re-election. Dr J Slocombe and Mr A Maughan were elected as new Directors

to the Gardiner Dairy Foundation Board at the October 2015 AGM. Ms R Britnell resigned

from the Gardiner Dairy Foundation Board in December 2015.

Members Guarantee The Gardiner Dairy Foundation is incorporated under the Corporations Act 2001 and is limited by

guarantee. If the Gardiner Dairy Foundation is wound up, the Constitution states that each

member is required to contribute an amount not exceeding $10 towards meeting the liabilities

and obligations of the Gardiner Dairy Foundation. At 30 June 2016, there were 3 members. The

total amount that members of the company are liable to contribute if the company is wound up is

$30 (2015: $30).

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DIRECTORS' REPORT

Auditor's Independence Declaration

A copy of the auditor's independence declaration as required under s.60–40 of the Australian Charities and Not-for-Profits Commission Act 2012 is attached to the annual financial report. This Directors Report is made in accordance with a resolution of the Board of Directors

B Kefford M Carroll Chairman Chairman, Finance, Investment & Audit Committee

Dated this 11

of August 2016

Page 10


DIRECTORS' DECLARATION

The Directors of Gardiner Dairy Foundation declare that:

1) The financial statements of the Gardiner Dairy Foundation, comprising Statement of Financial

Position, Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes

in Equity, Statement of Cash Flows and Notes to the Financial Statements set out herein, are in

accordance with the Australian Charities and Not-for-Profits Commission Act 2012:

a) comply with Australian Accounting Standards – Reduced Disclosure Requirements (including

the Australian Accounting Interpretations) and the Australian Charities and Not–for-Profits

Commission Regulation 2013.

b) give a true and fair view of the financial position as at 30 June 2016 and of the performance for

the year ended on that date, of Gardiner Dairy Foundation;

2) In the Directors' opinion these are reasonable grounds to believe that Gardiner Dairy Foundation

will be able to pay its debts as and when they become due and payable.

This Directors Declaration is made in accordance with a resolution of the Board of Directors

B Kefford

Chairman

Dated this 11

of August 2016

M Carroll Chairman, Finance, Investment & Audit Committee

Page 11


The accompanying notes form part of these financial statements

STATEMENT OF PROFIT OR LOSS AND

OTHER COMPREHENSIVE INCOME FOR

THE YEAR ENDED 30 JUNE 2016

Note 2016 2015

(Restated*)

$ $

REVENUE

Investment Revenue 2 6,042,723

6,064,982

Other income 2 3,193,381

152,750

PROJECT PAYMENTS AND OTHER EXPENSES

Project payments 3(a) (4,927,728)

(2,950,803)

Other expenses 3(b) (776,480)

(846,055)

SURPLUS FOR THE YEAR

3,531,896 2,420,874

OTHER COMPREHENSIVE INCOME

Gain/(Loss) on disposal of financial assets at fair value

104,251

3,608,354

Change in fair value of financial assets at fair value

(5,011,137)

1,100,602

TOTAL OTHER COMPREHENSIVE INCOME

(4,906,886) 4,708,956

TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO THE ENTITY

(1,374,990) 7,129,830

*Refer to note 1 (n) for details on restatement resulting from a change in reclassification.

Page 12



STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2016

Note 2016 2015

$ $

CURRENT ASSETS

Cash and cash equivalents 4

18,686,141

13,733,052

Receivables 5 2,688,456

2,675,278

TOTAL CURRENT ASSETS

21,374,597 16,408,330

NON-CURRENT ASSETS Financial assets

85,166,417

90,824,477

Plant and Equipment 6 59,174

80,261

TOTAL NON-CURRENT ASSETS

85,225,591 90,904,738

TOTAL ASSETS

106,600,188 107,313,068

CURRENT LIABILITIES Payables 7 826,228

192,762

Provisions 8(a) 95,067

71,052

TOTAL CURRENT LIABILITIES

921,295 263,814

NON-CURRENT LIABILITIES Provisions 8(b) 33,594

28,965

TOTAL NON-CURRENT LIABILITIES

33,594 28,965

TOTAL LIABILITIES

954,889 292,779

NET ASSETS

105,645,299 107,020,289

EQUITY Capital Contribution

62,126,314

62,126,314

Financial Asset Revaluation Reserve 20,495,225

25,402,111

Retained Earnings

23,023,760

19,491,864

TOTAL EQUITY

105,645,299 107,020,289

Page 13



STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2016

Note 2016 2015

$ $

CASH FLOWS FROM OPERATING ACTIVITIES Receipts in the course of operations includes - dividends and franking credits 5,605,883

5,744,772

- interest received 363,499

320,210

- bequest received 3,000,000

-

- other income 276,446

25,050

Payments in the course of operations - primarily includes project payments (4,709,350)

(3,761,844)

- management fees paid (334,563)

(377,354)

NET CASH INFLOW /(OUTFLOW) FROM OPERATING ACTIVITIES 9 4,201,915 1,950,834

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of plant and equipment -

(5,017)

Proceeds from sale of plant and equipment -

100

Proceeds from sale of financial assets at fair value 16,252,512

5,608,355

Purchase of financial assets at fair value (15,501,338)

(2,593,029)

NET CASH INFLOW FROM INVESTING ACTIVITIES 751,174 3,010,409

Net increase in cash and cash equivalents 4,953,089

4,961,242

Cash and cash equivalents at beginning of the financial year 13,733,052

8,771,810

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 4 18,686,141 13,733,052

Page 14



STATEMENT OF CHANGES OF EQUITY


Capital Contribution

Financial Asset

Revaluation Reserve

Retained Earnings Total

$

Balance at 30 June 2014

62,126,314

20,693,155

17,070,990

99,890,459

Surplus for the year 30 June 2015 - -

2,420,874

2,420,874

Gain on sale of financial assets at fair value through Other Comprehensive Income

3,608,354

3,608,354

Net fair value gain on revaluation of financial assets -

1,100,602 -

1,100,602

Total Comprehensive Income -

4,708,956

2,420,874

7,129,830


62,126,314

25,402,111

19,491,864

107,020,289

Surplus for the year 30 June 2016

3,531,896

3,531,896

Gain on sale of financial assets at fair value through Other Comprehensive Income

104,251

104,251

Net fair value gain on revaluation of financial assets

(5,011,137)

(5,011,137)

Total Comprehensive Income - (4,906,886)

3,531,896 (1,374,990)


62,126,314 20,495,225

23,023,760 105,645,299

Page 15


NOTES TO THE FINANCIAL STATEMENTS


NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The financial statements of Gardiner Dairy Foundation (the “Foundation”) are general purpose

financial statements that have been prepared in accordance with Australian Accounting Standards –

Reduced Disclosure Requirements of the Australian Accounting Standards Board and the Australian

Charities and Not-for-Profits Commission Act 2012. The company is a not-for-profit entity for

financial reporting purposes under Australian Accounting Standards.

The financial statements, except for the cash flow information, have been prepared on an accruals

basis and are based on historical costs, modified, where applicable, by the measurement at fair

value of selected non-current assets, financial assets and financial liabilities. The amounts

presented in the financial statements have been rounded to the nearest dollar.

The financial statements were authorised for issue on 11 August 2016 by the Directors of the

Gardiner Dairy Foundation.

(a) Revenue

Investment income

Investment income derived from the investment portfolio includes interest, dividend and franking

credit income on an accruals basis.

- Interest revenue is recognised using the effective interest rate method, which, for

floating rate financial assets is the rate inherent in the instrument.

- Dividend revenue is recognised when the right to receive a dividend has been

established.

- Franking credits are recognised when the right to the franking cred i t arises, which

is at the same time when the right to receive a dividend has been established.

All revenue is stated net of amount of goods and services tax (GST).

Royalty Income

Royalty Income is recognised on an accrual basis in the period which the income relates to.

Will and Bequests Income

Bequeathed items are recognised as income when the entity has obtained a present legal right

to, and therefore control of, the bequeathed items. This occurs when probate has been granted

and the period for challenging the Will has expired and or the Will has been challenged and it is

legally determined that the entity is entitled to particular assets or amounts.

(b) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at-call with banks, other short-

term highly liquid investments with original maturities of three months or less which are readily

accessible and convertible to known amounts of cash and subject to insignificant risk of change

in value.

(c) Plant and Equipment

Plant and equipment are measured on cost basis and are therefore carried at cost less

accumulated depreciation and any accumulated impairment losses. In the event the

carrying amount of plant and equipment is greater than its estimated recoverable amount, the

carrying amount is written down immediately to its estimated recoverable amount and

impairment losses are recognised in profit or loss. A formal assessment of recoverable amount

is made when impairment indicators are present.

Page 16




(c) Plant and equipment (cont’d)

Depreciation of Plant, Equipment and Leasehold Improvements

The depreciable amount of all fixed assets is depreciated on a straight-line basis over the

asset’s useful life to the entity commencing from the time the asset is held ready for use.

Leasehold improvements are depreciated over the shorter of either the unexpired period of the

lease or the estimated useful lives of the improvement.

The depreciation rates used for each class of depreciable asset are:

Class of Fixed Asset Useful life

Plant and equipment 3 – 5 years

Leasehold improvements 4 – 5 years

The assets’ residual values and useful lives are reviewed and adjusted if appropriate, at the end

of each reporting period.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount.

These gains or losses are included in the profit or loss.

(d) Trade and Other Payables

Trade and other payables represent the liabilities for goods and services received by the

company during the reporting period that remain unpaid at the end of the reporting period. The

balance is recognised as a current liability with the amounts normally paid within 30 days of

recognition of the liability.

(e) Provisions

Provisions are recognised when Gardiner Dairy Foundation has a legal or constructive

obligation, as a result of past events, for which it is probable that an outflow of economic benefits

will result and that outflow can be reliably measured. Provisions recognised represent the best

estimate of the amounts required to settle the obligation at the end of the reporting period.

(f) Employee Expenses

Provision is made for Gardiner Dairy Foundation’s liability for employee expenses arising from

services rendered by employees to the end of the reporting period. Employee expenses that are

expected to be settled within one year have been measured at the amounts expected to be paid

when the liability is settled. Employee expenses payable later than one year have been

measured at the present value of the estimated future cash outflows. In determining the

liability, consideration is given to employee wage increases and the probability that the

employee may not satisfy vesting requirements. Those cash outflows are discounted using

market yields on high quality corporate bonds with terms to maturity that match the expected

timing of cash flows. Any re-measurements arising from experience adjustments and changes in

assumptions are recognised in profit or loss in the periods in which the changes occur.

The Gardiner Dairy Foundation does not expect the full annual leave balance to be settled within

12 months, however, as the Gardiner Dairy Foundation does not have an unconditional right of

deferral, the full balance is presented as a current liability.

(g) Leases

Operating leases

Lease payments for operating leases, where substantially all the risks and benefits remain

with the lessor, are charged as expenses on a straight-line basis over the lease term.

Lease incentives under operating leases are recognised as a liability and amortised on a

straight-line basis over the life of the lease term.

Page 17




(h) Financial Instruments

The Foundation adopted the Australian Accounting Standard AASB 9 Financial Instruments in

the 2014 financial year.

AASB 9 Financial Instruments requires financial assets to be classified into two measurement

categories: those measured as at fair value and those measured at amortised cost. The

determination is made at initial recognition. The classification depends on the entity’s business

model for managing its financial instruments and the contractual cash flow characteristics of the

instrument.

AASB 9 Financial Instruments does not affect the Foundation’s accounting for its financial

liabilities, as the requirements only affect the accounting for financial liabilities that are

designated at fair value through profit or loss and the Foundation does not have any such

liabilities.

Initial recognition and measurement

Financial assets and financial liabilities are recognised when Gardiner Dairy Foundation

becomes a party to the contractual provisions to the instrument. For financial assets, this is

equivalent to the date that the Foundation commits itself to either purchase or sell the asset (i.e.

trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where

the instruments is classified ‘at fair value through profit or loss’ in which case transaction costs

are expensed to profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at fair value, amortised cost using the

effective interest method, or cost. Where available, quoted prices in an active market are used

to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is the amount at which the financial asset or financial liability is measured at

initial recognition less principal repayments and any reduction for impairment, and adjusted for

any cumulative amortisation of the difference between that initial amount and the maturity

amount calculated using the effective interest method.

The effective interest method is used to allocate interest income or interest expense over the

relevant period and is equivalent to the rate that exactly discounts estimated future cash

payments or receipts (including fees, transaction costs and other premiums or discounts)

through the expected life (or when this cannot be reliably predicted, the contractual term) of the

financial instrument to the net carrying amount of the financial asset or financial liability.

Revisions to expected future net cash flows will necessitate an adjustment to the carrying value

with a consequential recognition of an income or expense item in profit or loss.

Fair value is determined based on current bid prices for all quoted investments. Valuation

techniques are applied to determine the fair value for all unlisted securities, including recent

arm’s length transactions, reference to similar instruments and option pricing models.

Receivables

Receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market and are subsequently measured at amortised cost. Gains or losses

are recognised in profit or loss through the amortisation process and when the financial asset is

derecognised.

Page 18




Financial liabilities

Non-derivative financial liabilities other than financial guarantees are subsequently measured at

amortised cost. Gains or losses are recognised in profit or loss through the amortisation process

and when the financial liability is derecognised.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or

the asset is transferred to another party whereby Gardiner Dairy Foundation no longer has any

significant continuing involvement in the risks and benefits associated with the asset. Financial

liabilities are derecognised where the related obligations are discharged, cancelled or expired. The

difference between the carrying value of the financial liability, which is extinguished or transferred to

another party and the fair value of consideration paid, including the transfer of non-cash assets or

liabilities assumed, is recognised in profit or loss.

(i) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the

amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The

net amount of GST recoverable from, or payable to, the ATO is included with other receivables or

payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from

investing or financing activities which are recoverable from, or payable to, the ATO are presented

as operating cash flows.

(j) Income Tax

Gardiner Dairy Foundation is exempt from income tax and is an endorsed income tax exempt entity

pursuant to Item 8.2 of Section 50-40 of the Income Tax Assessment Act 1997. The Foundation

receives dividend and share buy-back franking credits in respect of investment activities from the

Australian Taxation Office.

(k) Comparative Figures

Where required by Australian Accounting Standards comparative figures have been adjusted to

conform with changes in presentation for the current financial year.

(l) Critical Accounting Estimates and Judgments

The Directors evaluate estimates and judgments incorporated into the financial statements

based on historical knowledge and best available current information. Estimates assume a

reasonable expectation of future events and are based on current trends and economic data,

obtained both externally and within the company.

Key Judgments-Financial Assets

The Foundation maintains a portfolio of investments which are managed by Equity Trustees. The

Directors, with the assistance of Equity Trustees, adjust the portfolio of investments to fair market

value at 30 June.

Long Service Leave

The liability for long service leave is recognised and measured at the present value of the estimated

cash flows to be made in respect of all employees at the reporting date. In determining the present

value of the liability, estimates of attrition rates and pay increases through promotion and inflation

have been taken into account.

Page 19




(m) Equity

Gardiner Dairy Foundation is limited by guarantee and does not have share capital. The

Foundation was formed for the purpose of managing the investment of funds to be used to

benefit all sectors of the Victorian Dairy Industry and Communities in accordance with Section

65 of the Dairy Act 2000.

The Foundation is prohibited by the Constitution from making distributions to its members. In

the event of winding up, the assets of Gardiner Dairy Foundation shall be applied in satisfaction

of its debts and liabilities and any surplus after such application shall be given or transferred to

one or more bodies ("Successor Body(s)") having objectives consistent with the objects of the

Foundation. The allocation of the surplus between Successor Body(s) must be approved by

unanimous resolution of each class of member and by the Minister of the Victorian Government

whose portfolio or responsibilities include agriculture. If the Successor Body(s) fail to meet the

objectives and surplus approval criteria by the date Gardiner Dairy Foundation is wound up, any

surplus will be transferred to the Minister on behalf of the State of Victoria.

(n) Reallocation of Project Payments and Other Expenses 2015

In the 2016 financial year, a new project allocation methodology was devised, on the basis of

which a certain proportion of administrative costs associated with project was allocated to project

expenditure . For consistency and comparability, this method of allocation was applied to the 2015

expenditure and is reflected in Note 3 (a) and (b) to the financials.

The key differences are reflected in the Statement of Profit or Loss and Other Comprehensive as

follows:

Expenditure Category Reported in 2015

($)

Reclassification

($)

Reported in 2016

for 2015

Comparatives

($)

Project payments (2,568,630) (382,173) (2,950,803)

Other expenses (1,228,228) 382,173 (846,055)

Page 20




(n) Reallocation of Project Payments and Other Expenses 2015 (con’t)

The reallocation to 2015 expenditure under Note 3 is as follows:

Reported in 2016 Reported in 2015 Difference

$ $ $

3(a) Project payments

Post-farm gate Innovation 604,236

604,236

Pre-farm gate Innovation 1,017,845

1,017,845

People Development 433,996

433,996

Industry Support 594,600

594,600

Community Development 300,126

300,126

Industry Wide projects

716,287 (716,287)

Innovation Projects

1,163,585 (1,163,585)

Community and People Development projects

688,758 (688,758)

Total project payments 2,950,803 2,568,630 382,173

3(b) Other expenses

Occupancy expenses 20,140 35,365 (15,225)

Rental expenses on operating leases 1,591 2,611 (1,020)

Consultants fees 37,533 51,084 (13,550)

Legal fees 7,048 10,572 (3,524)

Insurance 3,259 7,980 (4,721)

Events - 71,351 (71,351)

Record management 286 502 (216)

Stakeholder Management

52,036 (52,036)

Director’s costs 42,292 117,374 (75,082)

Employment expense 244,544 374,018 (129,475)

Other administration expenses 68,208 84,181 (15,973)

Total Other expenses 846,055 1,228,228 (382,173)

Total Project payments and other expenses

3,796,858 3,796,858 -

Page 21




2016

2015

$

$

NOTE 2: REVENUE

Operating Activities

Interest Revenue 362,284

320,210

Dividend Revenue 4,275,042

4,294,089

Franking Credit Revenue 1,405,397

1,450,683

6,042,723 6,064,982

Non-Operating Activities

Other Revenue 193,381

152,750

Bequest Income 3,000,000

-

3,193,381 152,750

Total Revenue 9,236,104 6,217,732

2016

$ 2015

$ (restated)

NOTE 3: PROJECT PAYMENTS AND OTHER EXPENSES

(a) Project payments

Post-farm gate Innovation 803,751

604,236

Pre-farm gate Innovation 1,261,855

1,017,845

People Development 785,988

433,996

Industry Support 1,703,104

594,600

Community Development 373,030

300,126

Total project payments 4,927,728 2,950,803

Post - farm gate Innovation: The post-farm gate projects support manufacturers to achieve process

improvements for the benefit of the industry and to build skills of individuals considering a career in the dairy

industry, where majority of the desired skills falls within the discipline of Engineering and IT programs.

Projects in this category include the Monash Industry Team Initiative (MITI) Project.

Pre - farm gate Innovation: Longer term projects that align with the Dairy Moving Forward National Strategy in

Feedbase and Animal Performance in the pre-farm gate sector.

People Development: A small number of projects where the primary purpose is developing the individual

recipient of a Gardiner Scholarship at Tier 1 level in line with Gardiner's Vision for supporting emerging

leaders and the Dairy Industries Blueprint for Leadership development. Projects in this category include

Nuffield and Farm Business Management scholarships.

Industry Support - A range of activity mainly in conjunction with United Dairy Farmers of Victoria (UDV) to

benefit the Victorian dairy industry. This may be known and budgeted, such as the NZ study tour for young

UDV Members, or the ability to respond to emerging issues for the Victorian Dairy Industry such as funding

the Dairy Australia Taking Stock Project in the milk price reduction event of 2016.

Community Development: Three smaller scale projects, developed over a decade where the primary

purpose is developing and supporting the communities within which the Victorian dairy industry operates.

Projects in this category include the Small Grants program administered via the Foundation for Rural &

Regional Renewal (FRRR), the Victorian Rural Community Leadership Programs and Tertiary Scholarships.

Page 22




NOTE 3: PROJECT PAYMENTS AND OTHER EXPENSES (con’t)

2016

2015

$

$ (restated)

(b) Other Expenses

Occupancy expenses 20,205

20,140

Depreciation expense 21,087

23,200

Rental expenses on operating leases 1,646

1,591

Remuneration of auditor- audit fees 21,100

20,600

Investment management fees paid to Equity Trustees 334,563

377,354

Consultants fees 26,221

37,533

Legal fees 6,092

7,048

Insurance 2,615

3,259

Record management 1,341

286

Director’s costs 38,710

42,292

Employment expense 227,968

244,544

Other administration expenses 74,931

68,208

Total Other expenses 776,480 846,055

Total Project payments and other expenses 5,704,208 3,796,858

Other administration expenses/Total Expenditure

5,704,207.41 #REF!

(c) Project related employee expenses are allocated to the project for which they have been incurred. Administration employment expenses are included in 3(b) Other expenses

Employee expenses 698,472

734,627

Superannuation 61,421

58,735

Total Employee Expense 759,893 793,362

NOTE 4: CASH AND CASH EQUIVALENTS

Cash at bank and on hand 91,284

239,682

Capital cash held by the Equity Trustees 11,694,453

10,943,282

Liquid cash held by the Equity Trustees 3,899,204

2,550,088

Niel Black Bequest Fund 3,001,200

-

Total Cash and Cash Equivalent 18,686,141 13,733,052

NOTE 5: RECEIVABLES

Sundry debtors including GST and other taxes receivable 164,116

219,994

Income accrued 2,524,340

2,455,284

Total receivables 2,688,456 2,675,278

Income accrued includes dividends owed but not received, franking credits on dividends received and

franking credits earned on dividends accrued. Franking credits are claimed from the Australian Taxation

Office after the year end.

Page 23




2016

2015

$

$

NOTE 6: PLANT AND EQUIPMENT

NON CURRENT

Plant and equipment at cost 69,088

69,088

Less accumulated depreciation (54,875) (46,569)

14,213 22,519

Leasehold improvements at cost 76,671

76,671

Less accumulated depreciation (31,710) (18,929)

44,961 57,742

59,174 80,261

Plant & Equipment

Leasehold Improvements

Total

$ $ $

Movements in carrying amounts

Movement in the carrying amounts for each class of plant and equipment between the beginning and the end of the current financial year.

Balance at 1 July 2014 29,897 70,523 100,420

Additions 5,017 - 5,017

Disposals (1,976) - (1,976)

Depreciation expense (10,419) (12,781) (23,200)

Balance at 30 June 2015 22,519 57,742 80,261

Additions - - -

Disposals - - -

Depreciation expense (8,306) (12,781) (21,087)

Balance at 30 June 2016 14,213 44,961 59,174

2016

2015

NOTE 7: PAYABLES $

$

Trade and other payables 170,984

89,740

Accrued Expenses 655,244

103,022

826,228 192,762

Page 24




2016

2015

$

$

NOTE 8 (a): CURRENT PROVISIONS

Employee entitlements 84,020

66,282

Other Provisions 11,047

4,770

Total Current Provisions 95,067 71,052

NOTE 8 (b): NON-CURRENT PROVISIONS

Employee entitlements 18,651

8,710

Rent Free Provision 14,943

20,255

Total Non-Current Provisions 33,594 28,965

128,661 100,017

Provision for Long-term Employee Expenses

A provision has been recognised for employee entitlements relating to annual and long service leave. In calculating the present value of future cash flows in respect of leave, the probability of leave being taken is based on estimates and judgements. The measurement and recognition criteria relating to employee expenses have been included in Note 1 to these financial statements.

Other Provisions

Fringe Benefit Tax Payable for 2015/16 and rent free provision has been recognised for straight line annual rental increases over the duration of the lease (five years).

2016

2015

$

$

NOTE 9: CASH FLOW INFORMATION

Reconciliation of cash flow from operations with surplus/(deficit) for the year:

Surplus/(Deficit) for the year 3,531,896

2,420,874

Non Cash flows

Depreciation and amortisation 21,087

23,200

Loss on sale of assets -

1,876

Increase/(decrease) in provisions 28,644

539

Changes in assets and liabilities

Decrease/(increase) in receivables

(13,178)

(150,927)

Increase/(decrease) in payables 633,466

(344,728)

Cash flow from operating activities 4,201,915 1,950,834

Page 25




2016

2015

$

$

NOTE 10: CAPITAL AND LEASING COMMITMENTS

(a) Operating lease commitments

Non-cancellable operating leases contracted but not capitalised in the financial statements:

Payable – minimum lease payments

- Not later than 1 year 68,935

66,478

- Later than 1 year but not later than 5 years 95,012

153,810

163,947 220,288

(b) Project expenditure commitments

The following funding commitments for projects existed at 30 June:

Payable not later than 1 year 4,415,759

3,149,703

Later than 1 year but not later than 5 years 7,132,108

5,455,746

11,547,867 8,605,449

The project expenditure commitment includes both contractual obligations for projects supported by Gardiner Dairy Foundation and other costs associated with servicing the contractual obligations.

NOTE 11: EVENTS AFTER THE REPORTING PERIOD

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations, the results of those operations, or the state of affairs in future financial years.

NOTE 12: RELATED PARTY TRANSACTIONS

There were no related party transactions during the year.

NOTE 13: DIRECTORS AND KEY MANAGEMENT PERSONNEL COMPENSATION

Any person(s) having authority and responsibility for planning, directing and controlling the activities of the Foundation, directly or indirectly, including any Director (whether executive or otherwise) is considered key management personnel. Key management personnel compensation includes Directors fees, and compensation paid to the CEO and Company Secretary.

The amounts paid or payable to Directors and key management personnel employed by Gardiner Dairy Foundation are:

Directors and key management personnel compensation 587,917 576,295

Page 26




2016

2015

$

$

NOTE 14: FINANCIAL RISK MANAGEMENT

Gardiner Dairy Foundation's financial instruments consist mainly of deposits with banks, accounts receivable and payable and investments.

The carrying amounts for each category of financial instruments, measured in accordance with AASB 9 Financial Instruments as detailed in the accounting policies to these financial statement, are as follows:

Financial Assets

Cash and cash equivalents 18,686,141 13,733,052

Receivables 2,688,456 2,675,278

Financial assets at fair value (i) 85,166,417 90,824,477

Total Financial Assets 106,541,014 107,232,807

Financial Liabilities

Trade and other payables 826,228 192,762

Total Financial Liabilities 826,228 192,762

(i) Financial assets comprise of equity instruments which have been designated as financial assets at fair value through other comprehensive income.

Page 27

The Rialto, Level 30

525 Collins St

Melbourne Victoria 3000

Correspondence to:

GPO Box 4736


T +61 3 8320 2222

F +61 3 8320 2200

E [email protected]

W www.grantthornton.com.au

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the

context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm

is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and

are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its

Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

Independent Auditor’s Report

To the Members of Geoffrey Gardiner Dairy Foundation Limited

We have audited the accompanying financial report of Geoffrey Gardiner Dairy Foundation

Limited (the “Company”), which comprises the statement of financial position as at 30 June

2016, the statement of profit or loss and other comprehensive income, statement of changes

in equity and statement of cash flows for the year then ended, notes comprising a summary

of significant accounting policies and other explanatory information and the directors’

declaration of the company .

Directors’ responsibility for the financial report

The Directors of the Company are responsible for the preparation of the financial report

that gives a true and fair view in accordance with Australian Accounting Standards -

Reduced Disclosure Requirements and the Australian Charities and Not-for-profits

Commission Act 2012. The Directors’ responsibility also includes 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.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We

conducted our audit in accordance with Australian Auditing Standards. Those standards

require us to comply with relevant ethical requirements relating to audit engagements and

plan and perform the audit to obtain reasonable assurance whether the financial report is

free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial report.

Page 28

The procedures selected depend on the auditor’s judgement, including the assessment of the

risks of material misstatement of the financial report, whether due to fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the

Company’s preparation of the financial report that gives a true and fair view in order to

design audit procedures that are appropriate in the circumstances, but not for the purpose

of expressing an opinion on the effectiveness of the Company’s internal control. An audit

also includes evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by the Directors, as well as evaluating the

overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide

a basis for our audit opinion.

Independence

In conducting our audit, we have complied with the independence requirements of the

Accounting Professional and Ethical Standards Board and the Australian Charities and Not-

for-profits Commission Act 2012.

Auditor’s opinion

In our opinion the financial report of Geoffrey Gardiner Dairy Foundation Limited is in

accordance with the Australian Charities and Not-for-profits Commission Act 2012,

including:

i giving a true and fair view of the Company’s financial position as at 30 June

2016 and of its performance for the year ended on that date; and

ii complying with Australian Accounting Standards- Reduced Disclosure

Requirements and the Australian Charities and Not-for-profits Commission

Regulation 2013.

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

Eric Passaris

Partner - Audit & Assurance

Melbourne, 11 August 2016

Page 29

The Rialto, Level 30

525 Collins St


Correspondence to:

GPO Box 4736


T +61 3 8320 2222

F +61 3 8320 2200

E [email protected]

W www.grantthornton.com.au

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the

context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm

is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and

are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its

Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

Auditor’s Independence Declaration

To the Directors of Geoffrey Gardiner Dairy Foundation Limited

In accordance with the requirements of section 60-40 of the Australian Charities and Not-

for-profits Commission Act 2012, as lead auditor for the audit of Geoffrey Gardiner Dairy

Foundation Limited for the year ended 30 June 2016, I declare that, to the best of my

knowledge and belief, there have been no contraventions of any applicable code of

professional conduct in relation to the audit.

GRANT THORNTON AUDIT PTY LTD

Chartered Accountants

Eric Passaris

Partner - Audit & Assurance

Melbourne, 11 August 2016

Page 30

Documents

GEOFFREY GARDINER DAIRY FOUNDATION LIMITED · Chief Executive M Harney . ... The Directors of Geoffrey Gardiner Dairy Foundation Limited ... B.Agr.Sc, MBA, FAICD