Beston Global Food Company Limited For personal use onlyDirectors’ Report (Cont.) For the period ended 30 June 2015 Results The result for the period from incorporation to 30 June

Financial ReportFor the period ended 30 June 2015

Beston Global Food Company Limited

ACN 603 023 383

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Corporate Information

Incorporation

Incorporated in Australia on 24 November 2014

Directors

Roger Sexton

Stephen Gerlach

Petrina Coventry

Jim Kouts

Don Taylor

CEO

Sean Ebert

Company Secretaries

Roger Sexton

Richard Willson

Registered Office

72 Sturt Street

ADELAIDE SA 5000

Share register

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Share register

Link Financial services

Level 12, 680 George Street

Sydney, NSW, 2000

Beston Global Food Company Limited shares are listed on the Australian Stock Exchange (ASX)

Legal AdvisorsMinter Ellison

AuditorsErnst & Young Australia

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Directors’ ReportFor the period ended 30 June 2015

The Board of Directors of Beston Global Food Company Limited has pleasure in submitting their report for the period ended

30 June 2015.

Directors

The names of the Directors in office during the financial year and until the date of this report are set out below. Directors

were in office for the entire period unless otherwise stated.

Names, qualifications, experience and special responsibilities

ROGER SEXTON, AM

B.Ec. (Hons), M.Ec., PhD (Econ), FAICD, FAIM, S.F.Fin, C.Univ

Non-Executive Chairman

Dr Roger Sexton is an investment banker and company director. He holds Doctorate and Master’s Degrees in Economics

from North Carolina State University and an Honours Degree (First Class) in Economics from the Flinders University of

South Australia.

He was awarded the Bank of Adelaide Prize in Economics in 1970 and the American Agricultural Economics Society

Outstanding Doctoral Program Award in 1976.

Roger has extensive experience in the agricultural sector, having completed his secondary education at the Urrbrae

Agricultural High School and undertaken tertiary studies in agricultural economics, in addition to finance and business

management. On graduation, he worked for the Bureau of Agricultural Economics and was an Executive Director of the

Industries Assistance Commission, specialising in rural industries.

Roger has also had extensive experience overseas and particularly in China and the Asia Pacific as a result of leading trade

and investment missions to the region for more than 30 years and from working on investment banking transactions in the

region.

Roger is Chairman of the Investment Manager, Beston Pacific Asset Management Pty Ltd, Chairman of ASX listed IOOF

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region.

Roger is Chairman of the Investment Manager, Beston Pacific Asset Management Pty Ltd, Chairman of ASX listed IOOF

Holdings Ltd,1 KeyInvest Ltd, and a Director of IBISWorld.

He has served on the Australian Accounting Standards Board and is actively engaged in a number of community

organisations, including as Chairman and Principal Patron of the Freemasons Foundation Men’s Health Centre at the

University of Adelaide.

Roger has founded and developed the Company over the past three years and will continue to play a key role in driving the

growth of the Company.

Roger is a member of the Audit and Risk Committee.

STEPHEN GERLACH AM

LL.B, FAICD

Non-Executive Director

Stephen Gerlach is a corporate adviser and company director. He was formerly a Partner and the Managing Partner of

Finlaysons Lawyers for 23 years.

Stephen is the Chancellor of Flinders University of South Australia. He was a Director of Santos Limited for over 20 years

and was its Chairman from 2001 to 2009.

Stephen has been Chairman of agricultural company Elders Australia Limited and its listed holding company, Futuris

Corporation Limited (now known as Elders Limited).

Stephen was a Director of the Australian and International wine company Southcorp Holdings Ltd from 1994 - 2005.

Stephen was also formerly Chairman of Riverland Water, Challenger Listed Investment Ltd, Amdel Ltd, Equatorial Mining

Ltd, and a Director of AMP Australia and a number of other listed and unlisted public companies.

Stephen is a director of Beston Pacific Asset Management Pty Ltd.

Stephen is Chairman of Adelaide Capital Partners Pty Ltd and Gerlach Asset Development Pty Ltd. He has also been

involved in many State and National Not-for-Profit organisations and Professional Associations and chaired many of them.

Stephen is a member of the Remuneration and Nomination Committee.

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Directors’ Report (Cont.)

For the period ended 30 June 2015

PETRINA COVENTRY

B.Ed., M. Phil. (Ethics), MBA, EMBA, FAHRI

Independent Non-Executive Director

Petrina has spent over twenty years working in Asia, the United States and Europe in global leadership and director roles

with The General Electric Company, The Coca Cola Company and Proctor and Gamble. Her experience covers multiple

industries including energy, technology, education, fast moving consumer goods and financial services.

Her work in organisational transformation, company performance and governance has led to increased involvement with

governments, industry associations and consulting groups across the Asian region.

Petrina is an ethicist by background and completing her PHD with Melbourne University.

She is a Vincent Fairfax Fellow, Fellow of the Australian Human Resource Institute (AHRI) and a Fellow of the Australian

Institute of Company Directors.

She was formally a senior executive of Santos Ltd and a non-executive director of AHRI and the Australasian Association of

Philosophy (AAP).

Petrina is both the Chair of the Remuneration and Nomination Committee, and a member of the Audit and Risk Committee.

JIM KOUTS

BA (Journalism), FAICD


Jim has served as a senior executive and non-executive director in major companies in the energy, financial service and

business tourism industries and has also held various senior positions in the public sector.

He is currently Chair of Home Start Finance, Senior Executive, GDF SUEZ Australian Energy, Non-Executive Director of

Adelaide Convention Bureau and is Strategic Advisor to Adelaide Airport Ltd.

Through his various roles, Jim has gained strong commercial and contract negotiation skills and has a sound grasp of

governance, strategy and strategy implementation.

These skills, together with his extensive insight of air freight logistics into Asia will be invaluable on the Board.

Jim is a member of both the Remuneration and Nomination Committee and the Audit and Risk Committee.

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DON TAYLOR

BCom, CA, GradCertRuralSc, FAICD


In 2014 Don served as the Executive Chairman and interim CEO of GrainCorp until the appointment of a new CEO.

Don is a Chartered Accountant and gained a broad knowledge of industry having worked with Arthur Andersen & Co in

their Sydney, Brisbane and Singapore offices in both the Assurance and Tax practices.

Some of Don’s previous roles have included Executive Chairman at Grainco Australia Limited and Chairman of Carrington

Cotton Limited. In addition he has served on a number of Government industry enquiries and consultative committees.

He has experience in capital raisings, takeovers and major business reorganisations and business integrations.

He has presented at a number of forums including the international Grains Council in London. His executive experience in

the grains industry covers logistics, processing, marketing and distribution both in Australia and internationally with a

particular focus in South East Asia, Middle East and Northern Africa.

Don is the Chair of the Audit and Risk Committee.

Jody Williamson

Appointed on 24 November 2014, resigned 28 April 2015

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Results

The result for the period from incorporation to 30 June 2015 was a loss of $1,103,800, after tax.

Dividends

No dividends were paid during the period and no dividends are recommended.

Review of operations

The company was incorporated on 24 November 2014 and commenced a process of identifying food industry investment

opportunities in conjunction with Beston Pacific Asset Management Limited. On 23 February 2015, the company raised

$16.5m before costs in anticipation of funding various transactions. In June 2015 a further $5.8m before costs was raised.

The funds raised were primarily expended in investing in entities aligned to the groups strategies and with opportunities to

create synergies, namely Ferguson Australia Pty Ltd (seafood), Paris Creek (dairy products), United Dairy Producers (dairy

products), Scorpio Foods (meat products), Australian Provincial Cheese (dairy products) and Wellington Dairies (dairy

farm).

Significant changes in the state of affairs

The company was incorporated on 24 November 2014.

Significant events after balance date

In August 2015, the Company was successful in raising $100m via an Initial Public Offer on the ASX, to continue its

expansion plans in line with the related prospectus.

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Other than above and as set out in Note 22, since the end of the financial period, the Directors are not aware of any matter or

circumstance not otherwise dealt with in this report or the financial statements that has significantly affected or may

significantly affect the operations of the company, the results of those operations or the state of affairs of the company in

subsequent financial years.

Likely developments and future results

The Group intends to continue actively exploring opportunities in the food services industries. As set out further in Note 22,

the company has undertaken a number of transactions since balance date.

The Directors have excluded from this report any further information on likely developments in the operations of the

company and the expected results of those operations in future financial years, since, in the opinion of the Directors, it would

prejudice the interests of the company if this information were included.

Directors’ benefits

Other than as set out in Note 22, since the end of the previous financial year, no Director has received or become entitled to

receive a benefit, other than a fixed salary of a full-time employee of the company or a related body corporate, by reason of a

contract made by the company or a related body corporate with the Director or with a firm of which they are a member, or

with a company in which they have a substantial financial interest.

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Indemnification of Officers and Auditors

During the year, the company paid insurance premiums in respect of a contract insuring each of the Directors against all

liabilities and expenses arising as a result of work performed in their capacities as Director. The terms of the insurance

policy prohibit disclosure of information specific to the policy.

To the extent permitted by law, the Company has agreed to indemnify its auditors Ernst & Young as a part of the terms of its

audit engagement against claims by third parties arising from the audit (for an unspecified amount). No payment has been

made to indemnify Ernst & Young during or since the financial period.

Directors' meetings

The number of meetings of directors (including meetings of committees of directors) held during the period and the number

of meetings attended by each director were as follows:

Number of meetings held - 7

Roger Sexton 7

Stephen Gerlach 7

Petrina Coventry 3 (all since appointment)

Jim Kouts 3 (all since appointment)

Don Taylor 3 (all since appointment)

Jody Williamson 4 (all during period of appointment)

The Audit Commitee held its first meeting post year-end.

The Remuneration and Nominations Committee did not hold any meetings during the period.

Company Secretaries

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Richard Willson, BA, CPA, FAICD

Richard was appointed on 25th September 2015, and has many years experience of being a Company Secretary for large

organisations.

Roger Sexton, B.Ec. (Hons), M.Ec., PhD (Econ), FAICD, FAIM, S.F.Fin, C.Univ

Roger Sexton is joint company secretary.

Ivan Jacques, FCA, B.Soc.Sc. (Hons), GAICD

Ivan resigned on 25th September 2015.

Auditor Independence and Non-Audit Services

The Directors received an independence declaration from the auditor of Beston Global Food Company Ltd. This is included

with the independent audit report at the end of these financial statements.

The following non-audit services were provided by the entity's auditor, Ernst & Young Australia. The directors are satisfied

that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the

Corporations Act 2001. The nature and scope of each type of non-audit service provided means that auditor independence

was not compromised.

Ernst & Young Australia received or are due to receive the following amounts for the provision of non-audit services:

Provision of Independent Limited Assurance Report for IPO - $260,000

Other services and related taxation work for IPO - $93,000

Tax compliance services - $50,000

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Remuneration report (audited)

This remuneration report for the period ended 30 June 2015 outlines the remuneration arrangements of the Group in

accordance with the requirements of the Corporations Act 2001(Cth), as amended (the Act) and its regulations. This

information has been audited as required by section 308(3C) of the Act.

The remuneration report is presented under the following sections:

1. Introduction

2. Remuneration governance

3. Executive remuneration arrangements

A. Remuneration principles and strategy

B. Approach to setting remuneration

C. Detail of incentive plans

4. Executive remuneration outcomes (including link to performance)

5. Executive contracts

6. Non-executive director fee arrangements

7. Additional disclosures relating to options and shares

8. Loans to key management personnel (KMP) and their related parties

9. Other transactions and balances with KMP and their related parties

1. IntroductionThe remuneration report details the remuneration arrangements for KMP who are defined as those

persons having authority and responsibility for planning, directing and controlling the major activities of

the Group, directly or indirectly including any director (whether executive or otherwise) of the parent.

The table below outlines the KMP of the Group during the financial period ended 30 June 2015.

For the purposes of this report, the term “executive” includes the executive directors and senior

executives of the Group.

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(i) Non-executive directors (NEDs)

Roger Sexton Non-Executive Chair

Stephen Gerlach Non Executive Director

Petrina Coventry Independent Non Executive Director (appointed 16 February 2015)

Jim Kouts Independent Non Executive Director (appointed 16 February 2015)

Don Taylor Independent Non Executive Director (appointed 28 April 2015)

(ii) Executive directors

Not applicable.

(iii) Senior executives

The company outsources all of its investment management, valuation, accounting and other administrative functions to

Beston Pacific Asset Management Pty Ltd (BPAM), and as such does not remunerate any Key Management Personnel

employees directly.

2. Remuneration governance

The Nomination and Remuneration Committee comprises three NEDs.

The Committee recommends the Director nominees for each annual general meeting and ensures that the audit,

compensation and nominating & corporate governance committees of the Board have the benefit of qualified and

experienced independent directors.

The Committee makes recommendations to the Board on remuneration packages and policies applicable to Directors and the

Management Team.

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Remuneration report (audited) (continued)

3. Executive remuneration arrangements

3A: Remuneration principles and strategy



employees directly.

3B. Approach to setting remuneration



employees directly.

3C. Detail of incentive plans

Post year-end the Group established a scheme to incentivise specific key personnel to maintain ongoing involvement with

the group via the issue of Founders Right. These Founder's rights are convertible into shares 15 months after being granted at

zero cost to the recipients, subject to certain conditions being met. This scheme allocates 5% of the share capital to the

participants.

4. Executive remuneration outcomes (including link to performance)

Group performance and its link to STI


Beston Pacific Asset Management Pty Ltd (BPAM), and as as such does not remunerate any Key Management Personnel

employees directly.

5. Executive contracts

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The Company has a formal agreement with BPAM to outsource key management activities for agreed fees which are flexed

according to their performance. This has an initial term of five years. During the period ended 30 June 2015 BPAM received

$76,428 under this arrangement.

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6. Non-executive director fee arrangements

Annual remuneration

Dr Roger Sexton AM $60,000

Mr Stephen Gerlach AM $40,000

Ms Petrina Coventry $40,000

Mr Jim Kouts $40,000

Mr Don Taylor $40,000

In addition, Directors will be entitled to statutory superannuation.




The Board has resolved, to provide for non-executive Directors’ fee (per annum) of up to a maximum of $350,000

in total with effect from Listing.

In addition to earning a Directors fee, a Director may also be paid fees or other amounts as the Directors determine

if a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a

Director. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or

any other special duties.

Dr Sexton and Mr Gerlach will not receive a Directors fee from BGFC in 2014-15 but may receive remuneration

from the Investment Manager if the Management Fee is sufficient to cover all expenses in that period.

Thereafter Dr Sexton and Mr Gerlach will receive Board fees on the same basis as has been independently

determined appropriate for a listed company of the size of the group, initially, $40,000 to each Non-Executive

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Directors remuneration for the period to 30 June 2015

Post employment Other long term

benefits

Total

Salary & fees Bonuses and non

monetary benefits

Superannuation Cash incentives

R Sexton - - - - - -

S Gerlach - - - - - -

P Coventry 10,000 - 925 - - 10,925

J Kouts 10,000 - 925 - - 10,925

D Taylor 10,000 - 925 - - 10,925

Total 30,000 - 2,775 - - 32,775

determined appropriate for a listed company of the size of the group, initially, $40,000 to each Non-Executive

Director and $60,000 to the Chair.

Dr Sexton and Mr Gerlach are shareholders and directors of the Investment Manager and as such, may receive

remuneration from the Investment Manager for services provided to the Investment Manager. As directors,

shareholders and employees of the Investment Manager, in their respective capacities, they may benefit from the

entry by the Investment Manager into the Management Agreement with the Company, through the payment of fees

under the Management Agreement.

The Company believes that the Management Agreement has been entered into on arm’s length terms and that the

remuneration payable to the investment Manager is reasonable.

Short term benefits Share based

payments

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7. Additional disclosures relating to options and shares

Held at

24/11/14

Issued during

period

Held at 30/6/15 Issued post

period end

Held at date of

signing

Directors report

R Sexton - 4,207,074 4,207,074 390,000 4,597,074

S Gerlach - 1,320,120 1,320,120 (660,060) 660,060

P Coventry - - 57,142 57,142

J Kouts - - 142,857 142,857

D Taylor - - 285,715 285,715

Total - 5,527,194 5,527,194 215,654 5,742,848

7B: Founders rights share options issued up to date of signing the Directors report

Volume of

options

(founders

rights) issued

at 30 June

2015

Volume of options

(founders rights)

issued since year

end

Volumes held at

date of Directors'

Report

Value of options

granted at 35

cents per option $

R Sexton - 12,404,931 12,404,931 4,341,726



7A: Shares held by Directors:


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R Sexton - 12,404,931 12,404,931 4,341,726

S Gerlach - 2,816,385 2,816,385 985,735

P Coventry - - - -

J Kouts - - - -

D Taylor - - - -

- 15,221,316 15,221,316 5,327,461

No rights have been exercised or lapsed.

8. Loans to KMP and their related parties

No loans were made to KMP or their related parties during the period.

9. Other transactions and balances with KMP and their related parties

There were no other transactions with KMPs or their related parties.

10. Share options

Unissued shares

Shares issued as a result of the exercise of options

During the financial year, no options have been exercised.

Signed in accordance with a resolution of the directors.

Roger Sexton ..................................................

Adelaide

30 September 2015

As at the date of this report, there were 716,047,775 unissued ordinary shares under options (zero at the reporting

date). Refer to section 3C of the remuneration report for further details of the options outstanding.

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FOR THE PERIOD ENDED 30 June 2015

ConsolidatedNotes 2015

$

Sales revenue 4 -

Cost of sales -

Gross profit -

Other revenues 4 268,075

Selling & distribution expenses (162,359)

Administration expenses 4 (861,713)

Other expenses (805,848)

Profit / (loss) from ordinary activities before income tax expense (1,561,845)

Income tax benefit / (expense) relating to profit from ordinary activities 5 458,045

(1,103,800)

Other comprehensive income -

Total comprehensive income (1,103,800)

Net profit/(loss) attributable to members of the parent entity

Income Statement

Total comprehensive income (1,103,800)

Attributable to:

Equity holders of the parent entity (1,103,087)

Non-controlling interests (713)

(1,103,800)

Earnings per share

Basic, loss for the period attributed to ordinary equity holders of the parent 8 (0.054)

Diluted, loss for the period attributable to ordinary equity holders of the

parent

8 (0.054)

The accompanying notes form an integral part of this Income Statement.

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As at 30 June 2015

Consolidated

Notes 2015

$

CURRENT ASSETS

Cash and cash equivalents 19 7,546,943

Other current financial assets 6 1,132,198

Trade and other receivables 7 5,314,357

Prepayments 9 8,877

Total current assets 14,002,375

NON-CURRENT ASSETS

Property, plant and equipment 10 2,151,755

Trade and other receivables 7 5,053,751

Intangible assets 12 25,000

Deferred tax assets 5 871,012

Total non-current assets 8,101,517

TOTAL ASSETS 22,103,892

CURRENT LIABILITIES

Trade and other payables 14 1,736,685

Provisions 15 -

Total current liabilities 1,736,685

Balance Sheet

NON-CURRENT LIABILITIES

Trade and other payables -

Deferred tax liabilities 5 -

Total non-current liabilities -

TOTAL LIABILITIES 1,736,685

NET ASSETS 20,367,207

EQUITY

Contributed equity 17 21,471,007

Accumulated (losses)/profit

Equity attributable to equity holders of the parent 18 (1,103,087)

Non-controlling interests (713)

TOTAL EQUITY 20,367,207

The accompanying notes form an integral part of this Balance Sheet.

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Share capital

Retained

earnings

Non-

controlling

interests Total equityNotes

$ $ $ $

Share capital on incorporation 100 - - 100

Ordinary shares issued to Founders 17 29,167 - - 29,167

Share issue 17 21,441,740 - - 21,441,740

Total income - (1,103,087) (713) (1,103,800)

As at 30 June 2015 21,471,007 (1,103,087) (713) 20,367,207

Statement of Changes in Equity

The accompanying notes form an integral part of this Statement of Changes in Equity

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ConsolidatedNotes 2015

$

Operating activitiesReceipts from customers -

Payments to suppliers and employees (661,814)

Interest receipts 39,730

Income taxes paid 0

Net cash flows from operating activities 19 (622,084)

Investing activities

Advancement of convertible notes (10,100,056)

Payment of deposits (930,056)

Purchase of property, plant and equipment (2,102,028)

Purchase of intangible assets (25,000)

Net cash flows used in investing activities (13,157,140)

Financing activities

Proceeds from share issues 22,626,979

Transaction costs on issue of shares (1,300,812)

Net cash flows from/(used in) financing activities 21,326,167

Cash and cash equivalents at 30 June 2015 19 7,546,943

Cash Flow Statement

The accompanying notes form an integral part of this Cash Flow Statement.

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Notes to the Financial Statements


Corporate information

The nature of the operations and principal activities of the Company are described in the Directors' Report.

Note 1. Summary of significant accounting policies:

(b) Basis of consolidationThe consolidated financial information comprise the financial information of the Group and its subsidiaries as at 30 June 2015.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the

ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group

has:

The consolidated financial report of Beston Global Food Company Ltd (the Company or the Group) for the year ended 30 June 2015

was authorised for issue in accordance with a resolution of the directors on 30 September 2015.

Beston Global Food Company Limited is a Company limited by shares incorporated in Australia.

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the

Corporations Act 2001, Australian Accounting Standards and other authorative pronouncements of the Australian Accounting

Standards Board.

The financial information has been prepared on a historical cost basis, except for derivative financial instruments and contingent

consideration, which have been measured at fair value.

The financial report also complies with International Financial Reporting Standards (IFRS) as issued by International Accounting

Standards Board.

The financial report is presented in Australian dollars and all values are rounded to the nearest dollar unless otherwise stated.

(a) Basis of preparation

(c) Business combinations and goodwill

has:

- Exposure, or rights, to variable returns from its involvement with the investee - The ability to use its power over the investee to affect its returns

- Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the

consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree.

Acquisition-related costs are expensed as incurred and included in administrative expenses.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for

non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair

value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly

identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be

recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the

aggregate consideration transferred, then the gain is recognised in profit or loss.

All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group

are eliminated in full on consolidation.

(d) Foreign currency translation

The Group’s consolidated financial statements are presented in Australian dollars, which is also the Parent’s functional currency. For

each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured

using that functional currency. The Group uses the direct method of consolidation and on disposal of a foreign operation, the gain or

loss that is reclassified to profit or loss reflects the amount that arises from using this method.

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Note 1. Statement of significant accounting policies (continued):

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the

reporting date.

Differences arising on settlement or translation of monetary items are recognised in profit or loss with the exception of monetary items

that are designated as part of the hedge of the Group’s net investment of a foreign operation. These are recognised in other

comprehensive income until the net investment is disposed of, at which time, the cumulative amount is reclassified to profit or loss.

Tax charges and credits attributable to exchange differences on those monetary items are also recorded in other comprehensive

income.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the

dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange

rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value

is treated in line with the recognition of gain or loss on change in fair value of the item (i.e., translation differences on items whose fair

value gain or loss is recognised in other comprehensive income or profit or loss are also recognised in other comprehensive income or

profit or loss, respectively).

Group companies

On consolidation, the assets and liabilities of foreign operations are translated into Australian dollars at the rate of exchange prevailing

at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions.

The exchange differences arising on translation for consolidation purposes are recognised in other comprehensive income. On disposal

of a foreign operation, the component of other comprehensive income relating to that particular foreign operation is recognised in

profit or loss.

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the

date the transaction first qualifies for recognition.

Transactions and balances

(i) Sale of goods

(ii) Interest income

(iii) Dividends

Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments to the carrying amounts of assets and

liabilities arising on the acquisition are treated as assets and liabilities of the foreign operation and translated at the spot rate of

exchange at the reporting date.

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be

reliably measured. The following specific recognition criteria must also be met before revenue is recognised.

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs

incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at

the time of delivery of the goods to the customer.

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a

financial asset and allocating the interest income over the relevant period using the effective interest rate that exactly discounts

estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the asset.

(e) Revenue recognition

Revenue is recognised when the Company's right to receive the payment is established.

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An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad

debts are written off when identified.

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to

the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by

the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities

and their carrying amounts for financial reporting purposes.

- when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of

outstanding bank overdrafts.

Trade receivables, which generally have 30-90 day term, are recognised and carried at original invoice amount less an allowance for

any uncollectible amounts.

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity

of three months or less.

(f) Cash and cash equivalents

(g) Trade and other receivables

(h) Income tax

Deferred income tax liabilities are recognised for all taxable temporary differences except:

not a business combination and that, at the time of the transaction affects neither the accounting profit nor taxable profit or loss; or

- when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the

timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in

the foreseeable future.

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Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised

or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

- when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or

liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor

taxable profit or loss; or

- when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in

which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the

foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer

probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become

probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax credits and unused tax

losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the

carry-forward of unused tax credits and unused tax losses can be utilised, except:

(h) Income tax (continued)

Life Method

25 years straight line

3 – 10 years straight line

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

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

- when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is

recognised as part of the cost of the acquisition of the asset or as part of the expense item as applicable; and

- receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the

balance sheet. Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising

from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash

flows.

Property, plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such costs

includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when

each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it

is eligible for capitalisation.

Property, plant and equipment, excluding freehold land, are depreciated or amortised at rates based upon their expected useful lives as

follows (which are consistent with previous year):

Buildings

Plant & equipment

(i) Other taxes

(j) Property, plant and equipment

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(k) Impairment

For plant and equipment, impairment losses are recognised in the Income Statement as an expense. However, when land and buildings

are measured at revalued amounts, impairment losses on land and buildings are treated as a revaluation decrement.

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with 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. In assessing value in use,

the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset.

For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to

which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value.

An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset

or cash-generating unit is then written down to its recoverable amount.

Trade and other payables are carried at amortised cost and due to their short-term nature they are not discounted. They represent

liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group

becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are

usually paid within 30 days of recognition.

(l) Trade and other payables

(n) Fair value measurement

The Group 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.

The Group measures financial instruments, such as derivatives, at fair value at each reporting date.

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

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.

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

(m) Contributed Equity

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:

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in

equity as a deduction, net of tax, from the proceeds.

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loans and receivables, held-to-maturity investments, AFS financial assets, or as derivatives designated as hedging

instruments in an effective hedge, as appropriate.

Initial recognition and measurement

Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss,

All financial assets are recognised initially at fair value plus, in the case of financial assets not subsequently

measured at fair value through profit or loss, transaction costs that are attributable to the acquisition of the

financial asset.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation

or convention in the market place (regular way trades) are recognised on the trade date, i.e. the date that the Group

commits to purchase or sell the asset.

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets

acquired in a business combination is their fair value at the date of acquisition. Following initial recognition,

intangible assets are carried at cost less any accumulated amortisation and accumulated

impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised

and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

p) Intangible assets

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment

(o) Financial assets

Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment

whenever there is an indication that the intangible asset may be impaired. The amortisation period and the

amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each

reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic

benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are

treated as changes in accounting estimates and adjusted on a prospective basis. The amortisation expense on

intangible assets with finite lives is recognised in the statement of profit or loss as the expense category that is

consistent with the function of the intangible assets.

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q) Leases

The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement at the inception of

the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on the use of a specific asset or assets

or the arrangement conveys a right to use the asset or assets, even if that right is not explicitly specified in an arrangement.

Group as a lessee

A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially all the risks and

rewards incidental to ownership to the Group is classified as a finance lease.

An operating lease is a lease other than a finance lease.

Finance leases are capitalised at the commencement of the lease at the inception date fair value of the leased property or, if lower, at

the present value of the minimum lease payments. Lease payments are apportioned between finance charges and reduction of the lease

liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised in finance

costs in the statement of profit or loss.

A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the Group will obtain

ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life of the asset and the lease

term.

Operating lease payments are recognised as an operating expense in the statement of profit or loss on a straight-line basis over the

lease term.

Group as a lessorGroup as a lessor

Leases in which the Group does not transfer substantially all the risks and benefits of ownership of an asset are classified as operating

leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and

recognised over the lease term on the same basis as rental income. Contingent rents are recognised as revenue in the period in which

they are earned.

(r) Financial instruments – initial recognition and subsequent measurement

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of

another entity.


Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-

to-maturity investments, AFS financial assets, or as derivatives designated as hedging instruments in an effective hedge, as

appropriate.

All financial assets are recognised initially at fair value plus, in the case of financial assets not subsequently measured at fair value

through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the

market place (regular way trades) are recognised on the trade date, i.e., the date that the Group commits to purchase or sell the asset.

Subsequent measurement

For purposes of subsequent measurement, financial assets are classified in three categories:

- Financial assets at fair value through profit or loss

- Loans and receivables

- Held-to-maturity investments

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Financial assets at fair value through profit or loss

Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial

recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of

selling or repurchasing in the near term. Derivatives, including separated embedded derivatives are also classified as held for trading

unless they are designated as effective hedging instruments as defined by AASB 139.

The Group has not designated any financial assets at fair value through profit or loss. Financial assets at fair value through profit or

loss are carried in the statement of financial position at fair value with net changes in fair value presented as finance costs (negative

net changes in fair value) or finance income (positive net changes in fair value) in the statement of profit or loss.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic

characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or

designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value

recognised in profit and loss.

Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would

otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss.

Loans and receivables

This category is the most relevant to the Group. Loans and receivables are non-derivative financial assets with fixed or determinable

payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at

amortised cost using the effective interest rate (EIR) method, less impairment. Amortised cost is calculated by taking into account any

discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance

income in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss in finance

costs for loans and in cost of sales or other operating expenses for receivables.

This category generally applies to trade and other receivables.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is primarily

derecognised (i.e., removed from the group’s consolidated statement of financial position) when:

- The rights to receive cash flows from the asset have expired: or

- The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows

in full without material delay to a third party under a ’pass-through’ arrangement; and either (a) the Group has transferred substantially

all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the

asset, but has transferred control of the asset

Held-to-maturity investments

Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held-to-maturity when the

Group has the positive intention and ability to hold them to maturity. After initial measurement, held-to-maturity investments are

measured at amortised cost using the EIR, less impairment. Amortised cost is calculated by taking into account any discount or

premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance income in the

statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss as finance costs.

This category generally applies to trade and other receivables.

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Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated

upon initial recognition as at fair value through profit or loss. Financial liabilities are classified as held for trading if they are incurred

for the purpose of repurchasing in the near term. This category also includes derivative financial instruments entered into by the Group

that are not designated as hedging instruments in hedge relationships as defined by AASB 139. Separated embedded derivatives are

also classified as held for trading unless they are designated as effective hedging instruments.

(s) Impairment of financial assetsThe Group assesses, at each reporting date, whether there is objective evidence that a financial asset or a group of financial assets is

impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss

event’) has an impact on the estimated future cash flows of the financial asset or the group of financial assets that can be reliably

estimated. Evidence of impairment may include indications that the debtor or a group of debtors is experiencing significant financial

difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial

reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in

arrears or economic conditions that correlate with defaults.


Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings,

payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial liabilities are

recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The Group’s financial liabilities include trade and other payables, loans and borrowings, including bank overdrafts, financial

guarantee contracts, and derivative financial instruments.

(t) Financial liabilities

also classified as held for trading unless they are designated as effective hedging instruments.

Gains or losses on liabilities held for trading are recognised in the statement of profit or loss.

Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of

recognition, and only if the criteria in AASB 139 are satisfied. The Group has not designated any financial liability as at fair value

through profit or loss.

ii) Financial liabilities (continued)

Subsequent measurement (continued)

Loans and borrowings

This is the category most relevant to the Group. After initial recognition, interest-bearing loans and borrowings are subsequently

measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are

derecognised as well as through the EIR amortisation

process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part

of the EIR. The EIR amortisation is included in finance costs in the statement of profit or loss.

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Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing

financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are

substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of

a new liability.

The difference in the respective carrying amounts is recognised in the statement or profit or loss.

iii) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the consolidated statement of financial position if

there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise

the assets and settle the liabilities simultaneously.

(u) Impairment of non-financial assets

The Group assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or

when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable

amount is the higher of an asset’s or cash-generating unit’s (CGU’s) fair value less costs of disposal and its value in use. Recoverable

amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from

other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered

impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects

current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of

disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is

used. These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available

fair value indicators.

(v) Provisions

fair value indicators.

The Group bases its impairment calculation on detailed budgets and forecast calculations, which are prepared separately for each of

the Group’s CGUs to which the individual assets are allocated. These budgets and forecast calculations generally cover a period of

five years. For longer periods, a long-term

growth rate is calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are recognised in the statement of profit or loss in

expense categories consistent with the function of the impaired asset, except for properties previously revalued with the revaluation

taken to OCI. For such properties, the impairment is recognised in OCI up to the amount of any previous revaluation.

Provisions are recognised when the Group has a present obligation (legal or constructive) 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. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance

contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain.

The expense relating to a provision is presented in the statement of profit or loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when

appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is

recognised as a finance cost.

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(w) Share-based payments

Employees and Directors of the Group may receive remuneration in the form of share-based

payments, whereby employees render services as consideration for equity instruments (equity-settled

transactions).

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made

using an appropriate valuation model. That cost is recognised, together with a corresponding increase in

other capital reserves in equity, over the period in which the performance and/or service conditions are

fulfilled in employee benefits expense. The cumulative expense recognised for equity-settled

transactions at each reporting date until the vesting date reflects the extent to which the vesting period

has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest.

The statement of profit or loss expense or credit for a period represents the movement in cumulative

expense recognised as at the beginning and end of that period and is recognised in employee benefits

expense. No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions

for which vesting is conditional upon a market or non-vesting condition. These are treated as vesting

irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other

performance and/or service conditions are satisfied.

When the terms of an equity-settled award are modified, the minimum expense recognised is the

expense had the terms not been modified, if the original terms of the award are met. An additional

expense is recognised for any modification that increases the total fair value of the share-based payment

transaction, or is otherwise beneficial to the employee as measured at the date of modification.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of

diluted earnings per share.

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Reference Title Application date of standard Impact on Group

financial report

Application date

for Group

Amendments to Australian Accounting Standards -

Offsetting Financial Assets and Financial Liabilities

AASB 2012-3 adds application guidance to AASB 132

Financial Instruments: Presentation to address

inconsistencies identified in applying some of the offsetting

criteria of AASB 132, including clarifying the meaning of

"currently has a legally enforceable right of set-off" and that

some gross settlement systems may be considered

equivalent to net settlement.

Levies

This Interpretation confirms that a liability to pay a levy is

only recognised when the activity that triggers the payment

occurs. Applying the going concern assumption does not

create a constructive obligation.

Amendments to AASB 136 – Recoverable

Amount Disclosures for Non-Financial Assets

AASB 2013-3 amends the disclosure requirements in AASB

AASB 2012-3 1-Jan-14 Application of the

amendments has not had

any impact on the

Group’s financial report.

Interpretation 21 1-Jan-14

1-Jul-14

1-Jul-14

AASB 2013-3 1-Jan-14 1-Jul-14Application of the


any impact on the


Application of the


any impact on the


(x) New Accounting Standards and Interpretations

(i) Changes in accounting policy and disclosures

The accounting policies adopted are consistent with those of the previous financial year except as follows:

The Group has adopted the following new and amended Australian Accounting Standards and AASB Interpretations as of 1 July 2014.

AASB 2013-3 amends the disclosure requirements in AASB

136 Impairment of Assets . The amendments include the

requirement to disclose additional information about the fair

value measurement when the recoverable amount of

impaired assets is based on fair value less costs of disposal.

Amendments to Australian Accounting Standards –

Novation of Derivatives and Continuation of Hedge

Accounting [AASB 139]

AASB 2013-4 amends AASB 139 to permit the

continuation of hedge accounting in specified circumstances

where a derivative, which has been designated as a hedging

instrument, is novated from one counterparty to a central

counterparty as a consequence of laws or regulations.

Materiality

The revised AASB 1031 is an interim standard that cross-

references to other Standards and the Framework ( issued

December 2013) that contain guidance on materiality.

AASB 1031 will be withdrawn when references to AASB

1031 in all Standards and Interpretations have been

removed.

AASB 2014-1 Part C issued in June 2014 makes

amendments to eight Australian Accounting Standards to

delete their references to AASB 1031. The amendments are

effective from 1 July 2014.

AASB 2013-4 1-Jan-14 1-Jul-14

AASB 1031 1-Jan-14 1-Jul-14

Application of the


any impact on the


Application of the


any impact on the


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Notes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2015Reference Title Application date of standard Impact on Group

financial report

Application date

for Group

Amendments to Australian Accounting Standards –

Conceptual Framework, Materiality and Financial

Instruments

The Standard contains three main parts and makes

amendments to a number Standards and Interpretations.

Part A of AASB 2013-9 makes consequential amendments

arising from the issuance of AASB CF 2013-1.

Part B makes amendments to particular Australian

Accounting Standards to delete references to AASB 1031

and also makes minor editorial amendments to various other

standards.

Part C makes amendments to a number of Australian

Accounting Standards, including incorporating Chapter 6

Hedge Accounting into AASB 9 Financial Instruments .

AASB 2014-1 AASB 2014-1 Part A: This standard sets out amendments

to Australian Accounting Standards arising from the

issuance by the International Accounting Standards Board

(IASB) of International Financial Reporting Standards

(IFRSs) Annual Improvements to IFRSs 2010–2012 Cycle

and Annual Improvements to IFRSs 2011 –2013 Cycle.

Part A -Annual

Improvements

Annual Improvements to IFRSs 2010–2012 Cycle

addresses the following items:

2010–2012 Cycle ► AASB 2 - Clarifies the definition of 'vesting

conditions' and 'market condition' and introduces the

definition of 'performance condition' and 'service

condition'.

► AASB 3 - Clarifies the classification requirements for

contingent consideration in a business combination by

removing all references to AASB 137.

AASB 2013-9

1-Jul-14 1-Jul-14

Application of the


any impact on the


Application of the


any impact on the


removing all references to AASB 137.

► AASB 8 - Requires entities to disclose factors used

to identify the entity's reportable segments when

operating segments have been aggregated. An entity is

also required to provide a reconciliation of total

reportable segments' asset to the entity's total assets.

► AASB 116 & AASB 138 - Clarifies that the

determination of accumulated depreciation does not

depend on the selection of the valuation technique and

that it is calculated as the difference between the gross

and net carrying amounts.

AASB 124 - Defines a management entity providing KMP

services as a related party of the reporting entity. The

amendments added an exemption from the detailed

disclosure requirements in paragraph 17 of AASB 124 for

KMP services provided by a management entity. Payments

made to a management entity in respect of KMP services

should be separately disclosed.

AASB 2014-1 Annual Improvements to IFRSs 2011–2013 Cycle

addresses the following items:

Part A -Annual

Improvements

► AASB13 - Clarifies that the portfolio exception in

paragraph 52 of AASB 13 applies to all contracts within

the scope of AASB 139 or AASB 9, regardless of

whether they meet the definitions of financial assets or

financial liabilities as defined in AASB 132.

2011–2013 Cycle ► AASB 140 - Clarifies that judgment is needed to

determine whether an acquisition of investment property

is solely the acquisition of an investment property or

whether it is the acquisition of a group of assets or a

business combination in the scope of AASB 3 that

includes an investment property. That judgment is based

on guidance in AASB 3.

Application of the


any impact on the


1-Jul-14 1-Jul-14

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(ii) Accounting Standards and interpretations issued but not yet effective

Reference Title Summary Application date of

standard

Application date

for Group

AASB 9 (December 2014) is a new Principal standardwhich replaces

AASB 139. This new Principal version supersedes AASB 9 issued in

December 2009 (as amended) and AASB 9 (issued in December 2010)

andincludes a model for classification and measurement, a single,

forward-looking ‘expected loss’ impairment model and a substantially-

reformed approach to hedge accounting.

AASB 9 is effective for annual periods beginning on or after 1 January

2018. However, the Standard is available for early application. The own

credit changes can be early applied in isolation without otherwise

changing the accounting for financial instruments.

The final version of AASB 9 introduces a new expected-loss

impairment model that will require more timely recognition of expected

credit losses. Specifically, the new Standard requires entities to account

for expected credit losses from when financial instruments are first

recognised and to recognise full lifetime expected losses on a more

timely basis.

Amendments to AASB 9 (December 2009 & 2010 editions and AASB

2013-9) issued in December 2013 included the new hedge accounting

requirements, including changes to hedge effectiveness testing,

treatment of hedging costs, risk components that can be hedged and

1-Jul-18

w) New Accounting Standards and Interpretations

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective and have not been

adopted by the Group for the annual reporting period ending 30 June 2015, outlined in the table below:

AASB 9 Financial Instruments 1-Jan-18

disclosures.

AASB 9 includes requirements for a simpler approach for classification

and measurement of financial assets compared with the requirements of

AASB 139.

The main changes are described below.

a. Financial assets that are debt instruments will be classified

based on (1) the objective of the entity's business model for

managing the financial assets; (2) the characteristics of the

contractual cash flows.

b. Allows an irrevocable election on initial recognition to

present gains and losses on investments in equity instruments that

are not held for trading in other comprehensive income. Dividends

in respect of these investments that are a return on investment can

be recognised in profit or loss and there is no impairment or

recycling on disposal of the instrument.

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Financial assets can be designated and measured at fair value

through profit or loss at initial recognition if doing so eliminates

or significantly reduces a measurement or recognition

inconsistency that would arise from measuring assets or liabilities,

or recognising the gains and losses on them, on different bases.

c. Where the fair value option is used for financial liabilities

the change in fair value is to be accounted for as follows:

► The change attributable to changes in credit risk are

presented in other comprehensive income (OCI)

► The remaining change is presented in profit or loss

AASB 9 also removes the volatility in profit or loss that was caused by

changes in the credit risk of liabilities elected to be measured at fair

value. This change in accounting means that gains caused by the

deterioration of an entity’s own credit risk on such liabilities are no

longer recognised in profit or loss.

Consequential amendments were also made to other standards as a

result of AASB 9, introduced by AASB 2009-11 and superseded by

AASB 2010-7, AASB 2010-10 and AASB 2014-1 – Part E.

AASB 2014-7 incorporates the consequential amendments arising from

the issuance of AASB 9 in Dec 2014.

AASB 2014-8 limits the application of the existing versions of AASB 9

(AASB 9 (December 2009) and AASB 9 (December 2010)) from 1

February 2015 and applies to annual reporting periods beginning on

after 1 January 2015.

Amendments to Australian

Accounting Standards – Accounting

for Acquisitions of Interests in Joint

Operations

AASB 2014-3 amends AASB 11 to provide guidance on the accounting

for acquisitions of interests in joint operations in which the activity

constitutes a business. The amendments require:

[AASB 1 & AASB 11] (a) the acquirer of an interest in a joint operation in which the activity

FOR THE YEAR ENDED 30 JUNE 2015

AASB 2014-3 1-Jan-16 1-Jul-16

[AASB 1 & AASB 11] (a) the acquirer of an interest in a joint operation in which the activity

constitutes a business, as defined in AASB 3 Business Combinations, to

apply all of the principles on business combinations accounting in

AASB 3 and other Australian Accounting Standards except for those

principles that conflict with the guidance in AASB 11; and

(b) the acquirer to disclose the information required by AASB 3 and

other Australian Accounting Standards for business combinations.

This Standard also makes an editorial correction to AASB 11

AASB 116 and AASB 138both establish the principle for the basis of

depreciation and amortisation as being the expected pattern of

consumption of the future economic benefits of an asset.

The IASB has clarified that the use of revenue-based methods to

calculate the depreciation of an asset is not appropriate because revenue

generated by an activity that includes the use of an asset generally

reflects factors other than the consumption of the economic benefits

embodied in the asset.

The amendment also clarified that revenue is generally presumed to be

an inappropriate basis for measuring the consumption of the economic

benefits embodied in an intangible asset. This presumption, however,

can be rebutted in certain limited circumstances.

AASB 2014-4 Clarification of Acceptable Methods

of Depreciation and Amortisation

(Amendments toAASB 116 and

AASB 138)

1-Jan-16 1-Jul-16

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AASB 2014-9 amends AASB 127 Separate Financial Statements , and

consequentially amends AASB 1 First-time Adoption of Australian

Accounting Standards and AASB 128 Investments in Associates and

Joint Ventures , to allow entities to use the equity method of accounting

for investments in subsidiaries, joint ventures and associates in their

separate financial statements.

AASB 2014-9 also makes editorial corrections to AASB 127.

AASB 2014-9 applies to annual reporting periods beginning on or after

1 January 2016. Early adoption permitted.

AASB 2014-10 amends AASB 10 Consolidated Financial Statements

and AASB 128 to address an inconsistency between the requirements in

AASB 10 and those in AASB 128 (August 2011), in dealing with the

sale or contribution of assets between an investor and its associate or

joint venture. The amendments require:

(a) a full gain or loss to be recognised when a transaction involves a

business (whether it is housed in a subsidiary or not); and

(b) a partial gain or loss to be recognised when a transaction involves

assets that do not constitute a business, even if these assets are housed

in a subsidiary.

AASB 2014-10 also makes an editorial correction to AASB 10.

AASB 2014-10 applies to annual reporting periods beginning on or

AASB 2014-9 Amendments to Australian

Accounting Standards – Equity

Method in Separate Financial

Statements

1-Jan-16 1-Jul-16


Accounting Standards – Sale or

Contribution of Assets between an

Investor and its Associate or Joint

Venture

1-Jan-16 1-Jul-16


after 1 January 2016. Early adoption permitted.

In May 2014, the IASB issued IFRS 15 Revenue from Contracts with

Customers , which replaces IAS 11 Construction Contracts , IAS 18

Revenue and related Interpretations (IFRIC 13 Customer Loyalty

Programmes , IFRIC 15 Agreements for the Construction of Real

Estate, IFRIC 18 Transfers of Assets from Customers and SIC-31

Revenue—Barter Transactions Involving Advertising Services ).

The core principle of IFRS 15 is that an entity recognises revenue to

depict the transfer of promised goods or services to customers in an

amount that reflects the consideration to which the entity expects to be

entitled in exchange for those goods or services. An entity recognises

revenue in accordance with that core principle by applying the following

steps:

(a) Step 1: Identify the contract(s) with a customer

(b) Step 2: Identify the performance obligations in the contract

(c) Step 3: Determine the transaction price

(d) Step 4: Allocate the transaction price to the performance obligations

in the contract

(e) Step 5: Recognise revenue when (or as) the entity satisfies a

performance obligation

Early application of this standard is permitted.

AASB 2014-5 incorporates the consequential amendments to a number

Australian Accounting Standards (including Interpretations) arising

from the issuance of AASB 15.

The International Accounting Standards Board (IASB) in September

2015 issued an amendment to defer the efefctive date of IFRS 15 (the

international equivalent of AASB 15) from 1 Janaury 2017 to 1 January

2018. At this time, it is expected that the AASB will make a

corresponding amendment to AASB 15, which will mean that the

application date of this standard for the Group will move from 1 July

2017 to 1 July 2018.

AASB 15 Revenue from Contracts with

Customers

1-Jan-17 1-Jul-17

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The subjects of the principal amendments to the Standards are set out

below:

AASB 5 Non-current Assets Held for Sale and Discontinued

Operations:

• Changes in methods of disposal – where an entity

reclassifies an asset (or disposal group) directly from being

held for distribution to being held for sale (or visa versa), an

entity shall not follow the guidance in paragraphs 27–29 to

account for this change.

AASB 7 Financial Instruments: Disclosures:

• Servicing contracts - clarifies how an entity should

apply the guidance in paragraph 42C of AASB 7 to a

servicing contract to decide whether a servicing contract is

‘continuing involvement’ for the purposes of applying the

disclosure requirements in paragraphs 42E–42H of AASB

7.

• Applicability of the amendments to AASB 7 to

• Discount rate: regional market issue - clarifies that the

high quality corporate bonds used to estimate the discount

rate for post-employment benefit obligations should be

denominated in the same currency as the liability. Further it

clarifies that the depth of the market for high quality

corporate bonds should be assessed at the currency level.



Accounting Standards – Annual

Improvements to Australian

Accounting Standards 2012–2014

Cycle

1-Jan-16

AASB 119 Employee Benefits:

1-Jul-16

corporate bonds should be assessed at the currency level.

AASB 134 Interim Financial Reporting:

• Disclosure of information ‘elsewhere in the interim

financial report’ -amends AASB 134 to clarify the meaning

of disclosure of information ‘elsewhere in the interim

financial report’ and to require the inclusion of a cross-

reference from the interim financial statements to the

location of this information.


Accounting Standards – Disclosure

Initiative: Amendments to AASB

101

The Standard makes amendments to AASB 101 Presentation of

Financial Statements arising from the IASB’s Disclosure Initiative

project. The amendments are designed to further encourage companies

to apply professional judgment in determining what information to

disclose in the financial statements. For example, the amendments make

clear that materiality applies to the whole of financial statements and

that the inclusion of immaterial information can inhibit the usefulness of

financial disclosures. The amendments also clarify that companies

should use professional judgment in determining where and in what

order information is presented in the financial disclosures.

1-Jan-16 1-Jul-16


Accounting Standards arising from

the Withdrawal of AASB 1031

Materiality

The Standard completes the AASB’s project to remove Australian

guidance on materiality from Australian Accounting Standards.

1-Jul-15 1-Jul-15

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Dairy Seafood Health Meat Total segments

Adjustmemts &

eliminations Consolidated

Other revenue

Lease revenues 35,889 - - - 35,889 - 35,889

Interest income 19,260 144,452 - 677 164,389 67,797 232,186

Total Income 55,149 144,452 - 677 200,278 67,797 268,075

Income/(expenses)

Consulting fees - - - - - (410,791) (410,791)

Legal fees (124,673) - - - (124,673) (270,383) (395,056)

Travel & accommodation - - - - - (114,163) (114,163)

PR, branding & publications - - - - - (158,175) (158,175)

Note 2: Segment information

For management purposes, the Group is organised into business units based on its products and services and has four reportable segments, as follows:

- The Dairy section which owns farms and production plants and uses milk to produce cheese and other dairy products

- The Seafood division is focussed on sourcing and supplying high quality seafood to the markets.

- The Health division targets innovative products for health conscious markets.

- The Meat division brings high quality and innovative Meat products to expanding markets.

The Executive Management Committee monitors the operating results of its business units separately for the purpose of making decisions about resource allocation and performance assessment.

Segment performance is evaluated based on operating profit or loss and is measured consistently with profit or loss in the consolidated financial statements.

Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.

No operating segments have been aggregated to form the above reportable operating segments.

PR, branding & publications - - - - - (158,175) (158,175)

Segment profit / (loss) (69,524) 144,452 - 677 75,605 (1,637,450) (1,561,845)

Dairy Seafood Health Meat Total segments

adjustmemts &

eliminations Consolidated

Total assets 8,233,114 5,212,620 38,086 127,622 13,611,443 8,492,450 22,103,892

Total liabilities (3,267,947) - - - (3,267,947) 1,531,262 (1,736,685)

Consolidated

2015

Geographic information $

Revenue from interest and lease income

Australia 268,075

Asean -

China -

Total 268,075

Income is based on the locations of the customers.

Non-current operating assets

Australia 2,173,196

Asean -

China -

2,173,196

Tax consolidation

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Note: 3 Significant accounting judgements, estimates and assumptions

In calculating the taxation obligations and classifications, we have assumed that the group forms a tax consolidated group in the 30 June 2015 financial year, and is able to achieve

the benefits of such an arrangement.

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Consolidated

2015

$

Note 4. Revenue and expenses

Net profit (loss) from ordinary activities is after crediting the following revenues:

Revenues:

Sales revenue -

Rental income 35,889

Interest income 232,186

- Total other income 268,075

Net profit from ordinary activities is after charging the following expenses:

Operating

expenses

IPO and

establishment

costs Total

$ $ $

Selling and distribution expenses - 162,359 162,359

Administration expenses 245,349 616,364 861,713

Other expenses 10,646 795,202 805,848

Total expenses 255,995 1,573,924 1,829,919

Note 5. Income tax

The major components of income tax expense are:

The major components of income tax expense are:

Income Statement

Current income tax

Current income tax charge -

Deferred income tax

Relating to the origination and reversal of temporary differences (458,045)

Income tax expense/(benefit) reported in the income statement (458,045)

A reconciliation between tax expense and the product of accounting profit before income tax

multiplied by the applicable income tax rate is as follows:

Accounting profit/(loss) before tax from continuing operations (1,561,845)

Accounting profit/(loss) before income tax (1,561,845)

At the income tax rate of 30% (468,554)

Non-deductible amounts 10,509

Other 0

Tax losses not recognised 0

Income tax expense reported in the income statement (458,045)

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Consolidated

2015

$

Note 5. Income tax (continued):

Deferred income tax as at 30 June relates to the following:

Deferred tax assets

Tax losses 309,478

Accruals 35,550

Tax only assets 525,984

Gross deferred income tax assets 871,012

The Group has tax losses which arose in Australia of $1,031,595 that are available

indefinitely for offsetting against future taxable profits of the companies in which the losses arose.

Note 6. Other current financial assets:

Capitalised acquisiton expenses 74,520

Deposits paid for potential acquisitions occurring post period end 1,057,678

Total current financial assets 1,132,198

Note 7. Trade and other receivables (Current):

Convertible notes receivable 5,176,187

Rent receivable 39,478

GST Recoverable 98,692

Total current receivables 5,314,357 Total current receivables 5,314,357

Note 7. Trade and other receivables (Non-Current):

Convertible notes receivable 5,053,751

During the period, the Group entered into a Convertible Note Agreement with potential to acquire 36% interest in Ferguson for an amount of

$5,000,000. This Note was issued at a 9.5% interest rate on 10 March 2015 and convert to that number of ordinary shares which equate to 36% of the

investee. The Group may convert the note at the discretion of the Group, after satisfaction of certain objectives and financing conditions. The investee

may be able to convert the note subject to the satisfaction of certain objectives and timeframes. The notes are contracted to mature 12 months after the

issue date. The Directors consider the embedded derivative component of the convertible note is not material and has not been separately brought to

account on inception. At balance date, the Directors also consider any movement in the fair value of the embedded derivative to not be material.

During the period, the Group entered into a Convertible Note Agreement with potential to acquire 26.5% interest in B d Paris Creek for an amount of

$5,000,000. This Note was issued at a 9.5% interest rate in the months leading up to 30 June 2015, and can be converted within 24 months.

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Note 8. Earnings per share (EPS)

Profit attributable to ordinary equity holders of the Parent: (1,103,087)

Profit attributable to ordinary equity holders of the Parent for basic earnings (1,103,087)

Weighted average number of ordinary shares for basic EPS* 20,503,220

Weighted average number of ordinary shares adjusted for the effect of dilution* 20,503,220

Consolidated

2015

$

Note 9. Prepayments

Prepayments 8,877

Total prepayments 8,877

Note 10. Property, plant and equipment:

Property, plant and equipment at cost:

Basic EPS amounts are calculated by dividing the profit for the year attributable to ordinary equity holders of the Parent by the weighted average number

of ordinary shares outstanding during the year.

Diluted EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of the Parent (after adjusting for interest on the

convertible preference shares) by the sum of the weighted average number of ordinary shares outstanding during the year and the weighted average

number of ordinary shares that would be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

There are no share options excluded from the calculation of diluted earnings per share that could potentially dilute basic earnings per share in the future

because they are anti-dilutive for the current period presented.

There have been no other transactions involving ordinary shares or potential ordinary shares between the reporting date and the date of authorisation of

these financial statements, other than the issue of Founder's rights as outlined in note 20.

Property, plant and equipment at cost:

Cost

Opening balance -

Additions of land 2,151,755

Disposals -

Closing balance 2,151,755

Total property, plant and equipment 2,151,755

Note: This asset is land used for farming, and is a non-depreciating asset.

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Consolidated

2015

$

Note 11. Investments (Non-current):

Investments at cost:

Other investments

Total investments -

Principal activities country of

incorporation

% equity

interest

Beston Global Food Company Limited Food services Australia

Beston Farms Pty Ltd Investment company Australia 100%

Beston Global Food (Thailand) Company Limited Sales and distribution Thailand 98%

Beston Pure Foods Pty Ltd Sales and distribution Australia 100%

Beston Dairies Pty Ltd Dairy production Australia 100%

Note 12. Intangible assets

Licences with

indefinite

useful life

Cost

Cost - at start of period -

Additions 25,000

As at 30 June 2015 25,000

Information about subsidiaries

The consolidated financial statements of the Group include:

Note 13. Financial assets and financial liabilities�

(a) Financial assets

Loans and receivables

Convertible loan notes 10,357,560

Intangible assets comprise water licences used on dairy farms, which have an indefinite useful life.

Loans and receivables are non-derivative financial assets carried at amortised cost which generate a fixed interest income for the Group. The carrying

value may be affected by changes in the credit risk of the counterparties. At pre-determined future dates they can be converted into equity.

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(b) Fair values

Note 14. Trade and other payables (Current):

Trade creditors – unsecured 829,142

Accrued expenses 907,543

Total current payables 1,736,685

Note 15. Other provisions (Current):

Employee entitlements -

Provision for income tax -

Total current other provisions -

The management assessed that the fair values of cash and short-term deposits, trade receivables, trade payables, bank overdrafts and other current

liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction

between willing parties, other than in a forced or liquidation sale.

Note 16. Commitments and contingencies

Contingent liabilities

The Group has a contingent liability to re-imburse BPAM $640,000 upon the successful IPO post balance date, which will be an expense in the 2016

financial year.

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Consolidated

2015

$

Note 17. Contributed equity:

Issued and paid up capital:

- 77,526,766 ordinary shares 21,471,007

Movement in share capital Shares

Establishment 100 100

Issuance of Founders shares on 6 - 9 February 2015 2,916,666 29,167

Shares issue via placement on 23 February 2015 55,000,000 16,500,000

Shares issue via placement on 29 June 2015 19,610,000 5,883,000

less equity raising costs (net of deferred tax of $412,967) (941,260)

Total shares on issue at 30 June 2015 77,526,766 21,471,007

Note 18. Retained earnings / (accumulated losses):

Loss atrributable to equity holders of the parent (1,103,087)

Loss attributed to Non-controlling interests (713)

Accumulated profit / (loss) at the end of the period (1,103,800)

Note 19. Notes to the Cash Flow Statement:

(a) Reconciliation of cash and cashflow equivalents

Cash on hand -

Cash at Bank 7,546,943

Total cash and cash equivalents 7,546,943

Cash flow reconciliation

Reconciliation of net profit after tax to net cash flows from operations

Net profit after tax (1,103,800)

For the purposes of the Cash Flow Statement, cash includes cash on hand and in banks and deposits at call, net of

outstanding bank overdrafts. Cash at the end of the financial year as shown in the Cash Flow Statement is reconciled to the

related items in the Balance Sheet as follows:

Working capital adjustments

Increase in trade and other receivables, and prepayments (48,355)

Increase in trade payables and accruals 1,799,596

Increase in deferred tax asset (871,012)

Interest receivable debtor change (268,075)

Withholding tax on interest (31,747)

GST recoverable increase (98,692)

Net cash flows from operating activities (622,084)

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Note 20. Related party disclosures

Amounts Amounts

Sales to Purchases owed by owed to

relatedfrom related related related

parties parties parties parties

Directors’ interests, via the Investment manager

Management fee - 76,428 - (18,003)

Reimbursement of costs associated with business formation (ex GST) - 189,200 - -

The ultimate parent

The ultimate parent of the Group is Beston Global Food Company Limited and is based in Australia.

Terms and conditions of transactions with key management personnel Consolidated

2015

$

Short-term employee benefits $30,000

Post-employment benefits $2,775

Other long-term benefits -

Termination benefits -

Share-based payment -

Number of shares:

R Sexton, via Blue Ridge Holdings Pty Ltd, Kijomi Holdings Pty Ltd and BPAM 4,207,074

Certain Directors have accepted appointment to be Board members of investee companies and will receive directors fees for

doing so.

Note 11 provides the information about the Group’s structure including the details of the subsidiaries and the holding company.

The following table provides the total amount of transactions that have been entered into with related parties for the relevant

financial period.

The annual fees payable to the directors of the company, inclusive of superannuation contributions, are set out below:

Dr Sexton and Mr Gerlach will not receive a Directors' Fee from the Group in 2014-15

As at 30 June 2015, the Directors' shareholding of the company is set out in the table below:

R Sexton, via Blue Ridge Holdings Pty Ltd, Kijomi Holdings Pty Ltd and BPAM 4,207,074

S Gerlach, via S Gerlach Pty Ltd 1,320,120

D Taylor -

J Kouts -

P Coventry -

Total 5,527,194

Founders rights share options issued up to date of signing the Directors report Volume value

R Sexton 12,404,931 4,341,726

S Gerlach 2,816,385 985,735

P Coventry - -

J Kouts - -

D Taylor - -

Certain Directors and members of the Management Team (“Senior Management”) acquired shares following formation of the

Company (Founder Shares). They have also subscribed for shares in the pre-IPO capital raisings. The Founder Shares are fully

paid ordinary shares and were issued for market consideration. The Senior Management team were entitled to be issued

Founders’ Rights on the successful close of the Offer on 26th August 2015, so as to bring the total number of Founders’ Shares

and Founders Rights to 5% on a fully diluted basis. Each right entitles the holder to be issued one ordinary share for nil

consideration subject to certain conditions and not before July 2016.

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Note 20. Related party disclosures (Continued)

Terms and conditions of transactions with related parties

Note 21. Commitments

Note 22. Subsequent events

The Company has recently undergone a capital raising and listing on the Australian Stock Exchange. On the closing of this

offer, the Investment Manager will be entitled to the recovery of costs associated with these functions over the prior three year

period. These costs amount to $640,000 and have not been provided or paid at balance date.

Grape Ensembles Co Pty Ltd is controlled by Dr Sexton. Grape Ensembles Co Pty Ltd holds an 80% interest in a company that

owns the BRANDLOCK intellectual property associated with brand protection seals which has been developed as an anti

counterfeiting device. The company has an option to purchase Grape Ensembles 80% shareholding in Brandlock Protection

Solutions Pty Ltd. The option was acquired subsequent to the year-end on 1st July 2015. The purchase price has been agreed at

the greater of 10 times the Net Profit after tax of BBPS; the then market value of the 80% holding of BBPS; and $2 million.

Since balance date, the Group has entered into the following transactions:

The company outsources various investment management and administrative functions to an Investment Manager including key

management personnel services. Dr Sexton controls and Mr Gerlach is a director of the Investment Manager, Beston Pacific

Asset Management Limited. The Investment Manager receives a fee for its management of the Group. This fee is equal to 1.2%

per annum (exclusive of GST) on the gross asset value of the assets of the Group. The Investment Manager will also be entitled

to receive a Performance Fee for outperformance against total shareholder return against a benchmark index. No Performance

Fee has been earned in the current period. Outstanding balances at the period-end are unsecured and interest free and settlement

occurs in cash. There have been no guarantees provided or received for any related party receivables or payables.

The Investment Manager of the Group is entitled to receive a selling fee of 2% for funds raised in the capitalisation of the

Group.

The Company is presently undergoing a capital raising and listing on the Australian Stock Exchange. On the closing of this

offer, the Investment Manager will be entitled to the recovery of costs associated with these functions over the prior three year

period. The recovery of these costs are contingent on completion of the capital raising and amount to $640,000. No amount has

been provided or paid at balance date.

-

-

-

-

-

-

-

-

-

-

-

-

-

Livestock Property Plant &

Equipment

Intangibles

(water licences)

Total

Consideration

Paid

$’000 $’000 $’000 $’000 $’000

Purchase of Kurleah Farm 779 4,714 489 1,024 7,006

Purchase of Pedra Branca Farm 1,643 13,578 537 2,700 18,458

Total consideration 2,422 18,292 1,026 3,724 25,464

add transaction costs expensed 1,817

Net cash consideration 27,281

On 1st July 2015 the Company eneterd a call option to acquire 80% of Brandlok Brand Protection Pty Ltd, and also a tag-along agreement to acquire the

balancing 20% from the other unrelated part owner.

A decision was made by the Board of the Group not to proceed with the acquisition of Weneeda Dairy Farms following conditions precedent contained

within the sale contract not being satisfied. The deposit paid of $180,000 will be refundable to the Group.

Purchased buildings and plant from Australian Dairy Protein Pty Ltd for an aggregate consideration of $7,700,000 before costs.

Capitalised the China business with circa $1.5m.

Acquired a Hong Kong and a Chinese subsidiary in September 2015 for the purposes of sales and distribution.

Advanced a Convertible Note with right to acquire 40% interest in Australian Provincial Cheese Pty Ltd for an amount of $914,000 before costs.

Acquired a 20% interest in Neptune Bio Innovations Pty Ltd for a total consideration of $15,000,000 inclusive of costs. This is inclusive of deferred

consideration payable of an amount of $3,000,000.

Acquired lobster quota and a property for a total consideration of $5,500,000 before costs.

On 26th August 2015 the Company raised additional funds of $100,000,000 via a public offer and admitted to the official list of the Australian Stock

Exchange.

Acquired United Dairy Producers (UDP) land and buildings for a total consideration of $4,500,000 before costs. This is an asset acquisition.

Advanced a Convertible Note with right to acquire 40% interest in Scorpio Pty Ltd for an amount of $1,986,000 before costs.

In addition the Group has entered into the following transactions during September 2015 which constitute business combinations:

Acquired Kurleah Dairy Farm for a total consideration of $7,006,000 plus transaction costs.

Acquired Pedra Branca Dairy Farm for a total consideration of $18,458 plus transaction costs.

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Note 23. Information relating to Beston Global Food Company Limited (the Parent)

2015

$Current assets 16,634,881

Total assets 22,232,647

Current liabilities (1,757,462)

Total liabilities (1,757,462)

Issued capital (21,471,007)

Accumulated losses 995,822

Profit or loss of the Parent entity 995,822

Total comprehensive income of the Parent entity 995,822

The Parent entity has a contingent liability at balance date to pay $640,000 to BPAM upon a successful IPO.

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Note 24. Financial risk management objectives and policies

The Group’s principal financial liabilities, comprise of loans and borrowings, trade and other payables, and financial guarantee

contracts. The main purpose of these financial liabilities is to finance the Group’s operations and to provide guarantees to support its

operations. The Group’s principal financial assets include loans, trade and other receivables, and cash and short-term deposits that

derive directly from its operations.

The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the management of

these risks. The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market

prices. Market risk comprise three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and

commodity risk. Financial instruments affected by market risk include cash, convertible notes and deposits.

Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows of an exposure will fluctuate because of changes in foreign

exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates relates primarily to the Group’s operating

activities (when revenue or expense is denominated in a foreign currency) and the Group’s net investments in foreign subsidiaries.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in

market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term

debt obligations with floating interest rates.

The Group manages its foreign currency risk by hedging transactions that are expected to occur within the next 12 months, mainly

focussed on forecasted sales and purchases.

Commodity price risk

The Group is affected by the price volatility of certain commodities. Its operating activities require the ongoing purchase of milk

and manufacture of cheddar and other cheese products, in addition to seafood and therefore require a continuous supply of milk and

seafood. The Group manages commodity risk by where possible entering into longer term relationships with key suppliers that

create more certainty around key commodity prices.

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Consolidated

2015

Note: 25 Auditors' remuneration $

The auditor of the Company is Ernst & Young Australia.

Amounts received or due and receivable by Ernst & Young Australia for:

- An audit or review of the financial report of the entity and any other entity in the consolidated

group 40,000

Credit risk

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a

financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing

activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Trade receivables

Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating to

customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and

individual credit limits are defined in accordance with this assessment.

Management have regular reporting and assessment of key customers credit risk in order to manage this.

Liquidity risk

The Group monitors its risk to a shortage of funds using a liquidity planning tool. The Group’s objective is to maintain a balance

between continuity of funding and flexibility through the use of bank balances, overdrafts, bank loans, finance leases, trade finance

facilties and hire purchase contracts.

group 40,000

- Other services in relation to the entity and any other entity in the consolidated group: (ASX

IPO support)

353,000

Tax compliance

- Assurance related 50,000

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Note: 26 Commitments and contingencies

Operating lease commitments — Group as lessor

Within one year 190,000

After one year but not more than five years 736,000

More than five years 874,000

1,800,000

The Group has entered into operating leases on its dairy farming property portfolio consisting of certain farms, including plant &

equipment, land and cattle herds.

These leases have terms of between 10 and 25 years. All leases include a clause to enable upward revision of the rental charge on an

annual basis according to prevailing market conditions. The total contingent rents recognised as income during the year is $0.

Future minimum rentals receivable under non-cancellable operating leases as at 30 June are as follows:

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Directors’ Declaration

1 In accordance with a resolution of the directors of Beston Global Food Company Ltd, the Directors declare :

In the opinion of the directors :

(a)

(i)

(ii)

(b)

(c)

2

giving a true and fair view of the Company's financial position as at 30 June 2015 and of it's performance for the period

ended on that date; and

On behalf of the Board

the financial statements and notes of the Company for the period ended 30 June 2015 are in accordance with the

Corporations Act 2001, including

complying with Accounting Standards and the Corporations Regulations 2001;

there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and

payable.

the financial statements and notes also comply with international Financial Reporting Standards as disclosed in Note 1; and

This declaration has been made after receiving the declarations required to be made to the directors by the chief executive

officer and the chief financial officer in accordance with section 295A of the Corporations Act 2001 for the financial period

ended 30 June 2015.

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_________________________________

Roger Sexton

Adelaide

30 Septemer 2015

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- 363,241,052 fully paid ordinary shares are held by 2,129 individual shareholders

All issued ordinary shares carry one vote per share and carry the rights to dividends.

The number of shareholders, by size of holding, in each class are:

1 - 1,000 3

126

336

1444

220

There are no unmarketable parcels of shares.

Fully paid

Number Percentage

I.G. Investment Management Ltd 58,783,807 16.18%

Deutsche Bank AG 20,597,795 5.67%

Fully paid

Number Percentage

1 AUSTRALIA AULONG AUNIU WANG FOOD HOLDINGS PTY LTD 54,449,834 14.99

2 NATIONAL NOMINEES LIMITED 45,386,179 12.49

3 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 24,506,454 6.75

4 CITICORP NOMINEES PTY LIMITED 20,081,369 5.53


6 FIRST BOOM INVESTMENTS LIMITED 11,428,572 3.15

7 UBS NOMINEES PTY LTD 9,268,835 2.55

8 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2 8,802,367 2.42


10 MISS HAIYUE ZHAO 8,571,429 2.36

11 HSBC CUSTODY NOMINEES ( AUSTRALIA) LIMITED 8,461,000 2.33

12 FIRST BOOM INVESTMENTS LIMITED 8,333,334 2.29

13 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 4,990,557 1.37

14 BNP PARIBAS NOMS PTY LTD 4,810,840 1.32

15 BLUE RIDGE HOLDINGS PTY LTD 4,206,974 1.16

16 MIRRABOOKA INVESTMENTS LTD 4,091,919 1.13

17 CS FOURTH NOMINEES PTY LTD 3,771,429 1.04

18 J P MORGAN NOMINEES AUSTRALIA LIMITED 3,237,143 0.89

19 WARBONT NOMINEES PTY LTD 2,857,143 0.79

20 G T C INDUSTRIES PTY LTD 2,135,081 0.59

(c) Twenty largest holders of quoted equity securities

1,001 - 5,000

5,001 - 10,000

10,001 - 100,000

100,001 and over

ASX additional information

(a) Distribution of equity securities

(i) Ordinary share capital

(b) Substantial shareholders

Ordinary shareholders

Additional information required by the Australian Stock Exchange Ltd and not shown elsewhere in this report

is as follows. The information is current as at 21 September 2015.

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Documents

Beston Global Food Company Limited For personal use onlyDirectors’ Report (Cont.) For the period ended 30 June 2015 Results The result for the period from incorporation to 30 June