MURRAY GOULBURN CO-OPERATIVE CO. LIMITED
51ST ANNUAL REPORT 2001
MURRAY GOULBURN ANNUAL REPORT 2001
Mr I W MacAulay Mr S J ORourke Dr W B Sanderson Mr L A Jarvis Mr K J Bruhn Mr T J Ennals
Ian W. MacAulay ChairmanDairyfarmerDirector since 1991Chairman Finance CommitteeB.Agr.Sc. Fellow Australian Institute of Company DirectorsDirector Geoffrey Gardiner Foundation
Stephen J. ORourke Managing DirectorB.Comm, ACADirector since 1993Director, Australian Dairy Corporation
Wayne B. Sanderson PhDExecutive DirectorDirector since 1994 Member Australian Dairy Product FederationResearch & Development Committee
Lindsay A. Jarvis Deputy ChairmanDairyfarmerDirector since 1985Chairman Audit Committee Grad Dip System AgricultureFellow Australian Institute of Company Directors Board Member North East Catchment -Management AuthorityChairperson Goulburn Murray Water - MurraySystems Water Service Committee
Kenneth J. BruhnDairyfarmerDirector since 1982Dip. Agr. Sc.Dip. Company Directors (UNE)
Trevor J. EnnalsDairyfarmerDirector since 1992Chairman Zone Committee Dip. Australian Institute of Company DirectorsPast District Council President UDV
Donald F. Howard DairyfarmerDirector since 1997Dip. Company Directors (ANU)Dip. Company Directors (Monash)
Trevor D. KeeleDairyfarmerDirector since 1993Fellow Australian Institute of Company Directors
John VardyDairyfarmerDirector since 1998Dip. Company Directors (ANU)
Alan L. MillarDairyfarmerDirector since 1986Dip. Company Directors (UNE)Fellow Australian Institute of Company Directors
John C. MasonDairyfarmerDirector since 1987Chairman Supplier Relations Committee Dip. Agr. Sc. Dip. Company Directors (UNE) Fellow Australian Institute of Company Directors
William M. BrownDairyfarmerDirector since 1994Cert. Company Directors (ANU)Fellow Australian Institute of Company DirectorsDirector Dairy Technical Services Ltd.
Ian C. BirdCompany SecretaryB.Bus. ASA.
MURRAY GOULBURN ANNUAL REPORT 2001
Mr I C BirdCompany Secretary
Mr D F Howard Mr T D Keele Mr J C MasonMr A L MillarMr J Vardy Mr W M Brown
Facts at a glance ($ Millions) 2001 2000 1999 1998 1997
Sales Revenue 1,613 1,420 1,320 1,115 1,114
Operating Profit (Before Tax) 50 30 26 16 17
Total Shareholders Equity 404 345 304 262 247
Issued Ordinary Capital 84 66 43 38 33
Reserves and Retained Profits 238 206 195 173 168
Total Assests 1,065 887 828 770 665
Milk Intake ex Suppliers (Million Litres) 3,393 3,134 2,776 2,425 2,269
Total Export Revenue 1,103 863 807 611 619
ContentsChairmans Report 2Operations Review 4Financial Statements 9
The Annual General Meeting of Murray Goulburn Co-Operative Co. Limited will be held at 1.30pm on Thursday 29th November 2001 in the Members Lounge Moonee Valley Racecourse McPherson Street Moonee Ponds
Registered Office & Principal Place of Business140 Dawson StreetBrunswick Victoria 3056ACN 004 277 089ABN 23 004 277 089
BankersABN - AMRO Bank N.V.ANZ Banking Group LimitedBNP ParibasCommonwealth Bank of AustraliaRabo Australia LimitedRural Finance Corporation of VictoriaWestpac Banking Corporation
SolicitorsPiper Alderman LawyersDH von Bibra (LL.B)
AuditorDeloitte Touche Tohmatsu
2MURRAY GOULBURN ANNUAL REPORT 2001
Mr Ian MacAulayChairman
2000/2001 has been a memorable year forMurray Goulburn Co-operative. The Co-operativefinished the year with a record milk intake,turnover, milk price and profit.
Murray Goulburns milk intake increased bymore than 8% to another record of 3.4 billionlitres which means we are now processingapproximately one third of Australias milk. Thisgrowth occurred against the trend of theAustralian industry which contracted by almost3%. Improved farm productivity and additionalsuppliers contributed to this growth. The totalnumber of suppliers consolidated at 3,319. Theaverage Murray Goulburn farm now supplies onemillion litres of milk annually.
Operating revenue for the year was a record $1.6 billion, an increase of almost 14% or $193 million over the previous year withoperating profit before tax and dividends risingby $21 million to $50 million. Shareholdersequity again increased this year rising by $59 million to $404 million and retained profitsand reserves gained $32 million to $238million.
Murray Goulburns milk price again led theAustralian dairy industry, maximising returns toour farmer/shareholders whilst declaring arecord profit of $50 million. To be able to retainprofit and increase equity is fundamental toproducing a strong balance sheet. The Co-operatives focus on financial strength andretaining profits at appropriate levels has led tothe continued improvement of key financialindicators which all improved again during theyear.
While the current low value of the Australiandollar has been a major factor in improved farmreturns, a low point for some farmers was thatpoor seasonal conditions across the supply areameant farmers were not able to take fulladvantage of the excellent milk price.
Exports now account for 70% of the Co-operatives turnover. With product exportedto more than 100 countries we are truly at theinternational forefront of the Australian foodbusiness. Long standing relationships with ourcustomers and our ability to customise
Murray Goulburns milk price againled the Australian dairy industry,maximising returns to ourfarmer/shareholders whilstdeclaring a record profit of $50 million.
3 MURRAY GOULBURN ANNUAL REPORT 2001
Milk Supply (million litres)
Shareholders' Equity ($ millions)
products to their needs has enabled MurrayGoulburn to record strong export growth andreturns.
Murray Goulburns commitment to the localmarket remained firm throughout the year, withall domestic divisions performing strongly. Highcustomer loyalty for a wide range of local dairyproducts from Devondale, Housebrand, Industrialand Foodservice divisions amplify the Co-operatives allegiance to the Australiancommunity.
Our proposal to acquire Bonlac Foods put to theboard of Bonlac on 28 February 2001 wassubsequently withdrawn on 4 April 2001. Ourdetailed review process concluded that theacquisition would not improve returns for MurrayGoulburn supplier/shareholders.
Our purchase of the Kraft factory at Leitchvilleand the resulting welcome of more than 200 newsuppliers created some exciting growthopportunities. The acquisition allowed forincreased milk processing capacity, additionalcheese and whey products manufacture to meetgrowing demand, operating cost savings and animportant commercial alliance with Kraft. We areconfident that this will generate improved returnsto supplier/shareholders.
Field Services expanded during the year not onlyin response to spirited growth in milk supply butalso as specialised programs such as [email protected],the suppliers internet site, CalfCare andMilkCare entered important phases in theirdevelopment. Murray Goulburn Trading againprovided valuable support in the form of vitaland relevant farm requisites convenientlyavailable at competitive prices in our 26 ruralstores.
Much of Murray Goulburns success has comefrom visionary and innovative programs to meetcustomer requirements. To improve milk price,to continue the growth of the company and toprovide for the growth of our suppliersbusinesses, it is imperative that we continue toinvest in new projects, research anddevelopment. $100 million was spent on capitalprojects during the year. The major development
of a milk powder plant at Koroit came onstreamfor the 2001 peak, while the expanded proteinproduction facilities at Leongatha added to theCo-operatives manufacturing flexibility andability to make higher value product.
Meeting our continuing and expandingenvironmental commitments and obligations tothe community has meant spending substantialsums on environmental improvements,especially in manufacturing plants. The Co-operatives achievements and commitmentto a sustainable dairy industry are highlighted inthe Co-operatives highly commendedEnvironmental Report 2001 which waspublished and distributed during the year.
The Co-operatives commitment to corporategovernance embraced an independent auditduring the year of the boards structure andreadiness to lead the organisation into the future.This extensive program confirmed the robustnessof the Co-operatives governance principles andis expected to conclude during the new year.
One year on from deregulation of the Australiandairy industry we see that Murray Goulburnsuppliers have benefited through more efficientutilisation of milk, taking advantage of a fairerdomestic market environment, and the positiveeffect of the dairy structural adjustment package.The final phase will see a review of the structureof the dairy industry and we support such areview. It is essential that the new industrybodies created are simple in structure and servethe industrys contemporary needs in a costeffective manner.
Murray Goulburn has consistently achievedstrong growth over the past decade and if we areto remain a co-operative determined to bring thevalue of the market place back to oursupplier/shareholders, we need the continuedsupport of our customers, service providers,bankers and advisors. In the past year thissupport has been exce