Droughtmaster Australia 2023 Annual Report

Breed Development

ACTIONS

Transition to Single Step

Improved Data Capture (eating quality, carcass performance, feed program performance)

Communicate BIN Project

Results

BREEDPLAN Incentives

Development of commercial market indicies

OPERATING OUTCOMES

Transition to Single Step

Improved Data Capture (eating quality, carcass performance, feed program performance)

Communicate BIN Project

Results

BREEDPLAN Incentives

Development of commercial market indicies

Marketing & Promotion Sales, Events & Activities Society Projects Member Engagement

ACTIONS

Benefits of the Droughtmaster female Strategic partnerships

Suitability to multi-markets

Droughtmaster beef

Commercial performance and sustainable and natural production (both grass and grain fed)

Testimonials and case studies

Bull and female sales

Benefits of cross breeding

OPERATING OUTCOMES

Increased registrations

Membership growth

Growth in our geographical footprint

Increased demand for

Droughtmaster Bulls and Females

Increased awareness of the quality and demand for

Droughtmaster beef

Less reliance on BIN Project Income

ACTIONS

Strategically targeted locations

Investment & improvements to existing sales, events & activities

Increased commitment to school agricultural programs and provide content for their curriculums

OPERATING OUTCOMES

Increased registrations

Growth in our geographical footprint

Increase in the number of schools using Droughtmaster ca le in their curriculum

Income to subsidise labour costs for Society Sponsored Sales

ACTIONS

Improvements to o ice facilities

Diversified income streams

Financial management and Investment Business model improvements

Sta training & development

R&D funding for various projects

OPERATING OUTCOMES

Improved operational

e iciency

Growth and sustainability of the Society

Additional Income Streams

Commitment to ESG

ACTIONS

Celebrate our people

Heighten the appeal of being a member

Provide members with educational content to assist with operating their businesses

Regular and e icient communication

OPERATING OUTCOMES

Member retention and improvements in value to members.

Member satisfaction

SOCIETY HIGHLIGHTS

DROUGHTMASTER AUSTRALIA FEMALE INVENTORY

Female Registrations (over 20 months) as at August after culls have been accounted Implementation of the Strategic Plan, The Road Ahead, Strategy 2020-2022

Female Registrations (over 20 months) as at August after accounting for culls

THE NEXT PHASE STRATEGIC PLAN 2023-2025

DROUGHTMASTER AUSTRALIA FEMALE INVENTORY

DROUGHTMASTER AUSTRALIA FEMALE INVENTORY

Female Registrations (over 20 months) as at August after culls have been accounted

Female Registrations (over 20 months) as at August after culls have been accounted

Implementation of the Strategic Plan, The Road Ahead, Strategy 2020-2022

Implementation of the Strategic Plan, The Road Ahead, Strategy 2020-2022

THE NEXT PHASE STRATEGIC PLAN 2023-2025

THE NEXT PHASE STRATEGIC PLAN 2023-2025

SYDNEY

Opportunities for Stud & Commercial Growth (stud & commercial members)

Opportunities for Stud & Commercial Growth (stud & commercial members) CANBERRA

Opportunities for Stud Growth (stud members)

Opportunities for Stud Growth (stud members)

Opportunities for Commercial Growth (commercial members)

BRISBANE PERTH 3 ANNUAL REPORT 2023 • droughtmaster.com.au

PRESIDENT’S REPORT

ON BEHALF OF THE BOARD of the Droughtmaster Stud Breeders’ Society, I am pleased to present the Annual Report for the financial year ended 31 March 2023.

This Annual Report sets out the results for the breed’s 60th Anniversary Diamond Jubilee Year, during which the Society set out an ambitious schedule of events that demanded a great deal of our staff and volunteers. I must acknowledge the efforts of my fellow Board members, our Chief Executive Officer, Company Secretary, staff and volunteers for their work in making our 60th year one of our best.

Operating Result

The net profit of the Society amounted to $10,379. It is a pleasing result in a year of near unprecedented promotional activities and events associated with the breed’s 60th Anniversary Diamond Jubilee, and significant inflation across the services upon which the Society relies. A number of items of note include:

Todd Heyman | President

• 60th Anniversary – Breed Celebration –in our Diamond Jubilee year, the Society dedicated significant time and resources toward celebrating our past, present and future, and the people of our great breed.

• Funding our future activities – the Society’s presence at the upcoming Beef24 event remains substantially funded via the remaining existing provision within the reported period;

• Single Step – Genetic Improvement –the Society directed significant funding towards a genotyping strategy to assist in the implementation of single-step genomic evaluation for the Droughtmaster breed. The work undertaken by the

PRESIDENT’S REPORT

Society in the reported period was aimed at an upgrade in the Droughtmaster BREEDPLAN analysis to the Single Step model.

• Governance – Established a Code of Conduct, amendments to the Rules and Regulations through significant consultation, and new Awards that recognise our members.

Reflecting on our Diamond Jubilee

For 60 years, your Society has been working hard to support and promote the Droughtmaster herd. It is wonderful to reflect on how much the status of our breed has grown over this period. Today, your Droughtmaster cattle are recognised for their adaptability, sustainability and suitability to the Australian environment –one of Australia’s natural wonders.

This did not happen by chance. It happened because pioneering men and women, such as yourselves, set out and maintained course in line with a vision to create an adaptable, fertile and easy-care breed, of great benefit to all sections of the beef industry – the Droughtmaster.

Today, your fellow members are now spread across the breadth of Australia, our Droughtmaster cattle are now building their reputation with studmasters across the world, and your Society has stood the test of time whilst managing Society activities, events and sales.

Over the past 60 years, there has obviously been much change – market demands continue to change, supply chains want greater yield, and there continues to be a push for sustainable and natural protein. It is a credit to our original members and

those that have followed that our cattle have continued to meet this change as an iconic allrounder, perfectly placed for the future.

As an organisation, you should all look back proudly over what you, your families, your fellow breeders, your Society and its staff have achieved over the last 60 years.

Our collective achievements of the last 60 years and the powerful role of the Droughtmaster breed in today’s Australian herd are an inspiration, which will continue to drive activities aimed at improving and growing your breed into the future.

Our Strategic Direction – The Next Phase

The reported financial year saw the Society renew its strategic direction. The Society’s Strategic Plan “The Road Ahead”, was highly successful in guiding the Society to growth, confidence and success over recent years. The Road Ahead drew to a close in the reported period, with a new Strategic Plan The Next Phase launched in November 2022.

A key focus of the new Strategic Plan, “The Next Phase”, is to look to the future, ensuring that the future activities of the Society are aimed at promoting the breed beyond our existing events, members and markets.

The future of the breed will also continue to include promotion and marketing to the entire protein supply chain – and will continue to highlight that our breed has been developed to naturally and sustainably meet the requirements for our changing future.

PRESIDENT’S REPORT

Members should be left in no doubt that the activities of the Society over the coming years will be focussed on:

• Growth in inventory to 40,000 females by 2025;

• Growth in membership to 750 members by 2025;

• Geographic spread in inventory and membership;

• Diversified income streams;

• Building upon our reputation as Australia’s most natural and sustainable beef cattle breed;

• Increasing the amount of Droughtmaster beef served on menus across Australia;

• Developing the breed and the data attached to the breed; and

• Increasing the exposure of the breed in school curiculums.

The actions that the Society will take to achieve these goals are clear:

These priorities have guided the Society’s actions for much of the reported period – and will continue to guide us over the coming years.

Happy Diamond Jubilee! Todd Heyman, President on behalf of the Board of Directors

Image: Hebertvale Station, Camooweal. Shelly Hawkins.

CEO’S REPORT

• Droughtmaster Futurity

• The Ekka

• Annual General Meeting

• 60th Anniversary Breed Conference

• 60th Anniversary Diamond Jubilee Dinner

• AgQuip

• Droughtmaster National Bull Sale

• Roma Bull Sale

• Production of various promotional materials including videos, digital content and the Droughtmaster Magazine.

• Partnership as the beef brand for the Road to Rodeo and Mt Isa Rodeo.

The above sales, events and activities were all delivered in the context of persistent COVID obstacles, gloomy forecasts around Foot and Mouth disease and fluctuating weather forecasts in the lead up to events and sales.

IT HAS BEEN A MEMORABLE YEAR for Droughtmaster Australia as we celebrated our 60th Anniversary. During this time, the breed and the Society have witnessed many achievements, however, there have also been periods of adversity. Through the dedication and passion of our many members, volunteers, and staff, the breed and Society have thrived and today we are recognised both nationally and internationally as a major cattle breed in the beef industry. We thank each and every one of you for your contribution and commitment to this wonderful breed.

The year in review has revolved around the following sales, events, and activities:

• National Female Sale held in Gympie

• Inaugural Commercial Female Sale hosted via AuctionsPlus

• Toogoolawah Feature Show

Further to the above, we also launched the next edition of the strategic plan, titled, The Next Phase 2023-2025. While our previous strategic plan, The Road Ahead 2020-2022 was heavily focused on building a solid foundation, the new plan is much more focused on growth, particularly around our geographic footprint and diversified income streams. With regard to diversifying our income streams, we are seeking to gain extensions to both the Repronomics and BIN projects which have not only been valuable in providing the breed with an additional income stream but also in the collection of the necessary data that will allow us to transition to Single Step. We are also considering growing our partnerships along with identifying other strategic investments which will complement our core business. Both diversifying our income streams and growing the breed’s footprint geographically are important in managing

Simon Gleeson | Chief Executive Officer

CEO’S REPORT

and mitigating seasonal and market risk which the Society is not immune.

The Society remains in a strong financial position and has again reported a small net profit. While revenue has increased on the previous year, we have experienced a larger increase in our cost base as a result of inflationary pressures, onboarding a new fulltime staff member, increases in employment costs to retain staff in a competitive job market and facilitating a larger number of events and activities than in the prior year. Pleasingly, our membership has continued to rise and growth in our female inventory has followed a similar trend. Additionally, the exposure and momentum of the Droughtmaster breed in the marketplace has certainly continued, witnessed by the results during the bull sale season and at the National Female Sale in March. The challenge going forward will be to maintain this momentum and growth while keeping a close watch on our cost base along with fluctuations and uncertainty in the economy and forecasted

demonstrates the strength of the balance sheet. Accordingly, net assets have also risen from the previous year. Inventory is up on the previous year which will result in a larger sell-off of steers through the BIN project in the next financial year and cash is at comfortable levels.

It has been an enjoyable year and the team, and I would like to thank the members, volunteers and partners for their ongoing support. Your dedication and passion are an upshot of why this breed has been so successful over the last 60 years and will continue to be for another 60 years. I would also like to thank the Board, led by Todd Heyman, Michele Gallagher our Company Secretary for their ongoing commitment and finally I would like to sincerely thank my team, Leigh, Ali, Leah and Jacinta for their unwavering support.

MORE OPTIONS BIGGER GAINS

REGISTRAR’S REPORT

THIS YEAR HAS AGAIN continued strongly with a significant increase in new and returning members along with growth in our registered females. As it stands and with the current growth rates we are experiencing, we are on track to reach 40,000 registered females by 2025 as per the new strategic plan – The Next Phase 2023-2025. With this year’s marketing focus being on the Droughtmaster female, incorporating the inaugural Commercial Female Sale, the National Female Sale, the Female Advantage lift out in Queensland Country Life, the Droughtmaster female digital promotion and social media campaigns, it has certainly raised awareness of the benefits of the Droughtmaster female and contributed to growth in female registrations. It would appear through the number of enquiries we are receiving; that demand for these females exceeds supply.

This increase in demand has also seen many of our approved classifiers being called upon frequently to visit new studs who are seeking to register commercial females. We are grateful to our volunteer classifiers for their commitment in donating their time and wisdom but also for their support to the Society and to current and new members.

DNA testing seems to have now become mainstream for our members and is also considered essential at stud sales. The new sire testing requirements as per the new, and recently released, rules and regulations has seen an uplift in the results in ABRI for registrations of the 2021 calf drop. We will continue to look at ways to more efficiently coordinate DNA results as the volume continues to grow. We are always open to feedback for improvements, provided improvements are suitable for the vast majority of the membership.

Single Step is almost upon us and there have been many hours of work going on in the background in preparation for a smooth transition. Earlier this year, over 3000 HD50K profiles were loaded onto

the ABRI database in readiness for Single Step. These profiles plus data collected by our BREEDPLAN members along with the valuable data collected through both the Repronomics and BIN Projects have been critical to the Single Step transition. The combination of phenotype data from BREEDPLAN and the genomic profiles are the basis for Single Step. The Society has also been working on a new funding model for BREEDPLAN which should be released on 1 July 2023 to encourage both greater participation and collection of data within the membership to ultimately improve the accuracy of EBVs.

Finally, I would like to take this opportunity to thank Ali Bull for all her marketing expertise and support to the registrar position throughout the year and I wish her all the best in her new endeavours. Along with the rest of the Droughtmaster Australia office, we are looking forward to another exciting year ahead.

Leah Wall Registrar, DNA Coordinator and Member Services

SALES AND EVENTS REPORT

ACROSS AUSTRALIA, Droughtmaster genetics were offered at twenty-four sales during the 2022/23 year. Many of these sales exceeded the results of previous years which highlights the continual demand for Droughtmaster cattle. We thank all our members who sell both privately and also through Society Sponsored Sales for promoting the breed and offering the market high quality genetics.

With regard to the Society Sponsored Sales, we continue to update our processes to streamline these sales in terms of nomination forms, sale documentation, photos and videos, “Drinks with Droughties”, marketing and promotion along with the majority of sale documentation having online portals to upload the data. Online advertising, bidding and viewing has once again continued to be a great way to measure our engagement with our audiences. Upon the previous year, our sale YouTube video playlists had collectively over 20,000 visitations and the online versions of the society sponsored sale catalogues had viewings over 6,500. Furthermore, the online bidding platform certainly proved its worth for the Roma Droughtmaster Bull Sale, which resulted in 30% of the sale gross and total bulls sold online.

A couple of false starts due to COVID and the Gatton Futurity made a return in 2023, with a new name and new venue. The event is now known as the Droughtmaster Futurity and was held at Toogoolawah over two days. The extra day saw an addition to the program of junior judging and parading and an educational component which was highly enjoyed by all who attended.

We look forward to working with you all again and seeing many of you at our next round of sales and events.

Leigh Eleison Sales & Events Manager

Growth in Sponsored Sales and Average $/Head at National Droughtmaster Female Sales

Growth in Sponsored Sales and Average $/Head at National Droughtmaster Female Sales

National Droughtmaster Female Sale Average $/Head

6. Increased partnerships and sponsorships

6. Increased partnerships and sponsorships

Creating successful partnerships has not only provided financial support and diversified the organisation’s income streams but has also furthered brand awareness through cross-promotional activities. Key partners include Ariat Australia, Morgans Financial, Outcross Systems, Newstead Brewing Co, Asahi Premium Beverages and Queensland Country Life.

Creating successful partnerships has not only provided financial support and diversified the organisation’s income streams but has also furthered brand awareness through cross-promotional activities. Key partners include Ariat Australia, Morgans Financial, Outcross Systems, Newstead Brewing Co, Asahi Premium Beverages and Queensland Country Life.

Versatility

7. Operational efficiency and effective financial management

7. Operational efficiency and effective financial management

Multi-marketability THE DROUGHTMASTER DIFFERENCE

Fertility

Updating processes, procedures and systems has allowed the organisation to operate more efficiently, and improvements in financial reporting and analysis have been critical to monitoring performance.

Updating processes, procedures and systems has allowed the organisation to operate more efficiently, and improvements in financial reporting and analysis have been critical to monitoring performance.

8. Advancements in technology

8. Advancements in technology

The organisation’s embrace of technological innovation over the past four years has improved its financial management and data capture capabilities, the Herdbook database and genetic selection in the breed.

The organisation’s embrace of technological innovation over the past four years has improved its financial management and data capture capabilities, the Herdbook database and genetic selection in the breed.

Summary

Summary

The board and staff at Droughtmaster Australia have worked tirelessly to execute this plan. Their teamwork has been outstanding, and they have gained a great deal of confidence as a result of the process. The board are extremely satisfied, and the plan’s success has highlighted for them the importance of effective strategic planning.

The board and staff at Droughtmaster Australia have worked tirelessly to execute this plan. Their teamwork has been outstanding, and they have gained a great deal of confidence as a result of the process. The board are extremely satisfied, and the plan’s success has highlighted for them the importance of effective strategic planning.

The transformation that the organisation has undertaken has resolved the initial problems its faced and seen a turnaround in female registrations, membership growth and an increase in cash reserves, as illustrated in Figures 15, 16 and 17. Figure 18 highlights the milestones reached by the organisation through its implementation of The Road Ahead: Strategy 2020–2022. There has also been a significant positive shift in the culture and morale within the membership. The most recent Annual Report issued to members and the public (Appendix D) highlights the successful journey the organisation has embarked on.

The transformation that the organisation has undertaken has resolved the initial problems its faced and seen a turnaround in female registrations, membership growth and an increase in cash reserves, as illustrated in Figures 15, 16 and 17. Figure 18 highlights the milestones reached by the organisation through its implementation of The Road Ahead: Strategy 2020–2022. There has also been a significant positive shift in the culture and morale within the membership. The most recent Annual Report issued to members and the public (Appendix D) highlights the successful journey the organisation has embarked on.

droughtmaster.com.au

MARKETING REPORT

THE 2022/23 MARKETING STRATEGY was strategically designed to support the Society’s overarching goals and objectives, and took into consideration insights from the 2021/22 marketing plan.

In line with the Society’s Strategic plan to attract new members, grow inventory, increase the Society’s geographical footprint and foster member engagement, key focus areas for the Marketing Strategy were identified:

• Increase brand awareness and enhance brand identity:

– Utilise curated case studies with claims substantiated by evidence to promote the commercial relevance of the breed.

Emphasise the breed’s unique traits through targeted media campaigns to increase the breed’s share of voice in the media.

– Highlight the benefits and advantages of the breed for both stud and commercial producers.

– Increase engagement through creative advertising campaigns utilising a variety of formats.

Hello hello

• Nurture meaningful relationships with corporate partners to develop mutually beneficial associations and broaden brand awareness. Build brand image and provide promotional opportunities to attract sponsorship.

• Ensure optimal utilisation of resources through a combination of diverse marketing activities for the best return on investment.

Additionally, notable marketing activities were carried out to commemorate the Society’s 60th year, including:

• Organisation and execution of the 60th Anniversary Gala Dinner and Conference held in Brisbane.

• Production of a hero video highlighting the Society’s 60-year history, incorporating archived footage and imagery.

• Creation of a special edition of the Droughtmaster Magazine dedicated to the 60th Anniversary.

• Commissioning renowned Australian poet, Rupert McCall OAM, to produce a special tribute to the Droughtmaster, breed and Society.

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– Deliver a consistent and well-aligned communication strategy throughout the entire supply chain.

Ali Bull Marketing & Events Executive

I need to have to Outback Mag by Monday, 22nd May.

Increase promotional opportunities through improved Droughtmaster marketing materials, in particular the Droughtmaster Magazine.

– Improve brand visibility and reputation through website optimisation.

• Expand geographical reach through targeted campaigns and events to extend the Society’s presence in specific regions.

• Enhance member engagement and attendee experience at sales and events. Cultivate a strong brand identity and foster a sense of community among members to drive new member enquiries.

I'm sure you weren't expecting an email from me again so soon, but just assisting the Droughtmaster team with a few things until their new team member starts. Hope you're well.

looking for an ad for the Outback Magazine - half page horizontal (see specs a ached). There are two image options (see Dropbox link below).

Please credit: Jack Poplawski, Whirlybird Photography Copy: Droughtmaster logo. Bred for Australian conditions. Suitable for all markets. droughtmaster.com.au

Jack Poplawski, Whirlybird Photography

DIRECTORS’ REPORT

Droughtmaster Stud Breeders’ Society Limited For the year ended 31 March 2023

The directors present their report on Droughtmaster Stud Breeders’ Society Limited for the financial year ended 31 March 2023.

1. General information Information on directors

The names of each person who has been a director during the year and to the date of this report are:

Names

Angus McCormack

Anna Hicks Powell

Bronwyn Betts

Ken McKenzie

Todd Heyman

Will Haviland Resigned 4 August 2022

Alex Power

Kellie Williams

Hastings Donaldson Appointed 4 August 2022

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Principal activities

The principal activity of Droughtmaster Stud Breeders’ Society Limited during the financial year was promotion and recording of Droughtmaster breed of cattle.

No significant changes in the nature of the Company’s activity occurred during the financial year.

Short term objectives

The Company’s short term objectives are:

• Promote, develop and protect the breed and the brand, identify activities that will further increase breed participation; and

• Enhance membership of the Breed Society by delivering more efficient services, benefits and value.

Long term objectives

The Company’s long term objectives are to:

• To be recognised nationally throughout the entire supply chain (paddock to plate) as a breed that was developed in Australia to suit the Australian environment for its resilience and exceptional meat quality.

Strategy for achieving the objectives

To achieve these objectives, the Company has adopted the following strategies:

• The traditional functions of the Droughtmaster Society will always remain core, however we must continue to be relevant and evolve to remain competitive in the beef industry

How principal activities assisted in achieving the objectives

The principal activities assisted the Company in achieving its objectives by:

• Promotion & marketing;

• Embrace technology;

• Retain & recruit members;

• Cultural reset & unity;

• Sponsors & corporate partners;

• Operational efficiency; and

• Financial management.

Performance measures

The following measures are used within the Company to monitor performance:

• Member retention & growth through improved communications, benefits and value;

• Brand awareness through improved marketing and promotion;

• Improved data capture and utilisation;

• Up weighting in Society activities, events and sponsored sales;

• Genetic improvement and breed excellence, protect breed integrity;

• Increased partnerships and sponsorships;

• Operational efficiency and financial management; and

• Advancement in technology.

Members’ guarantee

Droughtmaster Stud Breeders’ Society Limited is a company limited by guarantee. In the event of, and

for the purpose of winding up of the company, the amount capable of being called up from each member and any person or association who ceased to be a member in the year prior to the winding up, is limited to $20 for members that are corporations and $20 for all other members, subject to the provisions of the company’s constitution.

At 31 March 2023 the collective liability of members was $13,460 (2022: $12,740).

2. Other items

Future developments and results

Likely developments in the operations of the Company and the expected results of those operations in future financial years have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Company.

Meetings of directors

During the financial year, 9 meetings of directors (including committees of directors) were held. Attendances by each director during the year were as follows:

Auditor’s independence declaration

The lead auditor’s independence declaration in accordance with section 307C of the Corporations Act 2001 , for the year ended 31 March 2023 has been received and can be found on page 4 of the financial report.

Signed in accordance with a resolution of the Board of Directors:

Dated 20 June 2023

AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF INDEPENDENT AUDIT REPORT TO THE MEMBERS OF DROUGHTMASTER STUD BREEDERS’ SOCIETY LIMITED

I declare that, to the best of my knowledge and belief, during the year ended 31 March 2023, there have been:

(i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

(ii) no contraventions of any applicable code of professional conduct in relation to the audit.

INDEPENDENT

AUDIT SERVICES

Chartered Accountants

Jiahui (Jeremiah) Thum Director Brisbane, QLD

Dated this 20th day of June 2023

Angus McCormack, Director

Todd Heyman, Director

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Droughtmaster Stud Breeders’ Society Limited

For the year ended 31 March 2023

Other comprehensive income, net of income tax Items that will not be reclassified subsequently to profit or loss

Items that will be reclassified to profit or loss when specific conditions are met

STATEMENT OF FINANCIAL POSITION

Droughtmaster Stud Breeders’ Society Limited As at 31 March 2023

STATEMENT OF CHANGES IN EQUITY

Droughtmaster Stud Breeders’ Society Limited

For the year ended 31 March 2023

STATEMENT OF CASH FLOWS

Droughtmaster Stud Breeders’ Society Limited

For the year ended 31 March 2022

NOTES TO THE FINANCIAL STATEMENTS

Droughtmaster Stud Breeders’ Society Limited

For the year ended 31 March 2023

The financial report covers Droughtmaster Stud Breeders’ Society Limited as an individual entity. Droughtmaster Stud Breeders’ Society Limited is a not for profit Company limited by guarantee, incorporated and domiciled in Australia.

The functional and presentation currency of Droughtmaster Stud Breeders’ Society Limited is Australian dollars.

Comparatives are consistent with prior years, unless otherwise stated.

1 Basis of Preparation

The financial statements are general purpose financial statements that have been prepared in accordance with the Australian Accounting Standards – Simplified Disclosures and the Corporations Act 2001

The financial statements have been prepared on an accruals basis and are based on historical costs modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

Significant accounting policies adopted in the preparation of these financial statements are presented below and are consistent with prior reporting periods unless otherwise stated.

2 Summary of Significant Accounting Policies

(a) Revenue and other income Revenue from contracts with customers

The core principle of AASB 15 is that revenue is recognised on a basis that reflects the transfer of promised goods or services to customers at an amount that reflects the consideration the Company expects to receive in exchange for those goods or services.

Generally the timing of the payment for sale of goods and rendering of services corresponds closely to the timing of satisfaction of the performance obligations, however where there is a difference, it will result in the recognition of a receivable, contract asset or contract liability.

None of the revenue streams of the Company have any significant financing terms as there is less than 12 months between receipt of funds and satisfaction of performance obligations.

Specific revenue streams

The revenue recognition policies for the principal revenue streams of the Company are:

Female Inventory Fees

This is a charge for registering females and forms part of annual membership fees. Revenue is recognised at the beginning of the financial year.

DNA Testing Revenue

This is a charge for DNA testing done on cattle for members. Revenue is recognised when testing is performed.

Breed Promotion Fee

This is breed promotion levy charge and forms part of annual membership fees. Revenue is recognised at the beginning of the financial year.

Stud Membership

This forms part of annual membership fees. Revenue is recognised at the beginning of the financial year.

DN – Nomination Fees (National Bull Sale)

Nomination fees are charged in two parts for the National Bull Sale. Number nomination fees (1/2 full nomination fee) are charged out at close of number nominations and the remainder of the fee, Pedigree nomination fee, are charged out at the close of pedigree nominations.

BIN Research Project

This is sale of research livestock. Revenue is recognised when a livestock is sold.

Statement of financial position balances relating to revenue recognition

Contract assets and liabilities

Where the amounts billed to customers are based on the achievement of various milestones established in the contract, the amounts recognised as revenue in a given period do not necessarily coincide with the amounts billed to or certified by the customer.

When a performance obligation is satisfied by transferring a promised good or service to the customer before the customer pays consideration or the before payment is due, the Company presents the contract as a contract asset, unless the Company’s rights to that amount of consideration are unconditional, in which case the Company recognises a receivable.

When an amount of consideration is received from a customer prior to the entity transferring a good or service to the customer, the Company presents the contract as a contract liability.

Contract cost assets

The Company recognises assets relating to the costs of obtaining a contract and the costs incurred to fulfil a contract or set up / mobilisation costs that are directly related to the contract provided they will be recovered through performance of the contract.

Costs to obtain a contract

Costs to obtain a contract are only capitalised when they are directly related to a contract and it is probable that they will be recovered in the future. Costs incurred that would have been incurred regardless of whether the contract was won are expensed, unless those costs are explicitly chargeable to the customer in any case (whether or not the contract is won).

The capitalised costs are amortised on a straight line basis over the expected life of the contract.

Set up / mobilisation costs

Costs required to set up the contract, including mobilisation costs, are capitalised provided that it is probable that they will be recovered in the future and that they do not include expenses that would normally have been incurred by the Company if the contract had not been obtained. They are recognised as an expense on the basis of the proportion of actual output to estimated output under each contract. If the above conditions are not met, these costs are taken directly to profit or loss as incurred.

Costs to fulfil a contract

Where costs are incurred to fulfil a contract, they are accounted for under the relevant accounting standard (if appropriate), otherwise if the costs relate directly to a contract, the costs generate or enhance resources of the Company that will be used to satisfy performance obligations in the future and the costs are expected to be recovered then they are capitalised as contract costs assets and released to the profit or loss on a systematic basis consistent with the transfer to the customer of the goods or services to which the asset relates.

Provisions relating to contracts with customers

There are no provisions relating to contracts with customers identified during the year.

Financing component of contracts with customers

There are no significant financing component of contracts with customers identified during the year.

Other income

Other income is recognised on an accruals basis when the Company is entitled to it.

(b) Income Tax

The Company is exempt from income tax under Division 50 of the Income Tax Assessment Act 1997

(c) Goods and services tax (GST)

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

Receivables and payable are stated inclusive of GST. Cash flows in the statement of cash flows are included 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 is classified as operating cash flows.

(d) Inventories

Inventories are measured at the lower of cost and net realisable value.

Inventories acquired at no cost, or for nominal consideration are valued at the current replacement cost as at the date of acquisition, which is the deemed cost.

(e) Property, plant and equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment. Items of property, plant and equipment acquired for significantly less than fair value have been recorded at the acquisition date fair value.

Land and buildings

Land and buildings are measured using the cost model.

Plant and equipment

Plant and equipment are measured using the cost model.

Depreciation

Property, plant and equipment, excluding freehold land, is depreciated on a straight line and reducing balance basis over the asset’s useful life to the Company, commencing when the asset is ready for use.

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

At the end of each annual reporting period, the depreciation method, useful life and residual value of each asset is reviewed. Any revisions are accounted for prospectively as a change in estimate.

(f) Financial instruments

Financial instruments are recognised initially on the date that the Company becomes party to the contractual provisions of the instrument.

On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments measured at fair value through profit or loss where transaction costs are expensed as incurred).

Financial assets

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Classification

On initial recognition, the Company classifies its financial assets into the following categories, those measured at:

• amortised cost

Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets.

Amortised cost

The Company’s financial assets measured at amortised cost comprise trade and other receivables and cash and cash equivalents in the statement of financial position.

Subsequent to initial recognition, these assets are carried at amortised cost using the effective interest rate method less provision for impairment.

Interest income, foreign exchange gains or losses and impairment are recognised in profit or loss. Gain or loss on derecognition is recognised in profit or loss.

Impairment of financial assets

Impairment of financial assets is recognised on an expected credit loss (ECL) basis for the following assets:

• financial assets measured at amortised cost

When determining whether the credit risk of a financial assets has increased significant since initial recognition and when estimating ECL, the Company considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis based on the Company’s historical experience and informed credit assessment and including forward looking information.

The Company uses the presumption that an asset which is more than 30 days past due has seen a significant increase in credit risk.

The Company uses the presumption that a financial asset is in default when:

• the other party is unlikely to pay its credit obligations to the Company in full, without recourse to the Company to actions such as realising security (if any is held); or

• the financial assets is more than 90 days past due.

Credit losses are measured as the present value of the difference between the cash flows due to the Company in accordance with the contract and the cash flows expected to be received. This is applied using a probability weighted approach.

Trade receivables

Impairment of trade receivables have been determined using the simplified approach in AASB 9 which uses an estimation of lifetime expected credit losses. The Company has determined the probability of non

payment of the receivable and multiplied this by the amount of the expected loss arising from default. The amount of the impairment is recorded in a separate allowance account with the loss being recognised in finance expense. Once the receivable is determined to be uncollectable then the gross carrying amount is written off against the associated allowance.

Where the Company renegotiates the terms of trade receivables due from certain customers, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in profit or loss.

Other financial assets measured at amortised cost

Impairment of other financial assets measured at amortised cost are determined using the expected credit loss model in AASB 9. On initial recognition of the asset, an estimate of the expected credit losses for the next 12 months is recognised. Where the asset has experienced significant increase in credit risk then the lifetime losses are estimated and recognised.

Financial liabilities

The Company measures all financial liabilities initially at fair value less transaction costs, subsequently financial liabilities are measured at amortised cost using the effective interest rate method.

The financial liabilities of the Company comprise trade payables only.

(g) Impairment of non financial assets

At the end of each reporting period the Company determines whether there is evidence of an impairment indicator for non financial assets.

Where an indicator exists and regardless for indefinite life intangible assets and intangible assets not yet available for use, the recoverable amount of the asset is estimated.

Where assets do not operate independently of other assets, the recoverable amount of the relevant cash generating unit (CGU) is estimated.

The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash generating unit.

Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss.

Reversal indicators are considered in subsequent periods for all assets which have suffered an impairment loss.

(h) Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

(i) Employee benefits

Provision is made for the Company’s liability for employee benefits, those benefits that are expected to be wholly settled within one year have been measured at the amounts expected to be paid when the liability is settled.

Employee benefits expected to be settled more than one year after the end of the reporting period have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Cashflows are discounted using market yields on high quality corporate bond rates incorporating bonds rated AAA or AA by credit agencies, with terms to maturity that match the expected timing of cashflows. Changes in the measurement of the liability are recognised in profit or loss.

Defined contribution schemes

Obligations for contributions to defined contribution superannuation plans are recognised as an employee benefit expense in profit or loss in the periods in which services are provided by employees.

(j) Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Provisions are measured at the present value of management’s best estimate of the outflow required to settle the obligation at the end of the reporting period. The discount rate used is a pre tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the unwinding of the discount is taken to finance costs in the statement of profit or loss and other comprehensive income.

4 Revenue and Other Income

3 Critical Accounting Estimates and Judgments

The directors make estimates and judgements during the preparation of these financial statements regarding assumptions about current and future events affecting transactions and balances.

These estimates and judgements are based on the best information available at the time of preparing the financial statements, however as additional information is known then the actual results may differ from the estimates.

The significant estimates and judgements made have been described below.

Key estimates – impairment of property, plant and equipment

The Company assesses impairment at the end of each reporting period by evaluating conditions specific to the Company that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed using value in use calculations which incorporate various key assumptions.

There are no indicators of impairment during the year.

Key estimates – provisions

As described in the accounting policies, provisions are measured at management ís best estimate of the expenditure required to settle the obligation at the end of the reporting period. These estimates are made taking into account a range of possible outcomes and will vary as further information is obtained.

Key estimates – receivables

The receivables at reporting date have been reviewed to determine whether there is any objective evidence that any of the receivables are impaired. An impairment provision is included for any receivable where the entire balance is not considered collectible. The impairment provision is based on the best information at the reporting date.

5 Finance Income and Expenses

6 Result for the Year

7 Cash and Cash Equivalents

8 Trade and

The carrying value of trade receivables is considered a reasonable approximation of fair value due to the short term nature of the balances.

The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable in the financial statements.

10 Contract Balances

Contract assets and liabilities

The Company has recognised the following contract assets and liabilities from contracts with customers:

(i) Represents grant payments made for a specific purpose and unspent as well as members advanced payments received at year end.

(a) Movements in Carrying Amounts

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

ended 31 March 2023

12 Intangible Assets

13 Other non-financial assets

14 Trade and Other Payables

Trade and other payables are unsecured, non interest bearing and are normally settled within 30 days. The carrying value of trade and other payables is considered a reasonable approximation of fair value due to the short term nature of the balances.

Provision – Beef Aust Expo 2024

The Company incurred a significant amount for organising the Beef Aust Expo 2021. As a result, the Directors have decided to provide an estimate for Beef Aust Expo 2024. The estimate is based on the actual cost incurred for the 2021 event.

Provision – Single Step Genetic Improvement

This will include key genetics in the reference population so that a larger number of animals within the breed will be eligible to be analysed in Single Step Breedplan.

16 Employee Benefits

Financial Risk Management

18 Members’ Guarantee

The Company is incorporated under the Corporations Act 2001 and is a Company limited by guarantee. If the Company is wound up, the constitution states that each member is required to contribute a maximum of $20 each towards meeting any outstanding obligations of the Company. At 31 March 2023 the number of members was 673 (2022: 637).

19 Retrospective Restatement

(a) It is the accounting policy of the company to depreciate buildings at 2.5% on a straight line annually. On reviewing the asset register at year end we noted some buildings were not depreciated since the 2016 financial year.

The aggregate effect of the error on the annual financial statements for the year ended 31 March 2023 is as follows:

20 Key Management Personnel Disclosures

The remuneration paid to key management personnel of the Company is $251,024 (2022: $207,020).

22 Contingencies

In the opinion of the Directors, the Company did not have any contingencies at 31 March 2023 (31 March 2022: None).

23 Related Parties

(a) The Company’s main related parties are as follows:

Key management personnel refer to Note 20.

Other related parties include close family members of key management personnel and entities that are controlled or significantly influenced by those key management personnel or their close family members.

(b) Transactions with related parties

There are no transactions with related parties during the year.

(c) Loans to/from related parties

There are no loans to/ from related parties during the year.

24 Events after the end of the Reporting Period

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

25 Statutory Information

The registered office and principal place of business of the company is:

Droughtmaster Stud Breeders’ Society Limited

40 Thorn Street

IPSWICH QLD 4305

Droughtmaster

Stud Breeders’ Society Limited For the year ended 31 March 2023

Directors’ Declaration

The directors of the Company declare that:

1. The financial statements and notes, as set out on pages 14-29, are in accordance with the Corporations Act 2001 and:

a. comply with Australian Accounting Standards – Simplified Disclosure Standard; and

b. give a true and fair view of the financial position as at 31 March 2023 and of the performance for the year ended on that date of the Company.

2. In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

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

Angus McCormack, Director

Dated 20 June 2023

Todd Heyman, Director

INDEPENDENT AUDIT REPORT TO THE MEMBERS OF DROUGHTMASTER STUD BREEDERS’ SOCIETY LIMITED

Droughtmaster Stud Breeders’ Society Limited For the year ended 31 March 2023

Report on the Audit of the Financial Report

Opinion

We have audited the accompanying financial report, being a general purpose simplified disclosures financial report of Droughtmaster Stud Breeders’ Society Limited (the Company), which comprises the statement of financial position as at 31 March 2023, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

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

(i) giving a true and fair view of the Company’s financial position as at 31 March 2023 and of its financial performance for the year ended; and

(ii) complying with Australian Accounting Standards to the extent described in Note 1 and the Corporations Regulations 2001

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence

requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of the Company, would be in the same terms if given to the directors as at the time of this auditor’s report.

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

Responsibilities of Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view and have determined that the basis of preparation described in Note 1 to the financial report is appropriate to meet the requirements of the Corporations Act 2001 and is appropriate to meet the needs of the members.

The directors’ responsibility also includes such internal control as the directors determine necessary to enable the preparation of a financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

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

Auditor’s Responsibilities for the Audit of the Financial Report

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

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https:// www.auasb.gov.au/auditors_responsibilities/ar4.pdf. This description forms part of our auditor’s report.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

INDEPENDENT AUDIT SERVICES

Chartered Accountants

Jiahui (Jeremiah) Thum Director

Brisbane, QLD Dated this 20th day of June 2023

MARKET VERSATILITY. HIGH FERTILITY.

NATURAL ADAPTABILITY.

AUSTRALIA'S NATURAL WONDER

Stacey Ford Photography

DROUGHTMASTER STUD BREEDERS’ SOCIETY LIMITED

40 Thorn Street, Ipswich QLD 4305 07 3281 0056

office@droughtmaster.com.au

droughtmaster.com.au

ABN 19 010 129 683