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12 November 2015

The Manager Company Announcements Office ASX Limited 20 Bridge Street SYDNEY NSW 2000

GRAINCORP LIMITED: GNC

APPENDIX 4E AND ANNUAL REPORT

FINANCIAL YEAR ENDED 30 SEPTEMBER 2015

Please find attached the Appendix 4E and Annual Report relating to the financial year ended 30 September 2015.

Yours sincerely,

Gregory Greer Company Secretary

GrainCorp Limited

Level 28, 175 Liverpool Street Sydney NSW 2000 PO Box A268 Sydney South NSW 1235 T 02 9325 9100 F 02 9325 9180

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ABN 60 057 186 035

graincorp.com.au

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GRAINCORP LIMITED

APPENDIX 4E

FOR THE YEAR ENDED 30 SEPTEMBER 2015


RESULTS FOR ANNOUNCEMENT TO THE MARKET
	Up / Down	% Movement		2015 $ M
Revenue from ordinary activities	Down	0.2%	to	4,085.5
Profit before significant items from ordinary activities after tax attributable to owners of GrainCorp Limited	Down	52.9%	to	44.5
Significant items1from ordinary activities net of tax	Down	71.9%	to	(12.4)
Profit from ordinary activities after tax attributable to owners of GrainCorp Limited	Down	36.2%	to	32.1
Net profit for the period attributable to owners of GrainCorp Limited	Down	36.2%	to	32.1

Dividend Information	Amount per security		Franked amount per security at 30% tax
Interim dividend per share (paid 17 July 2015)	7.5 cents		7.5 cents
Final dividend per share	2.5 cents		2.5 cents
Record date for determining entitlements to the final dividend			1 December 2015
Payment date for final dividend			15 December 2015

Additional Information

Net Tangible Assets per share: $5.64 (2014: $5.48)

Additional Appendix 4E disclosure requirements can be found in the attached Annual Report.

This report is based on the consolidated financial statements and notes which have been reviewed by PricewaterhouseCoopers.

Further information regarding the company and its business activities can be obtained by visiting the company’s website at www.graincorp.com.au.

1 Significant items: GrainCorp defines significant items as not in the ordinary course of business, non-recurring and material in nature and amount. Significant items are shown in Note 8 of the Annual Report.

GrainCorp Limited

Level 28, 175 Liverpool Street Sydney NSW 2000 PO Box A268 Sydney South NSW 1235 T 02 9325 9100 F 02 9325 9180

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ABN 60 057 186 035

graincorp.com.au

Annual Report 2015

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GRAINCORP OVERVIEW

GrainCorp is a leading global food ingredients and agribusiness company with an integrated business model across three main grain activities: supply chain, origination and processing.

GrainCorp Overview

GrainCorp focuses its activities on three core grains (wheat, barley and canola) where we have a comparative advantage through grain origination, freight differentials and technical expertise.

GrainCorp has operations in Australia, New Zealand, Asia, North America, Europe and the United Kingdom. These markets collectively represent over 50 percent of the global export trade in wheat, barley and canola.

GrainCorp has four reporting segments:

GrainCorp Storage & Logistics
GrainCorp Marketing
GrainCorp Malt
GrainCorp Oils

GrainCorp also owns 60 percent of Allied Mills.

Our Mission and Vision

Our mission is to be an international leader in food ingredients and agribusiness, creating value by connecting consumers and producers.

Our vision is to grow as our customers’ preferred partner – driven by our passionate people and strategic assets around the world.

Our Integrated Supply Chain

Accumulation – Largest regional accumulation network.

Storage – Over 20mmt of country storage and handling capacity.

Marketing – Marketing to local and global markets.

Road & Rail – Full freight connectivity for rapid turnaround.

Ports – 7 bulk grain ports with 15mmt elevation capacity 14 bulk liquid terminals.

Processing – A key end producer of malt, oils and flour.

Our Values

Our values help define our organisational culture by providing a common understanding of how we do things at GrainCorp and how we should behave towards each other, our customers and other stakeholders.

Safety – We act consciously every day to keep ourselves and our teams safe.

Our People – We work together as part of a high performing team and deliver what we promise.

Customers – We build strong relationships and deliver value to customers.

Excellence – We consistently look for better ways to do things.

Sustainability – We understand the bigger picture and add value to the bottom line.

Our community – We support the communities in which we operate.

Integrity – We act with high integrity, energy and passion.

Our international operations

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Europe
Marketing
• Hamburg
• Saxon Agriculture
GrainCorp Malt Australia & New Zealand
North America • Bairds Malt• Schill Malz • Storage & Logistics• Ports
Marketing• Calgary • Scotgrain• Brewers Select • Marketing• GrainCorp Oils
GrainCorp Malt • Barrett Burston Malting
• Canada Malting Company • Allied Mills
• Great Western Malting
• Country Malt
• Brewcraft
Marketing office
Head office
Malt/Oils facilities
Storage & Logistics operations
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GRAINCORP LIMITED

Contents
Chairman’s Review	2
Managing Director & CEO’s Review	4
Board of Directors and Executives	6
Directors’ Report	9
Directors’ Report – Remuneration Report	23
Corporate Governance Statement	41
Auditor’s Independence Declaration	55
2015 Financial Report	56
Notes to the Financial Statements	62
Directors’ Declaration	122
Independent Auditor’s Report to the members of GrainCorp Limited 123
Shareholder Information	125
Corporate Directory	IBC

Annual General Meeting

18 December 2015, 10.00am Pullman Sydney Hyde Park Hotel 36 College Street Sydney NSW 2010 Interim Results Half year end – 31 March 2016 Results announcement – 11 May 2016

Full Year Results

Full year end – 30 September 2016

2015 ANNUAL REPORT

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We are pleased with the progress made this year on our strategic initiatives. Under the leadership of our new Managing Director and Chief Executive Officer Mark Palmquist, we delivered according to our plans and announced two additional expansions in our processing businesses. It was, however, a challenging year financially, highlighting the importance of the diversification strategy we are pursuing.

Financial performance

GrainCorp reported underlying earnings before interest, tax, depreciation and amortisation ('EBITDA') of $235 million and underlying net profit after tax ('NPAT') of $45 million. Our processing businesses contributed a significant proportion of our earnings while our grains businesses experienced some challenges.

Dividend in line with policy

The Board has declared a dividend of 2.5 cents per share for the period to 30 September 2015, taking the total dividend for the year to 10.0 cents per share. This represents a payout ratio of 51 percent for the year and, over a five-year period, the payout ratio is 61 percent, in line with our policy of paying 40 to 60 percent of NPAT through the cycle.

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Dividends
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We continue to play an important role in the Australian and international agriculture and food ingredients industries

Peter brings skills that will complement and further enhance the collective talent of the Board, particularly given his experience in international operations, supply chain management and stakeholder engagement.

Performance on corporate objectives

While the Company’s earnings were lower this year, we continued to make solid progress towards managing our earnings variability for the future, by investing in the growth of our processing businesses and progressing several initiatives. These included driving operational improvements across our global malt portfolio, optimising our oils processing footprint and expanding our network of bulk liquid terminals. We have maintained a strong focus on improving the capabilities of our grains businesses, through rationalising and revitalising our storage and handling network and increasing our capability to originate grain outside of eastern Australia.

We also announced that David Trebeck will retire from the Board. David has been an outstanding Director, completely devoted to guiding and overseeing the continued success of the company. We sincerely thank David for his tireless contribution to GrainCorp for over 13 years.

Our leading industry position & passionate people

GrainCorp continues to play an important role in the Australian and international agriculture and food ingredients industries. I am proud of how hard our team has worked in a challenging environment to maintain focus on delivery and manage risks. We have passionate and well engaged people at GrainCorp, which gives me continued confidence for the future of this Company.

I would like to note that earnings on a pershare basis remains below our expectations, as does return on equity. We are confident that we are investing in the right areas of the business to ensure that over the longer term, our performance on these metrics will improve.

Another challenging year ahead

I would also like to acknowledge the company’s executive team, led by Mark Palmquist in his first year as our Managing Director and Chief Executive Officer. To achieve our strategic objectives it is important that we plan thoroughly, set the right direction, and execute flawlessly. I am confident that we have the leadership team and people that can achieve this for GrainCorp.

We expect 2016 to be another year impacted by lower grain production. We face low carry-in and the recent hot and dry conditions in southern growing regions is likely to impact volumes. Nonetheless, we continue to have confidence in the earnings from our processing businesses, especially as we make further progress on our major development projects.

Board renewal update

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In 2014 we outlined a plan to refresh the Board and bring new skills and perspectives to our business. We recently announced the appointment of Peter Richards to the Board as a Non-executive Director.

Don C Taylor Chairman

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25 30 5
40
35
5
30
25
20
10
FY10 FY11 FY12 FY13 FY14 FY15
Ordinary DPS Special DPS
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Return on Equity

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14.4%
13.0%
2%
10.1%
5.4%
6.6%
2.5%
FY10 FY11 FY12 FY13 FY14 FY15
Annual ROE % Rolling 3yr avg ROE %
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Managing Variability

FY09 EBITDA

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13%
87%
Grains Allied
10% 14%
26%
50%
Grains Malt Oils Allied
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FY15 EBITDA

2015 ANNUAL REPORT

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When I joined GrainCorp the three characteristics that were immediately apparent were the business’ strong commitment to safety, its passionate people and its focus on customers. I’ve been pleased to see the continued development of these strengths as we pursue our strategic priorities of strengthening our supply chains, removing complexity within and across the business and delivering growth initiatives.

While it was a more challenging year financially, this is part of the cyclical nature of our industry. Looking through the cycle, we see strong underlying fundamentals and have substantially progressed the projects that will deliver less variable earnings in the future.

Safety performance

Safety continues to be a critically important indicator for our business. I am pleased to report a 46 percent reduction in the lost time injury frequency rate and 36 percent reduction in our all injury frequency rate. We have made substantial inroads toward improving our safety

culture by empowering our people to take responsibility for their safety each and every day. However, there were still injuries to 88 of our people this year. This is too many and we still have a long way to go to achieve our safety vision – “Zero Harm – Safe for Life”.

Financial performance

Our segment results highlight the significance of our diversification strategy, with the processing businesses contributing approximately 85 percent of this year's earnings.

Malt delivered an excellent result, with sales volumes of 1.25mmt and EBITDA of $140 million. The result was particularly pleasing given the poor quality barley crop in North America which the team dealt with extremely well.

Oils performed solidly, reporting EBITDA of $73 million. Volumes in the Foods division stabilised while crushing volumes were slightly higher this year. GrainCorp Liquid Terminals’ performance was steady.

Storage & Logistics started the year with low carry-in and faced another smaller crop. Nonetheless, the business reported EBITDA of $43 million, which was better than expected, due to improvements in cost management and a strong summer crop export program. The team should be congratulated on this performance.

Marketing delivered sales of 6.0mmt, slightly higher than last year, but an EBITDA loss of $2 million. The

adverse conditions included lower grain production in eastern Australia, resulting in intense competition to buy grain and larger crops in other regions, resulting in strong competition to supply grain to customers. This situation was exacerbated by lower fuel costs and ocean freight rates, which reduced Australia’s freight advantage to major export regions. While the difficult conditions persisted, our team maintained discipline and performed relatively well.

Executing on strategic plans

GrainCorp has a strong pipeline of organic growth opportunities. I’m delighted that we’ve progressed a number of strategic initiatives this year.

In Storage & Logistics we have progressed Project Regeneration, removing cost by rationalising the country network, reconfiguring our operating zones, introducing Export Direct and prioritising approximately $60 million of capital expenditure for 13 sites which are being built, upgraded or enhanced to revitalise the network and improve customer service.

GrainCorp Marketing has enhanced its origination capabilities with additional volumes sourced in Western Australia, South Australia, North America and Europe. While the volumes are incremental to our overall sales, it is important that we maintain our customer relevance by further enhancing this capability.

Our segment results highlight the significance of our diversification strategy

GrainCorp Oils achieved a number of significant milestones: enhancing the capabilities at the West Footscray refining facility, successful delivery of two bulk liquid terminals projects and progress of works at a third facility at Pinkenba in Brisbane. Responding to customer needs, we also announced a plan to invest approximately $50 million in expanding our crushing facility at Numurkah in Victoria.

Executive leadership

This year we also expanded our executive leadership team welcoming Andrew Baker as Chief Information Officer, Marcus Kennedy as Chief Development Officer and Phil Caris as Group General Manager Human Resources. I am pleased we have attracted such a high calibre group of executives who will complement and support the strong work of our existing Executive Team.

GrainCorp Malt is pursuing growth opportunities in craft beer in North America and other emerging regions. We were excited to announce in May a plan to invest approximately $95 million to increase production at our malt plant in Pocatello, Idaho, USA. The expansion is backed by support from a number of existing customers and continued demand for malt from the North American craft beer sector.

Sustainable performance

As a business tied so closely to the land and production cycles, sustainability has always been central to our business approach. We have published our second Sustainability Report and I am pleased with the incremental improvements we have made in a number of areas this year. Our long term objectives in sustainability go hand in hand with value creation for our shareholders, long term economic vitality for our customers and the positive outcomes this will have on our people, our communities and overall, our long term sustainability as an organisation.

Disciplined capital management

With approximately $325 million of projects announced and underway, it’s important that we maintain a disciplined approach to capital management. The majority of these investments are in our processing businesses which will generate less variable earnings. We also have some flexibility with regard to the timing of investment for a number of the opportunities.

I would like to thank the Executive Team and our people around the world for their hard work this year in serving our customers and delivering on our promises.

Lost Time Injury Frequency Rate (LTIFR)[1]

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11.9
10.7
7.0
3.8
FY12 FY13 FY14 FY15
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Lost Time Injury Frequency Rate (“LTIFR”) calculated as the number of Lost Time Injuries per million hours worked. Includes permanent and casual employees and GrainCorp controlled contractors.

Underlying EBITDA

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414
395
350
293
235
212
FY10 FY11 FY12 FY13 FY14 FY15
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Underlying NPAT

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205
172 175
95
80
45
FY10 FY11 FY12 FY13 FY14 FY15
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Mark Palmquist Managing Director & CEO

2015 ANNUAL REPORT 5

BOARD OF DIRECTORS

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DON C TAYLOR BCom, CA, GradCertRurSc, FAICD Chairman and Non-executive Director

Don Taylor joined the GrainCorp Board in October 2003 and has been Chairman since December 2005. Prior to joining the Board, he was the Executive Chairman of Grainco Australia Limited. Mr Taylor is a member of the Business Risk Committee and the People Remuneration and Nominations Committee, and attends all meetings of the Board Audit Committee and Safety Health and Environment Governance Committee. Mr Taylor is a Nonexecutive Director of Beston Global Foods Limited, GrainCorp’s appointed director on the Board of Five Star Flour Mills, member of the Agricultural Advisory Roundtable group to the Export Council of Australia, and has extensive experience as Chairman and Director on boards of public companies in the agriculture industry.

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DONALD G McGAUCHIE AO FAICD

Non-executive Director

Donald McGauchie re-joined the GrainCorp Board in December 2009 (having previously served during the period from October 2000 to July 2003). Mr McGauchie is a member of the People Remuneration and Nominations Committee and is a Director of James Hardie plc, Chairman of Nufarm Limited and Chairman of Australian Agricultural Company Limited. Mr McGauchie has farming interests and extensive experience acting as chairman and director on public company boards.

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MARK L PALMQUIST BBus Managing Director & Chief Executive Officer

Mark Palmquist joined the GrainCorp Board as Managing Director & CEO in October 2014. He was previously Executive Vice President and Chief Operating Officer, Ag Business, for CHS Inc., a leading global agribusiness, diversified in energy, grains and food. He has held a variety of leadership roles for a broad range of CHS agricultural inputs and marketing areas, retail businesses and grain-based food and food ingredients operations. Mr Palmquist was previously a Director of Rahr Malting, a leading US maltster. Mr Palmquist is a Director of Allied Mills Australia Pty Ltd.

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PETER I RICHARDS BCom

Non-executive Director

Peter Richards joined the GrainCorp Board in November 2015. Mr Richards was formerly the Managing Director of Norfolk Group Limited in 2013, and Managing Director and Chief Executive Officer of Dyno Nobel Limited from 2005 to 2008, having held various senior positions in the company since 1990. Prior to joining Dyno Nobel, Mr Richards worked for Wesfarmers Limited and BP Petroleum plc. Mr Richards has over 35 years business experience with global companies, having worked in operational and business development roles in Australia, the United Kingdom and the United States. Mr Richards is also a Non-executive Director of Cockatoo Coal Limited, Emeco Holdings Limited, Sedgman Limited and NSL Consolidated Limited.

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REBECCA P DEE-BRADBURY BBus, GAICD Non-executive Director

Rebecca Dee-Bradbury joined the GrainCorp Board in September 2014. Ms Dee-Bradbury is a member of the Board Audit Committee. She was previously Chief Executive Officer/ President Developed Markets Asia Pacific and ANZ for Mondel¯ez from 2010 to 2014. Ms DeeBradbury is also a Non-executive Director of TOWER Limited and BlueScope Steel Limited, an Honorary Fellow of the University of Melbourne, and was recently appointed as an inaugural member of the Business Advisory Board at Monash Business School. She brings to the Board significant experience in strategic brand marketing, business integration and transformation, customer relationship management and innovation.

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DAVID B TREBECK BScAgr(Hons), MEc, FAICD Non-executive Director

David Trebeck joined the GrainCorp Board in February 2002. Mr Trebeck is Chairman of the People Remuneration and Nominations Committee and is a member of the Safety Health Environment and Governance Committee. Mr Trebeck is Chairman of Australia's Oyster Coast Limited and the ACT Churchill Fellow Selection Committee and a member of the National Board of the Winston Churchill Memorial Trust. He has farming interests and is an ACT divisional councillor of the Australian Institute of Company Directors.

6 GRAINCORP LIMITED

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BARBARA J GIBSON BSc, MAICD, FTSE Non-executive Director

Barbara Gibson joined the GrainCorp Board in March 2011. Ms Gibson is Chairman of the Safety Health Environment and Governance Committee and is a member of the Business Risk Committee. Ms Gibson is an experienced executive having spent 20 years with Orica Limited. She is a fellow of the Australian Academy of Technological Sciences and Engineering and is a Director of Nuplex Industries Limited and Chairman of Warakirri Asset Management Pty Limited.

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PETER J HOUSDEN BCom, FCPA, FAICD Non-executive Director

Peter Housden joined the GrainCorp Board in October 2008. Mr Housden is Chairman of the Board Audit Committee and is Chairman of Royal Wolf Holdings Limited and a Director of Alliance Aviation Services Limited and Calibre Group Limited and Chairman of the Audit and Risk Committee for Sydney Trains (NSW Government). He has extensive experience acting on public company boards.

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DANIEL J MANGELSDORF BAgEc(Hons), FAICD Non-executive Director

Dan Mangelsdorf was elected as an independent Director of GrainCorp Limited in 2008, after having served as a major shareholder representative director from 2005. Mr Mangelsdorf is Chairman of the Business Risk Committee and a member of the Board Audit Committee. Mr Mangelsdorf owns and operates farming interests in NSW, and is an experienced company director with agricultural, supply chain, international trade and risk management expertise. He is also Chairman of Warakirri Agricultural Trust.

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SIMON L TREGONING BCom, FAICD

Non-executive Director

Simon Tregoning joined the GrainCorp Board in December 2008. Mr Tregoning is a member of the Board Audit Committee and the Safety Health Environment and Governance Committee. He is also a Director of Capilano Honey Limited. Mr Tregoning was previously Vice-President of Kimberly Clark Corporation, has extensive overseas senior executive experience and is an experienced company director.

2015 ANNUAL REPORT 7

EXECUTIVE LEADERSHIP TEAM

ANDREW BAKER

Chief Information Officer

Andrew Baker was appointed Chief Information Officer in July 2015. Mr Baker has experience across a variety of industries including resources, industrial and fast moving consumer products. He has held several IT leadership roles in Accenture, Mars Corporation and was previously the Chief Information Officer at BlueScope Steel.

BETTY IVANOFF

Group General Counsel

Betty Ivanoff joined GrainCorp in 2008, and is Group General Counsel and Joint Company Secretary, managing the company’s legal and compliance affairs. Ms Ivanoff’s portfolio includes various corporate services, namely Legal, Company Secretariat and Risk & Insurance. Prior to joining GrainCorp, Ms Ivanoff held internal corporate counsel positions with companies including CSR Limited, Walter Constructions and Sinclair Knight Merz. Ms Ivanoff is vice president of a number of GrainCorp’s North American companies and was previously a Director of Allied Mills.

NEIL JOHNS

Group General Manager GrainCorp Storage & Logistics

Neil Johns was appointed Group General Manager GrainCorp Storage & Logistics in November 2013. He has held a number of corporate and operating positions in the Company including General Manager Ports – Storage & Logistics, Chief Development Officer, Deputy Divisional Manager for Southern NSW, Grain Trading Manager and Customer Marketing Manager. He is a Non-executive Director of Grain Trade Australia and has previously served as a Non-executive Director of Allied Mills. Mr Johns is also a director of GrainCorp subsidiary companies.

ALISTAIR BELL

Group Chief Financial Officer

Alistair Bell was appointed Group CFO in November 2010. Mr Bell leads the international finance, treasury, investor relations and shares services. Prior to joining GrainCorp, Mr Bell held various CFO, COO and strategy positions with public, private equity and multinational companies spanning various industries. He is a Director of Allied Mills and Chairman of their Audit Committee, a Director of Alzheimer’s Australia NSW, and a member of its Investment Committee and Chairman of its Audit & Risk Committee. Mr Bell is also a director of GrainCorp subsidiary companies.

MARCUS KENNEDY

Chief Development Officer

Marcus Kennedy was appointed Chief Development Officer in August 2015. Mr Kennedy is responsible for corporate strategy development, implementation and governance. He joined GrainCorp in 2012 and was most recently the General Manager Strategy & Business Improvement for GrainCorp Oils. Mr Kennedy has held several senior commercial and strategy leadership roles across a variety of industries including financial services, insurance, resources and agriculture.

KLAUS PAMMINGER

Group General Manager GrainCorp Marketing

Klaus Pamminger was appointed Group General Manager GrainCorp Marketing in August 2012. Mr Pamminger joined GrainCorp in 2007 and was previously Trading Manager GrainCorp Marketing. Mr Pamminger is responsible for all domestic and international grain and oilseed marketing and trading activities. Before joining GrainCorp, he worked for a number of companies in Australia and the USA. Mr Pamminger is also a director of GrainCorp subsidiary companies.

PHIL CARIS

Group General Manager Human Resources

Phil Caris was appointed Group General Manager Human Resources in September 2015. Mr Caris leads GrainCorp's global people and culture strategy and is responsible for leadership, talent, engagement, employee relations, performance, reward and diversity & inclusion. Prior to joining GrainCorp, Mr Caris was Executive General Manager of Human Resources and Safety at Coates Hire and has held a number of other senior human resource leadership roles with companies including BHP, Coca-Cola and TNT both in Australia and overseas.

GREG FRIBERG

President and CEO GrainCorp Malt

Greg Friberg was appointed President and CEO GrainCorp Malt in July 2013. Mr Friberg joined United Malt Holdings (acquired by GrainCorp in 2009) in 1999 and has held a number of senior management and commercial roles across the Group. Mr Friberg has extensive experience across the grains and malting industries having previously worked for ConAgra Grain Company and Columbia Grain Inc.

SAM TAINSH

Group General Manager GrainCorp Oils

Sam Tainsh was appointed Group General Manager GrainCorp Oils in August 2012, and is responsible for the edible oils crushing, refining, food ingredients, feeds, liquid terminals and used oils businesses. Mr Tainsh joined GrainCorp in July 2001 and was previously Group General Manager GrainCorp Marketing. Before joining GrainCorp, he worked as a commodity trader at Louis Dreyfus Corporation in Australia and the USA. Mr Tainsh is also a director of GrainCorp subsidiary companies.

8 GRAINCORP LIMITED

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DIRECTORS’ REPORT
2015 ANNUAL REPORT 9
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GRAINCORP LIMITED

DIRECTORS’ REPORT

Directors’ Report

Introduction

The following people were Directors of GrainCorp during the financial year 2015 and up to the date of this report:

D C Taylor (Chairman)
M L Palmquist (Managing Director & CEO)
R P Dee-Bradbury
B J Gibson
P J Housden
D J Mangelsdorf
D G McGauchie AO
P I Richards (appointed 9 November 2015)
D B Trebeck
S L Tregoning

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. Details of the current members of the Board of Directors, including their experience, qualifications, special responsibilities and term of office are included on pages 6 to 7 of the Annual Report.

Details of Directors’ interests in shares and options of GrainCorp are set out in Section 6 of the Remuneration Report.

Group Company Secretary

Gregory Greer BCom, MPA, GIA(Cert)

Gregory Greer joined GrainCorp in 2004 and was appointed by the Board as Group Company Secretary on 23 June 2014. Mr Greer is responsible for the Group’s corporate governance, compliance, risk, insurance and company secretarial functions. Mr Greer has held a number of corporate positions in the Company, most recently as Group Risk & Insurance Manager.

Betty Ivanoff LLB, Grad Dip Leg Prac, Legal Practitioner Admitted NSW Supreme Court 1999; MAICD

Betty Ivanoff joined GrainCorp in 2008, and is Group General Counsel and Joint Company Secretary, managing the company’s legal and compliance affairs. Ms Ivanoff’s portfolio includes various corporate services, namely Legal, Company Secretariat, and Risk & Insurance. Prior to joining GrainCorp, Ms Ivanoff held internal corporate counsel positions with companies including CSR Limited, Walter Constructions and Sinclair Knight Merz. Ms Ivanoff is Vice President of a number of GrainCorp’s North American companies and was previously a Director of Allied Mills Australia.

10 GRAINCORP LIMITED

GRAINCORP LIMITED

DIRECTORS’ REPORT

Meetings of Directors

The following table sets out the number of meetings of GrainCorp’s Directors (including meetings of committees of Directors) held during the 12 months to 30 September 2015, and the number of meetings attended by each Director.

						People				Safety, Health,	Safety, Health,
Director		Board		Board Audit Committee		Remuneration Nominations	&	Business Risk Committee		Environment Governance	&
						Committee				Committee
	A		B	A	B	A	B	A	B	A	B
D C Taylor1	9		9	~	4#	5	52	4	4	~	4#
M L Palmquist	9		9	~	4#	~	5#	~	4#	~	4#
R P Dee-Bradbury3	9		9	4	3	~	~	~	~	~	~
B J Gibson	9		8	~	~	~	~	4	3	4	4
P J Housden	9		9	4	4	~	~	~	1#	~	~
D J Mangelsdorf	9		9	4	4	~	~	4	4	~	~
D G McGauchie	9		9	~	~	5	5	~	~	~	~
D B Trebeck	9		8	~	~	5	5	~	~	4	4
S L Tregoning	9		9	4	4	~	~	~	~	4	3

A Number held during period in office. B Number attended by members of the committee and other Directors.

~ Not a member of the relevant committee. # Attended by invitation.

1 Mr Don Taylor stepped down as a permanent member of the Safety, Health, Environment & Governance Committee following approval from the Board on 26 February 2015.

2 Mr Don Taylor was appointed to the People, Remuneration & Nominations Committee as a permanent member following approval from the Board on 26 February 2015.

3 Ms Rebecca Dee-Bradbury was appointed as a permanent member of the Board Audit Committee following approval from the Board on 26 February 2015.

2015 ANNUAL REPORT

GRAINCORP LIMITED

DIRECTORS’ REPORT

Operating and Financial Review

About GrainCorp

Our History

GrainCorp started in 1916 under the Grain Elevator Act and was administered as a branch, called the Government Grain Elevators (‘GGE’), of the New South Wales (‘NSW’) Government’s Department of Agriculture. The GGE led the development of Australia’s first bulk grain handling system with the construction of 200 country elevators linked by rail to shipping terminals at Sydney and Newcastle. By October 1989, the GGE had gone through a number of changes and was known as the Grain Handling Authority of NSW (‘GHA’). At this time the GHA was corporatised and became the NSW Grain Corporation. The NSW Grain Corporation was privatised in April 1992 and sold to the grain grower owned Prime Wheat Association that became GrainCorp. GrainCorp listed on the then Australian Stock Exchange (‘ASX’) in 1998.

GrainCorp has grown through acquisition and organic growth. GrainCorp acquired Victorian based Vicgrain in 2000, Allied Mills in a joint venture with Cargill Australia in 2002, Queensland based Grainco in 2003, an international portfolio of malt businesses from United Malt Holdings in 2009, Schill Malz in October 2011 and edible oils businesses Gardner Smith and Integro Foods in October 2012. In 1996, GrainCorp was the first Australian bulk handler to trade grain in the Australian domestic market, and in 2008 commenced exporting wheat to international markets following the removal of the export single wheat desk.

Overview

GrainCorp is Australia’s leading agribusiness with an integrated business model across three grain activities: supply chain, origination and processing. GrainCorp focuses its activities on the core grains of wheat, barley, canola and sorghum where the Company has comparative advantages through grain origination, freight differentials and technical expertise. GrainCorp has operations in Australasia, North America and Europe (including the United Kingdom), with these regions collectively representing over 50% of global export trade in wheat, barley and canola.

GrainCorp has four reporting segments:

Storage & Logistics
Marketing
Malt
Oils

In addition to the above reporting segments, GrainCorp owns 60% of Allied Mills.

Our Corporate Objectives

We aim to:

Manage earnings variability by participating in multiple grain chains and geographies.
Improve shareholder returns by creating and capturing value along the grain supply chain. Grow to realise opportunities and be competitive in the global grain market.

We have made significant achievements in meeting these corporate objectives through:

Dividends to shareholders representing 61% of earnings before significant items during the past 5 years, in line with our dividend policy of paying 40-60% of NPAT through the business cycle.
Delivering an average return on equity (‘ROE’) before significant items of 9.1% over the past 5 years since the commencement of the diversification strategy.
Reducing earnings volatility by growing earnings from business units with more stable earnings.
Organic and acquisitive growth, enabled by a strong and flexible balance sheet.
Creating two new processing businesses since 2009 – GrainCorp Malt and GrainCorp Oils.

Our Business Model

We operate a business model based on:

Our core grains – wheat, barley, canola and sorghum. We focus on the ‘drier climate’ grains where we have comparative advantages of grain origination, freight differentials and technical expertise.
Our integrated activities – supply chain, origination and processing. We create and capture value in our core grains along the grain chain, with insight into consumer requirements in these grains.
Our operating geographies – Australasia, North America and Europe. These regions collectively service over 50% of the global trade in our core grains; providing market insight, price risk management and multi-origin capability.

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Our Strategy

We operate in a global grain market that offers considerable growth prospects in the demand for grain and processed grains such as malt and edible oils.

Population growth and rising affluence over the next 40 years is projected to drive a 50% increase in global grain demand and 100% increase in the global trade in grains.

Our strategy is to apply our comparative advantages in the supply of grain, malt and edible oils to participate in this growth opportunity, serving customers in Australia and internationally.

Creating Value

We create and capture value for consumers, growers and shareholders from the following competitive advantages:

Strategic assets – our unique ‘end-to-end’ infrastructure network at all stages of the grain chain in our core grains.
Freight advantage – proximity to the world’s growth markets for grain in Asia, the Middle East and Africa.
Grain origination – access to grain with strong quality advantages to satisfy a diversified range of consumer products:
Wheat: dry, clean, mid to high protein, white with high flour extraction. Ideal for use in Asian noodles and Middle Eastern flat bread markets.
Barley: dry, clean with desirable characteristics. Ideal for use in Chinese malt and Middle Eastern feed markets.
Canola: desirable oil content.

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Group Financial Summary

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Key Results ($ M) 2011 2012 2013 2014 2015
Revenue 2,776.8 3,329.4 4,462.0 4,094.1 4,085.5
Underlying EBITDA [4] 349.6 413.9 395.4 293.3 235.4
Underlying EBIT [5] 271.1 322.7 276.6 166.8 99.1
Net profit after tax 171.6 204.9 140.9 50.3 32.1
Dividend (cents per share) [6] 55.0 65.0 45.0 20.0 10.0
Financial Position
Total assets $ M 2,635.2 2,840.3 3,170.3 3,333.2 3,673.7
Total equity $ M 1,372.7 1,540.5 1,758.6 1,744.5 1,821.8
Net assets per ordinary share [7] $ 6.92 7.32 7.69 7.62 7.97
Net debt to net debt and equity [8] % 19.4 17.5 24.8 29.8 29.0
Core debt to core debt and equity [9] % 0.6 1.0 18.9 21.5 23.4
Shareholder Returns
Basic earnings per ordinary share cents 86.2 102.6 61.9 22.0 14.0
Return on equity % 13.0 14.4 10.1 5.4 2.5
Dividend per ordinary share [6] cents 55.0 65.0 45.0 20.0 10.0
Dividend yield per ordinary share [10] % 7.6 7.3 3.6 2.3 1.1
Business Drivers (million metric tonnes)
Storage & Logistics
Grain carry-in 2.6 6.0 4.3 2.3 1.9
Country network grain receivals 14.9 12.2 10.4 8.0 7.4
Grain received at port ex-farm and from other bulk
2.3 3.0 2.2 1.7 1.4
handlers
Grain exports handled 8.1 10.6 8.3 4.4 3.5
Non-grain exports 1.5 1.8 1.9 1.9 2.5
Domestic outload 5.7 6.3 6.3 5.7 5.6
Grain carry-out 6.0 4.3 2.3 1.9 1.6
Grain throughput 24.1 28.5 23.8 15.7 14.6
Marketing
Total Marketing sales (including Pools) 5.5 6.9 6.1 6.2 6.0
GrainCorp international grain sales 2.7 4.4 4.1 3.9 3.6
Malt
Malt sales 1.1 1.3 1.3 1.3 1.3
Oils
Oils crushing & refining sales - - 0.6 0.5 0.6
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2014 2015
Segment Results ($ M) 2014 Underlying 2015 Underlying
Revenue EBITDA [4] Revenue EBITDA [4]
Storage & Logistics 443.8 71.8 390.1 42.5
Marketing 1,907.1 36.4 1,858.6 (2.0)
Malt 1,049.4 125.0 1,126.4 140.0
Oils 937.2 73.1 933.3 72.6
Allied Mills (60% share of NPAT) - 9.6 - 8.8
Corporate and eliminations (243.4) (22.6) (222.9) (26.5)
Total 4,094.1 293.3 4,085.5 235.4
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4 Underlying EBITDA is a non-IFRS measure representing earnings before interest, tax, depreciation and amortisation, excluding significant items.
5 Underlying EBIT is a non-IFRS measure representing earnings before interest and tax, excluding significant items.
6 All dividends were fully franked.
7 Excludes reset preference shares at nominal value.
8 Net debt is total debt less cash.
9 Core debt is net debt less commodity inventory.
10 Using closing price immediately prior to or on 30 September divided by dividends per year.

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Group Financial Analysis and Commentary

The Group recorded an underlying net profit after tax (‘NPAT’) of $44.5 million for the financial year compared to an underlying profit after tax of $94.5 million for the previous year. Underlying earnings before interest, tax, depreciation and amortisation (‘EBITDA’) decreased from $293.3 million for FY14 to $235.4 million in FY15.

Revenue from continuing operations decreased 0.2% to $4,085.5 million (2014: $4,094.1 million) due to lower commodity prices and harvest receivals.

Total country receivals during the year were 7.4 million metric tonnes (‘mmt’) (2014: 8.0 mmt) with 3.5 mmt exported (2014: 4.4 mmt). Grain in storage at the beginning of the year was 1.9 mmt; a decrease from 2.3 mmt in the previous year. Grain in storage at the end of the year was 1.6 mmt.

Malt sales volumes for the year were 1.3 mmt (2014: 1.3 mmt). Oils recorded crushing and refining sales volumes of 0.6 mmt (2014: 0.5 mmt).

Storage & Logistics

Business Unit Overview

GrainCorp has the largest grain storage & logistics network in eastern Australia, spanning regional storage facilities, rail/road and bulk grain ports.

From the farm gate to international export markets, GrainCorp’s ownership of key supply chain assets allow us to source, store, handle and transport grain efficiently and securely.

Our supply chain assets also allow us to closely manage the quality of grain in our system and provide high quality assurance to our customers.

Approximately 175 country receival sites with over 20 million tonnes of storage capacity.
7 port terminals with 15 million tonnes of elevation capacity.
More than 4 million tonnes of rail freight capacity.
Largest bulk exporter of eastern Australian grain.
Over 150 active grain buyers competing in our system.

FY15 Performance

Carry-in of 1.9 mmt (FY14: 2.3 mmt).
Grain throughput of 14.6 mmt, lower than prior year (FY14: 15.7 mmt).
Country receivals of 7.4 mmt (including 0.7 mmt summer crop) (FY14: 8.0 mmt).
Grain exports of 3.5 mmt (including containers) (FY14: 4.4 mmt).
Non-grain exports of 2.5 mmt (FY14: 1.9 mmt).

FY16 Outlook

Lower than average forecast grain production in eastern Australia and lower carry-in of 1.6 mmt will again put pressure on country grain receivals and export volumes.

Marketing

Business Unit Overview

GrainCorp Marketing has direct connections with producers and grain buyers, both local and international. Our origination and marketing teams on the ground across four continents partner with our customers to analyse the market, manage price risk and create value at every stage of the supply chain.

One of the biggest sellers of grain into the local Australian market.
Sell and deliver around 6 million tonnes annually to 30+ countries.

FY15 Performance

Earnings reflective of lower availability of grain and significant competition for grain in eastern Australia.
Strong competition from alternative supply origins and reduced freight advantage to major export regions making Australian grain less competitive.
Lower fuel costs and ocean freight rates, reducing Australia’s freight advantage to major export destinations and making Australian grain more expensive.
6.0 mmt sales delivered (2.4 mmt domestic, 3.6 mmt export and international).

FY16 Outlook

With below normal grain production volumes in eastern Australia, and higher production in other regions, the outlook for Marketing will remain challenging in the near term.

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Malt

Business Unit Overview

GrainCorp Malt offers deep grain expertise and tailored relationships with the advantage of a single point of contact worldwide.

GrainCorp Malt the world’s fourth largest commercial maltster with malting houses in Australia, Canada, USA, UK and Germany. GrainCorp Malt supplies malt to global brewers, craft brewers and distillers.

Global footprint offering security of supply.
Malting capacity of ~1.3 million tonnes per annum.
Single point of contact worldwide.

FY15 Performance

Earnings reflective of continued high capacity utilisation above 90%.
1.25 mmt of malt sales.
Continued incremental operational improvements from strategic initiatives being realised.
Favourable foreign exchange translation impact on earnings and improved export competitiveness for malt exports from Australia.
Final compensation receipt from Port of Vancouver received in March 2015.

FY16 Outlook

Continued strong capacity utilisation. Utilisation above industry averages is due to our reputation as a producer of quality malt and our penetration in the craft beer sector and distilling sectors, particularly in North America and Scotland respectively.

Oils

Business Unit Overview

GrainCorp Oils is a leading producer of edible oils in Australasia. Locally grown and processed, our oil is used or consumed in making a wide range of food and animal feed products.

GrainCorp Oils' ownership and management of key assets in the oilseed supply chain along with GrainCorp Oils’ size and quality assurance mean we are able to produce high quality products at competitive prices.

Operations including crushing, storage, refining, packaging, recycling and animal liquid feeds.
Australia's largest integrated edible oils business.
Operating 14 bulk liquid terminals in Australia, New Zealand and China.
Production of over 500,000 tonnes of animal feed in Australia and New Zealand.

FY15 Performance

High capacity utilisation for crushing with sales of 0.34 mmt.
Stabilisation of refining volumes with sales of 0.21 mmt, however volumes at lower margins.
Continued high capacity and utilisation for bulk liquid terminals.
Complementary contributions from commodity management businesses offset by low volumes for NZ Feeds.

FY16 Outlook

Continued high capacity utilisation expected for crushing facilities and bulk liquid terminals. Refining volumes to remain stable. Expected earnings uplift following completion of network optimisation and completion of bulk liquid terminal project. Domestic competition and demand for crushed and refined products will continue to influence performance.

Allied Mills

Business Overview

GrainCorp has a 60% joint venture interest in Allied Mills, Australia’s largest supplier of milled edible flour (for human consumption).

Allied Mills’ offering includes value-added products such as frozen, par-baked artisan bread and other frozen bakery products, pre mixes, batters and food coatings. Allied Mills has a network of seven flour mills and four mixing plants, four frozen product manufacturing facilities and a starch plant, supported by warehouse and distribution capabilities.

FY15 Performance

Tullamarine expansion of frozen bakery products completed.
Contributions from value add initiatives.

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FY16 Outlook

Earnings expected to continue to be supported by value add product initiatives and ranges such as frozen bakery products.

Sustainability

GrainCorp is committed to long-term sustainable value creation. Our long-term objectives in sustainability go hand in hand with value creation for our shareholders.

Safety

Safety is our core value and we are committed to achieving best practice safety standards. Initiatives undertaken this year were focused upon three key safety drivers:

Engagement – Employees working together for a common goal.
Empowerment – People owning their safety and the safety of their workmates.
Embedding – Building a robust learning culture where innovative ideas are shared across all teams, business units and geographies.

FY15 performance

46% reduction in lost time injury frequency rate (‘LTIFR’).
36% reduction in all injury frequency rate (‘AIFR’).
Implementation of monthly near miss reporting as a lead measure to drive accountability in each business unit.
Monthly significant risk and line leadership reviews used to identify and control significant safety and environmental risks across all business units. Progress tracked and communicated to business units and executive leadership teams.
Successful roll out of a staff training program in relation to the Safety, Health and Environment (SHE) Management System.
GrainCorp SHE leadership model introduced and leaders given an action to identify development areas for themselves and their teams.
Health & Wellbeing Plan 2015 and beyond was introduced offering a three-pillared framework aimed at ensuring an employee’s health and wellbeing. The pillars relate to maintaining fitness for work and prompt management of injuries.
Manual handling risk reduction program was devised and launched across the Storage & Logistics business.

People

GrainCorp acknowledges that the success of our business relies on our people. We recognise that in order to create the optimal working environment we need to continually develop our employees and keep them engaged to attract and retain talent and to maintain a rich and diverse workforce.

FY15 performance

Leadership development workshops launched in direct response to employee engagement survey outcomes.
Learning@GrainCorp development platform extended to include accessibility to video content for all employees.
Survey conducted across more than 300 members of the GrainCorp Leadership Group and their direct reports on how to continue to make GrainCorp a world class organisation.
Initiated the use of a talent pool as a “first stop” when seeking to fill roles.
Women occupied 26% of people leadership roles (from 20% in FY14).
Female representation at Board level remained at 25%.
Female representation at Executive level remained at 1.

Environment

We recognise that it is our responsibility to our employees, our investors, our business partners and the communities in which we operate to be conscientious in our environmental management practices. We seek to continually assess and manage immediate risks and take a long-term view with respect to our operations. Our four areas of focus are:

Energy – Our approach aims to continuously improve energy efficiency and reduce the carbon intensity of our operations.
Emissions – Our approach is to target our most energy intensive operations and seek energy efficiencies to reduce our emissions.
Water – Our approach is to limit the amount of water used in our processes while improving the quality of any water that we discharge. We aim to recycle and reuse water wherever possible.
Effluent and Waste – Minimising waste is fundamental to our sustainable operations. When using natural resources we apply the framework – avoid, reduce, reuse, recycle.

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FY15 performance

Total energy use of 5.3m GJ.
Energy use per tonne of 0.99 GJ.
Recycling rate of waste of 89% versus waste to landfill of 11%.
Total water usage per tonne of 1.23 KL[11] .
Trade Waste Discharge per tonne of 1.35 KL[11] .
Significant reductions in energy consumption, emissions, water use and waste have been achieved via the continuation of GrainCorp Malt’s Operational Excellence Program and the groupwide “World Environment Day Awards”. These awards resulted in the implementation of 53 initiatives across the business and provided the impetus for GrainCorp sites across the globe to review their greenhouse gas reduction strategies, water use and waste management processes.
Over the year GrainCorp Malt’s formal water management frameworks in Australia were reviewed and a project commenced to establish a baseline for water usage. The information will be used to develop a water management program that will optimise water management practices across GrainCorp Malt’s operations.
During the year we have focused on implementing systems to better capture waste and recycling data across the business. The implementation of waste minimisation plans at each site has been progressed and reporting on this is now part of each business unit’s monthly significant risk review.

Community

GrainCorp seeks to contribute positively to each of the communities it operates in around the world. One of the ways this is achieved is via financial support to community-minded initiatives through the GrainCorp Community Fund. Funding is allocated according to objectives that are centred upon sustainable investments. GrainCorp also supports employees who donate their time and resources to valuable causes and we actively seek to be involved with the initiatives of our customers. Having significant operations in rural geographies we recognise that engaging with stakeholders in these areas is important to ensuring we remain in touch with and relevant to local communities.

FY15 performance

Our employees support charities of their choice through volunteering and fundraising. Many of our employees volunteer in their local communities, either individually or as part of a team. Employee efforts are supported with paid leave for volunteering. Examples of GrainCorp’s support to local communities include:

Funding of community initiatives

GrainCorp Malt donated generously to the Watrous Playground Committee. The playground, in Watrous, Saskatchewan, is a wheelchair accessible playground which gives children with disabilities a place to play.
GrainCorp helped fund an additional portable classroom to accommodate the increasing demand for after school care at Diesterweg School – the local school near the GrainCorp Malt facility at Worms (outside Frankfurt). Many of the children who require after school care have parents who work at the plant.
GrainCorp held its second annual international Indigenous art auction with funds raised donated to participating schools to fund Indigenous programs.
GrainCorp Oilseeds are major sponsors of “Show us Ya Wheels” – a local committee in Numurkah dedicated to preserving rail history. Funds from GrainCorp helped restore the rail yard’s turntable which is displayed at the park around the corner from the Numurkah site.
GrainCorp donated new gloves and boxing equipment to the National Centre of Indigenous Excellence in Australia.

Employee involvement in community initiatives

Members from GrainCorp Malt’s Calgary team participated in the “Electro Dash 5k Dance Party”. Proceeds went to the WinSport Academy. The Academy is a community of professionals dedicated to athlete development and performance.
The GrainCorp Marketing operations team in Sydney spent a day at the Royal Far West School in Manly moving furniture, stripping back and painting outdoor furniture and filling up bean bags. The school works with over 1,500 students each year aged 3-18, all from country New South Wales and often from remote areas of the state.
GrainCorp employees in Hamburg make regular donations of clothes and other items to refugees, especially children.
The team from the Gladstone Port terminal held a working bee to help repair damage caused within the Jambin Community in Central Queensland by Cyclone Marcia. GrainCorp also donated to the Thangool State Primary School which was badly damaged in the cyclone.

11 Calculated as the average water use/trade waste (KL) per production/throughput tonne. Water sourced from municipal water supplies or other activities includes discharges after treatment into municipal sewers. Excludes Malt plants in Fletcher, South Holland and Champlain.

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Engaging stakeholders in local communities

The Storage & Logistics team in New South Wales conduct quarterly grower focus groups. These round table discussions focus on operational issues, projects, marketing and local site issues. The discussion provides a forum for receiving feedback from growers and the growers value this opportunity to connect and engage.
The Storage & Logistics area managers attended the “Approaching Ag” Fair at Charles Sturt University in Wagga Wagga which provides information to students on the careers available in Agriculture.
GrainCorp Oils teamed up with GrainCorp domestic marketing to showcase the best of GrainCorp at Beef Week Australia. Beef Week is held every three years and allows GrainCorp the opportunity to connect with key stakeholders in the Australian beef industry, from smaller farmers and major corporates to processors and live trade exporters.

Risk

There are various risks associated with owning shares in GrainCorp. Some of these risks are specific to GrainCorp and its business while others are risks of a more general nature that apply to any stock market investment.

The list of risks set out below is not exhaustive and does not take into account the personal circumstances of shareholders. Shareholders should seek professional advice if they are in any doubt about the risks associated with holding shares in GrainCorp.

Risks affecting GrainCorp’s business

Weather conditions - Weather conditions can cause variability in grain production, which may impact GrainCorp’s operating results in a number of ways, including variability in the volume of grain that GrainCorp stores, handles, transports, trades, exports and uses in its business, as well as by affecting the creditworthiness of agricultural producers who transact with GrainCorp.
Other external factors - GrainCorp’s business and financial performance are subject to external factors, including farmer sowing decisions, domestic and international government farm support programs and policies, demand for biofuels, commodity price volatility, the outbreak of plant disease or pest and the occurrence of and resistance of pests to pesticides used to protect grain in storage.
Regulation - GrainCorp’s business is regulated by a range of laws and regulations in countries where GrainCorp operates. GrainCorp may be subject to costs, investigations, penalties, liabilities, loss of reputation and other adverse effects as a result of failure to comply with these laws and regulations. Further, the introduction of new laws and regulations could materially adversely impact GrainCorp’s business and financial performance, for example by necessitating increased levels of expenditure on compliance, monitoring, controls, access regimes and arrangements and land use restrictions.
Transportation - GrainCorp’s operations rely on rail and road transportation to move grain from farms into country storage sites, and from these sites to port terminals and domestic consumers. A disruption or delay in rail transportation service provision, for instance as a result of temporary or permanent rail track closures, may adversely impact GrainCorp’s operations and operating results. GrainCorp also charters vessels in and to international jurisdictions to transport products to consumers. A disruption in international shipping activities, for instance ship diversion, port blockages or acts of piracy, may adversely impact GrainCorp.
Operational risks - GrainCorp’s business is subject to various operational risks, including claims and disputes in relation to grain or finished product inventory, machinery breakdown, supply issues, loss of long term agreements for supply or for premises, regulatory requirements, workplace disputes and impacts of environmental obligations.
Market demand - During times of reduced market demand for grain, GrainCorp may suspend or reduce operations and production at some of its facilities. The extent to which GrainCorp efficiently manages available capacity at its facilities will affect its profitability.
Commodity prices - GrainCorp’s business may be adversely affected by changes in the price of commodities, additional raw materials, the cost of energy and other utility costs caused by market fluctuations beyond GrainCorp’s control, which have in the past, and could in the future, adversely affect margins.
Hedging risk - GrainCorp engages in hedging transactions to manage risks associated with fluctuations in the price of commodities, transportation costs, energy and utility prices, interest rates and foreign currency exchange rates. However, GrainCorp’s hedging strategies may not be successful in minimising its exposure to these fluctuations. Further, it is possible that GrainCorp’s risk management policies may not successfully prevent GrainCorp’s traders from entering into unauthorised transactions that have the potential to alter or impair GrainCorp’s financial position.
Food and feed industry risks - GrainCorp is subject to food and stockfeed industry risks such as spoilage, contamination, fumigation or treatment applications which do not meet destination requirements, incorrect grade classification, tampering or other adulteration of products, product recalls, government regulation, destination or industry standards, shifting customer and consumer preferences and concerns and potential product liability claims. These matters could adversely affect GrainCorp’s business and operating results.

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Capital requirements - GrainCorp requires significant amounts of capital to operate its business and fund capital expenditure. If GrainCorp is unable to generate sufficient cash flows, or raise sufficient external financing on acceptable terms to fund these activities, GrainCorp may be forced to limit its operations and growth plans, which may adversely impact efficiency, productivity, competitiveness and financial results.
Debt obligations - GrainCorp’s debt obligations are subject to certain operating, financial and other covenants. If GrainCorp fails to meet these covenants, GrainCorp may be forced to repay those debt obligations on demand. GrainCorp may also not be able to put in place new debt facilities on acceptable terms by the time existing debt facilities expire.
Global and regional economic conditions - The level of demand for GrainCorp’s services and products is affected by global and regional demographic and macroeconomic factors, including population growth rates and changes in standards of living. A significant downturn in global economic growth, or recessionary conditions in major geographic regions, may lead to a change in consumer preferences impacting demand for grain and agricultural commodities, such as malt and flour, which could have a materially adverse effect on GrainCorp’s business and financial performance.
Customers and suppliers - The current weak global economic conditions and the tightening of credit markets have adversely affected, and may in the future continue to adversely affect, the financial viability of some of GrainCorp’s customers, suppliers and other counterparties, which in turn may negatively impact GrainCorp’s operations and financial performance.

General risks

Economic risks - General economic conditions, fluctuations in interest and inflation rates, commodity prices, currency exchange rates, energy costs, changes in governments, changes in fiscal, monetary and regulatory policies, the development of new technologies and other changes to general market conditions may have an adverse effect on GrainCorp, its future business activities and the value of GrainCorp shares.
Market conditions - Share market conditions may affect the value of shares regardless of GrainCorp’s financial or operating performance. Share market conditions can be unpredictable and are affected by many factors including changes in investor sentiment toward particular market sectors (in particular agriculture and food supply) and the domestic and international economic outlook.
Significant events - Significant events may occur in Australia or internationally that could impact the market for commodities relevant to GrainCorp, GrainCorp’s operations, the price of shares and the economy generally. These events include war, terrorism, civil disturbance, political actions and natural events such as earthquakes and floods.

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Additional Disclosures

Earnings per share (‘EPS’)

Basic EPS from continuing operations decreased 36.4% to 14.0 cents (2014: 22.0 cents).

Dividends

Since year end the Directors have approved the payment of a fully franked final dividend totalling $5.7 million. This represents the equivalent of a final dividend of 2.5 cents per share on issue at the record date of 1 December 2015. The dividends will be paid on 15 December 2015.

		Fully Franked	Total
Dividend	Date Paid	Dividend per	Dividend
		Share	($ M)
Final dividend for the year ended 30 September 2015	15 December 2015	2.5 cents	5.7

The following dividends on issued ordinary shares of GrainCorp have been paid since the end of the financial year 2014:

2014:
		Fully Franked	Total
Dividend	Date Paid	Dividend per	Dividend
		Share	($ M)
Final dividend for the year ended 30 September 2014	16 December 2014	5.0 cents	11.4
Interim dividend for the half year ended 31 March 2015	17 July 2015	7.5 cents	17.2

Significant changes in state of affairs during the financial year

GrainCorp Managing Director & CEO Appointment

On 1 October 2014, Mr Mark Palmquist commenced as Managing Director & CEO.

Matters subsequent to the end of the financial year

Mr Peter Richards was appointed as a Non-executive Director of the Company on 9 November 2015.

No other matters or circumstances have arisen since 30 September 2015 which has significantly affected or may significantly affect:

a) the Group's operations in future financial years; or
b) the results of those operations in future financial years; or
c) the Group’s state of affairs in future financial years.

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Insurance of officers

During the financial year, the Group has paid, or agreed to pay, premiums to insure persons who are, or have been, an officer of the Company or a related entity, or any past, present or future Director or officer of the Company, or any of its subsidiaries or related entities. The contracts prohibit disclosure of the amount of the premium paid. The liabilities insured include costs and expenses that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the Group.

Proceedings on behalf of the Company

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

Non-audit services

The Company may decide to employ the external auditor on assignments additional to its statutory audit duties where the auditor’s expertise and experience with the Company and/or the Group are important. Details of the amounts paid to the external auditor PwC for audit and non-audit services provided during the year are set out in note 7.

In accordance with the advice received from the Board Audit Committee (‘BAC’), the Board is 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 Directors are satisfied that the provision of non-audit services by the auditor did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons:

All non-audit services have been reviewed by the BAC to ensure they do not impact the integrity and objectivity of the auditor.
None of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics of Professional Accountants.

A copy of the external auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 55 and forms part of this report.

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REMUNERATION REPORT

Directors’ Report - Remuneration Report

Remuneration at a glance 24 2. Key Management Personnel (‘KMP’) 27 3. The link between remuneration and performance 28 4. Executive KMP remuneration framework and governance 33 5. Non-executive Director (‘NED’) fees framework 36 6. Mandatory disclosures in detail 37

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REMUNERATION REPORT

1. Remuneration at a glance

Overview of performance

This report outlines how GrainCorp’s performance for the 2015 financial year (‘FY15’) has determined the remuneration outcomes for its Key Management Personnel. It forms part of the Directors’ Report and has been audited in accordance with the Corporations Act 2001 . The report sets out remuneration information for the Company’s Non-executive Directors, Managing Director & Chief Executive Officer and senior executives (‘Executive KMP’).

These people are accountable for planning, directing and controlling the affairs of the Company and its controlled entities. Collectively, they are the KMP of the Company. The broader management group (who also participate in the various reward programs) are referred to as executives.

Detailed below is a summary of the remuneration outcomes during the year.

Total fixed remuneration (‘TFR’)

All eligible Executive KMP received a fixed pay increase of between 2.5 and 2.8 per cent, effective 1 December 2014.

Short term incentive (‘STI’)

The MD & CEO’s performance outcome was 64% of maximum performance, while other Executive KMP outcomes ranged from 40% to 84% of maximum performance. The range in STI outcomes delivered to Executive KMPs generally reflected strong financial performance against budget (specifically in the Storage & Logistics and Malt business units). Significantly improved outcomes against safety, health and environment measures also contributed to above target performance.

While external operating conditions remained challenging over the year, the Board believes that Executive KMP have performed well in these difficult circumstances. These outcomes are consistent with the Board’s philosophy that the plan should balance shareholder outcomes over the short term, with the need to recognise executive performance and contribution during a period of volatility and challenging budgets. The STI results appropriately reward our people for their significant achievements during FY15 and remain a mechanism for the motivation and retention of a stable Executive Team - critical for the achievement of GrainCorp’s strategy.

Long term incentive (‘LTI’)

During the year the People, Remuneration and Nominations Committee (‘PRNC’) undertook a review of the executive remuneration strategy. The outcome of this review has been the introduction of a minimum performance threshold (or ‘gate-opener’) for the Return on Equity (‘ROE’) performance hurdle. This change was in recognition that the LTI plan needs to provide greater alignment between executives and shareholders’ interests.

The PRNC reviewed the appropriateness of the ROE hurdle, specifically under a potential scenario where the ROE hurdle is met or exceeded (and full vesting achieved), while at the same time, GrainCorp fails to achieve an acceptable return on equity outcome for shareholders. To more closely align LTI outcomes with shareholder interests, the Board introduced a minimum performance threshold for the ROE performance hurdle. This means that vesting under the ROE hurdle will not occur unless the average of the ten year rolling period (prior to the end of the performance period for the LTI plan) is met or exceeded.

LTI awards relating to the 2013 financial year (‘FY13’) achieved a vesting of 25% based on three-year performance. GrainCorp did not meet the minimum performance threshold for the relative Total Shareholder Return (‘TSR’) performance hurdle, but achieved the minimum performance threshold under the Return on Equity (‘ROE’) performance hurdle

Total reward

The table below outlines the Executive KMP remuneration outcomes for FY15.

The information contained in this table is different from the statutory disclosures in Section 6 (which are based on the accounting standards), as it reflects only remuneration that was actually awarded or vested during the 12 month period, while the statutory disclosures also include the value of conditional awards that may or may not vest.

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The STI values represent the cash portion of awards earned in FY15 (but paid in December 2015) and the vested portion of deferred awards from FY13 and FY14. The LTI value represents the value of vested amounts from FY13 grant.

==> picture [498 x 188] intentionally omitted <==

----- Start of picture text -----

Deferred STI
Cash STI Other vesting in LTI vested
TFR [12] earned in FY15 Benefits FY15 in FY15 [13] Total
$’000 $’000 $’000 $’000 $’000 $’000
Executive Director
M L Palmquist 1,190 682 205 [14] - - 2,077
Executive KMP [15]
A G Bell 579 264 1 [16] 163 169 1,176
G A Friberg [17] 583 368 - 95 - 1,046
B Ivanoff 415 194 - 119 111 839
A N Johns 513 354 - 132 132 1,131
K Pamminger 487 162 - 347 - 996
S J Tainsh 521 255 - 243 153 1,172
Total 4,288 2,279 206 1,099 565 8,437
----- End of picture text -----

For more detail on performance and remuneration outcomes, please see Section 3 of this report.

Frequently asked questions

Frequently asked questions - remuneration

1	How do remuneration	A significant portion of on-target Executive KMP remuneration is ‘at-risk’, contingent on the
	outcomes reflect	achievement of measures related to overall Company performance and aligned to Company
	shareholder value?	strategy and shareholder interests.
		Specifically, financial incentive performance measures (ie NPAT in the STI and TSR and ROE
		in the LTI) provides a direct link between Executive KMP reward outcomes and the delivery
		of shareholder value over the short- and long-term.
2	How does GrainCorp	To ensure we appropriately account for this variability, the Board conducts regular reviews of
	address the challenges to	performance measures and targets (eg the one-year target setting approach for ROE). During
	target-setting in light of	the target-setting process, the Board sets challenging targets that reflect GrainCorp’s budgets
	variability in external /	to ensure the executives continue to drive Company performance, while cognisant of external
	environmental conditions?	conditions.
		GrainCorp also uses longer averaging periods to determine the number of rights granted (ie
		20-trading-day volume weighted average price (‘VWAP’) and in calculating TSR (ie a 12-month
		start and end averaging period) to mitigate against share price volatility (up or down), which
		may either advantage or disadvantage plan participants.
3	Why isn’t the actual	GrainCorp’s objective is to be as transparent as possible, without disclosing commercially
	financial STI target	sensitive information. Consequently, while the STI scorecard measures, description, weighting
	disclosed (eg NPAT	and performance in FY15 for Executive KMP have been provided, the specific targets for
	budget)?	measures such as NPAT have not. Please see Section 3 for further detail.
4	Why has a minimum	The Board believes that one of the objectives of the LTI is to align Executive KMP
	performance threshold	remuneration outcomes with shareholder value creation. Commencing with the FY15 grant,
	been introduced for the	the LTI will be subject to a minimum performance threshold based on the rolling ten-year
	ROE performance hurdle of	average ROE performance. This is to address the continued variability in GrainCorp’s year-
	the LTI?	on-year ROE and ensure a long term view of shareholder value creation.
5	Why does GrainCorp use a	GrainCorp is uniquely positioned in the Australian-listed environment in terms of its
	broad comparator group	operations and as for many Australian companies, there are limited Australian-listed
	for the relative TSR	comparators within the industry in which we operate in.
	measure in the LTI?	Consequently, the selected TSR comparator group represents GrainCorp’s competitors in
		terms of organisations of similar size and complexity.

12 Total fixed remuneration includes non-monetary benefits eg parking salary sacrifice and superannuation contributions.
13 Share value used in determining award value is $8.410 based on 5-trading-day VWAP at the time of vesting (17 November 2014).
14 This amount represents the gross value of benefits provided to Mr Palmquist as part of his relocation and ongoing residence in Australia. It includes the gross value of items such as airline flights, accommodation, health insurance and tax advice. This amount varies from the non-monetary benefits disclosed in Section 6 as the car parking benefit is included in the TFR column in this table.
15 Executive KMP as at 30 September 2015.
16 This amount represents the gross value of a flight provided to Mr Bell’s spouse. This amount varies from the non-monetary benefits disclosed in Section 6 as the car parking benefit is included in the TFR column in this table.
17 Converted from USD to AUD at rate of 0.786 (average rate from 1 October 2014 to 30 September 2015).

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Frequently asked questions - remuneration
6
Why is the LTI
performance period only
three years?
The Board’s view is that a three year performance period appropriately aligns with the
performance horizons in the strategic business plans and allows for the measurement of
sustained long-term performance. The current structure of the LTI plan has been effective
in achieving its dual objectives of Executive KMP retention and alignment with shareholder
interests.
7
Can the Company claw
back any incentive
awards?
Yes, STI or LTI awards can be clawed back if there is gross misconduct, material misstatement
or fraud.
8
Has the Company
considered the
introduction of a
mandatory shareholding
requirement for
executives?
While the Board has considered a mandatory shareholding requirement, it believes
shareholder and Executive KMP alignment is already achieved as a significant portion of
Executive KMP reward is delivered through equity (ie STI deferral and LTI awards). Shares
held by Key Management Personnel are outlined in Section 6 of this report.
9
Has the Company made
any changes to fees for
Non-executive Directors?
While Non-executive Director fees remained unchanged for FY15, the Board is proposing to
apply the following increases, effective 1 October 2015:

Non-executive Director base fees will increase from $114,000 to $117,500 per annum
(excluding superannuation);

The Chairman’s fee will remain unchanged at $330,000 per annum (including
superannuation);

Committee Chairman fees will increase as follows:
-
Chairman of the Board Audit Committee will increase from $27,100 to
$27,900 per annum (excluding superannuation; and
-
Chairman of the remaining Committees will increase from $20,000 to $20,600
per annum (excluding superannuation);

Committee member fees will increase from $10,900 to $11,250 per annum (excluding
superannuation); and

The aggregate feepool of$2,000,000 will remain unchanged.

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2. Key Management Personnel

This report details the remuneration of GrainCorp’s KMP for FY15. All incumbents were employed in their respective positions for the duration of the financial year, unless otherwise stated.

	Position title
Non-executive Directors
D C Taylor	Chairman
R P Dee-Bradbury	Non-executive Director
B J Gibson	Non-executive Director
P J Housden	Non-executive Director
D J Mangelsdorf	Non-executive Director
D G McGauchie	Non-executive Director
P I Richards	Non-executive Director (appointed 9 November 2015)
D B Trebeck	Non-executive Director
S L Tregoning	Non-executive Director
Executive Director
M L Palmquist	Managing Director and Chief Executive Officer (‘MD & CEO’)
Executive KMP
A G Bell	Group Chief Financial Officer (‘CFO’)
G A Friberg	President and CEO GrainCorp Malt
B Ivanoff	Group General Counsel
A N Johns	Group General Manager (‘GGM’) GrainCorp Storage & Logistics
K Pamminger	GGM GrainCorp Marketing
S J Tainsh	GGM GrainCorp Oils

This report incorporates the disclosure requirements of accounting standard AASB 124 Related Party Disclosures , as well as those prescribed by the Corporations Act 2001 . Details of equity holdings, loans and other transactions with respect to KMP are disclosed in Section 6 of this report.

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3. The link between remuneration and performance

Short-term incentives

FY15 STI opportunity

Executive KMP and other employees as determined by the Board are eligible to participate in the STI plan. Target STI is awarded for achieving on-target performance. Participants have the opportunity to earn up to a maximum capped amount for achieving stretch performance (ie significant out-performance against defined measures). Executive KMP STI opportunities are shown below.

	Target STI as a	Maximum STI
Role	% of TFR	as a % of TFR
MD & CEO	100%	150%
Functional Area Executive KMP	60%	120%
Operational Executive KMP	70%	140%
GGM Marketing	70%	167%

The STI opportunity for the GGM Marketing represents participation in an additional Marketing Incentive Plan (‘MIP’) that rewards for strong performance contributing to the Marketing business unit .

FY15 STI performance

Performance is assessed against a balanced scorecard of measures aligned to GrainCorp’s annual plan. Targets for each scorecard measure are determined prior to the start of the performance period. The table below outlines GrainCorp’s performance in FY15.

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Safety, health and
environment weighting (%)
Financial measures
weighting (%) and and performance. Agreed Non-financial weighting (%)
performance objectives include reduction and performance. Agreed
in Annual Injury Frequency objectives include talent
Rate (‘AIFR’) management, project
Name Business completion
Business
Group NPAT Unit Group SHE
Position Title Unit SHE
Financial
----- End of picture text -----

Name Position Title	Group NPAT	Business Unit Financial	Group SHE	Business Unit SHE	completion

M L Palmquist MD & CEO	60	-	10	-	30
A G Bell CFO	60	-	10	-	30
G A Friberg President and CEO GrainCorp Malt	20	40	5	5	30
B Ivanoff Group General Counsel	60	-	10	-	30
A N Johns GGM GrainCorp Storage & Logistics	20	40	-	10	30
K Pamminger GGM GrainCorp Marketing	20	40	5	-	35
S J Tainsh GGM GrainCorp Oils	20	40	-	10	30
Minimum performance threshold not met Minimum performance threshold met or exceeded Stretch/maximum performance achieved

Performance is assessed on a scale from 0% to 200%. With 100% representing target performance and 200% representing maximum performance. The table below details the performance outcome against target performance (at 100%) and maximum performance (at 200%).

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	Performance outcome as a % of	Performance outcome as a % of
	target	maximum
Executive Director
M L Palmquist	12718	64
Executive KMP
A G Bell	129	65
G A Friberg	161	81
B Ivanoff	132	66
A N Johns	168	84
K Pamminger	81	40
S J Tainsh	121	61

FY15 awarded STI outcomes

In what has been a demanding year for the company, STI payments to Executive KMPs ranged from ‘Below target’ to ‘Above target’. The table below outlines FY15 STI outcomes.

	Actual STI
	awarded as a	Actual STI	Amount paid	Amount	STI awarded	STI forfeited
	% of target	awarded	in cash	deferred	as a % of	as a % of
	STI	($’000s)	($’000s)	($’000s)19	maximum STI	maximum STI
Executive Director
M L Palmquist	114	1,363	682	681	76	24
Executive KMP
A G Bell	129	449	264	185	65	35
G A Friberg20	161	627	368	259	81	19
B Ivanoff	132	329	194	135	66	34
A N Johns	168	602	354	248	84	16
K Pamminger	81	276	162	114	34	66
S J Tainsh	121	434	255	179	61	39

Deferral of awarded STI

For STI awards earned in FY15, 50% of the awarded STI for the MD & CEO is deferred into cash, while 41.2% of awarded STI for other Executive KMP is deferred into rights. For awards made in FY16 and going forward, any deferred STI will be into performance rights, with the exception of the MD & CEO.

Deferred awards for the MD & CEO vest after 12 months. Deferred awards for other Executive KMP vest 50% after 12 months, and 50% after 24 months. There are no other performance conditions on the deferred portion of awards beyond continued employment by GrainCorp.

18 The maximum STI for the MD & CEO is 150% of TFR. This means that a performance outcome of 127 equates to an STI payment of 114% of TFR.

19 The STI deferred amount represents the portion earned in FY15 that is to be deferred into rights for all Executive KMP, with the exception of the MD & CEO who has his STI deferred into cash. The amounts presented differ from the statutory disclosures that are prepared in accordance with the accounting standards in Section 6 of this report.

20 Converted from USD to AUD at rate of 0.786 (average rate from 1 October 2014 to 30 September 2015).

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Long-term incentives granted in FY15

FY15 LTI opportunity

Executive KMP are eligible to participate in the LTI award.

The Board determines LTI opportunities based on a percentage of TFR. Current LTI opportunities are outlined in the table below. LTI opportunities represent the maximum incentive opportunity under the award.

Eligible participants are granted rights to GrainCorp shares for nil consideration. Rights vest subject to the achievement of the specified performance measures and do not carry any voting or dividend rights.

LTI opportunities are converted to a number of rights that are granted using a face value approach, ie based on the 20-trading-day VWAP for GrainCorp shares following the release of the Company’s annual financial results. Using a 20 trading-day VWAP helps mitigate against share-price volatility at the time of grant.

	LTI opportunity
Role	as a % of TFR
MD & CEO	100%
Group CFO	40%
President and CEO GrainCorp Malt	40%
Group General Counsel	40%
GGM GrainCorp Storage & Logistics	40%
GGM GrainCorp Marketing	42%
GGM GrainCorp Oils	42%

LTI performance measures for the FY15 grant

FY15 awards are subject to two separate tranches, each with one performance hurdle and an ongoing service condition: ROE (50% of the award) and relative TSR (50% of the award), both measured over a three-year performance period.

ROE

ROE focuses Executives on generating earnings that efficiently use shareholder capital and the reinvestment of earnings. ROE is defined as underlying NPAT divided by average shareholders’ equity, as determined by the Board from the Company’s financial results.

Due to the volatility in production conditions and seasonal variability, GrainCorp’s Board sets a one-year ROE target range as part of the budgeting process each year. The three-year ROE hurdle is the average of the three annual targets set by the Board. Annual ROE targets are set in November each year and disclosed following the end of the performance period.

One-year targets allow the Company to account for the variability in the agribusiness industry and for near-term capital management objectives. The following factors are considered by the Board in the target-setting process:

Expected earnings for each business area, overlaid with estimated production and market conditions for the forthcoming year (ie harvest volumes, receivals, export demand, malt contract sales, local and government trading environments and industry and climactic conditions);
External analysts’ views of GrainCorp’s performance;
External market forecasts (eg from the Australian Bureau of Agricultural Resource Economics and Sciences and Australian Crop Forecasters);
Capital investment strategy for the forthcoming year; and
Historical ROE performance.

The proportion of Rights that may vest based on ROE performance will be determined by the Board, based on the following vesting schedule.

Three-year average ROE performance	Percentage of ROE-tested rights to vest
Below minimum of target range	Nil
At minimum of target range	50%
Within target range	Straight line between 50% and 100%
At maximum of target range and above	100%

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To further align Executive KMP remuneration outcomes with shareholder value creation, the Board determined that from FY15, LTI ROE performance conditions would be subject to a minimum performance threshold, based on the rolling ten-year average ROE performance. This is to address the continued variability in GrainCorp’s year-on-year ROE and ensure a long term view of shareholder value creation.

While the Board will continue to set challenging annual ROE targets, the ROE portion of LTI awards will not vest if GrainCorp’s three-year average ROE performance is below the rolling ten-year average ROE as at the time of measurement (ie the end of the relevant performance period).

Relative TSR

Relative TSR focuses Executive KMP on shareholder value creation as it measures the percentage change in a Company’s share price, plus the value of dividends received during the period.

GrainCorp’s TSR is measured relative to a peer group of 100 ASX-listed companies (ie 50 companies above and 50 companies below GrainCorp’s market capitalisation ranking). The peer group is defined at the start of the performance period. As GrainCorp is uniquely positioned in the Australian-listed environment (in terms of operations), the selected comparator group represents GrainCorp’s competitors in terms of organisations of similar size and complexity.

For the FY15 LTI grant only, rather than applying a 12 month opening/base line reporting period for calculating relative TSR, a 10 month opening/base line reporting period will be applied. This means that, rather than applying a 12 month period from 1 October 2013 to 30 September 2014, a ten month period from 2 December 2013 (being the date of rejection of the ADM bid by the Federal Treasurer) to 30 September 2014 will be adopted. The rationale for this change is to help remove the share price volatility associated with ADM bid and is consistent with the relative TSR measurement approach taken for the FY14 LTI grant.

The proportion of Rights that may vest based on TSR performance is determined by the Board, based on the following vesting schedule.

Relative TSR (percentile ranking)	Percentage of TSR-tested rights to vest
At or below the 50th percentile	Nil
Above the 50th and below the 75th percentile	Straight line between 50% and 100%
At or above the 75th percentile	100%

Long-term incentives vesting in FY15

Key details of the FY13 LTI grant and vesting outcomes

The table below summarises the Company performance that determined vesting levels for the 2013 LTI plan.

As discussed in the FY13 Remuneration Report the Board adjusted its approach to executive remuneration due to the extended ADM takeover bid in FY12 and FY13. In response to the challenges of granting new equity awards, the Board determined that deferred cash awards were in the best interests of shareholders, while continuing to motivate and reward Executive KMP performance. Deferred cash awards replaced grants of rights for the 2013 LTI plan, granted on 21 December 2012. The Board reverted subsequent LTI plans back to an equity-based LTI following the 2014 AGM.

Performance against the relative TSR and ROE performance hurdles are outlined in the tables below.

	TSRpercentile ranking	TSRpercentile ranking	Amount to vest
	Below the 50thpercentile		0%

		Minimum of ROE	Maximum of ROE	GrainCorp ROE
Financialyear		target range	target range	performance	Amount to vest
2013		9.6%	10.6%	10.1%	-
2014		6.0%	6.6%	5.4%	-
2015		2.4%	2.6%	2.5%	-
3 year	average	6.0%	6.6%	6.0%	50% of ROE-tested rights to vest

The 2013 LTI plan vested at 25% this year, based on at target ROE and below target TSR performance for the three-year performance period. The MD & CEO commenced employment with GrainCorp on 1 October 2014 and consequently did not participate in the 2013 LTI plan.

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Historical ROE performance

The graph below outlines GrainCorp’s annual ROE performance over the prior ten years. The variability in ROE performance is characteristic of the industry in which we operate, where performance is subject to the weather, grain production volumes, commodity prices, global economic conditions and exchange rates.

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16%
14%
12%
10%
8%
6%
4%
2%
0%
FY11 FY12 FY13 FY14 FY15
Annual ROE performance 10 year rolling average ROE performance
----- End of picture text -----

Five year financial performance

GrainCorp’s performance on key metrics of sustainable value creation for the past five financial years is summarised below.

		2015	2014	2013	2012	2011
Underlying NPAT	$M	45	95	175	205	172
Statutory NPAT	$M	32	50	141	205	172
Basic EPS	cents	14.0	22.0	61.9	102.6	86.2
Total dividends per Share	cents	10	20	45	65	55
Closing Share price	$	9.05	8.55	12.35	8.9621	7.20

21 Share price for Monday 1 October 2012.

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4. Executive KMP remuneration framework and governance

Executive KMP remuneration framework

Remuneration benchmarking

GrainCorp aims to provide competitive remuneration opportunities measured against comparable companies. GrainCorp benchmarks roles against ASX-listed companies of similar size and complexity, using external market benchmarks conducted by independent remuneration advisors. Comparators are within 50% to 200% of GrainCorp’s market capitalisation for Functional Area Executive KMP roles, and within 50% to 200% of revenue accountability for Operational Executive KMP roles.

Market positioning policy

GrainCorp’s target positioning for fixed remuneration is market median, with total remuneration opportunity up to the 75[th] percentile for the achievement of stretch STI and LTI targets.

Summary of the Executive KMP remuneration framework

GrainCorp’s remuneration strategy rewards Executive KMP for the delivery of its business strategy. The diagram below provides an overview of this approach.

==> picture [502 x 138] intentionally omitted <==

On-target Executive KMP remuneration opportunities and mix

A significant portion of executive remuneration is ‘at-risk’ to ensure alignment with the Company’s strategic objectives. Executives are only rewarded for delivering performance aligned to GrainCorp’s short-term and longterm strategy. The table below outlines on-target Executive KMP remuneration opportunities.

			LTI grant value
			(face value at	Total target
Role	TFR	Target STI	maximum)	remuneration
MD & CEO	33%	33%	33%	100%
Group CFO	50%	30%	20%	100%
President and CEO GrainCorp Malt	48%	33%	19%	100%
Group General Counsel	50%	30%	20%	100%
GGM GrainCorp Storage & Logistics	48%	33%	19%	100%
GGM GrainCorp Marketing	47%	33%	20%	100%
GGM GrainCorp Oils	47%	33%	20%	100%

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Executive KMP target remuneration mix is summarised in the graph below. Remuneration mix is presented as a portion of total target remuneration and comprises TFR, target STI opportunity and LTI grant value (ie maximum LTI opportunity).

==> picture [497 x 124] intentionally omitted <==

----- Start of picture text -----

MD & CEO 33% 33% 33%
Other Executive KMP 47% ‐ 50% 30% ‐ 33% 19% ‐ 20%
TFR Target STI LTI grant value (face value at maximum)
----- End of picture text -----

Executive remuneration governance

Role of the People Remuneration and Nominations Committee

The PRNC assists the Board to ensure GrainCorp’s remuneration approach aligns with the business strategy and the interests of our shareholders. The PRNC reviews proposals made by management and makes recommendations to the Board on individual remuneration arrangements, target-setting, performance assessment of incentive plans, succession planning for the MD & CEO, and NED fee arrangements. Detailed information on the PRNC’s role, responsibilities and membership can be found in the PRNC Charter (see www.graincorp.com.au) and under Principle 2 of the Corporate Governance Statement.

Mr Taylor, in his role as Executive Chairman, also sits on the PRNC. Mr Taylor did not participate in any executive incentive plans and was not present during discussions in relation to his own remuneration.

Support from management and external advisors

To ensure the Board’s decisions are fully informed, the PRNC receives advice from management and the Company’s external remuneration advisor, Ernst & Young (EY).

EY’s engagement terms include protocols to maintain its independence. Throughout the year, the PRNC and the Board received external advice in relation to market practice of Director and Executive KMP remuneration and incentive plans, a review of the Executive KMP remuneration strategy and other general remuneration advice.

None of the advice provided during the year by EY included a remuneration recommendation (as defined in the Corporations Amendment (Improving Accountability on Directors and Executive Remuneration) Act 2011).

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Incentive plan governance

The STI is an annual ‘at-risk’ incentive award linked to the achievement of specific financial and non-financial Company, business-unit and individual targets. The LTI is complementary to the STI as it provides a performancebased ‘at-risk’ remuneration element over a longer time horizon. A summary of the key governance elements of both plans are provided below.

	STI		LTI
Performance		KPIs and STI outcomes for the MD & CEO are		The LTI is typically granted (or awarded)
measures /		approved by the Board. KPIs and STI outcomes		around November of each year and vests
assessment		for Executive KMP are approved by the MD &		(depending on performance against the
		CEO.		performance measures) on 30 September at
				the end of the three year performance period.
				The appropriateness of the relative TSR and
				ROE measures are reviewed annually by the
				PRNC to ensure alignment to GrainCorp’s
				business strategy and shareholder value
				creation.
Clawback		The Board in its discretion may determine that		The Board in its discretion may determine that
		some, or all, of an employee’s STI deferral is		some, or all, of an employee’s LTI award is
		forfeited for gross misconduct, material		forfeited for gross misconduct, material
		misstatement or fraud.		misstatement or fraud.
Cessation of		Subject to Board discretion the deferred		Subject to Board discretion:
employment		component may:		 Rights are forfeited for resignation and
		 Be forfeited for resignation or termination		termination for cause; and
		for cause; and		 Rights are pro-rated for the portion of the
		 Be paid in full at their normal payment		performance period served and vest at
		date for cessation of employment due to		the normal vesting date for cessation of
		redundancy, disability, death or		employment due to redundancy,
		retirement.		disability, death or retirement.
Change of		The deferred component will be paid in full on		Rights vest in full on change of control, unless
control		change of control, unless the Board determines		the Board determines otherwise. Rights that
		otherwise.		do not vest on change of control will lapse.

Hedging of unvested equity awards

Executives cannot sell, transfer or otherwise deal with their rights (eg by using them as security for a loan). Executives may sell, transfer or deal with any shares received on vesting of their Rights subject to compliance with GrainCorp’s Share Trading Policy.

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Summary of employment terms

Employment terms

GrainCorp’s Executive KMP are employed by GrainCorp Operations Limited under common law contracts with no fixed term. Contracts may be terminated at any time, provided that the notice period is given. The table below outlines a summary of key employment terms for Executive KMP.

	MD & CEO	Other Executive KMP
Notice period	Six months	Three to six months
Termination entitlements	Six months’ severance	Not in excess of 52 weeks base salary

As noted in the FY14 Remuneration Report, the MD & CEO is entitled to receive a deferred sign-on payment of up to $7,200,000 payable on the third anniversary of commencement. The deferred sign-on payment may be forfeited in the event of summary termination, underperformance, unethical or unprofessional business behaviour; or where employment has been terminated and the MD & CEO has subsequently been found to have acted contrary to the interests of GrainCorp.

The maximum amount will be reduced by the quantum of TFR paid, STI at target and gross value of LTI as these amounts are awarded, and the Board has discretion over the payment of any residual deferred sign-on element. Section 6 details the amounts paid to the MD & CEO during the FY15 period.

5. Non-executive Director (NED) fees framework

The PRNC regularly reviews NED fee arrangements to ensure fees remain competitive. This includes periodical benchmarking against companies of similar size and complexity to GrainCorp.

NED fees are paid from an aggregate annual fee pool of $2,000,000 (including superannuation contributions), as approved by shareholders at the 2014 AGM.

NED fees comprise a base fee plus a fee for participation in Board Committees (ie Committee Chairs and members). NEDs do not participate in any performance-related incentive awards.

The Board Chair receives a higher fee to reflect the additional time commitment and responsibilities required of the role and does not receive any additional fees for participation in Board Committees.

The fee policy for the year ended 30 September 2015 is outlined below. With the exception of the Board Chair, compulsory superannuation contributions are paid in addition to fees set out below.

Board fees		FY15 fees ($)
Board
Non-executive Chair		330,000
NEDs		114,000
Board Committees
	Chair	27,100
Board Audit Committee
	Member	10,900
People, Remuneration and Nominations	Chair	20,000
Committee	Member	10,900
	Chair	20,000
Business Risk Committee
	Member	10,900
Safety, Health, Environment & Governance	Chair	20,000
Committee	Member	10,900

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REMUNERATION REPORT

6. Mandatory disclosures in detail

Statutory remuneration disclosures Remuneration for Executive KMP for FY15 and FY14 is shown in the tables below.

	Year	Short-term benefits	Short-term benefits
Executive Director
M L Palmquist 2015 2014		1,189 206 682 - -	341 84 20 2,522
		- - - - -	- - - -
Executive KMP
A G Bell G A Friberg B Ivanoff A N Johns K Pamminger S J Tainsh	2015	555 6 264 19 -	160 63 10 1,077
	2014	541 5 196 18 -	150 62 10 982
	2015	554 21 36824 8 -	195 38 - 1,184
	2014	462 20 58425 6 -	117 24 - 1,213
	2015	386 - 194 29 -	130 45 7 791
	2014	376 - 180 28 -	124 42 7 757
	2015	484 - 354 29 -	177 54 22 1,120
	2014	422 15 165 25 -	116 46 19 808
	2015	457 - 162 30 -	240 55 8 952
	2014	440 - 181 27 -	347 11 8 1,014
	2015	485 5 255 31 -	171 59 9 1,015
	2014	465 5 222 30 -	194 56 8 980
Total	2015	4,110 238 2,279 146 -	1,414 398 76 8,661
	2014	2,706 45 1,528 134 -	1,048 241 52 5,754

22 The value of STI deferral and LTI awards represents the accounting value, rather than the cash value to participants. It includes the value of equity grants for LTI Plan and Deferred Equity Plans. It also includes the accounting value of the deferred cash based awards put in place of deferred equity.

23 The accounting value of short term incentive deferred share rights / deferred cash is reflected in the ‘STI deferral’ column. 24 Includes final retention payment of USD63,000 relating to prior loss of STI potential.

25 Includes a retention payment for Mr Friberg of USD167,254 related to post acquisition of the Malt business by GrainCorp and a USD63,000 payment relating to prior loss of STI potential following the realignment of Malt variable incentives to the GrainCorp incentive framework (paid October 2013 and December 2013 respectively). These amounts total AUD318,417 based on a conversion rate from USD to AUD of 0.921 (average rate from 1 October 2013 to 30 September 2014) and relate to Mr Friberg’s previous remuneration arrangements prior to being a KMP.

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REMUNERATION REPORT

From 1 October 2014 to 1 January 2015, Mr Taylor provided a hand-over to the incoming MD & CEO. The table below details both Mr Taylor’s fees for the period of the hand-over and his Chairman’s fees.

		Base salary and fees	Superannuation	Total
Interim CEO	Year	$'000	benefits $'000	$'000
D C Taylor - Handover period &	2015	178	-	178
Interim CEO D C Taylor - Chairman	2014 2015 2014	512 296 312	21 34 18	533 330 330
Total	2015	474	34	508
	2014	824	39	863

		Base salary and fees	Superannuation	Total
Non-executive Directors	Year	$'000	benefits $'000	$'000
D C Taylor R P Dee-Bradbury26 B J Gibson	2015 2014 2015 2014 2015	296 312 120 - 145	34 18 11 - 14	330 330 131 - 159
P J Housden	2014 2015	140 141	13 13	153 154
D J Mangelsdorf D G McGauchie27	2014 2015 2014 2015	141 145 145 125	13 14 14 12	154 159 159 137
D B Trebeck28	2014 2015	132 145	12 14	144 159
S L Tregoning	2014 2015	142 136	13 13	155 149
	2014	136	13	149
Total	2015	1,253	125	1,378
	2014	1,148	96	1,244

Movement of rights held during the reporting period

Details of the movement in performance rights in the Company, during the reporting period are detailed in the table below.

below.
						Vested and
	Balance at the	Granted during	Exercised	Forfeited or		exercisable at
	start of the	the year as	during the	lapsed during	Balance at the	the end of the
	year	compensation	year	theyear	end of theyear	year
Executive Director
M L Palmquist	-	147,601	-	-	147,601	-
Executive KMP
A G Bell	49,364	28,494	20,140	4,169	53,549	-
G Friberg	20,618	25,264	-	-	45,882	-
B Ivanoff	33,962	20,425	13,257	2,745	38,385	-
A N Johns	41,057	25,215	15,645	3,239	47,388	-
K Pamminger	22,118	25,158	-	-	47,276	-
S J Tainsh	45,220	26,476	18,175	3,763	49,758	-

26 Ms Dee-Bradbury commenced on 29 September 2014, however no payments were received within FY14.

27 Mr McGauchie ceased to be Chair of the former Human Resources Committee (now incorporated within the PRNC) from 26 March 2014. Mr McGauchie’s remuneration includes an additional $2,543 relating to the handover period to Mr Trebeck.

28 Mr Trebeck assumed Chair of the PRNC effective 26 March 2014.

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REMUNERATION REPORT

Number and value of rights granted, vested and forfeited under the deferred STI and LTI awards Details of the rights granted as remuneration and held, and vesting profile as at 30 September 2015 for each Executive KMP is presented in the table below. Rights are granted for nil consideration (ie zero exercise price) and automatically vest following performance testing (ie do not need to be exercised).

No performance rights vest if the conditions are not satisfied, hence minimum value yet to vest is nil. The maximum value of the grants yet to vest has been determined as the amount of the grant date fair value that is yet to be expensed.

expensed.
	Equity granted	Vested in FY15
	Plan29 Number of rights Grant date Fair value at grant $'000 Financial year in which rights may vest Maximum fair value yet to vest $'000 Vested in the year (%) Forfeited in the year (%) Number of ordinary shares
Executive Director
M L Palmquist LTI 2015 147,601 17-Dec-14 786 2017 702 - - -
Executive KMP
A G Bell LTI 2015 28,494 17-Dec-14 152 2017 135 - - - LTI 2014 25,055 02-May-14 138 2016 80 - - -
G A Friberg LTI 2015 25,264 17-Dec-14 135 2017 120 - - - LTI 2014 20,618 02-May-14 114 2016 66 - - -
B Ivanoff LTI 2015 20,425 17-Dec-14 109 2017 97 - - - LTI 2014 17,960 02-May-14 99 2016 57 - - -
A N Johns LTI 2015 25,215 17-Dec-14 134 2017 120 - - - LTI 2014 22,173 02-May-14 122 2016 71 - - -
K Pamminger LTI 2015 25,158 17-Dec-14 134 2017 120 - - - LTI 2014 22,118 02-May-14 122 2016 71 - - -
S J Tainsh LTI 2015 26,476 17-Dec-14 141 2017 126 - - - LTI 2014 23,282 02-May-14 128 2016 74 - - -

Value of deferred cash awarded, vested and forfeited under the deferred STI and LTI awards Details of the deferred cash awarded as remuneration and vesting profile as at 30 September 2015 for each Executive is presented in the table below. No deferred cash awards vest if the conditions are not satisfied (minimum value yet to vest is nil). The maximum value of the deferred cash awards yet to vest has been determined as the amount of the deferred cash award that is yet to be expensed.

	Deferred cash awarded	Vested in FY15
	Plan Value of deferred cash awarded $'000 Financial year awarded Period of vesting Maximum value yet to vest$'000 Vested in the year (%) Forfeited in the year (%)
Executive Director
M L Palmquist DEP 201530 682 2016 2016 341 50% -
Executive KMP
A G Bell DEP 2014 138 2015 2015 and 2016 23 50% - DEP 2013 151 2014 2015 - 50% - LTI 2013 220 2013 2015 - 25% 75%
G A Friberg DEP 2014 186 2015 2015 and 2016 31 50% - DEP 2013 58 2014 2015 - 50% -
B Ivanoff DEP 2014 126 2015 2015 and 2016 21 50% - DEP 2013 127 2014 2015 - 50% - LTI 2013 150 2013 2015 - 25% 75%
A N Johns DEP 2014 127 2015 2015 and 2016 21 50% - DEP 2013 124 2014 2015 - 50% - LTI 2013 172 2013 2015 - 25% 75%
K Pamminger DEP 2014 277 2015 2015 and 2016 46 50% - DEP 2013 462 2014 2015 - 50% - LTI 2013 179 2013 2015 - 25% 75%
S J Tainsh DEP 2014 156 2015 2015 and 2016 26 50% - DEP 2013 192 2014 2015 - 50% - LTI 2013 210 2013 2015 - 25% 75%

29 DEP 2015 for Executive KMP will be granted following the 20-trading-day VWAP period after the announcement of results and will therefore be reported in the FY16 report.

30 Mr Palmquist’s DEP 2015 is paid as cash, whereas DEP 2015 for the remaining Executive KMP will be granted as performance rights.

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REMUNERATION REPORT

Shares held by KMP

KMP have a relevant interest in the following number of shares in the Company as at the date of this report:

		Received during the
	Balance at the start	year on exercise of	Other changes	Balance at the end of
Name	of theyear	rights	during theyear	theyear
Non-executive Directors
D C Taylor	44,859	-	-	44,859
R P Dee-Bradbury	-	-	2,400	2,400
B J Gibson	-	-	7,000	7,000
P J Housden	8,083	-	-	8,083
D J Mangelsdorf	15,528	-	-	15,528
D G McGauchie	88,957	-	-	88,957
P I Richards	-	-	-	-
D B Trebeck	75,637	-	-	75,637
S L Tregoning	14,465	-	-	14,465
Executive Director
M L Palmquist	-	-	9,679	9,679
Executive KMP
A G Bell	29,027	20,140	(19,000)	30,167
G Friberg	11,177	-	-	11,177
B Ivanoff	1,646	13,257	-	14,903
A N Johns	19,227	15,645	-	34,872
K Pamminger	-	-	-	-
S J Tainsh	64	18,175	-	18,239

Loans to KMP and their related parties

No loans were provided to KMP or their related parties as at the date of this report.

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D C Taylor Chairman Sydney 12 November 2015

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CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement

Introduction

This section of GrainCorp Limited’s (‘GrainCorp’ or ‘the Company’) 2015 Annual Report outlines the governance framework the Board has adopted for all entities in the GrainCorp Group.

GrainCorp remains committed to ensuring that its systems, procedures and practices reflect a high standard of corporate governance. The Board believes that its governance framework provides clear guidance on how authority is exercised and promotes a culture of compliance, ethical behaviour, integrity and respect to protect shareholder and other stakeholder interests.

Annual Overview

On 1 October 2014, Mr Mark Palmquist was appointed Managing Director & CEO (‘CEO’). Following this, Mr Don Taylor resumed his position as Chairman and independent Non-executive Director.

For the year ended 30 September 2015, GrainCorp considers that its governance structure complies with the third edition of the ASX Corporate Governance Principles and Recommendations (‘Recommendations’).

Copies of GrainCorp’s Constitution, Charters and related governance materials are available on GrainCorp’s website at www.graincorp.com.au/investors-and-media/investor-information/corporate-governance

The following sections provide details of GrainCorp’s compliance with the adopted governance framework and its practices in accordance with the Recommendations.

Principle 1: Lay solid foundations for management and oversight

a) Primary objective of the Board

To build long term shareholder value with due regard to other stakeholder interests. The Board provides governance and strategic guidance for GrainCorp and effective oversight of management. The governance structure determines how GrainCorp sets and monitors its profit and growth targets, while appropriately managing risk, and considering the interests of shareholders and other stakeholders.

b) Board Charter

To define its role the Board has formalised its authority, responsibilities and processes in a Board Charter. The Charter includes the Board’s role in strategy and planning, budgeting, financial reporting, employee and remuneration policies, risk management, governance, safety, health and environment (‘SHE’) audit, compliance and performance monitoring. The Charter is consistent with GrainCorp’s Constitution.

Under GrainCorp’s Constitution, and as detailed in its Charter, the Board may delegate any of its powers to Committees of the Board. The standing Committees established by the Board are detailed on page 45.

c) Delegation to Managing Director & CEO

During the reporting period, the Board delegated authority for the day-to-day management of GrainCorp to the CEO, who manages GrainCorp according to strategies, budgets, policies and delegations approved by the Board.

The CEO has appointed a team of senior management (‘Executive Team’) to implement GrainCorp’s strategic plans and manage the business operations. The CEO provides reports to the Board to ensure it is fully informed of all material matters.

The Board and its Committees monitor the decisions and actions of the CEO and the performance of the business as a whole.

Following the appointment of Mr Palmquist on 1 October 2014, these delegated authorities reverted to the CEO and Mr Taylor resumed his position as Chairman while undertaking a suitable period of handover.

d) Board composition, selection and appointment of new directors

It is the Board’s policy to achieve a balance of relevant industry, technical and functional skills, experience, and diversity amongst its Directors. The People Remuneration and Nominations Committee (‘PRNC’) has the responsibility to review and make recommendations to the Board regarding composition and the nomination process for appointments. It regularly reviews the size, skills matrix and composition of the Board to assess the need for any new appointments or changes.

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As well as skills, experience and diversity, the PRNC considers factors such as personal qualities, ability and commitment to devote sufficient time, the contribution the prospective Director could make to the Board, and his or her professional reputation. Background checks are also performed prior to any recommendations being made to the Board. Following this, the PRNC assesses potential candidates and makes recommendations to the Board for final determination by shareholders. Through the Notice of Meeting, which is distributed to shareholders prior to the Annual General Meeting (‘AGM’), the Board aims to provide shareholders with all material information disclosed to the Board and relevant to a decision on whether or not to elect or re-elect a director.

All Directors and Executives are appointed subject to a written agreement with GrainCorp setting out the terms and conditions of their appointment.

e) The role of the Company Secretary

The appointment or removal of the Company Secretary is a decision made by the Board. The Company Secretary is accountable to the Board and works closely with the Chairman to manage the distribution of information between the Board, its Committees and the Executive Team. The Company Secretary provides advice and support to the Board and its Committees on governance-related matters, and is responsible for organising and managing the induction of all new and existing directors. All directors have a right of access to information and advice, which is facilitated through the Company Secretary and the Chair of each Committee. The Company Secretary’s qualifications and experience are set out in the Directors’ Report on page 10.

f) Evaluation of performance of the Board

The Board reviews its performance and that of each Director on an annual basis either by self-evaluation or by independent review. The review covers matters such as:

The Board’s contribution to developing strategy and policy.
The Board’s performance relative to its responsibilities.
The interaction between Board members and between the Board and Executives.
The Board’s oversight of the business and Executive performance, controls and compliance.
The operation of the Board including the conduct and content of Board meetings.
The performance of each Board Committee against the responsibilities of its respective Charter.
The individual contribution of each Director.

Each Committee reviews its performance annually through discussion and stakeholder feedback. The Chairman of the PRNC reviews the performance of the Chairman of the Board in consultation with other Directors.

In addition, the performance of a Non-executive Director is assessed when nominating for election or re-election at an AGM. In the particular Director’s absence, the Board, following recommendations from the PRNC, assesses whether to endorse the Director’s election or re-election to shareholders.

An external performance review is to be conducted every second year, under the direction of the PRNC Chairman. During the year ended 30 September 2015, a Board Performance Self-Assessment was conducted, following which the Directors were satisfied with the structure, process, role and performance of the Board.

g) Evaluation of performance of the Executive Team

The CEO is responsible for monitoring the performance of each member of the Executive Team. The CEO is also responsible for ensuring there is an effective succession planning process for each Executive Team member.

During the reporting year the Executive Team comprised the individuals listed on page 8 of the Annual Report. The Executive Team meets regularly to review performance and strategic issues, and to build alignment across the business. Each Executive has a written position description, employment contract and annual Key Performance Indicators (‘KPIs’).

The CEO reviews the performance of the Executive Team individually and collectively against their agreed KPIs, the Company’s leadership framework and GrainCorp’s values. The Board and its Committees review the performance of the Executive Team through reporting of formal mid-year and end-of-year performance appraisals. Performance reviews of the Executive Team were conducted by the CEO for the year ended 30 September 2015.

The PRNC and the Board formally review the performance of the CEO against agreed KPIs.

h) Board and Committee Meetings

The Board and its Committees meet regularly throughout the year according to an annual schedule of meetings, and at other times as required. Details of the number of meetings held and the attendance record of each Director are on page 11 of the Directors’ Report.

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i) Diversity

GrainCorp’s diversity objective is to value and respect the different perspectives and experiences of its people through harnessing the business benefits and opportunities that these diverse viewpoints and ideas bring to both GrainCorp and its stakeholders. GrainCorp’s commitment to recognising the importance of diversity extends to all areas of the business and our people strategy, including recruitment, leadership, succession planning and workplace policies and procedures. GrainCorp believes that treating our people with respect and providing an inclusive environment where they are seen and heard is critical to long term business performance.

In 2011, the Board approved GrainCorp’s diversity and inclusion strategy. Annually the People Remuneration and Nominations Committee (‘PRNC’) approves measurable objectives set in accordance with this strategy. Over the past 12 months, the following specific activities occurred which were consistent with the company’s objectives:

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----- Start of picture text -----

Objective Activities
Build a diverse talent pool Promoting “International Women’s Day” through a Group wide
focusing initially on women communication program, encouraging employees to reflect on progress
made for equality, to call for change and to celebrate acts of courage and
determination by women who have played an extraordinary role in the
history of their countries and communities.
Celebrating “International Day of Rural Women” which aims to highlight the
vital contributions women make within rural and country communities.
Enhance workplace flexibility Trialling of a number of working from home and remote location flexible
working arrangements.
Champion diversity from the Facilitating a diversity and inclusion workshop at the annual GrainCorp
top Leadership Group Conference, attended by 90 of the Company’s most
senior leaders, which elevated the need and identified opportunities to
promote a more diverse workplace.
Minimise the impact of an Trialling mentorship programs to help facilitate the transfer of knowledge
aging workforce and expertise.
Providing flexible part-time working arrangements.
Help make a difference to our Ongoing support of the Clontarf Foundation, in particular, the ability to offer
indigenous community school based traineeships for students to gain work experience in
GrainCorp’s Storage & Logistics business.
----- End of picture text -----

GrainCorp continues its commitment to:

Building a workforce which reflects the diversity of the customers it serves and the communities in which it operates;
Identifying and developing current and future leaders who are representative of the supply of diverse talent across its international operations;
Promoting and maintaining a workplace culture that is inclusive and equitable to employees from every background, consistent with its values; and
Supporting and promoting a more flexible work environment that appropriately balances the needs of its people with the needs of the business.

The number and percentage of women employed in permanent roles across GrainCorp at 30 September over the past three years were:

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2015 2014 2013
Groups Number Percentage Number Percentage Number Percentage
Board of Directors 2 25% 2 25% 2 25%
Executive Team 1 10% 1 17% 2 29%
GrainCorp Leadership Group 10 12% 11 13% 8 9%
People Leaders 90 21% 107 20% 104 19%
Total GrainCorp workforce 772 25% 617 22% 599 21%
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GrainCorp is deemed to be a ‘relevant employer’ under the Workplace Gender Equality Act 2012 , and has received notification that it is compliant with the provisions of the Act.

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Further information on GrainCorp’s diversity and inclusion performance is documented in the 2015 Sustainability Report available on the Company’s website.

Principle 2: Structure the Board to add value

a) Structure of the Board

GrainCorp’s Constitution has certain requirements concerning Board size, meetings, and election, powers and duties of Directors. Collectively the Board aims to achieve a broad range and balance of skills, experience and expertise to effectively oversee GrainCorp’s operations. The Company’s Constitution stipulates a minimum of four and a maximum of ten Directors.

At the beginning of the financial year, the Board comprised eight Non-executive Directors and one Executive Director, being the Managing Director & CEO (with Mr Palmquist having been appointed with effect from 1 October 2014). At the AGM on 18 December 2014, Ms Barbara Gibson and Mr Daniel Mangelsdorf were re-elected as Nonexecutive Directors, and Ms Rebecca Dee-Bradbury was elected as a Non-executive Director following her appointment to fill a casual vacancy. Mr Peter Richards was appointed as a Non-executive Director to fill a casual vacancy on 9 November 2015, and will be eligible for election at the AGM to be held on 18 December 2015.

The Chairman of the Board remains an independent Non-executive Director. The skills, experience and responsibilities of each Director are on pages 6 to 7.

Details of the period of office held by each Director and the year of their last election are as follows:

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Director Appointed Last Elected at an AGM Independence
Don Taylor 1 October 2003 20 December 2012 Independent
Rebecca Dee-Bradbury 29 September 2014 18 December 2014 Independent
Barbara Gibson 3 March 2011 18 December 2014 Independent
Peter Housden 17 October 2008 25 February 2014 Independent
Donald McGauchie 23 December 2009 20 December 2012 Independent
Daniel Mangelsdorf 17 February 2005 18 December 2014 Independent
Peter Richards 9 November 2015 Eligible for election Independent
David Trebeck 27 February 2002 20 December 2012 Independent
Simon Tregoning 2 December 2008 25 February 2014 Independent
Mark Palmquist 1 October 2014 Not Applicable Not Independent
----- End of picture text -----

The Board has assessed Mr Taylor’s independence following the period in which he acted as Executive Chairman & Interim CEO (from 2 December 2013 to 1 October 2014). Given the short tenure of Mr Taylor’s executive position the Board considers Mr Taylor to be an Independent Non-executive Director for the full year.

b) Board independence

All of GrainCorp’s Non-executive Directors are deemed independent. The Board Charter details the criteria used to assess whether a Director has a relationship with GrainCorp, which could, or could be perceived to, impede independent decision making.

All Directors are required to notify the Chairman and Company Secretary of their interests and other appointments as well as any changes to these. For the year ended 30 September 2015, the PRNC reviewed Non-executive Director independence. The PRNC considered all of the circumstances relevant to each Non-executive Director in determining whether the Director is free from any interest or other business or relationship which could, or could reasonably be perceived to, materially interfere with each Director’s ability to act in GrainCorp’s best interests and exercise unfettered and independent judgement.

Each of GrainCorp’s Non-executive Directors exercised judgement and discharged his or her responsibilities in an independent way at all times throughout the year.

During the reporting year, a number of Directors, through their association with other entities, entered into transactions with GrainCorp in the ordinary course of its business. These transactions were neither material nor

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impacted upon the independence of those Directors, as they were conducted on ordinary ‘arms-length’ commercial terms, being no more or less favourable than other users of GrainCorp’s services. Details of transactions with Directors are shown in note 34.

c) Conflicts of interest

Each Director has a responsibility to determine whether he or she has a potential or actual conflict of interest in relation to any material matter which comes before the Board. The Company maintains a Register of Directors’ Interests which is regularly updated.

The Board Charter details the obligations of Directors in dealing with any conflicts of interest. In such situations, the conflicted Director will not receive relevant Board papers and, unless the non-conflicted Directors resolve to the contrary, will not be present for Board deliberations on the matter and will not vote on any related Board resolutions. The same procedures apply in the event of any conflict which may arise relating to any matter to be considered by any Board Committee.

GrainCorp’s Code of Conduct provides guidelines for dealing with conflicts of interest, particularly for Executives and other employees.

d) Access to information and independent advice

Directors may access information and seek independent professional advice which they individually or collectively consider necessary to fulfil their responsibilities and permit independent, well informed judgement in decision making.

Any request for access to information or independent advice sought will be consented to by the Chairman, and such consent will not be unreasonably withheld or delayed, and all such information and advice will be shared with all other Directors unless precluded by any conflict situation, and will be at GrainCorp’s expense.

e) Tenure and election at Annual General Meetings

Non-executive Directors must retire from office and may seek re-election by shareholders at the third AGM after their election if they seek to continue in their role. The Constitution requires that there be an election of Directors at every AGM. If no Director is to retire from office in accordance with their tenure, the Director to retire will be the individual who has held office for the longest period since last elected or re-elected. GrainCorp’s Constitution does not impose a maximum term of service on its Directors.

The Chairman is appointed by his or her fellow Directors with the term of office determined by the remaining members of the Board. The Chairman remains subject to the same re-election rules as apply to the other Nonexecutive Directors.

f) Board Committees

The Board has the ability to delegate any of its powers to Board Committees. The standing Committees are as follows:

Board Audit Committee (‘BAC’)
Business Risk Committee (‘BRC’)
Safety Health Environment and Governance Committee (‘SHEGC’)
People Remuneration and Nominations Committee (‘PRNC’)

Each Committee is comprised of a majority of Non-executive Directors.

The composition of each Committee is regularly reviewed by the Chairman of the Board and annually by the PRNC. Membership of each Committee is determined by each Director’s skills and experience, their ability to add value and to commit the necessary time to the Committee.

Each Committee operates under a Charter detailing its responsibilities and has unrestricted access to GrainCorp’s Executives, advisors and other employees as well as to information necessary for the discharge of its responsibilities.

All Directors are entitled to attend meetings of any Committee and the CEO attends all meetings as appropriate, but does not attend any meetings where his performance, any conflicts, appointment or remuneration are considered.

Proceedings of each Committee meeting are reported by the respective Committee Chairman at the first Board meeting following the Committee meeting.

Details of the Directors’ attendance at Committee meetings during the year are contained in the Directors’ Report on page 11.

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CORPORATE GOVERNANCE STATEMENT

g) People Remuneration and Nominations Committee The PRNC is the ‘nominations committee’ for the Board and is also responsible for assisting the Board in the oversight and evaluation of GrainCorp’s people strategy and remuneration framework (detailed at Principle 8 of this Governance Statement). The full responsibilities of the PRNC are detailed in its Charter.

The current members of the PRNC are David Trebeck (Chairman), Donald McGauchie and Don Taylor. The CEO and Group General Manager Human Resources (previously the Group General Counsel) attend all meetings of the PRNC by invitation. The PRNC operates independently of the Executive and seeks its own advice, as considered necessary, to assist in its decision making processes.

Details of the attendance of the members at meetings of the PRNC during the year are contained in the Directors’ Report.

During the reporting year the PRNC focused on:

Conducting a reward strategy workshop to ensure that GrainCorp’s reward policies and strategies were aligned with and supported the business strategy.
Development and implementation of an industrial relations strategy to provide a greater focus on workplace efficiency and productivity.
Reviewing the Long Term Incentive Plan to ensure greater executive alignment with shareholder interests over the longer term, with the introduction of a minimum performance threshold for the ROE performance hurdle.
GrainCorp’s recruitment and sourcing strategy to ensure that the Company has the skills and capability needed to execute its business strategy over the short and longer term.

h) Board Skills, Experience and Attributes

GrainCorp seeks to maintain a Board of Directors who possess the right balance of skills, knowledge and experience to oversee the business and add value to the Company. The Board recognises that having a diversity of attributes, skills, and experience represented amongst its Directors is critical to maintain effective and robust decision-making processes.

The Board and PRNC regularly review the performance of Directors against the skills and experience needed to deliver the Company’s strategy and initiatives.

The following matrix sets out the skills and expertise across the Board and Committees:

Skills and Experience Financial and Risk Management Senior leadership experience in financial accounting, corporate finance, tax, trading and operational risk and internal controls Safety, Health and Environment Experience related to managing safety, health and environment programs Fast Moving Consumer Goods (‘FMCG’) and Manufacturing Experience in the FMCG or manufacturing industries Agribusiness / Supply Chain Experience in the agricultural industry or supply chain management Mergers and Acquisitions Experience in merger and acquisition activities and business integration strategies Non-executive Director and Governance Prior experience as a Non-executive Director with strong governance acumen International Operations Experience managing or leading global operations, especially in fields relating to GrainCorp’s business

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i) Director Induction, Training and Ongoing Development

All new Directors of GrainCorp undertake a company induction program which is tailored to their individual needs. Typically, GrainCorp’s induction program involves meetings with Executives and employees, briefings on GrainCorp’s business and strategic plans, independent meetings with external and internal auditors and other advisors, discussions with the Chairman and other Directors, and the provision of relevant corporate material and information. New Directors are encouraged to visit GrainCorp’s assets as soon as practicable to gain a thorough appreciation of the Group’s asset profile, business drivers and risk factors. In her first year on the Board, Ms Dee-Bradbury toured a number of GrainCorp locations, which included malt manufacturing operations and warehouse and distribution facilities in North America.

Training and development for Directors focuses on skills and knowledge enhancement through Company initiated activities and individual actions. The PRNC oversees the training and development program for Directors and each individual Director is responsible for understanding their own development needs.

At least once a year the Board undertakes site visits with the purpose of enhancing each individual Director’s knowledge about the business and its operating environment. These visits focus on, but are not limited to, capital projects and business process improvements, market dynamics and industry developments, safety, health and environment aspects and the competitive landscape. Additionally, Directors are encouraged to undertake individual actions which can include management briefings, continuous education through third party providers, membership affiliations and networking.

During the financial year, Directors (individually or collectively) participated in the following non-exhaustive list of activities:

Site inspections and staff engagement across Storage and Logistics country and port facilities.
Construction inspection and project update at GrainCorp Foods, West Footscray Victoria.
Site inspections, staff engagement and business strategy update at Great Western Malting Company, Country Malt Group, and Brewcraft USA, Vancouver Washington.
Site inspection, community interaction and construction project review at Great Western Malting Company, Pocatello Idaho.
Customer relationship engagements throughout Portland Oregon and Yakima Valley Washington.
Inspection of a GrainCorp Liquid Terminals facility, Tauranga New Zealand.

Principle 3: Promote ethical and responsible decision making

a) Responsibilities of the Board, Executives and other employees

GrainCorp has adopted a Code of Conduct (‘Code’) which provides a set of guiding principles for acting honestly and with integrity and fairness at all times. The Company’s values, outlined in the Code, provide a common understanding of expected behaviours of Directors and employees.

The Company’s Code and values together form the Company’s Charter, which is available on the Company’s website.

b) Dealing in GrainCorp securities

GrainCorp’s Share Trading Policy prohibits dealing in GrainCorp’s securities by all Directors, Executives and other employees, or their associates, when in possession of unpublished price sensitive information concerning the Company.

The Policy prohibits ‘Designated Officers’ (as defined in the Policy) from dealing in GrainCorp’s securities at all times other than during specific ‘Trading Window’ periods. A Designated Officer may only deal in a Trading Window when not in possession of price sensitive information.

The Policy outlines the requirements and process for Designated Officers to seek approval before they, or their associates, deal in the Company’s securities.

The Policy also prohibits Designated Officers and their associates from providing GrainCorp securities as security in connection with any margin loan or similar financing arrangement without prior approval.

Further, it is a condition of any grant to employees of any performance rights or deferred shares that no schemes are entered into that protect the value of such performance rights or shares before they vest. Any breach of this condition constitutes a breach of the terms of the grant and may result in the forfeiture of the performance rights.

A copy of the Share Trading Policy is lodged with the ASX and is available on the Company’s website.

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c) Whistleblower protection

A principle underlying GrainCorp’s Code is the requirement for any person at GrainCorp to immediately report, in good faith, any known or suspected breaches of the Code, other GrainCorp policies or the law.

GrainCorp’s Whistleblower Policy provides a mechanism whereby such breaches may be reported on a confidential basis without fear of reprisal, dismissal or discriminatory treatment.

Reports may be made under this Policy to specified ‘Whistleblower Disclosure Officers’ or to an independently managed ‘whistleblower hotline’ available in all the countries in which the Company has operations to all employees as well as to external parties.

The SHEG Committee has oversight of all whistleblower notifications. A copy of the Whistleblower Policy is available on the Company’s website.

Principle 4: Safeguard integrity in financial reporting

a) Board Audit Committee

The BAC was constituted by the Board of GrainCorp to assist the Board in fulfilling its responsibilities in relation to financial reporting and internal controls. The BAC reviews GrainCorp’s financial reporting processes, systems of internal control and management of financial risks as well as the process, coverage, performance and independence of the internal and external audit functions. The responsibilities of the BAC are detailed in its Charter.

The current members of the BAC are Peter Housden (Chairman), Rebecca Dee-Bradbury, Daniel Mangelsdorf and Simon Tregoning, all of whom are independent Non-executive Directors of GrainCorp. Each member has the technical expertise to enable the BAC to discharge effectively its responsibilities. Details of the BAC members’ qualifications, experience and attendance are set out on pages 6 to 11.

The CEO, Group CFO and Company Secretary, as well as representatives from GrainCorp’s external and internal audit advisory teams, attend all meetings of the BAC by invitation. The BAC regularly meets with the external auditors and advisors without the presence of Executives or other management.

b) External audit

PricewaterhouseCoopers (‘PwC’) has been GrainCorp’s external auditor since 1998 and is responsible for reviewing and auditing the half year and full year financial statements and reports to provide an independent opinion that these statements and reports are true and fair and comply with applicable accounting standards and regulations.

PwC attends all meetings of the BAC by invitation and regularly meets with the BAC independently of management to raise and discuss matters that have arisen during the course of its reviews and audits. Representatives of PwC also attend GrainCorp’s AGM to answer any shareholder questions on the conduct of the audit, the preparation of the audit opinion and any other related matters. A representative from PwC has attended all AGMs since 1998.

GrainCorp’s Board has adopted an External Auditor Independence Policy (‘Independence Policy’) to govern the independence of the external auditor. The Independence Policy places restrictions on the range of non-audit services PwC can provide to GrainCorp and contains a requirement that the lead audit partner be rotated after five years, unless that appointment is extended by agreement under transition provisions.

The Independence Policy also details the type of non-audit services or assignments that PwC cannot undertake. In addition, any non-audit services or assignments that are not prohibited, with estimated fees in excess of $100,000, must be approved by the BAC before that service or assignment commences. The Group CFO has been authorised to approve such services and assignments with fees estimated to be less than $100,000.

No work will be awarded to PwC if the BAC or the Group CFO, as applicable, believe such work would give rise to a ‘self-review’ threat (as defined in APES110-Code of Conduct for Professional Accountants) or would create a conflict, or potential conflict, of interest for PwC or otherwise compromise PwC’s independence.

Details of the amounts paid to PwC during the year, including for any non-audit services provided, are disclosed in note 7 to the Financial Statements.

PwC has provided GrainCorp with the required full year certification of independence which is on page 55.

GrainCorp’s current Audit Engagement Partner is Matthew Lunn, who commenced his role for the year ended 30 September 2012.

A copy of the Independence Policy, which forms part of the BAC Charter, is available on the Company’s website.

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c) Management assurance to Directors

The CEO and the Group CFO have provided a declaration to the Board in relation to the production of GrainCorp’s full year financial statements and reports, as required by Section 295A of the Corporations Act 2001 .

Supporting this declaration are certifications of assurance provided by other senior managers, including senior finance managers within GrainCorp. These certifications comprise representations and responses to questions concerning GrainCorp’s financial results, disclosure processes and controls and other matters related to GrainCorp’s external reporting obligations.

The effective control environment established by the Board, and reviewed by internal audit as part of its annual review program supports this declaration. Associated companies and joint ventures that are not controlled by GrainCorp are not covered by this declaration. Further, the declaration provides a reasonable, but not absolute, level of assurance of GrainCorp’s risk management, internal compliance and control systems, but does not imply a guarantee against any adverse events or more volatile conditions and outcomes that may occur in the future.

Principle 5: Make timely and balanced disclosure

a) Commitment to disclosure

GrainCorp seeks to provide shareholders and other interested parties with quality information in a timely way through the reporting of financial results, the provision of the Annual Report as well as other announcements and briefings to the market.

GrainCorp is committed to:

Ensuring that its shareholders and other stakeholders are provided with timely and balanced disclosure of all material matters concerning GrainCorp.
Complying with its continuous disclosure obligations as required by the Corporations Act 2001 , ASX Listing Rules and the Recommendations.
Ensuring that all stakeholders have equal and timely access to externally available information issued by GrainCorp.

b) Continuous Disclosure and Financial Markets Communication Policy (‘Communication Policy’)

GrainCorp’s Communication Policy supports the commitment to a fully informed market in its securities by ensuring that announcements are:

Made to the market (via the ASX Announcement Platform) in a timely manner, are factual and contain all relevant material information.
Expressed in a clear and objective manner that allows investment community stakeholders to assess the impact of the information when making investment decisions.

GrainCorp’s Company Secretary is responsible for monitoring compliance with the continuous disclosure obligations and for overseeing and coordinating disclosures to the ASX and other interested parties. GrainCorp’s Investor Relations Manager is responsible for the release of all communications with shareholders.

Principle 6: Respect the rights of shareholders

a) Annual General Meeting of Shareholders

GrainCorp is committed to ensuring its shareholders are provided with timely disclosure of all material matters concerning the Company.

GrainCorp encourages its shareholders to attend its AGM, where shareholders receive presentations on GrainCorp’s performance and outlook and can raise any questions concerning the management of GrainCorp, the conduct of the annual audit, as well as questions on resolutions put to the AGM.

The Notice convening the AGM is accompanied by explanatory notes regarding the resolutions to be put to the AGM. A copy of the Notice with the explanatory notes is lodged with the ASX and posted on GrainCorp’s website.

Shareholders who are unable to attend the AGM in person may vote by appointing a proxy using the form provided with the notice, via an online facility or directly through the same online facility.

The results of voting on all resolutions at the AGM are reported to the ASX and posted to GrainCorp’s website as soon as possible after the meeting.

Shareholders are also invited to submit questions in advance of the AGM, so that GrainCorp can ensure issues are suitably considered and addressed.

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GrainCorp’s External Audit Engagement Partner attends the AGM and is available to answer questions on the conduct of the annual audit of GrainCorp’s financial reports and statements, and may also answer any written questions shareholders have submitted prior to the meeting.

b) Access to Company Information

The Corporate Governance section on the Company’s website contains access to all relevant corporate governance information regarding the Board, Executive Team and Committees, Charters and Company policies. This section is located at http://www.graincorp.com.au/about-graincorp/company/corporate-governance.

The Board and Executives section on the Company’s website provides profiles on the Non-executive Directors and the Executive Team. This section is located at http://www.graincorp.com.au/about-graincorp/company/board-andexecutives.

c) Investor Relations Program

The Company’s investor relations program is designed to promote understanding amongst shareholders and other stakeholders of the Group’s businesses, governance framework, financial and operational performance, and outlook. The investor relations team is responsible for gauging and understanding shareholder feedback, and receiving comments and questions received at investment briefings and strategy days.

Throughout the financial year, the investor relations team interacts with institutional investors, private investors, analysts, proxy advisers and the financial media. Investor days take place on a regular basis and roadshows are held following the release of the Half Year results and End of Year results which the investor team, the CEO, the Chairman and some of the Non-executive Directors attend. Feedback from shareholders is regularly reported to the Board.

The Investor section on the company’s website can be found at http://www.graincorp.com.au/investors-and- media/investor information/index.htm. This section provides an overview of the business, share price information, analyst coverage, corporate governance and dates for upcoming investor presentations and events.

d) Electronic Communications

Shareholders have the ability to elect to receive communications and other shareholding information electronically. GrainCorp’s share registry is managed by Link Market Services, who can be contacted at: www.linkmarketservices.com.au, [email protected], or 1300 883 034. Shareholders can contact GrainCorp electronically by sending an email to [email protected], [email protected] or visiting the website www.graincorp.com.au.

Principle 7: Recognise and manage risk

a) Risks

GrainCorp is one of Australia’s largest agribusinesses and a global food ingredients business, with a significant presence in the storage and logistics of grain and non-grain commodities, the marketing of grain domestically and internationally, the production and marketing of edible oil products, storage of oils, petroleum and chemical products; as well as the production of malt, flour and related consumer end-products. Risk is therefore inherent in GrainCorp’s daily operations and the ability to achieve its goals depends heavily on how effectively risk is managed.

GrainCorp’s risk management objective is to ensure all material risks are identified and, where practical and economically viable, measures are implemented to mitigate or otherwise manage the impact those risks may have on GrainCorp’s activities.

b) Risk management framework

GrainCorp’s risk management framework identifies, assesses and manages GrainCorp’s strategic, operational, financial and reputational risks.

The risk framework consists of the Risk Management Policy and Guidelines (‘Policy’), which is largely consistent with the Australian/New Zealand and International Standard on Risk Management: AS/NZS ISO 31000:2009, and applies to all entities within GrainCorp. It:

Provides a systematic approach to risk management aligned to GrainCorp’s strategic objectives.
Defines the processes by which GrainCorp determines its risk appetite and manages risk.
Articulates the roles and accountabilities for the oversight, governance and management of risk within GrainCorp.

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c) Risk management responsibilities and actions

i. Board of Directors

GrainCorp’s Board is responsible for determining the risk profile, appetite and strategies and for monitoring the integrity of internal controls and other resources, processes and systems to manage and mitigate risks.

The Board has delegated direct oversight of risk management, other than financial risk management and SHE risk management, to the BRC.

The Board has delegated to the Executive Team the responsibility for establishing GrainCorp’s risk framework and for implementing the internal controls and other systems and processes to manage risk.

ii. Business Risk Committee (‘BRC’)

Subject to the overriding responsibilities of the Board, the BRC oversees all aspects of risk within GrainCorp except for financial risks, which remain the responsibility of the BAC, and SHE risks, which are the responsibility of the SHEGC.

The BRC’s objectives are to review, monitor and report on:

Strategic and operational risks which include, but are not limited to, business trading, ethical, and relevant regulatory risks.
Compliance with applicable laws and regulations as well as GrainCorp’s internal policies and procedures.

The full responsibilities of the BRC are detailed in its Charter.

The members of the BRC are Daniel Mangelsdorf (Chairman), Don Taylor, Barbara Gibson, and Ottmar Weiss (Independent Advisor). The business unit Group General Managers, Group CFO and Company Secretary attend all meetings of the BRC by invitation. Other Executives, senior managers and employees attend meetings as required.

Details of members’ attendance at meetings of the BRC during the year are contained in the Directors’ Report.

To discharge its responsibilities the BRC receives regular reports from the Executive Team:

That identify and evaluate the significant risks that may affect the achievement of GrainCorp’s strategies and operations, including credit and compliance risks.
On material business risks and progress against risk management plans and key performance indicators.
On grain, malt, oil and other commodity trading strategies, and as required approve new trading business activities and control measures.
Concerning credit, treasury, liquidity, foreign exchange, derivative, country and sovereign risks of the Marketing, Malt and Oils business units, and assesses their alignment to the company’s risk appetite.
On any related non-compliance, including with the Position and Trading Risk Management Policy.

During the year the BRC:

Commissioned an external review of GrainCorp’s Risk Management Framework.
Reviewed and monitored the Corporate Risk Register, and Statement of Risk Appetite.
Reviewed amendments to the Position and Trading Risk Management Policy to accommodate business growth.
Reviewed commodity marketing and trading strategies, including assessment of new customers and markets.
Assessed customer credit reviews and setting of credit and trade limits.
iii. Safety, Health Environment & Governance Committee (‘SHEGC’) The SHEGC has specific oversight of the Group’s safety, health, environment and corporate governance responsibilities, as delegated by the Board.

The SHEGC’s objectives are to review, monitor and report to the Board on the following matters:

Safety, health and environment risks, including systems of audit, policies, processes and controls.
Compliance with all applicable laws and regulations, including continuous disclosure obligations, share trading and other corporate governance responsibilities.

The full responsibilities of the SHEGC are detailed in its Charter.

The current members of the SHEGC are Barbara Gibson (Chairman), David Trebeck, and Simon Tregoning. The Group CFO, Group General Counsel, Company Secretary and Group SHE Director attend all meetings of the SHEGC by invitation. Other Executives, senior managers and employees attend meetings as required.

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Details of members’ attendance at meetings of the SHEGC during the year are contained in the Directors’ Report.

During the year the SHEGC:

Reviewed the content and development of GrainCorp’s first Sustainability Report.
Reviewed safety performance reports, which include information on employee and contractor injuries and actions taken to reduce the risks of injury.
Reviewed and approved policy and procedure updates, such as the Share Trading Policy, Privacy Policy, Whistleblower Policy, as well as the introduction of the Anti-Bribery and Corruption framework and associated policies.
Reviewed internal governance reports, including whistleblower notifications, continuous disclosure obligations, Director’s material interests and compliance registers.

iv. Management and other employees

GrainCorp’s CEO, supported by the Executive Team, has been delegated the responsibility for implementing the risk framework across GrainCorp, to ensure all risks identified as unacceptable are managed or mitigated, or otherwise dealt with.

Each business and function within GrainCorp is responsible for conducting risk assessments of its operations as well as developing, maintaining and reviewing relevant risk registers and risk management plans.

The Executive Team regularly monitors GrainCorp’s risks and reviews the effectiveness of treatment strategies. Corporate strategic and business unit plans are reviewed at least annually, which enables the Executive Team to assess whether GrainCorp’s risk profile has changed or any new risks emerged or existing risks increased, decreased or disappeared.

d) Material Risk Exposures – Economic, Environmental and Social Sustainability

The Board recognises that adopting sustainable business operations and sound environmental management practices are important to the long-term performance and growth of GrainCorp.

i. Economic Sustainability Risk

Like all businesses, GrainCorp has an exposure to economic sustainability risk. The Company operates along the entire supply chain and across multiple industries, from accumulation and storage of grain, transport and logistics, to manufacturing and distribution of products to customers and end consumers. GrainCorp is exposed to a variety of financial, operational, market and regulatory risks and is therefore continuously reviewing and managing these to ensure its operations are sustainable over the longer term. A non-exhaustive list of economic risks to which the Company is exposed is listed on pages 19 to 20 of the Directors’ Report.

GrainCorp’s corporate strategy reflects its mission to be “An international leader in food ingredients and agribusiness, creating value by connecting consumers and producers”. This strategy has a five year time horizon and is reviewed and updated annually by the management team and the Board. An integral aspect of GrainCorp’s strategy has been to reduce the influence of cyclical weather conditions, especially the impacts of drought. Over the past six years the Company has successfully managed this exposure, having diversified its operations into downstream value adding businesses in Australia and overseas. Through this diversification, GrainCorp has broadened its earnings base and reduced the economic impact that drought can have on its profitability.

GrainCorp’s strategic planning process aims to enhance the business through understanding and responding to its competitive environment, local and global macroeconomic conditions, customer and consumer preferences as well as its own ability to manage change.

ii. Environmental Sustainability Risk

GrainCorp has an exposure to environmental sustainability risk. The availability of cost effective energy, water and other resources is fundamental to the Company.

GrainCorp uses water and energy in its manufacturing operations and produces a moderate amount of waste to landfill. The Company strives to reduce its impact on the environment and increase the efficiency of its water and energy use. The Company has described a number of environmental process improvements in its 2015 Sustainability Report, see: http://www.graincorp.com.au/about-graincorp/company/corporate-governance. These projects are part of a continuous improvement program, as increasing water and energy efficiency and reducing waste to landfill are both environmentally sustainable and economically beneficial to the Company.

The Company is a registered reporter of energy use and greenhouse gas emissions under the National Greenhouse and Energy Reporting Act . Sites within the Australian Oils business, Allied Mills and Barrett Burston Malting that trigger thresholds under the National Pollutant Inventory are also subject to annual reporting. Information relating to GrainCorp’s compliance with the National Greenhouse and Energy Reporting Act can be found on the Clean Energy Regulator’s website.

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iii. Social Sustainability Risk

GrainCorp does not have a material exposure to social sustainability risk. The Company has long established and sound relationships with the communities and customers with whom it engages, all over the world. For almost 100 years, GrainCorp has been at the forefront of agricultural supply chain solutions for Australian growers. Over that time the Company has been meeting the needs of its farming partners. Similarly, GrainCorp has developed long term customer and supplier relationships that are built on trust, transparency and quality service.

GrainCorp contributes tangibly to rural and regional communities across the world through the GrainCorp Community Fund. The Company donates money to select community organisations following an evaluation process. Details of GrainCorp’s Community Fund contributions in 2015 can be found in the 2015 Sustainability Report, see: http://www.graincorp.com.au/about-graincorp/company/corporate-governance.

In addition to maintaining strong customer, supplier and other stakeholder relationships, GrainCorp is committed to developing its people, building an inclusive workforce and ensuring the Company and its people uphold the highest moral, ethical and social values. GrainCorp has a governance framework, through its Code of Conduct, that ensures its staff understand the values the Company aspires to, and expects of everyone in the workplace.

e) Internal Audit

The Board has appointed the audit firm, KPMG, to manage GrainCorp’s internal audit function (‘Internal Audit’).

The role of Internal Audit in relation to financial reporting is to provide the Board, through the BAC, with an effective and independent appraisal of GrainCorp’s internal control framework and an assurance that material risks and compliance obligations are effectively managed.

Internal Audit operates under a Charter and an annual audit program approved by the BAC. Internal Audit reports to the BAC but also has a direct line of communication to the Group CFO.

The annual Internal Audit work program is developed in consultation with the BAC and the Executive Team after considering GrainCorp’s risk profile and appetite.

Representatives of Internal Audit attend all meetings of the BAC and provide regular reports of progress against the annual program and detail any issues that have arisen.

Principle 8: Remunerate fairly and responsibly

a) People Remuneration and Nominations Committee

The PRNC assists the Board to consider people and remuneration strategies and related issues within GrainCorp, in addition to its ‘nominations’ responsibilities.

The role of the PRNC is to ensure that GrainCorp:

Has coherent and transparent remuneration policies and practices that are consistent with the Company’s strategic goals and people objectives, enabling it to attract, motivate and retain employees at all levels.
Fairly and responsibly remunerates Executives and other employees having regard to the performance of the Company, the performance of the Executive or employee and the general remuneration environment.

The responsibilities of the PRNC are detailed in its Charter.

Information concerning the members of the PRNC is detailed at Principle 2 section (g) above.

b) Non-executive Director remuneration

The remuneration of Non-executive Directors is by way of a fee and is paid according to the role of the Director on the Board and the Board Committees on which they serve.

Non-executive Directors do not participate in other remuneration components, such as performance related short term or long term incentives that are available to GrainCorp’s Executives and other employees.

c) Remuneration Report

Details of GrainCorp’s remuneration policies and practices and information relating to the remuneration of its Key Management Personnel (‘KMP’) (including the Non–executive Directors) are disclosed in the Remuneration Report starting on page 23 in the Directors’ Report.

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Conclusion and summary of compliance with the recommendations

The Board is satisfied with GrainCorp’s level of compliance with the Recommendations, but recognises that governance processes require continual monitoring and refinement. The Board, primarily through its SHEGC, regularly reviews GrainCorp’s corporate governance framework to ensure it remains effective, compliant with changing requirements and relevant to GrainCorp’s increasingly international business.

This Corporate Governance Statement is current as at 12 November 2015, and was approved by the Board on 12 November 2015.

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2015 Financial Report

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|2015 Financial Report|56|
|Consolidated Income Statement ............................................................................................................... 57|
|Consolidated Statement of Comprehensive Income ..................................................................................... 58|
|Consolidated Statement of Financial Position .............................................................................................. 59|
|Consolidated Statement of Changes in Equity............................................................................................. 60|
|Consolidated Statement of Cash Flows ...................................................................................................... 61|
|Notes to the Financial Statements|62|
|1.|Summary of significant accounting policies ............................................................................................ 62|
|2.|Critical accounting estimates and judgements ....................................................................................... 75|
|3.|Segment information ......................................................................................................................... 77|
|4.|Revenue .......................................................................................................................................... 79|
|5.|Other income .................................................................................................................................... 79|
|6.|Expenses ......................................................................................................................................... 80|
|7.|Remuneration of auditor ..................................................................................................................... 80|
|8.|Significant items ............................................................................................................................... 81|
|9.|Income tax expense .......................................................................................................................... 82|
|10.Cash and cash equivalents .................................................................................................................. 83|
|11.Trade and other receivables ................................................................................................................ 83|
|12.Inventories ....................................................................................................................................... 83|
|13.Derivative financial instruments........................................................................................................... 84|
|14.Deferred tax assets and liabilities ........................................................................................................ 86|
|15.Property, plant and equipment ............................................................................................................ 87|
|16.Intangible assets ............................................................................................................................... 88|
|17.Trade and other payables ................................................................................................................... 89|
|18.Borrowings ....................................................................................................................................... 90|
|19.Other financial liabilities ..................................................................................................................... 91|
|20.Provisions ........................................................................................................................................ 92|
|21.Retirement benefit obligations ............................................................................................................. 93|
|22.Contributed equity ............................................................................................................................. 95|
|23.Dividends ......................................................................................................................................... 97|
|24.Earnings per share ............................................................................................................................ 98|
|25.Contingencies ................................................................................................................................... 98|
|26.Commitments ................................................................................................................................... 99|
|27.Parent entity financial information ..................................................................................................... 100|
|28.Subsidiaries .................................................................................................................................... 101|
|29.Unconsolidated structured entities ..................................................................................................... 102|
|30.Deed of cross guarantee ................................................................................................................... 103|
|31.Investments accounted for using the equity method ............................................................................. 105|
|32.Reconciliation of profit after income tax to net cash flow from operating activities ..................................... 106|
|33.Financial risk management ............................................................................................................... 107|
|34.Key Management Personnel disclosures and related party transactions .................................................... 118|
|35.Share based payments ..................................................................................................................... 120|
|36.Events occurring after the reporting period ......................................................................................... 121|

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2015 FINANCIAL REPORT

Consolidated Income Statement

For the year ended 30 September 2015

Consolidated Income Statement For the year ended 30 September 2015
Note	2015 $ M 2014 $ M
Revenue 4 Other income 5 Goods purchased for resale Raw materials and consumables used Employee benefits expense 6 Finance costs Depreciation and amortisation 15, 16 Operating leases Repairs and maintenance Other expenses 6 Significant items 8 Share of results of investments accounted for using the equity method 31	4,085.5 4,094.1 (21.5) 75.0 (2,137.2) (2,109.0) (1,155.5) (1,238.0) (335.4) (331.7) (43.0) (45.0) (136.3) (126.5) (35.7) (39.0) (39.4) (41.3) (130.5) (121.5) (16.5) (61.6) 9.1 9.6
Profit before income tax	43.6 65.1
Income tax expense 9	(11.5) (14.8)
Profit for the year	32.1 50.3
Profit attributable to owners of GrainCorp Limited	32.1 50.3

Note	Cents Cents
Earnings per share Basic earnings per share 24 Diluted earnings per share 24	14.0 22.0 14.0 22.0

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

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Consolidated Statement of Comprehensive Income

For the year ended 30 September 2015

Consolidated Statement of Comprehensive Income For the year ended 30 September 2015
Note	2015 $ M 2014 $ M
Profit for the year	32.1 50.3
Other comprehensive income Items that will not be reclassified to profit and loss: Remeasurements of retirement benefit obligations 21 Income tax relating to these items 9 Items that may be reclassified to profit and loss: Changes in fair value of cash flow hedges Share of comprehensive income of joint ventures 31 Income tax relating to these items 9 Exchange differences on translation of foreign operations	(1.1) (2.9) 0.6 (0.1) (21.6) (3.8) 0.1 (0.1) 5.2 1.3 89.2 21.7
Other comprehensive income for the year, net of tax	72.4 16.1
Total comprehensive income for the year attributable to owners of GrainCorp Limited	104.5 66.4

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

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Consolidated Statement of Financial Position

As at 30 September 2015

Consolidated Statement of Financial Position As at 30 September 2015
Note	2015 $ M 2014 $ M
Current assets Cash and cash equivalents 10 Trade and other receivables 11 Inventories 12 Derivative financial instruments 13 Assets classified as held for sale 15 Current tax assets	374.0 206.2 474.6 404.3 554.9 576.2 91.5 153.0 0.4 5.6 2.5 23.1
Total current assets	1,497.9 1,368.4
Non-current assets Trade and other receivables 11 Derivative financial instruments 13 Investments in other entities Deferred tax assets 14 Property, plant and equipment 15 Intangible assets 16 Investments accounted for using the equity method 31	0.2 19.3 5.7 4.6 15.4 11.0 63.8 26.8 1,375.5 1,216.6 545.6 525.0 169.6 161.5
Total non-current assets	2,175.8 1,964.8
Total assets	3,673.7 3,333.2
Current liabilities Trade and other payables 17 Borrowings 18 Derivative financial instruments 13 Other financial liabilities 19 Current tax liabilities Provisions 20	348.7 268.9 329.3 352.5 103.7 127.2 0.1 0.2 7.8 1.8 81.4 94.7
Total current liabilities	871.0 845.3
Non-current liabilities Trade and other payables 17 Borrowings 18 Derivative financial instruments 13 Other financial liabilities 19 Deferred tax liabilities 14 Provisions 20 Retirement benefit obligations 21	41.0 18.2 789.1 600.7 21.2 4.2 2.5 0.2 78.0 62.0 11.9 26.0 37.2 32.1
Total non-current liabilities	980.9 743.4
Total liabilities	1,851.9 1,588.7
Net assets	1,821.8 1,744.5
Equity Contributed equity 22 Reserves Retained earnings	1,346.0 1,344.8 116.8 40.8 359.0 358.9
Total equity	1,821.8 1,744.5

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

2015 ANNUAL REPORT 59

GRAINCORP LIMITED

2015 FINANCIAL REPORT

Consolidated Statement of Changes in Equity

For the year ended 30 September 2015

	Hedging reserve $ M Capital reserve $ M Share option reserve $ M Translation reserve $ M	Total reserves $ M Contributed equity $ M Retained earnings $ M	Total equity $ M
As at 30 September 2013	(0.5) 8.3 8.1 12.8	28.7 1,338.3 391.6	1,758.6
Profit for the year	- - - -	- - 50.3	50.3
Other comprehensive income: Exchange difference on translation of foreign operations Changes in fair value of cash flow hedges Remeasurements of defined benefit obligations Share of other comprehensive loss of joint ventures Deferred tax credit / (expense)	- - - 21.7 (3.8) - - - - - - - (0.1) - - - 1.3 - - -
		21.7 - - (3.8) - - - - (2.9) (0.1) - - 1.3 - (0.1)	21.7
			(3.8)
			(2.9)
			(0.1)
			1.2
Total other comprehensive income	(2.6) - - 21.7	19.1 - (3.0)	16.1
Total comprehensive income	(2.6) - - 21.7	19.1 - 47.3	66.4
Transactions with owners: Dividends paid Share-based payments Dividends received by Employee Trust Less: Treasury shares Less: Treasury shares vested to employees	- - - - - - (0.2) - - - - - - - - - - - (6.8) -	- - (80.1)
			(80.1)
		(0.2) - -	(0.2)
		- - 0.1	0.1
		- (0.3) -	(0.3)
		(6.8) 6.8 -	-
Total transactions with owners	- - (7.0) -	(7.0) 6.5 (80.0)	(80.5)
As at 30 September 2014	(3.1) 8.3 1.1 34.5	40.8 1,344.8 358.9	1,744.5
Profit for the year	- - - -	- - 32.1	32.1
Other comprehensive income: Exchange difference on translation of foreign operations Changes in fair value of cash flow hedges Remeasurements of defined benefit obligations Share of other comprehensive income of joint ventures Deferred tax credit	(0.6) - - 92.7 (21.6) - - - - - - - 0.1 - - - 5.2 - - -
		92.1 - (2.9) (21.6) - - - - (1.1) 0.1 - -	89.2
			(21.6)
			(1.1)
			0.1
		5.2 - 0.6	5.8
Total other comprehensive income	(16.9) - - 92.7	75.8 - (3.4)	72.4
Total comprehensive income	(16.9) - - 92.7	75.8 - 28.7	104.5
Transactions with owners: Dividends paid Share-based payments Less: Treasury shares vested to employees	- - - - - - 1.4 - - - (1.2) -	- - (28.6) 1.4 - - (1.2) 1.2 -
			(28.6)
			1.4
			-
Total transactions with owners	- - 0.2 -	0.2 1.2 (28.6)	(27.2)
As at 30 September 2015	(20.0) 8.3 1.3 127.2	116.8 1,346.0 359.0	1,821.8

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

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2015 FINANCIAL REPORT

Consolidated Statement of Cash Flows

For the year ended 30 September 2015

Consolidated Statement of Cash Flows For the year ended 30 September 2015
Note	2015 $ M 2014 $ M
Cash flows from operating activities Receipts from customers Payments to suppliers and employees	4,315.5 4,594.5 (4,006.9) (4,425.2)
Proceeds from bank loans – inventory funding Interest received Interest paid Income taxes paid	308.6 169.3 9.1 83.2 2.6 11.3 (42.6) (46.6) (6.6) (46.1)
Net inflow from operating activities 32	271.1 171.1
Cash flows from investing activities Payments for property, plant and equipment Payments for computer software Proceeds from sale of property, plant and equipment Payments for investment / business (net of cash acquired) Dividends received Loans repaid by related parties	(223.6) (141.2) (12.8) (25.3) 6.2 0.8 (2.3) (9.3) 0.2 - 19.1 0.2
Net outflow from investing activities	(213.2) (174.8)
Cash flows from financing activities Proceeds from borrowings Repayment of borrowings Dividend paid 23	679.8 594.6 (561.8) (564.6) (28.6) (80.1)
Net inflow / (outflow) from financing activities	89.4 (50.1)
Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effects of exchange rate changes on cash and cash equivalents	147.3 (53.8) 206.2 255.0 20.5 5.0
Cash and cash equivalents at the end of the year 10	374.0 206.2

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

2015 ANNUAL REPORT 61

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

Notes to the Financial Statements

For the year ended 30 September 2015

1. Summary of significant accounting policies

The financial report includes consolidated financial statements for GrainCorp Limited (‘GrainCorp’ or the ‘Company’) and its controlled entities (collectively the ‘Group’). GrainCorp Limited is a company incorporated in Australia, limited by shares which are publicly traded on the Australian Securities Exchange.

The financial report of GrainCorp Limited for the period ended 30 September 2015 was authorised for issue in accordance with a resolution of the Directors on 12 November 2015. The Directors have the power to amend and reissue the financial report.

The nature of the operations and principal activities of the Group are described in the Directors’ Report.

a) Basis of preparation

The financial report is a general purpose financial report prepared in accordance with Australia Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

The accounting policies have been applied consistently to all periods presented in the financial report. New or amended accounting standards that have current year application did not have a significant impact on the presentation of the Group’s financial statements. No accounting standards issued but not yet effective have been early adopted in the financial year. The financial report has been prepared on a going concern basis.

i. Statement of compliance

Australian Accounting Standards include Australian equivalents to International Financial Reporting Standards (‘AIFRS’). Compliance with AIFRS ensures that the financial report of GrainCorp Limited complies with the International Financial Reporting Standards (‘IFRS’).

Certain comparative amounts have been reclassified to align with current period presentation.

ii. Historical cost convention

These financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities (including derivative instruments), and commodity inventories, at fair value through profit or loss.

iii. Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 2.

iv. Rounding amounts

The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the financial report. The financial reports and Directors’ report have been rounded to the nearest hundred thousand dollars, or in certain cases, to the nearest thousand dollars.

b) Principles of consolidation

i. Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of GrainCorp as at 30 September 2015 and the results of all subsidiaries for the year then ended. GrainCorp and its subsidiaries together are referred to in these financial statements as the Group.

Subsidiaries are all entities (including special purpose entities) over which the group has control. The group controls an entity when the group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group (refer to note 1(g)).

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NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies (continued)

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

Non-controlling interests in the results and the equity of subsidiaries are shown separately in the Consolidated Income Statement, Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Financial Position, respectively.

ii. Joint ventures

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control (ie when the strategic financial and operating policy decisions relating to activities of the joint venture require the unanimous consent of the parties sharing control). Joint venture arrangements that involve the establishment of a separate entity in which each venturer has an interest are referred to as joint ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal structure of the joint venture. Investments in joint ventures are accounted for using the equity accounting method. The investments are carried at the lower of the equity accounted amount and the recoverable amount.

The Group’s share of joint ventures’ post-acquisition profit or loss is recognised in the Consolidated Income Statement from the date that joint control commences until the date that joint control ceases. The Group’s share of post-acquisition movements in reserves is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the carrying value of the investment. Dividends reduce the carrying amount of the equity accounted investment.

When the Group’s share of losses exceeds its equity accounted carrying value of a joint venture, the Group’s carrying amount is reduced to nil and recognition of further losses is discontinued, except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of a joint venture.

iii. Employee share trust

The Group has formed a trust to administer the Group’s employee share schemes. This trust is consolidated, as the substance of the relationship is that the trust is controlled by the Group.

iv. Structured entity

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding who controls the entity, for example when any voting rights relate to administrative tasks only, and key activities are directed by contractual agreement. Structured entities often have restricted activities and a narrow and well defined objective. Involvement with structured entities is disclosed in note 29.

Shares held by the GrainCorp Employee Share Ownership Plan Trust are disclosed as treasury shares and deducted from contributed equity.

c) Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid.

i. Sale of goods

Revenue is generated from the marketing and sale of grain, production and provision of malt products, processing and crushing of oilseeds and the supply of edible oils and feeds. Revenue is recognised when the risks and rewards of the ownership of goods are transferred to an external party. This is either when goods are delivered, or for export sales it is in accordance with the shipping terms.

ii. Services

Service revenue is earned from grain handling services including receival, storage and handling of grain. Revenue recognition for receival and handling occurs as the service is rendered and for storage, it is recognised over the storage period.

iii. Rental income

Rental income is recognised on a straight-line basis over the lease term.

iv. Interest income

Interest income is recognised as the interest accrues using the effective interest method.

2015 ANNUAL REPORT 63

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NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies (continued)

v. Dividends

Dividends are recognised as revenue when the right to receive payment is established.

d) Government grants

Government grants relating to costs are deferred and recognised in the income statement over the period necessary to match them with the costs they are intended to compensate.

Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to the income statement on a straight-line basis over the expected lives of the related assets.

Where government grants take the form of a transfer of non-monetary assets for the use of the entity, both the asset and grant are recorded at a nominal amount.

e) Income tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributed to temporary differences between the tax bases of assets and liabilities and their carrying amount in the financial statements, and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Company’s subsidiaries and associates operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred income tax is provided in full, using the balance sheet liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax is also not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

GrainCorp and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are offset in the consolidated financial statements.

f) Goods and services tax (‘GST’) and other value-added taxes

Revenues, expenses and assets are recognised net of the amount of associated indirect taxes, except where the amount of GST incurred is not recoverable from the taxation authority, in which case it is recognised as part of the cost of acquisition of an asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of other receivables or payables in the statement of financial position.

Cash flows are included in the cash flow statement on a gross basis. 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.

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NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies (continued)

g) Business combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-byacquisition basis, the Group recognises non-controlling interest in the acquiree either at fair value or at the noncontrolling interest’s proportionate share of the acquirees’ net identifiable assets.

The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in the income statement as a bargain purchase.

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

h) Cash and cash equivalents

For cash flow statement presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities in the Consolidated Statement of Financial Position.

i) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. Trade receivables are generally due for settlement within 30 days. They are presented as current assets unless collection is not expected for more than 12 months after period end.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written-off. A provision for impairment of trade receivables is established when there is objective evidence that the Group will be unable to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and present value of estimated future cash flows. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. Movements in the amount of the provision are recognised in the income statement.

j) Inventories

i. Consumable stores

Consumable stores held for own consumption are valued at the lower of cost and net realisable value.

ii. Raw materials

Raw materials held for own use are valued at the lower of cost and net realisable value. Cost also includes the transfer from equity of any gains/losses on qualifying cash flow hedges relating to the purchases of raw materials.

iii. Finished goods and work in progress

Finished goods and work in progress are stated at the lower of cost and net realisable value. Cost comprises raw materials, direct labour and other direct costs and related production overheads. Net realisable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

2015 ANNUAL REPORT 65

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies (continued)

iv. Trading inventory Trading inventory is stated at the lower of cost and net realisable value. Cost comprises direct materials and an appropriate portion of variable overhead. Costs are assigned to individual items of inventory on the basis of weighted average costs.
v. Commodities inventory
Commodities inventory, principally grain inventories acquired with the purpose of selling in the near future and generating a profit from fluctuation in price or broker-traders’ margin, is measured at fair value less costs to sell, with changes in fair value recognised in the income statement.

k) Non-current assets (or disposal groups) held for sale and discontinued operations

Non-current assets (or disposal groups) are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell.

An impairment loss is recognised for any initial or subsequent write down of the asset (or disposal group) to fair value less costs to sell. A gain is recognised for any subsequent increase in fair value less costs to sell of an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is recognised at the date of derecognition.

Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised.

Non-current assets classified as held for sale and the assets of a disposal group classified as held for sale are presented separately from the other assets in the Consolidated Statement of Financial Position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the Consolidated Statement of Financial Position.

A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the Consolidated Income Statement.

l) Investments and other financial assets

Classification

The Group classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments at initial recognition and in the case of assets classified as held-to-maturity, re-evaluates this designation at each reporting date.

i. Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are categorised as held for trading unless they are designated as hedges. Assets in this category are classified as current assets.
ii. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for those with maturities greater than 12 months after the end of the reporting period which are classified as non-current assets. Loans and receivables are included in trade and other receivables in the Consolidated Statement of Financial Position.
iii. Held-to-maturity investments
Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity.
iv. Available-for-sale financial assets

Available-for-sale financial assets, comprising principally marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-

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NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies (continued)

current assets unless management intends to dispose of the investment within 12 months of the end of the reporting period. Investments are designated as available-for-sale if they do not have fixed maturities and fixed or determinable payments and management intends to hold them for the medium to long term.

Recognition and derecognition

Regular purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when all rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership.

Measurement

At initial recognition, the Group measures a financial asset at fair value plus, in the case of financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit and loss are expensed in profit or loss.

Loans and receivables and held-to-maturity investments are subsequently carried at amortised costs using the effective interest method.

Available-for-sale financial assets and financial assets at fair value through profit or loss are subsequently carried at fair value. Realised and unrealised gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the income statement in the period in which they arise. Unrealised gains and losses arising from changes in the fair value of non-monetary financial assets classified as available-for-sale are recognised in equity in the available-for-sale investments revaluation reserve. When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments are included in the Consolidated Income Statement as gains and losses from investment securities.

Details on how the fair value of financial instruments is determined are disclosed in note 33.

m) Derivatives

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. The method of recognising the resulting gain or loss depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as either:

Hedges of the fair value of recognised assets or liabilities or a firm commitment (fair value hedges).
Hedges of a particular risk associated with the cash flows of recognised assets and liabilities and highly probable forecast transactions (cash flow hedges).
Hedges of a net investment in a foreign operation (net investment hedges).

The Group documents at the inception of the transaction the relationship between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedging transactions. The Group also documents its assessment, both at hedge inception and on an ongoing basis, of whether the derivatives that are used in hedging transactions have been and will continue to be highly effective in offsetting changes in the cash flows of hedged items.

The full fair value of a hedging derivative is classified as a non-current asset or liability when the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability when the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as current assets or liabilities.

i. Fair value hedge
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The gain or loss relating to the effective portion of interest rate swaps hedging fixed rate borrowings is recognised in profit or loss within finance costs, together with changes in the fair value of the hedged fixed rate borrowings attributable to interest rate risk. The gain or loss relating to the ineffective portion is recognised in profit or loss within other income or other expenses.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount of a hedged item for which the effective interest method is used is amortised to profit or loss over the period to maturity using a recalculated effective interest rate.

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GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies (continued)

ii. Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in the income statement within other income or other expense.

Amounts accumulated in equity are reclassified to the income statement in the periods when the hedged item affects profit or loss (for example, when the forecast sale that is hedged takes place). However, when the forecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventory or fixed assets), the gains and losses previously deferred into equity are transferred from equity and included in the initial measurement of the cost of the asset.

When a hedging instrument expires or is sold, or when a hedge no longer meets the criteria for hedge accounting, any cumulative gain or loss existing in equity at the time remains in equity and is recognised when the forecast transaction is ultimately recognised in the income statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that was reported in equity is immediately transferred to the income statement within other income or other expense.

iii. Net investment hedges

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss within other income or other expenses.

Gains and losses accumulated in equity are reclassified to the income statement when the foreign operation is partially disposed of or sold.

iv. Derivatives that do not qualify for hedge accounting Where derivative instruments do not qualify for hedge accounting, changes in fair value are recognised immediately in the income statement and are included in other income or other expenses.

n) Financial guarantee contracts

Financial guarantee contracts are recognised as a financial liability at the time the guarantee is issued. The liability is measured at fair value and subsequently at the higher of the amount determined in accordance with AASB 137 Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less cumulative amortisation, where appropriate.

The fair value of financial guarantees is determined as the present value of the difference in cash flows between the contractual payments under the debt instrument and the payments that would be required without the guarantee, or the estimated amount that would be payable to a third party for assuming the obligations.

Where guarantees in relation to loans or other payables of subsidiaries or associates are provided for no compensation, the fair values are accounted for as contributions and recognised as part of the cost of the investment.

o) Property, plant and equipment

i. Cost of asset

Property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses. For acquired assets, cost includes the purchase price, costs that are directly attributable to bringing the asset to the necessary location and condition and an initial estimate of any dismantling, removal and restoration costs that have been recognised as provisions. For self-constructed assets, cost includes the cost of all materials used in construction, direct labour and borrowing costs incurred during the construction.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Borrowing costs incurred for the construction of any qualifying asset are capitalised during the period of time that it is required to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed.

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NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies (continued)

ii. Depreciation

Freehold land is not depreciated. Depreciation on other assets is calculated using the straight-line method to allocate the cost over their estimated useful lives as follows:

Freehold buildings – 2 to 50 years
Leasehold improvements – 3 to 40 years
Plant and equipment – 1 to 50 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

Assets located at port sites are depreciated over useful lives based on management’s judgement of the likelihood of continuing renewal of the underlying operating leases.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposal are determined by comparing proceeds with the carrying amount, and are included in the Consolidated Income Statement.

iii. Leased Assets

Leases of property, plant and equipment where the Group, as lessee, has substantially all the risks and rewards of ownership, are classified as finance leases. Finance leases are capitalised at the lease’s inception at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding rental obligations, net of finance charges, are included in current and non-current borrowings. Each lease payment is allocated between the liability and finance charges and the interest element of the finance cost is charged to the income statement. The leased asset is depreciated on a straight-line basis over the shorter of the asset’s useful life and the expected total lease term.

Leases in which a significant portion of the risks and rewards of ownership are not transferred to the Group as lessee are classified as operating leases. Payments under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the lease term.

Lease income from operating leases where the Group is lessor is recognised in income on a straight-line basis over the lease term. The respective leased assets are included in the statement of financial position based on their nature.

iv. Compensation for impairment

Compensation payable by third parties for items of property, plant and equipment that are impaired, lost, or given up is included in other income when the compensation becomes receivable.

p) Intangible assets

i. Computer software

Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to computer software. Costs capitalised include external direct costs of materials and service, direct payroll and payroll related costs of employees’ time spent on the project. Amortisation is calculated on a straight-line basis over an estimated useful life of 3 to 7 years.

Computer software development costs include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility and where the Group has an intention and ability to use the asset.

ii. Goodwill

The measurement of goodwill on acquisition is described in note 1(g).

Goodwill is not amortised but is tested for impairment at least annually and whenever there is indication that the goodwill may be impaired. Goodwill is stated at cost less accumulated impairment losses. Refer note 1(q) for accounting policy on impairment. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity or operation sold.

iii. Trade name

Trade names acquired as part of a business combination are recognised separately from goodwill. Trade names are carried at fair value at the date of acquisition less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis over the estimated useful life of 3 to 9 years.

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1. Summary of significant accounting policies (continued)

iv. Customer contracts and relationships Customer contracts and relationships acquired as part of a business combination are recognised separately from goodwill. The customer contracts and relationships are carried at their fair value at the date of acquisition less accumulated amortisation and impairment losses. Amortisation is calculated on a straight-line basis over the estimated useful life of 5 to 10 years.
v. Research and development
Research expenditure is recognised as an expense as incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will, after considering its commercial and technical feasibility, be completed and generate future economic benefits and its costs can be measured reliably. The expenditure capitalised comprises all directly attributable costs, including costs of material, services, direct labour and an appropriate proportion of overheads. Other development expenditures that do not meet these criteria are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Capitalised development costs are recorded as intangible assets and amortised from the point at which the asset is ready for use on a straight-line basis over its useful life, which varies from 3 to 7 years.

q) Impairment of assets

Assets that have an indefinite useful life, including goodwill, are not subject to amortisation and are tested at least annually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows, cashgenerating units (‘CGU’).

Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash generating units or groups of cash-generating units that are expected to benefit from the business combination in which goodwill arose, identified according to operating segments.

r) Repairs and maintenance

Property, plant and equipment are required to be overhauled on a regular basis. This is managed as part of an ongoing maintenance program. The costs of this maintenance are charged as expenses as incurred, except where they relate to the replacement of a component of an asset, in which case the costs are capitalised and depreciated. Other routine operating maintenance, repair and minor renewal costs are also charged as expenses as incurred.

s) Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are unpaid. These amounts are unsecured and are generally paid within 30 days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within 12 months of the reporting date.

t) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the income statement over the period of the borrowings using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss as other income or finance costs.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

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1. Summary of significant accounting policies (continued)

u) Employee benefits

i. Short term obligations

Liabilities for wages and salaries are included in other payables. Non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in current provisions in respect of employees’ services up to the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. Non-accumulating sick leave is charged to expense as the leave is taken and measured at the rates paid or payable.

ii. Other long-term employee benefit obligations

The liability for long service leave is measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using interest rates on high quality corporate bonds with terms to maturity that match, as closely as possible, the estimated future cash outflows.

iii. Pension obligations

Group companies operate various pension plans. The Group has both defined benefit and defined contribution plans. A defined contribution plan is a pension plan under which the Group pays fixed contributions publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. Typically defined benefit plans define an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service, and remuneration. The schemes are funded through payments to trustee-administered funds determined by periodic actuarial calculations.

The liability or asset recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximately equal to the terms of the related pension liability.

Remeasurements arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income in the period in which they arise. Past-service costs are recognised immediately in income.

iv. Life assurance and health insurance

Some Group entities pay premiums for life assurance and health insurance. The payments are recognised as employee benefit expense when they are due.

v. Termination benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage voluntary redundancy. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

vi. Share-based payments

Share-based compensation benefits are provided to employees via the LTI Plan. Information relating to these schemes is set out in note 35.

The fair value of share-based payment awards is recognised as an employee expense, with a corresponding increase in the share option reserve included in equity, over the period that the employees unconditionally become entitled to the awards. The total amount to be expensed is determined by reference to the fair value of the awards granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions. Non-market vesting conditions are included in assumptions about the number of awards that are expected to vest. At the end of each period, the entity revises its estimates of the number of awards that are expected to vest based

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1. Summary of significant accounting policies (continued)

on the non-market vesting conditions and any impact is recognised in the income statement with a corresponding adjustment to equity.

vii. Bonus plans

The Group recognises a liability and an expense for bonuses. The liability is recognised where the Group has a contractual obligation or where there is a past practice that has created a constructive obligation.

v) Provisions

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where 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 interest expense.

w) Workers’ Compensation

The Group insures for workers’ compensation through the relevant statutory funds in all Australian States and Territories. Premiums are recognised as an expense in the income statement as incurred.

Prior to 29 June 2006 the controlled entity GrainCorp Operations Limited was a self-insurer in New South Wales for workers’ compensation liabilities. Provision is made for potential liability in respect of claims incurred prior to 29 June 2006 on the basis of an independent actuarial assessment.

x) Foreign currency translation

i. Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The consolidated financial statements are presented in Australian dollars, which is GrainCorp’s functional and presentation currency.

ii. Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, except when they are deferred in equity as qualifying cash flow hedges and qualifying net investment hedges or are attributable to part of the net investment in a foreign operation.

Foreign exchange gains and losses that related to borrowings are presented in the income statement, within finance costs. All other foreign exchange gains and losses are presented in the Consolidated Income Statement on a net basis within other income or other expenses.

Non-monetary items that are measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences on assets and liabilities carried at fair value are reported as part of the fair value gain or loss. For example, translation differences on nonmonetary assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss and translation differences on non-monetary assets such as equities classified as available-for-sale financial assets are recognised in other comprehensive income.

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1. Summary of significant accounting policies (continued)

iii. Group companies The results and financial position of all the Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
i. Assets and liabilities for each statement of financial position presented are translated at the closing rate at the date of that statement of financial position.
ii. Income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction date, in which case income and expenses are translated at the rate on the dates of the transactions).
iii. All resulting exchange differences are recognised as a separate component of equity and disclosed in the Statement of Comprehensive Income.

On consolidation, exchange differences arising from the translation of any net investment in foreign entities, are recognised in other comprehensive income. When a foreign operation is sold, a proportionate share of such exchange differences is reclassified to profit and loss, as part of the gain and loss on sale where applicable.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entities and translated at the closing rate.

y) Contributed equity

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. Incremental costs directly attributable to the issue of new shares or options, for the acquisition of a business, are included in the cost of the acquisition as part of the purchase consideration.

Shares acquired by an employee share trust that is consolidated are not cancelled, but are presented as a deduction from equity.

z) Earnings per share

i. Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the year, adjusted for bonus elements in ordinary shares issued during the year.
ii. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

aa) Parent entity financial information

The financial information for the parent entity, GrainCorp Limited, disclosed in note 27 has been prepared on the same basis as the consolidated financial statements, except as set out below.

i. Investments in subsidiaries and associates Investments in subsidiaries and associates are accounted for at cost in the financial statements of GrainCorp Limited. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being deducted from the carrying amount of these investments.
ii. Tax consolidation legislation GrainCorp Limited is the head entity in a tax consolidated group comprising the head entity and all of its wholly-owned Australian subsidiaries. The head entity, GrainCorp Limited, and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a standalone taxpayer in its own right.

The members of the tax consolidated group have entered into a tax funding agreement which sets out the funding obligations of members of the tax consolidated group in respect of tax amounts. Under the terms of the agreement the wholly-owned entities fully compensate GrainCorp Limited for any current tax payable

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NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies (continued)

assumed and are compensated by GrainCorp Limited for any current tax receivable and deferred tax assets relating to unused tax losses or unused tax credits that are transferred to GrainCorp Limited under the tax consolidation legislation. The funding amounts are determined by reference to the amounts recognised in the wholly-owned entities' accounts.

The amounts receivable/payable under the tax funding agreement is due on demand, subject to set-off or agreement to the contrary, and regardless of whether any consolidated group liability is actually payable by the head entity. These amounts are recognised as current inter-company receivables or payables. Any differences between the amounts assumed and amounts receivable or payable under the tax funding agreement are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.

iii. Financial guarantees

Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the fair values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.

iv. Share-based payments

The grant by the Company of rights over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution to that subsidiary undertaking. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity.

ab) Significant Items

GrainCorp defines significant items as not in the ordinary course of business, non-recurring and material in nature and amount.

ac) New and amended standards adopted by the group

The Group has applied the following amended Australian Accounting Standards and AASB Interpretations as of 1 October 2014:

AASB 2013-3 Amendments to AASB 136 – Recoverable Amount Disclosures for Non-Financial Assets
AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting
AASB 2014-1 Amendments to Australian Accounting Standards – Annual Improvements project
AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments

The adoption of these standards did not have a material impact on the current period or any prior period and is not likely to affect future periods.

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NOTES TO THE FINANCIAL STATEMENTS

1. Summary of significant accounting policies (continued)

ad) New accounting standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for 30 September 2015 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards and interpretations is set out below.

			Application	Application
			date of	date for
Title of standard	Nature of change	Impact to Group	standard	Group
AASB 9 Financial	AASB 9 is a new standard that replaces	The Group has	1 January	1 October
Instruments	AASB 139. The standard includes a model	not yet fully	2018	2018
	for classification and measurement, a	assessed the
	single, forward-looking ‘expected loss’	impact of the
	impairment model and introduces a	changes.
	reformed approach to hedge accounting.
	The standard is available for early
	adoption.
AASB 15 Revenue	The AASB has issued a new standard for	The new	1 January	1 October
from contracts	the recognition of revenue. This will	standard is not	2018	2018
with customers	replace AASB 118 which covers contracts	expected to have
	for goods and services and AASB 111	a significant
	which covers construction contracts.	impact on the
	The new standard is based on the	financial
	principle that revenue is recognised when	statements.
	control of a good or service transfers to a
	customer – so the notion of control
	replaces the existing notion of risks and
	rewards.
	Early application of the standard is
	permitted.

There are no other standards that are not yet effective and that would be expected to have a material impact on the Group in the current or future reporting periods and on foreseeable future transactions.

2. Critical accounting estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. These key accounting estimates and judgements are below.

i. Estimated impairment of goodwill and other assets
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in note 1(q). The recoverable amounts of cash-generating units have been determined based on the higher of fair value less cost to sell and value-in-use. The calculations to determine the recoverable amount of cash-generating units require the use of assumptions. Refer to note 16 for details of these assumptions.

ii. Treatment of inactive sites

From time to time, the Group decides to close and/or suspend operations at certain sites based on expected receivals in the coming year, or other relevant factors. These sites can become operational in future periods. The carrying value of such sites is considered for impairment annually. The total value of such sites as at 30 September 2015 amounts to $21.7 million (2014: $23.8 million).

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Critical accounting estimates and judgements (continued)
iii. Defined benefit plans’ obligations

The calculation of defined benefit plans’ obligations is determined on an actuarial basis, using a number of assumptions including discount rates and future salary increases. Discount rates are based on interest rates applicable to high-quality corporate bonds that are denominated in the currency in which the benefits will be paid. Refer to note 21 for details of these assumptions.

iv. Income taxes

The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group estimates its tax liabilities based on the Group’s understanding of the tax law pertaining in each jurisdiction. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax assets and liabilities in the period in which such determination is made.

v. Fair value where there is no organised market
The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at the end of each reporting period. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Physical positions comprising inventory, forward sales and forward purchases for commodity trading do not have quoted market prices available. Other techniques, such as obtaining bid values from a variety of commodity brokers and trade marketers, are used to determine fair value for these financial instruments. The fair value of forward exchange contracts is determined using forward exchange market rates at the reporting date.
vi. Port leases and the useful lives of port assets
Operating leases over port facilities are on terms ranging from 3 to 99 years. The majority of these leases include options to extend terms. Given the nature of the Group’s relationship with port operators it is anticipated that most leases will be continually renewed. As a result, the useful lives of certain port assets may be assessed by management to be in excess of the lease term of the underlying port lease.
vii. Ownership interest in Allied Mills

GrainCorp has a 60% equity interest in Allied Mills Australia Pty Limited (‘Allied’), with the other 40% held by Cargill Australia Limited (‘Cargill’). However, GrainCorp’s voting rights in Allied are 50%, equal with Cargill.

GrainCorp entered into an agreement with Cargill on 2 October 2002 to establish Allied as a joint venture. The agreement establishes that neither party has control of Allied, due to the existence of 50% voting rights and equal Board representation between the two parties.

Therefore, although GrainCorp owns more than half of the equity interest in Allied, this ownership is not judged to constitute control. Hence the Group applies the concept of equity accounting and does not consolidate this entity.

viii. Judgements in providing for claims and losses

Provision is made for various claims for losses or damages received from time-to-time. Management estimates the provision based on historical information, business practices and its experience in resolving claims and losses.

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NOTES TO THE FINANCIAL STATEMENTS

3. Segment information

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, is the Managing Director & CEO.

For management purposes, the Group is organised into four business units based on their products and services, forming the four reportable segments reviewed by the Managing Director & CEO in making strategic decisions.

Storage & Logistics consists of :
Country & Logistics – receivals, transport, testing and storage of grains and other bulk commodities.
Ports – storage and export / import of grain, and other bulk commodities.
Marketing – marketing of grain and agricultural products, and the operation of grain pools.
Malt – production of malt products, provision of brewing inputs and other malting services to brewers and distillers, sale of farm inputs, and export of malt.
Oils – processing and crushing of oilseeds, supplying edible oils and feeds, operating bulk liquid port terminals, storage, packaging, transport and logistics operations.

Corporate includes the share of profit from equity accounted investments along with unallocated corporate costs.

Management measures performance based on a measure of EBITDA, after adjusting for the allocation of interest expense to the Marketing and Oils segments and significant items. Other than interest associated with Marketing and Oils, Group financing (including interest income and interest expense) and income taxes are managed on a Group basis and are not allocated to operating segments.

Revenue from external customers is measured in a manner consistent with that in the Consolidated Income Statement. Inter-segment pricing is determined on an arm’s length basis.

Segment assets reported to management are measured in a manner consistent with that of the financial statements, based on the operations of the segment.

2015	Storage & Logistics $ M Marketing $ M Malt $ M Oils $M	Reportable segments $ M Corporate $ M Eliminations $ M	Total $ M
Reportable segment revenue External revenue Inter-segment revenue	263.9 1,761.7 1,126.4 933.3 126.2 96.9 - -	4,085.3 - - 223.1 0.2 (223.3)
			4,085.3 -
Total reportable segment revenue	390.1 1,858.6 1,126.4 933.3	4,308.4 0.2 (223.3)	4,085.3
Dividends	- - - -	- 0.2 -	0.2
Total revenue from continuing operations	390.1 1,858.6 1,126.4 933.3	4,308.4 0.4 (223.3)	4,085.5
Reportable segment result Share of profit of joint ventures	42.5 (2.0) 140.0 72.3 - - - 0.3	252.8 (26.5) - 0.3 8.8 -	226.3 9.1
Profit before significant items, net interest, depreciation, amortisation and income tax Net Interest Depreciation and amortisation Significant items (note 8)	- (14.3) - (1.2) (52.0) (3.9) (50.6) (28.8) (1.6) - (4.4) (9.4)	(15.5) (23.5) - (135.3) (1.0) - (15.4) (1.1) -	235.4 (39.0) (136.3) (16.5)
Profit before income tax from continuing operations	(11.1) (20.2) 85.0 33.2	86.9 (43.3) -	43.6
Other segment information Capital expenditure Reportable segment assets Reportable segment liabilities	54.8 0.5 54.5 126.3 526.1 341.7 1,484.3 726.1 (99.7) (330.5) (767.9) (124.0)	236.1 0.3 - 3,078.2 595.5 - (1,322.1) (529.8) -	236.4 3,673.7 (1,851.9)

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NOTES TO THE FINANCIAL STATEMENTS

3. Segment information (continued)

2014	Storage & Logistics $ M Marketing $ M Malt $ M Oils $M	Reportable segments $ M	Corporate $ M Eliminations $ M	Total $ M
Reportable segment revenue External revenue Inter-segment revenue	270.1 1,839.4 1,049.4 935.2 173.7 67.7 - 2.0

			- - 0.3 (243.7)
		4,094.1 243.4		4,094.1 -
Total reportable segment revenue	443.8 1,907.1 1,049.4 937.2	4,337.5	0.3 (243.7)	4,094.1
Reportable segment result Share of profit of joint ventures	71.8 36.4 125.0 73.1 - - - -	306.3 -	(22.6) - 9.6 -	283.7 9.6
Profit before significant items, net interest, depreciation, amortisation and income tax Net Interest Depreciation and amortisation Significant items (note 8)	- (15.7) - (1.4) (49.1) (3.8) (45.9) (26.4) (38.7) - (4.8) (18.7)	(17.1) (125.2) (62.2)	(23.0) - (1.3) - 0.6 -	293.3 (40.1) (126.5) (61.6)
Profit before income tax from continuing operations	(16.0) 16.9 74.3 26.6	101.8	(36.7) -	65.1
Other segment information Capital expenditure Reportable segment assets Reportable segment liabilities	61.5 4.5 36.3 63.8 525.8 440.9 1,287.1 636.3 (134.0) (388.2) (545.3) (111.4)	166.1 2,890.1 (1,178.9)	0.4 - 443.1 - (409.8) -	166.5 3,333.2 (1,588.7)
Geographical information
			2015 $ M	2014 $ M
Sales revenue from external customers based on the location of the customer: Australasia North America Europe Asia Middle East and North Africa Other			1,708.0 628.9 497.8 960.8 254.7 35.3	1,804.2 530.7 569.7 747.6 385.5 56.4
			4,085.5	4,094.1
Non-current assets based on geographical location of assets:31 Australasia North America Europe Asia Middle East and North Africa			1,379.5 459.7 252.2 1.2 13.7	1,291.2 388.8 243.0 1.1 9.3
			2,106.3	1,933.4

31 Excludes derivative financial instruments and deferred tax assets.

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NOTES TO THE FINANCIAL STATEMENTS

4. Revenue

4. Revenue
	2015 $ M 2014 $ M
Sales revenue Sale of goods Services	3,821.9 3,848.0 251.9 233.5
	4,073.8 4,081.5
Other revenue Dividends Rental income	0.2 - 11.5 12.6
	11.7 12.6
Total revenue	4,085.5 4,094.1

5. Other income

5. Other income
	2015 $ M 2014 $ M
Net gain / (loss) on derivative / commodity trading: Net realised gain / (loss) on financial derivatives Net realised gain / (loss) on foreign currency derivatives	52.5 39.6 (70.4) 15.7
Net unrealised gain / (loss) on financial derivatives Net unrealised gain / (loss) on commodity contracts (forward purchases and sales) Net unrealised gain / (loss) on foreign currency derivatives Net unrealised gain / (loss) on commodity inventories at fair value less costs to sell	(17.9) 55.3 (12.6) 20.4 (3.7) 0.2 (21.3) (15.9) 9.7 (8.7)
	(27.9) (4.0)
Net gain / (loss) on derivative / commodity trading	(45.8) 51.3
Compensation for impairment of assets received from third party Interest Sundry income	5.3 4.6 4.0 4.9 15.0 14.2
Total other income	(21.5) 75.0

The Group recorded a net loss of $45.8 million on derivative and commodity trading activities. An offsetting realised net gain on delivered commodity contracts and commodity inventories is recognised in the income statement as part of Revenue and Goods purchased for resale, respectively.

The Group manages its exposure to commodity and foreign currency price risk for commodity contracts by entering foreign currency and commodity derivative contracts in accordance with the Group’s risk management policy. Refer to note 33 for further details

2015 ANNUAL REPORT 79

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

6. Expenses

6. Expenses
	2015 $ M 2014 $ M
Employee benefits expense Defined contribution superannuation Other employee benefits	13.1 13.9 322.3 317.8
Total employee benefits expense	335.4 331.7
Other expenses Insurance Motor vehicle cost Travel Occupancy cost Software maintenance Consulting Communication Other	9.4 8.4 10.5 11.8 11.7 9.2 15.2 16.0 14.3 10.6 10.6 9.6 5.9 5.4 52.9 50.5
Total other expenses	130.5 121.5

7. Remuneration of auditor

During the year the following fees were paid or payable for services provided by the auditor of the parent entity and its related practices:

and its related practices:
	2015 $’000 2014 $’000
PwC Australia Audit and review of financial reports and other work under the_Corporations Act 2001_ Other assurance services	983 1,026 137 147
Total remuneration of PwC Australia	1,120 1,173

Related practices of PwC Australia Audit and review of financial reports Other services	862 651 16 14
Total remuneration of related practices of PwC Australia	878 665
Total auditors remuneration	1,998 1,838

Any PwC non-audit engagements are subject to the Group’s corporate governance procedures, auditor independence policies and BAC approval.

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NOTES TO THE FINANCIAL STATEMENTS

8. Significant items

Net profit after tax for the current year includes the following items whose disclosure is relevant in explaining the financial performance of the Group.

financial performance of the Group.
	Business Unit Profit before tax $ M Tax $ M NPAT $ M
Significant items for 2015 comprise: Restructuring costs32 Impairment of assets33	S&L, Oils, Allied Mills (12.1) 3.4 (8.7) Malt (4.4) 0.7 (3.7)
Net significant items	(16.5) 4.1 (12.4)

	Business Unit Profit before tax $ M Tax $ M NPAT $ M
Significant items for 2014 comprise: Claims and losses34 Restructuring costs35 Impairment of assets36 Takeover response costs37 GrainCorp Oils acquisition and integration costs38	S&L (27.5) 8.3 (19.2) S&L, Oils (23.0) 6.9 (16.1) S&L, Malt, Oils (11.7) 2.1 (9.6) Corporate (0.4) 0.1 (0.3) Corporate 1.0 - 1.0
Net significant items	(61.6) 17.4 (44.2)

32 Restructuring costs of $8.7 million (after tax) relate to GrainCorp Oils Network Optimisation and Oilseeds crushing capacity expansion, Storage & Logistics Project Regeneration costs and Allied Mills restructure. The costs include redundancy and depreciation.

33 Impairment of assets of $3.7 million (after tax) relate to two sites in GrainCorp Malt.

34 Increased allowance for claims resulting from a higher likelihood of claims arising due to low grain tonnages in the network, a second below-normal harvest and the emptying of closed country silos and consolidation of stock under Project Regeneration.

35 Restructuring costs of $16.1 million (after tax) relate to GrainCorp Oils Network Optimisation and Storage & Logistics Project Regeneration costs. The costs include redundancy and depreciation.

36 Impairment of assets of $9.6 million (after tax) relate to plant and equipment in connection to GrainCorp Oils Network Optimisation, assets in Storage & Logistics and a site closure in GrainCorp Malt.

37 Expenses of $0.3 million (after tax) relate to costs of advisors engaged to support the Board and management in their response to ADM’s proposals.
38 GrainCorp Oils acquisition and integration benefit of $1.0 million (after tax) primarily relates to reversal of a provision for acquisition related stamp duty.

2015 ANNUAL REPORT

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

9. Income tax expense

9. Income tax expense
	2015 $ M 2014 $ M
a) Income tax expense Current tax Deferred tax Under / (over) provision in prior years	33.4 16.9 (21.8) 0.9 (0.1) (3.0)
	11.5 14.8
Income tax expense attributable to: Profit from continuing operations	11.5 14.8
Deferred income tax (revenue) / expense included in income tax expense: (Increase) / decrease in deferred tax assets (note 14) (Decrease) / increase in deferred tax liabilities (note 14)	(31.0) (7.6) 9.2 8.5
	(21.8) 0.9

b) Numerical reconciliation of income tax expense to prima facie tax payable Profit from continuing operations before income tax expense	43.6 65.1
Operating profit / (loss) before income tax expense	43.6 65.1
Income tax calculated at 30% (2014: 30%) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: - Other non-deductible items - Change in tax rates - Interest expense - Share of net (profit) / loss of joint ventures - Other non-assessable items	13.1 19.5 3.8 5.0 1.1 (0.7) (2.3) (2.3) (2.4) (2.8) (3.4) (1.4)
Under / (over) provision in prior years Difference in overseas tax rates	9.9 17.3 (0.1) (3.0) 1.7 0.5
Income tax expense39	11.5 14.8

c) Amounts recognised directly in equity Deferred tax: transaction costs debited / (credited) directly in equity (note 14)	- -

d) Tax expense / (income) relating to items of other comprehensive income Change in fair value of cash flow hedges Remeasurement of retirement benefit obligations	(5.2) (1.3) (0.6) 0.1
	(5.8) (1.2)

e) Tax losses Unused tax losses for which no deferred tax asset has been recognised	38.4 32.0

f) Unrecognised temporary differences Temporary differences relating to investments in subsidiaries for which deferred tax liabilities / (assets) have not been recognised	98.1 88.4

39 GrainCorp’s income tax expense represents the tax payable to the tax authorities in the jurisdiction that GrainCorp operates, subject to timing movements in GrainCorp’s deferred tax balances. GrainCorp’s effective tax rate for year ending 30 September 2015 would have been 32.3% (2014: 26.7%) excluding the effect of results attributable to investments accounted for using the equity method. These amounts are not assessable in calculating taxable income for the Group as equity accounted profits are taxed separately in the joint venture entities.

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NOTES TO THE FINANCIAL STATEMENTS

10. Cash and cash equivalents

10. Cash and cash equivalents
	2015 $ M 2014 $ M
Cash at bank and on hand Deposits at call	253.3 155.6 120.7 50.6
Total cash and cash equivalents	374.0 206.2

11. Trade and other receivables

11. Trade and other receivables
Current	2015 $ M 2014 $ M
Trade receivables Provision for impairment of trade receivables	365.0 351.9 (1.9) (1.2)
	363.1 350.7
Other receivables Prepayments Margin deposits Amounts receivable from joint ventures (note 34)	57.1 27.9 34.4 23.1 20.0 2.3 - 0.3
Total current trade and other receivables	474.6 404.3
Non-current
	2015 $ M 2014 $ M
Loans to joint ventures (note 34)	0.2 19.3
Total non-current trade and other receivables	0.2 19.3

a) Fair values

Current: due to the short-term nature of these receivables, their carrying amount is assumed to approximate their fair value.

Non-current: all amounts in respect of non-current receivables approximate fair value.

12. Inventories

12. Inventories
	2015 $ M 2014 $ M
Consumable stores Raw materials Work in progress Finished goods Trading stock at net realisable value Commodities inventory at fair value less cost to sell	2.4 2.4 210.2 197.1 24.0 22.8 145.5 121.1 12.9 15.7 159.9 217.1
Total inventories	554.9 576.2

a) Inventory expense

Inventories recognised as an expense during the year ended 30 September 2015 amounted to $3,033.7 million (2014: $3,132.2 million).

Write-downs of inventories to net realisable value recognised as an expense during the year ended 30 September 2015 amounted to $3.1 million (2014: $2.1 million). The expense is included in other expenses in the Consolidated Income Statement.

b) Secured inventory

The value of inventory secured against bank loans is $249.4 million (2014: $222.0 million). Refer to note 18.

2015 ANNUAL REPORT 83

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

13. Derivative financial instruments

The following table presents the Group’s assets and liabilities measured and recognised at fair value at 30 September.

30 September.
Current assets	2015 $ M 2014 $ M
Commodity futures and options Utility swap contracts Commodity contracts (forward purchases and sales) Foreign currency derivatives	12.1 98.9 - 0.2 61.5 46.3 17.9 7.6
Total current derivative financial instrument assets	91.5 153.0
Non-current assets
Commodity futures and options Commodity contracts (forward purchases and sales) Foreign currency derivatives Interest rate swaps contracts – cash flow hedges	1.0 3.7 0.2 0.1 4.5 0.5 - 0.3
Total non-current derivative financial instrument assets	5.7 4.6
Current liabilities
	2015 $ M 2014 $ M
Commodity futures and options Utility swap contracts Commodity contracts (forward purchases and sales) Foreign currency derivatives Interest rate swap contracts – cash flow hedges	8.2 79.4 0.2 - 39.6 26.5 54.5 21.3 1.2 -
Total current derivative financial instrument liabilities	103.7 127.2
Non-current liabilities
Commodity futures and options Utility swap contracts Commodity contracts (forward purchases and sales) Foreign currency derivatives Interest rate swaps contracts – cash flow hedges	1.3 0.6 - - 1.8 0.6 9.7 1.6 8.4 1.4
Total non-current derivative financial instrument liabilities	21.2 4.2

a) Instruments used by the Group

The Group is party to derivative financial instruments in the normal course of business in order to manage financial risk and the financial exposure of commodity trading in accordance with the Group’s financial risk management policies (refer to note 33). Of the Group’s derivative transactions, only the interest rate swap contracts and some foreign exchange contracts currently qualify for hedge accounting as defined under AASB 139 Financial

Instruments: Recognition and Measurement.

i. Commodity futures and options

To manage exposure to commodity price risk, the Group enters into commodity futures contracts and commodity options contracts.

ii. Commodity contracts (forward purchases and sales)

As part of its grain, tallow and vegetable oil marketing activities as a commodity trader the Group enters into forward purchase and forward sales contracts. All open contracts are fair valued at balance date with any gains and losses on these contracts, together with the costs of the contracts, being recognised immediately through the income statement.

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NOTES TO THE FINANCIAL STATEMENTS

13. Derivative financial instruments (continued)

The Group also enters into forward purchase and grain future contracts to manage the underlying price risks in the purchase of raw materials for malt and edible oil production and the subsequent sale of malt and edible oil products from own use manufacture. These contracts are entered into and continue to be held for the purpose of delivery of raw materials and subsequent sale of processed product arising from the Group’s expected purchase, sale or usage requirements; and are classified as non-derivative, and not fair valued.

iii. Foreign currency derivatives

The Group manages currency exposures arising from grain futures taken out in the US, Canada, Europe and New Zealand and from export contracts for sales of grain, edible oils and meal. In accordance with the Group’s risk management policy, this exposure is managed through transactions entered into in foreign exchange markets. Forward exchange contracts and currency option contracts have been used for this purpose. The foreign exchange contracts are timed to mature when the futures contracts expire.

Transactional currency exposures arise from sales or purchases of malt, edible oils and raw materials in currencies other than the Group’s functional currencies. Group companies hedge their foreign currency exposure using forward exchange and swap contracts.

iv. Interest rate swap contracts

The Group’s policy is to protect part of the loans from exposure to increasing interest rates. Accordingly, the Group enters into interest rate swap contracts under which the Group is entitled to receive interest at variable rates and obliged to pay interest at fixed rates. The contracts required settlement of net interest receivable or payable at each reset period. The settlement dates coincide with the dates on which interest become payable on the underlying debt.

The gain or loss from remeasuring the interest rate swap contracts at fair value is deferred in equity in the hedging reserve, to the extent that the hedge is effective, and reclassified into profit and loss when the hedged interest expense is recognised. In the year ended 30 September 2015, there were no balances reclassified into profit and loss and included in finance costs (2014: $nil). There was no hedge ineffectiveness in the current or prior year.

v. Utility swap contracts

The Group manages exposure to utility price risk in malt production through the use of gas swap contracts. Gains and losses on these contracts are recognised immediately through the income statement.

b) Risk exposures

Information about the Group’s exposure to credit risk, foreign exchange, utility price, commodity price and interest rate risk is provided in note 33.

2015 ANNUAL REPORT 85

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

14. Deferred tax assets and liabilities

14. Deferred tax assets and liabilities
Deferred tax assets	2015 $ M 2014 $ M
The balance comprises temporary differences attributable to: Unrealised losses on derivative contracts Inventories Creditors and other payables Pension deficit Provisions and accruals Tax losses recognised Deferred revenue Other Set-off deferred tax liabilities pursuant to set-off provision	9.9 5.0 3.0 1.0 4.7 1.8 7.0 6.4 47.1 41.8 5.7 2.7 15.8 6.5 5.8 4.2 (35.2) (42.6)
Net deferred tax assets	63.8 26.8
Movements: Opening balance at 1 October Credited to the income statement (note 9) Credited to other comprehensive income	26.8 18.6 31.0 7.6 6.0 0.6
Closing balance at 30 September	63.8 26.8

Deferred tax assets recoverable within 12 months: $28.2 million (2014: $11.8 million).

Deferred tax assets recoverable within 12 months: $28.2 million (2014: $11.8 million).
Deferred tax liabilities	2015 $ M 2014 $ M
The balance comprises temporary differences attributable to: Prepayments Inventories Consumables Creditors and other payables Property, plant and equipment Intangible assets Unrealised gains on derivative contracts Set-off deferred tax liabilities pursuant to set-off provision	1.1 0.6 1.5 2.3 0.9 1.1 12.4 3.4 82.2 69.7 13.0 16.4 2.1 11.1 (35.2) (42.6)
Net deferred tax liabilities	78.0 62.0
Movements: Opening balance 1 October Charged to the income statement (note 9) Credited / (charged) to other comprehensive income Exchange differences	62.0 57.9 9.2 8.5 0.2 (0.6) 6.6 (3.8)
Closing balance 30 September	78.0 62.0

Deferred tax liabilities recoverable within 12 months: $13.8 million (2014: $18.5 million).

86 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

15. Property, plant and equipment

	Land $ M Buildings & structures $ M Leasehold improvements $ M Leased plant and equipment $ M Plant and equipment $ M Capital works in progress $ M	Total $ M
As at 30 September 2013 Cost Accumulated depreciation and impairment	130.1 327.4 34.2 6.6 1,313.0 53.9 - (149.5) (9.2) (5.0) (519.2) -
		1,865.2
		(682.9)
Net book value	130.1 177.9 25.0 1.6 793.8 53.9	1,182.3
Movement Transfer between asset categories (note 16) Additions Disposals Depreciation Impairment Exchange difference	0.2 4.0 0.1 (0.1) 23.1 (37.9) 0.9 13.0 0.3 0.2 55.6 80.3 - (0.4) (0.2) - (2.8) (0.1) - (19.2) (1.6) (0.2) (77.8) - - (1.1) - - (8.5) (2.1) 0.9 - 0.1 0.1 7.2 0.3
		(10.6)
		150.3
		(3.5)
		(98.8)
		(11.7)
		8.6
Closing net book value	132.1 174.2 23.7 1.6 790.6 94.4	1,216.6
As at 30 September 2014 Cost Accumulated depreciation and impairment	132.1 349.7 34.5 7.1 1,372.6 97.5 - (175.5) (10.8) (5.5) (582.0) (3.1)
		1,993.5
		(776.9)
Net book value	132.1 174.2 23.7 1.6 790.6 94.4	1,216.6
Movement Transfer (to) assets held for sale Transfer between asset categories (note 16) Additions Disposals Depreciation Impairment Exchange difference	(0.2) (0.2) - - - - - 3.8 (0.6) 0.1 32.3 (38.5) 0.6 6.5 0.1 0.1 52.8 166.0 (0.1) - - - (0.7) - - (19.3) (1.7) (0.2) (85.6) - - (2.5) - - - (0.1) 3.6 4.9 0.3 0.1 32.5 4.9
		(0.4)
		(2.9)
		226.1
		(0.8)
		(106.8)
		(2.6)
		46.3
Closing net book value	136.0 167.4 21.8 1.7 821.9 226.7	1,375.5
As at 30 September 2015 Cost Accumulated depreciation and impairment	136.0 325.0 34.5 7.5 1,570.4 226.7 - (157.6) (12.7) (5.8) (748.5) -
		2,300.1
		(924.6)
Net book value	136.0 167.4 21.8 1.7 821.9 226.7	1,375.5

a) Assets held for sale

From time to time, the Directors of GrainCorp resolve to sell certain sites that have been closed to operations based on their historic and expected receivals and production utilisation. As at 30 September 2015, five sites measured at $0.4 million (2014: two sites measured at $5.6 million) were actively marketed for sale.

2015 ANNUAL REPORT 87

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

16. Intangible assets

16. Intangible assets
	Computer software $ M Trade name $ M Customer relationship $ M Goodwill $ M	Total $ M
As at 30 September 2013 Cost Accumulated amortisation and impairment	66.4 3.4 121.1 400.7 (25.3) (1.0) (52.7) -
		591.6
		(79.0)
Net book value	41.1 2.4 68.4 400.7	512.6
Movement Additions Transfer between asset categories (note 15) Amortisation charge Exchange difference	16.2 - 6.7 - 10.6 - - - (12.8) (0.3) (16.8) - 0.6 0.1 0.3 7.8
		22.9
		10.6
		(29.9)
		8.8
Closing net book value	55.7 2.2 58.6 408.5	525.0
As at 30 September 2014 Cost or fair value Accumulated amortisation and impairment	94.1 3.5 124.9 408.5 (38.4) (1.3) (66.3) -
		631.0
		(106.0)
Net book value	55.7 2.2 58.6 408.5	525.0
Movement Additions Transfer between asset categories (note 15) Disposals Amortisation charge Exchange difference	10.3 - - - 2.9 - - - (0.2) - - - (16.1) (0.3) (17.4) - 1.7 0.2 2.5 37.0
		10.3
		2.9
		(0.2)
		(33.8)
		41.4
Closing net book value	54.3 2.1 43.7 445.5	545.6
As at 30 September 2015 Cost or fair value Accumulated amortisation and impairment	108.3 4.3 130.5 445.5 (54.0) (2.2) (86.8) -
		688.6
		(143.0)
Net book value	54.3 2.1 43.7 445.5	545.6

a) Impairment tests for goodwill For the purposes of impairment testing goodwill acquired through business combinations is allocated to cash generating units (‘CGU’). Management have identified the Group’s operating segments as the lowest level within the Group at which goodwill is monitored for internal management purposes:

the Group at which goodwill is monitored for internal management purposes:
	2015 $ M 2014 $ M
Storage & Logistics Marketing Malt Oils	10.1 10.1 8.2 8.0 325.5 288.7 101.7 101.7
Total goodwill	445.5 408.5

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GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

16. Intangible assets (continued)

b) Key assumptions used for value-in-use calculations

The recoverable amount of the CGUs is determined based on value-in-use calculations undertaken at the CGU level. These calculations use projected cash flows from financial budgets and a growth model based on an initial five-year forecast which are approved by management. Projected cash flows are based on past performance and management’s expectation of grain handling volumes for Storage & Logistics, trading volumes and market conditions for Marketing, malt sales volumes for Malt and crushing and refining sales in Oils.

Cash flows beyond the five-year period are extrapolated using the estimated growth rate of 2.0% to 2.5%. The growth rate does not exceed the long-term average growth rate for the business in which the CGUs operate.

Post-tax discount rates of 6.9% to 7.9% (pre-tax discount rate 8.8% to 10.0%) have been applied to discount the forecast future attributable post-tax cash flows. These post-tax discount rates reflect specific risks relating to the relative segment and its country of operation.

Any reasonably possible change to the above key assumption would not cause the carrying value of a CGU to exceed its recoverable amount.

17. Trade and other payables

17. Trade and other payables
Current	2015 $ M 2014 $ M
Trade payables Other payables Income received in advance	179.8 155.8 136.0 88.4 32.9 24.7
Total current trade and other payables	348.7 268.9

Non-current	2015 $ M 2014 $ M
Income received in advance	41.0 18.2
Total non-current trade and other payables	41.0 18.2

2015 ANNUAL REPORT 89

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

18. Borrowings

18. Borrowings
Current	2015 $ M 2014 $ M
Short term facilities – unsecured Inventory funding facilities – secured Leases – secured	75.2 106.7 253.5 245.6 0.6 0.2
Total current borrowings	329.3 352.5
Non-current
Term funding facilities – unsecured Leases – secured	779.9 590.7 9.2 10.0
Total non-current borrowings	789.1 600.7

a) Bank overdraft

No interest is payable on overdrawn amounts, providing the Group’s cash position is positive.

b) Short term and inventory funding facilities

These facilities are available to be drawn down on demand. The facilities are renewable at the option of the financier each 12 months. Interest was payable for the term drawn in the range 0.5% - 4.2% (2014: 0.5% - 3.8%).

c) Term funding facilities

Interest was payable for the term drawn in the range 0.8% - 4.0% (2014: 1.3% - 3.9%).

d) Assets pledged as security

Leases are secured by the underlying assets. The inventory funding facilities are secured against the related inventory. The total secured liabilities (current and non-current) are as follows:

inventory. The total secured liabilities (current and non-current) are as follows:
	2015 $ M 2014 $ M
Lease liabilities Inventory funding facilities	9.8 10.2 253.5 245.6
Total secured liabilities	263.3 255.8

The carrying amounts of assets pledged as security for current and non-current borrowings are:

	2015 $ M 2014 $ M
Leased assets Inventory (note 12)	0.3 0.4 249.4 222.0
Total assets pledged as security	249.7 222.4

Lease liabilities (other than liabilities recognised in relation to surplus space under non-cancellable operating leases) are effectively secured as rights to the leased assets recognised in the financial statements revert to the lessor in the event of default.

Inventory funding facilities are secured against the related inventory.

Loans under term funding facilities are secured by a negative pledge that imposes certain covenants on the Group. The negative pledge states that (subject to certain exceptions) the subject entity will not provide any other security over its assets, and will ensure that certain financial ratios and limits are maintained at all times, including: interest cover, gearing ratio and net tangible assets. All such borrowing covenant ratios and limits have been complied with during the financial year.

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GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

18. Borrowings (continued)

e) Financing arrangements

Borrowings under the following Group debt facilities as at the date of this report and amounts drawn at year end:

		Principal facility	Amount
2015	Maturity date40	amount $ M40	utilised $ M41
Term debt	November 2019	385.0	292.8
Term debt	April 2020	225.0	225.0
Term debt	April 2022	262.1	262.1
Commodity inventory funding42	November 2016	1,130.6	253.5
Working capital43	November 2016	405.0	75.2
Total financing arrangements		2,407.7	1,108.6

		Principal facility	Amount
2014	Maturity date	amount $ M	utilised $ M
Term debt	July 2016	406.1	365.7
Term debt	October 2016	225.0	225.0
Term debt44	November 2019	210.0	-
Commodity inventory funding	November 2015	1,048.0	245.6
Working capital	October 2015	405.0	106.7
Total financing arrangements		2,294.1	943.0

f) Risk exposures

Information about the Group’s exposure to risks arising from current and non-current borrowings and interest rate and foreign currency movements is provided in note 33.

g) Fair value

Current and non-current liabilities are stated at costs that approximate fair value.

19. Other financial liabilities

19. Other financial liabilities
	2015 $ M 2014 $ M
Lease incentives – current Lease incentives – non-current	0.1 0.2 2.5 0.2

a) Financial guarantees

Financial guarantees are provided by Group entities as follows:

i. GrainCorp Operations Limited was a self-insurer for workers’ compensation in NSW up to 29 June 2006. As required by the NSW workers’ compensation self-insurance licensing requirements, a bank guarantee in favour of the WorkCover Authority NSW for $0.6 million (2014: $2.5 million) is in place, representing an actuarial assessment of the contingent liability arising from past self-insurance for periods prior to 29 June 2006.
ii. In the normal course of business the Group enters into guarantees. At 30 September 2015 they amounted to $12.1 million (2014: $10.1 million). The Directors do not believe any claims will arise in respect of these guarantees.
40 As at 12 November 2015.
41 As at 30 September 2015.
42 The maturity date and principal facility amount for the inventory funding facility is as at 12 November 2015. Subsequent to balance date, the maturity date was extended from November 2015 to November 2016 and the principal facility amount changed from $564.1 million to $1,130.6 million. This facility is renewed subsequent to balance date each year to align with the seasonal requirements of the Group.
43 The maturity date and principal facility amount for the working capital facility is as at 12 November 2015. Subsequent to balance date, the maturity date was extended from October 2015 to November 2016. The principal facility amount remained $405.0 million.

44 New Construction Facility executed on 12 November 2014.

2015 ANNUAL REPORT 91

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

19. Other financial liabilities (continued)

iii. GrainCorp and the wholly owned Australian incorporated entities listed in note 28 are parties to a deed of cross guarantee as described in note 30. The nature of the deed of cross guarantee is such that each company which is party to the deed guarantees, to each creditor, payment in full of any debt in accordance with the deed of cross guarantee. No deficiency of net assets existed for the Group as at 30 September 2015.

No liability was recognised by the Group in relation to these guarantees, as the fair value of the guarantees is immaterial.

20. Provisions

20. Provisions
Current	2015 $ M 2014 $ M
Claims and losses Workers’ compensation Restoration Onerous contracts Restructuring Employee benefits	19.0 44.7 - 0.1 3.8 1.6 0.7 1.2 13.2 1.7 44.7 45.4
Total current provisions	81.4 94.7
Non-current
Workers’ compensation Restoration Onerous contracts Restructuring Employee benefits	0.4 0.4 0.5 3.8 4.5 5.2 1.2 12.1 5.3 4.5
Total non-current provisions	11.9 26.0

a) Claims and losses

b) Workers’ compensation

GrainCorp Operations Limited was a self-insurer for workers’ compensation in NSW up to 29 June 2006. As required by the NSW workers’ compensation self-insurance licensing requirements, provision is made based on an annual actuarial assessment for GrainCorp Operations Limited’s potential liability arising from past self-insurance.

c) Restoration

Provision is made to satisfy obligations to remove redundant plant and equipment, and for make-good obligations for leased head office premises.

d) Onerous contracts

Provision is made for the unavoidable costs of meeting contractual obligations where the costs of meeting those obligations exceed the economic benefits expected to be received from the contract.

e) Restructuring

Provisions for restructuring are recognised when a detailed plan has been approved and the restructuring has either commenced or been publicly announced, or firm contracts related to the restructuring have been entered.

92 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

20. Provisions (continued)

f) Movements in provisions

	Claims and	Workers’		Onerous	Restructuring
	losses	compensation	Restoration	contracts	Provision
2015	$ M	$ M	$ M	$ M	$ M
Carrying amount at beginning of	44.7	0.5	5.4	6.4	13.8
year
Additional provisions recognised	3.9	-	-	-	4.1
Amounts used	(27.8)	(0.1)	(1.3)	(0.5)	(1.4)
Unused amounts reversed	(2.1)	-	-	(0.7)	(2.1)
Exchange difference	0.3	-	0.2	-	-
Carrying amount at end of year	19.0	0.4	4.3	5.2	14.4

g) Amounts not expected to be settled within the next 12 months

The Group’s current provision for employee benefits includes $44.7 million (2014: $45.4 million) in respect to accrued annual leave, vesting sick leave and a portion of long service leave, where employees have completed the required period of service and, as the Group does not have an unconditional right to defer settlement, the entire obligation is categorised as a current liability. Based on past experience, the Group does not expect all employees to take the full amount of accrued long service leave or require payment within the next 12 months.

Group long service leave obligations expected to be settled within the next 12 months amount to $0.7 million (2014: $1.1 million).

21. Retirement benefit obligations

a) Retirement benefit plans

Defined contribution superannuation plans

Employees of the Group’s Australian entities are entitled to benefits on retirement, disability or death from the Group’s defined contribution superannuation plans. Contributions to these employee superannuation plans are charged as an expense as the contributions are paid or become payable. The Group’s legal or constructive obligation is limited to these contributions. The expense recognised for the year is disclosed in note 6.

Defined benefit plans

The Group provides funded defined benefit plans for employees of its US, Canada, UK and Australia based Malt entities. These plans provide lump sum benefits based on years of service and final average salary. The following sets out details of the defined benefit plans.

b) Retirement benefit liability recognised in the Statement of Financial Position

	2015 $ M 2014 $ M
Present value of the defined benefit obligations Fair value of defined benefit plans assets	209.0 184.0 (171.8) (151.9)
Net liability recognised in Statement of Financial Position	37.2 32.1

The Group intends to continue to contribute to the defined benefit plans at a rate in line with the latest recommendations provided by the plans’ actuaries.

The retirement benefit liability recognised in Australia represents that of the top-up defined benefit fund. This fund operates under terms that are similar in nature to a defined contribution fund, and as such does not have an investment in plan assets. However, contractual terms between the Company and certain employees result in an obligation that is in substance that of a defined benefit fund and this obligation has been recognised as a retirement benefit liability.

2015 ANNUAL REPORT 93

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

21. Retirement benefit obligations (continued)

21. Retirement benefit obligations (continued)
c) Categories of plan assets
	2015	2014
	%	%
The major categories of plan assets are as follows:
Cash	1%	1%
Equity instruments	48%	51%
Debt instruments	47%	45%
Other assets	4%	3%
Total	100%	100%
d) Reconciliations

c) Categories of plan assets
	2015 % 2014 %
The major categories of plan assets are as follows: Cash Equity instruments Debt instruments Other assets	1% 1% 48% 51% 47% 45% 4% 3%
Total	100% 100%
d) Reconciliations
	2015 $ M 2014 $ M
Reconciliation of the present value of the defined benefit obligations: Balance at the beginning of the year Current service cost Interest cost Scheme participants contributions Remeasurements Benefits paid Exchange difference	184.0 159.4 1.3 1.2 7.3 7.1 0.1 0.1 2.1 14.5 (8.1) (6.1) 22.3 7.8
Balance as at 30 September	209.0 184.0
Reconciliation of fair value of plan assets: Balance at the beginning of the year Interest income Remeasurements Contributions by Group companies Scheme participants contributions Actual plan administration expense Benefits paid Exchange difference	151.9 125.0 5.8 5.7 1.0 11.6 4.1 10.4 0.1 0.1 (0.3) (0.2) (8.1) (6.1) 17.3 5.4
Balance as at 30 September	171.8 151.9
e) Amounts recognised in the income statement
	2015 $ M 2014 $ M
The amounts recognised in the income statement are as follows: Current service cost Net interest expense	1.3 1.2 1.5 1.4
Total expense included in employee benefits expense	2.8 2.6
f) Amounts recognised in other comprehensive income
	2015 $ M 2014 $ M
Remeasurements of retirement benefit obligations Cumulative remeasurements recognised	(1.1) (2.9) (27.0) (25.9)

94 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

21. Retirement benefit obligations (continued)

g) Principal actuarial assumptions

2015	North America UK Australia
Principal actuarial assumptions used (expressed as weighted averages): Discount rate Future salary increases	3.82% 3.90% 4.20% 2.50% 3.30% 4.00%
2014
	North America UK Australia
Principal actuarial assumptions used (expressed as weighted averages): Discount rate Future salary increases	3.80% 3.90% 3.90% 2.75% 3.20% 4.00%

h) Sensitivity analysis

Changes in the following principal actuarial assumptions would have the following effect on the defined benefit pension obligation:

pension obligation:
	2015 $ M Increase/(decrease) 2014 $ M Increase/(decrease)
Discount rate: 0.25% increase 0.25% decrease Inflation: 0.25% increase 0.25% decrease	(7.2) (6.9) 7.5 7.3 3.1 2.3 (3.1) (2.3)

The sensitivity information has been derived for all plans using projected cash flows valued using the relevant assumptions and membership profiles as at 30 September 2015. Extrapolation of these results beyond the sensitivity figures shown may not be appropriate.

i) Employer contributions

Employer contributions to the defined benefit plans are based on the recommendations of the plans’ actuaries. Actuarial assessments are made at time intervals as required by local regulations (ranging from annual to threeyear intervals).

Total employer contributions expected to be paid by the Group for the year ended 30 September 2015 are $5.1 million (2014: $4.3 million).

22. Contributed equity

Consolidated and Company	2015 2014 Number $ M Number $ M
Fully paid ordinary shares Total contributed equity – Company	228,855,628 1,347.9 228,855,628 1,347.9
_Less:_Treasury shares	(183,871) (1.9) (290,162) (3.1)
Total consolidated contributed equity	1,346.0 1,344.8

2015 ANNUAL REPORT 95

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

22. Contributed equity (continued)

Movements in ordinary share capital of the Company during the past two years were as follows:

		Total	Ordinary
	Details	number of	share capital
		shares	$ M
30-Sep-13	Balance brought forward	228,855,628	1,347.9
30-Sep-14	Total contributed equity - Company	228,855,628	1,347.9
30-Sep-15	Total contributed equity - Company	228,855,628	1,347.9
	Less: Treasury shares	(183,871)	(1.9)
30-Sep-15	Total consolidated contributed equity		1,346.0

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of shares held.

Ordinary shares have no par value and the Company does not have a limited amount of authorised capital.

Employee equity schemes

Details of employee share and rights schemes are set out in note 35.

Treasury shares

Treasury shares are shares in GrainCorp that are held by the GrainCorp Employee Share Ownership Plan Trust for purposes of issuing shares under employee share plans including: GrainCorp Long Term Incentive Plans, GrainCorp Deferred Equity Plan and GrainCorp Retention Share Plan (refer to note 35 for further information). During the year no shares were acquired on market (2014: 26,852 shares). Under the employee share plans, 298,633 shares were granted or issued during the year (2014: 131,206). At 30 September 2015, the aggregate amount of unvested performance rights of 429,839 as set out in note 35, is partially covered by the Treasury shares above.

Capital risk management

The Group’s objective when managing capital is to safeguard the Group's ability to maintain an optimal capital structure so that it can continue to provide returns for shareholders and benefits for other stakeholders.

The capital structure of the Group consists of debt and equity and the mix of debt and equity is measured by reference to the Group’s core debt gearing ratio (long term debt net of cash and cash equivalents to total equity).

The Group maintains a core debt gearing ratio of less than 25% although this may change as the earning base continues to diversify. At 30 September 2015, core debt gearing was 23% (2014: 22%).

The core debt gearing ratio is as follows:

The core debt gearing ratio is as follows:
	2015 $ M 2014 $ M
Total borrowings (note 18) Cash and cash equivalents (note 10)	1,118.4 953.2 (374.0) (206.2)
Net debt	744.4 747.0
Commodity inventory45	(188.3) (264.0)
Core debt	556.1 483.0
Total equity	1,821.8 1,744.5
Core debt gearing ratio	23% 22%

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares. The Group complied with all borrowing covenant ratios and other capital requirements during the year.

45 Marketing and Oils grain and oilseed inventory.

96 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

23. Dividends

23. Dividends
	2015 $ M 2014 $ M
Dividends paid in the year: Final fully franked dividend for the year ended 30 September 2014 of 5.0 cents (2013: 20.0 cents)	11.4 45.8
Interim fully franked dividend for the half year ended 31 March 2015 of 7.5 cents (2014: 15.0 cents)	17.2 34.3
Total dividends paid	28.6 80.1

Dividend not recognised at year end

Since year end the Directors have approved the payment of a final dividend, expected to be paid on 15 December 2015:

Final fully franked dividend for the year ended 30 September 2015 of 2.5 cents 5.7 (2014: 5.0 cents final dividend)

This dividend will be paid out of retained profits at 30 September 2015, but is not recognised as a liability at year end.

Franking credits available

Franking credits available
	2015 $ M 2014 $ M
Franking credits available for the subsequent financial year	39.2 43.9

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:

a) Franking debits that will arise from the receipts of the current tax liability;

b) Franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
c) Franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
d) Franking credits that may be prevented from being distributed in subsequent financial years.

The impact on the franking account of the dividend approved by the Directors since year end, but not recognised as a liability at year end, will be a reduction in the franking account of $2.5 million (2014: $4.9 million).

2015 ANNUAL REPORT 97

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

24. Earnings per share

24. Earnings per share
	2015 2014
Basic earnings per share (cents) Diluted earnings per share (cents)	14.0 22.0 14.0 22.0
Weighted average number of ordinary shares – basic Less adjustment for calculation of diluted earnings per share (performance rights) Weighted average number of ordinary shares – diluted	228,657,219 228,488,305 416,910 359,921 229,074,129 228,848,226

Basic and diluted earnings per share are calculated by dividing profit for the year by the weighted average number of shares on issue over the year.

Performance rights

Performance rights first granted in 2005 under the GrainCorp Performance Share Rights Plan are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share. The rights have not been included in the determination of basic earnings per share. Details relating to the rights are set out in the Remuneration Report and note 35.

25. Contingencies

The Group may from time to time receive notices of possible claims for losses or damages. A provision of $19.0 million (2014: $44.7 million) has been recognised to cover any liabilities which may arise out of such claims. Based on information currently available, the Directors believe that no further provision is required at this time. A contingent liability exists for any amounts that ultimately become payable over and above current provisioning levels.

98 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

26. Commitments

26. Commitments
	2015 $ M 2014 $ M
Capital expenditure commitments Total capital expenditure contracted for at the reporting date but not provided for in payables: - Not later than one year - Later than one year and not later than five years - Later than five years	68.3 101.5 3.4 11.0 - -
Total capital expenditure commitments	71.7 112.5
Operating lease commitments Cancellable operating leases Non-cancellable operating leases	5.1 0.1 334.1 380.8
Total operating lease commitments	339.2 380.9
Commitments in relation to non-cancellable operating leases contracted for at the reporting date but not recognised as liabilities, payable: - Not later than one year - Later than one year and not later than five years - Later than five years	45.5 54.3 118.2 158.9 170.4 167.6
Total non-cancellable operating lease commitments	334.1 380.8
Finance leases Commitments in relation to finance leases are payable as follows: - Not later than one year - Later than one year but not later than five years - Later than five years	1.3 1.3 3.3 5.7 16.2 18.8
Minimum lease payments Future finance charges	20.8 25.8 (11.0) (15.6)
Total finance lease liabilities	9.8 10.2
Representing lease liabilities: Current Non-current	0.6 0.2 9.2 10.0
	9.8 10.2

2015 ANNUAL REPORT 99

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

27. Parent entity financial information

a) Summary financial information

The individual financial statements for the parent entity (‘GrainCorp’) show the following aggregate amounts:

	2015 $ M 2014 $ M
Statement of financial position Current assets Total assets	1.7 1.7 1,781.5 1,657.9
Current liabilities Total liabilities	2.4 0.3 2.5 0.5
Shareholders’ equity Contributed equity Share option reserve Capital reserve Hedging reserve Translation reserve Retained profits	1,356.0 1,344.8 1.4 1.1 8.3 8.3 (0.1) - 2.0 - 411.4 303.2
Total shareholders’ equity	1,779.0 1,657.4
Profit for the year	71.8 70.4
Total comprehensive income	71.8 70.4

b) Guarantees entered into by the parent entity

GrainCorp and the wholly owned Australian incorporated entities listed in note 28 are parties to a deed of cross guarantee as described in note 30. The nature of the deed of cross guarantee is such that each company which is party to the deed guarantees, to each creditor, payment in full of any debt in accordance with the deed of cross guarantee. No deficiency of net assets existed for the Group as at 30 September 2015.

No liability was recognised by GrainCorp in relation to these guarantees, as the fair value of the guarantees is immaterial.

c) Contingent liabilities of the parent entity

GrainCorp did not have any contingent liabilities as at 30 September 2015 (2014: nil).

d) Contractual commitments for the acquisition of property, plant or equipment

GrainCorp Limited did not have any commitments for the acquisition of property, plant and equipment as at 30 September 2015 (2014: nil).

100 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

28. Subsidiaries

28. Subsidiaries
Name of entity Class of shares Country of incorporation	Equity holdings
	2015 2014
ABN 36 073 105 656 Pty Ltd (formerly Globex International Pty Limited)46Ordinary Australia Agricultural Risk Management Services Pty Limited47 Ordinary Australia Auscol Pty Ltd Ordinary Australia Australia Malt Finco Pty Ltd Ordinary Australia Australia Malt Holdco Pty Ltd Ordinary Australia Barrett Burston Malting Co. Pty. Ltd. Ordinary Australia Barrett Burston Malting Company WA Pty Limited Ordinary Australia Champion Liquid Feeds Pty Limited Ordinary Australia Containerlink Pty Limited46 Ordinary Australia Grainco Australia Pty Limited Ordinary Australia GrainCorp AG Finance Limited47 Ordinary Australia GrainCorp Australia Pty Ltd Ordinary Australia GrainCorp Commodity Management (Holdings) Pty Ltd (formerly Gardner Smith (Holdings) Pty Ltd) Ordinary Australia GrainCorp Commodity Management Pty Ltd (formerly Gardner Smith Pty Limited) Ordinary Australia GrainCorp Foods Australia Pty Ltd (formerly Integro Foods Australia Pty Ltd) Ordinary Australia GrainCorp Holdings Australia Pty Ltd Ordinary Australia GrainCorp Liquid Terminals Australia Pty Ltd (formerly Pacific Terminals (Australia) Pty Ltd) Ordinary Australia GrainCorp Oils Holdings Pty Ltd Ordinary Australia GrainCorp Oilseeds Pty Ltd (formerly Riverland Oilseeds Pty Ltd) Ordinary Australia GrainCorp Operations Limited Ordinary Australia GrainCorp Services Limited Ordinary Australia GrainCorp Superannuation Pty Ltd Ordinary Australia GrainCorp Warehouse Cashflow Pty Ltd Ordinary Australia GSEST Pty Ltd46 Ordinary Australia Hunter Grain Pty Limited Ordinary Australia Hunter Grain Transport Pty Limited Ordinary Australia Malt Real Property Pty Limited Ordinary Australia Security Superannuation Fund Pty Limited46 Ordinary Australia Vicgrain (Assets) Pty Limited Ordinary Australia Vicgrain Pty Limited Ordinary Australia Canada Malting Co. Limited Ordinary Canada Coastal Containers Limited Ordinary Canada GrainCorp Canada Inc. Common Canada Gardner Smith Commodities Trading (Shanghai) Co., Ltd Ordinary China Shanghai Grand Port Liquid Storage Terminals Co., Ltd Ordinary China GrainCorp Europe GmbH & Co. KG - Germany GrainCorp Europe Management GmbH Ordinary Germany Rhein-Ruhr-Malz GmbH - Germany Schill Malz GmbH & Co. KG Ordinary Germany	100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

46 Subject to members voluntary liquidation or deregistration. 47 Under External Administration.

2015 ANNUAL REPORT 101

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

28. Subsidiaries (continued)

28. Subsidiaries (continued)
Name of entity	Class of shares Country of incorporation	Equity holdings
		2015 2014
Schill Malz Verwaltungs-GmbH Thüringer Malz GmbH Barrett Burston Malting Co (NZ) Limited Enzpro NZ Limited48 GrainCorp Commodity Management (NZ) Limited (formerly Gardner Smith NZ Limited) GrainCorp Feeds Limited (formerly BLM Feeds Limited) GrainCorp Foods NZ Limited (formerly Integro Foods NZ Limited) GrainCorp Liquid Terminals NZ Limited (formerly Pacific Terminals NZ Limited) GrainCorp Operations Asia Pte Ltd Gardner Smith Africa Pty Ltd49 Bairds Malt Limited Bairds Malt (Pension Trustees) Limited Brewers Select Limited GrainCorp (Canada) Holdings UK Limited GrainCorp Europe (UK) Ltd GrainCorp UK Limited Malt UK Holdco Limited Maltco 3 Limited Mark Lawrence (Grain) Limited Moray Firth Maltings Limited Norton Organic Grain Limited Saxon Agriculture Limited Scotgrain Agriculture Limited Ulgrave Limited GrainCorp Holdings USA GrainCorp USA Great Western Malting Co Malt US Holdco, Inc	- Germany - Germany Ordinary New Zealand Ordinary New Zealand Ordinary New Zealand Ordinary New Zealand Ordinary New Zealand Ordinary New Zealand Ordinary Singapore Ordinary South Africa Ordinary UK Ordinary UK Ordinary UK Ordinary UK Ordinary UK Ordinary UK Ordinary UK Ordinary UK Ordinary UK Ordinary UK Ordinary UK Ordinary UK Ordinary UK Ordinary UK - USA Ordinary USA Ordinary USA Ordinary USA	100% 100% 100% 100% 100% 100% - 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

29. Unconsolidated structured entities

The term ‘unconsolidated structured entities’ refers to all structured entities that are not controlled by GrainCorp Operations Limited. GrainCorp Operations Limited enters into transactions on behalf of GrainCorp Pools Pty Ltd as authorised manager to facilitate customer transactions.

GrainCorp Operations has no intention, nor does it provide any financial support to GrainCorp Pools Pty Ltd.

GrainCorp Operations Limited received a management fee in the range of 2% to 3% based on the final pool return.

48 Deregistered in the current financial year.

49 Subject to members voluntary liquidation or deregistration.

102 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

30. Deed of cross guarantee

GrainCorp and its wholly-owned Australian incorporated entities listed in note 28, with the exception of Agricultural Risk Management Services Pty Ltd[50] , ABN 36 073 105 656 Pty Ltd, Containerlink Pty Ltd, GrainCorp AG Finance Limited[50] and GSEST Pty Ltd are parties to a deed of cross guarantee under which each of the companies guarantees the debts of the other and are thus relieved from the requirement to prepare a financial report and Directors’ report under Class Order 98/1418 (as amended) issued by the Australian Securities and Investment Commission.

The above mentioned parties to the deed of cross guarantee represent a ‘Closed Group’ for the purposes of the Class Order, and as there are no other parties in the deed of cross guarantee that are controlled by GrainCorp Limited, they also represent the ‘Extended Closed Group’.

Set out below is the consolidated income statement, a summary of movements in consolidated retained earnings and a consolidated statement of financial position for the Closed Group for the year ended 30 September 2015.

Consolidated income statement	2015 $ M 2014 $ M
Revenue Other income Goods purchased for resale Raw materials and consumables used Employee benefits expense Depreciation and amortisation Finance costs Operating leases Repairs and maintenance Other expenses Significant items Share of results from investments accounted for using the equity method	2,851.2 2,876.9 (25.9) 92.4 (1,854.2) (1,831.6) (419.0) (522.8) (241.0) (256.9) (96.5) (90.9) (35.4) (36.7) (35.7) (39.0) (38.2) (39.7) (104.1) (88.2) (13.8) (56.7) 9.1 9.6
Profit / (loss) before income tax Income tax (expense) / benefit	(3.5) 16.4 12.2 5.3
Profit for the year	8.7 21.7
Other comprehensive income: Changes in the fair value of cash flow hedges Share of other comprehensive income of joint ventures Remeasurements of defined benefit obligations Income tax relating to components of other comprehensive income	(5.6) (1.4) (0.1) (0.1) (0.2) - 1.8 0.4
Other comprehensive income for the year, net of tax	(4.1) (1.1)
Total comprehensive income for the year	4.6 20.6
Summary of movements in consolidated retained earnings Retained earnings at the beginning of the financial year Profit for the year Dividends provided for or paid	220.5 278.9 8.7 21.7 (28.6) (80.1)
Retained earnings at the end of the financial year	200.6 220.5

50 Under External Administration.

2015 ANNUAL REPORT 103

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

30. Deed of cross guarantee (continued)

Set out below is the consolidated statement of financial position as at 30 September of the Closed Group.

Consolidated statement of financial position	2015 $ M 2014 $ M
Current assets Cash and cash equivalents Trade and other receivables Inventories Derivative financial instruments Assets classified as held for sale Current tax assets	145.1 71.4 291.8 252.9 258.5 317.1 84.7 149.5 0.4 5.2 - 22.2
Total current assets	780.5 818.3
Non-current assets Trade and other receivables Investment in subsidiaries Investments accounted for using the equity method Investments in other entities Property, plant & equipment Deferred tax assets Intangible assets Derivative financial instruments	197.8 225.8 418.0 409.2 169.6 161.5 14.7 10.5 953.8 857.5 32.9 9.8 115.8 127.5 3.2 4.1
Total non-current assets	1,905.8 1,805.9
Total assets	2,686.3 2,624.2
Current liabilities Trade and other payables Borrowings Derivative financial instruments Other financial liabilities Current tax liabilities Provisions	200.3 151.4 215.2 297.8 86.9 118.7 0.1 0.2 6.1 - 53.7 81.9
Total current liabilities	562.3 650.0
Non-current liabilities Trade and other payables Borrowings Derivative financial instruments Other financial liabilities Provisions Retirement benefit obligations	24.7 7.0 527.0 369.7 9.7 5.3 2.5 0.2 8.6 18.1 0.3 0.4
Total non-current liabilities	572.8 400.7
Total liabilities	1,135.1 1,050.7
Net assets	1,551.2 1,573.5
Equity Contributed equity Reserves Retained earnings	1,346.0 1,344.8 4.6 8.2 200.6 220.5
Total equity	1,551.2 1,573.5

104 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

31. Investments accounted for using the equity method

a) Carrying amounts

a) Carrying amounts
Company Principal activity	Ownership interest Carrying amount
	2015 2014 2015 $ M 2014 $ M
Allied Mills Australia Pty Ltd51 Mixing & milling National Grower Register Pty Ltd Register management Flex Biofuels Pty Ltd Sales and purchases of biofuels	60% 60% 168.4 160.7 50% 50% 0.6 0.5 50% 50% 0.6 0.3
	169.6 161.5

All of the above joint ventures are incorporated in Australia.

b) Movements in carrying amounts

i. Group share of commitments and contingent liabilities in respect of joint ventures Group’s share of joint venture’s expenditure commitments, other than for supply of inventories:

	2015 $ M 2014 $ M
Capital commitments Lease commitments	16.0 8.4 1.9 2.8
	17.9 11.2

ii. Summarised financial information of joint ventures

The tables below provide summarised financial information for the joint venture that is material to the Group. The information disclosed reflects the amounts presented in the financial statements of the relevant joint venture and not the Group’s share of those amounts.

venture and not the Group’s share of those amounts.
Summarised statement of financial position	Allied Mills Australia Pty Ltd
	2015 2014 $ M $ M
Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net Assets Reconciliation of carrying amounts: Opening net assets 1 October Profit / (loss) for the period Other comprehensive income	179.3 186.6 311.6 303.7 490.9 490.3 137.5 135.6 72.6 86.8 210.1 222.4 280.8 267.9 267.9 252.2 12.8 15.8 0.1 (0.1)
Closing net assets	280.8 267.9
Group share of net assets	168.4 160.7

51 Equity interest in Allied Mills is 60%, however, voting rights are 50%, refer to note 2.

2015 ANNUAL REPORT 105

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

31. Investments accounted for using the equity method (continued)

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Allied Mills Australia Pty Ltd
2015 2014
Summarised statement of comprehensive income $ M $ M
Revenue 497.5 469.9
Operating profit (after tax) 14.5 15.8
Significant items (after tax) (1.8) -
Other comprehensive income 0.1 (0.1)
Total comprehensive income [52] 12.8 15.7
Group share of comprehensive income 7.7 9.4
----- End of picture text -----

iii. Individually immaterial joint ventures

In addition to the interest in joint ventures disclosed above, the Group also has an interest in a number of individually immaterial joint ventures that are accounted for using the equity accounting method.

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----- Start of picture text -----

2015 2014
$ M $ M
Aggregated carrying amount of individually immaterial joint ventures 1.2 0.8
Aggregated amounts of the Groups share of:
Profit from continuing operations 0.4 0.2
Other comprehensive income - -
Total comprehensive income [52] 0.4 0.2
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32. Reconciliation of profit after income tax to net cash flow from operating activities

	2015 $ M 2014 $ M
Profit / (loss) for the year Net (profit) / loss on sale of non-current assets Dividends received Non-cash employee benefits expense – share based payments Share of (profit) / loss of joint ventures not received as dividends Depreciation / amortisation Impairment expense Changes in operating assets and liabilities (net of acquired entities): (Increase) / decrease in inventories (Increase) / decrease in deferred tax asset (Increase) / decrease in derivatives (Increase) / decrease in receivables Increase / (decrease) in trade payables Increase / (decrease) in other liabilities Increase / (decrease) in provision for income tax Increase / (decrease) in provision for deferred tax liability Increase / (decrease) in defined benefit pension plan liability Increase / (decrease) in provisions	32.1 50.3 (1.7) - (0.2) - 1.4 (0.2) (9.1) (9.6) 140.6 126.5 4.4 11.7
	167.5 178.7 30.4 42.1 (37.0) (8.2) 53.9 (2.0) (70.4) 21.3 79.8 (67.3) 25.1 (2.1) 26.5 (27.2) 16.0 4.3 5.1 (2.3) (25.8) 33.8
Net cash provided by operating activities	271.1 171.1

52 Total comprehensive income does not include interest on loans to joint ventures. Refer to note 34 2(b).

106 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management

Overview

The Group’s activities expose it to a variety of financial risks including:

Market risk - commodity price risk, utility price risk, foreign currency risk, interest rate risk
Credit risk
Liquidity risk

The overall management of these financial risks seeks to minimise any potential adverse effects on the Group’s financial performance that may arise from the unpredictability of financial markets. All areas of risk management are subject to comprehensive policies, procedures and limits which are monitored by management and approved by the Board, the Board Audit Committee or the Business Risk Committee under authority from the Board.

Group Treasury manages interest rate risk, liquidity risk, counterparty credit risk and foreign currency risk in accordance with policies approved by the Board.

The Business Risk Committee reviews and agrees policies for managing risks arising from commodity trading, crushing and processing of edible oils and sales as well as malt production and sales including the setting of limits for trading in derivatives to manage commodity price risk, foreign currency risk and utility price risk.

The Group's principal financial instruments comprise receivables, cash and short-term deposits, payables, bank loans and overdrafts, finance leases and derivative financial instruments.

Derivative financial instruments are utilised to manage commodity price risk, utility price risk, and foreign currency risk arising from trading in commodities, as well as purchasing and sale activities in Malt and Oils in the ordinary course of business; and to manage the inherent interest rate risk of Group borrowings. Certain foreign exchange derivatives for activities in Malt and Oils and interest rate swaps currently qualify for hedge accounting as cash flow hedges.

The Group uses different methods to measure and manage the different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk, and assessments of market forecasts for interest rate, foreign exchange, commodity and utility prices. Ageing analysis and monitoring of specific credit limits are undertaken to manage credit risk. Liquidity risk is monitored through the use of rolling cash flow forecasts, and by comparing projected net debt levels against total committed facilities.

Market risk

Commodity price risk – commodity trading

Commodity price risk arises due to grain and edible oil price fluctuations impacting on the value of commodity forward purchase and forward sales contracts written by the Group as part of its grain, meal and edible oil marketing activities. The Group’s policy is generally to lock in favourable margins between the purchase and sale price of commodities but differences in the timing of entering into these contracts create an exposure to commodity price risk.

To manage exposure to this commodity price risk, the Group enters into various exchange traded commodity derivative contracts (futures and options) as well as over-the-counter contracts with terms between 2 and 24 months depending on the underlying transactions. These contracts are predominantly in Australia, New Zealand, US, Canada and Europe based financial markets and denominated in those currencies. Changes in fair value are recognised immediately in the income statement.

Commodity trading assets and liabilities subject to commodity price risk as at 30 September:

	Fair value of	Net effect of a 20%	Net effect of a 20%
	derivatives and	appreciation in price on	depreciation in price on
	physical inventory	post-tax profit or loss	post-tax profit or loss
	$ M	$ M	$ M
2015	183.8	(1.1)	1.1
2014	256.5	(2.9)	2.9

2015 ANNUAL REPORT 107

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management (continued)

The fair value for commodity trading assets and liabilities subject to commodity risk is defined as follows:

Commodity inventory at fair value: the market value amount as at reporting date.
Forward purchase and sales contracts: mark to market as at reporting date.
Commodity futures: mark to market as at reporting date.
Commodity options: market value amount as at reporting date.

Discussion of sensitivity analysis

A 20% movement in commodity prices has been determined as a reasonably possible change based on recent market history specific to agricultural commodities. However, due to controls the Group has in relation to commodity trading, such as trading limits and stop losses, it is not expected that a change of this magnitude would crystallise. The 20% movement is calculated over the market value amount of the net exposure of the commodity physical and derivative contracts.

Commonly traded commodities include wheat, sorghum, barley, tallow, vegetable oil, canola and pulses.

Commodity price risk – malt and oils production

The Group enters into forward physical purchase and sales contracts along with commodity derivative contracts to manage the underlying price risks in the purchase of raw materials for malt and oils production and the subsequent sale of malt and oils products from own use manufacture. These contracts are entered into and continue to be held for the purpose of delivery of raw materials and subsequent sale of processed malt and oils arising from the Group’s expected purchase, sale or usage requirements; and are classified as non-derivative, and not fair valued.

Utility price risk – malt production

The Group enters into utility price swap contracts to fix utility costs incurred in malt processing. Changes in fair value are recognised immediately in the income statement.

Assets and liabilities subject to utility price risk as at 30 September:

	2015 $ M 2014 $ M
Utility contracts at fair value: Asset / (liability)	(0.2) 0.2

At 30 September, if the price of utility swap contracts moved as illustrated in the table below, with all other variables held constant, profit and equity would have been affected as follows:

	2015 $ M 2014 $ M
Profit / (loss) 20% increase 20% decrease	0.3 0.9 (0.3) (0.9)

108 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management (continued)

Foreign currency risk

The Group is exposed to foreign currency risk arising from transactions entered into in its normal course of business and as a result of its investments in foreign operations. GrainCorp operates in seven local currencies across its global operations: Australian Dollar, US Dollar, Canadian Dollar, UK Pound Sterling, Euro, New Zealand Dollar and Japanese Yen. Movements in foreign currency exchange rates will result in gains or losses in the income statement due to the revaluation of certain balances or in movements in the foreign currency translation reserve from the revaluation of foreign operations. The Australian dollar is the presentation currency of the Group.

Transactional currency exposures arise from sales or purchases in currencies other than the functional currencies of each of the entities within the Group. For example, the Group is exposed to transactional exposure in respect of non-functional currencies on foreign currency denominated contracts taken out on the Australian, US, Canadian and European markets to manage commodity price risk from commodity trading. In accordance with the Group’s risk policy, forward exchange contracts and foreign currency options are utilised to manage this risk, with the contract timed to mature when the relevant underlying commodity contracts expire.

The investment of capital in foreign operations, such as overseas subsidiaries, with functional currencies other than the Australian Dollar exposes the Group to the risk of changes in foreign exchange rates. The Group’s Consolidated Statement of Financial Position is therefore affected by exchange differences between the Australian Dollar and functional currencies of foreign operations. Variations in the value of these overseas operations arising as a result of exchange differences are reflected in other comprehensive income. The Group monitors this risk via its foreign currency risk policy and conducts hedging, such as the use of net investment hedges, in accordance with this policy. Refer to note 1(m).

Expressed in Australian Dollars, the table below indicates GrainCorp’s exposure and sensitivity to movements in exchange rates on the profit or loss and equity of the Group, based on the global currency exposures at 30 September. The tables are based upon the Group’s financial asset and liability profile at 30 September, which fluctuates over the course of normal operations.

	Exposure at	Impact on	profit / (loss)	Impacts on other	Impacts on other
2015	reporting date		after tax	components of equity
	$M		$ M		$ M
Movement in exchange rate		+10%	-10%	+10%	-10%
Australian Dollar	(90.1)	2.9	(2.9)	(9.2)	9.2
US Dollar	71.0	1.6	(1.6)	3.3	(3.3)
Canadian Dollar	70.9	1.8	(1.8)	3.2	(3.2)
UK Pound Sterling	1.0	(5.1)	5.1	5.2	(5.2)
Euro	(62.5)	0.6	(0.6)	(5.0)	5.0
New Zealand Dollar	36.5	0.1	(0.1)	2.5	(2.5)
Yen	(39.2)	(2.7)	2.7	-	-
Malaysian Ringgit	12.3	0.9	(0.9)	-	-

	Exposure at	Impact on	profit / (loss)	Impacts on other	Impacts on other
2014	reporting date		after tax	components of equity
	$M		$ M		$ M
Movement in exchange rate		+10%	-10%	+10%	-10%
Australian Dollar	(107.2)	0.6	(0.6)	(8.1)	8.1
US Dollar	(19.7)	(4.0)	4.0	2.7	(2.7)
Canadian Dollar	106.7	4.4	(4.4)	3.1	(3.1)
UK Pound Sterling	45.3	(1.3)	1.3	4.5	(4.5)
Euro	(54.8)	0.7	(0.7)	(4.5)	4.5
New Zealand Dollar	27.2	(0.5)	0.5	2.4	(2.4)
Yen	2.5	0.2	(0.2)	-	-

2015 ANNUAL REPORT 109

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management (continued)

Interest rate risk

The Group’s interest rate risk arises from interest obligations on all borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk.

The Group's policy is to manage its finance costs using a mix of fixed and variable rate debt. Current policy is to maintain between 40% and 75% of long term borrowings at fixed rates inclusive of a natural hedge from a subordinated loan. To manage this mix, the Group predominantly uses interest rate swaps. Under interest rate swap contracts, the Group is entitled to receive interest at variable rates and is obliged to pay interest at fixed rates, calculated by reference to an agreed-upon notional principal amount. The contracts require settlement of net interest receivable or payable at each reset period. The settlement dates coincide with the dates on which interest is payable on the underlying debt.

At 30 September 2015, after taking into account the effect of interest rate swaps, approximately 51%, that is $394 million of the Group's long term borrowings are at a fixed rate of interest (2014: 57%, $339 million).

The Group constantly analyses its interest rate exposure with consideration given to cash flows impacting on rollovers/repayments of debt, alternative hedging instruments and the mix of fixed and variable interest rates.

At balance date, the Group had the following mix of financial assets and liabilities with interest at fixed and variable rates:

	2015 $ M 2014 $ M
Fixed rate instruments Financial assets Financial liabilities	0.2 0.2 (404.1) (329.6)
Net fixed rate instruments	(403.9) (329.4)
Variable rate instruments Financial assets Financial liabilities	374.0 206.2 (714.3) (604.3)
Net variable rate instruments	(340.3) (398.1)

At balance date the Group had the following borrowings outstanding exposed to variable interest rate risk:

	2015 2014
	Weighted average interest rate % Balance $ M Weighted average interest rate % Balance $ M
Current: Short term facilities Inventory funding facilities Interest rate swaps (notional principal amount)	1.00% (75.2) 1.90% (106.7) 2.80% (253.5) 3.56% (245.6) 1.16% 236.4 - -
	2.39% (92.3) 3.06% (352.3)
Non-current: Term facilities Subordinated loan Interest rate swaps (notional principal amount)	2.26% (779.9) 2.76% (590.7) - - 4.91% 19.3 1.16% 157.9 1.37% 319.4
	2.26% (622.0) 2.76% (252.0)
Net exposure to cash flow interest rate risk	(714.3) (604.3)

110 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management (continued)

Sensitivity analysis

At balance date, if interest rates had moved as illustrated in the table below, with all other variables held constant, profit and equity would have been affected as follows:

profit and equity would have been affected as follows:
	2015 $ M 2014 $ M
Profit / (loss) + 100 basis points – 100 basis points	(3.5) (4.0) 3.5 4.0
Increase / (decrease) in equity + 100 basis points – 100 basis points	3.9 3.2 (3.9) (3.2)

Credit risk

The Group's exposure to credit risk arises from potential default of customers or counterparties. The carrying amount of financial assets represents the maximum exposure at the reporting date:

amount of financial assets represents the maximum exposure at the reporting	date:
	2015 $ M 2014 $ M
Trade receivables Other receivables Derivative contracts at fair value Amounts receivable from joint ventures Derivative contracts margin deposits Bank balances and call deposits	365.0 351.9 56.5 27.9 97.2 157.6 0.2 19.6 19.9 2.3 374.0 206.2
Total exposure to credit risk	912.8 765.5

It is the Group's policy that customers who wish to trade on credit terms are subject to a credit assessment, which may include an assessment of their independent credit rating (provided by an independent credit bureau), supplier references, financial position, country risk, past trading experience and industry reputation. Credit limits are determined for each individual customer based on the credit assessment. These limits are approved under the credit policy that is approved by the Board.

The Group does not have any significant credit risk exposure to a single customer or group of customers. Receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is usually not significant but where appropriate, an allowance for doubtful debtors may be raised. On occasion, the Group may also hold collateral, which may take the form of physical commodities, bank guarantees, personal guarantee or mortgage over property until the debt is recovered. There was no significant concentration of credit risk within the Group as it deals with a large number of customers, geographically dispersed.

The credit risk arising from favourable derivatives transactions and deposits with financial institutions exposes the Group to credit risk if the contracting entity is unable to complete its obligations under the contracts. To respond to this risk, the Group has a panel of authorised counterparties. Authorised counterparties are principally large banks and recognised financial intermediaries with acceptable credit ratings determined by a rating agency. The Group’s net exposure and credit assessment of its counterparties are continuously monitored to ensure any risk is minimised.

The Group may also be subject to credit risk for transactions that are not included in the statement of financial position, such as when a guarantee is provided for another party. Details of contingent liabilities are disclosed in note 25.

2015 ANNUAL REPORT 111

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management (continued)

The ageing of trade receivables at the reporting date was:

	2015 2014
	Gross $ M Impairment $ M Gross $ M Impairment $ M
Not past due Past due up to 30 days Past due 31 to 60 days Past due 61 to 90 days Past due over 90 days	315.6 (0.4) 296.1 (0.5) 32.0 - 33.4 - 7.2 - 7.5 - 3.2 - 2.1 - 7.0 (1.5) 12.8 (0.7)
Total trade receivables	365.0 (1.9) 351.9 (1.2)

The movement in the provision for impairment in respect of trade receivables during the year was as follows:

	2015 $ M 2014 $ M
Balance at 1 October Provisions made during the year Impairment loss recognised Provisions reversed during the year Exchange difference	(1.2) (1.3) (1.0) (0.7) 0.2) 0.6 0.2) 0.2 (0.1) -
Balance at 30 September	(1.9) (1.2)

None of the Group’s other receivables or other financial assets are past due (2014: $0.6 million).

No provision for impairment is recognised at 30 September 2015 in respect of advances to joint ventures (2014: $nil impaired).

Liquidity risk

The Group's objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, finance leases and committed available credit facilities. The Group manages liquidity risk by regularly monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Group Treasury aims at maintaining flexibility in funding by keeping committed credit lines available with a variety of counterparties.

At balance date, the Group had approximately $421.5 million (2014: $309.3 million) of unused credit facilities available for immediate use.

112 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management (continued)

Maturity analysis of financial liabilities

The tables below show the contractual maturities of financial liabilities, including estimated interest payments. The amounts disclosed in the table are the contractual undiscounted cash flows:

As at 30 September 2015

Less than
1 year
$ M
Between
1 and 2
years
$ M
Between
2 and 5
years
$ M
Over 5
years
$ M
Total
$ M

Non-derivatives:
Bank borrowings53
Trade payables
Other payables
Finance leases
Derivatives:
Interest rate swap contracts
Forward foreign exchange contracts:
- outflow
- inflow
Commodity futures and options:
- outflow
- inflow
Commodity contracts (forward purchases
and sales):
- outflow
- inflow
Utility contracts (utility swaps):
- outflow
- inflow
Embedded foreign exchange contracts:
- outflow
- inflow

(336.6)
-
(529.6)
(268.0)
(1,134.2)
(167.2)
-
-
-
(167.2)
(148.6)
-
-
-
(148.6)
(1.3)
(0.8)
(2.5)
(16.2)
(20.8)
-
-
-
-
-
(681.7)
(92.7)
(13.3)
-
(787.7)
594.3
10.2
-
-
604.5
(128.7)
-
-
-
(128.7)
249.8
97.8
-
-
347.6
(594.6)
(28.1)
-
-
(622.7)
715.9
5.0
-
-
720.9
-
-
-
-
-
0.7
-
-
-
0.7
(6.4)
-
-
-
(6.4)
8.3
7.9
-
-
16.2

In addition to the cash flows above, financial guarantees (refer to note 19a) would be payable immediately in the event that a default of terms occurred.

53 The Group’s bank borrowings facilities and maturity dates are set out in note 18(e).

2015 ANNUAL REPORT 113

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management (continued)

As at 30 September 2014

Less than
1 year
$ M
Between
1 and 2
years
$ M
Between
2 and 5
years
$ M
Over 5
years
$ M
Total
$ M

Non-derivatives:
Bank borrowings
Trade payables
Other payables
Finance leases
Derivatives:
Interest rate swap contracts
Forward foreign exchange contracts:
- outflow
- inflow
Commodity futures and options:
- outflow
- inflow
Commodity contracts (forward purchases and
sales):
- outflow
- inflow
Utility contracts (utility swaps):
- outflow
Embedded foreign exchange contracts:
- outflow
- inflow

(363.2)
-
(600.7)
-
(963.9)
(151.2)
-
-
-
(151.2)
(93.0)
-
-
-
(93.0)
(1.3)
(1.1)
(4.6)
(18.8)
(25.8)
-
-
-
-
-
(653.6)
(49.2)
-
-
(702.8)
437.4
22.5
-
-
459.9
(411.7)
(3.8)
-
-
(415.5)
498.1
26.5
-
-
524.6
(342.2)
(9.6)
-
-
(351.8)
429.5
0.9
-
-
430.4
-
-
-
-
-
(6.4)
-
-
-
(6.4)
14.4
4.2
-
-
18.6

114 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management (continued)

Fair value measurements

Financial instruments carried at fair value are classified using a valuation method based on the following hierarchy:

Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).
Level 3: inputs for the asset or liability that are not based on observable market data (use of unobservable inputs).

The following table presents the Group’s assets and liabilities measured and recognised at fair value at 30 September:

30 September:
30 September 2015	Level 1 $ M Level 2 $ M Level 3 $ M	Total $ M
Assets Financial assets at fair value through profit or loss - Derivatives - Commodity contracts Derivatives used for hedging Commodity inventory at fair value less cost to sell (note 12)	11.9 19.4 - - 1.5 60.2 4.3 - - - 6.4 153.5

		31.3
		61.7
		4.3
		159.9
Total assets	16.2 27.3 213.7	257.2
Liabilities Financial liabilities at fair value through profit or loss - Derivatives - Commodity contracts Derivatives used for hedging	34.9 2.3 - - 0.2 41.2 46.2 - -

		37.2
		41.4
		46.2
Total liabilities	81.1 2.5 41.2	124.8
30 September 2014

Assets Financial assets at fair value through profit or loss - Derivatives - Commodity contracts Derivatives used for hedging Commodity inventory at fair value less cost to sell (note 12)	36.5 68.5 - - 0.6 45.8 3.9 2.3 - - 5.8 211.3

		105.0
		46.4
		6.2
		217.1
Total assets	40.4 77.2 257.1	374.7
Liabilities Financial liabilities at fair value through profit or loss - Derivatives - Commodity contracts Derivatives used for hedging	22.4 58.2 - - - 27.1 16.8 6.9 -

		80.6
		27.1
		23.7
Total liabilities	39.2 65.1 27.1	131.4

2015 ANNUAL REPORT 115

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management (continued)

Fair value estimation

The fair value of financial assets and liabilities must be estimated for recognition and measurement for disclosure purposes. The fair values of financial assets and liabilities are shown in note 13.

The fair value of financial instruments traded on active markets (such as exchange traded commodity derivatives and forward exchange contracts) is based on the quoted markets prices and forward exchange market rates as at the reporting date. The quoted market price used for financial assets and liabilities held by the Group is the market settlement price on the reporting date. These instruments are included in Level 1.

The fair value of financial instruments that are not traded in an active market (for example, over the counter commodity and foreign currency derivatives) are determined using the Black Scholes pricing model, which is sourced from a widely used market pricing provider. The fair value of interest rate swap contracts is received from market counterparties as at balance date. The valuation methodology used by the counterparties reflects common market practice of net present value of estimated future cash flows determined by observable yield curves. These instruments are included in Level 2.

The fair value of physical positions comprising inventory, forward sales and forward purchases for commodity trading do not have quoted market prices available. To obtain the market prices, bid values are sourced from commodity brokers and trade marketers, defined by commodity and grade type. The market prices are amended through location and grade differentials (market zone adjustments) to bring them to a common point. These instruments are included in Level 3. Refer to commodity price risk for the sensitivity of fluctuations of unobservable inputs used to calculate the Level 3 instruments.

The Group’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. There were no instruments reclassified between levels for the year ended 30 September 2015.

The Group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at balance date.

The following table presents the changes in Level 3 instruments for the year ended 30 September 2015 and 30 September 2014.

30 September 2014.
	2015 2014
	Commodity Contracts $M Commodity inventory at fair value $ M Commodity Contracts $M Commodity inventory at fair value $ M
Opening balance as at 1 October Gains / (losses) recognised in profit and loss Net acquisitions and disposals	18.7 213.9 13.5 162.8 (8.4) 9.2 0.2 (8.7) 8.8 (69.6) 5.0 59.8
Closing balance as at 30 September	19.1 153.5 18.7 213.9

Fair value of other financial instruments

The carrying amounts of other financial assets and liabilities are reasonable approximations of their fair values.

116 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

33. Financial risk management (continued)

Offsetting financial assets and liabilities

Agreements with derivative counterparties are based on an International Swaps and Derivatives Association (ISDA) Master netting agreement. Under the terms of these agreements, only where certain credit events occur (such as default), the net position owing/receivable to a single counterparty in the same currency will be taken as owing and all the relevant arrangements terminated.

The ISDA agreements do not meet the criteria for offsetting in the statement of financial position. This is because the Group does not have any legal enforceable right to offset recognised amounts, because the right to offset is enforceable only on the occurrence of future events such as default on the bank loans or other credit events.

The following table presents the recognised financial instruments that are offset, or subject to offsetting arrangements mentioned above, as at 30 September 2014 and 30 September 2015:

30 September 2015	Gross amounts Gross amount set off $ M $ M	Net amount in statement of financial position Amounts that are not offset $ M $ M	Net amount
			$ M
Financial assets Cash and cash equivalents Trade and other receivables Derivative financial instruments	415.8 (41.8) 477.5 (2.7) 99.8 (2.6)
		374.0 -	374.0
		474.8 -	474.8
		97.2 (24.8)	72.4
Total assets	993.1 (47.1)	946.0 (24.8)	921.2
Financial liabilities Cash overdraft Trade and other payables Derivative financial instruments	41.8 (41.8) 318.5 (2.7) 127.6 (2.6)
		- -	-
		315.8 -	315.8
		125.0 (24.8)	100.2
Total liabilities	487.9 (47.1)	440.8 (24.8)	416.0
30 September 2014

Financial assets Cash and cash equivalents Trade and other receivables Derivative financial instruments	220.0 (13.8) 429.8 (6.2) 164.9 (7.3)
		206.2 -	206.2
		423.6 (1.5)	422.1
		157.6 (88.0)	69.6
Total assets	814.7 (27.3)	787.4 (89.5)	697.9
Financial liabilities Cash overdraft Trade and other payables Derivative financial instruments	13.8 (13.8) 250.4 (6.2) 138.7 (7.3)
		- -	-
		244.2 -	244.2
		131.4 (89.5)	41.9
Total liabilities	402.9 (27.3)	375.6 (89.5)	286.1

2015 ANNUAL REPORT 117

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

34. Key Management Personnel disclosures and related party transactions

1. Key Management Personnel (‘KMP’) disclosures

a) KMP compensation

a) KMP compensation
	2015 $’000 2014 $’000
Short-term employee benefits Post-employment benefits Long-term benefits Share-based payments	8,058 7,433 271 262 1,100 417 788 (222)
Total KMP compensation	10,217 7,890

Detailed remuneration disclosures including details of rights provided as remuneration and shares issues on the exercise of such rights, together with terms and conditions of rights are provided in sections 1 to 6 of the Remuneration Report on pages 23 to 40.

b) Other transactions with KMP

Transactions for storage, handling, transport, testing, seed sales and purchase of grain, fertiliser and other agricultural products from Directors or Director-related entities took place during both financial years covered by this report and occurred within a normal customer relationship on terms no more favourable than those available on similar transactions to other customers. Below are aggregate amounts due, from and to Directors, any other KMP and their Director-related and KMP-related entities at balance date. These balances are the result of transactions conducted under normal trading terms and conditions.

Directors and other KMP who transacted business with the Group were A Bell, B Gibson, P Housden, B Ivanoff, A Johns, D Mangelsdorf, D McGauchie, M Palmquist, K Pamminger, D Taylor and D Trebeck. (2014: A Bell, B Gibson, P Housden, B Ivanoff, A Johns, D Mangelsdorf, D McGauchie, K Pamminger, D Taylor and D Trebeck).

Director related and KMP related entities	Consolidated
	2015 $’000 2014 $’000
Current receivables Current payables	5,247 3,821 9 92

2015: Current receivables include $3,689,000 relating to Allied Mills Australia Pty Ltd of which M Palmquist (appointed on 27 October 2014) and A G Bell are Directors and B Ivanoff (resigned on 27 October 2014) was a Director during the year. $863,000 receivable from Australian Agricultural Company Ltd, an entity related to D McGauchie. $691,000 receivable from Nuplex Industries Limited of which B Gibson is a Director. $2,000 receivable from Warakirri 2 Pty Ltd, an entity related to D Mangelsdorf. $1,000 receivable from National Grower Register Pty Ltd of which A Johns is a Director. Current payables include $9,000 relating to Allied Mills Australia Pty Ltd of which M Palmquist (appointed on 27 October 2014) and A Bell are Directors and B Ivanoff (resigned on 27 October 2014) was a Director.

2014: Current receivables include $1,840,000 relating to Allied Mills Australia Pty Ltd of which A Bell is a Director and B Ivanoff was a Director during the year. $1,981,000 receivable from Australian Agricultural Company Ltd of which D McGauchie is a Director. Current payables include $75,000 relating to Allied Mills Australia Pty Ltd of which A Bell is a Director and B Ivanoff was a Director during the year, $14,000 payable to Nuplex Industries Limited of which B Gibson is a Director, and $1,800 payable to Royal Wolf Trading Australia Pty Ltd of which P Housden is a Director and $1,000 payable to Klaus Trading Services Pty Ltd of which K Pamminger is a Director.

118 GRAINCORP LIMITED

GRAINCORP LIMITED

NOTES TO THE FINANCIAL STATEMENTS

34. Key Management Personnel disclosures and related party transactions (continued)

2. Related party transactions

a) Transactions with related parties – wholly-owned members of the Group

Details of wholly-owned members of the Group and ownership interests in controlled entities are set out in note 28. Aggregate amounts included in the determination of profit from ordinary activities before income tax that resulted from transactions with wholly-owned entities within the Group were as follows:

	Parent entity
	2015	2014
	$’000 $’000
Fee for liabilities guarantee	1,206	-
Interest expense payable to subsidiaries	3	3
Interest revenue from subsidiaries	62,146 69,492

b) Transactions with related parties

Details of related companies are shown in note 31. Aggregate amounts included in the determination of profit from ordinary activities before income tax that resulted from transactions with related parties were as follows:

	Consolidated	Consolidated	Parent entity
	2015	2014	2015	2014
	$’000	$’000	$’000 $’000
Freight income from Allied Mills Australia Pty Ltd (‘Allied Mills’) 8,115		10,529	-	-
Rental charge from Allied Mills	-	-	-	-
Sales income from Allied Mills	57,083	71,000	-	-
Purchases from Allied Mills	5,308	2,099	-	-
Interest income from Allied Mills	614	934	614	934
Storage income from Allied Mills	7,470	7,979	-	-
Sales income from Five Star Flour Mills (‘Five Star’)	96,477	104,900	-	-
Membership fees to National Grower Register Pty Ltd (‘NGR’)	-	2	-	-
Interest income from NGR	11	18	-	-

c) Outstanding balances in relation to transactions with related parties

Aggregate amounts receivable from and payable to other related parties at the end of the reporting period were as follows:

follows:
	Consolidated Parent entity
	2015 $’000 2014 $’000 2015 $’000 2014 $’000
Subsidiaries Non-current receivables	- - 1,473,479 1,419,178
Joint ventures Loan to NGR (note 11) Loan to Allied Mills (note 11) Current trade receivable Allied Mills Current trade receivable Five Star Loan interest receivable from Allied Mills (note 11)	175 175 - - - 19,092 - 19,092 3,689 1,840 - - 6,881 - - - - 279 - 279

2015 ANNUAL REPORT 119

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NOTES TO THE FINANCIAL STATEMENTS

34. Key Management Personnel disclosures and related party transactions (continued)

d) Terms and conditions

Transactions between GrainCorp and related parties in the Group during the years ended 30 September 2015 and 2014 consisted of:

i. loans advanced and repaid within the Group;
ii. payment of dividends to GrainCorp;
iii. management fees for administrative services paid to GrainCorp;
iv. liability guarantee fees paid to GrainCorp;
v. sale of goods; and
vi. reimbursement of expenses.

These transactions occurred within a normal customer relationship on terms no more favourable than those available on similar transactions to other customers, except when there is no interest or fixed terms for repayment on intercompany loans within the Group. Outstanding balances are unsecured and repayable in cash.

35. Share based payments

a) Long Term Incentive (‘LTI’) Plan

The LTI plan was designed to provide longer term focus and alignment to business strategy through performance hurdles of Return on Equity (‘ROE’) and relative Total Shareholder Return (‘TSR’).

Grant quantum is derived by a percentage of fixed remuneration as determined by the Board. The dollar value is converted into the number of rights by dividing it by the Volume Weighted Average Price (‘VWAP’) of GrainCorp’s shares over the 20 trading days after annual results are released. The vesting period is 3 years subject to meeting ROE and relative TSR performance hurdles. Full details of the LTI plan and link to performance can be found in the Remuneration Report.

The grant-date fair value of the rights granted through the LTI plan was measured based on a Monte-Carlo simulation for the TSR component and a binomial tree valuation methodology for the ROE component. The inputs used in the measurement of the fair values at grant date for grants made include the following:

Grant date	16 February 2012	2 May 2014	17 December 2014
Fair value at grant date (TSR)	$5.66	$2.84	$3.42
Fair value at grant date (ROE)	$6.96	$8.17	$7.23
Estimated vesting date	30 September 2014	30 September 2016	30 September 2017
Share price at grant date	$8.20	$8.94	$7.90
Volatility	30%	20%	20%
Risk free interest rate	3.50%	2.72%	2.20%
Dividend yield	5.9%	3.5%	3.0%

120 GRAINCORP LIMITED

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NOTES TO THE FINANCIAL STATEMENTS

35. Share based payments (continued)

Set out below is a summary of the number of rights granted under the plan:

		Balance	Granted	Exercised	Forfeited	Expired	Balance	Exercisable
Grant date	Expiry date	at start	during	during	during	during	at end	at end of
		of year	year	the year	year	year	of year	year
16 Feb 2012	30 Sep 2014	125,350	-	(103,849)	-	(21,501)	-	-
2 May 2014	30 Sep 2016	131,206	-	-	-	-	131,206	-
17 Dec 2014	30 Sep 2017	-	298,633	-	-	-	298,633	-
		256,556	298,633	(103,849)	-	(21,501)	429,839	-

The 2013 LTI plan was awarded as deferred cash grants due to takeover speculation and share price volatility at the time of the grant in December 2012. The deferred cash awards maintain the same time, vesting and performance conditions as existing LTI plans. The 2014 LTI plan was initially awarded as deferred cash grants for the same reasons. Following the rejection of the ADM bid by the Federal Treasurer on 29 November 2013, the Board determined that the award would be converted back to an equity-based LTI award. Refer to Section 5.2 of the Remuneration Report for further details.

b) Deferred Equity Plan (‘DEP’)

Short term incentives awarded to Executives are not paid in full in the performance year. Rather a significant portion (50% for the Managing Director & CEO and at least 40% for other Executives) is deferred and paid subject to the Executive remaining with the company for subsequent periods. This reflects the Board’s desire to encourage retention and performance.

For the Managing Director & CEO the 50% deferred component of STI is paid 12 months following the initial STI awards as cash. For the other Executives the deferred component is paid over two years as rights (ie 50% deferred component at the end of year one and 50% of deferred component at the end of year two).

Grant quantum under the DEP is a deferred proportion of the prior financial year’s total short term incentive. The dollar value is converted into the number of rights by dividing it by VWAP of GrainCorp’s shares over the 20 trading days after annual results are released. The vesting period is 50% at the end of one year and 50% at the end of two years.

c) Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the period as part of employee benefit expenses in the income statement were as follows:

	2015 $ M 2014 $ M
Share-based payments expense	1.4 (0.2)

36. Events occurring after the reporting period

Mr Peter Richards was appointed as a Non-executive Director of the Company on 9 November 2015.

No other matters or circumstances have arisen since 30 September 2015 which has significantly affected or may significantly affect:

a) the Group's operations in future financial years; or
b) the results of those operations in future financial years; or
c) the Group’s state of affairs in future financial years.

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DIRECTORS’ DECLARATION

Directors’ Declaration

In the Directors’ opinion:

a) the financial statements and notes set out on pages 56 to 121 are in accordance with the Corporations Act 2001 , including:
i. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
ii. giving a true and fair view of the consolidated entity’s financial position as at 30 September 2015 and of its performance for the financial year ended on that date; and
b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and
c) at the date of this declaration, there are reasonable grounds to believe that the members of the Extended Closed Group identified in note 30 will be able to meet any obligation or liabilities to which they are, or may become, subject to by virtue of a deed of cross guarantee described in note 30.

Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001 .

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

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D C Taylor Chairman Sydney 12 November 2015

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INDEPENDENT AUDITOR’S REPORT

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Independent auditor’s report to the members of GrainCorp Limited

Report on the financial report

We have audited the accompanying financial report of GrainCorp Limited (the company), which comprises the consolidated statement of financial position as at 30 September 2015, the consolidated income statement and consolidated statement of comprehensive income , consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration for the GrainCorp Group (the consolidated entity). The consolidated entity comprises the company and the entities it controlled at year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 1a, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements comply with International Financial Reporting Standards

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the consolidated entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001 .

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

2015 ANNUAL REPORT 123

GRAINCORP LIMITED

INDEPENDENT AUDITOR’S REPORT

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124 GRAINCORP LIMITED

GRAINCORP LIMITED

SHAREHOLDER INFORMATION

Shareholder Information

Holdings distribution as at 30 October 2015

Range	Securities	%	No. Of Holders	%
100,001 and Over	195,521,841	85.4	46	0.3
50,001 to 100,000	2,495,509	1.1	36	0.3
10,001 to 50,000	9,600,565	4.2	526	3.8
5,001 to 10,000	7,305,142	3.2	1,027	7.5
1,001 to 5,000	11,005,257	4.8	4,750	34.5
1 to 1,000	2,927,314	1.3	7,392	53.6
Total	228,855,628	100.0	13,777	100.0
Unmarketable Parcels	7,770	0.00	702	5.1

Twenty largest shareholders as at 30 October 2015

Rank	Name	Shares held	Issued Capital
1	ADM Australia Holdings II Pty Limited	45,420,054	19.9%
2	J P Morgan Nominees Australia Limited	35,437,670	15.4%
3	National Nominees Limited	26,216,726	11.4%
4	HSBC Custody Nominees (Australia) Limited	25,805,259	11.3%
5	Citicorp Nominees Pty Limited	23,724,432	10.4%
6	BNP Paribas Noms Pty Ltd	11,004,391	4.8%
7	RBC Investor Services Australia Nominees Pty Limited	9,176,006	4.0%
8	AMP Life Limited	2,792,309	1.2%
9	Citicorp Nominees Pty Limited	2,437,821	1.1%
10	Jarjums Holdings Pty Limited	1,700,000	0.7%
11	RBC Investor Services Australia Nominees Pty Limited	1,431,480	0.6%
12	RBC Investor Services Australia Nominees Pty Limited	1,360,372	0.6%
13	Donald Cameron Seaton	1,133,976	0.5%
14	HSBC Custody Nominees (Australia) Limited	990,898	0.4%
15	UBS Nominees Pty Ltd	970,141	0.4%
16	HSBC Custody Nominees (Australia) Limited	649,746	0.3%
17	Invia Custodian Pty Limited	483,486	0.2%
18	HSBC Custody Nominees (Australia) Limited	375,000	0.2%
19	Milton Corporation Limited	362,290	0.2%
20	Menegazzo Enterprises Pty Ltd	241,783	0.1%
Total		191,713,840	83.7%
Balance of	Register	37,141,788	16.3%
Grand Total		228,855,628	100.0%

Substantial shareholders

Substantial shareholders	Substantial shareholders	Substantial shareholders
The following organisations disclosed a substantial shareholding notice in GrainCorp Limited by 4			November 2015:
Name	Notice Date	Shares held	Issued Capital
ADM Group Company	2 December 2013	45,420,054	19.9%
Ellerston	18 September 2015	21,339,980	9.3%
Perpetual Limited	25 August 2015	16,825,580	7.4%
The Goldman Sachs Group, Inc	1 September 2015	16,613,308	7.3%
Dimensions Entities	22 July 2015	11,446,574	5.0%

Voting rights

On a show of hands, every member present in person or by proxy shall have one vote, and upon each poll, each share shall have one vote.

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128 GRAINCORP LIMITED

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CORPORATE DIRECTORY

DON C TAYLOR Chairman

MARK L PALMQUIST Managing Director and Chief Executive Officer

REBECCA P DEE-BRADBURY Non-executive Director

BARBARA J GIBSON Non-executive Director

PETER J HOUSDEN Non-executive Director

DONALD G MCGAUCHIE Non-executive Director

DANIEL J MANGELSDORF Non-executive Director

PETER I RICHARDS Non-executive Director

Graincorp Limited ABN 60 057 186 035

Registered Office

Level 28 175 Liverpool Street Sydney NSW 2000 Tel: +61 2 9325 9100 Fax: +61 2 9325 9180

Company Website www.graincorp.com.au

ASX Company Code: GNC

Share Registry Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Tel: +61 2 8280 7111

DAVID B TREBECK Non-executive Director

SIMON L TREGONING Non-executive Director

GREGORY GREER BETTY IVANOFF Company Secretaries

Media:

Director Government and Media, Angus Trigg

+61 2 9325 9132 or [email protected]

Investors:

Investor Relations Manager, David Akers

+61 2 9266 9217 or [email protected]

2015 ANNUAL REPORT

Level 28, 175 Liverpool Street Sydney NSW 2000 T + 61 2 9325 9100 F + 61 2 9325 9180 graincorp.com.au

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D GRAINCORP LIMITED

AI assistant

GRAINCORP LIMITED — Annual Report 2015

65001_rns_2015-11-11_a6667b66-47c9-41a9-b2a2-ed7c3644e067.pdf

GRAINCORP LIMITED: GNC

APPENDIX 4E AND ANNUAL REPORT

FINANCIAL YEAR ENDED 30 SEPTEMBER 2015

GrainCorp Limited

GRAINCORP LIMITED

APPENDIX 4E

FOR THE YEAR ENDED 30 SEPTEMBER 2015

Additional Information

Annual Report 2015

GRAINCORP OVERVIEW

GrainCorp is a leading global food ingredients and agribusiness company with an integrated business model across three main grain activities: supply chain, origination and processing.

GrainCorp Overview

Our Mission and Vision

Our Integrated Supply Chain

Our Values

Our international operations

Contents

Annual General Meeting

Full Year Results

Financial performance

Dividend in line with policy

Performance on corporate objectives

Our leading industry position & passionate people

Another challenging year ahead

Board renewal update

Safety performance

Financial performance

Executing on strategic plans

Our segment results highlight the significance of our diversification strategy

Executive leadership

Sustainable performance

Disciplined capital management

Lost Time Injury Frequency Rate (LTIFR)[1]

Underlying EBITDA

Underlying NPAT

BOARD OF DIRECTORS

Non-executive Director

Non-executive Director

BARBARA J GIBSON BSc, MAICD, FTSE Non-executive Director

PETER J HOUSDEN BCom, FCPA, FAICD Non-executive Director

DANIEL J MANGELSDORF BAgEc(Hons), FAICD Non-executive Director

SIMON L TREGONING BCom, FAICD

Non-executive Director

EXECUTIVE LEADERSHIP TEAM

ANDREW BAKER

Chief Information Officer

BETTY IVANOFF

Group General Counsel

NEIL JOHNS

Group General Manager GrainCorp Storage & Logistics

ALISTAIR BELL

Group Chief Financial Officer

MARCUS KENNEDY

Chief Development Officer

KLAUS PAMMINGER

Group General Manager GrainCorp Marketing

PHIL CARIS

Group General Manager Human Resources

GREG FRIBERG

President and CEO GrainCorp Malt

SAM TAINSH

Group General Manager GrainCorp Oils

Directors’ Report

Introduction

Group Company Secretary

Gregory Greer BCom, MPA, GIA(Cert)

Betty Ivanoff LLB, Grad Dip Leg Prac, Legal Practitioner Admitted NSW Supreme Court 1999; MAICD

Meetings of Directors

Operating and Financial Review

About GrainCorp

Our History

Overview

Our Corporate Objectives

Our Business Model

Our Strategy

Creating Value

Group Financial Summary

GRAINCORP LIMITED Annual Report 2015