Investor Presentaiton
Indonesian Divestment
Divestment update
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Elders confirms it will divest its Indonesian feed and processing assets following a comprehensive performance review of the business unit in line with the
Company's strategic Eight Point Plan.
The divestment will allow circa $13m of capital to be redeployed elsewhere.
High cattle costs and changing Indonesian governmental policies have adversely affected the performance of the business, making it appropriate to divest.
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Elders will continue to have a presence in Indonesia, China and Vietnam through our retail meat distribution businesses, which we intend to grow.
Indonesian business - Code of Conduct issue
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PT Elders Indonesia (PTEI), owns land in Sumatra, Indonesia, upon which, until recently, it operated a small palm oil plantation (the Plantation).
PTEI became aware that regional police from the area in which the Plantation was located have been investigating allegations of corruption in respect of the
licencing body in Indonesia which was responsible for issuing licences to the Plantation. Elders was informed by PTEI about this issue.
Upon learning of these allegations, PTEI took steps to understand the issue and to introduce additional controls over systems and processes. These included:
o Taking steps to ensure tighter payment controls;
o Putting an immediate stop to the use of external consultants as part of the licensing process; and
o Took steps to secure and retrieve documents
PTEI obtained relevant information in relation to the matter which confirmed that conduct had taken place contrary to Elders' Code of Conduct. In particular,
there was insufficient rigour and verification around the use of funds, and a lack of appreciation by PTEI representatives of the law concerning provision of
benefits to public officials.
Elders currently considers that this matter is unlikely to have a material impact on PTEI or Elders. The land on which the Plantation is located has no operational
relationship with PTEI's feedlot and abattoir operations which are subject to a sale agreement. PTEI has entered into a sale agreement to sell this land, which is
wholly written down, to an Indonesian buyer for an immaterial price.
PTEI has chosen to voluntarily disclose this matter to the central anti-corruption authority in Indonesia (the Komisi Pemberantasan Korupsi (KPK)). Elders has also
notified the Australian Federal Police about the issue and PTEI's report to the KPK and will cooperate with the authorities.
Outside of issues relating to the Plantation, Elders does not have knowledge of any other instances of conduct in Indonesia that are potentially contrary to its
values. However, Elders is reviewing practices employed by PTEI in its remaining operations to ensure full compliance with its Code of Conduct.
Elders
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