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## OPERATING AND FINANCIAL REVIEW (CONTINUED) 

## 1. Review (continued) 

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Summarised operating results are as follows: 

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AACo determined during the last quarter of 2012 not to sell cattle into an over-supplied domestic market where possible, focusing on retaining and improving a young herd and converting its cattle into beef for sale into a strong global thematic for red meat protein. 

This strategy has meant that AACo held substantial numbers of cattle as market prices in Australia fell throughout 2012 and into 2013. In accordance with Australian Accounting Standard AASB 141 Agriculture, the estimated market value of AACo’s herd has fallen in the 3 months to 31 March 2013. This change in the valuation of the current herd has significantly affected the Consolidated Income Statement. The difference in market value price movements between 31 March 2013 and the prior corresponding period is a reduction of $37.2 million. The main impact on this market value price movement was the breeder herd value decline of $35.3 million, based on independent valuations, since 31 December 2012. AACo sees the breeder herd as a significant and necessary asset. These cattle will be held for long periods of time as they are essential to the development of an integrated supply chain and hence non-cash movements in the valuation of this herd are not expected to be realised in the short term. 

